[Senate Hearing 110-]
[From the U.S. Government Publishing Office]


 
   MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2008 

                              ----------                              


                        THURSDAY, APRIL 12, 2007

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:12 a.m., in room SD-124, Dirksen 
Senate Office Building, Senator Jack Reed presiding.
    Present: Senators Reed, Byrd, Murray, Hutchison, Craig, and 
Allard.

                     DEPARTMENT OF VETERANS AFFAIRS

STATEMENT OF R. JAMES NICHOLSON, SECRETARY
ACCOMPANIED BY:
        MICHAEL J. KUSSMAN, M.D., ACTING UNDER SECRETARY, VETERANS 
            HEALTH ADMINISTRATION
        WILLIAM F. TUERK, UNDER SECRETARY FOR MEMORIAL AFFAIRS, 
            NATIONAL CEMETERY ADMINISTRATION
        ROBERT J. HENKE, ASSISTANT SECRETARY FOR MANAGEMENT, DEPARTMENT 
            OF VETERANS AFFAIRS
        ROBERT T. HOWARD, ASSISTANT SECRETARY FOR INFORMATION AND 
            TECHNOLOGY, DEPARTMENT OF VETERANS AFFAIRS
        RON AUMENT, DEPUTY UNDER SECRETARY, VETERANS BENEFITS 
            ADMINISTRATION

                 OPENING STATEMENT OF SENATOR JACK REED

    Senator Reed. Let me call this hearing to order.
    And, this morning we're joined by the chairman of the full 
committee, Senator Robert Byrd. And, I would like to, at this 
time, recognize Chairman Byrd for his statement.
    Senator Byrd, please.

                  STATEMENT OF SENATOR ROBERT C. BYRD

    Senator Byrd. I thank you.
    Mr. Chairman, in the fourth century Augustine of Hippo 
said, ``In doing what we ought, we deserve no praise because it 
is our duty.''
    Mr. Chairman, over the last several years the 
administration has repeatedly shirked its duty by sending 
budget requests to Congress that have short-changed our 
veterans. When the supplemental request was received a few 
months back, there was no request for additional funding from 
the Department of Veterans Affairs to treat those veterans who 
have been injured during the wars in Iraq and Afghanistan, 
including those injured who required special care and those who 
require long-term care.
    To address these very pressing needs, the Senate recently 
added $1.77 billion to the emergency supplemental 
appropriations bill. The continued neglect of America's 
seriously injured veterans demands an emergency response from 
Congress.
    As the chairman of the full Appropriations Committee, I am 
at a complete loss as to why this administration does not feel 
the same way. While the VA continues to try to address the 
injuries and unique illnesses suffered by Vietnam and Persian 
Gulf war veterans, a new surge of injured warriors are flooding 
our veterans hospitals. Each conflict and each patient presents 
a unique dilemma. The VA must be ready to step up to the 
daunting challenge. The backlog of claims within the Department 
of Veterans Affairs remains unacceptable.
    We continue to receive reports of veterans who are forced 
to wait far too long for an appointment. Now, I'll say that 
again. We continue to receive reports of veterans and from 
veterans and by veterans who are forced to wait far too long 
for an appointment. And, the number of veterans entering the 
system continues to grow at a rapid pace. The ongoing wars in 
Iraq and Afghanistan combined with a growing number of patients 
from previous conflicts have resulted in an unprecedented 
strain.
    Attempts at seamless transition between the Department of 
Defense and the Department of Veterans Affairs date back to the 
1980s. And, while billions of taxpayer dollars have been 
invested in the development of electronic medical record 
keeping standards in each agency, a reliable system has yet to 
be established.
    In West Virginia, we received positive comments regarding 
the quality of care, but very negative comments regarding 
appointments to get that care.
    I believe that these veterans, as a result of their service 
to our country, deserve the best possible care, not on your 
timeline, and I say this most respectfully, not on your 
timeline, but on theirs. And, we, meaning Robert C. Byrd and 
the members from both sides, we should do everything we can to 
ensure that their service and sacrifices are honored.
    Mr. Chairman.
    Senator Reed. At this point, I'd like to recognize the 
ranking member, Mrs. Hutchison, for her statement.

               STATEMENT OF SENATOR KAY BAILEY HUTCHISON

    Senator Hutchison. Mr. Chairman, I'm happy to defer to you 
for a statement first.
    Senator Reed. I think in fairness we'll go back and forth, 
so why don't you go ahead now.
    Senator Hutchison. Thank you. Thank you, Mr. Chairman.
    I'm pleased to welcome the Secretary and the other 
witnesses and guests today, because we all know this is a very 
important subject and the budget that you have presented is 
certainly one that we must appropriately address.
    The medical services account is up 6.49 percent and medical 
administration requests up 8.49 percent and this is necessary 
growth to keep pace with the increasing workload. That is in 
addition to over $1.5 billion that we put in a supplemental 
appropriation to assure that you would have the money to meet 
the increasing demand from the, for the Veterans Affairs 
Medical Services. I am especially pleased to see the emphasis 
that you have placed on post-traumatic stress syndrome and the 
incidence of traumatic brain injury, which we will discuss 
further, I'm sure, but this is something that we see many of 
our returning soldiers dealing with, and that you have 
increased that part of your appropriations request is very 
good.
    We also--I want to say that the $3 billion committed to 
mental health services, I am seeing that commitment to the 
Centers of Excellence and Mental Healthcare certainly coming to 
fruition. At the Waco Veterans Center--which has been one of 
the three designated, the other two being in California and New 
York--we're seeing that the collaboration with research 
facilities at Baylor University, Texas A&M, Fort Hood Army 
Hospital, and the Mental Health Association from the State of 
Texas, the facility at Waco has become a critical cornerstone 
in providing quality care. And I think that we're going to see 
great benefits from that. And, I appreciate your working to 
make that facility one that I think is going to be a true 
Center of Excellence.
    I also want to say that you have stepped up to the plate on 
gulf war syndrome. The research being done on that is very 
important for--not only today--but future warriors who will go 
into chemical or biological weaponry. I think it is important 
that we learn once and for all how the chemicals that we know 
our soldiers were exposed to, coming back with these symptoms, 
can be addressed. So, I appreciate that despite some of the 
chatter out there and some of the controversy, that you have 
remained committed to finding out what is the cause and 
therefore, what can be the cure.
    Another area of concern for me, has been the inability of 
the VA and the Department of Defense to coordinate the 
electronic transfer of records. One of the things that the 
committee has done through the years with myself and Senator 
Feinstein in complete agreement, and the full committee chair 
and ranking member in complete agreement, has been that the VA 
has a great electronic transfer system of records. That was 
shown in Katrina when not one veteran had a lost record. 
Wherever that veteran ended up from New Orleans, their records 
were electronically transferred and that, that veteran got the 
care and the medicine that he or she needed.
    However, the Department of Defense is not coordinated with 
the Veterans Administration so, we have found that there has 
been a disconnect when the returning veteran of today is trying 
to get into the Veterans' system from active duty service, and, 
we want to, we want to remedy that.
    I'm going to introduce an amendment to the Defense 
appropriations bill to ensure that the DOD healthcare records 
become electronic, and compatible, with the VA. That will mean 
that you, within your parameters and laws, will have to work 
with the Department of Defense, but it will be in everyone's 
interest that we improve that system.
    In addition, the number of days of processing required for 
benefits has certainly come under scrutiny. We are concerned 
that the processing of claims now has an average of 177 days 
and I know that you are aggressively hiring claims examiners 
and that you are providing in this appropriation for more 
claims examiners. I hope that this will be a major focus of 
your administration going forward. Someone should not have to 
wait more than 30 days to have the claims processed and I hope 
that that is your goal.
    I want to bring up in the major construction area. You've 
got, in this year's major construction request, $341 million 
for one project. That is over 53 percent of your major 
construction budget. This is a project that has already had 
$259 million appropriated for it, of which only $53 million has 
been obligated since 2004. So, I have to ask the question, why 
you're tying up so much money into one project if you are not 
obligating the funds? This is Las Vegas. The project was 
originally scheduled to cost $286 million. Last year, the 
project was projected to cost $406 million and now, 4 months 
later, your staff is reporting that the cost has risen to over 
$600 million. I understand that an additional 90,000 square 
feet has recently been added to the project after the design 
was complete and so, I want to, to have a little more 
exploration of that and particularly because I know that there 
is least one study of there for South Texas to have a Veterans' 
Administration hospital, and that Booz Allen Hamilton has been 
tasked to do that. We've waited for over a year for that 
report, but I'd just like a little more explanation about why 
the major construction funding seems to be taken up with a 
project that doesn't seem to be going forward, and seems to be 
increasing in the amount of the allocation to it.
    So, I hope that we can address some of these issues, but in 
the main, Mr. Secretary, I want to say that as the former 
chairman and now ranking member of this subcommittee, I 
appreciate how hard you have worked to be transparent with this 
committee, to address the issues of concern that we have had 
with our different chairmen and ranking members. Your staff has 
been very accessible and when you had the shortfall, you 
stepped up to the plate, you didn't try to, you didn't try to 
soften that there was going to be a shortfall. You came right 
to the committee, you asked for the help, and you got it. So, I 
appreciate the working relationship that we've had.

                           PREPARED STATEMENT

    I appreciate the great job that veterans believe that you 
do, even with some of the things that I've talked about. The 
veterans are coming for veterans' healthcare in droves. The 
numbers are increasing exponentially. So, you are doing a good 
job in many areas and we want to make sure you have the funding 
you need to do the good job and to grow and do an even better 
job.
    Thank you very much.
    [The statement follows:]

           Prepared Statement of Senator Kay Bailey Hutchison

    Thank you, Mr. Chairman. I am pleased to welcome Secretary 
Nicholson and our other witnesses and guests. Today, we will examine 
the President's budget request for the Department of Veterans Affairs, 
including funds for veterans' benefits, healthcare, and national 
cemeteries.
    There has been a lot of public concern lately about the ability of 
the Department of Veterans Affairs to deliver on its promises to 
America's veterans. This budget entrusts $84 billion to the Department 
of Veterans Affairs to provide healthcare and benefits for our 
veterans. This is $45 billion in mandatory benefits and $39 billion for 
discretionary spending, which includes $37 billion for medical 
programs.
    The Medical Services account request is up 6.49 percent to $1.656 
billion and the Medical Administration request is up 8.49 percent to 
$265 million. I know this growth is necessary to keep pace with the 
increasing workload you are taking on and we will do everything we can 
to work with you to take care of our Nation's veterans. We are 
concerned that as our brave men and women return from the war they 
receive the very best medical care our Nation can provide. I am please 
to see that your budget request keeps us on that track. I know it is 
difficult to anticipate every need, but I know this subcommittee is 
solidly behind providing everything you need to carry out your mission.
    As more of our soldiers return with delayed Post Traumatic Stress 
Syndrome (PTSD) and the incidence of Traumatic Brain Injury is at an 
alarmingly high rate, I am please to see the emphasis you placed on 
these problems in you budget request. I'm sure we will discuss these 
issues at length today.
    We are pleased to see that you have submitted all VA facilities to 
a thorough review to make sure there is no Building 18 in your system; 
and we are happy to find out there is not. Still, we recognize that our 
duty to veterans goes beyond buildings. It goes straight to the people 
and processes that ensure excellence in the spectrum of health, 
benefits, and memorial affairs.
    We are pleased to see that $3 billion has been committed to mental 
health services, including PTSD. The Waco Center of Excellence in 
Mental Health is a model for how consolidating personnel, training and 
specialized resources produces world class care. Their work includes 
close collaboration with the research facilities at Baylor University, 
Texas A&M University Medical School, Fort Hood Army Hospital, and the 
Mental Health Association from the State of Texas. The facility at Waco 
has become a critical cornerstone in providing quality care to our 
veterans and it is one of the many success stories for the VA. The VA 
is receiving great benefits from this hospital. I appreciate the work 
you have personally done for this facility and the other two in 
California and New York.
    I am also pleased that collaborative research into Gulf War illness 
has continued for a second year, and I ask your assurance that this $15 
million annual investment continues for the sake of our deserving 
veterans. I appreciate the efforts you and your staff have made to make 
the collaborative agreement between the Dallas VA Medical Center and 
the University of Texas Southwestern Medical College a win-win for the 
VA, UT and especially our veterans. We do not yet understand all of the 
factors that have caused serious health problems for our veterans who 
fought in the Gulf region but we are seeing the many affects. I am 
committed, as are you, to not turning a blind eye to veterans who may 
have suffered harm during either of the Gulf Wars. Instead, we will 
actively seek to understand and treat the service connected illnesses 
of our Gulf War veterans, whatever their cause.
    We look forward to the good work you will do as the Chair of the 
Task Force on Returning Global War on Terror Heroes. We trust that as 
you examine the system of care for our wounded veterans, you will take 
every opportunity to break through old agency processes to coordinate 
easily accessible and effective care for our veterans. There is no 
excuse for allowing bureaucratic barriers, especially between DOD and 
the VA, to get in the way of caring for our service men and women's 
needs.
    Electronic healthcare records proved how valuable they are during 
hurricanes Katrina and Rita. Because of the VA's great electronic 
healthcare system, not one veteran went without healthcare. You have 
said many times the VA has become the ``gold standard'' for its use of 
electronic healthcare records, and I think we all agree with you. While 
you are chairing this new task force I hope you are able to convince 
the Department of Defense not to develop records systems in parallel 
that do not build on your proven successes.
    Another area of concern for me is the inability of the VA to 
receive medical records from the Department of Defense automatically 
and electronically. I understand you are cooperating in a pilot program 
with the DOD to test the bi-directional transfer of records. We cannot 
afford to wait too long for a solution to this problem. Not only does 
this jeopardize healthcare, it physically slows down claims processing 
times, and we are very aware of the large backlog of claims.
    We are concerned that the average number of days to process 
benefits claims has risen to around 177 days instead of dropping to 160 
days, as originally estimated for 2007. We don't want our veterans 
waiting over 30 days to have their claims processed. We recognize that 
you have aggressively hired 580 claims examiners over the past 2 years, 
and now you need even more. But, we are concerned that the inability to 
electronically transfer medical records and the IT system and 
management processes designed to help process claims are not as good as 
you or we would want them to be.
    I will introduce an amendment to the Department of Defense 
appropriations bill to insure DOD healthcare records become electronic 
and are compatible with and easily transfer to the VA for a real 
seamless transition. In addition, we will then look to you to 
streamline your processes within the law, set explicit efficiency 
goals, and hold staff and contractors accountable to these high 
standards of productivity. We must improve the wait times for claims 
processing. That will be one of the major issues before this 
subcommittee.
    Another issue that has been discussed many times on this 
subcommittee is VA's major construction plan. I particularly note that 
in this year's major construction request you ask for $341.4 million 
for one project. This is over 53 percent of the entire major 
construction budget. This project already has $259 million appropriated 
for it, of which only $53 million has been obligated since 2004. Why 
tie up so much money into one project if you are not obligating the 
funds? Is this realistic? This project was originally projected to cost 
$286 million. In November of 2006 your staff reported the project was 
then projected to cost $406 million. Now 4 months later your staff 
reports the cost has risen to over $600 million. This can't be all 
inflation and construction demand. I understand that an additional 
90,000 square feet has recently been added to the project, after design 
was complete, and according to your architecture contractor the 
original plan we approved was not realistic. I hope you will speak to 
this in your remarks, as I would like more information on your plans.
    Mr. Secretary, last year I asked you to evaluate the inpatient 
healthcare needs of the South Texas Valley region. I understand you 
contracted for this study but it has been a year and I am still waiting 
for the results. Would you please advise me when I can expect the 
results from this study?
    I look forward to discussing these and other issues with our 
witnesses. Thank you, Mr. Chairman.

    Senator Reed. Thank you, Senator Hutchison.
    I have a prepared statement, but I think Senator Byrd made 
a very compelling case and I'd be prepared to submit my 
statement to the record. And, I know that there's a hearing 
going on simultaneously involving Veterans' Administration and 
we want to, I think, move quickly to questions. I presume my 
colleagues have no formal statements at the time.

                          PREPARED STATEMENTS

    Senator Craig. I'll make a statement in my questioning 
period.
    Senator Allard. I'd just, Mr. Chairman, I'd just like to 
have my statement made a part of the record.
    [The statements follow:]

                Prepared Statement of Senator Jack Reed

    Mr. Secretary, thank you for appearing before the subcommittee 
today to discuss the President's fiscal year 2008 budget request for 
the Department of Veterans Affairs. We welcome you and your associates, 
and we look forward to your testimony.
    I believe that the Department of Veterans Affairs is at a critical 
point. Two years ago, Congress and the Nation got a sobering wake up 
call when the VA owned up to a $3 billion shortfall in medical funding 
due to faulty budget projections. While the rest of America was focused 
on the growing number of casualties from the wars in Iraq and 
Afghanistan, the VA apparently neglected to factor them into its 
projections, thus leaving a gaping hole in its budget.
    Congress moved swiftly to remedy that shortfall, and since then, we 
have been watching the VA budget very closely, as I'm sure you have 
noticed. I commend you for sending up a more realistic budget request 
last year, and again this year, and I believe that the VA is moving in 
the right direction.
    Unfortunately, I do not believe that the VA is moving fast enough 
or aggressively enough to meet the challenges that are bearing down on 
it. Two weeks ago, the Senate passed a war supplemental funding bill 
that included $1.7 billion for the VA, primarily to meet the unique 
medical needs of Iraq and Afghanistan war veterans. The House passed a 
similar measure. The need for such funding seems obvious to me, and yet 
the President did not request one penny in the supplemental for Iraq 
and Afghanistan veterans.
    It is difficult to comprehend how the President and the Department 
of Veterans Affairs can reach the conclusion that no supplemental 
funding is needed for Iraq and Afghanistan veterans in the face of what 
has become the longest and costliest conflict for U.S. troops since 
Vietnam. No matter how you crunch the numbers, they just don't add up. 
Hundreds of thousands of new combat veterans are entering the VA 
healthcare system, some with catastrophic injuries that will require 
life-long care, and yet the Administration seems to think these 
veterans can simply be absorbed into the system without a major 
reassessment and reinforcement of the VA's budget.
    That is a perilous assumption. It is essential for the VA to 
prepare for the future now, not when the next crisis is upon us. We 
have all seen the reports in the media about the rundown facilities and 
substandard treatment of some of our wounded service members at 
military and VA hospitals. I am pleased that both the Defense 
Department and the VA are moving to address these issues. We know there 
are problems today, and it is no great stretch to recognize that these 
problems will only grow worse if they are not addressed quickly and 
comprehensively. This is not the time for penny-wise, pound-foolish 
budget decisions. I fear that the President's budget request for fiscal 
year 2008, while adequate to keep the VA afloat today, is dangerously 
shortsighted in terms of building the capacity that our veterans will 
need in the years to come.
    Although we may not always agree on policies or priorities, it is 
important to remember that we are all committed to helping our Nation's 
veterans. Mr. Secretary, we want to work with you, and we ask you to 
work with us. We had some problems during the drafting of the 
supplemental in getting timely and accurate information from the VA to 
verify certain data and statistics. I would like your personal 
assurance that your agency will cooperate fully with congressional 
requests for this type of data in the future so that we can tackle 
these very important issues together.
    There is much more that I could say, and would like to say, about 
the pressing needs of our Nation's veterans. But as you know, Mr. 
Secretary, there is a joint hearing of the Senate Armed Services and 
Veterans Affairs Committees underway at this time on disability and 
transition issues affecting both DOD and the VA. Many members of this 
panel who are also members of those committees, and I expect that many 
of our members would like an opportunity to attend that hearing as 
well. So in the interests of time, I suggest that we limit opening 
statements to the Chairman and Ranking Member, and I would ask that you 
keep your opening remarks brief so that we can get directly to our 
questions. We will, of course, include your full statement in the 
record, as well as the opening statements of any members who wish to 
submit them.
    Thank you again for appearing before the subcommittee today.
                                 ______
                                 

               Prepared Statement of Senator Wayne Allard

    Thank you, Mr. Chairman, for holding this important hearing today. 
I appreciate all of our witnesses appearing before the committee today, 
and would like to especially welcome Secretary Jim Nicholson, a long 
time friend and fellow Coloradan.
    This committee continues to face the challenges of balancing both 
the needs of veterans returning from combat in Afghanistan and Iraq as 
well as those who served their country in World War II, Korea, Vietnam 
and Desert Storm. As every day passes and more veterans return home, 
greater stresses are brought upon the Veterans Health Administration.
    Despite the excellent quality of care provided by the VA, there 
have been a number of incidents over the last year that have reflected 
poorly upon the military and veterans health systems. It is my hope 
that Congress can continue to work with the VA to ensure that the needs 
of all of our veterans are met and that they continue to receive 
exceptional care.
    Of course, accomplishing these objectives is not easy if we also 
intend to reign in Federal spending and act fiscally responsible. These 
are the challenges that await, and I look forward to working with the 
panel to deliver to our veterans the quality healthcare they deserve.
    Mr. Secretary, again I'd like to reiterate my appreciation to the 
panel for appearing in front of us today and I look forward to your 
testimony. Thank you Mr. Chairman.

    Senator Reed. All statements were made part of the record 
upon submission.
    And, at the request of Senator Byrd and we informed him, 
Mr. Secretary, we'd request you'd take an oath of your 
testimony. Please stand.
    Senator Craig. Oh, you've got to be kidding me.
    Senator Reed. Do you solemnly swear that the testimony you 
will give to the committee today is the truth, the whole truth, 
and nothing but the truth, so help you God?
    Secretary Nicholson. I do.
    Senator Reed. Thank you, Mr. Secretary.
    Senator Craig. Mr. Chairman, in all due courtesy to the 
chairman of the full committee, since when did we start asking 
for oaths? I've never seen that practice in my 10 years of 
serving on the Appropriations--are we suggesting that the 
testimony that's about to be given is not truthful?
    Senator Reed. No.
    Senator Craig. Then why are we asking for an oath?
    Senator Byrd. I'll tell you why.
    Senator Reed. Mr. Chairman----
    Senator Craig. Please do. This is a precedent-setting 
event, and it ought to be on the record.
    Senator Reed. Mr. Chairman and Senator Craig for the 
record, we informed the Secretary. He had no objection to it. 
We informed the ranking member. She had no objection to it. I 
think it's the right of any member of the committee, with at 
least three members present, to request that any witness take 
the oath.
    Senator Craig. I appreciate that.
    Senator Reed. Those are the rules.
    Senator Craig. Let the record show that I object, because I 
think it reflects an attitude of suspicion. Thank you.
    Senator Reed. The record will so show that.
    Secretary, your statement, please.
    Secretary Nicholson. Thank you, Mr. Chairman, Senator 
Hutchison, members of the committee, Chairman Byrd.
    I have a written statement that I would like to submit for 
the record.
    Senator Reed. Mr. Secretary, your statement will be made 
part of the record. You can make a statement, a summary, or 
any----
    Secretary Nicholson. Yes, sir.
    Senator Reed [continuing]. Form thereof. Thank you, Mr. 
Secretary.

                    STATEMENT OF R. JAMES NICHOLSON

    Secretary Nicholson. First, I'd like to introduce my VA 
colleagues that are at the table with me starting at my far 
left and your right is Under Secretary Bill Tuerk, who's the 
Under Secretary for Memorial Affairs. Next is Mr. Ron Aument, 
who is the Deputy Under Secretary for Benefits. My immediate 
left is Dr. Mike Kussman, who is the senior executive in charge 
of the Veterans Health Administration. My right and your left 
is Assistant Secretary Bob Howard, who's the Assistant 
Secretary for Information Technology. And, at my immediate 
right is Assistant Secretary Bob Henke, who is the Chief 
Financial Officer for the Department of Veterans Affairs.
    I also would like to mention that, I like everyone else, is 
heartened to learn that Senator Johnson seems to be firmly on 
the road to recovery and we look forward to his return to the 
Senate and to our working with him to care for our veterans.
    Mr. Chairman, I'm here today to discuss President Bush's 
landmark 2008 budget proposal of nearly $87 billion for the 
Department of Veterans Affairs, which represents a 77 percent 
increase in veterans spending since this President took office 
on January 20, 2001. Medical care itself is up 83 percent.
    This funding level allows for the VA to continue improving 
the delivery of benefits and services to veterans and their 
families in three critical primary areas.
    One, to provide timely, high-quality healthcare to veterans 
returning from service in Operation Iraqi Freedom and Operation 
Enduring Freedom. Veterans with service-connected disabilities, 
those with lower incomes, and veterans with special healthcare 
needs. To improve the delivery of benefits through the 
timeliness and accuracy of claims processing and to increase 
veterans access to a burial option in a National or State 
veteran cemetery. This budget will also allow us to continue 
our progress toward becoming a national leader in information 
technology and data security.
    Mr. Chairman, I will outline the major portions of our 
proposed budget. The Veterans Health Administration, our total 
medical care request is $36.6 billion in authority for our 
healthcare. VA healthcare is now almost universally acclaimed 
as the best healthcare in the world. During 2008, we expect to 
treat about 5.8 million unique veteran patients. We will see 
each of them on an average of 10 times, approximately, 
resulting in our seeing over 1 million patients per week.
    With the resources requested for medical care in 2008, the 
Department will continue our exceptional performance, providing 
access to healthcare. Ninety-six percent of primary care 
appointments and 95 percent of specialty care appointments are 
scheduled within 30 days of the patient's desired date.
    The President's request includes nearly $3 billion to 
improve access to mental health services across the country. 
The VA is a respected leader in mental health and PTSD research 
and care. About 80 percent of the funds for mental health go to 
treat seriously mentally ill veterans, including those 
suffering from post-traumatic stress disorder. Our approach to 
PTSD is the, is to promote early recognition of this condition 
to prevent lasting impairment.
    Medical research--the President's 2008 budget includes $411 
million to support VA's unparalleled medical and prosthetic 
research program. This amount will fund nearly 2,100 high-
priority research projects to expand knowledge in areas most 
critical to veterans' particular health needs. Nearly 60 
percent of our research budget is devoted to OIF/OEF healthcare 
issues.
    In response to the unique injuries of the current war, the 
VA has expanded its four traumatic brain injury centers, which 
are in Minneapolis, Palo Alto, Richmond, and Tampa, to become 
polytrauma centers encompassing additional specialties to treat 
patients from multiple complex injuries. We're now expanding 
our polytrauma network to 21 sites and 76 clinic support teams 
around the country providing state of the art treatment closer 
to injured veterans' homes.
    The VA has taken steps to raise awareness of TBI, that is 
traumatic brain injury, issues by requiring specific training 
on TBI. The course advises practitioners that brain trauma 
causes both acute and delayed symptoms and that prompt 
identification and multi-disciplinary evaluation and treatment 
are essential to successful recovery. On April 2, we began 
screening all OIF/OEF patients who come to us, to assess the 
possibility that they may have developed mild or moderate 
traumatic brain injury.
    Seamless transition--one of the most important features of 
the President's 2008 budget request, is to make injured service 
members' transition from active duty to veteran status as 
smooth as possible. And we will not rest until every seriously 
injured service member returning from combat receives the 
quality treatment they need in a compassionate and timely way.
    In that regard, Mr. Chairman, I have recently directed the 
hiring of 100 new patient advocates to serve as the voices for 
our severely wounded soldiers, as they transition from DOD 
hospitals, to our VA system, to their lives as civilians.
    In response to Walter Reed, on March 6 the President issued 
an Executive order forming a Presidential commission, led by 
Senator Dole and Secretary Shalala, tasked to review the care 
provided to our wounded servicemen and women. Their work is 
ongoing. In addition, President Bush appointed me, in that same 
Executive order, to Chair an inter-Cabinet taskforce that will 
report to the President on Federal services for our returning 
troops.
    The taskforce is examining services that are currently 
provided, as well as existing gaps in those services. It is 
seeking recommendations from Federal departments on ways to 
fill those gaps as quickly as possible. This taskforce will 
report to the President on April 19.
    Let me speak of veterans' benefits. The VA's primary focus 
within the administration of benefits remains unchanged, 
delivering timely and accurate benefits to veterans and their 
families. Improving the delivery of compensation and pension 
benefits has become increasingly challenging, but we will 
succeed. The volume of claims applications has grown 
substantially during the past few years, and is now the highest 
it's been in 15 years. We received more than 806,000 claims 
last year. Our pending inventory of disability rating claims is 
currently about 400,000 claims, and averages a processing time 
of 177 days. And this is too long.
    We must and will reduce the pending inventory and shorten 
the time veterans must wait for decisions on their claims. 
Through a combination of aggressive management and productivity 
improvements and our 2008 request we will add 450 additional 
staff and continue to improve our performance, while 
maintaining high quality. With this budget, we project that we 
will reduce our claims processing time by 18 percent, while 
maintaining high quality. Further, we continue to prioritize 
the claims processing for those claims of our OIF/OEF combatant 
veterans.
    For the National Cemetery Administration, we expect to 
perform nearly 105,000 interments, in 2008. And, this is 
primarily the result of the aging of the World War II and 
Korean War veteran population. We are experiencing the biggest 
expansion of the National Cemetery System since the Civil War, 
including six new cemeteries in this, President Bush's 2008 
budget. Every day now, more than 1,800 veterans die. Most of 
them are World War II and Korean War veterans.
    Let me mention capital programs. The VA's 2008 request 
includes $1.1 billion in new budget authority for our capital 
programs. Our request includes $727 million for major 
construction projects, $233 million for minor construction, $85 
million in grants for State extended-care facilities, and $32 
million in grants to build State veterans' cemeteries. The 2008 
request for construction funding for our healthcare programs is 
$750 million. These resources will be devoted to the 
continuation of the Capital Asset for Realignment for Enhanced 
Services, or CARES program.
    Over the last 5 years, $3.7 billion in total funding has 
been provided for CARES. With our request for major 
construction are the resources to continue six medical facility 
projects already underway. They are in Pittsburgh, Denver, Las 
Vegas, Orlando, Lee County, Florida, and Syracuse, New York. 
Funds are also included for six new national cemeteries in 
Bakersfield, California, Birmingham, Alabama, Columbia-
Greenville, South Carolina, Jacksonville, Florida, Southeastern 
Pennsylvania, and Sarasota County, Florida.
    Information technology--the VA's 2008 budget request for IT 
is $1.86 billion, which includes the first phase of our 
reorganization of IT functions in the Department. This major 
transformation of IT will bring our program in line with the 
best practices in the IT industry. Greater centralization will 
play a significant role in ensuring that we fulfill our promise 
to make the VA the gold-standard for data security within the 
Federal Government, just as we have done with electronic 
medical records.
    And speaking of electronic medical records, the most 
critical IT project for our medical care program, is the 
continued operation and improvement of the Department's 
electronic health records. Electronic health records are a 
Presidential priority and VA's electronic health record system 
has been recognized nationally as the model for increasing 
productivity, quality, and patient safety.
    And, I would like to point out--and I take great pride in 
doing so--the, an article of Monday's Washington Post in the 
Health section saying, ``The VA takes the lead in paperless 
care.'' And, it takes up almost the entire section, extolling 
the VA healthcare and the VA electronic medical records. And, 
it makes me very proud of the people who work for the VA and 
who have achieved that.
    We will continue to lead the way with electronic health 
records and we want to work closely with the Department of 
Defense and other Federal agencies to make the electronic 
sharing of medical information universally a reality, sooner 
rather than later.
    Mr. Chairman, I also want to take this opportunity to 
inform you that I have formed a special Advisory Committee on 
OIF/OEF veterans and their families. Under its charter, the 
committee will focus on advising me, directly, to ensure that 
all men and women with active military service in Iraq and 
Afghanistan are transitioned to the VA in a, in a hassle-free, 
informed manner. The committee will pay particular attention to 
severely disabled veterans and their families.
    Yesterday I was in Las Vegas speaking at a VA-DOD 
conference of 1,400 people focused on improving healthcare to 
transitioning combat veterans. In recent months, as I've 
traveled across the country, I have met with the leadership of 
the Southern, Central, and Northern Commands to talk to them 
about how the VA and the DOD could work better together to care 
for our soldiers, sailors, airmen, Marines, and Coast Guardsmen 
who are returning from the global war on terror.

                           PREPARED STATEMENT

    I've also met with the Commandant of the Marine Corps, the 
Chiefs of the Reserve Components and the Senior Enlisted 
Advisors of the Active and Reserve components, including the 
Coast Guard, for that same reason.
    We at the VA recognize and take very seriously our noble 
mission of serving those who have served us. This budget of the 
President's will allow us to fulfill our responsibilities.
    Thank you, Mr. Chairman.
    [The statement follows:]

                Prepared Statement of R. James Nicholson

    Mr. Chairman and members of the Committee, good morning. I am 
pleased to be here today to present the President's 2008 budget 
proposal for the Department of Veterans Affairs (VA). The request 
totals $86.75 billion--$44.98 billion for entitlement programs and 
$41.77 billion for discretionary programs. The total request is $37.80 
billion, or 77 percent, above the funding level in effect when the 
President took office.
    The President's requested funding level will allow VA to continue 
to improve the delivery of benefits and services to veterans and their 
families in three primary areas that are critical to the achievement of 
our mission:
  --to provide timely, high-quality healthcare to a growing number of 
        patients who count on VA the most--veterans returning from 
        service in Operation Iraqi Freedom and Operation Enduring 
        Freedom, veterans with service-connected disabilities, those 
        with lower incomes, and veterans with special healthcare needs;
  --to improve the delivery of benefits through the timeliness and 
        accuracy of claims processing; and
  --to increase veterans' access to a burial option in a national or 
        state veterans' cemetery.
ensuring a seamless transition from active military service to civilian 
                                  life
    The President's 2008 budget request provides the resources 
necessary to ensure that service members' transition from active duty 
military status to civilian life continues to be as smooth and seamless 
as possible. We will continue to ensure that every seriously injured or 
ill serviceman or woman returning from combat in Operation Iraqi 
Freedom and Operation Enduring Freedom receives the treatment they need 
in a timely way.
    Recently I announced plans to create a special Advisory Committee 
on Operation Iraqi Freedom/Operation Enduring Freedom Veterans and 
Families. The panel, with membership including veterans, spouses, and 
parents of the latest generation of combat veterans, will report 
directly to me. Under its charter, the committee will focus on the 
concerns of all men and women with active military service in Operation 
Iraqi Freedom or Operation Enduring Freedom, but will pay particular 
attention to severely disabled veterans and their families.
    We will expand our ``Coming Home to Work'' initiative to help 
disabled service members more easily make the transition from military 
service to civilian life. This is a comprehensive intergovernmental and 
public-private alliance that will provide separating service members 
from Operation Iraqi Freedom and Operation Enduring Freedom with 
employment opportunities when they return home from their military 
service. This project focuses on making sure service members have 
access to existing resources through local and regional job markets, 
regardless of where they separate from their military service, where 
they return, or the career or education they pursue.
    VA launched an ambitious outreach initiative to ensure separating 
combat veterans know about the benefits and services available to them. 
During 2006 VA conducted over 8,500 briefings attended by more than 
393,000 separating service members and returning reservists and 
National Guard members. The number of attendees was 20 percent higher 
in 2006 than it was in 2005 attesting to our improved outreach effort.
    Additional pamphlet mailings following separation and briefings 
conducted at town hall meetings are sources of important information 
for returning National Guard members and reservists. VA has made a 
special effort to work with National Guard and reserve units to reach 
transitioning service members at demobilization sites and has trained 
recently discharged veterans to serve as National Guard Bureau liaisons 
in every state to assist their fellow combat veterans.
    Each VA medical center and regional office has a designated point 
of contact to coordinate activities locally and to ensure the 
healthcare and benefits needs of returning service members and veterans 
are fully met. VA has distributed specific guidance to field staff to 
make sure the roles and functions of the points of contact and case 
managers are fully understood and that proper coordination of benefits 
and services occurs at the local level.
    For combat veterans returning from Iraq and Afghanistan, their 
contact with VA often begins with priority scheduling for healthcare, 
and for the most seriously wounded, VA counselors visit their bedside 
in military wards before separation to assist them with their 
disability claims and ensure timely compensation payments when they 
leave active duty.
    In an effort to assist wounded military members and their families, 
VA has placed workers at key military hospitals where severely injured 
service members from Iraq and Afghanistan are frequently sent for care. 
These include benefit counselors who help service members obtain VA 
services as well as social workers who facilitate healthcare 
coordination and discharge planning as service members transition from 
military to VA healthcare. Under this program, VA staff provide 
assistance at 10 military treatment facilities around the country, 
including Walter Reed Army Medical Center, National Naval Medical 
Center Bethesda, Naval Medical Center San Diego, and Womack Army 
Medical Center at Fort Bragg.
    To better meet the healthcare needs of the newest generation of 
combat veterans returning from Iraq and Afghanistan, VA has established 
a polytrauma system of care for veterans and active duty personnel with 
lasting disabilities due to polytrauma and traumatic brain injury. This 
system of care will provide the highest quality of medical, 
rehabilitation, and support services. This initiative was developed 
consistent with three fundamental principles--(1) geographic 
distribution of specialty rehabilitation programs so as to facilitate 
transitioning veterans into their home communities; (2) use of an 
interdisciplinary model of care delivery where specialists from several 
medical and rehabilitation disciplines work together to develop an 
integrated treatment plan for each veteran; and (3) provide lifelong 
services for veterans with severe impairments and functional 
disabilities resulting from polytrauma and traumatic brain injury.
    VA has expanded its four polytrauma centers in Minneapolis, Palo 
Alto, Richmond, and Tampa to encompass additional specialties to treat 
patients for multiple complex injuries. Our efforts are being expanded 
to 21 polytrauma network sites and clinic support teams around the 
country providing state-of-the-art treatment closer to injured 
veterans' homes. We have made training mandatory for all physicians and 
other key healthcare personnel on the most current approaches and 
treatment protocols for effective care of patients with traumatic brain 
injuries. At each of our medical centers, we will screen all recent 
combat veterans for traumatic brain injury. We have also created an 
outside panel of experts to review VA's complete polytrauma system of 
care, including programs focused specifically on patients with 
traumatic brain injuries. Furthermore, we established a polytrauma call 
center in February 2006 to assist the families of our most seriously 
injured combat veterans and service members. This call center operates 
24 hours a day, 7 days a week to answer clinical, administrative, and 
benefit inquiries from polytrauma patients and family members.
    VA is improving coordination of care for veterans with polytrauma 
and traumatic brain injury by assigning a social work case manager to 
every patient treated at the polytrauma centers. These case managers 
handle the continuum of care and care coordination, act as the point of 
contact for emerging medical, psychosocial, or rehabilitation problems, 
and provide psychosocial support and education. In addition, we are 
using state-of-the-art video conferencing that permits top specialists 
to take an active role in the treatment of patients in remote 
locations.
    VA has significantly expanded its counseling and other medical care 
services for recently discharged veterans suffering from mental health 
disorders, including post-traumatic stress disorder. We have launched 
new programs, including dozens of new mental health teams based in VA 
medical facilities focused on early identification and management of 
stress-related disorders, as well as the recruitment of about 100 
combat veterans as counselors to provide briefings to transitioning 
service members regarding military-related readjustment needs.
                              medical care
    We are requesting $36.6 billion for medical care in 2008, a total 
more than 83 percent higher than the funding available at the beginning 
of the Bush Administration. Our total medical care request is comprised 
of funding for medical services ($27.2 billion), medical administration 
($3.4 billion), medical facilities ($3.6 billion), and resources from 
medical care collections ($2.4 billion).
Legislative Proposals
    The President's 2008 budget request identifies three legislative 
proposals which ask veterans with comparatively greater means and no 
compensable service-connected disabilities to assume a small share of 
the cost of their healthcare.
    The first proposal would assess Priority 7 and 8 veterans with an 
annual enrollment fee based on their family income:

------------------------------------------------------------------------
                                                              Annual
                      Family income                       enrollment fee
------------------------------------------------------------------------
Under $50,000...........................................         ( \1\ )
$50,000-$74,999.........................................            $250
$75,000-$99,999.........................................             500
$100,000 and above......................................             750
------------------------------------------------------------------------
\1\ None.

    The second legislative proposal would increase the pharmacy co-
payment for Priority 7 and 8 veterans from $8 to $15 for a 30-day 
supply of drugs. And the last provision would eliminate the practice of 
offsetting or reducing VA first-party co-payment debts with collection 
recoveries from third-party health plans.
    While our budget requests in recent years have included legislative 
proposals similar to these, the provisions identified in the 
President's 2008 budget are markedly different in that they have no 
impact on the resources we are requesting for VA medical care. Our 
budget request includes the total funding needed for the Department to 
continue to provide veterans with timely, high-quality medical services 
that set the national standard of excellence in the healthcare 
industry. Unlike previous budgets, these legislative proposals do not 
reduce our discretionary medical care appropriations. Instead, these 
three provisions, if enacted, would generate an estimated $2.3 billion 
in mandatory receipts to the Treasury from 2008 through 2012.
Workload
    During 2008, we expect to treat about 5,819,000 patients. This 
total is more than 134,000 (or 2.4 percent) above the 2007 estimate. 
Patients in Priorities 1-6--veterans with service-connected conditions, 
lower incomes, special healthcare needs, and service in Iraq or 
Afghanistan--will comprise 68 percent of the total patient population 
in 2008, but they will account for 85 percent of our healthcare costs. 
The number of patients in Priorities 1-6 will grow by 3.3 percent from 
2007 to 2008.
    We expect to treat about 263,000 veterans in 2008 who served in 
Operation Iraqi Freedom and Operation Enduring Freedom. This is an 
increase of 54,000 (or 26 percent) above the number of veterans from 
these two campaigns that we anticipate will come to VA for healthcare 
in 2007, and 108,000 (or 70 percent) more than the number we treated in 
2006.
Funding Drivers
    Our 2008 request for $36.6 billion in support of our medical care 
program was largely determined by three key cost drivers in the 
actuarial model we use to project veteran enrollment in VA's healthcare 
system as well as the utilization of healthcare services of those 
enrolled: inflation; trends in the overall healthcare industry; and 
trends in VA healthcare.
    The impact of the composite rate of inflation of 4.45 percent 
within the actuarial model will increase our resource requirements for 
acute inpatient and outpatient care by nearly $2.1 billion. This 
includes the effect of additional funds ($690 million) needed to meet 
higher payroll costs as well as the influence of growing costs ($1.4 
billion) for supplies, as measured in part by the Medical Consumer 
Price Index. However, inflationary trends have slowed during the last 
year.
    There are several trends in the U.S. healthcare industry that 
continue to increase the cost of providing medical services. These 
trends expand VA's cost of doing business regardless of any changes in 
enrollment, number of patients treated, or program initiatives. The two 
most significant trends are the rising utilization and intensity of 
healthcare services. In general, patients are using medical care 
services more frequently and the intensity of the services they receive 
continues to grow. For example, sophisticated diagnostic tests, such as 
magnetic resonance imaging (MRI), are now more frequently used either 
in place of, or in addition to, less costly diagnostic tools such as x-
rays. As another illustration, advances in cancer screening 
technologies have led to earlier diagnosis and prolonged treatment 
which may include increased use of costly pharmaceuticals to combat 
this disease. These types of medical services have resulted in improved 
patient outcomes and higher quality healthcare. However, they have also 
increased the cost of providing care.
    The cost of providing timely, high-quality healthcare to our 
Nation's veterans is also growing as a result of several factors that 
are unique to VA's healthcare system. We expect to see changes in the 
demographic characteristics of our patient population. Our patients as 
a group will be older, will seek care for more complex medical 
conditions, and will be more heavily concentrated in the higher cost 
priority groups. Furthermore, veterans are submitting disability 
compensation claims for an increasing number of medical conditions, 
which are also increasing in complexity. This results in the need for 
disability compensation medical examinations, the majority of which are 
conducted by our Veterans Health Administration, that are more complex, 
costly, and time consuming. These projected changes in the case mix of 
our patient population and the growing complexity of our disability 
claims process will result in greater resource needs.
Quality of Care
    The resources we are requesting for VA's medical care program will 
allow us to strengthen our position as the Nation's leader in providing 
high-quality healthcare. VA has received numerous accolades from 
external organizations documenting the Department's leadership position 
in providing world-class healthcare to veterans. For example, our 
record of success in healthcare delivery is substantiated by the 
results of the 2006 American Customer Satisfaction Index (ACSI) survey. 
Conducted by the National Quality Research Center at the University of 
Michigan Business School, the ACSI survey found that customer 
satisfaction with VA's healthcare system increased last year and was 
higher than the private sector for the seventh consecutive year. The 
data revealed that inpatients at VA medical centers recorded a 
satisfaction level of 84 out of a possible 100 points, or 10 points 
higher than the rating for inpatient care provided by the private-
sector healthcare industry. VA's rating of 82 for outpatient care was 8 
points better than the private sector.
    Citing VA's leadership role in transforming healthcare in America, 
Harvard University recognized the Department's computerized patient 
records system by awarding VA the prestigious ``Innovations in American 
Government Award'' in 2006. Our electronic health records have been an 
important element in making VA healthcare the benchmark for 294 
measures of disease prevention and treatment in the United States. The 
value of this system was clearly demonstrated when every patient 
medical record from the areas devastated by Hurricane Katrina was made 
available to all VA healthcare providers throughout the Nation within 
100 hours of the time the storm made landfall. Veterans were able to 
quickly resume their treatments, refill their prescriptions, and get 
the care they needed because of the electronic health records system--a 
real, functioning health information exchange that has been a proven 
success resulting in improved quality of care. It can serve as a model 
for the healthcare industry as the Nation moves forward with the 
public/private effort to develop a National Health Information Network.
    The Department also received an award from the American Council for 
Technology for our collaboration with the Department of Defense on the 
Bidirectional Health Information Exchange program. This innovation 
permits the secure, real-time exchange of medical record data between 
the two departments, thereby avoiding duplicate testing and surgical 
procedures. It is an important step forward in making the transition 
from active duty to civilian life as smooth and seamless as possible.
    In its July 17, 2006, edition, Business Week featured an article 
about VA healthcare titled ``The Best Medical Care in the United 
States.'' This article outlines many of the Department's 
accomplishments that have helped us achieve our position as the leading 
provider of healthcare in the country, such as higher quality of care 
than the private sector, our nearly perfect rate of prescription 
accuracy, and the most advanced computerized medical records system in 
the Nation. Similar high praise for VA's healthcare system was 
documented in the September 4, 2006, edition of Time Magazine in an 
article titled ``How VA Hospitals Became the Best.'' In addition, a 
study conducted by Harvard Medical School concluded that Federal 
hospitals, including those managed by VA, provide the best care 
available for some of the most common life-threatening illnesses such 
as congestive heart failure, heart attack, and pneumonia. Their 
research results were published in the December 11, 2006, edition of 
the Annals of Internal Medicine.
    These external acknowledgments of the superior quality of VA 
healthcare reinforce the Department's own findings. We use two primary 
measures of healthcare quality--clinical practice guidelines index and 
prevention index. These measures focus on the degree to which VA 
follows nationally recognized guidelines and standards of care that the 
medical literature has proven to be directly linked to improved health 
outcomes for patients. Our performance on the clinical practice 
guidelines index, which focuses on high-prevalence and high-risk 
diseases that have a significant impact on veterans' overall health 
status, is expected to grow to 85 percent in 2008, or a 1 percentage 
point rise over the level we expect to achieve this year. As an 
indicator aimed at primary prevention and early detection 
recommendations dealing with immunizations and screenings, the 
prevention index will be maintained at our existing high level of 
performance of 88 percent.
Access to Care
    With the resources requested for medical care in 2008, the 
Department will be able to continue our exceptional performance dealing 
with access to healthcare--96 percent of primary care appointments will 
be scheduled within 30 days of patients' desired date, and 95 percent 
of specialty care appointments will be scheduled within 30 days of 
patients' desired date. We will minimize the number of new enrollees 
waiting for their first appointment. We reduced this number by 94 
percent from May 2006 to January 2007, to a little more than 1,400, and 
we will continue to place strong emphasis on lowering, and then 
holding, the waiting list to as low a level as possible.
    An important component of our overall strategy to improve access 
and timeliness of service is the implementation on a national scale of 
Advanced Clinic Access, an initiative that promotes the efficient flow 
of patients by predicting and anticipating patient needs at the time of 
their appointment. This involves assuring that specific medical 
equipment is available, arranging for tests that should be completed 
either prior to, or at the time of, the patient's visit, and ensuring 
all necessary health information is available. This program optimizes 
clinical scheduling so that each appointment or inpatient service is 
most productive. In addition, this reduces unnecessary appointments, 
allowing for relatively greater workload and increased patient-directed 
scheduling.
Funding for Major Healthcare Programs and Initiatives
    Our request includes $4.6 billion for extended care services, 90 
percent of which will be devoted to institutional long-term care and 10 
percent to non-institutional care. By continuing to enhance veterans' 
access to non-institutional long-term care, the Department can provide 
extended care services to veterans in a more clinically appropriate 
setting, closer to where they live, and in the comfort and familiar 
settings of their homes surrounded by their families. This includes 
adult day healthcare, home-based primary care, purchased skilled home 
healthcare, homemaker/home health aide services, home respite and 
hospice care, and community residential care. During 2008 we will 
increase the number of patients receiving non-institutional long-term 
care, as measured by the average daily census, to over 44,000. This 
represents a 19.1 percent increase above the level we expect to reach 
in 2007 and a 50.3 percent rise over the 2006 average daily census.
    The President's request includes nearly $3 billion to continue our 
effort to improve access to mental health services across the country. 
These funds will help ensure VA provides standardized and equitable 
access throughout the Nation to a full continuum of care for veterans 
with mental health disorders. The resources will support both inpatient 
and outpatient psychiatric treatment programs as well as psychiatric 
residential rehabilitation treatment services. We estimate that about 
80 percent of the funding for mental health will be for the treatment 
of seriously mentally ill veterans, including those suffering from 
post-traumatic stress disorder (PTSD). An example of our firm 
commitment to provide the best treatment available to help veterans 
recover from these mental health conditions is our ongoing outreach to 
veterans of Operation Iraqi Freedom and Operation Enduring Freedom, as 
well as increased readjustment and PTSD services.
    In 2008 we are requesting $752 million to meet the needs of the 
263,000 veterans with service in Operation Iraqi Freedom and Operation 
Enduring Freedom whom we expect will come to VA for medical care. 
Veterans with service in Iraq and Afghanistan continue to account for a 
rising proportion of our total veteran patient population. In 2008 they 
will comprise 5 percent of all veterans receiving VA healthcare 
compared to the 2006 figure of 3.1 percent. Veterans deployed to combat 
zones are entitled to 2 years of eligibility for VA healthcare services 
following their separation from active duty even if they are not 
otherwise immediately eligible to enroll for our medical services.
Medical Collections
    The Department expects to receive nearly $2.4 billion from medical 
collections in 2008, which is $154 million, or 7.0 percent, above our 
projected collections for 2007. As a result of increased workload and 
process improvements in 2008, we will collect an additional $82 million 
from third-party insurance payers and an extra $72 million resulting 
from increased pharmacy workload.
    We have several initiatives underway to strengthen our collections 
processes:
  --The Department has established a private-sector based business 
        model pilot tailored for our revenue operations to increase 
        collections and improve our operational performance. The pilot 
        Consolidated Patient Account Center (CPAC) is addressing all 
        operational areas contributing to the establishment and 
        management of patient accounts and related billing and 
        collections processes. The CPAC currently serves revenue 
        operations for medical centers and clinics in one of our 
        Veterans Integrated Service Networks but this program will be 
        expanded to serve other networks.
  --VA continues to work with the Centers for Medicare and Medicaid 
        Services contractors to provide a Medicare-equivalent 
        remittance advice for veterans who are covered by Medicare and 
        are using VA healthcare services. We are working to include 
        additional types of claims that will result in more accurate 
        payments and better accounting for receivables through use of 
        more reliable data for claims adjudication.
  --We are conducting a phased implementation of electronic, real-time 
        outpatient pharmacy claims processing to facilitate faster 
        receipt of pharmacy payments from insurers.
  --The Department has initiated a campaign that has resulted in an 
        increasing number of payers now accepting electronic 
        coordination of benefits claims. This is a major advancement 
        toward a fully integrated, interoperable electronic claims 
        process.
                            medical research
    The President's 2008 budget includes $411 million to support VA's 
medical and prosthetic research program. This amount will fund nearly 
2,100 high-priority research projects to expand knowledge in areas 
critical to veterans' healthcare needs, most notably research in the 
areas of mental illness ($49 million), aging ($42 million), health 
services delivery improvement ($36 million), cancer ($35 million), and 
heart disease ($31 million).
    VA's medical research program has a long track record of success in 
conducting research projects that lead to clinically useful 
interventions that improve the health and quality of life for veterans 
as well as the general population. Recent examples of VA research 
results that are now being applied to clinical care include the 
discovery that vaccination against varicella-zoster (the same virus 
that causes chickenpox) decreases the incidence and/or severity of 
shingles, development of a system that decodes brain waves and 
translates them into computer commands that allow quadriplegics to 
perform simple tasks like turning on lights and opening e-mail using 
only their minds, improvements in the treatment of post-traumatic 
stress disorder that significantly reduce trauma nightmares and other 
sleep disturbances, and discovery of a drug that significantly improves 
mental abilities and behavior of certain schizophrenics.
    In addition to VA appropriations, the Department's researchers 
compete for and receive funds from other Federal and non-Federal 
sources. Funding from external sources is expected to continue to 
increase in 2008. Through a combination of VA resources and funds from 
outside sources, the total research budget in 2008 will be almost $1.4 
billion.
                       general operating expenses
    The Department's 2008 resource request for General Operating 
Expenses (GOE) is $1.472 billion. This is $617 million, or 72.2 
percent, above the funding level in place when the President took 
office. Within this total GOE funding request, $1.198 billion is for 
the administration of non-medical benefits by the Veterans Benefits 
Administration (VBA) and $274 million will be used to support General 
Administration activities.
Compensation and Pensions Workload and Performance Management
    VA's primary focus within the administration of non-medical 
benefits remains unchanged--delivering timely and accurate benefits to 
veterans and their families. Improving the delivery of compensation and 
pension benefits has become increasingly challenging during the last 
few years due to a steady and sizeable increase in workload. The volume 
of claims applications has grown substantially during the last few 
years and is now the highest it has been in the last 15 years. The 
number of claims we received was more than 806,000 in 2006. We expect 
this high volume of claims filed to continue, as we are projecting the 
receipt of about 800,000 claims a year in both 2007 and 2008.
    The number of active duty service members as well as reservists and 
National Guard members who have been called to active duty to support 
Operation Enduring Freedom and Operation Iraqi Freedom is one of the 
key drivers of new claims activity. This has contributed to an increase 
in the number of new claims, and we expect this pattern to persist. An 
additional reason that the number of compensation and pension claims is 
climbing is the Department's commitment to increase outreach. We have 
an obligation to extend our reach as far as possible and to spread the 
word to veterans about the benefits and services VA stands ready to 
provide.
    Disability compensation claims from veterans who have previously 
filed a claim comprise about 55 percent of the disability claims 
received by the Department each year. Many veterans now receiving 
compensation suffer from chronic and progressive conditions, such as 
diabetes, mental illness, and cardiovascular disease. As these veterans 
age and their conditions worsen, we experience additional claims for 
increased benefits.
    The growing complexity of the claims being filed also contributes 
to our workload challenges. For example, the number of original 
compensation cases with eight or more disabilities claimed nearly 
doubled during the last 4 years, reaching more than 51,000 claims in 
2006. Almost one in every four original compensation claims received 
last year contained eight or more disability issues. In addition, we 
expect to continue to receive a growing number of complex disability 
claims resulting from PTSD, environmental and infectious risks, 
traumatic brain injuries, complex combat-related injuries, and 
complications resulting from diabetes. Each claim now takes more time 
and more resources to adjudicate. Additionally, as VA receives and 
adjudicates more claims, this results in a larger number of appeals 
from veterans and survivors, which also increases workload in other 
parts of the Department, including the Board of Veterans' Appeals.
    The Veterans Claims Assistance Act of 2000 has significantly 
increased both the length and complexity of claims development. VA's 
notification and development duties have grown, adding more steps to 
the claims process and lengthening the time it takes to develop and 
decide a claim. Also, we are now required to review the claims at more 
points in the adjudication process.
    We will address our ever-growing workload challenges in several 
ways. First, we will continue to improve our productivity as measured 
by the number of claims processed per staff member, from 98 in 2006 to 
101 in 2008. Second, we will continue to move work among regional 
offices in order to maximize our resources and enhance our performance. 
Third, we will further advance staff training and other efforts to 
improve the consistency and quality of claims processing across 
regional offices. And fourth, we will ensure our claims processing 
staff has easy access to the manuals and other reference material they 
need to process claims as efficiently and effectively as possible and 
further simplify and clarify benefit regulations.
    Through a combination of management/productivity improvements and 
an increase in resources in 2008 to support 457 additional staff above 
the 2007 level, we will improve our performance in the area most 
critical to veterans--the timeliness of processing rating-related 
compensation and pension claims. We expect to improve the timeliness of 
processing these claims to 145 days in 2008. This level of performance 
is 15 days better than our projected timeliness for 2007 and a 32-day 
improvement from the average processing time we achieved last year. In 
addition, we anticipate that our pending inventory of disability claims 
will fall to about 330,000 by the end of 2008, a reduction of more than 
40,000 (or 10.9 percent) from the level we project for the end of 2007, 
and nearly 49,000 (or 12.9 percent) lower than the inventory at the 
close of 2006. At the same time we are improving timeliness, we will 
also increase the accuracy of our decisions on claims from 88 percent 
in 2006 to 90 percent in 2008.
Education and Vocational Rehabilitation and Employment Performance
    With the resources we are requesting in 2008, key program 
performance will improve in both the education and vocational 
rehabilitation and employment programs. The timeliness of processing 
original education claims will improve by 15 days during the next 2 
years, falling from 40 days in 2006 to 25 days in 2008. During this 
period, the average time it takes to process supplemental claims will 
improve from 20 days to just 12 days. These performance improvements 
will be achieved despite an increase in workload. The number of 
education claims we expect to receive will reach about 1,432,000 in 
2008, or 4.8 percent higher than last year. In addition, the 
rehabilitation rate for the vocational rehabilitation and employment 
program will climb to 75 percent in 2008, a gain of 2 percentage points 
over the 2006 performance level. The number of program participants 
will rise to about 94,500 in 2008, or 5.3 percent higher than the 
number of participants in 2006.
    Our 2008 request includes $6.3 million for a Contact Management 
Support Center for our education program. These funds will be used 
during peak enrollment periods for contract customer service 
representatives who will handle all education calls placed through our 
toll-free telephone line. We currently receive about 2.5 million phone 
inquiries per year. This initiative will allow us to significantly 
improve performance for both the blocked call rate and the abandoned 
call rate.
    The 2008 resource request for VBA includes about $4.3 million to 
enhance our educational and vocational counseling provided to disabled 
service members through the Disabled Transition Assistance Program. 
Funds for this initiative will ensure that briefings are conducted by 
experts in the field of vocational rehabilitation, including 
contracting for these services in localities where VA professional 
staff are not available. The contractors would be trained by VA staff 
to ensure consistent, quality information is provided. Also in support 
of the vocational rehabilitation and employment program, we are seeking 
$1.5 million as part of an ongoing project to retire over 650,000 
counseling, evaluation, and rehabilitation folders stored in regional 
offices throughout the country. All of these folders pertain to cases 
that have been inactive for at least 3 years and retention of these 
files poses major space problems.
    In addition, our 2008 request includes $2.4 million to continue a 
major effort to centralize finance functions throughout VBA, an 
initiative that will positively impact operations for all of our 
benefits programs. The funds to support this effort will be used to 
begin the consolidation and centralization of voucher audit, agent 
cashier, purchase card, and payroll operations currently performed by 
all regional offices.
                    national cemetery administration
    The President's 2008 budget request includes $166.8 million in 
operations and maintenance funding for the National Cemetery 
Administration (NCA). These resources will allow us to meet the growing 
workload at existing cemeteries by increasing staffing and funding for 
contract maintenance, supplies, and equipment. We expect to perform 
nearly 105,000 interments in 2008, or 8.4 percent higher than the 
number of interments we performed in 2006. The number of developed 
acres (over 7,800) that must be maintained in 2008 will be 7.3 percent 
greater than last year.
    Our budget request includes $3.7 million to prepare for the 
activation of interment operations at six new national cemeteries--
Bakersfield, California; Birmingham, Alabama; Columbia-Greenville, 
South Carolina; Jacksonville, Florida; southeastern Pennsylvania; and 
Sarasota County, Florida. Establishment of these six new national 
cemeteries is directed by the National Cemetery Expansion Act of 2003.
    The 2008 budget has $9.1 million to address gravesite renovations 
as well as headstone and marker realignment. These improvements in the 
appearance of our national cemeteries will help us maintain the 
cemeteries as shrines dedicated to preserving our Nation's history and 
honoring veterans' service and sacrifice.
    With the resources requested to support NCA activities, we will 
expand access to our burial program by increasing the percent of 
veterans served by a burial option within 75 miles of their residence 
to 84.6 percent in 2008, which is 4.4 percentage points above our 
performance level at the close of 2006. In addition, we will continue 
to increase the percent of respondents who rate the quality of service 
provided by national cemeteries as excellent to 98 percent in 2008, or 
4 percentage points higher than the level of performance we reached 
last year.
          capital programs (construction and grants to states)
    VA's 2008 request includes $1.078 billion in appropriated funding 
for our capital programs. Our request includes $727.4 million for major 
construction projects, $233.4 million for minor construction, $85 
million in grants for the construction of State extended care 
facilities, and $32 million in grants for the construction of State 
veterans cemeteries.
    The 2008 request for construction funding for our healthcare 
programs is $750 million--$570 million for major construction and $180 
million for minor construction. All of these resources will be devoted 
to continuation of the Capital Asset Realignment for Enhanced Services 
(CARES) program, total funding for which comes to $3.7 billion over the 
last 5 years. CARES will renovate and modernize VA's healthcare 
infrastructure, provide greater access to high-quality care for more 
veterans, closer to where they live, and help resolve patient safety 
issues. Within our request for major construction are resources to 
continue six medical facility projects already underway:
  --Denver, Colorado ($61.3 million)--parking structure and energy 
        development for this replacement hospital
  --Las Vegas, Nevada ($341.4 million)--complete construction of the 
        hospital, nursing home, and outpatient facilities
  --Lee County, Florida ($9.9 million)--design of an outpatient clinic 
        (land acquisition is complete)
  --Orlando, Florida ($35.0 million)--land acquisition for this 
        replacement hospital
  --Pittsburgh, Pennsylvania ($40.0 million)--continue consolidation of 
        a 3-division to a 2-division hospital
  --Syracuse, New York ($23.8 million)--complete construction of a 
        spinal cord injury center.
    Minor construction is an integral component of our overall capital 
program. In support of the medical care and medical research programs, 
minor construction funds permit VA to address space and functional 
changes to efficiently shift treatment of patients from hospital-based 
to outpatient care settings; realign critical services; improve 
management of space, including vacant and underutilized space; improve 
facility conditions; and undertake other actions critical to CARES 
implementation. Our 2008 request for minor construction funds for 
medical care and research will provide the resources necessary for us 
to address critical needs in improving access to healthcare, enhancing 
patient privacy, strengthening patient safety, enhancing research 
capability, correcting seismic deficiencies, facilitating realignments, 
increasing capacity for dental services, and improving treatment in 
special emphasis programs.
    We are requesting $191.8 million in construction funding to support 
the Department's burial program--$167.4 million for major construction 
and $24.4 million for minor construction. Within the funding we are 
requesting for major construction are resources to establish six new 
cemeteries mandated by the National Cemetery Expansion Act of 2003. As 
previously mentioned, these will be in Bakersfield ($19.5 million), 
Birmingham ($18.5 million), Columbia-Greenville ($19.2 million), 
Jacksonville ($22.4 million), Sarasota ($27.8 million), and 
southeastern Pennsylvania ($29.6 million). The major construction 
request in support of our burial program also includes $29.4 million 
for a gravesite development project at Fort Sam Houston National 
Cemetery.
                         information technology
    VA's 2008 budget request for information technology (IT) is $1.859 
billion. This budget reflects the first phase of our reorganization of 
IT functions in the Department which will establish a new IT management 
structure in VA. The total funding for IT in 2008 includes $555 million 
for more than 5,500 staff who have been moved to support operations and 
maintenance activities. Prior to 2008, the funding and staff supporting 
these IT activities were reflected in other accounts throughout the 
Department.
    Later in 2007 we will implement the second phase of our IT 
reorganization strategy by moving funding and staff devoted to 
development projects and activities. As a result of the second stage of 
the IT reorganization, the Chief Information Officer will be 
responsible for all operations and maintenance as well as development 
activities, including oversight of, and accountability for, all IT 
resources within VA. This reorganization will make the most efficient 
use of our IT resources while improving operational effectiveness, 
providing standardization, and eliminating duplication.
    This major transformation of IT will bring our program under more 
centralized control and will play a significant role in ensuring we 
fulfill my promise to make VA the gold standard for data security 
within the Federal government. We have taken very aggressive steps 
during the last several months to ensure the safety of veterans' 
personal information, including training and educating our employees on 
the critical responsibility they have to protect personal and health 
information, launching an initiative to expeditiously upgrade all VA 
computers with enhanced data security and encryption, entering into an 
agreement with an outside firm to provide free data breach analysis 
services, initiating any needed background investigations of employees 
to ensure consistency with their level of authority and 
responsibilities in the Department, and beginning a campaign at all of 
our healthcare facilities to replace old veteran identification cards 
with new cards that reduce veterans' vulnerability to identify theft. 
These steps are part of our broader commitment to improve our IT and 
cyber security policies and procedures.
    Within our total IT request of $1.859 billion, $1.304 billion (70 
percent) will be for non-payroll costs and $555 million (30 percent) 
will be for payroll costs. Of the non-payroll funding, $461 million 
will support projects for our medical care and medical research 
programs, $66 million will be devoted to projects for our benefits 
programs, and $446 million will be needed for IT infrastructure 
projects. The remaining $331 million of our non-payroll IT resources in 
2008 will fund centrally-managed projects, such as VA's cyber security 
program, as well as management projects that support department-wide 
initiatives and operations like the replacement of our aging financial 
management system and the development and implementation of a new human 
resources management system.
    The most critical IT project for our medical care program is the 
continued operation and improvement of the Department's electronic 
health record system, a Presidential priority which has been recognized 
nationally for increasing productivity, quality, and patient safety. 
Within this overall initiative, we are requesting $131.9 million for 
ongoing development and implementation of HealtheVet-VistA (Veterans 
Health Information Systems and Technology Architecture). This 
initiative will incorporate new technology, new or reengineered 
applications, and data standardization to improve the sharing of, and 
access to, health information, which in turn, will improve the status 
of veterans' health through more informed clinical care. This system 
will make use of standards accepted by the Secretary of Health and 
Human Services that will enhance the sharing of data within VA as well 
as with other Federal agencies and public and private sector 
organizations. Health data will be stored in a veteran-centric format 
replacing the current facility-centric system. The standardized health 
information can be easily shared between facilities, making patients' 
electronic health records available to them and to all those authorized 
to provide care to veterans.
    Until HealtheVet-VistA is operational, we need to maintain the 
VistA legacy system. This system will remain operational as new 
applications are developed and implemented. This approach will mitigate 
transition and migration risks associated with the move to the new 
architecture. Our budget provides $129.4 million in 2008 for the VistA 
legacy system. Funding for the legacy system will decline as we advance 
our development and implementation of HealtheVet-VistA.
    In veterans benefits programs, we are requesting $31.7 million in 
2008 to support our IT systems that ensure compensation and pension 
claims are properly processed and tracked, and that payments to 
veterans and eligible family members are made on a timely basis. Our 
2008 request includes $3.5 million to continue the development of The 
Education Expert System. This will replace the existing benefit payment 
system with one that will, when fully deployed, receive application and 
enrollment information and process that information electronically, 
reducing the need for human intervention.
    VA is requesting $446 million in 2008 for IT infrastructure 
projects to support our healthcare, benefits, and burial programs 
through implementation and ongoing management of a wide array of 
technical and administrative support systems. Our request for resources 
in 2008 will support investment in five infrastructure projects now 
centrally managed by the CIO--computing infrastructure and operations 
($181.8 million); network infrastructure and operations ($31.7 
million); voice infrastructure and operations ($71.9 million); data and 
video infrastructure and operations ($130.8 million); and regional data 
centers ($30.0 million).
    VA's 2008 request provides $70.1 million for cyber security. This 
ongoing initiative involves the development, deployment, and 
maintenance of a set of enterprise-wide controls to better secure our 
IT architecture in support of all of the Department's program 
operations. Our request also includes $35.0 million for the Financial 
and Logistics Integrated Technology Enterprise (FLITE) system. FLITE is 
being developed to address a long-standing material weakness and will 
effectively integrate and standardize financial and logistics data and 
processes across all VA offices as well as provide management with 
access to timely and accurate financial, logistics, budget, asset, and 
related information on VA-wide operations. In addition, we are asking 
for $34.1 million for a new state-of-the-art human resource management 
system that will result in an electronic employee record and the 
capability to produce critical management information in a fraction of 
the time it now takes using our antiquated paper-based system.
                                summary
    Our 2008 budget request of $86.75 billion will provide the 
resources necessary for VA to:
  --strengthen our position as the Nation's leader in providing high-
        quality healthcare to a growing patient population, with an 
        emphasis on those who count on us the most--veterans returning 
        from service in Operation Iraqi Freedom and Operation Enduring 
        Freedom, veterans with service-connected disabilities, those 
        with lower incomes, and veterans with special healthcare needs;
  --improve the delivery of benefits through the timeliness and 
        accuracy of claims processing; and
  --increase veterans' access to a burial option by opening new 
        national and State veterans' cemeteries.
    I look forward to working with the members of this committee to 
continue the Department's tradition of providing timely, high-quality 
benefits and services to those who have helped defend and preserve 
freedom around the world.

    Senator Reed. Thank you very much, Mr. Secretary, for your 
statement.
    We will engage in our 6-minute rounds of questioning. And, 
I will yield my initial 6 minutes to Senator Byrd.
    Senator Byrd, do you have questions?
    Senator Byrd. Mr. Secretary we have been told that the VA 
hospitals are juggling the books to make it appear that the 
time to get an appointment is shorter than it is. Allegedly, 
appointments are being made, then cancelled, and rescheduled to 
make it appear that the time from making the appointment, to 
actually seeing a doctor, is shorter than it is. Are you aware 
of this practice?
    Secretary Nicholson. Senator Byrd, I've been Secretary now, 
for about 26 months and in that time, I have had it brought to 
my attention that this might be happening in isolated cases. 
And, I'm also told that the Inspector General looked into this. 
Because this would be a very unacceptable practice, and that it 
may have been found in very isolated cases, but it certainly is 
not systemic.
    I'm going to read this, because I'm under oath so I want to 
be as precise as I can be. First of all, I can tell you that 
the VA is very committed to improving access. All veterans who 
have urgent or emergent needs that come to a hospital are seen 
immediately. We are focused on getting appointments within 30 
days of the veteran's desired date.
    In fiscal year 2006, which was the last fiscal year, the VA 
provided 39 million outpatient appointments to 5.3 million 
veterans. Ninety-five percent of those were provided within 30 
days of the desired date, 98 percent of those were provided 
within 60 days of the desired date. And, most of those outliers 
were appointments for sub-specialty needs in other clinics.
    We also implemented the Advanced Clinical Access Program as 
a process to speed up the appointment process and it has worked 
very successfully. Because this is pretty extraordinary when 
you think of the volume that we do, that 95 percent of them get 
an appointment within 30 days.
    Now, I would also like to say if you have an incident of 
that or if a veteran has talked to you with that, I would very 
much appreciate if you would bring that to me with specificity, 
because I will direct the Inspector General to look into that. 
Because if that is happening, that is unacceptable even on an 
isolated incident and we will investigate that.
    Senator Byrd. Right? Now this is a second question. Will 
you look into this again and respond to the subcommittee?
    Secretary Nicholson. Yes, indeed. I will look into it, and 
I will repeat and say that if you have the specific case or 
incidences, it would greatly help us in looking into it.
    Mr. Chairman, I want to thank you and I want to thank all 
members. And, I want to thank the witnesses.
    Senator Reed. Thank you very much, Mr. Chairman.
    Senator Byrd. Yes, sir.
    Senator Reed. Senator Hutchison, your questions please?
    Senator Hutchison. Thank you, Mr. Chairman. I want to start 
with the issue of the claims backlog, Mr. Secretary. I know 
that you have said that you are appointing patient advocates 
and more claims adjusters. What do you--what is your goal to 
try to get this backlog really alleviated? I'm told that the 
current backlog is over 400,000, and you're saying 800,000 new 
claims are coming in annually. I sympathize with you--that is a 
huge workload.
    One of the things that has been suggested is that you maybe 
transfer some of the claims adjustment issues from regions that 
are overloaded to regions that might not be as overloaded, is 
that something that you're looking at? What is your plan to 
address this comprehensively?
    Secretary Nicholson. Well, first to your specific question 
at the end there, Senator Hutchison, we are doing that now. 
We're, the term of art that they use is ``brokering'' in that 
where a regional office might not be as loaded as another, we 
take bundles of claims to those, and have them evaluated by 
that office. They all use the same criteria, so they're, in 
that respect, able to do that, there's no jurisdictional border 
that would prohibit that.
    This is a beguiling problem. In a way we're kind of the 
victim of our own success, because we have a very active 
outreach effort going on, and education program going on to 
inform veterans, to inform Active duty members of the potential 
of benefits that may be available to them at the VA. In fact, 
we have VA personnel embedded at over 140 military 
establishments today, whose mission is to talk to people who 
are on the verge of getting out of the service. So that they 
know what is available, what they've earned, what they may be 
eligible for. We also have implemented a program called 
benefits during discharge, which allows us to accelerate the 
adjudication of a claim for a, about to be, or just departed 
Active duty member, and that has helped.
    This backlog, by the way, has come down--a few years ago is 
was like 212 days or something--and I would say, and I would 
commend the people in the Veterans' Benefit Administration 
because they really are working hard, we had 806,000 come in, 
and they----
    Senator Hutchison. Could I?
    Secretary Nicholson [continuing]. Processed almost that 
many.
    Senator Hutchison. Could I interrupt you for just a minute, 
because some of the people who cause this backlog are people 
who are coming in asking for benefits long after they have 
served, so it could have been in the Korean War or Vietnam or 
something. So, that is one category.
    But, do you prioritize people who are coming out right now, 
and particularly those who are injured? Is there a strata where 
you put people who are injured in Iraq, Afghanistan or any 
Active Duty, or any person now serving Guard, Reserve, 
whatever, do you make that a priority? So that somebody who's 
leaving because they're--they've lost a limb, or they have 
severe disabilities gets a, more immediate action?
    Secretary Nicholson. Yes, we do, Senator. We prioritize the 
returning OIF/OEF, Iraq and Afghanistan veterans, we prioritize 
them, and we prioritize the claims of veterans who are 70 years 
old, or older.
    Senator Hutchison. Okay.
    Secretary Nicholson. And we have special teams that are 
working to expedite those claims, in both cases.
    Senator Hutchison. Okay. Well, I just want to highlight, 
and I have, and you have responded, that this has to be taken 
care of.
    I want to ask a quick question, and then I hope I have time 
for----
    Senator Reed. There will be a second round.
    Senator Hutchison. Okay. Quick question on the study for 
south Texas for a Veterans Hospital--it just seems like it's 
been over--I know it's been over a year, that seems awfully 
long--could you tell me the status, and can we expect a report? 
We're told now, July--is that a set time, and I'd just like a 
status report on that?
    Secretary Nicholson. The study is still ongoing, and we do 
expect it to be completed in July, yes.
    Senator Hutchison. Thank you. Last question, or, for this 
round--the data security issue--I just can't not address that, 
since it's been in the news so much lately.
    We understand that Mr. Howard in your agency has begun 
using a Fidelis testing software to monitor VA employees' 
compliance, in addition to all of the education that you are 
giving to employees, regarding the need for this privacy and 
security of data.
    However, the testing software showed that there were--just 
in the week of March 5-11, 2007, violations in the Boston VA, 
of the security procedures. Can you tell me if you--how you 
think that happened, after all the education efforts, and what 
you are doing to assure the privacy of data of our veterans?
    Secretary Nicholson. Well, first of all, in a transcendent 
way, we're totally transforming the IT system in the VA. We've 
moved thousands of people from a decentralized format to a 
centralized format under the cone of the Assistant Secretary 
for IT, which is General Howard.
    We have intensive training going on, we're trying to re-
culturate the entire organization about the seriousness of 
data. It's handling, and it's security. And, we're making 
considerable progress. We have, taking the personal laptops and 
computers, personally owned, from people and giving them 
Government computers, we want the information on there to be 
encrypted. But, we're still dealing with human beings, some of 
whom have bad habits, and some of whom still have an overly lax 
attitude about the severity of this. But, I would say that 
we've made a lot of progress, we're encouraging self-reporting, 
we get those Security Operation Center reports every day, and 
people, I think, are quite forthcoming about the reporting of 
it, we take immediate corrective action if it's a serious 
episode.
    I'd like to invite, if I could, General Howard, if he would 
like to add anything specifically, particularly with regard to 
your question about the software.
    Senator Hutchison. Yes, I should have addressed that to 
you, thank you.
    General Howard. Senator Hutchison, the software you're 
referring to is one of several products that we're testing 
right now, Fidelis. The incidents you refer to were a result of 
the testing we were conducting, and just to let you know that 
what that was, monitoring activity, e-mail-type activity over 
the network. This particular software has the capability to 
terminate sessions, based on certain rules, and that's why 
we're very interested in it, and that's why we uncovered emails 
that were transmitting large amounts of information that should 
not have been transmitted. In fact, there were several of them 
that were serious enough that we actually reported them as 
``incidents'' and those are the ones that you're referring to.
    What has happened to the individuals who were involved in 
that, I'm not sure. They were in the Veterans' Health 
Administration, I think. Dr. Kussman is looking at that. There 
weren't a lot of them, but there were several.
    And I'll just summarize, the software like this we do 
intend to deploy, along with other techniques to help us better 
control activity on our networks.
    Senator Reed. Thank you, Senator Hutchison, and the vote as 
we have realized, has been delayed, and we will have at least 
two rounds, so I think everyone will have ample time to ask 
questions.
    Thank you, Mr. Secretary, for your statement today and your 
response to questions.
    Let me agree with you that 177 days is just much too long 
to process a claim. What is your target date in terms of your, 
ordering your or requesting your organization to manage down 
to?
    Secretary Nicholson. Well, the ultimate target date, Mr. 
Chairman is 125 days. But, because of the prioritization that 
we're giving to these young combatants returning from the War, 
I've put down a marker for us to do those in 100 days.
    Now, this is a complicated process, and it would take up 
quite a bit of the time of your hearing to really give you a 
primer on it, but I'll do it in a truncated form, and maybe use 
an example.
    A veteran comes into us--and by the way, veteran's claims 
are never res judicata--ever. They can continue to bring them 
back, if they're denied on an appeal, they can re-apply, if 
they get an award at a certain percent, they can come back in 
and, they are never finished. And, of those 800,000, roughly, 
that we saw last year, about half of them had been in there 
before.
    The Congress and the courts have afforded continual rights 
to the veteran claimants, and I'm just stating this, I'm not 
evaluating it or editorializing on it. But, for example, if a 
claimant comes in and said, ``I have, an arthritic knee, and I 
got it, I know I got in a parachute jump in the 82d Airborne 
Division in 1988,'' we must, in our fiduciary, go back and see, 
one, was the guy a parachutist? Was he in the 82d? Did he jump 
on that day? Did he go to the dispensary because he said he 
hurt his knee? And we need to find evidence of that, and those 
paper files, non-electronic, need investigating. And, if we 
need to go back to a veteran claimant and say, ``We need more 
verification or another document,'' he has 60 days, each time 
we do that, he has 60 days within which to respond to us.
    The culmination of this is while we can shorten it, and 
we're going to mobilize on this OIF/OEF on a test basis to see 
if we can't do that in 100 days, and they will have to work 
with us--it has some organic difficulties.
    Senator Reed. I recognize the complexity, because we have 
veterans coming through our offices every day asking for 
assistance. But, if your target is 125 days, do you have the 
resources in this budget, and succeeding budget plans to meet 
that target for all veterans?
    Secretary Nicholson. In this budget, as I testified, we are 
asking for resources to increase claim evaluators in the amount 
of 450, and again, they take a fair amount of training, but we 
project that would reduce it to 145 days.
    Senator Reed. So, we still have a ways to go, to get----
    Secretary Nicholson. Still have a ways to go to get the 
145.
    Senator Reed. Thank you, Mr. Secretary.
    Mr. Secretary, let me also commend you for the screening of 
all OIF/OEF veterans for traumatic brain injuries, and it's a 
great first step, but can you tell us what the next step is, 
after that? After you've identified these individuals?
    Secretary Nicholson. Yes, sir. As I've said, we're going to 
screen all of them now, and we've just about completed the 
training of all of our staff, our clinicians, to be able to do 
that. And then, they will commence a treatment regime for those 
that have any showing of either mild or moderate brain damage. 
I attended yesterday a session we had with DOD on this subject, 
so I learned a lot just yesterday about this, but it's often 
very difficult to discern whether or not they have any physical 
symptoms of it at some point.
    But we are being very diligent, we think, and of those 
that--through their answers to the questions that we give them 
seem to indicate, because of some experience, some moment of 
forgetfulness or something--we would then refer them for a 
neurological assessment. I think we have set up a very good 
program.
    Senator Reed. One of the difficulties is that once the 
person leaves the military, they leave the post, and the post 
hospital, and the whole structure, very structured environment, 
and go off to their--many times--small towns, where the VA 
doesn't have a huge presence. Are you reaching out to private 
clinicians to be able to treat these individuals who are 
identified with traumatic brain injuries, and doing it in a 
systematic way?
    Secretary Nicholson. We have been having some meetings, in 
fact, we had one in my conference room recently with the 
Association of the Private Rehabilitative Clinics, and we are 
interfacing with them, and we have a policy--if we cannot 
provide that kind of therapy and care to a veteran on a 
reasonable basis, we then can allow them to go out to the 
outside on a contract basis, and get this care, yes.
    Senator Reed. And, are you programming funds for this 
activity in this budget and succeeding budgets?
    Secretary Nicholson. Yes, we are. I'll ask Dr. Kussman to 
maybe give you more detail, Mr. Chairman.
    Dr. Kussman. Thank you, Mr. Secretary.
    The Secretary has alluded to the fact that we have this 
screen, and on the basis of the screen, if the questions are 
answered positively, they get a referral for a neuro-cognitive 
assessment, that is not as easy as it sounds, as you know. 
There's no x-ray or blood test that can be done to assess it, 
but further evaluation would then determine what kind of 
treatment, if anything.
    We're fortunate, the few studies that have been done are 
looking at mild to moderate TBI, longitudinally, long term, 
have shown that most people--thank goodness--will get better. 
And, so the important thing is to be able to identify them, and 
then follow them, in making sure that they get better, and if 
they don't, do everything possible to assist them.
    We do need to aggressively assist the civilian community, 
because as you allude to, the average practitioner in the 
country probably doesn't have much experience with TBI, and 
that's a fertile area that we need to look at.
    Senator Reed. Thank you very much, Doctor.
    Senator Craig.
    Senator Craig. Mr. Chairman, thank you very much. Let me 
make a comment more than a question, because as the chairman, 
now ranking member of the authorizing committee, I've had an 
opportunity to look at the budget of VA, to the extent that 
we've even offered views and estimates necessary to go to the 
Budget Committee, so that the budget that we now have in front 
of us to appropriate to, I've already screened.
    And so, as a result of that, I want to make this statement, 
and then ask a question.
    Mr. Chairman, just 2 months ago, the Veterans Affairs 
Committee held the hearings on the budget. At that time, I 
remarked to Secretary Nicholson that it must have been a little 
difficult to develop a budget without the knowledge of the 
fiscal year 2007 appropriation, because we had not yet passed 
it. As everyone knows, we now have passed the bill, the VA 
received about a $3.5 billion increase in funding relative to 
the 2006 budget. Of course, not long after the bill passed, we 
also passed a supplemental appropriation for, fiscal year 2007, 
which added another $1.7 billion, bringing the total increase 
for this year to about $5.2 billion, or just over a 15.5 
percent increase. Most of the money is for the medical system 
which, assuming enactment at some point of a supplemental bill, 
will have about $35 billion this year.
    Mr. Secretary, you've requested about $36.5 billion for 
medical care for next year. A few months ago that was a pretty 
strong increase, of about $2.9 billion. However, at this point, 
your increase would be about $1.3 billion over what you're 
likely to have for the rest of the fiscal year.
    Further, the Senate has gone on record as suggesting that 
we need around $40 billion for medical care, alone, next year. 
The money is coming in, in my opinion, in huge waves.
    Mr. Chairman, I recognize that returning troops from Iraq 
and Afghanistan are going to require a substantial infusion of 
money over the long term. And, I am committed to doing 
everything and anything we can to help the men and women who 
return from war injured, physically and mentally. I have even 
suggested that we should let them go outside of the VA system, 
where necessary. And we just have had reports this morning 
coming in, that maybe in the area of prosthesis and other 
areas, where VA is not yet geared up, and yet the private 
sector is clearly out there in advance of that, that some of 
our military people ought to be able to go there, or our 
veterans.
    But right now, I fear, we are almost throwing money at VA, 
with little planning on the part of the Agency as to how it 
could possibly be spent. And then, 6 months from now, we are 
going to hold another hearing, asking the VA one of two 
questions, Mr. Chairman: Why didn't you spend it all? That will 
be one of the questions, or, Why didn't you spend it all 
wisely?
    I hope we are mindful of those possibilities during this 
fiscal cycle. Additionally, Mr. Chairman, I know all of us here 
at the committee are concerned about VA's claims processing 
systems, and problems, I'd like to suggest that maybe money 
isn't a solution to all of those problems that plague the VBA. 
With the additional employees VA has requested for fiscal year 
2008, VBA staffing will have a increase 61 percent since 1997, 
and funding for compensation and pension service will have 
increased 118 percent. Yet probability--but productivity has 
been deteriorating, and the number of pending cases has been on 
the rise.
    And while more staffing may help, I don't believe that 
simply adding more employees is a long-term solution to the 
problem. For many years, experts have stressed that significant 
improvements may not be possible without fundamental changes in 
the system.
    A 1996 Veterans' Claims Commission concluded that problems 
with the existing systems are so many and varied, that it 
cannot be fine-tuned into a system that will consistently 
produce timely and high-quality adjudication products. After 
years of struggling to improve the performance of the existing 
system, it may be time to acknowledge that those experts were 
right--that fundamental changes are needed before we see the 
kind of lasting improvement we desire. And, Mr. Secretary, I am 
pleased that you are moving in that direction.
    Those are the issues that concern me. The question is, Mr. 
Chairman, the 2007 supplemental--Mr. Secretary, the 2007 
supplemental and the budget resolution of 2008, which provide 
VHA with about $5 billion more than your agency believes is 
necessary to fund operations--question, Do you believe VA can 
responsibly allocate that level of increased resources in such 
a short period of time? And what might be some of the 
challenges or issues you would encounter in planning to spend 
that amount of money?
    Secretary Nicholson. Well, I think it's a very good 
question, Senator Craig, I mean, we're a big agency with over 
1,400 points of where we dispense medical care, from Maine to 
Manila and we have a huge benefits operation going on, given 
also the real estate stock that we have, and the age of it, we 
probably could always use, use more resources.
    A very important part of the question to me is, can you 
spend it within the timeframe that you're supposed to? And 
sometimes, I think to do that prudently, is difficult. We have 
had incidents where we've been given more money to spend in 
mental health. That money, though, was subject to a CR, the CR, 
late in the fiscal cycle was released, and in that envelope 
that we had left, we did not spend it all, and we were 
criticized for that.
    But, the reason for that--and the same applying 
prospectively--is that we're talking about people with real 
specialties, and, they don't all grow on trees, and they're not 
all willing to move to certain locations, to be there where we 
want to set up a Center of Excellence, or where we have a 
particular need, so we have to recruit them. And these things 
take, they take time.
    So, I think the time part of it, is one that I--couldn't 
sit here, and certainly couldn't under oath say we could spend 
all of this within the prescribed time of that fiscal envelope, 
no.
    Senator Craig. Thank you.
    Mr. Chairman, thank you.
    Senator Reed. Thank you very much, Senator Craig.
    Senator Allard.
    Senator Allard. Thank you, Mr. Chairman.
    First of all, I want to recognize the improvement that's 
happened at the VA in the past several years. Some of it 
started before you assumed your term, so I have to credit your 
predecessor as well, but I think you've continued to improve on 
it, and I note that the American Customer Satisfaction Index, 
on their seventh consecutive year says that VA has earned 
higher marks in the private healthcare industry--this is on 
customer satisfaction--and I think you're to be commended about 
that.
    Colorado, as you're well aware of, has experienced a 
bigger, and a more important role, as far as our National 
defense is concerned, in many aspects, particularly as we move 
toward a modern military. And, I would say, before 9/11 that 
the healthcare that we provided our veterans in Colorado, at 
best, was marginal.
    But, the Veterans Administration has been willing to make 
some tough decisions in Colorado, we closed a VA hospital--how 
many times does that happen in a State? And, in replace of 
that, we put in some regional clinics. And, so, what it did, 
was made medical services much more available to a segment of 
the population that weren't being well served.
    And, the input that I'm getting from those veterans in 
southern Colorado, where that was located, has been very 
positive, since they appreciate the fact that they have these 
clinics.
    And one aspect in going through these clinics, and 
personally visiting them that--we've looked at is their 
electronic record keeping and everything, and it's phenomenal. 
And, I think that's added to that, also, I hope you continue 
that.
    I would like to join with Senator Hutchison in saying that 
we need to work on getting a transition from active military 
over to the veterans. And, I understand how complicated that 
could be, particularly if they come back home, and maybe they, 
then they re-enroll or something, back and forth. But, I do 
think that's something we really work on, and I think it's a 
doable thing, but we need to work on compatibility in our 
programming.
    In--so, you know, with the closure of the Fort Lyons 
Hospital and then those clinics opening up, Colorado, and those 
veterans feel well served. We've had a hospital in Colorado 
that has--you know, as far as medical care been doing pretty 
good, but it's just been getting outdated and old. And, as a 
result of that, you've recognized that need, and now in the 
Denver area, you're in the process of putting together, and 
constructing, we made the land agreements and everything, 
putting a plan together for a Veterans' Hospital in Denver to 
serve the entire Rocky Mountain Region, and provide some very, 
very high quality care, I'm convinced.
    And, I understand that Veterans' Hospitals don't come 
cheaply, and I appreciate your recognizing the needs--which are 
rather unique in the State of Colorado, because of our growing 
veteran population--people get assigned there, they decide to 
come back there and retire. And, so we're experiencing 
unprecedented growth, I think, in the veterans population, but 
your modernizing the VA has helped, and I think, provide good 
care despite that stress.
    Now, I've asked you to update the committee, what plans you 
foresee for the Veterans' Hospital there at the Fitzsimmons 
site in the future, and how you plan on meeting--you've got an 
additional amount in the budget of $62 million or so, which is 
an increase from last year. Now, we're going to have some 
expensive years ahead of us, now, we get into actual 
construction. Could you kind of indicate to me how you plan on 
generating the revenue, and what you plan on doing with those 
extra monies that's going to be needed to finish the 
construction of that hospital?
    Secretary Nicholson. Yes, I can, Senator Allard.
    We have slightly over $100 million approved so far for that 
project, as you know, because you've worked on this, and been 
very helpful. We've chosen the architect engineer, we've 
acquired the major part of the site for this, after months and 
months of negotiation with the city of Aurora to put this 
hospital out where it belongs, which is right next to the 
interstate highway, and right next to the University of 
Colorado Hospital, with whom the VA has been affiliating for 
over 50 years. In fact, it's interesting for some people to 
know that the first liver transplant ever--successful liver 
transplant ever done on a human being was done at the Denver VA 
Hospital, in consult with the University of Colorado.
    We will now continue to assemble the rest of the ground 
that we have, so we have the resources for that, and to do the 
design of the hospital. We, though, must come back here to the 
Congress, and get the subsequent approvals for the funding that 
it's going to take to build and finish the hospital. Assuming 
that we get that, we believe that we can have this hospital 
open sometime in 2011.
    Senator Allard. You think you can get that in the 
President's budget request? A good chance?
    Secretary Nicholson. Yes, sir, I do.
    Senator Allard. Okay, very good.
    I'd like to--discuss other Colorado business, because of 
our unique growth in military retirees as well as veterans, we 
have sort of a unique situation in the Colorado Springs area, 
in the fact that there's an increased demand for a cemetery to 
serve those that are in southern Colorado. And, I've introduced 
some legislation to take care of the Pike Peaks Region. I 
understand the challenges you're having with the number of 
people that you have to have to justify a cemetery within a 75-
mile region, and we've been visiting with Mr. Tuerk more, with 
this.
    And, so, I'm going to address this question to Mr. Tuerk, 
if I might. You mentioned in our discussion that it is not 
necessarily set in stone. That there are exceptions you have, 
maybe it's not easy to get the exception but it is possible in 
some unique situations, maybe, to get an exception.
    You mentioned last year that the formula, again as I 
stated, was not set in stone. Could you advise us on the 
progress of updating the formula? To be more accommodating to 
some of these unique situations, such as the Pikes Peak Region?
    Mr. Tuerk. Yes, Senator, I'm happy to have the opportunity 
to do that.
    The policy that we have adopted, and that the Congress has 
adopted in directing where we will locate new cemeteries, as 
you know, states that a new cemetery will be placed in a 
location that has 170,000 veterans, who are not served by 
another existing National or State Veterans cemetery. You're 
certainly correct that Colorado Springs is an area of 
significant growth--by our estimates there are 261,000 
veterans, within 75 miles of Colorado Springs.
    The question, though, for purposes of our determinations 
and, heretofore, the Congress's determinations on where we 
ought to go, is how many veterans, within proximity to a given 
city, aren't already served by an existing cemetery. You 
understand how that plays out with respect to Colorado Springs 
vis-a-vis Fort Logan National Cemetery, southwest of Denver.
    It is correct, as you said, that no formula is set in 
stone. We try to be flexible in making our determinations of 
where to put resources, and our recommendations to Congress on 
where it should decide our resources ought to be placed. And, 
when I say it's not set in stone, I mean it is subject to 
change.
    As we have discussed, I have commissioned a program 
evaluation by an outside consultant to look at our methodology 
for siting cemeteries to consider factors that you have brought 
to my attention, that Senator Salazar has brought to my 
attention, and members of Colorado's House delegation have 
brought to my attention about traffic issues between Colorado 
Springs and Fort Logan, and the significant growth the 
significant military presence, in the region. We have 
instructed our consultant to take those factors into account as 
it critically looks at the way we site cemeteries now. That 
program evaluation is in progress. We have hired a contractor, 
and we have set him off to work. He will report next year. He 
has not yet completed his analysis of the methodology that we 
have used to date on siting new cemeteries.
    Senator Allard. Well, then, you know, if we could exclude 
the Denver area, which we talked about, just the Pikes Peak 
Region, we've come up with 175,000 population, we talked about 
the Region, we pull in the area south of Colorado Springs and 
go south, we can come up with 175,000 on that. So, take a close 
look, and I'm glad to hear that you're working on the formula 
and looking at the unique aspects of Colorado and the situation 
there.
    Fort Logan which is also, is the cemetery you mentioned in 
southwest Denver--I've had some personal experience with that 
in the last year or so, we buried both of my wife's parents in 
Fort Logan. It's a great facility, but in visiting with those, 
you know, it doesn't have too much--there's still some capacity 
there, but you know, that capacity in 10 years is going to be 
gone.
    I, as well as you, know it takes awhile to get cemeteries 
built and get them in line, so I hope you keep that in mind 
when you're doing that. Thank you.
    Mr. Tuerk. We are very mindful of that, Senator. We are 
developing the last 66 acres of the Fort Logan site. We've 
encountered a problem with respect to some of it, that we can't 
turn into burial space. Right now we project that Fort Logan 
will continue to offer burial services until at least 2020, and 
we are very mindful of that, and are thinking ahead on where we 
might go to continue to provide services to the Denver/Colorado 
Springs area at the point in time when Fort Logan will have to 
close.
    Senator Allard. Thank you very much for your comments, and 
I have some additional questions on the second round.
    Senator Reed. Thank you very much, Senator Allard. We have 
a vote under way right now, for your information. And Senator 
Murray is voting, and she will join us shortly, and I'll begin 
the second round, Mr. Secretary and, Senator Craig raised some 
very interesting questions about the capacity to spend money, 
and I guess one point should be noted, is that in the Senate 
supplemental for the VA funding is ``no year'' funding, meaning 
that you will not have a specific amount of time to spend it, 
so that will give you a little more flexibility, we hope, going 
forward.
    I just would note, and Senator Allard has left, but the 
Denver Post reports that nearly 2 in 10 Fort Carson GIs got 
brain injuries in Iraq. They're screening. Which, if you do 
some back-of-the-envelope calculations of the several hundreds 
thousands of troops that have gone through Iraq and 
Afghanistan, if 20 percent is the number, that's going to 
present the VA with a very huge increase in very complicated 
cases, going forward.
    And it raises, perhaps the flip side, of Senator Craig's 
question, which is, do you have a number right now, going 
forward over the next--over the next 10 years, of how much 
we're going to have to devote to caring for these veterans?
    I've asked the same question of Dr. Chu on the DOD side.
    Secretary Nicholson. The answer is no, we do not, Senator. 
We monitor very closely, but we have not projected it out to a 
10-year number, no.
    Senator Reed. Well, Mr. Secretary, I think that's something 
collectively we have to do. Because the fear I have, and I 
think it's your fear also, is that at some point in time, when 
this situation has been resolved one way or the other in Iraq, 
Afghanistan, we'll still have these veterans, and it will be a 
disservice to them at that point, when the attention has waned, 
not to have at least understood the demands we need.
    And that also goes to the budget numbers that I've seen so 
far. You, quite rightly, reference the increase in the 
President's budgets, particularly for healthcare over the last 
several years, but if we look at the 5-year discretionary 
budget projections for VA medical care, it shows no growth at 
all. According to the historical tables that accompany the 2008 
budget request, hospital and medical care will actually 
decrease slightly by 2012. And, again, how realistic is that if 
we're looking at these, this patient flow coming into the 
system?
    Secretary Nicholson. Well, we've used a model, Senator 
Reed, it's proprietary, it's operated by a company called 
Milliman and over the years they've been very uncanny, 
accurate, not without exception. But, there is a decrease in 
the number of veterans in the country, on a net basis, because 
of the mortality rates. I would ask Dr. Kussman if he'd like to 
add anything to that medical projection.
    Dr. Kussman. Sir, as far as the severe TBI--the number that 
had been transferred to us throughout the war is 369 severe 
trauma, that have come to our polytrauma centers. No one really 
knows the number of mild to moderate. And, that's why we're 
putting this screening mechanism in. I think that at Fort 
Carson, it's a similar type of screening. We've worked with DOD 
and so, these are new numbers.
    As I mentioned earlier, hopefully these mild to moderate 
TBI, as I said, frequently will get better on its own and 
hopefully won't need a lot of care, hopefully these service 
members, who have suffered this, will return to whatever their 
baseline was before they suffered the injury.
    But, it's a very important thing. We need to get the 
information. This is a very important issue for us and we will 
monitor it very closely.
    Senator Reed. Well, I would suggest that, perhaps, the 
model has to be reviewed significantly. And, I do think we need 
a--at least a conceptual notion of how much money, going 
forward, we're going to need. And, not just the next 5 years, 
but these young people are going to be in your system for 50 
years, probably.
    And, let me ask a final question before I turn it over to 
Senator Murray and ask her to continue.
    One of the issues that's consistently in the public view, 
is homeless veterans. And, it seems to be a contradiction in 
terms, that someone who's served their country in the uniform 
of the country should not be without a home. There are some 
programs that have been proposed. And, one is a innovative 
program between the Veterans Administration and HUD where 
section 8 vouchers are combined with VA-supported services. 
That fund, that program has not been funded to date at any 
robust level. But just your opinion, Mr. Secretary, if that's 
the type of approach that would make sense in terms of dealing 
with this issue of homeless veterans.
    Secretary Nicholson. Yes, Mr. Chairman. In my opinion that 
would be very helpful. We have some microcosms of that. In 
fact, I'm going next month, I think, to open a facility that 
we've done in south Chicago in the old St. Leo's Parish Corner, 
we've done with Catholic charities there in Chicago and, and 
using HUD Section 8 to support the transitional housing costs. 
We've also sited a clinic on that facility. That's an excellent 
model.
    I was very recently in San Diego with Chairman Filner at a 
place called Veterans' Village, where we were supporting a lot 
of transitional housing there. That has a great deal of 
promise, I think, and it's the right model. Because what we do 
is, we support a non-profit sponsor who operates the facility 
and we help in its construction and then we have the per diem 
maintenance for the veterans who reside there. But we need more 
of that.
    Senator Reed. Thank you, Mr. Secretary. Let me just say 
we'll keep the record open for three additional days if there 
are questions from members of the panel.
    I'll recognize Senator Murray. I'll endeavor to get back 
after the vote, but if I don't, you finish your questions. Feel 
free to conclude the hearing.
    Thank you.
    Senator Murray [presiding]. Thank you very much, Mr. 
Chairman and thank you, Mr. Secretary.
    It has been a couple of months since you testified before 
the Veterans' Committee so, you know, I've been amazed at the 
number of things that have occurred since then. Obviously with 
the Walter Reed issue and the growing awareness of facilities 
across the country with needs, the internal VA report that 
showed the problems that need to be addressed and, of course, 
we have learned a lot more about the signature issue of this 
war, traumatic brain injury and the number of men and women out 
there who have been impacted that--some of them not yet caught. 
And, I appreciated some of the work you're doing to find those 
men and women and make sure we address that extremely important 
issue.
    The Senate has now passed a budget for fiscal year 2008 
that provides the VA with more money than the President's 
budget for medical care, for IT, medicom prosthetic research, 
and a lot more. I wanted to ask you. Do you support the higher 
level of veterans funding in the Senate Budget?
    Secretary Nicholson. Well, we've had a lot of consultation 
with staff on those amounts and the application of them and the 
way that we would utilize them. We, as part of the 
administration, have submitted a robust budget for 2007 and 
felt--and it was eventually approved and--that that is a solid 
budget. But, we can use, if you so choose in the Congress, we 
can make good use of the money.
    Senator Murray. And the additional money that is in the 
supplemental for polytrauma care and other issues for 
healthcare for veterans. I assume you would be supportive of 
that as well?
    Secretary Nicholson. We can use it, yes ma'am.
    Senator Murray. I appreciate that very much.
    We've talked, I heard you talk a little bit about 
polytrauma care. We have $90 million in that supplemental. I 
think this is an issue that we all have got to put down 
everything else we do and really address those issues. So, I 
appreciate it.
    I did want to ask you a little bit about the TBI. We are 
ready to give you the resources you need. I know that you're 
screening Iraq and Afghani veterans for TBI now and I think it 
would really be helpful for the VA to start that screening 
process a lot sooner.
    Back in August 2006, the Pentagon Medical Board proposed 
that the Defense Department begin tracking which service 
members were exposed to IEDs on the battle--even those without 
physical injury or serious at the time--because we know the 
shockwaves have an impact on the diagnosis of TBI. Do you agree 
that it would be helpful to the VA if those men and women were 
diagnosed before they left the service, or at least that you 
knew they'd been in the vicinity of an explosion before they 
entered the VA system?
    Secretary Nicholson. I'll give you my view and then I'll 
refer to Dr. Kussman, who is the Chief Medical Officer of the 
VA.
    I think that it would be useful because the sooner that we 
can detect it, the sooner that we can begin to treat it, and 
thus, the sooner we can bring about healing.
    Senator Murray. Yeah.
    Secretary Nicholson. And, through therapy and treatment. 
Now, I ask Dr. Kussman if he'd like to expand medically.
    Dr. Kussman. Yes, sir. Thank you.
    Yes, Senator, we've been working with DOD to develop an 
adequate screening mechanism. As you know, it's hard to do that 
because there's no test, as I mentioned earlier, or no blood 
test that you can do to make the diagnosis. I think we, with 
the DOD and the VA, do very well with severe TBI. Those people 
get into the medical evacuation chain and I think that 
together----
    Senator Murray. Well, it's more a physical injury.
    Dr. Kussman. That's correct. But, as far as the mild to 
moderate, one of the challenges is, and the difficulty is that 
the patient frequently doesn't even know they have it.
    Senator Murray. Right.
    Dr. Kussman. And so, we've developed a very, I think--and 
time will tell how accurate it is--but a good screening 
mechanism using the best knowledge from the civilian community, 
DOD, and us to ask people when they come in, everybody who is 
OIF/OEF, and we hope that DOD will use that as well during the 
post-deployment screen. On the basis of that, if the person 
answers yes to the questions then they would be referred for a 
neural cognitive evaluation by the subject-matter experts and 
then they determine what kind of treatment, if anything, needs 
to be done. Because, as you know, some of the mild or moderate 
do----
    Senator Murray. But, Dr. Kussman, I've talked to a number 
of the doctors at the polytrauma centers who tell me that there 
isn't necessarily a set of questions you can ask and know. And, 
in fact, the soldier may not even remember that he was in the 
vicinity of a, of an explosion in certain cases.
    Dr. Kussman. That's what makes it so challenging, but we 
need to have a least some mechanism for asking the right kinds 
of questions.
    Senator Murray. Yeah, that's why I was asking, if it would 
be helpful for the Pentagon to track battlefield exposures to 
IEDs, and then share that information with the VA.
    Dr. Kussman. If there's a mechanism for them to identify 
everybody who was near an IED, particularly ones that have been 
in contact with more than one IED. That would be very helpful, 
yes.
    Senator Murray. Well, Secretary Nicholson, would you be 
willing to write a letter to Secretary Gates and ask him if 
they would begin to track that information and share it with 
you so that we can make sure we don't lose these men and women?
    Secretary Nicholson. Yes, I would be willing to write him a 
letter. He serves on the taskforce, the inter-Cabinet taskforce 
that I chair on OIF/OEF heroes. And, discuss that it was 
brought up in this hearing and ask him to consider it. Yes, I 
would.
    [The information follows:]

    Secretary Nicholson sent a letter to Secretary Gates dated May 14, 
2007 encouraging the tracking of all soldiers at or near the site of an 
improvised explosive device (IED) incident so that soldiers could be 
closely monitored for subsequent health changes. In addition, the VA 
Deputy Secretary Gordon H. Mansfield and DOD Deputy Secretary Gordon 
England have already held discussions and as a result the topic will be 
brought before the DOD/VA Joint Executive Council and the DOD/VA Health 
Executive Council (HEC). The next HEC is scheduled to meet on May 24, 
2007.

    Senator Murray. Okay, I would appreciate that. I think it 
would be helpful. I've talked to too many of these young kids 
who, not many of them are young any more, are a year and a half 
after they separate, all of a sudden their family recognizes 
they are not tracking correctly, they can't remember things, 
whatever their issue is. And, if we can get them in sooner than 
a year and a half later, it would be great. I think if the 
Pentagon were able to share that information with the VA, we 
would be in a much better place to find them before they're 
lost for a year and a half of their lives. So, I would 
appreciate if you would be willing to do that.
    Secretary Nicholson, I also wanted to ask you, I saw in 
Salon.com yesterday a report on a focus group that the VA 
conducted at Walter Reed with Iraq and Afghani troops and their 
families way back in 2004. And, the focus group found that 
injured soldiers at Walter Reed were frustrated, confused, 
sometimes angry with the bureaucratic problems at Walter Reed. 
Were you ever briefed on that focus group report from 2004 
about Walter Reed?
    Secretary Nicholson. No, I was not, Senator. And, I asked 
Dr. Kussman about it this morning. And so, I'll ask him to 
respond.
    Dr. Kussman. Yes, Senator, I certainly read that report as 
well. As you know----
    Senator Murray. Read it yesterday, or read it----
    Dr. Kussman. No, I meant I read the----
    Senator Murray. Article.
    Dr. Kussman [continuing]. The Salon.com article. I'm aware 
of the report. That report was generated about 9 months into 
our seamless transition activities related to OIF/OEF. And, it 
was directed by the Chief of Staff at that time, this was 
before Senator----
    Senator Murray. Right.
    Dr. Kussman. I mean, Secretary Nicholson came. And, the 
effort here was for us to look at what our benefits counselors 
and social workers were doing, whether we were getting the 
information across to these veterans. We learned there were 
about six veterans and some members of families that came, 
obviously a small sample, but the effort here was to learn what 
we were doing well and not doing well.
    And, we did learn a lot of things. Several things came out 
of it about improving information, improving communication, 
when we should interact with the veterans. This taskforce was a 
multidisciplinary with that there were representatives from DOD 
there on the committee. The report went to all the members of 
the Committee, but it was geared to look at what the VA was 
doing over at Walter Reed, and determining whether we were 
accomplishing our mission.
    Senator Murray. Yeah, it's just, it's troubling that, that 
long ago there was a report somewhere that these issues were 
festering over there. And, it was not shared with anybody at 
the VA at the time?
    Dr. Kussman. Oh no, it was. We knew about it. Again, most 
of that had to do with our questions related to, and again 
small numbers, but related to whether the VA was doing its 
mission.
    Senator Murray. Was there follow-up then, after that?
    Dr. Kussman. There was a very thorough action plan that was 
established after that to address the issues of communication, 
timing of visiting, repeating visits. And, that was part of the 
reason we set up our seamless transition office. Because prior 
to that, it had been a task force that was established and we 
needed more effort.
    Senator Murray. But, was that focus group information 
shared with the DOD?
    Dr. Kussman. As I said, there were members from the DOD on 
the committee, but it wasn't directed to what DOD was doing.
    Senator Murray. So, the DOD was aware of that report.
    Dr. Kussman. There were DOD members on the committee.
    Senator Murray. Was it shared with the White House?
    Dr. Kussman. No, I don't believe it was shared with the 
White House.
    Senator Murray. But, the DOD was aware of it, as well.
    Dr. Kussman. There were members on the committee.
    Senator Murray. Okay. It's just troubling that it all came 
to light years later. Okay well, let me ask a few parochial 
questions in my few remaining minutes and I will turn it over 
to Senator Allard.
    Secretary Nicholson, while you're here today, I wanted to 
ask you about the Wenatchee VA clinic. You know, it was 
supposed to open this spring, it was pushed to August, and now 
we're told it's going to be September. Can I have your 
assurance that our Wenatchee VA clinic is going to be open, and 
that you're doing everything in your power not to have another 
delay for these folks who have been waiting for this for years?
    Secretary Nicholson. I'm going to have to defer to Dr. 
Kussman, or get back to you in writing.
    Can you respond?
    Dr. Kussman. I have to apologize. I don't have the 
specifics, but I can assure you that it's on the list and we'll 
do everything we can.
    Senator Murray. It's been on the list forever.
    Dr. Kussman. Well, we'll look into it and get back to you.
    [The information follows:]

    The lease for 13,000 sq ft of space at 2530 Chester Kimm Road, 
Wenatchee, Washington, was awarded November 16, 2006.
  --The design phase for the new clinic was completed on March 20, 
        2007.
  --Negotiations regarding tenant improvements concluded March 28, 
        2007.
  --The Notice to Proceed was issued April 2, 2007.
  --Construction commenced on April 3, 2007.
  --Under the 100 day agreement, construction must be completed by 
        August 22, 2007.
  --Activation of the clinic is projected for September 17, 2007 and is 
        still on target.
  --The VISN will continue to provide regular updates on the progress 
        to congressional and other stakeholders.
    The VISN office provides periodic updates on the status of the 
clinic with scheduled monthly reports.

    Senator Murray. Okay. Well, they've waited a long time for 
this. And, there was a lot of expectation it was going to be 
open more than a year ago. Then we were told this spring, then 
it was August, now it's September. And, nobody believes us 
anymore, that this is going to open. So, I just want your 
assurance that you can make a call, Mr. Secretary, and find out 
where this is, and move it along?
    Secretary Nicholson. Oh, yes, I'll do that, promptly.
    Senator Murray. Okay, very good.
    I have several other questions that I will submit for the 
record. I wanted to ask you about Walla Walla. I asked you 
about that before and haven't received any response back on 
that, Mr. Secretary. If you can get back to me on some of the 
mental healthcare issues on Walla Walla, I would really 
appreciate it.
    [The information follows:]

    The VAMCs in Walla Walla and Spokane will cooperatively manage 
inpatient mental healthcare for the Washington, Oregon and Idaho 
counties in their service areas. This will include residential 
rehabilitation care for substance abuse and PTSD provided mostly at the 
Jonathan M. Wainwright Memorial VAMC in Walla Walla and through 
community contracts in Spokane. Inpatient psychiatry will be provided 
at the Spokane VAMC in Spokane, Washington and through community 
facilities in Lewiston, ID and Yakima and Tri-Cities, Washington. 
Expanded outpatient mental health services will continue to be provided 
at the VAMCs, the existing and planned community based outpatient 
clinics, and in other locations as determined.

    Senator Murray. Thank you very much. And, I will turn it to 
Senator Allard.
    Senator Allard. Thank you. Mr. Secretary, another issue 
that has been brought to my attention last week--I think you 
were hanging around Colorado about that time--is that your 
agency had done some inspections on some nursing homes in 
Colorado. And, as you know this is a partnership between the 
Federal and State. I have visited one of those nursing homes, 
it's probably the one that passed. There's five of them 
altogether, I think, that we had there that were inspected. 
And, four of them were criticized in the report and I think 
they, the way they described it is that four nursing homes 
underperformed but only one of five had patient-related quality 
care issues. So, apparently the patients were getting pretty 
good care.
    But I was curious to know what there was about that report 
that was so troubling. The one facility that I went to is the 
newer facility and I was most impressed, by it and with the 
staff as well as the facilities there. So I doubt if that's the 
one. The one there at Fitzsimmons. I doubt, that's probably the 
one that passed is my guess. But, I'm wondering what, on the 
other four, can you share with me about what was going on there 
that was of concern to the inspectors? I suppose Colorado has 
to take some strong initiative here to begin to brief these up. 
What it is that we can do to encourage and to move forward on 
that?
    Secretary Nicholson. Yes, Senator Allard, as you know, we 
support the construction of those State VA nursing homes, two-
thirds/one-third, and then we support the operation of it 
through a, per diem for veterans who are in there. We also have 
a contractual prerogative and, you would say, duty also, to see 
that they're being maintained at the acceptable standards. So, 
in order to ensure ourselves we're doing that, we inspect them. 
And, our inspectors found those deficiencies in those Colorado 
VA nursing homes that are run by the State, that are the 
responsibility of the State.
    As to the specifics of those, I will defer to Dr. Kussman 
to respond.
    Dr. Kussman. I'd have to get back to you, sir, with the 
specifics of all of them, but as the Secretary alluded to, we 
review these by policy every year, to go----
    Senator Allard. Sure.
    Dr. Kussman. And to review the State homes because the 
veterans in there are our responsibility. We will then 
recommend to the State home what we think needs to be done. 
Generally, it could be patient safety, or some construction 
issues or whatever.
    Senator Allard. Sure.
    Dr. Kussman. And, then we go back within 30 days to review 
that to see if they've done it. And, then the State is usually 
informed at the same time of that. Because, as the Secretary 
mentioned, they are State homes and they're responsible for 
fixing those things.
    Ultimately, to protect the veterans, if the appropriate 
corrections aren't done, then we could refuse to send the per 
diem there and that usually gets everybody's attention.
    Senator Allard. Yeah. Well, that's been my understanding, 
that you're going to do some follow-up inspections on these 
facilities and that's what needs to be done. I commend you for 
that. I just was curious as to whether there were things that 
were going to be easily corrected or whether we're looking at 
new facilities because some of those nursing homes are aging in 
time.
    Dr. Kussman. I don't want to prejudice the response because 
I don't know the specifics.
    Senator Allard. Yeah.
    Dr. Kussman. But, generally they're relatively, not major 
construction issues, but how the patients are treated and other 
safety issues.
    Senator Allard. What I'm going to do is have my staff get 
in touch with you. Is that appropriate? And, kind of share with 
us the nature of those. I don't know if we need to go into all 
the little specifics, but the nature of it and how easily 
correctable they might be. And, my understanding is that they, 
weren't affecting the healthcare of those patients that were in 
those facilities.
    Okay.
    Secretary Nicholson. We'd be happy to respond back to you 
with the detail of those inspections, Senator.
    [The information follows:]

    State veterans homes are owned, operated, and the responsibility of 
the State, in this case Colorado. VA provides oversight to assure 
safety and quality healthcare of the veteran residents in the homes 
through annual inspections and interim inspections as deemed necessary. 
The inspections review all aspects of healthcare, including direct 
observation of care and care practices, medical record review, resident 
interviews, physical plant, and sanitation inspections.
    VA is aware of three press reports regarding State homes in 
Colorado. The following are the allegations in the press reports and 
the findings by VA and by State agencies addressing the allegations. 
The response addresses the issues noted in press release only and does 
not reflect the entire VA Annual Survey Report.
Failure to Report a Death of a Patient After a Fall
    This report cited a 100 bed State home at Rifle, CO. Upon review of 
the allegation, it was found that the veteran did not fall. He had 
multiple medical problems and was admitted to a local hospital. This 
veteran died within 24 hours of admission from a massive intracranial 
hemorrhage. Massive intracranial hemorrhage is not necessarily 
associated with trauma to the head. A VA physician reviewer concluded 
that advanced directives were followed and the continuation of care and 
the decisions made were appropriate. The resident's wife was satisfied 
with the care he received.
42 Residents at State Veterans Home in Walsenburg Suffered Bed Sores
    This report referenced a 120 bed nursing home at Walsenburg, CO. 
During the VA survey of September 2006, there were three residents in 
the facility with pressure areas. This VA annual survey found 42 
incidents of pressure ulcers for the entire year. Not all were acquired 
in the State home. These were noted and treated. The facility has an 
appropriate mechanism for prevention, detection, and treatment. 
Pressure ulcers acquired in the facility are tracked and remain at 2 
percent annual average, which is well below the national average. A 
focused review by VA on April 4, 2007, showed the facility at a rate of 
1 percent acquired pressure ulcers.
Life-safety Issues and Accessibility Issues at a Home
    A press article stated that twenty-five assisted-living 
``cottages'' at the Homelake facility contain aging and defective 
electrical systems, asbestos and lead paint. They also lacked 
functioning emergency-response systems, according to State inspection 
reports. Most of those aging cottages lack ``grab bars'' in bathing 
areas, their front doors are not wheelchair accessible, and their 
narrow entrances and concrete stoops create tripping hazards for the 
elderly residents, according to the inspection reports.
    These issues have been identified in VA annual survey reports for 
the past 3 years and increased emphasis has been placed on their 
resolution. VA indicators of compliance for State domiciliaries 
(standard 2c) State that--reasonable timetable (up to 5 years) is 
established for completion of corrective action for life safety 
deficiencies.
    The major factor that limited the home's ability to correct these 
deficiencies was State funding. On March 1, 2007, the State provided 
additional information to VA to support a life safety determination for 
the project On March 23, 2007; the project was determined to be a life 
safety project, based on the additional documentation. The State has 
certified State matching funds (good until 2010) and the project will 
be ranked as a life safety project on the fiscal year 2008 Priority 
List. Depending on the fiscal year 2008 appropriations, the project may 
be funded in fiscal year 2008. Separate from this request, an 
allocation of $60,000 was made by the Department of Human Services so 
that work can begin immediately to correct the life safety 
deficiencies.

    Senator Allard. Thank you.
    You know, Madame Secretary, I think if we have any other 
questions we'll submit those for the record.
    It's noon, I noticed. Mr. Secretary, I notice that we have 
pretty well ran them through the ringer this morning, so I 
thank you for allowing me a second round.
    Senator Reed [presiding]. Thank you, Senator Allard.
    Mr. Secretary, gentlemen, thank you for your testimony.
    Mr. Secretary, you have a final point?
    Secretary Nicholson. Mr. Chairman, if I might.
    Senator Reed. Yes, sir.
    Secretary Nicholson. As a matter of privilege I remain very 
proud of the people who work at the VA and how hard they work 
and how committed, dedicated they are to veterans. I received a 
couple of wonderful testimonials, unsolicited--under oath--they 
were unsolicited.
    Senator Reed. That's why we did it, Mr. Secretary. So, you 
could verify it under oath. These are unsolicited.
    Secretary Nicholson. But, if I could, I received and I'd 
like to enter them into the record.
    Senator Reed. Without objection, they'll be entered into 
the record.
    [The information follows:]

           Prepared Statement From Disabled American Veterans

    The news media recently uncovered a serious situation at the Walter 
Reed Army Medical Center in Washington. I am sure you have been 
affected by stories of neglect, abuse and the consequent overflowing 
frustrations of our wounded American military heroes that brought their 
plight so much national focus.
    Like many, Disabled American Veterans (DAV), with 1.3 million 
service-disabled veteran members, was appalled and demanded that the 
Department of Defense immediately correct these deplorable conditions 
at its premier medical treatment facility. A Nation at war cannot 
tolerate bureaucratic delays, substandard housing and less than 
compassionate treatment of its soldiers and marines who have sacrificed 
so much while serving their country.
    While media reports of the Walter Reed scandal have cast a shadow 
on military and veterans' medicine, I want to reassure you that DAV is 
very proud of you and the Department of Veterans Affairs (VA) 
healthcare system. Problems arise from time to time in any system that 
provides for the needs of large populations, but, at its root, VA 
healthcare is a constant and shining emblem of how to reform a system 
for excellence. Over the past 2 or 3 years we have seen mounting 
evidence that VA is a source of dependable, safe and efficient 
healthcare for veterans. The system provides a wonderful resource for 
sick and disabled veterans, that in so many ways is unique to our 
experience. You offer veterans the best quality at the least cost, and 
the lowest error rates of any healthcare system to which you might be 
compared. Your medication safety program, electronic health record and 
prevention programs are the envy of American medicine. VA serves the 
Nation's veterans well, while supporting and developing new generations 
of healthcare professionals and advancing the standard of care through 
its renowned biomedical research and development programs.
    We, the members of DAV, want you to know that we consider VA to be 
a national treasure. While we may have experienced a momentary 
controversy brought about because one military medical treatment 
facility let down our disabled service members, we hold the Veterans 
Health Administration--and the work each of you do every day for sick 
and disabled veterans--in the highest regard. On behalf of DAV, I 
salute you.
                                 ______
                                 

                        Letter From Tom Poulter

                             National Headquarters,
                                      5413-B Backlick Road,
                                    Springfield, VA, April 4, 2007.
Hon. R. James Nicholson,
Secretary, Department of Veterans Affairs, 810 Vermont Avenue NW, 
        Washington, DC 20420.
    Dear Mr. Secretary: In representing the 40,000 Patriot members of 
the Military Order of the Purple Heart, it is my honor to write to you 
concerning the overall condition and service of the Department of 
Veterans Affairs. For the record, the MOPH is very grateful for the 
assistance and service provided by the Department of Veterans Affairs 
and offers our continuing support to your staff and employees who do so 
much for so many. The Veterans Administration is ``World Class'' in my 
opinion offering patient care that far surpasses that obtained in 
civilian hospitals. This has been confirmed by studies done by the New 
England Journal of Medicine. I have yet to have one of my members 
complain about any care received by the VA. And we all remember how it 
used to be after Vietnam and as late as the early 1990's.
    As a Veteran Service Organization, the MOPH is extremely pleased 
with the reaction time for benefit adjudication by the VA. In addition, 
we remain assured that any disability claim is treated in a fair and 
unprejudiced manner and that the disability ratings are for the most 
part commensurate with the claim of the veteran. No one can predict 
when a war will break out in today's environment leading to unplanned 
increases in the number of claims the VA receives. However, even with 
the overwhelming number of new claims, the VA is treating each with 
courtesy and respect and doing their very best to make sure the veteran 
is given every benefit to which he is entitled.
    Further, as the VA plans and works under the budget as supplied by 
the Congress, we find no major areas of neglect in the physical 
properties. They are all well maintained and sanitary as befits the 
healthcare system. This is highly commendable considering that the VA 
is always working under a continuing resolution from Congress. I am the 
fourth consecutive National Commander of MOPH to ask the Congressional 
Veterans Affairs Committee for assured funding of the VA as our number 
one priority.
    The one issue that we can all agree on happens to be the personnel 
of the VA. The MOPH believes that the employees of the VA are some of 
the best trained and most responsible people found anywhere in the U.S. 
healthcare system. Their concern for the veteran is evident in every 
contact made and every service provided. We praise you and your staff 
for providing us with the finest employees of any healthcare system in 
the World. And for that you deserve our most sincere appreciation.
    Mr. Secretary, you and your staff are doing an excellent job with 
the Department of Veterans Affairs. If you ever require anything of us, 
please do not hesitate to call. We are all in total support of your 
efforts.
            With Highest Regards,
                                               Tom Poulter,
                                                National Commander.
                                 ______
                                 

                       Letter From Linda A. Foss

                                           17 Anchorage Rd,
                                      Franklin, MA, March 11, 2007.
    Dear Secretary R. James Nicholson: Due to the recent media coverage 
of the conditions at Waiter Reed, I feel I must get this letter to you.
    My youngest sister, Luella Winne, had a right radical mastectomy 
with a trans-flap reconstruction at your Albany VA facility last April 
17.
    Being an R.N., B.S., with experience at several major medical 
facilities in Boston, I need to tell you that your facility destroyed 
all my preconceived expectations of a Veteran's hospital. I wish 
civilian facilities could be as efficient as yours.
    On the day of surgery, we walked into your lobby to be greeted by 
many Senior veterans gathered and conversing. They greeted us with a 
smile and a tip of their caps. Luella responded with a ``Stand tall 
soldier. I sensed a deep camaraderie, that my sister responded to, that 
I would never fully understand. I am so grateful she has that support 
in her life.
    I would like to state the fact that every employee (from janitor to 
physician) appeared to enjoy being there--it was wonderful to see and 
feel.
    From a professional point of view, I was acutely observant of your 
medical staff. They never missed a step, from checking her wristband 
for identification, to lending a kind ear during this very emotional 
time. I have nothing but praise for your O.R., ICU, 5th floor surgical 
unit and the oncology infusion unit. Because of my sister's vegan 
lifestyle, your , dieticians were involved, daily, in her menu 
planning, which included many trips to a local health food store to 
accommodate her unique dietary needs.
    Due to the 10 hour surgery, Luella was directly admitted to your 
``state of the art'' surgical ICU. Late that evening, the Nursing 
Supervisor came to me and offered mea room on the 9th floor so I could 
get some rest, I was amazed with the kindness I received that night. I 
would have napped in the waiting room, because my family's home was 90 
minutes away.
    Luella and I have returned several times for follow-up visits at 
the surgical clinic. Your clinic staff was responsive to all her needs 
with respect, kindness and compassion. The attention she received was 
not unique, as I observed their interaction with other Veterans as 
well.
    Luella will continue her journey as a cancer survivor. She is still 
receiving chemotherapy, weekly now and her prognosis is excellent. The 
staff in the Infusion Unit is exceptional.
    Your hospital is spotless. Much pride is visible in the manner in 
which Albany VA is maintained. So, I close knowing that Luella has such 
a wonderful gift in your facility. 1 have confidence that she could not 
have received better care anywhere else in my experience. Be proud of 
your staff, they are very special.
            Thank you so very much,
                                             Linda A. Foss,
                                                         R.N., B.S.
                                 ______
                                 

                 Letter From VADM Norbert R. Ryan, Jr.

                  Military Officers Association of America,
                                 Alexandria, VA, February 12, 2007.
Vice Admiral Daniel L. Cooper (USN-Ret),
Under Secretary for Benefits, Department of Veterans Affairs, 
        Washington, DC.
    Dear Mr. Secretary: On behalf of the 360,000 members of the 
Military Officers Association of America, I'm writing to express MOAA's 
deep appreciation for your rapid response to ensure expedited 
consideration of disability benefit applications from all injured OlF/
OEF Veterans.
    Your action has taken a major step to provide dignity and help to 
thousands of heroes who, through no fault of their own, would find 
themselves at great risk without this kind of support from their 
nation. Their service in the combat zone deserves every bit of 
assistance we can give them. The action of your Regional offices will 
ensure they receive that help.
    All of us at MOAA express our thanks and gratitude for your 
national brokering strategy.
            Sincerely,
                                           Norbert R. Ryan,
                                                         President.

    Secretary Nicholson. And, to just say that one was from the 
Military Order of the Purple Heart saying that, ``The Veterans 
Administration is world-class,'' this is the President of this 
organization, ``offering patient care that far surpasses that 
obtained in civilian hospitals. I have yet to have one of my 
members complain about any care received by the VA.'' And, it 
goes on.
    And, another is from the Disabled American Veterans, from 
their National Commander saying that, ``The VA healthcare is a 
constant and shining emblem of how to reform a system for 
excellence. The VA is a source of dependable, safe, and 
efficient healthcare for veterans. We consider the VA to be a 
national treasure. And, we hold the Veterans Health 
Administration, the work each of you do every day for sick and 
disabled veterans in the highest regard.'' That's signed by 
their National Commander. And, I appreciate the chance to put 
that in the record on behalf of our employees.
    Thank you.
    Senator Reed. Thank you, Mr. Secretary.
    Senator Allard. Mr. Chairman.
    Senator Reed. Senator Allard, please.
    Senator Allard. If I might just follow-up on that. I don't 
think you were here when I made some of my remarks. But, you 
know, the American customer satisfaction index, they've rated 
better than the private sector now, they're on their seventh 
consecutive year. That's much better than their record was 
prior to 9/11. I think they're to be commended for that effort.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Reed. Well, I think that's accurate. I can reflect 
on the Veterans Hospital at Davis Park in Providence, Rhode 
Island and the spirit and the dedication to the veterans and 
the commitment to excellence is evident every time I go there. 
So, I accept those accolades for the record.
    But again, Mr. Secretary, thank you for your testimony. 
Gentlemen, thank you, and thank you for your continued efforts 
on behalf of veterans.
    Secretary Nicholson. Thank you, Mr. Chairman.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

               Questions Submitted by Senator Tim Johnson

    Question. The President's fiscal year 2008 Budget request 
recommends only a $4.5 million increase for Vets Centers. In South 
Dakota, there is a high demand for the counseling and readjustment 
services these centers provide. For instance, South Dakota is a prime 
example of how important Vets Centers are to large rural States. Many 
veterans in South Dakota have to travel great distances to their local 
VA in order to receive counseling treatment, unless they can receive it 
at a Vets Center closer to home. Furthermore, the Department of Defense 
is using our National Guard and Reserve members in greater numbers than 
ever before. In South Dakota, 87 percent of the Army National Guard, as 
well as 74 percent of the Air National Guard, has been mobilized in 
support of our efforts in Iraq and Afghanistan. Finally, recent reports 
indicate that servicemembers serving multiple deployments may be at 
greater risk for being diagnosed with PTSD.
    In light of the above considerations, is it realistic to believe 
this small increase is sufficient to meet the growing demand for the 
services that our Vets Centers provide?
    Answer. The $4.5 million increase for fiscal year 2008 represents 
the additional funding for only the first of two Vet Center program 
expansions approved by VA since 2006. In April 2006 VA approved of a 
plan to establish two new Vet Centers in Atlanta, Georgia, and Phoenix, 
Arizona, and to augment the staff at 11 existing Vet Centers. This 
brought the number of Vet Centers nationally to 209.
    In February 2007, we announced our plan to again increase the 
number of Vet Centers nationally to 232. Over the next year and a half, 
the Department of Veterans Affairs (VA) will be establishing new Vet 
Centers in 23 communities and augmenting staff at 61 existing Vet 
Centers. Our Vet Center expansion plans include augmenting the staff at 
the Sioux Falls, SD, Vet Center by one position.
    When taken together with the program's additional 100 OEF/OIF 
Global War on Terror (GWOT) Outreach Specialists hired in 2004 and 
2005, these program expansions have increased program staffing by a 
total of 269 positions from pre-2004 staffing levels. Based on these 
increases, and without cost of living adjustments added, the fiscal 
year 2008 budget for the Vet Center program will be $125 million, which 
is a 25 percent increase over the program's fiscal year 2006 $100 
million budget. We are committed to effectively serving the increasing 
number of returning combat veterans and will evaluate the need for 
additional Vet Center resources on an ongoing basis.
    Question. Last month, the Sexual Assault Prevention and Response 
Office (SAPRO) within the Department of Defense released the Military 
Services Sexual Assault Annual report detailing sexual assault in the 
military. According to the report, sexual assault reports increased 24 
percent from Calendar Year 2005. Furthermore, it is commonly known that 
sexual assault victims are prone to developing post-traumatic stress 
disorder (PTSD). In addition, a recent New York Times Magazine article 
suggested that some female soldiers serving in combat have been 
sexually assaulted during their tour of duty. As a result, this select 
group of servicemembers--combat veterans who suffered sexual assault--
may be at a higher risk for PTSD or the prevalence of PTSD symptoms 
will be exacerbated since they have been exposed to multiple traumatic 
events.
    What is the VA doing to address the unique service-related needs of 
these women? What PTSD programs are available to women within the VA 
who have suffered sexual assault?
    Answer. Every VA facility in the country has a designated Women 
Veterans Program Manager and a Military Sexual Trauma (MST) 
Coordinator. These are advocates who help women access VA services and 
programs, State and Federal benefits, and community resources.
    In fiscal year 2007, VA's Office of Mental Health Services (OMHS) 
established a MST Support Team to ensure that VA is in compliance with 
mandated monitoring of MST screening, treatment, and education/training 
efforts and to promote best practices in the field. The MST Support 
Team provides regular feedback to the MST Coordinators and VISN-level 
MST Points Of Contact (POC) on facility MST screening rates and 
treatment of sexual trauma. The Team has launched several initiatives 
to promote provider competence in evidence based care including the 
monthly MST Teleconference Training Series and a National MST Clinical 
Training Conference scheduled for September 2007.
    All VA medical centers provide mental health services to women. 
Additionally, every Vet Center has specially trained sexual trauma 
counselors. Nationwide, there are four specifically designated Women's 
Stress Disorder Treatment Teams (WSDTTs) located in Albuquerque, NM; 
Boston, MA; Loma Linda, CA; and Madison, WI. They are outpatient mental 
health programs specializing in treatment of posttraumatic stress 
disorder and other mental health disorders related to trauma exposure. 
An increasing number of other VA facilities have specialized outpatient 
mental health services and clinics for women and/or focusing on sexual 
trauma that are not formally designated as WSDTTs.
    In addition to the outpatient care available at every VA, thirteen 
programs currently offer residential or inpatient setting-based 
treatment for sexual trauma-specific PTSD and other related disorders; 
at least two additional programs are currently under development. 
Programs range from those solely dedicated to the treatment of sexual 
trauma; to those with a special track emphasizing the treatment of 
sexual trauma; to those with two or more staff members with expertise 
in sexual trauma who, in the context of a larger program not focused on 
sexual trauma, provide treatment targeting this issue. Although some of 
these programs treat men as well as women, each makes accommodations to 
ensure they provide treatment sensitive to women's needs (e.g., 
separate living arrangements; women's only groups).
VISN 1
    VA Boston HCS/Jamaica Plain Campus, Boston, MA: Women Veterans' 
Therapeutic Transitional Residence Program.
VISN 2
    VA Western New York HCS/Batavia Campus, Batavia, NY: Women 
Veterans' Residential Program.
VISN 5
    VA Maryland HCS/Baltimore Division, Baltimore, MD: Dual Diagnosis 
PTSD/Substance Abuse PRRP.
VISN 8
    Bay Pines VAMHCS, Bay Pines, FL: Center for Sexual Trauma Services.
VISN 10
    Cincinnati VAMC, Cincinnati, OH: Residential PTSD Program.
    VAMC Dayton, Dayton, OH: Sexual Health Clinic and Domiciliary 
Program.
VISN 12
    Clement J. Zablocki VAMC, Milwaukee, WI: Rehabilitation and 
Transition Unit--Trauma Track.
    North Chicago VAMC, North Chicago, IL: Stress Disorder Treatment 
Unit.
VISN 15
    VA Eastern Kansas HCS/Topeka Division, Topeka, KS: Stress Disorder 
Treatment Program.
VISN 17
    VA Central Texas Veterans HCS/Temple Division, Temple, TX.
VISN 20
    VA Puget Sound HCS/Seattle Division, Seattle, WA: Evaluation and 
Brief Treatment PTSD Unit.
VISN 21
    VA Palo Alto HCS/Menlo Park Division, Menlo Park, CA: Women's 
Trauma Recovery Program.
VISN 22
    VA Long Beach Healthcare System, Long Beach, CA: ``Renew''.
    Question. The St. Louis Regional Processing Center is responsible 
for processing education benefits claims for veterans in South Dakota. 
Since early last year, I have received multiple reports from local 
veterans and school officials that processing delays continue to plague 
the St. Louis facility making it difficult for veterans to receive 
their education benefits in a timely fashion.
    Furthermore, South Dakota has been reassigned a new Education 
Liaison Representative five times since 1999, the most recent 
reassignment occurring in October 2006. The South Dakota State 
Approving Agency values a strong working relationship with their 
Education Liaison Representative as it helps facilitate the claims 
process. However, the continued insistence on reassigning a new 
Education Liaison Representative to South Dakota disrupts working 
relationships and the State Approving Agency's ability to provide 
timely assistance to our veterans.
    Can you please provide an update on the status of claims processing 
at the St. Louis Regional Processing Center? If there is a backlog of 
claims pending, what resources does the VA need in order to eliminate 
this backlog?
    Answer. Education claims receipts have increased during this school 
year as a result of the implementation of the Reserve Educational 
Assistance Program (REAP) and an increase in participation in the 
educational benefit programs.
    The education workload at the St. Louis Regional Processing Office 
has been significantly reduced from 29,639 pending claims in late 
January to 7,632 pending claims as of April 30, 2007. The St. Louis RPO 
has also significantly improved claims processing timeliness from 41 
days for original claims and 22 days for supplemental claims in October 
2006, to 26 days for original claims and 11 days for supplemental 
claims during the month of April 2007.
    The additional education program staff hired in 2007 and the 
funding requested in the 2008 budget will allow us to continue to 
improve performance.
    Question. In addition, do you have concerns that the continued 
reassignment of Education Liaison Representatives (ELRs) will 
negatively impact the ability of State Approving Agencies to assist 
veterans as they access their education benefits?
    Answer. The Education Liaison Representative (ELR) for South Dakota 
changed a number of times as a result of employee retirements. In 
October 2006, Ms. Loretta Tollin was assigned as South Dakota's new 
ELR. This is a long-term, permanent assignment. We are confident that 
the State Approving Agency will find her highly attentive to South 
Dakota's requirements, and she will strengthen their ability to timely 
assist veterans in South Dakota.
    Question. The Capital Asset Realignment for Enhanced Services 
(CARES) decision approved construction for two new Community Based 
Outpatient Clinics (CBOCs) in South Dakota. These facilities would be 
located in Watertown and Wagner. It is my understanding that business 
plans are to be submitted to the VA Central Office for each proposed 
facility during fiscal year 2007.
    Can you please provide me with a detailed update on the status of 
the proposed facilities in Watertown and Wagner?
    Answer. Proposals for both were submitted in the last request for 
submission of business plans for CBOCs and are currently under review.
                                 ______
                                 

             Questions Submitted by Senator Robert C. Byrd

    Question. Mr. Secretary, what specific measures are the Department 
of Veterans Affairs taking to reduce the backlog of claims and when 
should we expect to see visible improvements?
    Answer. VA faces many challenges in managing the disability claims 
workload and producing timely decisions. These challenges include:
  --growth in disability claims received (up 38 percent since 2000)
  --increasingly complex nature of the claims workload
  --impact of expanded outreach efforts
    We are devoting additional resources to claims processing. 
Increasing staffing levels is essential to reducing the pending 
inventory and providing the level of service expected by the veterans 
we serve and the American people.
    We began aggressively hiring additional staff in fiscal year 2006, 
increasing our on-board strength by over 580 employees between January 
2006 and January 2007. With a workforce that is sufficiently large and 
correctly balanced, VBA can successfully meet the needs of our 
veterans.
    Our plan is to continue to accelerate hiring and fund additional 
training programs for new staff this fiscal year--adding over 400 
employees by the end of June. If we are funded at the level we 
requested in our 2008 budget submission, we will continue to add staff 
in 2008.
    Because it requires an average of 2 or 3 years for our decision-
makers to become fully productive, increased staffing levels do not 
produce immediate production improvements. Performance improvements 
from increased staffing are more evident in the second and third years.
    We have therefore also increased overtime funding this year and 
recruited retired claims processors to return to work as reemployed 
annuitants in order to increase decision output.
    We have deployed new training tools and centralized training 
programs that support more timely, accurate, and consistent 
decisionmaking. New employees receive comprehensive training and a 
consistent foundation in claims processing principles through a 
national centralized training program called ``Challenge.'' We have 
implemented an 80-hour mandatory training requirement for all 
employees.
    We have implemented a ``brokering'' strategy to help balance the 
inventory of claims across regional offices. Claims that are ready for 
decision are sent from offices with high inventories to other stations 
with capacity to process additional rating workload.
    We also established two Development Centers to specialize in 
``brokering'' cases from other offices to assist in developing the 
required evidence and preparing cases for decision.
    Our goal for this year is to reduce average processing time to 160 
days (currently 177 days)--and to 145 days in 2008.
    Question. We have been told that VA hospitals are juggling the 
books to make it appear that the time to get an appointment is shorter 
than it is. Allegedly, appointments are being made, then cancelled and 
rescheduled to make it appear that the time from making the appointment 
to actually seeing a doctor is shorter than it is. Are you aware of 
this practice? Will you look into it and respond back to me?
    Answer. It is possible that a VERY small number of patients could 
have been taken off the wait list and later rescheduled. If this was 
done, it is contrary to policy and official procedures and is likely a 
result of employee error.
    If information is coming from the OIG, we are visiting the sites 
where they found issues to determine the extent of the problem and to 
implement corrections as appropriate.
    Question. Efforts at electronic record transfer between the 
Department of Defense and the Department of Veterans Affairs date back 
to the 1980s. What progress is being made in developing the capability 
to transfer electronic records between the departments?
    Answer. VA and DOD have achieved a significant level of success and 
are currently using interoperable electronic health records that are 
standards-based and bidirectional to share clinical data. Pursuant to 
the Joint Electronic Health Interoperability Plan (JEHRI), our long 
term strategy to achieve interoperability, and the guidance and 
leadership of the DOD/VA Joint Executive Council, VA and DOD are 
presently sharing almost all of the electronic health data that are 
available and clinically pertinent to the care of our beneficiaries 
from both departments.
    VA receives these electronic data through successful one-way and 
bidirectional data exchange initiatives between existing legacy VA and 
DOD systems. These data exchanges support the care of separated and 
retired Service members who seek treatment and benefits from the VA and 
the care of shared patients who use both VA and DOD health systems to 
receive care.
    Since beginning transfer of electronic medical records to VA, DOD 
has transferred data on almost 3.8 million unique separated service 
members to VA clinicians and claims staff treating patients and 
adjudication disability claims. Of these individuals, VA has provided 
care or benefits to more than 2.2 million veterans. These data include 
outpatient pharmacy (government and retail), laboratory results, 
radiology reports, consults, admission, disposition and transfer data, 
and ambulatory coding data. In 2006, DOD began transferring pre- and 
post-deployment health assessment data and post deployment health 
reassessment data on separated members and demobilized National Guard 
and Reserve members. Leveraging some of the technical capability to 
transfer records one-way, VA and DOD began the bidirectional sharing of 
electronic health records on shared patients. Data shared 
bidirectionally include outpatient pharmacy and allergy data, 
laboratory results, and radiology reports. This capability is now 
available at all VA sites of care and is currently installed at 25 DOD 
host locations. These 25 locations consist of 15 DOD medical centers, 
18 DOD hospitals and over 190 DOD outpatient clinics and include Walter 
Reed Army Medical Center, Bethesda National Naval Center, and Landstuhl 
Regional Medical Center. VA is working closely with DOD to expand this 
capability and by June 2008, VA will have access to these data from all 
DOD locations. VA also is working with DOD to increase the types of 
data shared bidirectionally. Successful pilot projects demonstrated the 
capability to share narrative documents, such as discharge summaries 
and emergency department notes and this capability is now being used at 
four locations and will be expanded to others. Additional work 
scheduled for the remainder of fiscal year 2007 and 2008 will add data 
such as progress notes, problem lists, and history data to the set of 
information that is shared bidirectionally between DOD and VA 
facilities.
    VA and DOD also have accomplished the ground-breaking ability to 
share bidirectional computable allergy and pharmacy data between next-
generation systems and data repositories. This capability permits VA 
and DOD systems to conduct automatic drug-drug and drug-allergy 
interaction check to improve patient safety of those active dual 
consumers of VA and DOD healthcare who might receive prescriptions and 
other treatment from both VA and DOD facilities. At present, we have 
implemented this capability at seven locations and are working on 
enterprise implementation schedules.
    Whereas our earliest efforts focused on the sharing of outpatient 
data, VA and DOD also have made significant progress toward the sharing 
of inpatient data. Most recently, we began sharing significant amounts 
of inpatient data on our most critically wounded warriors. Previously, 
these data were only available to VA from DOD in paper format. We have 
successfully achieved the capability to support the automatic 
electronic bi-directional sharing of medical digital images and 
electronically scanned inpatient health records between DOD and VA. 
This effort has been successfully piloted, at least in one direction 
from DOD to VA, between the Walter Reed Army Medical Center and the 
four Level 1 VA Polytrauma Centers located in Tampa, Richmond, Palo 
Alto and Minneapolis. Clinicians at the Tampa and Richmond Polytrauma 
centers are routinely using it to view data on transferred patients. VA 
and DOD are finalizing a long-term strategy that will facilitate the 
expansion of this work across the enterprise systems of each 
department.
    In addition to our joint work to share scanned documents and 
digital radiology images, VA and DOD have undertaken a groundbreaking 
challenge to collaborate on a common inpatient electronic health 
record. On January 24, 2007, the Secretaries of VA and DOD agreed to 
study the feasibility of a new common in-patient electronic health 
record system. During the initial phase of this work, expected to last 
between 6 and 12 months, VA and DOD are working to identify the 
requirements that will define the common VA/DOD inpatient electronic 
health record. The Departments are working to conduct the joint study 
and report findings as expeditiously as possible. At the conclusion of 
the study, we hope to begin work to develop the common solution.
    Question. What challenges are created in treating Department of 
Defense patients in VA Polytrauma centers without the ability to 
transmit their records electronically?
    Answer. As is commonly understood, much of the DOD inpatient data 
exists in paper format and is not available in electronic format. 
Without question, this creates some challenges. However, to ensure VA 
is fully supporting the most seriously ill and wounded service members 
who are being transferred to VA polytrauma facilities, VA social 
workers located in Military Treatment Facilities (MTF) ensure that all 
pertinent inpatient records are copied and transferred with the 
patient. Once the patient arrives at VA for care we are now able to 
support the automatic electronic transfer of inpatient data to VA 
clinicians who will treat these patients.
    VA has successfully achieved the capability to electronically 
transfer DOD medical digital images and electronically scanned 
inpatient health records within VA. This effort has been successfully 
piloted between the Walter Reed Army Medical Center and three of the 
four Level 1 VA Polytrauma Rehabilitation Centers located in Tampa, 
Richmond, and Palo Alto. We are working now to add the fourth 
Polytrauma Rehabilitation Center at Minneapolis to this pilot project, 
and anticipate this will be accomplished soon. VA is also working to 
add this capability from Bethesda National Naval Medical Center and 
Brooke Army Medical Center to the four VA polytrauma centers. In the 
future, we hope to add the capability to provide this data bi-
directionally in the event the patients return to DOD for further care.
    VA and DOD also have established direct connectivity between the 
inpatient electronic data systems at Walter Reed Army Medical Center 
and Bethesda National Naval Medical Center and clinicians at the four 
Level 1 VA Polytrauma Rehabilitation Centers. These direct connections 
are secure and closely audited to ensure that only authorized personnel 
at the VA facilities access the electronic military data on the OEF/OIF 
service members who are coming to or who have transferred to the VA 
Polytrauma centers. VA and DOD are finalizing a long term strategy that 
will facilitate the expansion of this work across the enterprise in 
both departments.
    Question. What is the status of the replacement of Department of 
Veterans Affairs' facilities that were destroyed by Hurricane Katrina?
    Answer. The functions that were at VA medical center (VAMC) 
Gulfport, MS, will be replaced at VAMC Biloxi, MS. VAMC Gulfport was 
destroyed by the storm surge. Several buildings collapsed. The facility 
was shutdown completely and secured. Recent activities include 
structural analysis for cleanup operations, records recovery, site 
cleanup, asbestos abatement and building demolition. At VAMC Biloxi, 
there are several phases of the major project in various stages of 
design. The first of these phases could start construction in late 
2007.
    The existing hospital location of VAMC New Orleans, LA, was 
determined to be too costly to reactivate. VAMC New Orleans replacement 
is awaiting land acquisition. VA has reactivated portions of the 
existing facility, as well as leased spaces in other locations, in 
order to provide outpatient care in the interim.
    Question. Have you revised the headcount of VA patients to account 
for the current and projected casualties from Iraq and Afghanistan? 
What headcount was used in formulating the current budget request?
    Answer. From the 2007 President's budget, we have revised our 
estimates to include the current and projected casualties for Iraq and 
Afghanistan. As reflected in VA's budget submission for fiscal year 
2008, we estimate that we will treat over 263,000 OEF/OIF veterans at a 
cost of approximately $752 million.
    Question. In your opinion, how is the so called seamless transition 
between DOD and VA working?
    Answer. Since its inception, the seamless transition program has 
achieved numerous accomplishments that result in great improvements 
toward the seamless transition of OEF/OIF service members into civilian 
life. The ability to register for VA healthcare and file for benefits 
prior to separation from active duty is the result of the seamless 
transition process.
    VA/DOD Social Work Liaisons and VBA Benefit Counselors are now 
located at ten MTFs to assist injured and ill service members transfer 
healthcare needs to VA medical facilities closest to their home or most 
appropriate for their medical needs and to ensure that returning 
service members receive information and counseling about VA benefits 
and services. VHA staff has coordinated over 7,000 transfers of OEF/OIF 
service members and veterans from an MTF to a VA medical facility. 
Active duty Army Liaison Officers are assigned to each of the four VA 
Polytrauma Rehabilitation Centers to assist service members and their 
families from all branches of Service on issues such as pay, lodging, 
travel, movement of household goods, and non-medical attendant care 
orders. The Office of Seamless Transition established an OEF/OIF 
Polytrauma Call Center to assist our most seriously injured veterans 
and their families with clinical, administrative, and benefit 
inquiries. The Call Center which opened February 2006, is operational 
24 hours a day, 7 days a week to answer clinical, administrative, and 
benefit inquiries from polytrauma patients and their families. In 
addition, the Call Center has made 2,702 outreach phone calls to 
seriously injured OEF/OIF veterans, contacting 807 veterans since 
February 2007. Through these outreach phone calls, we have been able to 
provide these veterans additional assistance with outstanding health or 
benefits concerns.
    VA has implemented an automated tracking system to track service 
members and veterans transitioning from MTFs to VA facilities As part 
of this system, VHA implemented a 2007 performance measure to ensure 
that VHA assigns a case manager to seriously injured service members 
being referred from a DOD medical treatment facility to a VA treatment 
facility in a timely fashion. This performance measure monitors the 
percent of severely ill/injured service members and veterans who are 
contacted by their assigned VA case manager within 7 days of 
notification of transfer to the VA system. During the period October 
2006 through March 31, 2007, 152 severely ill/injured patients were 
transferred from MTFs to VAMCs. Ninety-five percent (144) were 
contacted by their assigned VA case manager within 7 days of 
notification of transfer to VA.
    VA is participating in DOD's Post Deployment Health Reassessment 
(PDHRA) program for returning deployed service members. Since its 
inception, over 83,956 Reserve and Guard members completed the PDHRA 
on-site screen resulting in over 20,397 referrals to VHA facilities and 
10,401 referrals to Vet Centers.
    To ensure that OEF/OIF combat veterans receive high quality 
healthcare and coordinated transition services and benefits as they 
transition from the DOD system to the VA, VA developed a robust 
outreach, education and awareness program. The signing of a Memorandum 
of Agreement (MOA) between the National Guard and VA, in May 2005, and 
the formation of VA/National Guard State coalitions in each of the 54 
States and territories now provide the opportunity for VA to gain 
access to returning troops and families as well as join with community 
resources and organizations to enhance the integration of the delivery 
of VA services to new veterans and families. This is a major step in 
closer collaboration with the National Guard soldiers and airmen. A 
similar MOA is being developed with the U.S. Army Reserve Command and 
the U.S. Marine Corps at the national level. VA and the National Guard 
Bureau teamed up to train 54 National Guard Transition Assistance 
Advisors who assist VA in advising Guard members and their families 
about VA benefits and services.
    Building on these accomplishments, VA continues to monitor and 
improve the delivery of healthcare services and benefits to severely 
injured OEF/OIF service members and veterans. Toward that end, VA is 
addressing future challenges, such as expanding our web-based tracking 
application and integrating it with VISTAweb and VA's Computerized 
Patient Record System (CPRS), and contacting all severely ill and 
injured veterans to assure their needs are being met.
                                 ______
                                 

              Questions Submitted by Senator Patty Murray

    Question. Secretary Nicholson, at a hearing 2 months ago, I 
submitted some questions for the record and I still not received a 
response. As you know, we can't provide what our veterans need if we 
can get accurate and timely answers from the VA. I would ask that you 
please provide a written answer to the following questions by Monday, 
April 23, 2007.
    Answer. Responses to these questions were forwarded to the Senate 
Veterans Affairs Committee on April 20, 2007, and are repeated below 
for the record.
    Question. Mr. Secretary, turning to Walla Walla, Washington--As you 
know, in 2003 the VA CARES Commission tried to close the facility that 
69,000 veterans rely on. I worked with the community and the VA, and I 
appreciate you committing to build a new facility in Walla Walla. The 
community and I have some questions about the care that will provided 
in that new facility--particularly mental healthcare, long-term care, 
and inpatient medical care.
Mental Healthcare
    Question. As you know, mental healthcare is not available in the 
surrounding community.
    Can you explain how veterans in Walla Walla will get mental 
healthcare under your proposal? Also, how will they get drug 
rehabilitation?
    Answer. The VAMCs in Walla Walla and Spokane will cooperatively 
manage inpatient mental healthcare for the Washington, Oregon, and 
Idaho counties in their service areas. This will include residential 
rehabilitation care for substance abuse and PTSD provided mostly at the 
Jonathan M. Wainwright Memorial VAMC in Walla Walla and through 
community contracts in Spokane. Inpatient psychiatry will be provided 
at the Spokane VAMC in Spokane, Washington, and through community 
facilities in Lewiston, ID, and Yakima and Tri-Cities, Washington. 
Expanded outpatient mental health services will continue to be provided 
at the VAMCs, the existing and planned community based outpatient 
clinics, and in other locations as determined.
Long-Term Care
    Question. There is very little long-term care available in the 
region. You've made a commitment to me that long-term care won't go 
away before a new facility is built.
    Will you continue to provide long-term care at the Walla Walla 
facility as long as it's needed, and will you commit to working with 
the State to build a State nursing home?
    Answer. Long-term care will be provided at the Walla Walla facility 
or the surrounding community as long as it's needed. In regards to 
working with the State to build a State nursing home, VISN 20's network 
director, has recently requested that Walla Walla's new director work 
with the director of the Washington State Department of Veterans 
Affairs to begin the process of establishing a nursing home. 
Applications for VA grants to assist in the construction of State 
nursing homes for fiscal year 2008 must be submitted by August 15, 
2007.
    Question. How should vets who need long-term care today get it?
    There has been no change in the provision of long term care at the 
Walla Walla facility at this time.
Inpatient Care
    Question.Can you assure me that veterans in Walla Walla will not 
lose access to inpatient care as this transformation moves forward?
    Answer. Veterans with service-connected conditions will continue to 
receive acute inpatient care in community facilities close to their 
homes. Walla Walla facility staff will ensure that the quality and 
accessibility of care are maintained.
                                 ______
                                 

                Questions Submitted by Senator Jack Reed

    Question. Secretary Nicholson, many of our troops have served 
multiple tours of duty in Iraq and Afghanistan, and have been deployed 
each time for months on end. I am growing increasingly worried about 
the strain that these multiple and increasingly dangerous deployments 
are having not only on the service members but also on their families.
    The common consequences of combat--substance abuse, mental health 
disorders, and physical injuries--affect not just the service member 
but every member of his or her family as well. While the service member 
remains on active duty, their family members have access to counseling 
and psychiatric services through military healthcare system. But once 
the service member transitions to the VA, there is no network in place 
to provide mental health assistance to their families.
    I would expect that the percentage of Iraq and Afghanistan combat 
veterans with spouses and young children is significantly higher than 
in previous extended conflicts. Has the VA undertaken any assessment of 
the mental health needs of the family members of these veterans?
    Answer. We agree that military families face a variety of 
stressors. Most families of deployed service members ``rise to the 
occasion'' and adapt successfully to this stressful experience. 
However, some service members who experience mental health disorders 
such as post-combat stress and PTSD may find reunification notably 
stressful (e.g., being startled by loud noises and disturbed by the 
chaos of a family with young active children). Thorough attention to 
service members and their family members' levels of stress and trauma 
is important for several reasons. First, increased stress in the family 
(especially tension and hostility) can trigger the veteran's PTSD 
symptoms. Second, family members who are hurt by the service member's 
behavior are often less supportive. This loss of social support is 
critical, as intimate relationships are a primary source of support for 
most people, and high levels of social support have been associated 
with decreased intensity of PTSD.
    VA's authority to provide mental health counseling to family 
members is limited to counseling in connection with the treatment of 
certain veterans. As a result, we have not undertaken an assessment of 
the prevalence of the need for counseling.
    Question. Psychiatric care and medications can be enormously 
expensive. Other than informal counseling through such services as Vet 
Centers, is the VA studying the possibility of extending mental health 
benefits to the families of Iraq and Afghanistan veterans--and if so, 
what statutory changes need to be made in order for this to occur?
    Answer. Currently, the law permits VA to provide such counseling, 
training, and mental health services for family members as are 
necessary in connection with the care of a veteran receiving treatment 
for a service-connected disability (38 USC 1782). Family members of 
veterans receiving care for nonservice-connected disabilities can 
receive such services only if those services were initiated during the 
veterans' hospitalization, and continuation of the family services on 
an outpatient basis is essential to permit the discharge of the veteran 
from the hospital.
    Question. Do you see this as an emerging problem, and what do you 
think the VA could or should do to screen and treat the spouses and 
children of combat veterans for mental health problems?
    Answer. Many VA facilities offer mental health services such as 
family psycho-education and spouse education/support groups. Broadening 
the scope of VA's mental health services to spouses and children of 
combat veterans would have to be deliberated further.
    Question. Secretary Nicholson, we know that on any given night more 
than 25 percent of homeless persons--nearly 200,000 people--are 
veterans. Already, some of these men and women are veterans of the 
current conflicts in Iraq and Afghanistan--although most of them are 
veterans from Vietnam, the first Gulf War, and peacetime service. In 
2005, VA's own CHALENG Community Homelessness Assessment report 
identified a need for 25,000 new permanent housing beds and 12,000 new 
transitional housing beds to help these homeless veterans.
    VA has effective programs that can meet these needs--the HUD-VASH 
supportive housing program that combines HUD Section 8 vouchers and VA 
supportive services for long-term homeless veterans with mental health 
and/or substance abuse problems, and the Grant and Per Diem program 
that funds transitional housing to help homeless veterans get jobs and 
return to independent living. However, HUD-VASH has not been funded 
since the 1990's, and Grant and Per Diem funding is not keeping pace 
with the need for housing. Do you agree that these programs are 
effective, and if so, do you believe that this Committee should provide 
the VA with increased resources for these programs--so that the VA can 
ensure that no veteran becomes or stays homeless?
    Answer. The number of transitional housing beds for homeless 
veterans has risen dramatically during the past 5 years, more than 
doubling the number of operational beds to more than 8,000 today. In 
addition we have already approved an additional 2,500 to 3,000 with the 
last three rounds of funding including the approximate 800 to 1,000 new 
beds to be created under a Notice of Funding Availability published on 
May 4, 2007.
    After this round of funding is awarded, VA will have in operation 
or awaiting opening between 12,500 and 13,500 transitional housing 
beds. In addition we are in the processes of awarding funding to more 
than double the number of Special Needs grants to organizations that 
serve veterans with additional healthcare challenges.
    VA has submitted a budget for 2008 that proposes to increase 
funding to further expand the capacity to offer services under the GPD 
program. Although funding amounts are still pending, it is expected 
that under the GPD Program for 2008, VA will be able to add to its 
current transitional housing bed capacity.
    The HUD-VASH Program has approximately 1000 housing units in 
operation at the present time. There is still significant need for 
additional permanent housing for veterans and VA will continue to work 
with HUD and the Congress to meet that long identified unmet need.
    VA remains committed working collaboratively with communities 
across the country to expand its capacity to serve homeless veterans 
with housing and other programs that will address the problems of 
homeless veterans.
                                 ______
                                 

          Questions Submitted by Senator Kay Bailey Hutchison

    Question. Mr. Secretary, I would like to compliment you again on 
the VA's successes in the area of electronic records. The VA's system 
is second to none, including the Department of Defense. It is a 
priority of this committee to see that our injured veterans receive 
world class care. We hear too often that the so called ``seamless 
transition'' is not seamless. A great many records are being lost 
between the time a soldier leaves the Department of Defense and arrives 
at the VA. The Department of Defense and the VA cannot electronically 
share medical records. I know you have several pilot test sites working 
on this problem. Why are the Department of Defense and VA not able to 
bridge this electronic gap? We are funding a working group that we 
hoped would fix this problem. I would like to see the Department of 
Defense adopt your electronic architecture to facilitate transferring 
records to the VA. Will you tell us where we are today and what are you 
doing to address the problem of sharing electronic healthcare records 
with the Department of Defense?
    Answer. VA and DOD have achieved a significant level of success and 
are currently using interoperable electronic health records that are 
standards-based and bidirectional to share clinical data. Pursuant to 
the Joint Electronic Health Interoperability Plan (JEHRI), our long 
term strategy to achieve interoperability, and the guidance and 
leadership of the DOD/VA Joint Executive Council, VA and DOD are 
presently sharing almost all of the electronic health data that are 
available and clinically pertinent to the care of our beneficiaries 
from both departments.
    VA receives these electronic data through successful one-way and 
bidirectional data exchange initiatives between existing legacy VA and 
DOD systems. These data exchanges support the care of separated and 
retired service members who seek treatment and benefits from the VA and 
the care of shared patients who use both VA and DOD health systems to 
receive care.
    Since beginning transfer of electronic medical records to VA, DOD 
has transferred data on almost 3.8 million unique separated service 
members to VA clinicians and claims staff treating patients and 
adjudication disability claims. Of these individuals, VA has provided 
care or benefits to more than 2.2 million veterans. These data include 
outpatient pharmacy (government and retail), laboratory results, 
radiology reports, consults, admission, disposition and transfer data, 
and ambulatory coding data. In 2006, DOD began transferring pre- and 
post-deployment health assessment data and post deployment health 
reassessment data on separated members and demobilized National Guard 
and Reserve members. Leveraging some of the technical capability to 
transfer records one-way, VA and DOD began the bidirectional sharing of 
electronic health records on shared patients. Data shared 
bidirectionally include outpatient pharmacy and allergy data, 
laboratory results and radiology reports. This capability is now 
available at all VA sites of care and is currently installed at 25 DOD 
host locations. These 25 locations consist of 15 DOD Medical Centers, 
18 DOD Hospitals and over 190 DOD outpatient clinics and include Walter 
Reed Army Medical Center, Bethesda National Naval Center and Landstuhl 
Regional Medical Center. VA is working closely with DOD to expand this 
capability and by June 2008, VA will have access to these data from all 
DOD locations. VA also is working with DOD to increase the types of 
data shared bidirectionally. Successful pilot projects demonstrated the 
capability to share narrative documents, such as discharge summaries 
and emergency department notes and this capability is now being used at 
four locations and will be expanded to others. Additional work 
scheduled for the remainder of fiscal year 2007 and 2008 will add data 
such as progress notes, problem lists and history data to the set of 
information that is shared bidirectionally between DOD and VA 
facilities.
    VA and DOD also have accomplished the ground-breaking ability to 
share bidirectional computable allergy and pharmacy data between next-
generation systems and data repositories. This capability permits VA 
and DOD systems to conduct automatic drug-drug and drug-allergy 
interaction check to improve patient safety of those active dual 
consumers of VA and DOD healthcare who might receive prescriptions and 
other treatment from both VA and DOD facilities. At present, we have 
implemented this capability at seven locations and are working on 
enterprise implementation schedules.
    Whereas our earliest efforts focused on the sharing of outpatient 
data, VA and DOD also have made significant progress toward the sharing 
of inpatient data. Most recently, we began sharing significant amounts 
of inpatient data on our most critically wounded warriors. Previously, 
these data were only available to VA from DOD in paper format. We have 
successfully achieved the capability to support the automatic 
electronic bi-directional sharing of medical digital images and 
electronically scanned inpatient health records between DOD and VA. 
This effort has been successfully piloted, at least in one direction 
from DOD to VA, between the Walter Reed Army Medical Center and the 
four Level 1 VA Polytrauma Centers located in Tampa, Richmond, Palo 
Alto and Minneapolis. Clinicians at the Tampa and Richmond Polytrauma 
centers are routinely using it to view data on transferred patients. VA 
and DOD are finalizing a long term strategy that will facilitate the 
expansion of this work across the enterprise systems of each 
department.
    In addition to our joint work to share scanned documents and 
digital radiology images, VA and DOD have undertaken a groundbreaking 
challenge to collaborate on a common inpatient electronic health 
record. On January 24, 2007, the Secretaries of VA and DOD agreed to 
study the feasibility of a new common in-patient electronic health 
record system. During the initial phase of this work, expected to last 
between 6 and 12 months, VA and DOD are working to identify the 
requirements that will define the common VA/DOD inpatient electronic 
health record. The Departments are working to conduct the joint study 
and report findings as expeditiously as possible. At the conclusion of 
the study, we hope to begin work to develop the common solution.
    Question. Mr. Secretary, you now have over $1.2 billion invested in 
Information Technology each year. A critical part of this will go 
toward upgrading VA's electronic medical records and VA's benefit 
processing systems.
    What IT governance structure have you put in place to ensure that 
these critical priorities are aggressively and successfully pursued? 
Who is the one person you designated to be directly responsible for 
these technical programs to ensure they will be completely successful?
    Answer. Over the last 18 months we have dramatically transformed 
the VA IT Management System. Significant parts of this transformation 
have been put in place in the last 6 months. Specifically:
  --October 31, 2006, VA established a single IT leadership authority 
        under the VA Chief Information Officer (CIO). This assigned the 
        responsibility and accountability for all IT activities in VA 
        to the Assistant Secretary for Information and Technology, the 
        VA CIO. This ensured that there was a single focus for all 
        Information Technology efforts at VA.
  --On February 27, 2007, VA consolidated all IT staff and resources 
        into a single organization; accordingly, consolidating the 
        authority and responsibility for all IT efforts at VA. In 
        addition, I directed that this new organization to implement 
        success based processes for all IT efforts at a department 
        level; therefore, ensuring that these critical priorities are 
        successfully pursued.
  --Finally, on March 12, 2007, the new IT Governance Plan was 
        approved. The plan is intended to be an integral component to 
        the VA Governance Framework and will serve as a mechanism to 
        ensure compliance with all Federal IT mandates. It is a vehicle 
        that enables VA to centralize its IT decision making. VA will 
        be able to better align IT strategy to business strategy, 
        maintain and develop the Enterprise Architecture, enhance 
        Information Protection/Data Security, manage IT investments, 
        and reconcile disputes regarding IT. IT Governance is the 
        responsibility of the VA Executive Board, the Strategic 
        Management Council (SMC) and other executive managers. While 
        the VA CIO has full IT decision authority on all IT related 
        activities and issues, the VA business units have recourse to 
        the SMC chaired by the Deputy Secretary and intimately to the 
        Executive Board chaired by myself. This will ensure that IT 
        efforts are focused on delivering services to our veterans and 
        that critical priorities are aggressively pursued.
    Our new OI&T structure, our IT Governance Plan and the 
implementation of ``core best business IT practices'' puts in place a 
robust VA IT Management System under the single IT leadership authority 
of the VA CIO. It provides the necessary oversight, safeguards, check 
and balances to ensure we achieve our IT objectives.
    Question. Who is the one person you designated to be directly 
responsible for these technical programs to ensure they will be 
completely successful?
    Answer. The Honorable Robert T. Howard, the Assistant Secretary for 
the Office of Information and Technology, and the Department's Chief 
Information Officer is designated to be directly responsible for 
technical programs and to ensure they will be completely successful.
    Question. VA's claims processing backlog is currently over 400,000. 
And, you predict over 800,000 new claims annually. Yet, despite immense 
resources allocated for VA IT infrastructure, VBA continues to use old 
systems that require staff to re-enter information by hand. In the last 
2 years the Veterans Benefit Administration has not been a priority in 
the Information Technology budget. I understand there are competing 
issues, but this is a critical mission of the VA.
    How do you plan to make electronic claims processing a priority for 
the VA and identify opportunities for improved accuracy and automation 
in claims handling in fiscal year 2008?
    Answer. Every year, more than 42 million disability compensation 
and pension payments are made to veterans and beneficiaries through the 
Benefits Delivery Network (BDN). BDN has been operational since the 
late 1960s, and the hardware and software that make up the system are 
obsolete. Each year the maintenance of obsolete technology becomes more 
expensive and more risky.
    We are focusing our efforts on completing VETSNET, the replacement 
system for BDN. There are many reasons why the completion of the 
VETSNET system is important. VETSNET will ensure continuity of benefit 
payments to veterans and beneficiaries, and there are other advantages 
as well. The system makes veterans' claims information available on-
line, which allows work on a claim to take place across regional office 
jurisdictions to better balance workload and provide improved customer 
service. Further, VA will be able to readily make software 
modifications to support improved work processes, legislative mandates, 
and security enhancements. It will also be possible to incorporate and 
enhance decision-support and ``expert system'' applications.
    In addition to completing VETSNET, VA is conducting a pilot program 
to incorporate imaging technology into our disability compensation 
processing. Our pilot program involves claims from recently separated 
veterans filed through our Benefits Delivery at Discharge Program 
(BDD). We are receiving the veterans' service medical records 
electronically and are maintaining electronic claims folders for all 
claims filed under this pilot program. However, because of the 
magnitude of the paper records we store, the extent to which we can 
``paperlessly'' process claims from veterans of all periods of service 
has yet to be determined.
    VBA has been exploring the use of electronic, rules-based claims 
processing for certain aspects of compensation and pension claims 
adjudication. Electronic, rules-based claims processing technology 
reduces variances among VA's regional offices, increases decision 
accuracy, and increases employee productivity.
    VA is also using imaging to process adjustments to pension awards, 
and to manage workload. Paperless claims processing offers many 
benefits, such as increasing workload efficiencies, eliminating the 
need for storage of folders, and increasing customer satisfaction 
through the instant availability of imaged information. Through the use 
of our imaging system (Virtual VA) and the associated electronic claims 
folder, employees nationwide have the ability to instantly access 
claims information (service medical records, other medical documents, 
personnel records, and claims applications). Web-based imaging programs 
allow users to navigate and search for information faster than turning 
pages.
    Question. What have you done to improve the accuracy and longer 
than average processing times for the Houston Regional Office?
    Answer. As of January 31, 2007, the accuracy rate for benefit 
entitlement at the Houston Regional Office was 86 percent. In an effort 
to achieve the fiscal year 2007 accuracy goal of 90 percent, the 
Houston RO continues to take aggressive measures to improve the 
accuracy of claims processing. As of March 2007, Houston increased from 
six to eleven the number of senior Veteran Service Center (VSC) 
employees responsible for reviewing quality and evaluating training 
needs. These eleven senior VSC employees are dedicated solely to 
improving the accuracy of Houston RO claims decisions.
    From the end of fiscal year 2005 through April 2007, the Houston RO 
has improved the average processing time of disability claims by 12 
days, from 217 to 205 days. To assist Houston management with the 
development of a comprehensive plan for improvement, VBA sent a team to 
Houston to review critical elements of the station's performance and 
operations. The team recommended strengthening the workload management 
plan and providing additional training for claims processors.
    The Houston RO has been given authority to hire additional claims 
processors in conjunction with the current national hiring initiative. 
The Houston RO had 286 FTE in its Veterans' Service Center at the 
beginning of fiscal year 2007 and is authorized to increase to 293 FTE. 
Four experienced claims processors are also transferring to Houston 
from other regional offices in the near future. The Houston RO also 
hired three retired decision makers whose sole responsibility is to 
process claims pending over 1 year or from claimants over the age of 
70.
    VBA continues to use an aggressive brokering strategy to decrease 
the inventory of claims across the Nation. Cases are sent from stations 
with high inventories to other stations with the capacity to take on 
additional work. This strategy allows the organization to address 
simultaneously the local and national inventory by maximizing resources 
where they exist. During fiscal year 2006, the Houston RO brokered 
nearly 5,000 rating claims, and the office continues to broker rating 
workload this fiscal year.
    Question. I am searching for new and innovative ways we can help 
you solve this problem. One method your Under Secretary for Benefits, 
Admiral Cooper, has instituted is ``brokering'', or the practice of 
moving cases from Regional Offices with larger workloads to regional 
offices with a lesser load.
    Can you tell us which regional offices have the highest workload 
per claims examiner and how this ``brokering'' has affected that 
office?
    Answer. At the end of April 2007, the regional offices with the 
highest workload per full time employee (FTE) were Detroit and Chicago. 
To assist these stations in reducing the number of pending claims and 
improving timeliness, VBA brokered cases from these offices to stations 
with additional capacity. During the first and second quarters of 
fiscal year 2007, the Detroit RO brokered 3,249 claims and the Chicago 
RO brokered 2,913.
    Brokering plans are developed on a monthly basis. Stations are 
selected for brokering based on the percentage gap between their 
current inventory of pending claims and their established end-of-year 
inventory target. Stations with the greatest percentage gap are asked 
to send ready-to-rate cases to other stations for rating decisions. The 
stations participating in brokering changes over time as stations are 
able to bring the pending inventory in line with established targets.
    Can you supply the subcommittee with a list of all Regional Offices 
and the associated workload per claims examiner?
    Answer. See attached spreadsheet.

                                            DISABILITY RATING CLAIMS
----------------------------------------------------------------------------------------------------------------
                                                                    March 2007       May 2007       Pending per
                                                                  Decisionmakers      Pending      Decisionmaker
----------------------------------------------------------------------------------------------------------------
USA.............................................................           5,409         403,268  ..............
Albuquerque.....................................................              51           3,875              76
Anchorage.......................................................              18           1,368              76
Atlanta.........................................................             157          17,175             109
Baltimore.......................................................              63           5,680              90
Boise...........................................................              32           1,522              48
Boston..........................................................              51           4,803              94
Buffalo.........................................................              60           5,353              89
Chicago.........................................................             116          14,093             121
Cleveland.......................................................             182          13,998              77
Columbia........................................................             136           6,959              51
Denver..........................................................             106           7,911              75
Des Moines......................................................              35           4,393             126
Detroit.........................................................              97          13,456             139
Fargo...........................................................              25           1,241              50
Fort Harrison...................................................              24           1,887              79
Hartford........................................................              32           2,581              81
Honolulu........................................................              32           3,067              96
Houston.........................................................             193          19,878             103
Huntington......................................................              73           4,266              58
Indianapolis....................................................              80           8,758             109
Jackson.........................................................              74           6,555              89
Lincoln.........................................................              58           2,839              49
Little Rock.....................................................              65           3,909              60
Los Angeles.....................................................             115          10,178              89
Louisville......................................................              76           6,833              90
Manchester......................................................              17           1,491              88
Milwaukee \1\...................................................             177           5,888              33
Montgomery......................................................             115          11,484             100
Muskogee........................................................             140           6,329              45
Nashville.......................................................             144           8,833              61
New Orleans.....................................................              82           7,431              91
New York........................................................              80          10,421             130
Newark..........................................................              47           4,425              94
Oakland.........................................................             128          14,276             112
Philadelphia \1\................................................             255           7,106              28
Phoenix.........................................................             108           8,095              75
Pittsburgh......................................................              73           6,668              91
Portland........................................................              71           6,962              98
Providence......................................................              27           1,369              51
Reno............................................................              44           4,302              98
Roanoke.........................................................             131          14,950             114
Salt Lake City..................................................              92           4,060              44
San Diego.......................................................             139           7,966              57
San Juan........................................................              62           3,690              60
Seattle.........................................................             139           9,487              68
Sioux Falls.....................................................              20           1,026              51
St. Louis.......................................................             142           8,755              62
St. Paul \1\....................................................             197           4,753              24
St. Petersburg..................................................             370          24,446              66
Togus...........................................................              54           2,470              46
Waco............................................................             263          18,415              70
Washington, DC..................................................              15           1,234              82
White River Junction............................................              10             868              87
Wichita.........................................................              39           3,724              95
Wilmington......................................................              14             742              53
Winston-Salem...................................................             263          19,024              72
----------------------------------------------------------------------------------------------------------------
\1\ Pension Maintenance Center.

    Question. We have discussed hiring more personnel, emphasizing IT 
solutions and now ``brokering''. We have to come up with something to 
relieve the pressure on the claims process and ensure our veterans have 
their claims processed in a timely manner. Can you offer any additional 
areas where we in Congress can help you with this problem?
    Answer. In addition to enhanced technology and management 
practices, increasing staffing levels is key to reducing the pending 
inventory and providing the level of service expected by the American 
people and that our veterans deserve. We very much appreciate the 
support of Congress in providing the resources that are allowing us to 
aggressively add more decisionmakers in our regional offices. We 
increased our on-board strength by over 580 employees between January 
2006 and January 2007. Our plan is to continue to accelerate hiring and 
fund additional training programs for new staff this fiscal year, 
adding 400 additional employees by the end of June.
    The Veterans Disability Benefits Commission is charged with 
assessing and recommending improvements to the laws and benefit 
programs for disabled veterans. We look forward to learning the 
Commission's findings and recommendations for revising and simplifying 
our laws and regulations and improving the delivery of benefits and 
services.
    Question. Mr. Secretary, your agency reports a $5 billion backlog 
in facility maintenance. Every VA facility reported their maintenance 
condition which you relayed to Congress. Yet, the Facilities Condition 
Assessment you delivered to Congress was not in any priority order. I 
am concerned about working our way through this list giving the most 
critical problems the top priority. Facility directors often hold back 
maintenance funds till the end of the year in case they need additional 
funds for medical services.
    How will you ensure that your facility directors spend all of the 
NRM funds as budgeted and appropriated and are incentivized to address 
the non-recurring maintenance projects?
    Answer. VHA is currently working to alter the historical trends of 
NRM obligations and to normalize the obligation of NRM funds throughout 
the fiscal year. Annually VISN's submit an NRM obligation plan and a 
report is provided to the VA Deputy Secretary indicating the variance 
of actual and planned NRM Obligations.
    Question. Mr. Secretary, as you know, this committee is interested 
in ensuring that our returning soldiers receive treatment for mental 
health problems as well as physical health needs.
    What is the VA doing to expand access to mental healthcare for 
returning OEF/OIF vets at our new Mental Health Centers of Excellence?
    Answer. Like other Centers of Excellence (COEs) within the Office 
of Mental Health Services, the new COEs in Mental Health and PTSD in 
Canandaigua, San Diego and Waco were established to support programs in 
research, education, and clinical care. In following this mission, 
their structure and processes are similar, in many ways, to the Mental 
Illness Research Education and Clinical Centers.
    The COE in Canandaigua has a focus on the secondary prevention of 
adverse consequences of serious mental illnesses, particularly on 
suicide prevention. It has appointed Dr. Kerry Knox as its director, 
initial support has been provided, and Dr. Knox is currently leading 
the development of the program plan. While this is in progress, the COE 
is serving as a center for technical assistance and program leadership 
for VA national efforts at suicide prevention.
    The COE in San Diego has a focus on understanding the processes of 
stress and resilience as well as vulnerability and recovery from PTSD 
and other stress related conditions throughout the adult lifespan. This 
includes pre- and post-deployment studies that are being conducted in 
collaboration with the Marine base and Camp Pendleton. It has appointed 
Dr. James Lohr as its director. He has led the development of a program 
plan that has been peer reviewed, approved, and fully funded. The 
Center is currently in the process of implementing its program plan. 
Its clinical activities include enhanced staffing for evaluations of 
returning veterans for deployment-related mental health conditions.
    The COE at Waco has a focus on deployment and stress-related mental 
health conditions, and the transition between DOD and VA care. Its 
proximity and the ongoing relationships of its staff with the Army 
installation at Fort Hood is a major resource. It is currently in the 
process of finalizing the recruitment of its director who will lead the 
development of its program plan. Meanwhile, the Center has implemented 
its activities by initiated specific clinical projects. In one, Dr. 
Kathryn Kotrla is leading a partnership with the State of Texas in 
developing a web-based directory of mental health resources for 
returning veterans and their families and in training providers and 
others on its use. In another, the Center is working in partnership 
with the Office of Research and Development, and the National Center 
for PTSD to support a clinical trial of a care management strategy for 
primary care treatment of PTSD.
                                 ______
                                 

              Questions Submitted by Senator Wayne Allard

    Question. Many of my colleagues from States similar to Colorado 
face a challenge with bringing veteran's healthcare to rural 
communities. I hear from many veterans that live far from VA health 
centers with these concerns. Community Based Outpatient Clinics have 
helped to alleviate some of the geographical obstacle problems that 
many rural veterans have, and Colorado has opened many new clinics in 
the past few years.
    The VA announced earlier this year it was to place a clinic in 
either eastern Colorado or western Kansas, and I was told by VISN 19 in 
Denver to expect a final decision on the placement of this clinic by 
the end of this month. Do you have an update on that decision?
    Answer. The lease for a community outreach clinic was awarded to 
the City of Burlington, Colorado on April 30. Congressional 
notifications were made on May 1, 2007. The location for the clinic is 
the Medical Arts Building, 1177 Rose Avenue, Burlington, CO 80807 It is 
anticipated that the clinic renovations will be completed and the 
clinic should open around October 1, 2007.
    Question. Are there other solutions that the VA is attempting to 
address this problem of rural healthcare with?
    Answer. Beyond establishing CBOCs, VHA employs other means to 
provide healthcare to veterans residing in rural areas. The strategic 
direction for providing services to veterans residing in rural areas is 
to provide non-institutional care and to bring care into veterans' 
homes. Examples of this are telehealth, mail order pharmacies, and home 
based primary care. We are setting the industry standards for using 
advanced technology with our telehealth healthcare delivery programs. 
With this advanced technology, we are providing services directly to 
veterans in their homes and expanding specialized care, such as 
specialized mental heath services, in our Community-Based Outpatient 
Clinics (CBOCs) through telemedicine capabilities.
    When a veteran needs to come to a facility, VHA has established 
outreach clinics which are part time clinics that operate under a 
``hub'' CBOC. These allow for access in more rural areas that do not 
have the demand for services that a more urban area would have. 
Additionally, VA operates Vet Centers often located in rural areas that 
provide mental health services.
    What about the challenges associated with Veterans that are in 
places deemed ``geographically inaccessible'' by the VA?
    Response: VHA acknowledges that those veterans who live in highly 
rural areas have greater access challenges than veterans who live in 
urban and rural areas. To address this challenge, VHA has strengthened 
telehealth healthcare delivery programs. This includes implementation 
of a national care coordination home telehealth program (CCHT). CCHT 
assists in monitoring and treatment of common diseases/conditions of 
patients in their own homes. VA is leading the industry in telehealth 
application and research. VHA will further expand this program in 
efforts to address the access challenges of our veterans who reside in 
highly rural areas.
                                 ______
                                 

             Questions Submitted by Senator Mitch McConnell

    Question. I am deeply concerned about the details that have come to 
light regarding the quality of care provided at Walter Reed Army 
Medical Center. While not directly involving the Department of Veterans 
Affairs (VA), the news about Walter Reed carries with it important 
implications for the VA. I know you agree that both our brave soldiers 
and our veterans deserve the best possible care and that the situation 
at Walter Reed is unacceptable. In your response to a letter I sent you 
on March 6, 2007, regarding the quality of care provided to our 
veterans, you stated that you had ``directed that all facilities for 
which [you are] responsible be inspected by management to assure that 
they are up to par.''
    What criteria were used to make these evaluations?
    What were the findings of this review overall?
    Answer. Each VISN and facility was asked to provide a description 
of substandard cleanliness conditions (e.g. unsanitary conditions, 
peeling paint, and exposed wall and ceiling structures). Many 
facilities went above and beyond our expectations in reporting their 
issues. Specifically, a majority of the items reported were of a 
routine and recurring nature and items that you would expect to see at 
any medical center on a daily or weekly basis.
    The Environment of Care (EOC) report identified 90 percent of the 
items as routine wear and tear for and included items such as paint 
repair, wall repair, and ceiling and floor tiles. Exterior items 
needing repair included sidewalks and doors, bathrooms, and light 
fixtures.
    Nearly one-half of all items identified were addressed by March 30, 
with 85 percent of the items expected to be corrected by September 30, 
2007. The remaining items represent larger ``wear and tear'' and 
infrastructure issues typical for healthcare facilities. Corrective 
actions have already begun on these with some being part of longer term 
existing projects and the remaining added to the facility's non-
recurring maintenance (NRM) or major projects list.
    VHA has had extensive oversight processes in place to assess and 
identify Environment of Care issues. Environment of Care walking rounds 
are conducted on a weekly basis in a specific area in facilities. The 
EOC rounds are led by the Associate Director and cover each area of the 
facility at least twice annually. Any findings noted on EOC rounds are 
tracked by facility leadership through to resolution. The Networks have 
also been directed to establish a VISN Environment of Care Team that 
will conduct unannounced visits at each facility at least once 
annually.
    Question. I am particularly concerned about the nearly 360,000 
veterans in the Commonwealth of Kentucky. I want to ensure they are 
receiving top quality healthcare from our State's VA facilities. Please 
provide a detailed description of the results of your findings for each 
Kentucky VA facility that includes both the criteria and your analysis 
of whether each facility meets acceptable standards for those criteria.
    Answer. Each VISN and facility was asked to provide a description 
of substandard cleanliness conditions (e.g. unsanitary conditions, 
peeling paint, and exposed wall and ceiling structures). Additionally, 
they were asked to provide a plan for correction including timelines 
and the reason why the condition was not immediately correctable.
    The findings within VISN 9 for Kentucky were limited to only one 
facility, the Lexington VA Medical Center. The findings were related to 
the need to replace carpet in three areas (primary care, medicine, and 
surgery administrative areas) and furniture in five areas (ambulatory/
primary care, surgical care, intensive care unit, and emergency 
department waiting rooms, and a mental health unit group room.) All 
furniture and carpet issues were due to normal wear and tear. The plan 
for correction should be completed by July 30, 2007
    Question. I was encouraged to see that the VA's Fiscal Year 2008 
Budget Submission included the new medical facility in Louisville, 
Kentucky among the top-five priority major construction projects for 
the Veterans Health Administration.
    Please explain the current status of this project, as well as your 
outlook for completion of this facility.
    Is the March 23, 2007 announcement that the VA had completed its 
advertisement and evaluation process for selecting an architectural and 
engineering (A/E) team to provide full design services for the 
construction of the replacement medical facility an indication of the 
Department's commitment to complete this important project in a timely 
manner?
    What deadline has the VA established for finalizing a contract with 
the selected A/E team?
    If a deadline has not been established, when do you expect to 
finalize a contract?
    When do you expect the site selection board to recommend its 
``preferred site?''
    Answer. As a result of the Capital Asset Realignment for Enhanced 
Services (CARES) process, a decision was made to plan for the 
construction of a new VA medical center in Louisville. At the present 
time, no funding is available for the acquisition of a site for this 
project. The site selection process, including conducting the necessary 
environmental impact studies will take about 1 year and will be timed 
to coincide with the ability to be considered for fiscal year 2009 
funding consideration. This process is expected begin this summer.
    In the meantime, the Department has selected an architect 
engineering firm as the designer for the project. The firm's initial 
work will include supporting the VA in evaluating sites identified 
through the search process and developing a space program for the 
project. Once a site has been selected, the firm will proceed into 
design. It is anticipated there will be individual contract actions 
with the firm for the start-up studies.
    This project is one of several large project requirements 
identified in the CARES process and will be considered along with 
others for funding as future budget requests are developed. Site 
acquisition and design funding will be a consideration for funding in 
fiscal year 2009.
    Question. I commend the Department, under your direction, for 
working to address the growing need for specialized care for veterans 
returning from Operation Enduring Freedom and Operation Iraqi Freedom 
who are suffering from polytraumatic injuries. I am particularly 
encouraged by your recent action to expand this specialized care 
through 21 Polytrauma Network Sites (PNS) nationwide.
    (a) What is the timeline for these PNS facilities to become 
operational?
    (b) What services will PNS facilities, such as the Lexington VA 
Medical Center in Lexington, Kentucky, provide veterans recovering from 
polytraumatic injuries that are not available at other VA medical 
centers?
    (c) In what ways will these new sites help reduce the strain 
endured by family members of severely wounded veterans?
    Answer. (a) All 21 Polytrauma Network Sites (PNS) are operational. 
(b) The PNS have dedicated interdisciplinary teams consisting of a 
physiatrist, rehabilitation nurse, psychologist, speech-language 
pathologist, physical therapist, occupational therapist, social worker, 
blind rehabilitation outpatient specialist, and certified prosthetist. 
The teams have received training in conditions associated with 
polytraumatic injuries including brain injury, amputation, visual 
impairment, pain management, and PTSD. They have also received training 
in the special needs of families and caregivers.
    (c) The role of the PNS is to manage the post-acute complications 
of polytrauma and to coordinate life-long rehabilitation services for 
patients with polytrauma within their VISN. As part of the Polytrauma 
System of Care (PSC), PNS are responsible for identifying VA and non-VA 
services available across the VISN to support the needs of patients and 
families with polytrauma.
    Case management has a crucial role in ensuring lifelong 
coordination of services for patients with polytrauma and TBI, and is 
an integral part of the system at each polytrauma care site. The PSC 
uses a proactive case management model, which requires maintaining 
routine contacts with veterans and their families to coordinate 
services and to address emerging needs. As an individual moves from one 
level of care to another, the case manager at the referring facility is 
responsible for a ``warm hand off'' of care to the case manager at the 
receiving facility closer to the veteran's home. Every combat injured 
veteran with TBI is assigned a case manager at the facility closest to 
his home. The assigned case manager handles the continuum of care and 
care coordination, acts as the POC for emerging medical, psychosocial, 
or rehabilitation problems, and provides patient and family advocacy.
    A Polytrauma Telehealth Network (PTN) links facilities in the 
Polytrauma System of Care and supports care coordination and case 
management. The PTN provides state-of-the-art multipoint 
videoconferencing capabilities. It ensures that polytrauma and TBI 
expertise are available throughout the system of care and that care is 
provided at a location and time that is most accessible to the patient. 
Clinical activities performed using the PTN include remote 
consultations, evaluations, and even treatment, and education for 
providers and families
    Question. The VA's 2004 Capital Asset Realignment for Enhanced 
Services (CARES) study recommended seven Community Based Outpatient 
Clinics (CBOCs) for VISN 15, which includes Daviess, Hopkins, and 
Graves Counties in Kentucky. Although the VA's budget request includes 
over 35 CARES major construction projects--several of which are CBOCs--
none of the fiscal year 2008 CARES projects is located in VISN 15. More 
troubling, within the VA's Fiscal Year 2008 Five-Year Capital Plan, 
eight potential major construction projects for VISN 15 are identified, 
nearly all of which are to be located within Missouri, yet none of 
Kentucky's CBOCs in VISN 15 is included in that plan.
    (a) Given that none of the three Kentucky CBOCs is registered on 
the VA's Five-Year Capital Plan, when can these communities expect to 
utilize the facilities they were promised?
    (b) What options are the VA considering to ensure that veterans 
living in western Kentucky have access to quality healthcare close to 
home?
    Answer. (a) There were three Community Based Outpatient Clinics 
(CBOCs) identified in the CARES study for Western Kentucky that are 
located in the VISN 15 service area. The Hopkins County CBOC, co-
located at the Western Kentucky Veterans Center in Hanson, Kentucky, 
opened in August 2005. VHA is currently evaluating options, including 
CBOCs, to improve access in Kentucky.
    (b) Veterans in Western Kentucky currently have access to three VA 
clinics in VISN 15. They may obtain care at the CBOC in Paducah, the 
Hopkins County CBOC, or the Evansville Outpatient Clinic. VHA is 
currently evaluating options, including CBOCs, to improve access in 
Kentucky.
                                 ______
                                 

            Questions Submitted by Senator Robert F. Bennett

    Question. Regarding the construction of a planned 120 bed Utah 
State Veterans' Nursing Home in Ogden, Utah, about which my office has 
been in contact with the Department of Veterans Affairs, I am concerned 
about the prioritization of the facility. The nearest comparable 
facility located in Salt Lake City, Utah, continues to place an 
increasing number of veterans on a waiting list to which many of the 
veterans will not live to see an end. I would like to greater 
understand the process used in determining the order of construction of 
nursing homes in various States. For example, is a formula used that 
would continually place the needs of States with comparatively smaller 
populations of veterans behind more populous States? I would appreciate 
an in-depth overview of the decision-making process regarding 
construction of these facilities, with particular attention to the 
planned Utah State Veterans' Nursing Home in Ogden.
    Answer. Projects submitted to VA for consideration under the State 
Home Construction Grant program are prioritized using criteria set 
forth in the law, as implemented by VA regulations in 38 CFR Part 59. 
In prioritizing projects, the law gives the highest ranking to those 
projects that are to correct life safety deficiencies at existing State 
Homes. The next highest priority is given to construction of new 
capacity in States that have a great need for nursing home beds. Title 
38 CFR Part 59.40 identifies the maximum number of nursing home and 
domiciliary care beds for veterans by State. The limits are currently 
based on projected demand for such beds for veterans that are 65 and 
older projected to the year 2009. VA may participate in a construction 
grant to build new beds (up to 65 percent of allowable costs) in those 
States up to the maximum bed limits. There is a 2-hour travel time 
exception that may be approved by VA's Secretary. The annual fiscal 
year priority list is developed in accordance with the priorities set 
forth in the law, as implemented in title 38 CFR 59.50. A copy of the 
prioritization for priority group 1 and the first page of the fiscal 
year 2007 Priority List illustrate the development of the annual list. 
All initial applications and pending projects will be considered as of 
August 15, 2007, for ranking on the fiscal year 2008 Priority List. If 
a project is to be ranked in priority group 1, the State authorization 
for a project and the State 35 percent Certification of State Matching 
Funds for the project must be approved. Usually during September, the 
annual Priority List is approved by VA's Secretary. When Congress 
appropriates VA's fiscal year 2008 State Home Construction Grant 
budget, VA will inform the States with the highest ranking projects 
that funds are available for their project in fiscal year 2008. 
Annually, VA utilizes nearly all appropriated funds. To receive a 
grant, a State informed of the availability of funds must meet all the 
requirements for a grant award during the fiscal year. The proposed 
Ogden home will continue to be ranked on the annual Priority List until 
it receives a grant, unless the State elects to withdraw the 
application for funding. 

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                          SUBCOMMITTEE RECESS

    Senator Reed. This hearing is recessed.
    [Whereupon, at 12:03 p.m., Thursday, April 12, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]
