[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                    LEGISLATIVE HEARING ON VETERANS 
                         HEALTHCARE LEGISLATION

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 26, 2008

                               __________

                           Serial No. 110-95

                               __________

       Printed for the use of the Committee on Veterans' Affairs

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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine            JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South     HENRY E. BROWN, Jr., South 
Dakota                               Carolina
HARRY E. MITCHELL, Arizona           JEFF MILLER, Florida
JOHN J. HALL, New York               JOHN BOOZMAN, Arkansas
PHIL HARE, Illinois                  GINNY BROWN-WAITE, Florida
SHELLEY BERKLEY, Nevada              MICHAEL R. TURNER, Ohio
JOHN T. SALAZAR, Colorado            BRIAN P. BILBRAY, California
CIRO D. RODRIGUEZ, Texas             DOUG LAMBORN, Colorado
JOE DONNELLY, Indiana                GUS M. BILIRAKIS, Florida
JERRY McNERNEY, California           VERN BUCHANAN, Florida
ZACHARY T. SPACE, Ohio               STEVE SCALISE, Louisiana
TIMOTHY J. WALZ, Minnesota
DONALD J. CAZAYOUX, Jr., Louisiana

                   Malcom A. Shorter, Staff Director

                                 ______

                         SUBCOMMITTEE ON HEALTH

                  MICHAEL H. MICHAUD, Maine, Chairman

CORRINE BROWN, Florida               JEFF MILLER, Florida, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
PHIL HARE, Illinois                  JERRY MORAN, Kansas
SHELLEY BERKLEY, Nevada              HENRY E. BROWN, Jr., South 
JOHN T. SALAZAR, Colorado            Carolina
VACANT                               VERN BUCHANAN, Florida

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
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                            C O N T E N T S

                               __________

                             June 26, 2008

                                                                   Page
Legislative Hearing on Veterans Healthcare Legislation...........     1

                           OPENING STATEMENTS

Chairman Michael Michaud.........................................     1
    Prepared statement of Chairman Michaud.......................    13
Hon. Shelley Berkley.............................................     6
    Prepared statement of Congresswoman Berkley..................    13
Hon. John T. Salazar, prepared statement of......................    14

                               WITNESSES

U.S. Department of Veterans Affairs, Gerald M. Cross, M.D., 
  FAAFP, Principal Deputy Under Secretary for Health, Veterans 
  Health Administration..........................................     8
    Prepared statement of Dr. Cross..............................    18

                                 ______

Paralyzed Veterans of America, Carl Blake, National Legislative 
  Director.......................................................     2
    Prepared statement of Mr. Blake..............................    14
Veterans of Foreign Wars of the United States, Christopher 
  Needham, Senior Legislative Associate, National Legislative 
  Service........................................................     3
    Prepared statement of Mr. Needham............................    16

                       SUBMISSIONS FOR THE RECORD

American Legion, Joseph L. Wilson, Deputy Director, Veterans 
  Affairs and Rehabilitation Commission, statement...............    19
American Veterans (AMVETS), Raymond C. Kelley, National 
  Legislative Director, statement................................    20
Disabled American Veterans, Adrian M. Atizado, Assistant National 
  Legislative Director, statement................................    21
Miller, Hon. Jeff, Ranking Republican Member, and a 
  Representative in Congress from the State of Florida, statement    22
National Association of Veterans' Research and Education 
  Foundations, Barbara F. West, Executive Director, statement....    23

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Request for Additional Views on H.R. 6366 and Draft 
    Legislation:
    Hon. Michael H. Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs, to Carl Blake, National 
      Legislative Director, Paralyzed Veterans of America, 
      requesting views on H.R. 6366, and Discussion Draft 
      relating to employment of psychologists by the Department 
      of Veterans Affairs, letter dated July 2, 2008, and PVA 
      response letter dated July 8, 2008.........................    26
    Hon. Michael H. Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs, to Dennis Cullinan, 
      National Legislative Director, Veterans of Foreign Wars 
      (VFW), requesting views on H.R. 6366, and Discussion Draft 
      relating to employment of psychologists by the Department 
      of Veterans Affairs, letter dated July 2, 2008, and VFW 
      response...................................................    28
    Hon. Michael H. Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs, to Hon. James B. Peake, 
      M.D., Secretary, U.S. Department of Veterans Affairs, 
      requesting Administration views on H.R. 6366, and 
      Discussion Draft relating to employment of psychologists by 
      the Department of Veterans Affairs, letter dated July 2, 
      2008 [AS OF JANUARY 12, 2009, THE VA FAILED TO PROVIDE THE 
      ADMINISTRATION VIEWS ON THE TWO BILLS.]....................    29
    Hon. Michael H. Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs, to Raymond Kelley, 
      Legislative Director, AMVETS, requesting views on H.R. 
      6366, and Discussion Draft relating to employment of 
      psychologists by the Department of Veterans Affairs, letter 
      dated July 2, 2008, and AMVETS response dated July 8, 2008.    30
    Hon. Michael H. Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs, to Joe Violante, 
      Legislative Director, Disabled American Veterans (DAV), 
      requesting views on H.R. 6366, and Discussion Draft 
      relating to employment of psychologists by the Department 
      of Veterans Affairs, letter dated July 2, 2008, and DAV 
      response dated July 8, 2008................................    31


                    LEGISLATIVE HEARING ON VETERANS

                         HEALTHCARE LEGISLATION

                              ----------                              


                        THURSDAY, JUNE 26, 2008

             U.S. House of Representatives,
                            Subcommittee on Health,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:10 a.m., in 
Room 334, Cannon House Office Building, Hon. Michael Michaud 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Michaud, Berkley, and Salazar.

             OPENING STATEMENT OF CHAIRMAN MICHAUD

    Mr. Michaud. The hearing will now come to order. I 
apologize for the delay. With the July work period coming up, 
Members are in other Committees for markups.
    But I would like to thank everyone for coming today. 
Today's legislative hearing is an opportunity for the veterans 
service organizations (VSOs), the U.S. Department of Veterans 
Affairs (VA), and other interested parties to provide their 
views on and discuss draft legislation within the 
Subcommittee's jurisdiction in a clear and orderly process.
    I do not necessarily agree or disagree with the draft bills 
before us today, but I believe that this is an important part 
of the legislative process and encourage an open and frank 
discussion about the drafts before us today.
    We have four drafts before us today. The first draft bill 
would expand VA's authority to provide mental health treatment 
for family members.
    The second draft bill would prohibit the collection of 
copayments from catastrophically disabled veterans.
    The third draft would authorize nonprofit research and 
education corporations in the Department of Veterans Affairs.
    And the fourth draft would establish seven consolidated 
patient accounting centers to facilitate third-party collection 
in the Department of Veterans Affairs.
    I understand that the fourth draft I mentioned was not 
ready until yesterday, so I do not expect our witnesses to have 
prepared statements on this bill. We would, however, appreciate 
if the witnesses could provide their views on this bill for the 
record.
    And I look forward to hearing the views of our witnesses on 
the draft legislation before us.
    [The prepared statement of Chairman Michaud appears on
p. 13.]
    Without any further ado, why don't we start? We have two 
witnesses on our first panel, Carl Blake, who is the National 
Legislative Director of Paralyzed Veterans of America (PVA), 
and Christopher Needham, who is the Senior Legislative 
Associate for the Veterans of Foreign Wars of the United States 
(VFW).
    So I want to thank both of you for coming here today and we 
will start with Mr. Blake.

   STATEMENTS OF CARL BLAKE, NATIONAL LEGISLATIVE DIRECTOR, 
PARALYZED VETERANS OF AMERICA; AND CHRISTOPHER NEEDHAM, SENIOR 
 LEGISLATIVE ASSOCIATE, NATIONAL LEGISLATIVE SERVICE, VETERANS 
              OF FOREIGN WARS OF THE UNITED STATES

                    STATEMENT OF CARL BLAKE

    Mr. Blake. Thank you, Mr. Chairman.
    On behalf of Paralyzed Veterans of America, I would like to 
thank you for the opportunity to testify today on the draft 
legislation.
    As you mentioned, we will be happy to submit additional 
comments on the bill that came out last night.
    In accordance with the recommendations of the Independent 
Budget for fiscal year 2009, PVA strongly supports the draft 
legislation that would prohibit the VA from collecting certain 
copayments from veterans who are catastrophically disabled. 
This issue has the greatest impact on PVA members.
    The current VA healthcare system allows veterans who have a 
nonservice-connected catastrophic disability, such as spinal 
cord injury, and who have incomes above median tested levels to 
enroll in Priority Group 4. Congress granted these 
catastrophically disabled veterans this higher priority for 
healthcare enrollment because of the unique nature of their 
complex disabilities and in recognition of the specialized 
services that only the VA healthcare system can provide.
    However, being enrolled in Priority Group 4 does not 
necessarily exempt PVA members and other catastrophically 
disabled veterans from the burden copayments impose. Those PVA 
members with nonservice-connected disabilities, who because of 
their incomes, would otherwise be classified a Priority Group 7 
or 8 can be enrolled in Priority Group 4 but are still subject 
to the copayments associated with 7s and 8s.
    PVA members go to the VA because there is no other system 
in the country that provides the level and quality of spinal 
cord injury care offered by the VA. Because of the nature of 
their disability, they require a host of pharmaceuticals, 
equipment, devices, and supplies to function on a daily basis.
    The hardship created by a catastrophic injury or disease is 
unique and devastating to the veteran and the family who may be 
responsible for his or her care. At a time when the veteran is 
in need of specialized assistance to regain some independence 
and quality of life, the financial burden of medical bills 
should be lifted.
    PVA also strongly supports the ``Veterans Nonprofit 
Research and Education Corporations Enhancement Act.'' The 
purpose of this legislation is to modernize and clarify the 
existing statutory authority for VA affiliated, nonprofit 
research and education corporations or NPCs.
    This bill will allow the NPCs to fulfill their full 
potential in supporting VA research and education, which 
ultimately results in improved treatment and high-quality care 
for veterans while ensuring VA and Congressional competence in 
NPC management.
    PVA has been a strong supporter of the NPCs since their 
inception, recognizing that they benefit veterans by increasing 
the resources available to support the VA research program and 
to educate VA healthcare professionals.
    We urge expeditious passage of this bill so that veterans 
may benefit even more from the enhancements in operational 
capabilities and oversight that this bill provides.
    Chairman Michaud, Ms. Berkley, again I would like to thank 
you for the opportunity to testify. I look forward to working 
with you and the Subcommittee to see that these bills get moved 
forward. And I would be happy to answer any questions that you 
might have.
    Thank you.
    [The prepared statement of Mr. Blake appears on p. 14.]
    Mr. Michaud. Thank you, Mr. Blake.
    Mr. Needham.

                STATEMENT OF CHRISTOPHER NEEDHAM

    Mr. Needham. Chairman Michaud, Members of the Subcommittee, 
thank you for the opportunity to testify today. The 2.3 million 
members of the Veterans of Foreign Wars appreciate the chance 
to comment on the important draft bills under consideration.
    The first draft would exempt catastrophically disabled 
veterans in Priority 4 from having to pay copayments for their 
healthcare. The VFW strongly supports this.
    The voting delegates to our National Convention have 
approved Resolution Number 639, which calls for this exemption.
    These veterans have a long list of specialized needs and VA 
is uniquely suited to care for them. With their ability to work 
impaired, they often lack other forms of health insurance as 
well as the financial means to pay for the intensive care they 
require.
    The VA confers a special status on them by enhancing their 
enrollment to protect their eligibility for care, but VA fails 
to acknowledge this status when it comes to charging 
copayments.
    With special care copayments at $50.00 per visit, it does 
not take too long before these men and women are suffering 
financial burdens of hundreds of dollars.
    Approving this bill is the right thing to do as it 
eliminates an unfair financial penalty on a group of veterans 
who truly demonstrate need.
    A second draft bill would expand family access to 
counseling services, closing a loophole in the law, which 
prevents many families, especially those of Operation Enduring 
Freedom/Operation Iraqi Freedom (OEF/OIF) veterans, from 
receiving care.
    Under current law, which was written before the current 
conflicts began, VA is authorized to provide counseling and aid 
to families of veterans who lack a diagnosis of service 
connection only if the counseling begins while the veteran is 
hospitalized. The proposed changes of this bill would strike 
that requirement, freeing up VA to provide a broader range of 
services to more men and women and the families of those men 
and women.
    These families might not have access to VA's counseling 
services because they are waiting months for VA to provide a 
claims rating decision for their loved one or perhaps the 
veteran has not yet filed for benefits despite suffering from 
some illness or condition.
    The need for these expanded services is clear, but the 
prevalence of mental health issues among OEF/OIF veterans and 
the importance of a safe, stable family life for their 
recovery, these services are essential.
    From marital counseling to assistance with helping their 
loved one deal with the sometimes difficult transition, the 
range of services VA can provide would be of great benefit to 
the families of any recently separated servicemember.
    But it is also important because these stresses and strains 
affect not just the veteran, but the families as well. The pain 
and emotions involved can be difficult and studies have shown 
increasing numbers of servicemembers and their families are 
facing marital difficulties and divorce.
    Expanding these services to more people would make a 
positive difference in the lives of our veterans and is the 
right thing to do for their families,who in their own way make 
a valuable contribution to the war effort.
    The third bill under consideration today involves VA's 
nonprofit research corporations. NPCs help VA conduct research 
and education and they assist with fund raising, especially 
from public and private services that VA otherwise would not 
have access to.
    The changes proposed by this bill would ultimately make 
more funds available for critical research purposes while 
tightening up control and oversight of the program in 
accordance with the recent VA Inspector General report.
    We believe that these changes would greatly benefit the 
VA's research programs and America's veterans and we are 
pleased to offer our support for it.
    Mr. Chairman, this concludes my testimony, and I would be 
happy to answer any questions you or the Members of the 
Subcommittee may have.
    [The prepared statement of Mr. Needham appears on p. 16.]
    Mr. Michaud. Thank you both for your testimony.
    Talking about looking at the mental health services bill, 
the repeated deployment of our veterans in OIF and OEF have 
created enormous strains on their families.
    What types of services do you think family members need 
most? We will start with Mr. Needham.
    Mr. Needham. Well, certainly as I said in the statement, 
divorce has become sort of an increasing problem. So marital 
counseling, sort of family counseling issues sort of dealing 
with the transition. How it affects the children as well.
    For example, when you were speaking of repeated 
deployments, there was testimony earlier before the Committee 
that talked about how repeated deployments sort of increases, 
greatly increases the chance of post traumatic stress disorder 
(PTSD). And obviously PTSD is going to affect not just the 
veteran but that family.
    So family and marital counseling are definitely one of the 
key things that needs to be done.
    Mr. Michaud. Mr. Blake.
    Mr. Blake. I would also suggest, Mr. Chairman, that some of 
the problems that the family members, spouses, and dependents 
or children face are not unlike some of the symptoms that many 
of the veterans have as it relates to PTSD or other mental 
health conditions.
    Families certainly deal with depression because of the 
strains that the soldiers' or the veterans' condition may place 
on the family and other types of symptoms that relate to that.
    I think there has been a lot of discussion about--I hate to 
say suicidal tendencies, but, you know, suicidal thoughts among 
veterans, and I do not think that that would necessarily be 
unique to veterans. I think you also find that when the burden 
of these mental health issues are weighed on the family that 
probably similar symptoms occur within the family members as 
well.
    I would also encourage the Subcommittee to look at, we have 
advocated for expanded caregiver assistance training for family 
members or even for nonfamily members who provide caregiver 
assistance to the most disabled veterans because we are finding 
that in many cases, particularly among the most severely 
disabled veterans, their family becomes their caregiver.
    And I think through some sort of caregiver assistance 
program, they may be reimbursed as a caregiver, that we could 
also benefit these families.
    Mr. Michaud. And as you both know, PTSD and traumatic brain 
injury are the signature wounds of this war. Looking at the 
length of the war and what we are seeing, do you think the VA 
will need additional resources, funding, or personnel to 
execute this legislation and how much of an increase do you 
think they will need?
    Mr. Needham. I am not sure I can quantify the increase, but 
I think that the specific place where, at least the VFW has 
seen a dramatic need for increase in personnel is at the Vet 
Centers, particularly with the expansion of this family bill.
    If the number of family members who are going to receive 
care, and they primarily receive it through Vet Centers, is 
going to be increased, then personnel at the Vet Centers is 
going to increase as well.
    What we have seen, at least so far, is that Vet Centers for 
the most part are managing sort of with current staff levels. 
Certainly there are some cases where, you know, there are 
problems, but we have not necessarily seen any sort of long-
term waiting lines.
    But as services continue to expand, whether, you know, 
expansion of their current obligations, but also sort of as 
more and more numbers of returning servicemembers and their 
families actually access the current benefits afforded to them, 
the staff members are going to need to increase there as well.
    Mr. Michaud. Ms. Berkley, have any questions.
    Ms. Berkley. Yes, I do. Thank you. Actually, I have a 
written statement and then questions, if that is okay.
    Ms. Berkley. I know that Mr. Hare has been very concerned, 
as you know, and has been on the forefront of fighting for 
veterans' mental health needs and additional funding and 
access.
    Since he is not here, if I could ask a question on his 
behalf, and I think I would like to address it to Mr. Needham, 
but you are both welcome to answer it.
    In regards to OEF/OIF veterans who can receive care for up 
to 5 years, current law says that the VA may provide necessary 
family mental services.
    What would your thoughts be on changing this language to 
shall instead of may?
    Mr. Needham. That is certainly an interesting possibility. 
I do not think we would necessarily or obviously I do not think 
we would oppose it.
    The catch is, I think, the current system, the way it is 
now, the current language can work with proper oversight. I 
mean, certainly, you know, VA, I think, by and large has done a 
pretty good job lately with mental healthcare issues. But as 
you are well aware, in some cases, we have had to sort of drag 
them kicking and screaming.
    But as long as we have sort of proper oversight and 
continued oversight and continued leadership within VA to 
tackle these issues, I think finally now we realize the scope 
of the problems, then a change in the language might not be 
necessary.
    Ms. Berkley. Okay. Thank you for your candid remark.

           OPENING STATEMENT OF HON. SHELLEY BERKLEY

    Ms. Berkley. I was absolutely delighted to learn a few 
weeks ago that the Senate passed S. 2162, the ``Veterans Mental 
Health Improvement Act.'' I introduced a House companion to 
this bill.
    This essential legislation increases research on post 
traumatic stress disorder and substance use disorders by 
establishing at least six National Centers of Excellence on 
PTSD and substance use disorders. The bill is designed to focus 
on how PTSD and substance use disorders affect each other.
    These centers will offer comprehensive inpatient and 
residential treatment programs for our returning veterans 
diagnosed with PTSD and substance dependency.
    This bill also contains a provision to provide for a review 
of all residential mental health facilities and to honor Justin 
Bailey. And I appreciate Mr. Michaud's help with that.
    These provisions, which were also passed by the House in 
H.R. 5554, ``The Justin Bailey Substance Use Disorders 
Treatment And Prevention Action,'' are vital to ensure that our 
veterans receive quality care at these residential mental 
health facilities and to make sure that what happened to Justin 
does not happen to anyone else.
    And I can tell you in a conversation with Justin's father 
after the bill passed the House, there was not a dry eye in my 
office. He was so pleased and honored that his son's death may 
prevent the death of others. And that was very important to 
this family.
    The Senate amended S. 2162 to include a number of 
provisions to make it a package bill. Some other initiatives in 
the Senate package include establishing Epilepsy Centers of 
Excellence, reimbursements for veterans receiving emergency 
treatment in non-VA facilities, homeless veterans' issues, as 
well as providing counseling for families of veterans for 
nonservice-connected issues.
    This is a similar provision to one of the draft bills we 
are discussing today. I am hopeful that the House and the 
Senate will work together and get this important package to the 
President. And I, of course, needless to say, although this is 
a very supportive Committee and a wonderful Subcommittee 
Chairman, we are all going to support this, I am sure.
    Soon it will be 4th of July and we will all be home. Every 
4th of July, I go to our homeless veterans' shelter and help 
feed our homeless veterans and talk with them. So many of these 
homeless vets and mostly, at least in Las Vegas, Vietnam era 
veterans, so they are my contemporaries. While I was in 
college, they were in Vietnam. I am always amazed at how 
intelligent, how forthright, and how conversational they are. 
And I keep thinking if not for the grace of God go I.
    And I am very happy that this Committee, and this Nation, 
appreciate the needs of the veterans coming home and that they 
are not, or at least intentionally, being treated the way our 
veterans coming home from Vietnam were treated. I think it 
created a lasting schism in this country and created 
unnecessary pain for thousands and thousands of young men that 
were in Vietnam through no choice of their own and came home 
badly damaged. And this Nation failed to recognize the damage 
emotionally, mentally. And I am hoping that we can make it up 
to our Vietnam vets by helping the veterans that are coming 
back now.
    And thank you both for the extraordinary efforts that you 
have put forth to make sure that we are aware of the issues.
    Thank you.
    [The prepared statement of Congresswoman Berkley appears on 
p. 13.]
    Mr. Michaud. Mr. Salazar.
    Mr. Salazar. Well, thank you, Mr. Chairman.
    I just briefly wanted to thank you for your work on 
veterans' issues, both of you.
    I came in a little bit late. Did we discuss the bill that 
is actually introduced by Mr. Buyer to consolidate patient 
accounting centers?
    Mr. Blake. Mr. Salazar, we did not actually get the bill 
until late last night, so we have not really had a chance to 
review it. But I think and Mr. Needham also said that we would 
be glad to submit some comments after we have a chance to 
review the bill.
    Mr. Salazar. Okay. I just wanted your reaction to it. I do 
not know whether the bureaucracy is actually more simplified by 
doing this or if it becomes more cumbersome.
    I would really appreciate it if you could review that and 
take a look at it and give us an answer. Thank you.
    Thank you, Mr. Chairman.
    Mr. Michaud. Thank you very much, Mr. Salazar.
    I want to thank both of you once again for coming today. I 
look forward to your written comments on Mr. Buyer's draft 
proposal when it comes out. So, once again, thank you very 
much. I appreciate it.
    I would like to now hear from the second panel, Dr. Cross, 
who is the Principal Deputy Under Secretary for Health, who is 
accompanied by Walter Hall, who is the Assistant General 
Counsel to the Department of Veterans Affairs, and Gary Baker, 
who is the Chief Business Officer for the Veterans Health 
Administration (VHA).
    I want to welcome you three and look forward to hearing 
your comments. And without further ado, Dr. Cross.

  STATEMENT OF GERALD M. CROSS, M.D., FAAFP, PRINCIPAL DEPUTY 
  UNDER SECRETARY FOR HEALTH, VETERANS HEALTH ADMINISTRATION, 
 U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY WALTER A. 
   HALL, ASSISTANT GENERAL COUNSEL; AND GARY M. BAKER, CHIEF 
    BUSINESS OFFICER, VETERANS HEALTH ADMINISTRATION, U.S. 
                 DEPARTMENT OF VETERANS AFFAIRS

    Dr. Cross. Good morning, Mr. Chairman and Members of the 
Subcommittee, and thank you for inviting me here today to 
present the administration views on several bills that would 
affect the Department of Veterans Affairs programs that provide 
healthcare benefits and services.
    With me today are Walter Hall, Assistant General Counsel, 
and Gary Baker, Chief Business Officer of the VHA.
    I am pleased to provide the Department's views on the draft 
bills under consideration.
    Discussion draft one would amend current law to exempt 
catastrophically disabled, nonservice-connected veterans and 
zero percent service-connected veterans whose incomes place 
them in a copayment required status for VA inpatient and 
outpatient care.
    We recognize that the draft bill is intended to address any 
disproportionate financial burden that falls on these seriously 
ill and disabled veterans. Because their catastrophic 
disabilities are not service connected and because their 
incomes exceed VA's mean test for low-income veterans, they are 
not exempt from copayment requirements.
    We share the Subcommittee's concern that these severely 
disabled veterans not be subject to any undue financial burden 
as a result of the copayment obligations. However, we are still 
in the process of ascertaining these veterans' hospital and 
outpatient utilization rates and copayments.
    VA has not previously reported amounts and ranges of 
copayments by enrollment category. Once we collect and analyze 
all the necessary data, we will come back to the Subcommittee 
with a recommendation as to the need for this legislation. And 
until then, we request that the Subcommittee refrain from 
taking action on this draft bill.
    Discussion draft two would amend VA's authority to furnish 
counseling, training, and mental health services to immediate 
family members of veterans receiving VA treatment for a 
nonservice-connected disability.
    Currently all enrolled veterans other than those receiving 
outpatient care for nonservice-connected disabilities are 
eligible for these family support services to the extent they 
are necessary to the veteran's treatment.
    Veterans being treated for nonservice-connected 
disabilities are only eligible for these family support 
services when they are initiated during the veteran's 
hospitalization. The draft bill would make this group of 
veterans eligible for needed family support services similar to 
other veterans.
    VA supports this bill. An enrolled veteran is eligible for 
any needed medical treatment regardless of whether the 
condition is service connected and consistent with this 
principle that family support services should be based on the 
medical needs, not on inpatient status or the service 
connection designation.
    Importantly, these amendments could improve the treatment 
outcomes for the affected groups of veterans. We are still 
developing costs for this draft bill and we will submit them 
for the record as soon as possible.
    Discussion draft three would update the law applicable to 
VA's nonprofit research and education corporations. VA 
affiliated nonprofit research corporations are important to 
VA's overall research program because they provide flexible 
funding mechanisms for the administration of non-VA funds for 
the conduct of VA approved research.
    A provision of the discussion draft three would authorize a 
single corporation, nonprofit corporation to facilitate the 
conduct of research and education at more than one VA Medical 
Center.
    It would also make it clear that corporations may reimburse 
a VA laboratory for the preliminary cost it incurs before a 
research project has officially been approved by the Secretary.
    VA would also be authorized to reimburse corporations for 
costs incurred for the assignment of corporation employees to 
VA under ``Intergovernmental Personnel Act 1970.''
    Additionally, this draft bill would clarify that 
corporations may set fees for certain education and training 
programs they administer and retain those funds to offset 
program expenses.
    We support the provision of the draft bill that would 
authorize the establishment of new multi-center, nonprofit 
research corporations and the consolidation of existing single-
facility, nonprofit corporations into multi-facility ones. This 
offers the prospect of nonprofit corporation assistance in 
funding research projects to VA Medical Centers that are unable 
to support their own dedicated corporation.
    This provision would also provide the system with the tools 
needed to consolidate or close nonprofit corporations that are 
too small to institute proper internal controls without the 
loss of the funding support for VA research and education 
programs that the corporation provides.
    By requiring the Directors at all Medical Centers supported 
by a nonprofit corporation to sit on its Board of Directors, 
the provision provides this beneficial increased flexibility 
without sacrificing VA oversight.
    With respect to the draft bill's remaining provisions, we 
ask the Subcommittee to defer further action on this draft bill 
in order to give the Department an opportunity to address 
underlying structural issues and to formulate policy related to 
the governance and finance of the VA affiliated nonprofit 
research corporations.
    Specifically a Steering Committee, a Steering Committee has 
been chartered by the VHA Office of Research and Development to 
provide recommendations regarding governance, oversight, and 
finance issues related to the corporations by the end of the 
fiscal year.
    We will be happy to provide you with a copy of the final 
report and recommendations.
    Mr. Chairman, this concludes my prepared statement. I will 
be pleased to answer any questions.
    [The prepared statement of Dr. Cross appears on p. 18.]
    Mr. Michaud. Thank you very much, Dr. Cross.
    Dealing with the copayment issue, I know you are reviewing 
that as far as number of veterans in Priority Group 4. When 
will the report be complete dealing with Priority Group 4 
veterans?
    Dr. Cross. With the catastrophic provisions.
    Mr. Michaud. Yes.
    Dr. Cross. Our analysis on that is trying to do a better 
job of understanding what the individual veterans are 
experiencing with this program. We have average figures and we 
have some figures that we are not quite comfortable with yet 
that are preliminary, that we are still refining.
    I would really like to know what the spectrum of those 
costs are for veterans and what other sources of care and 
support that they have in terms of insurance and other 
assistance they receive based on higher income.
    Until we get that information, which I hope we can get 
toward the end of next week, and we will provide that for you.
    [As of January 12, 2009, the VA failed to provide the 
administration views on the two bills.]
    Mr. Michaud. Okay. Great. Looking at the mental health 
service for families, does the VA currently provide any of 
these counseling, training, or mental health services for 
family members outside of the Vet Centers?
    Dr. Cross. Yes, we do. These services are provided for the 
service-connected individuals and for the nonservice connected 
for inpatients where necessary in conjunction with the 
veteran's own treatment.
    This is really directed at helping the family understand 
and deal with and respond to the veteran's needs and whatever 
the illness or injury that the veteran has sustained. And we 
are doing that now.
    Mr. Michaud. Do you expect that the workload is going to 
increase and, if so, by how much and would you need additional 
staffing and resources to take care of the additional workload?
    Dr. Cross. I believe in our testimony we mentioned that we 
are still working on some of the data related to cost. But we 
think this is part of our mission to provide this.
    And, furthermore, the rule that makes it necessary to start 
the process only if the person is an inpatient does not really 
respond to the current way that we do medical care.
    So much more is being done for outpatients these days. 
Procedures that used to be done as inpatient are commonly done 
as outpatient circumstances. We need to move with the times and 
be able to provide that support for families without getting 
tangled up by that rule.
    Mr. Michaud. And my only concern is with what is happening 
in Iraq and Afghanistan and what we are seeing. And I agree 
that family members is a big component of taking care of the 
veterans. If you open up access in rural areas to include the 
family members, which I think is extremely important, then that 
is going to add an additional burden on the VA.
    And my concern is that I want to make sure that the VA has 
the staffing that it needs to take care of the men and women 
that need help. And when you look at the healthcare shortage, 
particularly in the mental health area, that could be 
problematic.
    Dr. Cross. Mr. Chairman, I think it is important that we 
clarify the limits on what this would really provide us. I will 
ask my associate, Mr. Hall.
    Mr. Hall. Yes, sir. This authority would be limited to 
providing training and counseling necessary to permit the 
family to assist or aid the veteran in his treatment. It does 
not authorize the Department to independently care for the 
family members.
    Mr. Michaud. But in that training and assistance, my 
concern is if you are going to do it, that you do it adequately 
and in a timely manner.
    Will there be additional staffing needs for that? Doctor 
are you are saying you can do it within existing resources?
    Dr. Cross. We are doing much of it with existing resources 
already. Plus we have expanded our mental health staffing quite 
a bit. In fact, tremendously. But as I said in my statement, we 
still need to look at the resource and cost issues just a bit 
more.
    Mr. Michaud. Okay. My last question is on the research 
provision. The Senate companion bill, S. 2926, has a provision 
that would authorize the nonprofit corporations to reimburse 
the VA Office of General Counsel for specialized legal services 
in regards to review and approval of certain research 
agreements.
    Is this provision necessary and, if so, can you explain why 
that provision is necessary?
    Dr. Cross. I will defer to Mr. Hall for that.
    Mr. Hall. Sir, we are currently providing those services to 
the research corporations. I think the research corporations 
are continuously increasing the amount of work they do, the 
number of agreements that they are entering into, and it is the 
responsibility of the Office of General Counsel to review 
those.
    I think there is a concern with the attention they get and 
the speed with which we are able to address them. We are able 
to at this time to get to them all. I think there is always 
some concern that we could do them more quickly with more 
resources.
    Mr. Michaud. Thank you.
    Ms. Berkley.
    Ms. Berkley. I just want to thank all of you for being 
here, and I have no additional questions.
    Mr. Michaud. Mr. Salazar.
    Okay. Once again, I want to thank you, Dr. Cross, and Mr. 
Baker and Mr. Hall for accompanying Dr. Cross, and for coming 
here this morning. We look forward to working with you as we 
move forward on these draft proposals.
    Does the Counsel for the Minority side have any questions?
    If there are no further questions, this hearing is 
adjourned. Thank you.
    [Whereupon, at 10:46 a.m., the Subcommittee was adjourned.]


















                            A P P E N D I X

                              ----------                              

        Prepared Statement of Hon. Michael H. Michaud, Chairman,
                         Subcommittee on Health
    I would like to thank everyone for coming today.
    Today's legislative hearing is an opportunity for the VSOs, the VA 
and other interested parties to provide their views on and discuss 
draft legislation within the Subcommittee's jurisdiction in a clear and 
orderly process.
    I do not necessarily agree or disagree with the draft bills before 
us today, but I believe that this is an important part of the 
legislative process that will encourage frank discussions and new 
ideas.
    We have four draft bills before us today. These draft bills:

      Expand VA's authority to provide mental health treatment 
for family members
      Prohibit the collection of copayments from 
catastrophically disabled veterans
      Authorize non-profit research and education corporations 
in the Department of Veterans Affairs
      Establish seven ``Consolidated Patient Accounting 
Centers'' to facilitate 3rd party collections in the Department of 
Veterans Affairs

    I understand that the fourth bill that I mentioned (on the 
establishment of Consolidated Patient Accounting Centers) was not ready 
until yesterday and I do not expect our witnesses to have prepared 
statements on this bill. We would, however, appreciate it if the 
witnesses would provide their views on this bill for the record.
    I look forward to hearing the views of our witnesses on the draft 
legislation before us.

                                 
              Prepared Statement of Hon. Shelley Berkeley,
         a Representative in Congress from the State of Nevada
    Mr. Chairman,
    I am pleased to know that a few weeks ago the Senate passed S. 
2162, the Veterans Mental Health Improvements Act. I introduced a House 
companion to this bill, H.R. 4053. This essential legislation increases 
research on post-traumatic stress disorder (PTSD) and substance use 
disorders.
    By establishing at least six national centers of excellence on PTSD 
and substance use disorders, the bill is designed to focus on how PTSD 
and substance use disorders affect each other. These centers will offer 
comprehensive inpatient and residential treatment programs for our 
returning heroes diagnosed with PTSD and substance dependency.
    This bill also contains a provision to provide for a review of all 
residential mental health facilities and to honor Justin Bailey. These 
provisions which were also passed by the House in H.R. 5554, the Justin 
Bailey Substance Use Disorders Treatment and Prevention Act, are vital 
to ensure that our veterans receive quality care at these residential 
mental health facilities and to make sure that what happened to Justin 
does not happen to anyone else.
    The Senate amended S. 2162 to include a number of provisions to 
make it a package bill. Some other initiatives in the Senate package 
include establishing epilepsy centers of excellence, reimbursements for 
veterans receiving emergency treatment in non-VA facilities, homeless 
veteran issues, as well as providing counseling for families of 
veterans for non-service connected issues. This is a similar provision 
to one of the draft bills we are discussing today.
    I am hopeful that the House and the Senate will work together to 
get this important package to the President and I encourage Members of 
the Committee to support this initiative.

                                 
              Prepared Statement of Hon. John T. Salazar,
        a Representative in Congress from the State of Colorado
    Thank you Mr. Chairman,
    My district has one of the largest veteran populations in the state 
of Colorado.
    Rural health care, homelessness, improving research are constant 
priorities.
    I am interested in hearing the discussion on the mental healthcare 
for families.
    As a veteran I know the impact that military service has on 
families.
    Long deployments have also been hurting families in rural districts 
like mine where many people are farmers and small business owners.
    It is important that we address the total impact that extended 
tours are having on our servicemen and women.
    I also look forward to reviewing how we can better support 
research.
    Veterans deserve research that is prepared for tomorrow's 
challenges.
    Mr. Chairman, I thank you for the opportunity to discuss these 
bills and make sure that they serve the many unique needs of our 
veterans.
    It is an honor to serve the heroes that have served our Nation.

                                 
                   Prepared Statement of Carl Blake,
      National Legislative Director, Paralyzed Veterans of America
    Chairman Michaud, Ranking Member Miller, Members of the 
Subcommittee, on behalf of Paralyzed Veterans of America (PVA) I would 
like to thank you for the opportunity to testify today on the proposed 
legislation that is meant to enhance the health care services available 
to veterans. We appreciate the efforts of this Subcommittee to address 
the varying needs of the men and women who are currently serving in the 
War on Terror as well as those men and women who served during past 
conflicts.
   Prohibition of Co-payments for Catastrophically Disabled Veterans
    In accordance with the recommendations of The Independent Budget 
for FY 2009, PVA strongly supports the draft legislation that would 
prohibit the Department of Veterans Affairs (VA) from collecting 
certain copayments from veterans who are catastrophically disabled. 
This issue has the greatest impact on PVA members. The current VA 
health care system allows veterans who have a non-service connected 
catastrophic disability, such as spinal cord injury, and who have 
incomes above means tested levels to enroll in Priority Group 4. 
Because of their designation as catastrophically disabled any PVA 
members not eligible for health care in Priority Group 1 can enroll in 
the system in Priority Group 4. Congress granted these catastrophically 
disabled veterans this higher priority for health care enrollment 
because of the unique nature of their complex disabilities and in 
recognition of the specialized services that only the VA health care 
system can provide.
    However, being enrolled in Priority Group 4 does not necessarily 
exempt PVA members and other catastrophically disabled veterans from 
the burden copayments impose. Those PVA members with non-service 
connected disabilities, who because of their incomes would otherwise be 
classified as Priority Group 7 or 8, can be enrolled in Priority Group 
4 but are still subject to Priority Group 7 or 8 copayments. PVA 
members go to the VA because there is no other system in the country 
that provides the level and quality of spinal cord injury care. Over 80 
percent of our members use the VA for all or part of their care. 
Because of the nature of their disabilities they require a host of 
pharmaceuticals, equipment, devices and supplies to function on a daily 
basis. As stated in The Independent Budget for FY 2009:

          The hardship [created] by a catastrophic injury or disease is 
        unique and devastating to the veteran and the family who may be 
        responsible for his or her care. At a time when the veteran is 
        in need of specialized assistance to regain some independence 
        and quality of life, the financial burden of medical bills 
        should be lifted. Any veteran determined by VA to be 
        catastrophically disabled and placed in the priority group 4 
        should be afforded the same benefits as if rated as entitled to 
        Aid & Attendance to eliminate medical/prescription co-pays and 
        provide assistance with travel for that care.

    PVA looks forward to working with the Subcommittee to ensure that 
those veterans who are already struggling with the hardships associated 
with a catastrophic disability are relieved of this additional burden. 
We believe that it is simply the right thing to do.
    Counseling for Family Members of Veterans Receiving Non-Service 
                          Connected Treatment
    The proposed legislation would expand the authority of the VA to 
provide counseling for family members of veterans receiving non-service 
connected medical treatment. Currently, the VA provides consultation, 
counseling and training to family members of veterans being treated by 
the VA for a service-connected disability when those services for the 
family members support the veteran's treatment.
    Likewise, the VA is authorized to provide consultation, counseling 
and training for a veteran's family, if the veteran has a non-service 
connected disability as long as the veteran is receiving hospital care 
and the services were initiated during the veteran's hospitalization 
and if their continuation on an outpatient basis is essential to permit 
the discharge of the veteran from the hospital. The proposed 
legislation would eliminate the criteria for hospital care and expand 
the authority of the VA to provide these essential services to family 
members.
    PVA supports this proposal. We have, along with the co-authors of 
The Independent Budget, called for continued support for family 
services to benefit the spouses and dependents who are dealing with the 
struggles faced by the veteran. However, it is imperative that adequate 
resources be devoted to these family support services if Congress 
chooses to expand this authority.
     The ``Veterans Nonprofit Research and Education Corporations 
                           Enhancement Act''
    PVA strongly supports the ``Veterans Nonprofit Research and 
Education Corporations Enhancement Act.'' The purpose of this 
legislation is to modernize and clarify the existing statutory 
authority for VA-affiliated nonprofit research and education 
corporations (NPCs). This bill will allow the NPCs to fulfill their 
full potential in supporting VA research and education, which 
ultimately results in improved treatments and high quality care for 
veterans, while ensuring VA and congressional confidence in NPC 
management.
    Since passage of P.L. 100-322 in 1988 (codified at 38 U.S.C. 
Sec. 7361-7368), the NPCs have served as an effective ``flexible 
funding mechanism for the conduct of approved research and education'' 
performed at VA medical centers across the Nation. NPCs provide VA 
medical centers with the advantages of on-site administration of 
research by nonprofit organizations entirely dedicated to serving VA 
researchers and educators, but with the reassurance of VA oversight and 
regulation. During 2007, 84 NPCs received nearly $230 million and 
expended funds on behalf of approximately 5,000 research and education 
programs, all of which are subject to VA approval and are conducted in 
accordance with VA requirements.
    NPCs provide a full range of on-site research support services to 
VA investigators, including assistance preparing and submitting their 
research proposals; hiring lab technicians and study coordinators to 
work on projects; procuring supplies and equipment; monitoring the VA 
approvals; and a host of other services so the principal investigators 
can focus on their research and their veteran patients.
    Beyond administering research projects and education activities, 
when funds permit, these nonprofits also support a variety of VA 
research infrastructure expenses. For example, NPCs have renovated 
labs, purchased major pieces of equipment, staffed animal care 
facilities, funded recruitment of clinician-researchers, provided seed 
and bridge funding for investigators, and paid for training for 
compliance personnel.
    Although the authors of the original statute were remarkably 
successful in crafting a unique authority for VA medical centers, 
differing interpretations of the wording and the intent of Congress, 
gaps in NPC authorities that curtail their ability to fully support VA 
research and education, and evolution of VA health care delivery 
systems have made revision of the statute increasingly necessary in 
recent years. This legislation contains revisions that will resolve all 
of these and will allow the NPCs to better serve VA research and 
education programs while maintaining the high degree of oversight 
applied to these nonprofits.
    The legislation reinforces the idea of ``multi-medical center 
research corporations'' which provides for voluntary sharing of one NPC 
among two or more VA medical centers, while still preserving their 
fundamental nature as medical center-based organizations. Moreover, 
accountability will be ensured by requiring that at a minimum, the 
medical center director from each facility must serve on the NPC board. 
This authority will allow smaller NPCs to pool their administrative 
resources and to improve their ability to achieve the level of internal 
controls now required of nonprofit organizations.
    The legislation also clarifies the legal status of the NPCs as 
private sector, tax exempt organizations, subject to VA oversight and 
regulation. It also modernizes NPC funds acceptance and retention 
authorities as well as the ethics requirements applicable to officers, 
directors and employees and the qualifications for board membership. 
Moreover, it clarifies and broadens the VA's authority to guide 
expenditures.
    We would urge the Subcommittee to reconsider one substantive change 
that the Subcommittee's draft bill makes to its Senate companion, S. 
2926. That is, deletion of the provision that would authorize the NPCs 
to reimburse the VA Office of General Counsel for specialized legal 
services in regard to review and approval of certain research 
agreements. While we would agree that the VA Office of General Counsel 
is obligated and funded to provide these services, the funds generated 
by these reimbursements would provide it with additional training and 
staffing resources to meet the high demand for these services which we 
understand may be obtained exclusively from VA attorneys. We also 
understand that the foundations are in favor of making these 
reimbursements and that because in most cases the cost may be passed 
through to sponsors in the form of a legal review fee, there would be 
little or no impact on the funding available for the conduct of the 
research itself. In our view, this reimbursement authority would be 
appropriate and PVA would concur with adding the necessary provisions 
to the Subcommittee's discussion draft.
    PVA has been a strong supporter of the NPCs since their inception, 
recognizing that they benefit veterans by increasing the resources 
available to support the VA research program and to educate VA health 
care professionals. We urge expeditious passage of this proposed bill 
so that veterans may benefit even more from the enhancements in 
operational capabilities and oversight that this bill provides.
    Chairman Michaud and Ranking Member Miller, we appreciate the 
emphasis you have placed on providing for the needs of the men and 
women who have served and continue to serve in harm's way. We look 
forward to working with you to ensure that the best quality health care 
services are made available to them.
    Thank you again for the opportunity to testify. I would be happy to 
answer any questions that you might have.

                                 
               Prepared Statement of Christopher Needham,
      Senior Legislative Associate, National Legislative Service,
             Veterans of Foreign Wars of the United States
    Mr. Chairman and Members of the Subcommittee:
    On behalf of the 2.3 million men and women of the Veterans of 
Foreign Wars of the U.S. (VFW) and our Auxiliaries, I would like to 
thank you for the opportunity to provide our views on the draft bills 
under consideration at today's hearing. All three would make meaningful 
changes in the law, improving the quality of health care this Nation's 
veterans receive at the Department of Veterans Affairs (VA). We urge 
quick passage of all three.
                     Draft Bill, Family Counseling
    The VFW is pleased to support this legislation, which would expand 
the counseling services that VA provides to family members of sick and 
disabled servicemembers.
    Currently, VA provides limited services to family members, under 
certain circumstances. This bill would strike two of the requirements 
for veterans not yet rated as service-connected--that the family 
members begin counseling while the veteran is still hospitalized, and 
that the services are necessary for the veteran to adjust outside the 
hospital. Striking these two requirements would greatly expand the 
range of services VA could provide, and would be of great benefit to 
veterans, especially those returning from the front lines of Iraq and 
Afghanistan.
    This section of the law was crafted before the current conflicts 
began, and it needs to be updated to reflect the changes in the needs 
of veterans. In the case of a returning servicemember who is in need of 
care, many are not rated as service connected because either they have 
not yet applied for benefits, or because of the length of time it takes 
VA to produce a decision on a claim. This same veteran may also not be 
hospitalized for their condition, instead receiving limited outpatient 
treatments. In both cases, the support VA can provide to the veteran's 
family is limited.
    We have seen with this conflict--especially with mental health 
issues--that families are at the forefront of providing care and easing 
the servicemember's transition back into civilian life. Their spouses 
and loved ones can provide a safe, stable and supportive network, and 
their involvement can only improve the effectiveness of the treatment 
that veterans receive.
    Beyond that, the stresses and strains of frequent deployments and 
the transition period affect families as well. The impact of the 
conflict extends beyond the deserts of Iraq and mountains of 
Afghanistan, right into each family's front door. Numerous studies have 
shown that increasing numbers of separating servicemembers are facing 
marital problems and difficulties at home, at a time when the stability 
of family is often so essential.
    Expanding the range of services we provide to the families of our 
veterans is the right thing to do for all. This bill would make a 
meaningful difference in the lives of thousands of men and women, and 
we urge its quick passage.
   Draft Bill, Eliminating Co-Payments for Catastrophically Disabled 
                                Veterans
    The VFW is happy to offer our strong support for this draft 
legislation, which would exempt catastrophically disabled veterans in 
enrollment priority category four from having to pay hospital or 
nursing home copayments. This bill is clearly the right thing to do as 
it eliminates an unfair financial penalty on a group of veterans who 
demonstrate true need.
    These catastrophically disabled veterans were placed in category 
four to protect their enrollment status. This group of veterans has a 
long list of special needs, many of which VA is uniquely suited to 
address. For great numbers of them, VA is their safety net. With their 
inability to work, they often lack other forms of health care 
insurance, but also the financial means to pay for the intensive health 
care services their conditions require. If VA is there to, in part, 
provide care for those who have the greatest need, then changing this 
policy is entirely justified.
    The nature of their disabilities means that these men and women 
require intensive and lifelong care. VA acknowledges their unique needs 
by providing the specialized services to them, but at the same time, VA 
fails to recognize their special circumstances by charging them 
copayments.
    The VFW has had a longstanding resolution in support of this 
concept. Most recently, the voting delegates to our 108th National 
Convention approved Resolution 639, calling for this exemption. I would 
note that our resolution also requests that this exemption be extended 
to those low-income, pension-eligible veterans in category five. They, 
too, have a demonstrated need for VA health care services and finances 
can often be a deterrent to receiving their earned health care. We 
would ask the Subcommittee to consider this issue.
       Draft Bill, Nonprofit Research and Education Corporations
    The VFW is pleased to offer our support for the draft bill on 
nonprofit research and education corporations. The changes this bill 
would make would strengthen and improve VA's nonprofit research 
corporations (NPCs). NPCs help VA to conduct research and education and 
assist in the raising of funds for VA's essential projects from sources 
VA otherwise might not have access to, to include private and public 
funding sources. NPCs also provide administrative support and services, 
freeing up VA researchers to focus on their projects and patients.
    The legislation would allow for the creation of multi-medical 
center NPCs. This would let several smaller facilities pool their 
resources to improve management or staffing. We believe that this would 
streamline the administration of these organizations, reducing 
overhead, but also tightening up their control, especially in 
accordance with the recent VA Inspector General report.
    This bill would also reaffirm that NPCs are 501(c)(3) organizations 
that are not owned or controlled by the federal government. This is 
important to ensure that they are able to receive funding from all 
sources and to clarify their purpose in accordance with various state 
laws and private foundation regulations.
    Ultimately, the bill would make more funds available for critical 
research purposes. It would also improve the accountability and 
oversight of these corporations, requiring more information in their 
annual reports and periodic audits of their activities. Together, these 
changes would greatly benefit America's veterans.
    We strongly support this legislation, and urge the Subcommittee to 
report it favorably.
    Mr. Chairman, this concludes my testimony. I would be happy to 
answer any questions that you or the Members of the Subcommittee may 
have. Thank you.

                                 
          Prepared Statement of Gerald M. Cross, M.D., FAAFP,
              Principal Deputy Under Secretary for Health,
  Veterans Health Administration, U.S. Department of Veterans Affairs
    Good Morning Mr. Chairman and Members of the Subcommittee:
    Mr. Chairman, thank you for inviting me here today to present the 
Administration's views on several bills that would affect Department of 
Veterans Affairs (VA) programs that provide veteran healthcare benefits 
and services. With me today are Walter Hall, Assistant General Counsel, 
and Gary Baker, Chief Business Officer, Veterans Health Administration. 
I am pleased to provide the Department's views on the 3 draft bills 
under consideration by the Subcommittee.
Discussion Draft #1. Catastrophically Disabled Veterans' Exemption from 
        Certain Copayment Requirements
    Discussion Draft #1 would amend current law to exempt a veteran who 
is catastrophically disabled from having to pay copayments that would 
otherwise apply to inpatient and outpatient services that the veteran 
receives through the Department.
    Mr. Chairman, we recognize that the draft bill is intended to 
address any disproportionate financial burden that falls on these 
seriously ill and disabled veterans because their very complex medical 
needs compel their high use of the VA healthcare system. The draft bill 
is targeted at the approximately 25,000 veterans who because of their 
conditions rely on VA healthcare services more than any other veteran-
population enrolled in our system. Because their catastrophic 
disabilities are not service-connected and because their incomes exceed 
VA's means test level for low-income veterans, they are not exempt from 
the copayment requirements.
    We share the Subcommittee's concern that these severely disabled 
veterans not be subject to an undue financial burden as a result of the 
copayment obligations that apply to their receipt of inpatient and 
outpatient care. However, we are still in the process of ascertaining 
these veterans' hospital and outpatient utilization rates and 
copayments. VA has not previously tracked amounts and ranges of 
copayments by enrollment category. Without that data, we cannot 
determine the extent of their copayment liability or project the 
estimated loss in revenue that would be associated with this bill's 
enactment. Once we have had an opportunity to collect and analyze all 
of the necessary data, we will come back to the Subcommittee with a 
recommendation as to the need for this legislation or any other 
approach that the administration believes, based on the confirmed data, 
might be an appropriate means of protecting these veterans from undue 
copayment burden. Until then, we therefore request that the 
Subcommittee refrain from taking action on this draft bill.
Discussion Draft #2. Counseling, Training, and Mental Health Services 
        for Immediate Family Members of Veterans Receiving Treatment 
        for a Non-Service Connected Disability
    Discussion Draft #2 would amend VA's authority to furnish 
counseling, training, and mental health services to immediate family 
members of veterans receiving VA treatment for a non-service connected 
disability. Currently, all enrolled veterans other than those who are 
receiving outpatient care for non-service connected disabilities are 
eligible for these family support services to the extent they are 
necessary to the veterans' treatment. Veterans being treated for non-
service connected disabilities are only eligible for these family 
support services only to the extent they are necessary in connection 
with the veteran's treatment and if they were initiated during the 
veteran's hospitalization and their continued provision on an 
outpatient basis is deemed essential to permit the discharge of the 
veteran from the hospital. The draft bill would eliminate the 
requirements that the services be initiated during the veteran's 
hospitalization and deemed essential to permit the veteran's discharge, 
thus making the eligibility criteria the same for all veterans.
    VA supports Discussion Draft #2. Over the last decades, VA has 
successfully transformed its delivery of healthcare services from an 
inpatient-based model to an outpatient-based model. This has 
significantly increased our efficiencies, increased veterans' access to 
care, and aligned our system with the healthcare industry at large. 
However, as a result, some families have become ineligible for 
counseling, training, and other family support services that are 
essential to the veterans' treatment simply because their loved ones' 
care was for a non-service connected disability that was provided on an 
outpatient basis. The draft bill would eliminate vestiges of an old 
system that no longer have any place in today's VA healthcare system. 
An enrolled veteran is eligible for any needed medical treatment, 
regardless of whether the condition is service-connected. It is 
incongruent to still base eligibility for needed family support 
services on the service-connected nature of the veteran's disability. 
As long as the family support services are necessary in connection with 
the veteran's treatment, it should be irrelevant whether the disability 
under treatment is service-connected and whether it was provided in 
hospital. Importantly, these amendments could improve the treatment 
outcomes for the affected group of veterans.
    We are still developing costs for this draft bill and will submit 
them for the record as soon as possible.
Discussion Draft #3. Veterans Nonprofit Research and Education 
        Corporations Enhancement Act of 2008
    Discussion Draft #3 would update the law applicable to VA's 
nonprofit research and education corporations (corporations). VA-
affiliated nonprofit research corporations are critical to VA's overall 
research program because they provide flexible funding mechanisms for 
the administration of non-VA funds for the conduct of VA-approved 
research.
    A provision of Discussion Draft #3 would authorize a single 
corporation to facilitate the conduct of research and education at more 
than one VA medical center. It would also make it clear that 
corporations may reimburse a VA laboratory for the preliminary costs it 
incurs before a research project has been officially approval by the 
Secretary. VA would also be authorized to reimburse corporations for 
costs incurred for the assignment of corporation employees to VA under 
the Intergovernmental Personnel Act 1970 (IPA).
    Additionally, this draft bill would clarify that corporations may 
set fees for certain education and training programs they administer 
and retain those funds to offset program expenses.
    We support the provision of the draft bill that would authorize the 
establishment of new multi-center non-profit research corporations 
(NPCs) and the consolidation of existing single facility NPCs into 
multi-facility NPCs. This offers the prospect of NPC-assistance in 
funding research projects to VA medical centers (VAMCs) that are unable 
to support their own dedicated corporation. This provision would also 
provide the system with the tools needed to consolidate or close NPCs 
that are too small to institute proper internal controls without the 
loss of the funding support for VA research and education programs that 
the NPCs provide. By requiring the Director of all VAMCs supported by 
an NPC to sit on its board of directors, the provision provides this 
beneficial increased flexibility without sacrificing VA oversight.
    With respect to the draft bill's remaining provisions, we ask the 
Subcommittee to defer further action on this draft bill in order to 
give the Department an opportunity to address underlying structural 
issues and to formulate policy related to the governance and finance of 
the VA affiliated non-profit research corporations. A steering 
Committee has been chartered by the Veterans Health Administration 
Office of Research and Development, to provide recommendations 
regarding governance, oversight, and finance issues related to the 
corporations by the end of the fiscal year. We will be happy to provide 
you with a copy of their final report and recommendations.
    Mr. Chairman, this concludes my prepared statement. I would be 
pleased to answer any questions you or any of the Members of the 
Subcommittee may have.

                                 
                     Statement of Joseph L. Wilson,
          Deputy Director, Veterans Affairs and Rehabilitation
                      Commission, American Legion
    Mr. Chairman and Members of the Subcommittee:
    Thank you for this opportunity to present The American Legion's 
view on the three pieces of draft legislation being considered by the 
Subcommittee today. The American Legion commends this Subcommittee for 
holding a hearing to discuss these very important and timely issues.
Prohibition on Collection of Copayments from Veterans Catastrophically 
        Disabled
    This bill seeks to prohibit the Secretary of Veterans Affairs from 
collecting certain copayments from veterans who are catastrophically 
disabled. Veterans who are categorized by the Department of Veterans 
Affairs (VA) as Priority Group Four are also the catastrophically 
disabled. These veterans depend on the VA health care system as their 
primary source of health care support.
    The American Legion, in this case, believes VA should discontinue 
and further disallow the collection of copayments and other relative 
fees as this unconscionable action is warrantless when measured against 
the sacrifices veterans made in serving this Nation. We hereby urge the 
enactment of this bill, which will alleviate the added fiscal strain 
veterans and their families are enduring.
Veterans Nonprofit Research and Education Corporations Enhancement Act 
        of 2008
    This bill seeks to modify and update the provisions of law relating 
to nonprofit research and education corporations, and for other 
purposes.
    The American Legion has no position on this piece of legislation.
Provision of Counseling for Family Members of Veterans Receiving Non 
        Service-Connected Treatment
    This bill seeks to expand the authority of the Secretary of 
Veterans Affairs to provide counseling for family members of veterans 
receiving nonservice-connected treatment. During site visits to various 
VA Medical Centers, Vet Centers, and Community Based Outpatient Clinics 
(CBOCs), The American Legion has recognized many gaps in services to 
families of veterans; mainly due to the absence of legislation which 
would allow complete counseling of the veteran's loved ones throughout 
the VA Medical System.
    After all, the family, who began as a support system, may 
potentially suffer as a result of illnesses and injuries sustained by 
the veteran during his or her deployment in theater. If lack/absence of 
counseling is the result, this in turn weakens the family unit; 
subsequently the veteran may suffer further ordeals, which renders the 
veteran's transition futile.
    The American Legion therefore urges this Subcommittee to pass this 
legislation, which would allow the provision of adequate counseling for 
family members of veterans receiving nonservice-connected treatment. We 
also urge DoD and VA to enhance and further create family support 
programs to improve the quality-of-life for all veterans and their 
families.
    Again, thank you Mr. Chairman for allowing The American Legion this 
opportunity to present its views on the aforementioned issues. We look 
forward to working with the Subcommittee to help increase and improve 
access to quality care for our Nation's veterans.

                                 
                Prepared Statement of Raymond C. Kelley,
       National Legislative Director, American Veterans (AMVETS)
    Chairman Michaud, Ranking Member Miller, thank you for holding this 
important hearing today. AMVETS is pleased to provide our views on 
pending health care legislation.
    AMVETS wholly supports draft legislation that would prohibit the 
collection of copayments from veterans who are catastrophically 
disabled. As co-authors of the Independent Budget, AMVETS believes that 
the hardship endured by a catastrophic injury or disease is devastating 
to the veterans and the family left responsible for care. Waiving 
copayments for these veterans and their families can help alleviate the 
financial burden assumed by the need for specialized assistance. 
Veterans enrolled in health care eligibility category 4 should be 
exempt from all health-care copayments and fees.
    AMVETS supports draft legislation that would grant greater 
authority of the Secretary of Veterans Affairs to provide counseling 
for family members of veterans receiving non-service connected 
treatment. Currently, the Department of Veterans Affairs provides 
counseling and training to family members only if the veteran is 
receiving hospital care or if the services were rendered during the 
veteran's hospitalization and continuation is necessary in order to 
permit discharge from the medical facility. This legislation would 
remove those two stipulations. AMVETS supports any family services, 
including counseling, that will help alleviate problems experienced by 
veterans.
    AMVETS also supports the ``Veterans Nonprofit Research and 
Education Corporations Enhancement Act of 2008.'' This legislation 
seeks to modify and update provisions relating to nonprofit research 
and education corporations operating within the Department of Veterans 
Affairs. Currently these research and education corporations provide 
on-site administration of research entirely dedicated to VA researchers 
and educators. They prepare and submit research proposals, hire lab 
technicians and study coordinators to work on projects, procure 
supplies and equipment, and monitor VA approvals. Having these 
corporations benefits veterans by increasing the resources available to 
support VA research programs and education. They serve as a vital tool 
to improving the quality of healthcare being rendered to veterans in VA 
facilities.
    This legislation provides for voluntary sharing of each corporation 
among two or more VA medical centers, or ``multi-medical center 
research corporations''. Accountability is maintained by requiring a 
center director from each facility serves on the Board of Directors. It 
also clarifies the legal status of these corporations as a private 
501(c)(3) overseen by the VA.
    Different interpretation of the language and intent of Congress in 
creating these corporations has necessitated clarification through this 
bill. Gaps in authority restrict their capacity to fully support VA 
research and education. This bill will resolve these matters and 
strengthen the service to VA research.
    Mr. Chairman, this concludes my testimony. I will be happy to 
answer any questions regarding our opinion on these matters.

                                 
                    Statement of Adrian M. Atizado,
  Assistant National Legislative Director, Disabled American Veterans
    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting the Disabled American Veterans (DAV) to 
testify at this important legislative hearing of the Committee on 
Veterans' Affairs' Subcommittee on Health. DAV is an organization of 
1.3 million service-disabled veterans, and devotes its energies to 
rebuilding the lives of disabled veterans and their families.
    You have requested testimony today on three draft bills primarily 
focused on healthcare services for veterans under the jurisdiction of 
the Veterans Health Administration, Department of Veterans Affairs 
(VA). This statement submitted for the record reviews our positions on 
all of the proposals before you today, and we offer them for your 
consideration.
Draft Bill to Expand VA Authority to Provide Consultation, Counseling, 
        Training and Mental Health Services for Family Members of 
        Veterans Receiving Nonservice-Connected Treatment
    As this Subcommittee is aware of the importance of families in the 
recovery of disabled veterans, VA is able to provide limited services 
to family members, which includes members of the immediate family, the 
legal guardian of a veteran, or the individual in whose household the 
veteran certifies an intention to live. In recent years, VA has 
included families in mental health evaluations, participation in 
treatment planning, and collaboration in monitoring treatment outcomes. 
Such services are provided to families only when their involvement is 
included in a treatment plan designed to benefit the veteran.
    Section 1782(a) of title 38, United States Code, provides, in 
general, that the family members of a veteran being treated for a 
service-connected disability may receive consultation, counseling, 
training and mental health services in support of the veteran's 
treatment. Section 1782(b) pertains to veterans receiving hospital care 
for a non-service connected disability. In this instance, VA is 
authorized to provide those same services to family members if the 
services were initiated during the veteran's hospitalization and their 
continuation on an outpatient basis is essential to permit the 
discharge of the veteran from the hospital.
    The draft bill for consideration in today's hearing would seek to 
eliminate the aforementioned criteria, and to conform section 1782 to 
the provision of services more consistent with medical necessity by 
expanding VA's authority to provide mental health services for family 
members of veterans receiving treatment for nonservice-connected 
ailments. While DAV has no adopted resolution from our membership 
pertaining to this measure, it appears beneficial because some veterans 
may have a pending claim for service connection of the disability for 
which he or she is seeking VA care. Other veterans may not be aware 
that they may have a meritorious service-connected claim to a 
disability for which they are receiving nonservice-connected treatment.
    While the measure would provide needed care to disabled veterans, 
we urge this Subcommittee to ensure additional workload be met with 
appropriate resources in light of VA testimony that, ``funding family 
readjustment services wholly unrelated to the veteran's readjustment 
needs would divert medical care funds needed for veterans' health 
care.'' Moreover, such resources should allow VA to be the primary 
provider of such services and where, on occasion, non-VA providers 
would be necessary for the provision of care, it is essential that such 
providers have the proper training and that VA provide the appropriate 
oversight.
Draft Bill to Prohibit VA From Collecting Certain Copayments From 
        Veterans Who Are Catastrophically Disabled
    In conjunction with DAV's national resolution from our membership 
calling for legislation to repeal all copayments for military retirees 
and veterans' medical services and prescriptions, and as part of The 
Independent Budget (IB), the DAV fully supports this draft bill, one 
that meets the IB recommendation that veterans designated by VA as 
being catastrophically disabled for the purpose of enrollment in health 
care eligibility category 4 should be exempt from all health care 
copayments and fees.
The Veterans Nonprofit Research and Education Corporations Enhancement 
        Act of 2008 (Draft bill)
    This measure would modernize and enhance oversight and reporting 
requirements of nonprofit research and education corporations that 
support VA biomedical research by managing extramural grant funds made 
available to VA principal investigators. It would also provide new 
guidance and policy requirements for the operation of these 
corporations within the VA research program, and would be responsive to 
recent recommendations for improved accountability within some of these 
corporations made by the VA Inspector General.
    The basic statutory authority for these corporations was enacted in 
1988, so this bill would be the first significant amendment to that 
statute. If enacted, this bill would authorize the corporations to 
fulfill their full potential in supporting VA biomedical research and 
education, the results of which would improve treatments and promote 
higher quality care for veterans, while underwriting VA and 
Congressional confidence in these corporations' management of public 
and private funds.
    We note one significant difference between the Subcommittee's draft 
bill and its Senate companion bill. S. 2926 would authorize the VA 
research and education foundations to reimburse the VA Office of 
General Counsel for certain specialized legal services rendered to the 
foundations in connection with establishing and administering research 
and education agreements entered into by the foundations with other 
partners in conducting VA research. This provision is absent from this 
Subcommittee's legislation. We understand that the foundations need 
these services, and would be required to pay private attorneys for 
them, and that the Office of General Counsel, in providing these 
services, has expended considerable resources in aiding these 
foundations to execute and administer research and education 
agreements. We also understand that the foundations are in agreement on 
such reimbursements. It would seem equitable that the foundations be 
authorized to reimburse those costs to the Office of General Counsel, 
and thus, DAV would have no objection to these Senate provisions being 
added into this bill.
    While DAV has no adopted resolution on this particular legislation, 
DAV is a strong supporter of a robust VA biomedical research and 
development program, and we believe enactment of this bill would be in 
that program's best interest. Therefore, DAV would have no objection to 
enactment of this bill.
    Mr. Chairman, again, DAV appreciates the Subcommittee's interest in 
these issues, and we appreciate the opportunity to present the DAV's 
views, which we hope will be helpful.

                                 
       Statement of Hon. Jeff Miller, Ranking Republican Member,
                         Subcommittee on Health
    Thank you, Mr. Chairman.
    I would like to welcome our colleague from Florida, Vern Buchanan 
to the Subcommittee on Health. Having served 6 years in the Air 
National Guard, Vern brings with him strong military values and 
experience that will be an asset to our Subcommittee and our Nation's 
veterans.
    Mr. Chairman, we have worked well together this year to move 
legislation for the benefit of our veterans, and I look forward to 
continuing to work in a bipartisan manner as we consider four draft 
legislative proposals today.
    One of the bills before us today would prohibit collecting 
copayments from catastrophically disabled veterans enrolled in priority 
group 4. There are about 25,000 veterans in Priority Group 4 who have 
been determined to be catastrophically disabled and are still subject 
to copay requirements. This legislation would ensure that copay rules 
do not apply to any Priority Group 4 veterans.
    A second bill would expand VA's authority to provide services to 
family members of veterans seeking services for non-service connected 
conditions.
    We will also examine legislation to clarify and update provisions 
of law authorizing VA-affiliated Nonprofit Research and Education 
Corporations (NPCs). In 2006, VA's NPCs reported over $230 million in 
revenues to support VA-approved research and education activities. 
These NPCs work in coordination with VA Medical Centers, and it is 
important that we provide effective oversight to ensure the proper 
management of these corporations.
    Additionally, a fourth bill, H.R. 6366, the Veterans Revenue 
Enhancement Act of 2008 was recently added to the Subcommittee's 
agenda, and provided to our witnesses yesterday. The Government 
Accountability Office (GAO) reported this month that problems in 
billing processes at VA continue to impair VA's ability to maximize 
collections from third-party insurance companies. They estimated that 
1.2 to 1.4 billion dollars are going uncollected. GAO did note, 
however, that a congressionally mandated Mid-Atlantic Consolidated and 
Revenue Improvement Demonstration Project increased cash collections 
using effective cycle management tools and process standardization. 
This demo collected an additional seven million dollars. The bill would 
require VA within 5 years to establish not more that seven consolidated 
patient accounting centers modeled after this successful Mid-Atlantic 
Consolidated Patient Accounting Center in Asheville, North Carolina. I 
understand that given the short time to respond our witnesses may not 
be able to comment on this legislation today. However, I would 
appreciate and request that your views be provided for the record 
following the hearing.

                                 
                     Statement of Barbara F. West,
         Executive Director, National Association of Veterans'
                   Research and Education Foundations
    Chairman Michaud and Members of the Committee on Veterans Affairs 
Subcommittee on Health, thank you for the opportunity to present a 
statement on behalf of the National Association of Veterans' Research 
and Education Foundations (NAVREF) in regard to the Discussion Draft of 
the ``Veterans Nonprofit Research and Education Corporations 
Enhancement Act of 2008.''
    NAVREF is the membership organization of the 84 VA-affiliated 
nonprofit research and education corporations (NPCs) originally 
authorized by Congress under Public Law 100-322, and currently codified 
at sections 7361 through 7368 of the United States Code. NAVREF's 
mission is to promote high quality management of the NPCs and to pursue 
issues at the Federal level that are of interest to its members. NAVREF 
accomplishes this mission through educational activities for its 
members and interactions and advocacy with agency and congressional 
officials. Additional information about NAVREF is available on its Web 
site at www.navref.org.
Background about the NPCs
    In 1988, Congress allowed the Secretary of the Department of 
Veterans Affairs to authorize ``the establishment at any Department 
medical center of a nonprofit corporation to provide a flexible funding 
mechanism for the conduct of approved research and education at the 
medical center.'' [38 U.S.C. Sec. 7361(a)] At this time, 84 NPCs 
provide their affiliated VA Health Care Systems and medical centers 
with a highly valued means of administering non-VA Federal research 
grants and private sector funds in support of VA research and 
education. The fundamental purpose of the nonprofits is to serve 
veterans by supporting VA research and education to improve the quality 
of care that veterans receive.
    Last year, the NPCs collectively administered $230 million with 
expenditures that supported nearly 5,000 VA-approved research and 
education programs. These nonprofits are dedicated solely to supporting 
VA and veterans. This includes providing VA with the services of nearly 
2,500 without compensation (WOC) research employees who work side-by-
side with VA-salaried employees, all in conformance with the VA 
background, security and training requirements such appointments 
entail.
    Beyond administering research projects and education activities 
these nonprofits support a variety of VA research infrastructure and 
administrative expenses. They have provided seed and bridge funding for 
investigators; staffed animal care facilities; funded recruitment of 
clinician researchers; paid for research administrative and compliance 
personnel; supported staff and training for institutional review boards 
(IRBs); and much more.
Legislation Would Enhance and Clarify NPC Authorities
    The Discussion Draft heading correctly states that the purpose is 
to ``modify and update'' the 1988 statute, but it also modernizes and 
clarifies the statute after nearly 20 years of experience under its 
current terms. The NPCs have already proven themselves to be valued and 
effective ``flexible funding mechanisms for the conduct of approved 
research,'' and this legislation will further enhance their value to 
VA.
    The objectives of this legislation are consistent with the findings 
in the recently released VA Office of Inspector General (OIG) review of 
five NPCs and VHA's oversight of them. VHA is working hard to address 
the shortcomings in oversight that the OIG identified. And NAVREF and 
the NPCs are working equally hard to ensure that NPCs have appropriate 
controls over funds and equipment (including strengthening the 
documentation for all transactions), and that all NPC officers, 
directors and employees are certifying their awareness of the 
applicable Federal conflict of interest regulations. While NAVREF 
firmly believes that NPC boards and administrative employees strive to 
be conscientious stewards of NPC funds, NAVREF thanks the OIG for its 
thorough review of those five NPCs and for bringing to light these 
areas in need of improvement.
    It is noteworthy for the Subcommittee that the OIG report cited no 
actual misuse of funds or instances of conflicts of interest, dual 
compensation of Federal employees or fraud. However, we take very 
seriously the OIG finding that these NPCs nonetheless did not have 
adequate controls over some of the funds they manage. We believe that 
two major provisions in the Discussion Draft directly address this 
finding.
    First, section 2 allows formation of ``multi-medical center 
research corporations'' (MMCRCs). That is, two or more VA medical 
centers may share one NPC, subject to board and VA approval, while 
preserving their fundamental nature as medical center-based 
organizations. This will allow interested VA facilities with small 
research programs to join with larger ones. Or several smaller 
facilities may pool their resources to support management of one NPC 
with funds and staffing adequate to ensure an appropriate level of 
internal controls, including segregation of financial duties.
    Second, the last item in section 5(a) of the Discussion Draft 
addresses the OIG criticism by broadening VA's ability to guide NPC 
expenditures. The only constraint on VA is that such guidance must be 
consistent with other Federal and state requirements as specified in 
laws, regulations, executive orders, circulars and directives--of which 
there are many--applicable to other 501(c)(3) organizations. The 
purpose of this limitation is to avoid the possibility of imposing on 
NPCs conflicting requirements or reducing their ability to remain 
independent ``flexible funding mechanisms.''
    The Discussion Draft provides a number of other welcome 
enhancements to the NPC authorizing statute.

      Section 4(b)(2) of the draft legislation broadens the 
qualifications for the two mandatory non-VA board members beyond 
familiarity with medical research and education. This will allow NPCs 
to use these board positions to acquire the legal and financial 
expertise needed to ensure sound governance and financial management.
      Section 4(c) of the draft legislation also deletes the 
overly broad stipulation in the current statute that these non-VA board 
members may not have ``any financial relationship'' with any for-profit 
entity that is a source of funding for VA research or education. This 
absolute prohibition conflicts with regulations applicable to Federal 
employees with respect to conflicts of interest, which are invoked for 
all NPC directors and employees in section 7366(c)(1) of title 38, 
United States Code. Unlike the deleted provision, Federal conflict of 
interest regulations provide means of recusal as well as de minimus 
exceptions. Additionally, the prohibition has been interpreted to apply 
to any individual who has ever accepted compensation or reimbursement 
from a for-profit sponsor of VA research for purposes unrelated to VA 
research, thereby eliminating many otherwise desirable and qualified 
individuals from serving on NPC boards.
      Section 5(a) also increases the efficiency of NPC 
administration of funds generated by educational activities. This 
clause allows NPCs to charge registration fees for the education and 
training programs they administer, and to retain such funds to offset 
program expenses or for future educational purposes. However, it also 
explicitly sustains the existing prohibition against NPCs accepting 
fees derived from VA appropriations.
      Additionally, section 5(a) of the draft legislation 
includes authority for VA to reimburse NPCs for the salary and benefits 
of NPC employees loaned to VA under Intergovernmental Personnel Act 
(IPA) assignments conducted in accordance with section 3371 of title 5, 
United States Code. This provision responds to recent OIG questions 
asking whether such reimbursements are allowable and permits VA to 
continue to benefit from this efficient and cost-effective mechanism to 
acquire the temporary services of skilled research personnel.

    We note that the Discussion Draft omits the clauses contained in 
the Senate companion bill, S. 2926, that would provide NPCs with 
authority to reimburse the Office of General Counsel (OGC) for legal 
services related to review and approval of Cooperative Research and 
Development Agreements (CRADAs), the form of agreement used to 
establish terms and conditions for industry-funded studies performed at 
VA medical centers and administered by NPCs. While we agree that OGC is 
already obligated to review these agreements without reimbursement, the 
funds generated under this provision would help OGC to staff Regional 
Counsel offices to accommodate the substantial workload these 
agreements entail and to provide training for VA attorneys in CRADA 
requirements and related VA policies. The NPCs support making these 
reimbursements. We encourage the Subcommittee to include the necessary 
provisions in the next version of the Discussion Draft.
    The proposed legislation also contains a number of useful 
clarifications of NPC status and purposes.

      Section 2(c) codifies--without changing--the legal status 
of the NPCs as state-chartered, independent organizations exempt from 
taxation under section 501(c)(3) of the Internal Revenue Service (IRS) 
code and subject to VA oversight and regulation. This clause codifies 
the congressional intent, previously expressed in the House report that 
accompanied the original NPC authorizing statute (H. Rept. 100-373), 
that nonprofits established under this authority would not be 
corporations controlled or owned by the Government. As a result, this 
draft legislation resolves longstanding differences of opinion among 
stakeholders, overseers and funding sources about the legal status of 
NPCs.
      Section 3(a)(1) of the draft legislation establishes that 
in addition to administering research projects and education 
activities, NPCs may support ``functions related to the conduct of 
research and education.'' This resolves differences of opinion about 
the allowability of NPC expenditures that support VA research and 
education generally, such as purchase of core research equipment used 
by many researchers for many projects, and enhances the value of NPCs 
to VA facilities.
      Section 5(a) ascertains that all NPC-administered 
research projects must undergo ``scientific'' rather than ``peer'' 
review. This change recognizes that peer review is not necessary or 
appropriate for all research projects administered by NPCs. However, 
the draft legislation leaves in place the overarching requirement for 
VA approval and the medical center's Research and Development Committee 
remains in a position to determine on a case-by-case basis whether a 
project also requires peer review as a condition of approval for NPC 
administration.

    In addition to these enhancements and clarifications, this draft 
legislation reorganizes the NPC authorizing statute to put all 
provisions regarding their establishment and status in one section; 
describes their purposes in another; and gathers in one section the 
clauses enumerating their powers. Many other revisions are largely 
technical and conforming amendments.
Proposed Legislation Preserves Measures Providing Oversight of NPCs
    The proposed legislation statute makes no changes in VA's power to 
regulate and oversee the NPCs. Further, NPC records remain fully 
available to the Secretary and his designees; to the Inspector General; 
and to the Government Accountability Office (GAO). Likewise, NPCs are 
still required to undergo an annual audit by an independent auditor in 
accordance with the sources--Federal or private--and amount of its 
prior year revenues, and they must submit to VA the resulting audit 
report along with detailed financial information and descriptions of 
accomplishments.
    In the wake of the Sarbanes-Oxley Act and new Federal Accounting 
Standards Board (FASB) requirements and auditing standards, even the 
most basic form of nonprofit audit has become an effective means for 
assessing an organization's financial controls. Additionally, as more 
NPCs assume responsibility for Federal grants, a higher percentage of 
NPC funds are subject to Generally Accepted Government Accounting 
Standards (GAGAS) and OMB Circular A-133, the most rigorous and 
comprehensive level of auditing standards. These audits are 
comprehensive and provide a sound framework for examining an 
organization's controls over funds as well as compliance with program 
requirements.
Conclusion
    In conclusion, NAVREF urges the Subcommittee to approve the 
Discussion Draft for introduction and enactment at the earliest 
possible opportunity. The NPCs are already a highly efficient means to 
maximize the benefits to VA of externally funded research conducted in 
VA facilities, ably serving to facilitate research and education that 
benefit veterans. Additionally, they foster vibrant research 
environments at VA medical centers, enhancing VA's ability to recruit 
and retain clinician-investigators and other talented staff who in turn 
apply their knowledge to state-of-the-art care for veterans.
    Twenty years after the VA-NPC public-private partnership was first 
authorized by Congress, and co-incident with the expiration of 
authority to establish new NPCs, this is a timely opportunity to update 
and clarify the NPCs' enabling legislation. This draft legislation will 
accomplish those objectives. Experience working within the current 
statute has brought to light its many strengths, but also areas that 
will benefit from modification, enhancement and updating, particularly 
in light of the increasing complexity of both research and nonprofit 
compliance. We believe enactment of the proposed legislation, 
preferably including authority for NPCs to reimburse OGC for certain 
legal services, will allow NPCs to better achieve their potential to 
support VA research and education while ensuring VA and congressional 
confidence in their management.
    NAVREF thanks the Subcommittee and its staff members for their work 
on the Discussion Draft. We look forward to working with the Members of 
the Subcommittee and the Senate Committee on Veterans Affairs toward 
enactment of the final legislation. Please direct any questions you may 
have to NAVREF Executive Director Barbara West at 301-656-5005 or 
[email protected].

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                       July 2, 2008

Carl Blake
National Legislative Director
Paralyzed Veterans of America
801 18th Street, NW
Washington, D.C. 20006-3517

Dear Mr. Blake:

    Thank you for your testimony at the House Committee on Veterans' 
Affairs Subcommittee on Health legislative hearing that was held on 
July 26, 2008.
    To ensure that the Subcommittee has Paralyzed Veterans of America 
(PVA)'s views on all of the bills that were discussed at this hearing, 
I request that you please provide a statement for the record on the 
following two bills that are enclosed with this letter:

    1.  H.R. 6366, Veterans Revenue Enhancement Act of 2008
    2.  Discussion Draft, To Amend Title 38, United States Code, 
relating to employment of psychologists by the Department of Veterans 
Affairs

    I would appreciate receiving your statement by July 8, 2008
    Again, thank you for your testimony. I look forward to reading your 
comments on these additional bills. If you have any questions or 
concerns, please don't hesitate to contact Chris Austin, Executive 
Assistant to the Subcommittee on Health at (202) 225-9154.

            Sincerely,

                                                 Michael H. Michaud
                                                           Chairman

                                 ______
                                 
                                      Paralyzed Veterans of America
                                                     Washington, DC
                                                       July 8, 2008

Honorable Michael H. Michaud
Chairman
House Committee on Veterans' Affairs
Subcommittee on Health
335 Cannon House Office Building
Washington, DC 20515

Dear Chairman Michaud:

    On behalf of Paralyzed Veterans of America (PVA), I would like to 
thank you again for the opportunity to testify before the House 
Committee on Veterans' Affairs, Subcommittee on Health at the hearing 
held on June 26, 2008. We appreciate your efforts to continue to 
improve the health care services available to the men and women who 
have honorably served and are currently serving.
    Following the hearing, you submitted an additional inquiry 
regarding two additional proposed bills--H.R. 6366, the ``Veterans 
Revenue Enhancement Act'' and a draft bill regarding employment of 
psychologists at the Department of Veterans Affairs (VA)--that were not 
received by PVA prior to the hearing. We would like to offer our views 
on these two bills. Our statement for the record on the two proposed 
bills is attached.
    PVA looks forward to working with you and Ranking Member Miller to 
ensure that the most appropriate enhancements are made to the VA health 
care system. Thank you again.

            Sincerely,

                                                         Carl Blake
                                      National Legislative Director

                                 ______
                                 
          H.R. 6366, the ``Veterans Revenue Enhancement Act''
    PVA has no objection to the proposed bill that would require the 
Department of Veterans Affairs (VA) to consolidate its patient 
accounting centers into seven regional locations. These locations would 
be required to conduct industry-modeled billing and collection 
activities. It is a well-known fact that the VA has historically done a 
poor job in achieving its third-party collections estimates. While in 
recent years there has been some improvement, the VA continues to leave 
a significant amount of money that could be used to enhance the quality 
of health care services on the table.
    This legislation would expand the concept of the Consolidated 
Patient Accounting Center (CPAC) that was included as a demonstration 
project in the Conference Report accompanying Public Law 109-114. 
Subsequent to the enactment of that law, the VA created the Mid-
Atlantic Consolidated Patient Accounting Center demonstration project 
located in Asheville, North Carolina. With establishment of the Center, 
third-party collections at the medical facilities in VISN Six have 
greatly improved. Using the CPAC in Asheville as a model, the VA could 
significantly improve its collections systemwide.
           The ``Department of Veterans Affairs Psychologist
                       Employment Fairness Act''
    PVA believes that the intent of this legislation is to remove 
psychologists from the Hybrid Title 38 system used to hire and promote 
certain health care professionals in the VA. As explained by the 
American Psychological Association (APA) at a hearing held by the 
Subcommittee on May 22, the hybrid model requires Professional 
Standards Boards to make recommendations on employment, promotion and 
grade for psychologists, and is still more subjective than a pure Title 
38 program. The APA explained that implementation of the new Title 38 
Hybrid boarding process has been extremely variable and chaotic across 
the system. As such, we have no objection to this legislation.

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                       July 2, 2008

Dennis Cullinan
National Legislative Director
Veterans of Foreign Wars (VFW)
200 Maryland Avenue, N.E.
Washington, D.C. 20002

Dear Mr. Cullinan:

    Thank you for the testimony provided by Christopher Needham, Senior 
Legislative Associate, National Legislative Service, at the House 
Committee on Veterans' Affairs Subcommittee on Health legislative 
hearing that was held on July 26, 2008.
    To ensure that the Subcommittee has VFW's views on all of the bills 
that were discussed at this hearing, I request that you please provide 
a statement for the record on the following two bills that are enclosed 
with this letter:

    1.  H.R. 6366, Veterans Revenue Enhancement Act of 2008
    2.  Discussion Draft, To Amend Title 38, United States Code, 
relating to employment of psychologists by the Department of Veterans 
Affairs

    I would appreciate receiving your statement by July 8, 2008.
    Again, thank you for your testimony. I look forward to reading your 
comments on these additional bills. If you have any questions or 
concerns, please don't hesitate to contact Chris Austin, Executive 
Assistant to the Subcommittee on Health at (202) 225-9154.

            Sincerely,

                                                 Michael H. Michaud
                                                           Chairman

                                 ______
                                 
  Comments of the Veterans of Foreign Wars of the U.S. On Additional 
                                 Bills
       Following the June 26, 2008 Subcommittee on Health Hearing
                               H.R. 6366
    The VFW has no position on the ``Veterans Revenue Enhancement 
Act.'' This bill would create seven centralized patient accounting 
centers that would attempt to enhance VA's ability to collect from 
third parties.
    These centers were first devised as a demonstration project that 
has been occurring in Asheville, NC. The aim is to standardize 
collection practices in a central location, using private sector 
business practices to improve the rate of collections from third party 
insurers for the non-service-connected care certain veterans receive.
    The appeal of this approach is that the enhanced collections are 
returned to the department for use in health care delivery. With the 
increased emphasis on collections as part of the appropriations 
process, ensuring that VA gets every projected dollar is critical. We 
have argued that these collected dollars should be a supplement to the 
regular appropriations, but in the years where Congress has not agreed, 
it only serves to increase the importance of VA collecting every dollar 
possible.
    We do wonder whether the centralization of these processes is 
necessary though. Were the standardized processes and business 
practices utilized in Asheville applied to every VA medical center, 
wouldn't it be likely that their collection efforts be improved? It is 
likely that VA managers could use the lessons learned from the 
demonstration projects to improve practices throughout the system 
without consolidation. With steady leadership and oversight--similar to 
the level of oversight the Committee has used over the last 7 years or 
so to move VA's collections efforts from their initial dreadful state--
perhaps consolidation would not be necessary.
       Draft Bill, Relating to the Employment of VA Psychologists
    The VFW is pleased to support this draft bill, which would enhance 
VA's ability to recruit and retain psychologists. The bill would shift 
psychologists into the appointment category that includes doctors, 
dentists and optometrists. We believe that this change would increase 
VA's ability to recruit and retain high quality psychologists, 
something that the system greatly needs--especially with the demand for 
mental health services expected to rise dramatically in the coming 
years.
    In testimony by the American Psychological Association before an 
April 2008 Senate Veterans Affairs Committee hearing, Dr. Randy Phelps 
explained that the current Hybrid Title 38 hiring practices were having 
a negative effect on psychologists within VA. They claim that the 
hiring authority is resulting in lower pay, more paperwork hassles and 
bureaucratic procedures that prevent or curtail promotions. Together, 
these hurt VA's ability to recruit and retain these essential health 
care personnel, at a time when VA needs more of them than ever.
    With the increased attention paid to mental health, and the growing 
demands veterans have for these kinds of services, putting 
psychologists on par with other essential health care personnel makes 
sense. Mental health care is part of the total health care package and 
its practitioners deserve the same level of benefits and the same type 
of compensation system.
    One of the biggest complaints about the level of mental health 
services veterans have is with access. VA has made great efforts to 
increase the number of psychologists within the system--over 800 new 
hires since 2005--but VA must certainly do more. To do this properly, 
VA must continue to provide a competitive work environment on par with 
what is available in the private sector. This legislation would be a 
step in that direction, and we urge its passage.

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                       July 2, 2008

Honorable James B. Peake, M.D.
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue NW
Washington, DC 20240

Dear Secretary Peake:

    Thank you for the testimony provided by Gerald M. Cross, M.D., 
FAAFP, Principal Deputy Under Secretary for Health, Veterans Health 
Administration, who was accompanied by Walter A. Hall, Assistant 
General Counsel, and Gary M. Baker, Chief Business Officer, Veterans 
Health Administration, at the House Committee on Veterans' Affairs 
Subcommittee on Health legislative hearing that was held on July 26, 
2008.
    To ensure that the Subcommittee has the Department of Veterans 
Affairs' (VA) views on all of the bills that were discussed at this 
hearing, I request that you please provide a statement for the record 
on the following two bills that are enclosed with this letter:
    1.  H.R. 6366, Veterans Revenue Enhancement Act of 2008
    2.  Discussion Draft, To Amend Title 38, United States Code, 
relating to employment of psychologists by the Department of Veterans 
Affairs
    I would appreciate receiving your statement by July 8, 2008.
    Again, thank you for your testimony. I look forward to reading your 
comments on these additional bills. If you have any questions or 
concerns, please don't hesitate to contact Chris Austin, Executive 
Assistant to the Subcommittee on Health at (202) 225-9154.
            Sincerely,
                                                 Michael H. Michaud
                                                           Chairman
[AS OF JANUARY 12, 2009, THE VA FAILED TO PROVIDE THE ADMINISTRATION 
        VIEWS ON THE TWO BILLS.]

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                       July 2, 2008

Raymond Kelley
Legislative Director
American Veterans (AMVETS)
4647 Forbes Boulevard
Lanham, MD 20706

Dear Mr. Kelley:

    Thank you for your testimony at the House Committee on Veterans' 
Affairs Subcommittee on Health legislative hearing that was held on 
July 26, 2008.
    To ensure that the Subcommittee has Paralyzed Veterans of America 
(PVA)'s views on all of the bills that were discussed at this hearing, 
I request that you please provide a statement for the record on the 
following two bills that are enclosed with this letter:

    1.  H.R. 6366, Veterans Revenue Enhancement Act of 2008
    2.  Discussion Draft, To Amend Title 38, United States Code, 
relating to employment of psychologists by the Department of Veterans 
Affairs

    I would appreciate receiving your statement by July 8, 2008.
    Again, thank you for your testimony. I look forward to reading your 
comments on these additional bills. If you have any questions or 
concerns, please don't hesitate to contact Chris Austin, Executive 
Assistant to the Subcommittee on Health at (202) 225-9154.

            Sincerely,

                                                 Michael H. Michaud
                                                           Chairman

                                 ______
                                 
                      Statement for the Record of
        Raymond C. Kelley, AMVETS National Legislative Director
                               before the
                   House Veterans' Affairs Committee
                         Subcommittee on Health
         Concerning H.R. 6366 and the ``Department of Veterans
                  Affairs Psychological Fairness Act''
                         Thursday, July 8, 2008
    Chairman Michaud, Ranking Member Miller, thank you for providing 
added time to respond to these two pieces of legislation
    AMVETS wholly supports H.R. 6366, the ``Veterans Revenue 
Enhancement Act of 2008,'' which would require VA to establish no more 
than seven consolidated patient accounting centers within the next 5 
years. The General Accounting Office (GAO) has recently estimated VA 
has not collected 1.2 to 1.4 billion dollars through third party 
collections. For VA to maintain its world class status of exceptional 
care, it is important to continually improve all areas of their 
operations. This includes collecting from third party insurance 
companies. This unrecovered revenue would greatly assist in fully 
funding the needs of our veterans.
    AMVETS holds no official position on the ``Department of Veterans 
Affairs Psychologist Employment Act.'' However, AMVETS would like to 
point out the fact that moving Psychologist to the ``pure title 38'' 
would make it harder to hire and retain these professionals who are at 
a critical need at this time.
    Mr. Chairman, this concludes my testimony. I will be happy to 
answer any questions regarding our opinion on these matters.

                                 

                                     Committee on Veterans' Affairs
                                                     Washington, DC
                                                       July 2, 2008

Joe Violante
Legislative Director
Disabled American Veterans (DAV)
807 Maine Avenue, S.W.
Washington, D.C. 20024-2410

Dear Mr. Violante:

    Thank you for your testimony at the House Committee on Veterans' 
Affairs Subcommittee on Health legislative hearing that was held on 
July 26, 2008.
    To ensure that the Subcommittee has Paralyzed Veterans of America 
(PVA)'s views on all of the bills that were discussed at this hearing, 
I request that you please provide a statement for the record on the 
following two bills that are enclosed with this letter:

    1.  H.R. 6366, Veterans Revenue Enhancement Act of 2008
    2.  Discussion Draft, To Amend Title 38, United States Code, 
relating to employment of psychologists by the Department of Veterans 
Affairs

    I would appreciate receiving your statement by July 8, 2008.
    Again, thank you for your testimony. I look forward to reading your 
comments on these additional bills. If you have any questions or 
concerns, please don't hesitate to contact Chris Austin, Executive 
Assistant to the Subcommittee on Health at (202) 225-9154.

            Sincerely,

                                                 Michael H. Michaud
                                                           Chairman

                                 
                Prepared Statement of Adrian M. Atizado,
               Assistant National Legislative Director of
                     the Disabled American Veterans
    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting the Disabled American Veterans (DAV) to 
submit testimony for the record on legislation before the Committee on 
Veterans' Affairs Subcommittee on Health. DAV is an organization of 1.3 
million service-disabled veterans, and devotes its energies to 
rebuilding the lives of disabled veterans and their families.
    You have requested testimony on two bills primarily focused on 
health care services for veterans under the jurisdiction of the 
Veterans Health Administration (VHA), Department of Veterans Affairs 
(VA). This statement submitted for the record reviews our positions on 
both proposals, and we offer them for your consideration.
The Department of Veterans Affairs Psychologist Employment Fairness Act 
                              (Draft Bill)
    The need to increase psychologist staffing levels in response to 
the increasing demand for the care they provide is apparent. This 
measure would amend title 38, United States Code, Sec. 7401 by moving 
VA's appointment authority of psychologists from hybrid title 38 to 
``pure title 38.'' The intended flexibility of the hybrid model 
requires Professional Standards Boards to make recommendations on 
hiring, pay grade and promotion for medical care providers, which is 
more subjective than pure title 38 where recruitment, promotion and 
retention is based solely on the individual's qualifications.
    DAV does not have a resolution on this particular issue, therefore, 
we can take no official position. However, we note that although 
psychologists remain the only doctoral health care providers in VA who 
remain in hybrid title 38, this legislation would allow psychologists 
to avoid the well documented delays in the hybrid title 38 boarding 
process. Moreover, with VHA as the single largest employer of 
psychologists in the Nation, this bill would in turn subject 
psychologists to the erosion of collective bargaining rights being 
experienced by pure title 38 health care providers, which this 
Subcommittee is aware.
        H.R. 6366, the Veterans Revenue Enhancement Act of 2008
    In 1986, Congress authorized legislation giving VA authority to 
bill private insurers for care provided to insured nonservice-connected 
veterans. In 1990, this authority was expanded to allow VA to collect 
for the treatment of nonservice-connected conditions of insured 
service-connected veterans. In 1997, Public Law 105-33 established the 
current Medical Care Collections Fund (MCCF) and authorized VA to 
retain all collections from insurers as well as other revenues such as 
veterans' copayments and deductibles. The funds collected may only be 
used for providing VA medical care and services and for VA expenses for 
identification, billing, auditing and collection of amounts owed the 
federal government.
    Before the MCCF was established, VA was allowed to keep only enough 
collections to cover administrative collection costs and was required 
to deposit the remainder in the U.S. Treasury. This law also granted VA 
authority to begin billing reasonable charges versus reasonable costs 
for care. Reasonable charges are based on the amounts that insurers pay 
for the same care provided by private industry health care providers in 
a given geographic area.
    Funds collected through MCCF are used as an offset rather than a 
supplement to annual discretionary appropriations for VA's medical care 
budget. The efficient and timely collection of these reimbursable costs 
greatly benefits the VHA in meeting the demands of an increasingly 
overburdened system. The DAV, in concert with the Independent Budget, 
believes that it is the responsibility of the Federal Government to 
fund the cost of veterans' health care. Therefore, we urge Congress to 
provide a sufficient, timely and predictable medical care budget fully 
funded by direct appropriations.
    Although the VA has the legal authority to collect third-party 
payments for certain types of care, Congress should consider any funds 
derived from third-party collections as a supplement, not a substitute 
for appropriations. In the same vein, we are opposed to Congress and 
the administration, using collections or projections of collection, to 
reduce appropriations.
    Although VA has attempted to implement more effective billing 
practices and systems, it has historically been unable to meet its 
collection goals.
    Having accurate information on third party insurance, such as the 
type of policy and the types of services covered, patient copayments 
and deductibles, and preadmission certification requirements, is key to 
VA's MCCF program. VA's ability to accurately document the nonservice-
connected care provided to insured veterans and assign the appropriate 
codes for billing purposes is essential to third-party collections. 
Although VA can bill only for nonservice-connected care, we 
occasionally hear reports from service-connected disabled veterans 
indicating that VA is billing their insurance company for treatment of 
service-connected conditions. In addition, failure to properly document 
care can lead to missed opportunities to bill for care, billing 
backlogs, overpayments by insurers, or denials of VA bills.
    With the establishment of the VA's Chief Business Office (CBO), an 
expanded revenue optimization plan had been formulated that combines 
the 2001 Revenue Improvement Plan, the 2003 Revenue Action Plan, and a 
series of additional tactical and strategic objectives targeting a 
combination of immediate, mid-term, and long-term improvements to the 
broad range of business processes encompassing VA revenue activities.
    In 2004, CBO began conducting a demonstration pilot to demonstrate 
improved revenue performance, increase collections and ultimately 
establish consistent, nationally deployable business practices. Meeting 
these expectations would serve to validate the viability and 
effectiveness of creating an industry-modeled regionalized Consolidated 
Patient Account Center (CPAC) with application of industry based 
performance measures, supported by organizationally aligned remote 
intake, utilization review and customer service functions.
    Subsequent to a number of hearings conducted by the House Committee 
on Veterans' Affairs Subcommittee on Oversight and Investigations on 
VA's progress in third party collections programs, the ``Revenue 
Improvement Demonstration'' provision in Conference Report 109-305, in 
which the conferees modified the original provision in House Report 
109-95, recommended VA initiate a new pilot program that will provide a 
comprehensive restructuring of the complete revenue cycle including 
cash-flow management and accounts receivable processes in certain VA 
hospitals. Due to similar objectives, CPAC was selected to be the host 
site for the Revenue Improvement Demonstration Project (RIDP).
    The CPAC pilot was planned in three phases. Completed on September 
30, 2006, Phase I began with the activation of the Mid-Atlantic CPAC in 
Asheville, North Carolina, by converting the Veterans Integrated 
Service Network (VISN) 6 Centralized Revenue Unit, which only served 
VISN 6 facilities (8 VA Medical Centers), into the first CPAC. Phase II 
would take place in VISN 11, a non-consolidated VISN. As the pilot 
progresses, an evaluation is to be conducted before proceeding to the 
next phase. Phase III would concentrate on a national expansion.
    Coinciding with the oversight hearings, previous reports by the 
Government Accountability Office (GAO) in September 2001, January and 
May 2003, and July 2004, describe weaknesses in VA's revenue cycle 
including inadequate patient intake procedures for gathering insurance 
information, insufficient physician documentation of specific medical 
care provided, a shortage of qualified coders, billing backlogs, missed 
billing opportunities, and inadequate pursuit of accounts receivable. 
We understand a recent GAO report reiterates previous findings that 
VA's third-party billing and collection processes continue to be 
ineffective and limit the revenue received by VA from third-party 
insurance companies.
    With the establishment by VA of the Mid-Atlantic CPAC, the 
collection of third-party revenues has improved significantly at the 
medical centers in VISN 6; however, we note that problems continue to 
persist related to unpaid bills such as coding, billing, and 
documentation errors. GAO also found a lack of adequate management and 
accountability and oversight such as VA's requirement for medical 
center accounts receivable staff to make up to three followup contacts 
in a timely manner and document such followups with third-party 
insurers on unpaid amounts and to document the details.
    VA medical centers subject to GAO's report indicate the followup 
failure rate is due to inadequate staffing, where VA shifted non-
revenue functions from billing and collections staff to other medical 
center personnel to provide greater focus on the revenue function. 
Additionally, they determined that there are no established formal 
policies and procedures such for proper oversight to maximize the 
third-party insurer billing and collection processes by medical centers 
or VHA.
    We urge this Subcommittee to provide VA the necessary resources and 
continued oversight to address the abovementioned concerns when 
considering H.R. 6366, which would authorize VA to establish no more 
than seven CPACs. Any loss of third-party revenue has a tremendous 
impact on VA medical care since such collections are being used as a 
substitute for, not a supplement to, direct medical care 
appropriations.
    Mr. Chairman, again, DAV appreciates the Subcommittee's interest in 
these issues, and we appreciate the opportunity to present the DAV's 
views, which we hope will be helpful.

                                 
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