[Senate Hearing 111-167]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-167

                    THE FISCAL YEAR 2010 BUDGET FOR 
                           VETERANS' PROGRAMS

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 10, 2009

                               __________

       Printed for the use of the Committee on Veterans' Affairs


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate



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                     COMMITTEE ON VETERANS' AFFAIRS

                   Daniel K. Akaka, Hawaii, Chairman
John D. Rockefeller IV, West         Richard Burr, North Carolina, 
    Virginia                             Ranking Member
Patty Murray, Washington             Lindsey O. Graham, South Carolina
Bernard Sanders, (I) Vermont         Johnny Isakson, Georgia
Sherrod Brown, Ohio                  Roger F. Wicker, Mississippi
Jim Webb, Virginia                   Mike Johanns, Nebraska
Jon Tester, Montana
Mark Begich, Alaska
Roland W. Burris, Illinois
Arlen Specter, Pennsylvania \1\
                    William E. Brew, Staff Director
                 Lupe Wissel, Republican Staff Director



----------
\1\ Hon. Arlen Specter was recognized as a majority Member on May 5, 
2009.













                            C O N T E N T S

                              ----------                              

                             March 10, 2009
                                SENATORS

                                                                   Page
Akaka, Hon. Daniel K., Chairman, U.S. Senator from Hawaii........     1
Burr, Hon. Richard, Ranking Member, U.S. Senator from North 
  Carolina.......................................................     2
Rockefeller, Hon. John D., IV, U.S. Senator from West Virginia...     4
Brown, Hon. Sherrod, U.S. Senator from Ohio......................     5
Tester, Hon. Jon, U.S. Senator from Montana......................     6
Sanders, Hon. Bernard, U.S. Senator from Vermont.................     7
Burris, Hon. Roland W., U.S. Senator from Illinois...............     9
Murray, Hon. Patty, U.S. Senator from Washington.................    10
Begich, Hon. Mark, U.S. Senator from Alaska......................    11
Graham, Hon. Lindsey, U.S. Senator from South Carolina...........    23

                               WITNESSES

Shinseki, Hon. Eric K., Secretary, U.S. Department of Veterans 
  Affairs........................................................    12
    Prepared statement...........................................    15

                   Independent Budget Representatives

Blake, Carl, National Legislative Director, Paralyzed Veterans of 
  America........................................................    32
    Prepared statement...........................................    34
Baker, Kerry, Assistant National Legislative Director Disabled 
  American Veterans..............................................    37
    Prepared statement...........................................    38
Kelley, Raymond C., National Legislative Director, AMVETS........    44
    Prepared statement...........................................    46
Cullinan, Dennis, Director, National Legislative Service, 
  Veterans of Foreign Wars.......................................    49
    Prepared statement...........................................    51

                  Other Veterans Service Organizations

Robertson, Steve, Director, National Legislative Commission, The 
  American Legion................................................    60
    Prepared statement...........................................    62
Weidman, Rick, Director of Governmental Relations, Vietnam 
  Veterans of America............................................    70
    Prepared statement...........................................    72

                                APPENDIX

The Independent Budget Critical Issues; report...................    83

 
           THE FISCAL YEAR 2010 BUDGET FOR VETERANS' PROGRAMS

                              ----------                              


                        TUESDAY, MARCH 10, 2009

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:34 a.m., in 
Room 418, Russell Senate Office Building, Hon. Daniel K. Akaka, 
Chairman of the Committee, presiding.
    Present: Senators Akaka, Rockefeller, Murray, Brown, 
Tester, Begich, Burris, Sanders, Burr and Graham.

     OPENING STATEMENT OF HON. DANIEL K. AKAKA, CHAIRMAN, 
                    U.S. SENATOR FROM HAWAII

    Chairman Akaka. This hearing of the U.S. Senate will come 
to order.
    Aloha and welcome to all.
    Today, the Committee begins its review of fiscal year 2010 
funding for the Department of Veterans Affairs. When we talk 
about the VA, we are talking about people. I have had a few 
chats with the Secretary, and that is what we have been talking 
about--those who have served and the nearly 280,000 VA 
employees who work on their behalf.
    The budget outline presented by the President last month 
appears to be a good one which reflects many important 
priorities of this Administration. From my vantage point, as 
Chairman of this Committee, I am committed to ensuring that 
veterans receive quality benefits and quality services. When 
troops are sent into battle on behalf of our Nation, there is a 
commitment to care for them when they return home. They must be 
given the best health care and the best rehabilitation. They 
must be fairly compensated for their injuries. And now, in this 
time of war, VA must have the resources it needs to carry out 
its mission.
    The troop surge in Iraq and the increases in Afghanistan 
will soon be felt at VA. To date, this generation of veterans 
as a group have been slow to come to VA for benefits and 
services. VA must be prepared to reach out to those now coming 
home and bring them into the system.
    While many details of the Administration's final budget 
proposal have yet to be presented, the Committee is required to 
submit the Views and Estimates to the Budget Committee by the 
end of this week. I intend to meet that deadline, but doing so 
will not complete our work on next year's budget. We will 
evaluate the President's final budget once it is received and 
make additional recommendations.
    One of the most pressing issues facing VA is ensuring 
timely, sufficient and predictable funding from year to year. 
Last month, I introduced legislation with bipartisan support to 
help secure the timely funding of veterans' health care through 
advance appropriations. Too often, VHA's budget is subject to 
delay and uncertainty, hampering planning and threatening 
health care quality. This situation must end.
    Another serious issue is the backlog in VA construction. I 
am eager to learn how the Committee can help the Department 
complete pending construction projects so that VA can provide 
veterans with more access to care in better facilities. There 
are many other important areas of health care that the 
Committee is concerned about, such as: care in rural areas; the 
health care needs of women veterans; recruitment and retention 
of medical providers; research programs; and homelessness among 
veterans.
    On the benefits side of the ledger, timely and accurate 
adjudication of disability claims and appeals remains a 
significant problem. Veterans deserve to have their claims 
addressed fairly and without needless delay. The President's 
budget proposes to invest in better technology, and I am 
pleased that the Department will invest in the development of 
rules-based electronic processes to improve accuracy, 
consistency and timeliness in claims processing.
    As one who knows firsthand the value of education benefits 
under the GI Bill, I want to hear how VA intends to implement 
the Post-9/11 GI Bill.
    I know that VA shares my commitment to providing a seamless 
transition from military to civilian life for today's 
servicemembers. VA must be an active partner with the 
Department of Defense to ensure that troops are cared for 
appropriately when they transition from active service to 
veteran status. I look forward to learning in more detail how 
the President's budget responds to this issue.
    I am committed to working with the Secretary and my 
colleagues in Congress on both sides of the aisle to ensure 
that the Department gets what it needs to deliver high-quality 
benefits and services to veterans. We must acknowledge the fact 
that the needs of veterans are costs of war.
    I look forward to our dialog with Secretary Shinseki as 
well as the representatives of veterans service organizations 
here with us today.
    And now I would like to call on our Ranking Member, my good 
friend, Senator Burr.

        STATEMENT OF HON. RICHARD BURR, RANKING MEMBER, 
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Burr. Aloha, Mr. Chairman.
    Chairman Akaka. Aloha.
    Senator Burr. And to my colleagues and our witnesses, 
welcome.
    Mr. Secretary, this is the first time you have been before 
the Committee. Therefore, it is the first time I have been able 
to address you formally as Mr. Secretary, and I want you to 
know what a special privilege it is to have you in this 
position. As I have said in the past, we are fortunate to have 
a person of your caliber as the head of the Veterans 
Administration, and I am personally looking forward to working 
with you as you chart the future of VA and the shared mission 
to serve America's veterans. I thank you for being here.
    We are here this morning to learn more about the 
President's fiscal year 2010 budget request. There are very few 
issues that are more important, in my estimation, than to 
ensure that the programs and the services for our veterans are 
adequately funded.
    Mr. Secretary, I'm counting on you to be very candid with 
us and with this budget. More importantly, I am counting on you 
to make sure that veterans' lives are improved with the 
resources that we provide the VA.
    We have very few details about what is within the budget. 
In fact, we really only have a 134-page book submitted by the 
Office of Management and Budget, with only two pages of that 
devoted to VA's budget.
    Let me say that for the upcoming fiscal year this budget 
appears to be a very strong one, with an 11 percent increase in 
discretionary spending. This is consistent with the increases 
shown in recent years.
    I am especially pleased that the budget appears to fund 
legislation I authored and was signed into law last year to 
help our veterans who are at risk of becoming homeless. This 
new law, Public Law 110-387, authorized the VA to make grants 
to nonprofit organizations to provide supportive services to 
these veterans. I believe that when it comes to dealing with 
problems of homelessness we must approach it in a proactive 
and, more importantly, a holistic way. My hope with this new 
effort is that we can end the cycle of homelessness by ensuring 
it never begins in the first place. I commend the President for 
making this a priority of the 2010 budget.
    Although the fiscal year 2010 outlook appears promising, I 
am concerned about what the President's budget tells us for the 
subsequent years. I am concerned because I believe the 
President when he says his goal is to bring a new level of 
transparency to government. In fact, here is what the President 
had to say about his own budget, ``But this Budget does begin 
the hard work of bringing new levels of honesty and fairness to 
government. It looks ahead a full 10 years, making good-faith 
estimates about what costs we would incur.''
    That is why when I look at the tables in the back of the 
budget and I see a proposed 2.3 percent increase in fiscal year 
2011, 2.6 percent in 2012, 2.7 percent in 2013, 2.8 percent in 
2014, I get very concerned. We all know medical inflation alone 
has been averaging around 4 to 5 percent per year. On top of 
that, we are expecting more veterans to enter the system in the 
near future, especially as 100,000 plus troops are drawn down 
in Iraq and as our weak economy is leaving many veterans out of 
work; and I might also add the goal of absorbing 500,000 
Priority 8s over the next several years.
    I do not know how these numbers add up to ensure our 
veterans get the quality of care that they have earned, more 
importantly, that we have promised. But, again, if indeed these 
are good-faith estimates, I am confident you will be able to 
defend these numbers.
    In closing, let me also acknowledge the contributions of 
the veterans service organizations on our second panel. Not 
only have they given us the benefit of their expertise in 
determining appropriate funding levels for the VA for the 
upcoming year, but they have also given us a guide to reform 
what I think is a broken budget process.
    I have joined as an original co-sponsor of the Veterans 
Health Care Budget Reform and Transparency Act. I believe this 
bill will start the discussion in Congress on how we can 
deliver a timely, predictable and sufficient budget for our 
veterans. It will also lend new transparency to the budget 
process which I believe is consistent with the President's own 
goal.
    Mr. Chairman, again, I thank you for calling this hearing, 
and I look forward to the testimony of not just the Secretary 
but of the other veterans organizations.
    Chairman Akaka. Thank you very much, Senator Burr, for your 
opening statement.
    And now I would like to call on Senator Rockefeller for his 
opening statement.

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. Thank you, Mr. Chairman.
    Good morning, Mr. Secretary. We have chatted on two 
occasions, and I have expressed to you my profound pride in 
your selection, and all I can do is repeat that with the same 
heartfelt feeling. I think it is one of the best selections the 
President has made. If I were in a veterans service 
organization, I would be jumping up and down with happiness and 
with a sense that there is somebody who really cares, who 
understands, who is humble in nature but has steel in the 
spine, and who will fight hard for veterans.
    The veterans have so many problems, it is almost difficult 
to pick out one or two. Senator Burr mentioned homelessness. 
That is huge.
    He also mentioned the 5-year running budget which, as we 
discussed, may not actually work out, it being very unique if 
we were to do that.
    He mentioned the health care inflation. I have to leave to 
go to a Finance Committee meeting on that precise subject.
    Let it just be said that the stimulus package gave the 
veterans an enormous boost. That boost is here to stay.
    The question is how do you take the multiplicity of the 
visible and invisible wounds that veterans bring home with 
them--and will continue to bring home with them, and will have 
living with them for the rest of their lives--and help them 
cope?
    I have not even given up an inch on the Gulf War Syndrome. 
I think that is still out there, still an active matter of 
consideration and still more or less denied by the Department 
of Defense.
    But I think a lot of Americans thrive on hope. They see 
somebody or they see something which is turning the corner--
let's say, in the economic crisis. If we could see that, it 
would be nice. They see somebody like you, if they are 
veterans, and their life gets better simply because there is 
hope, because of your integrity, your strength.
    I think the bond you already have with each of us on this 
Committee and with the veterans service organizations will 
serve you well.
    I congratulate you. I am really looking forward to your 
being a superb Secretary.
    Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Rockefeller.
    Now I would like to call on Senator Brown for his opening 
statement.

               STATEMENT OF HON. SHERROD BROWN, 
                     U.S. SENATOR FROM OHIO

    Senator Brown. Thank you, Mr. Chairman.
    I echo the words of Senator Rockefeller in saying this is, 
I believe, one of the President's best choices for Cabinet 
Secretary.
    I also thank the veterans organizations here, particularly 
the Paralyzed Vets, the DAV, the AMVETS and the VFW for the 
Independent Budget. I think that helped get us on our way and 
the President's way and Secretary Shinseki's way on a much 
better VA budget than we have had in years past.
    I also thank the Legion and the Vietnam Vets for being with 
us today and helping us shine a light on the direction we need 
to go.
    I appreciate Secretary Shinseki already having said in 
earlier discussions that he has had three meetings with Defense 
Secretary Gates. I guess having a four-star general as VA 
Secretary helps get into the Pentagon and understand the 
Pentagon a little better than others and in the relationship he 
has had with Secretary Gates. And I think that is so important 
as we have really worked for the last couple of years to try to 
integrate the two departments better to ease the transition 
from active duty to veteran status.
    I have held probably a dozen roundtables where I will sit 
down with 20 vets--similar to what I know Senator Rockefeller 
does in a different format but the same kind of thing--and just 
talk with them about their experiences and what they are seeing 
with the VA and what they are seeing with CBOCs and what they 
are seeing just generally with their treatment as veterans.
    One of the most common complaints from veterans service 
organizations is they cannot find veterans when they come home. 
The screening for PTSD is not done and the problems happen 
because we sort of lose track. And veterans do not always step 
up because when they get home they want to get integrated 
back--particularly if they are Guard or Reserve--integrated 
back into their homes and their neighborhoods and their 
churches and their work places.
    I appreciate especially the work that the VA has done, 
starting 10 years ago, on IT and that success. I know Secretary 
Shinseki is going to mention that in his opening testimony--
what strides that the VA has made with information technology, 
and how it has made such a difference in cutting down the 
number of medical errors. That should be instructive to the 
Finance Committee and to the Health Committee and to the House 
and Senate on how we do health care in this country because the 
VA really has done better than anybody else in reducing medical 
errors.
    A couple of other points I wanted to make: I held a vets 
roundtable the other day in Columbus at the Veterans Memorial, 
and a couple of things came up. One is--this is a problem 
unique to Ohio--Ohio has the second lowest average payment for 
disability compensation. I want to understand that better and 
make sure that does not continue to happen.
    More national in scope is the VA, as it has moved toward 
privatization of all kinds of services, it has moved away from 
hiring the number of veterans they ought to hire. It has 
probably meant less diversity too at the VA. It is so important 
that there be a focus on hiring veterans, that I think the VA 
has lost its way on hiring veterans for a whole host of issues.
    I also heard a lot yesterday about dental care; that there 
is a window during which vets have to get dental care. If they 
do not get inside that window, they lose their option to have 
VA dental care. I am not sure of that. That was said by several 
people at this panel.
    And, last, the whole issue of mental health. There were 
several women there that talked passionately about the VA's 
inability to deal with sexual trauma from veterans who had been 
assaulted--men and women veterans, they said, who had been 
assaulted. I mean, there were soldiers that had been assaulted, 
and they were not getting help from the VA in terms of 
counseling because the mental health counselors typically 
specialized in alcohol and drug abuse and other kinds of PTSD 
issues, but not a lot about sexual trauma. So that is an issue 
that we need to raise and work through in the months and years 
ahead.
    I am thrilled that you are the Secretary, General Shinseki, 
and I look forward to hearing your testimony.
    I have another hearing, so I may not get to hear everything 
today, but I appreciate your being here.
    Chairman Akaka. Thank you very much, Senator Brown.
    Now we will call on Senator Tester for the opening 
statement.

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. Thank you, Chairman Akaka, and I want to 
thank all the distinguished witnesses who are going to testify 
today on the 2010 budget for veterans' programs.
    Secretary Shinseki, it is good to see you again. I want to 
publicly reaffirm my support and confidence in your leadership. 
I look forward to the testimony.
    As the global war on terrorism enters its eighth year, 
servicemen and women continue to experience traumatic mental 
and physical injuries as they are placed in harm's way. Since 
fighting began, more than 4,914 U.S. servicemembers have been 
killed, and more than 40,000 have been injured. The lives of 
our servicemembers and their families have truly been changed 
forever.
    Suicide rates are at an all-time high. The rates of 
psychological and neurological injuries are high and rising. 
According to IAVA, about one in five new veterans are 
experiencing symptoms of PTSD or major depression.
    Nineteen percent of Iraq and Afghanistan veterans have 
experienced probable Traumatic Brain Injury during their 
deployment. Tens of thousands of new veterans are coping with 
both the psychological injuries and TBI, the effects of which 
can compound each other, but less than half of those suffering 
from psychological and neurological injuries are receiving 
sufficient treatment.
    Multiple tours and inadequate time at home between 
deployments are increasing the rates of combat stress.
    For me, it is personal. It is serious. Our decisions 
directly impact the lives of veterans and their families. We 
have accomplished a lot, but, as just about every Member of 
this Committee said going around the room, more needs to be 
done.
    More needs to be done to ensure the care of our veterans 
and their families. Is the VA adequately prepared to address 
these issues? What more do we need to do?
    There are over 100,000 veterans living in Montana. This 
number includes a significant number of Native American 
veterans. This is an extraordinary group of veterans that is 
disproportionately affected by service-connected health 
conditions. Their access to primary and mental health care is 
further limited by distance and underfunded--often inadequate--
community health care, IHS services.
    Veterans living in rural and highly rural areas deserve 
better. We have to improve the way we administer and deliver VA 
services in rural areas. The budget needs to fully support 
these programs, and, personally, I need to know that the 
dollars allocated to support rural health initiatives are being 
appropriately applied.
    Overall, as I look at this budget, I think it looks pretty 
decent. It funds IT infrastructure, telemedicine, upgrades VA 
facilities, improves health care for rural veterans and extends 
care to our Priority 8 veterans--something that I have heard a 
lot about.
    However, there is still a big gap, almost $2 billion, 
between the VA-President's budget and the Independent Budget. 
As stewards of the taxpayer dollar, we need to reconcile these 
differences.
    Once again, General Shinseki, very, very good to see you. I 
look forward to your testimony. I look forward to working on 
this budget for 2010.
    Chairman Akaka. Thank you very much, Senator Tester.
    Senator Sanders, your opening statement.

              STATEMENT OF HON. BERNARD SANDERS, 
                   U.S. SENATOR FROM VERMONT

    Senator Sanders. Thank you very much, Mr. Chairman.
    General Shinseki, it is great to see you again, and I 
concur in the feelings of my fellow Senators, that in these 
difficult times you are the right person for the job, and we 
look forward to working with you.
    Over the last several years, we have made some significant 
progress in addressing many areas that have been long 
neglected, and I want to thank, quite sincerely, our Chairman, 
Danny Akaka, and Bill Filner in the House, because we have made 
some real progress.
    We have, among other things, begun the process of bringing 
our Priority 8 veterans back into the system. That is not a 
small thing.
    We have passed a GI Bill which has the greatest expansion 
in veterans' educational opportunities since World War II, and, 
especially in these very difficult economic times, that is a 
huge step forward for hundreds of thousands of veterans and 
their families.
    At a time when we almost had to rush money into the VA 
several years ago--when the VA ran out of money--we have 
consecutively, in recent years, proposed record-breaking 
budgets for the VA. And that is the right thing to do.
    We have raised mileage reimbursement rates. That may not 
seem like a big deal, but when you are in a rural State like 
mine, the fact that people now can get decent compensation to 
get to the clinic or get to the hospital is quite a big deal.
    So, we have made some progress in recent years, but 
obviously we have a long way to go. And I think, as Senator 
Brown indicated a moment ago, one of the reasons that we have 
made progress is we have worked with the service organizations 
who are on the ground, who know what the problems are, and we 
have come very close to matching what the Independent Budget 
has brought forth.
    I want to thank Paralyzed Veterans of America, DAV, AMVETS, 
VFW, the American Legion, and the Vietnam Veterans of America. 
I thank them very much for their help in making our job easier 
in terms of allowing us to know what is happening on the 
ground.
    Now, in terms of this budget, let me talk very briefly 
about what I see as some of the highlights. This budget will 
allow 500,000 Priority 8 veterans back into the VA health care 
system over the next 3 years. As you and I discussed the other 
day, that is, in my view, exactly the right thing to do. It was 
wrong for the previous administration to throw those people out 
and deny them admission to our VA system. We are making some 
progress in bringing them back in.
    This budget enhances outreach and other services related to 
mental health care, TBI and other areas with a focus on rural 
areas through increased use of Vet Centers and mobile health 
clinics. We can have the best health care in the world for our 
veterans, but if they do not know how to access it and if they 
are not brought into the system, it does nobody any good. So I 
absolutely support and appreciate the effort to increase 
outreach. We are making some progress in Vermont in that sense, 
and I am glad that we are doing it around the country.
    Clearly, one of the problems, Mr. Secretary, that you have 
heard over and over again is the backlog in terms of getting 
benefits to our veterans in a timely manner. I believe that 
this budget begins the process of addressing that very serious 
problem, and I know that that is high on your priority list. In 
an age of sophisticated hardware and all of this computer 
technology, it makes no sense that veterans have to wait as 
long as they are currently waiting for the benefits that they 
are entitled to.
    This budget ends the disabled veterans tax by supporting 
full concurrent receipt. That is something the veterans 
organizations have fought for a long time.
    And this budget makes sure that the new GI Bill hits the 
ground running. Once again, we have a wonderful benefit out 
there in terms of educational opportunities for veterans. It 
does not do anybody any good unless they fully understand the 
benefits to which they are entitled and know how to access 
those benefits.
    I share some concerns that my colleagues have raised about 
this budget. We are going to want to work on the amount of 
money in the budget. I think we can do a little bit better than 
the President has proposed, and we also want to make some more 
progress on advance appropriations, something that I think many 
of us believe is the right direction.
    So, I think the budget is off to a good start. It is going 
to need some work, and we look forward, Mr. Secretary, to 
working with you and the veterans organizations on these 
issues.
    Thank you very much.
    Chairman Akaka. Thank you very much, Senator Sanders.
    And now I call on Senator Burris for your opening 
statement.

             STATEMENT OF HON. RICHARD W. BURRIS, 
                   U.S. SENATOR FROM ILLINOIS

    Senator Burris. Thank you very much, Mr. Chairman.
    And to Secretary Shinseki and to those who will be 
testifying on the second panel, my congratulations and hopes, 
wishes and prayers for you to be very, very successful as we 
undertake this great mission to deal with those individuals who 
have enabled us to be where we are today, and those are our 
veterans.
    You know, Mr. Secretary, we have a person who has joined 
you from the great State of Illinois, a young lady by the name 
of Tammy Duckworth, and we are looking forward to bringing her 
knowledge of what she did for veterans in our State. I 
understand she has met with you, and you have really given her 
the green light in putting up some of those programs that we 
have put into place in Illinois for our veterans. I think the 
President has put together a very good team.
    As you know, I was hoping and praying I would get on this 
Committee, Mr. Chairman. Thanks to the leadership, they did put 
me on the Veterans' Affairs Committee, and all my activities 
since I have been in office for these 50 days or 60 days has 
been dealing with our veterans. I have already been to the 
Great Lakes Hospital. I met with veterans in my office. I met 
with all the veterans groups that have come here to Washington 
because we must take care of our veterans. With your leadership 
and your knowing what that is, I am pretty sure that that will 
be dealt with.
    So, this proposed 2010 budget has the potential to lead the 
way in the transformation of the VA. It has provisions to 
improve many different parts of the VA system from homelessness 
prevention to the expansion of IT capabilities. Secretary 
Shinseki and his staff have used their considerable experience 
and expertise to create this budget, and I commend them for 
their hard work on behalf of our veterans.
    However, as I said last week, veterans advocacy groups like 
those here today are our eyes and our ears on the ground; and I 
want to commend each and every one of those groups that are 
keeping us informed as to what is happening out there with 
their colleagues. I am to gather from each of you the insight 
into how we can fully take advantage of the opportunities 
provided in this budget.
    Furthermore, Mr. Chairman, I come here with my own 
questions. I am also a member of the Homeland Security and 
Government Affairs Committee, and lately I have been thinking a 
lot about oversight, transparency and accountability in 
relation to the Recovery Act.
    Well, in fact, I have been thinking about oversight, 
transparency and accountability for most of my working life, 
first, as an old Federal bank examiner where I was making sure 
that the banks were sound--maybe we should do something about 
that today; and as Comptroller of my State; and as the Attorney 
General of my State; and now as a United States Senator from my 
State.
    I do not want to squander the opportunity for change 
afforded by this budget because of miscalculations or misuse of 
funds. We have increased the budget to some extent, and we must 
make sure that those dollars are spent and they are spent 
wisely, effectively, for the benefit, Mr. Secretary, of our 
veterans.
    I will have some questions as soon as I have time. I have 
to go to my other committee, Mr. Chairman, but I will have some 
questions since I cannot be at two places at the same time.
    Thank you very much.
    Chairman Akaka. Thank you very much, Senator Burris.
    Now we will hear from Senator Murray.

                STATEMENT OF HON. PATTY MURRAY, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Murray. Well, good morning, Mr. Chairman. Thank you 
and Senator Burr very much for holding this very important 
hearing on the proposed 2010 VA budget.
    I want to extend a warm welcome to the representatives of 
the veterans service organizations. Every year, you put an 
incredible amount of time and hard work into producing your own 
budget estimates and policy recommendations, and every one on 
this Committee appreciates all the work you do in that regard.
    I also want to extend a warm welcome to Secretary Shinseki. 
As I said at your confirmation hearing, you have one of the 
most challenging and rewarding positions in our government, and 
I appreciate what you are doing.
    Modernizing our VA into a 21st Century organization is not 
an easy task. We have a lot of work ahead of us in improving 
access and understanding mental health, improving the seamless 
transition process, fixing the disability claims project, 
leveraging information technology so we can improve the 
delivery of services, and preparing the VA to care for an 
increasing number of female veterans. By themselves, none of 
these is an easy task, and, together, they are very 
complicated. So we appreciate the tremendous amount of energy 
you have given, Mr. Secretary, to putting this system to the 
right.
    We have not seen a lot of details on the proposed budget 
yet, but there are some good things I am seeing, and I want to 
mention a couple of them.
    As the lead sponsor of the Women Veterans Health Care 
Improvement Act, I was especially glad to see the budget enable 
the VA to provide additional specialty care for female 
veterans. Women now make up 14 percent of our active duty 
forces, and they represent one of the fastest growing groups 
coming into the VA for health care. So, getting the VA to be 
ready for the unique needs of women veterans is a very 
important task ahead of us, and I appreciate that this budget 
recognizes that reality.
    I was also pleased that the budget provides funding to 
bring more than 500,000 Priority 8 veterans back into the VA 
system by 2013. I introduced legislation along with others in 
the 110th Congress to overturn the Bush Administration's 2003 
ban on enrollment of new Priority 8 veterans. I believe that 
all veterans should be able to get the care they have earned. 
We have made some progress on this issue, and I look forward to 
working with the VA to make all Priority 8 veterans again 
eligible.
    Additionally, I want to commend you for including in your 
budget a pilot program to combat homelessness by providing 
stable housing for vets who are at risk of falling into 
homelessness. I chaired an appropriations subcommittee last 
year on this issue, and the VA testified at that committee, 
saying that, ``the best strategy with this new generation of 
veterans is to reach them very early.'' That was a quote.
    In order to start addressing those needs, I included 
funding for a similar pilot project in the 2009 Transportation 
and Housing Appropriations Bill which we are on the floor 
considering now. I hope we send it very quickly to the 
President. When we pass that, there will be a demonstration 
program, and it directs HUD to work with the VA and the 
Department of Labor--all the agencies--to test different 
strategies to prevent veterans from becoming homeless.
    Finally, I do want to mention one concern I have with the 
budget--which Secretary Shinseki, you and I talked about it 
last week--and that is the rumored proposal that would allow 
the VA to bill a veteran's insurance company for service-
connected disabilities and injuries. I believe that veterans 
with service-connected injuries have already paid by putting 
their lives on the line for our safety, and when our troops are 
injured while serving our country we should take care of those 
injuries completely. I do not think we should nickel and dime 
them for their care.
    I know no formal proposal has been made on this, but I can 
assure you that it will be dead on arrival if it lands here in 
Congress; and I think I shared that with you last week.
    But, again, Mr. Chairman, I really appreciate the 
opportunity to take a look at the budget proposal as we see it 
so far and have our questions.
    So, thank you very much for your testimony today.
    Chairman Akaka. Thank you very much, Senator Murray.
    Senator Begich, for your opening remarks.

                STATEMENT OF HON. MARK BEGICH, 
                    U.S. SENATOR FROM ALASKA

    Senator Begich. Thank you very much, Chairman Akaka and 
Senator Burr, for holding this meeting.
    Secretary Shinseki, I know we already had our conversation. 
It was good information we exchanged. As you know, one of the 
big issues that I have--and I will be looking closely as the 
budget progresses--is rural health care for veterans and how we 
bridge that gap especially in a rural community like Alaska, 
which is very unique. I know there are some great ideas 
materializing from the local veterans community as well as the 
Veterans' Administration on what we can do to achieve that.
    Mr. Chairman, I am going to keep my comments brief as 
always. I like to get to the questions and also to the 
presentation by our guests. So I will end it there.
    Thank you very much.
    Chairman Akaka. Thank you very much, Senator Begich.
    I would like to now welcome with much aloha, Secretary Eric 
K. Shinseki. I hope this will be the first of many appearances 
you will have before this Committee as head of the Department 
of Veterans Affairs.
    I thank you for joining us today to give your perspective 
on the Department's fiscal year 2010 budget. I think I speak 
for all of the Members of this Committee when I say that we are 
here to support you in any manner appropriate, but we do need 
to know that VA is on track for a fair budget based on our 
needs for the upcoming fiscal year.
    I would just state for the record that VA and OMB are still 
negotiating on specific amounts for various VA programs. As I 
said in my opening statement, this Committee must still provide 
input to the Budget Committee.
    Your full statement, Mr. Secretary, of course, will appear 
in the record of the Committee.
    Secretary Shinseki, will you please begin with your 
statement?

        STATEMENT OF HON. ERIC K. SHINSEKI, SECRETARY, 
              U.S. DEPARTMENT OF VETERANS AFFAIRS

    Secretary Shinseki. Thank you, Chairman Akaka, Ranking 
Member Burr, other Members of this distinguished Committee. 
Thank you for the opportunity to present an overview of the 
2010 budget for the Department of Veterans Affairs.
    I appreciate also the opportunity to have had a chance to 
speak with a number of the Committee Members prior to coming to 
testimony today, and I regret that I was not able to get to 
everyone, but I will certainly make up for that in the future.
    Let me also acknowledge, as many of you have, and thank the 
leaders of our veterans service organizations who are present 
here today. We look at each other as partners in this effort to 
ensure that our veterans remain the center focus of all that we 
do. So I welcome them, and I thank them for their help and 
support to the VA as well as to those of you who sit on this 
Committee.
    As I have said before, President Obama has charged me with 
transforming the VA into a 21st Century organization--not 
change for the sake of change, not nibbling around the edges--
but a fundamental and comprehensive review of all that we do 
for veterans and then moving boldly to acknowledge new times, 
new demographic realities, leveraging new technologies to renew 
our commitment to our veterans wherever they live.
    I have been conducting that comprehensive and fundamental 
review for nearly 7 weeks now, and it is not nearly over, but I 
would like to share with you a snapshot of what I have gleaned 
thus far since my last appearance before this Committee.
    A new GI Bill: We hired an outside consultant to conduct a 
quick-look study to validate our plans and procedures for 
executing this large new program of educational benefits. The 
quick look was completed on 27 February, and it basically 
validated all the steps and procedures we are to put into 
place, what we are doing.
    They provided eight additional risk areas--risk factors for 
us to consider--which we had not thought about. I have accepted 
them all except for one, and that one was solved internally. 
And I am satisfied that we will get veterans who apply in time 
into schools this fall.
    I will tell you it remains a high-risk enterprise only 
because of the very compressed timelines we are working with. 
But we have mitigated that risk responsibly. I have reviewed 
it, and at this point I classify the risk as acceptable.
    But, as you know, there are milestones that have to be met 
between now and the execution dates in August. If any of those 
are delayed or founder, I will have to readjust that risk 
assessment. But that is something I will do and keep the 
Committee updated as we progress.
    The 2009 plan for this new GI Bill will be a computer-
assisted manual system. That is the best I can do at this 
point, a computer-assisted manual system. We hope to move to a 
fully automated system in 2010, but we are not able to do that 
this year.
    For 2009, user testing of the interim IT solution was 
completed, and phase one training for our newly-hired 530 
employees began yesterday.
    The final regulation is at OMB. The contingency plan is 
finished. Final coordination is underway. My estimation: all is 
in order to meet the August 2009 implementation date. We still 
have multiple milestones to meet, as I have indicated, and I 
will keep you abreast of how we fare in meeting them.
    Paperless: Our goal is to re-engineer the claims process 
into a fully paperless environment by no later than 2012. Our 
lead systems integrator has been on board since October of this 
past year, reviewing all of our business processes and 
beginning key design deliverables which we expect by August of 
this year. Application developers will then begin building 
specific components in early fiscal year 2010, capitalizing on 
recent successes with VETSNET and leveraging funding that 
should be available early in next year's budget.
    We are already processing loan guarantees, insurance and 
educational claims electronically and plan to conduct a 
business transformation pilot at the Providence Regional Office 
later this year.
    In conjunction with this paperless initiative, DOD and VA 
have met three times now to address the potential for 
automatically enrolling all military personnel into the VA upon 
their entry into the Armed Forces--just a statement of what we 
are seeking to do. We call this initiative Uniform 
Registration. We are in agreement about the goodness of such a 
system and have people working toward making this a reality.
    Uniform Registration will push both the VA and the DOD to 
create a single electronic record that would govern how we 
acknowledge, identify, track, and manage each of our clients: 
those in Active service; those in the Reserve components and 
when they become veterans, how we continue that same management 
process.
    This automatic enrollment is intended to take place when 
the first allegiance is sworn by a youngster donning one of our 
country's uniforms.
    Our management decisions will be better, faster, more 
consistent and fair, and less subject to lost files or 
destroyed claims. Such electronic records would have a 
personnel component and a medical component. We have benefited 
from the insights, experience and advice of Secretary Gates and 
Deputy Secretary Lynn about not trying to build a single large 
database. So we are committed, both Secretary Gates and I, to 
doing this smartly and differently from some of our recent, 
past, hard lessons learned.
    In the VA's experience, the EHR, the electronic health 
record, has figured prominently in the growth and quality of 
medical services. In 1997, we rolled out an enterprise-wide 
update for our EHR. We have had an electronic health record 
experience for 20 years, but in 1997 we rolled out an 
enterprise-wide update that, by 1999, provided for us a 
clinical data repository including privacy protection with 
real-time data flow across the entire system, with clinical 
decision support and clinical alert templates, notification 
systems and disease management features.
    Today, it has an imaging capability that allows tracking of 
all tests done on any patient: everything from EKGs to studies; 
procedures; endoscopies; scanned documents. Some international 
observers, I am told, have called it the Gold Standard in 
clinical informatics.
    What has been the impact of this improved EHR for the VA? 
Between 1996 and 2004, this updated electronic medical record 
enabled VA's ability to handle a 69 percent increase in 
patients; reduce the workload by over 35 percent; and hold the 
cost of medical treatment steady when the cost of health care 
across the country was climbing significantly.
    Now some would suggest that the VA's lower cost of 
treatment was as much a function of its lean budget in some of 
those years as they were efficiencies that we practiced. But, 
in reality, I think it is fair to say that lean budgets were 
not just not visited on the VA but on other government 
institutions as well. At Medicare, health costs rose 26 percent 
at a time when we were able to keep ours under control.
    So, that is where we are with what we understand is the 
potential for what we can achieve working with DOD in coming to 
this single electronic record. The challenge for all of us is 
making health care more accessible to more folks, keeping the 
costs down, and increasing the quality. If we can do those 
three things, we will have achieved something significant.
    Regarding the backlog that some of you have already 
mentioned, this is the area I have to tell you that I have not 
made much headway--at least not in 7 weeks--in attacking the 
problem, either in understanding it or solving this dilemma 
other than to acknowledge that it is a significant obstacle to 
building trust with veterans and the organizations who 
represent them.
    I am not sure that I personally have a valid working 
definition for the backlog. When I ask if a claim is initiated 
today, is it part of the backlog tomorrow, I am told it is. So, 
I need a way to come up with a set of metrics that allow me to 
solve a problem that right now I cannot address.
    So, I am personally working this issue. I intend to develop 
a valid way of defining what the backlog is--and not defining 
myself out of a situation but defining myself into a way to 
measure it properly--and then to set about fixing it. If I 
cannot do that, I do not think any of us will be able to solve 
it.
    So our efforts to institute Uniform Registration to create 
a single electronic record will lay the foundation for 
eventually controlling the inputs to the backlog dilemma, but I 
must find ways to control and reduce the backlog as it exists 
today, and I must tell you that is probably a brute force 
solution which requires a lot of hands on.
    Now having provided you this update, let me now report that 
our proposed 2010 budget is critical to realizing the 
President's vision for a 21st Century VA, and it is also 
critical to helping me begin to solve some of the problems I 
have touched on. The proposal would increase VA's budget to 
$112.8 billion, up $15 billion or 15 percent from the 2009 
enacted budget. This is the largest dollar and percentage 
increase ever requested by a President on behalf of veterans.
    Nearly two-thirds of the increase, $9.7 billion, would go 
to mandatory programs, up 20 percent. The remaining third, $5.6 
billion would be discretionary funding, up 11 percent. The 
total budget would be almost evenly split between mandatory 
funding, $56.9 billion, and discretionary funding, $55.9 
billion.
    The 2010 budget funds the new GI Bill and would allow a 
gradual expansion of health care eligibility to Priority 8 
group veterans who have been excluded from VA care since 2003--
an expansion of up to 550,000 new enrollees by the year 2013. 
Further, it contains sufficient resources to ensure that we 
will maintain our quality of health care for veterans, which 
sets the national standard for excellence in my opinion, with 
no adverse impact on wait times for those already being served.
    The 2010 budget provides greater benefits for veterans who 
are medically retired from active duty. By phasing in an 
expansion of concurrent receipt eligibility to military 
disability retirees, the proposal will allow highly disabled 
veterans to receive both their military retired pay and VA 
disability compensation benefits.
    The budget provides resources to effectively implement the 
Post-9/11 GI Bill and streamline the disability claims system. 
It supports additional specialty care in such areas as: aging; 
women's health; mental health; homelessness; prosthetics; 
vision; spinal cord injury; and it helps to extend VA services 
to rural communities which lack access to care.
    The details of the President's budget are still being 
finalized, and I expect that it will be available in April. So, 
I lack budgetary detail on specific programs and activities 
today. I do, however, look forward to your questions and will 
do my best to answer them.
    Thank you, Mr. Chair.
    [The prepared statement of Secretary Shinseki follows:]
        Prepared Statement of Hon. Eric K. Shinseki, Secretary, 
                  U.S. Department of Veterans Affairs
    Mr. Chairman, Senator Burr, distinguished Members of the Committee: 
Thank you for this opportunity to present an overview of the 2010 
budget for the Department of Veterans Affairs (VA). President Obama has 
charged me with transforming VA into a 21st Century organization--a 
transformation demanded by new times, new technologies, new demographic 
realities, and new commitments to today's 
Veterans.
    The VA's proposed 2010 budget demonstrates the President's 
commitment to our Nation's Veterans and a transformed VA that is 
people-centric, results-driven, and forward-looking. The proposal would 
increase VA's budget to $113 billion--up $15 billion, or 16 percent, 
from the 2009 enacted budget. This is the largest one-year dollar and 
percentage increase for VA ever requested by a President.
    Nearly two-thirds of the increase ($9.7 billion) would go to 
mandatory programs (up 20 percent); the remaining third ($5.6 billion) 
would be discretionary funding (up 11 percent). The total budget would 
almost evenly split between mandatory funding ($56.9 billion) and 
discretionary funding ($55.9 billion).
    The President's 2010 budget is the first step toward increasing VA 
funding by $25 billion over the baseline over the next five years. This 
strong financial commitment will ensure Veterans receive timely access 
to the highest quality benefits and services we can provide and which 
they earned through their sacrifice and service to our Nation.
    These resources will be critical to our mission of addressing 
Veterans' changing needs over time. This funding pledge ensures we can 
deliver state-of-the-art health care and benefits; grow and maintain a 
skilled, motivated, and client-oriented workforce; and implement a 
comprehensive training and leader development program for long-term 
professional excellence at VA.
    The Administration is still developing the details of the 
President's 2010 budget request, to be released in late April. As a 
result, I cannot address today the funding for any specific program or 
activity. However, I want to summarize this budget's major focus areas 
that are critical to realizing the President's vision and fulfilling my 
commitment to Veterans.
            dramatically increasing funding for health care
    VA's request for 2010 provides the funds required to treat more 
than 5.5 million Veteran patients. This is 9.0 percent above the 
Veteran patient total in 2008 and is 2.1 percent higher than the 
projected number in 2009. The number of patients who served in 
Operations Enduring Freedom and Iraqi Freedom will rise to over 419,000 
in 2010. This is 61 percent higher than in 2008 and 15 percent above 
the projected total this year.
    The 2010 budget request enables VA to achieve the President's 
pledge of strengthening the quality of health care for Veterans. We 
will increase our emphasis on treating those with vision and spinal 
cord injury and meet the rising demand for prosthetics and sensory 
aids. We will respond to the needs of an aging population and a growing 
number of women Veterans coming to VA for health care. The delivery of 
enhanced primary care for women Veterans is one of VA's top priorities. 
The number of women Veterans is growing rapidly. In addition, women are 
becoming increasingly dependent on VA for their health care. More than 
450,000 women Veterans have enrolled for care and this number is 
expected to grow by 30 percent in the next five years. We will soon 
have 144 full-time Women Veterans Program Managers serving at VA 
medical facilities. They will serve as advisors to and advocates for 
women Veterans to help ensure their care is provided with the 
appropriate level of privacy and sensitivity.
    The Department will continue to actively collaborate with the 
Department of Defense (DOD) to establish a DOD/VA vision center of 
excellence in the prevention, diagnosis, mitigation, treatment, and 
rehabilitation of eye injuries. The FY 2010 budget request provides 
resources to continue development of a network of eye and vision care 
specialists to assist with the coordination and standardization of 
vision screening, diagnosis, rehabilitative management, and vision 
research associated with Traumatic Brain Injury (TBI). This network 
will ensure a continuum of care from DOD military treatment facilities 
to VA medical facilities.
                   expanding health care eligibility
    For the first time since 2003, the President's budget expands 
eligibility for VA health care to non-disabled Veterans earning modest 
incomes. This commitment recognizes that economic conditions have 
changed and there are many lower-income Priority 8 Veterans who are now 
facing serious financial difficulties due to the rising cost of health 
care. This year VA will open enrollment to Priority 8 Veterans whose 
incomes exceed last year's geographic and VA means-test thresholds by 
no more than 10 percent. We estimate that 266,000 more Veterans will 
enroll for care in 2010 due to this policy change. Furthermore, the 
budget includes a gradual expansion of health care eligibility that is 
expected to result in nearly 550,000 new enrollees by 2013. The 
Department's 2010 budget contains sufficient resources to ensure we 
will maintain our quality of care, which sets the national standard of 
excellence. Further, there will be no adverse impact on wait times for 
those already enrolled in our system.
   enhancing outreach and services related to mental health care and 
cognitive injuries, including post-traumatic stress disorder (ptsd) and 
 traumatic brain injury (tbi), with a focus on access for veterans in 
                              rural areas
    The Department's 2010 budget provides the resources VA needs to 
expand inpatient, residential, and outpatient mental health programs. A 
key element of VA's program expansion is integrating mental health 
services with primary and specialty care. Veterans receive better 
health care when their mental and physical needs are addressed in a 
coordinated and holistic manner.
    This budget allows us to continue our effort to improve access to 
mental health services across the country. We will continue to place 
particular emphasis on providing care to those suffering from PTSD as a 
result of their service in Operations Enduring Freedom and Iraqi 
Freedom. The Department will increase outreach to these Veterans as 
well as provide enhanced readjustment and PTSD services. Our strategy 
for improving access includes expanding our tele-mental health program, 
which allows us to reach thousands of additional mental health patients 
annually, particularly those living in rural areas.
    To better meet the health care needs of recently discharged 
Veterans, the 2010 budget enables VA to expand its screening program 
for depression, PTSD, TBI, and substance use disorders. The Department 
will also enhance its suicide prevention advertising campaign to raise 
awareness among Veterans and their families of the services available 
to them.
    In 2010, VA will expand the number of Vet Centers providing 
readjustment counseling services to Veterans, including those suffering 
from PTSD. The Department will also improve access to mental health 
services through expanded use of community-based mental health centers. 
We will continue to place VA mental health professionals in community-
based programs to provide clinical mental health services to Veterans. 
Where appropriate, we will provide fee-basis access to mental health 
providers when VA services are not reasonably close to Veterans' homes. 
We will also expand use of Internet-based mental health services 
through ``MyHealtheVet,'' which provides an extensive degree of health 
information to Veterans electronically. These steps are critical to 
providing care to Veterans living in rural areas.
    The 2010 budget provides resources for vital research projects 
aimed at improving care and clinical outcomes for Veterans of 
Afghanistan and Iraq. Some of this key research will focus on TBI and 
polytrauma, specifically studies on blast-force-related brain injuries, 
enhancing diagnostic techniques, and improving prosthetics. We will 
strengthen our burn injury research to improve the rehabilitation and 
daily lives of Veterans who have suffered burns. VA will also enhance 
research on chronic pain, which afflicts one of every four recently 
discharged Veterans. And the Department will also advance research on 
access to care, particularly for Veterans in rural areas, by studying 
new telemedicine efforts focused on mental health and PTSD.
  investing in better technology to deliver services and benefits to 
         veterans with the quality and efficiency they deserve
    Leveraging information technology (IT) is crucial to achieving the 
President's vision for transforming VA into a 21st Century organization 
that meets Veterans' needs. This is critical not only for today's 
demands, but also for laying a foundation for high-quality, timely, and 
accessible service to Veterans, whose use of VA services is expected to 
grow year to year.
    IT is an integral component of VA's health care and benefits 
delivery systems. They enable VA's ability to deliver high-quality 
health care, ranging from emergency treatment to routine exams in 
medical centers, outpatient clinics, and in-home care and telehealth 
settings. These technologies are also the foundation of our benefits 
delivery systems, to include, for example, compensation, pensions, 
education assistance, and burial benefits. VA depends on a reliable and 
accessible IT infrastructure, a high-performing IT workforce, and 
modernized information systems that are flexible enough to meet both 
existing and emerging service delivery requirements. Only in this way 
can we ensure system-wide information security and the privacy of our 
clients. The President's 2010 budget for VA provides the resources 
necessary to meet these vital IT requirements.
    This budget strongly supports the most critical IT development 
program for medical care--advancement of VA's ``HealtheVet'' program, 
which is the future foundation of our electronic health record system. 
This system includes a health data repository, a patient scheduling 
system, and a reengineered pharmacy application. ``HealtheVet'' will 
equip our health care providers with the modern technology and tools 
they need to improve the safety and quality of care for Veterans.
    The Secretary of Defense and I are collaborating to simplify the 
transition of military personnel into civilian status through a uniform 
approach to both registering into VA and accessing electronic records 
data. Through a cooperative effort, we seek to improve the delivery of 
benefits and assure the availability of medical data to support the 
care of patients shared by VA and DOD. This will enhance our ability to 
provide world-class care to Veterans, active-duty servicemembers 
receiving care from both health care systems, and our wounded warriors 
returning from Iraq and Afghanistan.
    The 2010 budget provides the funds necessary to continue moving 
toward the President's goal of reforming the benefits claims process to 
ensure VA's claims decisions are timely, accurate, fair, and consistent 
through the use of automated systems. VA's paperless processing 
initiative expands on current paperless claims processing already in 
place for some of our benefits programs and will improve both the 
timeliness and accuracy of claims processing. It will strengthen 
service to Veterans by providing them the capability to apply for and 
manage their benefits on-line. It will also reduce the movement of 
paper files and further secure Veterans' personal information. The 
initial features of the paperless processing initiative will be tested 
in 2010, and by 2012 we expect to complete the implementation of a 
fully electronic benefits delivery system.
            providing greater benefits to veterans who are 
                     medically retired from service
    The President's 2010 budget provides for the first time concurrent 
receipt of disability benefits from VA in addition to DOD retirement 
benefits for disabled Veterans who are medically retired from service. 
Presently, only Veterans with at least 20 years of service who have 
service-connected disabilities rated 50 percent or higher by VA are 
eligible for concurrent receipt. Receipt of both VA and DOD benefits 
for all who were medically retired from service will be phased in 
starting in 2010.
       combating homelessness by safeguarding vulnerable veterans
    The President has committed to expanding proven programs and 
launching innovative services to prevent Veterans from falling into 
homelessness. The 2010 budget includes funds for VA to work with the 
Departments of Housing and Urban Development, Labor, Education, Health 
and Human Services, and the Small Business Administration, in 
partnership with non-profit organizations, to improve the well-being of 
Veterans. This effort focuses on reducing homelessness and increasing 
employment opportunity among Veterans, and includes a pilot program 
aimed at maintaining stable housing for Veterans at risk of 
homelessness while also providing them with ongoing medical care and 
supportive services.
   facilitating timely implementation of the comprehensive education 
    benefits veterans earn through their dedicated military service
    The Department is on target to implement the Post-9/11 Veterans 
Educational Assistance Act starting August 1, 2009. VA is pursuing two 
parallel strategies to successfully implement this new education 
program, both of which are fully supported by the resources presented 
in the 2010 budget.
    The short-term strategy relies upon a combination of manual claims 
processing and modifications to existing IT systems. Until a modern 
eligibility and payment system can be developed, VA will adjudicate 
claims manually and use the existing benefits delivery network to 
generate recurring benefit payments to schools and program 
participants. This budget includes funds to hire and maintain the 
additional staff required.
    The long-term strategy is the development and implementation of an 
automated system for claims processing. The Department has teamed with 
the Space and Naval Warfare Systems Command to address the necessary IT 
components of this strategy. They are the premier systems engineering 
command for the Department of the Navy, and they have extensive 
experience in building state-of-the-art IT systems. The automated 
solution will be available by the end of calendar year 2010, by which 
time full operational control of the automated system will be in VA's 
hands.
                                closing
    Veterans are VA's sole reason for existence and my number one 
priority--bar none. I am inspired by this Committee's unwavering 
commitment to Veterans, and I look forward to working with you to 
transform VA into an organization that reflects the change and 
commitment our country expects and our Veterans deserve.

    Chairman Akaka. Thank you very much, Secretary Shinseki.
    I must commend you for what you have been doing for the 
last 7 weeks. You have certainly accomplished a lot in dealing 
with the needs of VA and working with the Secretary of Defense 
on some of these issues. So, I thank you very much.
    I do have questions, but I would like to give my Committee 
Members a chance to ask their questions first. So, I will ask 
Senator Burr to begin with his questions.
    Senator Burr. Well, I thank the Chair for his generosity.
    Mr. Secretary, thank you for that report.
    Let me go right to the meat of it. I am concerned, as I 
expressed in my opening statement, that though the 2010 budget 
I think targets a number that is very realistic, I am concerned 
with the out years: 2011 at 2.3, 2012 at 2.6.
    So I guess my question is multi-pronged. If Priority 8s are 
being considered in the 2010, what number of the Priority 8s 
have you modeled into the 2010 and is the 2011, is the 2012 
reflective of additional Priority 8s of potentially those 
active duty that will be part of the Veterans' Administration 
by 2011, by 2012, by 2013? Is that modeled into the projections 
that we see reflected?
    Secretary Shinseki. Senator, the figure for 2010 reflects 
that we expect about 266,000 Priority 8 group veterans to be 
registered with us and then, over the period to 2013, building 
that number up to 550,000 veterans.
    I do not have a good figure on the entire population now. 
Some of that is due to the fact, as you described, we are 
constantly growing that population. But we are working with 
trying to get a better estimate, so I can provide a little 
better detail. But at least for out through 2010, we are 
looking at 266,000 veterans.
    Senator Burr. I would like to ask you on the Committee's 
behalf today, as we go through 2010 and you begin to bring in 
Priority 8s, will you regularly make us aware of how many 
Priority 8s have come into the system?
    The pre-enrollment into the VA that you talked about 
certainly changes the projections for the out years as far as 
how many veterans would then choose the VA for their home for 
medicine. Is that policy change also incorporated into these 
out year budget projections?
    Secretary Shinseki. Not at this point. We are still working 
on an agreement on how to do this.
    I think for the vast majority the enrollment will be for 
identity and tracking purposes. The vast majority of youngsters 
who leave the service do not enroll with the VA for a variety 
of reasons, but in later years find reasons to come back to us. 
And the challenge at that point is doing all the kinds of 
things we could do now: identify, track, and be ready to help 
with a claims submission in a way that we are not today.
    Senator Burr. Many members brought up in their opening 
statements concerns as it relates to the VA's intent to raise 
revenue by billing insurance companies and charging them for 
the VA's care related, I think, to medical services even for 
service-connected injuries. Is that policy contained in this 
budget?
    Secretary Shinseki. It is a consideration. A final decision 
has not been made yet, Senator, but it would fall into the 
category of what I would describe as risk. It is the risk we 
carry every year in third-party collections.
    Senator Burr. I appreciate your candor on this. It is an 
important matter to be finalized prior to understanding exactly 
whether the budget allocations are, in fact, correct and 
certainly as it relies on the out years when you are dealing 
with such small percentages of projected increase.
    If, in fact, you give up a revenue stream as significant as 
that--and I think I would agree with Senator Murray, I think 
you will give that up--then it makes those out years look even 
more problematic.
    Mr. Secretary, I appreciate your commitment to using 
automation to help improve the disability claims process. I 
think we can all agree that a paperless claims process would be 
a significant improvement, but automation alone may not be 
enough to significantly reduce the delays and frustrations 
experienced by many veterans seeking VA benefits. Do you agree 
with the Independent Budget that the VA also needs to take 
steps to improve training, quality assurance, and 
accountability; and, if so, does this budget allow you to 
accomplish those goals?
    Secretary Shinseki. I agree with the comment on training 
and sustainment training for people who do this. And, yes, that 
kind of training is included.
    Senator Burr. Mr. Chairman, my time is expired.
    I challenged the VSOs several weeks ago, General, to start 
with a clean piece of paper and tell us how to design that 
process so that we would not have a backlog system, and I say 
to all of them that are here today I am still waiting for those 
plans. I know they are all working on them, but time is of the 
essence right now.
    Thank you, General.
    Secretary Shinseki. Senator, I have made the same challenge 
to my people: If we are going to start with a clean slate here, 
how would you redesign the process? This is sort of like trying 
to paint a moving train, and they owe me some answers as well.
    Senator Burr. I think we may all be shocked at how close 
the ideas come.
    Secretary Shinseki. I just would like to make one comment 
on the third-party collections, and I know that the VSOs and I 
have personally had discussions on this. So I know there is a 
different perspective on this.
    Health care delivery has two pieces. One is financing, and 
the other is the delivery of quality care.
    What is not at issue here is the delivery of timely, 
highest quality care in the Nation that we can provide. That is 
not a question here.
    This is about financing, and that is where the dialog 
continues.
    Senator Burr. General, I believe you on that, and I believe 
that that is the mission of VA. I know you understand why I 
have to raise the issue, that if you eliminate a built-in 
revenue stream that has gone into the projections for 
construction of the budget, you eliminate some of that.
    When the last administration was operating with a 
tremendous amount of liberty with respect to revenue streams. 
Individuals on this Committee questioned the accuracy of the 
last administration's budget. As a matter of fact, the 
President was a Member of this Committee, and at that time 
talked about budget gimmicks in the last administration.
    My attempt is to make sure that all of the items that are 
there to construct the budget are foundational--that they do 
not go away with the wind. So, if we are going to eliminate 
some of them, let's eliminate them up front. Let's know what we 
are going to deal with. Let's have the transparency of the 
budget process, and I only encourage you to try to get the 
Administration to come to that conclusion sooner rather than 
later.
    Secretary Shinseki. OK.
    Chairman Akaka. Thank you very much, Senator Burr.
    Now, Senator Murray, for your questions.
    Senator Murray. Yes, thank you, Mr. Secretary. Can you tell 
us what the revenue impact of the third-party billing proposal?
    Secretary Shinseki. What the impact is?
    Senator Murray. The revenue impact, yes.
    Secretary Shinseki. Well, you know I usually have third-
party collections for non-service-connected. In the past, we 
have exceeded our targets. In 2008, I think we are at $2.4 
billion, and 2009 looks like it is going to be slightly above, 
maybe closer to $2.5.
    Using that as a general start point, I would guess that 
something on the order of $500 million is probably the target 
that would appear here.
    Senator Murray. Right. Then we did have this discussion.
    I just, again, tell you that I think our veterans already 
paid, and proposals that just simply balance the VA budget on 
their backs are, you know, as far as I am concerned, dead on 
arrival. But, again, we will be looking for that, but I 
question the revenue impacts on that. So I am sure we will have 
more discussions if that proposal becomes real.
    Secretary Shinseki. I am sure we will.
    Senator Murray. Let me thank you on the Priority 8 veterans 
again. I think the best thing to do is to completely overturn 
the 2003 ban. I appreciate your moving forward with your target 
of 550,000 by 2013, and I will continue to work with you on 
that.
    Secretary Shinseki. We will look at that en route and just 
make sure our metrics are right. Again, part of the decision 
here is to ensure we do not impact any other services we are 
providing. So if we can go faster, that is fine. If we have to 
slow down a little, the end state is still clear.
    Senator Murray. OK, very good. I appreciate that.
    Let me ask you, the economy is number 1 on everybody's 
mind, and people are very concerned about it. I have been 
concerned, watching our veterans come home. We know that in 
2007 the unemployment rate for veterans aged 18 to 24, who 
served in Iraq and Afghanistan was considerably higher than the 
rate for non-veterans. I am assuming that trend is continuing.
    As many of our veterans come home and transition into 
civilian employment, there are a lot of different Federal 
agencies that have different support services. The VA does, of 
course. DOL has the Veterans Unemployment and Training Service. 
I am concerned about the complexity of that and wanted to know 
what your thoughts are on improving the transition for our 
veterans into civilian jobs and working with these other 
agencies to address some of the gaps.
    Secretary Shinseki. Senator, I will tell you that this is 
one of those areas where I would describe lots going on, and 
yet I do not have my fingers around all of it. I am still 
discovering that there are programs out there, that in fact 
some of them are doing very well, others less so.
    For the transition, I think it is fair to say, and the 
President has said it, so I will use his words, that veterans 
lead the country in joblessness, homelessness, substance abuse, 
mental health problems. So that is a tall order because it is 
not one thing. It is a multiplicity of things. Some of them 
touch, some of them do not touch.
    But I think, as was said earlier here, if we prevent 
homelessness, we have a much better chance of solving some of 
the other things. So the first order of business here is paying 
attention to that.
    Secretary Donovan and I have met. We have met with the 
Coalition of Homeless Veterans Organizations, representatives 
of some 20 organizations. We have committed to working 
together, he and I, with his opportunity to provide safe 
housing and my opportunity to prioritize how we get people in 
there. We look at that as sort of the first piece.
    Once we have them safely housed, and families are included 
in our discussions, then we can begin the rest of this: talking 
about getting them off of whatever ailments they may have, like 
substance abuse; get mental health treatments going; and then 
talk about training for either education or jobs. For that, I 
will have to reach out to other departments much as I have with 
DOD.
    And so, there is a lot of work to be done, but I think, as 
I say, it is a large issue. Lots going on. I am not sure all of 
it is as well synchronized as we would like, and I intend to 
get into that.
    Senator Murray. I appreciate that. Again, once we get the 
2009 bill passed, hopefully tonight, we do have money in there 
for some pilot projects on homelessness. I agree with you, you 
got to have home in order to be able to go to work.
    But I hope we can really begin to focus on some of the 
efforts to bring our agencies together to make sure that these 
young men and women come home and do not end up on unemployment 
rolls; and really look at how we can get them into the job 
market.
    A quick question: You used the words ``brute force,'' on 
the claims backlog. I assume that means funding and staffing. 
Do you have adequate money for that brute force that you are 
going to need?
    Secretary Shinseki. For 2009, that is clear. I am still 
waiting on a report that says we have to increase those 
numbers. This year alone, we hired another, I think, 1,100 
people--3,000 in the last 2 years. And so, we have right now 
11,300 people doing this.
    If I am going to increase those personnel assets in 2010, I 
want to see what the return on investment is going to be. Just 
adding people to work on this problem may not be the only 
approach, and so I need to press for doing this better, not 
just with more hands.
    Senator Murray. OK. Thank you very much.
    Chairman Akaka. Thank you very much, Senator Murray.
    And now I would like to call on Senator Graham for his 
questions.

               STATEMENT OF HON. LINDSEY GRAHAM, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator Graham. Thank you, Mr. Chairman.
    General, I appreciate your serving your country yet again. 
You have a tough job.
    But when it comes to dealing with the claims backlog, there 
was an initiative, I think a year ago or 2 years ago, about 
looking at providing legal representation to our veterans as 
they pursue claims. How do you feel about that proposal?
    Secretary Shinseki. Senator, I would never stand in the way 
of a veteran seeking assistance in putting together the best 
claim he or she can put together so that we have the best shot 
of giving a quality decision quickly.
    Senator Graham. I tell you what, why don't you, if you 
could, just have your people look at the proposal a couple 
years ago and let me know what you think about that idea?
    Secretary Shinseki. I would prefer that that not be on a 
paid basis.
    Senator Graham. That what?
    Secretary Shinseki. That that not be on a paid basis. I 
think I am very comfortable with pro bono support, volunteer 
support for our veterans. But you know my primary 
responsibility is to help veterans.
    Senator Graham. Would you feel that way about social 
security? Why should a social security recipient be entitled to 
paid representation and a veteran not?
    Secretary Shinseki. I was not aware of that, Senator. I do 
not know that I have a good opinion today. But my job is to 
make sure that veterans have what they are entitled to with the 
least obstruction, and if they seek legal advice on it, I think 
that is fine. I would hope that we could do this in a way that 
veterans could get what they deserve.
    Senator Graham. Thank you.
    How can 500,000 people being added to the system not impede 
care for some people? I mean are we so well staffed that you 
could add 500,000 Priority 8 veterans and it not hurt someone 
who has been permanently disabled or a severely paralyzed 
veteran in terms of the care they would receive?
    Secretary Shinseki. I believe that, well, that is our 
intent. I do not know that I can give you an absolute here, but 
this is a process by which we grow to 550,000 over a period of 
time, and we will have to make those assessments as we go.
    Senator Graham. And the only reason I raise that is I guess 
I would be, well, income-wise I would not be eligible.
    But if you believe that organizations cannot be all things 
to all people, you serve as many as you can. Then the military 
is sort of a triage system here, that we want to make sure that 
those who have been most severely injured and have the highest 
medical needs are taken care of. So we will just cross that 
bridge when we get there.
    The one thing about expanding coverage in terms of the 
people you treat, something usually has to give unless you just 
continue to increase the size of the organization, and that is 
something I would like to talk with you about as we get into 
this.
    Secretary Shinseki. Sure.
    Senator Graham. Have you looked at Senator Dole-Secretary 
Shalala proposals about how we would go forward in terms of 
claims and compensation?
    Secretary Shinseki. Yes, I have.
    Senator Graham. What was your view of that?
    Secretary Shinseki. Well, frankly, it was one of several 
views that are being looked at. We have another, the Scott 
Commission's views that provided similar recommendations. What 
I have asked for is a harmonizing of these reports out of 
multiple studies on the same subject and find where there is 
common ground.
    Senator Graham. But that will be part of the study mix, 
their proposal?
    Secretary Shinseki. That is correct.
    Senator Graham. Have you heard of the Charleston model 
where the Medical University of South Carolina and the VA 
hospital in Charleston are trying to build a new hospital in 
collaboration?
    Secretary Shinseki. I am aware, yes.
    Senator Graham. Does that sound like a reasonable proposal 
as we go forward to improve health care for veterans?
    Secretary Shinseki. I think, well, we are reviewing all of 
our major construction initiatives.
    Senator Graham. I would really encourage you to do that 
because there are a lot of teaching hospitals, university 
hospitals, private organizations that serve veterans, that if 
you combined the two funding pools you would have a better 
service for the veteran and get more bang for your buck. The 
goal is to add to, not take away. So I appreciate your looking 
at that.
    Secretary Shinseki. We do that now, Senator. About 108 of 
our 153 hospitals are affiliated with medical centers.
    Senator Graham. I am talking about as we construct new 
ones.
    Secretary Shinseki. Right.
    Senator Graham. And I think you can get a bigger hospital 
to help veterans as well as the people in the area.
    One last question. You said something to me that was pretty 
intriguing, that you have been able to manage the health care 
costs of the veteran population significantly without the 
inflationary costs associated with Medicare. Medicare has grown 
in terms of health care inflation much faster than the VA.
    What would you say would account for that and would you be 
willing to go to the Medicare people and talk to them? We will 
pay your mileage.
    Secretary Shinseki. This is an area that has a little bit 
of debate because part of the cost factor was some lean 
budgets. So you can say it was induced, but out of that came 
some tough decisions on what we would keep, what we had to sort 
of put on the back burner or discard. And so, for a variety of 
reasons, not just the electronic health record, our costs were 
maintained and/or slightly reduced in a period of time when 
others, to include Medicare, were increasing by 26 percent.
    What are the things I am talking about?
    Prior to 1997, patient records were available to doctors 
about 60 percent of the time, which meant the other 40 percent 
involved either a doctor's time arriving at a patient's bedside 
and nothing could happen, or maybe even worse--flying by the 
seat of our pants. That has changed. A hundred percent of our 
records are available all the time now.
    In 1996, we lagged industry in providing pneumonia vaccine 
to patients over 65--something around 28 or 29 percent. Today, 
we are at 94 percent and leading the industry.
    So, in terms of delivering quality health care when needed, 
at the appropriate time, without a lot of repeats, without a 
lot of tests being redone because we did not know what was in 
the system, we have been able to reduce costs.
    Senator Graham. One final comment. I have been following 
this like most people on the Committee and being a military 
member myself, pretty closely, and the number of complaints 
about veterans' health care, at least in my State, has gone 
down.
    I am sure there are problems. But one thing I want you to 
tell the people that work for you--particularly in the 
hospitals and the service organizations and our VSOs--I think 
we have the best system in the world and do not ever lose sight 
of that. I would like to make it better, but there are a lot of 
complaints always talked about in Congress. But to those people 
working in the VA, I think you do a heck of a job.
    And you are the right guy at the right time, I agree with 
that. Thank you very much.
    Secretary Shinseki. Thanks, Senator.
    Chairman Akaka. Thank you very much, Senator Graham.
    Now we will have questions from Senator Tester.
    Senator Tester. Thank you, Chairman Akaka.
    And I want to echo those remarks of Senator Graham in that 
your people do great work. We always need to continue to look 
for ways to improve the system, as I know you do, but the truth 
is I get a lot of positive comments from the veterans back in 
Montana about the health care that they receive.
    That being said, just very quickly, could you tell me your 
perspective on Priority 8 vets as to why you think they should 
be in the system?
    Secretary Shinseki. Well, for one thing, Senator, they are 
part of our veterans' programs.
    I mean the fact that they have not been serviced for the 
past 8 years does not mean they are not veterans. They are 
veterans. They are part of our system. They have entitlements 
based on economics and location. And given the current economic 
situation, I think the stress on all of our veterans is even 
greater. Therefore, I look forward to taking care of this part 
of our responsibility.
    Senator Tester. I appreciate your commitment to them. I 
agree with you wholeheartedly. I guess I am going to push in a 
little different direction in that the program here talks about 
a 5-year schedule to get the Priority 8s into the system. Is 
there any way it could be done quicker than that, say 2-3 
years?
    Secretary Shinseki. We will certainly look at that, 
Senator.
    I would just say again, bringing Priority 8s on gradually 
is a function of ensuring that what we do today remains high 
quality for the variety of services we provide. So it is a 
rheostat. We will do it faster if we can assure these other 
things remain at high quality.
    Senator Tester. I appreciate that, General.
    The 2009 VA Appropriations Bill provides about $250 million 
for rural health initiatives. We know where some of the dollars 
are going. Is it possible, and I do not expect you to do that 
today unless you know, to get an update on where all the money 
is going for rural health initiatives?
    Secretary Shinseki. Certainly, I would like to provide that 
once I have more detail.
    Senator Tester. That would be good. I am sure, as well as 
Montana, other rural States including Alaska would love to know 
that.
    Secretary Shinseki. I can certainly provide the 2009 
priorities now.
    Senator Tester. In how the money is being utilized?
    Secretary Shinseki. That is correct.
    Senator Tester. That would be great.
    You talked about electronic health records pretty 
extensively in your opening statement and the benefits for 
moving forward with that with the DOD. I guess my question is, 
have we allocated enough resources to meet the needs of that 
transition--number 1? And, number 2, have your conversations 
with the higher-ups in the DOD indicated a willingness to work 
with you?
    Secretary Shinseki. Yes. Yes, there is agreement that 
uniform registration makes sense and that a single electronic 
record is something we need to go to work on. As in all things, 
the devil is in the details here on exactly what that 
constitutes. But, yes.
    Senator Tester. OK. Have we fully funded the mental health 
diagnosis and treatment to this point to your knowledge?
    Secretary Shinseki. I believe so. I can tell you we are 
doing it, and I would say yes, we have funded it.
    Senator Tester. OK. Kind of along those lines as long as I 
have about a minute left here, could you give me any indication 
as to what, if anything, the VA is doing to track mental health 
concerns amongst our military folks who are in your system?
    Secretary Shinseki. You are talking OEF/OIF returnees?
    Senator Tester. Yes, specifically, those; and if you want 
to talk more generally, that is fine because there are issues 
that revolve around the previous wars too.
    Secretary Shinseki. I would say that we participate with 
DOD and have participated with them in assessments that they 
have done since 2005. Through our joint work, over 93,000 
referrals have taken place.
    Senator Tester. Go ahead.
    Secretary Shinseki. We are participating in demobilization 
enrollment for our Reserve component personnel in terms of OEF/
OIF transitions.
    Senator Tester. Yes.
    Secretary Shinseki. And so, we are actively engaged in 
that. Let me just give you some figures. For example, we now 
have 18,000 full-time equivalent staff, $4 billion going to 
mental health programs, and we are interviewing veterans, 
returnees from Iraq and Afghanistan.
    Either when they come in for services from us, we screen 
them or we have called them, phone calls in the number of 
600,000. We have only gotten about 150,000 responses, but we 
continue to work that. We are reaching out to this population.
    Senator Tester. If I just might, Mr. Chairman.
    There is a program that deals with Reservists and 
Guardsmen. It is a pilot program in five States called Beyond 
the Yellow Ribbon. Are you familiar with that program at all?
    Secretary Shinseki. I am, yes.
    Senator Tester. Good. Do you think that that program has 
enough merit to be implemented at least initially with 
Guardsmen and Reservists throughout all 50 States?
    Secretary Shinseki. I will have to look at that, but, yes, 
I think there is merit to the program. When you say all 50 
States----
    Senator Tester. OK. And when you are looking at that, see 
if you think it has merit for active duty too.
    The reason I say that is because we had a hearing here 2 or 
3 weeks ago that the Chairman called that dealt with mental 
health issues. It requires screening every 6 months for 2 years 
after they are out, and it takes away the stigma, I think. It 
really does help folks that serve that could, quite honestly, 
get screwed up and helps get them treatment when they need it 
early and saves money over the long haul.
    General, I want to thank you for being here today. I really 
appreciate your testimony, perspective, and leadership in the 
VA. Thank you.
    Secretary Shinseki. OK. Thank you.
    Chairman Akaka. Thank you very much, Senator Tester.
    Now we will have Senator Begich ask his questions.
    Senator Begich. Thank you, Mr. Chairman.
    Just a couple. I want to do a little follow-up. I know 
Senator Graham had some questions regarding the claims; and I 
thought maybe--I don't know if it was when we were talking 
about it--but of the claims that are filed for disability and 
services, what is the percentage of approval rate?
    In other words, after they go through a process, maybe the 
short process; in other words, right when they come in the door 
or before they go through an appeal process, what is it 
usually?
    Secretary Shinseki. Well, I think the stats I have looked 
at say that of a set of claims that are handled, 90 percent of 
them are accepted. In other words, whether it was an approval 
or a declination, 90 percent do not result in an appeal. About 
10 percent do.
    Now, of that 90 percent, 2 years down the road someone may 
have another.
    Senator Begich. Additional.
    Secretary Shinseki. Yes, another opportunity to reinitiate. 
That is why the backlog issue is complex because you have all 
these factors playing in each case.
    Senator Begich. I know when we talked, we talked a lot 
about system changes and system improvements. Is there a 
process you are going through to not only look at the data of 
claims, but are there systematic issues where it seems there is 
a certain group we are just routinely approving at some point 
anyway, that maybe there is a front-end improvement that could 
be done so they do not go through this long process? Am I 
making sense there?
    Secretary Shinseki. Right. There are claims that have two 
or three or maybe up to six cases associated with it, and if 
one of those claims would result in immediate payment, we start 
that. Then we work through the other issues. We do not do this 
as well as I would like. We need to continue doing that.
    But this whole area of the claims backlog is something that 
I have taken on, and I will get into it.
    Senator Begich. Great. With the GI system, I know you have 
mentioned to me and we on the Committee know that it is a tight 
timeframe to get to where you need to be.
    Secretary Shinseki. Right.
    Senator Begich. And you will be a kind of automated/manual 
combo this year and then next year to try to get to a full 
automation. I think you answered yes, but I want to confirm. 
Does the 2010 budget give you enough resources to get to full 
automation as you see it or do you think you might have to have 
an adjustment after you go through this first 6 months, or 
whatever that period might be, where you have the combo?
    Secretary Shinseki. Yes. We are setting those numbers now, 
but, yes, my intent is to have an automation program funded for 
2010.
    Senator Begich. OK. So the resource is in the budget 
itself. That is the hope.
    Secretary Shinseki. It will be.
    Senator Begich. That is a good attitude.
    I do not know the debate, and I am afraid to get into it 
because it sounds like both Majority and Minority members do 
not want you to do this. So I am afraid to ask about it, but it 
is such a big number on the third-party collection issue. If I 
got the numbers right, and I know you were just kind of ranging 
them because you did not have the document right in front of 
you, but you thought it was around $500 million.
    Secretary Shinseki. That is an estimate based on 
collections I have done in the past. We have been collecting 
for non-service-connected disabilities for a number of years 
now. Since 2004, that account has grown from $1.7 billion to 
$2.4 billion last year. So, we have exceeded our targets each 
year.
    Senator Begich. Can you give me just a brief overview--and 
again I do not want to get into the great debate on this topic 
today--on what some of the discussion might be around it? Why? 
Because it is hard in these formats to get that kind of 
discussion.
    If you do not want to do that right now, that is fine.
    Secretary Shinseki. Well, it is a consideration. It is 
under consideration, and I would say the basis is the same for 
non-service-connected disabilities that are currently approved 
and we are collecting on, and it is to see whether or not there 
is a contribution from insurance companies that makes sense.
    Senator Begich. In the budget proposal--and you have heard 
some of the discussion already--will you have some opportunity 
if you do include this, an option if not included, and what 
kind of service reduction and/or other revenue sources? Will 
that be part of the discussion if you go down that path?
    Secretary Shinseki. I intend for it to be.
    Senator Begich. OK. Great.
    I know my time is up, Mr. Chairman, but, again, thank you 
very much.
    Thank you for the time that you spent with me. Thanks for 
coming to the Committee meeting and presenting. I know there 
will be a lot of discussion, especially around rural health 
care.
    Secretary Shinseki. Yes.
    Senator Begich. Thanks.
    Secretary Shinseki. Thanks, Senator.
    Chairman Akaka. Thank you very much, Senator Begich.
    Mr. Secretary, I continue to have concerns about the 
effectiveness of VA's outreach efforts, especially as it 
applies to those who suffer from PTSD and TBI. This is 
especially true for those National Guard and Reserve members 
who live in rural areas. Will you please explain how the 
proposed budget addresses improving the effectiveness of VA's 
outreach efforts?
    Secretary Shinseki. Well, Senator, I indicated that we are 
reaching out to OEF/OIF veterans as they return, both with DOD 
and in particular with Reserve component units. We have 
participated at their demobilization, within their 
demobilization process, this contact. We have 27 VHA liaison 
personnel at DOD hospitals, at 13 of the DOD hospitals to 
facilitate this outreach and transition.
    We in the VA have contacted OEF and OIF veterans who have 
enrolled with us, and there are a number who have not enrolled 
with us. But for the ones who have enrolled with us, we put 
them through a PTSD/TBI screen, so we have some sense of what 
the impacts from combat are, or traumatic experiences are, even 
though they are not carried as PTSD or TBI accounts. We are 
coming up with patients.
    We have also reached out to about 630,000 veterans, as I 
indicated, and have spoken with about 150,000, trying to get 
them to come in and talk to us at VA health care.
    We have PTSD clinical teams or specialists at each of 153 
medical centers and many of our larger community-based 
outpatient clinics--so, professional people onsite.
    We have provided training to over 1,200 providers in 
evidence-based psychotherapy.
    A key element of our treatment has been to move mental 
health into the primary care area of the hospital to reduce the 
stigma of folks not wanting to be seen going into the mental 
health clinic. So, in the primary care area we have included 
mental health, and we have included training of primary care 
personnel in how to get into the discussion here and begin to 
identify people that may need follow-up and then get them into 
the professional care. By and large, these are our efforts to 
increase awareness and access to mental health.
    For us, PTSD increased. From fiscal year 2009, 120,000 
people were carried on our rolls with PTSD issues to 342,000 
veterans as of September of last year--so, a significant growth 
in PTSD.
    About 23 percent of returning OEF and OIF veterans who come 
to VA have received a preliminary diagnosis of PTSD, and about 
50 percent of those with another mental health diagnosis. Our 
standards have been: initial evaluation within 24 hours, with 
immediate urgent care where needed; and a full evaluation and 
treatment plan initiated within 14 days for people who have 
been validated for PTSD.
    In terms of TBI, we have been involved with TBI for about 
15 years and have just learned more as a result of ongoing 
operations. Early intervention and specialized care can reduce 
physical and cognitive impairment. So the sooner we identify 
and get into this makes a huge difference.
    Since April, 2007, any OEF/OIF veteran seen by a VA health 
care provider is screened. If the screen is positive, again, 
the veteran is referred for an evaluation by a specialized 
team.
    Through fiscal year 2008, 235,000 OEF/OIF veterans were 
screened. About 43,000 of them came up with indications for 
follow-up, possible TBI; 28,000 received follow-up evaluations; 
12,000 confirmed with diagnosis of TBI. About 10,000 were not 
validated, and we still have about 5,000 follow-ups to do.
    So we are doing this, but not as quickly as we would like. 
We are reaching the veterans who enroll with us, and I cannot 
give you data for the veterans whom we are not able to contact, 
which goes back to the earlier discussion about why this 
automatic enrollment becomes important, and now we have a wider 
safety net where we can begin to get a better assessment on the 
larger problem.
    Chairman Akaka. Mr. Secretary, you brought up the quick-
look study of VA's plans for implementation of the new GI Bill. 
I just want to ask a question on that. That was completed at 
the end of February and identified eight high-risk areas that 
needed to be addressed. Could you expand on what those areas 
are and how they are being addressed and, especially, how one 
of the eight was addressed in-house?
    Secretary Shinseki. One of the eight was: No single 
executive with authority over the integrated product team. And 
I have fixed that by appointment. The recommendation was that I 
hire somebody from outside. I thought the amount of time to 
take someone from the outside to come in and learn what we were 
trying to do is probably time I could not afford. So, I 
appointed someone from within my organization as the expediter 
with those authorities.
    The other seven observations were: Regulations were not 
complete. They are now complete.
    No critical path defined for milestones. We are in the 
process now of laying those out. The milestones are clear. It 
is identifying a critical path.
    Training materials not complete. Training started 
yesterday. So we completed. In the time between when the survey 
started and ended, we have now completed our training 
materials.
    Call center telephone structure inadequate. That, I do not 
have a final response on, and I will look into that.
    The phase one of the front-end tool is compromised due to 
limited resources, short development time, unstable 
requirements. All of that is true. But we are where we are, and 
we are working to improve on those things. Phase one training 
began yesterday, and so I will know more as training evolves.
    Workflow to support BDN changes is inefficient. We will do 
better.
    Not all DOD data required to determine eligibility may be 
readily available. That is being corrected.
    So those were the eight items.
    Chairman Akaka. I was very interested in your comments 
about your schedule in putting the GI Bill into effect, and we 
are looking to the fall as you are in trying to implement that.
    I have been pleased with the efforts of the joint VA and 
DOD Senior Oversight Committee, and I am encouraged that you 
and Secretary Gates have continued these efforts and recently 
co-chaired the SOC yourselves.
    Secretary Shinseki. Yes.
    Chairman Akaka. Would you please address how this budget 
will improve the level of collaboration and cooperation between 
VA and DOD?
    Secretary Shinseki. I am not sure there will be a direct 
impact on the budget, but I will tell you there is a direct 
impact on Gates and Shinseki taking responsibility for the SOC. 
The reason we held the first meeting was that both he and I 
were without deputies who would normally chair this. I am still 
without a deputy. And so, we will have the second meeting. He 
has agreed to co-chair it with me even though his new deputy 
has arrived.
    At some point, we will transition that over to our 
deputies, but for the time being he and I have accepted 
responsibility for conducting the SOC, setting the agenda and 
providing vectors for what we would like to accomplish. I 
shared some of those priorities with you.
    Chairman Akaka. Secretary, I have no other questions. But 
let me ask, do you have any further questions?
    Secretary Shinseki. No, sir.
    Chairman Akaka. As we may, we might put some of these 
questions in the record for you. So, Secretary Shinseki, once 
we see the details on the budget, we will have more questions. 
Perhaps we will submit them in writing or perhaps, who knows, 
maybe have another hearing on this another time.
    So, for now, I want to thank you so much for your 
testimony, your responses to all our questions. We look forward 
to continuing to work with you. Of course, we want to wish you 
well, with much aloha.
    Secretary Shinseki. Thank you, Mr. Chairman.
    Thank you, Senators.
    Chairman Akaka. I welcome our second panel of witnesses.
    First, I welcome Carl Blake, the National Legislative 
Director of the Paralyzed Veterans of America.
    I also welcome Kerry Baker, Assistant National Legislative 
Director for the Disabled American Veterans.
    I welcome Raymond Kelley, National Legislative Director of 
AMVETS.
    I would also like to welcome Dennis Cullinan, National 
Legislative Director for Veterans of Foreign Wars.
    We have Steve Robertson, Director of the National 
Legislative Commission of the American Legion.
    And, finally, we have Rick Weidman, Director of Government 
Relations of Vietnam Veterans of America.
    A very warm welcome to all of you and warm aloha to each of 
you.
    Mr. Blake will begin, and then we will move down the table 
in order. The Independent Budget will have 20 minutes total to 
make its presentation. The American Legion and Vietnam Veterans 
of America will be recognized for 5 minutes each. Your prepared 
remarks will, of course, be made part of the hearing record.
    So, Mr. Blake, will you please begin?

    STATEMENT OF CARL BLAKE, NATIONAL LEGISLATIVE DIRECTOR, 
                 PARALYZED VETERANS OF AMERICA

    Mr. Blake. Thank you, Mr. Chairman.
    Chairman Akaka, Senator Tester, on behalf of the co-authors 
of The Independent Budget, PVA is pleased to be here today to 
present our views on the fiscal year 2010 funding requirements 
for the Department of Veterans Affairs health care system.
    First, Mr. Chairman, I would like to say thank you to your 
staff and also to Senator Burr's staff for affording us the 
opportunity about a month ago to go through a lot of the nuts 
and bolts of the Independent Budget already. So we have had a 
good opportunity to work with them already to begin developing, 
as we go forward, the 2010 numbers.
    We are pleased to see that the initial information provided 
by the Administration suggests a very good budget for fiscal 
year 2010. The discretionary funding levels provide for what 
would truly be a significant increase. However, we will 
withhold final judgment on the budget submission until we have 
much more details about the 2010 budget.
    For fiscal year 2010, the Independent Budget, or the IB, 
recommends approximately $46.6 billion for total medical care, 
an increase of $3.6 billion over the fiscal year 2009 operating 
budget level.
    Our recommendation includes approximately $36.6 billion for 
medical services. Our medical services recommendation includes 
approximately $34.6 billion for current services, $1.2 billion 
for projected increase in patient workload and $800 million for 
policy 
initiatives.
    The policy initiatives include $250 million, approximately, 
for mental health needs and expansion of that area, $440 
million to bring the long-term care capacity level in the VA up 
to the mandated level of the Millennium Health Care Act and 
approximately $100 million additional for centralized 
prosthetics funding.
    For medical support and compliance, the IB recommends 
approximately $4.6 billion, and for medical facilities we 
recommend approximately $5.4 billion. This amount includes an 
additional $150 million for nonrecurring maintenance for the VA 
to begin addressing the massive backlog of infrastructure needs 
beyond those addressed through the recently enacted Stimulus 
Bill.
    And I would like to offer our thanks as well to the 
Committee and to Congress as a whole for the funding that was 
provided in the Stimulus Bill directed at infrastructure needs 
in the VA because it is certainly a critical need.
    The IBVSOs contend that despite the recent increases in VA 
health care funding, VA does not have the resources necessary 
to completely remove the prohibition on enrollment of Priority 
8 veterans who have been blocked from enrolling in the VA since 
January 2003. However, we certainly believe that it is time for 
the VA and Congress, along with our assistance, to develop a 
workable solution to allow all eligible Priority Group 8 
veterans to begin enrolling in the system.
    For medical and prosthetic research, the Independent Budget 
recommends $575 million. This represents a $65 million increase 
over the fiscal year 2009 appropriated level. We are 
particularly pleased that Congress has recognized the critical 
need for funding in the medical and prosthetic research account 
in the last couple of years. Research is a vital part of 
veterans' health care and an essential mission for our national 
health care system.
    Mr. Chairman, we would like to express our sincere thanks 
for your introduction of S. 423, the Veterans Health Care 
Budget Reform and Transparency Act. Moreover, we would like to 
extend our thanks to the Members of the Committee who have 
agreed to co-sponsor this important legislation, including 
Ranking Member Burr. This funding mechanism will provide an 
option that the IBVSOs believe is politically more viable than 
mandatory funding and is unquestionably better than the current 
process.
    Finally, Mr. Chairman, I would like to express PVA's 
serious concerns that we have regarding the policy proposal 
that has already been discussed here today, which we have been 
told may be included in the Administration's budget submission 
later this year, and which may be one of the factors that allow 
for the budget increase in the fiscal year 2010 numbers 
released on February 26.
    As mentioned, we have been told that they may be 
considering a proposal that would allow the VA health care 
system to bill a veteran's insurance for the care and treatment 
of a disability or injury that was determined to have been 
incurred in or the result of the veteran's honorable military 
service to our country. I think some of the comments made 
already here today sort of affirm our worst fears in that 
respect.
    Such a consideration from our community, I think I am free 
to say, is wholly unacceptable as evidenced, hopefully, by the 
letter that you received from 11 service organizations, 
including PVA and I believe everyone seated here at the table, 
outlining our concerns.
    This proposal simply ignores the solemn obligation that 
this 
Nation has to care for those men and women who have served this 
Nation with distinction and were left with the wounds and scars 
of that service. The blood spilled in service to this Nation is 

the premium that they have already paid for that care. While we 
understand the fiscal difficulties this country faces right 
now, placing the burden of those fiscal problems on the men and 
women who have already sacrificed a great deal for this country 
is unconscionable.
    We strongly urge you to investigate whether such a proposal 
is being considered--which I think we have already gone down 
that road today--and to forcefully reject it if it is brought 
before you in April.
    Mr. Chairman, this concludes my portion of the testimony on 
behalf of the IB, and I would be happy to take any questions 
you have.
    [The prepared statement of Mr. Blake follows:]
   Prepared Statement of Carl Blake, National Legislative Director, 
    Paralyzed Veterans of America, Concerning The Independent Budget
    Chairman Akaka, Ranking Member Burr, and Members of the Committee, 
As one of the four co-authors of The Independent Budget (IB), Paralyzed 
Veterans of America (PVA) is pleased to present the views of The 
Independent Budget regarding the funding requirements for the 
Department of Veterans Affairs (VA) health care system for FY 2010.
    PVA, along with AMVETS, Disabled American Veterans, and the 
Veterans of Foreign Wars, is proud to come before you this year to 
present the 23rd edition of The Independent Budget, a comprehensive 
budget and policy document that represents the true funding needs of 
the Department of Veterans Affairs. The Independent Budget uses 
commonly accepted estimates of inflation, health care costs and health 
care demand to reach its recommended levels. This year, the document is 
endorsed by over 60 veterans' service organizations, and medical and 
health care advocacy groups.
    The process leading up to FY 2009 was extremely challenging. For 
the second year in a row, VA received historic funding levels that 
matched, and in some cases exceeded, the recommendations of the IB. 
Moreover, for only the third time in the past 22 years, VA received its 
budget prior to the start of the new fiscal year on October 1. However, 
this funding was provided through a combination continuing resolution/
omnibus appropriations act. The underlying Military Construction and 
Veterans Affairs appropriations bill for FY 2009 was not actually 
completed by Congress in the regular order. While the House passed the 
bill in the summer, the Senate never brought its bill up for a floor 
vote. This fact serves as a continuing reminder that, despite excellent 
funding levels provided over the last two years, the larger 
appropriations process is completely broken.
    PVA is pleased to see that the initial information provided by the 
Administration suggests a very good budget for the VA in FY 2010. The 
discretionary funding levels provide for a truly significant increase. 
However, we will withhold final judgment on the budget submission until 
we have much more details about the FY 2010 budget. Moreover, we would 
like to highlight our concern that the out year projections for VA 
funding do not seem to reflect sufficient budgets to serve the needs of 
veterans. In fact, the projected increases in all cases are less than 
three percent. We would be very interested in an explanation and 
justification for the small out year spending increases.
    For FY 2010, The Independent Budget recommends approximately $46.6 
billion for total medical care, an increase of $3.6 billion over the FY 
2009 operating budget level established by Public Law 110-329, the 
``Consolidated Security, Disaster Assistance, and Continuing 
Appropriations Act of 2009.'' Our recommendation reinforces the long-
held policy that medical care collections should be a supplement to, 
not a substitute for, real dollars. Until Congress and the 
Administration fairly address the inaccurate estimates for Medical Care 
Collections, the VA operating budget should not include these estimates 
as a component.
    The medical care appropriation includes three separate accounts--
Medical Services, Medical Support and Compliance, and Medical 
Facilities--that comprise the total VA health care funding level. For 
FY 2010, The Independent Budget recommends approximately $36.6 billion 
for Medical Services. Our Medical Services recommendation includes the 
following recommendations:
Current Services Estimate............................... $34,608,814,000
Increase in Patient Workload............................   1,173,607,000
Policy Initiatives......................................     790,000,000
                    --------------------------------------------------------
                    ____________________________________________________
    Total FY 2010 Medical Services...................... $36,572,421,000
                    ========================================================
                    ____________________________________________________

    Our increase in patient workload is based on a projected increase 
of 93,000 new unique patients--Priority Group 1-8 veterans and covered 
non-veterans. We estimate the cost of these new unique patients to be 
approximately $639 million. The increase in patient workload also 
includes a projected increase of 90,000 new Operation Iraqi Freedom and 
Operation Enduring Freedom (OIF/OEF) veterans at a cost of 
approximately $279 million. Finally, our increase in workload includes 
the projected increase of new Priority Group 8 veterans who will use 
the VA health care system as a result of the recent decision to expand 
Priority Group 8 enrollment by 10 percent. The VA estimated that this 
policy change would allow enrollment of approximately 265,000 new 
enrollees. Based on a historic Priority Group 8 utilization rate of 25 
percent, we estimate that approximately 66,250 of these new enrollees 
will become users of the system. This translates to a cost of 
approximately $255 
million.
    Our policy initiatives include a continued investment in mental 
health and related services, returning the VA to its mandated long-term 
care capacity, and meeting prosthetics needs for current and future 
generations of veterans. For mental health and related services, the IB 
recommends approximately $250 million. In order to restore the VA's 
long-term care average daily census (ADC) to the level mandated by 
Public Law 106-117, the ``Millennium Health Care Act,'' we recommend 
$440 million. Finally, to meet the increase in demand for prosthetics, 
the IB recommends an additional $100 million.
    For Medical Support and Compliance, The Independent Budget 
recommends approximately $4.6 billion. This new account was established 
by the FY 2009 appropriations bill, replacing the Medical 
Administration account. Finally, for Medical Facilities, The 
Independent Budget recommends approximately $5.4 billion. This amount 
includes an additional $150 million for non-recurring maintenance for 
the VA to begin addressing the massive backlog of infrastructure needs 
beyond those addressed through the recently enacted Stimulus bill.
    The IBVSOs contend that despite the recent increases in VA health-
care funding VA does not have the resources necessary to completely 
remove the prohibition on enrollment of Priority Group 8 veterans, who 
have been blocked from enrolling in VA since January 17, 2003. In 
response to this continuing policy, the Congress included additional 
funding to begin opening the VA health care system to some Priority 
Group 8 veterans. In fact, the final approved FY 2009 appropriations 
bill included approximately $375 million to increase enrollment of 
Priority Group 8 veterans by 10 percent. This will allow the lowest 
income and uninsured Priority Group 8 veterans to begin accessing VA 
health care.
    The Independent Budget believes that providing a cost estimate for 
the total cost to reopen VA's health care system to all Priority Group 
8 veterans is a monumental task. That being said, we have developed an 
estimate based on projected new users and based on second hand 
information we have received regarding numbers of Priority Group 8 
veterans who have actually been denied enrollment into the health care 
system. We have received information that suggests that the VA has 
actually denied enrollment to approximately 565,000 veterans. We 
estimate that such a policy change would cost approximately $545 
million in the first year, assuming that about 25 percent (141,250) of 
these veterans would actually use the system. If, assuming a worst-case 
scenario, all of these veterans who have actually been denied 
enrollment were to become users of the VA health care system, the total 
cost would be approximately $2.2 billion. These cost estimates reflect 
a total cost that does not include the impact of medical care 
collections. We believe that it is time for VA and Congress to develop 
a workable solution to allow all eligible Priority Group 8 veterans to 
begin enrolling in the system.
    For Medical and Prosthetic Research, The Independent Budget 
recommends $575 million. This represents a $65 million increase over 
the FY 2009 appropriated level. We are particularly pleased that 
Congress has recognized the critical need for funding in the Medical 
and Prosthetic Research account in the last couple of years. Research 
is a vital part of veterans' health care, and an essential mission for 
our national health care system. VA research has been grossly 
underfunded in contrast to the growth rate of other Federal research 
initiatives. At a time of war, the government should be investing more, 
not less, in veterans' biomedical research programs.
    The Independent Budget recommendation also includes a significant 
increase in funding for Information Technology (IT). For FY 2010, we 
recommend that the VA IT account be funded at approximately $2.713 
billion. This amount includes approximately $130 million for an 
Information Systems Initiative to be carried out by the Veterans 
Benefits Administration. This initiative is explained in greater detail 
in the policy portion of The Independent Budget.
    Paralyzed Veterans of America is pleased that the ``American 
Recovery and Reinvestment Act of 2009'' (also the Stimulus bill) 
included a substantial amount of funding for veterans programs. The 
legislation identified areas of significant need within the VA system, 
particularly as it relates to infrastructure needs. While we were 
disappointed that additional funding was not provided for major and 
minor construction in the Stimulus bill, we recognize that the funding 
that was provided will be critically important to the VA going forward.
    As explained in The Independent Budget, there is a significant 
backlog of major and minor construction projects awaiting action by the 
VA and funding from Congress. We have been disappointed that there has 
been inadequate follow-through on issues identified by the Capital 
Asset Realignment for Enhanced Services (CARES) process. In fact, we 
believe it may be time to revisit the CARES process all together. For 
FY 2010, The Independent Budget recommends approximately $1.123 billion 
for Major Construction and $827 million for Minor Construction. The 
Minor Construction recommendation includes $142 million for research 
facility construction needs.
    Mr. Chairman, we would like to express our sincere thanks for your 
introduction of S. 423, the ``Veterans Health Care Budget Reform and 
Transparency Act.'' Moreover, we would like to extend our thanks to the 
Members of the Committee who have agreed to co-sponsor this important 
legislation, including Ranking Member Burr. For more than a decade, the 
Partnership for Veterans Health Care Budget Reform (Partnership), made 
up of nine veterans service organizations including PVA, and our IB co-
authors, has advocated for reform in the VA health-care budget process. 
The Partnership worked with the Senate and House Committees on 
Veterans' Affairs last year to develop this alternative proposal that 
would change the VA's medical care appropriation to an ``advance 
appropriation,'' guaranteeing funding for the health-care system up to 
one year in advance of the operating year. This alternative proposal 
would ensure that the VA received its funding in a timely and 
predictable manner. Furthermore, it would provide an option the IBVSOs 
believe is politically more viable than mandatory funding, and is 
unquestionably better than the current process.
    Moreover, to ensure sufficiency, our advance appropriations 
proposal would require that VA's internal budget actuarial model be 
shared publicly with Congress to reflect the accuracy of its estimates 
for VA health-care funding, as determined by the Government 
Accountability Office (GAO) audit, before political considerations take 
over the process. This feature would add transparency and integrity to 
the VA health-care budget process. We ask this Committee in your views 
and estimates for FY 2010 to recommend to the Budget Committee an 
advance appropriations approach to take the uncertainties out of health 
care for all of our Nation's wounded, sick and disabled veterans.
    In the end, it is easy to forget, that the people who are 
ultimately affected by wrangling over the budget are the men and women 
who have served and sacrificed so much for this Nation. We hope that 
you will consider these men and women when you develop your budget 
views and estimates, and we ask that you join us in adopting the 
recommendations of The Independent Budget.
    Finally, Mr. Chairman, I would like to express PVA's serious 
concern that we have regarding a policy proposal that we have been told 
may be included in the budget submission later this year, and that may 
be one of the factors that allowed for the increased budget request for 
FY 2010, released on February 26. We have been told that the 
Administration may be considering a proposal that would allow the VA 
health care system to bill a veteran's insurance for the care and 
treatment of a disability or injury that was determined to have been 
incurred in or the result of the veteran's honorable military service 
to our country. Such a consideration is wholly unacceptable. This 
proposal ignores the solemn obligation that this country has to care 
for those men and women who have served this country with distinction 
and were left with the wounds and scars of that service. The blood 
spilled in service for this Nation is the premium that service-
connected veterans have paid for their earned care.
    While we understand the fiscal difficulties this country faces 
right now, placing the burden of those fiscal problems on the men and 
women who have already sacrificed a great deal for this country is 
unconscionable. We strongly urge Congress to investigate whether such a 
proposal is being considered and to forcefully reject it if it is 
brought before you.

    This concludes my testimony. I will be happy to answer any 
questions you may have.

    Chairman Akaka. Thank you very much, Mr. Blake.
    Mr. Baker.

   STATEMENT OF KERRY BAKER, ASSISTANT NATIONAL LEGISLATIVE 
              DIRECTOR, DISABLED AMERICAN VETERANS

    Mr. Baker. Aloha, Mr. Chairman, Members of the Committee. 
It is a pleasure to be here today on behalf of the Independent 
Budget.
    Today, I will focus on issues affecting the Veterans 
Benefits Administration. On behalf of VBA, we have come before 
you for many years, requesting additional funding to reverse 
its chronic history of understaffing. You have answered that 
call. In just the past few years, VBA has hired over 3,000 
additional claims processors. More continue to be hired as we 
speak.
    This year, the IBVSOs recommend that Congress adopt both 
short- and long-term strategies for improvements--strategies 
focused on VBA's IT infrastructure, as well as the claims and 
appeals process. We are also seeking improvements in training, 
accountability and quality assurance.
    To improve the claims process, VBA must do more to upgrade 
its IT infrastructure. It must also be given flexibility to 
manage those improvements.
    Despite the growing problems in the claims process, 
Congress has steadily reduced funding for IT initiatives over 
the past several years. In fiscal year 2001, Congress provided 
$82 million for IT initiatives. By 2006, that funding had 
fallen to $23 million.
    Congress has, however, noticed the disconnect between IT 
and improvements in claims processing. Section 227 of the 
Veterans Benefits Improvement Act of 2008 places new 
requirements on VBA to closely examine all uses of current IT 
and comparable outside IT systems with respect to claims 
processing. Following that examination, VBA is required to 
develop a new plan to use these and other relevant technologies 
to reduce subjectivity, avoid remands, and reduce variances in 
VA regional office disability 
ratings.
    Section 227 will require VBA to examine IT systems that it 
has been attempting to implement and improve for years. We 
believe that examination will reveal that progress has been 
impeded due to lack of directed funding to underwrite IT 
development.
    The IBVSOs believe a conservative increase of at least 5 
percent annually in IT initiatives is warranted. VA should give 
the highest priority to the review required by the Veterans 
Benefits Improvement Act of 2008 and double its efforts to 
ensure these ongoing initiatives are fully funded and 
accomplish their goals.
    Further, the Secretary should examine the impact of IT 
centralization under the Chief Information Officer, or CIO, 
and, if warranted, shift appropriate responsibility for their 
management from the CIO to the Undersecretary for Benefits.
    Additionally, as long stated by the IBVSOs, the VA must 
invest more in training adjudicators and decisionmakers. It 
should also hold them accountable for higher standards of 
accuracy. The VBA's problems caused by a lack of accountability 
do not begin in the claims development and rating process. They 
begin in the training program. The lack of accountability 
during training reduces or even eliminates employee motivation 
to excel.
    The VA should undertake an extensive training program to 
educate its adjudicators on how to weigh and evaluate medical 
evidence and should require mandatory and comprehensive testing 
by all trainees, as well as the claims process and appellate 
staff.
    In addition to training, accountability is a key to 
quality. However, there is a gap in quality assurance for 
purposes of individual accountability and decisionmaking. In 
the STAR program, the sample drawn each month from a regional 
office workload is simply too inadequate to determine 
individual quality.
    The Veterans Benefits Improvement Act of 2008 requires VA 
to conduct a study on the effectiveness of the current employee 
work credit system and work management system. The legislation 
requires VA to submit a report to Congress which must explain 
how to implement a system for evaluating VBA employees no later 
than October 31, 2009. This is an historic opportunity for VA 
to implement a new methodology, a new philosophy by developing 
a system with a primary focus on quality through 
accountability. Properly undertaken, the outcome would result 
in a new institutional mindset across VBA, one that achieves 
excellence and changes a mindset focused on quantity to one 
focused on quality.
    The IBVSOs believe the VA's upcoming report must 
concentrate on how the VA will establish a quality assurance 
and accountability program that will detect, track and hold 
responsible those employees who commit errors. VA should 
generate this report in consultation with the veterans service 
organizations most experienced in the claims process.
    That concludes my oral statement, and it has been an honor 
to give it to you today.
    [The prepared statement of Mr. Baker follows:]
   Prepared Statement of Kerry Baker, Assistant National Legislative 
                  Director, Disabled American Veterans
    Mr. Chairman and Members of the Committee: I am pleased to have 
this opportunity to appear before you on behalf of the Disabled 
American Veterans (DAV), one of four national veterans' organizations 
that create the annual Independent Budget (IB) for veterans programs, 
to summarize our recommendations for fiscal year (FY) 2009.
    As you know Mr. Chairman, the IB is a budget and policy document 
that sets forth the collective views of DAV, AMVETS, Paralyzed Veterans 
of America (PVA), and Veterans of Foreign Wars of the United States 
(VFW). Each organization accepts principal responsibility for 
production of a major component of our IB--a budget and policy document 
on which we all agree. Reflecting that division of responsibility, my 
testimony focuses primarily on the variety of Department of Veterans 
Affairs' (VA) benefits programs available to veterans.
    In preparing this 23rd IB, the four partners draw upon our 
extensive experience with veterans' programs, our firsthand knowledge 
of the needs of America's veterans, and the information gained from 
continuous monitoring of workloads and demands upon, as well as the 
performance of, the veterans benefits and services system. 
Consequently, this Committee has acted favorably on many of our 
recommendations to improve services to veterans and their families. We 
ask that you give our recommendations serious consideration again this 
year.
      the veterans benefits administration and its claims process
    To improve administration of VA's benefits programs, the IB 
veterans' service organizations (IBVSOs) recommend that Congress adopt 
both short- and long-term strategies for improvements within the 
veterans Benefits Administration (VBA). These strategies focus on the 
VBA's information technology (IT) infrastructure as well as the claims 
and appeals process, to include the resulting backlog. Consequently, we 
are also seeking improvements in VBA's training programs and 
enhancements in accountability and quality assurance with respect to 
disability ratings. If Congress accepts our recommendations, VBA will 
be better positioned to serve all disabled veterans and their families.
                       vba information technology
    To maintain and improve efficiency and accuracy of claims 
processing, the VBA must continue to upgrade its information technology 
(IT) infrastructure. Also, VBA must be given more flexibility to 
install, manage and plan upgraded technology to support claims 
management improvement.
    To meet ever-increasing demands while maintaining efficiency, the 
VBA must continually modernize the tools it uses to process and resolve 
claims. Given the current challenging environment in claims processing 
and benefits administration, and the ever-growing backlog, the VBA must 
continue to upgrade its IT infrastructure and revise its training to 
stay abreast of program changes and modern business practices. In spite 
of undeniable needs, Congress has steadily reduced funding for VBA 
initiatives over the past several years. In fiscal year 2001, Congress 
provided $82 million for VBA-identified IT initiatives. In FY 2002, it 
provided $77 million; in 2003, $71 million; in 2004, $54 million; in 
2005, $29 million; and in 2006, $23 million.
    Funding for FY 2006 was only 28 percent of FY 2001 funding, without 
regard to inflation. Moreover, some VBA employees who provided direct 
support and development for VBA's IT initiatives have been transferred 
to the VA Chief Information Officer (CIO) when VA centralized all IT 
operations, governance, planning and budgeting. Continued IT 
realignment through FY 2007 and 2008 shifted more funding to VA's 
agency IT account, further reducing funding for these VBA initiatives 
in the General Operating Expenses account to $11.8 million. It should 
be noted that in the FY 2007 appropriation, Public Law 110-28, Congress 
provided $20 million to VBA for IT to support claims processing, and in 
2009 Congress designated $5 million in additional funding specifically 
to support the IT needs of new VBA Compensation and Pension Service 
personnel--also authorized by that appropriations act.
    All IT initiatives are now being funded in the VA's IT 
appropriation and tightly controlled by the CIO. However, needed and 
ongoing VBA initiatives include expansion of web-based technology and 
deliverables, such as web portal and Training and Performance Support 
Systems (TPSS); ``Virtual VA'' paperless processing; enhanced veteran 
self-service and access to benefit application, status, and delivery; 
data integration across business lines; use of the corporate database; 
information exchange; quality assurance programs and controls; and, 
employee skills certification and training.
    We believe VBA should continue to develop and enhance data-centric 
benefits integration with ``Virtual VA'' and modification of The 
Imaging Management System (TIMS). All these systems serve to replace 
paper-based records with electronic files for acquiring, storing, and 
processing claims data.
    Virtual VA supports pension maintenance activities at three VBA 
pension-maintenance centers. Further enhancement would allow for the 
entire claims and award process to be accomplished electronically. TIMS 
is the Education Service's system for electronic education claims 
files, storage of imaged documents, and work flow management. The 
current VBA initiative is to modify and enhance TIMS to make it fully 
interactive and allow for fully automated claims and award processing 
by Education Service and VR&E nationwide.
    The VBA should accelerate implementation of Virtual Information 
Centers (VICs). By providing veterans regionalized telephone contact 
access from multiple offices within specified geographic locations, VA 
could achieve greater efficiency and improved customer service. 
Accelerated deployment of VICs will more timely accomplish this 
beneficial effect.
    With the effects of inflation, the growth in veterans' programs, 
and the imperative to invest more in advanced IT, the IB veterans 
service organizations (IBVSOs) believe a conservative increase of at 
least 5 percent annually in VBA IT initiatives is warranted. Had 
Congress increased the FY 2001 funding of $82 million by five percent 
each year since then, the amount available for FY 2010 would be nearly 
$130 million. Unfortunately, these programs have been chronically 
underfunded, and now with IT centralization, IT funding in VBA is even 
more restricted and bureaucratic.
    Congress has taken notice of the chronic disconnect between VBA IT 
and lagging improvements in claims processing. Section 227 of Public 
Law 110-389 places new requirements on VA to closely examine all uses 
of current IT and comparable outside IT systems with respect to VBA 
claims processing for both compensation and pension. Following that 
examination, VA is required to develop a new plan to use these and 
other relevant technologies to reduce subjectivity, avoid remands and 
reduce variances in VA Regional Office ratings for similar specific 
disabilities in veteran claimants.
    The act requires the VA Secretary to report the results of that 
examination to Congress in great detail, and includes a requirement 
that the Secretary ensure that the plan will result, within three years 
of implementation, in reduction in processing time for compensation and 
pension claims processed by VBA. The requirements of this section will 
cause heavy scrutiny on IT systems that VBA has been attempting to 
implement, improve and expand for years. We believe the examination 
will reveal that progress has been significantly stymied due to lack of 
directed funding to underwrite IT development and completion, and lack 
of accountability to ensure these programs work as intended.
Recommendations:
     Congress should provide the Veterans Benefits 
Administration adequate funding for its IT initiatives to improve 
multiple information and information-processing systems and to advance 
ongoing, approved and planned initiatives such as those enumerated in 
this section. We believe these IT programs should be increased annually 
by a minimum of five percent or more.
     VA should ensure that recent funding specifically 
designated by Congress to support the IT needs of VBA, and of new VBA 
staff authorized in fiscal year 2009, are provided to VBA as intended, 
and on an expedited basis.
     The Chief Information Officer and Under Secretary for 
Benefits should give high priority to the review and report required by 
Public Law 110-389, and redouble their efforts to ensure these ongoing 
VBA initiatives are fully funded and accomplish their stated 
intentions.
     The Secretary should examine the impact of the current 
level of IT centralization under the Chief Information Officer on these 
key VBA programs, and, if warranted, shift appropriate responsibility 
for their management, planning and budgeting from the CIO to the Under 
Secretary for Benefits.
                           the claims process
    In order to make the best use of newly hired personnel resources, 
Congress must focus on the claims process from beginning to end. The 
goal must be to reduce delays caused by superfluous procedures, poor 
training, and lack of accountability.
    During the past couple of years, the VA hired a record number of 
new claims adjudicators. Unfortunately, as a result of retirements by 
senior employees, an increase in disability claims, the complexity of 
such claims, and the time required for new employees to become 
proficient in processing claims, VA has achieved few noticeable 
improvements.
    The claims process is burdensome, extremely complex, and often 
misunderstood by veterans and many VA employees. Numerous studies have 
been completed on claims-processing delays and the backlog created by 
such delays, yet the delays continue. The following suggestions would 
simplify the claims process by reducing delays caused by superfluous 
procedures, inadequate training, and little accountability. Other 
suggestions will provide sound structure with enforceable rights where 
current law promotes subjectivity and abuses rights.
    The subjectivity of the claims process results in large variances 
in decisionmaking, unnecessary appeals, and claims overdevelopment. In 
turn, these problems contribute to the duplicative, procedural chaos of 
the claims process. Congress and the Administration should seek to 
simplify, strengthen, and provide structure to the VA claims process.
    In order to understand the complex procedural characteristics of 
the claims process, and how these characteristics delay timely 
adjudication of claims, one must focus on the procedural 
characteristics and how they affect the claims process as a whole. 
Whether through expansive judicial orders, repeated mistakes, or 
variances in VA decisionmaking, some aspects of the claims process have 
become complex, loosely structured, and open to the personal discretion 
of individual adjudicators. By strengthening and properly structuring 
these processes, Congress can build on what otherwise works.
    These changes should begin by providing solid, nondiscretionary 
structure to VA's ``duty to notify.'' Congress meant well when it 
enacted VA's current statutory ``notice'' language. It has nonetheless 
led to unintended consequences that have proven detrimental to the 
claims process. Many Court of Appeals for Veterans Claims (Court) 
decisions have expanded upon VA's statutory duty to notify, both in 
terms of content and timing. However, with the recent passage of Public 
Law 110-389, the ``Veterans Benefits Improvement Act of 2008,'' 
Congress, with the Administration's support, took an important step to 
correct this problem. However, the IBVSOs believe VA can do more.
    The VA's administrative appeals process has inefficiencies. The 
delays caused by these inefficiencies force many claimants into drawn-
out battles for justice that may last for years. Delays in the initial 
claims development and adjudication process are insignificant when 
compared to delays that exist in VA's administrative appeals process. 
The IBVSOs believe VA can eliminate some of the delays in this process 
administratively, and we urge VA to do so. For example, VA can amend 
its official forms so that the notice VA sends to a claimant when it 
makes a decision on a claim includes an explanation about how to obtain 
review of a VA decision by the Board of Veterans' Appeals (Board) and 
provides the claimant with a description of the types of reviews that 
are available.
    Another problem that seems to plague the VA's claims process is its 
apparent propensity to overdevelop claims. One possible cause of this 
problem is that many claims require medical opinion evidence to help 
substantiate their validity. There are volumes of Veterans Appeals 
Reporters filled with case law on the subject of medical opinions, 
i.e., who is competent to provide them, when are they credible, when 
are they adequate, when are they legally sufficient, and which ones are 
more probative, etc.
    There is ample room to improve the law concerning medical opinions 
in a manner that would bring noticeable efficiency to VA's claims 
process, such as when VA issues a Veterans Claims Assistance Act (VCAA) 
notice letter. Under current notice requirements and in applicable 
cases, VA's letter to a claimant normally informs the claimant that he 
or she may submit a private medical opinion. The letter also states 
that VA may obtain a medical opinion. However, these notice letters do 
not inform the claimant of what elements render private medical 
opinions adequate for VA rating purposes. To correct this deficiency, 
we recommend to VA that when it issues proposed regulations to 
implement the recent amendment of title 38, United States Code, section 
5103 that its proposed regulations contain a provision that will 
require it to inform a claimant, in a VCAA notice letter, of the basic 
elements that make medical opinions adequate for rating purposes.
    We believe that if a claimant's physician is made aware of the 
elements that make a medical opinion adequate for VA rating purposes, 
and provides VA with such an opinion, VA no longer needs to delay 
making a decision on a claim by obtaining its own medical opinion. This 
would reduce the number of appeals that result from conflicting medical 
opinions--appeals that are ultimately decided in an appellant's favor--
more often than not. If the Administration refuses to promulgate 
regulations that incorporate the foregoing suggestion, Congress should 
amend VA's notice requirements in section 5103 to require that VA 
provide such notice regarding the adequacy of medical opinions.
    Congress should consider amending section 5103A(d)(1) to provide 
that when a claimant submits private medical evidence, including a 
private medical opinion, that is competent, credible, probative, and 
otherwise adequate for rating purposes, the Secretary shall not request 
such evidence from a department health-care facility. Some may view 
this suggestion as an attempt to tie VA's hands with respect to its 
consideration of private medical opinions. However, it does not. The 
language we suggest adding to section 5103A(d)(1) would not require VA 
to accept private medical evidence if, for example, VA finds that the 
evidence is not credible and therefore not adequate for VA rating 
purposes.
    The IBVSOs also believe that other procedures add unnecessary 
delays to the claims process. For example, we believe VA routinely 
continues to develop claims rather than issue decisions even though 
evidence development appears complete. These actions result in numerous 
appeals and unnecessary remands from the Board and the Court. Remands 
in fully developed cases do nothing but perpetuate the hamster-wheel 
reputation of veterans law. In fact, the Board remands an extremely 
large number of appeals solely for unnecessary medical opinions. In FY 
2007, the Board remanded 12,269 appeals to obtain medical opinions. Far 
too many were remanded for no other reason but to obtain a VA medical 
opinion merely because the appellant had submitted a private medical 
opinion. Such actions are, we respectfully submit, a serious waste of 
VA's resources.
    The suggested rulemaking actions and recommended changes to 
sections 5103 and 5103A(d)(1) may have a significant effect on 
ameliorating some problems. But to further improve these procedures, 
Congress should amend title 38, United States Code, section 5125. 
Congress enacted section 5125, for the express purpose of eliminating 
the former title 38, Code of Federal Regulations, section 3.157(b)(2) 
requirement that a private physician's medical examination report be 
verified by an official VA examination report before VA could award 
benefits. However, Congress enacted section 5125 with discretionary 
language. This discretionary language permits, but does not require, VA 
to accept medical opinions from private physicians. Therefore, Congress 
should amend section 5125 by adding new language that requires VA to 
accept a private examination report if the VA determines that the 
report is (1) provided by a competent health-care professional; (2) 
probative to the issue being decided; (3) credible; and (4) otherwise 
adequate for adjudicating the claim.
Recommendations:
     VA should amend its notification forms to inform claimants 
of the procedures that are available for obtaining review of a VA 
decision by the Board of Veterans' Appeals along with providing an 
explanation of the types of reviews that are available to claimants.
     VA should issue proposed regulations to implement the 
recent amendment of title 38, United States Code, section 5103 as 
quickly as possible. The VA's proposed regulations should include 
provisions that will require VA to notify a claimant, in appropriate 
circumstances, of the elements that render medical opinions adequate 
for rating purposes.
     Congress should amend section 5103A(d)(1) to provide that 
when a claimant submits a private medical opinion that is competent, 
credible, probative, and otherwise adequate for rating purposes, the 
Secretary shall not request another medical opinion from a department 
health care facility.
     Congress should amend title 38, United States Code, 
section 5125, insofar as it states that a claimant's private 
examination report ``may'' be accepted. The new language should direct 
that the VA ``must'' accept such report if it is (1) provided by a 
competent health care professional, (2) probative to the issue being 
decided, (3) credible, and (4) otherwise adequate for adjudicating such 
claim.
                                training
    The IBVSOs have consistently maintained that VA must invest more in 
training adjudicators and decisionmakers, and should hold them 
accountable for higher standards of accuracy. VA has made improvements 
to its training programs in the past few years; nonetheless, much more 
improvement is required in order to meet quality standards that 
disabled veterans and their families deserve.
    Training has not been a high enough priority in VA. We have 
consistently asserted that proper training leads to better quality 
decisions, and that quality is the key to timeliness of VA 
decisionmaking. VA will only achieve such quality when it devotes 
adequate resources to perform comprehensive and ongoing training and 
imposes and enforces quality standards through effective quality 
assurance methods and accountability mechanisms.
    The VBA's problems caused by a lack of accountability do not begin 
in the claims development and rating process--they begin in the 
training program. There is little measurable accountability in the 
VBA's training program.
    The VBA's unsupervised and unaccountable training system results in 
no distinction existing between unsatisfactory performance and 
outstanding performance. This lack of accountability during training 
further reduces, or even eliminates, employee motivation to excel. This 
institutional mind-set is further epitomized in VBA's day-to-day 
performance, where employees throughout VBA are reminded that optimum 
work output is far more important than quality performance and accurate 
work.
    The effect of VBA's lack of accountability in its training program 
was demonstrated when it began offering skills certification tests to 
support certain promotions. Beginning in late 2002, VSR job 
announcements began identifying VSRs at the GS-11 level, contingent 
upon successful completion of a certification test. The open book test 
consisted of 100 multiple-choice questions. VA allowed participants to 
use online references and any other reference material, including 
individually prepared notes in order to pass the test.
    The first validation test was performed in August 2003. There were 
298 participants in the first test. Of these, 75 passed for a pass rate 
of 25 percent. The VBA conducted a second test in April 2004. Out of 
650 participants, 188 passed for a pass rate of 29 percent. Because of 
the low pass rates on the first two tests, a 20-hour VSR ``readiness'' 
training curriculum was developed to prepare VSRs for the test. A third 
test was administered on May 3, 2006, to 934 VSRs nationwide. Still, 
the pass rate was only 42 percent. Keep in mind that these tests were 
not for training; they were to determine promotions from GS-10 to GS-
11.
    These results reveal a certain irony, in that the VBA will offer a 
skills certification test for promotion purposes, but does not require 
comprehensive testing throughout its training curriculum. Mandatory and 
comprehensive testing designed cumulatively from one subject area to 
the next, for which the VBA then holds trainees accountable, should be 
the number one priority of any plan to improve VBA's training program. 
Further, VBA should not allow trainees to advance to subsequent stages 
of training until they have successfully completed such testing.
    The Veterans' Benefits Improvement Act of 2008 mandated some 
testing for claims processors and VBA managers, which is an 
improvement; however, it does not mandate the type of testing during 
the training process as explain herein. Measurable improvement in the 
quality of and accountability for training will not occur until such 
mandates exist. It is quite evident that a culture of quality neither 
exists, nor is much desired, in the VBA.
Recommendation:
    VA should undertake an extensive training program to educate its 
adjudicators on how to weigh and evaluate medical evidence. In 
addition, to complement recent improvements in its training programs, 
VA should require mandatory and comprehensive testing of the claims 
process and appellate staff. To the extent that VA fails to provide 
adequate training and testing, Congress should require mandatory and 
comprehensive testing, under which VA will hold trainees accountable.
                        stronger accountability
    In addition to training, accountability is the key to quality, and 
therefore to timeliness as well. As it currently stands, almost 
everything in the VBA is production driven. Performance awards cannot 
be based on production alone; they must also be based on demonstrated 
quality. However, in order for this to occur, the VBA must implement 
stronger accountability measures for quality assurance.
    The quality assurance tool used by the VA for compensation and 
pension claims is the Systematic Technical Accuracy Review (STAR) 
program. Under the STAR program, VA reviews a sampling of decisions 
from regional offices and bases its national accuracy measures on the 
percentage with errors that affect entitlement, benefit amount, and 
effective date.
    However, there is a gap in quality assurance for purposes of 
individual accountability in quality decisionmaking. In the STAR 
program, a sample is drawn each month from a regional office workload 
divided between rating, authorization, and fiduciary end-products. 
However, VA recognizes that these samples are only large enough to 
determine national and regional office quality. Samples as small as 10 
cases per month per office are woefully inadequate to determine 
individual quality.
    While VA attempts to analyze quality trends identified by the STAR 
review process, claims are so complex, with so many potential 
variables, that meaningful trend analysis is difficult. As a 
consequence, the VBA rarely obtains data of sufficient quality to allow 
it to reform processes, procedures, or policies.
    As mentioned above, STAR samples are far too small to allow any 
conclusions concerning individual quality. That is left to rating team 
coaches who are charged with reviewing a sample of ratings for each 
rating veteran service representative (RVSR) each month. This review 
should, if conducted properly, identify those employees with the 
greatest problems. In practice, however, most rating team coaches have 
insufficient time to review what could be 100 or more cases each month. 
As a consequence, individual quality is often under-evaluated and 
employees with quality problems fail to receive the extra training and 
individualized mentoring that might allow them to be competent raters.
    In the past 15 years the VBA has moved from a quality-control 
system for ratings that required three signatures on each rating before 
it could be promulgated to the requirement of but a single signature. 
Nearly all VA rating specialists, including those with just a few 
months' training, have been granted some measure of ``single 
signature'' authority. Considering the amount of time it takes to train 
an RVSR, the complexity of veterans disability law, the frequency of 
change mandated by judicial decisions, and new legislation or 
regulatory amendments, a case could and should be made that the routine 
review of a second well-trained RVSR would avoid many of the problems 
that today clog the appeals system.
    The Veterans' Benefits Improvement Act of 2008 (section 226) 
required VA to conduct a study on the effectiveness of the current 
employee work-credit system and work-management system. In carrying out 
the study, VA is required to consider, among other things: (1) measures 
to improve the accountability, quality, and accuracy for processing 
claims for compensation and pension benefits; (2) accountability for 
claims adjudication outcomes; and (3) the quality of claims 
adjudicated. The legislation requires VA to submit the report to 
Congress, which must include the components required to implement the 
updated system for evaluating VBA employees, no later than October 31, 
2009.
    This is a historic opportunity for VA to implement a new 
methodology--a new philosophy--by developing a new system with a 
primary focus of quality through accountability. Properly undertaken, 
the outcome would result in a new institutional mind-set across the 
VBA--one that focuses on the achievement of excellence--and change a 
mind-set focused mostly on quantity-for-quantity's sake to a focus of 
quality and excellence. Those who produce quality work are rewarded and 
those who do not are finally held accountable.
Recommendation:
     The VA Secretary's upcoming report must focus on how the 
Department will establish a quality assurance and accountability 
program that will detect, track, and hold responsible those VA 
employees who commit errors while simultaneously providing employee 
motivation for the achievement of excellence. VA should generate the 
report in consultation with veterans service organizations most 
experienced in the claims process.
    We invite your attention to the IB itself for the details of the 
remaining recommendations, but the following summarizes a number of 
suggestions to improve benefit programs administered by VBA:

     allow veterans eligible for benefits under title 38, 
United States Code, sections 31 and 33 to choose the most favorable 
housing allowance from the two programs
     support legislation to clarify the intent of Congress 
concerning who is considered to have engaged in combat
     repeal in whole the offset between disability compensation 
and military retired pay
     provide cost-of-living adjustments for compensation, 
specially adapted housing grants, and automobile grants, with 
provisions for automatic annual increases in the housing and automobile 
grants based on increases in the cost of living
     propose a rule change to the Federal Register that would 
update the mental health rating criteria
     provide a presumption of service connection for hearing 
loss and tinnitus for combat veterans and veterans who had military 
duties involving high levels of noise exposure who suffer from tinnitus 
or hearing loss of a type typically related to noise exposure or 
acoustic trauma
     increase the maximum coverage and adjustment of the 
premium rates for Service-Disabled Veterans' Life Insurance
     increase the maximum coverage available in policies of 
Veterans' Mortgage Life Insurance
     enforce VA's benefit of the doubt rule in judicial 
proceedings
     appoint judges to the Court of Appeals for Veterans claims 
who are advocates experienced VA law
     support legislation to increase Dependency and Indemnity 
Compensation (DIC) for certain survivors of veterans, and to no longer 
offset DIC with Survivor Benefit Plan payments. And
     authorize rates of DIC for surviving spouses of 
servicemembers who die while on active duty to the same rate as those 
who die while rated totally disabled.

    We hope the Committee will review these recommendations and give 
them consideration for inclusion in your legislative plans for FY 2009. 
Mr. Chairman, thank you for inviting the DAV and other member 
organizations of the IB to testify before you today.

    Chairman Akaka. Thank you very much, Mr. Baker.
    Mr. Kelley.

STATEMENT OF RAYMOND C. KELLEY, NATIONAL LEGISLATIVE DIRECTOR, 
                             AMVETS

    Mr. Kelley. Good morning, Mr. Chairman. Thank you for 
inviting AMVETS to testify on behalf of the Independent Budget 
today.
    As partner of the Independent Budget, AMVETS devotes a 
majority of its time with the concerns of the National Cemetery 
Administration. I would like to speak directly to the issues 
and concerns surrounding NCA.
    In fiscal year 2008, $195 million was appropriated for the 
operations and maintenance of NCA, $28.2 million over the 
Administration's request, with only $220,000 in carryover. NCA 
awarded 39 of 42 minor construction projects that were in the 
operating plan. The State Cemetery Grants Service awarded $37.3 
million of the $39.5 million that was appropriated. 
Additionally, $25 million was invested in the National Shrine 
Commitment.
    NCA has done an exceptional job of providing burial options 
for 88 percent of all veterans who fall within the 170,000 
veterans within a 75-mile radius threshold model. However, 
under this model, no new geographic area will become eligible 
for a National Cemetery until 2015. An analysis shows that the 
five areas with the largest veteran population will not become 
eligible for the National Cemetery because they will not reach 
the 170,000 threshold.
    Lowering the population threshold to 100,000 veterans would 
immediately make several areas eligible for a National Cemetery 
regardless of any change of the mile radius threshold, and a 
new threshold model must be implemented, so more of our 
veterans will have access to that earned benefit.
    The Independent Budget recommends an operations budget of 
$241.5 million for NCA for fiscal year 2010, so it can meet the 
increasing demands of interments, gravesite maintenance, and 
related essential elements of cemetery operations. Congress 
should include as part of the NCA appropriations $50 million 
for the first stage of a $250 million 5-year program to restore 
and improve the condition and character of the existing NCA 
cemeteries.
    The Independent Budget recommends that Congress appropriate 
$52 million for the State Cemetery Grants program. This funding 
level will allow the program to establish six new cemeteries 
that will provide burial options for 179,000 veterans who live 
in regions that currently have no reasonable access to State or 
National Cemeteries.
    The national average cost for a funeral and burial in 
private cemeteries has reached $8,555, and the cost for a 
burial plot is $2,133. Based on accessibility, and the need to 
provide quality burial benefits, the Independent Budget 
recommends that VA separate burial benefits into two 
categories: veterans who live inside the VA accessibility 
threshold model and those who live outside the 
threshold.
    For veterans who live outside the threshold, the service-
connected burial benefit should be increased to $6,160. Non-
service-connected veterans burial benefits should be increased 
to $1,918, and the plot allowance should be increased to $1,150 
to match the original value of the benefit. For veterans who 
live inside the threshold, the benefit for a service-connected 
burial will be $2,793. The amount provided for non-service-
connected burial will be $854, and the plot allowance will be 
$1,150.
    This will provide a burial benefit at equal percentages 
based on the average cost for a VA funeral and not on a private 
funeral cost that will be provided for those veterans who do 
not have access to a State or National Cemetery. The new model 
will provide a meaningful benefit to those veterans whose 
access to a State or National Cemetery is restricted as well as 
provide an improved benefit for eligible veterans who opt for 
private burial.
    Congress should also enact legislation to address these 
burial benefits for inflation annually.
    This concludes my testimony, and I am happy to answer any 
questions you may have.
    [The prepared statement of Mr. Kelley follows:]
Prepared Statement of Raymond C. Kelley, National Legislative Director, 
               AMVETS, Concerning The Independent Budget
    Chairman Akaka, Ranking Member Burr, and Members of the Committee: 
AMVETS is honored to join our fellow veterans service organizations and 
partners at this important hearing on the Department of Veterans 
Affairs budget request for fiscal year 2010. My name is Raymond C. 
Kelley, National Legislative Director of AMVETS, and I am pleased to 
provide you with our best estimates on the resources necessary to carry 
out a responsible budget for VA.
    AMVETS testifies before you as a co-author of The Independent 
Budget. This is the 23rd year AMVETS, the Disabled American Veterans, 
the Paralyzed Veterans of America, and the Veterans of Foreign Wars 
have pooled our resources to produce a unique document, one that has 
stood the test of time.
    In developing the Independent Budget, we believe in certain guiding 
principles. Veterans should not have to wait for benefits to which they 
are entitled. Veterans must be ensured access to high-quality medical 
care. Specialized care must remain the focus of VA. Veterans must be 
guaranteed timely access to the full continuum of health care services, 
including long-term care. And, veterans must be assured accessible 
burial in a state or national cemetery in every state.
    The VA healthcare system is the best in the country and responsible 
for great advances in medical science. VHA is uniquely qualified to 
care for veterans' needs because of its highly specialized experience 
in treating service-connected ailments. The delivery care system 
provides a wide array of specialized services to veterans like those 
with spinal cord injuries, blindness, Traumatic Brain Injury, and Post 
Traumatic Stress Disorder.
    Mr. Chairman, I want to thank you for introducing H.R. 1016, the 
Veterans Health Care Budget Reform and Transparency Act of 2009. 
Providing sufficient, predictable and timely funding for VA health care 
will go a long way in ensuring our veterans receive the care they need 
from fully staffed, state-of-the-art VA medical centers. I also want to 
thank each Member of the Committee who has co-sponsored this act, and 
for those who still have questions. I look forward to further 
discussions so we can solve the problems of the current funding system.
    As a partner of the Independent Budget, AMVETS devotes a majority 
of its time with the concerns of the National Cemetery Administration 
(NCA) and I would like to speak directly to the issues and concerns 
surrounding NCA.
                  the national cemetery administration
    The Department of Veterans Affairs National Cemetery Administration 
(NCA) currently maintains more than 2.9 million gravesites at 125 
national cemeteries in 39 states and Puerto Rico. Of these cemeteries, 
65 will be open to all interments; 20 will accept only cremated remains 
and family members of those already interred; and 40 will only perform 
interments of family members in the same gravesite as a previously 
deceased family member. NCA also maintains 33 soldiers' lots and 
monument sites. All told, NCA manages 17,000 acres, half of which are 
developed.
    VA estimates that about 27 million veterans are alive today. They 
include veterans from World War I, World War II, the Korean War, the 
Vietnam War, the Gulf War, the conflicts in Afghanistan and Iraq, and 
the Global War on Terrorism, as well as peacetime veterans. With the 
anticipated opening of the new national cemeteries, annual interments 
are projected to increase from approximately 100,000 in 2007 to 111,000 
in 2009. Historically, 12 percent of veterans opt for burial in a state 
or national cemetery.
    The most important obligation of the NCA is to honor the memory f 
America's brave men and women who served in the Armed Forces. 
Therefore, the purpose of these cemeteries as national shrines is one 
of the NCA's top priorities. Many of the individual cemeteries within 
the system are steeped in history, and the monuments, markers, grounds, 
and related memorial tributes represent the very foundation of the 
United States. With this understanding, the grounds, including 
monuments and individual sites of interment, represent a national 
treasure that deserves to be protected and cherished.
    The Independent Budget veterans service organizations (IBVSOs) 
would like to acknowledge the dedication and commitment of the NCA 
staff who continue to provide the highest quality of service to 
veterans and their families. We call on the Administration and Congress 
to provide the resources needed to meet the changing and critical 
nature of NCA's mission and fulfill the Nation's commitment to all 
veterans who have served their country honorably and faithfully.
    In FY 2008, $195 was million appropriated for the operations and 
maintenance of NCA, $28.2 million over the administration's request, 
with only $220,000 in carryover. NCA awarded 39 of the 42 minor 
construction projects that were in the operating plan. The State 
Cemetery Grants Service awarded $37.3 million of the $39.5 million that 
was appropriated. This carryover was caused by the cancellation of a 
contract that NCA had estimated to be $2 million but the contractor's 
estimation was considerable higher. Additionally, $25 million was 
invested in the National Shrine Commitment.
    NCA has done an exceptional job of providing burial options for 88 
percent of all veterans who fall within the 170,000 veterans within a 
75 mile radius threshold model. However, under this model, no new 
geographical area will become eligible for a National Cemetery until 
2015. St. Louis, MO. will, at that time, meet the threshold due to the 
closing of Jefferson Barracks National Cemetery in 2017. Analysis shows 
that the five areas with the highest veteran population will not become 
eligible for a National Cemetery because they will not reach the 
170,000 threshold.
    NCA has spent years developing and maintaining a cemetery system 
based on a growing veteran population. In 2010 our veteran population 
will begin to decline. Because of this downward trend, a new threshold 
model must be developed to ensure more of our veterans will have 
reasonable access to their burial benefits. Reducing the mile radius to 
65 miles would reduce the veteran population that is served from 90 
percent to 82.4 percent, and reducing the radius to 55 miles would 
reduce the served population to 74.1 percent. Reducing the radius alone 
to 55 miles would only bring two geographical areas in to 170,000 
population threshold in 2010, and only a few areas into this revised 
model by 2030.
    Several geographical areas will remain unserved if the population 
threshold is not reduced. Lowering the population threshold to 100,000 
veterans would immediately make several areas eligible for a National 
Cemetery regardless of any change to the mile radius threshold. A new 
threshold model must be implemented so more of our veterans will have 
access to this earned benefit.
            national cemetery administration (nca) accounts
    The Independent Budget recommends an operations budget of $241.5 
million for the NCA for fiscal year 2010 so it can meet the increasing 
demands of interments, gravesite maintenance, and related essential 
elements of cemetery operations.
    The NCA is responsible for five primary missions: (1) to inter, 
upon request, the remains of eligible veterans and family members and 
to permanently maintain gravesites; (2) to mark graves of eligible 
persons in national, state, or private cemeteries upon appropriate 
application; (3) to administer the state grant program in the 
establishment, expansion, or improvement of state veterans cemeteries; 
(4) to award a Presidential certificate and furnish a United States 
flag to deceased veterans; and (5) to maintain national cemeteries as 
national shrines sacred to the honor and memory of those interred or 
memorialized.
    The national cemetery system continues to be seriously challenged. 
Though there has been progress made over the years, the NCA is still 
struggling to remove decades of blemishes and scars from military 
burial grounds across the country. Visitors to many national cemeteries 
are likely to encounter sunken graves, misaligned and dirty grave 
markers, deteriorating roads, spotty turf and other patches of decay 
that have been accumulating for decades. If the NCA is to continue its 
commitment to ensure national cemeteries remain dignified and 
respectful settings that honor deceased veterans and give evidence of 
the Nation's gratitude for their military service, there must be a 
comprehensive effort to greatly improve the condition, function, and 
appearance of all our national cemeteries.
    Therefore, in accordance with ``An Independent Study on 
Improvements to Veterans Cemeteries,'' which was submitted to Congress 
in 2002, The Independent Budget again recommends Congress establish a 
five-year, $250 million ``National Shrine Initiative'' to restore and 
improve the condition and character of NCA cemeteries as part of the 
FY 2008 operations budget. Volume 2 of the Independent Study provides a 
system wide, comprehensive review of the conditions at 119 national 
cemeteries. It identifies 928 projects across the country for gravesite 
renovation, repair, upgrade, and maintenance. These projects include 
cleaning, realigning, and setting headstones and markers; cleaning, 
caulking, and grouting the stone surfaces of columbaria; and 
maintaining the surrounding walkways. Grass, shrubbery, and trees in 
burial areas and other land must receive regular care as well. 
Additionally, cemetery infrastructure, i.e. buildings, grounds, walks, 
and drives must be repaired as needed. According to the Study, these 
project recommendations were made on the basis of the existing 
condition of each cemetery after taking into account the cemetery's 
age, its burial activity, burial options and maintenance programs.
    The IBVSOs is encouraged that $25 million was set aside for the 
National Shrine Commitment for FY 2007 and 2008. The NCA has done an 
outstanding job thus far in improving the appearance of our national 
cemeteries, but we have a long way to go to get us where we need to be. 
By enacting a five-year program with dedicated funds and an ambitious 
schedule, the national cemetery system can fully serve all veterans and 
their families with the utmost dignity, respect, and compassion.
    In addition to the management of national cemeteries, the NCA is 
responsible for the Memorial Program Service. The Memorial Program 
Service provides lasting memorials for the graves of eligible veterans 
and honors their service through Presidential Memorial Certificates. 
Public Laws 107-103 and 107-330 allow for a headstone or marker for the 
graves of veterans buried in private cemeteries who died on or after 
September 11, 2001. Prior to this change, the NCA could provide this 
service only to those buried in national or state cemeteries or to 
unmarked graves in private cemeteries. Public Law 110-157 gives VA 
authority to provide a medallion to be attached to the headstone or 
marker of veterans who are buried in a private cemetery. This benefit 
is available to veterans in lieu of a government furnished headstone or 
marker.
    The IBVSOs call on the Administration and Congress to provide the 
resources required to meet the critical nature of the NCA mission and 
fulfill the Nation's commitment to all veterans who have served their 
country so honorably and faithfully. Congress should provide NCA with 
$241.5 million for fiscal year 2010 to offset the costs related to 
increased workload, additional staff needs, general inflation and wage 
increases and Congress should include as part of the NCA appropriation 
$50 million for the first stage of a $250 million five-year program to 
restore and improve the condition and character of existing NCA 
cemeteries.
                   the state cemetery grants program
    The State Cemeteries Grant Program faces the challenge of meeting a 
growing interest from states to provide burial services in areas that 
are not currently served. The intent of the SCGP is to develop a true 
complement to, not a replacement for, our Federal system of national 
cemeteries. With the enactment of the Veterans Benefits Improvements 
Act of 1998, the NCA has been able to strengthen its partnership with 
states and increase burial service to veterans, especially those living 
in less densely populated areas not currently served by a national 
cemetery. Currently there are 55 state and tribal government cemetery 
construction grant pre-applications, 34 of which have the required 
state matching funds necessary totaling $120.7 million.
    The Independent Budget recommends that Congress appropriate $52 
million for SCGP for FY 2010. This funding level would allow SCGP to 
establish six new state cemeteries that will provide burial options for 
179,000 veterans who live in a region that currently has no reasonably 
accessible state or national cemetery.
                            burial benefits
    In 1973 NCA established a burial allowance that provided partial 
reimbursements for eligible funeral and burial costs. The current 
payment is $2,000 for burial expenses for service-connected (SC) death, 
$300 for non-service-connected (NSC) deaths, and $300 for plot 
allowance. At its inception, the payout covered 72 percent of the 
funeral cost for a service-connected death, 22 percent for a non-
service-connected death, and 54 percent of the burial plot cost. In 
2007 these benefits eroded to 23 percent, 4 percent, and 14 percent 
respectively. It is time to bring these benefits back to their original 
value.
    Burial allowance was first introduced in 1917 to prevent veterans 
from being buried in potters' fields. In 1923 the allowance was 
modified. The benefit was determined by a means test, and then in 1936 
the allowance was changed again, removing the means test. In its early 
history, the burial allowance was paid to all veterans, regardless of 
the service-connectivity of their death. In 1973 the allowance was 
modified to reflect the relationship of their death as service-
connected or not.
    The plot allowance was introduced in 1973 as an attempt to provide 
a plot benefit for veterans who did not have reasonable access to a 
national cemetery. Although neither the plot allowance nor the burial 
allowances were intended to cover the full cost of a civilian burial in 
a private cemetery, the increase in the benefit's value indicates the 
intent to provide a meaningful benefit by adjusting for inflation.
    The national average cost for a funeral and burial in a private 
cemetery has reached $8,555, and the cost for a burial plot is $2,133. 
At the inception of the benefit the average costs were $1,116 and $278 
respectively. While the cost of a funeral has increased by nearly seven 
times the burial benefit has only increased by 2.5 times. To bring both 
burial allowances and the plot allowance back to its 1973 value, the SC 
benefit payment will be $6,160, the NSC benefit value payment will be 
$1,918, and the plot allowance will increase to $1,150. Readjusting the 
value of these benefits, under the current system, will increase the 
obligations from $70.1 million to $335.1 million per year.
    Based on accessibility and the need to provide quality burial 
benefits, The Independent Budget recommends that VA separate burial 
benefits into two categories: veterans who live inside the VA 
accessibility threshold model and those who live outside the threshold. 
For those veterans who live outside the threshold, the SC burial 
benefit should be increased to $6,160, NSC veteran's burial benefit 
should be increased to $1,918, and plot allowance should increase to 
$1,150 to match the original value of the benefit. For veterans who 
live within reasonable accessibility to a state or national cemetery 
that is able to accommodate burial needs, but the veteran would rather 
be buried in a private cemetery the burial benefit should be adjusted. 
These veterans' burial benefits will be based on the average cost for 
VA to conduct a funeral. The benefit for a SC burial will be $2,793, 
the amount provided for a NSC burial will be $854, and the plot 
allowance will be $1,150. This will provide a burial benefit at equal 
percentages, but based on the average cost for a VA funeral and not on 
the private funeral cost that will be provided for those veterans who 
do not have access to a state or national cemetery.
    The recommendations of past legislation provided an increased 
benefit for all eligible veterans but it currently fails to reach the 
intent of the original benefit. The new model will provide a meaningful 
benefit to those veterans whose access to a state or national cemetery 
is restricted as well as provides an improved benefit for eligible 
veterans who opt for private burial. Congress should increase the plot 
allowance from $300 to $1,150 for all eligible veterans and expand the 
eligibility for the plot allowance for all veterans who would be 
eligible for burial in a national cemetery, not just those who served 
during wartime. Congress should divide the burial benefits into two 
categories: veterans within the accessibility model and veterans 
outside the accessibility model. Congress should increase the service-
connected burial benefit from $2,000 to $6,160 for veterans outside the 
radius threshold and $2,793 for veterans inside the radius threshold. 
Congress should increase the non-service-connected burial benefit from 
$300 to $1,918 for veterans outside the radius threshold and $854 for 
veterans inside the radius threshold. Congress should enact legislation 
to adjust these burial benefits for inflation annually.
    The NCA honors veterans with a final resting place that 
commemorates their service to this Nation. More than 2.8 million 
soldiers who died in every war and conflict are honored by burial in a 
VA national cemetery. Each Memorial Day and Veterans Day we honor the 
last full measure of devotion they gave for this country. Our national 
cemeteries are more than the final resting place of honor for our 
veterans; they are hallowed ground to those who died in our defense, 
and a memorial to those who survived.

    Mr. Chairman, this concludes my testimony. I thank you again for 
the privilege to present our views, and I would be pleased to answer 
any questions you might have.

    Chairman Akaka. Thank you very much, Mr. Kelley.
    Mr. Dennis Cullinan.

 STATEMENT OF DENNIS CULLINAN, NATIONAL LEGISLATIVE DIRECTOR, 
                    VETERANS OF FOREIGN WARS

    Mr. Cullinan. Aloha, Chairman Akaka.
    Chairman Akaka. Aloha.
    Mr. Cullinan. It is a pleasure to be here again today. On 
behalf of the IB group and the men and women of the Veterans of 
Foreign Wars, I want to thank you for including us in today's 
most important discussion.
    I will be limiting my remarks today to the construction 
portion of the IB.
    VA's most recently asset management plan provides an update 
of the state of CARES projects including those only in the 
planning of acquisition process. They show a need for future 
appropriations to complete these projects of $2.193 billion. 
Meanwhile, VA continues to identify and reprioritize potential 
major construction projects.
    In a November 17th, 2008 letter to the Senate Veteran 
Affairs Committee, then Secretary Peake said the Department 
estimates that the total funding requirement for the major 
medical facilities projects over the next 5 years would be in 
excess of $6.5 billion. It is clear that VA needs a significant 
infusion of cash for its construction priorities. VA's own 
words show this.
    In light of these things, the IB recommendation for major 
construction is a total $1.123 billion, and we are requesting 
$827 million for the minor construction portion.
    With respect to nonrecurring maintenance, for years, the IB 
has highlighted the need for increased funding for the 
nonrecurring maintenance account. Projects in this area are 
essential because, if left undone, they could really take a 
toll on a facility, leading to more costly repairs in the 
future and the potential of need for a minor construction 
project. Beyond the fiscal aspects, facilities that fall into 
disrepair can create access difficulties and impair patient and 
staff health and safety. And if things do develop into a larger 
construction project because early repairs were not done, it 
creates an even larger inconvenience and problem for veterans 
and staff.
    With respect to nonrecurring maintenance, the VA must 
dramatically increase the nonrecurring maintenance in line with 
a 2 to 4 percent total that is the industry standard, so as to 
maintain clean, safe and efficient facilities. That means VA 
needs an interim budget of at least $1.7 billion. Portions of 
the NRM account should continue to be funded outside of VERA as 
we have recommended in the past and as Congress has done so 
that funding is allocated to the facilities that actually have 
the greatest need for maintenance and repair.
    Congress should also consider the strengths of allowing VA 
to carry over some of the maintenance funding from one fiscal 
year to another so as to reduce the temptation that some VA 
hospital managers have of inefficiently spending their 
nonrecurring maintenance money at the end of the fiscal year. 
For the past several years, in the last quarter, approximately 
60 percent of NRM funds are expended. That is just not very 
efficient.
    VA must also protect against deterioration of its 
infrastructure and a declining capital asset value. The last 
decade of underfunded construction budgets has meant that VA 
has not adequately recapitalized its facilities. 
Recapitalization is necessary to protect the value of VA's 
capital assets through the renewal of physical infrastructure. 
This ensures safe and fully functional facilities long into the 
future. VA's facilities have an average age of 55 years, and it 
is essential that funding be increased to renovate, repair and 
replace these aging structures.
    VA must also maintain its critical infrastructure. We are 
concerned with VA's recent attempts to back away from the 
original infrastructure blueprint laid by CARES, and we are 
worried that the plan to begin widespread leasing and 
contracting for inpatient services would not meet the needs of 
veterans. To summarize a point here, it comes down to an issue 
of providing proper services and care to veterans, and it has 
been pointed out earlier to maintaining VA's own capacity to 
maintain cost control.
    VA is a very efficient and effective provider of VA health 
care. That is one of the reasons we believe that the system is 
certainly not spending out at the rate of Medicare. It is a 
health care provider, and it provides the bulk of this through 
its own facilities and through its own resources. It is 
essential that they continue in this vein.
    The last thing I will touch on here is VA research 
infrastructure funding shortfalls. In recent years, funding for 
VA medical and prosthetic research has failed to provide the 
resources needed to maintain and upgrade and replace VA's aging 
research facilities. Many VA facilities have exhausted their 
available research space.
    Mr. Chairman, this is certainly something that needs to be 
addressed, and that concludes my statement.
    [The prepared statement of Mr. Cullinan follows:]
     Prepared Statement of Dennis M. Cullinan, Director, National 
   Legislative Service, Veterans of Foreign Wars of the United States
    Mr. Chairman and Members of the Committee: On behalf of the 2.4 
million men and women of the Veterans of Foreign Wars of the U.S. (VFW) 
and our Auxiliaries, I would like to thank you for the opportunity to 
testify today. The VFW works alongside the other members of the 
Independent Budget (IB)--AMVETS, Disabled American Veterans and 
Paralyzed Veterans of America--to produce a set of policy and budget 
recommendations that reflect what we believe would meet the needs of 
America's veterans. The VFW is responsible for the construction portion 
of the IB, so I will limit my remarks to that portion of the budget.
    On May 5, 2008, VA released the final results of its Capital Asset 
Realignment for Enhanced Services (CARES) business plan study for 
Boston, Massachusetts. The decision to keep the four Boston-area 
medical campuses open was the culmination of many years of work and 
tens of millions of dollars as it marked the final step of the CARES 
planning process.
    CARES--VA's data-drive assessment of VA's current and future 
construction needs--gave VA a long-term roadmap and has helped guide 
its capital planning process over the past few fiscal years. CARES 
showed a large number of significant construction priorities that would 
be necessary for VA to fulfill its obligation to this Nation's veterans 
and over the last several fiscal years, the administration and Congress 
have made significant inroads in funding these priorities. Since FY 
2004, $4.9 billion has been allocated for these projects. Of these 
CARES-identified projects, VA has completely five and another 27 are 
currently under construction. It has been a huge, but necessary 
undertaking and VA has made slow, but steady progress on these critical 
projects.
    The challenge for VA in the post-CARES era is that there are still 
numerous projects that need to be carried out, and the current backlog 
of partially funded projects that CARES has identified is large, too. 
This means that VA is going to continue to require significant 
appropriations for the major and minor construction accounts to live up 
to the promise of CARES.
    VA's most recent Asset Management Plan provides an update of the 
state of CARES projects--including those only in the planning of 
acquisition process. Appendix E (pages 93-95) shows a need of future 
appropriations to complete these projects of $2.195 billion.


------------------------------------------------------------------------
                                                       Future Funding
                      Project                           Needed  ($ in
                                                         thousands)
------------------------------------------------------------------------
Pittsburgh........................................               $62,400
Orlando...........................................               462,700
San Juan..........................................                91,620
Denver............................................               580,900
Bay Pines.........................................               156,800
Los Angeles.......................................               103,864
Palo Alto.........................................               412,010
St. Louis.........................................               122,500
Tampa.............................................               202,600
                                                   ---------------------
    TOTAL.........................................            $2,195,394
------------------------------------------------------------------------


    This amount represents just the backlog of current construction 
projects. It also does not reflect the additional $401 million Congress 
gave VA as part of the FY 2009 appropriation, which did not earmark 
specific construction projects.
    Meanwhile, VA continues to identify and reprioritize potential 
major construction projects. These priorities, which are assessed using 
the rigorous methodology that guided the CARES decisions are released 
in the Department's annual Five-Year Capital Asset Plan, which is 
included in the Department's budget submission. The most recent one was 
included in Volume IV and is available on VA's Web site: http://
www.va.gov/budget/summary/2009/index.htm.
    Pages 7-12 of that document shows the priority scoring of projects. 
Last year's budget request sought funding for only three of the top 
scored projects. No funding was requested for any other new project, 
including those in Seattle, Dallas, Louisville or Roseburg, Oregon. In 
addition to the already-identified needs from that table, page 7-86 
shows a long list of potential major construction projects the 
department plans to evaluate from now through FY13. These 122 potential 
projects demonstrate the continued need for VA to upgrade and repair 
its aging infrastructure, and that continuous funding is necessary for 
not just the backlog of projects, but to keep VA viable for today's and 
future veterans.
    In a November 17, 2008 letter to the Senate Veterans' Affairs 
Committee, Secretary Peake said that ``the Department estimates that 
the total funding requirement for major medical facility projects over 
the next 5 years would be in excess of $6.5 billion.''
    It is clear that VA needs a significant infusion of cash for its 
construction priorities. VA's own words and studies show this.


               Major Construction Account Recommendations
------------------------------------------------------------------------
                                                         Recommendation
                       Category                         ($ in thousands)
------------------------------------------------------------------------
VHA Facility Construction............................           $900,000
NCA Construction.....................................             80,000
Advance Planning.....................................             45,000
Master Planning......................................             20,000
Historic Preservation................................             20,000
Miscellaneous Accounts...............................             58,000
                                                      ------------------
  TOTAL..............................................         $1,123,000
------------------------------------------------------------------------


     VHA Facility Construction--this amount would allow VA to 
continue digging into the $2 billion backlog of partially funded 
construction projects. Depending on the stages and ability to complete 
portions of the projects, any additional money could be used to fund 
new projects identified by VA as part of its prioritization methodology 
in the Five-Year Capital Plan.
     NCA Construction--page 7-143 of VA's Five-Year Capital 
Plan details numerous potential major construction projects for the 
National Cemetery Association throughout the country. This level of 
funding would allow VA to begin construction on at least three of its 
scored priority projects.
     Advance Planning--helps develop the scope of the major 
construction projects as well as identifying proper requirements for 
their construction. It allows VA to conduct necessary studies and 
research similar to planning processes in the private sector.
     Master Planning--a description of our request follows 
later in the text.
     Historic Preservation--a description of our request 
follows later in the text.
     Miscellaneous Accounts--these include the individual line 
items for accounts such as asbestos abatement, the judgment fund and 
hazardous waste disposal. Our recommendation is based upon the historic 
level for each of these accounts.


               Minor Construction Account Recommendations
------------------------------------------------------------------------
                                                         Funding  ($ in
                       Category                            thousands)
------------------------------------------------------------------------
Veterans Health Administration.......................           $550,000
Medical Research Infrastructure......................            142,000
National Cemetery Administration.....................            100,000
Veterans Benefits Administration.....................             20,000
Staff Offices........................................             15,000
                                                      ------------------
  TOTAL..............................................           $827,000
------------------------------------------------------------------------


     Veterans Health Administration--Page 7-95 of VA's Capital 
Plan reveals hundreds of already identified minor construction 
projects. These projects update and modernize VA's aging physical plant 
ensuring the health and safety of veterans and VA employees. 
Additionally, a great number of minor construction projects address 
FCA-identified maintenance deficiencies, the backlog of which was 
nearly $5 billion at the start of FY 2008 (page 7-64).
     Medical Research Infrastructure--a description of our 
request follows later in the text.
     National Cemetery Administration--Page 7-145 of the 
Capital Plan identifies numerous minor construction projects throughout 
the country including the construction of several columbaria, 
installation of crypts and landscaping and maintenance improvements. 
Some of these projects could be combined with VA's new NCA nonrecurring 
maintenance efforts.
     Veterans Benefits Administration--Page 7-126 of the 
Capital Plan lists several minor construction projects in addition to 
the leasing requirements VBA needs. This funding also includes $2 
million it transfers yearly for the security requirements of its Manila 
office.
     Staff Offices--Page 7-166 lists numerous potential minor 
construction projects related to staff offices, including increased 
space and numerous renovations for VA's Inspector General's office.
             increase spending on nonrecurring maintenance
      The deterioration of many VA properties requires increased 
                  spending on nonrecurring maintenance
    For years, the Independent Budget Veteran Service Organizations 
(IBVSOs) have highlighted the need for increased funding for the 
nonrecurring maintenance (NRM) account. NRM consists of small projects 
that are essential to the proper maintenance of and preservation of the 
lifespan of VA's facilities. NRM projects are one-time repairs such as 
maintenance to roofs, repair and replacement of windows and flooring or 
minor upgrades to the mechanical or electrical systems. They are a 
necessary component of the care and stewardship of a facility.
    These projects are so essential because if left unrepaired, they 
can really take their toll on a facility, leading to more costly 
repairs in the future, and the potential of a need for a minor 
construction project. Beyond the fiscal aspects, facilities that fall 
into disrepair can create access difficulties and impair patient and 
staff health and safety, and if things do develop into a larger 
construction projection because early repairs were not done, it creates 
an even larger inconvenience for veterans and staff.
    The industry standard for medical facilities is for managers to 
spend from 2%-4% of plant replacement value (PRV) on upkeep and 
maintenance. The 1998 PriceWaterhouseCoopers study of VA's facilities 
management practices argued for this level of funding and previous 
versions of VA's own Asset Management Plan have agreed that this level 
of funding would be adequate.
    The most recent estimate of VA's PRV is from the FY 2008 Asset 
Management Plan. Using the standards of the Federal Government's 
Federal Real Property Council (FRPC), VA's PRV is just over $85 billion 
(page 26).
    Accordingly, to fully maintain its facilities, VA needs a NRM 
budget of at least $1.7 billion. This number would represent a doubling 
of VA's budget request from FY 2009, but is in line with the total NRM 
budget when factoring in the increases Congress gave in the 
appropriations bill and the targeted funding included in the 
supplemental appropriations bills.
    Increased funding is required not to just to fill current 
maintenance needs and levels, but also to dip into the extensive 
backlog of maintenance requirements VA has. VA monitors the condition 
of its structures and systems through the Facility Condition Assessment 
(FCA) reports. VA surveys each medical center periodically, giving each 
building a thorough assessment of all essential systems. Systems are 
assigned a letter grade based upon the age and condition of various 
systems, and VA gives each component a cost for repair or replacement.
    The bulk of these repairs and replacements are conducted through 
the NRM program, although the large increases in minor construction 
over the last few years have helped VA to address some of these 
deficiencies.
    VA's 2009 Five-Year Capital Plan discusses FCAs and acknowledges 
the significant backlog, noting that in FY 2007, the number of high 
priority deficiencies--those with ratings of D or F--had replacement 
and repair costs of over $5 billion. Even with the increased funding of 
the last few years, VA estimates that the cost for repairing or 
replacing the high priority deficiencies is over $4 billion.
    VA uses the FCA reports as part of its Federal Real Property 
Council (FRPC) metrics. The department calculates a Facility Condition 
Index, which is the ratio of the cost of FCA repairs to the cost of 
replacement. According to the FY 2008 Asset Management Plan, this 
metric has gone backwards from 82% in 2006 to just 68% in 2008. VA's 
strategic goal is 87%, and for it to meet that, it would require a 
sizable investment in NRM and minor construction.
    Given the low level of funding the NRM account has historically 
received, the IBVSOs are not surprised at the metrics or the dollar 
cost of the FCA deficiencies. The 2007 ``National Roll Up of 
Environment of Care Report,'' which was conducted in light of the 
shameful maintenance deficiencies at Walter Reed further prove the need 
for increased spending on this account. Maintenance has been neglected 
for far too long, and for VA to provide safe, high-quality health care 
in its aging facilities, it is essential that more money be allocated 
for this account.
    We also have concerns with how NRM funding is actually apportioned. 
Since it falls under the Medical Care account, NRM funding has 
traditionally been apportioned using the Veterans Equitable Resource 
Allocation (VERA) formula. This model works when divvying up health-
care dollars, targeting money to those areas with the greatest demand 
for health care. When dealing with maintenance needs, though, this same 
formula may actually intensify the problem, moving money away from 
older hospitals, such as in the northeast, to newer facilities where 
patient demand is greater, even if the maintenance needs are not as 
high. We were happy to see that the conference reports to the VA 
appropriations bills required NRM funding to be apportioned outside the 
VERA formula, and we would hope that this continues into the future.
    Another issue related to apportionment of funding came to light in 
a May 2007 Government Accountability Office (GAO) report. They found 
that the bulk of NRM funding is not actually apportioned until 
September, the final month of the fiscal year. In September 2006, GAO 
found that VA allocated 60% of that year's NRM funding. This is a 
shortsighted policy that impairs VA's ability to properly address its 
maintenance needs, and since NRM funding is year-to-year, it means that 
it could lead to wasteful or unnecessary spending as hospital managers 
rushed in a flurry to spend their apportionment before forfeiting it 
back. We cannot expect VA to perform a year's worth of maintenance in a 
month. It is clearly poor policy and not in the best interest of 
veterans. The IBVSOs believe that Congress should consider allowing 
some NRM money to be carried over from one fiscal year to another. 
While we would hope that this would not resort to hospital managers 
hoarding money, it could result in more efficient spending and better 
planning, rather than the current situation where hospital managers 
sometimes have to spend through a large portion of maintenance funding 
before losing it at the end of the fiscal year.
Recommendations:
    VA must dramatically increase funding for nonrecurring maintenance 
in line with the 2%-4% total that is the industry standard so as to 
maintain clean, safe and efficient facilities. VA also requires 
additional maintenance funding to allow the department to begin 
addressing the substantial maintenance backlog of FCA-identified 
projects.
    Portions of the NRM account should be continued to be funded 
outside of the VERA formula so that funding is allocated to the 
facilities that actually have the greatest maintenance needs.
    Congress should consider the strengths of allowing VA to carry over 
some maintenance funding from one fiscal year to another so as to 
reduce the temptation some VA hospital managers have of inefficiently 
spending their NRM money at the end of a fiscal year for fear of losing 
it.
          inadequate funding and declining capital asset value
    VA must protect against deterioration of its infrastructure and 

                    a declining capital asset value
    The last decade of underfunded construction budgets has meant that 
VA has not adequately recapitalized its facilities. Recapitalization is 
necessary to protect the value of VA's capital assets through the 
renewal of the physical infrastructure. This ensures safe and fully 
functional facilities long into the future. VA's facilities have an 
average age of over 55 years, and it is essential that funding be 
increased to renovate, repair and replace these aging structures and 
physical systems.
    As in past years, the IBVSOs cite the Final Report of the 
President's Task Force to Improve Health Care Delivery for Our Nation's 
Veterans (PTF). It found that from 1996-2001, VA's recapitalization 
rate was just 0.64%. At this rate, VA's structures would have an 
assumed life of 155 years.
    The PTF cited a PriceWaterhouseCoopers study of VA's facilities 
management programs that found that to keep up with industry standards 
in the private sector and to maintain patient and employee safety and 
optimal health care delivery, VA should spend a minimum of 5 to 8 
percent of plant replacement value (PRV) on its total capital budget.
    The FY08 VA Asset Management Plan provides the most recent estimate 
of VA's PRV. Using the guidance of the Federal Government's Federal 
Real Property Council (FRPC), VA's PRV is just over $85 billion (page 
26).
    Accordingly, using that 5 to 8 percent standard, VA's capital 
budget should be between $4.25 and $6.8 billion per year in order to 
maintain its infrastructure.
    VA's capital budget request for FY 2009--which includes major and 
minor construction, maintenance, leases and equipment--was just $3.6 
billion. We greatly appreciate that Congress increased funding above 
that level with an increase over the administration request of $750 
million in major and minor construction alone. That increased amount 
brought the total capital budget in line with industry standards, and 
we strongly urge that these targets continue to be met and we would 
hope that future VA requests use these guidelines as a starting point 
without requiring Congress to push them past the target.
Recommendation:

    Congress and the Administration must ensure that there are adequate 
funds for VA's capital budget so that VA can properly invest in its 
physical assets to protect their value and to ensure that the 
Department can continue to provide health care in safe and functional 
facilities long into the future.
                 maintain va's critical infrastructure
    The IBVSOs are concerned with VA's recent attempts to back away 
from the capital infrastructure blueprint laid out by CARES and we are 
worried that its plan to begin widespread leasing and contracting for 
inpatient services might not meet the needs of veterans.
    VA acknowledges three main challenges with its capital 
infrastructure projects. First, they are costly. According to a March 
2008 briefing given to the VSO community, over the next five years, VA 
would need $2 billion per year for its capital budget. Second, there is 
a large backlog of partially funded construction projects. That same 
briefing claimed that the difference in major construction requests 
given to OMB was $8.6 billion from FY 2003 through FY 2009, and that 
they have received slightly less than half that total. Additionally, 
there is a $2 billion funding backlog for projects that are partially 
but not completely funded. Third, VA is concerned about the timeliness 
of construction projects, noting that it can take the better part of a 
decade from the time VA initially proposes a project until the doors 
actually open for veterans.
    Given these challenges, VA has floated the idea of a new model for 
health care delivery, the Health Care Center Facility (HCCF) leasing 
program. Under the HCCF, VA would begin leasing large outpatient 
clinics in lieu of major construction. These large clinics would 
provide a broad range of outpatient services including primary and 
specialty care as well as outpatient mental health services and 
ambulatory surgery.
    On the face of it, this sounds like a good initiative. Leasing has 
the advantage of being able to be completed quickly, as well as being 
adaptable, especially when compared to the major construction process. 
Leasing has been particularly valuable for VA as evidenced by the 
success of the Community Based Outpatient Clinics (CBOCs) and Vet 
Centers.
    Our concern rests, however, with VA's plan for inpatient services. 
VA aims to contract for these essential services with affiliates or 
community hospitals. This program would privatize many services that 
the IBVSOs believe VA should continue to provide. We lay out our 
objections to privatization and widespread contracting for care 
elsewhere in the Independent Budget.
    Beyond those objections, though, is the example of Grand Island, 
Nebraska. In 1997, the Grand Island VA Medical Center closed its 
inpatient facilities, contracting out with a local hospital for those 
services. Recently, the contract between the local facility and VA was 
canceled, meaning veterans in that area can no longer receive inpatient 
services locally. They must travel great distances to other VA 
facilities such as the Omaha VA Medical Center. In some cases, when 
Omaha is unable to provide specialized care, VA is flying patients at 
its expense to faraway VA medical centers, including those in St. Louis 
and Minneapolis.
    Further, with the canceling of that contract, St. Francis no longer 
provides the same level of emergency services that a full VA Medical 
Center would provide. With VA's restrictions on paying for emergency 
services in non-VA facilities, especially for those who may have some 
form of private insurance, this amounts to a cut in essential services 
to veterans. Given the expenses of air travel and medevac services, the 
current arrangement in Grand Island has likely not resulted in any cost 
savings for VA. Ferrying sick and disabled veterans great distances for 
inpatient care also raises patient safety and quality concerns.
    The HCCF program raises many concerns for the IBVSOs that VA must 
address before we can support the program. Among these questions, we 
wonder how VA would handle governance, especially with respect to the 
large numbers of non-VA employees who would be treating veterans? How 
would the non-VA facility deal with VA directives and rule changes that 
govern health-care delivery and that ensure safety and uniformity of 
the quality of care? Will VA apply its space planning criteria and 
design guides to non-VA facilities? How will VA's critical research 
activities, most of which improve the lives of all Americans and not 
only veterans, be affected if they are being conducted in shared 
facilities, and not a traditional part of VA's first-class research 
programs? What would this change mean for VA's electronic health 
record, which many have rightly lauded as the standard that other 
health-care systems should aim to achieve? Without the electronic 
health record, how would VA maintain continuity of care for a veteran 
who moves to another area?
    But most importantly, CARES required years to complete and consumed 
thousands of hours of effort and millions of dollars of study. We 
believe it to be a comprehensive and fully justified roadmap for VA's 
infrastructure as well as a model that VA can apply periodically to 
assess and adjust those priorities. Given the strengths of the CARES 
process and the lessons VA learned and has applied from it, why is the 
HCCF model, which to our knowledge has not been based on any sort of 
model or study of the long-term needs of veterans, the superior one? We 
have 
yet to see evidence that it is and until we see more convincing 
evidence that it will truly serve the best needs of veterans, the 
IBVSOs will have a difficult time supporting it.
Recommendation:
    VA must resist implementing the HCCF model without fully addressing 
the many questions the IBVSOs have and VA must explain how the program 
would meet the needs of veterans, particularly as compared to the 
roadmap CARES has laid out.
                    research infrastructure funding
    The Department of Veterans Affairs must have increased funding 
     for its research infrastructure to provide a state-of-the-art 
    research and laboratory environment for its excellent programs, 
    but also to ensure that VA hires and retains the top scientists 
                            and researchers.
VA Research Is a National Asset
    Research conducted in the Department of Veterans Affairs has led to 
such innovations and advances as the cardiac pacemaker, nuclear 
scanning technologies, radioisotope diagnostic techniques, liver and 
other organ transplantation, the nicotine patch, and vast improvements 
in a variety of prosthetic and sensory aids. A state-of-the-art 
physical environment for conducting VA research promotes excellence in 
health professions education and VA patient care as well as the 
advancement of biomedical science. Adequate and up-to-date research 
facilities also help VA recruit and retain the best and brightest 
clinician scientists to care for enrolled veterans.
VA Research Infrastructure Funding Shortfalls
    In recent years, funding for the VA Medical and Prosthetics 
Research Program has failed to provide the resources needed to 
maintain, upgrade, and replace VA's aging research facilities. Many VA 
facilities have exhausted their available research space. Along with 
space reconfiguration, ventilation, electrical supply, and plumbing 
appear frequently on lists of needed upgrades in VA's academic health 
centers. In the 2003 Draft National Capital Asset Realignment for 
Enhanced Services (CARES) plan, VA included $142 million designated for 
renovation of existing research space and build-out costs for leased 
researched facilities. However, these capital improvement costs were 
omitted from the Secretary's final report. Over the past decade, only 
$50 million has been spent on VA research construction or renovation 
nationwide, and only 24 of the 97 major VA research sites across the 
Nation have 
benefited.
    In House Report 109-95 accompanying the FY 2006 VA appropriations, 
the House Appropriations Committee directed VA to conduct ``a 
comprehensive review of its research facilities and report to the 
Congress on the deficiencies found and suggestions for correction of 
the identified deficiencies.'' In FY 2008, the VA Office of Research 
and Development initiated a multiyear examination of all VA research 
infrastructure for physical condition and capacity for current 
research, as well as program growth and sustainability of the space 
needed to conduct research.
Lack of a Mechanism to Ensure VA's Research Facilities Remain 
        Competitive
    In House Report 109-95 accompanying the FY 2006 VA appropriations, 
the House Appropriations Committee expressed concern that ``equipment 
and facilities to support the research program may be lacking and that 
some mechanism is necessary to ensure the Department's research 
facilities remain competitive.'' A significant cause of research 
infrastructure's neglect is that there is no direct funding line for 
research facilities.
    The VA Medical and Prosthetic Research appropriation does not 
include funding for construction, renovation, or maintenance of 
research facilities. VA researchers must rely on their local facility 
managements to repair, upgrade, and replace research facilities and 
capital equipment associated with VA's research laboratories. As a 
result, VA research competes with other medical facilities' direct 
patient care needs--such as medical services infrastructure, capital 
equipment upgrades and replacements, and other maintenance needs--for 
funds provided under either the VA Medical Facilities appropriation 
account or the VA Major or Minor Medical Construction appropriations 
accounts.
Recommendations:
    The Independent Budget veterans service organizations anticipate 
VA's analysis will find a need for funding significantly greater than 
VA had identified in the 2004 Capital Asset Realignment for Enhanced 
Services report. As VA moves forward with its research facilities 
assessment, the IBVSOs urge Congress to require the VA to submit the 
resulting report to the House and Senate Committees on Veterans' 
Affairs no later than October 1, 2009. This report will ensure that the 
Administration and Congress are well informed of VA's funding needs for 
research infrastructure so they may be fully considered at each stage 
of the FY 2011 budget process.
    To address the current shortfalls, the IBVSOs recommend an 
appropriation in FY 2010 of $142 million, dedicated to renovating 
existing VA research facilities in line with the 2004 CARES findings.
    To address the VA research infrastructure's defective funding 
mechanism, the IBVSOs encourage the Administration and Congress to 
support a new appropriations account in FY 2010 and thereafter to 
independently define and separate VA research infrastructure funding 
needs from those related to direct VA medical care. This division of 
appropriations accounts will empower VA to address research facility 
needs without interfering with the renovation and construction of VA 
direct health-care infrastructure.
                 program for architectural master plans
    Each VA medical facility must develop a detailed master plan.
    The delivery models for quality healthcare are in a constant state 
of change. This is due to many factors including advances in research, 
changing patient demographics, and new technology.
    The VA must design their facilities with a high level of 
flexibility in order to accommodate these new methods of patient care. 
The department must be able to plan for change to accommodate new 
patient care strategies in a logical manner with as little effect as 
possible on other existing patient care programs. VA must also provide 
for growth in already existing programs.
    A facility master plan is a comprehensive tool to look at potential 
new patient care programs and how they might affect the existing 
healthcare facility. It also provides insight with respect to possible 
growth, current space deficiencies, and other facility needs for 
existing programs and how VA might accommodate these in the future.
    In some cases in the past, VA has planned construction in a 
reactive manner. After funding, VA would place projects in the facility 
in the most expedient manner--often not considering other projects and 
facility needs. This would result in shortsighted construction that 
restricts, rather than expands options for the future.
    The IBVSOs believe that each VA medical Center should develop a 
comprehensive facility master plan to serve as a blueprint for 
development, construction, and future growth of the facility. Short and 
long-term CARES objectives should be the basis of the master plan.
    Four critical programs were not included in the CARES initiative. 
They are long-term care, severe mental illness, domiciliary care, and 
Polytrauma. VA must develop a comprehensive plan addressing these needs 
and its facility master plans must account for these services.
    VA has undertaken master planning for several VA facilities; most 
recently Tampa, Florida. This is a good start, but VA must ensure that 
all facilities develop a master plan strategy to validate strategic 
planning decisions, prepare accurate budgets, and implement efficient 
construction that minimizes wasted expenses and disruption to patient 
care.
Recommendation:
    Congress must appropriate $20 million to provide funding for each 
medical facility to develop a master plan.
    Each facility master plan should include the areas left out of 
CARES; long-term care, severe mental illness, domiciliary care, and 
Polytrauma programs as it relates to the particular facility.
    VACO must develop a standard format for these master plans to 
ensure consistency throughout the VA healthcare system.
                      empty or underutilized space
    VA must not use empty space inappropriately and must continue 
disposing of unnecessary property where appropriate Studies have 
suggested that the VA medical system has extensive amounts of empty 
space that the Department can reuse for medical services. Others have 
suggested that unused space at one medical center may help address a 
deficiency that exists at another location. Although the space 
inventories are accurate, the assumption regarding the feasibility of 
using this space is not.
    Medical facility planning is complex. It requires intricate design 
relationships for function, but also because of the demanding 
requirements of certain types of medical equipment. Because of this, 
medical facility space is rarely interchangeable, and if it is, it is 
usually at a prohibitive cost. For example, VA cannot use unoccupied 
rooms on the eighth floor to offset a deficiency of space in the second 
floor surgery ward. Medical space has a very critical need for inter- 
and intra-departmental adjacencies that must be maintained for 
efficient and hygienic patient care.
    When a department expands or moves, these demands create a domino 
effect of everything around it. These secondary impacts greatly 
increase construction expense, and they can disrupt patient care.
    Some features of a medical facility are permanent. Floor-to-floor 
heights, column spacing, light, and structural floor loading cannot be 
altered. Different aspects of medical care have different requirements 
based upon these permanent characteristics. Laboratory or clinical 
spacing cannot be interchanged with ward space because of the needs of 
different column spacing and perimeter configuration. Patient wards 
require access to natural light and column grids that are compatible 
with room-style layouts. Labs should have long structural bays and 
function best without windows. When renovating empty space, if the area 
is not suited to its planned purpose, it will create unnecessary 
expenses and be much less efficient.
    Renovating old space rather than constructing new space creates 
only a marginal cost savings. Renovations of a specific space typically 
cost 85% of what a similar, new space would. When you factor in the 
aforementioned domino or secondary costs, the renovation can end up 
costing more and produce a less satisfactory result. Renovations are 
sometimes appropriate to achieve those critical functional adjacencies, 
but it is rarely economical.
    Many older VA medical centers that were rapidly built in the 1940s 
and 1950s to treat a growing veteran population are simply unable to be 
renovated for modern needs. Most of these Bradley-style buildings were 
designed before the widespread use of air conditioning and the floor-
to-floor heights are very low. Accordingly, it is impossible to 
retrofit them for modern mechanical systems. They also have long, 
narrow wings radiating from a small central core, which is an 
inefficient way of laying out rooms for modern use. This central core, 
too, has only a few small elevator shafts, complicating the vertical 
distribution of modern services.
    Another important problem with this unused space is its location. 
Much of it is not located in a prime location; otherwise, VA would have 
previously renovated or demolished this space for new construction. 
This space is typically located in outlying buildings or on upper floor 
levels, and is unsuitable for modern use.
                va space planning criteria/design guides
    VA must continue to maintain and update the Space Planning Criteria 
and Design Guides to reflect state-of-the-art methods of healthcare 
delivery.
    VA has developed space-planning criteria it uses to allocate space 
for all VA healthcare projects. These criteria are organized into 60 
chapters; one for each healthcare service provided by VA as well as 
their associated support services. VA updates these criteria to reflect 
current methods of healthcare delivery.
    In addition to updating these criteria, VA has utilized a computer 
program called VA SEPS (Space and Equipment Planning System) it uses as 
a tool to develop space and equipment allocation for all VA healthcare 
projects. This tool is operational and VA currently uses it on all VA 
healthcare projects.
    The third component used in the design of VA healthcare projects is 
the design guides. Each of the sixty space planning criteria chapters 
has an associated design guide. These design guides go beyond the 
allocation of physical space and outline how this space is organized 
within each individual department, as well as how the department 
relates to the entire medical facility.
    VA has updated several of the design guides to reflect current 
patient delivery models. These include those guides that cover Spinal 
Cord Injury/Disorders Center, Imaging, Polytrauma Centers, as well as 
several other services.
Recommendation:
    The VA must continue to maintain and update the Space Planning 
Criteria and the VA SEPS space-planning tool. It also must continue the 
process of updating the Design Guides to reflect current delivery 
models for patient care. VA must regularly review and update all of 
these space-planning tools as needed, to reflect the highest level of 
patient care delivery.
               design-build construction delivery system
    The VA must evaluate use of the design-build construction delivery 
system.
    For the past ten years, VA has embraced the design-build 
construction delivery system as a method of project delivery for many 
healthcare projects. Design-build attempts to combine the design and 
construction schedules in order to streamline the traditional design-
bid-build method of project delivery. The goal is to minimize the risk 
to the owner and reduce the project delivery schedule. Design-build, as 
used by VA, places the contractor as the design builder.
    Under the contractor-led design build process, VA gives the 
contractor a great deal of control over how he or she designs and 
completes the project. In this method, the contractor hires the 
architect and design professionals. With the architect as a 
subordinate, a contractor may sacrifice the quality of material and 
systems in order to add to his own profits at the expense of the owner.
    Use of design-build has several inherent problems. A short-cut 
design process reduces the time available to provide a complete design. 
This provides those responsible for project oversight inadequate time 
to review completed plans and specifications. In addition, the 
construction documents may not provide adequate scope for the project, 
leaving out important details regarding the workmanship and/or other 
desired attributes of the project. This makes it difficult to hold the 
builder accountable for the desired level of quality. As a result, a 
project is often designed as it is being built, which often compromises 
VA's design standards.
    Design-build forces the owner to rely on the contractor to properly 
design a facility that meets the owner's needs. In the event that the 
finished project is not satisfactory to the owner, the owner may have 
no means to insist on correction of work done improperly unless the 
contractor agrees with the owner's assessment. This may force the owner 
to go to some form of formal dispute resolution such as litigation or 
arbitration.
Recommendation:

    VA must evaluate the use of Design-build as a method of 
construction delivery to determine if design-build is an appropriate 
method of project delivery for VA healthcare projects.
    The VA must institute a program of ``lessons learned.'' This would 
involve revisiting past projects and determining what worked, what 
could be improved, and what did not work. VA should compile and use 
this information as a guide to future projects. VA must regularly 
update this document to include projects as they are completed.
                preservation of va's historic structures
    The VA must further develop a comprehensive program to preserve and 
protect its inventory of historic properties.
    The VA has an extensive inventory of historic structures that 
highlight America's long tradition of providing care to veterans. These 
buildings and facilities enhance our understanding of the lives of 
those who have worn the uniform, and who helped to develop this great 
Nation. Of the approximately 2,000 historic structures, many are 
neglected and deteriorate year after year because of a lack of funding. 
These structures should be stabilized, protected and preserved because 
they are an integral part our Nation's history.
    Most of these historic facilities are not suitable for modern 
patient care. As a result, a preservation strategy was not included in 
the CARES process. For the past six years, the IBVSOs have recommended 
that VA conduct an inventory of these properties; classifying their 
physical condition and their potential for adaptive reuse. VA has been 
moving in that direction and historic properties are identified on 
their Web site. VA has placed many of these buildings in an ``Oldest 
and Most Historic'' list and these buildings require immediate 
attention.
    At least one project has received funding. The VA has invested over 
$100,000 in the last year to address structural issues at a unique 
round structure in Hampton, VA. Built in 1860, it was originally a 
latrine and the funding is allowing VA to convert it into office space.
    The cost for saving some of these buildings is not very high 
considering that they represent a part of history that enriches the 
texture of our landscape that once gone cannot be recaptured. For 
example, VA can restore the Greek Revival Mansion in Perry Point, MD, 
which was built in the 1750's, to use as a training space for about 
$1.2 million. VA could restore the 1881 Milwaukee Ward Memorial Theater 
for use as a multi-purpose facility at a cost of $6 million. This is 
much less than the cost of a new facility.
    As part of its adaptive reuse program, VA must ensure that the 
facilities that it leases or sells are maintained properly. VA's legal 
responsibilities could, for example, be addressed through easements on 
property elements, such as building exteriors or grounds.
    We encourage the use of Public Law 108-422, the Veterans Health 
Programs Improvement Act, which authorized historic preservation as one 
of the uses of a new capital assets fund that receives funding from the 
sale or lease of VA property.
Recommendation:
    VA must further develop a comprehensive program to preserve and 
protect its inventory of historic properties.

    Mr. Chairman, this concludes my statement. I would be happy to 
answer any questions that you or the Members of the Committee may have.

    Chairman Akaka. Thank you very much, Mr. Cullinan.
    Now we will have the statement from Steve Robertson.

 STATEMENT OF STEVE ROBERTSON, DIRECTOR, NATIONAL LEGISLATIVE 
                COMMISSION, THE AMERICAN LEGION

    Mr. Robertson. Aloha, Mr. Chairman.
    Chairman Akaka. Aloha.
    Mr. Robertson. Thank you again for the opportunity for the 
American Legion to present our views on President Obama's top-
line budget request for fiscal year 2010. I guess the best 
explanation of our support is the letter we sent to the White 
House, applauding them for the top-line number that they 
provided us, and we look forward to getting the multivolume 
breakdown as to the specifics of that budget request.
    I also would be remiss if we did not thank you and your 
colleagues for getting the fiscal year 2009 budget done on time 
at the start of the fiscal year. I am sure that in this 
transition between administration, Secretary Shinseki's job was 
a little bit easier when he looked around the cabinet table and 
saw how many of his colleagues are still waiting on their 
budget. We have all been there, and we understand what they are 
going through.
    On the same note, I want to thank you for your introduction 
of the advance appropriations legislation. We have been 
disseminating that information around to our grassroots folks, 
trying to muster up additional co-sponsors for that legislation 
both here and in the House, and it is being very well received.
    I would also like to thank you and your colleagues for the 
contributions to the veterans with the veterans provisions in 
the stimulus package. A lot of those are right on time. We are 
hoping that they are fully implemented. I think that they will 
make a difference.
    In looking at the specific outlines of initiatives that the 
President has prioritized in his budget, we were very pleased 
to see some of the issues that were addressed--the increase, 
obviously, in the overall funding for the next 5 years.
    Allowing more Priority Group 8 veterans in to the system, I 
think, is even going to be more critical in an economic 
downturn when many people may be losing their health care 
coverage in the private sector, and the VA may be their health 
care choice of last resort. For those folks, they will really 
be grateful to be able to come into the system.
    You know, one of the things we have always been concerned 
about with the Priority Group 7s and 8s is that those veterans 
earned their access into the system because of their military 
service, not because of their income. Nobody asked them their 
income when they came in. Nobody asked them their income when 
they left. So it should not be a defining factor as to whether 
they get into the system or not. Especially when you talk to 
World War II veterans that fought in North Africa or landed in 
Normandy or fought at the Battle of the Bulge, they do not 
understand why with their fixed income now in their retirement 
years, that they cannot access the system.
    I also want to remind you that back in September we 
provided testimony addressing specifically the 2010 budget, and 
we still stand by those recommendations. Hopefully, we think 
that may have influenced some of the Administration's decisions 
as well.
    Mr. Chairman, I want to apologize for our concluding 
statement. It seemed that somebody was really thinking of 
advance funding, and they have some mistakes in the years that 
we have identified for funding.
    But the one thing we were going to ask is that the budget 
resolution, when it is being compiled, that they give us the 
advance appropriations in that budget resolution for 2011 as 
well, just to set the tone. It does not require legislation for 
them to be able to do that, but it would be a nice gesture. 
Since we have the out years already figured out in the 
President's budget request, they can do it there as well.
    Mr. Chairman, again, I thank you for the opportunity for us 
to be able to testify. We look forward to working with you and 
your staff and your colleagues in making sure that the VA is 
adequately funded.
    I do want to make one closing comment on the concept of the 
third-party billing for service-connected disabilities. When I 
first heard it, I was appalled. I could not believe that 
anybody would ever think that Great-West or Prudential or Aetna 
or any of the insurance companies had an obligation to take 
care of the men and women who have service-connected 
disabilities. None of those insurance companies sent us into 
combat. None of those insurance companies put us in harm's way 
and should not be held responsible for the health care.
    Finally, I do not think that they thought through the 
process of the adverse impact this would have on the service-
connected disabled veteran and their family. Some insurance 
companies have caps that could be quickly met if they were 
having to reimburse for service-connected disabilities, which 
would leave their family members kind of on the outs if not 
being able to access care.
    It would also affect premiums to where it may not be 
affordable, especially for veterans that are self-employed or 
ones that are on fixed incomes and just cannot see the ability 
to make that kind of payment to secure insurance.
    This would be a terrible, terrible mistake, and I think it 
needs to be seriously looked at.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Robertson follows:]
 Prepared Statement of Steve Robertson, Director, National Legislative 
                    Commission, The American Legion
    Mr. Chairman and Members of the Committee: The American Legion 
welcomes this opportunity to comment on President Obama's ``top line'' 
budget request for Fiscal Year 2010. The American Legion is pleased by 
the $113 billion total appropriations for the Department of Veterans 
Affairs (VA) in FY 2010 and the projected $57 billion in mandatory 
appropriations and $56 billion in discretionary appropriations.
    As a nation at war, America has a moral, ethical and legal 
commitment to the men and women of the Armed Forces of the United 
States and their survivors. These current defenders of democracy will 
eventually join the ranks of their 23.5 million comrades, we refer to 
as veterans. The active-duty, Reserve components and veterans continue 
to make up the Nation's best recruiters for the Armed Forces. Young men 
and women across the country see servicemembers and veterans as role 
models. Chances are before enlisting in the Armed Forces, these young 
people will seek the advice of those they see in uniform or family 
members who served in the Armed Forces for their recommendations on 
military service.
    Therefore, it is absolutely critical that the entire veterans' 
community (active-duty, Reserve component, and veterans) continue to 
remain supportive of honorable military service. No servicemember 
should ever be in doubt about:

     the quality of health care he or she will receive if 
injured;
     the availability of earned benefits for honorable military 
service upon discharge; or
     the quality of survivors' benefits should he or she pay 
the ultimate sacrifice.

    The American Legion and many other veterans' and military service 
organizations are united in advocating enactment of timely, predictable 
and sufficient budgets for VA medical care. In FY 2009, Congress passed 
and the President signed this budget at the start of the fiscal year. 
Clearly, Secretary Shinseki is much more fortunate than many of his 
colleagues in the Cabinet because he has a timely, predictable and 
sufficient budget with which to administer. The American Legion urges 
Congress to once again pass the VA budget for FY 2010 prior to the 
start of the fiscal year--it does make a difference!
    Mr. Chairman, The American Legion sincerely appreciated your 
introduction of S. 423, Veterans Health Care Budget Reform and 
Transparency Act of 2009. This legislation should help achieve the 
timeliness and predictability goals, while giving us the remainder of 
the budget cycle to assure the sufficiency goal. Working together, the 
veterans' community is actively seeking additional cosponsors to this 
legislation.
    Mr. Chairman and Members of the Committee, The American Legion 
greatly appreciates the provisions contained in the American Recovery 
and Reinvestment Act:

     A Tax Credit for Hiring Unemployed Veterans: Provides a 
tax credit to businesses for hiring unemployed veterans. Specifically, 
veterans would qualify if they were discharged or released from active 
duty from the Armed Forces during the previous five years and received 
unemployment benefits for more than 4 weeks before being hired.
     Disabled Veterans Payment of $250: Provides a payment of 
$250 to all disabled veterans receiving benefits from the Department of 
Veterans Affairs. VA Medical Facilities: Provides $1 billion for non-
recurring maintenance, including energy efficiency projects, to address 
deficiencies and avoid serious maintenance problems at the 153 VA 
hospitals across the country.
     Increase the Number of VA Claims Processors: Provides $150 
million for an increase in VA claims processing staff, in order to 
address the large backlog in processing veterans' claims. This backlog 
has been a key complaint of veterans across the country.
     Improve Automation of VA Benefit Processing: Provides $50 
million to improve the automation of the processing of veterans' 
benefits, to get benefits out sooner and more accurately.
     Construction of Extended Care Facilities for Veterans: 
Provides $150 million for state grants for the construction of 
additional extended care facilities for veterans.

    After reviewing the Office of Management and Budget's Web site with 
regards to the President's ``top line'' Budget Request for the 
Department of Veterans Affairs, The American Legion renders its support 
as follows:

     Increases funding for the Department of Veterans Affairs 
by $25 billion above baseline over the next five years.--Supported by 
The American Legion*
     Dramatically increases funding for veterans health care.--
Supported by The American Legion*
     Expands eligibility for veterans health care to over 
500,000 veterans by 2013.--Supported by The American Legion*
     Enhances outreach and services related to mental health 
care and cognitive injuries, including Post Traumatic Stress Disorder 
and Traumatic Brain Injury, with a focus on access for veterans in 
rural areas.--Supported by The American Legion*
     Invests in better technology to deliver services and 
benefits to veterans with the quality and efficiency they deserve.--
Supported by The American Legion*
     Provides greater benefits to veterans who are medically 
retired from service.--Supported by The American Legion*
     Combats homelessness by safeguarding vulnerable 
veterans.--Supported by The American Legion*
     Facilitates timely implementation of the comprehensive 
education benefits that veterans earn through their dedicated military 
service.--Supported by The American Legion*

    * All support is contingent upon the release of the budget request 
in April.

    On September 11, 2008, The American Legion National Commander David 
Rehbein testified before a joint session of the congressional 
Committees on Veterans' Affairs. In that testimony, he clearly outlined 
the funding recommendations for FY 2010. I am here today to re-
emphasize that support for certain specific areas.
                     medical care collections fund
    The Balanced Budget Act of 1997, Public Law (P.L.) 105-33, 
established the VA Medical Care Collections Fund (MCCF), requiring 
amounts collected or recovered from third-party payers after June 30, 
1997, be deposited into this fund. The MCCF is a depository for 
collections from third-party insurance, outpatient prescription co-
payments and other medical charges and user fees. Funds collected may 
only be used to provide VA medical care and services, as well as VA 
expenses for identification, billing, auditing and collection of 
amounts owed the Federal Government.
    The American Legion supported legislation to allow VA to bill, 
collect, and reinvest third-party reimbursements and co-payments; 
however, The American Legion adamantly opposes the scoring of MCCF as 
an offset to the annual discretionary appropriations since the majority 
of these funds come from the treatment of non-service-connected medical 
conditions. Previously, these collection goals have far exceeded VA's 
ability to collect accounts receivable.
    Since FY 2004, VHA's total collections increased from $1.7 billion 
to $2.2 billion; a 29.4 percent increase. The third-party component of 
VA's collections also increased from $960,000 to $1.26 million; a 31.3 
percent increase.
    VA's ability to capture these funds is critical to its ability to 
provide quality and timely care to veterans. Miscalculations of VA 
required funding levels result in real budgetary shortfalls. Seeking an 
annual emergency supplemental is not the most cost-effective means of 
funding the Nation's model health care delivery system. Government 
Accountability Office (GAO) reports continue to raise the issue of 
VHA's ability to capture insurance data in a timely and correct manner. 
In addition, they continue to express concerns of VHA's ability to 
maximize its third-party collections.
    According to a 2008 GAO report, VA lacks policies and procedures 
and a full range of standardized reports for effective management 
oversight of VA-wide third-party billing and collection operations. 
Further, although VA management has undertaken several initiatives to 
enhance third-party revenue, many of these initiatives are open-ended 
or will not be implemented for several years. Until these shortcomings 
are addressed, VA will continue to fall short of its goal to maximize 
third-party revenue, thereby placing a higher financial burden on 
taxpayers. In addition, GAO recommended an improvement of third-party 
billings; follow-up on unpaid amounts, and management oversight of 
billing and collections.
    The American Legion opposes offsetting annual VA discretionary 
funding by the MCCF goal.
              third-party reimbursements for treatment of 
                  service-connected medical conditions
    Recently, there has been some talk about VA seeking third-party 
reimbursements from private health care insurers for the treatment of 
service-connected medical conditions. The American Legion believes that 
this would be inconsistent with the mandate ``. . . to care for him who 
shall have borne the battle . . .'' The United States government sent 
these men and women into harm's way, not private insurance companies.
    Should private insurance companies be required to reimburse VA for 
the treatment of service-connected medical conditions, The American 
Legion has grave concerns over the adverse impact such a policy change 
would have on service-connected disabled veterans and their families. 
Depending on the severity of the medical conditions, those medical 
insurance policies with a calendar year benefit maximum or a life-time 
benefit maximum could result in the rest of the family not receiving 
any health care benefits. Many health insurance companies require 
deductibles to be paid before any benefits are covered.
    In addition, there is concern as to what premiums would be to cover 
service-connected disabled veterans and their families with private 
health insurance, especially those who are small business owners or 
self-employed. The American Legion is also concerned with employers who 
would be reluctant to hire service-connected disabled veterans because 
of the impact their employment might have on company health care 
benefits.
    The American Legion adamantly opposes any legislative initiative 
that would require third-party reimbursements from private health 
insurance providers for the treatment of service-connected disabled 
veterans by VA.
                        medicare reimbursements
    As do most American workers, veterans pay into the Medicare system, 
without choice, throughout their working lives, including while on 
active duty or as active service Reservists in the Armed Forces. A 
portion of each earned dollar is allocated to the Medicare Trust Fund 
and, although veterans must pay into the Medicare system, VA is 
prohibited from collecting any Medicare reimbursements for the 
treatment of allowable, non-service-connected medical conditions. Since 
over half of VA's enrolled patient population is Medicare-eligible, 
this prohibition constitutes a multi-billion dollar annual subsidy to 
the Medicare Trust Fund.
    The American Legion would support a legislative initiative to allow 
VHA to bill, collect and reinvest third-party reimbursements from the 
Centers for Medicare and Medicaid Services for the treatment of 
allowable, non-service-connected medical conditions of enrolled 
Medicare-eligible veterans. This legislative change would generate 
approximately $3-5 billion in new third-party collections annually. The 
Congressional Budget Office predicts that enrolled veterans in Priority 
Groups 7 and 8 alone would generate $12 billion from 2010 to 2014 and 
$26 billion from 2010 to 2019.
        state extended care facility construction grants program
    Since 1984, nearly all planning for VA inpatient nursing home care 
has revolved around State Veterans' Homes (SVHs) and contracts with 
public and private nursing homes. The reason for this is obvious: for 
FY 2004, VA paid a per diem of $59.48 for each veteran it placed in 
SVHs, compared to the $354 VA claims it cost in FY 2002 to maintain a 
veteran for one day in its own nursing home care units (NHCUs).
    Under the provisions of title 38, U.S.C., VA is authorized to make 
payments to states to assist in the construction and maintenance of 
SVHs. Today, there are 133 SVHs in 47 states with over 27,000 beds 
providing nursing home, hospital, and domiciliary care. Grants for 
Construction of State Extended Care Facilities provide funding for 65 
percent of the total cost of building new veterans' homes. Recognizing 
the growing LTC needs of older veterans, it is essential the State 
Veterans' Homes Program be maintained as an important alternative 
health care provider to the VA system.
    The American Legion opposes attempts to place a moratorium on new 
SVH construction grants. State authorizing legislation has been enacted 
and state funds have been committed. Delaying projects will result in 
cost overruns and may result in states deciding to cancel these much 
needed facilities.
    The American Legion supports increasing the amount of authorized 
per diem payments to 50 percent for nursing home and domiciliary care 
provided to veterans in State Veterans' Homes; providing prescription 
drugs and over-the-counter medications to State Homes Aid and 
Attendance patients along with the payment of authorized per diem to 
State Veterans' Homes; and allowing full reimbursement of nursing home 
care to 70 percent or higher service-connected disabled veterans, if 
those veterans reside in a State Veterans' Home.
    The American Legion recommends $275 million for the State Extended 
Care Facility Construction Grants Program in FY 2010.
                    medical and prosthetics research
    The American Legion believes VA's focus in research must remain on 
understanding and improving treatment for medical conditions that are 
unique to veterans. Servicemembers are surviving catastrophically 
disabling blast injuries due to the superior armor they are wearing in 
the combat theater and the timely access to quality combat medical 
care. The unique injuries sustained by the new generation of veterans 
clearly demand particular attention. It has been reported that VA does 
not have state-of-the-art prostheses like DOD and that the fitting of 
prostheses for women has presented problems due to their smaller 
stature.
    The American Legion also supports adequate funding of other VA 
research activities, including basic biomedical research and bench-to-
bedside projects for FY 2010. Congress and the Administration should 
continue to encourage acceleration in the development and initiation of 
needed research on conditions that significantly affect veterans, such 
as prostate cancer, addictive disorders, trauma and wound healing, Post 
Traumatic Stress Disorder, rehabilitation, and other research that is 
conducted jointly with DOD, the National Institutes of Health (NIH), 
other Federal agencies, and academic institutions.
    The American Legion recommends $532 million for Medical and 
Prosthetics Research in FY 2010.
                            blinded veterans
    There are currently over 35,000 blind veterans enrolled in the VA 
health care system. Additionally, demographic data suggests that in the 
United States, there are over 160,000 veterans with low-vision problems 
who are eligible for Blind Rehabilitative services. Due to staffing 
shortages, over 1,500 blind veterans will wait months to get into one 
of the 10 blind rehabilitative centers.
    VA currently employs approximately 164 Visual Impairment Service 
Team (VIST) Coordinators, to provide lifetime case management to all 
legally blind veterans and all Operation Enduring Freedom/Operation 
Iraqi Freedom (OEF/OIF) patients, and 38 Blind Rehabilitative 
Outpatient Specialists (BROS) to provide services to patients who are 
unable to travel to a blind rehabilitation center. The training 
provided by BROS is critical to the continuum of care for blind 
veterans. In addition, the DOD medical system is dependent on VA to 
provide blind rehabilitative services.
    Given the critical skills a BROS teaches to help blind veterans and 
their families adjust to such a devastating injury, The American Legion 
urges VA to recruit more specialists and continue with expansion of 
Blind Rehabilitation Outpatient Specialists and Visual Impairment 
Services Teams.
                         major vha construction
    The CARES process identified approximately 100 major construction 
projects throughout the VA Medical Center System, the District of 
Columbia, and Puerto Rico. Construction projects are categorized as 
major if the estimated cost is over $10 million. Now that VA has 
disclosed the plan to deliver health care through 2022, Congress has 
the responsibility to provide adequate funds. The CARES plan calls for 
the construction of new hospitals in Orlando and Las Vegas and 
replacement facilities in Louisville and Denver for a total cost 
estimated over $1 billion for these four facilities.
    VA has not had this type of progressive construction agenda in 
decades. Major construction costs can be significant and proper 
utilization of funds must be well planned. However, if timely 
completion is truly a national priority, The American Legion continues 
to have concerns due to inadequate funding.
    In addition to the cost of the proposed new facilities, there are 
many construction issues that have been ``placed on hold'' for the past 
several years due to inadequate funding and the moratorium placed on 
construction spending by the CARES process. One of the most glaring 
shortfalls is the neglect of the buildings sorely in need of seismic 
correction. This is an issue of safety. The delivery of health care in 
unsafe buildings cannot be tolerated and funds must be allocated to not 
only construct the new facilities, but also to pay for much needed 
upgrades at existing facilities. Gambling with the lives of veterans, 
their families and VA employees is absolutely unacceptable.
    The American Legion believes VA has effectively shepherded the 
CARES process to its current state by developing the blueprint for the 
future delivery of VA health care--we urge Congress to adequately fund 
the implementation of this comprehensive and crucial undertaking.
    The American Legion recommends $1.8 billion for Major Construction 
in FY 2010.
                         minor vha construction
    VA's minor construction program has also suffered significant 
neglect over the past several years. Maintaining the infrastructure of 
VA's buildings is no small task, due to the age of these buildings, 
continuous renovations, relocations and expansions. When combined with 
the added cost of the CARES program recommendations, it is easy to see 
that a major increase over the previous funding level is crucial and 
overdue.
    The American Legion recommends $1.5 billion for Minor Construction 
in FY 2010.
                     information technology funding
    Since the data theft occurrence in May 2006, the VA has implemented 
a complete overhaul of its Information Technology (IT) division 
nationwide. The American Legion is hopeful VA takes the appropriate 
steps to strengthen its IT security to regain the confidence and trust 
of veterans who depend on VA for the benefits they have earned.
    Within VA Medical Center Nursing Home Care Units, it was discovered 
there was conflict with IT and each respective VAMC regarding provision 
of Internet access to veteran residents. VA has acknowledged the 
Internet would represent a positive tool in veteran rehabilitation. The 
American Legion believes Internet access should be provided to these 
veterans without delay for time is of the essence in the journey to 
recovery. In addition, veterans should not have to suffer due to VA's 
gross negligence in the matter.
    The American Legion hopes Congress will not attempt to fund the 
solution to this problem with scarce fiscal resources allocated to the 
VA for health care delivery. With this in mind, The American Legion is 
encouraged by the fact that IT is its own line item in the budget 
recommendation.
    The American Legion believes there should be a complete review of 
IT security government wide. VA isn't the only agency within the 
government requiring an overhaul of its IT security protocol. The 
American Legion urges Congress to exercise its oversight authority and 
review each Federal agency to ensure that the personal information of 
all Americans is secure.
    The American Legion supports the centralization of VA's IT. The 
amount of work required to secure information managed by VA is immense. 
The American Legion urges Congress to maintain close oversight of VA's 
IT restructuring efforts and fund VA's IT to ensure the most rapid 
implementation of all proposed security measures.
    The American Legion recommends $2.7 billion for Information 
Technology.
                        state approving agencies
    The American Legion is deeply concerned that veterans, especially 
returning wartime veterans, receive their education benefits in a 
timely manner. Annually, approximately 300,000 servicemembers (90,000 
of which belong to the National Guard and Reserve) return to the 
civilian sector and use their earned educational benefits from the 
Department of Veterans Affairs (VA).
    Any delay in receipt of education benefits or approval of courses 
taken at institutions of higher learning can adversely affect a 
veteran's life. There are time restrictions on most veterans' education 
benefits; significantly, the National Guard and Reserve must remain in 
the Selected Reserve to use their earned benefits.
    The American Legion believes that every effort should be made to 
ensure the New GI Bill education benefits are delivered without 
problems or delays. Veterans are unique in that they volunteer for 
military service; therefore, these educational benefits are earned as 
the thanks of a grateful Nation. The American Legion believes it is a 
national obligation to provide timely oversight of all veterans' 
education programs to assure they are administered in a timely, 
efficient, and accurate manner.
    GAO report entitled ``VA Student Financial Aid; Management Actions 
Needed to Reduce Overlap in Approving Education and Training Programs 
and to Assess State Approving Agencies'' (GAO-07-384) focuses on the 
need to ``ensure that Federal dollars are spent efficiently and 
effectively.'' GAO recommends VA require State Approving Agencies 
(SAAs) to track and report data on resources spent on approval 
activities, such as site visits, catalog review, and outreach in a 
cost-efficient manner. The American Legion agrees. GAO recommends VA 
establish outcome-oriented performance measures to assess the 
effectiveness of SAA efforts. The American Legion fully agrees. 
Finally, GAO recommends VA collaborate with other agencies to identify 
any duplicate efforts and use the agency's administrative and 
regulatory authority to streamline the approval process. The American 
Legion agrees. VA Deputy Secretary Gordon Mansfield responded at the 
time to GAO that VA would initiate contact with appropriate officials 
at the Departments of Education and Labor to help identify any 
duplicate efforts.
    The American Legion strongly recommends SAA funding at $19 million 
in FY 2010.
                      make tap and dtap mandatory
    The American Legion is deeply concerned with the timely manner in 
which veterans, especially returning wartime veterans, transition into 
the civilian sector.
    The Department of Defense (DOD) estimates that 68 percent of 
separating active-duty servicemembers attend the full Transitional 
Assistance Program (TAP) seminars, but only 35 percent of Reserve 
components' servicemembers attend. The American Legion believes these 
low attendance numbers are a disservice to all transitioning 
servicemembers, especially Reserve component servicemembers. In 
addition, many National Guard and Reserve troops have returned from the 
wars in Iraq and Afghanistan only to encounter difficulties with their 
Federal and civilian employers at home, and the number of destroyed and 
bankrupt businesses due to military deployment is still being realized.
    In numerous cases brought to the attention of The American Legion 
by veterans and other sources, many returning servicemembers have lost 
jobs, promotions, businesses, homes, and cars and, in a few cases, 
become homeless. The American Legion strongly believes all 
servicemembers would benefit greatly by having access to the resources 
and knowledge that TAP/Disabled Transitional Assistance Program (DTAP) 
provide. TAP/DTAP also needs to update their programs to recognize the 
large number of National Guard and Reserve business owners who now 
require training, information and assistance while they attempt to 
salvage or recover a business which they abandoned to serve their 
country.
    The American Legion strongly recommends DOD require all separating 
servicemembers, including those from Reserve component units, 
participate in TAP and DTAP training not more than 180 days prior to 
their separation or retirement from the Armed Forces.
    TAP Employment Workshops provided to transitioning servicemembers 
at most military installations in the United States as well as in eight 
overseas locations consist of two and one-half day employment 
workshops. The training helps servicemembers prepare a plan for 
obtaining meaningful civilian employment when they leave the military. 
The workshop focuses on skills assessment, resume writing, job 
counseling and assistance, interviewing and networking skills, labor 
market information, and familiarization with America's workforce 
investment system.
    Studies show servicemembers who participate in TAP employment 
workshops find their first civilian job three weeks earlier than 
veterans who do not participate in TAP. The Department of Labor's 
Veterans Employment Training Services (DOL-VETS) ensures every TAP 
participant leaves the program with a draft resume, a practice 
interview session, and a visit to their state job board.
    VETS only received a modest 4 percent increase since 2002. 
Transition assistance, education, and employment are each a pillar of 
financial stability. They will prevent homelessness; assist the veteran 
to compete in the private sector, and allow our Nation's veterans to 
contribute their military skills and education to the civilian sector. 
By placing veterans in suitable employment quickly, the country 
benefits from increased income tax revenue and reduced unemployment 
compensation payments, thus greatly offsetting the cost of TAP 
training.
    The American Legion recommends $404.2 million to DOL-VETS for FY 
2010.
       military occupational specialty transition (most) program
    The American Legion supports legislation to reauthorize and fund 
$60 million for the next ten years for the Service Members' 
Occupational Conversion and Training Act (SMOCTA). SMOCTA is a training 
program developed in the early 1990's for those leaving military 
service with few or no job skills transferable to the civilian market 
place. SMOCTA was renamed the Military Occupational Specialty 
Transition (MOST) program in legislation proposed last year, but the 
language and intent of the program still apply.
    If enacted, MOST would be the only Federal job training program 
designed strictly for veterans and the only Federal job training 
program available for use by state veterans' employment personnel to 
assist veterans with barriers to employment.
    Veterans eligible for MOST assistance are those with a primary or 
secondary military occupational specialty that DOD has determined is 
not readily transferable to the civilian workforce, or those veterans 
with a service-connected disability compensation rating of 30 percent 
or higher. MOST is a unique job training program because there is a job 
waiting for the veteran upon completion of training.
    The American Legion recommends reauthorization of MOST and $60 
million in funding for the program.
                              homelessness
    The American Legion notes there are approximately 154,000 homeless 
veterans on the street each night. This number, compounded with 300,000 
servicemembers entering the civilian sector each year since 2001 with 
at least a third of them potentially suffering from mental illness, 
indicates that programs to prevent and assist homeless veterans are 
needed.
    The Homeless Veterans Reintegration Program (HVRP) is a competitive 
grant program. Grants are awarded to states or other public entities 
and non-profit organizations, including faith-based organizations, to 
operate employment programs that reach out to homeless veterans and 
help them become gainfully employed. HVRP provides services to assist 
in reintegrating homeless veterans into meaningful employment in the 
labor force and stimulates the development of effective service 
delivery systems that will address the complex problems facing 
veterans. HVRP is the only nationwide program focused on assisting 
homeless veterans to reintegrate into the workforce.
    The American Legion recommends $50 million for this highly 
successful grant program in FY 2010.
                                  nvti
    The National Veterans' Employment and Training Services Institute 
(NVTI) was established to ensure a high level of proficiency and 
training for staff that provide veterans employment services. NVTI 
provides training to Federal and state government employment service 
providers in competency-based training courses. Current law requires 
all DVOPs and LVERs to be trained within three years of hiring. We 
recommend these personnel be trained within one year.
    The American Legion recommends $4.2 million for NVTI in FY 2010.
                 veterans workforce investment program
    VWIP grants support efforts to ensure veterans' lifelong learning 
and skills development in programs designed to serve most-at-risk 
veterans, especially those with service-connected disabilities, those 
with significant barriers to employment, and recently separated 
veterans. The goal is to provide an effective mix of interventions, 
including training, retraining, and support services, that lead to long 
term, higher wage and career jobs.
    The American Legion recommends $20 million for VWIP in FY 2010.
               employment rights and veterans' preference
    The Uniformed Services Employment and Reemployment Rights Act 
(USERRA) protects civilian job rights and benefits of veterans and 
members of the Armed Forces, including National Guard and Reserve 
servicemembers. USERRA prohibits employer discrimination due to 
military obligations and provides reemployment rights to returning 
servicemembers. VETS administers this law; it conducts investigations 
for USERRA and Veterans' Preference cases, conducts outreach and 
education, and investigates complaints by servicemembers.
    Since September 11, 2001, nearly 600,000 National Guard and Reserve 
servicemembers have been activated for military duty. During this same 
period, DOL-VETS provided USERRA assistance to over 410,000 employers 
and servicemembers.
    Veterans' Preference is authorized by the Veterans' Preference Act 
of 1944. The Veterans' Employment Opportunity Act (VEOA) of 1998 
extended certain rights and remedies to recently separated veterans. 
VETS has the responsibility to investigate complaints filed by veterans 
who believe their Veterans' Preference rights have been violated and to 
conduct an extensive compliance assistance program.
    Veterans Preference is being unlawfully ignored by numerous 
agencies. Whereas figures indicate a decline in claims by veterans of 
the current conflicts compared to Gulf War I, the reality is that 
employment opportunities are not being properly publicized. Federal 
agencies, as well as Federal Government contractors and subcontractors, 
are required by law to notify the Office of Personnel Management (OPM) 
of job opportunities, but more often than not these job opportunities 
are never made available to the public. The VETS program investigates 
these claims and corrects unlawful practices.
    The American Legion recommends $40 million for Program Management 
that encompasses USERRA and VEOA in FY 2010.
      veteran-owned and service-connected disabled veteran-owned 
                            small businesses
    The American Legion views small businesses as the backbone of the 
American economy. It is the driving force behind America's past 
economic growth and will continue to be the major economic growth 
factor as we move into the 21st Century. Currently, more than nine out 
of every ten businesses are small firms. They produce almost one-half 
of the Gross National Product. Veterans' benefits have always included 
assistance in creating and operating veteran-owned small businesses.
    The impact of deployment on self-employed National Guard and 
Reserve servicemembers is tragic, with a reported 40 percent of all 
businesses owned by veterans suffering financial losses and, in some 
cases, bankruptcy. Many other small businesses have discovered they are 
unable to operate and suffer some form of financial loss when key 
employees who are members of the Reserve Components are activated. The 
Congressional Budget Office report, ``The Effects of Reserve Call-Ups 
on Civilian Employers,'' stated that it ``expects that as many as 
30,000 small businesses and 55,000 self-employed individuals may be 
more severely affected if their Reservist employee or owner is 
activated.'' The American Legion supports legislation that would 
require the Federal Government close the pay gap between Reserve and 
National Guard servicemembers civilian and military pay and would also 
provide tax credits up to $30,000 for small businesses with 
servicemembers who are activated.
    The Office of Veterans' Business Development within the Small 
Business Administration (SBA) is crippled and ineffective due to a 
token funding of $750,000 per year. This amount, which is less than the 
office supply budget for the SBA, is expected to support an entire 
nation of veterans who are entrepreneurs. The American Legion feels 
this pittance is an insult to American veterans who are small business 
owners. This token funding also undermines the spirit and intent of 
Public Law 106-50 that provides small business opportunities to 
veteran-owned businesses.
    The American Legion strongly recommends increased funding of the 
SBA's Office of Veterans' Business Development to provide enhanced 
outreach and specific community-based assistance to veterans and self-
employed members of the Reserves and National Guard. The American 
Legion also supports legislation that would permit the Office of 
Veterans Business Development to enter into contracts, grants, and 
cooperative agreements to further its outreach goals and develop a 
nationwide community-based service delivery system specifically for 
veterans and members of the Reserve Components.
    The American Legion recommends $15 million in FY 2010 to implement 
a nationwide community-based assistance program to veterans and self-
employed members of the Reserves and National Guard.
     homeless providers grant and per diem program reauthorization
    In 1992, VA was given authority to establish the Homeless Providers 
Grant and Per Diem Program under the Homeless Veterans Comprehensive 
Service Programs Act of 1992, Public Law 102-590. The Grant and Per 
Diem Program is offered annually (as funding permits) by the VA to fund 
community agencies providing service to homeless veterans.
    VA can provide grants and per diem payments to help public and 
nonprofit organizations establish and operate supportive housing and/or 
service centers for homeless veterans. Funds are available for 
assistance in the form of grants to provide transitional housing (up to 
24 months) with supportive services, supportive services in a service 
center facility for homeless veterans not in conjunction with 
supportive housing; or to purchase vans.
    The American Legion recommends $200 million for the Grant and Per 
Diem Program for FY 2010.
                               conclusion
    Mr. Chairman and Members of the Committee, The American Legion is 
impressed by President Obama's initial ``top line'' budget request. 
Like the rest of America, The American Legion waits to see the details, 
legislative initiatives and other specifics in the budget request he 
has promised to provide in April. The American Legion and VA Secretary 
Shinseki cannot over emphasize the importance of enactment of the 
Military Construction, Veterans' Affairs and Related Agencies 
Appropriations for FY 2010 before the start of the new fiscal year.
    The American Legion would greatly appreciate support of this 
Committee for advance appropriations for VA medical care in FY 2010 and 
FY 2011 in the FY 2010 Budget Resolution and the Military Construction, 
Veterans' Affairs and Related Agencies Appropriations for FY 2010.
    Once again, The American Legion can support President Obama's top 
line budget request; however, that support is contingent upon review of 
his budget request released in April:

     Increases funding for the Department of Veterans Affairs 
by $25 billion above baseline over the next five years.
     Dramatically increases funding for veterans health care.
     Expands eligibility for veterans health care to over 
500,000 veterans by 2013.
     Enhances outreach and services related to mental health 
care and cognitive injuries, including Post Traumatic Stress Disorder 
and Traumatic Brain Injury, with a focus on access for veterans in 
rural areas.
     Invests in better technology to deliver services and 
benefits to veterans with the quality and efficiency they deserve.
     Provides greater benefits to veterans who are medically 
retired from service.
     Combats homelessness by safeguarding vulnerable veterans.
     Facilitates timely implementation of the comprehensive 
education benefits that veterans earn through their dedicated military 
service.

    The American Legion welcomes the opportunity to work with this 
Committee and the Administration on the enactment of a timely, 
predictable and sufficient budget for the Department of Veterans 
Affairs.

    Mr. Chairman, that concludes my testimony and The American Legion 
would welcome any questions you or your colleagues may have.

    Chairman Akaka. Thank you very much, Mr. Robertson.
    Now we will hear from Rick Weidman.

 STATEMENT OF RICK WEIDMAN, DIRECTOR OF GOVERNMENT RELATIONS, 
                  VIETNAM VETERANS OF AMERICA

    Mr. Weidman. Aloha, Mr. Chairman.
    Chairman Akaka. Aloha.
    Mr. Weidman. Thank you for the opportunity for Vietnam 
Veterans of America to present our views here this morning.
    We have endorsed the Independent Budget and would like to 
associate ourselves with the figures you have heard here 
before, particularly the construction figures.
    In the last decade we have approached looking at the health 
care budget for VHA working off of a per capita and looking at 
the Center for Medicare and Medicaid Services inflation figure, 
which currently is figured at 3.6 percent. Therefore, we came 
up with $1.4 billion just for inflationary increases with no 
increase in the number of persons served; and an additional $2 
billion for increased numbers that we will see over the coming 
years, for expanding the organizational capacity, and front-
loading the services in the primary health care clinics before 
letting people into the system--back into the system--which 
they legitimately should have access to. But we need to front-
load the services and get the teams in place before they come 
because otherwise we will end up in the same situation that we 
were in the Fall of 2002, where we had extremely long waits, 
and it was just an unacceptable situation across the board.
    VVA also believes that we should get serious about funding 
for research and development at VA, so we are recommending $750 
million this year with a commensurate increase in each of the 
next 4 years to bring it to well over a billion dollars.
    The reason for that is that DOD does not look at any of the 
environmental injuries to veterans. They do not do any longer-
term epidemiological studies on any group, and NIH refuses to 
do, across the board, any veteran-specific studies. We only 
know of one specific study that recently was funded by earmark, 
I believe, and that is a head injury study at NIH. Otherwise, 
NIH does not even take veteran status and exposures that 
veterans may have as a possible confounding variable that is 
required to be looked at in all their research; therefore, 
calling into question much of their research particularly on 
things that veterans are prone to having.
    So, we strongly recommend that if we are going to go down 
this road of NIH continuing to pay no attention whatsoever to 
the problems of veterans, then we need to get serious and 
increase that budget at VA significantly over the next 5 years.
    In regard to IT, we believe that we need to get really 
serious about that and rebuild, provide at least a billion 
dollars specifically for IT in the next year to start to do two 
things. One is to build the platform on which the Veterans 
Benefits Administration will have their system, as they design 
it. We agree with Secretary Shinseki that you need to 
straighten out the business processes before you automate it 
because if you do not straighten those out, then you just go 
wrong faster.
    And second is the terrific system, the VistA system, is 
going to need a modern platform. We need to start the process 
in that. We hope that General Shinseki is successful in 
negotiating with Secretary Gates to share the cost of that new 
platform and have a single unified medical record. But, in any 
case, we need to look forward to that.
    Specifically, we would also argue that we need to 
specifically fund outreach. The veterans still do not know 
about the services that are rendered to them or their health 
care maladies. As a result of that, VBA recently announced the 
formation of the Veterans Health Council, which is a 
partnership working with private civilian health care, diseases 
and groups, and the American Academy of Ophthalmology, the 
American Psychological Association, Men's Health Network, 
Easter Seals, et cetera, to get the word out.
    This would be an ongoing effort over the next 3 years to 
educate the civilian medical system in the wounds, maladies, 
injuries and conditions that veterans are subject to, partly to 
be preventive health care measures that can be taken by early 
intervention. But, in addition to that, a lot of people are 
eligible for benefits who do not even know it, and VA continues 
to do a poor job of outreach.
    But there needs to be a specific budget. When it is 
everybody's responsibility, it ends up being nobody's 
responsibility.
    Two last things, if I may. One is we would encourage much 
stronger oversight in the next year. Particularly, General 
Shinseki, we believe, has it right when he says that the main 
problem at VA boils down to leadership and accountability. We 
believe that that is accurate, that most of the laws that are 
in place are reasonable, and he has the statutory authority to 
do things and do them right, but oftentimes you cannot get the 
system to respond.
    We believe that you do not go down and beat up the 
privates. What you do is hold management and the officers 
accountable, strictly accountable, and that has not been done.
    Last but not least, one minor digression, if I may, and 
that is on the issue about whether or not there are enough 
clinicians in mental health and in PTSD programs. We have 
started to call into question that even though they have hired 
an additional 3,800 clinicians, whether or not it is adequate 
because we still discover and hear around the country that they 
are not doing the testing, as recommended by the Institute of 
Medicine report in June 2006, to accurately diagnose PTSD at 
the front end. If you do that at the front end, then it makes 
the adjudication of the PTSD claim much more speedy and 
accurate at the back end because you have already done the 
testing.
    In regards to that, VA in 2002 developed a Best Practices 
Guide, but they continue to refuse to train their people on how 
to use it, either in the VBA or in the VHA, and this would 
significantly speed up adjudication. So, we ask the Committee 
to pay some significant attention, once again, to the 
organizational capacity when it comes to mental health.
    Thank you, sir.
    [The prepared statement of Mr. Weidman follows:]
 Prepared Statement of Rick Weidman, Executive Director for Policy and 
            Government Affairs, Vietnam Veterans of America
    Chairman Akaka, Ranking Senator Burr, and distinguished Senators on 
the Committee, on behalf of Vietnam Veterans of America (VVA) National 
President John Rowan and all of our officers, Board of Directors, and 
members, I thank you for giving Vietnam Veterans of America (VVA) the 
opportunity to testify today regarding the President's fiscal year 2010 
budget request for the Department of Veterans Affairs. VVA thanks each 
of you on this distinguished panel, on both sides of the aisle, for 
your strong leadership on issues and concerns of vital concern to 
veterans and their families.
    I want to thank you for recognizing that caring for those who have 
donned the uniform in our name is part of the continuing cost of the 
national defense. Caring for veterans, the essential role of the VA 
and, for specific services other Federal entities such as the 
Department of Labor, the Small Business Administration, and the 
Department of Health and Human Services, must be a national priority. 
This is poignantly clear when we visit the combat-wounded troops at 
Walter Reed Army Medical Center and Bethesda Naval Hospital.
    Mr. Chairman, VVA thanks you for sponsoring advanced Appropriations 
legislation in the Senate (S. 423). As you know, VVA and other major 
veterans' service organizations have been long-time supporters of 
legislation to achieve assured funding. When the VA budget is late 19 
of the last 22 times, it is clear that there is a need for a new 
mechanism to correct the problems in the current system of funding. 
While VVA remains committed to the assured funding concept, we 
currently strongly support the Advanced Appropriations legislation 
contained in S. 423 as being so much better than what we currently have 
in place. As we have this discussion in regard to the FY 2010 budget 
for the VA, the readily apparent need for this legislation has never 
been more pressing. We look forward to working with you to ensure its 
enactment, as it will move us toward our common goal of predictable, 
fully adequate, and timely funding for VA health care that is 
sufficient to truly meet the needs of all veterans in vital need of 
such care.
                                overview
    Concerning the proposal at hand, the President's FY 2010 budget for 
the VA, VVA is pleased with the overall amount of the request, which is 
for a $5.5 Billion overall increase over the FY 2010 budget. It is 
unclear how much of that is slated for the Veterans Health 
Administration (VHA), and how much for other purposes given the sketchy 
outline of the VA budget thus far available. However, it is clear that 
the bulk of those funds needs to VHA to meet the rising needs of 
medical inflation continue the process of adding needed organizational 
capacity as the population served expands, and for modernizing 
equipment and facilities.
    Using the Center for Medicare & Medicaid Services (CMS) figure of 
3.6% inflation, that would mean that the Congress needs to add a 
minimum figure of about $1.4 Billion to VHA just to keep up with 
increases in fixed costs, even if no more veterans entered the system. 
Further, there is a need to ``front load'' staff to increase 
organizational capacity to be ready to handle additional numbers of 
veterans allowed to seek health care from the VHA as the system is re-
opened to those who were frozen out of the system by the actions of the 
previous Administrations beginning in January 2003. There will be 
further increases of our youngest veterans from the current conflicts 
seeking services from VHA as well as more older veterans seeking 
services, particularly Vietnam veterans whose medical problems are now 
coming to the fore due to age and manifestation of long-term effects of 
exposure to Agent Orange and other herbicides and toxins in Vietnam and 
elsewhere during their military service.
    While VVA is adamant that VA needs to allow these veterans to 
register and to receive health care, it needs to be done in a manner 
that avoids overwhelming the system all at once leading to long delays 
in receiving care. The system is in many cases too ``thin'' to be able 
to accommodate more people for more than a brief amount of time. VVA 
believes that these staff enhancements and increases in organizational 
capacity will require at least another $2 Billion for VHA to increase 
the size of permanent staff.
                              vet centers
    This would include significantly increasing the number of staff in 
the highly successful VA Vet Center (Readjustment Counseling) program 
to not just open and provide staff for new centers and to do rural 
outreach, as important as these two efforts are, but to enlarge the 
size of existing teams. Perhaps the most pressing need, beyond ensuring 
that staff members at Vet Centers are not so over-worked that they 
``burn out,'' is the need for more certified family counselors and more 
counselors professionally trained and certified to deal with military 
sexual trauma in veterans of both genders. The Vet Centers are our 
first line of defense against suicides, and we must make sure they have 
the organizational capacity to continue doing what they do so well on a 
long-term sustainable basis.
                                research
    VVA calls for an increased outlay for Research and Development. 
Traumatic Brain Injuries, or TBI, needs to be better understood for 
treatment to be more effective. Other mental health issues, too, that 
are afflicting too many of our returning troops, need to be better 
understood. Research, for which VA scientists and epidemiologists can 
be justifiably proud, benefit not only troops who are forever changed 
by their experiences in combat but the general populace as well. VVVA 
believes that we must become more serious about research at the VA, 
given that the National Institutes of Health (NIH) continues to totally 
ignore veterans and the long-term health effects of military service. 
Other than one head injury study, we know of no other NIH research 
project that even tangentially asks about military service and uses 
that as a variable (and possible confounder). VVA recommends that 
Research & Development be provided at least $ 750 million for FY 2010 
and commensurately large increases in the out years, so that over five 
years this activity is funded at least at the $1 Billion level.
    For the first time in many years, VVA has NOT signed on to the 
Friends of VA Health Care & Medical Research (FOVA) although we 
strongly believe that there needs to be a significant increase in R&D 
funding. VVA did not sign on to FOVA because of a required pledge not 
to push for any earmarks in Research & Development funds. It would be 
irresponsible of VVA to sign this pledge and not seek ear marks given 
that we have been unable to discover ANY research programs into the 
long-term health effects of Agent Orange and other toxins, despite 
repeated inquiries to the current Undersecretary for Health and the 
current occupant of the office of Director of Research & Development, 
as well as the previous two occupants of the office of Secretary of 
Veterans Affairs. Obviously we need ear marks for research into the 
environmental wounds of Vietnam, as well as into the deleterious health 
effects of service in other periods of time and theaters of operation, 
such as the first Gulf War. It would be a betrayal of our members and 
their families if we did not urgently seek ear marks for further 
research into the terrible health long-term effects of exposure to the 
herbicides and other toxins (including pesticides, PCBs, etc.) used in 
Vietnam during the war.
    This lack of such research projects is compounded by VHA's adamant 
refusal to obey the law and complete the replication of the ``National 
Vietnam Veterans Readjustment Study'' (NVVRS) as a robust mortality and 
morbidity study from the only existing statistically valid random 
sample of Vietnam veterans in existence. Frankly, this study in needed 
not only to document the long-term course of Post Traumatic Stress 
Disorder, but also to document physiological problems in this 
population (which we know to be many). Their refusal says a great deal 
about their bias and determinedly continued willful ignorance.
    Mr. Chairman, VVA thanks this Committee and the Appropriations 
Committee for using the power of the purse in the FY 2008 and FY 2009 
Appropriations act to compel VA to obey the law (Public Law 106-419) 
and conduct the long-delayed National Vietnam Veterans Longitudinal 
Study. VVA asks that you schedule a hearing and/or a Members briefing 
for the second half of March for VA to outline their plan as to how 
they are going to complete this much needed study for delivery of the 
final results to the Congress by April 1, 2010, as a comprehensive 
mortality and morbidity study of Vietnam veterans, the last large 
cohort of combat veterans prior to those now serving in OIF/OEF.
    VVA is concerned that previous leadership at VA felt they were 
above the law and ignored this mandate, and were unapologetic about 
being scofflaws. We hope this provision will again be included in the 
Appropriations act and that General Shinseki will see to it that VA 
obeys the law and gets this done on his watch.
    Further, VVA strongly urges the Congress to mandate and fund 
longitudinal studies to begin virtually immediately, using the exact 
same methodology as the NVVRS, for the following cohorts: a) Gulf War 
of 1991; b) Operation Iraqi Freedom; and c) Operation Enduring Freedom.
    Please take action now so that these young veterans are not placed 
into the same predicament Vietnam veterans find ourselves today.
    Further, the continued refusal of VHA to take a complete military 
record as part of the electronic medical records means that there is no 
way to do needed epidemiological research on veterans who use the VA 
system that looks into exposures they may have been subject to in 
military service, depending on the branch of service, when, where, and 
MOS. Further, this would enable mortality studies based on when and 
where one served for those who have already died. It's almost as if our 
government does not want to know about these ailments so that it won't 
be burdened with Dependency Indemnity Compensation (DIC) payments.
    VVA asks that $25 million be specifically designated for 
replication of the NVVRS, $20 million for research into the health care 
effects of Agent Orange and other toxins, $15 million to the Medical 
Follow Up Agency (MFUA) at the Institute of Medicine (IOM) at the 
National Academies of Sciences, to finish translating all of the data 
from the now closed Ranch Hand Study into modern computer language and 
properly catalogue it to make this data accessible to credentialed 
researchers. This potentially enormously valuable trove of research 
data should not be allowed to perish for want of these minimal funds.
    In 2009, VA and DOD is supposed to complete the pilot of a new 
disability evaluation system for wounded returnees at major medical 
facilities in the Washington, DC, area, and expand it to most other 
large military medical centers. We hope that what results from this 
effort ``to eliminate the duplicative and often confusing elements of 
the current disability process of the two departments'' will lead to 
less confusion and a single, viable disability rating determined by the 
VA. However the process is currently not working as it is supposed to 
work. VVA repeatedly brought this to the attention on the former 
Secretary of Veterans Affairs and the current Undersecretary for 
Benefits and his staff since last November. There is a real need for 
joint oversight of this process by the Veterans' Affairs Committee and 
the Armed Services Committee to ensure that wounded and ill soldiers 
are treated fairly in their waning days of military service.
    We are also concerned that there still will not be enough resources 
to deal with the flood of troops and veterans returning to our shores 
and presenting with a range of mental health issues. The VA ramped down 
for several years the numbers of mental health professionals it 
employed. Now, seeing the error of its ways, it is hurriedly hiring 
clinicians. The question is: Will there be enough of them to meet the 
challenge? Will those staff be properly trained to deal with the needs 
of veterans with heavy combat trauma and other problems?
    Much more attention needs to be devoted to continuing medical 
education, particularly for mental health providers and for primary 
care physicians and other clinicians. One of the best kept secrets at 
VA is the existence of the Veterans Health Initiative (VHI) curricula 
about the wounds, maladies, illnesses, and conditions endemic to 
military service depending on when and where one served. (www.va.gov/
vhi) VHA apparently makes no systematic effort to utilize this tool to 
better educate these clinicians who can and will do an even better job 
if properly trained and supported. As Secretary Shinseki has repeatedly 
stated, what is lacking is primarily a matter of leadership and 
accountability. We hope and trust that he can and will meet that lack, 
particularly if the rest of his team gets on board quickly.
      mental health--need to restore organizational capacity for 
                       substance abuse treatment
    VVA urges that language be inserted in the Appropriations bill the 
Congress to express concern that substance use disorders among our 
Nation's veterans is not being adequately addressed by the Veterans 
Health Administration (VHA). The relatively high rate of drug and 
alcohol abuse among our Nation's veterans (much of which is self-
medication to deal with untreated PTSD), especially those returning 
from service in Operation Enduring Freedom and Operation Iraqi Freedom, 
is causing significant human suffering for veterans and their families.
    These folks can and will be stronger for their experience if we 
only will deliver the effective care they need when they need it in a 
way they will accept.
    Further delay in moving to restore effective mental health and 
substance abuse services will lead to poorer health and more acute 
health care utilization in the out years, not to mention economic 
opportunity cost to the Nation and needless suffering by these 
veterans, and their families.
    Last year, VVA urged the Congress to direct the Secretary to make 
concerted efforts to reduce the overall incidence of drug and alcohol 
abuse and dependence among enrollees in the Veterans Health 
Administration by meeting the performance measurements included in ``A 
Comprehensive VHA Strategic Plan for Mental Health Services,'' VA's 
current and adopted plan to reform its mental health programs, with the 
hallmark of recovery. To its credit, VA has developed a strategy to 
``restore VHA's ability to consistently deliver state-of-the-art care 
for veterans with substance abuse disorders,'' as a milestone within 
that reform plan, but to date has yet to fulfill the promise of its 
commitment to recovery, and establishing the goal of every veteran 
being able to obtain and sustain meaningful employment at a living wage 
as the ultimate goal for all VA mental health programs, including its 
substance use disorder programs. It should now no longer be a case of 
lacking resources, so we need much better oversight and accountability 
in the coming year. In addition it is clear that we need new leadership 
in the Mental Health area, as the Chairman has noted on several 
occasions. We hope Secretary Shinseki will heed the Chairman and others 
in this regard.
    VVA urges the Congress to direct the Secretary to provide quarterly 
reports beginning with a baseline report by each Veterans Integrated 
Service Network (VISN) on the initiatives set forth in the VHA 
Strategic Plan for Mental Health Services, specifically to improve VA's 
treatment of substance use disorders. These reports will provide an 
ongoing indication of VHA's progress in the implementation of its 
adopted Strategic Plan as described in section 1.2.8 of ``A 
Comprehensive VHA Strategic Plan of Mental Health Services,'' May 2, 
2005. In addition to baseline information, at minimum these reports 
should include: the current ranking of networks on their percentage of 
substance abuse treatment capacity along with plans developed by the 
lowest quartile of networks to bring their percentage up to the 
national average; and, the locations of VA facilities that provide five 
days or more of inpatient/residential detoxification services, either 
on site, at a nearby VA facility, or at a facility under contract to 
provide such care; and, the locations of VA health care facilities 
without specialized substance use disorder providers on staff, with a 
statement of intentions by each such facility director of plans to 
employ such providers or take other actions to provide such specialized 
care.
    The decade long diminishment of VA mental health programs that we 
experienced in the 1990s did level out by 2001, and VA all too slowly 
started to rebuild capacity that has been accelerated in recent years. 
However, we must continue to restore capacity to deal with mental 
disorders, particularly with Post Traumatic Stress Disorder and the 
often attendant co-morbidity of substance abuse. In particular, 
substance abuse treatment needs to be expanded greatly, and be more 
reliant on evidence based medicine and practices that are shown to 
actually be fruitful, and be held to much higher standards of 
accountability, as noted above. The 21-day revolving door or the old 
substance abuse wards is not something we should return to, but rather 
treatment modalities that can be proven to work, and restore veterans 
of working age to the point where they can obtain and sustain 
meaningful employment at a living wage, and therefore re-establish 
their sense of self-esteem.
    VVA also urges that additional resources explicitly be directed in 
the appropriation for FY 2009 to the National Center for PTSD for them 
to add to their organizational capacity under the current fine 
leadership. The signature wounds of this war may well be PTSD and 
Traumatic Brain Injury and a complicated amalgam of both conditions. 
VVA believes that if we provide enough resources, and hold VA managers 
accountable for how well those resources are applied, that these fine 
young veterans suffering these wounds can become well enough again to 
lead a happy and productive life.
    Up until recently, VA has not made enough progress in preparing for 
the needs of troops returning from Iraq and Afghanistan--particularly 
in the area of mental health care. In addition to the funds VVA is 
recommending elsewhere, we specifically recommend an increase of an 
additional $500 million dollars over and above the $3.9 Billion that VA 
now says they will allocate to assist VA in meeting the mental health 
care needs of all veterans. These funds should be used to develop or 
augment with permanent staff at VA Vet Centers (Readjustment Counseling 
Service or RCS), as well as PTSD teams and substance use disorder 
programs at VA medical centers and clinician who are skilled in 
treating both PTSD and substance abuse at the CBOC, which will be 
sought after as more troops (Including demobilized National Guard and 
Reserve members) return from ongoing deployments. VVA also urges that 
the Secretary be required to work much more closely with the Secretary 
of Health and Human Services, and the states, to provide counseling to 
the whole family of those returning from combat deployments by means of 
utilizing the community mental health centers that dot the Nation. 
Promising work is now going on in Connecticut in and possibly elsewhere 
in this regard that could possibly be a model. In addition, VA should 
be augmenting its nursing home beds and community resources for long-
term care, particularly at the state veterans' homes.
    To allow the staffing ratios that prevailed in 1998 for its current 
user population, VA would have to add more than 15,000 direct care 
employees--MDs, nurses, and other medical specialists--at a cost of 
about $2 billion. This level, because the system can and should be more 
efficient now, would allow us to end the shame of leaving veterans out 
in the cold who want and are in vital need of health care at VA, and 
who often have no other option.
blind and low vision veterans need much greater resources and attention
    The President's request contains a significant reduction in the 
efforts to strengthen services for blind veterans. With the number of 
blind and very low vision veterans of the Nation's latest wars in need 
of services now, VVA strongly recommends the Congress explicitly direct 
an additional $35 million for FY 2010 to increase staffing and 
programming at the VA's Blind and Visually Impaired Service Centers, 
and to add at least one new center.
    Further, VVA recommends that the Congress directs the Secretary to 
implement an employment and independent living project modeled on the 
highly successful ``Project Amer-I-Can'' that so successfully placed 
blind and visually impaired veterans into work and other situations 
that resulted in them becoming much more autonomous and independent. 
That program was a cooperative venture of the New York State Department 
of Labor, the Veterans Employment & Training Service (VETS), and the 
Blind Veterans Association.
    In a system in which so much of the infrastructure would be deemed 
obsolete by the private sector (in a 1999 report GAO found that more 
than 60% of its buildings were more than 25 years old), this has and 
may again lead to serious trouble. We are recommending that Congress 
provide an additional $1.5 billion to the medical facilities account to 
allow them to begin to address the system's current needs. We also 
believe that Congress should fully fund the major and minor 
construction accounts to allow for the remaining CARES proposals to be 
properly addressed by funding these accounts with a minimum of the 
remaining $2.3 billion.
                           homeless veterans
    As we all know, homelessness is a significant problem in the 
veterans' community and veterans are disproportionately represented 
among the homeless population. While many effective programs assist 
homeless veterans to become productive and self-sufficient members of 
their communities and Congress must ensure that the Department of 
Veterans Affairs has adequate funding to meet the needs of the over 
154,000 homeless veterans who served this country so proudly in past 
wars and veterans of our modern day war. VVA recommends the following 
in VA FY 2010 budget for homeless programs.
              homeless provider grant and per diem program
    The Department of Veterans Affairs Homeless Grant & Per Diem 
Program has been in existence since 1994. These programs address the 
needs of homeless veterans and support the development of transitional, 
community-based housing and the delivery of supportive services. 
Because financial resources available to HGPD are limited, the number 
of grants awarded and the dollars granted are restrictive and hence 
many geographic areas in need suffer a loss that HGPD could address.
    The Consolidated Appropriations Act of 2008, Public Law 110-161 
provides $130 million, the fully authorized level, to be expended for 
the GPD program. Based on GAO's findings and VA's projected needs for 
additional GPD beds, VVA that for FY 2010 a $200 million authorization 
is required. An increase in the funding level for the next several 
years would help ensure and expedite VA's program expansion targets. It 
would provide critical funding for service, or drop-in, centers--the 
primary portal that links veterans in need with the people who can help 
them. It would guarantee continued declines in veteran homelessness, 
and provide for scaling back the funding as warranted by the VA's 
annual Community Homelessness Assessment, Local Education and 
Networking Group (CHALENG) reports.
    The VA provides grants to VA health care facilities and existing 
GPD recipients to assist them in serving homeless veterans with special 
needs including women, women who have care of dependent children, 
chronically mentally ill, frail elderly and terminally ill veterans. 
Initiated in FY 2004, VA has provided special needs funding to 29 
organizations totaling $15.7 million. The VA Advisory Committee on 
Homeless Veterans 2007 report states the need and complexity of issues 
involving women veterans who become homeless are increasingly 
unexpected. Recognizing women veterans are one of the fastest growing 
homeless populations, the Committee recommended future notices of 
funding availability target women veteran programs including special 
needs grant offerings. Public Law 109-461 authorizes appropriations of 
$7 million for FY 2007 through FY 2011 for special needs grants.
    VVA estimates approximately $45 million will be needed to 
adequately serve 7,500 or more clients in HUD-VASH housing units. 
Rigorous evaluation of this program indicates this approach 
significantly reduces the incidence of homelessness among veterans 
challenged by chronic mental and emotional conditions, substance abuse 
disorders and other disabilities.
    VVA also strongly urges you to actively help us seek an 
appropriation for the full $50 million authorized for the Homeless 
Veterans Reintegration Program (HVRP) for FY 2010.
                    veterans benefits administration
    The Veterans Benefits Administration (VBA) continues to not only 
need additional resources and enhanced accountability measures, but a 
total paradigm shift and re-tooling of the business processes.
                         compensation & pension
    VVA recommends adding one hundred staff members above the level 
requested by the President for the Compensation & Pension Service (C&P) 
specifically to be trained as adjudicators. Further, VVA strongly 
recommends adding an additional $80 million dollars specifically 
earmarked to create ``express lines'' at all VARO and not just the ten 
pilot sites, for additional training for all of those who touch a 
veterans' claim, institution of a competency based examination that is 
reviewed by an outside body that shall be used in a verification 
process for all of the VA personnel, veteran service organization 
personnel, attorneys, county and state employees, and any others who 
might presume to at any point touch a veterans' claim.
                       vocational rehabilitation
    Last year (and the year before that), VVA recommended adding an 
additional two hundred specially trained vocational rehabilitation 
placement specialists to work with returning servicemembers who are 
disabled to ensure their placement into jobs or training that will 
directly lead to meaningful employment at a living wage. VA only added 
60 such counselors. It still remains clear that the system funded 
through the Department of Labor simply is failing these fine young men 
and women when they need assistance most in rebuilding their lives.
    It is clear VA needs to add several hundred of these employment 
placement specialists for disabled veterans specifically called for in 
past years' funding measures, and there is clearly a need for 
additional training to ensure they are effective in assisting disabled 
veterans, particularly profoundly disabled veterans, to obtain decent 
jobs.
    VVA has always held that the ability to obtain and sustain 
meaningful employment at a living wage is the absolute central event of 
the readjustment process. Adding additional resources and much greater 
accountability to the VA Vocational Rehabilitation process is essential 
if we as a nation are to meet our obligation to these Americans who 
have served their country so well, and have already sacrificed so much.
                 computerization of the claims process
    VVA agrees with Secretary Shinseki's statement that computerization 
in and of itself will not fix the mess in the Compensation & Pension 
program, but rather to re-think and straighten out the business 
processes first before we ``put garbage in to get garbage out.'' While 
the Secretary and his new team figure that out, VVA also believes that 
Congress needs to set aside funds for putting all of the VBA records 
into digital form. This is essentially an investment in computer 
infrastructure every bit as important as buildings. We do not know what 
that figure is, but we have to believe there are existing platforms 
that can be adapted for this use that are already successfully being 
used in other branches of the Federal Government.
                        accountability at the va
    There is no excuse for the dissembling and lack of accountability 
in so much of what happens at the VA. It is certainly better than it 
used to be, but there is a long way to go in regard to cleaning up that 
corporate culture to make it the kind of system that it can be with 
existing resources, and even largely the same personnel as they 
currently have on board. It can be cleaned up and done right the first 
time, if there is the political will to hold people accountable for 
doing their job properly.
    The almost quarter of a million VA personnel consist of fine hard 
working people who are by and large committed to doing a good job for 
the veterans whom they serve. What is needed is leadership that is 
worthy of those fine workers, and a better system of accountability 
(especially for managers) and the system will work much better.

    Thank you again, Mr. Chairman, for allowing VVA to be heard at this 
forum. We look forward to working with you and this distinguished 
Committee to obtain an excellent budget for the VA in this fiscal year, 
and to ensure the next generation of veterans' well being by enacting 
S. 423 at the earliest possible time. I will be happy to answer any 
questions you or your colleagues may have.

    Chairman Akaka. Thank you very much, Mr. Weidman.
    This question has been mentioned quite often in today's 
hearing, and this question is for the entire panel. There is 
clear opposition to any proposal to allow VA to bill insurance 
companies for care for veterans' service-connected injuries. 
Assuming Congress does not move forward with this proposal, how 
would you suggest covering the resulting gap?
    Mr. Blake?
    Mr. Blake. Mr. Chairman, I would suggest that, first off, 
this is money that should never have been considered in the 
first place. My sense is that it is included in the inflated 
estimate for the budget submission that we have seen so far, 
but we do not know the details.
    The best way to answer that question is to say that since 
we are going to assume that this is money that is not going to 
be collected, that real dollars will have to be appropriated to 
offset that gap. I do not know any other way you could solve 
that gap.
    Chairman Akaka. Mr. Baker?
    Mr. Baker. I would have to agree with Mr. Blake, 100 
percent on that.
    Chairman Akaka. Mr. Kelley?
    Mr. Kelley. I am in concurrence with Mr. Blake also.
    Chairman Akaka. Mr. Cullinan?
    Mr. Cullinan. Mr. Chairman, I would certainly agree with 
Mr. Blake and have to add that this proposal strikes at the 
very heart of the philosophy and moral obligation this Nation 
has to care for its wounded warriors.
    With respect to making up any gap, we would think that some 
dollars would flow from third-party connections from the 
Category 8 veterans that will be coming into the system, who 
are more inclined to have insurance and also tend to use the 
services less. They are inexpensive, relatively speaking. The 
rest would have to be appropriated dollars.
    Chairman Akaka. Any further comment, Mr. Robertson?
    Mr. Robertson. Yes, sir. The American Legion--when 
eligibility reform was passed back in 1996, we were a strong 
advocate of allowing VA to bill Medicare for the treatment of 
non-service-connected medical conditions for Medicare-eligible 
patients. Clearly, over half of the VA patient population is 
Medicare-eligible, and the idea was that whoever would be 
brought into the system that was not entitled to care would pay 
through either co-payments and third-party reimbursements from 
their private insurance.
    That is where I think a critical mistake was made because 
we are subsidizing Medicare by billions of dollars. As Mr. 
Cullinan said, comparing Medicare to VA is apples and oranges. 
They are simply an insurance company. They are not a health 
care provider, and VA is the best health care provider in the 
country.
    There is no incentive for fraud, waste and abuse in billing 
Medicare. This would be straight up and down. This is a 
reasonable charge. Reimburse us for those allowable conditions.
    So I think that there is literally billions of dollars that 
are being missed that would help the system and would take care 
of these extra costs of bringing this group of patients in, 
especially if they are Medicare-eligible--the Priority Group 
8s.
    Chairman Akaka. Mr. Weidman, any further comment?
    Mr. Weidman. This proposal is so wrong in so many ways, it 
is hard. It would take a long time to elucidate them, but I 
will say that it does bear in mind the old sardonic cartoon of 
the real GI Bill which is what veterans have to pay for having 
been disabled in service to country.
    Chairman Akaka. You have all heard the Secretary, and we 
have heard your testimony. I am trying to reach into your 
mental capacity here, and what I am asking for is what is 
missing? What is missing?
    We are slightly disadvantaged because of the lack of 
budgetary information at this point. But in looking at the 
Administration's priorities as outlined in the documents we do 
have, think about it. What do you think is missing?
    Mr. Robertson. Well, the one area dealing with concurrent 
receipt, which is really a DOD funding issue and should not be 
in this part of the budget because it is the DOD military 
retirement pay that is offset. I did not understand that one to 
begin with.
    Another area, I just want to mention one thing about the 
outreach. I think that just about everybody sitting at this 
table has community-based organizations, chapters, posts, 
lodges, et cetera. Speaking for the American Legion--and I know 
that the other groups are there with us when we do this--we 
have been connecting with the National Guard and Reserve, and I 
think that there is a great deal of outreach that is being done 
by the veterans service organizations that we are probably not 
getting credit for, both with the active duty military, the 
Guard and Reserve, and even the veterans that are in our 
communities. We are trying to beat the drum.
    If you do recall when eligibility reform did initially kick 
in, we went out and we brought people to the VA system that had 
never been there before. And we told them: Trust us. It is a 
great system. You are going to be happy.
    The results were they came back and said, enough, enough, 
enough.
    So, as far as outreach, we are going to be in there, 
cheering for the Secretary. If he will give us the snowballs, 
we will throw them.
    Chairman Akaka. Any other comment?
    Mr. Weidman. There are couple things that come to mind, Mr. 
Chairman.
    The first is something that nobody has been talking about, 
but our Alaska State President, Ric Davidge, and folks in 
Alaska have been working on a paper--when it is ready we will 
certainly share with you and your distinguished colleagues as 
well as staff--on a distinction between rural and remote. There 
are sections of Vermont that are very rural, but it is not 
remote like an outer island from the big island. It is not 
remote like many of the places in Alaska where you cannot drive 
to either.
    So we need to look at this problem and delineate between 
remote and rural and just change our paradigm and the way in 
which we think about that in the future.
    The other thing I think is not apparent in there, and that 
is no earmarks in the research budget. VVA, for the time in 
recent years, refused to join with the Friends of VA Medical 
Care and Research, not because we disagree with them, but 
because you have to pledge to have no earmarks.
    There is not a single Agent Orange study funded by the VA 
currently out of R&D, not one. There is the National Vietnam 
Veterans Readjustment Study. They refused to obey the law and 
do the replication even though they have been, again, ordered 
to do so in the Appropriations Act that you passed on time. And 
so, we would ask that you include that again.
    Last but by no means least, when it comes to Agent Orange, 
we need the funding for a medical follow-up agency at the 
Institute of Medicine--about $15 million--to not only translate 
that into modern computer language, the Ranch Hand data, but to 
do some research organization to find out how can we best make 
that available to independent scientists and research 
institutions.
    Agent Orange is not mentioned anywhere in this document, 
and I am willing to bet when they publish the big one it will 
not be mentioned anywhere in there. This is unacceptable to 
Vietnam Veterans of America. We are the largest cohort of 
veterans living today. We are 60 percent of all living 
veterans. And our folks are increasingly getting ill from the 
long-term effects of, we believe, Agent Orange; and there is 
substantial scientific evidence to that fact, but none of that 
research is being done by VA.
    In fact, none of it is being done in the U.S. It is being 
done in Europe, it is being done in Asia, and it is being done 
in Australia and New Zealand, but not in the USA. We think this 
is wrong. You cannot throw away a generation as concerned as we 
are with the young people coming home.
    Thank you.
    Mr. Blake. Mr. Chairman, could I take one quick shot at 
that?
    Chairman Akaka. Mr. Blake.
    Mr. Blake. I would suggest that probably the most glaring 
omission from any statement in the budget is any mention of 
advance appropriations as a policy, given the fact that then 
Candidate Obama affirmed his support for this and even went so 
far as to say he was going to propose it in his budget; and 
that Secretary Shinseki at least initially supported it before 
you during his confirmation hearing, yet seems to have 
backtracked since then. I would say that that is probably the 
most glaring omission in the priorities discussion of the 
budget.
    Chairman Akaka. Thank you.
    Mr. Baker?
    Mr. Baker. The DAV completely agrees. Advance 
appropriations is the thing missing.
    Thank you.
    Chairman Akaka. Any other comments on what is missing?
    Mr. Cullinan. I will simply have to agree with Mr. Blake 
and Mr. Kerry Baker.
    Chairman Akaka. Well, I want to thank you very much for 
your testimony and also your responses. I think we have covered 
a huge area, and I thought I would end this hearing by asking 
you what you think was missing from what has been said today.
    I want to thank you so much for participation in our 
efforts to help our veterans across the Nation. It is an effort 
that, of course, the Congress, the Administration, and the VSOs 
have been a huge part of. We do not want you to ever forget 
that you are part of this partnership, and we are looking 
forward to further hearings on other issues as well as coming 
together to try to find the best ways to improve the quality of 
service to our veterans.
    So, in closing, again, I want to thank all of you for 
appearing today. We are just beginning our work on the VA 
budget, and your input has been very much appreciated. I think 
you know that we have a deadline this Friday with the Budget 
Committee on this particular issue.
    So, again, thank you very much.
    This hearing is now adjourned.
    [Whereupon, at 11:56 a.m., the Committee was adjourned.]
                            A P P E N D I X

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