[Senate Hearing 109-108]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 109-108


 
                    NOMINATION OF JONATHAN B. PERLIN
                   TO BE UNDER SECRETARY FOR HEALTH,
                  U.S. DEPARTMENT OF VETERANS AFFAIRS

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS

                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 7, 2005

                               __________

       Printed for the use of the Committee on Veterans' Affairs


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                     COMMITTEE ON VETERANS' AFFAIRS


        .........................................................


                    Larry E. Craig, Idaho, Chairman
Arlen Specter, Pennsylvania          Daniel K. Akaka, Hawaii, Ranking 
Kay Bailey Hutchison, Texas              Member
Lindsey O. Graham, South Carolina    John D. Rockefeller IV, West 
Richard Burr, North Carolina             Virginia
John Ensign, Nevada                  James M. Jeffords, (I), Vermont
John Thune, South Dakota             Patty Murray, Washington
Johnny Isakson, Georgia              Barack Obama, Illinois
                                     Ken Salazar, Colorado


                  Lupe Wissel, Majority Staff Director
               D. Noelani Kalipi, Minority Staff Director


                            C O N T E N T S

                              ----------                              

                        Thursday, April 7, 2005

                                SENATORS

                                                                   Page


Craig, Hon. Larry E., U.S. Senator from Idaho....................     1
Akaka, Hon. Daniel K., U.S. Senator from Hawaii..................     2
Isakson, Hon. Johnny, U.S. Senator from Georgia..................    14
Jeffords, Hon. James M., U.S. Senator from Vermont...............    15
Salazar, Hon. Ken, U.S. Senator from Colorado, prepared statement    15
Thune, Hon. John, U.S. Senator from South Dakota.................    16

                                WITNESS

Perlin, Jonathan B., M.D., Ph.D., MSHA, FACP, nominee to be Under 

  Secretary for Health, Department of Veterans Affairs...........    18
    Prepared statement...........................................    20
    Response to written pre-hearing questions submitted by Hon. 
      Daniel K. Akaka............................................     3
    Questionnaire for Presidential nominee.......................    21
    Response to written post-hearing questions submitted by:
        Akaka, Hon. Daniel K.....................................    23
        Specter, Hon. Arlen......................................    35
        Rockefeller IV, Hon. John D..............................    36
        Graham, Hon. Lindsey.....................................    38
        Salazar, Hon. Ken........................................    39
        Ensign, Hon. John........................................    41


                    NOMINATION OF JONATHAN B. PERLIN
                   TO BE UNDER SECRETARY FOR HEALTH,
                  U.S. DEPARTMENT OF VETERANS AFFAIRS

                              ----------                              


                        THURSDAY, APRIL 7, 2005

                      United States Senate,
                    Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:04 a.m., in 
room SR-418, Russell Senate Office Building, Hon. Larry E. 
Craig 
presiding.
    Present: Senators Craig, Burr, Thune, Isakson, Akaka, 
Jeffords, Murray, and Salazar.

      OPENING STATEMENT OF HON. LARRY E. CRAIG, CHAIRMAN, 
                    U.S. SENATOR FROM IDAHO

    Chairman Craig. The Senate Committee on Veterans' Affairs 
will be in order. Good morning, ladies and gentlemen, and 
welcome to this hearing. And a very special good morning to 
you, Dr. Perlin.
    Dr. Perlin. Good morning.
    Chairman Craig. We are pleased to have you before the 
Committee. It is our pleasure this morning to take the 
testimony of Dr. Jonathan B. Perlin.
    As everyone in this room likely knows, the President has 
nominated Dr. Perlin to serve as VA's Under Secretary for 
Health. This is an exceedingly important position. The Under 
Secretary, in effect, serves as CEO of the VA's entire health 
care system, the largest integrated health care system in the 
United States. Dr. Perlin, this is a big, big, big job.
    Now that I have impressed you with that--but I didn't need 
to because you already know--I must tell you that I believe you 
are up to the challenge. Before I proceed, let me offer to the 
Committee a brief summary of Dr. Perlin's extraordinary 
background, and probably this is going to get repeated by our 
colleague John Thune a bit.
    But as you know, Dr. Perlin now serves as VA's Acting Under 
Secretary for Health. Prior to taking that assignment, he 
served as Deputy Under Secretary of Health from 2002 to 2004 
while also serving as VA's Chief Research and Development 
Officer. And from 1999 to 2002, he was VA's Chief Quality and 
Performance Officer.
    Before taking on these important jobs at VA Headquarters, 
Dr. Perlin served from 1997 to 1999 as Medical Director of the 
Medical College of Virginia. Prior to that, he had been, among 
other things, an Adjutant Professor of Medicine at the Medical 
School and, most importantly, a practicing physician at VA's 
Medical Center in Richmond, Virginia.
    Dr. Perlin's academic background is truly impressive. He 
holds the following degrees: a Bachelor's degree from the 
University of Virginia in Interdisciplinary Studies, a Ph.D. in 
Pharmacology and Toxicology from the Medical College of 
Virginia, an M.D. from the Medical College of Virginia, and 
finally, a Master's degree in Health Administration from 
Virginia Commonwealth University.
    Dr. Perlin has received so many grants and awards that I am 
not going to list them. But clearly, he is recognized for his 
professionalism and through his training and background has 
arrived at these levels.
    I also note that Dr. Perlin is married to a physician and 
that several of his family members are with us today. I hope 
you will take the opportunity, Doctor, when it is appropriate, 
to introduce them.
    Before I swear Dr. Perlin in, let me turn to my colleagues 
here for any opening comments they would like to make. And then 
I will ask you to take the oath, as is customary here in the 
Senate for confirmation hearings of our Executive Branch 
personnel, and then we will hear testimony from you.
    But first, let me turn to the Ranking Member of this 
Committee, Danny Akaka.
    Senator Akaka.

      STATEMENT OF HON. DANIEL K. AKAKA, RANKING MEMBER, 
                    U.S. SENATOR FROM HAWAII

    Senator Akaka. Thank you very much, Mr. Chairman. I am 
delighted to be here with you and working with you on this 
Veterans' Affairs Committee.
    I want to add my welcome to Dr. Jonathan Perlin. And not 
only to you, but to your family, too. I want to say aloha and 
welcome to Dr. Donna, wife of Dr. Perlin, and also Benjamin, 
his son. And his sister, Sarah is not here because she had to 
take a field trip at school.
    Chairman Craig. He is missing a Spanish test.
    [Laughter.]
    Senator Akaka. But we are delighted to have you, and we 
have the reason why Dr. Perlin, our witness today is here, and 
that is his parents, Dr. Perlin and his mother, who are here 
with him. And we welcome you, too.
    Looking at the first row, I see a friend for many, many 
years in Hawaii and thereafter, General Mick Kicklighter. And I 
want to say welcome to you, too, and all others here from VA 
and friends of VA.
    Today's confirmation hearing is enormously important, as 
was mentioned by the Chairman. The VA medical system, as he 
said, is the largest health care system in this country and one 
of the largest in the world. And the quality of service is 
known as being very good.
    It is a program with many strengths. And having said that, 
it is also a program with many weaknesses. One major weakness 
is that it lacks the resources that it needs to provide medical 
care for all our Nation's veterans who would like to obtain 
care there.
    The VA Under Secretary for Health is one of the most 
important public servants. And I am reiterating that. The next 
Under Secretary will guide the VA medical system at a time when 
so many new veterans will be turning to VA for help. The next 
Under Secretary will assume his duties in a tough financial 
climate. The funding squeeze means that some will push 
proposals to curtail benefits and to put limits on who can 
access these benefits.
    The President has his ideas and his solutions to make room 
for returning servicemembers. And from what I see, part of the 
President's solution is to literally force other veterans out 
of the system. This is short-sighted, as the proposed cuts for 
care will surely affect Iraq and Afghanistan veterans.
    I urge you now, Dr. Perlin, if you are confirmed--and I 
have no question that you will be--you must look for ways to 
uphold the promises we made to all of our troops. We in 
Congress and the millions of veterans across this country will 
accept no less. We want to do the best we can for them.
    In the coming year, I will be dedicating my efforts to 
maintaining access to a high-quality health care system for all 
veterans, whether they are new veterans returning from the war 
or older veterans in need of good nursing home care. Our goal 
is to keep what has made VA great while strengthening it in 
such areas as long-term care and mental health.
    VA needs a leader who is strong enough to offer his own 
ideas but be able to delegate authority to others. And I am 
glad we had the chance to talk together on some of these issues 
yesterday. One purpose of this confirmation hearing is to 
convey our concerns about maintaining a viable VA medical 
system and give to Dr. Perlin the opportunity to let us know 
how he plans to meet those challenges.
    Dr. Perlin, I appreciate your responses to my pre-hearing 
questions, and I ask, Mr. Chairman, that the questions and Dr. 
Perlin's answers be entered into the record.
    Thank you very much.
    Chairman Craig. Without objection, they will become a part 
of the record.
    [Pre-hearing questions from Sen. Akaka for Dr. Perlin 
follow:]


        Response to Written Pre-Hearing Questions Submitted by 
     Hon. Daniel K. Akaka to Dr. Jonathan B. Perlin, Nominee to be 
    Under Secretary for Health, U.S. Department of Veterans Affairs
    Dr. Perlin, if confirmed, your term would run until 2008. Please 
describe your vision for the VA health care system by that year. 
Specifically describe the mix of services that you believe enrolled 
veterans will receive, the makeup of staff providing these services, 
and a description of the VA facilities involved.
    Answer: My goal for the year 2008 is to ensure excellent, safe, 
effective and compassionate health care for veterans who have chosen VA 
for their health care needs. I expect that we will make better use of 
advanced technologies that exist today, such as our electronic health 
records system, and new technologies that may be better developed by 
then, such as remote physiological monitoring systems, to help care for 
veterans in their homes. I also hope that accelerating our research 
programs will enable us to better help our patients' rehabilitation, 
physical and mental health needs.
    2. The Committee notes with concern the numerous positions that are 
currently vacant in VHA, including the heads of mental health, a number 
of professional services, and other key positions, including your own 
position of Deputy Under Secretary, should you be Confirmed. What are 
your plans and priorities to address these vacancies?
    Answer: I have absolute confidence in the abilities of Dr. Michael 
Kussman to continue to discharge the responsibilities of Deputy Under 
Secretary. He has been serving diligently on an acting basis, and VA 
would be fortunate to have the benefit of his leadership as the 
permanent Deputy Under Secretary.
    Our Department has also been aggressively recruiting for the 
positions of Chief Research and Development Officer. I have elevated 
the position of Chief of Chief Consultant for the Mental Health 
Strategic Health Care Group to Deputy Chief of Patient Care Services 
for Mental Health Care, and recruitment is currently underway for this 
position. Another critical role is Chief Consultant for the Emergency 
Management Strategic Health Care Group. I can report that we are in the 
advanced stages of all of these recruiting efforts, and that we have 
very promising candidates for each position.
    3. The Fiscal Year 2006 (FY06) budget request contains a proposal 
to enact an increase in prescription drug co-payments from $7 to $15 
for ``middle-income'' veterans and an annual enrollment fee of $250 for 
``middle-income'' veterans. Given VA's assumption that the proposals 
will suppress demand and that veterans will, in fact, leave the VA 
health care system, what is your view of these fees? Additionally, VA 
intends to continue its ban on so-called ``middle-income'' or Priority 
8 veterans. How do you feel about explicitly excluding certain veterans 
from the system?
    Answer: VA has proposed cost sharing policies for Priority 7 and 8 
enrollees as a means of balancing veteran demand and available 
resources. If the $250 enrollment fee is not adopted, another means to 
balance available resources must be found.
    In a perfect world without resource constraints, VHA would welcome 
all veterans to have access to our care. While I wish that there were 
no resource constraints, that is not the case. VA must make sure that 
it never falls short in meeting those with greatest need, including 
Service Connected, Special Needs, Financially Challenged and New Combat 
Veterans.
    4. I am deeply concerned about VA's present approach to caring for 
veterans suffering from PTSD and other mental health disorders.
    A. Please describe the priority that you believe VA should place on 
providing care to veterans with PTSD, and how you would ensure that 
priority is manifested in budget requests and programmatic planning.
    Answer: I place the highest priority on Mental Health Care and 
share your interest in assuring accessible, excellent, and caring Post 
Traumatic Stress Disorder (PTSD) treatment. I believe that our 
Department needs to place an extremely high priority on providing care 
to veterans with PTSD. This fiscal year we have allocated $100 million 
to implement initiatives contained in the Department's Mental Health 
Strategic Plan. The President's fiscal year 06 budget proposes to 
supplement this with an additional $100 million. These initiatives will 
benefit not only veterans with PTSD, but all veterans receiving mental 
health care from VHA. In addition, this week we are announcing that we 
will add 50 additional veterans of the Global War on Terrorism to our 
Readjustment Counseling Service, to provide outreach and services to 
fellow service members returning from Iraq and Afghanistan.
    B. From your experience as Acting Under Secretary, what is your 
assessment of the unmet treatment needs among veterans with PTSD? Where 
do you see the most room for VA to improve?
    Answer: I believe that we are meeting the needs of veterans with 
PTSD. To improve our service to these veterans, however, we must 
improve the availability of services to some veterans, especially those 
living in rural areas; and we must also do additional research to 
ascertain and treat possible co-morbidities facing those with a PTSD 
diagnosis. I have identified improving access to specialty mental 
health services and substance abuse treatment as two critical 
priorities for fiscal year 05 and fiscal year 06, in accordance with 
our Mental Health Strategic Plan.
    C. Based on your experience as Acting Under Secretary and your time 
as VHA's Chief Quality and Performance Officer, please give your 
assessment of the Readjustment Counseling Service and the relationship 
to VA medical centers. Also, please describe the relationship today 
between the mental health departments at VA Medical Centers and the Vet 
Centers.
    Answer: Our Vet Centers offer a safe haven to veterans to explore 
and discuss adjustment reactions they may be having, and appropriate 
referrals to ensure that those who require additional help receive it 
expeditiously. I particularly appreciate Dr. Al Batres' initiative to 
create better data interfaces between Vet Centers and VA medical 
centers, so that we can improve the clinical interface between the two 
organizations.
    5. As you know, in 1997, VA implemented the Veterans Equitable 
Resource Allocation (VERA) methodology to manage how funds are provided 
throughout the system.
    A. Given the tremendous fiscal pressure faced by certain networks, 
are you still satisfied that this system is a fair way to allocate 
funds?
    Answer: VERA as a methodology has been reviewed three times by the 
RAND corporation and found to be a fair and equitable way for VHA to 
distribute resources. Given these findings by an impartial outside 
organization, I am satisfied that VERA is, in fact, a fair way to 
allocate funding.
    B. In your view, does VERA sufficiently allow VA managers to 
sustain programs for high cost patients and patients in need of 
specialized services?
    Answer: We have recently eliminated several disincentives to VISNs 
to provide care for patients in need of specialized services under the 
VERA systems; one involving blinded veterans, and the other involving 
veterans seeking certain mental health treatment. We will continue to 
search out such disincentives, and remove them as they become known.
    6. As you may know, I am deeply concerned about issues relating to 
long-term care services and delivery in VA.
    A. Based on estimates, the number of veterans age 85 and older will 
dramatically increase--from 154,000 in 1990 to 1.3 million in 2010. If 
confirmed, what changes would you seek to implement to allow VHA to 
respond to the impact of this looming change? How do you reconcile the 
current budget proposal and its vision of the future of VA long-term 
care with the projected increase in demand for these services?
    Answer: The statistics you mention are for all veterans, not the 
number of veterans above 85 VA expects to see in 2010. I believe that 
with our current budget proposals, we will be able to meet the long-
term care needs of World War II veterans. Our goal is to provide long-
term care in the least restrictive setting that is compatible with a 
veteran's medical condition and personal circumstances, and we are 
moving aggressively to meet that goal.
    B. The budget proposal for FY06 includes a number of changes to 
both State and VA nursing homes. What is your view of the proposed 
changes to the State Veterans Home program? Do you believe these 
changes could jeopardize the future of these homes if needed funding is 
no longer available?
    Answer: State homes provide an important complement to our long-
term care program. They are an incredible resource for veterans, and VA 
fully supports their continuance. To insure fairness and consistency, 
VA proposed similar eligibility criteria across all institutional long-
term care venues. VA would continue to expand access to non-
institutional long-term care with an emphasis on community-based and 
in-home care. This approach allows veterans to receive needed services 
in the comfort of their own homes and is much more closely aligned with 
progressive community care standards.
    C. It is widely acknowledged within the health care industry that 
long-term care is moving out of the institutional realm and more into 
the non-institutional realm, as most patients prefer to stay in their 
own homes or in a similar setting. In 2003, GAO found that VA's non-
institutional capacity was inconsistent and inadequate system-wide. 
What is your view of where VA is on implementing GAO's recommendations 
in this area, and what further steps would you envision taking to bring 
VA's capacity up to more appropriate levels?
    Answer: In its report, GAO made some very good points. We 
acknowledge the shortfalls they highlighted, and are moving 
aggressively to close the gaps in the non-institutional care services 
we provide. The average daily census in all of our non-institutional 
services combined grew by 27 percent in Fiscal Year 2004, and our 
target for fiscal year 2005 is an additional 18 percent growth. To meet 
these targets, we are expanding our non-institutional care programs. We 
recently approved our 100th Home-Based Primary Care program, an 
increase of almost 25 percent in less than 2 years. Home Hospice 
programs have increased by 50 percent in the last year. Care 
Coordination programs, which use telehealth and disease management 
technologies to support veterans, are expected to double by the end of 
this fiscal year. We have also introduced a performance measure for 
VISN Directors to increase the census in the non-institutional long-
term care programs in their networks, and we are committed to further 
expand our non-institutional care capacity to meet veterans health care 
needs.
    D. In 1999, Congress made sweeping changes to VA's long-term care 
programs. A major facet of this legislation was a mandatory bed census 
requirement for institutional long-term care services. Part of the FY06 
budget submission also proposed the elimination of the census 
requirement. What is your view of this proposal, and of the future of 
VA institutional long-term care services, particularly while 
noninstitutional capacity is nowhere near adequate?
    Answer: I believe that we need to define bed requirements by need 
and not by legislation. As a clinician, I have often had to discuss 
long-term care decisions with families who felt that institutional care 
was what their loved one needed. After explaining alternatives to them, 
they frequently determined that non-institutional care was much more in 
the interests of their loved ones and themselves. There will always be 
a need for institutional long-term care capacity, but our aggressive 
efforts to provide additional alternatives should provide the capacity 
we will require to adequately serve our older veteran population.
    7. The relationship between VA medical centers and medical schools 
has endured for more than 50 years. I am concerned that this 
relationship may not be functioning at an optimal level today as 
compared with that of decades past.
    A. If you are confirmed, what are the strengths and weaknesses of 
VA's current relations with American medical schools?
    Answer: I believe that the relationship between our medical centers 
and our affiliates could be better, and I look forward, as Under 
Secretary, to building a new framework for productive, synergistic, and 
equitable interaction.
    B. With respect to any weaknesses you identify, what are your top 
goals for strengthening VA's relations with schools of medicine?
    Answer: Our medical school affiliation agreements, in general, were 
formulated sixty years ago, at the close of World War II. It is time, 
in my opinion, to create a new series of agreements-ones that hopefully 
will remain in place for the next sixty years. To do this, I would like 
to form a committee of senior VA employees and medical school deans to 
discuss the framework for new agreements.
    8. In recent years, VA seems to have operated under the premise 
that it may not have been receiving its ``fair share'' of benefits from 
its affiliations, and that action has been necessary to shift the 
balance of power toward VA. To what foundational issues do you 
attribute any such imbalance?
    Answer: VA has, as our primary reason for existence, the 
responsibility to provide world-class care to the veterans it is our 
privilege to serve. Medical schools are responsible for educating new 
generations of clinicians. There is occasional tension between us; 
however, to say that VHA has not received our ``fair share'' from these 
agreements would be misleading. To the extent that problems have 
occurred, I believe it is due to the fact that we are still working on 
principles arrived at 60 years ago, at the end of World War II, and 
that it is time for us to discuss, as equals, what our partnership 
should look like in the future.
    9. One prominent State university recently considered ending a 
longstanding medical affiliation with VA but thankfully did not do so. 
As the Under Secretary for Health, how would you propose to address any 
problematic or frictional affiliations to ensure veterans continue to 
receive the benefits of affiliation?
    Answer: I propose creating a committee of senior VA employees and 
medical school deans to discuss how we will continue our partnership 
for many years into the future.
    10. It has been reported to me that you recently convened a meeting 
with representatives of the Association of American Medical Colleges 
(AAMC) to discuss affiliation relations. Please provide the Committee 
with a summary of these discussions with AAMC and any conclusions you 
may have reached, or plan you may be formulating, based on that 
meeting.
    Answer: There was no meeting to discuss affiliation relations with 
AAMC. However, I do meet regularly with AAMC's VA Liaison Committee as 
well as the Council of Deans to discuss our relationship. The recurrent 
themes of these meetings related to some of the tensions arising from 
IG audits of part-time physician time and attendance and concerns about 
the new sole-source clinical service contract process.
    11. How will you encourage the non-veteran health care system to 
better understand the VA health care system?
    Answer: One of the most effective means of communicating our 
successes to the public is through positive media. Recently, The Globe 
and Mail, a Canadian newspaper published an article that carried the 
headline, ``U.S. veterans' health care healed itself: So can our 
Medicare system''. It went on to say, ``The U.S. Veterans Health 
Administration is, by any measure, a remarkable success story, a tale 
of revitalization the likes of which is rarely seen.'' In January 2005 
the Washington Monthly magazine stated, ``Today's troops are headed 
into the country's best health-care system--the VA.'' Additionally, the 
Institute for Healthcare Improvement (IHI) consistently cites the VA as 
the gold standard for patient safety. I do believe we need to do a 
better job of explaining the importance of serving veterans to the many 
clinicians who receive all or part of their training from our 
Department. I also believe we must share our many innovations, 
including the Electronic Health Record, with others in health care. I 
am particularly excited about the partnership with the Department of 
Health and Human Services to make a version of our electronic health 
record (known for this purpose as VistA-Office EHR) available, 
especially to rural and underserved areas.
    12. There has been a push, mostly from within VA, to encourage more 
cooperation and sharing agreements between VA and the Department of 
Defense (DoD).
    A. What areas do you see as having the most potential for new 
sharing arrangements?
    Answer: Clinical activities when there are complementary needs have 
the greatest potential for new sharing agreements. In addition, we have 
the goal, which I support, of having at lest 80 percent of our 
facilities become TRICARE Network providers, and each VISN has 
performance measures to support continued sharing between the 
Departments. There are over 250 separate sharing activities currently; 
they range from shared specialty services, to shared capital equipment 
(e.g., MRI & CT), to joint purchasing, to shared personnel management. 
At a national level, the joint procurement activities that have been so 
successful in pharmacy are beginning to be recapitulated in the area of 
medical-surgical supplies and capital equipment acquisition; I believe 
that is an extremely promising area of work.
    B. What would you do to bring DoD to the table to bring about more 
sharing successes?
    Answer: VA and DoD already collaborate on several levels. Our 
framework consists of the Joint Executive Council (JEC), the Health 
Executive Council (HEC), the Joint Strategic Planning Committee and the 
Construction Planning Committee, and is composed of senior leaders of 
both Departments. Our two Departments approved an initial Joint 
Strategic Plan in 2003 and this year, we have updated the plan to 
include specific performance metrics; a more strategic planning 
horizonl and a commitment to link JSP goals and objectives to 
Department strategic plans. I believe that we are on the verge of many 
sharing successes, and that the framework is currently in place to 
accomplish this.
    C. I commend VA's establishment of a permanent office to address 
the needs of returning service members. While many strides have been 
made to ensure a seamless transition from active duty to veteran 
status, more must be done to ease this integration into the VA system 
and reintegration into society. What is your view of the work that 
remains in this area, and how would you seek to accomplish a truly 
seamless transition? What are your plans to combat the cultural issues 
that accompany the transition to veteran status?
    Answer: Veterans Health Administration must honor our returning 
heroes and their families by providing them with care that is 
compassionate and dignified; and by coordinating every possible service 
and support activity that may help improve their functioning, and 
restore them to their rightful place in our society. VA has embraced 
the opportunity to serve these heroes by reinventing existing programs, 
creating outreach initiatives, enhancing specialized clinical care, and 
collaborating with our DoD partners to share access to health records.
    Our medical centers will do their best heal the wounds of combat 
veterans, and our vet centers will support their readjustment efforts. 
We have an opportunity to define VA, and VHA, for a new generation of 
veterans, and we will make the most of that opportunity.
    13. The Administration's FY06 budget request relies heavily on co-
payments from veterans and collections from third-party insurance. VA 
is estimating $2.1 billion in collections for fiscal year 2006, 
assuming the enactment of the policy proposals included in the budget 
request.
    A. What changes to the MCCF program do you envision to improve 
third-party collections?
    Answer: Recently, we have automated a number of critical revenue 
processes which have dramatically improved collections. These include 
electronic insurance identification; electronic claims generation 
capabilities; electronic receipt of third party insurance remittance 
advices and associated payments; a lockbox to automatically apply 
payments from veterans to co-payment charges; an electronic remittance 
advice to accurately identify deductible/coinsurance amounts that 
Medicare supplemental insurers calculate to determine reimbursement to 
VA; and electronic documentation templates. In the future, we will 
improve our collections by creating consolidated patient accounting 
centers (CPAC's), which are designed to gain economies of scale by 
regionally consolidating key business functions; and to implement an 
industry proven Patient Financial Services System (PFSS) that will 
yield dramatic improvements in both the timeliness and quality of 
claims and collections.
    B. VA cannot charge a co-payment that is more than the cost of 
medication. To justify the proposed $15 prescription co-payment, VA 
included a myriad of administrative costs. Do you feel that this charge 
is appropriate for over-the-counter medications such as aspirins, 
vitamins, and cough syrup?
    Answer: VHA does not have the business processes and computer 
programs in place to implement a ``tiered'' co-pay for pharmaceuticals. 
That is something we may be able to implement in the future. In the 
meantime, the existing co-pay structure is a reasonable approach.
    C. If confirmed, would you recommend that the $15 co-payment amount 
be increased in the future?
    Answer: One of the ways in which VA balances veteran demand and 
available resources is through cost-sharing policies such as the 
existing co-payment of $7 for a 30-day supply of medications. I believe 
that this balance should continue to be looked at in the future and co-
payments adjusted thoughtfully.
    D. What is your view of contracting out portions of the MCCF 
collection effort? Recently, companies that employ electronic appeals 
software, among other innovations, have revolutionized the way funds 
that are owed to VA can be recovered. Will you continue to pursue the 
use of these alternative methods for collections?
    Answer: Absolutely. We will continue to pursue all available means 
to improve our revenue cycle performance success.
    14. Do you believe that the VistA system is still able to meet the 
clinical and administrative needs of VHA?
    Answer: VHA has used our pioneering VistA electronic health record 
systems for more than a decade. It provides an integrated record 
covering all aspects of patient care and treatment, and maintains 
records on five million eligible veterans who have chosen to receive 
their health care from our Department. We are proud to lead the health 
care industry in the use of information technology, and fully believe 
that there is no better or more comprehensive health care software in 
the world.
    While there is no better system today for supporting clinical 
needs, VistA must be improved in its ability to support administrative 
needs. The ``rehosting'' efforts will allow VistA functions to become 
the next generation ``HealtheVet'' system, which will allow easier 
programming, and support better administrative data and appropriate 
data sharing (especially, the ability to incorporate electronic health 
data from DoD, as those data come online).
    15. What are your views on CoreFLS and how VA managed this large-
scale contract?
    Answer: VistA works for VHA because end users (clinicians) were 
engaged in its development process. I believe that CoreFLS did not work 
for VA because the end State was not well defined, and the end users 
were not adequately involved in the process. Absence of ``business 
owner'' participation doomed the computerized medical record recently 
installed in Cedars-Sinai. The relationship of business owner 
engagement and success is well-recognized.
    16. The Committee understands that several clinics have stopped 
seeing new patients because of fiscal constraints. Please provide 
detail on any such changes in any of the networks, including overall 
guidance VA Headquarters is providing on this issue.
    Answer: VA has guidelines for Community Based Outpatient Clinics 
(CBOCs) to assure productivity, high quality, and access. Our 
guidelines to ensure quality care at CBOCs include setting a ceiling of 
1,200 patients per primary care provider, and insuring that proper 
support resources are provided in sufficient quantity, such as 
examination rooms. This helps us to provide timely and high quality 
care to veterans at our CBOCs. CBOCs are an integral part of our 
strategy of insuring that care for veterans is provided in the most 
appropriate environment, and has reduced hospital use by providing care 
in outpatient clinics. In the last 4 years, we have increased the 
number of CBOCs by 91. The CARES decision called for the development of 
156 new CBOCs, pending the availability of financial resources and the 
validation of their need with the most current data available. I 
believe that they are a vital part of VHA's future ability to care for 
veterans. Some CBOCs are contracted on a ``capitated'' basis--that is, 
the contractor is paid a flat rate for each patient. When a contract 
has achieved its budgeted level, VHA may limit new enrollment.
    17. A couple of years ago, Committee staff found grave 
inconsistencies in access to mental health services at clinics within 
the VA health care system. How do you plan to improve the availability 
of mental health services at CBOCs across the country? Please also 
describe the management of these clinics, for example, the process you 
use to evaluate and renew contracts for CBOC providers.
    Answer: VHA's goal in mental health is to support the six goals of 
the President's New Freedom Commission for transforming Mental Health 
Care in America. The plan provides special attention to the needs of 
seriously mentally ill veterans and veterans with PTSD. My highest 
priority in this area is to increase access to behavioral health 
services, and to reduce disparity to such access. Today, 71 percent of 
our CBOCs provide direct access to Mental Health services, and all of 
our CBOCs are able to refer cases to our medical centers.
    CBOC contracts are typically awarded for 1 year with an option for 
four 1-year renewal. Before any contract renewal, facilities review 
contract terms and conduct analyses regarding in house capabilities and 
cost benefit. The results may support a decision to renew the contract 
or cancel. At contract expiration, an analysis is done to determine 
their own internal capabilities and the benefits of continuing to use 
contracts. If a contract model is recommended, a new open solicitation 
is issued. The care provided to patients at contract CBOCs must meet 
the same quality standards as care provided in VA facilities.
    18. Non-physician providers are critical to the VA health care 
system. Please describe what you see as the future role within VA for 
non-physician providers, such as physician assistants and advanced 
nurse practitioners.
    Answer: Non-physician providers are critical, not only to VHA, but 
to the entire health care system. VA will continue to be a leader in 
providing opportunities for physician assistants and nurse 
practitioners. We have been approached by professional organizations to 
serve as a model not only for collaborative practice, but also for 
collaborative practice education, and we will do so. Collaborative 
practice, involving non-physician providers is seen as the model for 
successful future health care.
    19. Last year, Congress passed legislation that completely 
restructured the physician and dentist pay structure. This was done 
mainly in response to the fact that VA was forced to enter into high 
dollar scarce medical contracts for the provision of certain specialty 
services at facilities where VA could not recruit full-time doctors in 
those areas. Please describe any other recruitment and retention 
problems involving health care personnel you have encountered within 
the VA health care system.
    A. Do you think the changes that have been made to the pay 
structure will help solve the problems VA has been facing?
    Answer: The new legislation for physician and dentist pay is 
effective January 2006. VA is working aggressively and is confident 
policies and procedures will be in place to take full advantage of 
opportunities included in this legislation. The new pay structure will 
allow us to create pay ranges designed to recruit and retain the many 
different specialties and assignments in our VA system. We can also use 
the new pay flexibilities to parallel community standards and attract 
scarce specialty resources.
    B. What more would you suggest needs to be done to respond to these 
difficulties?
    Answer: Continuing recruitment and retention problems involving our 
health care personnel include the following:
    a. The need for expanded authority under Title 38 to hire 
additional positions that are critical to the support of our health 
care professionals. These include Nursing Assistants, Medical Clerks, 
Medical Technicians, Health Technicians and Food Service Workers.
    b. The ability to hire a limited number of annuitants without an 
offset to their retirement. VA loses these incredible resources to our 
competitors when they retire. VA could reduce costs by being able to 
utilize these fully trained and seasoned staff to bridge between 
vacancies, extended absences, etc. Staff would feel more valuable and 
have a better transition into their retirement.
    20. VA recently issued new procedures to address reported flaws and 
begin strengthening your timekeeping system. Please describe to the 
Committee the State of implementation of the new timekeeping system for 
part-time VA physicians.
    Answer: The part-time physician time and attendance pilot 
eliminates core hours for those part time physicians on adjustable work 
hours. Each physician signs an agreement for the number of hours they 
will work during the year. They will be paid in equal amounts each pay 
period. The hours they actually work will be negotiated with their 
supervisors prior to each pay period based on VA needs. At the end of 
their agreement, reconciliation will take place for those hours that 
were worked in excess or below the agreement.
    The physician time and attendance policy was manually piloted from 
October 2004 through January 2005. In January 2005, the Alpha test on 
these new procedures was initiated and concluded at the end of March 
when the next phase was implemented.
    The beta testing for the electronic time will be completed April 8, 
2004. The national release of this new Electronic Time and Attendance 
(ETA) software to support the time and attendance for part time 
physicians for adjustable work hours will be April 27, 2005. All 
facilities have 30-days to load the software into their systems. The 
policy supporting the new software is targeted for release for mid-May. 
In addition a draft of this new directive and handbook is in final 
review with a targeted date of mid-May 2005.
    21. Dr. Perlin, you once served as a part-time VA physician while 
practicing at the Medical College of Virginia, its academic health 
center, and the McGuire VA Medical Center in Richmond.
    A. What are your personal reflections on practicing in a mixed 
environment, in particular in reference to apportioning and accounting 
for your professional time in VA versus your attending responsibilities 
at the other facility, as well as for any teaching or research 
responsibilities you may have had, whether at the University or at VA?
    Answer: Like most of my colleagues, I worked 60-plus hour weeks as 
an attending physician when I was in Richmond. I had scheduled times 
when I was at VA, scheduled times when I was at MCV, and scheduled 
times when I discharged my teaching responsibilities. There were times 
when I had ``ward attending physician'' duties at VA, and during those 
periods, I spent 30 consecutive days caring for VA inpatients. My other 
responsibilities were adjusted accordingly. I regularly juggled my 
responsibilities as a physician; a teacher; and a researcher; but I 
always understood that whatever I did revolved around my most important 
mission: to provide the best possible care I could to the patients I 
was responsible for.
    B. Assuming you were currently practicing in the MCV-VA McGuire 
environment, how would the new approach to part-time timekeeping affect 
your working conditions of a joint faculty member, a department head, 
or staff physician?
    Answer: The new timekeeping concept that VHA is currently 
developing and will be implementing provides a much more rational basis 
for the distribution of a physician's time than the old Core Hours 
doctrine, which often required physicians to be present when they were 
not needed; and caused them not to be present when they were needed in 
order to be technically compliant with the regulations.
    C. Did your personal experience in Richmond help inform VHA's new 
policies on part-time physician timekeeping; and if so, in what manner?
    Answer: Yes, it did, by instilling in me the firm belief that there 
had to be a better, and more rational, way to manage my time and that 
of others.
    D. You recently wrote the deans of the 107 medical schools with 
which VA is affiliated on the topic of part-time physician's time-and-
attendance matter. Please provide the Committee the content of that 
letter and explain your approach to the schools, your assessment of 
whether your effort was successful, and any further steps you intend to 
take in this regard.
    Answer: In short, my letter expressed the concept that improper 
supervision put three lives at risk, not one-the patient, the trainee, 
and the trainee's supervisor. I used that concept to explain to the 
deans why we needed to change our existing system. I was quite 
surprised that the only letters I received in response were letters of 
thanks, agreeing that not only did the existing system fail our 
patients, but also the ethical responsibilities we had to ensure the 
proper training of medical school students.
    22. The Inspector General reviewed VHA's policies in contracting 
for specialty services in the affiliated environment. VHA has been 
criticized for often relying on sole source methods to procure clinical 
services, often from practitioners associated with VA-affiliated 
schools of medicine and their academic health centers. The IG has 
specifically recommended using competition to gain VHA a better 
business advantage in obtaining scarce and highly specialized health 
care practitioners to care for veterans. What views do you hold on 
these matters of contracting policy, and what are your plans as Under 
Secretary to manage such specialty contracting?
    Answer: While we should always strive for competition to get the 
best business propositions for veterans in our contracting activities, 
sole source procurements of clinical services from VA affiliates often 
offer value and extend our capability to work with outstanding health 
care residents and fellows. Fellows are clinicians who could practice 
independently in particular specialties, but are continuing in 
additional training for periods of one to 7 years. Consequently, they 
are highly skilled in advanced practice in medical areas like 
interventional cardiology, interventional radiology and the surgical 
subspecialties, like cardio-thoracic or neurosurgery.
    I am concerned that limiting our ability to do sole source 
contracting will keep us from obtaining highly skilled residents and 
fellows as well as top notch faculty. This will make it impossible for 
VA to serve veterans properly because of the overall loss of 
productivity from the imminent absence of fellows and residents because 
a low-bid procurement effectively severed supervisory faculty from 
their appointed roles and required residents and fellows to go 
elsewhere for appropriate supervision. In implementing the IG's 
recommendations, we will have to weigh all factors including this one.
    23. Your immediate predecessor informed the Committee that VHA 
intended to address high-cost contract specialty services partly by 
reforming VA physician compensation policy. In response, Congress 
enacted Public Law 108-445, which gives VA wide latitude to establish 
market-sensitive physician compensation rates, along with a 
significantly higher salary cap, and new incentives for performance 
pay.
    A. What is the status of implementation of the reform in VA's 
physician compensation system?
    Answer: The legislation provided for an effective date of January 
8, 2006. In order to assure VHA has policy and procedure in place, we 
have convened a core work group to oversee the myriad of details and 
consultation required to effectively implement this legislation. 
Currently, the policy and procedures are in their final draft. General 
Counsel will be responding to this policy by April 21, 2005. We have 
purchased available pay publications and finalizing the appointment of 
Executive and Steering Committees. Our timeline of events provides for 
having recommended pay ranges to the Secretary for consideration by 
September 2005. We must publicize the approved pay ranges for 60 days 
in the Federal Register. VHA expects to conduct training to the field 
during the 60 day notice period, and be ready to effect the new pay 
system on January 8, 2006. The policy also requires that all physicians 
and dentists have their initial review completed by the appropriate 
Physician and Dentist Pay Compensation Panel by no later than May 14, 
2006.
    B. What are your views on the potential of the new compensation 
authority to influence VA's performance in attracting new specialty 
physicians to full-time VA employment?
    Answer: The new legislation provides broad authority to address pay 
comparability in a number of ways, including geographic needs, 
individual expertise, scarce specialties and the ability to recruit 
physicians and dentists for complex assignments.
    VHA views this new pay system as a significant enhancement to our 
ability to attract new specialty physician to full time employment.
    24. In the past, VA has had increasing difficulty recruiting and 
retaining an adequate number of high quality nurses. Please describe 
what you see as the current role of nurses in the VA health care 
system, and how that might change, if at all, over the next 20 years.
    Answer: America's veterans deserve the best treatment our Nation 
can provide. Nurses are central to our mission to provide them with 
safe, high quality and compassionate care. I believe that VHA has done 
an outstanding job of recruiting many of the best nurses our nation's 
nursing schools provide, and of retaining a cadre of experienced and 
competent nurses. In the next 20 years, VHA will need to maintain and 
expand our nursing staffs as the number of veterans increase. We must, 
as the National Commission on VA Nursing explained, actively address 
those factors known to affect the retention of nurses: leadership, 
professional development; work environment; respect and recognition; 
and fair compensation. We must also develop and test technology and 
actively embrace research leading to the creation of new nursing roles 
that complement innovations in health care. Among the actions we must 
take, or have taken, are making the facility nurse executives members 
of the executive body at VISNs and facilities; engaging experts to 
evaluate and redesign nursing work processes; more aggressively 
recruiting for the best and brightest nursing school graduates; and 
creating new affiliations with schools for advanced degree nurses, 
baccalaureate nurses, and also with associate degree programs.
    25. As you are in a unique position to know, the VA research and 
development program not only makes a major contribution to our national 
effort to combat disease, but also serves to maintain a high quality of 
care for veterans through its impact on physician recruitment and 
retention.
    A. Fiscal growth in this program, however, has slowed to nearly a 
flat line, and average award amounts have also declined. During the 
first 4-year term of this President, only minimal increases in the 
research account were proposed in budgets. Sadly, Congress has acted 
only marginally to change that trend, as opposed to what has been done 
for the National Institutes of Health and other Federal research 
activities. The flat budgetary environment in VA research has a 
consequence in delaying funding for, or preventing altogether, good 
research proposals from being funded. VA's average ``pay line'' for 
awards to principal investigators is reportedly down to a scant 15 
percent of submitted proposals. Five years ago, it was double that 
level.
    i) Can you explain why the pay line has dropped out of proportion 
to the overall funding available for VA research, and provide the 
reasons average award amounts have declined?
    Answer: Paylines have dropped though not necessarily in a manner 
disproportionate to overall funding for VA research. Only about 20 
percent of the current Research and Development (R&D) budget is 
available for new awards in an average year because of recurring and 
out-year commitments for grants, centers and career development awards. 
The VA Office of Research and Development (ORD) is transitioning to 
shorter durations of awards and conducting competitive reviews of all 
centers to assure that a higher percentage of funding is available 
annually for new awards. The goal is to achieve a workable balance 
among the competing needs for research and continue to fund new 
projects at a comparable rate as has happened previously.
    ii) Given our concerns about the status of VA's affiliations, our 
new policy on part-time physicians and the stringent reviews of scarce 
medical specialist contracting, what are your concerns as Under 
Secretary, if confirmed, about the present financial condition of VA 
research?
    Answer: A successful and vibrant research program is critical to 
the health of affiliations with our academic partners. The VA Office of 
Research and Development (ORD) presently supports nearly 3000 clinician 
investigators, many of whom forgo higher salaries available in other 
settings because they value participation in VA research. Not only do 
these investigators make important contributions to advancing medical 
knowledge and improving health care for veterans, they also provide 
outstanding, direct medical care to veterans and serve as the educators 
for the next generation of health care providers.
    For nearly 50 years, the close and mutually beneficial relationship 
between VA medical centers and their academic affiliates has enhanced 
patient care, teaching and research. Almost uniformly, part-time VA 
physicians have more than fulfilled their commitments in terms of time 
and effort devoted to VA. It has always been essential for clinicians 
to be flexible in responding to the complex and changing demands of 
patient care, research and teaching. Recent efforts to impose more 
rigid constraints on clinicians' scheduling threatens to undermine that 
flexibility, and undermines their ability to fulfill those commitments.
    iii) What are your views on the importance of VA research compared 
to funding for services?
    Answer: Research is an integral part of providing exceptional 
health care to veterans. The VA Research program is unique among 
Federal research entities. Rather than funding investigators or 
programs that are divorced from clinical care or that are outside of 
the department, institute, or agency, VA's research program is 
intramural. Only VA investigators are funded to conduct research. The 
clinicians who are most familiar with the health care needs of the 
veteran population are also the scientists who submit research 
proposals, manage the projects, and publish the results. In fact, more 
than 80 percent of VA's researchers are physicians, nurses, and other 
professionals who provide patient care. This unique combination of 
clinician-researcher provides the direct connection to clinical care 
and the health care needs of veterans. VA is committed to evidence-
based medical care and VA's research program is committed to providing 
the evidence for the best practice of medical care.
    iv) What can be done to combat the chronic under-funding of the VA 
research program?
    Answer: The VA Office of Research and Development (ORD) continues 
to make significant contributions to the health care of veterans, and 
the program enjoys the full support of the Department. As priorities 
for VA change and as new scientific developments emerge, VA ORD must 
continue to review research priorities in relation to the evolving 
needs of veteran patients.
    It is also important for VA ORD to closely manage and leverage its 
resources. To assure adequate funding is available each year for new 
projects, especially to meet newly identified veteran-centric needs, VA 
is transitioning to shorter durations of awards and conducting 
competitive reviews of all research centers.
    VA ORD is strengthening its partnerships within VHA, other Federal 
agencies, as well as academic affiliates and the non-profit sector to 
leverage the funding as efficiently as possible.
    v) How do you think VA should allocate its limited research funds 
among the general areas of basic, applied clinical, and health services 
research.
    Answer: As an intramural program, the VA Office of Research and 
Development (ORD) has a clear responsibility to assure that sponsored 
research addresses the needs of veterans who seek care from VA. The 
quality of the research and relevance to the veteran population remain 
the determining factors in deciding what studies to fund. Rather than 
focus on numerical percentage allocation of research funds for each 
Service, the goal is to be sure that the funded projects meet stringent 
standards for scientific rigor and match the current needs of veterans. 
Priorities change as needs change.
    Examples of VA's efforts to allocate according to the needs of 
veterans, rather than an apportionment among Services, are the recent 
solicitations for proposals involving deployment health including 
rehabilitation and prosthetics, mental health, and poly trauma 
projects.
    B. One of VA's hallmarks is the sheltering of ``bench to bedside'' 
research. VA clinical practitioners and physician-scholars serve as 
principal investigators in VA- and NIH-funded research projects. They 
have the ability and the means to apply results of their own and 
colleagues' research in the clinical arm of the institution that 
husbands both activities. This unique setting has served VA well as a 
powerful recruitment and retention incentive, while elevating the 
standard of care to veterans.
    i) Recognizing that designating time for clinician investigators to 
conduct research and providing them with adequate infrastructure are 
continuing problems in VA, would you support addressing this by 
administering investigator salaries and facilities operation costs 
centrally, in a manner similar to that used by NIB, to ensure that VA-
funded investigators have adequate time and resources to conduct 
research?
    Answer: In all parts of the health care sector, including VA, 
pressures to increase clinical productivity have risen. In some cases, 
this has eroded time available for clinicians to perform research. 
Because the VA research program is exclusively intramural, it has 
permitted a different approach to funding investigator time than used 
by other granting agencies such as NIH. Provision of salary support to 
investigators through the VERA research allocation is intended to 
enable clinician investigators to balance clinical and research 
responsibilities and to provide flexibility. This issue is being 
addressed by the VHA National Leadership Board, Health Systems 
Committee and a task force has recently been approved to describe how 
VERA research funds are being utilized and to outline a set of best 
practices. At the present, we believe this approach is preferable to 
transferring VERA research funds to the research appropriation.
    ii) Do you believe the falling payline, pressures on the 
affiliations, the part-time physician timekeeping controversy, and the 
flat budget, not only for research itself but in the medical care 
programs in general, affect the attractiveness of VA as a place of 
employment for physicians, research scientists, and other 
professionals? What are your views on addressing these matters, to 
reverse any such negative effects? (Two Questions Combined)
    Answer: I agree that participation in VA research is a significant 
incentive for high quality medical professionals to join the VA system. 
The reasons for this are many and remain strong recruitment and 
retention tools. VA maintains a climate of scientific inquiry and rigor 
that continues to attract the highest caliber physicians.
    Within the broad range of research from the very basic as well as 
applied research, VA highly values research that specifically addresses 
medical issues that are most relevant to the veteran population. In 
many such areas, VA is widely regarded as an international leader, 
including research related to rehabilitation, mental health and post-
traumatic stress disorder, and health services delivery. VA also 
emphasizes research that capitalizes on its unique strengths, such as 
the integrated delivery system and the electronic medical record. The 
VA Cooperative Studies Program, for example, is internationally 
recognized for conducting the highest quality, multi-center studies 
that address clinically important topics that are difficult, if not 
impossible, to perform in other settings.
    C. As VHA's former Acting Chief Research and Development Officer 
what, in your view, should be the goals of VA's research program over 
the next 4 years?
    Answer: It is crucial that VA's research must focus on veterans: 
the aging population, the increasing numbers of women, and the emerging 
needs of veterans of our most current deployments. We must be sure that 
the research program from basic to applied science addresses 
rehabilitation, mental health, and deployment issues.
    I support the merit review process. We must maintain the highest 
standards of scientific rigor. To have a program respected in the 
scientific community, VA must also support a strong research oversight 
program. Accountability and assurances that our research programs meet 
and exceed all legal requirements, standards, and practice guidelines 
must be an ongoing task.
    High standards for and implementation of practices for human 
subject protection, biosafety, and biosecurity are hallmarks of an 
excellent research program, and I will expect nothing else for VA's 
research program. It is also important to improve our relationships 
with entities like the National Institutes of Health and Department of 
Defense. I am pleased with the partnerships developing in the area of 
rehabilitation research. But we can do more.
    Not only must we maintain our successful research programs, but we 
must also continue to forge new initiatives. Health Services research 
facilitates and expedites improving the system through more effective 
and efficient care delivery. As a health care system with arguably the 
finest electronic health record in the world, we have exciting 
opportunities to use it as a platform for groundbreaking work. For 
example, we are presently exploring exciting opportunities to 
established a research program in genomic medicine that has the 
potential not only advance scientific discoveries in this area but also 
to provide objective improvements in the health care of veterans in 
areas such as improved medication prescribing and avoidance of adverse 
drug effects.
    26. What does your experience tell you with regard to women 
veterans' access to VA health care services? What changes, if any, 
would you propose in this area if confirmed as Under Secretary?
    Answer: Between 1990 and 2000, the women veteran population 
increased by 33.3 percent. Today, women represent approximately 7 
percent of the total veteran population, and by the year 2010, they 
will be well over 10 percent, as they now make up 14 percent of the 
active duty military. VA has designed services and programs to be 
responsive to the gender-specific needs of women veterans. VA offers 
comprehensive healthcare services for women including: counseling for 
sexual trauma; Pap smears, mammography and general reproductive health 
care; and full-time Women Veterans Coordinators at most VA medical 
centers. Providing gender-specific, age-appropriate health care is our 
most important responsibility to women veterans. It should be noted 
that we already set the benchmark for care in the United States in such 
areas as breast and cervical cancer screening. As Under Secretary, I 
would propose additional research in the areas of general women's 
health and in issues related to military service, such as Military 
Sexual Trauma.
    27. Please provide me with the status of recommendations for VA 
made by the President's New Freedom Commission on Mental Health. 
Specifically, I am interested in knowing more about how VA will abide 
by Recommendation 2.3, which calls for the alignment of relevant 
Federal Programs, including VA, to improve access and accountability 
for mental health services.
    Answer: VHA developed a Comprehensive Strategic Mental Health Plan 
in accordance with the President's New Freedom Commission on Mental 
Health. VHA has identified goals and strategies to align mental health 
commensurate with the President's goal. One such area is to ``improve 
access and accountability for mental health services''.
    VHA has multiple initiatives which are in progress with other 
Federal agencies to reach this goal. VA has established a partnership 
with SAMSHA to coordinate policy and planning. A formal VA/DOD council 
develops clinical practice guidelines which all clinicians use to 
ensure all clients receive evidence based care. Coordination with DOD 
is allowing VA to improve access for Operation Enduring Freedom and 
Operation Iraqi Freedom to have a Seamless Transition into VA services. 
Additional housing for homeless veterans is made accessible through the 
partnership with HUD. Prevention of homeless, unemployment, and mental 
health support is addressed through Partnerships with the Department of 
Labor. VA has developed Work Restorative services that promote 
entrepreneurship to expand Compensated Work Therapy for veterans who 
have lost work skills. Contracts are developed with state, local, and 
community partners.
    28. In October of last year, Congress passed the Federal Workforce 
Flexibility Act. This bill, among other things, enhanced vacation time 
and other benefits for the purposes of making the Federal Government a 
more competitive employer. What is the current status of the 
implementation of these changes, particularly to the vacation time for 
Senior Executives and the compensation for official travel during off-
duty hours?
    Answer: The new leave provisions for SES were implemented 
immediately after the Act's passage on October 30, 2004.
    The Office of Personnel Management (OPM) issued regulations 
regarding the compensatory time off for travel provisions on January 
27, 2005. A draft VA policy to implement the regulations is currently 
under review by the Administrations and Staff Offices. Other provisions 
of the Act dealing with enhanced recruitment and retention incentives 
will be implemented once OPM issues regulations. VHA will, of course, 
comply with OPM regulations and the implementing VA policy.

    Chairman Craig. Senator Isakson, any opening comment?

               STATEMENT OF HON. JOHNNY ISAKSON, 
                   U.S. SENATOR FROM GEORGIA

    Senator Isakson. Thank you, Mr. Chairman. And welcome to 
Dr. Perlin and his family. It was a pleasure to meet all of 
you, and it is a great day.
    And I told Dr. Perlin back in the Chairman's office that 
unfortunately for Dr. Perlin, last night I was home by 8:00, 
and I had my briefing book. And I said, ``well, I am going to 
get prepared.'' For me, I have never seen a more impressive 
resume. And I look forward to hearing your testimony and what 
you have to say here today.
    So I will only make one set of remarks. I married into a 
career Navy family. My father-in-law is 91, a retired Navy 
Commander. Both of my brothers-in-law are retired Navy. And at 
Christmas, Thanksgiving, and frequently on e-mail, VA health 
care is something I hear a lot about.
    The VA has done a lot of wonderful things, and there are a 
lot of challenges ahead, as Mr. Akaka has said, with regard to 
long-term care and with regard to nursing home care, which we 
will certainly discuss later on. But I am confident, from 
having heard about you and read about you, that your commitment 
to excellence and the most often used word in your resume, 
which is the word ``quality,'' will serve our veterans well in 
the years to come.
    I welcome you here today.
    Chairman Craig. Senator Jeffords.

             STATEMENT OF HON. JAMES M. JEFFORDS, 
                   U.S. SENATOR FROM VERMONT

    Senator Jeffords. Thank you, Mr. Chairman, for holding this 
hearing so that we can have an opportunity to discuss the 
important issues of VA health with Dr. Perlin.
    I am pleased that last month, under the leadership of the 
Chairman, funding was added to the Senate version of the bill 
of the VA health care. While I would have preferred a bigger 
addition, it is still better than the President's budget.
    Dr. Perlin, you are going to have a tough job. New veterans 
are streaming home from Iraq, many with very tough wounds. And 
yet the VA budget hasn't risen sufficiently to cover inflation. 
I don't envy your task in keeping American promises to our 
veterans in the budget that you are given.
    And I am glad that you bring with this job the experience 
of having acted as head of the VA health for the past year. 
That experience should prove invaluable, and I look forward to 
discussing the important issues with you.
    Thank you.
    Chairman Craig. Senator Salazar, you have just arrived. Do 
you have any opening comments before we turn to Dr. Perlin's 
introduction?
    Senator Salazar. I have an opening comment, but I will just 
submit it for the record and look forward to asking the doctor 
some questions.
    Chairman Craig. Fine enough.
    [The prepared statement of Senator Salazar follows:]


                Prepared Statement of Hon. Ken Salazar, 
                       U.S. Senator from Colorado

    Thank you, Mr. Chairman, Senator Akaka. Thank you, Dr. Perlin, for 
coming here this morning. I know that you have appeared at many 
hearings over the years in your duties with the VA, but this one is 
special. This one is about you.
    Today, we will have the chance to review the record of an 
experienced administrator.
    I am entering this hearing with the sincere hope that Dr. Perlin is 
willing and able to make the major reforms that are needed at the VA. 
And with a message that the Members of this Committee will be watching.
    Over the next few years, VHA will face one of the hardest periods 
in its history. Costs are expected to continue to rise and demand on 
the system will increase. The VA is bringing in thousands of seriously 
injured veterans from Iraq and Afghanistan. The VHA will be tested. It 
will not have the resources to meet demand. Dr. Perlin will have the 
choice whether or not to continue the VA's trend toward rationing care.
    Right now, thousands of veterans are being turned away from the VA. 
Since January 2003, when the VA suspended enrollment of new Priority 8 
veterans, 192,000 veterans across the country and 2,000 Coloradoans 
have sought VA care and been turned away. The Administration's new 
budget hopes to kick 1.1 million more veterans out of the system next 
year with draconian cuts in service and increased fees. 130,000 of 
these veterans have no other form of health coverage.
    This cold-hearted approach is the worst way to go. Before we leave 
130,000 veterans without any health care, we need to exhaust every 
other option.
    The VHA collects less than half of its claims on third party 
private insurers, costing the VHA billions a year. Why? A recent 
Inspector General report found that the VHA may be paying excessive 
prices on major construction projects valued at $133.6 million. Why? 
Another OIG report showed that the VHA has done little to comply with 
Federal energy savings standards, costing the agency as much as $12 
million a year. Why?
    These problems are the administrative bread and butter of the VA. I 
hope it will be Dr. Perlin's priority to squeeze every last dollar of 
waste out of the system, before we continue squeezing veterans out into 
the cold.
    Thank you Dr. Perlin. I look forward to your testimony.

    Chairman Craig. Now let me turn to our colleague John Thune 
for the introduction of the nominee.

                 STATEMENT OF HON. JOHN THUNE, 
                A U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Thank you, Mr. Chairman, Senator Akaka, and 
Members of the Committee.
    I, too, want to echo what has already been said and welcome 
Dr. Perlin and his family here this morning. I have been 
extremely impressed in my discussions with him by his 
knowledge, his experience, his vision for the future of the 
system.
    He has, as many of you have already noted, a very difficult 
job when it comes to administering a program with a finite 
amount of resources and budget. But he has a record, I think, 
of proving to be very innovative, very creative, and I look 
forward to working with him in the days ahead.
    I have the honor, Mr. Chairman, to introduce to you and my 
fellow Committee Members the President's nominee for the 
position of Under Secretary for Health for the Department of 
Veterans Affairs, Dr. Jonathan B. Perlin.
    Dr. Perlin is supremely qualified to fill the position for 
which he has been nominated. For the past year, he has led the 
Veterans Health Administration as its Acting Under Secretary 
for Health, serving as acting chief executive officer for our 
Nation's largest integrated health care system.
    Before that, he served as Deputy Under Secretary for Health 
from July 2002 to April 2004, and from December 2003 to July 
2004, Dr. Perlin simultaneously served as VHA's Acting Chief 
Research and Development Officer, directing a $1.8 billion 
research program specializing in basic, clinical, 
rehabilitation, and health services research.
    Between 1999 and 2002, Dr. Perlin was VHA's Chief Quality 
and Performance Officer. In that role, he supported quality 
improvement and performance management throughout the veterans 
health system. As a result of his efforts, VA is one of two 
Federal agencies we in the Congress have commended for managing 
for results not once, but twice.
    VHA's Quality and Performance Program has also been 
specifically recognized by both the Innovations in American 
Government and the RIT/USA Today Quality Cup programs.
    His VA experience also includes appointments at Richmond, 
Virginia, VA Medical Center, where he saw patients and led in 
the development and implementation of a group practice system. 
He was also the first chief of the center's Telemedicine 
Section, developing an interstate network for providing 
clinical consultations to improve care to veterans.
    Dr. Perlin's background includes expertise in health care, 
quality management, health information technologies, medical 
education, and health services research. Prior to joining VHA, 
he served as Medical Director for Quality Improvement at the 
Medical College of Virginia Hospitals, part of the Virginia 
Commonwealth University Health System.
    At VCU, he helped establish the Health Services Research 
Fellowship in the Division of Quality Health Care, Department 
of Internal Medicine, and was Associate Director of the 
Internal Medicine Residency Training Program. He is broadly 
published and maintains an academic appointment as Adjunct 
Associate Professor of Medicine and Health Administration at 
Virginia Commonwealth University.
    A Fellow of the American College of Physicians, Dr. Perlin 
has a Master's Degree of Science in Health Administration. He 
received his Ph.D. in Pharmacology and Toxicology, performing 
research in molecular neurobiology, along with his M.D. as part 
of the Medical Scientist Training Program at Virginia 
Commonwealth University's Medical College of Virginia campus.
    He is clearly among the best and the brightest of this 
generation of public servants, and we are fortunate that he has 
chosen to dedicate his career to serving America's veterans.
    I thank the Committee for considering his nomination. I 
look forward to a speedy confirmation process, and I would 
simply again add, Mr. Chairman, that I have just been extremely 
impressed by this gentleman's understanding of technology. I am 
very interested in telemedicine, very interested in applying 
technology to the health care world. He is very much at the 
forefront of that.
    I think he is a great nominee, and I hope that this 
Committee will work quickly and that the Senate will confirm 
him so that he can continue the great work that he is doing.
    Thank you, Mr. Chairman, and I yield to Dr. Perlin.
    Chairman Craig. John, thank you very much.
    Doctor, would you please rise? Dr. Perlin, do you solemnly 
swear or affirm that the testimony you are about to give the 
Committee at this hearing shall be the truth, the whole truth, 
and nothing but the truth, so help you God?
    Dr. Perlin. I do.
    Chairman Craig. Please be seated, and you may proceed.

   TESTIMONY OF JONATHAN B. PERLIN, M.D., Ph.D., MSHA, FACP, 
    NOMINEE TO BE UNDER SECRETARY FOR HEALTH, DEPARTMENT OF 
                        VETERANS AFFAIRS

    Dr. Perlin. Chairman Craig, Ranking Member Akaka, Members 
of the Committee, and staff, thank you very much for the 
opportunity to sit before you this morning.
    Senator Thune, thank you so very much for that kind and 
generous introduction.
    Before I begin my statement, I would like also to note that 
my wife, Donna; my son, Benjamin; my parents, Dr. and Mrs. 
Seymour Perlin; are here with me today. Their love and their 
support has made it possible for me to devote my unwavering 
focus to veterans health issues in the past few years. Without 
their help, I could not possibly have qualified for the office 
for which I have the honor of your consideration.
    I would also like to note that no one does this job alone. 
I am very fortunate to be joined by colleagues that I know the 
Committee also regards in the highest esteem. I am joined this 
morning by General Mick Kicklighter, VA chief of staff, whose 
stalwart leadership sets an example for the entire department.
    It is also my pleasure to recognize that I am joined today 
by Dr. Michael Kussman, Brigadier General Michael Kussman, 
Retired, our Deputy Under Secretary for Health, Acting, and Ms. 
Laura Miller, our Deputy Under Secretary for Operations and 
Management.
    I am also pleased this morning to note and thank my 
colleagues from the veterans service organization community 
without whose support as well we would not do nearly the job in 
serving the needs of veterans.
    Mr. Chairman, when I was a medical school student, I had 
the privilege of receiving part of my training at a VA medical 
center. My time at VA was my favorite part of my entire medical 
school experience. I had the privilege of taking care of some 
of the last Buffalo soldiers and World War I doughboys, along 
with veterans of World War II, Korea, and Vietnam.
    I especially enjoyed talking to those older veterans about 
their connection to American history and, almost invariably, to 
witness the humble selflessness they displayed when they spoke 
of what they did in service to our Nation. Sometimes their 
stories were sad or tragic. Sometimes they were humorous, 
sometimes incredibly heroic, but always filled with passion and 
with a patriotism and pride I had never encountered before.
    Years later, when given the opportunity, I gratefully 
returned to VA. I returned for the opportunity to serve 
America's heroes and to help our Nation meaningfully and 
tangibly express our gratitude to the men and women of all 
generations who successfully defended our freedom while in 
uniform.
    Since I came back to VA Central Office in 1999 to lead VA's 
Performance Measurement and Quality Management Program, I have 
proudly been a part of the singular transformation of the 
Veterans Health Administration into an organization that the 
Washington Monthly recently said produces the ``best health 
care anywhere.'' There are many reasons for this 
transformation.
    VHA's performance measurement system enables us to hold 
ourselves accountable for providing the best care for veterans. 
A recent RAND study focusing on our care demonstrated to the 
Nation and the world that it is possible to measurably and 
rapidly improve health care quality and that specific 
improvement initiatives are the right way to do so.
    Placing significant emphasis on performance measurement is 
not an academic exercise. It improves real outcomes for real 
veterans.
    Our revolutionary electronic health record provides better, 
safer, and more consistent care to veterans by harnessing 
information technology to serve the clinical care needs of 
America's veterans.
    And our pathbreaking research program has given us the 
first effective therapies for tuberculosis; better fitting, 
lighter artificial limbs; the implantable cardiac pacemaker; 
the CT, the MRI; and even the nicotine patch.
    Today, VA researchers, focusing on veterans' needs, are on 
the verge of dozens of new discoveries and developments--like 
the artificial retina--that will improve care, restore 
function, and enhance the health and well-being of veterans and 
all of the world's citizens.
    And last, but by no means least, we are reinventing 
existing programs, enthusiastically creating outreach 
initiatives, enhancing specialized clinical care, and 
collaborating with our Department of Defense partners to better 
serve our newest generation of returning heroes. It is VHA's 
highest priority to ensure their seamless transition back to 
our society, and we are making significant progress in this 
area.
    Just this week, for example, we announced that we will be 
hiring 50 additional Operation Iraqi Freedom and Operation 
Enduring Freedom veterans to provide timely outreach services 
to other veterans returning from Afghanistan and Iraq. They 
will join the 50 other veterans previously hired by the 
department for the same purpose.
    But for all of our successes in the last 10 years, I know 
that the past is but prologue to the present and to the future. 
We have the incredible opportunity today to move VA health care 
from intervention to prevention, to be able to predict outcomes 
with near-certainty even before treatment is begun, and to 
truly provide our patients with the kind of high performance, 
high value, high quality, safe, patient-centered health care 
that will enable us to fully meet President Lincoln's great 
goal to care for those who shall have borne the battle and for 
their families.
    Mr. Chairman, General Omar Bradley wrote in his memoirs 
about his experiences as administrator of the Department of 
Veterans Affairs. He said that, ``Nothing I have done in my 
life gave me more satisfaction than the knowledge that I had 
done my utmost to ease veterans' way when they come home.''
    In every VA role that I have had--as medical student, house 
officer, young staff member, and certainly now--I have 
understood General Bradley's sentiment, and I appreciate the 
privilege that I have been given to serve America's veterans.
    I am humbled that the President has nominated me to lead 
the Veterans Health Administration for the next 4 years. And I 
promise you, and I promise America, that I, too, will do my 
utmost to ease the way for today's veterans and their 
families--those who are already home and those who are still 
fighting overseas.
    If confirmed, I will work with you and all Members of this 
Congress to build a safe, effective, and compassionate health 
care system that will fully meet the needs of the men and women 
it is VHA's honor and privilege to serve.
    Thank you.
    [The prepared statement of Dr. Perlin follows:]


Prepared Statement of Dr. Jonathan B. Perlin, Acting Under Secretary of 
                 Health, Department of Veterans Affairs

    Chairman Craig, Ranking Member Akaka, Members of the Committee and 
its staff. Good morning.
    Before I begin my statement, may I mention that my wife Donna, my 
son Benjamin, and my parents, Dr. and Mrs. Seymour Perlin, are all here 
with me today. Their love and support has made it possible for me to 
devote my unwavering focus to veterans' health issues in the past few 
years. Without their help, I could not possibly have qualified for the 
office for which I have the honor of your consideration.
    Mr. Chairman, when I was a medical school student, I had the 
privilege of receiving part of my training at a VA medical center. My 
time at VA was my favorite part of the entire medical school 
experience. I had the privilege of taking care of some of the last 
Buffalo Soldiers and World War I doughboys--along with veterans of 
World War II, Korea and Vietnam.
    I especially enjoyed talking to these older veterans about their 
connection to American history, and almost invariably to witness the 
humble selflessness they displayed when they spoke of what they did in 
service to our Nation. Sometimes their stories were sad or tragic; 
sometimes they were humorous; sometimes incredibly heroic; but they 
were always filled with passion, and with a patriotism and pride I had 
never encountered before.
    Years later, when given the opportunity, I gratefully returned to 
VA. I returned for the opportunity to serve America's heroes, and to 
help our Nation meaningfully and tangibly express our gratitude to the 
men and women of all generations who successfully defended our freedom 
while in uniform.
    Since I came back to VA Central Office in 1999, to lead VA's 
performance measurement and quality management program, I have proudly 
been a part of the singular transformation of the Veterans Health 
Administration into an organization the Washington Monthly recently 
said produces the ``best care anywhere.''
    There are many reasons for this transformation.
    VHA's performance measurement system enables us to hold ourselves 
accountable for providing the best care for veterans. A recent RAND 
study focusing on our care demonstrated to the Nation and the world 
that it is possible to measurably and rapidly improve health care 
quality--and that specific improvement initiatives are the right way to 
do so. Placing significant emphasis on performance measurement is not 
an academic exercise--it improves real outcomes for real veterans.
    Our revolutionary Electronic Health Record system provides better, 
safer and more consistent care to veterans by harnessing information 
technology to serve the clinical care needs of America's veterans;
    Our path-breaking research program has given us the first effective 
therapies for tuberculosis; Better fitting, lighter artificial limbs; 
The implantable cardiac pacemaker; The CT scanner and MRI machine; And 
the nicotine patch.
    Today, VA researchers, focusing on veterans' needs, are on the 
verge of dozens of new discoveries and developments--like the 
artificial retina--that will improve care, restore function, and 
enhance the health and well being of veterans and all the world's 
citizens;
    And, last but by no means least, we are reinventing existing 
programs, enthusiastically creating outreach initiatives, enhancing 
specialized clinical care, and collaborating with our Department of 
Defense partners to better serve our newest generation of returning 
heroes. It is VHA's highest priority to ensure their seamless 
transition back to our society, and we are making significant progress 
in this area.
    Just this week, for example, we announced that we will be hiring 
fifty veterans of Operation Iraqi Freedom and Operation Enduring 
Freedom to provide timely outreach services to veterans returning from 
Afghanistan and Iraq. They will join fifty other veterans previously 
hired by the Department for the same purpose.
    But for all our successes in the last 10 years, I know that the 
past is but prologue to the present--and the future.
    We have the incredible opportunity, today, to move VA health care 
from intervention to prevention;
    To be able to predict outcomes with near-certainty before treatment 
is begun;
    And to truly provide our patients with the kind of high 
performance, high value, high quality, safe, patient-centered health 
care that will enable us to fully meet President Lincoln's great goal 
to care for those who shall have borne the battle and for their 
families.
    Mr. Chairman, General Omar Bradley wrote in his memoirs about his 
experiences as Administrator of Veterans Affairs that: ``Nothing I have 
done in my life gave me more satisfaction than the knowledge that I had 
done my utmost to ease (veterans') way when they came home.'' In every 
VA role that I've had--as medical student, house officer, young staff 
member, and certainly now--I've understood General Bradley's sentiment, 
and appreciate the privilege I have been given to serve America's 
Veterans.

    I am humbled that the President has nominated me to lead the 
Veterans Health Administration for the next 4 years. I promise you, and 
I promise America, that I, too, will do my utmost to ease the way for 
today's veterans and their families--those who are already home, and 
those who are still fighting overseas.

    If confirmed, I will work with you and all Members of this Congress 
to build a safe, effective, compassionate health care system that will 
fully meet the needs of the men and women it is VHA's privilege, and 
honor, to serve.

    Thank you.


                               __________


                 Questionaire for Presidential Nominee

     PART I: ALL THE INFORMATION IN THIS PART WILL BE MADE PUBLIC.

    1. Name: Jonathan Brian Perlin.
    2. Present Address: 205 Serenade Court, Millersville, MD 21108.
    3. Position to which nominated: Under Secretary for Health, 
Department of Veterans Affairs.
    4. Date of nomination: 2/18/2005.
    5. Date of birth: February 25, 1961.
    6. Place of birth: New York, NY.
    7. Marital Status: Married.
    8. Full name of spouse: Donna Jablonski Perlin.
    9. Names and ages of children: Benjamin Alexander--June 3, 1994 
(Age 10); Sarah Elizabeth, January 13, 1998 (Age 7).
    10: Education: Institution, dates attended, degrees received, dates 
of degree; University of Virginia, Charlottesville, VA; 1979-1984; BA/
Interdisciplinary Honors; BA 1985 Medical College of Virginia, 
Richmond, VA; 1986-1992; MD/PhD (Pharmacology & Toxicology); PhD, 1991-
MD, 1992; Medical College of Virginia/Virginia Commonwealth University, 
Richmond, VA; 1995-1997; Master of Science Health Administration 
Executive Program; MSHA 1997.
    11. Honors and awards: List below all scholarships, fellowships, 
honorary degrees, military medals, honorary society memberships, and 
any other special recognitions for outstanding service or achievement.
     Medical Scientist (MD/PhD) Training Program, Medical 
College of Virginia,1986-1992
     Alpha Omega Alpha, Medical Honor Society, 1993
     Innovations in Government Semifinalist, (VA Performance 
Measurement Program)
     Council for Excellence in Government, Kennedy School, 
Harvard, 2000
     RIT USA Today Quality Cup Semifinalist, (VA Performance 
Measurement Program), 2001
     Fellow, American College of Physicians, 2001
     Commendation ``For Service Following 9-11'', Department of 
Veterans Affairs, 2002
     Richard A. Kern Award for Federal Medicine, AMSUS 
(Association of Military Surgeons of the United States), 2003
     Frank Brown Berry Federal Medicine Finalist, U.S. Medicine 
Institute, 2004
     Vision Award, Improving Chronic Illness Care. MacColl 
Institute/Group Health, 2004
    12. Memberships: List below all memberships and offices held in 
professional, fraternal, business, scholarly, civic, charitable, and 
other organizations for the last 5 years and any other prior 
memberships or offices you consider relevant:
    American Medical Association--Inactive Member 1986-present
    American College of Physician Executives--Inactive Member 1997-
present
    Alpha Omega Alpha Honor Medical Society--Member 1993-present
    Medical College of Virginia Alumni Association--Member 1992-present
    American College of Physicians--Fellow 1993-present
    Association of Military Surgeons of the United States (AMSUS)
    2nd Vice-President--4/04-11/04
    1st Vice-President & President-elect--11/04-present

    13. Employment record: List below all employment (except military 
service) since your twenty-first birthday, including the title or 
description of job, name of employer, location of work, and inclusive 
dates of employment.
    1983-85: Laboratory Technician, University of Virginia, 
Charlottesville, VA
    1986-92: Medical Scientist (MD/PhD) Training Program, Medical 
College of Virginia, Richmond, VA
    1992-95: Medical Resident, Medical College of Virginia, Richmond, 
VA
    1995-96: Chief Medical Resident/Instructor in Medicine, Medical 
College of Virginia, Richmond, VA
    1996-97: Group Practice Chief (and Chief of Telemedicine Section), 
Medicine Service, Hunter Holmes McGuire VA Medical Center, Richmond, VA
    1997-99: Medical Director, Quality Improvement, Medical College of 
Virginia Hospitals
    1997-99: Director, Continuing Internal Medicine Education, 
Associate Director, Internal Medicine Residency Training Program, 
Associate Director, Health Services Research Fellowship Program, 
Department of Internal Medicine, Virginia Commonwealth, University, 
Richmond, VA
    1999-02: Chief Quality & Performance Officer, Veterans Health 
Administration, Washington, DC
    7/02-4/04: Deputy Under Secretary for Health, Department of 
Veterans Affairs, Washington, DC
    4/04-Present: Acting Under Secretary for Health, Department of 
Veterans Affairs, Washington, DC
    14. Military service: List below all military service (including 
reserve components and National Guard or Air National Guard), with 
inclusive dates of service, rank, permanent duty stations and units of 
assignment, titles, descriptions of assignments, and type of discharge.
    N/A
    15. Government record: List any advisory, consultative, honorary, 
or other part-time service or positions with Federal, State, or local 
governments other than those listed above.
    1999: Consultant to Commonwealth of Virginia on Telemedicine and 
Telehealth Infrastructure. (Work performed through Division of Quality 
Healthcare, Department of Internal Medicine, Virginia Commonwealth 
University)
    16. Published writings: List the titles, publishers, and dates of 
books, articles, reports, or other published materials you have 
written.
    Please see attached CV pages 45-52. (Includes more than 80 peer-
reviewed journal articles, book chapters, abstracts, and manuscripts 
published or in press)
    17. Political affiliations and activities: (a) List all memberships 
and offices held in and financial contributions and services rendered 
to any political party or election committee during the last 10 years.
    N/A
    (b) List all elective public offices for which you have been a 
candidate and the month and year of each election involved.
    N/A
    18. Future employment relationships:
    (a) State whether you will sever all connections with your present 
employer, business firm, association, or organization if you are 
confirmed by the Senate.
    N/A: I am currently a Federal employee of the Department of 
Veterans Affairs (VA). VA would be my prospective employer, if 
confirmed.
    (b) State whether you have any plans after completing Government 
service to resume employment, affiliation, or practice with your 
previous employer, business firm, association, or organization.
    I would be likely to continue service with the Department of 
Veterans Affairs (or another Federal Agency) after Government Service 
as VA Under Secretary for Health.
    (c) What commitments, if any, have been made to you for employment 
after you leave Federal service?
    None.
    (d) (If appointed for a term of specified duration) Do you intend 
to serve the full term for which you have been appointed?
    Yes.
    (e) (If appointed for an indefinite period) Do you intend to serve 
until the next Presidential election?
    Term of appointment is for four (4) years.
    19. Potential conflicts of interest:
    (a) Describe any financial arrangements, deferred compensation 
agreements, or other continuing financial, business, or professional 
dealings which you have with business associates, clients, or customers 
who will be affected by policies which you will influence in the 
position to which you have been nominated.
    None.
    (b) List any investments, obligations, liabilities, or other 
financial relationships which constitute potential conflicts of 
interest with the position to which you have been nominated.
    None.
    (c) Describe any business relationship, dealing, or financial 
transaction which you have had during the last 5 years, whether for 
yourself, on behalf of a client, or acting as an agent, that 
constitutes a potential conflict of interest with the position to which 
you have been nominated.
    None.
    (d) Describe any lobbying activity during the past 10 years in 
which you have engaged for the purpose of directly or indirectly 
influencing the passage, defeat; or modification of any Federal 
legislation or for the purpose of affecting the administration and 
execution of Federal law or policy.
    N/A
    (e) Explain how you will resolve any potential conflict of interest 
that may be disclosed by your responses to the above items. (Please 
provide a copy of any trust or other agreements involved.)
    N/A
    20. Testifying before the Congress:
    (a) Do you agree to appear and testify before any duly constituted 
committee of the Congress upon the request of such committee?
    Yes.
    (b) Do you agree to provide such information as is requested by 
such a committee?
    Yes.


                               __________


  Post-Hearing Questions from Senator Daniel K. Akaka for Jonathan B. 
     Perlin, M.D., Ph.D., Nominee to be Under Secretary for Health
    Question 1. Networks are living under tough fiscal constraints. 
While many have deficits, I understand that to date, none have asked 
for supplemental funds. What is the reason for this?
    Response: You are correct that networks and facilities are being 
challenged by continued patient demand growth. However, most are 
gaining the efficiencies or taking the management actions required to 
operate within their allocated funding levels while continuing to 
maintain the highest quality of care for those they serve. To date, 
only one network has requested an adjustment to its funding level this 
fiscal year. The need for that adjustment is currently being analyzed 
by our Finance Committee and VHA Office of Finance staff who will 
present a recommendation to me very soon. One other network has been 
provided some additional funding due to management and quality issues 
at a specific facility found to need immediate attention.
    Question 2. In your capacity as Acting Under Secretary for Health, 
you were responsible for the oversight of VA's Research and Development 
program. What do you plan to do to improve oversight of this vital 
segment of the Veterans Health Administration?
    Response: I expect to announce the appointment of a permanent Chief 
Research and Development Officer (CRADO) very soon. I will work 
directly with the CRADO to assure that the research portfolio maintains 
its focus on veterancentric issues and that the VA research program 
continues to be regarded as one of the best scientific programs in the 
world. I have worked closely with the interim leadership to strengthen 
the Office of Research and Development, and I expect to maintain the 
same close relationship with the new leadership.
    We have continued to improve our human subjects protection program. 
To date, all chairs and members of Institutional Review Boards that 
oversee VA research have received special training. An aggressive 
accreditation is underway and on schedule. Presently half of all IRBs 
have received accreditation from the National Committee on Quality 
Assurance - more than double the number of all other accreditations in 
the country. We have completed training for all board members for VA 
Nonprofit Corporations that support research and education. The 
Nonprofit Oversight Board, which I chair, is creating an aggressive, 
new oversight program. I support a strong, yet reasonable, financial 
conflict of interest policy. A handbook is currently in final review, 
and I will monitor the progress of implementation and support the ORD 
leadership in taking appropriate action if conflicts of interest are 
identified. We must continue to make progress in establishing and 
maintaining high standards for biosafety and biosecurity to protect 
employees and volunteers. I am pleased that a new biosafety program is 
being implemented, and I expect to have continuing discussions with ORD 
leadership about continuous improvement in these areas.
    The Office of Research Oversight (ORO) serves as the primary VHA 
office in advising me on all matters of research compliance and 
assurance for human subjects protections, animal welfare, research 
safety and security, and research misconduct. ORO promotes and enhances 
the responsible conduct of research in these areas in conformance with 
laws, regulations, and policies. This office reports directly to me and 
briefs me routinely and about any particular matters of concern in 
research compliance. ORO manages its program of oversight through a 
variety of mechanisms, which include the provision of assistance to 
VHA's research community on how to prevent and correct research 
noncompliance. ORO carries out ``for cause'' on-site reviews and has 
recently launched a program to carry out routine site visits to review 
compliance in each of the areas of research it oversees. In addition, 
ORO has taken the lead in security/safety inspections for BSL-3 
laboratories in the last 2 years. ORO also has begun quality assurance 
approach to help VHA facilities improve compliance activities.
    I should add, that no amount of oversight is effective or 
worthwhile unless the quality of our science and our investigators is 
the highest possible. I will insist that the projects conducted by VA 
investigators meet the highest standards of integrity and scientific 
rigor and that the independence of our highly respected merit review 
process is maintained. I am committed to and will work to protect this 
process.
    Question 3. I am pleased that VA has directed appropriate attention 
to the issue of returning service members, and the logistics of 
integrating them into the VA system and back into society as seamlessly 
as possible. However, it has been difficult to get a real assessment of 
what the current conflicts will mean for VA health care in terms of 
both costs and new patient workload. Current data indicate that VHA 
will see double the amount of new patients from Operations Iraqi and 
Enduring Freedom. What are your thoughts on how VA will be able to 
absorb this influx, and whether additional funding is necessary?
    Response: I am confident that our FY 2005 budget and our FY 2006 
budget request provide sufficient resources and capacity to address all 
their health care needs. Meeting the comprehensive health care needs of 
returning OIF and OEF veterans who choose to come to VA is one of the 
Department's highest priorities.
    Our latest data show that we have seen nearly 63,000 veterans of 
Operation Iraqi Freedom (OIF) and Operation Enduring Freedom (OEF). In 
this context, we must bear in mind that OEF veterans may have been seen 
by VA beginning in FY 2002, and OIF veterans beginning in FY 2003. 
Therefore, the 63,000 number does not represent the workload of a 
single fiscal year. Nonetheless, simply for the sake of comparison, 
that number is approximately 1.5 percent of the 4.2 million unique 
patients we have seen thus far in FY 2005 (as of January 31, 2005). 
Thus, the number we have seen to date has been a very small percentage 
of our overall workload.
    OIF and OEF veterans have sought VA health care for a wide-variety 
of physical and psychological problems. The most common health problems 
have been musculoskeletal ailments (principally joint and back 
disorders) and diseases of the digestive system, with teeth and gum 
problems predominating. No particular health problem stands out among 
these veterans at present. The medical issues we have seen to date are 
those we would expect to see in young, active, military populations. 
However, we will continue to monitor the health status of recent OIF 
and OEF veterans to ensure that VA aligns its health care programs to 
meet their needs.
    Question 4. The Administration has made it clear that VA should 
predominantly serve service-connected and indigent veterans. What is 
your view of this policy, and do you believe that the system can 
survive seeing only that population?
    Response: VA has an obligation to meet the health care needs of all 
enrolled veterans in a timely manner and provide all the same high-
quality health care. We will continue to do that so long as I am Under 
Secretary for Health.
    In a perfect world without resource constraints, we would welcome 
all veterans to have access to our care. However, in a time of fiscal 
constraint, we must make sure that it never falls short in meeting 
those with greatest need, including veterans with service-connected 
disabilities, veterans whose incomes and other resources are the most 
limited, veterans with special needs, and new combat veterans. 
Therefore, we have found it necessary to make difficult decisions and 
have proposed cost-sharing policies for Priority 7 and 8 enrollees as a 
means of balancing veteran demand and available resources.
    We believe that these policies are modest in their scope, and their 
impact limited. We are currently projecting the loss of 1.1 million 
enrollees and 213,000 unique patients if these policies are 
implemented. However, even given these two proposals, we are projecting 
6.8 million enrollees and 5.2 million unique patients for FY 2006. 
Moreover, Priority 7 and 8 enrollees who have no other health care 
options are expected to remain in the VA health care system.
    Question 5. Have you had a chance to discuss the need for an annual 
enrollment decision with the newly confirmed Secretary, Jim Nicholson? 
When do you anticipate Secretary Nicholson making this decision, and 
what has your role been in the decision-making process?
    Response: There have been no formal discussions with the Secretary 
about the FY 2006 enrollment decision. At this time we are in the 
initial stages of collecting and analyzing FY 2006 enrollment and 
budget projections. We expect the Secretary to make his decision toward 
the end of the current fiscal year. My role is essentially two-fold. 
First, I oversee and provide direction to the staff of the Veterans 
Health Administration (VHA) who are responsible with formulating the 
data on the basis of which VHA's formal recommendations will be made to 
the Secretary. Second, I advise the Secretary and explain VHA's 
recommendations based on our final data analysis.
    Question 6. There have been a number of reports and articles that 
have come out recently citing VA as one of the nation's leaders in 
quality of health care. It has been broadly acknowledged that VA has 
made great strides in the past decade and has become the model for 
large-scale health care delivery. How do you intend to get the word out 
to service members and veterans alike about VA's new status as a top-
notch health care system?
    Response: VHA understands that our responsibility is to provide 
information on the services we provide to veterans and their families; 
members of Congress; veterans service organizations; state and 
community leaders, and others. We do seek positive publicity for our 
organization and its accomplishments to insure that eligible veterans 
have a favorable impression of the care we provide so that they will 
seek the care they may need; to support our recruitment efforts; and to 
foster professional respect for our clinicians and other employees. 
Every VHA hospital has at least one collateral duty or full time Public 
Affairs Officer; every network has a Public Affairs Office; and four 
Central Office FTEE are dedicated to the Office of Communications 
Management within the Office of Communications. All work closely with 
VA's senior communications organization, the Office of Public and 
Intergovernmental Affairs to identify publicity opportunities, develop 
new publicity vehicles, and insure the Department speaks with one 
voice. As your question notes, a number of news media outlets have 
recently cited VHA as a leader in quality health care; many of those 
stories were generated by the efforts of VACO and facility Public 
Affairs Officers. We expect to continue our level of effort in this 
area in the future; hopefully with continued good results.
    Question 7. As you know, GAO issued a report in February of this 
year that questioned VA's capability to treat veterans with Post-
Traumatic Stress Disorder. You were quoted in one article as ``taking 
exception'' to GAO's findings. GAO's biggest issue was that VA has 
lagged in implementation of the Advisory Committee on PTSD's 
recommendations. What has been done since this report was released to 
move closer to the goals that GAO found were unmet? When will the 
Committee receive the Mental Health Strategic Plan?
    Response: I specifically referred to the narrow focus of the GAO 
report and my concern that a conclusion could be misinterpreted and 
leave the impression that globally, VA was providing sub-standard care 
for veterans with PTSD simply because there was incomplete 
implementation of the PTSD Committee's recommendations. This impression 
is entirely erroneous.
    That said, however, I have met with the members of the Special 
Committee, and we have agreed upon a plan of action that embodies the 
spirit and intent of the Advisory Committee recommendations. The Co-
Chairs of the Special Committee have expressed their support for VA's 
implementation of the Committee's recommendations, and are now working 
in concert with VHA officials health to achieve the goals identified by 
the Special Committee. The Committee chairs are in agreement that all 
of the goals have been incorporated into VA's Mental Health Strategic 
Plan (MHSP).
    VA continues to expand resources to improve the care for PTSD 
patients. For example:
     In response to Public Law 108-170, VA has approved $5 
million per year for three years to establish new PTSD programs, and an 
additional $5 million per year for three years for new OIF/OEF 
programs.
     VA is developing a plan to add new PTSD Clinical Teams 
(PCTs) throughout the nation in areas of shortage.
     VA and DOD held a joint strategic planning meeting in 
March 2005 to coordinate ways to bridge the gaps for soldiers needing 
PTSD and other mental health care when they are separated from active 
duty.
    On October 1, 2004, VA provided copies of the draft MHSP to the 
Veterans' Affairs Committees of the House and Senate. On November 18, 
2005, the Secretary approved the MHSP, subject to integration of its 
initiatives with the FY 2005 and FY 2006 budgets. The integration 
process is nearly complete. It is my hope that we will be able to 
provide the Committee a copy of the final Mental Health Strategic Plan 
in the near future.
    Question 8. How will you meet the nursing home care needs of 
veterans with serious mental illnesses, who typically cannot obtain 
that type of care in community nursing homes or state veterans' homes?
    Response: We will continue to emphasize the provision of a spectrum 
of institutional and non-institutional geriatric and extended care 
services to all enrolled veterans, including those with serious mental 
illness. However, in a time of constrained resources, we are proposing 
to restrict the provision of long-term maintenance nursing home care to 
our highest mission priority, serviceconnected disabled veterans and 
those with special needs not generally met in the community, such as 
traumatic brain injury or ventilator dependency. Patients with serious 
chronic mental illness have also been identified as one of the special 
populations for whom VA would provide long-term maintenance nursing 
home care. We are projecting that there will be adequate capacity to 
care for these patients now and in the future.
    Question 9. Constituents of mine have raised the issue that fee 
basis care is no longer being provided to veterans living on Molokai. 
Please provide me with a status of the fee basis program on the island.
    Response: My staff has confirmed with the Acting Director of the 
Pacific islands Healthcare System that this is not true. There is a 
uniform fee basis policy for all the neighbor islands, and there has 
been no change in policy for Molokai. The Acting Director and his staff 
are not aware of any specific veteran complaint on this issue, but 
would be happy to review and respond to any that may come to light.
    Answer: I propose creating a committee of senior VA employees and 
medical school deans to discuss how we will continue our partnership 
for many years into the future.
    Question 10. It has been reported to me that you recently convened 
a meeting with representatives of the Association of American Medical 
Colleges (AAMC) to discuss affiliation relations. Please provide the 
Committee with a summary of these discussions with AAMC and any 
conclusions you may have reached, or plan you may be formulating, based 
on that meeting.
    Answer: There was no meeting to discuss affiliation relations with 
AAMC. However, I do meet regularly with AAMC's VA Liaison Committee as 
well as the Council of Deans to discuss our relationship. The recurrent 
themes of these meetings related to some of the tensions arising from 
IG audits of part-time physician time and attendance and concerns about 
the new sole-source clinical service contract process.
    Question 11. How will you encourage the non-veteran health care 
system to better understand the VA health care system?
    Answer: One of the most effective means of communicating our 
successes to the public is through positive media. Recently, The Globe 
and Mail, a Canadian newspaper published an article that carried the 
headline, ``U.S. veterans' health care healed itself: So can our 
Medicare system''. It went on to say, ``The U.S. Veterans Health 
Administration is, by any measure, a remarkable success story, a tale 
of revitalization the likes of which is rarely seen.'' In January 2005 
the Washington Monthly magazine stated, ``Today's troops are headed 
into the country's best health-care system--the VA.'' Additionally, the 
Institute for Healthcare Improvement (IHI) consistently cites the VA as 
the gold standard for patient safety. I do believe we need to do a 
better job of explaining the importance of serving veterans to the many 
clinicians who receive all or part of their training from our 
Department. I also believe we must share our many innovations, 
including the Electronic Health Record, with others in health care. I 
am particularly excited about the partnership with the Department of 
Health and Human Services to make a version of our electronic health 
record (known for this purpose as VistA-Office EHR) available, 
especially to rural and underserved areas.
    Question 12. There has been a push, mostly from within VA, to 
encourage more cooperation and sharing agreements between VA and the 
Department of Defense (DOD).
    A. What areas do you see as having the most potential for new 
sharing arrangements?
    Answer: Clinical activities when there are complementary needs have 
the greatest potential for new sharing agreements. In addition, we have 
the goal, which I support, of having at lest 80 percent of our 
facilities become TRICARE Network providers, and each VISN has 
performance measures to support continued sharing between the 
Departments. There are over 250 separate sharing activities currently; 
they range from shared specialty services, to shared capital equipment 
(e.g., MRI & CT), to joint purchasing, to shared personnel management. 
At a national level, the joint procurement activities that have been so 
successful in pharmacy are beginning to be recapitulated in the area of 
medical-surgical supplies and capital equipment acquisition; I believe 
that is an extremely promising area of work.
    B. What would you do to bring DOD to the table to bring about more 
sharing successes?
    Answer: VA and DOD already collaborate on several levels. Our 
framework consists of the Joint Executive Council (JEC), the Health 
Executive Council (HEC), the Joint Strategic Planning Committee and the 
Construction Planning Committee, and is composed of senior leaders of 
both Departments. Our two Departments approved an initial Joint 
Strategic Plan in 2003 and this year, we have updated the plan to 
include specific performance metrics; a more strategic planning 
horizonl and a commitment to link JSP goals and objectives to 
Department strategic plans. I believe that we are on the verge of many 
sharing successes, and that the framework is currently in place to 
accomplish this.
    C. I commend VA's establishment of a permanent office to address 
the needs of returning servicemembers. While many strides have been 
made to ensure a seamless transition from active duty to veteran 
status, more must be done to ease this integration into the VA system 
and reintegration into society. What is your view of the work that 
remains in this area, and how would you seek to accomplish a truly 
seamless transition? What are your plans to combat the cultural issues 
that accompany the transition to veteran status?
    Answer: Veterans Health Administration must honor our returning 
heroes and their families by providing them with care that is 
compassionate and dignified; and by coordinating every possible service 
and support activity that may help improve their functioning, and 
restore them to their rightful place in our society. VA has embraced 
the opportunity to serve these heroes by reinventing existing programs, 
creating outreach initiatives, enhancing specialized clinical care, and 
collaborating with our DOD partners to share access to health records.
    Our medical centers will do their best heal the wounds of combat 
veterans, and our vet centers will support their readjustment efforts. 
We have an opportunity to define VA, and VHA, for a new generation of 
veterans, and we will make the most of that opportunity.
    Question 13. The Administration's FY06 budget request relies 
heavily on co-payments from veterans and collections from third-party 
insurance. VA is estimating $2.1 billion in collections for fiscal year 
2006, assuming the enactment of the policy proposals included in the 
budget request.
    A. What changes to the MCCF program do you envision to improve 
third-party collections?
    Answer: Recently, we have automated a number of critical revenue 
processes which have dramatically improved collections. These include 
electronic insurance identification; electronic claims generation 
capabilities; electronic receipt of third party insurance remittance 
advices and associated payments; a lockbox to automatically apply 
payments from veterans to co-payment charges; an electronic remittance 
advice to accurately identify deductible/coinsurance amounts that 
Medicare supplemental insurers calculate to determine reimbursement to 
VA; and electronic documentation templates. In the future, we will 
improve our collections by creating consolidated patient accounting 
centers (CPAC's), which are designed to gain economies of scale by 
regionally consolidating key business functions; and to implement an 
industry proven Patient Financial Services System (PFSS) that will 
yield dramatic improvements in both the timeliness and quality of 
claims and collections.
    B. VA cannot charge a co-payment that is more than the cost of 
medication. To justify the proposed $15 prescription co-payment, VA 
included a myriad of administrative costs. Do you feel that this charge 
is appropriate for over-the-counter medications such as aspirins, 
vitamins, and cough syrup?
    Answer: VHA does not have the business processes and computer 
programs in place to implement a ``tiered'' co-pay for pharmaceuticals. 
That is something we may be able to implement in the future. In the 
meantime, the existing co-pay structure is a reasonable approach.
    C. If confirmed, would you recommend that the $15 co-payment amount 
be increased in the future?
    Answer: One of the ways in which VA balances veteran demand and 
available resources is through cost-sharing policies such as the 
existing co-payment of $7 for a 30-day supply of medications. I believe 
that this balance should continue to be looked at in the future and co-
payments adjusted thoughtfully.
    D. What is your view of contracting out portions of the MCCF 
collection effort? Recently, companies that employ electronic appeals 
software, among other innovations, have revolutionized the way funds 
that are owed to VA can be recovered. Will you continue to pursue the 
use of these alternative methods for collections?
    Answer: Absolutely. We will continue to pursue all available means 
to improve our revenue cycle performance success.
    Question 14. Do you believe that the VistA system is still able to 
meet the clinical and administrative needs of VHA?
    Answer: VHA has used our pioneering VistA electronic health record 
systems for more than a decade. It provides an integrated record 
covering all aspects of patient care and treatment, and maintains 
records on five million eligible veterans who have chosen to receive 
their health care from our Department. We are proud to lead the health 
care industry in the use of information technology, and fully believe 
that there is no better or more comprehensive health care software in 
the world.
    While there is no better system today for supporting clinical 
needs, VistA must be improved in its ability to support administrative 
needs. The ``rehosting'' efforts will allow VistA functions to become 
the next generation ``HealtheVet'' system, which will allow easier 
programming, and support better administrative data and appropriate 
data sharing (especially, the ability to incorporate electronic health 
data from DOD, as those data come online).
    Question 15. What are your views on CoreFLS and how VA managed this 
large-scale contract?
    Answer: VistA works for VHA because end users (clinicians) were 
engaged in its development process. I believe that CoreFLS did not work 
for VA because the end State was not well defined, and the end users 
were not adequately involved in the process. Absence of ``business 
owner'' participation doomed the computerized medical record recently 
installed in Cedars-Sinai. The relationship of business owner 
engagement and success is well-recognized.
    Question 16. The Committee understands that several clinics have 
stopped seeing new patients because of fiscal constraints. Please 
provide detail on any such changes in any of the networks, including 
overall guidance VA Headquarters is providing on this issue.
    Answer: VA has guidelines for Community Based Outpatient Clinics 
(CBOCs) to assure productivity, high quality, and access. Our 
guidelines to ensure quality care at CBOCs include setting a ceiling of 
1,200 patients per primary care provider, and insuring that proper 
support resources are provided in sufficient quantity, such as 
examination rooms. This helps us to provide timely and high quality 
care to veterans at our CBOCs. CBOCs are an integral part of our 
strategy of insuring that care for veterans is provided in the most 
appropriate environment, and has reduced hospital use by providing care 
in outpatient clinics. In the last 4 years, we have increased the 
number of CBOCs by 91. The CARES decision called for the development of 
156 new CBOCs, pending the availability of financial resources and the 
validation of their need with the most current data available. I 
believe that they are a vital part of VHA's future ability to care for 
veterans. Some CBOCs are contracted on a ``capitated'' basis--that is, 
the contractor is paid a flat rate for each patient. When a contract 
has achieved its budgeted level, VHA may limit new enrollment.
    Question 17. A couple of years ago, Committee staff found grave 
inconsistencies in access to mental health services at clinics within 
the VA health care system. How do you plan to improve the availability 
of mental health services at CBOCs across the country? Please also 
describe the management of these clinics, for example, the process you 
use to evaluate and renew contracts for CBOC providers.
    Answer: VHA's goal in mental health is to support the six goals of 
the President's New Freedom Commission for transforming Mental Health 
Care in America. The plan provides special attention to the needs of 
seriously mentally ill veterans and veterans with PTSD. My highest 
priority in this area is to increase access to behavioral health 
services, and to reduce disparity to such access. Today, 71 percent of 
our CBOCs provide direct access to Mental Health services, and all of 
our CBOCs are able to refer cases to our medical centers.
    CBOC contracts are typically awarded for 1 year with an option for 
four 1-year renewal. Before any contract renewal, facilities review 
contract terms and conduct analyses regarding in house capabilities and 
cost benefit. The results may support a decision to renew the contract 
or cancel. At contract expiration, an analysis is done to determine 
their own internal capabilities and the benefits of continuing to use 
contracts. If a contract model is recommended, a new open solicitation 
is issued. The care provided to patients at contract CBOCs must meet 
the same quality standards as care provided in VA facilities.
    Question 18. Non-physician providers are critical to the VA health 
care system. Please describe what you see as the future role within VA 
for non-physician providers, such as physician assistants and advanced 
nurse practitioners.
    Answer: Non-physician providers are critical, not only to VHA, but 
to the entire health care system. VA will continue to be a leader in 
providing opportunities for physician assistants and nurse 
practitioners. We have been approached by professional organizations to 
serve as a model not only for collaborative practice, but also for 
collaborative practice education, and we will do so. Collaborative 
practice, involving non-physician providers is seen as the model for 
successful future health care.
    Question 19. Last year, Congress passed legislation that completely 
restructured the physician and dentist pay structure. This was done 
mainly in response to the fact that VA was forced to enter into high 
dollar scarce medical contracts for the provision of certain specialty 
services at facilities where VA could not recruit full-time doctors in 
those areas. Please describe any other recruitment and retention 
problems involving health care personnel you have encountered within 
the VA health care system.
    A. Do you think the changes that have been made to the pay 
structure will help solve the problems VA has been facing?
    Answer: The new legislation for physician and dentist pay is 
effective January 2006. VA is working aggressively and is confident 
policies and procedures will be in place to take full advantage of 
opportunities included in this legislation. The new pay structure will 
allow us to create pay ranges designed to recruit and retain the many 
different specialties and assignments in our VA system. We can also use 
the new pay flexibilities to parallel community standards and attract 
scarce specialty resources.
    B. What more would you suggest needs to be done to respond to these 
difficulties?
    Answer: Continuing recruitment and retention problems involving our 
health care personnel include the following:
    a. The need for expanded authority under Title 38 to hire 
additional positions that are critical to the support of our health 
care professionals. These include Nursing Assistants, Medical Clerks, 
Medical Technicians, Health Technicians and Food Service Workers.
    b. The ability to hire a limited number of annuitants without an 
offset to their retirement. VA loses these incredible resources to our 
competitors when they retire. VA could reduce costs by being able to 
utilize these fully trained and seasoned staff to bridge between 
vacancies, extended absences, etc. Staff would feel more valuable and 
have a better transition into their retirement.
    Question 20. VA recently issued new procedures to address reported 
flaws and begin strengthening your timekeeping system. Please describe 
to the Committee the state of implementation of the new timekeeping 
system for part-time VA physicians.
    Answer: The part-time physician time and attendance pilot 
eliminates core hours for those part time physicians on adjustable work 
hours. Each physician signs an agreement for the number of hours they 
will work during the year. They will be paid in equal amounts each pay 
period. The hours they actually work will be negotiated with their 
supervisors prior to each pay period based on VA needs. At the end of 
their agreement, reconciliation will take place for those hours that 
were worked in excess or below the agreement.
    The physician time and attendance policy was manually piloted from 
October 2004 through January 2005. In January 2005, the Alpha test on 
these new procedures was initiated and concluded at the end of March 
when the next phase was implemented.
    The beta testing for the electronic time will be completed April 8, 
2004. The national release of this new Electronic Time and Attendance 
(ETA) software to support the time and attendance for part time 
physicians for adjustable work hours will be April 27, 2005. All 
facilities have 30-days to load the software into their systems. The 
policy supporting the new software is targeted for release for mid-May. 
In addition a draft of this new directive and handbook is in final 
review with a targeted date of mid-May 2005.
    Question 21. Dr. Perlin, you once served as a part-time VA 
physician while practicing at the Medical College of Virginia, its 
academic health center, and the McGuire VA Medical Center in Richmond.
    A. What are your personal reflections on practicing in a mixed 
environment, in particular in reference to apportioning and accounting 
for your professional time in VA versus your attending responsibilities 
at the other facility, as well as for any teaching or research 
responsibilities you may have had, whether at the University or at VA?
    Answer: Like most of my colleagues, I worked 60-plus hour weeks as 
an attending physician when I was in Richmond. I had scheduled times 
when I was at VA, scheduled times when I was at MCV, and scheduled 
times when I discharged my teaching responsibilities. There were times 
when I had ``ward attending physician'' duties at VA, and during those 
periods, I spent 30 consecutive days caring for VA inpatients. My other 
responsibilities were adjusted accordingly. I regularly juggled my 
responsibilities as a physician; a teacher; and a researcher; but I 
always understood that whatever I did revolved around my most important 
mission: to provide the best possible care I could to the patients I 
was responsible for.
    B. Assuming you were currently practicing in the MCV-VA McGuire 
environment, how would the new approach to part-time timekeeping affect 
your working conditions of a joint faculty member, a department head, 
or staff physician?
    Answer: The new timekeeping concept that VHA is currently 
developing and will be implementing provides a much more rational basis 
for the distribution of a physician's time than the old Core Hours 
doctrine, which often required physicians to be present when they were 
not needed; and caused them not to be present when they were needed in 
order to be technically compliant with the regulations.
    C. Did your personal experience in Richmond help inform VHA's new 
policies on part-time physician timekeeping; and if so, in what manner?
    Answer: Yes, it did, by instilling in me the firm belief that there 
had to be a better, and more rational, way to manage my time and that 
of others.
    D. You recently wrote the deans of the 107 medical schools with 
which VA is affiliated on the topic of part-time physician's time-and-
attendance matter. Please provide the Committee the content of that 
letter and explain your approach to the schools, your assessment of 
whether your effort was successful, and any further steps you intend to 
take in this regard.
    Answer: In short, my letter expressed the concept that improper 
supervision put three lives at risk, not one-the patient, the trainee, 
and the trainee's supervisor. I used that concept to explain to the 
deans why we needed to change our existing system. I was quite 
surprised that the only letters I received in response were letters of 
thanks, agreeing that not only did the existing system fail our 
patients, but also the ethical responsibilities we had to ensure the 
proper training of medical school students.
    Question 22. The Inspector General reviewed VHA's policies in 
contracting for specialty services in the affiliated environment. VHA 
has been criticized for often relying on sole source methods to procure 
clinical services, often from practitioners associated with VA-
affiliated schools of medicine and their academic health centers. The 
IG has specifically recommended using competition to gain VHA a better 
business advantage in obtaining scarce and highly specialized health 
care practitioners to care for veterans. What views do you hold on 
these matters of contracting policy, and what are your plans as Under 
Secretary to manage such specialty contracting?
    Answer: While we should always strive for competition to get the 
best business propositions for veterans in our contracting activities, 
sole source procurements of clinical services from VA affiliates often 
offer value and extend our capability to work with outstanding health 
care residents and fellows. Fellows are clinicians who could practice 
independently in particular specialties, but are continuing in 
additional training for periods of one to 7 years. Consequently, they 
are highly skilled in advanced practice in medical areas like 
interventional cardiology, interventional radiology and the surgical 
subspecialties, like cardio-thoracic or neurosurgery.
    I am concerned that limiting our ability to do sole source 
contracting will keep us from obtaining highly skilled residents and 
fellows as well as top notch faculty. This will make it impossible for 
VA to serve veterans properly because of the overall loss of 
productivity from the imminent absence of fellows and residents because 
a low-bid procurement effectively severed supervisory faculty from 
their appointed roles and required residents and fellows to go 
elsewhere for appropriate supervision. In implementing the IG's 
recommendations, we will have to weigh all factors including this one.
    Question 23. Your immediate predecessor informed the Committee that 
VHA intended to address high-cost contract specialty services partly by 
reforming VA physician compensation policy. In response, Congress 
enacted Public Law 108-445, which gives VA wide latitude to establish 
market-sensitive physician compensation rates, along with a 
significantly higher salary cap, and new incentives for performance 
pay.
    A. What is the status of implementation of the reform in VA's 
physician compensation system?
    Answer: The legislation provided for an effective date of January 
8, 2006. In order to assure VHA has policy and procedure in place, we 
have convened a core work group to oversee the myriad of details and 
consultation required to effectively implement this legislation. 
Currently, the policy and procedures are in their final draft. General 
Counsel will be responding to this policy by April 21, 2005. We have 
purchased available pay publications and finalizing the appointment of 
Executive and Steering Committees. Our timeline of events provides for 
having recommended pay ranges to the Secretary for consideration by 
September 2005. We must publicize the approved pay ranges for 60 days 
in the Federal Register. VHA expects to conduct training to the field 
during the 60 day notice period, and be ready to effect the new pay 
system on January 8, 2006. The policy also requires that all physicians 
and dentists have their initial review completed by the appropriate 
Physician and Dentist Pay Compensation Panel by no later than May 14, 
2006.
    B. What are your views on the potential of the new compensation 
authority to influence VA's performance in attracting new specialty 
physicians to full-time VA employment?
    Answer: The new legislation provides broad authority to address pay 
comparability in a number of ways, including geographic needs, 
individual expertise, scarce specialties and the ability to recruit 
physicians and dentists for complex assignments.
    VHA views this new pay system as a significant enhancement to our 
ability to attract new specialty physician to full time employment.
    Question 24. In the past, VA has had increasing difficulty 
recruiting and retaining an adequate number of high quality nurses. 
Please describe what you see as the current role of nurses in the VA 
health care system, and how that might change, if at all, over the next 
20 years.
    Answer: America's veterans deserve the best treatment our Nation 
can provide. Nurses are central to our mission to provide them with 
safe, high quality and compassionate care. I believe that VHA has done 
an outstanding job of recruiting many of the best nurses our nation's 
nursing schools provide, and of retaining a cadre of experienced and 
competent nurses. In the next 20 years, VHA will need to maintain and 
expand our nursing staffs as the number of veterans increase. We must, 
as the National Commission on VA Nursing explained, actively address 
those factors known to affect the retention of nurses: leadership, 
professional development; work environment; respect and recognition; 
and fair compensation. We must also develop and test technology and 
actively embrace research leading to the creation of new nursing roles 
that complement innovations in health care. Among the actions we must 
take, or have taken, are making the facility nurse executives members 
of the executive body at VISNs and facilities; engaging experts to 
evaluate and redesign nursing work processes; more aggressively 
recruiting for the best and brightest nursing school graduates; and 
creating new affiliations with schools for advanced degree nurses, 
baccalaureate nurses, and also with associate degree programs.
    Question 25. As you are in a unique position to know, the VA 
research and development program not only makes a major contribution to 
our national effort to combat disease, but also serves to maintain a 
high quality of care for veterans through its impact on physician 
recruitment and retention.
    A. Fiscal growth in this program, however, has slowed to nearly a 
flat line, and average award amounts have also declined. During the 
first 4-year term of this President, only minimal increases in the 
research account were proposed in budgets. Sadly, Congress has acted 
only marginally to change that trend, as opposed to what has been done 
for the National Institutes of Health and other Federal research 
activities. The flat budgetary environment in VA research has a 
consequence in delaying funding for, or preventing altogether, good 
research proposals from being funded. VA's average ``pay line'' for 
awards to principal investigators is reportedly down to a scant 15 
percent of submitted proposals. Five years ago, it was double that 
level.
    i) Can you explain why the pay line has dropped out of proportion 
to the overall funding available for VA research, and provide the 
reasons average award amounts have declined?
    Answer: Paylines have dropped though not necessarily in a manner 
disproportionate to overall funding for VA research. Only about 20 
percent of the current Research and Development (R&D) budget is 
available for new awards in an average year because of recurring and 
out-year commitments for grants, centers and career development awards. 
The VA Office of Research and Development (ORD) is transitioning to 
shorter durations of awards and conducting competitive reviews of all 
centers to assure that a higher percentage of funding is available 
annually for new awards. The goal is to achieve a workable balance 
among the competing needs for research and continue to fund new 
projects at a comparable rate as has happened previously.
    ii) Given our concerns about the status of VA's affiliations, our 
new policy on part-time physicians and the stringent reviews of scarce 
medical specialist contracting, what are your concerns as Under 
Secretary, if confirmed, about the present financial condition of VA 
research?
    Answer: A successful and vibrant research program is critical to 
the health of affiliations with our academic partners. The VA Office of 
Research and Development (ORD) presently supports nearly 3000 clinician 
investigators, many of whom forgo higher salaries available in other 
settings because they value participation in VA research. Not only do 
these investigators make important contributions to advancing medical 
knowledge and improving health care for veterans, they also provide 
outstanding, direct medical care to veterans and serve as the educators 
for the next generation of health care providers.
    For nearly 50 years, the close and mutually beneficial relationship 
between VA medical centers and their academic affiliates has enhanced 
patient care, teaching and research. Almost uniformly, part-time VA 
physicians have more than fulfilled their commitments in terms of time 
and effort devoted to VA. It has always been essential for clinicians 
to be flexible in responding to the complex and changing demands of 
patient care, research and teaching. Recent efforts to impose more 
rigid constraints on clinicians' scheduling threatens to undermine that 
flexibility, and undermines their ability to fulfill those commitments.
    iii) What are your views on the importance of VA research compared 
to funding for services?
    Answer: Research is an integral part of providing exceptional 
health care to veterans. The VA Research program is unique among 
Federal research entities. Rather than funding investigators or 
programs that are divorced from clinical care or that are outside of 
the department, institute, or agency, VA's research program is 
intramural. Only VA investigators are funded to conduct research. The 
clinicians who are most familiar with the health care needs of the 
veteran population are also the scientists who submit research 
proposals, manage the projects, and publish the results. In fact, more 
than 80 percent of VA's researchers are physicians, nurses, and other 
professionals who provide patient care. This unique combination of 
clinician-researcher provides the direct connection to clinical care 
and the health care needs of veterans. VA is committed to evidence-
based medical care and VA's research program is committed to providing 
the evidence for the best practice of medical care.
    iv) What can be done to combat the chronic under-funding of the VA 
research program?
    Answer: The VA Office of Research and Development (ORD) continues 
to make significant contributions to the health care of veterans, and 
the program enjoys the full support of the Department. As priorities 
for VA change and as new scientific developments emerge, VA ORD must 
continue to review research priorities in relation to the evolving 
needs of veteran patients.
    It is also important for VA ORD to closely manage and leverage its 
resources. To assure adequate funding is available each year for new 
projects, especially to meet newly identified veteran-centric needs, VA 
is transitioning to shorter durations of awards and conducting 
competitive reviews of all research centers.
    VA ORD is strengthening its partnerships within VHA, other Federal 
agencies, as well as academic affiliates and the non-profit sector to 
leverage the funding as efficiently as possible.
    v) How do you think VA should allocate its limited research funds 
among the general areas of basic, applied clinical, and health services 
research.
    Answer: As an intramural program, the VA Office of Research and 
Development (ORD) has a clear responsibility to assure that sponsored 
research addresses the needs of veterans who seek care from VA. The 
quality of the research and relevance to the veteran population remain 
the determining factors in deciding what studies to fund. Rather than 
focus on numerical percentage allocation of research funds for each 
Service, the goal is to be sure that the funded projects meet stringent 
standards for scientific rigor and match the current needs of veterans. 
Priorities change as needs change.
    Examples of VA's efforts to allocate according to the needs of 
veterans, rather than an apportionment among Services, are the recent 
solicitations for proposals involving deployment health including 
rehabilitation and prosthetics, mental health, and poly trauma 
projects.
    B. One of VA's hallmarks is the sheltering of ``bench to bedside'' 
research. VA clinical practitioners and physician-scholars serve as 
principal investigators in VA- and NIH-funded research projects. They 
have the ability and the means to apply results of their own and 
colleagues' research in the clinical arm of the institution that 
husbands both activities. This unique setting has served VA well as a 
powerful recruitment and retention incentive, while elevating the 
standard of care to veterans.
    i) Recognizing that designating time for clinician investigators to 
conduct research and providing them with adequate infrastructure are 
continuing problems in VA, would you support addressing this by 
administering investigator salaries and facilities operation costs 
centrally, in a manner similar to that used by NIB, to ensure that VA-
funded investigators have adequate time and resources to conduct 
research?
    Answer: In all parts of the health care sector, including VA, 
pressures to increase clinical productivity have risen. In some cases, 
this has eroded time available for clinicians to perform research. 
Because the VA research program is exclusively intramural, it has 
permitted a different approach to funding investigator time than used 
by other granting agencies such as NIH. Provision of salary support to 
investigators through the VERA research allocation is intended to 
enable clinician investigators to balance clinical and research 
responsibilities and to provide flexibility. This issue is being 
addressed by the VHA National Leadership Board, Health Systems 
Committee and a task force has recently been approved to describe how 
VERA research funds are being utilized and to outline a set of best 
practices. At the present, we believe this approach is preferable to 
transferring VERA research funds to the research appropriation.
    Question 25. As you are in a unique position to know, the VA 
research and development program not only makes a major contribution to 
our national effort to combat disease, but also serves to maintain a 
high quality of care for veterans through its impact on physician 
recruitment and retention.
    A. Fiscal growth in this program, however, has slowed to nearly a 
flat line, and average award amounts have also declined. During the 
first 4-year term of this President, only minimal increases in the 
research account were proposed in budgets. Sadly, Congress has acted 
only marginally to change that trend, as opposed to what has been done 
for the National Institutes of Health and other Federal research 
activities. The flat budgetary environment in VA research has a 
consequence in delaying funding for, or preventing altogether, good 
research proposals from being funded. VA's average ``pay line'' for 
awards to principal investigators is reportedly down to a scant 15 
percent of submitted proposals. Five years ago, it was double that 
level.
    i) Can you explain why the pay line has dropped out of proportion 
to the overall funding available for VA research, and provide the 
reasons average award amounts have declined?
    Answer: Paylines have dropped though not necessarily in a manner 
disproportionate to overall funding for VA research. Only about 20 
percent of the current Research and Development (R&D) budget is 
available for new awards in an average year because of recurring and 
out-year commitments for grants, centers and career development awards. 
The VA Office of Research and Development (ORD) is transitioning to 
shorter durations of awards and conducting competitive reviews of all 
centers to assure that a higher percentage of funding is available 
annually for new awards. The goal is to achieve a workable balance 
among the competing needs for research and continue to fund new 
projects at a comparable rate as has happened previously.
    ii) Given our concerns about the status of VA's affiliations, our 
new policy on part-time physicians and the stringent reviews of scarce 
medical specialist contracting, what are your concerns as Under 
Secretary, if confirmed, about the present financial condition of VA 
research?
    Answer: A successful and vibrant research program is critical to 
the health of affiliations with our academic partners. The VA Office of 
Research and Development (ORD) presently supports nearly 3000 clinician 
investigators, many of whom forgo higher salaries available in other 
settings because they value participation in VA research. Not only do 
these investigators make important contributions to advancing medical 
knowledge and improving health care for veterans, they also provide 
outstanding, direct medical care to veterans and serve as the educators 
for the next generation of health care providers.
    For nearly 50 years, the close and mutually beneficial relationship 
between VA medical centers and their academic affiliates has enhanced 
patient care, teaching and research. Almost uniformly, part-time VA 
physicians have more than fulfilled their commitments in terms of time 
and effort devoted to VA. It has always been essential for clinicians 
to be flexible in responding to the complex and changing demands of 
patient care, research and teaching. Recent efforts to impose more 
rigid constraints on clinicians' scheduling threatens to undermine that 
flexibility, and undermines their ability to fulfill those commitments.
    iii) What are your views on the importance of VA research compared 
to funding for services?
    Answer: Research is an integral part of providing exceptional 
health care to veterans. The VA Research program is unique among 
Federal research entities. Rather than funding investigators or 
programs that are divorced from clinical care or that are outside of 
the department, institute, or agency, VA's research program is 
intramural. Only VA investigators are funded to conduct research. The 
clinicians who are most familiar with the health care needs of the 
veteran population are also the scientists who submit research 
proposals, manage the projects, and publish the results. In fact, more 
than 80 percent of VA's researchers are physicians, nurses, and other 
professionals who provide patient care. This unique combination of 
clinician-researcher provides the direct connection to clinical care 
and the health care needs of veterans. VA is committed to evidence-
based medical care and VA's research program is committed to providing 
the evidence for the best practice of medical care.
    iv) What can be done to combat the chronic under-funding of the VA 
research program?
    Answer: The VA Office of Research and Development (ORD) continues 
to make significant contributions to the health care of veterans, and 
the program enjoys the full support of the Department. As priorities 
for VA change and as new scientific developments emerge, VA ORD must 
continue to review research priorities in relation to the evolving 
needs of veteran patients.
    It is also important for VA ORD to closely manage and leverage its 
resources. To assure adequate funding is available each year for new 
projects, especially to meet newly identified veteran-centric needs, VA 
is transitioning to shorter durations of awards and conducting 
competitive reviews of all research centers.
    VA ORD is strengthening its partnerships within VHA, other Federal 
agencies, as well as academic affiliates and the non-profit sector to 
leverage the funding as efficiently as possible.
    v) How do you think VA should allocate its limited research funds 
among the general areas of basic, applied clinical, and health services 
research.
    Answer: As an intramural program, the VA Office of Research and 
Development (ORD) has a clear responsibility to assure that sponsored 
research addresses the needs of veterans who seek care from VA. The 
quality of the research and relevance to the veteran population remain 
the determining factors in deciding what studies to fund. Rather than 
focus on numerical percentage allocation of research funds for each 
Service, the goal is to be sure that the funded projects meet stringent 
standards for scientific rigor and match the current needs of veterans. 
Priorities change as needs change.
    Examples of VA's efforts to allocate according to the needs of 
veterans, rather than an apportionment among Services, are the recent 
solicitations for proposals involving deployment health including 
rehabilitation and prosthetics, mental health, and poly trauma 
projects.
    B. One of VA's hallmarks is the sheltering of ``bench to bedside'' 
research. VA clinical practitioners and physician-scholars serve as 
principal investigators in VA- and NIH-funded research projects. They 
have the ability and the means to apply results of their own and 
colleagues' research in the clinical arm of the institution that 
husbands both activities. This unique setting has served VA well as a 
powerful recruitment and retention incentive, while elevating the 
standard of care to veterans.
    i) Recognizing that designating time for clinician investigators to 
conduct research and providing them with adequate infrastructure are 
continuing problems in VA, would you support addressing this by 
administering investigator salaries and facilities operation costs 
centrally, in a manner similar to that used by NIB, to ensure that VA-
funded investigators have adequate time and resources to conduct 
research?
    Answer: In all parts of the health care sector, including VA, 
pressures to increase clinical productivity have risen. In some cases, 
this has eroded time available for clinicians to perform research. 
Because the VA research program is exclusively intramural, it has 
permitted a different approach to funding investigator time than used 
by other granting agencies such as NIH. Provision of salary support to 
investigators through the VERA research allocation is intended to 
enable clinician investigators to balance clinical and research 
responsibilities and to provide flexibility. This issue is being 
addressed by the VHA National Leadership Board, Health Systems 
Committee and a task force has recently been approved to describe how 
VERA research funds are being utilized and to outline a set of best 
practices. At the present, we believe this approach is preferable to 
transferring VERA research funds to the research appropriation.


                               __________


   Post-Hearing Questions from Senator Arlen Specter for Jonathan B. 
     Perlin, M.D., Ph.D., Nominee to be Under Secretary for Health
    Question 1. In view of the fact that diabetes is the third largest 
bill for the VA and that 1.1 million veterans have been stricken with 
diabetes, what is the VA system doing in the area of preventative care 
for diabetes patients? What is the VA system doing to curb diabetic 
ulcerations resulting from improper footwear? Has the VA looked at the 
economic advantages of centrally ordering diabetic shoes? Is the VA 
using the latest technology in developing its diabetic shoes? If so, 
what is it? Walter Reed, Bethesda Naval Hospital, and the NIH are using 
the latest technology in their diabetic shoes. Has the VA consulted 
with them?
    Response: Clinical problems associated with the diabetic foot have 
been a concern of VHA for a number of years. VA sets the standard for 
overall health status monitoring of patients with diabetes, providing 
near-universal preventive care through blood glucose monitoring and 
follow-up. VA podiatric care for veterans with diabetes is provided by 
highly competent professionals with access to the latest technology and 
techniques, thanks to a vibrant academic partnership with schools of 
podiatric medicine.
    Proper prescriptions, appropriate footwear and prevention are the 
keystones to quality foot care. VA purchases shoes, whether from 
national contracts or individual orders, only from companies that use 
the most advanced materials for shock absorption, accommodation, and 
fit. New technologies for taking images of the foot in order to 
fabricate orthotics or inserts for shoes are in use at many VA podiatry 
services. VA is currently reviewing and evaluating the option of a 
national contract for the purchase of both therapeutic shoes (including 
depth shoes) and custom molded shoes. These factors--quality, cost, and 
access to the latest technologies--will be used from an evidence-based 
perspective for the standards and criteria which will be used to 
evaluate shoe manufacturers.
    Question 2. Israel has expertise in handling veterans' issues due 
to its requirement that all Israelis serve in its military. They have 
dealt with a number of the same issues that confront our veterans 
returning home from Iraq and Afghanistan. I know that Israel is 
interested in working with us to collectively work to address these 
issues. Would you consider forming a working group including members of 
the Veterans Health Administration and officials, clinicians, and 
researchers of the Israeli Ministry of Defense for a collaborative 
research effort in various areas including post-traumatic stress 
disorder, virtual reality rehabilitation for motor recovery and 
ambulatory training for veterans with prosthetic limbs, robotic 
rehabilitation trials for neurological impaired and for veterans with 
limb loss, and other issues confronting both the United States and 
Israel?
    Response: VA recognizes the importance of conducting cutting edge 
research that advances knowledge about the problems affecting veterans 
returning home from Iraq and Afghanistan. For example, in FY 2004 VA 
spent over $5 million for 34 projects related to diagnosis and 
management of PTSD, including virtual reality therapy. VA is funding 
additional studies in FY 2005, several of which are being conducted in 
collaboration with the Department of Defense.
    VA's Office of Research and Development collaborates with many 
entities regularly on scientifically meritorious research focused on 
the high priority health care needs of veterans. These collaborations 
are always accomplished through VA's intramural program after careful 
review of scientific merit, clinical relevance, ethics, and 
investigator productivity. Unlike agencies such as the National 
Institutes of Health, VA does not have statutory authority to make 
research grants to colleges and universities, cities, states, or any 
other non-VA entity. Rather, VA's research funding is available only to 
those researchers who are primarily employed by VA.
    To initiate a collaborative project, an investigator affiliated 
with a VA medical facility would need to submit a formal research 
proposal and provide information about any proposed partnerships. Then, 
either a standing committee chartered under the Federal Advisory 
Committee Act (FACA) or a special non-FACA panel with appropriate 
scientific and research expertise would review the proposal for 
scientific merit, clinical relevance, ethics, and other administrative 
issues such as budget and investigator productivity. Each proposal 
receives a priority score based on a number of factors including 
significance (e.g., plausibility, originality, possibility of results); 
approach (e.g., valid study design, state-of-the-art methodology, 
proper study subjects, appropriate analysis of data)'' feasibility 
(suitable background of investigators and facility resources), and 
ethical and safety issues.
    VA would be happy to review proposals for collaborative projects 
with Israel if the research proposal meets the statutory and regulatory 
authorities for VA's research program.


                               __________


Post-hearing Questions from Senator John D. Rockefeller IV for Jonathan 
    B. Perlin, M.D., Ph.D., Nominee to be Under Secretary for Health

    Question 1. In January of 2003, your predecessor Dr. Roswell 
testified before Congress that, in a typical year, VA requires a 13 or 
14 percent annual increase in funding to care for veterans seeking VA 
medical care. Do you agree with his assessment? If not, why not?
    Response: The President's 2006 budget request includes budgetary 
resources of $30.7 billion (including $750 million for construction and 
$2.6 billion in collections) (includes proposed policies) for the 
medical care program, an increase of 2.5 percent over the enacted level 
for 2005 to meet actuarially projected demand for health care services. 
If the policies proposed with the budget are accepted and implemented, 
the resources requested will be sufficient.
    Question 2. In March of 2005, the Congressional Budget Office (CBO) 
examined the potential budgetary implications of meeting the demands of 
veterans' health care through the year 2025, assuming that the per 
capita health care costs would grow by 6.1 percent in 2006 in nominal 
terms and fall to 4.2 percent in 2025. Do you believe that VA will be 
able to sustain its current health care system for current and future 
veterans using CBO's health care costs projections?
    Response: Forecasting resource needs 20 years into the future is 
very risky at best and pure speculation at worst. In the past, however, 
both the President and Congress have ensured that sufficient resources 
were made available to provide the high quality of care that VA has 
become renowned for. Based upon historical precedent, therefore, I 
strongly believe and am confident that both future Presidents and 
Congress will continue to work together to ensure that our nation's 
veterans receive the appropriate level of health care.
    Question 3. With the current enrollment decision restricting the 
enrollment of Priority Group 8 veterans, do you believe Veterans Health 
Administration has the critical mass of patients it needs to provide a 
full continuum of high quality medical care now and in the future?
    Response: Yes. The VHA health care demand model, which is produced 
by a private sector health care actuarial firm, provides VA with the 
data needed to assess the concept of critical mass. For any enrollment 
policy scenario, the actuarial model can project future veteran 
enrollment and health care service utilization for over 50 health care 
services.
    Because the actuarial model projects that enrollment in Priorities 
1-7 will grow from 5.51 million in FY 2004 to 5.99 million in FY 2015, 
the suspension of enrollment in Priority 8 is expected to cause only a 
small decrease in total enrollment and veteran patients by FY 201115. 
In FY 2004, 4.54 million veterans used VA health care, and 4.47 million 
are projected to be patients in FY 2015. (These projections do not 
assume the implementation of the $250 annual enrollment fee proposed in 
the FY 2006 Budget.)
    Question 4. What are your thoughts on providing direct spending 
(mandatory funding) for Priority Groups 1-6?
    Response: At present, VA is considering H.R. 515, a ``mandatory'' 
funding bill recently introduced by Congressman Evans. We have recently 
completed our analysis of this legislation and are in the process of 
preparation of a formal response. The Administration has in the past 
opposed such legislation, as articulated, for example, by the Deputy 
Secretary in his testimony before the Senate Veterans' Affairs 
Committee on June 22, 2004.
    Question 5. What is the rate of enrollment into VA medical care of 
veterans from Afghanistan and Iraq, including National Guard and 
Reserves?
    Response: On the basis of the latest roster of veterans from 
Operation Iraqi Freedom and Operation Enduring Freedom, we have 
identified approximately 289,600 veterans. Of these, approximately 
63,000 (22 percent) have sought health care in VA. Active duty veterans 
accounted for 27,800 of these patients, and Reserve/National Guard 
members have accounted for 35,200.
    Question 6. How has the funding and the staffing for Vet Centers 
changed since 2001 to provide for the veterans from Afghanistan and 
Iraq, including National Guard and Reserves?
    Response: The Vet Center program operating budget for FY 2001 was 
$76.7 million. This amount covered the cost of 206 community-based Vet 
Centers and 943 staff. The budget for FY 2005 is $89.3 million. In 
February 2004 I authorized a Vet Center program staff augmentation to 
enhance the program's capacity to provide outreach to the new veterans 
returning from combat operations in OEF and OIF. Specifically, the Vet 
Centers have hired and trained a cadre of 50 new outreach workers from 
among the ranks of recently separated OEF and OIF veterans at targeted 
Vet Centers. These 50 new staff members were hired on a three-year 
temporary basis. In March 2005, based upon the demonstrated success of 
the Global War on Terrorism (GWOT) veteran outreach initiative to 
locate and inform new returning veterans, I authorized the Vet Centers 
to hire an additional 50 GWOT veterans to further enhance the program's 
outreach capacity. Additionally we are in the process of converting the 
initial 50 GWOT veteran outreach counselors to career status. The 
latter action will increase the Vet Center program's annual recurring 
budget by $2.5 million. Also, in November 2004, I approved a plan to 
establish a new 5-person Vet Center in Nashville, TN. This will 
increase the number of Vet Centers to 207 system-wide, and increase the 
program's recurring base by $393,000 annually.
    Question 7. The significant number of service members sustaining 
limb amputation has spurred DOD's progress in prosthetics and 
rehabilitation. What advances has VA made to ensure that it is in the 
forefront amputee healthcare, prosthetic design, and postprosthetic 
amputee rehabilitation?
    Response: a. VA has no more important mission today than to restore 
the maximum amount of functioning possible to those men and women who 
have returned from combat with injuries or illnesses. To ensure that 
these heroes receive the state-of-the-art care they are entitled to, 
here are some of the most recent initiatives we have undertaken. A 
collaborative effort with Prosthetic and Sensory Aids Service (PSAS), 
Physical Medicine and Rehabilitation Service (PM&RS) and Rehabilitation 
Research and Development (RR&D) has been initiated to develop and 
implement a system of care within the VA for our older veteran amputees 
and new amputees transitioning from DoD to VHA. This workgroup has 
identified four levels of care to provide prosthetic, rehabilitative 
and research care for the amputee patient.
    b. Four Polytrauma Centers have been named to provide total 
healthcare to VHA patients and to Operation Enduring Freedom/Operation 
Iraqi Freedom (OEF/OIF) soldiers returning with numerous and complex 
injuries and conditions. They will serve as Level II sites in the 
Amputation System of Care. Level II facilities will provide a high 
level of expert care, a full range of clinical and ancillary resources, 
and serve as a resource to other facilities within their network. 
Criteria for Level II sites include the presence of a Commission on 
Accreditation of Rehabilitation Facilities (CARF)accredited inpatient 
rehabilitation unit, an accredited Prosthetic/Orthotic Lab, surgical 
expertise in the area of polytrauma, and access to telerehabilitation 
technology. The facility will coordinate the care and level of services 
required to meet the needs of the amputee population and assure that 
patients have access to the same high level of care across the network. 
Level II facilities will enter information into a clinical database and 
manage outcomes of polytrauma within their respective VISNs. They will 
be responsible for implementing care that transitions individuals back 
into their home community.
    Site visits to the prosthetic/orthotic laboratory of the four 
polytrauma centers are being conducted to assess the functional level 
and current resources. In addition to these four Polytrauma Centers, 
PSAS and PM&RS are developing a plan to have at least an additional 17 
Level II Centers, located throughout the 21 Veterans Integrated Service 
Networks (VISN). Level II facilities will be located at tertiary care 
facilities and have a full range of professional staff and services to 
care for the needs of the amputee patient.
    c. VHA Handbook 1173.3, Amputee Clinic Teams and Artificial Limbs 
was updated in June 2004, to include current VA procedures for 
administering amputee clinic teams and providing artificial limbs to 
veteran beneficiaries.
    d. VHA Prosthetic and Orthotic (P&O) Laboratories have been 
mandated to become accredited (VHA Directive 2004-020; Accreditation of 
VA Prosthetic and Orthotic Laboratories dated May 17, 2004). There are 
currently 35 P&O Laboratories accredited by the American Board of 
Certification (ABC) or the Board of Certification for Orthotists and 
Prosthetists (BOC).
    e. Certification of Staff--VHA is committed to having at least one 
certified practitioner located in each of its P&O Laboratories. There 
are currently 104 certified practitioners that have achieved 
certification from ABC and BOC.
    f. Many of our Prosthetists and Orthotists have attended recent 
programs at Walter Reed Army Medical Center, at Orlando, Florida. VHA 
Prosthetists and Orthotists were exposed to new and emerging 
technologies at these conferences. Additionally, manufacturers are 
being scheduled to provide in-house training to VHA Prosthetists and 
Orthotists on new and emerging technologies.
    g. When new and emerging technology is available through Prosthetic 
and Orthotic manufacturers, our VHA veteran patients and OEF/OIF 
patients are provided with these advanced designs and components.
    h. Computerized Aided Design/Computer Aided Manufacture (CAD/CAM) 
technology has been employed in the majority of VHA P&O Laboratories 
since the mid 1990s. This technology enables Prosthetists/Orthotists to 
design and manufacture custom prosthetic and orthotic appliances by 
computer technology.
    i. Approval for a new Prosthetic/Orthotic Residency Program marks 
the first National residency program for Prosthetic and Orthotic 
students in VHA. Having a Prosthetic/Orthotic Residency Program will 
enable VHA to train and potentially recruit these students once they 
have successfully achieved their degrees and certification.
    Question 8. What will be your process to evaluate the need and 
future at the Clarksburg VA Medical Center for its inpatient 
psychiatric unit. This is a priority for veterans in NorthCentral West 
Virginia, and I would like to be apprised on your decision making 
process at every step.
    Response: A conceptual Behavioral Health Care Model was submitted 
by the Clarksburg VA Medical Center (VAMC) to the Network Director, 
VISN 4, on February 7, 2005. Under this model, a small inpatient care 
unit would continue to provide acute psychiatric care for patients. To 
complement this care, Clarksburg proposes creating subacute beds, a 
partial hospitalization program, and other new components of mental 
health care not currently available at Clarksburg. The primary focus is 
on the provision of behavioral health services through a continuum of 
care, while enhancing quality, access, and cost effectiveness.
    In follow-up discussions between Network and VA Medical Center 
staff, the conceptual model was well received and accepted. Clarksburg 
VAMC has submitted an implementation plan detailing the transition from 
the existing model of care to the proposed model. The proposed model 
complies with the goals of the President's New Freedom Commission on 
Mental Health. In April 2005, Network staff will conduct a site visit 
at Clarksburg to further discuss and refine the implementation plan. 
The viability of this approach will be monitored through the balance of 
FY 2005.


                               __________


  Post-hearing Questions from Senator Lindsey Graham for Jonathan B. 
     Perlin, M.D., Ph.D., Nominee to be Under Secretary for Health

    Question 1. The Veterans Affairs (VA) Inspector General has just 
completed an audit of physician timekeeping at Charleston VA, which 
included many of the MUSC physician faculty who work part time in the 
VA and Medical University hospitals. I am pleased that the audit was 
highly successful, again demonstrating the ability to have physicians 
involved jointly with VA and the MUSC affiliate. For many scarce 
specialties in medicine (liver doctors, cancer specialists), surgery, 
psychiatry, and others, VA can not afford to recruit and hire its own 
full time specialists, due to the higher salaries available in the 
private sector.
    It is common practice for part-time VA physicians (faculty from the 
university) to work more hours caring for VA patients within any pay 
period than the time listed as their assigned core hours. The Dean at 
MUSC and other schools have suggested that VA consider a more flexible 
policy of ``time-banking'' which would give the physicians credit for 
their after hours off duty coverage, weekend and holiday work 
(currently they get no credit or recognition or pay for this activity). 
If properly documented and tracked, a flexible time bank could be used 
also to offset minor shortfalls in the attendance a physician might 
have during official duty hours because of emergencies or competing 
priorities at the medical school.
    What is your opinion of such a remedy to this nationwide 
timekeeping problem?
    Response: VA has introduced significant improvements to our policy 
on timekeeping for part-time physicians. The revised system, currently 
undergoing phased implementation, eliminates core hours for part time 
physicians on adjustable work hours. Each physician signs an agreement 
for the number of hours they will work during the year. They will be 
paid in equal amounts each pay period. The hours they actually work 
will be negotiated with their supervisors prior to each pay period, 
based on VA's needs. At the end of their agreement, reconciliation will 
take place for those hours that were worked in excess of or below the 
agreement.
    This physician time and attendance policy was piloted from October 
2004 through January 2005. In January 2005, the Alpha test on these new 
procedures was initiated and concluded at the end of March when the 
Beta phase was implemented.
    The Beta testing for the electronic time will be completed by the 
end of April 2005. The national release of new Electronic Time and 
Attendance (ETA) software to support the time and attendance for part 
time physicians for adjustable work hours will also be the end of April 
2005. All facilities will have 30 days to load the software into their 
systems. A policy supporting the new software is targeted for release 
for mid-May. A draft directive and handbook addressing timekeeping for 
part-time physicians is in final review with a targeted date of mid-May 
2005.
    Question 2. It has been suggested that The Medical University of 
South Carolina (MUSC) and the Charleston VA Medical Clinic could 
collaborate to build new, modern, state-of-the-art hospital facilities 
that can be shared, reducing the building costs to both partners. MUSC 
has already begun its Phase 1 expansion, building a new specialty 
hospital across the street from the Charleston VAMC. In addition, The 
Medical University has initiated a Phase 2 planning effort that could 
include the Veterans Administration and help provide the VA with an 
avenue to replace its aging facility.
    a. What is your opinion of such joint ventures between the VA and 
affiliated University Medical Centers?
    Response: In general, the close relationships between VAMCs and 
affiliated university medical centers provide excellent opportunities 
to explore potential joint ventures. Any joint venture would have to 
meet the needs of both partners. In the case of MUSCs proposal, the 
financial terms were not feasible, nor was a replacement hospital for 
Charleston deemed necessary. There was an agreement for an enhanced use 
lease of Doughty Street property that allowed MUSC to move ahead with 
their own construction plans while bringing lease income to VA. 
Discussions continue with MUSC on other sharing opportunities, such as 
support/ancillary services, expensive technologies, scarce medical 
specialty services, steam generation, and joint parking solutions.
    b. Are you supportive of such collaborative strategies that rely on 
the VA's enhanced use authority?
    Response: Yes. One of the needs identified through the CARES 
process was VHA's plan for management of its property and other capital 
assets, much of which is not currently fully utilized. The Enhanced Use 
Lease authority provides an opportunity for VHA to engage in joint 
venture relationships for use of these assets.
    c. What advice would you give the local VA and MUSC leadership in 
Charleston to facilitate their sharing/collaborating?
    Response: My expectation is that the Charleston VAMC and MUSC will 
continue their constructive, mutually beneficial relationship. Future 
opportunities for cooperation should be fully explored and implemented 
when they will both benefit our mutual patient populations and make 
good business sense.


                               __________


Post-hearing Questions from Senator Ken Salazar for Jonathan B. Perlin, 
         M.D., Ph.D., Nominee to be Under Secretary for Health

                    mental health and long-term care
    Question 1. In the report of VA's CARES decisions published in May 
2004, the Secretary indicated that VA would develop appropriate 
forecasting models and strategic plans for mental health and long-term 
care services. That was more than a year ago, but we haven't seen any 
plans.
    a. What is the status of these reports and what is causing the 
delays?
    Response: The model modifications for Mental Health involved 
extensive discussions with clinical experts and our actuarial 
consultant and have been completed. The strategic planning guidance 
which will utilize this data is going through VHA concurrence and will 
be released to our field planners in the near future. Strategic plans 
will be submitted to the Under Secretary for Health by the end of July 
2005.
    The Long Term Care model projections while completed is influenced 
by the changes in policy included in the FY2006 budget submission and 
we are awaiting final appropriation action before it is released.
    b. How will you ensure that VA makes progress in eliminating 
current geographic inequities in veterans' access to mental health 
services, especially for those in rural areas?
    Response: The prime outreach initiative for reaching veterans who 
live in areas not served by VA medical centers has been the creation of 
680 community based outpatient clinics (CBOCs) throughout the country. 
Seventy-two of those CBOCs are in rural (7-99 civilians per square 
mile) or highly rural counties (1-6 civilians per square mile).
    Accountability for delivery of mental health services rests with 
the VISN Directors. Performance contracts that specific outcome 
measures to achieve the desired mental health goals.
    The VHA budget for the remaining FY 2005 and FY 2006 includes 
additional funding for VISNs that have a gap in their mental health 
services in CBOCs on the order of $24 million. This funding is 
centrally directed and targeted to areas of greatest need.
    VHA is providing $9 million additional funding to provide more 
telemental health services to CBOCs and rural communities this next 
fiscal year so that specialty mental services, such as treatment for 
post-traumatic stress disorders, can be made available even in remote 
areas.
    VHA has provided better access to our mental health intensive case 
management services by expanding the number of teams from 49 to 78 
since FY 2000. Two additional teams are planned for this year and $4.5 
million will be used to fund additional programs in FY 2006.
    In order to fill other gaps in mental health services, in FY 2006, 
VHA will fund:
     $29 million for continued expansion of PTSD services and 
OIF/OEF mental health services;
     $10 million for augmentation and expansion of homeless 
domiciliaries plus $4 million for staffing augmentation and outreach 
for other homeless initiatives; and
     $20 million for continued expansion of substance abuse 
services.
    As I'm sure you're aware, I have allocated $100 million additional 
funds for the expansion of mental health services in FY 2005 and an 
additional $100 million in funds in FY 2006. This funding is evidence 
of VHA's commitment to mental health services--and that commitment must 
be further appreciated given the context of the current budgetary 
constraints.
    For the first time the Department has developed a Mental Health 
Strategic Plan that acts as a long term road map to guide the expansion 
of MH services throughout VHA. The plan is monitored for compliance by 
the Deputy Under Secretary for Health and the Deputy Under Secretary 
for Health for Operations and Management to assure that implementation 
is progressing. VHA is committed to meeting the mental health needs of 
veterans throughout the country, including rural areas.
    c. Will VA evaluate the location of its mental health services to 
ensure that acute inpatient psychiatric services are collocated with 
other acute inpatient services when possible and that domiciliary and 
residential rehabilitation services are located as close as possible to 
the areas where veterans who use those services reside?
    Response: A forecasting model to project the demand for acute 
inpatient psychiatric services has been developed. The model takes 
current utilization of acute inpatient psychiatric services as well as 
projected enrollees into account to determine future demand for 
services.
    In addition to the forecasting model, VHA's Mental Health Strategic 
Plan has identified integration of medical and mental health care as a 
major theme. This integration of medical and mental health care for 
veterans is considered essential and forms the basis for development of 
a national plan for consistent provision of a full complement of care 
and supportive services in order to effectively treat veterans with 
mental illnesses.
    Thus, while collocation of acute inpatient psychiatric services 
with other acute inpatient services is not specifically addressed in 
either the projection model or the Mental Health Strategic Plan, it is 
VHA's intention to assure that veterans with mental illness have access 
ito the full range of medical and mental health services including 
acute inpatient psychiatry and other acute inpatient services when 
necessary.
    With regard to the location of domiciliary and residential 
rehabilitation services, again a forecasting model has been developed 
to project the need for these kinds of services. Use of this model 
identified gaps in residential rehabilitation services for homeless 
veterans in VISNs 5, 6, 7, 8, 9, 11, 16, 17, 19, and 22. Based on gap 
analysis, VHA issued a Request for Proposals (RFP) to invite these 
VISNs to apply for specialized funding for 3 years to activate 
Domiciliary Residential Rehabilitation and Treatment Programs (DRRTPs) 
for homeless veterans. Based on final review and approval of the 
applications submitted under this RFP VHA expects to provide funding 
for 7 new DRRTPs this year (FY 2005). VHA also expects to make 
additional funding available for additional new DRRTPs in FY 2006.
    d. How do you propose to meet the nursing home care needs of 
veterans with serious mental illnesses, who typically can not obtain 
that care in community nursing homes or State veterans' homes?
    Response: We will continue to emphasize the provision of a spectrum 
of institutional and non-institutional geriatric and extended care 
services to all enrolled veterans, including those with serious mental 
illness. However, in a time of constrained resources, we are proposing 
to restrict the provision of long-term maintenance nursing home care to 
our highest mission priority, service-connected disabled veterans 
(Priority groups 'I - 3) and those with special needs not generally met 
in the community, such as traumatic brain injury or ventilator 
dependency. Patients with serious chronic mental illness have also been 
identified as one of the special populations for whom VA will provide 
long-term maintenance nursing home care. We are projecting that there 
will be adequate capacity to care for these patients now and in the 
future.
    e. There is some controversy about how VA should balance short-term 
nursing care needs (such as post-acute care) with long-term nursing 
home care needs. What do you think VA's policy should be on this issue?
    Response: Our policy is articulated in the FY 2006 budget 
submission. VA will provide short-term care for all who need it; long-
term care will be limited to Priority Groups 1-3 and those with special 
needs, as cited above.
    f. VA's increasing emphasis on non institutional long-term care 
services is encouraging for veterans who prefer to stay at home rather 
than enter a nursing home. Based on GAO's work, however, VA's estimate 
of how many veterans receive these services appears to be overstated. 
What steps will you take to ensure that VA provides a more accurate 
measure of workload for home-based primary care?
    Response: VA's measure of access to care is ``Days of Enrollment'', 
a standard and accurate measure that is also utilized by the Centers 
for Medicare and Medicaid Services. VA does not concur with GAO that 
this measure overstates access. VA currently tracks three measures of 
access: days of enrollment, unique veterans served, and number of 
visits (GAO's preferred measure). We believe that these measures in 
combination provide us an accurate picture of workload and utilization.


                               __________


Post-hearing Questions from Senator John Ensign for Jonathan B. Perlin, 
         M.D., Ph.D., Nominee to be Under Secretary for Health

    Question 1. Dr. Perlin, I understand there were some comments by 
members of the House of Representatives regarding the status of the 
future Las Vegas Veterans Hospital. Those comments alluded to the fact 
that the hospital was not a ``done deal'' and caused much concern 
amongst the Veterans community in Nevada. Please elaborate on your 
understanding of the status of the Las Vegas Veterans Administration 
Hospital?
    Response: I am pleased to advise that $199 million in construction 
funding for a comprehensive 90 bed medical center in Las Vegas is 
included in VA's budget for FY 2006. Funding for a 120 bed VA nursing 
home will be considered for the FY 2007 budget, and the facility is 
currently scheduled to open in FY 2010. The total cost of the 
comprehensive medical center and long term care facility is $286 
million. Construction of the project will begin in 2007. A project 
architectural design contract has been awarded to a joint venture 
between RTKL Associates, Inc. in Washington, DC and JMA Architecture 
Studios in Las Vegas, NV. A schematic design for the facility is 
currently under development.
    VA is also planning to lease a minimum of four Community Based 
Outpatient Clinics throughout the Las Vegas Metropolitan Area to meet 
approximately 50% of primary care needs of Las Vegas area veterans. 
This will allow many veterans the opportunity to continue to receive 
their primary care close to their home.
    The Las Vegas Metropolitan Area is one of the fastest growing in 
the nation. VA is committed to meeting the growing healthcare demands 
of Nevada's veterans.
    Question 2. Dr. Perlin, rural healthcare is a vital importance to 
the veterans of northern Nevada. Those who live in Elko must travel to 
Salt Lake City, a drive of more than 5 hours, to get some of their 
healthcare needs met. I know that Elko failed to meet the CARES 
Commission population standard of 7,000, but isn't there something that 
the VA can do to address this situation?
    Response: The VA Rocky Mountain Network (VISN 19) and the VA Salt 
Lake City Health Care System understand that Elko County, Nevada is an 
underserved area for VA health care. It is also located a significant 
distance from the nearest VA Medical Center in Salt Lake City. VISN 19 
plans to first address the need for three priority Community Based 
Outpatient Clinic (CBOC) sites that were contained in the Secretary's 
May 2004 CARES Decision (Lewiston, Montana; Cut Bank, Montana; and Salt 
lake City, Utah). The VISN planned to activate those three priority 
CBOCs in FY 2005. However, resources are not available to activate 
those clinics in 2005, and they may not be available in FY 2006. After 
the CARES priority CBOCs are activated, then VISN 19 will address plans 
for developing CBOCs in other underserved areas, such as Elko.
    Question 3. Dr. Perlin, John Bright is currently the Acting 
Director of the VA Southern Nevada Healthcare System. Every Veterans' 
organization in my state is anxious to change the ``acting'' to 
``permanent.'' What is the status of this appointment?
    Response: The Secretary recently approved the appointment of Mr. 
Bright into this permanent position. However, because Mr. Bright will 
be a new member of the Senior Executive Service, his proposed 
appointment had to be sent to the Office of Personnel Management (OPM) 
for final approval. VA anticipates hearing from OPM in the very near 
future. At that time, VA will notify your office and, following that 
notification and Mr. Bright's formal notification, will announce Mr. 
Bright's appointment to all our stakeholders in Southern Nevada.

    Chairman Craig. Well, Doctor, thank you for your opening 
statement and the thoughts involved and, I believe, the sincere 
compassion expressed by that statement.
    We are going to move to 5-minute rounds for questioning 
from myself and our colleagues as it relates to your service.
    You assumed the role of Acting Under Secretary of Health in 
April of 2004. So you have had 1 year's experience on the job. 
Beyond your testimony, what have you learned during this acting 
status? What experience have you had that is going to obviously 
give you a leg up as the permanent Under Secretary of Health in 
this situation?
    Dr. Perlin. Mr. Chairman, during the past year as Acting 
Under Secretary, almost a year to the day yesterday, I have 
learned a tremendous amount. Your description of the enormity 
of the job is precise and accurate.
    The responsibilities of our first mission of providing 
world-class health care for veterans are themselves enormous, 
but we have three other missions as well in statute: research 
to improve the health and well-being of veterans, an academic 
mission to provide services for veterans and to, in fact, meet 
the needs of the country, and to provide back-up to our 
partners in Department of Defense. I have learned the enormity 
of that mission.
    I have also learned it is an incredible privilege, and I 
also learned that no one does this job alone. Working with the 
Secretary and the Deputy Secretary, with Congress, with 
veterans service organizations, academic partners, public and 
private sector, and receiving support from my family are all 
part of what is necessary to bring to this job to make sure 
that we provide the highest level of quality for veterans.
    I have realized that we have a highly motivated workforce. 
I think the stories that we have all heard after the hurricanes 
of selfless sacrifice, the ability to deploy within 24 hours to 
support veterans and, in fact, the country are really quite 
remarkable and demonstrates the commitment of those who work in 
VA to veterans.
    And I have learned, perhaps most importantly, that it is 
possible, despite the size of the organization, to make change. 
I believe we shared with you ``12-for-12'' strategic 
priorities, and in some absolutely critical areas, such as 
moving forward and seamless transition, we have been able to 
make real progress in easing the new veterans' transition from 
active duty, or from reserve service, into VA.
    Chairman Craig. Twelve goals for 12 months I think is what 
you called it, when you released that set of goals as you 
became the Acting Under Secretary of Health. Share with the 
Committee briefly, if you would, the 12 ``for'' 12 plan, what 
it was intended to accomplish, what it has accomplished, and 
frankly, what it has not. Where were the shortfalls or where 
are the shortfalls, as you see them, through that 12 and 12?
    Dr. Perlin. Well, thank you, Mr. Chairman.
    The 12-for-12 was a 12-month action plan for improving care 
and service and effectiveness and efficiency throughout VA. It 
was really divided into four major components. One was mission 
improvement, and the most critical area, clearly, was seamless 
transition.
    The other areas included clinical practice improvement. We 
had clinical process improvement in mental health care, in 
long-term care, and in acute care services specifically, and 
business process improvement. Improvement in our managerial 
efficiency so that we could serve more veterans with the 
resources that we are entrusted with and also serve as a 
vehicle for further strategic planning.
    As I mentioned, the most critical was ``seamless 
transition.'' And with the able leadership of Dr. Michael 
Kussman, we have established a permanent Seamless Transition 
office, and the first time ever, there are VHA social workers 
in military treatment facilities not only here in Washington at 
National Naval Hospital, and Walter Reed, but at Brook, 
Madigan, Eisenhower, Darnell, Evans, and 250 points of contact 
throughout the country.
    We have facilitated our tighter relationship with VBA and 
with our colleagues in VBA. Last year, over 7,200 briefings 
have been done to literally hundreds of thousands of troops 
throughout the world, including at Landstuhl and on troop 
transport ships back to the United States.
    I have mentioned some of the successes, but in every story, 
there is still work to do. And this is, indeed, a journey. It 
is not a work that is completed. We have further work to do, as 
you know, in terms of really tightening that relationship, 
especially around information with our partners in the 
Department of Defense.
    There have been steps forward. In fact, just last month, 
Department of Defense placed four uniformed personnel at our 
major polytrauma centers. But there is further work to do in 
that regard. And we know that we have further work to do in 
terms of improving our business processes so that we can make 
sure that every last resource serves the veteran.
    Chairman Craig. Thank you.
    Let me turn to my colleague, Senator Akaka.
    Danny.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Dr. Perlin, you have such outstanding credentials and 
experiences working in the Department of Veterans Affairs 
health care system. And because of the chat we had, which I 
consider very good, there was a strong understanding of who you 
are and what you want to be.
    At the outset, I want to ask, as Under Secretary, would you 
be willing to fight for the health care that veterans are 
entitled to even when opposed by OMB or even the White House?
    Dr. Perlin. Sir, I believe that my job requires that I join 
the Secretary as the veterans' advocate within the Department 
of Veterans Affairs. That our job is to provide information 
that is accurate and supportive of telling the story of what 
services are required for the veterans it is our privilege to 
serve.
    Senator Akaka. In answers to my pre-hearing questions, you 
mentioned--and as we talked about--better technology to be one 
of your main goals. Please discuss this further and tell me 
more about your vision for the future of VA health care. 
Particularly, what will your other priorities be, and how you 
will lead VHA and work with the various networks and the costs 
of implementing these initiatives?
    Dr. Perlin. Well, thank you, sir, for the question.
    First, in terms of some of the technologies, let me just 
note that many of these technologies build from the incredible 
electronic health record that VA has. This electronic health 
record allows us to be far more efficient.
    The President's Information Technology Advisory Committee 
noted for the country, that in the United States, 1-in-7 
hospitalizations occurs because previous records were not 
available, and 1-in-5 lab tests are repeated. That doesn't 
happen in VA, because every last one of our hospitals and 
clinics are computerized, and so we have that information.
    So for the cost of $78 per patient per year, roughly akin 
to not repeating one lab test, we can provide safe, excellent 
care. That information is transportable. It is transportable 
across the country. So the ability to serve particularly rural 
veterans by placing devices for communication--communication 
not just in words or in text, but with device that connect to a 
telephone, such as for a heart failure patient, instead of 
having to come to the clinic, who can stand on a digital 
electronic scale and send the information of his or her weight 
back to the team at the clinic or hospital means that not only 
can we keep that patient from having to drive to the clinic. 
But in fact, rather than waiting for the patient to become ill 
and show up in the emergency room with fluid overload, we can 
actually use that technology to know that he or she is getting 
into trouble and call them, perhaps change their medication, or 
even go out to visit them.
    So my vision for the future is that we use these 
technologies particularly to help those veterans who may not be 
rural, but are also isolated by virtue of extreme age or 
frailty or chronic illness or even mental illness and support 
them in the comfort of their community and the comfort of their 
families.
    So I believe those technologies are absolutely critical for 
helping us transcend some of those boundaries.
    Senator Akaka. And as far as priorities are concerned, 
yesterday you mentioned the 50 Vet Center Outreach positions 
that you are adding. Can you tell us more?
    Dr. Perlin. Yes. Thank you, Senator.
    I appreciate the discussion that we had, the opportunity 
for discussion at the hearing recently on seamless transition. 
And we had a very positive discussion about the effect of 50 
OEF/OIF (Operation Iraqi Freedom, and Operation Enduring 
Freedom) counselors, veterans themselves who would provide 
outreach to other servicemembers returning home.
    And following that discussion with this Committee, we have 
expedited, (in fact, just on March 30th), signed a directive to 
hire 50 additional counselors for outreach to veterans. But 
with the permission of the Chairman, I would like to submit for 
the record an announcement that came out just yesterday, 
identifying these new positions and these new individuals.
    Chairman Craig. We will make that a part of the record.
    [The announcement follows:]

Department of Veterans Affairs,
Office of Public Affairs,
Media Relations,
Washington, DC 20420
             va to hire 50 new oif/oef outreach counselors

    Washington--The Department of Veterans Affairs will hire 50 
veterans of Operations Iraqi and Enduring Freedom (OIF/OEF) to provide 
outreach services to veterans returning from Afghanistan and Iraq. They 
will join 50 other OIF/ OEF outreach counselors already hired by VA.
    ``How we care for our returning combat veterans will define VA for 
decades,'' said Secretary of Veterans Affairs Jim Nicholson.
    The outreach counselors will brief servicemen and women leaving the 
military about VA benefits and services available to them and their 
family members. They will also encourage new veterans to use their 
local Vet Center as a point of entry to VA and its services.
    ``We believe that our outreach to veterans is most effective when 
the message is carried by their comrades,'' said Dr. Jonathan B. 
Perlin, VA's Acting Under Secretary for Health.
    Outreach counselors visit military installations, coordinate with 
military family assistance centers and conduct one-on-one interviews 
with returning veterans and their families.
    The new outreach counselors will be located in the 206 Vet Centers 
operated by VA throughout the country, especially near military out 
processing stations. They will be hired for a 3-year period.
    Vet Centers have been VA's first line of contact for troops 
returning from combat for every war since Vietnam. For 26 years, 
counselors have provided services for the psychological and social 
readjustment needs of combat veterans, and prevented possible 
development of more chronic and delayed forms of war-related trauma.
    Vet Center employees have seen more than 16,000 of the 244,000 
combat veterans VA estimates have left the service since the start of 
the Global War on Terrorism.
    People wishing to receive e-mail from VA with the latest news 
releases and updated fact sheets can subscribe at the following 
Internet address: http://www.va.gov/opa/pressrel/opalist--listserv.cfm

    Dr. Perlin. Thank you, sir.
    Senator Akaka. Yes, and I just want to close by saying we 
are looking forward to your coming on board, and you will have 
to fill many now vacant positions. And we look forward to 
seeing these slots filled in the near future.
    Thank you very much, Mr. Chairman.
    Chairman Craig. Senator Akaka, thank you.
    Senator Isakson.
    Senator Isakson. Thank you, Mr. Chairman.
    One observation, Dr. Perlin. Senator Jeffords and I are on 
the Health, Education, Labor, and Pension Committee and have 
had, I think, three hearings already regarding the FDA. And I 
just wanted to make the observation that the VA, from 
everything I have gleaned from those hearings, is leading the 
United States of America in information technology and 
information management for patients, for pharmaceuticals, and 
for care.
    And in reading your resume, I know you made a major 
presentation last year on what VA has done and what it can be 
as a foundation for the country. So I want to commend you, and 
the others at the VA deserve credit because I do think that 
harnessing information technology in health care can have more 
to do with lowering medical errors, improving prevention than 
any single thing that we can do. And the VA has been a leader 
in that. And I commend you on that.
    Dr. Perlin. Thank you, sir.
    Senator Isakson. Second, I saw where you gave a 
presentation entitled, ``No One Grows Old Saying, `Gee, I Hope 
I End Up In A Nursing Home.' '' And I have never seen a better 
title or a more prophetic statement.
    We obviously are confronted with great challenges in terms 
of nursing homes, and looking at the VA stats, we have got over 
40,000 veterans in institutional care. And we have got a number 
of them in non-institutional, but assisted care.
    What I wanted to ask you, are there any, beyond telehealth 
and some of the other home respite programs, are there any 
incentives for caregiver benefits or caregiver incentives so 
that some veterans can be supported by the VA, but not be 
institutionalized?
    Dr. Perlin. Well, thank you, Senator, and thank you as well 
for the very close reading of the resume.
    It is imperative that we find ways to support veterans in 
their communities. I came to that statement after many 
conversations with my own patients who, in fact, particularly 
the World War II generation, are fiercely independent, but 
sometimes just having a little trouble. And that is the person 
who really doesn't need to be in the nursing home. That is the 
person who with some of the technologies, such as the digital 
scale for the heart failure patient that I just mentioned, can 
be supported in their home.
    And your question about that, how can we work toward 
supporting the caregiver and not just the patient, is 
absolutely critically important because, as you know, if we 
institutionalize that patient, we may not only prevent that 
patient from aging successfully in his or her community, but 
even aging in the context of a spousal relationship of 50 or 60 
years duration.
    And a new program that VA is developing to complement the 
electronic health record is something called ``My Healthe 
Vet,'' and it is the patient's portal to their health record. 
And it is really a support system, not just for the patient, 
but the patient's caregivers, be it a spouse or a child who 
might be helping to support that patient.
    I think your other comment, this is important for the 
country, is absolutely accurate. Data from the Organization for 
Economic Cooperation and Development would suggest that the 
cost of institutional care in European countries with aging 
curve ahead of our own, the costs for one individual in their 
eighth decade, is equivalent to per capita gross domestic 
product.
    So even if we didn't feel morally that it is the right 
thing to do as a country, we will have to confront these sorts 
of economic decisions. So we are very appreciative of the 
ability to work with the Senate and with Congress to develop 
these new technologies, to provide a service for veterans and 
caregivers, but also I think something that may provide a 
greater service to the country as well.
    Senator Isakson. Last month, I had the occasion to visit 
Landstuhl Regional Medical Center in Ramstein, Germany, where 
our wounded veterans from Iraq and from Afghanistan are coming, 
and one thing made a tremendous impression on me. With the new 
technology in body armor, the new technology in protection for 
eyes, and the new technologies that we are using in terms of 
delivering intensive care almost on the battlefield with our 
intervention teams, many, many veterans are being saved today 
from injuries in combat, and we are going to have more unique 
types of surviving veterans and their injuries.
    Is the VA focusing--and are maybe some of these 50 you are 
bringing in--designed to help focus on the care that is going 
to be needed that is going to be so unique to the Iraqi 
conflict?
    Dr. Perlin. Senator, your question is right on target. If 
you survive a forward injury to a combat surgical hospital, or 
``CSH'', you have a 98.3 percent chance of survival back to the 
States. But those improvised explosive devices, in the context 
of body armor, may leave someone with an injury that leads to 
amputation or blindness or hearing loss, spinal cord injury, 
traumatic brain injury, or all of the above in conjunction with 
the psychological trauma.
    Those 50 outreach counselors help all veterans, but with 
the VA social workers that are at military treatment 
facilities, through video teleconferences with our VA medical 
centers, we are working closely with DOD to meet the needs of 
this newest generation and the newest injuries, physical and 
emotional, providing mental health services as well as 
aggressive rehabilitation.
    It starts with the same sort of intention as restoring a 
professional athlete back to competitive play level.
    Senator Isakson. Thank you very much, Doctor.
    Thank you, Mr. Chairman.
    Chairman Craig. Thank you, Senator.
    Now let me turn to Senator Jeffords.
    Jim.
    Senator Jeffords. The Administration has proposed that a 
fee be charged of all new enrollees and the cost of 
prescription drugs increased for veterans. Thankfully, the 
Senate has spoken against these changes. But the fact that they 
are in the President's budget proposals indicates the depth of 
the problem confronting the VA.
    It seems to me that given the expected level of funding, 
you are going to have to make some very difficult choices 
between cutting services to veterans or reducing the pool of 
veterans who will be served by the VA. What criteria will you 
use to make these decisions, and what do you think the core 
mission of the VA is?
    Dr. Perlin. Senator Jeffords, the policy proposals we 
understood very clearly from this Committee, the Senate that a 
number of them have not been well received. And we recognize 
that we have a tight budget going into this year.
    But we presented a budget which, as a package, allowed us 
to project the ability to provide care to that entire 
population of veterans. That was a package, and we appreciate 
Chairman Craig's subsequent consideration of VA in light of 
some of the sentiment about the policy proposals.
    I believe, and I think we have heard from the President and 
from the Secretary, that our first mission is to those who are 
most vulnerable. Those individuals who have illness or injury 
as a result of service, those service-connected veterans. Those 
with catastrophic disabilities, those who have statutorily 
defined catastrophic disabilities. Those individuals who are 
financially challenged, and critically now, those individuals 
who are returning from combat.
    We need to make sure that those who are most vulnerable 
receive, first and foremost, the attention of VA. And I think I 
would be remiss to speculate before the decision is actually 
formed. It would be a hypothetical. But of course, Congress 
provided the Secretary with a prioritization, and any decisions 
that the Secretary might consider--again, absolutely 
hypothetical--would have to follow the guidance provided to us 
by Congress.
    Senator Jeffords. What do you think is the core mission of 
the VA?
    Dr. Perlin. I think the core mission is really so 
eloquently stated in Lincoln's words, ``To care for those who 
shall have borne the battle, and for his widow and for his 
orphan.'' And I think that the first mission is to those who 
are most vulnerable.
    Senator Jeffords. What is our obligation to the veterans 
that fall outside of that core mission?
    Dr. Perlin. Well, this is an ongoing dialog. It is a public 
dialog about how far VA resources will extend in terms of 
serving veterans. In this country, there are 25 million 
veterans today. But the core mission are those individuals who 
have vulnerabilities as a result of their service, especially 
combat service.
    Senator Jeffords. With respect to mental health, it has 
been estimated that about a third of the servicemembers 
returning from Iraq have some mental health problems. Members 
of the National Guard and Reserves are less likely to live near 
military installations and, therefore, will be turning to the 
VA in a large number to receive their health care.
    I would assume that most VA rural health facilities, 
particularly the CBOCs, do not have mental health specialists 
on their staff. Yet the number of people depending on the VA 
for specialized mental health is likely to skyrocket. Research 
shows that early intervention and treatment can prevent the 
onset of more serious diagnosis, PTSD.
    How does the VA propose to meet these increasing needs?
    Dr. Perlin. Sir, we have no higher mission than serving the 
needs of our returning combat personnel. In fact, 248,000 
individuals have separated from service in OIF and OEF, and of 
those, about 50,000 have come to VHA, about 16,000, to a 
readjustment counseling center. And in fact, out of the 
248,000, about 3 percent have been either diagnosed with, or 
are being evaluated for, PTSD.
    A far larger number of individuals will have adjustment 
reactions, and one would view that as part of the normal 
continuum of normal experience. It is when the symptoms are 
persistent that post traumatic stress disorder as a diagnosis 
would be entertained.
    But even beyond the mission of meeting the mental health 
needs of these returning service personnel in 2005, we have, 
one, developed a new mental health strategic plan and, two, 
have added $100 million directly to mental health support to 
increase access, particularly in rural areas, and other areas 
where there have been disparities, to specialty mental health 
care services.
    All CBOCs--Community-Based Outpatient Clinics--with over 
1,500 patients have direct onsite mental health care. And all 
CBOCs have referral mechanisms for specialty mental health 
care. There are 144 PTSD programs in the fiscal year 2006 
budget. The $100 million, which this Committee supported, being 
added to the $2.2 billion for direct specialty mental health 
services, will help to add 627 new personnel to support the 
needs of not only new servicemembers, but all veterans with 
PTSD, with mental illness, with substance use disorders, to 
extend outreach, and reduce disparity, and improve service.
    Senator Jeffords. Several years ago, I introduced 
legislation to implement Medicare subvention, allowing the VA 
to be reimbursed by Medicare for care given to Medicare-
eligible vets. Very serious negotiations ensued between the VA 
and the HHS.
    It seems that we were close to making this happen, but time 
ran out before it was finished. And we have not gotten back to 
that issue since. What is your position on VA subvention, and 
do you see a role for closer cooperation between Medicare and 
the VA?
    Dr. Perlin. Senator, let me give you my personal views on 
this. It is my understanding that when eligibility reform was 
drafted, and was being considered, Medicare subvention or the 
ability for VA to collect for Medicare services from Medicare, 
that was part of the framing of how eligibility reform would 
work.
    I know there has not been much discussion of this recently, 
and I know there have been some concerns in terms of the 
relationship to the Medicare Trust Fund. I would observe there 
is a recent study by Gary Nugent and Ann Hendricks in ``Medical 
Care'' that suggests that VA's care is 18 to 22 percent more 
efficient. And so, if that were to occur, it would be a good 
value.
    A discussion that this body has had recently was something 
called VA Plus Choice or a VA Advantage program, which was a 
plan to develop a partnership with the Department of Health and 
Human Services, Medicare program specifically, to allow 
Medicare beneficiaries to exercise their Medicare benefit for 
services in VA. That program would require further legislative 
support.
    But the discussions are ongoing, and I do agree with your 
premise that VA, the Department of Health and Human Services, 
and the Medicare program specifically, should work more closely 
in coordinating Federal health care supports.
    Senator Jeffords. Well, thank you. And I would appreciate 
it if we could be in touch on the progress there. Thank you 
very much.
    Chairman Craig. Jim, thank you.
    Let us turn to Senator Salazar.
    Ken.
    Senator Salazar. Thank you, Mr. Chairman, and thank you 
again for your leadership of this Committee and for standing up 
for veterans.
    Dr. Perlin, congratulations to you, and congratulations as 
well to your wonderful family. It is always good to see 
families here in support of the great honor that you are being 
bestowed on to serve our country. So congratulations to each 
member of your family, including your young son.
    Let me ask first a parochial question, and that is with 
respect to Fitzsimmons and the effort to construct a new 
hospital for veterans at Fitzsimmons, can you please give me a 
quick update?
    Do you share the Secretary's commitment on the construction 
of that hospital? And you know by now that it obviously is a 
major priority of Senator Allard and mine and the rest of the 
delegation. And give me a quick update on where we are on 
Fitzsimmons.
    Dr. Perlin. Well, Senator Salazar, first, thank you for 
your kind remarks. And thank you for your support of a 
replacement hospital in Denver.
    I absolutely share the Secretary's enthusiasm. As you know, 
I combined my trip to the Association of Military Surgeons of 
the United States, AMSUS, in Denver with a trip to the 
Fitzsimmons campus to see how we could get back on track. And 
since that time, in November of last year, there has been a 
great deal of progress.
    As you know, the Secretary's team has been working on this, 
and in fact, I recently had a conversation with the Surgeon 
General of the Air Force, Peach Taylor, and he continues to 
express his commitment to the sharing that is such an important 
part of this concept.
    Further, there are obvious benefits by being a part of that 
campus: For example, the ability for us to share services, 
specialty services, capital intensive equipment, and the 
ability to partner, of course, with our Federal colleagues.
    The limiting factor has been really determining a suitable 
piece of land, and I know we started initially with the idea of 
seeking 40 acres. A minimum footprint to allow for good spinal 
cord injury access and good nursing home access at ground level 
is about 28 acres or so. And I appreciate anything that you 
might do to assist us in coming to the ability to get started 
on what we believe should occur.
    Senator Salazar. I appreciate those comments, and I very 
much look forward to working with you on that very important 
project for the West.
    Second, let me ask you about rural health care and your 
views on how we might be able to help make sure that veterans 
who live far away from where we offer services are, in fact, 
served. And I have heard some of your testimony and read some 
of your remarks concerning telemedicine and other ways in which 
we would outreach to those veterans who live in remote 
communities.
    For me, it is a personal issue when I go up into places 
like northwest Colorado and recognize that many of our veterans 
who live in those communities up there have to go back and 
forth 200 miles to Grand Junction to receive any kind of 
service. And there are many of us on this Committee, as well as 
my colleagues in the Senate, who have wanted to move forward 
and trying to make sure that we are making much more of an 
effort in the creation of rural outpatient health care clinics 
that would serve our veterans.
    I would like your thoughts generally on how we serve our 
veterans who are located in these remote areas of rural 
America, both generally and specifically with respect to the 
construction and creation of some of these outlying facilities.
    Dr. Perlin. Well, thank you for that question. It takes me 
right back to Chairman Craig's first question, what did I learn 
during this past year? I learned it is a very large country, 
and some areas of the country are really intensely isolated. 
And I appreciated that in Washington State and in Colorado as 
well.
    When we framed the CARES review, we built into that some 
criteria to try to make care more accessible. We framed that we 
wanted primary care not farther than 60 minutes, recognizing 
that 60 minutes may be a few blocks in New York City or quite a 
few miles in the West. Ninety minutes to regular hospital care 
and 2 hours or the community standard to tertiary care.
    We have made a tremendous amount of progress. And I think 
that the way we have proceeded actually demonstrates that the 
approach has been not only more effective, but more efficient. 
We have made a lot of progress by building these outpatient 
clinics that have allowed us to move to model of health 
promotion and disease prevention.
    In fact, over the last 9 years, we have gone from less than 
200 outpatient clinics to now, including the clinics that are 
actually onsite at facilities of medical centers, to 871. And 
that is about 704 as of today, that are offsite. They really do 
provide that access.
    But no matter how many clinics we ultimately have, we will 
never be everywhere that veterans are. This is, as I learned, a 
huge country with many remote areas. And to augment that, the 
use of technologies are critically important. We have not only 
the capacity for telehealth but last year, did nearly 500,000 
patient visits using telehealth technologies. Not only things 
like heart failure, but also telemental health--the ability to 
check in on patients with mental illness--that were very well 
received.
    Those technologies allowed us to actually provide services 
in some areas that we have not traditionally had access, like 
Indian nations.
    Senator Salazar. If I may, Dr. Perlin, because I see my 
time is up here on this question? I understand the use of new 
technology to make sure that we are doing the very best that we 
can.
    In terms of the creation of additional facilities, I 
recognize the progress that the VA has made over the last 
several years. In terms of additional outpatient health care 
facilities, other than those that are currently authorized 
under the CARES process, what is your view? I mean, I think I 
heard somewhere that the statistic was that we currently are 
working on a list of 150 additional ones. But the question--and 
frankly in my State, both in northeast and northwest Colorado--
we don't have a facility that would actually be within that 
list of 150.
    And so, I am wondering what additional efforts you might 
have in mind with respect to those additional facilities that 
might be needed in Washington or Idaho or anywhere else in the 
country?
    Dr. Perlin. Sir, in short, the 156 that you refer to were 
those that were prioritized in the Secretary's CARES process. 
Beyond that, we review the needs locally, and it is really an 
operational decision within each network. And the ability to 
bring on new CBOCs is directly related to the resources that 
are available to support not only the capital development of 
the new clinic, but also the operation of that clinic.
    So we try to balance the needs and the degree to which 
there is a veteran population and come to something that really 
supports veterans. In absence of that, we look to technologies 
and relationships with local hospitals and practices to try to 
find accessible support.
    Senator Salazar. Let me just say that I very much look 
forward to working with you, Dr. Perlin, as we do outreach and 
make sure we are providing health care to our veterans who live 
in those far out communities.
    Dr. Perlin. Thank you.
    Senator Salazar. Thank you, Mr. Chairman.
    Chairman Craig. Thank you, Senator.
    Now let me turn to Senator Patty Murray, from the State of 
Washington.
    Patty.
    Senator Murray. Thank you very much, Mr. Chairman.
    And I want to join you and Senator Akaka and our colleagues 
in welcoming Acting Under Secretary Perlin before the 
Committee. Just let me say for the record that I think he has 
done a tremendous job during his tenure at the VA, and I really 
am impressed with his ability and his passion to serve our 
veterans. And I thank you very much for your service to this 
country.
    We had a chance to meet yesterday and talk about a few 
issues. And obviously, the Walla Walla facility is one that is 
very important to me. It covers a three-State area, including 
Chairman Craig's, and serves 65,000 veterans.
    We had a chance to talk about the fact that the CARES 
Commission was mistaken in their thinking that they should 
close that facility. They rejected that, and now we are working 
with the Committee to really put in place a facility that 
reduces the VA's pressure to maintain the 84 acres and the 
historic buildings as well as serve the veterans. And I 
appreciate your commitment to working with us to make sure that 
that is accomplished in a good way for everybody, and I just 
wanted to say that publicly.
    Dr. Perlin. Thank you.
    Senator Murray. My first question really regards the CBOCs 
that we talked about as well yesterday. We have two areas in 
our State that, as Senator Salazar was just talking about, are 
very remote, that have been promised CBOCs. One in Wenatchee, 
where people actually have to go over a mountain pass to get 
care at a VA today, and one in the North Walkum area, where 
people have to travel more than 100 miles in a difficult area 
as well to receive care at the VA.
    Both of these facilities have been promised, but we now 
understand that they are in jeopardy because of finances. And I 
wanted to ask you for the record this morning, I know that cost 
of establishing those is estimated at about $5 million. Can you 
tell me what we need to do to make sure that these two 
essential facilities become a reality and when they might be 
available for veterans in these areas?
    Dr. Perlin. First, Senator, thank you very much for your 
kind words and the comments on Walla Walla, because the local 
access panels and further study really are intended to make 
sure that we have a good community partnership in finding ways 
to support veterans and the communities in the best fashion. I 
thank you for your support of that.
    With respect to the clinics, after our discussion 
yesterday, I went back and reviewed VISN 20 and Washington 
State in particular and noted that in the CARES decision that 
north central Washington, Bellingham, and Centralia were the 
three that were prioritized there. And our goal is to balance 
those prioritized clinics and the needs of veterans in 
particular areas.
    But as I mentioned to Senator Salazar, the ability to 
develop new clinics to augment the nearly 900 that we have now, 
871 to be precise, is directly tied to resources. And capital 
construction of the clinics, unlike a major capital project, is 
part of the operational balance. And so, we will bring on those 
clinics as budget permits.
    Senator Murray. Well, you have talked about the lack of 
resources several times now, and I know firsthand it is real. 
Washington State is home to six military installations, and 
many veterans choose to stay in Washington when they leave 
service. And in addition, the vast reach of the VISN 20 
includes four States--Washington, Oregon, Idaho, and Alaska.
    The number of soldiers from the Northwest serving on duty 
in Iraq and Afghanistan today is going to place a real burden 
on our budget when they return. VISN 20 is projected to be the 
fastest-growing network. Again, this year, they expect an 8 
percent increase in enrollment, including a 5 percent increase 
in Category A veterans.
    We know that the hiring freeze has been technically lifted, 
but according to our network director, he does not have a 
budget to hire. Attrition rates, he has told me, have slowed to 
a point that he is using his capital budget to pay for salaries 
and mandatory costs. He says he is not replacing equipment or 
upgrading facilities, and at this rate, he is only going to be 
able to hire one person to replace the five that leave.
    Dr. Perlin, you have talked about lack of resources to 
accomplish all the things we do. Yet what I keep hearing here 
is that there is some kind of $500 million reserve in the VA's 
budget. Can you clear that up for me?
    Why are we not using that $500 million? Is it phantom? Is 
it real? And why aren't we using it, when clearly CBOCs and 
other facilities are so essential to providing services for not 
only today's vets, but for those soldiers who are returning to 
us?
    Dr. Perlin. Thank you, Senator.
    You know, the acquisition of capital equipment is balanced 
over the year. In terms of your network, for instance, you 
noted very high demands. If funds are spent right, they are 
really titrated to make sure that we don't end up not able to 
provide the services. We balance the capital equipment 
purchases with that.
    There is not a $500 million phantom reserve that exists for 
any sorts of additional activities.
    Senator Murray. Is there a $500 million reserve?
    Dr. Perlin. No.
    Senator Murray. There is no $500 million reserve?
    Dr. Perlin. I don't know where that might have been 
suggested, but there is no $500 million reserve that is sitting 
there for future projects.
    Let me be clear that there are CARES funds, the capital 
constructions funds--a different pot--that are not able to be 
converted. The 2006 budget calls for $750 million in capital 
construction, but that is a separate appropriation line that 
cannot be operationalized for other purposes.
    But there is no--within operational dollars--$500 million 
reserve.
    Senator Murray. OK. Well, Mr. Chairman, as you know, I am 
very, very concerned about the lack of dollars that we have for 
our veterans, particularly those who are returning. That is why 
I am talking, hopefully, with you and others about putting some 
additional money into the supplemental.
    Because I believe that we have an obligation to these 
soldiers as part of the cost of war, and I am deeply concerned 
that we will not have the facilities available as they return.
    Thank you very much.
    Chairman Craig. Patty, thank you very much.
    Let us turn to Senator Burr.
    Richard.
    Senator Burr. Thank you, Mr. Chairman.
    Dr. Perlin, welcome. And as well, welcome to your family.
    You should really be commended because I think you have 
brought a level of progress to health care at the veterans 
clinics through the integration of technology that has directly 
affected the quality of care. And I think that goes overlooked.
    But I would also take this opportunity to share with my 
colleagues that many of the things that we do in telemedicine, 
many of the technological uses to deliver medicine today at the 
Veterans Administration, we still don't pay for in Medicare 
reimbursements. So some of the advances that we highlight and 
that we hear from veterans, the things that make their quality 
of life better, that make access to health care easier, we 
don't do that across the whole population.
    And I think that is something that we need to sit down and 
look at long and hard, because if it works for them, why are we 
not doing it for the largest piece of health care that we have 
got in this country? And I think we have got a lot of progress 
that we can make.
    On the question of technology, the VA plans to move to 
remote monitoring of diabetics in the veteran population. I 
commend you for that because I think we all understand that the 
ability in real time to watch the health of an individual is 
better, that our ability to regulate the insulin need is better 
in the remote case, and consequently, quality of care and the 
long-term effects of diabetes are reduced.
    But the reality is that we have a segment of the population 
of veterans that are at an age that e-mail is not something 
that they do daily. Working the remote on the TV or programming 
the clock on the VCR is challenging. And relying on this remote 
monitoring as their only source of diabetes control will be a 
difficult transition. Share with me, if you will, how we are 
going to handle both of these worlds.
    Dr. Perlin. Thank you, Senator, for your comments and also 
thank you very much for the opportunity to discuss some of 
these technologies as they may apply more broadly to our 
country.
    Diabetes is a great example because in our population, 
obesity is really becoming an epidemic. Surgeon General Carmona 
asked what the number-one public health threat was. The answer, 
to everyone's surprise, obesity and, as a consequence, 
diabetes. 7.3 percent of the American population has diabetes, 
and in VA, it is nearly 20 percent. And we learned from Surgeon 
General Carmona that 54 percent of today's military are 
overweight or obese. So diabetes is a huge issue in VA.
    The goal with the new technology is actually to make it 
easier. Some of these new blood glucose self-monitoring meters, 
or glucometers, can be plugged right into the phone and just 
automatically push one button to send blood sugar readings to 
the patients care team. So I can tell you as a doctor, I have 
never had a patient with diabetes ever bring me a successfully 
completed log book. And the ability to actually check your 
sugar and just put it up to the phone, push one button, 
actually works pretty well.
    In public libraries, I have noticed that there are two 
populations. There are young children using the Internet and 
there are older adults using the Internet, primarily for health 
questions. And that has actually been validated in the 
scientific literature. But I am pleased to be able to share 
with you that VA actually was recently noted in the Annals of 
Internal Medicine as the benchmark in the country for diabetes 
care.
    And you are right. Some of these technologies may not work 
for certain individuals, but the ability to tailor it to the 
needs of each and every veteran, be it with new technologies or 
be it with high touch, low tech, is really how VA needs to be 
able to serve to be successful in achieving the highest levels 
of diabetes care.
    Senator Burr. I appreciate it because I think what you said 
is the VA is not going into this blindly, saying it is this way 
or no way.
    Dr. Perlin. You bet.
    Senator Burr. You will adapt it. Thank you.
    Currently, the VA has targeted the construction of nine 
community-based outpatient clinics in North Carolina. We know 
the realities of the 2006 budget and how tight it is, and 
Senator Murray expressed the concern over our ability to 
service the entire population of needs that are out there.
    Share with me, if you can--it is of great interest, and I 
would expect each one of us to talk about projects in our given 
States. It is particularly alarming to me because we are the 
State with the fastest-growing veterans population in the 
country. And I think you and I probably both agree that is not 
a trend that is going to change in the next decade. Will you be 
able to fulfill that type of goal of nine new clinics?
    Dr. Perlin. Senator, thank you for the question.
    North Carolina does have the fastest growth rate that I am 
aware of. Clearly, the ability to bring on clinics is dependent 
on the budget.
    But part of serving veterans is not just building new 
clinics, it is using the resources that we have more 
efficiently to reach the veterans and use the facilities and 
resources that we do have in any situation, be it a new 
building, be it modernizing a building, be it new equipment. We 
make choices. All of us make choices, and our choices, we hope, 
are those that will serve the veterans best.
    And in North Carolina, we are working aggressively with a 
program called Advanced Clinic Access to try to make sure that 
our clinics and our physicians and nurses and pharmacists are 
all as efficient as possible so that the access is as good as 
possible for veterans, even in fast-growing States like North 
Carolina.
    Senator Burr. Last question, Mr. Chairman, if I can? I am 
sure you have been asked this. We will continue to ask it until 
we probably do the budget. Do you believe that the Veterans 
Health Administration will be able to accomplish its mission of 
providing health care to our Nation's veterans with the 
proposed 2006 budget?
    Dr. Perlin. The budget as proposed, with all the policies 
and the value of those policies, would work. If certain 
policies are not enacted, I think the Secretary would have to 
reconsider how we make adjustments to make sure that we do our 
job of meeting the mission.
    Senator Burr. Thank you, Dr. Perlin.
    Mr. Chairman, I encourage all of our colleagues to quickly 
move this nomination. Thank you.
    Chairman Craig. Richard, thank you.
    Doctor, I think you have heard a common theme of concern 
amongst all of us, and that is, of course, adequate resources 
to accomplish your mission, to sustain the quality of health 
care that we have built inside your system that you administer 
and will continue to.
    I had three marvelous young soldiers in my office today. 
One has lost all of his eyesight in Iraq. One has lost two 
legs. The other one has lost one leg. And they are in 
transition and doing remarkably well. In fact, those who had 
lost their limbs had taken a leave from skiing to be in my 
office today to lobby me about some new approaches for 
transitional funding and insurance for them and their families 
as their colleagues and buddies go through similar experiences.
    I thought at the time--I looked at one young man walking 
out of my office with a tremendous stride, but he had a 
prosthesis underneath that pant leg. You couldn't see it. You 
could hardly tell it. It appeared to be seamless, but if he 
hadn't had those long pants on, it would have been obvious.
    I think that is the thing that concerns me the most in our 
search for seamlessness. Sometimes Government looks whole when 
you look at the suit. But when you start taking off the suit, 
all of a sudden you find that there are pieces under there that 
don't really fit or don't communicate or aren't coordinated.
    And we have held several hearings. We will continue to 
pursue this very aggressively and openly, those relationships 
between DOD and veterans and Social Security, for that matter, 
for certain needs and others.
    In that, resource coordination is going to be tremendously 
valuable. My guess is there will never be enough resource. But 
having said that, I will continue to pursue with you something 
that the Senator from Vermont talked about, Medicare 
subvention--an opportunity, a resource. If it works, if we can 
make it work. It is obviously moving dollars from one pot to 
another pot. It is Federal dollars, but still, at the same 
time, it is a potential resource.
    I had a fascinating visit last night with the chief 
executive of Tri-Care West. And the work they are doing, they 
talked about the potential opportunity to have a relationship 
with the Veterans Administration for their particular clients 
as it relates to veterans, and that is something that I will 
pursue with them and ultimately with you.
    Again, how do you create seamlessness in relationships, and 
how do you blend resources where oftentimes there is tremendous 
rigidity to do so for institutional bias or because of the law? 
And we will search those out over time as they become obvious 
to us and as we can work with you to do so.
    I know that one of the fears I always heard with Medicare 
subvention was, well, gee, if Medicare starts paying, then 
Congress will back off from their obligation to the Veterans 
Administration. I don't sense that. And if we do it right, as 
you have said, there is an efficiency in the quality of care 
now being delivered by veterans health care that might actually 
save a few dollars here and there. And that is a tremendously 
positive approach.
    We know the efficiencies and prescriptions and 
pharmaceuticals that have, as a result of doing it right, 
getting it down, repeating it on a daily basis, scope, size, 
magnitude, and therefore, savings as a result. Those are all 
very positive accomplishments.
    So my guess is this will not be your last journey to 
Capitol Hill. We will anticipate your presence here as needed, 
as you have promised, and I know you will deliver on. And when 
you can't come to see us, I will come see you, as I am sure 
others of our colleagues will.
    There isn't one person in this room or one Member of the 
U.S. Senate that is not fully Committed to the service and the 
effective relationships that need to be developed for the 
benefit of our veterans.
    Do either of my colleagues have further questions that they 
would want to ask?
    Senator Salazar.
    Senator Salazar. Mr. Chairman, I have just one more 
question if you will let me.
    Chairman Craig. Please proceed.
    Senator Salazar. In my State of Colorado--I am sure this is 
the same reality in other States--there are concerns about 
State nursing homes. In my State, the President's proposed 
budget essentially would have required the closing of most of 
our State veterans nursing homes. And because of the work of 
the Senate and the budget resolution, I think it was $410 
million that were added to help with some of these services.
    My question to you, Dr. Perlin, is how do you foresee 
moving forward with respect to these nursing homes that would 
have been so affected by the President's proposals?
    Dr. Perlin. Thank you, Senator, for that question. And 
first, let me note that I appreciate the sentiment of this 
Committee on that proposal. And I had the privilege of meeting 
recently with the State directors of Veterans Affairs. I met 
with the directors of the nursing homes, and what I want to 
reaffirm, what I want to assure, is that VA absolutely supports 
the State Veterans Homes. They are an invaluable resource for 
an aging population. They do a phenomenal service, and they do 
provide that service very efficiently.
    So I foresee working with those State Homes more 
progressively to make sure that we can together meet the needs 
of veterans who will benefit from those services.
    Senator Salazar. Thank you, Mr. Chairman. And I have no 
further questions.
    Chairman Craig. Senator, thank you very much.
    Again, Dr. Perlin, thank you for being with us this 
morning. As my colleague Senator Akaka said, we will move as 
quickly and as expeditiously as we possibly can to change your 
status from acting to official.
    Dr. Perlin. Thank you, sir.
    Chairman Craig. The Committee record will remain open for a 
short period of time for any additional questions that might 
want to be asked, at least through the balance of the day. And 
of course, I am confident that you will respond quickly to 
those.
    Again, thank you very much, and the hearing will stand 
adjourned.
    [Whereupon, at 11:18 a.m., the hearing adjourned.]
  

                                  
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