[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                  BUDGET REQUEST FOR FISCAL YEAR 2012

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

                                HEARING

                               before the

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

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 17, 2011

                               __________

                            Serial No. 112-2

                               __________

       Printed for the use of the Committee on Veterans' Affairs



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                    COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

GUS M. BILIRAKIS, Florida            BOB FILNER, California, Ranking
CLIFF STEARNS, Florida               CORRINE BROWN, Florida
DOUG LAMBORN, Colorado               SILVESTRE REYES, Texas
DAVID P. ROE, Tennessee              MICHAEL H. MICHAUD, Maine
DAN BENISHEK, Michigan               LINDA T. SANCHEZ, California
ANN MARIE BUERKLE, New York          BRUCE L. BRALEY, Iowa
JEFF DENHAM, California              JERRY McNERNEY, California
BILL FLORES, Texas                   JOE DONNELLY, Indiana
TIM HUELSKAMP, Kansas                TIMOTHY J. WALZ, Minnesota
BILL JOHNSON, Ohio                   JOHN BARROW, Georgia
JON RUNYAN, New Jersey               RUSS CARNAHAN, Missouri
MARLIN A. STUTZMAN, Indiana
Vacancy
Vacancy

            Helen W. Tolar, Staff Director and Chief Counsel

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                           February 17, 2011

                                                                   Page
U.S. Department of Veterans Affairs Budget Request for Fiscal 
  Year 2012......................................................     1

                           OPENING STATEMENTS

Chairman Jeff Miller.............................................     1
    Prepared statement of Chairman Miller........................    52
Hon. Bob Filner, Ranking Democratic Member.......................     3
    Prepared statement of Congressman Filner.....................    53
Hon. Doug Lamborn................................................     4
Hon. Michael H. Michaud..........................................     5
Hon. Dan Benishek................................................     5
Hon. Bruce L. Braley.............................................     6
Hon. Ann Marie Buerkle...........................................     6
    Prepared statement of Congresswoman Buerkle..................    53
Hon. Jerry McNerney..............................................     6
Hon. Jeff Denham.................................................     7
Hon. Silvestre Reyes, prepared statement.........................    54

                               WITNESSES

U.S. Department of Veterans Affairs, Hon. Eric K. Shinseki, 
  Secretary......................................................     8
    Prepared statement of Secretary Shinseki.....................    54

                                 ______

American Veterans (AMVETS), Christina M. Roof, National Acting 
  Legislative Director...........................................    41
    Prepared statement of Ms. Roof...............................    86
American Legion, Timothy M. Tetz, Director, National Legislative 
  Commission.....................................................    42
    Prepared statement of Mr. Tetz...............................    92
Disabled American Veterans, Joseph A. Violante, National 
  Legislative Director...........................................    40
    Prepared statement of Mr. Violante...........................    79
Paralyzed Veterans of America, Carl Blake, National Legislative 
  Director.......................................................    36
    Prepared statement of Mr. Blake..............................    64
Veterans of Foreign Wars of the United States, Raymond C. Kelley, 
  Director, National Legislative Service.........................    38
    Prepared statement of Mr. Kelley.............................    67

                   MATERIAL SUBMITTED FOR THE RECORD

Background Material:

  U.S. Court of Appeals for Veterans Claims, FY 2012 Budget 
    Estimate.....................................................    96

Pre-Hearing Questions and Responses for the Record:

  Pre-Hearing Budget Questions, Honorable Jeff Miller, Chairman, 
    U.S. Department of Veterans Affairs Budget Request for Fiscal 
    Year 2012....................................................   109

Post-Hearing Questions and Responses for the Record:

  Hon. Jeff Miller, Chairman, Committee on Veterans' Affairs to 
    Hon. Eric K. Shinseki, Secretary, U.S. Department of Veterans 
    Affairs, letter dated March 16, 2011, also forwarding 
    questions from Hon. Jeff Denham, Hon. Bill Flores, and Hon. 
    Jon Runyan, and VA responses.................................   121
  Hon. Bob Filner, Ranking Democratic Member, Committee on 
    Veterans' Affairs to Hon. Eric K. Shinseki, Secretary, U.S. 
    Department of Veterans Affairs, letter dated March 7, 2011, 
    and VA responses.............................................   160
  Hon. Bob Filner, Ranking Democratic Member, Committee on 
    Veterans' Affairs to Carl Blake, National Legislative 
    Director, Paralyzed Veterans of America, Raymond C. Kelley, 
    Director, National Legislative Service, Veterans of Foreign 
    Wars of the United States, Joseph A. Violante, National 
    Legislative Director, Disabled American Veterans, and 
    Christina M. Roof, National Acting Legislative Director, 
    AMVETS, letter dated March 7, 2011, and Response from the 
    Members of The Independent Budget, letter dated April 7, 2011   169
  Hon. Bob Filner, Ranking Democratic Member, Committee on 
    Veterans' Affairs to Tim Tetz, Director, National Legislative 
    Commission, American Legion, letter dated March 7, 2011, and 
    response letter dated April 11, 2011.........................   172


                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                  BUDGET REQUEST FOR FISCAL YEAR 2012

                              ----------                              


                      WEDNESDAY, FEBRUARY 17, 2011

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

    The Committee met, pursuant to notice, at 10:03 a.m., in 
Room 334, Cannon House Office Building, Hon. Jeff Miller 
[Chairman of the Committee] presiding.

    Present: Representatives Miller, Bilirakis, Lamborn, Roe, 
Benishek, Buerkle, Denham, Flores, Huelskamp, Johnson, Runyan, 
Stutzman, Filner, Reyes, Michaud, Braley, McNerney, Donnelly, 
Walz, Barrow, and Carnahan.

              OPENING STATEMENT OF CHAIRMAN MILLER

    The Chairman. And I now turn the Committee's attention to 
today's scheduled budget hearing. Thank you very much.
    As the Secretary and his folks make their way forward, I 
would like to add that we do have votes that are going to be 
called within the next few minutes. I apologize for that. We 
were hoping that we would be able to get the bulk of this 
meeting done without the interruption. But in order to get our 
business done, we need to have early votes today.
    So I would ask folks when they do their opening statements 
this morning to please bear that in mind so that we can get to 
the Secretary for his opening statement, his testimony, and 
also for us to have the opportunity to ask questions.
    Mr. Secretary, thank you so much for being here today, 
bringing your team to present the President's 2012 Budget for 
the Department.
    I also recognize all the veterans service organizations 
(VSOs) that are represented here today and we look forward to 
working with each of the VSOs very closely and the U.S. 
Department of Veterans Affairs (VA) as we all work to improve 
the delivery of benefits and health care to those who have been 
in service to our country.
    Everybody knows this is a tighter budget year and it is 
going to be very difficult to measure because right now we do 
not have a full appropriations for every VA account for the 
current fiscal year.
    That being said, if the numbers in the House Continuing 
Resolution (CR) bill are carried forward, the President's 
budget is roughly a three and a half percent increase in 
discretionary spending relative to the current spending, 
needless to say, this is a much more measured increase.
    I think what is important for us to all remember is it is 
not necessarily the percentage of the increase, but it is, in 
fact, whether we are meeting our obligations to American 
veterans and to the taxpayers of this country. And to that end, 
I have a couple of observations that I just want to bring 
forward.
    First, I am interested in learning how this budget will 
chart a path to address the broken disability claims system. 
Staffing compensation since the late 1990s has tripled. 
Numerous information technology (IT) tools have been utilized. 
There have been different organizational models attempted and 
nothing has appeared to work. And so I want to know what this 
budget will do in taking a new approach to meeting this 
challenge.
    Second, I am interested, as you and I have already 
discussed, Mr. Secretary, how this budget is prioritized to 
meet the needs of the family caregivers of the severely wounded 
Iraq and Afghanistan veterans. The reaction to the initial 
plan, as most of us have seen, has been negative. And I want to 
explore ways we might be able to refocus resources for this 
important, very important initiative.
    Third, I want to know what energy went into eliminating 
wasteful, redundant spending. The bipartisan Deficit Reduction 
Commission suggested that every agency, VA included, step up to 
the plate to meet the challenges of eliminating wasteful and 
redundant spending.
    Mr. Secretary, I have to say when I look at this budget and 
I see that it proposes a funding level for the Office of the 
Secretary that is 41 percent higher than 2009 levels, 50 
percent higher for the Office of Congressional and Legislative 
Affairs, 96 percent higher for the Office of Policy and 
Planning, and 140 percent higher for the Office of Public and 
Intergovernmental Affairs, it does raise questions and red 
flags.
    Also, there is some curious budgeting mechanisms that have 
been requested and put in place, the contingency fund that is 
in there is one. I want to know how Congress can appropriate 
money for this contingency fund how exactly it will be used.
    Also, the budget proposes that we appropriate money that 
you can save through management efficiencies so that it can 
carry that money forward into another fiscal year. These are 
new concepts and I think each Committee Member is anxious to 
get details on those.
    Look, we are acutely aware of the fiscal and economic 
crisis that this country faces, a debt of $14 trillion, a 
deficit this year of $1.55 trillion, and unemployment hovering 
at just under 10 percent on the average and with veterans, a 
higher number than that. We have work to do. Together we have 
work to do.
    I want to borrow a quote from recent history because it 
touches on the challenges that we face in finding a balance 
between meeting our obligations to veterans and keeping in mind 
fiscal limitations. ``The Committee Members have kept in mind 
the fiscal limitations within which we must operate if we are 
to get Federal spending under control and thereby reduce the 
Federal deficit and debt. We believe that the government can be 
fiscally responsible while still fulfilling its commitments to 
the most deserving among us, including our Nation's veterans. 
We are also mindful that uncontrolled Federal spending 
threatens the long-term health of the Nation's economy and in 
turn could adversely affect the provision of veterans' 
benefits. Thus, we recognize those who have worn the uniform in 
defense of the Nation seek, as we do, to protect the health of 
the Nation's economy.''
    You might think that comes from a tea party group. It 
really does not. This was a letter that was sent in 1997 signed 
by every Member of the Senate Veterans' Affairs Committee both 
Democrat and Republican, including the current Chairman of the 
Senate Veterans' Affairs Committee. Times are different. The 
deficit then was $128 billion. Now it is 10 times higher.
    Moving forward, I think that every one of us can work 
together to find common ground on difficult choices that are 
ahead.
    I would like to turn the microphone now over to the Ranking 
Member, Mr. Filner.
    [The prepared statement of Chairman Miller appears on p. 
52.]

              OPENING STATEMENT OF HON. BOB FILNER

    Mr. Filner. Thank you, Mr. Chairman.
    If I may spend 2 minutes on something we did last week 
because I think you and this Committee ought to be 
congratulated.
    I have been in politics for over 30 years and I have never 
seen such a quick and profound reaction to a hearing than we 
had from JPMorgan Chase. We had a hearing that you called, Mr. 
Chairman, on some of the actions taken by JPMorgan Chase that 
were adverse to both the law and to the interest of our 
fighting troops.
    They responded within a few days. They have lowered their 
interest rate below what is required by law. They made all 
active duty eligible even though they did not have a loan 
before they were on active duty. If they foreclosed on people 
improperly, they are giving the homes debt free, I mean, no 
payments to the servicemembers. They formed a Veterans Advisory 
Council. They are hiring veterans. They are making a thousand 
homes available over the next few years to our veterans.
    The hearing was incredible. I appreciate what you have 
done, and I think we have helped a lot of servicemembers and 
made their lives more secure. So thank you, Mr. Chairman. It 
was an incredible response to a hearing.
    Secretary Shinseki, thank you for being here. I do 
associate myself with the remarks of the Chairman. I am also 
looking forward to our Independent Budget panel. But, you know, 
Mr. Secretary, like the Chairman, I have questions regarding 
some of your assumptions and estimates. But if you tell me and 
tell this Committee that this is what you need to get the job 
done in this fiscal year, then I am going to offer you, and I 
hope we all do, our support and fight to get the funding levels 
that you say you need.
    Like the Chairman, I have concerns about the contingency 
fund, the operational improvements that are built in there and 
whether they will work. But the bottom line is that we have to 
work with you to assure that all our veterans get the care they 
need.
    I am looking forward to The Independent Budget, also. Many 
of you know that for years, I have been waving this around as 
my Bible and we will continue to take what they have said very 
seriously. I hope you will be here to also hear that, Mr. 
Secretary. We look forward to your testimony.
    I think we are having votes and probably we will come back 
afterward. It is up to you, Mr. Chairman.
    [The prepared statement of Congressman Filner appears on 
p. 53.]
    The Chairman. We have 11 minutes on the clock right now. I 
would ask the Committee, what is your pleasure? I know that 
everybody probably has a statement that they would like to read 
or present. Would you like to start that process or would you 
like to hear from the Secretary?
    Guys, you want to go ahead and do your opening statements 
or let the Secretary begin?
    Mr. Johnson. I would rather do our statements so he is not 
interrupted when he makes his.
    The Chairman. Okay. Very well. We will recognize Mr. 
Lamborn for his opening statement.

             OPENING STATEMENT OF HON. DOUG LAMBORN

    Mr. Lamborn. Thank you, Mr. Chairman. And I will make a 
very brief opening statement.
    I want to thank you, Secretary Shinseki and Members of the 
panel, for your service and hard work on behalf of the men and 
women of our Armed Forces and veterans. Your tireless efforts 
have made it possible for our veterans and families to secure a 
better future in terms of health care and compensation.
    I want to personally thank Secretary Shinseki for his 
personal involvement in bringing a community-based outpatient 
clinic (CBOC) and a veterans' cemetery to Colorado District 5. 
We look forward to hearing the results of these endeavors in 
the near future.
    We also eagerly await the start of the new VA medical 
center in Denver and we are hoping that the level of funding 
will keep the construction on track. There are over 100,000 
veterans in my district and they look forward to the new 
services that it brings to Colorado.
    To the veterans' support organizations, I thank you for 
your work on behalf of veterans. Your advocacy gives millions 
of veterans a voice and a sounding board for many of their 
issues.
    And, distinguished Members of the panels, I salute you and 
I look forward to your testimony today.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. Thank you, Mr. Lamborn.
    Mr. Reyes.
    Mr. Reyes. Thank you, Mr. Chairman.
    Mr. Secretary and members of your team, welcome.
    And I will just insert my statement for the record. Thank 
you.
    [The prepared statement of Congressman Reyes appears on 
p. 53.]
    The Chairman. Thank you very much.
    Dr. Roe.
    Mr. Roe. Welcome, General Shinseki. Look forward to your 
comments.
    And I yield back.
    The Chairman. Thank you very much.
    Mr. Michaud.

          OPENING STATEMENT OF HON. MICHAEL H. MICHAUD

    Mr. Michaud. Thank you, Mr. Chairman and Ranking Member, 
for having this hearing.
    I, too, want to thank you, Mr. Secretary, for your 
unwavering support in service and commitment to our veterans of 
this Nation and everyone on this panel.
    Looking at the Administration's budget, it actually 
reflects a lot of the shared priorities of Members of this 
Committee such as rural health, mental health, and homeless 
veterans' issues.
    I do want to single out your commitment to investing in 
innovation and technology to better serve our veterans. I had 
an opportunity earlier this week to actually meet members of 
your staff that head up the VA information technology (IT) 
Program and am impressed with the exciting work that they are 
undertaking and want to thank you for moving forward in 
technology.
    With that, Mr. Chairman, I yield back.
    The Chairman. Dr. Benishek.

             OPENING STATEMENT OF HON. DAN BENISHEK

    Mr. Benishek. I just want to say that I am looking forward 
to working with you on this Committee. And I think we will be 
able to make some progress in the care of our veterans. And I 
think it is going to be an exciting time going forward.
    And I would just like to yield back the remainder of my 
time.
    The Chairman. Mr. Braley.

           OPENING STATEMENT OF HON. BRUCE L. BRALEY

    Mr. Braley. Thank you, Mr. Chairman.
    As the Ranking Member of the Economic Opportunity 
Subcommittee, I am very excited about working with Chairman 
Stutzman on creating economic opportunities for veterans across 
the country. I think at a hearing like this, it is important to 
put a human face on what the Veterans Administration does.
    I just want to share, especially with my new colleagues, 
this is a young family in Dubuque, Iowa, Andrew, Jenny, and 
Brody Connolly, who moved into a new home on November of 2010 
with a specially adapted housing grant. Andrew served honorably 
in Iraq, came home with a service-related disability, and that 
program which we help oversee has made an enormous impact in 
their lives, especially with their profoundly disabled son, 
Brody.
    This is the housewarming party that they had. And they are 
wearing sweatshirts, Mr. Chairman, that say this house was 
built on hope and love. That is what the VA does for people.
    This is a young man from Dubuque, Iowa, Christopher 
Billmeyer, who lost both of his legs above the knee and is 
recovering at Bethesda right now.
    This is another young man in my district, Staff Sergeant 
Ian Ralston, who went to school with my daughter, Lisa, and was 
paralyzed from the neck down because of an improvised explosive 
device (IED) explosion.
    And this is why the Chairman's comment about the Caregivers 
and Veterans Omnibus Health Services Act is so important. We 
have thousands of disabled veterans who depend on those 
caregivers. And in rural places like Iowa, it is increasingly 
difficult to find qualified caregivers.
    And I had the opportunity to speak with the Secretary about 
that. I look forward to his comments about what we will do 
together to get that program off the ground.
    And I yield back.
    The Chairman. Thank you very much.
    Members, I am watching the clock, so we are in good shape. 
We are at 6 minutes right now.
    Ms. Buerkle.

          OPENING STATEMENT OF HON. ANN MARIE BUERKLE

    Ms. Buerkle. Thank you, Mr. Chairman.
    As a freshman Member of the Committee and as the Chair of 
the Subcommittee on Health, I take very seriously my 
responsibilities to ensure that the Department of Veterans 
Affairs is adequately funded to provide our veterans with the 
benefits that their service afforded them.
    We are all aware of the current economic situation in our 
country, our $14 trillion debt, our unemployment rate. There is 
no doubt we have to take a critical look at how our country 
spends our tax dollars.
    However, the laws providing care to our veterans were some 
of the first laws enacted by Congress and because our founding 
fathers understood and had the foresight that America's 
veterans deserve the gratitude of a grateful Nation and 
providing care and benefits for those who have proved so worthy 
will make our country stronger.
    I hope that our hearing this morning will point the way 
towards close cooperation among all of us who advocate for our 
Nation's veterans to respond to their evolving needs and to 
those of their families.
    Thank you, Mr. Secretary, for your service and for being 
here this morning.
    Also, thank you to the veterans service organizations for 
being here as well.
    I yield back.
    [The prepared statement of Congresswoman Buerkle appears on 
p. 53.]
    The Chairman. Mr. McNerney.

            OPENING STATEMENT OF HON. JERRY McNERNEY

    Mr. McNerney. Thank you, Mr. Chairman.
    On Monday night, I had the honor of having dinner with two 
severely-wounded veterans, one with a traumatic brain injury 
(TBI) that is very similar to the injury that Ms. Gifford 
suffered in January. He was recovered, did not have much use of 
his right side. And so when I shook hands with the left side, 
he was very excited. But he is absolutely determined to get to 
college and learn history so that he can teach high-schoolers 
about our Nation's history. That is why I am here today. That 
is why this Committee is so important.
    So thank you for your work and thank all the Members for 
working together to serve our veterans.
    The Chairman. Mr. Denham.

             OPENING STATEMENT OF HON. JEFF DENHAM

    Mr. DENHAM. Thank you, Mr. Chairman.
    Chairman Miller, Ranking Member Filner, thank you for 
holding this hearing. I think that this will most likely be the 
most important hearing that we hold this year. I do not say 
that lightly because I know that we are going to be addressing 
a number of very, very important topics for our veterans.
    But at a time when we are going to see more veterans return 
home than we have since Vietnam, we had better be prepared to 
be able to fulfill our commitment to our servicemembers and 
make sure that the benefits that they so deserve are there and 
available.
    With that, I also want to welcome Secretary Shinseki. Thank 
you for spending a lot of your time with various new Members. 
We certainly appreciate your openness.
    Also, I am impressed with your plan to reduce the backlog 
of disability claims in my district especially. It is one of 
the top casework issues that we have and probably one of the 
most important. Our disabled veterans, we need to make sure as 
Members of Congress that they are receiving the benefits that 
they need and deserve and at the same time, the process that 
you are putting in place or that you put in place not only will 
better serve those veterans, but, as I understand, reduce costs 
as well.
    So, you know, again with the budget, you know, we are 
looking at reducing spending in every area of the budget. I 
believe that there is justification here for an increase, but 
that also comes with a great deal of responsibility, oversight. 
We want to make sure that the money that is allocated goes 
exactly where it is needed and that is to our huge influx of 
veterans that will be coming home, many of which have suffered 
different issues than previous veterans. Whether you have lost 
a home, you know, maybe a relationship, or a job, we need to be 
prepared not only with economic development but those health 
benefits and making sure that we can reintegrate them back into 
civilian life.
    Thank you.
    The Chairman. We are down to 2 minutes, so we will recess 
at this point. We have 14 votes. They are going to be 2-minute 
votes, so we will return as quickly as we can.
    The Committee stands in recess.
    [Recess.]
    The Chairman. Bear with us for just one more second. The 
Ranking Member is here and he will be right with us.
    Again, Mr. Secretary, we apologize for the votes, but thank 
you for coming today.
    And on the first panel, we are going to hear from the 
Honorable Eric Shinseki, Secretary of the United States 
Department of Veterans Affairs. The Secretary is accompanied by 
the Honorable Robert Petzel. He is the Under Secretary for 
Health for the Veterans Health Administration (VHA); Mr. 
Michael Walcoff, Acting Under Secretary for Benefits in the 
Veterans Benefits Administration (VBA); Steve Muro, the Acting 
Under Secretary for Memorial Affairs in the National Cemetery 
Administration (NCA); and the Honorable Roger Baker, Assistant 
Secretary for Information and Technology and Chief Information 
Officer; and, finally, W. Todd Grams, the Acting Assistant 
Secretary for Management.
    Mr. Secretary, as usual, your written statement will be 
made a part of the record and you are now recognized.

STATEMENT OF HON. ERIC K. SHINSEKI, SECRETARY, U.S. DEPARTMENT 
  OF VETERANS AFFAIRS; ACCOMPANIED BY HON. ROBERT A. PETZEL, 
       M.D., UNDER SECRETARY FOR HEALTH, VETERANS HEALTH 
 ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; MICHAEL 
WALCOFF, ACTING UNDER SECRETARY FOR BENEFITS, VETERANS BENEFITS 
 ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; STEVE L. 
  MURO, ACTING UNDER SECRETARY FOR MEMORIAL AFFAIRS, NATIONAL 
 CEMETERY ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; 
 HON. ROGER W. BAKER, ASSISTANT SECRETARY FOR INFORMATION AND 
TECHNOLOGY AND CHIEF INFORMATION OFFICER, OFFICE OF INFORMATION 
  AND TECHNOLOGY, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND W. 
 TODD GRAMS, ACTING ASSISTANT SECRETARY FOR MANAGEMENT, OFFICE 
       OF MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Secretary Shinseki. Thank you, Chairman Miller.
    Ranking Member Filner, other distinguished Members of the 
House Committee on Veterans' Affairs, thanks for this 
opportunity to present the President's 2012 budget and 2013 
advanced appropriation request for the Department of Veterans 
Affairs.
    I will just speak in general to the Members of the 
Committee. It was helpful for me to meet with so many Members 
of this Committee prior to the hearing. I did not get to visit 
every Member because of schedule alignments, but I assure you 
that I will follow-up and complete those visits.
    Members were generous with their time, Mr. Chairman, and I 
appreciate it very much.
    This Committee's support for our Nation's veterans has been 
unequivocal and unwavering. I have said that before. I say it 
again. And that support has never been more necessary or 
appreciated.
    Let me also acknowledge, as you did, the representatives 
from some of our veterans service organizations in attendance 
today. They provide insights into veterans' needs and how VA 
might consider better addressing them. Those insights are 
always helpful to our workforce, our great folks who come to 
work each and every day to serve veterans, but there is more 
that we can all do to even better serve them within the 
resources we have. And we are always open to new ideas here.
    Mr. Chairman, thank you for introducing the members of the 
VA leadership team who are here with me. I will just point them 
out, Roger Baker on the extreme left; Todd Grams, our Chief 
Financial Officer (CFO) here; I think most know Dr. Petzel, our 
Chief Medical Officer, Under Secretary for Health; Mr. Mike 
Walcoff from Veterans Benefits; and Steve Muro from our 
National Cemetery Administration, who is also the President's 
nominee to fill the position of Under Secretary for NCA.
    Thank you for accepting my written statement, Mr. Chairman.
    Let me just say that the VA budget is large and complex, 
and I think you alluded to that in your opening comments, 
important enough to be sure because it cares for those who have 
safeguarded the Nation so that others can do what Americans do 
best and that is out-create, out-work, and out-produce the rest 
of the world.
    Maybe the economy has lost a bit of sparkle for the moment, 
but I trust the instincts, the ingenuity, the intelligence, and 
the intellectual power of the American people. Less than 1 
percent of our citizens who serve in the military enable the 
rest of us, the rest of the Nation to unleash the economic 
engine to do what we have historically done and that is win.
    And when members of the military transition back into their 
communities to add their time and talent to that economic 
engine, VA's mission is to care for those who have borne the 
battle and their spouses and orphans as President Lincoln 
reminded us 146 years ago now.
    And to do that, VA is a large integrated health care 
system, perhaps the largest in the Nation. It is also our 
largest national cemetery system with credentials as the top-
performing institution in the country over the past 10 years as 
reflected in the American Customer Survey Satisfaction Index.
    VA also manages the country's second-largest education 
assistance program. It guarantees nearly 1.4 million 
individuals home loans at zero down payment with the lowest 
foreclosure rates in all categories of mortgage loans.
    Finally, VA is the eighth largest life insurance entity in 
the country with a 96 percent customer satisfaction rating.
    Why is the VA enterprise so large and complex? Mr. 
Chairman, I would just offer simply because in times past, 
those who wore the Nation's uniforms were often unable to 
either acquire or afford these services on their own.
    Our mission--to provide or arrange for the care of veterans 
who need us once the uniforms come off--is rooted in President 
Lincoln's promise of 1865. We deliver on the promises of 
presidents and fulfill the obligations of the American people 
through those who have borne the battle.
    Today, the Nation's military remains deployed in two 
different operational theaters, conflicts that have been 
underway for most of the past decade in Afghanistan and Iraq. 
And we are all very familiar with the results that we see as 
our youngsters come home.
    The burden on our magnificent all-volunteer force and their 
families in accomplishing every mission without failure, 
without fanfare, or complaint has been enormous. VA's 
requirements have grown over that time as we address long-
standing issues from past wars and watch the requirements for 
those fighting the current conflicts grow significantly.
    These numbers will continue to rise, perhaps for several 
decades, after the last American combatant departs Iraq and 
Afghanistan and we must be prepared to absorb them.
    This budget request is the Department's plan for meeting 
our obligations to all generations of veterans effectively, 
accountably, and efficiently.
    At present, about 8.3 million veterans depend on VA for 
medical care and benefits, but over 22 million veterans and 
another 35 million spouses and adult children see themselves as 
veterans, a part of veterans' families whether or not they 
visit one of our medical centers or apply for benefits.
    Lots of people are counting on us to get things right for 
veterans. We need your continued support, Mr. Chairman, and I 
look forward to working with you to serve them.
    To resource VA's efforts, the President's budget request 
would provide $132.2 billion in 2012, almost $61.9 billion in 
discretionary resources, and $70.3 billion in mandatory 
funding. Our discretionary budget request represents an 
increase of $5.9 billion or 10.6 percent over the 2010 enacted 
level.
    Since I appeared before this Committee last year, we have 
published and implemented our strategic plan to continue 
transforming VA into an innovative 21st Century organization 
that is people-centric, results-driven, and forward-looking.
    Our 2012 and 2013 budget plans are based on four goals in 
that strategic plan. First, continue improving the quality and 
accessibility of VA health care, benefits, and services; 
second, increase veterans' satisfaction with the care and 
services we provide them now; third, raise readiness to 
continue the provision of care and services at a time of 
crisis; and, finally, improve VA internal management systems.
    Achievement of these goals mandates our constant and 
consistent good stewardship of the financial resources 
entrusted to us by the Congress both in the current constrained 
fiscal environment and during less stressful times.
    We have designed management systems and initiatives to 
maximize efficiency and effectiveness and eliminate waste, 
including VA's project management accountability system, P-M-A-
S, PMAS as it is often referred to, a new acquisition strategy 
to make more effective use of our IT resources.
    Second, VA's transformation 21 total technology, T4. T4 
consolidates our IT requirements into 15 prime contracts and 
leverages economies of scale to save time and money, enabling 
greater oversight and accountability.
    Our strategic capital investment plan, S-C-I-P, SCIP, 
defines and assesses VA's capital portfolio and enables 
improved efficiency of operations.
    Last November, we launched two on-line metric systems, one 
called LinKS, standing for Linking Information, Knowledge, and 
Systems, LinKS, and the other one Aspire. Together these 
systems allow VA to transparently increase our quality of 
health care against private sector benchmarks.
    VA successfully remediated three of four long-standing 
material weaknesses in 2010 and earned our 12th consecutive 
clean audit opinion on our consolidated financial statements.
    Finally, we have implemented Medicare standard payment 
rates and consolidated contracting requirements to reduce cost 
and waste within the system.
    A recent independent study, which covered a 10-year period, 
found that VA's health IT investments between 1997 and 2007 
were $4 billion while savings from those investments were more 
than $7 billion. More than 86 percent of the savings resulted 
from the elimination of duplicated tests and reduced medical 
errors.
    Furthermore, reduced workload and lowered operating 
expenses were additional byproducts resulting in cost savings.
    The 2012 budget continues to focus on our three key 
transformational priorities: expanding veteran, family, and 
survivor access to benefits and services; reducing and 
ultimately eliminating the claims backlog; and ending veterans' 
homelessness by 2015, three visible and urgent issues for VA.
    A comprehensive review is underway to reuse VA's inventory 
of vacant or under-utilized buildings to house homeless and at-
risk veterans and their families where practical.
    Congress allocated $50 million to renovate unused VA 
buildings and VA has identified 94 sites with the potential to 
add approximately 6,300 units of housing through public and 
private ventures using VA's enhanced use lease authority.
    The enhanced use lease legislative authority is scheduled 
to lapse at the end of calendar year 2011, this year, and its 
reauthorization is needed to continue to increase housing for 
homeless veterans and their families.
    The most flexible and responsive housing option remains the 
U.S. Department of Housing and Urban Development-Veterans 
Affairs Supportive Housing (HUD-VASH) voucher on which we work 
quite closely with the Department of Housing and Urban 
Development. Both Secretary Donovan and I endorse the 
importance of this joint effort to care for our homeless 
veterans. Right now our only option is the HUD-VASH voucher for 
housing veterans with families.
    As advocates for veterans and their families, VA is 
committed to providing the very best services to all veterans. 
I will do everything possible to ensure that we wisely use the 
funds that Congress appropriates to VA to improve the quality 
of life for veterans innovatively and transparently as we 
deliver on the enduring promises of presidents and the 
obligations of the American people.
    Again, thank you for this opportunity to appear before this 
Committee. And I look forward to your questions, Mr. Chairman.
    [The prepared statement of Secretary Shinseki appears on p. 
54.]
    The Chairman. Thank you very much, Mr. Secretary.
    And with the Members' indulgence, I know we did not finish 
opening statements. But in view of the fact the Secretary has 
had to wait during our votes, I would like to ask if we can go 
ahead and continue on and everybody will have an opportunity if 
they wish to have their opening statements.
    Mr. Secretary, one of the first things the leadership did 
in this new Congress was to require a 5 percent budget cut on 
our staffs and Committees, including this one, as a matter of 
fact. And in looking in the budget, I see tremendous increases 
and I alluded to them in my opening statement.
    So, you know, I think the thing this Committee wants to 
know is, number one, does the agency understand, and I know you 
do, but explain to us, that you understand the current fiscal 
condition that this country is in? And these increases that are 
being made to support staff that do not directly impact the 
veterans and their benefits, just explain to us why such large 
increases.
    Secretary Shinseki. Thank you, Mr. Chairman.
    Let me call on our Chief Financial Officer to provide some 
details on some of the offices you covered. I will speak about 
the Office of the Secretary and then I will wrap up at the end.
    Mr. Grams. Thank you, Mr. Chairman.
    The increases that you are referring to I believe are in 
the staff offices at the Department level at the VA. In total, 
those increases from 2011, which we are assuming a freeze under 
a Continuing Resolution until we actually see what comes out of 
that, to the request in 2012 is about 13 percent.
    Half of that increase is for the President's initiative. It 
is about $24 million to strengthen and enhance the acquisition 
workforce. And this is part of a government-wide initiative 
that is across all departments, not only in the VA.
    This is important to us because part of our plan for 
decreasing waste and getting more efficient and having savings 
lies in our ability to reduce the spending in the $16, $17 
billion that we have every year in VA acquisitions.
    Of the remaining increases in the staff offices that are 
left, it is around 6 or 7 percent. Those increases are to help 
us strengthen and finish up the requirements of Homeland 
Security HSPD-12, which relates to the safety and security of 
our employees as well as the veterans who come to our 
facilities.
    We are also looking to enhance our General Counsel's office 
so that we can more timely publish regulations and deal with 
issues in front of the U.S. Court of Appeals for Veterans 
Claims (CAVC).
    There are also increases requested in our ability to do 
modeling and data analysis so that we can better project future 
needs of veterans and then also provide better oversight as we 
go forward.
    Secretary Shinseki. Mr. Chairman, I think one of the points 
you made was the Office of the Secretary also showed an 
increase. That increase is $834,000, about a 9 percent 
increase.
    There was an arrangement where in the past, people have 
been detailed from outside the office to work in the Office of 
the Secretary and so they are paid for elsewhere and, yet, they 
work in my location. I ended that this year. I said if they are 
going to work in my office, we are going to pay for it and that 
is what you see reflected here, so that accountability for how 
that money is being spent is properly accounted.
    I would say when we get around to talking about things like 
the savings we are generating, some of this overhead, if you 
will, is designed to drive the better results of our 
expenditure funds and we can demonstrate what savings we have 
been able to realize.
    The Chairman. Mr. Grams, you, I think, were talking about 
expected CR levels off 2011. And if we go back to 2009, I think 
the number is 33\1/2\ percent increase from 2009.
    Mr. Secretary, if we go back to 2009 with the Office of the 
Secretary, we have seen a 41 percent increase. So while the 
numbers may appear small as compared to the line in the CR, we 
are still talking about an increase on top of a very large 
increase; is that correct?
    Mr. Grams. Yes, sir. I think there has been growth through 
2009. When you look at the Office of the Secretary, and it 
relates to what the Secretary said earlier in terms, let's say, 
straightening out who is detailed or who is actually on the 
Secretary's rolls, which is what he was referring to, my 
understanding is that, I believe it was in 2009, there was a 
decision made to put certain organizations in the Office of the 
Secretary that had previously been in some of the other 
Assistant Secretaries' offices. And that is part of the growth 
from 2009 through 2012 as well.
    The Chairman. Okay. Thank you.
    I see my time is expired. Mr. Filner.
    Mr. Filner. Thank you, Mr. Chairman.
    Mr. Secretary, you rightly pointed out the importance of 
the HUD-VASH Program. The HUD-VA Supported Housing Program 
provides permanent housing and ongoing treatment service to 
hard to serve homeless veterans with chronic mental illness, 
substance abuse, and other disabilities. And you pointed out 
how important this is.
    The Continuing Resolution that is on the floor that was 
sponsored by the majority party eliminates the HUD-VASH Program 
for the rest of this fiscal year.
    Do you have the numbers of how many veterans that might cut 
off from vouchers? Do you have any numbers there that can help 
us?
    I may propose an amendment later on today that tries to 
restore that funding, but I think it is disgraceful that it was 
eliminated from the budget.
    Secretary Shinseki. Congressman Filner, I believe that the 
allocation for this year would have been about 10,000 which is 
the number of HUD-VASH vouchers we have been provided in the 
past, but that exact number is----
    Mr. Filner. Okay. Again, you and the Administration have 
devised what you called a zero tolerance for veterans' 
homelessness over the next 5 years. That is the disgrace of 
having those who have served our Nation on the streets without 
getting the kind of help you want to eliminate. I greatly 
applaud you for that and we are going to try to do everything 
we can to support that.
    But when one of the cornerstones of that program, the HUD-
VASH Program, is cut, it makes it that much more difficult. I 
am sorry that it is going ahead in the CR. I hope the Senate 
does not accept that.
    The Chairman. Will the gentleman yield time?
    Mr. Filner. Yes.
    The Chairman. Actually, the HUD-VASH Voucher Program is not 
being eliminated from the CR; is that correct, Mr. Secretary?
    Secretary Shinseki. I am not current.
    The Chairman. Well, as I understand, there are, I think, 
30,000 that were already done. You have 19,000 that have 
already been allocated. I think there are 11,000 out there that 
have not been and they are still in the CR. So, again, I think 
the important thing is they are not being eliminated.
    Mr. Filner. I do not know how you could say that, if I can 
reclaim my time. If you eliminate the funding, how many 
vouchers are left? We are talking, of course, for the remainder 
of the fiscal year. Those that you have said were allocated 
were not. But the funding is zeroed out. So how do you expect 
any vouchers to be given out later?
    The Chairman. There will be 11,000 vouchers still left to 
be issued.
    Please continue. And that was on my time.
    Mr. Filner. But the funding has been zeroed out, so I am 
not sure how we reconcile that. We will try to figure that out.
    But in any case, I think it is disgraceful that we are 
moving in that direction. These are folks, again, who have 
served our Nation.
    The one subject that has concerned us over the years, Mr. 
Secretary, is the elimination of the claims backlog. You have 
taken an approach since you have been Secretary to get the 
numbers down by force, by hiring--you have hired, I do not 
know, over 10----
    Secretary Shinseki. Brute force.
    Mr. Filner. Brute force. You have hired over 10,000 new 
people, roughly that, and, yet, we have not brought down the 
backlog at all. It has increased. I do not know if you want to 
try to defend that brute force. You know, you are not an Army 
Secretary anymore. You are into peaceful stuff.
    But it seems, and just for the new Members here, I have 
advocated a brute force approach that eliminated the backlog 
rather quickly by using the so-called Linda Bilmes approach to 
mainly recognize the claims if they have been prepared with a 
veterans service officer.
    I am thinking of a compromise where you do not need to 
comment on now, but you might think about, that we do the 
Bilmes approach maybe for a year or two. Similar to the way an 
organization that wants to reduce its overhead so they buy out 
people and let them retire early. If we buy out or give an 
offer of a buy-out and say it offers people 30 percent, which 
is a little bit above the average of their disability, and they 
will not go further in the system, but they get their check 
now, we might eliminate half a million of those claims right 
away.
    I think we ought to figure out an outside the box thinking 
of going after those claims. We are never going to do it by 
this brute force. I do not know, over 10,000 new hires and we 
have not broken into backlog that at all.
    I think we are going to have to cut the backlog down as far 
as we can go with one swift buy-out and then take all the new 
things that you have been developing in the last couple of 
years to speed things up. You can start from a base of 
somewhere near zero, and you may be able to keep up with it.
    I do not want to give up on all those new things that you 
have been doing, but I do not think we are ever going to get it 
down to a reasonable number unless you take a meat ax on the 
brute force approach. I cannot think of the right metaphor 
here.
    Secretary Shinseki. May I comment?
    Mr. Filner. Please.
    Secretary Shinseki. We look at every opportunity to take on 
a new idea. And you and I have discussed this before, 
Congressman Filner, and I am happy to continue this. We will 
look at this option you offer us.
    May I just call on a couple of our folks here to give you 
an update on where we are with regard to the investments we 
have made here? I will call, first of all, on Mike Walcoff to 
talk about the business processes we are doing and then on 
Roger Baker for the IT piece of this.
    And very quickly, please.
    Mr. Walcoff. Thank you.
    Mr. Filner, there certainly has been very generous support 
from Congress over the last several years and we have hired a 
number of people. The number when you look at our compensation 
and pension (C&P) workforce, has gone from about 7,500 in 2005 
to around 14,000 now. So that gives you some idea. It is a 
pretty big increase.
    And I believe that the hiring of those people has made it 
so that the elimination of the backlog is a reasonable goal. 
Through efforts to address not only people but also our process 
as well as technology, our production over the last year went 
over a million for the first time. We had an increase of 10 
percent in production for 2009.
    The receipts, however, were 1.2 million. They went up 18 
percent last year and 14 percent the year before. So the 
question is, how do we eliminate that. And the fact is that 
there are problems with our capabilities that we have to 
address, and the things that we are doing to address that 
involve technology.
    The Veterans Benefits Management System, which is our 
paperless system, we need to complete development of that. This 
is going to improve our efficiency. It is going to improve our 
quality and it is going to improve our timeliness.
    The veterans relationship management initiative is going to 
make it so that veterans can communicate with us on their 
terms. And the Virtual Lifetime Electronic Record (VLER) 
Project, the development with VA and U.S. Department of Defense 
(DoD), is the third piece of the technology that we really need 
in order to eliminate that backlog.
    The good news is that in 2012, this budget year, we will 
get to the point where we are producing more cases than we are 
getting in. And that is the beginning of the elimination of the 
backlog.
    The other thing that is going to happen in 2012 is we begin 
rolling out the Veterans Benefits Management System (VBMS) so 
that paperless technology begins going to our regional offices.
    Secretary Shinseki. Secretary Baker.
    Mr. Baker. Just quickly, Congressman Filner, I would tell 
you that the VBMS Program is on track. We are using the very 
successful techniques that we use to deliver the new GI Bill 
system on time to meet the VBMS system. And so we look forward 
to deploying that in conjunction with VBA. It will take 
technology to break the back of the backlog.
    Mr. Filner. My time is up and I will yield back. I just 
want to say for all of the freshmen, if we look at the 
transcripts from this hearing over the last 10 years, over 20 
years, we have heard the exact same issues. We are going to 
break the back next year, we are going to break the back. So I 
hope you are right, but I do not see it happening.
    Secretary Shinseki. Mr. Filner, I share your frustration. I 
do not take it lightly. But in the past, I think we have said 
that for the first time in this year, 2011, a 27 percent 
increase to the VBA budget gives them the resources to go get 
the tools. And we are on the verge of getting those tools. I 
will continue to look at this option of how to cut back on the 
processing time and perhaps see how the Linda Bilmes model 
fits.
    Mr. Filner. Yes.
    Secretary Shinseki. We are in a big numbers game. When we 
arrived 2 years ago, we produced 977,000 decisions and 
everybody was celebrating. We got a million claims in. And as 
Mr. Walcoff just suggested, last year----
    Mr. Filner. Make up for it.
    Secretary Shinseki [continuing]. We exceeded a million and 
got a million two in. So we are in a numbers game and----
    Mr. Filner. Okay. Will the Chairman allow me just 1 more 
minute.
    Another issue that I don't have the exact numbers, if 
somebody has it please tell me. This Nation has been saying for 
the last year or two, it is time to say welcome home to our 
Vietnam vets who we never really welcomed home as a Nation.
    There must be hundreds of thousands of them that have Agent 
Orange claims that get sicker fighting the VA bureaucracy than 
they did from the original illness probably. I believe we ought 
to think about saying thank you and welcome home finally by 
granting these Agent Orange claims, get those out of the 
system.
    It is another way to break the back. I do not know how many 
you have. I would guess a couple hundred thousand, but I do not 
know for sure. But I would ask the Committee to think about 
finally saying welcome home to the Vietnam vets.
    Do you have any numbers there?
    Secretary Shinseki. I can provide numbers----
    Mr. Filner. Okay.
    Secretary Shinseki [continuing]. From where we are in 
processing claims of Vietnam veteran Agent Orange claims. We 
have a count and we are pushing them out just not as fast as we 
would like.
    [The VA subsequently provided the following information:]

        As of April 4, VA has received over 189,000 Agent Orange claims 
        based on the newly established presumptive conditions. Of the 
        approximately 93,000 previously denied claims from Veterans 
        with Vietnam service (Nehmer claims), 26,955 claims have been 
        completed thru April 4. Of the nearly 60,000 claims received 
        from October 2009 announcement through publication of the final 
        rule, 45,787 claims have been completed thru April 4. VA was 
        required to hold all claims based on the new Agent Orange 
        presumptive disabilities until publication of the final 
        regulation and expiration of the 60-day Congressional review 
        period on October 30, 2010.

    Mr. Filner. I thank the Chairman for his indulgence.
    The Chairman. Thank you very much.
    And very quickly, Mr. Grams, again, in the CR, is it your 
understanding that the HUD-VASH has been zeroed out?
    Mr. Grams. I have not personally seen the legislation, sir. 
What I have been advised----
    The Chairman. You are the CFO.
    Mr. Grams. I am.
    The Chairman. Okay. I will answer for you.
    Mr. Grams. Okay.
    The Chairman. It has not been zeroed out. And I would like 
to ask my colleague to provide me where it has been. The 
baseline is 30,000. Those that are in the system stay in the 
system. There are 11,900 left. Those can still be allocated. We 
have been told that that is more than enough. I say more than 
enough. More than what VA can actually handle between now and 
the end of the fiscal year.
    So with that, Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chairman.
    Secretary Shinseki, we had a really good visit in my office 
recently. You gave me the courtesy of giving me a personal 
call. And we were able to talk about a lot of issues.
    So with that in mind, Mr. Chairman, and for the sake of 
time, I will yield back.
    The Chairman. Mr. Reyes.
    Mr. Reyes. Thank you, Mr. Chairman. And may I say it is 
good to be back on the Committee.
    Mr. Secretary, this goes back along the same lines what the 
Ranking Member was talking about. You and I have discussed this 
many times, including before I temporarily left the Committee. 
The issue pertains to DoD and VA's inability to establish a 
system, an electronic system that facilitates the transfer of 
records. Records pertaining to whatever claims an individual 
may have when they come out of active duty and become part of 
the VA system.
    We had Secretary Gates in our Armed Services Committee 
yesterday and I mentioned it to him, encouraging him to work 
with you to finally establish a system that, as the Ranking 
Member and the Chairman have said, is seamless in terms of how 
we handle a servicemember's information.
    We know when individuals are going to end their service. We 
know that in many cases, at least, well at least in El Paso and 
Fort Bliss, areas that, as you know, I represent, many soldiers 
will be going to the VA. It would be very helpful and it would 
likely save money, to be able to settle on a system, which 
would allow the VA and the DoD to talk to each other.
    We still have, as Mr. Filner mentioned, we still have many 
Vietnam veterans, and I am particularly sensitive because I am 
a Vietnam veteran, that are still struggling with the claims 
under Agent Orange and others. It seems to me, for the sake of 
being able to provide better service, there ought to be a 
better way for the VA and the DoD to computerize and at least 
serve those veterans that are coming out of Iraq and 
Afghanistan and other parts of the world.
    And I know, believe me, I appreciate your efforts. You are, 
I think, our best champion in terms of taking care of veterans. 
But can you speak to the point of creating a singular digital 
network?
    Secretary Shinseki. Absolutely, Congressman. I am going to 
call on Mr. Baker for a technical update. But let me just say 
that, and I mentioned it before this Committee before, 2 years 
ago as I was waiting to be sworn in, both Secretary Gates and 
I, we shook hands and agreed that we were going to go to work 
on this seamless transition, of which the electronic health 
record was a key part.
    Following that, in April of 2009, the President stood on 
the stage with both of us and said we are going to develop 
something call LVER, the virtual lifetime electronic record, 
which has a medical piece and a personnel piece, in order to 
get to this seamless transition we all talk about.
    What it is for me is when a youngster raises his right hand 
and takes oath of office upon entering the military, Air Force, 
Navy, whatever, with this system, a duplicate record will be 
created in VA so as that individual is deployed, gets sick, is 
promoted, goes to school, all of that is being replicated in 
VA.
    And when the uniform comes off, if that individual chooses 
not to come and enroll with us right away, which is a choice, 
we will at least have captured the key data so that when they 
do come back, if they do, 20 years later and say there is 
something wrong here, we have a way to establish identity and 
tie it to an event that might have occurred during their 
service. This is the intent.
    I just met with Secretary Gates again the first week in 
February. We renewed our pledge to go after the single 
electronic health record.
    I think in Chicago where VA and the DoD have combined our 
efforts to produce an integrated hospital with the Navy and VA, 
we have an opportunity to do a proof of principle to put in 
place an electronic health record that both sides would use and 
then find out whether it serves, and what needs to be done to 
improve it.
    I am out of time here. Mr. Chairman, may I have just a 
minute to provide an update on the electronic health record?
    The Chairman. Yes, sir.
    Mr. Baker. Thank you, Mr. Secretary. I will make this 
quick.
    We have, over the last year, made great progress on the 
President's virtual lifetime electronic record initiative and I 
will just highlight two things for you in that program.
    The first is DoD and VA are jointly moving forward as the 
implementers of the nationwide health information network, 
which will then tie the private sector and other Federal 
agencies like the Social Security Administration into the 
provision of information that will let us provide better 
service at the benefits end as an example there.
    We have also moved forward with a single, common Web portal 
for servicemembers. As the Secretary referenced, when they 
raise their right hand and are sworn in, now in their left 
hand, they are handed the log-in to that Web portal. That stays 
with them through their lifetime. Whether they are a 
servicemember or a veteran, all of the information about their 
service is put on to that portal. And so everything new we 
bring in is brought together there so they can constantly have 
access to it as can we so as to provide that information.
    Those are the sort of things that we are doing inside the 
lifetime electronic program to achieve the President's vision 
of that lifetime electronic record.
    As the Secretary said, the most substantial thing we can do 
to make that happen is a single common electronic health record 
system with DoD. We are close at this point. The Secretary and 
Secretary Gates have driven the two Departments to come to that 
agreement. We have had a lot of work over the last 4 or 5 
months to come to agreement on what that is.
    I believe that will happen with strong guidance from the 
secretaries in the next month or two and that will be a very 
substantial push forward on the LVER front.
    Mr. Reyes. Can I just ask one follow-up? When you say 
close, what does that mean and, secondly, of the whole realm, 
what percentage is computerized as you describe it right in 
your records?
    Mr. Baker. As to the percentage computerized, I believe 
that anyone who is seen now has a large percentage of what they 
do computerized.
    The issue you spoke to--going back to Vietnam-era vets--is 
primarily paper and the records that come out there are then 
dealt with from a paper standpoint. That is why the Veterans 
Benefits Management System is so important to this. It is 
bringing them in, even if we get them as paper, bringing them 
in, turning them into electronic and turning them into data 
that we can really use when we access those.
    As to the definition of close, we have recently had a 
series of meetings at the highest levels to make that decision 
and determine what the path forward will be.
    I believe that the two departments have never had a greater 
opportunity to nail this down and nail it shut. And I believe 
that it should happen in the next month or two to come to final 
agreement that this is where we are going, we will have a 
single record, and it will be along this path.
    Mr. Reyes. Thank you.
    The Chairman. Dr. Roe.
    Mr. Roe. To continue with what Congressman Reyes was 
talking about you know you are a freshman Congressman when you 
go to Great Lakes, Illinois, in January for your Codel. We went 
there at Great Lakes where the Navy trains their folks. And it 
was a VA and the military had a hospital there. This was over a 
year ago.
    The Secretary and I talked about this. Thank you for coming 
by the other day, and we had a great conversation. The problem 
with it was, as you were pointing out, I am a physician and 
here we have a troop over here and we have two sets of medical 
records. The DoD and VA systems cannot talk to each other. A 
lot of smart people have tried. We spent $10 billion and they 
still cannot talk to each other.
    I was on the Oversight and Investigations Subcommittee at 
that time. I want to go back and revisit that because that was 
over a year ago and they were supposed to make the systems able 
to talk to each other.
    To Congressman Filner's point, we have heard this before. I 
really thank the Secretary, and I agree, somebody has to blink 
and there is going to have to be one record because right now 
with two, we will be sitting here 20 years from now doing the 
same thing. So great point that you made. And we will talk 
about this after.
    And I know Mr. Baker is as good as there is in technology. 
I do know that. He is spot on. But somebody, either the 
Secretary of the VA or Secretary Gates, is going to have to 
make a decision and pick one record, a winner or a loser, and 
then go with it. And people are going to have to deal with it. 
Otherwise, we will be sitting here 10 years from now and spend 
another $10 billion. I think the point that the Chairman made 
is a very good one.
    In the county I live in, we have just cut 5 percent of our 
county budget. In the State I live in, Tennessee, we have a $1 
billion budget hole that Congress running this Committee has 
cut 5 percent.
    And I was looking at the amounts of money we have spent on 
VA, which is a good thing, the Post-9/11 G.I. benefit, but we 
have gone in fiscal year 2008 from $90 billion to $126 billion 
this is a substantial increase in spending in the VA. And I 
think the thing that I am most concerned with is if we are 
getting a bang for our buck. And I will give just an example.
    I saw there was another $6 million in funding included in 
the budget for the the Vision Center of Excellence. We heard 
all the testimony in the last year or two about the Vision 
Center of Excellence, and I still do not know whether it works 
or not. I do not have a clue.
    So I would like to see that brought up. And when we spend 
this money, are we getting value for the money. I think that 
was the thing. And I think everybody wants that. Do we have 
metrics out there we can measure and are we getting value for 
our money?
    Secretary Shinseki. Dr. Petzel.
    Dr. Petzel. Thank you, Mr. Secretary and Dr. Roe.
    The Vision Center for Excellence, as I hope everybody 
knows, is a VA/DoD enhanced care initiative. We have spent in 
the VA about $1.5 million and are in the process of executing 
an obligation for the remaining $5.4 million of the initial 
commitment that was made in support of this through fiscal year 
2014.
    That total commitment was $6.9 million. The staffing that 
we are supporting there are deputy directors, some vision 
rehabilitation analysts, and an administrative assistant that 
provides support.
    They have developed their eye injury registry. They 
continue to expand their capabilities to store data, keep track 
of the transit of the veteran, of combat soldiers that are 
injured, veterans and their transition from that status into 
our organization.
    And I do believe that we are getting value for the limited 
amount of money we are spending there, Dr. Roe.
    Mr. Roe. And we will have time for that later.
    Another thing that I have noticed in my home area where our 
VA hospital is, we have the CBOCs, which I think are a 
tremendous asset. I cannot say enough good things about the 
CBOCs. I think they need to be expanded. Certainly in this 
budget, I do not know whether you can, but I think they should 
be.
    But in most of our CBOCs that we have, there are waiting 
lists for veterans to get in. One in Morristown, Tennessee, has 
over 500 veterans who cannot get in that CBOC. They still have 
to go to the main VA not near their home. And Knoxville, 
Tennessee, has huge waiting lists as well.
    The other question, and, again, my time is running short, 
and I am in a rural district like Mr. Michaud is, we both serve 
rural areas, we have $250 million last year that was supposed 
to be spent on rural access to care, I guess, I do not know how 
it was spent. And that is what I would like to know. I did not 
see the value in my local district about how that $250 million 
in rural health was spent.
    And I do not know whether you did, Mike or not.
    Dr. Petzel. That is an excellent question. As Congress has 
generously over the last several years given us $250 million a 
year to spend on rural initiatives and a good portion of that 
money went to support new CBOCs, Congressman, a good portion of 
that money went for telehome health, that is where we put tools 
into the home, connect them directly to the medical 
professionals.
    Mr. Roe. Can a Veterans Integrated Services Network (VISN) 
director request money from this $250 million for a CBOC 
because those are great investments?
    Dr. Petzel. Oh, absolutely. The way this was done in the 
first 2 years is that we sent out a request for proposals to 
every one of the networks. They came back to us with proposals 
on how they would like to spend that rural money. We funded it. 
We kept track of how the money was spent. And, again, 
telehealth, telemedicine, transportation networks, new CBOCs, 
all of those things were included in the grants.
    Mr. Roe. My time is expired, but I would like to talk 
further about that, and I yield back.
    Secretary Shinseki. Congressman Roe, I will close the loop 
with you. I mean, we owe you a sharper point on the pencil here 
on specifically CBOCs if you are talking about if we have that 
many veterans waiting to get in. We will find out what was 
requested and how it was addressed.
    The Chairman. Mr. Michaud.
    Mr. Michaud. Thank you very much, Mr. Chairman.
    And, Mr. Secretary, I have several questions and actually 
part of it was what Mr. Roe has talked about. And the problem 
when you look at the rural health initiative, if they are able 
to get money for a CBOC, the problem comes in the maintenance 
of those CBOCs. I do not think you can get those operating 
funds out of the rural health and that is where the problem 
comes in.
    A couple of questions and I will ask them in the order that 
hopefully you can answer them in because of the time limit.
    Last year, as you know, I raised serious concerns about the 
VA implementing the regulations with the new payment schedule 
for State veterans' nursing homes. These payment rates actually 
have put some State veterans' nursing homes in a financial 
liability situation where they have actually stopped taking 
veterans, especially for those veterans' homes that are States 
that have high Medicare, Medicaid patients.
    This year, the VA is implementing new regulations that may 
have similar impact on veterans in need of dialysis care, 
especially those living in rural areas. I understand that the 
patient access issues were raised at the stakeholders during 
the regulation process. I would like to better understand VA's 
plans to address the access issue as it relates to the 
dialysis.
    The second question, you mentioned in your testimony that, 
and Congress is concerned, about the resources we are giving. 
We are trying to make sure we, you know, make the best of 
whatever dollars that we do give. You point out in your written 
testimony a method by which you can save millions of dollars 
eliminating redundant evaluations. I was just kind of curious 
if you could elaborate a little about that.
    Another question would come up over and over again when you 
look at the Veterans Equitable Resource Allocation (VERA) model 
as far as the VISN distributing money within a VISN, a big 
issue that has come up over and over again, for instance, the 
increased funding we have given veterans for mileage 
reimbursement.
    For instance, Togus gets $1.5 million, $1.6 million from 
the VISN to reimburse veterans in Maine. However, it costs 
between $5 and $6 million. So, automatically, a health care 
facility in a rural area is operating in the red because of the 
model that is given them as they distribute the money.
    And my last question, you mentioned earlier the strategic 
capital investment planning process. Does that process take 
into consideration where you might have some facilities that 
are on the historic list and they might not be able to actually 
renovate the facilities as need be? So those are my four 
initial questions.
    Secretary Shinseki. Mr. Michaud, let me ask Dr. Petzel to 
address the State veterans' homes arrangements and then the 
rural aspects of this.
    Mr. Michaud. Yeah. But, actually, it was on the dialysis 
issue.
    Secretary Shinseki. And dialysis as well.
    Mr. Michaud. Yes.
    Dr. Petzel. Thank you, Mr. Secretary.
    Congressman Michaud, what the Congressman is referring to 
is that we are going to a reimbursement system for fee-basis 
dialysis that uses a Medicare rate and there was some thought 
that there were some providers who would not be willing to 
accept the Medicare rate and would not be willing to 
participate.
    We did a survey. We looked. We did not find anyone at the 
level of providing services in a town was threatening to do 
that. We left open the possibility that if there are existing 
contracts, those can stay in place and we will use those rates. 
And if we need to contract above the Medicare rate in an 
ongoing fashion in order to get the services, we will do that.
    We absolutely share your concern and we do not want any 
veteran in rural America or any place that needs dialysis not 
to have access to that.
    Secretary Shinseki. State veterans' homes.
    Mr. Michaud. The second one was on the savings, limiting 
redundant evaluations. Can you elaborate.
    Secretary Shinseki. Evaluations, redundant evaluations.
    Dr. Petzel. Are you talking about Integrated Disability 
Evaluation System (IDES) or are you talking about the 
Disability Evaluation System that we are doing in DoD?
    Mr. Michaud. No. I thought you were looking at doing some 
work with Centers for Medicare and Medicaid Services (CMS). 
Well, CMS, actually, they evaluate nursing homes. And it is my 
understanding that VA also evaluates nursing homes. You have a 
check-off list and I think there is only eight questions 
difference between what CMS does and the VA does. And I was 
wondering what is happening in that effort.
    Dr. Petzel. We are trying to accommodate ourselves, 
Congressman, to the CMS process. We do not want to have 
redundant evaluations that basically are finding the same 
things using almost, as you point out, virtually the same tool. 
And that is being worked through.
    But then my hope is that in the not too distant future, we 
will have that settled and we will be using the same tool or we 
will be relying on CMS evaluations and not having to do our 
own. That is an excellent idea.
    Mr. Michaud. Okay. Thank you.
    And the VERA model, have you looked at that as far as the 
inequities in rural areas?
    Secretary Shinseki. VERA, like any model, responds to 
quality input. And I must say when you get into the rural area, 
they are unique and we have to be sensitive to this. But the 
VERA model responds to use. A number of people come in and 
establish a pattern of requirement. Then the VERA model will 
respond to that.
    And the challenge to the rural areas is dispersion. It is 
hard to get to see that population. And we need to be sensitive 
to this, Mr. Michaud, and figure out a way to see whether or 
not we have tweaked the model sufficiently.
    Mr. Michaud. Well, I mean, it gets back to Mr. Roe's 
concern and my concern is, the VERA model is there, but if we 
are required by law that we reimburse veterans with 41 cents a 
mile and you have a rural area that are getting reimbursed a 
mile, but they only get from the VISN office a third of what it 
actually costs to provide the service, it puts an inequity upon 
that health care facility.
    As I mentioned earlier, Maine, we spend between $5 and $6 
million at Togus. They only get $1.5 million. They are at a 
disadvantage. Rural areas are getting hurt. The model is right, 
but they are not getting the money for it and, therefore, they 
have to actually cut back on services in rural areas, which 
actually could hurt when you look at CBOCs and funding those 
programs in rural areas because they are not getting the 
adequate funding that they are supposed to get.
    Dr. Petzel. Congressman Michaud, just to respond to that 
question. We have established a different mechanism for 
distributing money from the networks to the facilities. VERA 
takes the money from Central Office and distributes it to the 
network. We have a different model with much more flexibility 
in it that distributes money from the network to the individual 
medical centers.
    I will talk with Dr. Mayo Smith on the opportunity for them 
to do what they need to do to accommodate that discrepancy. I 
certainly do not want a medical center in Maine or any other 
rural area to be disadvantaged because the veterans have larger 
travel distances and there is a larger travel bill for those 
people. So we will look into that, sir.
    The Chairman. Ms. Buerkle.
    Ms. Buerkle. First of all, I want to start by saying that 
several weeks ago when I was in the district, I had the 
pleasure of touring our VA hospital. Syracuse, New York has a 
very large VA facility there. And Mr. Cody took me on a tour. I 
had the pleasure of meeting the senior staff there. And I just 
want to tell you the senior staff and Mr. Cody, it is apparent 
to me that this is just not a job. It is a mission to them. The 
facility was topnotch. We had an excellent tour.
    And, most importantly, when I had the opportunity to talk 
to patients, they were pleased with their care, the services 
they were receiving. And I think you should know that it was a 
very positive meeting and we look forward to working together.
    Also, several weeks ago when we met in my office, one of my 
concerns that we discussed was the payment methodology issue, 
the inconsistencies and the various reimbursement formulas that 
were a little confusing because there was no consistency.
    I see here in your testimony that you are going to apply 
the Medicare payment methodology, which will be a more--it will 
be more consistent and it will be less confusing for everyone. 
You talk about saving $275 million in 2011 and then $315 
million in 2012. But this system has not been put in place yet 
is my understanding. You are just rolling out.
    And so I would like to ask you to explain to us how you, 
you just made this decision in February, how you would expect 
that we would have that much of a savings in 2011 when it has 
not been implemented yet.
    Secretary Shinseki. Fair enough. It is a fair question. We 
just put it in place this month and the system is running. And 
the estimates are that we are going to achieve those outcomes. 
They are estimates. We will have to see how we progress here to 
see whether we achieve those savings. We are pretty 
comfortable. It is a conservative model.
    Ms. Buerkle. Do you have a time table for when all the 
hardware and all the software will be and you will be able to 
do the automatic payments and get away from the manual?
    Mr. Baker. I do not off the top of my head have that one. 
We just had a review and I am trying to recall that, but we 
will have to get back with the specifics on the date for that. 
It is in the near term, but I do not have the specific dates in 
my head.
    Ms. Buerkle. Thank you.
    The other question I had was with regards to the Caregiver 
Assistance Program. I have heard from veterans, and you rolled 
out a plan last week. Can you just talk to us a little bit 
about your expectation for the program and how many veterans 
you would anticipate and families being eligible for that 
program and then beyond that, if you think that that number is 
consistent with the number Congress intended?
    Secretary Shinseki. First, Congresswoman, I regret the 
delay that occurred in transmitting the implementation plan to 
the Congress. There was an expectation it would be here 
November. Did not get here until February. All kinds of reasons 
why all those things happened that way. They are my 
responsibilities. And so I apologize for that.
    Let me just assure you that even as the legislation was 
being crafted, we began in a parallel way in VA writing what we 
thought were going to be potential regulations that we might 
need. At the time, our proposal was to use, in trying to get 
the payments going as quickly as possible, an existing 
mechanism that is there today called Aid and Attendance. And we 
have been using Aid and Attendance for eight decades now and 
providing that kind of support to veterans.
    Our position did not prevail and so we were required to 
create a new payment methodology. This time, for the first time 
in my understanding, we provide this support directly to the 
caregiver. We have never done that before. And so we are in the 
process of creating regulations that do not exist.
    And, unfortunately, the regulation process is a long and 
involved one and requires legal review. Congress has an 
opportunity to review it as well. We put our thoughts out for 
public comment and stakeholders have an opportunity to make 
comment. And then we have to address each one of them. So it is 
an involved process which we were hoping to avoid.
    That said, we are going as fast as we can. What we were 
asked to do was to look at the Iraq and Afghanistan population 
and address the caregiver requirements there. As we did that, 
we came to understand because we held sensing sessions with 
veterans' caregivers and others, including DoD, that there was 
some interest in caregivers of previous generations, World War 
II and Vietnam, whose families have been dealing with the same 
problems for decades.
    And we are trying to write a regulation that meets the 
immediate requirement and that is to get payments going to the 
Iraq and Afghanistan veterans and caregivers and, yet, keep the 
opportunity open that if Congress says there is a better way to 
do this that we can also address the requirement over time.
    A good policy we arrive at here would also have the 
capability of addressing veterans and caregivers of the next or 
yet to be determined conflict in the future. So it is an issue 
of fairness. We are trying to get it right. And then we will 
await the comments from folks that suggest that we ought to, 
you know, look more closely at this.
    I think we have established a population for the immediate 
requirements of the Iraq and Afghanistan population. I think 
that number is about 840, I think, is my understanding. But 
that is a start point. That number is subject to review. And we 
are, as I say, going as fast we can. We would like to turn this 
quickly.
    Ms. Buerkle. Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Carnahan.
    Mr. Carnahan. Thank you, Mr. Chairman.
    I first want to say it is a pleasure to join this Committee 
and take a special assignment here for this Congress. And I 
want to thank you and Ranking Member Filner for coming to St. 
Louis last year when we were looking at issues at the Cochran 
VA Medical Center. So it is great to be here with you.
    I took this assignment because in my district, we have a 
number of great facilities, the VA facility there at Jefferson 
Barracks, really the national treasure there, the national 
cemetery which we take great pride in.
    And, Mr. Muro, we look forward to working with you.
    But the number one reason that I am on this Committee right 
now is to work with turning around Cochran.
    And I appreciate our discussions we have been able to have, 
Mr. Secretary. And as we wait for some of the national 
investigations that are going on with the administrative 
investigative board, the Inspector General, the U.S. Government 
Accountability Office (GAO) to really pull together those 
results to really engage with our veterans there locally, to 
engage with the employees.
    I had a great conversation with the Director there, Rima 
Nelson, this past week about how to put that together in a 
turnaround plan. We want to work with you to help do that.
    So we look forward to doing that. And I really want to be 
sure that we can address some of these negative issues that 
have come up in substance, but also in perception of the 
community and veterans.
    So I wanted to ask, you know, how we can work together, how 
these resources are going to help focus on those needs there, 
and how you all are going to focus some of the leadership of 
the Department to do that.
    Secretary Shinseki. Let me call on Dr. Petzel and then I 
will wrap up.
    Dr. Petzel. Thank you, Mr. Secretary.
    Thank you, Congressman Carnahan. We are also concerned 
about St. Louis.
    I want to first say that we are very supportive of the 
present Director, Rima Nelson. She has done an excellent job 
since she acquired that job, first of all as an acting, and 
then was given it permanently just around the time that the 
initial problem occurred with the dental processing.
    She has put together with our help and cooperation a four-
part plan that is going to, we believe, turn St. Louis into one 
of our quality and safety and satisfaction leaders. It involves 
what we would call tiger teams composed of people from the 
medical center, from the network surrounding, and with national 
support to look at patient satisfaction, to look at employee 
satisfaction, to look at quality and safety issues within the 
medical center, and then finally to develop a process of 
continuous improvement where they are continuously evolving and 
improving.
    Since Ms. Nelson arrived there, the employee perceptions of 
the medical center have changed dramatically. There is no 
question that 2 or 3 years ago employees did not feel their 
voices were heard. They did not feel as if when they had a 
problem to bring forward, it was being listened to and acted 
on. And now that has changed dramatically.
    Ms. Nelson has set up a process, several processes, in 
fact, where employees can both meet with her regularly and can 
go through a number of different pathways to make their 
concerns known and feedback provided for them to see what has 
actually happened as a result of what they said.
    The union is very supportive of her. The veterans service 
organizations in the community are supportive of what is 
happening there right now. And I am very optimistic that over a 
period of time, it does not happen over night, but over a 
period of time, this is going to be one of our leading 
hospitals, sir.
    Secretary Shinseki. Congressman, you have my assurance that 
we are going to get Cochran where it needs to be and both Dr. 
Petzel and I are committed to doing that with you and anyone 
else who has veterans that come to Cochran for care.
    The first incident that occurred about a year ago was a 
failure in leadership in my opinion, not the leadership at the 
director level, but inside the dental department. That 
individual has been replaced.
    This latest event where a nurse in the surgical ward saw 
spots on an instrument and did what we would expect anyone to 
in that position, called it to the attention of her superiors 
and they suspended surgery until they could figure out what 
caused them.
    What is clear is that it is not a result of unsanitary 
conditions. It is not blood. It is not pathogens. It is not 
tissue. Discoloration on the instrument, we are still 
investigating exactly what caused them. We think there may be a 
chemical basis for this. As soon as we have that answer, we 
will begin surgeries again.
    Mr. Carnahan. Great. Thank you.
    And I see I am out of time, but if I could indulge just one 
15-second comment. The other issue just is critical. And we 
recently lost one of our veterans who served on my veterans 
advisory panel back home from suicide. And the dramatic rise we 
have seen in suicides nationally among our veterans, I hope 
that we can all again redouble our commitment and our focus to 
those issues because it has really been a national problem. And 
I hope that these additional funds for mental care and so forth 
within the VA can really help turn that around.
    Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Huelskamp.
    Mr. Huelskamp. Thank you, Mr. Chairman.
    And thank you, Secretary, for being here today and being by 
my office earlier in the week. And we discussed there that 
Pratt, Kansas, was selected as one of the sites for the pilot 
program you are calling Project Arch. And I know Pratt is 
scheduled to be up and providing services hopefully by mid 
2011.
    Is VA on track to meet that targeted date?
    Dr. Petzel. Congressman, thank you very much for the 
question.
    As you pointed out, Project ARCH was passed by Congress and 
there are five sites that we are beginning a pilot in each one 
of them. And Pratt, Kansas is indeed one of them. These are on 
track. We are calling this phase one. These are all on track to 
be hopefully up and running by the end of fiscal year 2011.
    We will evaluate those initial efforts and then begin based 
on the evaluation to open up other sites in those five networks 
that are part of the pilot. The networks, just for your 
information, Network 1, northern Maine; Network 6, Virginia; 
Network 15, Kansas; Flagstaff, Arizona, Network 18; and 
Billings, Montana, Network 19.
    Mr. Huelskamp. Thank you.
    How quickly do you think you will be able to provide an 
assessment of how that is working?
    Dr. Petzel. The plan is that 6 months into the operating 
pilot, we would assess the impact, assess the cost, and make 
decisions about whether or not we are going to proceed with 
other sites and, if so, where.
    Secretary Shinseki. By this fall, we expect to have the 
analysis done.
    Mr. Huelskamp. Okay.
    Secretary Shinseki. We have set aside sufficient funds to 
do this.
    Mr. Huelskamp. In addition to that, I appreciate that 
answer and look forward to hopefully the success of that pilot 
program.
    In addition, just in general, how does this budget assist 
veterans in rural areas that have limited access to facilities? 
How does this initiative protect those veterans in that 
situation?
    Dr. Petzel. That is an excellent question. I come 
originally from Minneapolis where I ran a network that was 
incredibly rural, and I have great empathy for the inability 
that we have sometimes to reach people in these remote 
communities.
    First of all, there is a 69 percent increase in the amount 
of telemedicine and telehealth money that we are spending. We 
believe that telehome health particularly is the wave of the 
future in terms of reaching the particular remote areas. The 
ability to monitor patients at their home, have a television, 
computer connection with them, the instruments to measure their 
blood pressure, their EKG, their heart rate, is going to be a 
major modality for reaching rural America.
    Secondly, there is again $250 million worth of rural health 
money that is going to be used for pilot projects, perhaps a 
clinic in Tennessee.
    And then the third component of this is contracting and fee 
basis. In many communities, we just are not able to provide VA 
owned and operated facilities. And we use fee-basis care quite 
substantially, $4 billion of it actually each year, to try and 
reach remote rural areas.
    While we are trying to get and will get a handle on our 
fee-basis cost and expenditures, I am expecting that there will 
be an increase in our use of this modality in the rural parts 
of this country.
    Mr. Huelskamp. And how is the provider response to the fee 
basis that you mentioned? A lot of folks involved in that or--
--
    Dr. Petzel. I think it is excellent. When we use fee basis 
in the community, we are working with the other community 
providers. We are not a competitor. We are not seen as a 
competitor by them. We are seen as a partner. So it is often 
very successful.
    Mr. Huelskamp. All right. Thank you, Mr. Chairman.
    Secretary Shinseki. Congressman, I would just add on fee 
basis, non-VA care where we pay a fee for care downtown, in 
2011, based on what comes out of the CR, we had estimated $4 
billion going into caring for veterans who get their care in 
other than VA facilities, about a million people.
    And then in the rural discussion we just had prior to that, 
there are about three million veterans who live in these rural 
and highly rural areas and the challenge for us is how do we 
ensure that one of those rural veterans has the same 
opportunity as someone living in, you know, suburbs of 
Washington, DC, to have their health care needs met. And it is 
something we pay attention to.
    Mr. Huelskamp. Thank you, Mr. Secretary. I appreciate that 
recognition.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman.
    And, Mr. Secretary, thank you to you and your team for 
being here with us today.
    I am very grateful to the brave men and women who have 
served our country and I believe that our veterans, as I had 
mentioned to you, are the segment of our society that most 
deserves our sincere gratitude and assistance. So I applaud 
what you and your team are trying to do.
    The Department of Veterans Affairs has the most important 
and singular responsibility of caring for our Nation's veterans 
and that is a promise that we made to them for their sacrifice 
to our country and for the cause of freedom.
    In turn, it is the role of the Congress to ensure that the 
VA is both effectively carrying out that responsibility and 
that it has the funding necessary to fulfill that promise.
    It is also our responsibility to ensure that veterans 
returning home are made aware of the benefits that they are 
entitled to and that they receive the necessary assistance to 
ease their transition back into civilian life and the 
workforce.
    We have, in that regard, a very difficult task ahead us to 
create a budget that holds spending in line in order to bring 
down the national debt while simultaneously providing veterans 
with the quality health care benefits and services they 
deserve.
    In order to efficiently provide these services, we must 
also ensure that programs provided by the VA are not only cost 
effective but are managed with discipline and accountability. 
And I know your team is trying to do that.
    I welcome this opportunity to discuss the budget the 
President has proposed and to work with your team and my 
colleagues to ensure that the needs of our veterans will be met 
in this upcoming fiscal year. So thank you again for being 
here.
    The virtual lifetime electronic record, is there a timeline 
for achieving that? Is this an active program? I mean, what is 
the status of that?
    Mr. Baker. The VLER Program we break into four different 
what we call capability areas. Each one of those will have an 
initial operating capability by 2012.
    So, for example, in the first area, which is health 
information for health purposes, we will have rolled out the 
nationwide health information network across the country at all 
VA facilities from an IT perspective by 2012. And the 
facilities will be implementing their connectivity to their 
local health information exchanges in that time frame. So each 
of them has an initial operating capability in the 2012 time 
frame.
    As you can imagine, it is, inside of VA and DoD, what we 
call a pervasive program. It touches everything. So as an 
example, what we did very early on was agree with DoD that 
there would be a single identifier for every servicemember and 
it would be the DoD's Electronic Data Interchange Personal 
Identifier (EDIPI), getting into the vernacular, but the number 
that they issue that identifies every servicemember.
    We have then also said that all of our databases will 
contain that identifier. It will take a long time to convert 
all of those databases to that, but the effect is that all of 
our applications, when they go to look for information for a 
veteran, can rely on that identifier being there to find the 
information on the veteran.
    So a lot of capabilities that we have, if you will, kicked 
off and started to work on will take quite a number of years to 
really roll that through all of the various systems at agencies 
like the VA and the DoD.
    Mr. Johnson. But is there a formal project manager that is 
overseeing this and is there a timeline and a project plan and 
a strategic plan to get from point A to point Z?
    Mr. Baker. Yes. There is a very detailed project plan on 
this one. It is actually in our vernacular called an operating 
plan. It is one of the major initiatives overseen by the deputy 
Secretary. So there is a detailed plan, detailed timelines. I 
am happy to provide that to you. It may be more than you want 
to read, but happy to provide it from that standpoint.
    [The VA subsequently provided the following the operating 
plan entitled, ``FY11-13 Virtual Electronic Record (VLER) 
Initiative Operations Plan,'' by the Office of Information and 
Technology, U.S. Department of Veterans Affairs, which will be 
retained in the Committee files.]
    Mr. Johnson. Shifting gears just a bit, does the VA charge 
veterans for a service-connected visit such as an annual exam? 
I am not sure who should answer that.
    Dr. Petzel. Thank you, Congressman.
    No. If a veteran is seen for a service-connected problem, 
they are not charged.
    Mr. Johnson. They are not. Okay. Okay. All right. I think I 
have used up most of my time.
    Thank you, Mr. Chairman.
    The Chairman. You have 17 seconds left.
    Mr. Johnson. I am good. Thank you.
    The Chairman. Mr. Stutzman.
    Mr. Stutzman. Thank you, Mr. Chairman.
    And first of all, I would like to thank Secretary Shinseki 
for, first of all, his service and also service to our vets as 
well as everybody that is here today.
    I appreciate your visit as well a couple of weeks ago. I 
thoroughly enjoyed it and appreciate the information that you 
were able to get to us as well as getting to know you and 
looking forward to working with you in the future.
    We have almost 51,000 plus veterans in my district back in 
Indiana and it is a privilege to serve them. And I know that in 
these tough economic times, it is those folks who are willing 
to serve us that I believe should be standing in the front of 
the line for taxpayer dollars because they were willing to put 
their life on the line as well as those who are serving us 
currently.
    So I am looking forward to working with you in the future. 
Our visit a couple of weeks ago answered a lot of questions for 
me, but I did want to just kind of follow-up with a proposal 
out of the budget.
    In the Fort Wayne facility there in Indiana, the northern 
Indiana facility, it looks like there are a couple of different 
options. And I do not know if you can share or give us any more 
details on what might possibly be coming out of it. I know that 
there are several alternative possibilities there.
    Dr. Petzel. Thank you, Mr. Secretary.
    Congressman Stutzman, right now in the fiscal year 2012 
budget, there is a proposal for leasing 27,000 net square feet 
in Fort Wayne for expansion of primary care, mental health, 
post-traumatic stress disorder (PTSD), substance abuse, and 
some ancillary services to take pressure off of the major 
facilities there.
    Mr. Stutzman. Okay. I mean, as we know, that facility, it 
is an aging facility and one that we have tried to upgrade and 
even rebuild a new facility.
    Looking down the road, is the facility going to be on the 
same campus? Is it going to be close in proximity to the campus 
and then how also does that relate to the mental health to the 
facility in Merriam as well which is just to the south of Fort 
Wayne? Is that going to be taking any services away from that 
facility and bringing it to Fort Wayne? Are these new services 
that are going to be provided in Fort Wayne?
    Dr. Petzel. Congressman, these are services that were 
formerly in the main building and are going to be done in a 
different setting. So these would be things that were already 
being done in that area, but we are going to do them in a new 
modern building in a different way to, again, relieve some of 
the pressure that is on the Fort Wayne facility.
    I would have to get back to you about Marion, Indiana, and 
its relationship to this. I do not have that information at the 
tip of my tongue, but we can certainly get back to you about 
that.
    [The VA subsequently provided the following information:]

          FY 2012 Budget included a proposal for leasing space for an 
        expansion of primary care, mental health, PTSD, substance abuse 
        and some ancillary services in the Fort Wayne area. At this 
        time, it is unknown where the additional clinic space will be 
        located. Congressman Stutzman was informed in a conference call 
        on January 12, 2011, that a competitive solicitation will 
        determine the location of the clinic.
          Fort Wayne, Indiana, is approximately 1 hour from Marion, 
        Indiana. Moving the mental health clinic, PTSD clinic, 
        substance abuse clinic, clinic based home care, telephone 
        triage and fee services to an off-site location from the 
        current Fort Wayne facility will not impact the Marion campus. 
        No new services will be provided, however, access to Veterans 
        for these services, as well as primary care will be improved as 
        capacity for those services is increased.

    Mr. Stutzman. Okay. All right. I appreciate that a lot. And 
we look forward to working with you some more on this and some 
of the ideas that have been proposed. And hopefully, you know, 
our office can be helpful and appreciate the information.
    Dr. Petzel. Absolutely.
    Mr. Stutzman. Okay. Thank you, Mr. Chairman. I will just 
yield back.
    The Chairman. Thank you very much.
    Vice Chairman of the Committee, Mr. Bilirakis.
    Mr. Bilirakis. Thank you, Mr. Chairman.
    Thank you, General. Thank you for your service to our 
veterans, and thank you for your entire service to our Nation.
    We had an opportunity to talk about some of the local 
interests in my district yesterday, so I want to focus on this. 
I want to ask this question. It really does not pertain to the 
budget.
    But are there any particular areas or employees maybe in 
vet clinics, CBOCs, hospitals if the veteran decided to enter 
to the facility to find out general information with regard to 
services and benefits? I know there is a lot of information--
you can get on the Web site and also on the phone and ask 
particular questions. But maybe is there space available for 
certified veterans service officers to see veterans in any type 
of need----
    Secretary Shinseki. Congressman----
    Mr. Bilirakis [continuing]. And is it permitted?
    Secretary Shinseki [continuing]. That is our intent. That 
has not been our history, but that is our intent. We are moving 
that way where our medical facilities also have a 
representative from our benefits administration who can deal 
with those questions.
    Mr. Bilirakis. Is it a budget issue or----
    Secretary Shinseki. It is not. It is culture. We grew up as 
two separate administrations and now we are forcing a marriage 
here. And so I would say in the future that you will probably 
look at collocation of our VBA and VHA facilities so that 
veterans have an opportunity to go to one location and take 
care of business----
    Mr. Bilirakis. Very good.
    Secretary Shinseki [continuing]. With ample parking, which 
is always an issue, ample parking. But these are plans that we 
are right now beginning to consider how we bring this about 
within the budgets we have.
    Mr. Bilirakis. I appreciate that very much because 
sometimes a lot of times, they do not know where to turn to 
and----
    Secretary Shinseki. Just let me call----
    Mr. Bilirakis. Yes.
    Secretary Shinseki [continuing]. Mr. Walcoff to add to 
that.
    Mr. Walcoff. Yes, sir. Just using Florida as an example, 
Veterans Benefits Administration is located in about 15 
different places throughout the State. And in most of those 
places, we are located at a VHA facility. So when a veteran 
comes in for treatment, there is a VBA person right there to 
work with them.
    Mr. Bilirakis. Very good. Common sense. Very good. Thank 
you.
    Every day I hear from my constituents about difficulties 
and delays that are encountered in VA claims. You hear this all 
the time.
    In your testimony, Mr. Secretary, you mentioned the 
accelerated claims process being used for the influx of new 
claims associated with the exposure to Agent Orange.
    Is there a way to expand such an accelerated process to 
reduce the current system-wide backlog and then, if so, what is 
the timeline that we can anticipate realizing such an 
accelerated system and how do you plan to end the current 
backlog through the system that the system faces and what is 
your ideal turnaround time for claims processing and when do 
you think this goal may be realized?
    Mr. Walcoff. Yes, sir. We have several initiatives that are 
aimed at expediting the claims process. An example would be our 
benefits delivery at discharge initiative where we are located 
at bases when veterans are getting out. We take their 
application 60 days before they get out and have their claim 
adjudicated shortly thereafter from when they are discharged. 
We have several programs that are modeled like that.
    In terms of what is our idea of how long it should take, 
our answer to that is we believe that no claim should take more 
than 125 days. And the primary way that we are going to get to 
that is through the technology that we are currently 
developing. The Veterans Benefits Management System, VBMS, is 
the key to us being able to eliminate the backlog. And we 
define that backlog as any case that is over 125 days.
    Mr. Baker. If I could just touch on your point about the 
Agent Orange fast-track system, we have had a good experience 
with that. The main focus there is on establishing what are 
called Disability Benefit Questionnaires (DBQs) or forms that 
ensure that the veteran has an opportunity to provide us all 
the information necessary to process the claim and it can then 
be processed automatically to the point of automatically 
generating a recommended adjudication for the adjudicator to 
then review.
    My understanding is that to fully do the benefits, it would 
be about 79 of those DBQs, all of which need to go through the 
standard forms to be able to be put public. We are working 
those. It is an approach that we like and we believe is going 
to, in conjunction with VBMS, both turn all the paper we 
receive into electronic images, but even more importantly make 
certain that the originating information is electronic, making 
it even easier to deal with and more automatic.
    I believe we said that we are going to put VBMS live in the 
2012 time frame. We see adding more and more of those DBQs to 
the fast-track system as we go along. It is live today, as you 
know, working for Agent Orange.
    Mr. Bilirakis. Thank you very much.
    Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    The Chairman. Dr. Benishek, do you have questions?
    Mr. Benishek. Yes. I am sorry I missed quite a bit of the 
question and answering, but I do have some questions.
    You may know I have spent quite a bit of time at a VA 
hospital and I have some concerns about the answers to the 
questions here. There were five answers reducing indirect 
costs, reducing the costs, you know, the answers to the, you 
know, how are you going to identify waste in that.
    And it was two of the costs that are actually decreasing 
payments to the people that actually do the care or changing 
the mix of health care professionals to the veterans. In other 
words, to me, that means there are going to be less doctors and 
more, you know, adjunct personnel. So I just wondered how that 
relates to quality.
    Similarly with the dialysis, implementing Medicare standard 
payment rates, which is obviously a decrease in the payment 
rate and how difficult it is to, you know, for dialysis to--
that amount is not very much money to pay for dialysis. And 
that is sort of the standard of care. But dialysis payments are 
so low that it is just a bare minimum of what can be done to 
treat dialysis patients.
    So I am just a little upset about the fact that, you know, 
the people that are actually providing the care are two of the 
ways of saving the money. And there is nothing in there about, 
you know, the ratio of people in the VA that do not actually 
care for patients, that are a part of the administrative, 
bureaucratic side of the VA. It does not say anything about 
cutting those people.
    You understand what I am saying?
    Dr. Petzel. Yes, Congressman, and let me respond to that, 
please.
    First of all, we appreciate the fact that you did work at 
the Iron Mountain VA Medical Center. That is a good experience 
and hopefully it is going to be helpful for our interactions 
with the Committee.
    First, the dialysis regulation, the rest of this country 
pays for dialysis using the Medicare rates almost exclusively. 
We are a relatively small portion, I believe it is less than 5 
percent, of the total dialysis business that occurs in this 
country. And the rates that were previously being charged were 
sometimes two to two and a half times the Medicare rate.
    We did not believe that was appropriate. And we think that 
the providers are able to survive, make a profit on the 
Medicare reimbursement rate. It means that veterans or the 
people that care for veterans are not paying anything more than 
the rest of the community is paying to provide those rates.
    So I feel quite comfortable that this is a fair 
reimbursement and a fair way to do it. If we are not able, as I 
said earlier in response to another question, to provide the 
care using Medicare rates, we have the freedom and the 
flexibility to contract for higher rates.
    So if there is a rural community where the provider refuses 
to take Medicare, then we are in a position to contract for a 
higher price.
    In terms of the staff realignments, what we are doing with 
staff realignments is looking to see that the work is being 
done by the most appropriate person so that if a nurse's aide 
can do the work as opposed to a licensed practical nurse (LPN) 
and is trained to do that, they should be doing it. If an LPN 
can do some of the work that an RN was doing and is trained to 
do it, they should be doing that. Same thing applies to 
physicians. We certainly do not want physicians taking blood 
pressures, doing the other things that other people can do just 
as competently.
    Mr. Benishek. I do not think physicians take blood 
pressures anymore. I am just saying----
    Dr. Petzel. I am just using this as an example, sir.
    Mr. Benishek. I know, but that is a bad example. Would you 
rather see a doctor or a nurse when you go to see your health 
care provider? There is a certain something to that, don't you 
think?
    Dr. Petzel. Oh, absolutely. And we are not saying that 
there are not going to be physicians seeing the patients. We 
are saying that we are going to be using people that can do the 
tasks physicians are doing by using other people to do it in a 
more appropriate fashion.
    Mr. Benishek. Oh, I understand that. But the point of my 
question was, you know, there were two things about patient 
care in the cost reduction and there was not anything about 
bureaucratic cuts. I mean, you know, reducing the cost by 
adopting uniform standards for administrative and support 
services, reducing the cost by----
    Dr. Petzel. The item there is all administrative costs. 
That is the indirect cost of care and we are reducing 
substantially the indirect costs of care.
    Mr. Benishek. I just did not see anything about reducing 
the costs if an administration is adopting uniform standards. 
You know, reducing the cost of the administrative portion of 
the thing is my biggest concern, you know, the bureaucracy 
involved with running the system.
    Secretary Shinseki. Congressman Benishek, in our tables 
here, we show a line for medical and administrative support 
savings. In the 2012, the estimate is $150 million. And I 
believe that is sort of the topic area you are looking in.
    Mr. Benishek. Okay.
    Secretary Shinseki. We are happy to provide more detail 
here for you.
    [The VA subsequently provided the following information:]

          The cost savings of $150 million will be achieved by more 
        efficiently employing the resources in various medical care, 
        administrative, and support activities at each medical center 
        and will be achieved by targeting the following areas to 
        improve overall operational efficiency:

          High missed outpatient appointments/no show rates
          Observed to Expected Length of Stay
          Diagnostic colonoscopy (CPT code 45378) cost per 
        procedure
          Cardiac catheterization cost per procedure
          Primary care cost per encounter

    Mr. Benishek. Well, I guess you understand the point of my 
question. I just see the bureaucratic side of the budget cut 
and the people that are actually delivering the care, those 
people should be the last people to be cut.
    Dr. Petzel. Right. I understand your concern.
    The Chairman. Thank you.
    Mr. Secretary, there are numerous questions that I think 
each of us will probably put together. We will do them 
collectively from the Committee to submit to you for the 
record.
    Are there any other questions that people want to ask in 
the public forum?
    [No response.]
    The Chairman. If not, we thank you for being here and you 
are recognized again, Mr. Secretary.
    Secretary Shinseki. Thank you, Mr. Chairman, for very, very 
helpful testimony.
    We began with a discussion about overhead and staff and we 
never really got to talk about savings because part of the 
responsibility of having that kind of overhead is to have 
something to show for it.
    We are estimating that this year, we will generate about a 
$1.1 billion in savings. What we would like to work on with the 
Committee is taking $600 million of that and reinvesting it in 
our 2012 budget, take the second $500 million and reinvest it 
in the 2013 budget so that with these monies, we are able to 
generate additional savings. And we are targeting with this 
carryover, this is the carryover discussion, we anticipate 
another $1.2 billion in 2012. And it is still a fuzzy estimate, 
but we are looking at about the same kind of savings in 2013.
    We think this is the return on the investment for some of 
this additional overhead where we can put in place processes, 
business plans, and follow-up that are going to outlast 
everyone here at the table where the behaviors at VA are the 
ones that we would all expect about good business.
    The Chairman. Again, Mr. Secretary, we thank you for your 
indulgence. We apologize again for the delay. Thank you for 
those people that were here with you to help in answering the 
questions. We appreciate that as well. Each of us on this 
Committee is dedicated to working with you to help those whom 
we are supposed to be serving from the veteran community. Thank 
you, sir.
    And as the Secretary and his party depart, I would like to 
go ahead and invite the second panel to make their way to the 
table.
    The second panel with us today includes Mr. Carl Blake, 
National Legislative Director of the Paralyzed Veterans of 
America (PVA); Mr. Raymond Kelley, the Director of the National 
Legislative Service for Veterans of Foreign Wars of the United 
States (VFW); Mr. Joseph Violante, the National Legislative 
Director of the Disabled American Veterans (DAV); Ms. Christina 
Roof, the National Acting Legislative Director for AMVETS; and 
Mr. Timothy Tetz, the Director of the National Legislative 
Commission for the American Legion.
    As customary, each of your written statements will be 
entered into the record and you will each be recognized for 5 
minutes. And I do not know who has been selected to go first, 
but you are on.
    Mr. Blake. We did not select, but I am just going to go 
first, Mr. Chairman.
    The Chairman. Mr. Blake.

   STATEMENTS OF CARL BLAKE, NATIONAL LEGISLATIVE DIRECTOR, 
  PARALYZED VETERANS OF AMERICA; RAYMOND C. KELLEY, DIRECTOR, 
 NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE 
    UNITED STATES; JOSEPH A. VIOLANTE, NATIONAL LEGISLATIVE 
   DIRECTOR, DISABLED AMERICAN VETERANS; CHRISTINA M. ROOF, 
    NATIONAL ACTING LEGISLATIVE DIRECTOR, AMERICAN VETERANS 
 (AMVETS); AND TIMOTHY M. TETZ, DIRECTOR, NATIONAL LEGISLATIVE 
                  COMMISSION, AMERICAN LEGION

                    STATEMENT OF CARL BLAKE

    Mr. Blake. Chairman Miller, Ranking Member Filner, Members 
of the Committee, on behalf of the four co-authors of The 
Independent Budget (IB), I would like to thank you for the 
opportunity to be here to testify today. I will focus my 
comments on the health care budget of the VA for fiscal year 
2012.
    Before I begin the rest of my statement, I would just like 
to say thank you to your staff and to Ranking Member Filner's 
staff for giving us the opportunity last week to come over and 
sit down and talk about The Independent Budget in advance and 
sort of, you know, lay out what we are looking at going forward 
before the President's budget was actually released on Monday.
    With that, Mr. Chairman, we are pleased that it appears 
that the fiscal year 2011 appropriations process may be 
actually nearing an end as last week, the House Committee on 
Appropriations introduced H.R. 1. And as you well know, it is 
being considered on the floor as we speak.
    While we have some minor concerns with the details of H.R. 
1, we appreciate the needed increases in certain funding for 
the VA provided by the legislation and we hope the Congress 
will act on this legislation quickly.
    Additionally, we appreciate the fact that the 
Appropriations Committee has outlined the advanced 
appropriations for fiscal year 2012. As you know, last year, 
the Administration recommended an advanced appropriation for 
fiscal year 2012 of approximately $50.6 billion in 
discretionary funding for VA medical care. The House Committee 
on Appropriations supported this recommendation in H.R. 1 as 
well.
    When combined with the $3.7 billion for medical care 
collections previously projected, the total available operating 
budget recommended for 2012 is approximately $54.3 billion.
    However, included in the President's budget request for 
fiscal year 2012, the Administration revised the estimates for 
medical care down by $713 million due to the proposed Federal 
pay freeze. That is something that we recognized in The 
Independent Budget and we chose to do so as well as part of our 
recommendations.
    I would like to say that I believe that the Administration 
has offered a reasonable starting point, particularly for 
medical care, for the overall medical care budget. However, we 
do have some concerns about some of the proposals that are 
included in the fiscal year 2012 health care budget.
    Of particular concern to The Independent Budget is the ill-
defined contingency fund that would provide $953 million more 
for medical services for fiscal year 2012. Moreover, we are 
especially concerned that the VA presumes management 
improvements, something that harkens back to the gimmicks known 
as management efficiencies of the past, of approximately $1.1 
billion to be directed towards fiscal year 2012 and fiscal year 
2013.
    The VA has explained that these management improvements 
provide $1.1 billion that the VA would like to carry over and, 
yet, if the VA is not authorized to carry over this additional 
money, its fiscal year 2012 budget request and 2013 advanced 
appropriations request will be insufficient to meet the health 
care demand of veterans it serves.
    Finally, we have real concerns about the revised estimates 
and medical care collections from what was originally 
projected. In last year's advanced appropriations, as I 
mentioned, it was projected that they would collect $3.7 
billion and now it appears that they are projecting only $3.1 
billion.
    Given the emphasis on medical care collections and ramping 
up through Consolidated Patient Account Center (CPAC) in recent 
years, we are just as curious, as I hope the Committee is, as 
to how these things have occurred like this.
    Given this revision in estimates, the VA's budget may 
arguably be short $600 million additionally in budget authority 
for next year based on the consideration of those collections.
    The Administration recommended, as I mentioned, $53.9 
billion for total medical care funding for fiscal year 2012. 
The Independent Budget recommends approximately $55 billion for 
total medical care. This includes approximately $43.8 billion 
for medical services. Our medical services recommendation 
includes $41.3 billion for current services, $1.1 billion for 
the increase in projected workload, and $1 billion for 
additional medical care program costs. Each of these areas is 
explained in more detail in my full written statement and in 
The Independent Budget for fiscal year 2012.
    For medical support and compliance, The Independent Budget 
recommends approximately $5.4 billion and finally for medical 
facilities, The Independent Budget recommends approximately 
$5.9 billion.
    While our recommendation does not include additional 
increases over and above the baseline for nonrecurring 
maintenance (NRM), it does reflect the fiscal year 2012 
baseline of approximately $1.1 billion for NRM.
    We are also concerned about the steep reduction in spending 
for medical and prosthetic research. The Independent Budget 
recommends $620 million, approximately $111 million more than 
the Administration's request. As you know, research is a vital 
part of veterans' health care and an essential mission for our 
national health care system.
    Finally, Mr. Chairman, The Independent Budget is pleased to 
see that the Administration has proposed an increase in the 
medical care accounts for fiscal year 2013. However, we cannot 
emphasize enough that Congress must remain vigilant to ensure 
that the proposed funding levels for fiscal year 2013 are, in 
fact, sufficient to meet the continued growth and demand on the 
health care system.
    Mr. Chairman, that concludes my statement. I will be happy 
to answer any questions that you might have.
    [The prepared statement of Mr. Blake appears on p. 64.]

                 STATEMENT OF RAYMOND C. KELLEY

    Mr. Kelley. Mr. Chairman, Members of the Committee, on 
behalf of the 2.1 million members of the Veterans of Foreign 
Wars and its auxiliary, I would like to thank you for the 
opportunity to testify today.
    As a partner of The Independent Budget, the VFW is 
responsible for the construction accounts, so I will limit my 
remarks to that portion of the budget.
    A vast growing and aging infrastructure continues to create 
a burden on VA's overall construction and maintenance 
requirements. These facilities are the instruments that are 
used to deliver the care to our ill and injured veterans. Every 
effort must be made to ensure these facilities are safe and 
sufficient environments to deliver that care.
    A VA budget that does not adequately fund facility 
maintenance and construction will reduce the timeliness and 
quality of care to our veterans. This is why The Independent 
Budget partners are recommending an overall construction budget 
of $2.8 billion, $2.2 billion for the major construction 
accounts, $585 million for the four minor construction 
accounts.
    Last fall, VA provided the IB partners with an overview of 
the strategic capital investment plan or SCIP. After this 
briefing and upon reviewing the VA's fiscal year 2012 budget 
submission, The Independent Budget partners were pleased with 
the improved transparency of the capital planning.
    The VA has advised The Independent Budget partners that 
SCIP is intended to identify capital acquisition needs ranging 
from nonrecurring maintenance and leasing to major and minor 
construction projects to close the currently identified 
performance gaps. All tolled, these gaps will require between 
$53 billion and $65 billion in funding over the next 10 years.
    However, at the Administration's requested funding level, 
it will take between 18 and 22 years to complete the current 
10-year plan. Under-funding VA's capital plan in its infancy 
will only exacerbate their ongoing construction and maintenance 
needs.
    We are happy to see the VA's fiscal year 2012 budget 
request for the medical facilities in New Orleans and Denver 
along with three other major construction projects will be 
fully funded. However, only 7 of the 23 partially funded major 
construction projects will continue to be funded in 2012, 
leaving over $4 billion remaining in partially funded projects 
dating back to fiscal year 2007.
    These projects include improving seismic deficiencies, 
providing spinal cord injury centers, completing a polytrauma, 
blind and rehab research facility, as well as expanding mental 
health facilities. These projects have a purpose and should be 
funded as quickly as possible to fulfill the promise of care to 
our wounded and ill veterans.
    VA is requesting approximately $545 million to continue 
construction on the seven existing projects and to begin work 
on four new projects. At this pace, VA will not reach its 
strategic capital investment 10-year plan. Therefore, the IB 
partners request that Congress provide funding of $1.85 billion 
for VHA major construction accounts. This will allow VA to 
complete all current partially funded major construction 
projects within 5 years, begin providing funding for 15 new 
projects, and fund the four currently partially funded seismic 
correction projects at a level that will have them completed 
within 3 years.
    The IB partners are pleased with VA's funding request for 
VHA minor construction accounts. This level of funding will 
allow VA to fully fund more than 75 projects.
    The Administration's request for managerial cost accounting 
(MCA) construction projects is nearly $80 million. The IB is 
requesting $161 million. This will allow MCA to complete nearly 
all of its minor construction projects and begin three major 
projects, expanding veterans' access to cemeteries in Hawaii, 
Florida, and Colorado.
    The IB partners are also requesting an increase in funding 
for research facilities. Funding at a level of $150 million 
will allow work to begin on the five highest priority research 
facilities. Again, it is critical to the care of our veterans 
that we fully fund VA construction.
    Mr. Chairman, thank you for the opportunity to testify 
today and I look forward to any questions you may have.
    [The prepared statement of Mr. Kelley appears on p. 67.]

                STATEMENT OF JOSEPH A. VIOLANTE

    Mr. Violante. Mr. Chairman, Ranking Member Filner, Members 
of the Committee, on behalf of the Disabled American Veterans, 
I am here today to present the recommendations of The 
Independent Budget for fiscal year 2012 in the area of 
veterans' benefits.
    Mr. Chairman, for fiscal year 2012, the IB recommends only 
modest increases in personnel levels for Veterans Benefits 
Administration. And those increases are targeted primarily at 
the Vocational Rehabilitation and Employment Service and the 
Board of Veterans' Appeals.
    The Voc Rehab Program is one of the most important benefits 
provided to many disabled veterans. However, a 2009 study by 
GAO found that 54 percent of the VA regional offices reported 
they had fewer vocational rehab counselors than needed.
    The current caseload target is one counselor for every 125 
veterans, but the ratio is reported to be as high as one to 
160. Therefore, the IB supports an increase of 100 new 
counselors and an additional FTEE dedicated to management and 
oversight of the growing number of contract counselors and 
service providers.
    The Board of Veterans' Appeals' workload has consistently 
averaged about 5 percent of the total number of claims before 
VBA. So as claims rise, so, too, do the number of appeals. To 
meet the new demand and avoid creating an ever-larger backlog 
of appeals, the IB recommends funding increases for the board 
that are commensurate with increasing workload.
    Mr. Chairman, the IB once again calls on Congress to 
completely end the ban on concurrent receipt for all disabled 
veterans and eliminate the SBP and DIC offsets for veterans' 
widows and dependents. Under current law, most service-
connected disabled veterans who retire after a full career in 
the Armed Forces must forfeit a portion of their retirement pay 
before they can receive VA disability compensation rightfully 
due to them. This inequity unfairly penalizes a servicemember 
who pursues a career in the military.
    A disabled veteran who elects to pursue a civilian career 
will be able to receive full VA disability compensation and 
full civilian retirement pay. Although Congress has addressed 
this inequity for veterans with disability ratings of 50 
percent or greater, it is time to extend fairness to all 
veterans.
    Similarly, when a disabled veteran dies of service-
connected causes, their eligible survivors or dependents 
receive dependency and indemnity compensation or DIC. The 
benefit provides a modest support to compensate for the 
veteran's earnings loss due to disability. However, if the 
survivors are also eligible under the Survivor Benefit Program 
or SBP, they will have their SBP benefits reduced by the amount 
of DIC payments.
    This fails to recognize that SBP is a separate and 
purchased program paid for by deductions from servicemembers' 
military pay. Surviving spouses of Federal civilian retirees 
who are disabled veterans can receive a DIC payment without any 
offset for their purchased Federal civilian survivor benefits. 
Congress should treat military widows equally by repealing the 
offset between DIC and SBP.
    Mr. Chairman, VA is at a critical junction in its efforts 
to reform the outdated, inefficient, and overwhelmed claims 
processing system. Secretary Shinseki has made clear his 
intention to break the back of the backlog as a top priority. 
And while we welcome this goal, we would caution that 
eliminating the backlog is not necessarily the same goal as 
reforming the claims process system. To achieve real and 
lasting success, the VA must focus on creating a veterans 
benefits claims processing system designed to decide each case 
right the first time.
    Undoubtedly, the most important new initiative underway is 
the Veterans Benefits Management System, VBMS, their new IT 
program being designed to provide a paperless and rules-based 
method of processing and awarding claims. We would urge 
Congress to carefully monitor and oversee this work and 
recommend considering an independent outside expert review of 
the VBMS. However, regardless of the IT solutions, VBA must 
ensure that they have a properly trained workforce and a 
comprehensive quality control system.
    That concludes my statement and I would be happy to answer 
any questions from the Committee.
    [The prepared statement of Mr. Violante appears on p. 79.]

                 STATEMENT OF CHRISTINA M. ROOF

    Ms. Roof. Chairman Miller, Ranking Member Filner, and 
distinguished Members of the Committee, on behalf of AMVETS, I 
would like to thank you for inviting me and the representatives 
of the other member organizations that authored The Independent 
Budget to share with you our recommendations on the Department 
of Veterans Affairs' fiscal year 2012 budget.
    We believe our recommendations to be the most fiscally 
responsible way of ensuring quality and protecting the 
integrity of the care and benefits our veterans' community 
receives.
    As a partner of The Independent Budget, AMVETS devotes a 
majority of our time to the concerns and matters of VA's 
National Cemetery Administration as well as veteran 
entrepreneurship and Federal procurement. Today I will briefly 
speak to both issues.
    The most important obligation of the NCA is to honor the 
memory of America's brave men and women who served in the Armed 
Forces. As of late 2010, NCA maintained more than three million 
graves at 131 national cemeteries in 39 States and Puerto Rico.
    With the anticipated opening of several new national 
cemeteries, annual interments are projected to increase to 
approximately 116,000 in 2013 and are projected to remain at 
this level through 2015.
    The IB recommends a total operating budget of $275 million 
for NCA for fiscal year 2012. This is so that they may meet the 
increasing demands for interments, grave site maintenance and 
related essential elements of cemetery operations. This 
recommendation is based upon the immediate and increasing need 
for NCA services as well as the upkeep of these sacred grounds.
    The State Cemeteries Program is currently facing the 
challenge of meeting the growing needs from States to provide 
burial services in areas not currently served by NCA. The 
Independent Budget thus recommends Congress appropriate $51 
million for the State Cemetery Grant Program (SCGP) for fiscal 
year 2012. This funding level will allow SCGP to establish new 
State cemeteries at the current rate of need and will provide 
burial options for veterans that otherwise would have no 
reasonable access to State or national cemeteries.
    We call on the Administration and to you, the Congress, to 
provide the resources required to meet the critical nature of 
NCA's mission and to fulfill this Nation's commitment to all 
veterans who have served their country so honorably and 
faithfully.
    AMVETS' second focus of the fiscal year 2012 IB is on 
veteran entrepreneurship and Federal procurement as it relates 
to service-disabled veteran-owned small businesses and veteran-
owned small businesses. And while I will note that a majority 
of the preceding information is focused on policy rather than 
hard fiscal numbers, we believe that broken policies, 
duplication of efforts, and lack of oversight are key factors 
in determining a fiscally responsible budget and eliminating 
any unnecessary waste.
    Supporting service-disabled veteran-owned small businesses 
and veteran-owned small businesses contributes significantly in 
sustaining a veteran's quality of life while also contributing 
to the success and ease of transitioning from active duty to 
civilian life.
    Given the current state of the economy, now more than ever 
Federal agencies must be held accountable in meeting the 3-
percent Federal procurement goal as outlined by Executive Order 
13-360 and Section 36 of the Small Business Act. All Federal 
agencies must assist in the development and implementation of 
strong strategies and be held accountable to meeting the 3-
percent goal.
    Furthermore, Congress must ensure adequate resources are 
available to effectively monitor and recognize those agencies 
that are not meeting the 3-percent goal and hold them 
accountable for their failure.
    Another critical part of protecting veterans in a 
successful Federal procurement system is to centralize the 
vendor verification system. Thus far, VA has been awarded $1.4 
billion in Recovery Act funds to aid in the employment and 
contracting opportunities available to veteran-owned 
businesses. And according to VA, of the Recovery Act funds they 
have received, $538 million, of the $1.4 billion, have been 
used on awards to service-disabled-owned small businesses and 
veteran-owned small businesses.
    However, we have serious concerns on how much of the 
awarded funds were actually awarded to legitimate veteran-owned 
businesses due to the lack of a solid verification process in 
place at VA.
    In closing, I encourage each of the Members to review my 
full written testimony, which will outline all of our concerns 
and recommendations on veteran entrepreneurship, contracting, 
and the NCA.
    Again, Chairman Miller and Members of the Committee, thank 
you for your time.
    [The prepared statement of Ms. Roof appears on p. 86.]

                  STATEMENT OF TIMOTHY M. TETZ

    Mr. Tetz. Good afternoon, Mr. Chairman and Ranking Member 
Filner and Members of the Committee. On behalf of the American 
Legion, I would like to thank you for the opportunity to 
present our thoughts on the VA's 2012 budget.
    You only have to open the newspapers to know we are all as 
a Nation deeply concerned with financial responsibility, making 
smart choices about how to spend money. The American Legion 
believes in making those smart choices, the right choices.
    When I started to buy my first car, I remember my father 
speaking to me about how to make the right choices, being wise 
about spending. I was, of course, not really interested in 
hearing what he had to say. I was a young man and thinking more 
about what I wanted out of my car. Did I want the truck to feel 
with my attitude or did I want the sporty coupe to attract the 
ladies? Yet, the reality was I only had a limited amount of 
money, only so much to spend to meet all my needs, all of my 
desires. And I was too naive to understand factoring the cost 
of insurance, tires, maintenance, and other unforeseen hazards.
    The Department of Veterans Affairs' approach to the 2012 
budget is not much different than the car buying experience of 
a 21-year-old. They have tried to manage the reality today 
against the possibilities of tomorrow while listening to the 
veterans service organizations. And they have done a fairly 
admirable job.
    The American Legion is grateful the President's budget 
represents a 10-percent increase over the last budget. This 
demonstrates a mind set that places a priority on the debt owed 
to the men and women who have sacrificed so much and, yet, ask 
so little.
    We understand these are hard times and hard choices must be 
made. What are the smart decisions in the current budget? Smart 
is funding $6 billion to enhance VA's ability to provide the 
best possible specialized care for post-traumatic stress, 
traumatic brain injury, and other mental health needs. Smart is 
funding $939 million towards programs to help eradicate veteran 
homelessness. Yet, we are left with the question, are these 
decisions based on the reality of today overlooking the 
probability of tomorrow?
    Some of the $6 billion will help meet this research need, 
but is that enough? This money seems to be directed at the 
immediate medical needs of these veterans, but perhaps not the 
long-term needs of those very same veterans. Does it address 
the chasm between the advances in treatment of PTSD and TBI in 
DoD and is available once they leave the service and separate 
to return to their homes in upstate New York or rural Indiana?
    We face many new and evolving medical concerns for which 
the VA is uniquely placed to a be a trailblazer in research. 
Perhaps one of the greatest investments to consider is to give 
VA funding to lead this research. Given the intellectual and 
technological might of this Nation, there is no reason the VA 
should not be the world expert and leading authority on TBI, 
PTSD, amputation and prosthetic medicine.
    Fully fund VA research for prosthetics, vision, medical, 
and TBI and PTSD. Give this aspect the needed money and let it 
be what we all imagine it can be. VA must lead from the front, 
not play catch-up for the rest of the world.
    Despite these positives, VA seems short-sighted in their 
allocation of resources for tomorrow. A reduction of 
construction funds of $800 million certainly points to this. 
Infrastructure is vital. Infrastructure is one of those things 
you can pay for now or later and if you choose to pay for it 
later, you always pay more.
    How can we complete the new projects in Las Vegas, Denver, 
New Orleans and the upgrades needed nationwide without adequate 
funding? This is one area the American Legion strongly 
disagrees with the proposed budget and asks Congress to 
consider the importance of funding nearly twice that amount. 
Cutting money from construction creates an illusionary savings. 
You can choose to pay now or pay later, but the price of 
failure to invest in infrastructure will eventually come due. 
Smart money invests in infrastructure now.
    We realize there is only so much money. We realize the 
American Legion as well as every other veterans' organizations 
here comes with expanded visions of what we need, what our 
veterans need, and what the VA must deliver. We remain 
committed to help you find savings within the existing budget, 
identifying chances to shift resources to serve the needs of 
the veterans sitting in the clinic in Florida and the future 
veteran sitting in the forward observation base in Afghanistan.
    We find ourselves in that very same situation my father was 
in all those years ago, pointing out considerations that quite 
honestly you do not take account for as a 21-year-old. You can 
learn a lot by making bad choices and you also learn the older 
you get, the wiser your dad seems to be. It is the little 
things. It is the details you do not think about that make the 
sense in the long run.
    I thank you again for the opportunity to present this 
testimony and will gladly answer any questions you might have.
    [The prepared statement of Mr. Tetz appears on p. 92.]
    The Chairman. We thank each and every one of you for your 
testimony.
    The President's Commission on Fiscal Responsibility and 
Reform released its report back in December. And, basically, it 
said that everything needed to be on the table to include 
finding waste, fraud, and abuse that may exist in Federal 
agencies.
    I know each of your organizations works very closely with 
VA as do your members in utilizing their services. And I would 
like to just ask, do you have any particular areas that you can 
bring to our attention so that we can help find these extra 
dollars?
    Mr. Blake. Right now I do not know that I can answer that 
question, Mr. Chairman, but it is probably something where we 
could mine the information from the bulk of our organization 
and provide you with a better answer after having had a chance 
to sort of spread that word and that question around.
    Mr. Kelley. My office has taken some time to go ahead and 
look into some of that. And I will be happy to work with the 
Committee to identify more than a handful of areas where there 
are some savings.
    Mr. Violante. Mr. Chairman, I think when you opened up this 
hearing, you pointed to a number of issues that we think need 
to be looked at, including the growth in the administrative 
side versus the hands-on services. So we certainly would be 
willing to work with staff to look into that to see if all 
those increases are as necessary as VA seems to think.
    Ms. Roof. As AMVETS has been saying for the past year and a 
half, I would love the opportunity to sit down with each and 
every one of you and identify some areas where we definitely 
believe there is duplication of efforts and so on.
    Mr. Tetz. Mr. Chairman, we obviously join our fellow 
veterans organizations in that. Like all of us, we go out there 
and hear it and we will be happy to share that.
    I think earlier Mr. Michaud brought up some of the 
duplicative contracting, some of the oversight. And if we can 
start looking at those little pieces, tens of millions of 
dollars here suddenly start adding up to big savings that we 
get out to the right people in the right places.
    The Chairman. That they do. And I appreciate your 
willingness to work with the Committee and staff. This is 
something again that we pledge to work with you and hope that 
you will work with us and VA as well as we try to navigate 
through these very perilous financial waters that we find 
ourselves in here in the United States.
    Mr. Blake, you talked about concerns regarding VA's 
proposed contingency fund. I have concerns as well. The Ranking 
Member and I have been discussing it. I would like you to 
expand a little bit, if you would, on your concerns.
    Mr. Blake. Well, first let me say that when we had the 
briefing from the VA, it was a little unclear as to what 
exactly the contingency fund is. So maybe this is my 
interpretation of the way they explained it.
    But as I understood it, the cost associated with that 
contingency fund is based on some assumptions they made for 
their model that is impacted by changes in the economic 
conditions, unemployment and things like that, as best as I can 
understand, which sounds a little bit like they have 
manipulated their health care projection model to serve a 
singular purpose beyond the broader scope of the model itself.
    I guess the concern I have is do you need $953 million or 
do you not. I believe they do because I think our projections 
go along that line of thinking for workload and things like 
that and, yet, by identifying it as sort of a contingency fund, 
you say, well, maybe we need it or maybe we do not and, yet, 
their budget is built on the assumption that they need that 
money because it is included in their overall recommendation.
    So I would sit here and say you need the money from The 
Independent Budget's perspective. We believe that money can be 
used and is needed. I think the VA should do the same.
    The Chairman. Mr. Filner.
    Mr. Filner. Thank you, Mr. Chairman. Just three quick 
points.
    First, in the past, some administrations have, after the 
Secretary's presentation, not stayed around to hear your 
testimony. I want to thank all of you for staying and listening 
to these stakeholders who worked so hard on this budget. So 
thank you.
    Again, all of you who worked so hard on this, you give us 
material that we have to absorb and chew over for a long period 
of time. But we have a lot of confidence in it because of the 
work you put into it. We are going to use this again and again 
and again and there is a lot to absorb. I just want to thank 
you once more for each year that you put such hard work in it.
    Lastly, I want to just point out the success that you all 
had. Most of your organizations had as your top priority last 
year the forward or advanced funding. You showed how important 
that was.
    We are going around and around on the Continuing 
Resolution. Various agencies do not know what the budget will 
be. They cannot plan. They cannot move forward while the health 
care budget of the VA is solid and they are working from it. 
Veterans are being positively impacted by that.
    So that was your work, all of you, and it shows how 
necessary it was because this year, the first year that it was 
in effect, it is absolutely necessary that we had it. So I want 
to just thank you for all the work you did on that and all this 
stuff on The Independent Budget. We will be using it for the 
coming year.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Bilirakis.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it.
    Mr. Blake, in your testimony, you make reference to medical 
and prosthetic research. Many breakthroughs have been made with 
medical technology and products.
    Do you believe that the VA has the necessary tools to 
partner with companies that develop and produce such cutting-
edge products to ensure that we are providing veterans with the 
highest quality of life possible? And anyone who wants to 
comment on that as well, I would appreciate it.
    Thank you.
    Mr. Blake. If by necessary tools you mean the funding, I 
think my statement speaks for itself. The concern I have is for 
years, we felt like medical and prosthetic research was under-
funded. And in the last 2, 3 years, the Congress as a whole, 
has committed to funding medical and prosthetic research at a 
more appropriate level.
    And I think it is absolutely necessary because of the 
demand for advanced prosthetics and the things across the 
spectrum that particularly this newest generation of veterans 
have placed on the VA for their needs and because, you know, 
this is a young generation that is going to rely on these 
things for a very long time. And so we need to make sure that 
the VA is prepared to address those needs for a long time.
    So we are certainly disappointed to see that the 
Administration is coming with a significantly reduced 
recommendation for medical and prosthetic research. In fact, it 
is $72 million below what may or may not end up being the 
appropriated level when H.R. 1 or whatever the final version of 
the funding is. So that would suggest a pretty significant 
curbing in the availability of grants and such like that which 
are the way that the VA sort of farms out its research 
programs. So I would certainly have real concerns about that.
    The Chairman. Anyone else on this particular subject 
matter?
    Mr. Tetz. Mr. Bilirakis, our concern and what we are 
hearing out in the field is the discrepancy once they leave the 
service. They sit there and they go through the DoD and they 
get the quality of care and the tools and the prosthetics that 
they need and all of a sudden, they come back out and they get 
into their local community and they cannot service that.
    And there should be that seamless help to say, hey, we had 
you covered when you were wearing the uniform and now that you 
are wearing a suit, we still have you covered. And that is a 
bigger piece. So it goes beyond merely just keeping on top of 
that advances but making sure that it is hand in hand and 
seamless.
    Mr. Bilirakis. Good point. Anyone else?
    Ms. Roof. Just a real quick point I would like to add in. I 
think a lot of times when people think prosthetics, they think 
a leg or an arm. I think it is really, really important for 
everyone to remember anything that goes on a veteran, in a 
veteran, or a veteran uses is a prosthetic device from a heart 
stent to a prosthetic leg to a service dog. So I agree with 
Carl, 100 percent on the funding aspect. So I would want 
everyone to keep that in mind when talking about cutting that 
kind of funding.
    Mr. Bilirakis. Okay. Mr. Kelley and anyone who wants to 
comment on this, I would appreciate it. In general, is the VA 
adequately transforming to meet the different needs of the men 
and women who serve in Iraq and Afghanistan and what are the 
top concerns associated with ensuring that changes are meeting 
veterans' needs? We will start with Mr. Kelley if that is okay.
    Mr. Kelley. Mr. Bilirakis, I had a hard time hearing the 
question.
    Mr. Bilirakis. I will repeat it if that is okay. Is the VA 
adequately transforming to meet the different needs of the men 
and women who have served in Iraq and Afghanistan? And, 
secondly, what are the top concerns associated with ensuring 
that the changes are meeting veterans' needs?
    Mr. Kelley. Sure. I think they are making strides. I do not 
know how you predicate adequate if we still have a suicide rate 
that is 18 veterans a day. And so they are making strides. They 
are going in the right direction, but there are areas that need 
to continue to be improved, mental health, suicide prevention, 
making sure that the needs of women veterans are being met.
    There was a GAO report back in December that showed that 
women veterans who applied for a disability rating for PTSD 
related to combat service were denied at a very high rate and 
men were accepted at a very high rate.
    But in reversing that, if they applied for some other type 
of mental health issue, whether it was military sexual trauma 
or some other sort of trauma that affected them 
psychologically, women were rated at a very high rate and men 
were rated at a very low rate.
    So there is still some training that needs to be done 
within VA to make sure that they have a full understanding of 
the needs of gender--I guess gender specific needs.
    Mr. Bilirakis. Thank you.
    Anyone else wish to comment?
    Mr. Violante. I would just like to add to that. I agree. I 
think there is a lot more work that needs to be done with 
regards to women veterans. There are more of them. There are 
now women serving in combat coming back with combat 
disabilities. And VA needs to be mindful of that and work 
towards improving access.
    I think one area that they have greatly improved is what 
they are doing jointly with DoD at a lot of the separation 
centers with regards to getting claims done before men and 
women leave the military. And that seems to be working rather 
well. So we are happy to see that.
    And I think better collaboration between DoD and VA with 
regards to electronic records would be very helpful.
    Mr. Blake. I want to go back to something that I think Mr. 
Michaud or a number of the Members on the panel mentioned 
earlier. It is not just about health care. They talked about 
the evolution of the virtual lifetime record. That is not just 
their medical record, but it could be their DoD service record 
and all that. I do not think that is something that can happen 
fast enough. I think that is something that should have 
happened long ago.
    I mean, we talk about the overwhelming problems with the 
claims backlog and a lot of times, you hear about just the 
sheer volume and weight of paper and things like that. So I 
know that the Administration and Secretary Shinseki has made 
one of their top priorities being this conversion into a 
virtual lifetime record. And we hope that that is something 
that will be expedited, not just we are still working on seeing 
how close we are and all that. That needs to happen. It needs 
to be done.
    And now, in defense of the VA, it is not just a VA problem. 
I mean, DoD has some blame in not getting this going faster as 
well. And we have talked to some of the folks on the Armed 
Services side about our concern with their involvement in this 
as well. But that is something that needs to be done yesterday.
    Mr. Bilirakis. Thank you.
    The Chairman. Dr. Benishek.
    Mr. Benishek. My concern about the electronic record, do 
you get a copy of all your records that you have had from DoD 
when you are in the service? You know, I have a little bit of 
concern about the fact that sometimes the electronic record can 
be lost easier than the paper record. I have concerns about 
that. Does anybody have any insight as to what that is about or 
is that going to be a problem?
    The problem that I see for veterans is they are delayed in 
their benefits because they cannot find their records. I mean, 
that is what I hear all the time. We cannot prove that you are 
saying what you said. And I just do not see how that is really 
possible. I mean, the guy was in the service. I mean, how can 
you not, you know what I mean?
    Mr. Kelley. If a servicemember has the foresight to make 
copies of their medical record, they will leave the military 
with their medical record. But they have to have the foresight 
to say I am going to take my medical record down to the copy 
machine, make a copy of everything that is in there so I can 
have my own personal record. That is not something that they 
tell them to do. They have to do that on their own.
    The idea of having a database that loses accessibility, 
whatever happens, that system goes down, and you cannot 
retrieve it, it is no better or no worse than having paper 
copies. St. Louis is an example. We lost hundreds of thousands, 
if not millions of documents from Vietnam era veterans who are 
without medical records because they did not make their own. 
The military kept them in St. Louis and the building burned.
    So there will always be a fear of lost records. Is it a 
good idea to hand a veteran his or her medical records the day 
they leave? Absolutely. Is it a good idea to have them 
electronically so it is easily accessible by the VA? 
Absolutely.
    Mr. Benishek. Thank you.
    I yield the remainder of my time.
    The Chairman. Mr. Flores.
    Mr. Flores. I want to thank you for joining us today and 
also for The Independent Budget that you have prepared for our 
use. I think that will be a helpful tool.
    Have you looked at the section of the VA budget about 
greening the VA? In the grand scheme of things, it is minor 
dollars, but I just wondered if it might be better deployed. We 
are talking about $124 million.
    Mr. Blake. We do not typically dig down that deep, but if 
there is something you have an issue of concern about, I will 
be glad to look at it.
    Mr. Flores. I am just thinking about the allocation in 
terms of we have talked about raising administrative costs, we 
have talked about not enough resources going to help the vets 
directly, but on the other hand, we have $124 million to green 
the VA. I was wondering what your----
    Mr. Blake. I have a hard enough time understanding regular 
budgeting without understanding how you quantify greening to be 
perfectly honest with you. But, again, it is something we would 
certainly take a look at.
    Mr. Flores. Okay. If you have any feedback, you can provide 
it back to us. Thank you.
    I yield back.
    The Chairman. Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman.
    And thank you all for coming and speaking with us today.
    Just a real quick question. The claims backlog, everybody 
is talking about it. That is what we are focused on. You know, 
certainly it is addressed in the budget.
    In your view, and no particular order to answer here, what 
is your top three things that you think we can do or should be 
done to reduce that backlog?
    Mr. Violante. Mr. Johnson, it is interesting because right 
now we are not focused so much on legislative fixes. We are 
still looking at that to see what is working. VA has roughly 
about 48, 50 pilot programs out there that they are running and 
we would like to see what the results are of those pilot 
programs.
    The big key to all of this is their VBMS and how that 
system is going to operate their IT system and whether or not 
it is a good searchable database, whether or not it is rules 
based. And that is why we have asked Congress to monitor that 
closely, maybe even bring in some third-party experts.
    I mean, I do not know that any of us here are IT experts. 
But we know what we would like to see the end result be and 
that is a searchable electronic database rules based system. So 
that is a key element and if you can keep an eye on that.
    I mean, the other part of this is training. We do not 
believe that VA personnel are adequately trained to do the job 
that they are supposed to do to get the case right the first 
time. So training is an important element.
    And another element is accountability. No one is held 
accountable for the fact that the decisions are wrong. The only 
thing they are held accountable for is did they do a decision, 
right or wrong. So we would like to see some accountability in 
there.
    And I think if we can get those elements and get VA focused 
on that, I think we can tackle this claims backlog and get 
things under control.
    Mr. Tetz. I would really echo many of the things that my 
counterpart said. You know, too often we want to throw more 
things at them. Too often we want to say, hey, let's get 
another project in there, let's do another, what do you think.
    And with these pilot programs that are out there and the 
opportunities out there, we really need to take a step back and 
look at those and say what works, what does not, what is 
realistic. And until you can sit there and work through that, 
you cannot say what those successes are.
    Currently, the VBMS when it is implemented, when it is 
actually there could have a tremendous, tremendous help. It 
also could be a disaster and we could be upside down there. But 
I think that, you know, training all those folks who are 
brought on board and creating a way for us to know, the VA 
leadership and for the public to know that those folks are 
using every hour they can dedicate to those and the work they 
are doing is quality work and not just getting shoved around to 
level to level. Make certain that all that staff we brought on 
board and all that time is going to actually help the veteran 
at the end and decrease and break the backlog.
    Mr. Johnson. Sorry. I want to take just a couple of seconds 
and give you some encouragement. I came to Congress from the 
role of Chief Information Officer for a global manufacturing 
company and spent 27 years in the Air Force as an IT geek.
    So in our Subcommittee on Oversight and Investigations, we 
have already begun a very open dialogue with Mr. Baker and the 
team from the VA and we are going to be looking at these 
things. I certainly am concerned because this is not rocket 
science. These are technologies that are available, have been 
available, and, you know, why we are not putting them to good 
use for our veterans, we are going to be digging into that and 
where we can help push those along.
    So with that, Mr. Chairman, I yield back.
    The Chairman. Thank you very much
    Anything else for the good of the order?
    [No response.]
    The Chairman. I thank you very much again for your 
indulgence, also in waiting through the delays with the votes. 
We thank you for your testimony.
    And also thank you to the VSOs and to VA for your timely 
submission of your statements. It is very important that we and 
the staff are able to get them in a timely fashion so that we 
can go through them to develop questions prior to this hearing.
    So, again, without objection, each Member will have 5 
legislative days to submit further testimony, revise and extend 
extraneous materials. Any objection?
    [No response.]
    The Chairman. Without objection, so ordered.
    And with that, this hearing is adjourned.
    [Whereupon, at 1:42 p.m., the Committee was adjourned.]



                            A P P E N D I X

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           Prepared Statement of Hon. Jeff Miller, Chairman,
                  Full Committee on Veterans' Affairs

    Welcome, Secretary Shinseki, to you and your team. Thank you for 
being here today to present the President's fiscal year 2012 budget 
request for the Department of Veterans Affairs (VA). Welcome also to 
the veterans' organizations that are with us today.
    Let me say at the outset that I look forward to a close working 
relationship with all of you as we work to improve the delivery of 
benefits and services to America's veterans.
    As everyone knows, this is a tougher budget to measure because we 
do not have a full-year appropriation for every VA account for the 
current fiscal year. That said, if the numbers in the House CR bill are 
carried forward I see the President's fiscal year 2012 budget as, 
roughly, a 3.5 percent increase in VA discretionary spending. Relative 
to prior years, this is a much more measured request.
    What is important, however, is not the percentage increase it is 
whether the resources requested meet our obligations to America's 
veterans and America's taxpayers. Toward that end, I have several 
initial observations.
    First, I'm interested to learn how this budget will chart a path 
forward to address the broken disability claims system. Staffing for 
compensation claims has tripled since the late 1990's, numerous 
Information Technology tools have been utilized, and there have been 
different organizational models attempted. Nothing has worked. I want 
to know how this budget takes a new approach to this challenge.
    Second, I'm interested in learning how this budget is prioritized 
to meet the needs of family caregivers of severely wounded Iraq and 
Afghanistan veterans.
    The reaction to VA's initial plan to implement the new Family 
Caregiver law has been negative. I will explore ways we might be able 
to refocus resources for this important initiative.
    Third, I'd like to know what energy went into eliminating wasteful, 
redundant spending. The President's bipartisan Deficit Reduction 
Commission suggested that every agency, VA included, step up to the 
plate.
    I have to say, when I look at this budget and I see that it 
proposes a funding level for the Office of the Secretary that is 41 
percent higher than 2009 levels; 50 percent higher for the Office of 
Congressional and Legislative Affairs; 96 percent higher for the Office 
of Policy and Planning; and 140 percent higher for the Office of Public 
and Intergovernmental Affairs . . . it raises all kinds of red flags.
    Finally, there are some curious new accounting mechanisms proposed 
in this budget. VA proposes that a portion of its 2012 medical care 
budget be classified as a `contingency fund.'
    It also proposes that Congress appropriate money VA says it can 
save through management efficiencies so that it can then carry that 
money over into another fiscal year. These are new concepts that I'd 
like to get more detail on.
    Mr. Secretary, we are all acutely aware of the fiscal and economic 
crisis our Nation is in . . . debt of $14 Trillion, a deficit this year 
of $1.55 Trillion, unemployment hovering at just under 10 percent.
    We also are aware of the obligation we have to those who defend our 
freedoms every day. That is the privilege we all have in serving on 
this Committee. One measure of that obligation is how well we are 
addressing veterans' needs through the programs and services 
administered by VA.
    So, there is a balance that must be struck a balance that 
recognizes both the moral duty we have to care for those who served in 
uniform and the reality that funding for that care doesn't exist in a 
vacuum.
    Let me borrow a quote from recent history that touches on the 
challenge we face in finding that balance

        `[T]he Committee's Members have kept in mind the fiscal 
        limitations within which we must operate if we are to get 
        Federal spending under control and thereby reduce the Federal 
        deficit and debt. We believe that the Government can be 
        fiscally responsible while still fulfilling its commitments to 
        the most deserving among us--including our Nation's veterans. 
        We also are mindful that uncontrolled Federal spending 
        threatens the long-term health of the Nation's economy and, in 
        turn, could adversely affect the provision of veterans' 
        benefits. Thus, we recognize that those who have worn the 
        uniform in defense of the Nation seek, as we do, to protect the 
        health of Nation's economy.'

    Now, I know some listening might think I'm quoting from a Tea Party 
Committee.
    No, these were views expressed in a letter signed by every Member, 
Democrat and Republican, of the Senate Committee on Veterans' Affairs 
back in 1997, including the current Chairman of that Committee.
    I recognize that times are different now than they were then. We 
are now fighting a war on terrorism that has placed demands on VA's 
medical and benefits system, so our priorities must obviously reflect 
that basic fact.
    But here is another difference, the deficit then was only $128 
billion, today it's over 10 times larger.
    Moving forward, I sincerely hope every Member of this Committee can 
work together to find common ground on the difficult choices ahead. 
Together, I truly believe we can meet our commitments to veterans while 
also being mindful of our fiscal stewardship of taxpayer dollars.

                                 
       Prepared Statement of Hon. Bob Filner, Ranking Democratic
              Member, Full Committee on Veterans' Affairs

    Thank you, Mr. Chairman.
    I want to thank Secretary Shinseki for appearing before us this 
morning to testify as to the resource requirements of the Department of 
Veterans Affairs for the upcoming fiscal year, and the VA's 
recommendation for an advance appropriation for medical care for fiscal 
year 2013.
    I would also like to thank the representatives of the veterans 
service organizations who annually co-author The Independent Budget, 
and The American Legion, for presenting us with their views as to the 
needed funding levels for veterans' programs.
    Although I have a number of concerns regarding the funding levels 
you propose, and questions regarding some of the assumptions and 
estimates that underlie your request, if you, Secretary Shinseki, tell 
me that this is what you need to get the job done in the coming fiscal 
year, then I will offer you my support and I will fight to get you the 
funding levels you say you need.
    I do, however, have concerns about your request for a ``contingency 
fund'' and questions as to whether your ``operational improvements'' 
will actually generate the cost savings you estimate, but I will work 
with my colleagues to ensure that you have the bottom-line dollars that 
you need to care for our veterans in the coming fiscal year.
    I look forward to hearing from our veterans' groups as to how they 
generated their recommendations, and to hear from them their 
experiences, and the experiences of their fellow veterans, who are on 
the receiving end of the programs we fund. What is the need out there 
and is the need being met?
    Every year I refer to The Independent Budget as ``my bible'' when 
it comes to helping us decide what funding levels to recommend to the 
Budget Committee-- this year is no different. Budgets speak louder than 
words as to what our priorities are as a country. Caring for our 
veterans is a national priority.
    I am hopeful that all of us, working together, will be able to 
provide the VA with the funding it needs, and that the VA will be a 
faithful steward of the taxpayer dollars it receives. I firmly believe 
that you should request what you need, and that you need every dollar 
that you request.
    Thank you, Mr. Chairman. I yield back the balance of my time.

                                 
              Prepared Statement of Hon. Ann Marie Buerkle

    Thank you, Mr. Chairman.
    As a Freshman Member of this Committee and Chair of the 
Subcommittee on Health, I take very seriously my responsibility to 
ensure that the Department of Veterans Affairs is adequately funded to 
provide our veterans with the benefits their service afforded them.
    We are all aware of our country's current economic crisis. We have 
a $14 trillion debt. We have an unemployment rate that is close to 10 
percent. There is no doubt we have to take a critical look at how we 
spend our tax dollars and make tough choices.
    However, laws providing for the care of our Nation's veterans were 
some of the very first laws enacted by Congress because our Founding 
Fathers had the foresight to know that America's veterans deserve the 
gratitude of a grateful Nation and providing care and benefits for 
those who had proved so worthy would make our country stronger.
    I hope that our hearing this morning will point the way toward 
close cooperation among all of us as advocates of our Nation's veterans 
to respond to their evolving needs and those of their families. That 
does not mean that there aren't many areas where we can improve. We 
can, we should, and we will conduct rigorous oversight to ensure the VA 
is being a responsible steward of taxpayer dollars.
    I want to thank the Secretary for his appearance before the 
Committee today and I thank you for your leadership.
    I also appreciate the Veterans Service Organization representatives 
for participating in our hearing today. Your outlook on funding 
recommendations for veterans programs and input into the budget is of 
great value to me in this process.
    I look forward to today's discussion and yield back my time.

                                 
               Prepared Statement of Hon. Silvestre Reyes

    Thank you Mr. Chairman,
    Secretary Shinseki, I want to thank you for coming today to address 
our concerns with the care of our Nation's Veterans. I also want to 
thank you for your outstanding service to this Nation. As a Veteran, 
the issues we address in this Committee are very personal to me. They 
are also very personal to the more than 80,000 veterans that live in my 
district.
    Many Veterans issues have come to the forefront in the recent 
weeks. They include violations of the Servicemember's Civil Relief Act, 
high rates of homeless veterans, failure of the administration to honor 
the Caregivers and Veterans Omnibus Health Services Act, and the recent 
lawsuit by victims of sexual assault, although against the U.S. 
Department of Defense (DoD), it is brought by veterans. These are just 
a few issues that are affecting the brave men and women who have fought 
for this country.
    Even with all these high profile issues, the most important thing 
we can give our Veterans is comprehensive health care for the injuries 
they sustained in service of their Nation. As a Member of this 
Committee, and the Armed Services Committee, I feel very strongly that 
one of the most effective ways the Veterans Administration can provide 
these services to our Soldiers, Sailors, Airmen, and Marines is to 
ensure a seamless hand-off between the Department of Defense and the 
VA. Too often wounded servicemembers must wait for months while their 
records are transferred between the two agencies, and what's worse, is 
that the information that is transferred is not comprehensive in 
regards to what our soldiers were exposed to on the battlefield. The 
Vietnam War ended almost 40 years ago, and to this day there are 
Veterans that have still not received medical care for their exposure 
to Agent Orange.
    It is my goal that we address all of the challenges facing our 
Veterans. Although we cannot erase the mistakes of the past, it is 
imperative that we move forward with the programs that will efficiently 
and effectively provide care to those who have given so much defending 
this country.
    Thank you Mr. Chairman, and I yield back the balance of my time.

                                 
        Prepared Statement of Hon. Eric K. Shinseki, Secretary,
                  U.S. Department of Veterans Affairs

    Chairman Miller, Ranking Member Filner, Distinguished Members of 
the House Committee on Veterans' Affairs:
    Thank you for the opportunity to present the President's 2012 
Budget and 2013 Advance Appropriations Requests for the Department of 
Veterans Affairs (VA). Budget requests for this Department deliver the 
promises of Presidents and fulfill the obligations of the American 
People to those who have safeguarded us in times of war and peace.
    Today, the Nation's military remains deployed overseas as it has 
during the last 9 years of major conflict. Our requirements have grown 
over the past 2 years as we addressed longstanding issues from past 
wars and watched the requirements for those fighting the current 
conflicts grow significantly. These needs will continue long after the 
last American combatant departs Iraq and Afghanistan. It is our intent 
to continue to uphold our obligations to our Veterans when these 
conflicts have subsided, something that we have not always done in the 
past. Not upholding these obligations in the past has left at least one 
generation of Veterans struggling in anonymity for decades. We, who 
sent them, owe them better.
    VA has an obligation to track, communicate to stakeholders, and 
take decisive action to consistently meet the requirements of our 
Nation's Veterans for care and services. We pay great attention to 
detail but there are many factors in the health care market that we 
cannot control. We must mitigate the risk inherent when requirements 
for Veterans' care and services, and costs in the health care market, 
exceed our estimates. This request is the Department's plan for 
managing that risk and meeting our obligations to all Veterans 
effectively, accountably, and efficiently.
    The President's budget for 2012 requests $132 billion--$62 billion 
in discretionary funds and $70 billion in mandatory funding. Our 
discretionary budget request represents an increase of $5.9 billion, or 
10.6 percent, over the 2010 enacted level.
    Our plans for 2012 and 2013 pursue strategic goals we established 2 
years ago to transform VA into an innovative, 21st century organization 
that is people-centric, results-driven, and forward-looking. These 
strategic goals seek to reverse in-effective decision-making, 
systematic inefficiency, and poor business practices in order to 
improve quality and accessibility to VA health care, benefits, and 
services; increase Veteran satisfaction; raise readiness to serve and 
protect in a time of crisis; and improve VA internal management systems 
to successfully perform our mission. We seek to serve as a model of 
governance, and this budget is shaped to provide VA both the tools and 
the management structure to achieve that distinction.
    For almost 146 years now, VA and its predecessor institutions have 
had the singular mission of caring for those who have ``borne the 
battle'' and their survivors. This is our only mission, and to do that 
well, we operate the largest integrated health care system in the 
country; the eighth largest life insurance entity covering both active 
duty members as well as enrolled Veterans; a sizable education 
assistance program; a home mortgage enterprise which guarantees over 
1.4 million Veterans' home loans with the lowest foreclosure rate in 
the Nation; and the largest national cemetery system, which continues 
to lead the country as a high performing institution.
    For 2 years now, we have disciplined ourselves to understand that 
successful execution of any strategic plan, especially one for a 
Department as large as ours, requires good stewardship of resources 
entrusted to us by the Congress. Every dollar counts, both in the 
current constrained fiscal environment and during less stressful times. 
Accountability and efficiency are behaviors consistent with our 
philosophy of leadership and management. The responsibility of caring 
for America's Veterans on behalf of the American people demands 
unwavering commitment to effectiveness, accountability, and in the 
process, efficiency. In the past 2 years, we have established and 
created management systems, disciplines, processes, and initiatives 
that help us eliminate waste.

                        Stewardship of Resources

    VA has made great progress instilling accountability and 
disciplined processes by establishing our Project Management 
Accountability System (PMAS). This approach has created an information 
technology (IT) organization that can rapidly deliver technology to 
transform VA. PMAS is a disciplined approach to IT project development 
whereby we hold ourselves and our private-sector partners accountable 
for cost, schedule and performance. In just 1 year, PMAS exceeded an 80 
percent success rate of meeting customers' milestones.
    In addition to PMAS, we adopted a new acquisition strategy to make 
more effective use of our IT resources. This new strategy, 
Transformation Twenty-One Total Technology (T4--for short), will 
consolidate our IT requirements into 15 prime contracts, leveraging 
economies of scale to save both time and money and enable greater 
oversight and accountability. T4 also includes significant goals for 
subcontractors and other protections to make sure Veteran-owned small 
businesses get a substantial share of the work. Seven of the 15 prime 
contracts are reserved for Veteran-owned small businesses, and four of 
the seven are reserved for service-disabled small businesses.
    In developing the 2012 budget, VA used an innovative, Department-
wide process to define and assess VA's capital portfolio. This process 
for Strategic Capital Investment Planning (SCIP) is a transformative 
tool enabling VA to deliver the highest quality of services by 
investing in the future and improving efficiency of operations. SCIP 
has captured the full extent of VA infrastructure and service gaps and 
developed both capital and non-capital solutions to address these gaps 
through 2021. SCIP also produced VA's first-ever Department-wide 
integrated and prioritized list of capital projects, which is being 
used to ensure that the most critical infrastructure needs are met, 
particularly in correcting safety, security, and seismic deficiencies, 
and creating consistent standards across the system.
    The use of metrics to monitor and assess performance is another key 
strategy we employ to ensure the effective use of resources and 
accountability. For example, in November 2010, VA launched two online 
dashboards to offer transparency of the clinical performance of our 
health care system to the general public. First, VA's Linking 
Information Knowledge and Systems (LinKS) provides outcome measurement 
data in areas such as acute, intensive, and outpatient care. This 
allows management to assess a specific medical facility's performance 
against other facilities while, at the same time, serving as a 
motivational tool to improve performance. The dashboard, Aspire, 
compiles data from VA's individual hospitals and hospital systems to 
measure performance against national private-sector benchmarks. 
Financial and performance metrics also provide the foundation for 
monthly performance reviews that are chaired by the Deputy Secretary. 
These monthly meetings play a vital role in monitoring performance 
throughout the Department, and are designed to ensure both operational 
efficiency and the achievement of key performance targets.
    We also demonstrated our ongoing commitment to effective 
stewardship of our financial resources by obtaining our 12th 
consecutive unqualified (clean) audit opinion on VA's consolidated 
financial statements. In 2010, we were successful in remediating 3 of 4 
longstanding material weaknesses, a 75 percent reduction in just 1 
year. We also began implementation of a number of key management 
initiatives that will allow us to better serve Veterans by getting the 
most out of our available resources:

      Reducing improper payments and improving operational 
efficiencies in our medical fee care program will result in estimated 
savings of $150 million in 2011. This includes continued expansion of 
the Consolidated Patient Account Centers to standardize VA's billing 
and collection activities.
      Implementing Medicare's standard payment rates will allow 
VA to better plan and redirect more funding into the provision of 
health care services. The estimated savings of this change in business 
practices in 2011 is $275 million.
      Consolidating contracting requirements, adopting 
strategic sourcing and other initiatives will reduce acquisition costs 
by an estimated $177 million in 2011.

    The effective use of information technology is critical to 
achieving efficient health care and benefits delivery systems for 
Veterans. To accelerate the process for adjudicating disability claims 
for new service-connected presumptive conditions associated with 
exposure to Agent Orange, we implemented a new on-line claims 
application and processing system.
    A recent independent study, which covered a 10-year period between 
1997 and 2007, found that VA's health IT investment during the period 
was $4 billion, while savings were more than $7 billion. \1\ More than 
86 percent of the savings were due to the elimination of duplicated 
tests and reduced medical errors. The rest of the savings came from 
lower operating expenses and reduced workload. VA is continuing to 
modernize its electronic medical records to optimally support health 
care delivery and management in a variety of settings. This effort 
includes migrating the current computerized patient record system into 
a modern, Web-based electronic health record.
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    \1\ The Value From Investments In Health Information Technology At 
The U.S. Department Of Veterans Affairs, Colene M. Byrne, Lauren M. 
Mercincavage, Eric C. Pan, Adam G. Vincent, Douglas S. Johnston, and 
Blackford Middleton, Health Aff April 2010 29:4629-638.
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    Advance appropriations for VA medical care require a multi-year 
approach to budget planning whereby 1 year builds off the previous 
year. This provides opportunities to more effectively use resources in 
a constrained fiscal environment as well as to update requirements.

                Multi-Year Plan for Medical Care Budget

    The 2012 budget request for VA medical care of $50.9 billion is a 
net increase of $240 million over the 2012 advance appropriations 
request of $50.6 billion in the 2011 budget. This is the result of an 
increase of $953 million associated with potential increased reliance 
on the VA health care system due to economic employment conditions, 
partially offset by a rescission of $713 million which reflects the 
cumulative impact of the statutory freeze on pay raises for Federal 
employees in 2011 and 2012. The 2013 request of advance appropriations 
is $52.5 billion, an increase of $1.7 billion over the 2012 budget 
request.
    The establishment of a Contingency Fund of $953 million for medical 
care is requested in 2012. These contingency funds would become 
available for obligation if the Administration determines that 
additional costs, due to changes in economic conditions as estimated by 
VA's Enrollee Health Care Projection Model, materialize in 2012. This 
economic impact variable was incorporated into the Model for the first 
time this year. Based on experience from 2010, the need for this fund 
will be carefully monitored in 2011 and 2012. This cautious approach 
recognizes the potential impact of economic conditions as estimated by 
the Model to ensure funds are available to care for Veterans, while 
acknowledging the uncertainty associated with the new methodology 
incorporated into the Model estimates.
    Another key building block in developing the 2012 and 2013 budget 
request for medical care is the use of unobligated balances, or 
carryover, from 2011 to meet projected patient demand. This carryover 
of more than $1 billion, which includes savings from operational 
improvements, supports anticipated costs for providing medical care to 
Veterans in 2012 and 2013 and is factored into VA's request for 
appropriations. This is a vital component of our multi-year budget and 
any reductions in the amount of 2011 projected carryover funding would 
require increased appropriations in 2012 and 2013.

                            Transforming VA

    The Department faces an increasingly challenging operating 
environment as a result of the changing population of Veterans and 
their families and the new and more complex needs and expectations for 
their care and services. Transforming VA into a 21st-century 
organization involves a commitment to many broad challenges: to stay on 
the cutting edge of health care delivery; to lay the foundation for 
safe, secure, and authentic health record interoperability; to deliver 
excellent service for Veterans who apply for disability and education 
benefits; and to create a modern, efficient, and customer-friendly 
interface that better serves Veterans. In this journey, we are focusing 
on opportunities to improve our efficiency and effectiveness and the 
individual performance of our employees.
    Our health informatics initiative is a foundational component for 
VA's transition from a medical model to a patient-centered model of 
care. The delivery of health care will be better tailored to the 
individual Veteran, yet utilize treatment regimens validated through 
population studies. Veterans will receive fewer unnecessary tests and 
procedures and more standardized care based on best practices and 
empirical data.
    The purpose of the VA Innovation Initiative (VAi2) is to identify, 
fund, and test new ideas from VA employees, academia, and the private 
sector. The focus is on improving access, quality, performance, and 
cost. VA remains committed to the best system of delivering quality 
care and benefits to Veterans. VAi2 plays an important role by enabling 
the use of promising technologies in the design of cost-effective 
solutions. For example, TBI Toolbox pilot, located at McGuire VA 
Medical Center in Richmond, Virginia, will test a software tool to 
standardize data gathered from brain injury treatments. The strategy 
will allow sharing of rapidly evolving treatment guidelines at VA 
polytrauma centers and Department of Defense medical facilities, as 
well as patient progress and outcomes.
    The 2012 budget continues our focus on three key transformational 
priorities I established when I became Secretary: Expanding access to 
benefits and services; reducing the claims backlog; and eliminating 
Veteran homelessness by 2015. These priorities address the most visible 
and urgent issues in VA.

               Expanding Access to Benefits and Services

    Expanding access to health care and benefits for underserved 
Veterans is vital to VA's success in best serving Veterans of all eras.
    The Veterans Relationship Management (VRM) initiative will provide 
Veterans, their families, and survivors with direct, easy, and secure 
access to the full range of VA programs through an efficient and 
responsive multi-channel program, including phone and Web services. VRM 
will provide VA employees with up-to-date tools to better serve VA 
clients, and empower clients through enhanced self-service 
capabilities. Expanding the self-service capabilities of the eBenefits 
on-line portal is one of the early successes of the VRM program in 
2010, and expansion of eBenefits functionality continues through 
quarterly releases and programs to engage new users.
    VA also saw significant progress in expanding access to Veterans. 
In July 2010, the Center for Women Veterans sponsored a forum to 
highlight enhancements in VA services and benefits for women Veterans 
which resulted in an information toolkit for advocates such as Veteran 
Service Organizations to share with their constituencies.
    Outreach was extended directly to women when, for the first time in 
25 years, VA surveyed women Veterans across the country to (1) identify 
in a national sample the current status, demographics, health care 
needs, and VA experiences of women Veterans; (2) determine how health 
care needs and barriers to VA health care differ among women Veterans 
of different generations; and (3) assess women Veterans' health care 
preferences in order to address VA barriers and health care needs. The 
interim report, released in summer 2010, informs policy and planning 
and provides a new baseline for program evaluation with regard to 
Veterans' perceptions of VA health services. The final report will be 
released in spring 2011.
    The Enhancing the Veteran Experience and Access to Health care 
(EVEAH) initiative will expand health care for Veterans, including 
women and rural populations. Care alternatives will be created to meet 
these special population access needs, including the use of new 
technology. Where technology solutions safely permit, VA has already 
transitioned from inpatient to outpatient settings through the use of 
telemedicine, in-home care, and other delivery innovations.
    One area of success is our expansion of telehome health-based 
clinical services in rural areas, which increases access, and reduces 
avoidable travel for patients and clinicians. In 2010, the total 
average daily census in telehome health was 31,155. This program will 
continue to expand to an estimated average daily census of 50,147 in 
2012, an increase of 60 percent over 2010.
    Through the Improve Veteran Mental Health (IVMH) initiative more 
Veterans will have access to the appropriate mental health services for 
which they are eligible, regardless of their geographic location. VA is 
leveraging the virtual environment with services such as the Veterans' 
Suicide Prevention Chat Line and real-time clinical video conferences.

                      Reducing the Claims Backlog

    One of VA's highest priority goals is to eliminate the disability 
claims backlog by 2015 and ensure all Veterans receive a quality 
decision (98 percent accuracy rate) in no more than 125 days. VBA is 
attacking the claims backlog through a focused and multi-pronged 
approach. At its core, our transformational approach relies on three 
pillars: a culture change inside VA to one that is centered on advocacy 
for Veterans; collaborating with stakeholders to constantly improve our 
claims process using best practices and ideas; and deploying powerful 
21st century IT solutions to simplify and improve claims processing for 
timely and accurate decisions the first time.
    The Veterans Benefits Management System (VBMS) initiative is the 
cornerstone of VA's claims transformation strategy. It integrates a 
business transformation strategy to address process and people with a 
paperless claims processing system. Combining a paperless claims 
processing system with improved business processes is the key to 
eliminating the backlog and providing Veterans with timely and quality 
decisions. The Virtual Regional Office, completed in May 2010, engaged 
employees and subject-matter experts to determine system specifications 
and business requirements for VBMS. The first VBMS pilot began in 
Providence in November 2010. Nationwide deployment of VBMS is expected 
to begin in 2012.
    VA is encouraging Veterans to file their Agent Orange-related 
claims through a new on-line claims application and processing system. 
Vietnam Veterans are the first users of this convenient automated 
claims processing system, which guides them through Web-based menus to 
capture information and medical evidence for faster claims decisions. 
While the new system is currently limited to claims related to the new 
Agent Orange presumptive conditions of Parkinson's Disease, Ischemic 
Heart Disease, and Hairy Cell Leukemias, we will expand it to include 
claims for other conditions.
    VA also published the first set of streamlined forms capturing 
medical information essential to prompt evaluation of disability 
compensation and pension claims, and dozens more of these forms are in 
development for various disabilities. The content of these disability 
benefit questionnaires is being built into VA's own medical information 
system to guide in-house examinations. Veterans can provide them to 
private doctors as an evidence guide that will speed their claims 
decisions.
    Another initiative to reduce the time needed to obtain private 
medical records utilizes a private contractor to retrieve the records 
from the provider, scan them into a digital format, and send them to VA 
through a secure transmission. This contract frees VA staff to focus on 
processing claims more quickly.
    Additional claims transformation efforts deployed nationwide in 
2010 include the Fully Developed Claims initiative to promptly rate 
claims submitted with all required evidence and an initiative to 
proactively reach out to Veterans via telephone to quickly resolve 
claims issues.
    VA needs these innovative systems and initiatives to expedite 
claims processing as the number of claims continue to climb. The 
disability claims workload from returning war Veterans, as well as from 
Veterans of earlier periods, is increasing each year. Annual claims 
receipts increased 51percent when comparing receipts from 2005 to 2010 
(788,298 to 1,192,346). We anticipate claims receipts of nearly 1.5 
million in 2011 (including new Agent Orange presumptive) and more than 
1.3 million claims in 2012. The funding request in the President's 
budget for VBA is essential to meet the increasing workload and put VA 
on a path to achieve our ultimate goal of no claims over 125 days by 
2015.

                    Eliminating Veteran Homelessness

    VA has an exceptionally strong track record in decreasing the 
number of homeless Veterans. Six years ago, there were approximately 
195,000 homeless Veterans on any given night; today, there are about 
75,600. VA uses a multi-faceted approach by providing safe housing; 
outreach; educational opportunities; mental health care and treatment; 
support services; homeless prevention services, and opportunities to 
return to employment. The National Call Center for Homeless has 
received 13,000 calls since March 2010, and 18,000 Veterans and 
families of Veterans have been provided permanent housing through VA 
and Housing and Urban Development Department programs. These Veterans 
were also provided with dedicated case managers and access to high-
quality VA health care.
    The Building Utilization Review and Repurpose (BURR) study is using 
VA's inventory of vacant/underutilized buildings to house homeless and 
at-risk Veterans and their families, where practical. Congress 
allocated $50 million to renovate unused VA buildings and VA has 
identified 94 sites with the potential to add approximately 6,300 units 
of housing through public/private ventures using VA's enhanced-use 
lease authority. This legislative authority is scheduled to lapse at 
the end of calendar year 2011. The Administration remains committed to 
this important program, and a proposal to address the expiration will 
accompany the Department's legislative package submitted through the 
President's Program. In addition to helping reduce homelessness, vacant 
building reuse is being considered for housing for Operation Enduring 
Freedom/Operation Iraqi Freedom/Operation New Dawn (OEF/OIF/OND) 
Veterans, polytrauma patients, assisted living, and seniors.
    Homelessness is both a housing and health care issue, heavily 
burdened by depression and substance abuse. Our 2012 budget plan also 
supports a comprehensive approach to eliminating Veteran homelessness 
by making key investments in mental health programs.
    The 2012 budget includes $939 million for specific programs to 
prevent and reduce homelessness among Veterans. This is an increase of 
17.5 percent, or $140 million over the 2011 level of $799 million. This 
increase includes an additional $50.4 million to enhance case 
management for permanent housing solutions offered through the Housing 
Urban Development-VA Supported Housing (HUD-VASH) program. These funds 
are required to maintain the services that keep Veterans rescued from 
homelessness sheltered; get the remaining men and women off the streets 
whom we have not reached in the past; and, prevent additional Veterans 
from becoming homeless during a time of war and difficult economic 
conditions.

                             Mental Health

    The mental health of Veterans is a more important issue now than 
ever before, as increasing numbers of Veterans are diagnosed with 
mental health conditions, often coexisting with other medical problems. 
More than 1.2 million of the 5.2 million Veterans seen in 2009 in VA 
had a mental health diagnosis. This represents about a 40 percent 
increase since 2004.
    Veterans of Iraq and Afghanistan rely on mental health care from VA 
to a greater degree than earlier groups of Veterans. Diagnosis of PTSD 
is on the rise as the contemporary nature of warfare increases both the 
chance for injuries that affect mental health and the difficulties 
facing Veterans upon their return home. In addition, mental health 
issues are often contributing factors to Veterans' homelessness.
    In order to address this challenge, VA has significantly invested 
in our mental health care workforce, hiring more than 6,000 new mental 
health care workers since 2005. In 2010, VA hired more than 1,500 
clinicians to conduct screenings and provide treatment as well as 
trained over 1,000 clinicians in evidenced-based practices. The 
Department has also established high standards for the provision of 
mental health care services through the recent publication of our 
Handbook on Uniform Mental Health Services in VA medical centers and 
clinics, and we have developed an integrated mental health plan with 
DoD to ensure better continuity of care--especially for Veterans of 
Iraq and Afghanistan. The 2012 budget includes $6.2 billion for mental 
health care programs, an increase of $450 million, or 8 percent over 
the 2011 level of $5.7 billion.

                          Medical Care Program

    We expect to provide medical care to over 6.2 million unique 
patients in 2012, a 1.4 percent increase over 2011. Among this 
community are nearly 536,000 Veterans of Iraq and Afghanistan, an 
increase of over 59,000 (or 12.6 percent) above 2011.
    The 2012 budget will support several new initiatives in addition to 
our efforts to eliminate Veteran homelessness. For example, $344 
million is provided for the activation of newly constructed medical 
facilities. In addition, we provide $208 million to implement 
provisions of the Caregivers and Veterans Omnibus Health Services Act 
and improve the quality of life for Veterans and their families.
    The 2012 budget also includes operational improvements that will 
make VA more effective and efficient in this challenging fiscal and 
economic environment. VA is proposing $1.2 billion of operational 
improvements which include aligning fees that VA pays with Medicare 
rates, reducing and improving the administration of our fee-based care 
program, clinical staff realignments, reducing indirect medical and 
administrative support costs, and achieving significant acquisition 
improvements to increase our purchasing power.
    Beginning in 2010, VHA embarked on a multi-year journey to enhance 
significantly the experience of Veterans and their families in their 
interactions with VA while continuing to focus on quality and safety. 
This journey required the VHA to develop new models of health care that 
educated and empowered patients and their families, focused not only on 
the technical aspects of health care but also designed for a more 
holistic, Veteran-centered system, with improved access and 
coordination of care. New Models of Health Care is a portfolio of 
initiatives created to achieve these objectives. We are re-designing 
our systems around the needs of our patients and improving care 
coordination and virtual access through enhanced secure messaging, 
social networking, telehealth, and telephone access.
    An essential component of this approach is transforming our primary 
care programs to increase our focus on health promotion, disease 
prevention, and chronic disease management through multidisciplinary 
teams. The new model of care will improve health outcomes and the care 
experience for our Veterans and their families. The model will 
standardize health care policies, practices and infrastructure to 
consistently prioritize Veterans' health care over any other factor 
without increasing cost or adversely affecting the quality of care. 
This important initiative will enable VA to become a national leader in 
transforming primary care services to a medical home model of health 
care delivery that improves patient satisfaction, clinical quality, 
safety and efficiencies. VA Telehealth and the Home Care Model will 
develop a new generation of communication tools (i.e. social 
networking, micro-blogging, text messaging, and self management groups) 
that VA will use to disseminate and collect critical information 
related to health, benefits and other VA services.
    VA is taking this historic step in redefining medical care for 
Veterans with the adoption of a modern health care approach called 
PACT, which stands for Patient Aligned Care Team. PACT is VA's 
adaptation of the popular contemporary team-based model of health care 
known as Patient Centered Medical Home designed to provide continuous 
and coordinated care throughout a patient's lifetime.

                            Medical Research

    VA's many trailblazing research accomplishments are a source of 
great pride to our department and the Nation. Today's committed VA 
researchers are focusing on traumatic brain injury, post-traumatic 
stress disorder, post-deployment health, women's health and a host of 
other issues key to the well-being of our Veterans. As one of the 
world's largest integrated health care systems, VA is uniquely 
positioned to not only conduct and fund research, but to develop 
solutions and implement them more quickly than other health care 
systems--turning hope into reality for Veterans and all Americans.
    VA's budget request for 2012 includes $509 million for research, a 
decrease of $72 million below the 2010 level. In addition, VA's 
research program will receive approximately $1.2 billion from medical 
care funding and Federal and non-Federal grants. These research funds 
will continue support for genomic medicine, point of care research, and 
medical informatics and information technology. Genomic medicine, also 
referred to as personalized medicine, uses information on a patient's 
genetic make-up to tailor prevention and treatment for that individual. 
The Million Veteran Program invites users of the VA health care system 
nationwide to participate in a longitudinal study with the aim of 
better understanding the relationship between genetic characteristics, 
behaviors and environmental factors, and Veteran health.
    To leverage data in the electronic health record, VA Informatics 
and Computing Infrastructure (VINCI) is creating a powerful and secure 
environment within the Austin Information Technology Center. This 
environment will allow VA researchers to access more easily a wide 
array of VHA databases using custom and off-the-shelf analytical tools. 
The Consortium for Health care Informatics Research (CHIR) will provide 
research access to patient information in VA's Computerized Patient 
Record System (CPRS) narrative text and laboratory reports. Together, 
VINCI and CHIR will allow data mining to accelerate findings and 
identify emerging trends. Ultimately, this critical work will lead to 
greater effectiveness of our medical system--improving value by 
assisting in the prevention and cure of disease.

                            Veteran Benefits

    The 2012 budget request for the Veterans Benefits Administration is 
$2.0 billion, an increase of $330 million, or 19.5 percent, over the 
2010 enacted level of $1.7 billion. This budget supports ongoing and 
new initiatives to reduce disability claims processing time, including 
development and implementation of further redesigned business 
processes. It funds an increase in FTE of 716 over 2010 to 20,321 to 
assist in reducing the benefits claims backlog. It also supports the 
administration of expanded education benefits eligibility under the 
Post-9/11 GI Bill, which now includes benefits for non-college degree 
programs, such as on-the-job training, flight training, and 
correspondence courses. In addition, the 2012 budget request supports 
the following initiatives:

Integrated Disability Evaluation System (IDES) Program
    IDES simplifies the process for disabled servicemembers 
transitioning to Veteran status, improves the consistency of disability 
ratings, and improves customer satisfaction. An IDES claim is completed 
in an average of 309 days; 43 percent faster than in the legacy system. 
VA and DoD worked together to increase the number of sites for the IDES 
program from 21 to 27 in 2010. The six new sites are Fort Riley, Fort 
Benning, Fort Lewis, Fort Hood, Fort Bragg and Portsmouth Naval 
Hospital, and VA and DoD will continue to expand the IDES program.
    IDES is being expanded to provide Vocational Rehabilitation and 
Employment (VR&E) services to active duty Servicemembers transitioning 
through the IDES. These services range from a comprehensive 
rehabilitation evaluation to determine abilities, skills, and interests 
for employment purposes as well as support services to identify and 
maintain employment. The budget request includes $16.2 million for 110 
FTE for the VR&E program to support IDES.

Veterans Benefits Management System (VBMS)
    In 2011, we will conduct two of three planned pilot programs to 
test VBMS, the new paperless claims processing system. Each pilot will 
expand on the success of the first pilot by adding additional software 
components. In the 2012 budget request for information technology, we 
will invest $148 million to complete pilot testing and initiate a 
national rollout.

VetSuccess on Campus
    In July 2009, VA established a pilot program at the University of 
South Florida called VetSuccess on Campus to improve graduation rates 
by providing outreach and supportive services to Veterans entering 
colleges and universities and ensuring that their health, education and 
benefit needs are met. The program has since expanded to include an 
additional seven campuses, serving approximately 8,000 Veterans. The 
campus Vocational Rehabilitation Counselor (VRC) and the Vet Center 
Outreach Coordinator liaise with school certifying officials, perform 
outreach, and communicate with Veteran-students to ensure their health, 
education, and benefit needs are met. This will enable Veterans to stay 
in college to complete their degrees and enter career employment. In 
addition, it provides Veterans the skills necessary to gain employment 
after graduation, which can help prevent Veteran homelessness. The 2012 
budget includes $1.1 million to expand the program to serve an 
additional 9,000 Veteran students on nine campuses, more than doubling 
the size of the current program.

                    National Cemetery Administration

    The budget plan includes $250.9 million in operations and 
maintenance funding for the National Cemetery Administration (NCA). The 
funding will allow us to provide more than 89.8 percent of the Veteran 
population a burial option within 75 miles of their residences by 
keeping existing national cemeteries open and establishing new State 
Veterans cemeteries, as well as increasing outreach efforts.
    VA expects to perform 115,500 interments in 2012, a 1.0 percent 
increase over 2011. In 2012, NCA will provide maintenance of 8,759 
developed acres, 3.0 percent over the 2011 estimate, while 3,228,000 or 
2.6 percent more gravesites will be given perpetual care.
    The budget request will allow NCA to maintain unprecedented levels 
of customer satisfaction. NCA achieved the top rating in the Nation 
four consecutive times on the prestigious American Customer 
Satisfaction Index (ACSI) established by the University of Michigan. 
ACSI is the only national, cross-industry measure of satisfaction in 
the United States. On the most recent 2010 survey and over the past 
decade, NCA's scores bested over 100 Federal agencies and the Nation's 
top corporations including Ford, FedEx and Coca Cola, to name a few. 
Our own internal surveys confirm this exceptional level of performance. 
For 2010, 98 percent of the survey respondents rated the appearance of 
national cemeteries as excellent; 95 percent rated the quality of 
service as excellent.
    NCA has implemented innovative approaches to cemetery operations: 
the use of pre-placed crypts, that preserve land and reduce operating 
costs; application of ``water-wise'' landscaping that conserves water 
and other resources; and installation of alternative energy products 
such as windmills and solar panels that supply power for facilities. 
NCA has also utilized biobased fuels that are homegrown and less 
damaging to the environment. NCA is developing an independent study of 
emerging burial practices throughout the world to inform its planning 
for the future.
    Support for the Veterans Cemetery Grants Program continues in 2012 
with $46 million to fund the highest priority Veterans cemetery grant 
requests ready for award. In addition to State cemetery grants, NCA is 
engaged in discussions with tribal governments regarding the 
construction of Veterans' cemeteries on their land and is awarding six 
such grants in 2011. The inclusion of tribal governments as grant 
recipients recognizes and empowers the authority of these groups to 
represent a unique group of Veterans and respond to their needs.

                         Capital Infrastructure

    Congressional support of VA has resulted in 63 major construction 
projects funded in whole, or in part, since 2004. When combined with 
investments in our minor construction and major lease programs, this 
has contributed to a plant inventory which includes 5,541 owned 
facilities, 1,629 leased facilities, 155 million square feet of 
occupied space (owned and leased) and 33,718 acres of owned real 
property.
    To best utilize resources, VA has reduced its inventory of owned 
vacant space by 34 percent, from 8.6 million square feet in 2001 to 5.7 
million square feet in 2010. As discussed previously, we are using the 
Building Utilization Review and Repurpose (BURR) effort to reuse vacant 
space for homeless Veterans and their families. BURR also identifies 
other potential reuses of vacant and underutilized space and land 
within VA's inventory such as assisted living, senior housing, and 
housing for Veterans of Iraq and Afghanistan and their families. VA 
also houses homeless Veterans in public/private ventures through 
enhanced-use leasing.

Major Construction
    The major construction request in 2012 is $589.6 million in new 
budget authority. In addition, VA has been the beneficiary of a 
favorable construction market and, as a result, is able to reallocate 
$135.6 million from previously authorized and appropriated projects to 
accomplish additional project work--resulting in a total of $725.2 
million for the major construction program. This reflects the 
Department's continued commitment to provide quality health care and 
benefits through improving its infrastructure to provide for modern, 
safe, and secure facilities for Veterans. It includes seven ongoing 
medical facility projects (New Orleans, Denver, San Juan, St. Louis, 
Palo Alto, Bay Pines, and Seattle) and design for three new projects 
(Reno, West Los Angeles and San Francisco) primarily focused on safety 
and security corrections. One cemetery expansion will be completed to 
maintain and improve burial service in Honolulu, HI.

Minor Construction
    In 2012, the minor construction request is $550.1 million. In 
support of the medical care and medical research programs, minor 
construction funds permit VA to realign critical services, make seismic 
corrections, improve patient safety, enhance access to health care and 
patient privacy, increase capacity for dental care, improve treatment 
of special emphasis programs, and, expand our research capability. We 
also use minor construction funds to improve the appearance of our 
national cemeteries. Further, minor construction resources will be used 
to comply with energy efficiency and sustainability design 
requirements.

Greening VA
    The ``greening VA'' effort continues to be strong. There are 21 
facilities Green Globe-certified and four LEED-certified. We have 
completed energy efficiency benchmarking for 99 percent of VA-owned 
facilities and obtained the Energy Star label for 30 VA sites since 
2003. Electric meter installations were completed for 60 percent of 
targeted buildings and we are installing solar energy systems at 35 
sites for a total capacity of 30 megawatts. VA has installed wind 
turbines at two sites, awarded two ground source heat pump projects, 
awarded five renewably fueled cogeneration projects, and completed one 
fuel cell project.
    In 2012, we plan to invest $27 million for solar photovoltaic 
projects, $51 million in energy infrastructure improvements, $21 
million in renewably fueled cogeneration using biomass (wood waste) or 
biogas (waste methane), $1 million in sustainable building, $14 million 
for wind projects, and $10 million for alternative fueling projects and 
expansion of environmental management systems.

                         Information Technology

    Information Technology (IT) is integral to the delivery of 
efficient and effective service to Veterans. IT is not a supplementary 
function--it is key to the delivery of efficient, modern health care. 
The 2012 budget includes $3.161 billion to support Information 
Technology (IT) development, operations and maintenance expenses. The 
2012 budget will fund the Department's highest IT priorities as well as 
information security programs, which protect privacy and provide secure 
IT operations across VA. Under our disciplined development program, 
PMAS, the delivery of customer software milestones exceeds 80 percent 
which is up from just 20 percent before the implementation of PMAS. The 
budget request will also fund systems that VA will develop and 
implement under the Caregivers and Veterans Omnibus Health Services Act 
of 2010.
    In 2010, VA made the sound business decision to discontinue the 
Integrated Financial Accounting System (IFAS) and the data warehouse 
component of the Financial and Logistics Integrated Technology 
Enterprise (FLITE), but will continue to provide funding for the 
Strategic Asset Management (SAM) system in 2011 and 2012. OI&T will 
fund other continuing projects such as Compensation and Pension Records 
Interchange (CAPRI) which offers VBA Rating Veteran Service 
Representatives and Decision Review Officers help in building the 
rating decision. CAPRI does this by creating a more efficient means of 
requesting compensation and pension examinations and navigating 
existing patient records.

Veterans Relationship Management (VRM)
    The 2012 IT budget for VRM is $108 million, and will support 
continued development of the on-line portal as well as the development 
of Customer Relationship Management capabilities.

Virtual Lifetime Electronic Record (VLER)
    The Virtual Lifetime Electronic Record (VLER) is a Federal, inter-
agency initiative to provide portability, accessibility and complete 
health, benefits, and administrative data for every servicemember, 
Veteran, and their beneficiaries. The goal of this major initiative is 
to establish the interoperability and communication environment 
necessary to facilitate the rapid exchange of patient and beneficiary 
information that will yield consolidated, coherent and consistent 
access to electronic records between DoD, VA, and the private sector.
    VLER will not create a new data record, but it will ensure 
availability of reliable data from the best possible source. The VLER 
health component of this initiative is in operation at two pilot sites 
with a plan to add nine more pilots this fiscal year. VLER will work 
closely with other major initiatives including the Veterans Benefits 
Management System (VBMS) and the Veterans Relationship Management 
(VRM). A total of $70 million in IT funds in 2012 is required to 
complete the effort and move to national production and deployment of 
initial VLER capabilities. The VLER partnership between VA and the 
Department of Defense will serve as a positive model for electronic 
health record interoperability in the country, which has been an 
Administration priority.

                                Summary

    VA is the second largest Federal department and has over 300,000 
employees. Among the many professions represented in the vast VA 
workforce are physicians, nurses, counselors, claims processers, 
cemetery groundskeepers, statisticians, engineers, architects, computer 
specialists, budget analysts, police, and educators--all working with 
the greatest determination to best serve all generations of Veterans. 
In addition, VA has approximately 140,000 volunteers serving Veterans 
at our hospitals, Vet Centers and cemeteries. There are things that 
they do that cannot be converted into dollar values--patience, dignity 
and respect for Veterans, some of whom are heavily challenged by the 
memories of their wars.
    As advocates for Veterans and their families, VA is committed to 
providing the very best services. I will do everything possible to 
ensure that we wisely use the funds Congress appropriates for VA to 
improve the quality of life for Veterans and the efficiency of our 
operations--innovatively and transparently--as we deliver on the 
enduring promises of Presidents and the obligations of the American 
people to our Veterans.
    I am honored to present the President's 2012 budget request for VA, 
and to represent all VA employees and the interests of those outside of 
VA, who share our commitment to Veterans.

                                 
         Prepared Statement of Carl Blake, National Legislative
                Director, Paralyzed Veterans of America

    Chairman Miller, Ranking Member Filner, 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 2012.
    With the newly elected 112th Congress just beginning to conduct 
business, it is important to once again review and assess the efforts 
of the 111th Congress to provide sufficient, timely, and predictable 
funding for the Department of Veterans Affairs (VA), particularly the 
VA health-care system. The first session of the 111th Congress laid the 
groundwork for a historic year in 2010. In 2009 the President signed 
Public Law 111-81, the ``Veterans Health Care Budget Reform and 
Transparency Act,'' which required the President's budget submission to 
include estimates of appropriations for the Medical Care accounts for 
fiscal year (FY) 2012 and thereafter (advance appropriations) and the 
VA Secretary to provide detailed estimates of the funds necessary for 
these accounts in budget documents submitted to Congress. Consistent 
with advocacy by The Independent Budget, the law also required a 
thorough analysis and public report by the Government Accountability 
Office (GAO) of the Administration's advance appropriations projections 
to determine whether that information is sound and accurately reflects 
expected demand and costs to be incurred in FY 2012 and subsequent 
years.
    The Independent Budget veterans service organizations (IBVSOs) were 
pleased to see that in February 2010 the Administration released a 
detailed estimation of its FY 2011 funding needs as well as a blueprint 
for the advance funding needed for the Medical Care accounts of VA for 
FY 2012. It is important to note that last year was the first year that 
the budget documents included advance appropriations estimates. 
Unfortunately, due to differences in interpretation of the language of 
Public Law 111-81, the GAO did not provide an examination of the budget 
submission to analyze its consistency with VA's Enrollee Health Care 
Projection Model. The Independent Budget was informed that the GAO was 
not obligated to report on the advance appropriations projections of VA 
until at least 2011. The IBVSOs look forward to working with Congress 
to ensure that the GAO fulfills its responsibility this year.
    For FY 2011, Congress provided historic funding levels for VA in 
the House and Senate versions of the Military Construction and Veterans 
Affairs appropriations bill that matched, and in some cases exceeded, 
the recommendations of The Independent Budget. Unfortunately, as has 
become the disappointing and recurring process, the Military 
Construction and Veterans Affairs appropriations bill was not completed 
even as the new fiscal year began October 1, 2010. Although the House 
passed the bill in the summer, the Senate failed to enact the bill in a 
timely manner. This fact serves as a continuing reminder that, despite 
excellent funding levels provided over the past few years, the larger 
appropriations process continues to break down over matters unrelated 
to VA's budget due to partisan political gridlock.
    Fortunately, this year, the enactment of advance appropriations has 
temporarily shielded the VA health-care system from this political 
wrangling and legislative deadlock. However, the larger VA system is 
still negatively affected by the incomplete appropriations work. VA 
still faces the daunting task of meeting ever-increasing health-care 
demand as well as demand for benefits and other services.
    In February 2010, the President released a preliminary budget 
submission for VA for FY 2011. The Administration recommended an 
overall funding authority of $60.3 billion for VA, approximately $4.3 
billion above the FY 2010 appropriated level but approximately $1.2 
billion less than The Independent Budget recommended. The 
Administration's recommendation included approximately $51.5 billion in 
total medical care funding for FY 2011. This amount included $48.1 
billion in appropriated funding and nearly $3.4 billion in medical care 
collections. The budget also included $590 million in funding for 
Medical and Prosthetic Research, an increase of $9 million over the FY 
2010 appropriated level.
    For FY 2011, The Independent Budget recommended that the 
Administration and Congress provide $61.5 billion to VA, an increase of 
$5.5 billion above the FY 2010 operating budget level, to adequately 
meet veterans' health-care and benefits needs. Our recommendations 
included $52 billion for health care and $700 million for medical and 
prosthetic research.
    The Administration also included an initial estimate for the VA 
health-care accounts for FY 2012. Specifically, the budget request 
calls for $54.3 billion in total budget authority, with $50.6 billion 
in discretionary funding and approximately $3.7 billion for medical 
care collections. Unfortunately, because work on the FY 2011 
appropriations bill was not completed, advance appropriations funding 
for FY 2012 remains in limbo.
    Moreover, recent actions by VA suggest that the FY 2011 advance 
appropriations funding levels (which were affirmed in the President's 
budget request) may not be sufficient to support the health-care 
programs managed by VA. In a letter sent to Congress on July 30, 2010, 
VA Secretary Eric Shinseki explained that he believes the advance 
appropriations levels provided for FY 2011--that virtually match the 
Administration's request for FY 2011--will be insufficient to meet the 
health-care demand that VA will face this year. He also emphasized that 
the passage of Public Law 111-163, the ``Caregivers and Veterans 
Omnibus Health Services Act,'' and Public Law 111-148, the ``Patient 
Protection and Affordable Care Act,'' will increase workloads for VA. 
Unfortunately, the House version of the FY 2011 Military Construction 
and Veterans Affairs appropriations bill did not fully address this 
projected current year demand. Likewise, the Senate version of the 
appropriations bill is apparently insufficient to meet the new demand 
the Secretary projects.
    While we appreciate the funding levels that are provided by the 
appropriations bills, we believe that the Secretary's letter sends a 
clear message that, absent some unclear ``management action'' by VA, 
more funding will be needed for FY 2011 for VA Medical Care accounts. 
We hope that as the House and Senate finally complete work on the FY 
2011 Military Construction and Veterans' Affairs appropriations bill, 
proper consideration must be given to this concern.

Funding for FY 2012
    Last year the Administration recommended an advance appropriation 
for FY 2012 of approximately $50.6 billion in discretionary funding for 
VA medical care. The House Committee on Appropriations supported this 
recommendation in H.R. 1 as well. When combined with the $3.7 billion 
Administration projection for medical care collections, the total 
available operating budget recommended for FY 2012 is approximately 
$54.3 billion. However, included in the President's Budget Request for 
FY 2012, the Administration revised the estimates for Medical Care down 
by $713 million due to the proposed Federal pay freeze (a factor not 
included in H.R. 1).
    Of particular concern to The Independent Budget is an ill-defined 
contingency fund that would provide $953 million more for Medical 
Services for FY 2012. Moreover, we are especially concerned that the VA 
presumes ``management improvements'' of approximately $1.1 billion to 
be directed towards FY 2012 and FY 2013; and yet, the VA does not 
define the relationship between the contingency fund and the 
``management improvements'' that it proposes. Additionally, we are 
concerned about the revised estimate in Medical Care Collections from 
the originally projected $3.7 billion to now only $3.1 billion. 
Ultimately, the VA seems to recommend a revised decrease to 
approximately $53.9 billion for Medical Care for FY 2012.
    For FY 2012, The Independent Budget recommends approximately $55.0 
billion for total medical care, an increase of $3.4 billion over the FY 
2011 operating budget level currently proposed in H.R. 1, the 
``Continuing Resolution for FY 2011.'' 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 2012, The Independent Budget recommends 
approximately $43.8 billion for Medical Services. Our Medical Services 
recommendation includes the following recommendations:




Current Services Estimate...........................    $41,274,505,000

Increase in Patient Workload........................     $1,495,631,000

Additional Medical Care Program Costs...............     $1,010,000,000

Total FY 2012 Medical Services......................    $43,780,136,000



    Our growth in patient workload is based on a projected increase of 
approximately 126,000 new unique patients--Priority Group 1-8 veterans 
and covered non-veterans. We estimate the cost of these new unique 
patients to be approximately $1.0 billion. The increase in patient 
workload also includes a projected increase of 87,500 new Operation 
Enduring Freedom and Operation Iraqi Freedom (OEF/OIF) veterans at a 
cost of approximately $306 million.
    Finally, our increase in workload includes the projected enrollment 
of new Priority Group 8 veterans who will use the VA health care system 
as a result of the Administration's continued efforts to incrementally 
increase the enrollment of Priority Group 8 veterans by 500,000 
enrollments by FY 2013. We estimate that as a result of this policy 
decision, the number of new Priority Group 8 veterans who will enroll 
in the VA should increase by 125,000 between FY 2010 and FY 2013. Based 
on the Priority Group 8 empirical utilization rate of 25 percent, we 
estimate that approximately 31,250 of these new enrollees will become 
users of the system. This translates to a cost of approximately $148 
million.
    Lastly, The Independent Budget believes that there are additional 
projected funding needs for the VA. Specifically, we believe there is 
real funding needed to restore the VA's long-term care capacity (for 
which a reasonable cost estimate can be determined based on the actual 
capacity shortfall of the VA), to provide additional centralized 
prosthetics funding (based on actual expenditures and projections from 
the VA's prosthetics service), and to meet the new projected demand 
associated with the provisions of P.L. 111-163, the ``Caregivers and 
Veterans Omnibus Health Services Act.'' In order to restore the VA's 
long-term care average daily census (ADC) to the level mandated by P.L. 
106-117, the ``Veterans Millennium Health Care Act,'' we recommend $375 
million. In order to meet the increase in demand for prosthetics, the 
IB recommends an additional $250 million. This increase in prosthetics 
funding reflects the significant increase in expenditures from FY 2010 
to FY 2011 (explained in the section on Centralized Prosthetics 
Funding) and the expected continued growth in expenditures for FY 2012.
    Finally, we believe that there will be a significant funding need 
in order for the VA to address the provisions of P.L. 111-163, 
specifically as it relates to the caregiver provisions of the law. 
During consideration of the legislation, the costs were estimated to be 
approximately $1.6 billion between FY 2010 and FY 2015. This included 
approximately $60 million identified for FY 2010 and approximately 
$1.54 billion between FY 2011 and FY 2015. However, no funding was 
provided in FY 2011 to address this need. As a result, the VA will have 
an even greater need for funding to support P.L. 111-163 between FY 
2012 and FY 2015 in order to fully implement these provisions. While 
the Administration claims to have provided an additional $208 million 
for implementation of P.L. 111-163, we remain concerned about the lack 
of action by the VA thus far to actually implement the law. Moreover, 
it is not clear where that additional funding is included in the FY 
2012 Medical Care budget request. With this in mind, The Independent 
Budget recommends approximately $385 million to fund the provisions of 
P.L. 111-163 in FY 2012.
    For Medical Support and Compliance, The Independent Budget 
recommends approximately $5.4 billion, approximately $50 million above 
the FY 2011 appropriated level. Finally, for Medical Facilities, The 
Independent Budget recommends approximately $5.9 billion, approximately 
$160 million above the FY 2011 appropriated level. While our 
recommendation does not include an additional increase for non-
recurring maintenance (NRM), it does reflect a FY 2012 baseline of 
approximately $1.1 billion. While we appreciate the significant 
increases in the NRM baseline over the last couple of years, total NRM 
funding still lags behind the recommended 2 to 4 percent of plant 
replacement value. In fact, the VA should actually be receiving at 
least $1.7 billion annually for NRM (Refer to Construction section 
article ``Increase Spending on Nonrecurring Maintenance'').
    For Medical and Prosthetic Research, The Independent Budget 
recommends $620 million. This represents a $39 million increase over 
the FY 2011 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.

Advance Appropriations for FY 2013
    As explained previously, P.L. 111-81 required the President's 
budget submission to include estimates of appropriations for the 
medical care accounts for FY 2012 and subsequent fiscal years. With 
this in mind, the VA Secretary is required to update the advance 
appropriations projections for the upcoming fiscal year (FY 2012) and 
provide detailed estimates of the funds necessary for the medical care 
accounts for FY 2013. Moreover, the law also requires a thorough 
analysis and public report of the Administration's advance 
appropriations projections by the GAO to determine if that information 
is sound and accurately reflects expected demand and costs.
    The Independent Budget is pleased to see that the Administration 
has proposed an increase in the Medical Care accounts for FY 2013. We 
simply urge Congress to remain vigilant to ensure that the proposed 
funding levels for FY 2013 are in fact sufficient to meet the continued 
growth in demand on the health care system. Moreover, it is important 
to note that this is the first year that the GAO will examine the 
budget submission to analyze its consistency with VA's Enrollee Health 
Care Projection Model. The Independent Budget looks forward to 
examining all of this new information and incorporating it into future 
budget estimates.
    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.
    This concludes my testimony. I will be happy to answer any 
questions you may have.

                                 
           Prepared Statement of Raymond C. Kelley, Director,
 National Legislative Service, Veterans of Foreign Wars of the United 
                                 States

    MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE:

    On behalf of the 2.1 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.
    The Department of Veterans Affairs (VA) manages a wide portfolio of 
capital assets throughout the nationwide system of health-care 
facilities. According to the latest VA Capital Asset Plan, VA owns 
5,405 buildings and almost 33,000 acres of land. It is a vast network 
of facilities that requires much time and attention from VA's capital 
asset managers. Unfortunately, VA's infrastructure is aging rapidly. 
Although Congress has funded a significant number of new facilities in 
recent years, the vast majority of existing VA medical centers and 
other associated buildings are on average more than 60 years old.
    Aging facilities create an increased burden on VA's overall 
maintenance requirements. They must be maintained aggressively so that 
their building systems--electrical, plumbing, capital equipment, etc.--
are up to date and that these facilities are able to continue to 
deliver health care in a clean and safe environment. Older, out-of-date 
facilities do not just present patient safety issues: from VA's 
perspective, older buildings often have inefficient layouts and 
inefficient use of space and energy. This means that even with 
modification or renovation, VA's operational costs can be higher than 
they would be in a more modern structure.
    VA has begun a patient-centered reformation and transformation of 
the way it delivers care and new ways of managing its infrastructure 
plan based on the needs of sick and disabled veterans in the 21st 
century. Regardless of what the VA health-care system of the future may 
look like, our focus must remain on ensuring a lasting, accessible, 
modernized system that is dedicated to the unique needs of veterans 
while also providing unparalleled and timely care when and where 
veterans need it.
    The Capital Asset Realignment for Enhanced Services (CARES) 
process, VA's data-driven assessment of current and future construction 
needs, gave VA a long-term roadmap and has helped guide its capital 
planning process over the past 10 years. The CARES process developed a 
large number of significant construction objectives that would be 
necessary for VA to fulfill its obligation to sick and disabled 
veterans. Over the past several years, the Administration and Congress 
have made significant inroads in funding these priorities. Since fiscal 
year (FY) 2004, $5.9 billion has been allocated for these projects.
    The Independent Budget veterans service organizations believe that 
CARES was a necessary undertaking and that VA has made slow but steady 
progress on many of these critical projects. In the post-CARES era, 
many essential construction projects are still awaiting authorization 
and funding, and the IBVSOs firmly believe that Congress cannot allow 
the construction needs that led to the CARES blueprint to be 
disregarded. Both strong oversight and sufficient funding are critical 
in this ongoing task of maintaining the best care for veterans.
    Given the challenges presented by the CARES blueprint, including a 
backlog of partially funded construction projects, high costs of 
individual projects, and our concern about the timeliness of these 
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' care--VA has proposed a new program, named ``Strategic 
Capital Investment Planning'' (SCIP). This initiative will address some 
of the infrastructure issues that have been noted in The Independent 
Budget.
    SCIP is VA's newest approach to reevaluating its aging and 
underutilized infrastructure, as well as examining the lack of 
infrastructure in various locations around the country. The intent of 
SCIP, according to VA, is to scrutinize all property so that VA can 
best address gaps in delivery of care and services to veterans. Unlike 
CARES, SCIP will cover all of VA, not only Veterans Health 
Administration facilities; however, similar to CARES, SCIP is designed 
to evaluate the condition of VA infrastructure, in order to build a 10-
year integrated capital plan. The goal is to improve quality of and 
access to VA services by modernizing facilities based on current and 
future needs. If SCIP is approved as VA's capital planning method, the 
Department plans to begin this process with the FY 2012 budget cycle.
    VA has also advised the IBVSOs that SCIP is intended to address the 
funding shortfall of $24.3 billion to deal with major construction and 
facility condition assessment backlogs, inefficient use of resources, 
and high maintenance costs, as well as an existing commitment of about 
$4.4 billion to complete ongoing major construction projects. If 
approved, the goal of this new initiative must be a comprehensive plan 
that will improve quality by providing equitable access to services for 
all veterans across the VA system of care and services. As the age of 
VA structures increase, costs go up, often dramatically so. 
Accordingly, more funding is spent on older projects, leaving less for 
other maintenance and construction needs and increasing the overall 
budget for both major and minor construction. VA must adopt a plan for 
the future that will review and assess all current and future needs 
while providing priorities and transparency at the forefront.
    A draft of the SCIP proposal was most recently provided to the 
IBVSOs in October 2010. The overview included a future-oriented view of 
VA capital needs beginning with the 2012 budget. According to VA, SCIP 
would adapt to changes in environment, provide a comprehensive planning 
process for all projects, and result in one prioritized listing of 
capital projects VA wide. The list intends to ensure equitable access 
to services for veterans across the country and includes major and 
minor construction, nonrecurring maintenance, and leasing.
    Because SCIP is a new initiative, The Independent Budget veterans 
service organizations encourage VA to be transparent during the process 
and would advise that challenges must be met when reviewing all current 
and future needs of its aging infrastructure. The goal must be a 
comprehensive plan that will improve quality by maintaining equitable 
access to services across the VA system. The changing health-care 
delivery needs of veterans, including reduced demand for inpatient beds 
and increasing demand for outpatient care and medical specialty 
services, along with limited funding available for construction of new 
facilities, has created a growing backlog of projects that are becoming 
more expensive to complete. VA has advised that SCIP is intended to 
address the funding shortfalls of its current capital backlog needs.

Major and Minor Construction Accounts
    The Department of Veterans Affairs continues to be faced with 
challenges with respect to the maintenance backlog. VA regularly 
surveys each facility as part of the Facilities Condition Assessment 
(FCA) process. VA estimates the cost of repair and uses this cost 
estimate as a component of its Federal Real Property Report 
requirements. According to its latest 5-Year Capital Plan, VA has 
estimated the total cost of repairing all ``D-rated'' and ``F-rated'' 
FCA deficiencies at a cost of $8 billion, even as it and Congress have 
greatly increased the amount of funding and resources devoted to this 
critical aspect of capital asset management. Although Congress has 
increased recent funding for nonrecurring maintenance (NRM), these 
funding levels only touch the surface of the backlog.
    For years, NRM and other maintenance needs were significantly 
underfunded, and massive backlogs ensued (see ``Increased Spending on 
Nonrecurring Maintenance'' in this Independent Budget). Maintenance is 
only a small fraction of the major infrastructure issues confronting 
the system. The Independent Budget veterans service organizations 
(IBVSOs) are also concerned about the huge backlog of major medical 
construction projects and the political and economic reality that fully 
funding each of these projects and constructing them in a timely manner 
may not be feasible.
    One of the reasons for such a large backlog of construction 
projects is because Congress allocated so little funding during the 
Capital Asset Realignment for Enhanced Services (CARES) process. The 
Appropriations Committees provided few resources during the initial 
review phase, and against our advice, preferred to wait for the result 
of CARES. Because of our convictions that a number of these projects 
needed to go forward and that they would be fully justified through any 
plans developed by CARES, the IBVSOs argued that a de facto moratorium 
on construction was unnecessary and would be harmful. The House agreed 
with our views as evidenced by its passage of the Veterans Hospital 
Emergency Repair Act, March 27, 2001; however, Congress never 
appropriated funding to carry out the purposes of that act, and the 
construction and maintenance backlogs continued to grow.
    Upon completion of the CARES decision document in 2004, former VA 
Secretary Anthony Principi testified before the Health Subcommittee of 
the House Committee on Veterans' Affairs. He noted that CARES 
``reflects a need for additional investment of approximately $1 billion 
per year for the next 5 years to modernize VA's medical infrastructure 
and enhance veterans' access to care.'' In a November 17, 2008, letter 
to the Senate Committee on Veterans' Affairs, then-Secretary James 
Peake reported that VA would need at least $6.5 billion over the 
following 5 years to meet its funding requirements for major medical 
facility construction projects.
    As noted previously, VA has proposed a new program, Strategic 
Capital Investment Planning (SCIP), to address some of the construction 
and infrastructure issues presented in The Independent Budget. Given 
the President's pledge to create a VA for the 21st century, the IBVSOs 
expect the Department to proceed with its SCIP plan in a transparent 
way, coordinate the plan through our community and other interested 
parties, and provide its plan to Congress for review and approval if 
required. However, until SCIP is fully implemented, we fear that VA's 
capital programs and the significant effects on the system as a whole 
and veterans individually will go unchanged; ultimately risking a 
diminution of care and services provided by VA to sick and disabled 
veterans in substandard facilities.
    Until the SCIP plan is approved and in place across the VA network 
of care, the IBVSOs will continue to argue for sufficient funding needs 
to maintain VA's capital infrastructure and to ensure a safe and useful 
system for all veterans who need VA health care. With this in mind, the 
IBVSOs would like to outline the components of our Major and Minor 
Construction account requests of this Independent Budget.


                           MAJOR CONSTRUCTION

                                                Recommendation ($ in
                 Category                            Thousands)

Major Medical Facility Construction                          $1,850,000

NCA Construction                                                $61,000

Advance Planning                                                $45,000

Master Planning                                                 $15,000

Historic Preservation                                           $20,000

Medical Research Infrastructure                                $150,000

Miscellaneous Accounts                                          $60,000
------------------------------------------------------------------------




                           MINOR CONSTRUCTION

                 Category                     Funding ($ in Thousands)

Veterans Health Administration                                 $450,000

National Cemetery Adminsitration                               $100,000

Veterans Benefits Administration                                $20,000

Staff Offices                                                   $15,000
------------------------------------------------------------------------



    Major Medical Facility Construction--This amount would allow VA to 
continue to address the backlog of partially funded construction 
projects which includes any ongoing major construction projects already 
approved. Depending on the stage in the process and VA's ability to 
complete portions of the projects within the fiscal year, remaining 
funds could be used for projects identified by VA as part of SCIP.
    National Cemetery Administration--This amount would fund a number 
of national cemeteries from VA's priority list as well as potential 
projects identified by SCIP.
    Advanced Planning--This amount helps develop the scope of the Major 
Medical Facility construction project as well as to identify proper 
requirements for their construction. It allows VA to conduct necessary 
studies and research similar to the planning process in the private 
sector.
    Master Planning--A description of The Independent Budget request 
follows later in the text.
    Historic Preservation--A description of The Independent Budget 
request follows later in the text.
    Miscellaneous Accounts--These included the individual line items 
for such accounts as asbestos abatement, the judgment fund, and 
hazardous waste disposal.
    Minor Construction Account--SCIP has already identified minor 
construction projects that update and modernize VA's aging physical 
plant, ensuring the health and safety of veterans and VA employees.
    Medical Research Infrastructure--Funding needs to be allocated by 
Congress to allow for needed renovations to VA research facilities.
    Medical Research Infrastructure--A description of The Independent 
Budget request follows later in the text.
    National Cemetery Administration--This includes minor construction 
projects identified by SCIP to include the construction of several 
columbaria, installation of crypts, and landscaping and maintenance 
improvements.
    Veterans Benefits Administration--This includes several minor 
construction projects identified by SCIP in addition to the leasing 
requirements the Veterans Benefits Administration needs. It also 
includes $2 million transferred yearly for the security requirements of 
its Manila office.
    Staff Offices--This includes minor construction projects related to 
staff offices, including increased space and numerous renovations for 
the VA Office of Inspector General.
    We view these issues as the critical areas that must be addressed 
when developing our funding recommendations. We would also like to note 
that within many of these categories lies ongoing and unfunded projects 
as well as backlogged facility repairs and maintenance.

INADEQUATE FUNDING AND DECLINING CAPITAL ASSET VALUE:
    The Department of Veterans Affairs must protect against 
deterioration of its infrastructure and a declining capital asset 
value.

    Good stewardship demands that VA facility assets be protected 
against deterioration and that an appropriate level of building 
services be maintained. Given VA's construction needs, such as seismic 
correction, compliance with the Americans with Disabilities Act (ADA) 
and Joint Commission on Accreditation of Health care Organization 
(JCAHO) standards, replacing aging physical plant equipment, and 
projects that were identified by the Capital Asset Realignment for 
Enhanced Services (CARES) initiative, the VA construction budget 
continues to be inadequate. During the past decade of underfunded 
construction budgets, 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 facilities have an average age of more than 60 years, and it is 
essential that funding be increased to renovate, repair, and replace 
these aging structures and physical systems. In the past, The 
Independent Budget veterans service organizations (IBVSOs) have cited 
the recommendations of the final Report of the President's Task Force 
to Improve Health Care Delivery for Our Nations Veterans (PTF). To 
underscore the importance of this issue, we again cite the 
recommendations of the PTF. It was noted that VA health-care facility 
major and minor construction over the 1996 to 2001 period averaged only 
$246 million annually, a recapitalization rate of 0.64 percent of the 
$38.3 billion total plant replacement value. At this rate of 
investment, VA would be recapitalizing its infrastructure every 155 
years.
    If maintenance and restoration were considered along with major 
construction, VA invests less than 2 percent of plant replacement value 
for its entire facility infrastructure nationwide. A minimum of 5 
percent to 8 percent investment of plant replacement value is necessary 
to maintain health-care infrastructure. If this rate is not improved, 
veterans could be receiving care in potentially more unsafe and 
dysfunctional settings as time goes along. Improvements in the delivery 
of health care to veterans require that VA adequately create, sustain, 
and renew physical infrastructure to ensure safe and functional 
facilities. The FY 2008 VA Asset Management Plan provided the most 
recent estimate of plant replacement value (PRV).Using the guidance of 
the Federal Government's Federal Real Property Council, VA's PRV is 
more than $85 billion. The IBVSOs appreciate the Administration's 
efforts to increase the total capital budget, and we hope future 
requests will be more in line with the system's needs.
Recommendations:
    Congress and the Administration must ensure that adequate funds are 
appropriated for VA's capital needs so that it can properly invest in 
its physical assets to protect their value and to ensure that it can 
continue to provide health care in safe and functional facilities long 
into the future.

INCREASED SPENDING ON NONRECURRING MAINTENANCE:
    The deterioration of many VA properties requires increased spending 
on nonrecurring maintenance.

    For years The Independent Budget veterans service organizations 
(IBVSOs) have stressed the importance of providing necessary funding 
for nonrecurring maintenance (NRM) accounts to ensure that longstanding 
and continual upkeep requirements at VA facilities are met. NRM 
embodies the many small projects that together provide for the long-
term sustainability and usability of VA facilities. NRM projects are 
onetime repairs, such as modernizing mechanical or electrical systems, 
replacing windows and equipment, and preserving roofs and floors, among 
other routine maintenance needs. Nonrecurring maintenance is a 
necessary component of the care and stewardship of a facility. When 
managed responsibly, these relatively small, periodic investments 
ensure that the more substantial investments of major and minor 
construction provide real value to taxpayers and to veterans as well.
    When NRM projects are ignored, the results can be detrimental to 
the value of a VA property and the quality of care they facilitate for 
veterans. Nonrecurring maintenance projects that are left undone 
inevitably require more costly and time-consuming repairs when they are 
eventually addressed. Furthermore, this lack of attention to basic 
structural maintenance issues jeopardizes the safety of staff and 
patients. Because delayed maintenance projects always require a more 
invasive response as opposed to situations in which NRM is responsibly 
managed, the IBVSOs believe neglecting such projects is tantamount to 
denying veterans timely and professional care and even placing them in 
danger.
    Accordingly, to fully maintain its facilities, VA needs an NRM 
annual budget of at least $1.7 billion. Teams of professional engineers 
and cost estimators survey each medical facility at least once every 3 
years as part of VA's Facilities Condition Assessment (FCA) process. 
These surveys assess all components of a given facility to include 
internal issues, such as plumbing, and external issues, such as parking 
and mobility barriers. Each component of a facility is given a letter 
grade, A through F. Areas given a grade of F no longer function or are 
in danger of imminent structural or system failure. VA estimates the 
cost of repair for each item that is rated D or F and then uses this 
cost estimate as a component of its Federal Real Property Report 
requirements. VA's latest 5-Year Capital Plan estimated the total cost 
of repairing all D-rated and F-rated FCA deficiencies at a staggering 
$8 billion, even as VA and Congress have greatly increased the amount 
of funding and resources devoted to this critical aspect of capital 
asset management. Since that time, NRM received a one-time allocation 
of $1 billion through Public Law 111-5, the ``American Recovery and 
Reinvestment Act.''
    VA uses the FCA reports as part of its Federal Real Property 
Council metrics. The department calculates a Facility Condition Index 
(FCI), which is the ratio of the cost of FCA repairs compared to the 
cost of replacement. According to the FY 2008 Asset Management Plan, 
this metric has declined from 82 percent in 2006 to 68 percent in 2008. 
VA's strategic goal is 87 percent, and for the Department to meet that 
goal, it would require a sizeable investment in NRM and minor 
construction. Given the low level of funding NRM accounts have 
historically received, the IBVSOs are not surprised that basic facility 
maintenance remains a challenge for VA.
    In addition, the IBVSOs have long-standing concerns with how this 
funding is apportioned once received by VA. Because NRM accounts are 
organized under the Medical Facilities appropriation, it has 
traditionally been apportioned using the Veterans Equitable Resource 
Allocation (VERA) formula. This formula was intended to allocate 
health-care dollars to those areas with the greatest demand for health 
care, and is not an ideal method to allocate NRM funds. When dealing 
with maintenance needs, this formula may prove counterproductive by 
moving funds away from older medical centers and reallocating the funds 
to newer facilities where patient demand is greater, even if the 
maintenance needs are not as intense. We are encouraged by actions the 
House and Senate Veterans' Affairs Committees have taken in recent 
years requiring NRM funding to be allocated outside the VERA formula, 
and we hope this practice will continue.
    Another issue related to apportionment of funding and the budget 
cycle has been well documented. Prior to the passage of advance 
appropriations, the GAO had found that the bulk of NRM funding was not 
apportioned until September, the final month of the fiscal year. For 
example, the GAO reported that 60 percent of total NRM funding for FY 
2006 was allocated in September of that year.
    In other words, during the first 11 month of FY 2006, only 40 
percent of NRM funding had been allocated even as VA knew any 
unobligated funds would be remitted to the Department of the Treasury 
by statute. This is a shortsighted policy that impairs VA's ability to 
properly address its maintenance needs, and with NRM funding year to 
year, those conditions, which lead to a functional mishandling of 
essential funds, have been changed by advance appropriations. Medical 
accounts are now appropriated by Congress a year in advance to allow VA 
the ability to plan farther in advance and reduce the impact of delayed 
appropriations.
    Not receiving timely appropriations from Congress has curtailed the 
positive impacts of medical spending over the years, and Congress must 
now provide oversight of this process to ensure that these upfront 
dollars for NRM and all medical spending realize their potential 
benefits. Congress and VA should provide oversight to ensure this 
change will not result in medical center managers continuing to sit on 
unspent funds for longer periods of time, but that it will produce more 
efficient spending and better planning, thereby eliminating the 
previous situation in which these managers sometimes spent a large 
portion of their maintenance funding very late in the fiscal year.
Recommendations:
    VA must dramatically increase funding for nonrecurring maintenance 
(NRM) in line with the industry standard of 2 percent to 4 percent of 
plant replacement value in order to maintain modern, safe, and 
efficient facilities. Congress should provide VA with additional 
maintenance funding in the Medical Facilities appropriation to enable 
the Department to begin addressing the substantial maintenance backlog 
of Facilities Condition Assessment--identified projects.
    Congress should provide NRM funding to support maintenance and 
upgrades to VA's research infrastructure. Portions of the NRM account 
should continue to be funded outside of the Veterans Equitable Resource 
Allocation formula so that funding is allocated to the facilities that 
have the greatest maintenance needs, rather than based on other 
criteria unrelated to the condition of facilities. Congress must 
provide oversight of the NRM funding allocated through the advance 
appropriations process to ensure NRM funds are being spent in such a 
way to meet their full potential.

MAINTAIN CRITICAL VA HEALTH INFRASTRUCTURE:
    The Department of Veterans Affairs must execute a comprehensive, 
strategic health infrastructure plan that is focused on the unique 
needs of its veteran population. In order to reduce the growing backlog 
and maintenance needs of its medical facilities, Congress and the 
Administration must work together to secure the Department's future by 
designing the ``VA of the 21st century.''

    Today we find ourselves at a critical juncture with respect to how 
VA health care will be delivered and what the VA of the future will be 
like in terms of its health care facility infrastructure. One fact is 
certain--our Nation's sick and disabled veterans deserve and have 
earned a stable, accessible VA health-care system that is dedicated to 
their unique needs and can provide high-quality, timely care where and 
when they need it. Given these significant challenges and the shift in 
care in many areas, in 2008 VA developed a new approach to dealing with 
infrastructure, the Health Care Center Facility (HCCF) leasing program. 
Under the HCCF leasing program, in lieu of the traditional approach to 
major medical facility construction, VA would obtain by long term lease 
a number of large outpatient clinics built privately to VA 
specifications. These large clinics could provide a broad range of 
outpatient services, including primary and specialty care as well as 
outpatient mental health services and ambulatory surgery.
    According to VA, inpatient needs at such sites would be managed 
through contracts with affiliates or local private medical centers. The 
Independent Budget veterans service organizations (IBVSOs) believe that 
the adoption of Strategic Capital Investment Planning (SCIP) and more 
HCCF leasing proposals illustrate a shift toward reliance on health 
care leasing or a build-to-suit strategy with reliance on community 
providers or academic affiliates for inpatient services, rather than VA 
constructing its own comprehensive medical centers. We remain watchful 
as to how such arrangements will be managed and what unintended 
consequences may await sick and disabled veterans and those who 
represent them.
    Further, SCIP must be clearly explained and integrated with all 
stakeholders involved in the process--specifically, how will it be 
developed and prioritized, and will the implementation of the HCCF 
model impact VA's specialized medical care programs, continuity of 
high-quality care, delivery of comprehensive services, protection of VA 
biomedical research and development programs, and particularly the 
sustainment of VA's renowned graduate medical education and health 
profession training programs? VA noted that, in addition to any new 
HCCF facilities, it would maintain its VA medical centers, larger 
independent outpatient clinics, community-based outpatient clinics 
(CBOCs), and rural outreach clinics.
    VA has argued that adopting the HCCF model would allow it to 
quickly establish new facilities that would provide 95 percent of the 
care and services veterans need in their catchment areas, specifically 
primary care, a variety of specialty care services, mental health, 
diagnostic testing, and same-day ambulatory surgery. Initially, the 
IBVSOs have been supportive of the goals of this program. The HCCF 
model seems to offer a number of benefits in addressing VA capital 
infrastructure problems, including more modern facilities that meet 
current life-safety codes, better geographic placements, increased 
patient safety, reductions in veterans' travel costs, and increased 
personal convenience.
    This process could also offer the advantage of quick completion as 
compared to the existing major construction design-authorization-
appropriation process, thus allowing more flexibility to respond to 
changes in patient loads and technologies and making possible net 
savings in operating costs and in facility maintenance.
    While it offers these obvious advantages, the HCCF model raises 
concerns about VA's plan for providing inpatient services. VA suggests 
it will contract for these essential services with affiliates or 
community hospitals. The IBVSOs believe this program would privatize 
many services that we believe VA should continue to provide directly to 
veterans. We are also deeply concerned about the overall impact of this 
new model on the future of VA's system of care, including the potential 
unintended consequences on continuity of high quality care; maintenance 
of VA's specialized medical programs for spinal cord injury, blindness, 
amputation care, and other health challenges of seriously disabled 
veterans; delivery of comprehensive services; its recognized biomedical 
research and development programs; and, in particular, the impact on 
its renowned graduate medical education and health profession training 
programs, in conjunction with long-standing affiliations with nearly 
every health professions university in the Nation.
    Moreover, we believe the HCCF model could well challenge VA's 
ability to provide alternatives to maintaining directly its existing 
130 nursing home care units now called ``community living centers''), 
homelessness programs, domiciliary facilities, compensated work therapy 
programs, hospice and respite, adult day health-care units, the Health 
Services Research and Development Program, and a number of other highly 
specialized services, including 24 spinal cord injury/dysfunction 
centers, 10 blind rehabilitation centers, a variety of unique ``centers 
of excellence'' (in geriatrics, gerontology, mental illness, 
Parkinson's, and multiple sclerosis), and various critical care 
programs for veterans with serious and chronic mental illnesses.
    In general, the IBVSOs believe the HCCF proposal could be a 
positive development, with good potential. But the process must be 
transparent to all those involved--veterans, stakeholders, community 
leaders, VA employees--and there must be a well-thought-out and well-
communicated plan to carry out the HCCF policy. It has been proven that 
leasing can help to diminish long and costly in-house construction 
delays and can be adaptable, especially when compared to costs for 
renovating existing VA major medical facilities. Leasing options have 
been particularly valuable for VA as evidenced by the success of the 
leased-space arrangements for many VA community-based outpatient 
clinics, Vet Centers, and leased VA regional office staff expansions. 
However, the IBVSOs remain concerned with VA's plan for obtaining 
inpatient services under the HCCF model, and have many unanswered 
questions. There are major concerns with the pervasive contracting that 
would be mandated by this type of proposal.
    Acknowledging all the changes taking place in health care, VA needs 
to look very closely at all its infrastructure plans, and needs to do a 
better job explaining to veterans, their representatives, and Congress 
what its plans are for every location, with a full exposition based on 
facts.
    Responding to a Congressional request, VA addressed a number of 
specific questions related to its plan for the HCCF leasing initiative, 
including whether studies had been carried out to determine the 
effectiveness of the current approach; the full extent of the current 
construction backlog of projects; its projected cost over the next 5 
years to complete; the extent to which national veterans organizations 
were involved in the development of the HCCF proposal; the engagement 
of community health-care providers related to capacity and willingness 
to meet veterans' needs; the ramifications on the delivery of long-term 
care and specialized services; and whether it would be able to ensure 
that needed inpatient capacity would remain available indefinitely.
    Based on its response, the IBVSOs believe VA has a reasonable 
foundation for assessing capital needs and has been forthright with the 
estimated total costs for ongoing major medical facility projects, and 
that the HCCF model can be a basis for meeting some of these needs at 
lower cost. We agree with VA's assertion that it needs a balanced 
capital assets program, of both owned and leased buildings, to ensure 
that demands are met under current projections. Likewise, we agree with 
VA that the HCCF concept could provide modern health-care facilities 
relatively quickly that might not otherwise be available because of the 
predictable constraints of VA's major construction program.
    However, what is not clear to us is the extent to which VA plans to 
deploy the HCCF model. In areas where existing CBOCs need to be 
replaced or expanded with additional services due to the need to 
increase capacity, the HCCF model would seem appropriate and 
beneficial.
    On the other hand, if VA plans to replace the majority or even a 
large fraction of all VA medical centers with Health Care Center 
Facilities, such a radical shift would pose a number of concerns for 
us. Nevertheless, the IBVSOs see this challenge as only a small part of 
the overall picture related to VA health infrastructure needs. The 
emerging HCCF plan does not address the fate of VA's 153 medical 
centers located throughout the Nation that are on average 60 years of 
age or older. It does not address long-term-care needs of the aging 
veteran population, inpatient treatment of the chronically and 
seriously mentally ill, the unresolved rural health access issues, the 
lingering questions on improving VA's research infrastructure, or the 
fate of VA's academic training programs. Fully addressing these and 
related questions is extremely important and will have an impact on 
generations of sick and disabled veterans far into the future.
    We would like to reiterate: Creating a VA of the 21st century must 
include all stakeholders' interests. The IBVSOs expect VA to establish 
any new infrastructure plan in a transparent way; vet that plan through 
our community and other interested parties; and provide its plan to 
Congress for review, oversight, and approval if required by law. 
Congress and the Administration must work together to secure VA's 
future to design a VA of the 21st century. It will take the joint 
cooperation of Congress, veterans' advocates, and the Administration to 
support this reform, while setting aside resistance to change, even 
dramatic change, when change is demanded and supported by valid data.
    Finally, one of our community's frustrations with respect to VA's 
infrastructure plans is lack of consistent and periodic updates, 
specific information about project plans, and even elementary 
communications. The IBVSOs ask that VA improve the quality and quantity 
of communications with us, our larger community, enrolled veterans, 
concerned labor organizations, and VA's own employees, affiliates, and 
other stakeholders as the VA capital planning process moves forward. We 
believe that all of these groups must be made to understand VA's 
strategic plan and how it may affect them, positively and negatively. 
Talking openly and discussing potential changes will help resolve the 
understandable angst about these complex and important questions of VA 
health-care infrastructure. While we agree that VA is not the sum of 
its buildings, and that a veteran patient's welfare must remain at the 
center of the Department's concern, VA must be able to maintain an 
adequate infrastructure around which to build and sustain ``the best 
care anywhere.''
    If VA keeps faith with these principles, the IBVSOs are prepared to 
aid and support VA in accomplishing this important goal.
Recommendations:
    VA must develop a well-thought-out health-care infrastructure and 
strategic plan that becomes the means for it to establish a veterans 
health-care system for the 21st century. Congress, the Administration, 
and internal and external stakeholders must work together to secure 
VA's future, while maintaining the integrity of the VA health-care 
system and all the benefits VA brings to its unique patient population.
    VA's new proposal, the Strategic Capital Investment Planning (SCIP) 
and VA's health Care Center facility leasing proposal must be clearly 
explained and integrated with all stakeholders involved in the process, 
including how will it be developed, prioritized, and implemented, and 
how it will impact VA's specialized medical care programs, continuity 
of high-quality care, delivery of comprehensive services, protection of 
VA biomedical research and development programs, and particularly the 
sustainment of VA's renowned graduate medical education and health 
profession training programs.
    VA must improve the quality and quantity of communications with 
internal and external communities of interests, including the authors 
of this Independent Budget, concerning its plans for future 
infrastructure improvements through the HCCF leasing and other 
approaches.
    VA must improve the quality and quantity of communications with 
internal and external communities of interests, including the authors 
of this Independent Budget, concerning its plans for future 
infrastructure improvements through the HCCF leasing and other 
approaches.

EMPTY OR UNDERUTILIZED SPACE AT MEDICAL CENTERS:
    The Department of Veterans Affairs must use empty and underutilized 
space appropriately.

    The Department of Veterans Affairs maintains approximately 1,100 
buildings that are either vacant or underutilized. An underutilized 
building is defined as one where less than 25 percent of space is used. 
It costs VA from $1 to $3 per square foot per year to maintain a vacant 
building. Studies have shown that the VA medical system has extensive 
amounts of empty space that can be reused for medical services. It has 
also been shown 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, as 
well as 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. 
Unoccupied rooms on the eighth floor used as a medical surgical unit, 
for example, cannot be used 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 on everything around it. These secondary impacts greatly 
increase construction expense and can disrupt patient care. Some 
features of a medical facility are permanent. Floor-to-floor heights, 
column spacing, light, and structural floor loading cannot necessarily 
be altered. Different aspects of medical care have various requirements 
based upon these permanent characteristics. Laboratory or clinical 
spacing cannot be interchanged with ward space because of the different 
column spacing and perimeter configuration. Patient wards require 
access to natural light and column grids that are compatible with room-
style layouts. Laboratories should have long structural bays and 
function best without windows. When renovating empty space, if an area 
is not suited to its planned purpose, it will create unnecessary 
expenses and be much less efficient if simply renovated. Renovating old 
space, rather than constructing new space, often provides only marginal 
cost savings. Renovations of a specific space typically cost 85 percent 
of what a similar, new space would cost. Factoring in domino or 
secondary costs, the renovation can end up costing more while producing 
a less satisfactory result.
    Renovations are sometimes appropriate to achieve those critical 
functional adjacencies, but are rarely economical. As stated earlier in 
this analysis, the average age of VA facilities is 60 years. Many older 
VA medical centers that were rapidly built in the 1940s and 1950s to 
treat a growing war veteran population are simply unable to be 
renovated for modern needs. Most of these so called ``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. Many of them 
also have long, narrow wings radiating from small central cores, 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 
existing unused space is its location. Much of it is not in a prime 
location; otherwise, it would have been previously renovated or 
demolished for new construction. This space is typically located in 
outlying buildings or on upper floor levels and is unsuitable for 
modern use.
    Public Law 108-422 incentivized VA's efforts to properly dispose of 
excess space by allowing VA to retain the proceeds from the sale, 
transfer, or exchange of certain properties in a Capital Asset Fund 
(CAF). Further, that law required VA to develop short- and long-term 
plans for the disposal of these facilities in an annual report to 
Congress. VA must continue to develop these plans, working in concert 
with architectural master plans and the long-range vision for all such 
sites.
Recommendations:
    VA must develop a plan for addressing its excess space in non 
historic properties that is not suitable for medical or support 
functions because of its permanent characteristics or locations

PROGRAM FOR ARCHITECTURAL MASTER PLANS:
    Each VA medical facility must develop a detailed master plan and 
delivery models for quality health care that are in a constant state of 
change as a result of factors that include advances in research, 
changing patient demographics, and new technology.

    The Department of Veterans Affairs must design facilities with a 
high level of flexibility in order to accommodate new methods of 
patient care and new standards of care. VA 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 existing programs based on 
projected needs through capital planning strategy.
    A facility master plan is a comprehensive tool to examine and 
project potential new patient care programs And how they might affect 
the existing health-care facility design. It also provides insight with 
respect to growth needs, current space deficiencies, and other facility 
needs for existing programs and how they might be accommodated in the 
future with redesign, expansion, or contraction.
    In many past cases VA has planned construction in a reactive 
manner. Projects are first funded and then placed in the facility in 
the most expedient manner, often not considering other future projects 
and facility needs. This often results in short-sighted construction 
that restricts rather than expands options for the future. The 
Independent Budget veterans service organizations 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; $15 million should be budgeted for this purpose.
    We 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. VA has 
undertaken master planning for several VA facilities, and we applaud 
this effort. But VA must ensure that all VA facilities develop master 
plan strategies to validate strategic planning decisions, prepare 
accurate budgets, and implement efficient construction that minimizes 
wasted expenses and disruption to patient care.
Recommendations:
    Congress must appropriate $15 million to provide funding for each 
medical facility to develop a 10-year comprehensive facility master 
plan. The master plan should include all services currently offered at 
the facility and should also include any projected future programs and 
services as they might relate to the particular facility. Each facility 
master plan is to be reviewed every 5 years and modified accordingly 
based on changing needs, technologies, new programs, and new patient 
care delivery models.

ARCHITECT-LED DESIGN-BUILD PROJECT DELIVERY:
    The Department of Veterans Affairs must evaluate use of architect-
led design-build project delivery.

    VA currently employs two project delivery methods: design-bid-build 
and design-build. Design-bid build project delivery is appropriate for 
all project types. Design-build is generally more effective when the 
project is of a low complexity level. It is critical to evaluate the 
complexity of the project prior to selection of a method of project 
delivery.
    Design-bid-build is the most common method of project design and 
construction. In this method, an architect is engaged to design the 
project. At the end of the design phase, that same architect prepares a 
complete set of construction documents. Based on these documents, 
contractors are invited to submit a bid for construction of the 
project. A contractor is selected based on this bid and the project is 
constructed. With the design-bid-build process, the architect is 
involved in all phases of the project to insure that the design intent 
and quality of the project is reflected in the delivered facility. In 
this project delivery model, the architect is an advocate for the 
owner.
    The design-build project delivery method 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 VA and reduce the project delivery schedule. 
Design build, as used by VA, is broken into two phases. During the 
first phase, an architect is contracted by VA to provide the initial 
design phases of the project, usually through the schematic design 
phase. After the schematic design is completed, VA contracts with a 
contractor to complete the remaining phases of the project.
    This places the contractor as the design builder. One particular 
method of project delivery under the design-build model is called 
contractor-led design build. Under the contractor-led design-build 
process, the contractor is given a great deal of control over how the 
project is designed and completed. In this method, as used by VA, a 
second architect and design professionals are hired by the contractor 
to complete the remaining design phases and the construction documents 
for the project. With the architect as a subordinate to the contractor 
rather than an advocate for VA, the contractor may sacrifice the 
quality of material and systems in order to add to his own profits at 
the expense of VA. In addition, much of the research and user interface 
may be omitted, resulting in a facility that does not best suit the 
needs of the patients and staff.
    Use of contractor-led 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 often do 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, 
compromising VA's design standards.
    Contractor-led design-build forces VA to rely on the contractor to 
properly design a facility that meets its needs. In the event that the 
finished project is not satisfactory, VA may have no means to insist on 
correction of work done improperly unless the contractor agrees with 
VA's assessment.
    This may force VA to go to some form of formal dispute resolution, 
such as litigation or arbitration. An alternative method of design-
build project delivery is architect-led design-build. This model places 
the architect as the project lead rather than the builder. This has 
many benefits to VA. These include ensuring the quality of the project, 
since the architect reports directly to VA.
    A second benefit to VA is the ability to provide tight control over 
the project budget throughout all stages of the project by a single 
entity. As a result, the architect is able to access pricing options 
during the design process and develop the design accordingly. Another 
advantage of architect-led design-build is in the procurement process. 
Since the design and construction team is determined before the design 
of the project commences, the request-for-proposal process is 
streamlined. As a result, the project can be delivered faster than the 
traditional design-bid-build process. Finally, the architect-led 
design-build model reduces the number of project claims and disputes. 
It prevents the contractor from ``low-balling,'' a process in which a 
contractor submits a very low bid in order to win a project and then 
attempts to make up the deficit by negotiating VA change orders along 
the way.
    In addition to selecting the proper method of project delivery, 
there is much to learn from the design and construction process for 
each individual project. It is important for VA to apply these 
``lessons learned'' to future projects.
Recommendations:
    VA must establish a category system Ranking design/construction 
project types by complexity. This system should be used to determine if 
the project is a candidate for the design-build method of project 
management. The design-build method of project delivery should only be 
used on projects that have a low complexity, such as parking structures 
and warehouses. For health-care projects,
    VA must evaluate the use of architect-led design build as the 
preferred method of project delivery in place of contractor-led design-
build project delivery. 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. This 
information should be compiled and used as a guide to future projects. 
This document should be updated regularly to include projects as they 
are completed.

INCREASE NEED FOR VA RESEARCH SPACE AND INFRASTRUCTURE MPROVEMENTS:
    The Department of Veterans Affairs needs research space renovations 
and improved infrastructure.

    A state-of-the-art physical environment for VA research promotes 
excellence in science as well as teaching and patient care. Research 
opportunities help VA recruit and retain the best and brightest 
clinician scientists to care for veterans. However, many VA facilities 
effectively have run out of usable research space. Also, research 
``wet'' laboratory ventilation, electrical supply, plumbing, and other 
projects appear frequently on internal VA lists of needed upgrades 
along with research space renovations and new construction, but these 
projects languish due to the weight VA places on direct medical care 
projects as opposed to research space and facility needs.
    Five years ago, the House Appropriations Committee expressed 
concern (House Report 109-95) 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.'' The 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.
    To comply, VA initiated a comprehensive assessment of VA research 
infrastructure. To prompt VA to complete its long overdue assessment, 
House Report 111-564 accompanying the FY 2011 VA appropriations bill 
directed the Department to provide its final report to Congress by 
September 1, 2010, with details of any recent renovations or new 
construction.
    As of publication of this Independent Budget, VA had not released 
the results of its review. According to an October 26, 2009, VA report 
to the VA National Research Advisory Committee, however, preliminary 
results of the review indicated, ``there is a clear need for research 
infrastructure improvements throughout the system, including many that 
impact on life safety.''
    The Independent Budget veterans service organizations (IBVSOs) are 
concerned that a significant cause of VA's research infrastructure 
neglect is that neither VA nor Congress provides direct funding for 
research facilities. The VA Medical and Prosthetic Research 
appropriation excludes funding for construction, renovation, or 
maintenance of VA research facilities. VA researchers must rely on 
their local facility management 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 
facility direct patient care needs (such as medical services 
infrastructure, capital equipment upgrades and replacements, and other 
medical maintenance needs) for funds provided under either the Major 
Medical Facility, Minor Construction, or Medical Facilities 
appropriations accounts.
    The IBVSOs believe that correction of VA's known infrastructure 
deficiencies should become a higher VA and Congressional priority. 
Therefore, we recommend VA promptly submit to Congress the report it 
requested in 2006, provide construction funding sufficient to address 
VA's five highest priority research facility construction needs as 
identified in its facilities assessment report, and approve a pool of 
funding targeted at renovating existing research facilities to address 
the current and well-documented shortcomings in research 
infrastructure. For these funding needs we recommend $150 million and 
$50 million, respectively. Additionally, an emerging problem is that VA 
research facilities often are not an integral component of planning for 
new VA medical centers (including new medical centers in Las Vegas, 
Denver, and Orlando).
    Modern-day biomedical research needs customized power, safety, 
privacy, and configuration requirements that should be fundamental to 
the new construction planning processes, not an expensive afterthought. 
The IBVSOs urge the Administration to require that research space be 
made an integral component of planning for every new medical center and 
that such space be designed by architects and engineers experienced in 
contemporary research facility requirements.
Recommendations:
    Congress should require VA to report its findings from its research 
infrastructure review, now pending more than 5 years. Congress should 
authorize construction of, and appropriate $150 million in FY 2012 to 
advance, the five highest priority research construction projects 
identified by VA in its research infrastructure review, and provide VA 
an additional $50 million in maintenance funding (in the Non Recurring 
Maintenance account) in FY 2012 to address current shortfalls in VA's 
research laboratories and other research space.

PRESERVATION OF VA'S HISTORIC STRUCTURES:
    The Department of Veterans Affairs must further develop a 
comprehensive program to preserve and protect its inventory of historic 
properties.

    The Department of Veterans Affairs 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, of those 
who cared for their wounds, and of those who helped to build this great 
Nation. Of the approximately 2,000 historic structures in the VA 
historic building inventory, many are neglected and deteriorate year 
after year because of a lack of any funding for their upkeep. 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 but may be used for other purposes. For the past 7 years, 
The Independent Budget veterans service organizations (IBVSOs) have 
recommended that VA conduct an inventory of these properties to 
classify their physical condition and study their potential for 
adaptive reuse. VA has moved in that direction; historic properties 
have been identified. Many of these buildings have been placed in an 
``Oldest and Most Historic'' list and require immediate attention.
    The cost for saving some of these buildings is not very high 
considering that they represent a part of American history. Once gone, 
they cannot be recaptured. For example, the Greek Revival Mansion at 
the VA Medical Center in Perry Point, Maryland, built in the 1750s can 
be restored and used as a facility or network training space for about 
$1.2 million. The Milwaukee Ward Memorial Theater, built in 1881, could 
be restored as a multipurpose facility at a cost of $6 million. These 
expenditures would be much less than the cost of new facilities and 
would preserve history simultaneously. The preservation of VA's 
historic buildings also fits into the VA's commitment to ``green'' 
architecture. Materials would be reused, reducing the amount of 
resources needed to manufacture and transport new materials to building 
sites.
    As part of its adaptive reuse program, VA must ensure that 
facilities that are leased or sold are maintained properly. VA's legal 
responsibilities could, for example, be addressed through easements on 
property elements, such as building exteriors or grounds. The IBVSOs 
encourage VA to use the tenants of Public Law 108-422, the ``Veterans 
Health Programs Improvement Act,'' in improving the plight of VA's 
historic properties. This act authorizes historic preservation as one 
of the uses of the proceeds of the capital assets fund resulting from 
the sale or leases of other unneeded VA properties.
Recommendations:
    VA must continue to develop a comprehensive program to preserve and 
protect its inventory of historic properties. VA must allocate funding 
for adaptive reuse of historic structures and empty or underutilized 
space at medical centers.
    Mr. Chairman, this concludes my statement. I would be happy to 
answer any questions that you or the Members of the Committee may have.

                                 
           Prepared Statement of Joseph A. Violante, National
            Legislative Director, Disabled American Veterans
    Chairman Miller, Ranking Member Filner and Members of the 
Committee:
    On behalf of the Disabled American Veterans and our 1.2 million 
members, all of whom are wartime disabled veterans, I am pleased to be 
here today to present the recommendations of The Independent Budget for 
the fiscal year 2012 budget in the area of veterans' benefits. As you 
know, The Independent Budget is a collaboration amongst the DAV, 
AMVETS, Paralyzed Veterans of America and Veterans of Foreign Wars.
    First, however, I want to congratulate you, Chairman Miller, on 
your selection to lead this great Committee. I also want to welcome 
back the Committee's Ranking Minority Member and past Chairman, Bob 
Filner. The DAV looks forward to working together with both of you, as 
well as all of the returning and new Members of the Committee, to 
improve the lives of our Nation's veterans, particularly disabled 
veterans, their families and survivors.
    For the past 25 years, The Independent Budget has provided Congress 
and the Administration with budget and policy recommendations to 
strengthen programs serving America's veterans. I note with 
appreciation that Public Law 111-275, the Veterans Benefits Act of 
2010, which was enacted in the last Congress, contained a number of 
provisions addressing recommendations made to this Committee by The 
Independent Budget. In particular, the new law includes an increase in 
the automobile grant from $11,000 to $18,900; an expansion of 
eligibility for Aid and Attendance benefits for veterans suffering from 
traumatic brain injury; an increase in Supplemental Service-Disabled 
Veterans' Insurance (SDVI or ``RH'') from $20,000 to $30,000; and an 
increase in Veterans Mortgage Life Insurance (VMLI) for disabled 
veterans from $90,000 to $150,000 effective October 1, 2011, with a 
2012 increase to $200,000. Each of these and many other provisions in 
this new law will make a real difference in the lives of thousands of 
disabled veterans and their families and we thank this Committee for 
helping to enact this legislation.

SUFFICIENT STAFFING FOR THE VETERANS BENEFITS ADMINISTRATION
    Mr. Chairman, for fiscal year 2012, The Independent Budget 
recommends only modest increases in personnel levels for the Veterans 
Benefits Administration (VBA), and those increases are targeted at 
Vocational Rehabilitation and Employment (VR&E) and the Board of 
Veterans' Appeals (BVA). Over the past couple of years, with strong 
support from Congress, VBA's Compensation and Pension Service has seen 
a significant increase in personnel to address the rapidly rising 
workload they face. It is important to note that this large increase in 
claims processors could actually result in a short-term net decrease in 
productivity, due to experienced personnel being taken out of 
production to conduct training, and the length of time it takes for new 
employees to become fully productive. While we do not recommend 
additional staffing increases at this time, we do recommend that VBA 
conduct a study on how to determine the proper number of full-time 
employees necessary to manage its growing claims inventory so that 
claims are decided accurately and in a timely manner.
    The Independent Budget does, however, recommend that Congress 
authorize at least 160 additional full-time employees for the VR&E 
Service for fiscal year (FY) 2012, primarily to reduce current case 
manager workload. A 2009 study by the GAO found that 54 percent of 
Department of Veterans Affairs Regional Offices (VAROs) reported they 
had fewer counselors than they needed and 40 percent said they had too 
few employment coordinators. VR&E officials indicated that the current 
caseload target is 1 counselor for every 125 veterans, but that ratio 
is reported to be as high as 1 to 160 in the field. An increase of 100 
new counselors would address that gap. Given its increased reliance on 
contract services, VR&E also needs an additional 50 full-time employee 
equivalents (FTEE) dedicated to management and oversight of contract 
counselors and rehabilitation and employment service providers. In 
addition, VR&E has requested at least 10 FTEE in FY 2012 to expand its 
college program--`Veteran Success on Campus,'' and we support that 
request.
    With the number of claims for benefits increasing over the past 
several years, so too is the number of appeals to the BVA. On average, 
BVA receives appeals on 5 percent of all claims, a rate that has been 
consistent over the past decade. With the number of claims projected to 
rise significantly in the coming years, so too will the workload at 
BVA, and thus the need for additional personnel. Funding for the BVA 
must rise at a rate commensurate with its increasing workload so it is 
properly staffed to decide veterans' appeals in an accurate and timely 
manner.

CLAIMS PROCESSING REFORM: GET IT RIGHT THE FIRST TIME
    The VBA is at a critical juncture in its efforts to reform an 
outdated, inefficient, and overwhelmed claims-processing system. After 
struggling for decades to provide timely and accurate decisions on 
claims for veterans' benefits, the VBA over the past year has started 
down a path that may finally lead to essential transformation and 
modernization, but only if it has the leadership necessary to undergo a 
cultural shift in how it approaches the work of adjudicating claims for 
veterans benefits.
    The number of new claims for disability compensation has risen to 
more than 1 million per year and the complexity of claims have also 
increased as complicated new medical conditions, such as traumatic 
brain injury, have become more prevalent. To meet rising workload 
demands, The Independent Budget has recommended, and Congress has 
provided, significant new resources to the VBA over the past several 
years in order to increase their personnel levels. Yet despite the 
hiring of thousands of new employees, the number of pending claims for 
benefits, often referred to as the backlog, continues to grow.
    As of January 31, 2011, there were 775,552 pending claims for 
disability compensation and pensions awaiting rating decisions by the 
VBA, an increase of 289,081 from 1 year ago. About 41 percent of that 
increase is the result of the Secretary's decision to add three new 
presumptive conditions for Agent Orange (AO) exposure: ischemic heart 
disease, B-cell leukemia, and Parkinson's disease. Even discounting 
those new AO-related claims, the number of claims pending rose by 
171,522, a 37 percent increase of pending claims over just the past 
year. Overall, there are 331,299 claims that have been pending greater 
than VA's target of 125 days, which is an increase of 147,930, up more 
than 80 percent in the past year. Not counting the new AO-related, over 
50 percent of all pending claims for compensation or pension are now 
past the 125-day target set by the VBA.
    Worse, by the VBA's own measurement, the accuracy of disability 
compensation rating decisions continues to trend downward, with their 
quality assurance program, known as the Systematic Technical Accuracy 
Review (STAR) reporting only an 83 percent accuracy rate for the 12-
month period ending May 31, 2010. Moreover, VA's Office of Inspector 
General found additional undetected or unreported errors that increased 
the error rate to 22 percent. Complicating the Department's problems is 
its reliance on an outdated, paper-centric processing system, which now 
includes more than 4.2 million claims folders.
    Faced with all of these problems, VA Secretary Shinseki last year 
set an extremely ambitious long-term goal of zero claims pending more 
than 125 days and all claims completed to a 98 percent accuracy 
standard. Throughout the year he repeatedly made clear his intention to 
``break the back of the backlog'' as his top priority. While we welcome 
his intention and applaud his ambition, we would caution that 
eliminating the backlog is not necessarily the same goal as reforming 
the claims-processing system, nor does it guarantee that veterans are 
better served.
    The backlog is not the problem, nor even the cause of the problem; 
rather, it is only one symptom, albeit a very severe one, of a much 
larger problem: too many veterans waiting too long to get decisions on 
claims for benefits that are too often wrong. If the VBA focuses simply 
on getting the backlog number down, it can certainly achieve numeric 
success in the near term, but it will not necessarily have addressed 
the underlying problems nor taken steps to prevent the backlog from 
eventually returning. To achieve real success, the VBA must focus on 
creating a veterans' benefits claims-processing system designed to 
``get each claim done right the first time.'' Such a system would be 
based upon a modern, paperless information technology and workflow 
system focused on quality, accuracy, efficiency, and accountability.
    Recognizing all of the problems and challenges discussed above, we 
have seen some positive and hopeful signs of change. VBA leadership has 
been refreshingly open and candid in recent statements on the problems 
and need for reform. Over the past year, dozens of new pilots and 
initiatives have been launched, including a major new IT system that is 
now being field-tested. The VBA has shared information with the 
veterans service organizations (VSOs) about its ongoing initiatives and 
sought feedback on these initiatives. These are all positive 
developments.
    Yet despite the new openness and outreach to the VSO community, we 
remain concerned about VBA's failure to fully integrate service 
organizations in reforming the claims process. VSOs not only bring vast 
experience and expertise about claims processing, but our local and 
national service officers hold power of attorney for hundreds of 
thousands of veterans and their families. In this capacity, VSOs are an 
integral component of the claims process. We make the VBA's job easier 
by helping veterans prepare and submit better claims, thereby requiring 
less time and resources to develop and adjudicate them. VBA leadership 
must commit to a true partnership with service organizations, and 
infuse this new attitude throughout the VBA from central office down to 
each of the 57 regional offices.
    Mr. Chairman, the VBA must also change how it measures success and 
rewards performance in a manner designed to achieve the goal of 
``getting it right the first time.'' Unfortunately, most of the 
measures that the VBA employs today, whether for the organization as a 
whole, or for regional offices or employees, are based primarily on 
measures of production, which reinforces the goal of ending the 
backlog. VBA must change how it measures and reports progress and 
success so that there are more and better indicators of quality and 
accuracy. VBA must also continue to review employee performance 
standards to ensure that it creates incentives and accountability to 
achieve quality and accuracy, not just increased speed or production.

PILOT PROGRAMS
    As the VBA moves forward with dozens of pilots and initiatives 
designed to modernize and streamline the claims-processing system, it 
is imperative that the VBA have a systematic method for analyzing and 
integrating ``best practices'' that improve quality and accuracy, 
rather than just those that may increase production. One of the most 
important new initiatives is the use of templates for medical evidence, 
which VBA calls Disability Benefits Questionnaires (DBQs). There are 
currently three DBQs that have been approved for use in claims for the 
three new presumptive conditions associated with Agent Orange exposure: 
ischemic heart disease, Parkinson's disease, and B-cell leukemia. An 
additional 76 DBQs are in various stages of the development and 
approval process. We support the use of DBQs as a method to streamline 
and improve the quality and timeliness of decisions; however, it is 
crucial that DBQs are properly completed, either by VA or private 
medical examiners. VBA employees must be properly trained so they 
understand that DBQs are but one piece of evidence that must be 
considered in the development and decision-making process. VBA's rating 
specialists must properly consider the evidentiary weight and value of 
all evidence related to the claim and address it adequately in the 
reason and bases of the subsequent decision.
    One of the major new claims process reform initiatives is the Fully 
Developed Claims (FDC) program, which began as a pilot program mandated 
by Public Law 110-389, and was rolled out to all VAROs last year. We 
were pleased that VBA modified the FDC application process at our 
request so that a veteran could make an informal notification to the 
VBA of his or her intention to file a FDC claim, thereby protecting the 
earliest effective date for receipt of benefits. However, we have been 
hearing numerous reports from the field that local ROs are not allowing 
such informal claims to be made. We have also been told that that the 
participation level of veterans in the FDC program remains low. We 
continue to believe in the FDC program and urge this Committee to work 
with us and VBA to address the obstacles to its success.
    In order to synthesize the ``best practices'' from all of the 
ongoing pilots, VBA recently started a new Integration Laboratory at 
their Indianapolis Regional Office. Given all of the pressure to 
``break the backlog'' by increasing production, we have concerns about 
whether the VBA will successfully extract and then integrate the best 
practices from so many ongoing initiatives. Given the enormous pressure 
to reduce the backlog, we are concerned that there could be a tendency 
to focus on process improvements that result in greater production 
rather than those that lead to greater quality and accuracy.
    Congress must continue to provide aggressive oversight of the VBA's 
myriad ongoing pilots and initiatives to ensure that practices adopted 
and integrated into a cohesive new claims process are judged first and 
foremost on their ability to help VA get claims ``done right the first 
time.''

TRAINING AND QUALITY CONTROL
    Mr. Chairman, two longstanding weaknesses of VBA's claims 
adjudication process are training and quality control, which should be 
linked to create a single continuous improvement program, both for 
employees and for the claims process itself. Quality control programs 
can identify areas and subjects that require new or additional training 
for VBA employees and better training programs for employees and 
managers should improve the overall quality of the VBA's work.
    VBA's primary quality assurance program is the STAR program. The 
STAR program was last evaluated by the VA Office of Inspector General 
(OIG) in March 2009, with the OIG finding that STAR does not provide a 
complete assessment of rating accuracy. Although the STAR reviewers 
found that the national accuracy rate was about 87 percent, the OIG 
found additional errors and projected an overall accuracy rate of only 
78 percent. In addition to rectifying errors found by the OIG, we 
recommend that the VBA establish a true quality control program that 
looks at claims ``in-process'' in order to determine not just whether a 
proper decision was made, but how it was arrived at in order to 
identify ways to improve the system. The data from all such reviews 
should be incorporated into the VBA's new information technology 
systems being developed so that analysis can provide management and 
employees important insights into processes and decisions. This in turn 
would lead to quicker and more accurate decisions on benefits claims, 
and most important, the delivery of all earned benefits to veterans, 
particularly disabled veterans, in a timely manner.
    Training is essential to the professional development of an 
individual and tied directly to the quality of work they produce, as 
well as the quantity they can accurately produce. Veterans service 
organization officers have been told by many VBA employees that meeting 
production goals is the primary focus of management, whereas fulfilling 
training requirements and increasing quality is perceived as being 
secondary. An overemphasis on productivity must not interfere with the 
training of new employees who are still learning their job.
    The GAO recently conducted a study to determine the appropriateness 
of training for experienced claims processors and the adequacy of VBA's 
monitoring and assessment of such training. Of particular interest are 
GAO findings that experienced claims processors' had concerns with the 
training received--specifically the hours, amount, helpfulness, 
methods, and timing of training. Likewise, as the GAO report pointed 
out, there is very little done by the VBA to ensure the required 
training is completed or to assess the adequacy and consistency of the 
training, nor to properly ascertain the total number of employees who 
have met the annual training requirement. In fact, only one VARO met 
the annual training requirement and nine VAROs had less than half their 
employees meet the annual training requirement. It is simply 
unacceptable to have only one VARO meeting the most basic requirement 
of ensuring that all its employees complete 80 hours of training. VBA 
must place greater emphasis on training by implementing stricter 
monitoring mechanisms for all VAROs and ensuring that they are held 
accountable for failure to meet this minimal standard.
    Mr. Chairman, Public Law 110-389, the ``Veterans' Benefits 
Improvement Act of 2008,'' required the VBA to develop and implement a 
certification examination for claims processors and managers; however, 
today there are still gaps in the implementation of these provisions. 
While tests have been developed and piloted for Veterans Service 
Representatives (VSRs) and Rating Veterans Service Representatives 
(RVSRs), additional tests need to be developed and deployed for 
Decision Review Officers and supervisory personnel. None of these 
certification tests are mandatory for all employees, nor are they done 
on a continuing basis.
    The VBA cannot accurately assess its training or measure an 
individual's knowledge, understanding, or retention of the training 
material without regular testing. It is important, however, that all 
testing and certification be applied equally to employees and to the 
people who supervise and manage them. All VBA employees, coaches, and 
managers should undergo regular testing to measure job skills and 
knowledge, as well as the effectiveness of the training.
    Equally important, testing must properly assess the skills and 
knowledge required to perform the work of processing claims. Many 
employees report that the testing does not accurately measure how well 
they perform their jobs, and there have been reports that significant 
numbers of otherwise qualified employees are not able to pass the 
tests. VBA must ensure that certification tests are developed that 
accurately measure the skills and knowledge needed to perform the work 
of VSRs, RVSRs, decision review officers, coaches and other managers.
    Successful completion of training by all employees and managers 
must be an absolute requirement for every VARO and must be a shared 
responsibility of both employees and management. Managers must be held 
responsible for ensuring that training is offered and completed by all 
of their employees. However it is also the responsibility, as well as 
part of the performance standard, for employees to complete their 
training requirements. Managers must provide employees with the time to 
take training and employees must fully and faithfully complete their 
training as offered. Neither should be able or pressured to just 
``check the box'' when it comes to training.

NEW VBA INFORMATION TECHNOLOGY SYSTEMS
    Mr. Chairman, undoubtedly the most important new initiative 
underway at the VBA is the Veterans Benefits Management System (VBMS), 
which is designed to provide the VBA with a comprehensive, paperless, 
and ultimately rules-based method of processing and awarding claims for 
VA benefits, particularly disability compensation and pension. 
Following initial design work, the VBMS had its first phase of 
development in Baltimore last year where a prototype system was tested 
in a virtual regional office environment. The first actual pilot of the 
VBMS system was begun in November 2010 at the Providence, Rhode Island 
Regional Office. The 6-month pilot program began with simulated claims 
and was scheduled to begin working on actual ``live'' claims early this 
year. A second 6-month pilot is expected to begin in May 2011 at the 
Salt Lake City Regional Office, which will build on the work begun at 
Providence. A third pilot is scheduled to begin in November 2011 at an 
undesignated location, and the final national rollout of the VBMS is 
schedule to take place in 2012.
    Although the development and deployment of a modern information 
technology (IT) system to process claims in a paperless environment is 
long overdue, we have concerns about whether the VBMS is being rushed 
to meet self-imposed deadlines in order to show progress toward 
``breaking the back of the backlog.'' While we have long believed that 
the VBA's IT infrastructure was insufficient, outdated, and constantly 
falling further behind modern software, Web, and cloud-based technology 
standards, we would be equally concerned about a rushed solution that 
ultimately produces an insufficiently robust IT system.
    Given the highly technical nature of modern IT development, we 
would urge Congress to fully explore these issues with the VBA and 
suggest that it could be helpful to have an independent, outside, 
expert review of the VBMS system while it is still early enough in the 
development phase to make course corrections, should they be necessary.
    To be successful, the VBMS must include the maximum level of rules-
based decision support feasible at the earliest stages of development 
in order to build a system capable of providing accurate and timely 
decisions, as well as include real-time, quality control as a core 
component of the system. VBA must also commit to incorporating all 
veterans' legacy paper files into the paperless environment of the VBMS 
within the minimum amount of time technically and practically feasible.

DISABILITY COMPENSATION AND QUALITY OF LIFE
    The Institute of Medicine (IOM) Committee on Medical Evaluation of 
Veterans for Disability Compensation published a report in 2007, ``A 
21st Century System for Evaluating Veterans for Disability Benefits,'' 
recommending that the current VA disability compensation system be 
expanded to include compensation for nonwork disability (also referred 
to as ``noneconomic loss) and loss of quality of life. Nonwork 
disability refers to limitations on the ability to engage in usual life 
activities other than work. This includes ability to engage in 
activities of daily living, such as bending, kneeling, or stooping, 
resulting from the impairment, and to participate in usual life 
activities, such as reading, learning, socializing, engaging in 
recreation, and maintaining family relationships. Loss of quality of 
life refers to the loss of physical, psychological, social, and 
economic well-being in one's life.
    The IOM report stated that, ``. . . Congress and VA have implicitly 
recognized consequences in addition to work disability of impairments 
suffered by veterans in the Rating Schedule and other ways. Modern 
concepts of disability include work disability, nonwork disability, and 
quality of life (QOL) . . . '' The congressionally-mandated Veterans 
Disability Benefits Commission (VDBC), established by the National 
Defense Authorization Act of 2004 (Public Law 108-136), spent more than 
2 years examining how the rating schedule might be modernized and 
updated. Reflecting the recommendations of the IOM study, the VDBC in 
its final report issued in 2007 recommended that the ``. . . veterans 
disability compensation program should compensate for three 
consequences of service-connected injuries and diseases: work 
disability, loss of ability to engage in usual life activities other 
than work, and loss of quality of life.''
    The IOM Report, the VDBC (and an associated Center for Naval 
Analysis study) and the Dole-Shalala Commission (President's Commission 
on Care for America's Returning Wounded Warriors) all agreed that the 
current benefits system should be reformed to include noneconomic loss 
and quality of life as a factor in compensation.
    The Independent Budget recommends that Congress finally address 
this deficiency by amending title 38, United States Code, to clarify 
that disability compensation, in addition to providing compensation to 
service-connected disabled veterans for their average loss of earnings 
capacity, must also include compensation for their noneconomic loss and 
for loss of their quality of life. Congress and VA should then 
determine the most practical and equitable manner in which to provide 
compensation for noneconomic loss and loss of quality of life and then 
move expeditiously to implement this updated disability compensation 
program.

ELIMINATION OF CONCURRENT RECEIPT FOR ALL DISABLED VETERANS
    Mr. Chairman, many veterans retired from the armed forces based on 
longevity of service must forfeit a portion of their retired pay, 
earned through faithful performance of military service, before they 
receive VA compensation for service-connected disabilities. This is 
inequitable--military retired pay is earned by virtue of a veteran's 
career of service on behalf of the Nation, careers of usually more than 
20 years. Entitlement to compensation, on the other hand, is paid 
solely because of disability resulting from military service, 
regardless of the length of service.
    A disabled veteran who does not retire from military service but 
elects instead to pursue a civilian career after completing a service 
obligation can receive full VA compensation and full civilian retired 
pay--including retirement from any Federal civil service. A veteran who 
honorably served and retired for 20 or more years and suffers from 
service-connected disabilities due to disability should have that same 
right.
    Congress should enact legislation to repeal the inequitable 
requirement that veterans' military longevity retired pay be offset by 
an amount equal to their rightfully earned VA disability compensation 
if rated less than 50 percent.

REPEAL OF OFFSET AGAINST SURVIVOR BENEFIT PLAN
    When a disabled veteran dies of service-connected causes, or 
following a substantial period of total disability from service-
connected causes, eligible survivors or dependents receive Dependency 
and Indemnity Compensation (DIC) from VA. This benefit indemnifies 
survivors, in part, for the losses associated with the veteran's death 
from service-connected causes or after a period of time when the 
veteran was unable, because of total disability, to accumulate an 
estate for inheritance by survivors.
    Career members of the armed forces earn entitlement to retired pay 
after 20 or more years' service. Unlike many retirement plans in the 
private sector, survivors have no entitlement to any portion of the 
member's retired pay after his or her death. Under the Survivor Benefit 
Program (SBP), deductions are made from the member's retired pay to 
purchase a survivors' annuity. Upon the veteran's death, the annuity is 
paid monthly to eligible beneficiaries under the plan. If the veteran 
died of other than service-connected causes or was not totally disabled 
by service-connected disability for the required time preceding death, 
beneficiaries receive full SBP payments. However, if the veteran's 
death was a result of his or her military service or followed from the 
requisite period of total service-connected disability, the SBP annuity 
is reduced by an amount equal to the DIC payment. Where the monthly DIC 
rate is equal to or greater than the monthly SBP annuity, beneficiaries 
lose all entitlement to the SBP annuity.
    We strongly believe this offset is inequitable because no 
duplication of benefits is involved. Payments under the SBP and DIC 
programs are made for different purposes. Under the SBP, a dependent 
purchases coverage that would be paid in the event of the death of the 
servicemember. On the other hand, DIC is a special indemnity 
compensation paid to the survivor of a servicemember who dies while 
serving or a veteran who dies from service-connected disabilities. In 
such cases, VA indemnity compensation should be added to the SBP, not 
substituted for it.
    We note that surviving spouses of Federal civilian retirees who are 
veterans are eligible for dependency and indemnity compensation without 
losing any of their purchased Federal civilian survivor benefits. The 
offset penalizes survivors of military retired veterans whose deaths 
are under circumstances warranting indemnification from the government 
separate from the annuity funded by premiums paid by the veteran from 
his or her retired pay. Congress should repeal the offset between DIC 
and the SBP.
    In addition, Congress should lower the age required for survivors 
of veterans who died from service-connected disabilities who remarry to 
be eligible for restoration of dependency and indemnity compensation to 
conform with the requirements of other Federal programs. Current law 
permits the VA to reinstate DIC benefits to remarried survivors of 
veterans if the remarriage occurs at age 57 or older or if survivors 
who have already remarried apply for reinstatement of DIC at age 57. 
Although we appreciate the action Congress took to allow this 
restoration of rightful benefits, the current age threshold of 57 years 
is arbitrary. Remarried survivors of retirees of the Civil Service 
Retirement System, for example, obtain a similar benefit at age 55. We 
believe the survivors of veterans who died from service-connected 
disabilities should not be further penalized for remarriage and that 
equity with beneficiaries of other Federal programs should govern 
Congressional action for this deserving group.

VA SCHEDULE FOR RATING DISABILITIES
    The amount of disability compensation paid to a service-connected 
disabled veteran is determined according to the VA Schedule for Rating 
Disabilities (VASRD), which is divided into 15 body systems with more 
than 700 diagnostic codes. In 2007, both the VDBC, as well as the IOM 
Committee on Medical Evaluation of Veterans for Disability Compensation 
in its report ``A 21st Century System for Evaluating Veterans for 
Disability Benefits,'' recommended that VA regularly update the VASRD 
to reflect the most up-to-date understanding of disabilities and how 
disabilities affect veterans' earnings capacity.
    In line with these recommendations, the VBA is currently engaged in 
the process of updating the 15 body systems, beginning with mental 
disorders and the musculoskeletal system. Additionally, it has 
committed to regularly updating the entire VA Schedule for Rating 
Disabilities every 5 years.
    In January 2010, the VBA held a Mental Health Forum jointly with 
the Veterans Health Administration (VHA), which included a VSO panel. 
In August 2010, the VBA and VHA held a Musculoskeletal Forum, which 
also included a VSO panel. Just a few weeks ago, a series of four 
public forums were held in Scottsdale, Arizona over the course of 2 
weeks on four additional body systems. The Arizona sessions in 
particular, were far removed from the public and offered little 
opportunity for most VSOs to observe, much less offer any input.
    While we are appreciative of such efforts, we are concerned that 
except for these initial public forums, VBA is not making any 
substantial efforts to include VSO input during the actual development 
of draft regulations for the updated rating schedule. Since the initial 
public meetings, the VBA has not indicated it has any plans to involve 
VSOs at any other stage of the rating schedule update process other 
than what is required once a draft rule is published, at which time 
they are required by law to open the proposed rule to all public 
comment. We strongly believe that the VBA would benefit from the 
collective and individual experience and expertise of VSOs and our 
service officers throughout the process of revising the rating 
schedule. In addition, since the VBA is committed to a continuing 
review and revision of the rating schedule, we believe it would be 
beneficial to conduct reviews of the revision process so that future 
body system rating schedule updates can benefit from ``lessons 
learned'' during prior body system updates.
    Mr. Chairman and Members of the Committee, this concludes my 
statement and I would be happy to answer any questions you may have.

                                 
           Prepared Statement of Christina M. Roof, National
        Acting Legislative Director, American Veterans (AMVETS)

    Chairman Miller, Ranking Member Filner and distinguished Members of 
the Committee, on behalf of AMVETS I would like to thank you for 
allowing myself and representatives of the other member organization 
authors of The Independent Budget to share with you our recommendations 
on the Department of Veterans Affairs Fiscal Year 2012 budget, in what 
we believe to be the most fiscally responsible way of ensuring the 
quality and integrity of the care and benefits our veterans community 
receive.
    AMVETS is honored to join our fellow Veterans' Service 
Organizations in presenting The Independent Budget's recommendations on 
the Fiscal Year 2012 Department of Veterans Affairs Budget Request. 
AMVETS testifies before you as a co-author of The FY 2012 Independent 
Budget. This is the 25th year AMVETS, the Disabled American Veterans, 
the Paralyzed Veterans of America and the Veterans of Foreign Wars have 
combined our expertise, experiences and resources to produce this 
unique and in-depth document; one that has stood the test of time.
    In developing The Independent Budget we are always guided by the 
same set of principles. These principles include, first, our belief 
that veterans should not have to wait for the benefits to which they 
are entitled through their service to our country. Second, every 
veteran must be ensured access to the highest quality medical care 
available. Third, specialized care must remain a top priority and focus 
of the Department of Veterans Affairs (VA). Furthermore, we believe 
veterans must be guaranteed timely access to the full continuum of 
health care services, including, but not limited to, long-term care. 
Finally, veterans must be assured accessible burial in a State or 
national cemetery regardless of their location.
    As a partner of The Independent Budget, AMVETS devotes a majority 
of our time to the concerns and matters of the Department of Veterans 
Affairs National Cemetery Administration (NCA) and to all of the 
aspects of veteran entrepreneurship and Federal procurement. Today I 
will be speaking directly to these two issues.
    By way of background, the stated mission of The National Cemetery 
Administration (NCA) is to honor veterans with final resting places in 
national shrines and with lasting tributes that commemorate their 
service to our Nation. Their vision is to serve all veterans and their 
families with the utmost dignity, respect, and compassion and ensure 
that every national cemetery will be a place that inspires visitors to 
understand and appreciate the service and sacrifice of our Nation's 
veterans. Furthermore, many States have established State veterans 
cemeteries. Eligibility is similar to that of the Department of 
Veterans Affairs (VA) national cemeteries, but may include residency 
requirements. Even though they may have been established or improved 
with government funds through VA's State Cemetery Grants Program, State 
veterans cemeteries are run solely by the States.
    As of late 2010 the Department of Veterans Affairs National 
Cemetery Administration (NCA) maintained more than 3 million graves at 
131 national cemeteries in 39 States and Puerto Rico. Of these 
cemeteries, 71 are open to all interment; 19 will accept only cremated 
remains and family members of those already interred; and 41 will only 
perform interments of family members in the same gravesite as a 
previously deceased family member.i
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    \i\  http://www.cem.va.gov/cem/cems/listcem.asp
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    VA estimates nearly 23 million veterans are living today. They 
include veterans from World Wars I and II, the Korean War, the Vietnam 
War, the Gulf War, the conflicts in Afghanistan and Iraq, the Global 
War on Terrorism, as well as peacetime veterans. With the anticipated 
opening of the newly planned national cemeteries, annual interments are 
projected to increase to approximately 116,000 in 2013, and are 
projected to maintain that level through 2015. Historically, only 12 
percent of veterans opt for burial in a State or national cemetery, 
although these numbers are rising.
    The most important obligation of the NCA is to honor the memory of 
America's brave men and women who served in the armed forces. 
Therefore, the purpose of these cemeteries as national shrines is one 
of 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 must 
be protected, respected 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 2010, $250 million was appropriated for the operations and 
maintenance of NCA, with approximately $2 million in carryover. NCA 
awarded 47 of its 50 minor construction projects that were in the 
operating plan. Additionally, the State Cemetery Grants Service (SCGS) 
awarded $48.5 million in grants for 12 projects.
    NCA has done an exceptional job of providing burial options for the 
nearly 91 percent, about 170,000, of veterans who fall within a 75-mile 
radius threshold model. However, the NCA realized that, without 
adjusting this model, only one area, St. Louis, would qualify for a 
cemetery within the next 5 years and that the five highest veteran 
population concentrated areas of the country would never qualify if the 
threshold remained unchanged.
    In 2010, the IBVSOs recommended several new threshold models for 
NCA to consider in an effort to best serve a veterans population 
declining in number. The IBVSOs are pleased to see that NCA has 
adjusted its model and will begin factoring in 80,000 veterans within a 
75-mile radius for future cemetery placement. This modification will 
allow NCA to continue to provide burial options for veterans who would 
otherwise be limited geographically for this benefit.

National Cemetery Administration (NCA) Accounts
    The Independent Budget recommends an operations budget of $275 
million for NCA for fiscal year 2012 so it can meet the increasing 
demands of interments, gravesite maintenance and related essential 
elements of cemetery operations.
    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.
    However, the national cemetery system continues to face serious 
challenges. Though there has been significant progress made over recent 
years, NCA is still struggling to remove decades of blemishes and scars 
from military burial grounds across the country. Visitors to national 
cemeteries are still 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 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.
    NCA has worked tirelessly to improve the appearance of our national 
cemeteries, investing $45 million in the National Shrine Initiative in 
FY 2010 and approximately $25 million per year for the three previous 
years. 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. In 2006 only 67 percent of headstones and 
markers in national cemeteries were at the proper height and alignment. 
By 2009 proper height and alignment increased to 76 percent. NCA is on 
target to reach 82 percent this fiscal year. To ensure that NCA has the 
resources to reach its strategic goal of 90 percent, the IBVSOs 
recommend that NCA's operations and maintenance budget be increased by 
$20 million per year until the operational standards and measures goals 
are reached.
    In addition to the management of national cemeteries, 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, 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 State Cemetery Grants Program
    The State Cemeteries Grant Program (SCGP) 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 48 State and tribal 
government matching grants for cemetery projects.
    The Independent Budget recommends Congress appropriate $51 million 
for SCGP for FY 2012. This funding level would allow SCGP to establish 
new State cemeteries at their current rate that will provide burial 
options for veterans who live in regions that currently have no 
reasonably accessible State or national cemeteries.

Burial Benefits
    Burial allowance was first introduced in 1917 to prevent veterans 
from being buried in potter's fields. In 1923 the allowance was 
modified. The benefit was determined by a means test, and then in 1936 
the means test was removed. In its early history the burial allowance 
was paid to all veterans, regardless of their service-connectivity of 
death. In 1973 the allowance was modified to reflect the status of 
service-connection. 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.
    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 restore the original value of the benefit.
    The IBVSOs are pleased that the last Congress acted to improve the 
benefits, raising the plot allowance to $700 as of October 1, 2011. 
However, there is still a serious deficit in original value of the 
benefit when compared to the current value.
    While the cost of a funeral has increased by nearly 700 percent, 
the burial benefit has only increased by 250 percent. To restore both 
the burial allowance and plot allowance back to their 1973 values, the 
SC benefit payment should be $6,160, the NSC benefit value payment 
should be $1,918, and the plot allowance should increase to $1,150.
    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 
an SC burial should be $2,793, the amount provided for an NSC burial 
should be $854, and the plot allowance should 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.
    In addition to the recommendations we have mentioned, the IBVSOs 
also believe that Congress should enact legislation to adjust these 
burial benefits for inflation annually.
    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.
    NCA honors veterans with a final resting place that commemorates 
their service to this Nation. More than 3 million servicemembers who 
died in every war and conflict are honored through interment 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.
    AMVETS' second focus in the FY 2012 IB is on veteran 
entrepreneurship and Federal procurement as it relates to Service 
Disabled Veteran Owned Small Businesses (SDVOSB) and Veterans Owned 
Small Businesses (VOSB). We believe that both of these issues play a 
vital role in the success of transitioning servicemembers and the 
quality of life for veterans. And while I do note that a majority of 
the proceeding information is focused on policy rather than hard fiscal 
numbers, we believe that broken policy, duplication of efforts and lack 
of oversight are key factors in determining fiscally responsible 
budgets.

Veteran Preference in Federal Hiring and Procurement
    Supporting Service-disabled Veteran-owned Small Businesses 
(SDVOSBs) and Veteran-owned Small Businesses (VOSB) contributes 
significantly in sustaining a veteran's quality of life, while also 
contributing to the success and ease of transitioning from active duty 
to civilian life. Often in these tough economic times, self employment 
and entrepreneurship are the only ways many veterans are able to earn a 
living wage. Given the circumstances, now more than ever, Federal 
agencies must be held accountable to meet the Federal procurement goals 
outlined by Executive Order 13360, Sections 15 (g) and 36 of the Small 
Business Act and the numerous other published Federal regulations 
outlining veterans' preference and SDVOSB set-aside laws.
    The GAO's most recent review of interagency agreements found that 
VA is still lacking an effective process to ensure that interagency 
agreements include the required language instructing all Federal 
agencies comply with VA's contracting goals and preferences for SDVOSBs 
and VOSBs. While it is noted that VA issued guidance to all contracting 
officers on managing interagency acquisitions in March 2009, the 
numerous interagency agreements still did not even include the required 
language addressing VA's contracting goals and preferences until it was 
amended on March 19, 2010. This serves as an example of how VA is 
clearly lacking an established hierarchy or clear delegation of duties 
in oversight activities. This lack of oversight is continuing to 
contribute to VA having no assurance or metrics in place to conduct 
proper oversight that agencies have made maximum feasible efforts to 
contract with SDVOSBs or VOSBs. This lack of oversight only stands to 
hurt those in which the laws were established to protect, the veterans.
    We recommend stronger oversight, outreach and enforcement by all 
Federal agencies tasked with ensuring the success of our veteran 
entrepreneur community. This includes, but is not limited to, the U.S. 
Department of Labor (DOL), Office of Small Business Programs (OSBP), 
Small Business Administration (SBA), Office of Federal Contract 
Compliance and Procurement (OFCCP) and all other Federal agencies 
committing to reaching their 3 percent goal. All Federal agencies must 
make a high priority of assisting in the development and implementation 
of stronger strategies and accountability in reaching the 3-percent 
goal of veteran employment and contracting.
    Congress must ensure adequate resources are available to 
effectively monitor and recognize those agencies that are not meeting 
the 3-percent goal and hold them accountable for failure. The annual 
reports filed by all Federal agencies, reporting the prior fiscal 
years' actual percentage of goal achieved, should serve as guidance as 
to which agencies need the most assistance in the development and 
implementation of stronger contracting plans and oversight.

Center for Veteran Enterprise
    Another critical aspect in ensuring the success of our veteran 
entrepreneur community is promoting and assisting veterans in their 
entrepreneurial endeavors through programs such as the Center for 
Veteran Enterprise (CVE). CVE was established to assist all veterans 
with the numerous aspects of establishing and maintaining a small 
business. CVE is a subdivision of the Office of Small and Disadvantaged 
Business Utilization that extends entrepreneur services to veterans who 
own or who want to start a small business. CVE is also tasked with 
aiding other Federal contracting offices in identifying VOSBs in 
response to Executive Order 133600. In the past, VA has faced many 
obstacles, from lack of leadership to best practices with their 
entrepreneurship programs, which have directly resulted in and 
prevented the success of veteran owned businesses. For this reason, VA 
established the program entitled the Center for Veterans Enterprise 
(CVE) with the passage of the Veterans Entrepreneurship and Small 
Business Development Act of 1999. Furthermore, on Dec. 22, 2006, 
President Bush signed Public Law 109-461, the Veterans Benefits, Health 
Care, and Information Technology Act of 2006 in an effort to 
successfully identify and grant status to SDVOSBs. Effective June 20, 
2007, this legislation authorized a unique ``Veterans First'' approach, 
specific to VA contracting.
    As we move through the 21st century, during a time of war on 
multiple fronts, the VOSB and SDVOSB population continues to rise at a 
rate not seen since the end of World War II. As America's war-fighters 
transition back into civilian life, many are choosing to pursue lives 
as entrepreneurs. Given the almost 35 percent influx of VOSB and 
SDVOSB, it is vital that the Center for Veterans Enterprise be ready 
and able to meet the growing demand for their services. However, the 
IBVSOs do not believe that CVE is serving the needs of those veterans 
it was originally designed to help. Due to a lack of leadership over 
the past year, we have seen CVE slowly move from the role of assisting 
VOSB and SDVOSBs to that of an information and referral agency for 
other Federal and State agencies. We believe the Center for Veteran 
Enterprise must be brought back up to par with what it was originally 
tasked to do: assisting our veteran population in all aspects for their 
entrepreneurship endeavors. In order to effectively accomplish this 
Congress must provide dedicated funding and strong oversight in 
ensuring CVE is properly staffed, trained and funded.

Vendor Verification Systems
    Another key part of protecting our veterans in a successful Federal 
procurement system is through a centralized vendor verification system. 
We believe it to be vital for all Federal agencies to utilize a 
continually updated, single centralized source database in the 
verification of all businesses claiming preferred status as a VOSB or 
SDVOSB.
    At present, vendors desiring to do business with the Federal 
Government must register in the Central Contractor Registration (CCR) 
database, and those who indicate they are veterans or service-disabled 
veterans, self-certify their status without verification. P.L. 109-461 
required VA to establish a Vendor Information Page (VIP) database to 
accurately identify businesses that are 51 percent or more owned by 
veterans or service-disabled veterans. This database was originally 
designed to act as a reliable, centralized database enabling all 
Federal agencies a single source in the identification of possible 
SDVOSB and VOSB for consideration during their procurement processes. 
Furthermore, both contractors and subcontractors involved in the 
procurement process of any government award is then required to provide 
the Secretary of Labor a specific breakdown of all information required 
by the VETS 100 and VETS 100-A filed on an annual basis, demonstrating 
their continued compliance with the contracts terms regarding veterans 
preference and status. As of April 15, 2009, approximately 18,000 
SDVOSBs were registered in the Central Contractor Registration, 
however, due to lack of oversight and an inconsistent, self-reported 
status verification processes, many non-veteran-owned businesses are 
not receiving the protections they are entitled to under the law.
    On February 8, 2010, the final CFR rules regarding ``VA Veteran-
Owned Small Business Verification Guidelines'' were published. The 
document affirms as final, with changes, an interim final rule that 
implements portions of the Veterans Benefits, Health Care, and 
Information Technology Act of 2006. This law requires the Department of 
Veterans Affairs (VA) to verify ownership and control of veteran-owned 
small businesses, including service-disabled veteran-owned small 
businesses. This final rule declares to define the eligibility 
requirements for businesses to obtain verified status, explains 
examination procedures and establishes records retention and review 
processes. However, the newly published rule fails to outline any solid 
changes or improvements to the SDVOSB verification process. We further 
believe the newly published rules on the verification process focused 
on control and ownership definitions, yet provided no clarification on 
the specifics of the verification process. The IBVSOs believe these 
updates to 38 CFR, Part 74 regarding P.L. 109-461 still leave the 
integrity of the SDVOSB and VOSB verification system open to fraud. 
This continued lack of clarity and non-uniformed inconsistent status 
verification processes will cause the same unwanted results of many 
veteran owned businesses not receiving the protections they are 
entitled to under the law.
    VA has thus far been awarded $1.4 billion in recovery act funds to 
aide in the employment and contracting opportunities available to 
SDVOSB and VOSB. To date $538 million has been used on awards to SDVOSB 
and VOSB, according to VA. However, we have very serious concerns on 
how much of these appropriated funds were actually awarded to 
legitimate SDVOSB and VOSBs, due to the lack of verification processes 
in place at VA.
    In an effort to resolve this issue we recommend that all Federal 
agencies should be required to certify veteran status and ownership 
through the VA's VIP program before awarding contracts to companies 
claiming veteran status. We also recommend the database be maintained 
and updated on a regular basis to avoid backlogs of vendors waiting to 
be certified or re-certified.
    Furthermore, Congress must take the necessary actions in requiring 
all Federal agencies to use a single source database in all 
verifications of veteran ownership statuses before unknowingly awarding 
contracts to companies on the basis of claiming SDVOSB or VOSB 
preference. Finally, internal promotion and education on proper usage 
of the database should coincide with implementation of databases use.

Veteran Set-Asides
    Protecting veteran set-asides within the Federal procurement system 
is a matter that must be addressed more rigorously within VA's training 
and personnel programs. Public Law 109-461, the ``Veterans Benefits, 
Health Care and Information Technology Act of 2006,'' was signed Dec. 
22, 2006, and went into effect on June 20, 2007. The law allows VA 
special authority to provide set-aside and sole-source contracts to 
small businesses owned and operated by veterans and service-disabled 
veterans. This legislation is codified in Title 38, United States Code, 
sections 8127 and 8128. After more than 3 years since its enactment, no 
significant change has been implemented with regard to how Federal 
contracting officers are trained. VA personnel involved in the 
acquisition process need to be trained and familiarized with all 
current and new authorizations and responsibilities under P.L. 109-461, 
as well as all other procurement directives regarding VOSBs and 
SDVOSBs. Our service disabled veterans who own small businesses cannot 
afford to wait any longer for VA to enforce compliance with the law.
    Under current policy, no proof of compliance is required, nor do 
random labor audits occur. OIG has issued more than 10 reports 
illustrating these deficiencies in recent years. Most recently, in 
October of 2009 the GAO issued their report on ``Service-Disabled 
Veteran-Owned Small Business Program: Case Studies Show Fraud and Abuse 
Allowed Ineligible Firms to Obtain Millions of Dollars in Contracts'' 
to the Committee on Small Business. This report outlines how millions 
of dollars in set-aside contracts were awarded to non-SDVOSB businesses 
due to the gross lack of program controls in place to detect and 
prevent fraud. The report identified 10 case-study examples of firms 
that did not meet the basic SDVOSB program eligibility requirements, 
but yet received over $100 million in SDVOSB set-aside contracts. VA, 
DOL, SBA and the OFCCP must exercise better oversight and stronger 
enforcement with consequences for any government agency or 
nongovernment business claiming to be awarding set-asides to veteran-
owned businesses when, indeed, they are not. There needs to be an 
immediate focus on proactive measures to eliminate untruths, such as 
``rent a vet,'' and cease only exercising ``reactive'' strategies. VA, 
the DOL, SBA, and OFCCP should pool all their resources and successful 
strategies to ensure swift action and to avoid duplication of efforts.
    Furthermore, we believe VA must develop and implement uniformed 
training processes for all staff involved with the Federal procurement 
process, especially contracting officers. VA must also provide systems 
and metrics to identify the strengths and weaknesses in its procurement 
processes, as well as continued training and evaluations of contracting 
staff in efforts of successfully identifying weaknesses and strengths 
within the program as a whole.
    Lastly, VA, DOL, SBA, OFCCP and the Employment and Training 
Administration must collaborate in developing and implementing a 
single-source database for employer outreach programs for the promotion 
of veterans' entrepreneurship at local and national levels. This system 
must allow all employers to locate veterans for employment as well as 
provide an updated listing of employment opportunities.
    Again, Chairman Miller and Members of the Committee, we thank you 
for inviting us to share with you our recommendations and stand ready 
to answer any questions you may have.

                                 
            Prepared Statement of Timothy M. Tetz, Director,
            National Legislative Commission, American Legion

    Mr. Chairman and Members of the Committee:
    The American Legion welcomes this opportunity to comment on the 
President's budget request.
    President Obama has issued the challenge to invest in the future of 
America. The American Legion believes strongly in this ideal. 
Investment in the future means taking care of the needs of veterans 
today. Investing in the future means solving problems at their onset 
rather than reaping heavy debts down the road as the problems grow to 
unmanageable levels. Investing in the future means having the foresight 
to see tomorrow's problems today, and avoiding the errors of the past. 
Imagine how the lives of veterans today would be changed had this 
Nation had the foresight to invest in preparation to deal with the full 
consequences of Agent Orange, the ever-growing claims backlog, and 
substandard medical facilities as in days past.
    Challenging tasks require aggressive solutions. The American Legion 
supports the value of fiscal responsibility and recognizes the economic 
stability of this Nation is vital to its overall security. Even in 
difficult times, however, there is always the duty to ensure that vital 
needs are not neglected. The budget, at a proposed 10.6 percent 
increase over fiscal year (FY) 2010 levels, recognizes meeting the 
needs of veterans continues to be an area where we must ensure proper 
funding.
    Furthermore, with advance appropriations for the Department of 
Veterans Affairs (VA) now the law of the land, The American Legion is 
encouraged to see the proposed advance appropriations as the fruition 
of many years of hard work by our organization and others to ensure the 
stability and ability for long term health care planning in this 
sector.
    The veterans' community is paradoxically vulnerable in many ways. 
Our Nation's defenders are visualized justly as brave and true 
sentinels, yet as they transition from warrior to citizen they face 
challenges not commensurate with the rest of the population. The twin 
scourges of joblessness and homelessness are growing and remain 
challenges. Veterans make up less than 10 percent of the population, 
yet face unemployment at rates two thirds higher than the overall 
average of America and while the numbers are being reduced, still the 
staggering figure of over 75,000 of our Nation's homeless are believed 
to be veterans. Clearly these are areas where we are not meeting the 
duty to care for our Nation's heroes.
    These numbers of veterans in need are only going to grow. Already 
Defense Secretary Gates speaks of force reduction for those on Active 
Duty, and this will contribute more to the growing rolls of veterans as 
those servicemembers step down from active service. While it may not 
make the glamorous front page news, The American Legion has not 
forgotten that every single day the brave men and women of our armed 
forces overseas ``leave the wire'' to face roadside bombs, ambushes, 
combat and other hazards which continue to send service-disabled 
servicemembers back home to cope with the aftereffects of war. This is 
the true and on-going cost of war, and even in tough times this country 
cannot shirk the duty of paying that cost.
    Therefore, it is absolutely critical the entire military and 
veterans' community (active duty, Reserve Component, and veterans) 
continue to remain supportive of honorable military service. No 
servicemember should ever doubt:

      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.

    When National Commander Jimmie Foster testified on September 22, 
2010 before a Joint Session of the Committees on Veterans' Affairs, he 
clearly outlined the funding recommendations of The American Legion for 
FY 2012. Our testimony today re-emphasizes those recommendations for 
certain specific areas.

                            MEDICAL SERVICES
------------------------------------------------------------------------

-------------------------------------------------------------------------
  The American Legion strongly supports the overall funding level for
total medical services proposed by the administration.
------------------------------------------------------------------------

    The American Legion fully supports funding ``the best health care 
anywhere''. VA reports that 6.1 million veterans will need to receive 
timely access to quality health care in this upcoming year alone. This 
represents an anticipated increase of 168,904 new patients who will 
``vote with their feet'' in making VA their health care provider of 
choice. VA medical care is still America's best investment in quality 
health care delivery--the right care, at the right time, in the right 
facility. The Legion would further urge Congress to act now and ensure 
the passage of the full budget for FY 2011 so that a continuity of 
funding, to include all advanced appropriations, is available for full 
use and planning purposes.


                     Medical and Prosthetic Research
------------------------------------------------------------------------

-------------------------------------------------------------------------
  The American Legion recommends $600 million for Medical and
Prosthetics Research in FY 2011.
------------------------------------------------------------------------

    The American Legion believes VA's focus in research must remain an 
understanding and improving treatment for medical conditions that are 
unique to veterans and their military service. Servicemembers are 
surviving catastrophically disabling blast injuries due to the superior 
armor they are wearing in the combat theater and 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. Clearly, adequate funding is needed to ensure 
that VA does not continue to lag behind DoD in this capacity, and both 
agencies should be pushing forward in the field of innovations in 
prosthetic technology.
    There is a need for adequate funding of other VA research 
activities, including basic biomedical research and bench-to-bedside 
projects. Congress 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 
(PTSD), rehabilitation; in addition, VA must have direction and funding 
to support supplementary research conducted jointly with DoD, the 
National Institutes of Health (NIH), other Federal agencies, and 
academic institutions.
    As challenging health concerns such as the long term effects of 
Traumatic Brain Injury (TBI), exposures to environmental hazards in 
domestic and overseas deployment, and the mental health impact of 
exposure to combat conditions as well as military sexual trauma and 
assault develop, it is essential that VA lead the way in research and 
development to combat and treat these conditions. Servicemembers 
afflicted by these conditions will have a deep and lasting effect on 
the economy through their reduced ability to contribute if these 
conditions are not treated and mitigated. Quite simply, the more that 
can be learned about diagnosing and treating these conditions, the more 
likely this Nation can avert catastrophic impact in the future.
    Truly, investing in research at the onset is investing in the 
future. While The American Legion applauds the budget's stated research 
priorities of Mental Health, Gulf War Illness and Environmental 
Exposures, Prosthetics, and TBI and Spinal Cord Injuries, the allocated 
$509 million should be made more robust. As the lesson learned from 
Agent Orange exposure in Vietnam should have taught us, research 
delayed can have devastating economic impact down the road. Money 
invested now in this research has the potential to not only save this 
Nation money in the long run, but also ameliorate and alleviate the 
suffering of veterans at a time when the long term impact can be 
minimized.
                      DEPARTMENTAL ADMINISTRATION

                      Construction--Major and Minor
------------------------------------------------------------------------

-------------------------------------------------------------------------
  The American Legion recommends that the President's budget request for
$590 million for Major Construction and $550 million for Minor
Construction in FY 2012 be increased to $1.2 billion for Major
Construction projects and $800 million for Minor Construction projects
to provide for additional facilities particularly the aforementioned
improvements to infrastructure, as well as Community-Based Outpatient
Clinics in rural and highly rural areas and additional Vet Centers.
------------------------------------------------------------------------

    The American Legion has seen firsthand the structural deficiencies 
and challenges facing the infrastructure of the VA Health Care system 
as a part of the preparation for the annual System Worth Saving 
reports. During those site visits, many VA Medical Center staff have 
informed Legion personnel they are unable to dedicate needed funds 
towards construction projects due to the funding needs of actual 
medical care. Furthermore, many VA construction projects were only made 
possible through the use of funding from the America Reinvestment and 
Recovery Act. Such money is no longer available to meet the 
construction needs to shore up VA infrastructure in areas such as 
seismic criteria, aging electrical systems, insufficient parking and 
space utilization, and other needed areas. Therefore, the need to fully 
fund this area of the budget is even more apparent.
    Recent reports of the VA Regional Office in Roanoke, VA noted the 
floors of the building were in danger of collapsing due to the 
aggregate weight of the claims files. While this highlights yet another 
major implication of the claims backlog, it also underlines this is not 
an area where VA can afford to scrimp and save. Substandard facilities 
do not serve the veterans of this country, and are a hazard to VA 
employees as well.
    If we are to truly invest in the future of this country, there are 
few more sound decisions to be made than investing in infrastructure. 
Just as the roads and bridges of America must be upgraded to support 
the crumbling infrastructure and prevent even greater costs down the 
road, so too must the infrastructure of VA solidify to meet the needs 
of the growing veterans' community.
    Whether it is much needed medical facilities in the rural regions 
of the country, repairs to aging urban hospitals, proper laboratory 
facilities, adequate parking or other needs, it is short-sighted to see 
opportunities to cut and save on immediate construction, for cuts to 
this area now will only bring far greater construction costs down the 
road. The wise fiscal decision is to invest carefully now to head off 
ballooning costs in the future.

                     Information Technology Systems
------------------------------------------------------------------------

-------------------------------------------------------------------------
  The American Legion urges Congress to ensure this key component
receives full funding as VA transitions towards paperless processing,
but also that this budget continues to fund the efforts towards a truly
seamless electronic health records from induction in service through the
rest of a veteran's life.
------------------------------------------------------------------------

    Since the data theft occurrence in May 2006, VA has implemented a 
complete overhaul of its Information Technology (IT) division 
nationwide. The American Legion is hopeful VA continues to take 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. 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.
    As acknowledged by the GAO Report 11-265 ``Electronic Health 
Records--DoD and VA Should Remove Barriers and Improve Efforts to Meet 
Their Common System Needs'' there are still major hurdles to be 
overcome to achieve the goals set forth of a Virtual Lifetime 
Electronic Record for servicemembers from induction through the rest of 
their lives as active duty and veteran. The President's budget sets 
aside monies for this purpose, but it is vitally important to ensure 
that this component is not left behind, nor allowed to falter. 
Achieving this goal should remain a major priority of both DoD and VA 
in cooperation with one another.
    Obviously, with VA's transformation of the VBA to a ``paperless'' 
processing system through the Veterans Benefits Management System 
(VBMS) this can be an area of great savings overall for VA as VBA moves 
out of the research and piloting stage of this system and into regular 
operations. Start up costs can now be eliminated and hopefully VA will 
be vigilant in ensuring that this new system offers the speed and 
accuracy promised.

                              Homelessness
------------------------------------------------------------------------

-------------------------------------------------------------------------
  The American Legion supports sustaining funding levels addressing
homelessness in the veterans' community and urges complete support
through other Departments such as Housing and Urban Development to help
eliminate homelessness among veterans.
------------------------------------------------------------------------

    The American Legion notes that by the VA Secretary's own recent 
estimates there are approximately 75,600 homeless veterans on the 
street each night as of 2009. This number represents a significant 
improvement over previous years. As far back as 2007 the estimates were 
over 150,000 and each year of concerted effort has brought further 
improvement and reduction of these numbers. Clearly the good work in 
this area must retain the funding to continue so that the levels will 
never again reach those seen in the past.
    With 300,000 servicemembers entering the civilian sector each year 
since 2001 with at least a third of them potentially suffering from 
mental illness, such as the effects of Combat Stress, PTSD and TBI, 
nothing could more clearly indicate programs to prevent and assist 
homeless veterans are vitally needed. The American Legion applauds VA's 
continued emphasis as one of its priority items the elimination of 
homelessness among America's veterans.

                         FISCAL RESPONSIBILITY

    Fiscal responsibility is of course a vital concern in the difficult 
times we are facing as a Nation. The American Legion strongly believes 
money spent must be spent wisely. To this end, all aspects of operation 
must be scrutinized, and where waste and mismanagement contribute to an 
inflated budget, these must be eliminated. Rather than wholesale 
cutting of necessary infrastructure, areas of redundancy must be 
sought, and targeted cuts to those areas serve a far better purpose in 
managing the budget of VA.
    Better coordination with outside evaluations can help reduce 
internal costs of evaluation. For example, State Veterans' Homes are 
evaluated not only by VA internal evaluation, but also by outside 
Centers for Medicare and Medicaid Services (CMS) evaluation. Better 
coordination and standardization of evaluation could result in reduced 
costs of VA evaluations by millions of dollars by reducing this level 
of redundancy. The American Legion has also called for some time for VA 
to accept outside, third party evaluation of accuracy and quality rates 
in the benefits management and claims system. Such outside evaluation 
could further reduce costs where areas of redundancy with VA's own 
evaluative process can be found. Surely, though savings of this type 
may only rank individually in the tens of millions, these are funds 
that could be directed towards better use addressing shortfalls 
elsewhere.
    Better Central Office oversight is further needed at the local 
level to ensure that money directed to the VISNs and Regional Offices 
are being spent in accordance with the direction of the administration. 
All too often in The American Legion visits to local areas as a part of 
the System Worth Saving (SWS) Reports and Regional Office Action 
Reviews (ROAR), discover wide variances in execution of basic policies 
and directives from region to region. To truly manage the budget of VA 
most effectively, developing uniform consistency is vital across the 
country.

                               CONCLUSION

    In conclusion, The American Legion believes a true investment in 
the future means investing in key areas of infrastructure now and not 
making short-sighted cuts to vital areas that will only bring greater 
costs in the future.
    Full funding of essential projects such as research in emerging 
health risks and disabilities, as well as the physical infrastructure 
of VA facilities, will be the prudent choice now to stave off even 
greater financial burdens down the road. VA must meet these challenges 
with an adequate budget to fund these necessary aims.
    The American Legion welcomes the opportunity to work with this 
Committee on the enactment of a timely, predictable and sufficient 
budget for the Department of Veterans Affairs.

                                                            VA MEDICAL DISCRETIONARY PROGRAMS
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         FY 2013
                                                                  P.L. 111-117 FY  P.L. 111-322 FY   President's FY      Proposed      American Legion's
                                                                   2010 VA Final   2011 VA Funding   2012 VA Budget      Advance        FY 2013 Request
                                                                      Funding                           Proposal      Appropriations
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medical Supplies                                                   $34.7 billion    $37.1 billion    $39.5 billion    $41.3 billion       $38.1 billion
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medical Support &                                                   $4.9 billion     $5.3 billion     $5.4 billion     $5.7 nillion        $5.3 billion
  Compliance
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medical Facilities                                                  $4.8 billion     $5.7 billion     $5.4 billion     $5.4 billion        $6.2 billion
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medical/Prosthetic                                                  $581 billion     $581 million     $509 million           ------        $600 million
  Research
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medical Care Collections Fund                                     [$2.9 billion]   [$2.9 billion]   [$3.1 billion]           ------              ------
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Medical Care                                                 $47.9 billion    $51.6 billion    $53.9 billion    $52.4 billion       $50.2 billion
--------------------------------------------------------------------------------------------------------------------------------------------------------



                                      VA NON-MEDICAL DISCRETIONARY PROGRAMS
----------------------------------------------------------------------------------------------------------------
                                           P.L. 111-117 FY                     President's FY       American
                                            2010 VA Final    P.L. 111-322 FY   2012 VA Budget     Legion's  FY
                                               Funding       2011 VA Funding      Proposal        2012 Request
----------------------------------------------------------------------------------------------------------------
Major Construction                           $1.2 billion      $1.2 billion      $590 million      $1.2 billion
----------------------------------------------------------------------------------------------------------------
Minor Construction                           $703 million      $703 million      $550 million      $800 million
----------------------------------------------------------------------------------------------------------------
State Veterans' Homes Construction           $100 million      $100 million       $85 million      $100 million
 Grants
----------------------------------------------------------------------------------------------------------------
State Veterans' Cemeteries Construction       $46 million       $46 million       $46 million       $60 million
 Grants
----------------------------------------------------------------------------------------------------------------
General Operating                            $2.1 billion      $2.5 billion      $2.5 billion      $2.6 billion
  Expenses
----------------------------------------------------------------------------------------------------------------
Information                                  $3.3 billion      $3.3 billion      $3.2 billion      $3.5 billion
  Technology
----------------------------------------------------------------------------------------------------------------
National Cemetery System                     $250 million      $250 million      $251 million      $260 million
----------------------------------------------------------------------------------------------------------------


                                 
           UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
                            FISCAL YEAR 2012
                            BUDGET ESTIMATE
                           TABLE OF CONTENTS

INTRODUCTION
SALARIES AND EXPENSES
        Appropriation Language
        Program Justification
        Fiscal Year 2010 Program
        Fiscal Year 2011 Program
        Fiscal Year 2012 Program
        Summary of Fiscal Year 2012 Budget Request
        Program Funding Changes
        Program and Financing Schedule
        Object Classification Schedule
U.S. COURT OF APPEALS FOR VETERANS CLAIMS RETIREMENT SYSTEM
        Introduction
        Status of Funds Schedule
PRO BONO REPRESENTATION PROGRAM
        Fiscal Year 2012 Budget Request--Appendix A

                               __________

           UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

                              INTRODUCTION

    The United States Court of Appeals for Veterans Claims (Court) is a 
national court of record established by the Veterans Judicial Review 
Act, Pub. L. No. 100-687, Division A (1988) (The Act). The Act, as 
amended, is codified in part at 38 U.S.C. Sec. Sec. 7251-7299. The 
Court is part of the Federal judicial system and has a permanent 
authorization for seven judges, one of whom serves as chief judge. The 
judges are appointed by the President, by and with the advice and 
consent of the Senate, for 15-year terms, except that two have been 
appointed for 13-year terms pursuant to Pub. L. No. 106-117, Nov. 30, 
1999. Two additional positions have been authorized but not yet filled, 
and one judge recently entered senior status, such that the Court 
currently has three vacancies. Our senior judges, now numbering 6, are 
available for service, and have been recalled the past several years. 
One judge is retired due to permanent disability. Certain decisions by 
the Court are reviewable by the United States Court of Appeals for the 
Federal Circuit and, if certiorari is granted, by the United States 
Supreme Court. Further, for management, administration, and expenditure 
of funds, the Court exercises the authorities provided for such 
purposes applicable to other courts under Title 28, U.S. Code.
    The Court has exclusive jurisdiction to review decisions made by 
the Department of Veterans Affairs' Board of Veterans' Appeals (Board) 
that adversely affect a person's entitlement to VA benefits. This 
judicial review, although specialized in scope, is the same as that 
performed by all other United States Courts of Appeal. In cases before 
it, the Court has the authority to decide all relevant questions of 
law; to interpret constitutional, statutory, and regulatory provisions; 
and to determine the meaning or applicability of actions/decisions by 
the Secretary of Veterans Affairs. The Court may affirm, set aside, 
reverse, or remand those decisions as appropriate. Additionally, the 
Court has authority under 28 U.S.C. Sec. 1651, to issue all writs 
necessary or appropriate in aid of its jurisdiction, and to act on 
applications under 28 U.S.C. Sec. 2412(d), the Equal Access to Justice 
Act (EAJA).
    The Court is empowered to compel actions of the Secretary that are 
unlawfully withheld or unreasonably delayed, and can set aside 
decisions, findings, conclusions, rules, and regulations issued or 
adopted by the Secretary, the Board, or the Board Chairman that are 
arbitrary or capricious, an abuse of discretion or otherwise not in 
accordance with law, contrary to constitutional right, in excess of 
statutory jurisdiction or authority; or without observance of the 
procedures required by law. The Court also may hold unlawful and set 
aside or reverse findings of material fact that are adverse to the 
appellant if the findings are clearly erroneous.
    The Court is located in Washington, D.C., see 38 U.S.C. Sec. 7255 
(requiring the principal offices of the Court to be located in the D.C. 
metropolitan area), but as a national court, the Court may conduct 
hearings anywhere in the United States.

                         APPROPRIATION LANGUAGE
                        GENERAL AND SPECIAL FUND
                         SALARIES AND EXPENSES

    For necessary expenses for the operation of the United States Court 
of Appeals for Veterans Claims as authorized by 38 U.S.C. 
Sec. Sec. 7251-7299, [$90,146,729] $55,796,690: Provided that, of the 
foregoing amount, $25,000,000 shall be transferred to the General 
Services Administration (GSA) for the design engineering and site 
acquisition of a courthouse to house the United States Court of Appeals 
for Veterans Claims: Provided further, that [$2,515,229] $2,726,363 
shall be available for the purpose of providing financial assistance as 
described, and in accordance with the process and reporting procedures 
set forth, under this heading in Public Law No. 102-229.

                         PROGRAM JUSTIFICATION

Court Caseload Trends and Variations:
    The United States Court of Appeals for Veterans Claims is one of 
the busiest Federal appellate courts, when considering numbers of 
appeals per judge. Approximately 200 cases were filed monthly from FY 
1999 through FY 2004. Thereafter the caseload began a steady increase, 
with the Court averaging 350 cases filed per month for the past several 
years. The chart below shows the figures by fiscal year since FY 1999. 
In addition, in FY 2010 the Court acted on over 2,600 applications for 
fees and expenses authorized by the Equal Access to Justice Act (EAJA). 
28 U.S.C. Sec. 2412(d).
    Appeals to the Court come from the pool of cases in which the Board 
has denied some or all benefits sought by claimants. Also, under its 
All Writs Act authority, the Court has jurisdiction to consider 
petitions for extraordinary relief or writs of mandamus filed by 
claimants who believe that unlawful action is being taken by the 
Secretary of Veterans Affairs on their claims. As the number of claims 
processed by the Board has increased over the years, and as the number 
of issues raised in each claim has grown, the number of appeals filed 
with the Court has increased, although not on a linear path. Every 
indication is that the number of cases handled by the Board will 
continue to increase, and we anticipate that this will result in 
continued growth in the number of appeals to the Court over time.


--------------------------------------------------------------------------------------------------------------------------------------------------------

                                  FY 99     FY 00     FY 01     FY 02     FY 03     FY 04     FY 05     FY 06     FY 07     FY 08     FY 09     FY 10
------------------------------------------------------------------------------------------------------------------------------------------------------ ----
BVA TOTAL DENIALS                 14881     14080      8514      8606     10228      9299     13033     18107     16531     17005     17601     13788
--------------------------------------------------------------------------------------------------------------------------------------------------------
CASE FILINGS TO USDAVC             2397      2442      2296      2150      2532      2234      3466      3729      4644      4128      4725      4341
--------------------------------------------------------------------------------------------------------------------------------------------------------
CASE FILINGS AS % OF              16.1%     17.3%     27.0%     25.0%     24.0%     24.2%     26.6%     20.6%     28.1%     24.3%     26.8%     31.5%
  DENIALS
--------------------------------------------------------------------------------------------------------------------------------------------------------

Unrepresented Appellants:
    The Pro Bono Representation Program (the Pro Bono Program or 
Program) began in FY 1992 when Congress authorized the Court to fund a 
pilot Pro Bono Representation Program in the amount of $950,000 from 
that fiscal year's appropriation. Under this program, the Legal 
Services Corporation (LSC) administers pro bono representation and 
legal assistance to veterans and their survivors who have appeals at 
the Court and who are unable to afford legal representation. The Court 
and the parties benefit from this Program because when an attorney is 
retained, the issues and arguments presented in the brief are generally 
more detailed and thorough than would be if the claimant had remained 
unrepresented.
    The now well-established Pro Bono Program continues to receive 
funding through the Court's annual appropriation. Before FY 1997, 
Congress gave the Court limited discretion over the Pro Bono Program's 
funding level. Since FY 1997, the Appropriations Subcommittees have 
considered the Program's budget request separately from the Court's 
budget request, although both are submitted together. The Program 
budgeted $2,515,229 in FY 2011. Distribution of the grant and oversight 
for the Program continues to be performed by the LSC, which provides 
monitoring, evaluation, and technical support, as it does for all of 
its grantees. The Pro Bono Program's FY 2012 request for $2,726,363 is 
attached at Appendix A.

Staffing Requirements:
    The Court requests funding for 127 full-time equivalent (FTE) 
positions. This request represents no increase from the FY 2011 level. 
It includes, as did the 2011 budget, staffing for two additional 
chambers, as authorized by 38 U.S.C. Sec. 7253(i). It also includes one 
Secretary for support to our senior judges in service, one additional 
staff attorney, and a senior attorney position (for possible service as 
an Appellate Commissioner), originally requested for FY 2011; these 
positions have not been filled as of this writing because we are 
operating on a continuing resolution for FY 2011.

Veterans Courthouse:
    The United State Court of Appeals for Veterans Claims is the newest 
Federal court and the only Article I court without a dedicated 
courthouse. Since at least 2003, several of our Nation's largest 
Veterans Service Organizations (VSOs) have supported a dedicated 
courthouse for veterans seeking judicial review. In 2004, the House of 
Representatives expressed its sense that the Court ``should be housed 
in a dedicated courthouse'' that would be ``symbolically significant of 
the high esteem the Nation holds for its veterans'' and would ``express 
the gratitude and respect of the Nation for the sacrifices of those 
serving and those who have served in the Armed Forces, and their 
families'' (H.R. 3936). That sentiment was echoed in 2007 with the 
sense of Congress that the Court be provided appropriate office space 
``to provide the image, security, and stature befitting a court that 
provides justice to the veterans of the United States'' (S. 1315). The 
Board of Judges fully supports the convictions expressed by Congress 
and the VSOs.
    In 2004, pursuant to Congressional support and funding, an initial 
and a follow-on study were undertaken by GSA to determine the 
feasibility of acquiring a dedicated courthouse. In 2009, eight 
National VSOs collaboratively sent a letter to Congress expressing 
their strong support of legislation that would authorize the funding 
and construction of a veterans courthouse. In FY 2009, Congress 
responded by appropriating $7 million (M) for advance planning and 
architectural design, and those funds were transferred to GSA for 
completion of a pre-development planning study (planning study). The 
Court made no specific funding request for the courthouse project in 
its FY 2010 budget request because the planning study had not yet been 
concluded and plans were too uncertain at that time to make such a 
request prudent.
    Following receipt of a GSA estimate that $62M was needed for 
construction funding, this amount was requested in the Court's FY 2011 
budget. In response, the House proposed full funding at $62M, and the 
Senate proposed $25M--sufficient funding, per GSA, to perform more 
detailed design and planning, and to purchase necessary land adjacent 
to GSA property being considered for the courthouse, the next steps in 
the process. The FY 2011 budget request has not yet been acted on 
because we are operating on a continuing resolution, and therefore no 
funding has been appropriated for construction of the courthouse in FY 
2011. Subsequent to submitting the Court's FY 2011 request, GSA 
presented a more specific courthouse cost estimate based on the 
particular location and general design developed in the planning study. 
This estimate reflects a substantial cost increase for project 
completion over the FY 2011 budget request. We understand that GSA has 
either briefed or offered to brief the appropriate congressional 
Committees as to the basis for the cost increase.
    Given the increased cost estimate from GSA and need for close study 
thereof, and mindful of the Court's responsibility to ensure fiscal 
prudence, our FY 2012 request includes $25M, necessary for funding the 
next steps toward construction, i.e., more detailed planning, design 
and land acquisition. (This $25M is not needed in FY 2012 if the $25M 
for the veterans courthouse is appropriated in FY 2011.) We are 
sensitive to budget constraints and understand that priorities must be 
set by Congress; however, if any Federal courthouses are to be funded 
for construction, we support the veterans who contend that their 
courthouse should be one of them.

                        FISCAL YEAR 2010 PROGRAM

    The Court's FY 2010 program accomplished the following:
    Opened 4,341 new cases, including appeals from decisions of the 
Board of Veterans' Appeals and petitions for extraordinary relief 
directed to the Court. During the same period, the Court disposed of 
5,141 cases through a combination of court orders, single judge 
decisions, and panel opinions. In addition, the Court ruled on 
thousands of motions and took action on 2,653 applications for attorney 
fees filed under the Equal Access to Justice Act.
    Paid all obligations and staffed all positions necessary for the 
continued, proper functioning of the Court.
    Received a clean audit with no exceptions for FY 2010.
    Continued to develop and execute plans for construction of a 
veterans courthouse for the United States Court of Appeals for Veterans 
Claims, including coordinating with GSA.
    Continued to work with GSA to locate additional leased space for 
existing staff and two new judicial chambers.
    Continued the agreements with the U.S. Marshals Service (U.S.MS) 
for Court security, with the Department of Agriculture's National 
Finance Center (NFC) for payroll/personnel services, and with the 
Bureau of the Public Debt (BPD) for administrative payments, credit-
card, travel, and financial accounting and reporting services. Also, 
continued existing agreement with the Administrative Office of U.S. 
Courts (AO) for electronic-case filing (e-filing) system support.
    Transferred appropriations made available for the Pro Bono 
Representation Program.

                        FISCAL YEAR 2011 PROGRAM

    To maintain and enhance the FY 2010 initiatives, the Court's FY 
2011 budget request reflected the following:
    Funding to pay for projected expenses to staff and support the 
operations of the Court to ensure its continued, proper functioning 
throughout the fiscal year, including two new chambers and three FTE 
positions not previously required--a secretary for the senior judges, a 
staff attorney, and a senior attorney (for possible service as an 
appellate commissioner).
    Funding to have the Court's financial statements audited.
    Funding to build a veterans courthouse at GSA cost estimate.
    Funding to acquire additional leased space to meet space needs for 
existing staff and two new judicial chambers.
    Funding to continue agreements with the USMS for Court security, 
with the Department of Agriculture's NFC for payroll/personnel 
services, and with BPD for administrative payments, credit-card, 
travel, and financial accounting and reporting services. Also, to 
continue existing agreement with the AO for e-filing system support.
    Funding to be made available for the Pro Bono Representation 
Program.

                        FISCAL YEAR 2012 PROGRAM

    To maintain and enhance the FY 2011 initiatives, the Court's FY 
2012 budget request reflects the following:
    Funding to pay for projected expenses to staff and support the 
operations of the Court to ensure its continued, proper functioning 
throughout the fiscal year, including two new chambers to accommodate 
the two judges authorized by Congress (judges authorized but not yet 
appointed), and three FTE positions first requested for funding in FY 
2011 (budget not yet approved)--a secretary for the senior judges, a 
staff attorney, and a senior attorney (for possible service as an 
appellate commissioner).
    Funding to have the Court's financial statements audited.
    Funding for design and site acquisition toward ultimate 
construction of a veterans courthouse. The FY 2012 request includes 
funding for the next major step in the construction, planning, and 
design process, as opposed to full construction cost funding, and is 
subject to continued congressional and veteran support for a veterans 
courthouse at this time.
    Funding to acquire additional leased space to meet space needs for 
existing staff and two new judicial chambers.
    Funding to continue agreements with the USMS for Court security, 
with the Department of Agriculture's NFC for payroll/personnel 
services, and with BPD for administrative payments, credit-card, 
travel, and financial accounting and reporting services. Also, to 
continue existing agreement with the AO for e-filing system support.
    Funding to be made available for the Pro Bono Representation 
Program.


                                   SUMMARY OF FISCAL YEAR 2012 BUDGET REQUEST
                                         (in thousands of dollars--$000)
            A summary of the FY 2012 funding requirements for conducting the Court's activities follows:
----------------------------------------------------------------------------------------------------------------
                                                              FY 2011
                                                           Appropriation     FY 2012 Estimate        Change
----------------------------------------------------------------------------------------------------------------
FTE Positions                                                         127                127                  0
----------------------------------------------------------------------------------------------------------------
Personnel Compensation and Benefits                               $17,458            $17,863              +$405
----------------------------------------------------------------------------------------------------------------
Other Objects (Operating Expenses)                                 $8,174            $10,208            +$2,034
----------------------------------------------------------------------------------------------------------------
Courthouse                                                        $62,000            $25,000           -$37,000
----------------------------------------------------------------------------------------------------------------
Grants                                                             $2,515             $2,726              +$211
----------------------------------------------------------------------------------------------------------------
Budget Authority/                                                 $90,147            $55,797           -$34,350
  Appropriation
----------------------------------------------------------------------------------------------------------------


    The FY 2012 budget request of $55,796,690 reflects a decrease of 
$34,350,039 from the Court's budget request for FY 2011. This 
significant decrease results primarily from the fact that $62,000,000 
was requested in FY 2011 for construction of a veterans courthouse. 
That request has not been approved, and indications from congressional 
staff are that the project will be funded, if at all, in a piecemeal 
fashion tied to major steps in the construction process. GSA advises 
that $25,000,000 will fund the next major step, which is design 
engineering and site acquisition, and this is the amount reflected in 
our FY 2012 budget request.
    The Court's operating expenses reflect an overall increase of 
$2,033,827, primarily due to the fact that two new chambers for which 
funding was requested and appropriated in 2010 were not built out and 
equipped because the judges were not appointed, and funding for this 
purpose was not requested in our FY 2011 budget request. The FY 2012 
request for personnel compensation and benefits reflects an increase of 
$405,000 over our FY 2011 budget request to accommodate scheduled step 
increases and time-in-grade promotions for current FTE positions. There 
is also a $211,000 increase requested by the Pro Bono Representation 
Program.

                FISCAL YEAR 2012 PROGRAM FUNDING CHANGES
                    (in thousands of dollars--$000)

Personnel Compensation and Benefits:
                                                              +$405

    The overall increase in personnel compensation and benefits 
includes maintaining FTE positions at the FY 2011 level, as well as 
accommodating scheduled step increases and time-in-grade promotions.

All Other Objects (Operating Expenses):
                                                            +$2,034

    The increase in operating expenses is due largely to anticipated 
one-time expenses to build out and equip two new chambers for two 
additional judges authorized and anticipated to be appointed.

Courthouse:
                                                         (-$37,000)

    This significant decrease results primarily from the fact that 
$62,000,000 was requested in FY 2011 for construction of a veterans 
courthouse that has not been approved, with indications from 
congressional staff that the project will be funded, if at all, in a 
piecemeal fashion tied to major steps in the construction process. GSA 
advises that $25,000,000 will fund the next major step, which is design 
engineering and site acquisition.

Grants:
                                                              +$211

    The grantee, Pro Bono Representation Program, explains its request 
in Appendix A.

Total Changes:
                                                           -$34,350

              DETAILS OF FISCAL YEAR 2012 FUNDING CHANGES
                            (in dollars--$0)
    The following information provides details for the funding changes 
from the FY 2011 budget request:

PERSONNEL COMPENSATION & BENEFITS:
                                                          +$405,000

    The overall increase in personnel compensation and benefits 
includes maintaining existing FTE positions as well as accommodating 
possible promotional allowances.

OTHER OBJECTS (OPERATING EXPENSES):
                                                        +$2,033,827

TRAVEL:
                                                           +$55,000

    Budget requests in FY 2010 and FY 2009 have proven to be 
inadequate, but this trend was identified after submission of the FY 
2011 budget. This increase will accommodate ongoing Court travel for 
oral arguments outside of the Washington, D.C. Metropolitan Area.

TRANSPORTATION OF EQUIPMENT:
                                                            +$1,000

    Budget requests in FY 2010 and FY 2009 have proven to be 
inadequate, but this trend was identified after submission of the FY 
2011 budget. This increase will accommodate ongoing Court activities, 
to include transportation of things associated with Court travel as 
well as continue to fund for anticipated additional staff.

RENTAL PAYMENTS TO GSA:
                                                          +$105,000

    This increase is attributed to the estimated rental costs for the 
current space (42,541 sq ft) plus future space (13,000 sq ft). The 
amount is calculated based on information provided by GSA.

RENTAL PAYMENTS TO OTHERS:
                                                            +$3,600

    This increase is attributed to the estimated rental cost for garage 
and storage space.

COMMUNICATIONS, UTILITIES, AND MISCELLANEOUS
CHARGES:
                                                           +$25,000

    This increase is based on increased communications and utilities 
costs experienced over the past 2 years and projected additional costs 
to provide communications and utilities associated with the appointment 
of two additional judges, additional staff, and an increase in future 
leased space of approximately 13,000 sq ft.

PRINTING & REPRODUCTION:
                                                            +$7,000

    Increased to accommodate additional printing costs for a Bench and 
Bar Conference.

ALL OTHER SERVICES:
                                                          +$100,000

    This increase is due to increased cost associated with the USMS 
contract for Court security officers, finance and accounting services, 
guards in the building and garage pursuant to the FPS contract, 
security-system maintenance, and projected cost associated with the 
appointment of two additional judges, additional staff, and an increase 
in future leased space of approximately 13,000 sq ft.

SUPPLIES & MATERIALS:
                                                           +$60,000

    This increase is for the initial set up and supply for two new 
chambers to accommodate two additional judges and the required 
supporting staff.

EQUIPMENT:
                                                          +$625,000

    This increase reflects our scheduled industry standard (3-year) 
replacement program for IT equipment and continued enhancement of 
electronic filing and case management.

CONTRIBUTION TO JUDGES RETIREMENT TRUST FUND:
                                                        +$1,052,227

    This increase reflects the amount required to maintain the 
statutorily required estimate for full funding as of September 30, 
2011, for the retirement fund, as estimated by Actuary's report.

COURTHOUSE:
                                                     (-$37,000,000)

    This significant decrease results primarily from the fact that 
$62,000,000 was requested in FY 2011 for construction of a veterans 
courthouse that has not been approved, with indications from 
congressional staff that the project will be funded, if at all, in a 
piecemeal fashion tied to major steps in the construction process. GSA 
advises that $25,000,000 will fund the next major step, which is design 
engineering and site acquisition.

GRANTS:
                                                          +$211,134

    The grantee, Pro Bono Representation Program, explains its request 
in Appendix A.

       UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS

                          PROGRAM AND FINANCING
                        (in thousands of dollars)
------------------------------------------------------------------------
                                               2011 Budget      2012
                                 2010 Actual     Request      Estimate
------------------------------------------------------------------------
  OBLIGATIONS BY PROGRAM ACTIVITY
------------------------------------------------------------------------
10.00 Total obligations           $25,436.0     $90,147.0     $55,797.0
------------------------------------------------------------------------
  BUDGETARY RESOURCES AVAILABLE FOR OBLIGATION
------------------------------------------------------------------------
21.40 Unobligated balance                        $ --
 available, start of year
------------------------------------------------------------------------
22.0 New budget authority         $27,115.0     $90,147.0     $55,797.0
 (gross)
------------------------------------------------------------------------
22.30 Unobligated balance          $1,679.0      $ --          $ --
 expiring
------------------------------------------------------------------------
23.95 New Obligations             $25,436.0     $90,147.0     $55,797.0
------------------------------------------------------------------------
24.40 Unobligated balance          $ --          $ --          $ --
 available, end of year
------------------------------------------------------------------------
  NEW BUDGET AUTHORITY (GROSS) DETAIL
------------------------------------------------------------------------
40.00 Appropriation               $27,115.0     $90,147.0     $55,797.0
------------------------------------------------------------------------
40.35 Appropriation rescinded      $ --          $ --          $ --
------------------------------------------------------------------------
43.00 Appropriation (total)       $27,115.0     $90,147.0     $55,797.0
------------------------------------------------------------------------
  CHANGE IN UNPAID OBLIGATIONS:
------------------------------------------------------------------------
72.40 Obligated balance, start    $10,796.0     $10,987.1     $11,077.2
 of year
------------------------------------------------------------------------
73.10 New obligations             $25,914.2     $90,147.0     $55,797.0
------------------------------------------------------------------------
73.20 Total outlays (gross)      -$25,712.5    -$90,056.9    -$50,217.3
------------------------------------------------------------------------
74.40 Obligated balance, end      $10,987.1     $11,077.2     $16,656.9
 of year
------------------------------------------------------------------------
  OUTLAYS (GROSS), DETAIL
------------------------------------------------------------------------
86.90 Outlays from new current    $23,313.8     $79,069.8     $39,140.1
 authority
------------------------------------------------------------------------
86.93 Outlays from current         $2,398.8     $10,987.1     $11,077.2
 balances
------------------------------------------------------------------------
87.00 Total Outlays               $25,712.5     $90,056.9     $50,217.3
------------------------------------------------------------------------
  NET BUDGET AUTHORITY AND OUTLAYS
------------------------------------------------------------------------
89.00 Budget authority            $27,115.0     $90,147.0     $55,797.0
------------------------------------------------------------------------
90.00 Outlays                     $25,712.5     $90,056.9     $50,217.3
------------------------------------------------------------------------



                          SALARIES AND EXPENSES
             Object Classification (in thousands of dollars)
------------------------------------------------------------------------
                                               2011 Budget      2012
       Direct Obligation         2010 Actual     Request      Estimate
------------------------------------------------------------------------
11.1 Full-time permanent         $10,386.25    $13,225.00    $13,625.00
------------------------------------------------------------------------
11.5 Other personnel                $284.47       $150.00       $150.00
 compensation
------------------------------------------------------------------------
11.9 Total personnel             $10,670.72    $13,375.00    $13,775.00
 compensation
------------------------------------------------------------------------
12.1 Civilian personnel           $2,853.77     $4,083.00     $4,087.50
 benefits
------------------------------------------------------------------------
13.1 Unemployment compensation
------------------------------------------------------------------------
21.0 Travel and transportation       $99.63        $70.00       $125.00
 of
  persons
------------------------------------------------------------------------
22.0 Transportation of things         $3.40         $3.00         $4.00
------------------------------------------------------------------------
23.1 Rental payments to GSA       $2,100.00     $3,500.00     $3,605.00
------------------------------------------------------------------------
23.2 Rental payments to others      $104.10       $120.00       $123.60
------------------------------------------------------------------------
23.3 Communications,                $149.97       $145.00       $170.00
 utilities, and miscellaneous
 charges
------------------------------------------------------------------------
24.0 Printing and reproduction       $23.35        $13.00        $20.00
------------------------------------------------------------------------
25.2 Other services               $1,577.28     $1,793.00     $1,843.00
------------------------------------------------------------------------
25.3 Purchases of goods and         $757.53       $590.00       $620.00
 services from government
 sources
------------------------------------------------------------------------
25.4 Operation and maintenance       $41.00        $37.00        $45.00
 of facilities
------------------------------------------------------------------------
25.7 Operation and maintenance       $89.50        $80.00        $92.00
 of equipment
------------------------------------------------------------------------
26.0 Supplies and materials         $164.97       $193.00       $253.00
------------------------------------------------------------------------
31.0 Equipment                      $691.99       $325.00       $950.00
------------------------------------------------------------------------
32.0 Land and Structures              $0.00    $62,000.00    $25,000.00
------------------------------------------------------------------------
41.0 Grants, subsidies, and       $1,820.00     $2,515.00     $2,726.36
 contributions
------------------------------------------------------------------------
43.0 Interest                        --            --            --
------------------------------------------------------------------------
94.0 Contributions to Trust       $4,715.37     $1,305.00     $2.357.23
 Fund
------------------------------------------------------------------------
99.0 Total obligations           $25,862.58    $90,147.00    $55,796.69
------------------------------------------------------------------------


JUDGES RETIREMENT FUND
    The Judges Retirement Fund, established under 38 U.S.C. Sec. 7298, 
is used for judges' retired pay and for annuities, refunds, and 
allowances provided to surviving spouses and dependent children. 
Participating judges pay 1 percent of their salaries to cover 
creditable service for retired-pay purposes and 2.2 percent of their 
salaries for survivor-annuity purposes. Additional funds needed to 
cover the unfunded liability may be transferred to this fund from the 
Court's annual appropriation. The Court's contribution to the fund is 
estimated annually by an actuarial firm retained by the Court. The fund 
is invested solely in government securities. The Court paid from fund 
assets one survivor annuitant and six retired judges in FY 2010. In FY 
2011 and FY 2012, the Court anticipates these payments to retired 
judges to increase to seven retirees.

                         JUDGES RETIREMENT FUND
                        (in thousands of dollars)
------------------------------------------------------------------------
    Unavailable Collections                    2011 Budget      2012
           Schedule:             2010 Actual     Request      Estimate
------------------------------------------------------------------------
  Balance, Start of year:
------------------------------------------------------------------------
01.99 Balance, start of year     $19,039.00    $22,727.00    $23,657.00
------------------------------------------------------------------------
  Receipts:
------------------------------------------------------------------------
02.01 Earnings on investment         $52.22       $650.00        $80.00
------------------------------------------------------------------------
02.02 Employer contributions      $4,715.37     $1,530.00     $2,357.00
------------------------------------------------------------------------
02.03 Employee contributions         $47.60        $50.00        $55.00
------------------------------------------------------------------------
02.99 Subtotal, receipts          $4,815.19     $2,230.00     $2,492.00
------------------------------------------------------------------------
04.00 Ofsetting Collectons        $1,124.17    $-1,300.00    $-1,474.00
 (Outlays)
------------------------------------------------------------------------
88.03 Total: Balances and        $22,727.00    $23,657.00    $24,675.00
 collections
------------------------------------------------------------------------
  Appropriations:
------------------------------------------------------------------------
65.99 Judges Retirement and       $1,124.17    $-1,300.00    $-1,474.00
 Survivor Annuity Fund
------------------------------------------------------------------------
88.99 Balance, end of year       $22,727.00    $23,657.00    $24,675.00
------------------------------------------------------------------------


                               APPENDIX A
                THE VETERANS CONSORTIUM PRO BONO PROGRAM
             FY 2012 FUNDING REQUEST, BUDGET AND NARRATIVE

                                Overview

    The Pro Bono Program is requesting an appropriation of new grant 
funds in the amount of $2,726,363 for FY 2012. This request represents 
an increase of $216,133 or 8 percent from the $2,515,229 pending 
authorization for the Program for the current FY 11. The Pro Bono 
Program has recently brought on a new Executive Director and taken 
steps to become a ``stand-alone'' entity. The 8 percent increase is due 
to the need to cover the additional costs associated with this goal.
    The Program's proposed budget for FY 2012 is attached.
SIGNIFICANT PRO BONO PROGRAM, COURT, and BVA STATISTICS:
    The Program sent program information to 2,320 pro se appellants in 
calendar year (CY) 2010, a slight decline over prior years. The Program 
received 671 requests for assistance in 2010. This continues to mirror 
the change in the Court's caseload; historically, the Court has 
received 2,200-2,400 new filings per fiscal year, until FY 2005, when 
the Court's caseload began to rise rather dramatically.
    The Court's Annual Reports (available at www.uscourts.cavc.gov/
documents/
Annual_Report_FY_2009_October_1_2008_to_September_30_2009.pdf) indicate 
that the Court had 4,725 new pro se and represented cases filed in 
2009; 4,128 new cases filed in FY 2008; 4,644 new cases filed in FY 
2007; and 3,729 new cases filed in 2006. Preliminary Court statistics 
for FY 2010 indicate that the number of new cases filed with the Court 
in FY 2010 declined slightly from FY 2009, to 4,340.
    The Program evaluated 669 cases in 2010, a decline over the 849 
cases evaluated in 2009, the 818 cases evaluated in CY 2008 and the 737 
cases evaluated in CY 2007. Of those 669 evaluated cases, 205 cases 
were accepted into the Program, the remainder being rejected for a 
variety of reasons (e.g., financial ineligibility, jurisdictional 
defects, lack of merit, retained own counsel, etc.).
    We note, as we did in our FY 11 budget request, that the Court's 
statistics (reported on a fiscal year basis) show that the percentage 
of appellants unrepresented at the time of filing the appeal remained 
steady at 58-59 percent from FY 2002 through FY 2005. While the 
percentage decreased to 53 percent in FY 2007, it rebounded to 64 
percent in FY 2008 and increased further to 68 percent in FY 2009 (a 
level not seen since FY 2000). However, the pro se percentage declined 
in FY 2010 to 57 percent.
    The Program continues to provide free legal service to a 
significant number of unrepresented veterans with active appeals at the 
Court, as more and more veterans seek judicial review. The number of 
appeals decided by the Board of Veterans' Appeals increases annually, 
with the BVA issuing over 48,800 decisions in 2009 and 43,700 decisions 
in 2008 (see http://www.bva.va.gov/docs/Chairmans_Annual_Rpts/
BVA2009AR.pdf). Preliminary reports from the BVA indicate that the 
Board decided some 49,100 cases in FY 2010, although the percentage of 
denials declined from 36.1 percent in 2009 to 28.1 percent in 2010, 
which necessarily impacts the number of appeals to the Court, and the 
number of appellants seeking Program services.
    However, the number of claims filed by a rapidly growing number of 
returning Iraq and Afghanistan veterans can be expected to continue to 
increase. We believe that the BVA will continue to decide an even 
greater number of appeals and that, in turn, more cases will be filed 
with the Court, and that there will be a resultant increased demand for 
Program services in 2012 and beyond.
    To meet that anticipated demand, we added a full-time 
administrative support person in January, 2009. We are requesting 
continued funding for this administrative support person in FY 2012, 
and continuation of funding for the remainder of the Program staff. In 
addition, the Legal Services Corporation, in a recent review of the 
Program, concurred in the decision of the Board of Directors to hire a 
full-time Executive Director. We are pleased to report that the new 
Executive Director, with an extensive background in nonprofit 
management, joined the program on January 10, 2011.

                                 DETAIL

    Personnel costs--salary and benefits of those individuals 
performing services for the Program that are reimbursed from grant 
funds--account for 57 percent of the proposed FY 12 budget. These costs 
include the time for part-time personnel who staff the Outreach and 
Education Components and the time of the full-time paid personnel who 
staff the Case Evaluation and
                                Table A

                                 PRO BONO PROGRAM PERSONNEL AND FTE DISTRIBUTION
----------------------------------------------------------------------------------------------------------------
                                                          Total Number                Total Number
                                                          of Personnel                of Personnel  Total FTE to
                                                            Providing     Total FTE     Providing        be
                        Component                          Services to   Authorized    Services to   Authorized
                                                           the Program  by the Grant  the  Program  by the Grant
                                                              FY 11         FY 11         FY 12         FY 12

----------------------------------------------------------------------------------------------------------------
Outreach                                                            6          0.25             6          0.25
----------------------------------------------------------------------------------------------------------------
Education                                                          13          0.92            13          0.92
----------------------------------------------------------------------------------------------------------------
Case Evaluation and Placement                                      11            11            11            11
----------------------------------------------------------------------------------------------------------------
Direct Representation                                               1             1             1             1
----------------------------------------------------------------------------------------------------------------
Administration                                                      3             3             3             3
----------------------------------------------------------------------------------------------------------------
Total                                                              34         16.17            34         16.17
----------------------------------------------------------------------------------------------------------------


    Placement Component along with the three new additional personnel 
required to move the Pro Bono Program to a stand-alone entity. Staff 
who are reimbursed from grant funds for all or a portion of their 
salary and benefits are currently employees of either the National 
Veterans Legal Services Program (NVLSP) or the Paralyzed Veterans of 
America (PVA). It is anticipated that by the end of 2011, all of these 
personnel will be employees of the stand-alone entity.
    Table A above shows in summary form the number of persons providing 
services for each component, and the number of Full Time Equivalent 
(FTE) positions to be paid out of grant funds in FY 11 and FY 12.
    A detailed breakdown by Component follows.

I. Case Evaluation and Placement Component
                                                         $1,698,330

    The FY 12 funding request reflects a $168,132 (10.99 percent) 
increase over the FY 11 budget for the Case Evaluation and Placement. 
Personnel cost increased by $56,361 and non-personnel cost increased by 
$111,771 for this Component.

    A.  Personnel

    There are three categories of personnel staffing this component--
attorneys, non-attorney veterans law specialists, and other.
    Three attorneys--the Director, the Deputy Director for Case 
Evaluation and the Deputy Director for Placement--function full time. 
Their personnel costs are currently fully reimbursed by the Program--
one position to PVA and two positions to NVLSP. The attorneys are 
reimbursed from grant funds, in both FY 11 and FY 12. It is anticipated 
that all of these individuals will become full time employees by FY 12.
    Veterans law specialists review the VA claims file and BVA decision 
in each case to determine whether the case presents an issue that 
justifies referral to a lawyer. Veterans law specialists are among the 
most experienced non-lawyer personnel in the veterans-law field. The 
Program requests funding for four full time veterans law specialists in 
FY 12, the same number as in FY 11. It is anticipated that all of these 
individuals will also become full time employees by FY 12.
    We request funding for four full time administrative support staff. 
All are currently employees of NVLSP, and are all reimbursed out of 
Program funds. The other components in this increase represent the 
combination of a modest cost of living and merit raises.
    The level of salaries and benefits paid by the Program for 
personnel provided on a reimbursable basis is governed by the personnel 
policies of the constituent organizations of which they are employees--
i.e., NVLSP and PVA--and to which they may return in the event of 
termination of the Program or rotation of personnel by the 
organizations involved. Typically, the Program budgets a 5 percent 
increase in salary and benefits--3 percent for cost-of-living 
increases, and 2 percent for merit increases. The budget for FY 12 
follows this formula. Such increases are reflected in the personnel 
costs of all four Components of the Program in the FY 12 budget.

    B.  Space-Rent

    The largest single increase in the requested budget for FY 12 is 
associated with space-rental costs. The Program's current space lease 
will expire in November, 2012. Consequently, during FY 12, the Program 
will be entering into a new lease. It is expected that the Program will 
incur higher rental costs and moving costs related to the anticipated 
move. The FY 12 funding request reflects an $82,208 (33.39 percent) 
increase over the FY 11 budget for this line item.

    C.  Equipment Rental and Maintenance

    The increase of $903 from FY 11 provides for a 5 percent rate 
adjustment for the maintenance contracts/service agreements on office 
equipment and telephone system.

    D.  Office Supplies & Expense

    The increase of $12,122 over the amount budgeted for FY 11 reflects 
the increased cost for office supplies and the use of Priority Mail to 
expedite delivery of Program materials to an increased number of pro se 
appellants. Furthermore, due to the Court's change in the manner in 
which the cases are referred to the Pro Bono Program, i.e., from hard 
copy to electronically, the copying costs have risen significantly. 
This increase represents a 17.32 percent rise over the prior year.

    E.  Telephone

    The increase of $540 over the amount budgeted for FY 11 provides 
for a 5 percent rate increase.

    F.  Travel/Continuing Legal Education

    The increase of $1,060 provides for a 5 percent increase over FY 
11.

    G.  Library

    The increase of $381 over the amount budgeted for FY 11 provides 
for a 5 percent rate increase.

    H.  Insurance

    The increase of $5,344 over the amount budgeted for FY 11 
represents a 77.67 percent increase that is due to the Pro Bono Program 
having to acquire its own insurance. In prior years, the Pro Bono 
Program was able to rely on the NVLSP for insurance coverage. By moving 
to a stand alone entity, the Pro Bono Program's insurance costs have 
significantly increased.

    I.  Dues and Fees

    There is a significant increase in expected costs associated with 
Dues and Fees over the prior year. The increase of $3,090 represents a 
166.51 percent rise over FY 11 due, in large part, to costs related to 
becoming a stand alone entity.

    J.  Audit

    The increase of $1,050 over the amount budgeted for FY 11 provides 
for a 5 percent rate increase.

    K.  Property Acquisition

    The increase of $525 over the amount budgeted for FY 11 provides 
for a 5 percent rate increase.

    L.  Contract Services

    The increase of $20,277 over the amount budgeted for FY 11 provides 
for a 5 percent rate increase in expected Contract Services.

    M.  Expense for Administration

    The increase of $2,100 allows for a 5 percent rate increase for the 
cost of grant administration, which now must be procured from a third 
party, since NVLSP will no longer supply it at a reduced fee.

II. Direct Representation Component
                                                           $131,250

    Some cases require immediate attention by a lawyer experienced in 
veterans law. Previously, PVA committed to accepting 20 such cases and 
charging the Pro Bono Program just 75 percent of PVA's out-of-pocket 
costs, the remaining 25 percent being donated by PVA. It is unclear 
whether, when the Pro Bono Program becomes a stand-alone entity, these 
services will remain available at a discounted rate. Consequently, the 
FY 12 budget provides for the hiring of a full-time attorney to handle 
these cases and other items that may arise during the course of the 
year.

III. Outreach Component
                                                            $74,579

    The Outreach Component is provided on a fixed price contract by the 
NVLSP. Overall, the FY 12 budget calls for a $3,551 increase from the 
FY 11, a 5 percent increase. In addition to the prior outreach 
services, this budget component also provides for Web site maintenance 
and an annual report and brochure.

IV. Education Component
                                                           $300,828

    The proposed FY 12 budget for the Education Component reflects an 
increase of $14,325 (5 percent) over the budget for FY 11. Like the 
Outreach Component, for FY 12, these services are being provided by the 
NVLSP at a fixed price. Included in this budget component are the costs 
of volunteer reference materials of approximately $105,000.

V. Executive Administration
                                                           $501,375

    In accordance with certain suggestions made by the Legal Services 
Corporation in its 2009 Program Quality Report assessing the Pro Bono 
Program, the Program is in the process of becoming a ``stand-alone'' 
entity such that it will no longer be able to rely upon component 
veterans service organizations (The American Legion, Disabled American 
Veterans, National Veterans Legal Services Program and Paralyzed 
Veterans of America) for certain administrative and other assistance. 
The amount budgeted for FY 12 represents a 5 percent increase over FY 
11, specifically $23,875.

VI. TOTAL BUDGET REQUESTED




Case Evaluation and Placement Component                      $1,698,330

Direct Representation Component                                $131,250

Outreach Component                                              $74,579

Education Component                                            $300,828

Executive Administration                                       $501,375


  LSC Oversight                                                 $20,000


  LESS: ANTICIPATED FY 11 CARRYOVER                                ($0)




                                 
                      Pre-Hearing Budget Questions
                  The Honorable Jeff Miller, Chairman
U.S. Department of Veterans Affairs Budget Request for Fiscal Year 2012
                           February 17, 2011

General Questions
    Question 1: The President's National Commission on Fiscal 
Responsibility and Reform issued its report in December 2010. In 
discussing possible solutions to our country's fiscal crisis the report 
highlighted that ``everything must be on the table,'' to include the 
elimination of redundant, wasteful, and ineffective spending that may 
exist within every Federal agency.

    Question 1(a): To what extent has VA undertaken a comprehensive 
effort to identify and eliminate redundant, wasteful, and ineffective 
spending consistent with the Commission report's mandate? If VA has not 
yet done so, will it?

    Response: VA has conducted a review of the efficiencies to be 
gained, and the savings to be achieved within the agency. These 
improvements are estimated to total $745 million in FY 2011. Similar 
improvements are included in VA's budget request for 2012 at estimated 
savings of $1.2 billion.
    The VA is firmly committed to increasing the value of every dollar 
entrusted by the Congress and the American taxpayer to this Department 
for the delivery of benefits and services to Veterans, their families 
and survivors. For example, in 2011, we are implementing several 
operational improvements in our medical care programs that will save 
money while improving the quality of health care. These include:

      Reducing indirect costs by adopting uniform standards for 
administrative and support services;
      Reducing the costs of non-VA provided dialysis by 
implementing Medicare's standard payment rates;
      Reducing acquisition costs by consolidating contracting 
requirements, adopting strategic sourcing and other initiatives;
      Reducing improper payments and improving operational 
efficiencies in the administration of the medical fee program; and
      Reducing payroll costs by increasing capabilities and 
productivity of health care professionals through more appropriate 
alignment of the mix of physician and nursing staff, and other non-
physician providers, to meet patient demand.

    In developing the 2012 budget, we also carefully reviewed 
requirements in our non-medical programs. As a result, we will reduce 
spending by $1.1 billion below current 2011 estimates in several 
program areas. For example, by prioritizing our most critical safety 
and security capital infrastructure needs, funding for major and minor 
construction will be reduced. Investments in information technology 
will begin to pay dividends as deployment of the Veterans Benefits 
Management System (VBMS) begins in 2012, allowing for increased 
productivity and reduced operating costs in processing disability 
compensation claims in the Veterans Benefits Administration. In 
addition, we are adopting new acquisition strategies to make more 
effective use of our information technology resources, including 
consolidating requirements into 15 prime contracts that will allow VA 
to leverage economies of scale and reduce IT spending.
    VA has also instituted a number of innovative practices to improve 
our energy efficiency and make more effective use of our resources. For 
example, the National Cemetery Administration (NCA) has implemented 
creative approaches to cemetery operations: the use of pre-placed 
crypts, that preserve land and reduce operating costs; application of 
``water-wise'' landscaping that conserves water and other resources; 
and installation of alternative energy products such as windmills and 
solar panels that supply power for facilities. NCA has also utilized 
biobased fuels that are homegrown and less damaging to the environment. 
NCA is developing an independent study of emerging burial practices 
throughout the world to inform its planning for the future.
    In the past 2 years, we have established and created management 
systems, disciplines, processes, and initiatives that help us eliminate 
waste. Financial and performance metrics provide the foundation for 
monthly performance reviews that are chaired by the Deputy Secretary. 
These monthly meetings play a vital role in monitoring performance 
throughout the Department, and are designed to ensure both operational 
efficiency and the achievement of key performance targets. In addition, 
a new budget review cycle was established to further strengthen 
stewardship of our financial resources. This cycle has three 
components: pre-year review; mid-year review; and post-year review. The 
Secretary chairs meetings in each review cycle to assess budget and 
operational efficiency and effectiveness.
    We also demonstrated our ongoing commitment to effective 
stewardship of our financial resources by obtaining our 12th 
consecutive unqualified (clean) audit opinion on VA's consolidated 
financial statements. In 2010, we were successful in remediating 3 of 4 
longstanding material weaknesses, a 75 percent reduction in just 1 
year.

    Question 1(b): What barriers exist, legal or otherwise, to 
eliminate any such wasteful spending?

    Response: We have not identified any legal barriers to date. 
However, VA's authority to enter into private/public ventures to make 
better use of underutilized space and land through enhanced use leasing 
is scheduled to lapse at the end of calendar year 2011. The 
Administration remains committed to this important program, and a 
proposal to address the expiration will accompany the Department's 
legislative package through the President's program.

    Question 2: The President's Commission highlighted the fact that 
Federal travel, printing, and vehicle budgets have ballooned in recent 
years and recommended these areas for fiscal restraint.

    Question 2(a): Please outline for me VA-wide spending in each of 
these categories for each of fiscal years 2009, 2010, the current 
estimate for FY 2011, and what is proposed for FY 2012.

    Response: VA medical personnel require frequent training to 
maintain clinical skills and medical knowledge. Similarly benefits 
raters require training to implement programs. Please see the table 
below:


                                         Department of Veterans Affairs
                                 Employee, Travel, Printing, and Fleet Services
                                                 ($ in millions)
----------------------------------------------------------------------------------------------------------------
                      Appropriated                            2009          2010          2011          2012
----------------------------------------------------------------------------------------------------------------
Employee Travel                                                   193           228           259           252
----------------------------------------------------------------------------------------------------------------
Printing                                                           27            40            46            56
----------------------------------------------------------------------------------------------------------------
Fleet Vehicles                                                     69            73            80            86
----------------------------------------------------------------------------------------------------------------
Total                                                            $289          $341          $385          $394
----------------------------------------------------------------------------------------------------------------


    Question 2(b): What is your assessment regarding the Commission's 
recommendation in this area and its potential applicability to VA?

    Response: The Commission made the following observations:

    ``1.10.5 Reduce Federal travel, printing, and vehicle budgets. 
Despite advances in technology, Federal travel costs have ballooned in 
recent years, growing 56 percent between 2001 and 2006 alone. 
Government fleets, meanwhile, have grown by 20,000 over the last 4 
years. Printing costs are still higher than necessary despite 
technological advancement. We propose prohibiting each agency from 
spending more than 80 percent of its FY 2010 travel budget and 
requiring them to do more through teleconferencing and telecommuting. 
We also recommend a 20 percent reduction in the nearly $4 billion 
annual Federal vehicle budget, excluding the Department of Defense and 
the Postal Service. Additionally, we recommend allowing certain 
documents to be released in electronic-only form, and capping total 
government printing expenditures. This proposal will save $1.1 billion 
in 2015.''
    For VA, the key driver to savings in this area lies in government 
travel, which dwarfs the costs of government printing and fleet 
vehicles. In this important area, VA's 2012 budget proposes a reduction 
of $6M from the current estimate for 2011, which is a reduction of 2.3 
percent. VA believes that these costs should be taken in context with 
the growth in complexity of the Department's mission and our 
initiatives to increase access to health care to Veterans residing in 
rural areas. In addition, travel costs have increased with the hiring 
and training of new staff, including additional disability claims 
processors.

    Question 3: VA's budget request for fiscal year 2011 did not assume 
any unobligated balance, i.e., carryover, would be available from funds 
appropriated for fiscal year 2010. However, VA's Quarterly Status 
Report for the fourth quarter of fiscal year 2010 suggests an end-of-
year unobligated balance for VA medical care accounts in excess of $1.5 
B and additional unobligated balances in other accounts.

    Question 3(a): What is VA's plan for this unanticipated carryover 
of funds?

    Response: VA will use all of the carryover funds, from FY 2010 in 
FY 2011, to meet Veterans' health care needs.


                  Veterans Health Administration Unobligated Balances as of September 30, 2010
                                  That Are Available for Obligation in FY 2011
----------------------------------------------------------------------------------------------------------------
                                                                                                  Unobligated
       Fund  Account Number                             Fund Description                            Balance
----------------------------------------------------------------------------------------------------------------
   0152                                                        Medical Support & Compliance        $132 million
----------------------------------------------------------------------------------------------------------------
 $48 million will be used to pay for supplies, equipment and contracts to provide health care services
 to veterans at VA medical centers.

 $39 million will fund initiatives to expand access to and enhance health care services for rural
 veterans

 $32 million will be used to fund initiatives including enhanced teleradiology capabilities, recruiting
 initiatives for scarce clinical specialists, training for clinical staff, and enhancements to the disability
 rating process for veterans.

 $7 million was specifically designated by Congress for prosthetics for veterans that will be used for
 that purpose in FY 2011.

 $6 million was specifically designated by Congress for pandemic influenza.
----------------------------------------------------------------------------------------------------------------
   0160                                                                    Medical Services      $1,208 million
----------------------------------------------------------------------------------------------------------------
 $700 million will be used to pay for supplies, equipment and contracts to provide health care to
 Veterans at VA medical centers.

 $289 million will be used to fund activation costs of 55 major construction and lease projects
 providing new or enhanced VA health care facilities, including the cost of initial outfitting of each facility
 with equipment and supplies, as well as the cost of new workload associated with those new facilities that will
 begin to provide health care to Veterans during FY 2011.

 $105 million will be used to implement provisions of Public Law 111-163, the Caregivers and Veterans
 Omnibus Health Services Act of 2010.

 $30 million will fund the Homeless Veterans Supported Employment Program.

 $24 million will fund pilot projects to provide dialysis care for Veterans and to enhance the process
 by which Veterans receive disability ratings.

 $24 million will fund initiatives for recruitment and training of scarce clinical specialties.

 $13 million will be used in FY 2011 for polytrauma centers to treat severely wounded and injured
 Veterans, as specifically designated by Congress.

 $10 million will fund enhanced operations at the National Center for Post-Traumatic Stress Disorder.

 $7 million was specifically designated by Congress for pandemic influenza prevention, treatment and
 staff protection at VA medical centers and will be used for that purpose in FY 2011.

 $6 million will fund the DoD-VA Eye Center of Excellence.
----------------------------------------------------------------------------------------------------------------
   0161                                                       Medical & Prosthetic Research        $106 million
----------------------------------------------------------------------------------------------------------------
These funds will be used for ongoing and new resesarch projects.
----------------------------------------------------------------------------------------------------------------
   0162                                                                  Medical Facilities        $109 million
----------------------------------------------------------------------------------------------------------------
 $103 million will be used to fund activation costs of 55 major construction and lease projects
 providing new or enhanced VA health care facilities, including the cost of initial outfitting of each facility
 with equipment and supplies.

 $3 million was specifically designated by Congress for polytrauma centers to treat severely wounded and
 injured Veterans and will be used for that purpose in FY 2011.

 $2 million is energy rebate collections that will be used to fund FY 2011 energy costs.

 $1 million was specifically designated by Congress for pandemic influenza prevention, treatment and
 staff protection at VA medical centers and will be used for that purpose in FY 2011.
----------------------------------------------------------------------------------------------------------------
              Total                                                                              $1,555 million
----------------------------------------------------------------------------------------------------------------
              Obligated as of January 31, 2011                                                     $660 million
----------------------------------------------------------------------------------------------------------------


    Question 3(b): In fiscal year 2010 VA used carryover funds from FY 
2009 to begin new Information Technology initiatives and create new 
staff positions within the Office of the Secretary, initiatives and 
positions that were never justified in the FY 2010 budget submission. 
Has VA used any carryover funds from FY 2010 to begin initiatives, 
increase staff, or establish new offices that were never justified in 
the FY 2011 budget request? Does it plan to do so?

    Response: The Department has used Information Technology carryover 
in implementing a new approach to managing the Department's IT 
investments in FY 2011 within the authorities previously provided. That 
new approach, the Project Management Accountability System (PMAS) is 
documented in detail in the Volume 2 of the FY 2012 President's Budget 
submission for the Department. The limited carryover available in the 
General Administration account has not been used to begin new 
initiatives, increase staff or establish new offices that were not 
included in the FY 2011 budget and there are no current plans to do so.

    Question 4: In a July 30, 2011, letter to Congress, Secretary 
Shinseki stated that there currently is no authority to carry over 
unobligated balances made available in the FY 2011 advance 
appropriation and ``[a]s a result, VA will be unable to use carryover 
funds in this manner in future years unless Congress extends carryover 
authority.''

    Question 4(a): Will the Department seek such carry over authority 
and, if so, how does this reconcile with VA's FY 2011 budget submission 
which assumed no unobligated carryover balances from fiscal year 2011?

    Response: The legislative language to authorize this carryover was 
included in the 2011 President's budget that was submitted in February 
2010, in sections 226, 227 and 228 of the Administrative Provisions. VA 
strongly recommends that Congress provide this authority in final 
appropriations action for FY 2011. The ability to carryover funding 
from 2011 into 2012 is a key building block of VA's 2012 budget. 
Without the authority for carryover funding at the end of 2011, 
increased appropriations would be required in the carryover amount over 
the 2012 budget request to meet the health care needs of Veterans.

    Question 5: Public Law 111-322 included a 2-year freeze on Federal 
employee pay through December 31, 2012.

    Question 5(a): What impact, if any, does this Federal pay freeze 
have on the Department of Veterans Affairs employees? Specifically, 
does this prohibit VA from implementing regularly scheduled step 
increases, bonuses, pay authorities for Veterans Health Administration 
physicians and dentists as provided for under Public Law 108-445 or 
other title 38 hybrid occupations?

    Response: The Federal pay freeze has an impact on all Department of 
Veterans Affairs (VA) employees, including Veterans Health 
Administration (VHA) physicians and dentists and other employees in 
health care occupations who are normally entitled to statutory and 
administrative adjustments.

    In accordance with the Office of Personnel Management's guidance 
regarding the pay freeze, VA will forgo general increases to all pay 
systems and pay schedules covered by title 38 whenever possible. 
However, we will authorize such administrative increases if 
extraordinary circumstances exist that compromise patient care. 
Consistent with the spirit of the President's memorandum regarding the 
pay freeze, management officials will make any such adjustments in a 
prudent and strategic manner.
    During the pay freeze, VHA physicians and dentists will continue to 
receive regular step increases based on longevity. Additionally, 
adjustments to market pay for individual physicians and dentists are 
not prohibited by the pay freeze, and may be used in a strategic effort 
to meet the recruitment and retention needs for a specialty or 
assignment of a physician or dentist at a VA facility. Physicians and 
dentists will also remain eligible to receive performance pay and 
special contribution awards during the pay freeze.
    The pay freeze does not prohibit employees from receiving regularly 
scheduled step increases or bonuses. In regard to the VHA Physician and 
Dentist pay system, authorized by Public Law 108-445, the pay freeze 
did not affect employees from receiving scheduled increases on the Base 
and Longevity Pay Scale nor the receipt of Performance Pay, which is 
paid in a lump sum payment after the end of the fiscal year through the 
attainment of established goals.
    Overall, the pay freeze may have an impact on retention for 
critical health care occupations or information technology positions 
that are in high demand in the private sector; however, having the 
ability to provide incentive pay and awards during the pay freeze will 
help in our efforts to retain high quality employees.

    Question 5(b): What is the financial impact of the pay freeze and 
what is VA's plan for the excess appropriation?

    Response: The 2011 advance appropriation for VA medical care 
included $213 million for the employee pay raise. VA plans to carry 
over this funding into 2012 to meet increased patient demand in our 
health care system. All other programs are operating under the funding 
provided by the current continuing resolution.

    Question 6: VA frequently conducts national training and 
educational conferences for its employees at various locations 
throughout the country.

    Question 6(a): For both the current fiscal year and fiscal year 
2012, how much money is budgeted for such national conferences?

    Response: $20,018,644 for FY 2011 and $22,020,508 for FY 2012.

    Question 6(b): Does VA have a policy on the maximum per night cost 
for lodging and daily per diem payments when choosing conference 
locations?

    Response: VA ensures that when selecting venues we are in 
compliance with the published FY 2011 GSA per diem rates that define 
the maximum for lodging and per diem.

    Question 6(c): If so, what are those maximums and if not, why has 
VA not adopted such a policy in light of the current fiscal and 
economic climate?

    Response: Maximum rates vary by locality and must comply with GSA 
schedule. Venues are selected based on compliance with GSA published 
per diem rates; we often rule some cities/venues out of contention 
based on ``price unreasonableness'' IAW FAR 14.408-2 and 15-404-1(b). 
In doing so, the contracting officer performs a price analysis before 
evaluating the venues. If a venue is not ``price reasonable'', it is 
automatically eliminated and is no longer considered for evaluation. If 
a venue is determined price reasonable, then it is evaluated based on 
``best value.''

    Question 7: Both VA and DoD operate overlapping programs and 
systems of benefits and care that have as their goal improving the 
lives of Servicemembers, veterans, and their families. Although much 
improvement has been made in this area, more can be done.

    Question 7(a): How can both entities better partner on issues of 
relevance to both organizations in a manner that reflects better 
accountability and fiscal responsibility?

    Response: The VA/DoD Joint Executive Council (JEC) was established 
by Congress in 2003 and provides opportunities for improved 
collaboration and coordination between the two Departments. The JEC has 
served as a mechanism for identifying policies, procedures, and 
practices that would promote the sharing or exchange of services and 
resources between VA and DoD. The JEC consists of separate Health and 
Benefits Councils with nineteen working groups focusing on finding 
better ways to partner on a wide range of health and benefits related 
issues. Two specific examples of JEC initiatives in FY 2010 designed to 
increase fiscal responsibility were:

      VA and DoD expanded the capabilities of the Medical 
Surgical Product Data Bank (MEDPDB) which provides VA and DoD the 
unique ability to analyze spending, resource and standardize products, 
and determine best prices from a single system, resulting in a cost 
avoidance of over $13.2 million dollars in FY 2010.
      There were 98 VA and DoD pharmaceutical contracts and 
agreements that resulted in more than a $500 million in cost avoidance.

    Additionally, the VA and DoD Deputy Secretaries chair monthly 
meetings of the Wounded, Ill, and Injured (WII) Senior Oversight 
Committee (SOC). The SOC was created to coordinate policies to improve 
the medical care, disability processing, and transition activities to 
the Department of Veterans Affairs for all military personnel, but 
particularly to improve the support of injured Servicemember's 
recovery, rehabilitation, and reintegration.
Health Care
    Question 8: The Department recently announced the establishment of 
two new offices: The Office of Patient Centered Care and Cultural 
Transformation; and the Office of Tribal Government Relations.

    Question 8(a): Given the state of the U.S. economy, what, if any, 
cost analysis did VA employ to determine the cost of operating these 
separate and distinct offices and the reason the stated 
responsibilities could not be assumed under current Veterans Health 
Administration business lines which have received substantial budget 
increases to improve outreach and coordination and quality of care? If 
such an analysis was done, please provide it.

    Response: The Patient Centered Care effort is one of many 
transformation initiatives in the Department's Strategic Plan. These 
major initiatives are designed to improve the value of VA health care--
safety, quality, efficiency, and the experience patients and their 
families have when they obtain VA health care services. The new Office 
of Patient Centered Care (PCC) consists of 10 employees, including its 
Director, and has an operating budget of $1.676 million for its first 
year. The Office is responsible for VA's effort to transform our 
clinical and business processes to be more Veteran-centric. This 
fundamental change in our systems will allow VA to engage patients and 
their families in mutually beneficial and respectful health care 
partnerships that improve health outcomes and patient satisfaction. 
They will be working directly with Network and Medical Center 
leadership to bring about these changes.
    VA attempted a cost benefit analysis before undertaking the PCC 
initiative. A literature review indicated many private sector 
organizations with similar patient care principles have realized 
economic returns on that investment. Patient-centered care approaches 
are rapidly becoming the norm in private health care. The Joint 
Commission has recently published proposed standards that will be 
incorporated into their accreditation requirements. Recognizing the 
evolving industry standards and the needs of Veterans, VA took this 
initiative to craft standards and programs that are best aligned with 
our very unique mission and patient population. We expect that many of 
the necessary changes can easily be accomplished within existing 
resources and will improve patient satisfaction and quality outcomes.
    The new PCC office will be responsible for developing, evaluating, 
and implementing broad strategies to change current practices and 
organizational culture consistent with our patient centered care goals. 
They will have a major role in ensuring that all these efforts are 
integrated and aligned with operational plans. Consequently, this new 
Office was created under the Deputy Under Secretary for Health for 
Operations and Management. This placement is consistent with the 
philosophy and intent of the Under Secretary for Health's plans for the 
realignment of VHA Central Office to create a more effective and 
efficient organizational structure.
    American Indians and Alaska Natives are one of the highest per 
capita populations of Veterans in any ethnic group but are among the 
least likely to access VA services and benefits. The Federal Government 
has a unique relationship with Indian tribes derived from the 
Constitution of the United States, treaties, Supreme Court doctrine, 
and Federal statutes. It is deeply rooted in American history, dating 
back to the earliest contact in which colonial governments addressed 
Indian tribes as sovereign Nations. The Department of Veterans Affairs, 
as a Federal agency, recognizes the government-to-government 
relationship between the United States and Federally recognized Indian 
tribes and acknowledges Indian tribes as sovereign Nations with 
inherent powers of self-governance. This relationship has been defined 
and clarified over time in legislation, Executive Orders, Presidential 
directives, and by the Supreme Court. The determination was made that 
as the Office of Public and Intergovernmental Affairs, within VA, is 
responsible for VA's partnerships with State, county, municipal 
governments that it should also be home to the office responsible for 
partnerships with Federally recognized tribal governments (OTGR). These 
partnerships address not only issues related to health care, but the 
full spectrum of services and resources offered by VA including 
Veterans Benefits Administration and the National Cemetery 
Administration.

    Question 6(b): Who do the new Directors of these offices report to 
and how many new offices, such as these, does VA plan to establish this 
year?

    Response: The new Director of PCC reports to the Deputy Under 
Secretary for Health for Operations and Management. Presently, under 
the Veterans Health Administration's (VHA) new T21 Major Initiatives, 
there are no plans to open any new offices such as PCC.
    The new Director of the Office of Tribal Government Relations 
reports to the Assistant Secretary for Public and Intergovernmental 
Affairs.

    Question 6(c): Please provide the Committee with a detailed 
description of all Department of Veterans Affairs, and in particular, 
Veterans Health Administration, office operations that are leased or 
shared in and around the Washington, D.C. area.

    Response: Below is a list of office operations that are leased or 
shared in and around the Washington, DC area:

    VACO--810 Vermont Ave., NW
    NWLAF Bldg.--811 Vermont Ave., NW
    TechWorld--801 I Street, NW
    1800 G Street, NW
    Indiana Plaza--625 Indiana Ave., NW
    Landover Warehouse--7100 Old Landover Rd.
    1575 I Street, NW
    1722 I Street, NW
    1717 H Street, NW
    1990 K Street, NW
    7th and D Sts., SW
    131 M St., NE

    Question 9: In a July 30, 2011, letter to Congress, Secretary 
Shinseki stated that VA expected new funding requirements as a result 
of passage of Public Law 111-148, the Patient Protection and Affordable 
Care Act (PPACA).

    Question 9(a): What additional costs does VA expect for fiscal year 
2012 as a result of the PPACA?

    Response: The Indian Health Service (IHS) is initiating 
implementation of sections 2901(b) and 10221 of the Patient Protection 
and Affordable Care Act (Public Law 111-148). Section 2901(b) 
establishes IHS, Indian tribes, tribal organizations, and Urban Indian 
organizations as the payer of last resort for services provided by such 
entities to eligible individuals (25 U.S.C. 1623(b)). Section 10221 
includes two provisions relating to Veterans and VA; the first relating 
to sharing arrangements between IHS, Indian tribes and tribal 
organizations and VA and the Department of Defense (DoD) (25 U.S. C. 
1645) and the second pertaining to ``eligible Indian Veterans'' (25 
U.S.C. 1647). The estimated cost in 2012 is $52 million.

    Question 10: The statutory deadline for full implementation of the 
family caregiver program mandated by the Caregivers and Veterans 
Omnibus Health Services Act of 2010 (Public Law 111-163) was January 
30, 2011. However, not only is the program not implemented yet, no 
initial plan for the new program was submitted on November 1, 2010, 
also a statutory mandate.

    Question 10(a): What is the delay attributable to?

    Response: Drafting and policy discussions related to this 
unprecedented legislation, which directs the payment of a stipend 
directly to caregivers, has caused the VA to miss the mandated 
submission date. VA's planning and work on regulations has been ongoing 
since before the Caregivers and Veterans Omnibus Health Services Act of 
2010 was signed into law. This work has continued throughout the time 
the implementation plan was under development.
    The Implementation Plan was provided to Congress on February 9, 
2011 and can be accessed at http://www.caregiver.va.gov/docs/
Caregivers_part1.pdf.
    The requirements of this legislation will take time to implement. 
Important requirements include determining eligibility, designating and 
approving primary and additional family caregivers, and providing 
stipends and health care coverage to primary family caregivers. VA must 
draft regulations defining specified benefits, and this process will 
provide Veterans and their caregivers an opportunity to provide 
comments before those regulations are finalized. VA advised Committee 
staff during the consideration of the bill of its concerns with the 
proposed effective date, based on the mandatory periods involved in 
drafting regulations and submitting them for public comment. VA is 
working as quickly and responsibly as possible to deliver these 
enhanced benefits to eligible Veterans and their caregivers and will 
keep the Committee closely apprised of its progress.
    Not all of the benefits in the law are complex. New benefits will 
be phased in with many enhanced support, training and counseling 
services already available. The new Caregiver Support Line (1-855-260-
3274) and other support, training, and counseling services are 
available to all caregivers of Veterans. As of February 11, 2011, the 
Caregiver Support Line has already received well over 1,000 calls since 
it launched on February 1, 2011. Each VA medical center has designated 
caregiver support coordinators who will assist eligible Veterans and 
caregivers in understanding and applying for the new benefits, as well 
as accessing other existing support services. VA also has a Caregiver 
Support Web site, www.caregiver.va.gov, which will provide general 
information once final regulations are published.

    Question 10(b): What funding in fiscal year 2011 has VA set aside 
for the caregiver program and what funding proposed for fiscal year 
2012 will be devoted to it?

    Response: VA has set aside $132 million in 2011 and $208 million in 
2012 for implementation of all sections of the Caregivers and Veterans 
Omnibus Health Services Act of 2010 (Public Law 111-163); of these 
amounts, $30 million in 2011 and $66 million in 2012 are for 
implementation of the enhanced programs for caregivers found in 
Sections 101-104 of that law.

    Question 11: As you know VA has a substantial backlog of pending 
projects designed to ensure that health care delivery is rendered in a 
modern setting. Among the options VA has to consider to achieve its 
goal of providing 21st century health care in modern, state-of-the-art 
facilities is to (1) renovate existing facilities; (2) build new 
facilities; (3) lease new facilities; (4) contract for care or (5) some 
combination of some or all of the above.

    Question 11(a): What cost-benefit analysis does VA conduct before 
making decisions on how best to deliver modern health care to veterans.

    Response: All capital (major, minor, non-recurring maintenance and 
leases) business case applications are reviewed and prioritized by a 
Department-wide Strategic Capital Investment Planning (SCIP) Board and 
approved through the VA governance process. VA Policy, the Capital 
Programming Guide in OMB Circular A-11, and OMB Circular A-94 all 
require a cost benefit or cost effectiveness analysis be completed. The 
VA SCIP process utilizes a cost-effectiveness analysis (CEA) that 
provides a life cycle cost comparison of alternatives including: Build, 
renovate, lease, and contract out for services. A detailed cost 
effectiveness analysis must be completed for each capital solution 
included in the OMB exhibit 300 business case. For SCIP projects, the 
benefits of each are provided in the business case justification and by 
the project's impact on closing specific gaps in access, space, 
utilization, safety and security.VA capital projects are required to 
complete business cases for capital projects which include alternatives 
analysis and a comparison of the net present value (NPV) of up to four 
options: status quo; construct new/renovate; lease space; and contract 
out services where appropriate.
    Please outline the methodology VA uses to determine whether one 
approach should be advanced over another.

    Response: The first step in deciding which capital solution should 
be chosen is to establish the type and level of the health care 
services needed and their appropriate location(s). VA's Health Care 
Planning Model provides data on the projected Veteran population, 
demographics, utilization, and access that assist in this 
determination.
    The second step is to determine the best solution to meet the need 
(including SCIP identified infrastructure gaps) to provide that care--
with a new facility, leased facility, renovated facility, or contract 
care where appropriate. All capital (major, minor, non-recurring 
maintenance and leases) business case applications are reviewed and 
prioritized by a Department-wide SCIP Board and approved through the VA 
governance process.
    Other factors, such as the need for additional space, the ability 
to build on medical center campuses or renovate existing buildings, the 
requirement for quick implementation or flexibility to terminate a 
contract, and budget constraints, all go into determining the best 
solution for providing the best quality health care. For example, a 
medical center campus that is landlocked, with no excess space would 
need to pursue leasing or contracting out because building on campus or 
renovating existing space to provide additional care is not feasible. A 
campus with excess building space or acreage could more easily renovate 
space or build new space on the campus.

      Each Administration reviews their need to fill gaps in 
service, space, or condition and which capital project is the best 
solution.
      All business case applications are reviewed by a 
Department-wide SCIP Board, with assistance of the SCIP Panel. For a 
complete business case, capital projects (Construction and Lease) are 
required to conduct an alternatives analysis, including a comparison of 
the net present value (NVP) of four options: status quo; construct new/
renovate; lease space; and contract out services.
      Project business case applications are scored and ranked 
on several SCIP criteria, one of which is called the ``Best Value 
Solution,'' which provides an analysis of which option has the best 
NPV. If the chosen option does not have the best NPV, an explanation of 
why it is the chosen option is required.

    Question 11(b): How is buy vs. lease determined?

      Many factors, such as the need for additional space, the 
capacity to build on medical center campuses or renovate existing 
buildings, the requirement for quick implementation or flexibility to 
terminate a contract, the most cost effective alternative, all go into 
the buy vs. lease determination. Each acquisition decision is 
considered and reviewed on an individual basis.

    Question 11(c): Is a Cost Benefit Analysis (CBA) completed and by 
whom for every new construction project or lease agreement?

      VA utilizes the cost-effectiveness analysis for each 
construction and/or lease business case application to help ensure an 
accurate analysis the status quo and viable options. These cost-
effectiveness analyses (CEA) are completed by the business case 
preparers and reviewed by the Department as part of the SCIP process.

    Benefits and Memorial Affairs

    Question 12: According to VBA's most recent Monday Morning Workload 
Report, the backlog of pending compensation and pension claims is 
currently at 775,552. This is an increase of 289,081 claims, or about 
59 percent, from this time last year and is an increase of 390,410, or 
a 101 percent increase since President Obama took office. Congress has 
invested heavily in improving the claims process over the years, nearly 
tripling the number of claims processing staff since 1997 and making 
hundreds of millions in IT investments, yet the same problems persist.

    Question 12(a): Can you please reflect on the goal of ``breaking 
the back of the backlog'' by reducing the average days to complete to 
125 days with a 98 percent accuracy rate as listed as integrated 
objective 1 for the Compensation and Pension Service in the FY 2011 
budget request?

    Response: VA's commitment to ``breaking the back of the backlog'' 
relies on a three-tiered approach that addresses people and culture, 
re-engineered business practices, and technology improvements. Our 
backlog today is a symptom of fundamental problems in our capabilities 
and processes--problems we are now aggressively solving. We remain 
dedicated to providing timely service with the highest quality to our 
Nation's Veterans. By 2015, we intend to have no Veteran wait longer 
than 125 days for a quality decision (98 percent accuracy).
    To date, we have passed clear milestones on the path to success. VA 
has developed two rules-based calculators to streamline and improve 
decision quality, and together with VHA, developed the Agent Orange 
(AO) Miner Tool that links AO-related databases together and 
facilitates data search in developing Veterans' AO claims. 
Additionally, VA completed the Virtual Regional Office (VRO), which was 
the first major milestone in the Veterans Benefits Management System 
(VBMS) initiative. VBMS integrates technological advances to streamline 
the disability claims process and establish a paperless processing 
environment. It is being developed in three 6-month phases that 
continue to build on the previous phase and expand functionality. 
Information gained from the VRO helped create the specifications and 
requirements for the VBMS Phase 1 software solution now being developed 
and tested at the Providence Regional Office. Phases 2 and 3 of VBMS 
development will be undertaken at two additional regional offices. 
Deployment of the system to all regional offices begins in 2012.
    In addition to the VBMS initiative, the Veterans Relationship 
Management (VRM) initiative is building a multi-channel gateway for 
Veterans to securely access VA health care and benefits information and 
provide self-service capabilities that will put Veterans in control of 
their relationship with VA. VRM will provide Veterans with rapid access 
to high quality benefits and services when and how they choose, whether 
through telephone, web, email, social media, or in person.

    Question 12(b): Do you still believe this goal is attainable and 
how does the President's budget approach the problem in a way that 
doesn't repeat past failures?

    Response: We believe this goal is attainable. The President's FY 
2012 budget proposal sustains our FY 2011 growth in personnel devoted 
to claims processing at a time that earlier hires are becoming fully 
trained and more productive. Additionally, the budget bolsters an 
investment in strategic planning, IT development and execution, 
continued acquisitions support, and project management. For both IT and 
acquisitions, past weaknesses have stemmed from overly decentralized 
control, lack of enterprise-wide information and, in some cases, 
improvised policies.
    One of the most important steps VA has taken to ensure 
accountability was the establishment of the Project Management 
Accountability System (PMAS). PMAS is a disciplined approach to 
information technology (IT) project development whereby we hold 
ourselves and our private-sector partners accountable for cost, 
schedule and performance. In just 1 year, PMAS tripled the success of 
meeting project milestones.
    Our holistic approach to transformation changes our culture, 
improves our processes, and integrates innovative technologies. This 
approach as outlined in the 2012 budget ensures different results from 
our past efforts. VA's transformation strategy for the claims process 
integrates the power of 21st Century technologies applied to redesigned 
business processes so that the overall service we provide is more 
efficient, timely and accurate. Additionally, we continue to partner 
with Veteran Service Organizations and business partners from the 
private sector to deliver services faster. As we transform VA, we will 
closely monitor our progress in achieving our strategic goals and 
integrated objectives. We will continue developing an annual 
performance plan, which we submit with the President's budget each 
year. We will report to Congress and other stakeholders each year in 
our VA Performance and Accountability Report. We will monitor each of 
our major initiatives through a quarterly Operational Management Review 
team, chaired by the Deputy Secretary, to ensure that cost, schedule, 
and performance targets are being met, and that corrective action is 
taken where necessary, and with Monthly Performance Review meetings to 
monitor progress in meeting our annual performance plan.

    Question 13: Please provide the Committee with an update on VBA's 
efforts to improve training and require skills certification for claims 
examiners and managers as required by section 225 of P.L. 110-389.

    Response: To ensure VA has highly proficient claims examiners, we 
have developed a National Training Curriculum with input from the 
Compensation and Pension (C&P) Quality Assurance Staff and managers and 
subject matter experts working in the field. As the Quality Assurance 
Staff identify national error trends through quality reviews, we create 
or revise training products to address knowledge gaps. This National 
Training Curriculum establishes a consistent and uniform standard for 
training quality across VA, and is updated based on feedback each year. 
For example, analysis of national error trends in FY 2010 led to the 
inclusion of mandatory training topics in the curriculum for FY 2011. 
The C&P Service Training Staff uses the results from these studies and 
analyses of error patterns to generate interactive training lessons. 
All training material is reviewed and updated on a continuing basis as 
changes are made to policy and procedures and knowledge gaps from the 
field are identified.
    VBA's managers are responsible for ensuring that claims processors 
accomplish the minimum annual training requirement of 85 hours. 
Training requirements were recently written into Veterans Service 
Representative (VSR) performance plans, and VBA plans to incorporate 
training requirements into other claims-processor performance plans.
    VBA improved its capability to monitor the quantity and type of 
training by establishing the lessons in a VA LMS (Learning Management 
System) curriculum. Managers at all levels are held accountable for 
their subordinates' completion of training requirements. If employees 
do not meet the requirement of 85 hours per year, it is reflected in 
both the managers' and employees' performance evaluations.
    In 2008, VBA created the position of Training Manager for each 
regional office. The Training Manager uses LMS to track training and 
ensure each regional office is compliant with requirements. VBA fielded 
an on-line evaluation tool in February 2010 to collect employees' 
evaluations of the usefulness, relevance, and quality of national 
training. As of February 11, 2011, 8,560 evaluations have been 
submitted for FY 2011. Every regional office has access to the 
evaluations so that feedback can be used to improve the training. On a 
national level, the evaluations are reviewed to enhance the content of 
the training and identify additional topics for the National Training 
Curriculum.
    Prior to FY 2010, four skill certification tests were implemented--
Veterans Service Representative (VSR), Pension Maintenance Center (PMC) 
VSR, Basic Rating VSR (RVSR) and Journey-Level RVSR. In FY 2010, the 
skills certification operational tests for supervisory VSRs (coach 
level) and decision review officers (DROs) were completed. Testing was 
held on January 13, 2010 for coaches and June 16, 2010 for DROs. VBA 
plans to offer each test twice a year.
    The VSR skill certification test began in 2003. Since that time, 
2,084 VSRs have been certified. In 2008, the PMC VSR test and the Basic 
RVSR test were introduced. The numbers of employees certified for these 
two tests are 84 and 1,212 respectively. The Journey-Level RVSR test 
was first given in 2009 and there have been 413 employees certified 
under this test. The 2010 test for coaches certified 70 employees, and 
the DRO test certified 88 employees.
    A Skills Certification Readiness Guide is available on the training 
Web site that includes references and job aids to assist in test 
preparation. Under a recently awarded contract, an on-line preparatory 
tool is being developed to provide additional training materials.

    Question 14: In a tough economy it is imperative that VA provide 
the highest level of support to veterans seeking employment, especially 
veterans with service-related disabilities.

    Question 14(a): How many professional level Vocational 
Rehabilitation and Employment staff will the proposed FY 2012 budget 
support?

    Response: The Vocational Rehabilitation and Employment budget 
request for FY 2012 supports 1,286 direct FTE, an increase of 132 over 
the FY 2010 FTE level.

    Question 14(b): What will be the resulting average caseload, and 
what performance improvements will the budget detail, to include 
successful job placement services?

    Response: VR&E expects an average caseload per rehabilitation 
counselor of 135 in FY 2012. VR&E projects a 77 percent national 
rehabilitation rate and a 77 percent employment rehabilitation rate in 
FY 2012, up from the 76 percent national rehabilitation rate and 73 
percent employment rehabilitation rate achieved in FY 2010. The 
employment rehabilitation rate refers to the number of disabled 
Veterans who successfully complete VA's vocational rehabilitation 
program and acquire and maintain suitable employment. The national 
rehabilitation rate also includes Veterans with disabilities for which 
employment is infeasible but who obtain independence in their daily 
living with assistance from the program.
    Increased staffing will also support 9 additional VetSuccess on 
Campus locations and expansion of VR&E services to include early 
intervention through integration with the Integrated Disability 
Evaluation System (IDES) program.

    Question 14(c): As a point of comparison, what did VA accomplish in 
FY 2010 in these areas and what is expected in the current fiscal year?

    Response: In FY 2010, VR&E rehabilitated 10,041 Veterans, of which 
8,161 were placed in employment and 1,880 successfully completed 
Independent Living services. VR&E achieved a national rehabilitation 
rate of 76 percent and an employment rehabilitation rate of 73 percent 
in FY 2010. In FY 2011, VR&E projects a national rehabilitation rate of 
77 percent and an employment rehabilitation rate of 75 percent.

    Question 15: VA hired nearly 1,000 temporary and full time 
education claims processors as a result of passage of the Post 9/11 GI 
Bill.

    Question 15(a): With the fielding of the new Post 9/11 IT system, 
how does the proposed budget reflect those employees?

    Response: The Post-9/11 GI Bill required VA to significantly 
increase staffing in the short term until a new, robust IT environment 
is developed, deployed, and proved successful. To support the 
implementation of the Post-9/11 GI Bill, VA hired 530 temporary claims 
examiners with funds from the Supplemental Appropriations Act of 2008, 
and 428 temporary claims examiners with American Recovery and 
Reinvestment Act (ARRA) funding. While the ARRA employees were retained 
through FY 2010, VA anticipated the remaining temporary claims 
examiners would be retained through the end of FY 2011.
    Public Law 111-377, the Post-9/11 Veterans Educational Assistance 
Improvement Act of 2010, modifies aspects of the Post-9/11 GI Bill. In 
order to implement the new law, changes need to be made to the Long 
Term Solution (LTS) for processing Post-9/11 GI Bill claims. As a 
result, automation of end-to-end processing for some reenrollments, 
functionality planned for release in June 2011, will not be available 
until the third quarter of FY 2012. This delay increases the number of 
FTE needed to process education claims. Our budget request of 1,429 FTE 
reflects the need for 324 of the 530 temporary claims examiners to 
remain through FY 2012 to maintain current claims processing 
efficiencies.

    Question 16: Foreclosures continue across the country at record 
levels, making VA efforts to assist veterans with VA-guaranteed loans 
to avoid foreclosure extremely important.

    Question 16(a): Please detail VA's progress in fiscal year 2010 in 
helping veterans avoid foreclosures.

    Response: When a VA-guaranteed home loan becomes delinquent, VA 
provides supplemental servicing to help cure the default. VA's focus is 
working with borrowers and mortgage servicers to ensure every effort is 
made to help Veterans avoid foreclosure.
    Assistance that VA and servicers can offer Veterans/Servicemembers 
includes:

      Repayment Plan--The borrower makes the regular 
installment each month plus part of the missed installments.
      Special Forbearance--The servicer agrees not to initiate 
foreclosure to allow time for borrowers to repay the missed 
installments. An example of when this would be likely is when a 
borrower is waiting for a tax refund.
      Loan Modification--The servicer agrees to reamortize the 
loan to include delinquent payments and establish a new payment 
schedule.
      Additional Time to Arrange a Private Sale--The servicer 
agrees to delay foreclosure to allow a sale to close if the loan will 
be paid off.
      Short Sale--A borrower sells his/her home for a lesser 
amount than owed. VA recently instituted a ``Relocation Assistance'' 
program where servicers may pay $1,500 to borrowers upon successful 
sale to help them obtain alternate housing.
      Deed-in-Lieu of Foreclosure--The borrower agrees to deed 
the property to the servicer instead of foreclosure. VA recently 
instituted a ``Relocation Assistance'' program where servicers may pay 
$1,500 to borrowers.
      Refunding--When VA believes a borrower may be able to 
retain his/her home through an aggressive loan modification, but the 
servicer has decided to proceed with foreclosure, VA may purchase the 
VA-guaranteed loan from the servicer.
      Servicemembers Civil Relief Act (SCRA)--VA discusses SCRA 
eligibility and protections with defaulted borrowers, and advises them 
of their rights and responsibilities to request relief.
      Financial Guidance--VA has a toll-free number Veterans 
can call for financial guidance, whether or not they have a VA-
guaranteed loan (1-877-827-3702).
      Relocation Assistance--For properties conveyed to VA 
after loan termination, VA offers the occupants relocation assistance 
(cash-for-keys) to vacate the property and to assist in their 
transition.
      Homelessness Assistance--Veterans potentially at risk for 
homelessness are directed to VA's Call Center for Homeless Vets 1-877-
4AID VET (877-424-3838).

    In FY 2010:

      VA helped 76 percent (66,030) of all borrowers who 
defaulted on their VA mortgage loan retain their home or avoid 
foreclosure.
      Of that 66,030, 60,816 were able to remain in their 
homes. 5,214 voluntarily completed a deed-in-lieu of foreclosure, or a 
short sale.
      VA made 137,982 contacts with Veterans on delinquent VA 
loans, and 199,749 contacts with their servicers.

    Question 16(b): What is the funding devoted to reducing the number 
of foreclosures in the current fiscal year and what is proposed for FY 
2012?

    Response: The Loan Guaranty funding level is $137.1 million in FY 
2011 and 2012. This funding level includes all Loan Guaranty staff to 
support our mission to help Veterans obtain, retain, and adapt homes. 
Included are loan administration staff members who help Veterans in 
default avoid foreclosure.
    The VA Loan Electronic Reporting Interface (VALERI) is the Web-
based system that supports VA employees and loan servicers in assisting 
veteran borrowers in default on their VA home loans. For FY 2011 and 
2012, the funding allocated for the VALERI contract is $4.8 million.

    Question 17: Please detail for me National Cemetery 
Administration's capability to train not only its own employees at the 
NCA Training Academy in St. Louis, but also personnel from Arlington 
National Cemetery and the National Parks Service. Will that capability 
remain intact in the current fiscal year and the next?

    Response: NCA's Training Academy was established in 2004 to ensure 
training for cemetery directors and assistant directors. The curriculum 
has expanded over the years to provide training for a wide range of NCA 
employees including cemetery directors, equipment operators, foremen, 
caretakers and cemetery representatives. Training is focused on all 
aspects of national cemetery operations and management. Subjects 
include supervisory skills, use of NCA's electronic databases for 
recordkeeping, grounds maintenance, burial operations and resource 
allocation. Experienced and successful national cemetery employees are 
called upon to share their expertise as classroom instructors. The 
training academy is located in 3,000 square feet of leased space in St. 
Louis, MO. The location was selected because it is near Jefferson 
Barracks National Cemetery, where employees can receive practical 
experience. A training session is usually comprised of 20-25 employees. 
Since 2006, NCA has conducted 95 courses in 24 training areas.
    A Memorandum of Agreement (MOA) is in place between the Department 
of the Army and the Department of Veterans Affairs to support the Army 
through NCA training programs. The MOA is in effect through September 
30, 2013. As of December 2010, four Arlington National Cemetery (ANC) 
employees participated in NCA training: two employees in cemetery 
representative training and two employees in supervisory training. Two 
ANC employees are scheduled for supervisory training in the spring 
2011. The Department of Army pays for each ANC employee's travel and 
accommodations while at the training center.
    The National Park Service (NPS) has sent one employee to NCA's 
training center who attended cemetery representative training and a 
course on using NCA's electronic databases for recordkeeping. Another 
NPS employee plans to enroll in the same courses.
    NCA can accommodate ANC and NPS employees who enroll in NCA 
training programs. NCA will sustain its current level of support 
without compromising the Training Academy's operations.

                                 

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                     March 16, 2011
The Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420

Dear Mr. Secretary:

    In reference to our full Committee hearing entitled, ``U.S. 
Department of Veterans Affairs Budget Request for Fiscal Year 2012,'' 
that took place on February 17, 2011, I would appreciate it if you 
could answer the enclosed hearing questions by the close of business on 
April 20, 2011.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Diane Kirkland at [email protected]. If you have any 
questions, please call 202-225-3527.

            Sincerely,

                                                        JEFF MILLER
                                                           Chairman
JT/dk

                               __________

                        Questions for the Record
                  The Honorable Jeff Miller, Chairman
                  House Committee on Veterans' Affairs
U.S. Department of Veterans Affairs Budget Request for Fiscal Year 2012
                           February 17, 2011

    Question 1: According to VA's response to question 2, VA's 3-year 
increase for employee travel will exceed 30 percent.

    Question 1(a): If the President's Fiscal Commission recommendation 
was adopted and VA had to manage an employee travel budget that was 80 
percent of FY 2010 levels, how could that be accomplished without 
degrading services to veterans?

    Response: If VA were held to the travel limitation of 80 percent of 
the FY 2010 level, this would have an adverse impact upon VA's ability 
to deliver health care services to veterans and deliver training to VBA 
claims examiners. This would amount to a $69 million (27 percent) 
reduction in the overall employee travel costs across VA for FY 2012. 
This magnitude reduction would impact VA's ability to relocate health 
care staff, to properly train benefits claims examiners, and delay 
continuing education of our health care and service providers. This 
reduction would also limit the number of times staffs can meet face-to-
face to share best practices, a technique which allows VA to improve 
service delivery to veterans.

    Question 1(b): Has this question been examined in full by VA?

    Response: Yes, VA's travel requirements were fully evaluated as VA 
considered its resource needs to meet its commitments to deliver 
services to veterans. These requirements are reflected in the estimates 
included in the President's budget request.

    Question 2: According to VA's response to question 2, VA's 3-year 
increase in its printing costs will be 100 percent.

    Question 2(a): If the President's Fiscal Commission recommendation 
was adopted and VA had to manage a printing costs budget that was 80 
percent of FY 2010 levels, how could that be accomplished without 
degrading services to veterans?

    Response: If VA were held to the printing limitation of 80 percent 
of the FY 2010 level, this would amount to a $24 million reduction 
across VA. This would mean that fewer documents would be available to 
inform veterans of their benefits and how to access them.

    Question 2(b): Has this question been examined in full by VA?

    Response: VA printing requirements were evaluated and are reflected 
in the estimates included in the President's budget request.

    Question 3: According to VA's response to question 2, VA's 3-year 
increase in its vehicle fleet costs will be approximately 25 percent.

    Question 3(a): If the President's Fiscal Commission recommendation 
was adopted and VA had to manage a vehicle fleet budget that was 80 
percent of FY 2010 levels, how could that be accomplished without 
degrading services to veterans?

    Response: A 20 percent reduction on the vehicle fleet budget is 
expected to impact on the services to veterans. The vast majority of 
the VA fleet is used for direct services to veterans. These services 
primarily include transportation services to bring veterans and staff 
to medical care facilities, transportation to bring care to veterans in 
the home-based health care and rural outreach programs, transitional 
programs for veterans such as the Compensated Work Therapy program, 
home visits to veterans by benefits counselors and field examiners, 
facility/campus maintenance, security and emergency services 
(ambulances and fire trucks), and interments at cemeteries. A 20 
percent reduction of the vehicle fleet budget will also limit VA's 
ability to fully implement the outreach initiatives to underserved 
veterans.
    Some VA medical centers also rely on donations of vehicles from 
veterans service organizations, but these vehicles are normally not as 
fuel-efficient as the vehicles that we buy or lease. A reduction in our 
fleet budget would require both greater reliance on donated vehicles, 
and retain VA-owned vehicles beyond their economical life span. Greater 
use of older vehicles would further hamper our ability to meet 
petroleum reduction mandates and increase the cost of maintaining the 
fleet.

    Question 3(b): Has this question been examined in full by VA?

    Response: VA reviews its vehicle utilization annually, and is 
closely monitoring growth in our fleet. Vehicle utilization reviews 
have improved usage rates of fleet vehicles to the point of reaching 
optimum levels. New initiatives have been put in place by VHA to review 
and approve all fleet acquisitions, and additional measures are being 
considered across VA to identify additional ways to meet the fleet 
petroleum reduction mandates without compromising services to our 
veterans.

    Question 4: In response to question 3, VA suggested that $105 
million of money carried over from FY 2010 into FY 2011 will be used to 
implement provisions of the new Caregiver Law (P.L. 111-163).

    Question 4(a): Please detail those provisions and how the $105 
million will be (or has been) allocated among the provisions of P.L. 
111-163.

    Response: VA will be updating the cost estimates for the 
implementation of the Caregiver Act. These costs cannot be finalized 
while the Interim Final Rule is pending. VA will continue to keep the 
Committee informed, including providing our final estimate, once the 
process is completed.

    Question 4(b): Please detail how the request for FY 2012 and FY 
2013 is allocated among the provisions of P.L. 111-163.

    Response: The specific eligibility criteria that will be adopted in 
the final publication of the Interim Final Rule are still under review. 
A change in these criteria that resulted in a different population of 
eligible veterans would also change VA's cost estimates. VA will 
continue to keep the Committee informed, including providing our final 
estimate, once the process is completed.

    Question 5: In response to question 3b VA states that carryover 
funding from FY 2010 into FY 2011 in the General Administration account 
was not used to begin new initiatives, increase staff or establish new 
offices.

    Question 5(a): What, then, was the carryover used for?

    Response: In our original response we stated, ``The limited 
carryover available in the General Administration account has not been 
used to begin new initiatives, increase staff or establish new offices 
that were not included in the FY 2011 budget and there are no current 
plans to do so.''
    The carryover is being used to support initiatives to transform the 
Department by improving accountability, efficiency and veteran safety 
throughout the system. Initiatives that will help transform the way we 
provide services include: VA's Human Capital Investment Plan (HCIP), 
which will re-engineer VA's human capital framework and provide a 
corporate strategy to improve training throughout the system; VA/DoD 
collaboration efforts and Corporate Analysis and Evaluation, which will 
produce better data that drive corporate level decisions; Facilities-
wide transformation to maximize life cycle performance, increase on-
site project management, and reduce project costs; and implementation 
of VA's Emergency Preparedness and Homeland Security Presidential 
Directive 12, which will lead to improvements in veterans' safety as 
well as security of VA employees and all of our facilities.

    Question 6: In response to question 5 VA stated that VA will only 
authorize administrative pay increases under ``extraordinary 
circumstances'' and that management officials will make any such 
adjustments in a ``prudent and strategic manner.''

    Question 6(a): Have any adjustments been made thus far? If so, 
when, where, and under what circumstances?

    Response: We have not processed any schedules for which we applied 
the ``exceptional circumstances'' authority. We have processed several 
new nurse Locality Pay Schedules effective on/after Jan 2, 2011 based 
on new assignments that have been created; these actions are considered 
to be an exception and are not covered by the pay freeze. There have 
been no adjustments to pay scales since the pay freeze has been 
implemented. VHA medical centers and other human resource offices have 
been apprised that discretionary pay adjustments are not permitted 
until guidance is received through the Human Resource Management Letter 
(HRML), which is pending concurrence.

    Question 6(b): Please provide any guidance as to what qualifies as 
an ``extraordinary circumstance'' for purposes of providing a pay 
increase.

    Response: When higher non-Federal rates of pay in a local labor 
market are causing extraordinary recruitment or retention problems a 
facility may establish or increase a special rate schedule or nurse 
Locality Pay schedule. Examples of some factors that may be relevant in 
determining the existence of extraordinary circumstances include a 
turnover rate of more than 40 percent, a ``quit for pay'' rate of more 
than 30 percent, a job acceptance or staffing success rate of less than 
50 percent, a vacancy rate of more than 30 percent, a large number of 
declinations for positions, unsuccessful recruitment activity, a large 
number of employees having received bona fide job offers, etc.
    Nurse Locality Pay Schedules (LPS):

      Some factors that may demonstrate an extraordinary 
circumstance or critical staffing or retention problem include 
increases in turnover rates, ``quits for pay'', decreased job 
acceptance or staffing success due to pay. Facilities authorizing an 
increase to an existing LPS schedule must provide detailed staffing 
data that supports the percentages provided above as well as detailed 
information regarding recruitment efforts, to include information on 
vacancy announcements (i.e. number of advertisements placed or job 
fairs attended during a specific period of time) how long a position(s) 
has remained vacant despite recruitment efforts, and the use of 
appropriate incentives. Increases to existing rates may also be 
authorized in instances where a facility anticipates extraordinary 
recruitment or retention problem. An adjustment made under this 
assumption must be fully documented; for example, the facility must 
provide information on the number of employees that have received bona 
fide job offers; information on how the facility has used all available 
incentives and other flexibilities to alleviate the likelihood of 
losses; what external factors contribute to the belief that a critical 
retention problem exists, etc.

    Physician and Dentist Market Pay Adjustments:

      All market pay adjustments that result in an increase, 
excluding those that result from a change in assignment, must include 
information that addresses the following criteria/justification in 
addition to the seven market pay criteria as prescribed in VA Handbook, 
Part IX, paragraph 9e:

      (a)  The individual possesses unique skills and competencies for 
a particular specialty or assignment that are essential to recruit or 
retain. This may include information regarding the extent to which the 
employee's departure would affect VA's ability to provide quality 
patient care or information on how the employee's skills and 
competencies uniquely contribute to the organization; or
      (b)  The individual is in a scarce specialty or assignment, or 
possess skills and competencies that are hard-to-find, or in high 
demand within the local labor market area. This may include information 
that the local labor market is in a less than desirable location (i.e. 
in a rural area, a high cost of living area, etc.); or
      (c)  The availability and quality of candidates. This may include 
information on past recruitment activity, the length of time a 
position(s) have remained vacant and the affect on patient care, or the 
likelihood of being able to recruit should the individual decide to 
leave the VA; or
      (d)  Information on salaries typically paid for similar 
specialties within the local labor market. This may include information 
regarding unique opportunities or benefits that exist in the private 
sector that affect VA's ability to recruit and/or retain high quality 
physicians and dentists; or
      (e)  Other situations or unique circumstances, as deemed 
appropriate, that indicate an increase to market pay is necessary.

    Question 6(c): Please provide the guidance released to the field on 
this matter.

    Response: A Human Resources Management Guidance Letter was 
developed by the Office of Personnel Management and the Office of 
Management and Budget and has been determined to fully comply with law 
and the President's Memorandum. We expect it to be released soon and 
will provide it to you at that time.

    Question 7: In response to question 6 VA stated that it complies 
with GSA per diem rates defining the maximum for lodging and per diem, 
and that maximum rates vary by locality.

    Question 7(a): Does VA have a policy concerning which locality to 
choose after it determines that the localities among those available 
for selection all comply with the GSA strictures, i.e., is there a 
policy steering VA to localities or venues that are the lowest cost 
option allowing VA to accomplish the purpose of the conference (even 
though other options may be permissible under GSA's strictures)?

    Response: Yes, VA has drafted policy to govern the financial 
policies and procedures relating to conference planning. Currently 
under internal review, the policy is intended to implement and 
supplement those portions of the Federal Travel Regulation (FTR) 
pertaining to Temporary Duty Travel (TDY) and provides specific 
guidance on cost control procedures, such as conference planning and 
technical evaluation factors pertaining to location and price, among 
others.

    Question 7(b): Should there be such a policy?

    Response: As previously stated, VA is currently reviewing draft 
policy relating to conference planning and financial controls.

    Question 7(c): If authorizations for national conferences were 
capped at 80 percent of fiscal year 2010 levels, would that encourage 
such a policy being adopted? What efforts have there been to reduce 
costs in this area through the use of lower-cost venues or technology?

    Response: VA has implemented efforts to reduce cost (venues and 
technology) while maintaining quality service for our customers. For 
example, VALU's training (i.e. Supervisory and Management, Leadership 
Development, Transformation Leadership, etc) is facilitated by the 
trainers that deploy to the location where the VA employees are located 
as opposed to the employees traveling to a venue. Secondly, VA is 
currently working on recording/videotaping training sessions to reduce 
the overall costs required of the vendors. As previously stated, VA is 
currently reviewing draft policy pertaining to conference planning and 
financial controls.
Medical Care
    Question 1: Secretary Shinseki's February 17, 2011, testimony 
suggests that certain operational improvements will result in savings 
of over $1 billion. However, VA proposes that Congress still provide 
money in the amount VA says it will save so that it may then carry 
those funds over into a subsequent fiscal year. This seems to be a 
``pay us now, we'll account for the savings later'' approach to 
budgeting.

    Question 1(a): Why does that make sense? Why, if VA asserts it can 
save money through a variety of management efficiencies, should 
Congress provide that money anyway?

    Response: Estimated savings from management improvements to be 
achieved in 2011 and 2012 will be carried forward into the following 
years to reduce the new appropriations needed in 2012 and 2013.

    Question 1(b): Wouldn't accounting for the management efficiencies 
up front actually create the pressure and incentive necessary to 
realize them?

    Response: VA accounted for the savings up front. VA has conducted a 
review ofthe efficiencies to be gained, and the savings to be achieved 
within the agency through improved management actions. VA is 
implementing several operational improvements in our medical care 
programs that will save money while improving the quality of health 
care. These savings are in six separate areas listed in the budget 
submission. These savings are estimated to total $746 million in FY 
2011 and $1.2 billion in FY 2012 and FY 2013. We are confident that 
these are achievable savings.

    Question 1(c): Which of the management improvements resulting in 
savings would otherwise be reflected in data captured by the Enrollee 
Health Care Projection model estimates?

    Response: None of the management improvements resulting in savings 
would be reflected in data captured by the Enrollee Health Care 
Projection model estimates. Enrollee Health Care Projection model for 
the 2012 President's submission is based on FY 2009 (base year). The 
effects of the operational improvements are anticipated beginning in FY 
2011.

    Question 2: It would appear that a cursory look at budget requests 
spanning multiple administrations that carryover of unobligated 
balances for medical care was a normal element of the request. Only in 
the past several years has VA not assumed such a carryover, although 
with the President's FY 2012 request there is, again, a carryover 
assumption.

    Question 2(a): Please clarify why carryover of funds is a necessary 
management tool that should be available to VA.

    Response: The Medical Services, Medical Support and Compliance, and 
Medical Facilities appropriations have historically had a small portion 
of their total appropriation available for obligation for two fiscal 
years. The purpose of this authority is to provide the flexibility to 
make the most appropriate procurement decisions as the end of the 
fiscal year approaches without being forced to simply obligate any 
available funds on less critical requirements. Forced year-end spending 
incentivizes organizations to spend funds in order to protect the 
following year's budget request. Congress has historically granted this 
carryover authority and we believe that it has enabled good stewardship 
of the Nation's resources and ensured that our veterans receive the 
best possible health care.

    Question 2(b): Is carryover necessary because VA, at times, can't 
prudently spend all the money it is given in a fiscal year? Or, is 
carryover evidence that VA doesn't need all of the money appropriated 
to it? Or, is carryover evidence of some combination of the above?

    Response: In addition to the response to Question 2a, it is also a 
reflection of the complexities associated with acquisition in the 
health care industry. In the Medical Facilities appropriation, protests 
of contract awards also frequently delay final obligation of funds, and 
long lead times associated with executing major leases sometimes cause 
award dates to slip across fiscal years. This authority also provides 
additional assurance that unforeseen delays in implementing new 
authorities may be addressed without requiring supplemental 
appropriation requests.

    Question 3: One of the new accounting features of this budget is a 
proposed $953 million ``contingency fund'' for medical care. Secretary 
Shinseki's testimony suggests this money is based on an economic 
variable that was incorporated into VA's actuarial model, and that the 
money may or may not actually be needed.

    Question 3(a): In the heart of the economic recession when VA 
submitted its resource requests for medical care for fiscal years 2010 
and 2011, was there an economic variable used to inform VA's budget 
request?

    Response: The 2008 VA Enrollee Health Care Projection Model 
(Model), which supported VA's 2010 Budget Submission, did not include 
an economic variable because it was developed early in the economic 
downturn cycle. In response to indicators that the economic downturn 
could deepen into a recession, VA initiated a study to assess the 
potential impact of a recession on enrollee reliance on VA health care. 
This study was complex and time consuming since economic conditions 
were relatively stable during the last decade. As the recession 
deepened, and with an understanding that the impact would continue 
throughout the recovery, an economic variable was included in the 2010 
Model, which supports VA's 2012/2013 Budget Submission.

    Question 3(b): Even though no carryover of funds was expected in 
VA's budget submissions for 2009 through 2011, VA carried over 
substantial sums of money in each of those years, and it expects to 
carry over a substantial sum of money from 2011 into 2012. This would 
suggest that VA's actuarial model worked as designed, even without 
incorporating an economic variable, and even though the model used data 
on utilization that predated the recession. Is this correct?

    Response: The Model is updated annually to reflect the most current 
data, updated analyses, new policies and regulations, and evolving 
experience, such as the economic downturn. As a result, the Model is 
successfully accounting for the changing dynamics of veteran demand for 
VA health care.

    Question 3(c): If that's the case, why did VA decide to incorporate 
an economic variable into the FY 2012 submission, especially for a year 
when the President is expecting job recovery?

    Response: Historically, unemployment rates have not returned to 
prerecession levels for 5 years following the recession. While both the 
Administration and the Congressional Budget Office are projecting that 
the unemployment rate will improve this year, both are projecting that 
unemployment rates will remain above prerecession levels through 2015.

    Question 3(d): What assumptions regarding unemployment in 2012 were 
used for the economic variable, and do the assumptions track the 
President's own forecasts for unemployment in 2012?

    Response: VA's FY 2012/2013 Budget Submission is based on the 
Office of Management and Budget's July 2010 Mid-Session Review 
unemployment rate projections.

    Question 4: Page 1A-3 of the VA FY 2012 Budget Submission reads 
``Based upon experience in 2010, the need for this [contingency fund] 
funding will be carefully initiated in 2012. This cautious approach 
recognizes the impact of economic conditions as estimated by the model 
while acknowledging the uncertainty associated with estimates.''

    Question 4(a): Please describe what 2010 experience contributed to 
the development of the Contingency Fund and a description of how the 
Department addressed that experience.

    Response: VA saw a 4.4 percent increase in unique patients and a 
3.7 percent increase in unique enrollees from FY 2009 to FY 2010. VA 
was able to meet all of its commitments to treat veterans and 
Servicemembers in 2010. The $953 million contingency fund, estimated in 
the VA's Enrollee Health Care Projection Model, was created to address 
the potential demand increase for medical care services due to changes 
in economic conditions. The fund will only become available for 
obligation if the Administration determines the anticipated changes in 
economic conditions, as estimated by the Model, materialize in 2012.

    Question 4(b): What methodology was used to determine that $953 
million was the appropriate amount to account for changes due to 
economic change?

    Response: The actuarial estimates that were used to develop the 
budget request included estimates of unemployment rates and how they 
are expected to influence veterans reliance on VA for care. This 
methodology resulted in the estimated $953 million amount.

    Question 5: Is the Contingency Fund a one-time request or does the 
Department expect to continually require a bank of reserve funds to 
respond to economic fluctuations?

    Response: This economic impact was incorporated into the Model for 
the first time this year. Based upon experience from 2010, the need for 
this funding will be carefully monitored in 2012. This cautious 
approach recognizes the potential impact of economic conditions as 
estimated by the Model while acknowledging the uncertainty associated 
with the estimates. VA's experience with the relative reliability of 
the model forecast for economic conditions will help determine the need 
for a contingency fund in future years.

    Question 6: If the Contingency Fund funds are not utilized in FY 
2012, will they be returned to the Treasury, re-allocated to patient 
care, carried over as an offset in FY 2013, or used for some other 
purpose?

    Response: These funds will be returned to the Treasury.

    Question 7: How confident is VA in the accuracy of its FY 2013 
advance appropriations request? Are economic conditions or other 
factors expected to impact that estimate? If so, how?

    Response: The FY 2013 advanced appropriations request is based 
largely on our actuarial estimates using FY 2009 data as the base year. 
The request does not include additional resources for any new 
initiatives that would begin in FY 2013, Strategic Planning Major 
Initiatives other than Homeless or Rural Health Initiatives. 
Obligations for these categories will be addressed in the FY 2013 
budget submission.

    Question 8: It is my understanding that VA retains ``virtual'' 
central office employees at the VISN level.

    Question 8(a): Provide a detailed list for all virtual employees 
that includes: the number of employees at each VISN; title and job 
description for each position; and GS pay associated with each 
position.

    Response: VHA does have Central Office employees that perform their 
duties at locations other than Washington, DC. The attached spreadsheet 
provides a listing of individuals that have a duty station outside VHA 
Central Office. [The attached spreadsheet will be retained in the 
Committee files.]

    Question 9: The budget submission estimates savings of $275M in FY 
2011 and $315 million in FY 2012 by moving the fee care program 
payments to be consistent with that of Medicare payments.

    Question 9(a):What are the underlying assumptions for these savings 
estimates?

    Response: The underlying assumptions for these savings were based 
on use of the multiple pricing schedules covered under the regulation. 
VA has had authority to pay inpatient hospital claims and physician 
services utilizing the Centers for Medicare & Medicaid (CMS) payment 
methodologies for many years. Effective for non-VA treatment on or 
after February 15, 2011, VHA adopted CMS payment methodologies for 
outpatient services. This aligns VHA with standard Federal payment 
schedules and assures these payments from VA utilize the same 
structure. Prior to adopting CMS payment methodologies VHA processed 
payment for outpatient services for facility charges using a ``VA Fee 
Schedule'' which is based on billed charges and reimbursement was based 
on the 75th Percentile of those charges, significantly higher than 
standard CMS pricing. The estimated savings were developed using the 
difference between the 75 Percentile from the VA Fee Schedule and the 
CMS rates extrapolated from actual payment data from the first 6 months 
of calendar year 2008. VHA contracted with an outside vendor to 
complete a comparison to identify cost savings under this regulation. 
The analysis compared CMS rates with VA Fee Schedule rates to make this 
estimate. A sampling of lab, ESRD, and other Medicare methodologies was 
used to estimate an average savings based on these rates.

    Question 9(b): What is the status of upgrading the IT 
infrastructure to process the new fee payments at the Medicare rate? 
Please provide a timeline for this process.

    Response: The current claims processing system, Fee Basis Claims 
System, is scheduled to be updated with CMS rates by mid-year FY 2012. 
To assure accurate pricing, VA developed an interim solution utilizing 
a contract service to price claims submitted to VHA for authorized 
services by non-VA providers. This service will initially be manual, 
with a move to a web-based solution by the end of April. VA will 
continue to utilize this service until such time as the appropriate 
technology is in place to accurately price these claims.

    Question 9(c): How can VA realize savings in 2011 if there is not a 
system currently and fully in place to handle electronic processing of 
payments?

    Response: VHA contracted with an outside vendor to price claims at 
Medicare rates for all claims submitted for treatment dates on or after 
February 15, 2011. VA facilities were instructed to hold those claims 
until the contractor was ready to accept those claims for pricing. It 
is anticipated the contractor will be ready to receive those claims 
effective March 28, 2011. Claims will be printed and mailed to the 
contractor for pricing. A web based portal will be available for 
pricing by sites in late April. VA is working towards an electronic 
mechanism to transmit the claims via Electronic Data Interchange (EDI) 
later this year once the IT solution is developed.

    Question 9(d): Are the savings estimates in the budget submission 
the same as what VA projected when developing the regulations to move 
the fee program to Medicare rates? Please explain any changes in 
assumptions that resulted in an adjustment to the savings estimate.

    Response: No, the savings are less due to delay in publication of 
the regulations. The savings were adjusted because the implementation 
date was delayed to February 15, 2011. The estimated savings are 
included below. The FY 2012 budget request utilizes the same cost 
savings estimates documented in the Final Rule.


------------------------------------------------------------------------
                    Year                     Estimated Projected Savings
------------------------------------------------------------------------
FY 2011                                                    $274,700,000
------------------------------------------------------------------------
FY 2012                                                    $314,700,000
------------------------------------------------------------------------
FY 2013                                                    $361,800,000
------------------------------------------------------------------------
FY 2014                                                    $405,800,000
------------------------------------------------------------------------
FY 2015                                                    $452,700,000
------------------------------------------------------------------------
5-year total                                             $1,809,700,000
------------------------------------------------------------------------

    Question 10: Describe the mission of the Chief Business Office 
(CBO) and if and how this mission has changed since the office was 
established.

    Response: The VHA Chief Business Office provides national 
leadership for advancing business practices that support patient care 
and the efficient delivery of health benefits.

    Question 10(a): Do the current activities of the CBO directly align 
with the original mission?

    Response: Yes. Established in 2002, the CBO's original mission was 
to develop and implement policy, processes, information and business 
solutions to support high quality service delivery to veterans, enhance 
employee development and demonstrate effective stewardship. The CBO 
Mission Statement supported the Vision which was to provide quality 
veteran focused services with smart business solutions. In 2006, the 
CBO reorganized functionally to more effectively carry out the mission. 
The reorganization resulted in realigning the existing executive 
positions subordinate to the Chief Business Officer to lead each of the 
three functional areas--Revenue Operations, Member Services and 
Purchased Care.

    Question 10(b): What are the three primary areas of responsibility 
for each of the three deputy directors?

    Response:

      The Deputy Chief Business Officer for Revenue Operations 
is accountable for the development of administrative processes, 
policies, regulations, and directives associated with revenue 
activities. The incumbent serves as primary advisor to the field on 
revenue collections and is responsible for developing quality products 
whose business processes and outcomes are measurable and effectively 
managed.
      The Deputy Chief Business Officer for Purchased Care 
supports and augments the delivery of health care benefits through 
enterprise program management and oversight of Purchased Care services, 
including programs such as Fee Basis, CHAMPVA, State Home Per Diem and 
others.
      The Deputy Chief Business Officer for Member Services 
provides veterans and their families with respectful, timely, accurate 
and efficient service. Member Services supports ``front-end'' elements 
of interaction with VA's Health Care System such as enrollment, contact 
management, beneficiary travel and transportation.

    Question 10(c): Please provide a comprehensive list that includes 
the following related to the CBO: total number of employees; title and 
job description for each position; and GS pay associated with each 
position.

    Response: See attachment. [The attachment is being retained in the 
Committee files.]

    Question 11: What is the status of the establishment of seven 
consolidated patient account Centers (CPACs)?

    Response: An integral part of VHA's strategy for increasing 
collections is deployment of industry best practice Consolidated 
Patient Account Centers (CPACs). VHA is deploying CPACs by FY 2012, 1 
year earlier than required by Public Law 110-387. Four CPACs have been 
completed to date: North Central (VISNs 10/11/12); Mid South (VISNs 9/
16/17); Mid Atlantic (VISNs 5/6/7); and Florida/Caribbean (VISN 8). 
Three CPACs are in progress for completion in FY12: West (VISNs 18/20/
21/22); North East (VISNs 1/2/3/4); and Central Plains (VISNs 15/19/
23). CPACs have demonstrated success in improving collections through 
process standardization and internal controls to mitigate risks.

    Question 12: How will the CPACs be funded? If funded through the 
use of VISN resources, what is the formula for determining individual 
VISN contributions?

    Response: Each CPAC's annual operational cost is funded by the 
VISNs to which it provides services based on each VISN's percentage of 
the Medical Care Collection Fund (MCCF) goal assigned to that CPAC. 
Initial start up costs for each CPAC are paid by the VHA Central 
Office. This funding approach will continue through FY 2012. Once all 
CPACs are operational in FY 2013, both the operational cost and any 
recurring lease costs will be paid by the VHA Central Office, with no 
charges to the VISNs. The rationale for this funding approach during 
the start up of the CPACs is to not place those VISNs not yet supported 
by a CPAC at a financial disadvantage because they currently pay all 
costs of collection activities within their VISN.

    Question 13: What is the total number of VA and total number of 
contracted employees expected to staff each CPAC?

    Response: The number of staff authorized for each CPAC is 
determined by the estimated workload from the serviced VISNs assigned 
to that CPAC. Contractors are only used to handle small balance claims 
once the CPAC is fully operational. The number of VA employees expected 
to staff each CPAC are as follows:

      Mid-Atlantic CPAC: 539
      Mid-South CPAC: 583
      North Central CPAC: 461
      Florida Caribbean CPAC: 324
      Central Plains CPAC: 515
      West CPAC: 483

    Question 14: How will the staffing and functional responsibilities 
that are currently in place at the Veterans Integrated Service Network 
be transferred to the CPACs? Will any functions be duplicated at the 
VISNs? What will happen to VISN employees whose current 
responsibilities will be assumed by the CPACs?

    Response: Prior to the start of the national CPAC deployment, VHA 
developed a detailed implementation plan grounded in industry best 
practices and lessons learned from previous transitions. The plan for 
each CPAC is organized around four main phases of transition:

      Readiness Planning: A team of evaluators assess VAMC 
operations to determine overall readiness for transition and develop 
site specific implementation plans based on assessment results.
      Transition of Host VISN/Expansion VISNs: Ownership for 
designated revenue cycle function is officially transferred from VA 
medical centers to CPAC. Typically, the host VISN of each consolidated 
center is transitioned first following the implementation of the new 
business model and deployment of CPAC business tools. Expansion VISNs 
are scheduled for transition following sustainment of the host network.
      Stabilization: CPAC business analysts and industry 
experts conduct further assessments of transitioned sites, resolve 
identified issues with field leadership, and further stabilize 
operations following the transition period.
      Sustainability: Based on observed operational performance 
and the results of internal controls and quality assurance monitoring 
activities, CPAC business processes are continually enhanced, and staff 
is provided with targeted professional development to optimize business 
performance.

    Each element of the implementation plan contains thousands of 
activities, which are carefully managed and reported on by our 
implementation coordinator and team of project management 
professionals.
    The CPAC business model was carefully crafted by industry experts 
to ensure that CPAC-owned business processes complement supporting 
functions that remain at the medical centers (registration, charge 
capture, coding, etc.) There is no duplication of effort expected as a 
result of the national CPAC deployment.
    VHA is working diligently to minimize the impact of this 
reorganization on employees and will provide as smooth a transition as 
possible. Impacted employees are strongly encouraged to apply for CPAC 
positions and are notified as soon as the positions are announced. 
Additionally, these employees are in the first area of consideration 
for facility-based and CPAC-based positions. Impacted staff remaining 
after CPAC positions are filled will be placed in comparable positions 
at their current duty station based upon their requisite knowledge, 
skills, and abilities. Local facility management is responsible for the 
placement of remaining impacted employees at each medical center. The 
placement process is unique for each facility given their individual 
circumstances and staff. VHA has also received concurrence for both 
Voluntary Early Retirement Authority (VERA) and Voluntary Separation 
Incentive Payment (VSIP) from the U.S. Office of Personnel Management 
(OPM) to assist with the transition of impacted staff.

    Question 15: Medical collections goals have been adjusted downward 
for FY 2011 and FY 2012.

    Question 15(a): What is the reason?

    Response: The reduction is a result of VA revising assumptions from 
the collections forecasting model to incorporate the following factors:

      Poor economic conditions--Growth in national unemployment 
(from 7.7 percent in the First Quarter of FY 2009 to 9.8 percent at the 
end of the First Quarter of FY 2011) continues to impact both first 
party collections (veteran out-of-pocket costs) and third party 
collections (unemployment and resultant loss of health insurance 
coverage).
      Hardship waivers and exemptions from copayments are 
increasing--veteran first party copayment economic hardship waivers and 
exemptions were at their highest levels in FY 2010 (the most recent 
completed year) and this is expected to continue with the current poor 
economic conditions.
      Third party ``Collections to Billings'' (CtB) ratios are 
down nationally--CtB ratios are expected to continue a downward trend, 
reducing third party collections. CtB decreased from 43.1 percent in 
January 2009 to 39.1 percent in January 2011, influenced by the 
continued shift by insurance companies of payment responsibility to the 
patient (i.e., higher deductibles, increased copayments, etc.). Section 
1729 of title 38 prevents VA from billing veterans if insurance 
companies do not pay. Each 1 percent decrease in CtB represents a $55 
million revenue loss.
      Veterans aging to 65 years and older--FY 2012 begins to 
reflect the shift in workload for Vietnam Era veterans aging to 65 
years and older. Once a veteran is Medicare-eligible, Medicare becomes 
the primary insurance coverage and VA can bill insurance companies only 
for the portions Medicare does not cover (typically their deductibles). 
This significantly reduces the amount VA can collect.
      Priority Group migration from lower to higher status--
National Priority Group migration over the past 2 years has shown a 
sharp decrease in collections for veterans in Priority Group 8 which is 
the primary driver of both first and third party collections.
      Shift in Service Connected Workload vs. Non-Service 
Connected Workload--As veterans migrate from lower to higher status, 
there is also a shift in workload from Non-Service Connected (Non-SC) 
care (which could be billable if the veteran has insurance) to Service 
Connected (SC) care (regardless of insurance coverage VA does not bill 
for SC care). From FY 2009 to FY 2011 the total number of outpatient 
encounters has seen an increase of 2 percent nationally in SC care, 
with an equal decrease of 2 percent in Non-SC care, which has impacted 
Third Party collections.

    Question 15(b): Have you identified specific obstacles that impede 
meeting the collections goals? If so, what is being done to address 
these problems?

    Response: Specific obstacles that impede meeting the collection 
goals, as noted in the response to (15a) are primarily tied to economic 
market conditions. However, VA also recognizes that focused efforts 
must be implemented to optimize available revenue opportunities and 
several initiatives are underway to improve results aside from the 
deployment of Consolidated Patient Account Centers described in 
question 11 including:

      Improving Recoveries from Non-VA (FEE) Care: VA can bill 
third party payers for veterans receiving non-service-connected Fee 
care with insurance. In an effort to enhance charge capture for these 
services, a workgroup has been formed to develop monitoring metrics to 
assist in identifying best-practice performers and opportunities for 
improvement. As part of this effort, a pilot is currently underway at 
two medical centers in VISN 9 (Mountain Home and Huntington) to 
reengineer business processes.
      Revenue Cycle Enhancement Teams (RCET): RCET visits 
identify opportunities to improve revenue cycle performance at lower 
performing facilities by developing action plans to increase 
collections. During FY 2011, RCET will conduct 32 sites reviews.
      Payer Relations and Business Practices: VHA is conducting 
an in depth analysis of managed care contracts, billing practices and 
rates/charges in an effort to optimize revenues. The outcome of this 
work will be a 5 year strategic roadmap with short, medium and long-
term project deliverables.
      Regulatory and Policy Changes: Currently, third party 
payers unilaterally offset payments on claims without notification to 
VHA. A Final Rule barring offsets by third party payers and 
establishing a process by which they will submit a request for a refund 
on claims for which there is an alleged overpayment is in review within 
VA. Eliminating these offsets will positively impact VA by ensuring 
accounting records accurately reflect any necessary adjustments to 
accounts and speeds processing of claims. VA also recently (March 18, 
2011) implemented a new methodology for billing third parties for 
outpatient prescriptions. VA's actual costs for each drug dispensed, 
plus an administrative fee are now being billed instead of using a 
national average drug cost.
      Enhanced Business Systems: VA continues to develop 
electronic business transaction capabilities including insurance 
verification, billing, and payments. Benefits from electronic 
transmissions include faster payments.

    Question 15(c): What is the total potential medical collections 
number (as opposed to what VA actually collects)?

    Response: CBO utilizes the Integrated Collections Forecasting Model 
(ICFM) to produce a 20-year collection forecast at the MCCF fund and 
Station levels. ICFM incorporates the VHA Office of Policy & Planning 
Enrollee Health Care Projection Model (EHCPM) workload projections as a 
starting point of the model. ICFM accounts for several factors in 
determining a collections forecast including: service volume, Priority 
Group status, demographics, economic market conditions, insurance 
coverage, and historical billings and collections performance. 
Additional considerations are made for any legislative or regulatory 
policy changes that may impact collections.

    The goal of establishing Expected Results (ER) is to set reasonable 
and achievable medical collections targets. The current published 
President's Budget for FY 2011, FY 2012 and FY 2013 represent 
collection targets that challenge each Medical Center to achieve their 
revenue potential.


------------------------------------------------------------------------
 Published President's Budget      FY 2011       FY 2012       FY 2013
------------------------------------------------------------------------
MCCF Collections (in millions)       $2,817        $2,925        $3,134
------------------------------------------------------------------------


    Question 16: The Secretary stated that the cost of caring for a 
homeless veteran is three and a half times the cost of caring for a 
non-homeless veteran in the VA health care system. Please provide a 
detailed cost comparison of what and how the care and services differ 
for a homeless veteran and non-homeless veteran.

    Response: See table below.


------------------------------------------------------------------------
                                           Dollars in Thousands
                                 ---------------------------------------
           Description               Non-Homeless
                                        Veteran        Homeless  Veteran
------------------------------------------------------------------------
Inpatient Medical/Surgical              $10,084,130            $410,372
------------------------------------------------------------------------
Inpatient Pyschiatric                    $1,068,085            $459,553
------------------------------------------------------------------------
Residential Rehabilitation                 $190,496            $488,478
------------------------------------------------------------------------
PTSD Residential Rehabilitation             $73,902             $29,056
------------------------------------------------------------------------
Nursing Home                             $3,861,526             $93,106
------------------------------------------------------------------------
Primary Care Clinic                      $3,230,059            $111,807
------------------------------------------------------------------------
Medical/Surgical Cliics                  $6,577,896            $296,831
------------------------------------------------------------------------
Mental Health Clinics                    $1,845,179            $586,882
------------------------------------------------------------------------
PTSD Clinics                               $249,706             $21,826
------------------------------------------------------------------------
Other Clinics                            $7,653,696            $276,571
------------------------------------------------------------------------
Diagnostics                              $2,719,443            $113,336
------------------------------------------------------------------------
Pharmacy                                 $5,150,716            $140,782
------------------------------------------------------------------------
Readjustment Counseling                    $147,211              --
------------------------------------------------------------------------
State Home                                 $701,936              --
------------------------------------------------------------------------
Miscellaneous Contracts                    $131,683              --
------------------------------------------------------------------------
Total                                   $43,685,664          $3,028,600
------------------------------------------------------------------------
Number of Veterans                       $5,332,093            $108,966
------------------------------------------------------------------------
Cost Per Veteran                             $8,193             $27,794
                                                            = 3.4 times
                                                                greater
------------------------------------------------------------------------


    Question 17: What changes, if any, have been made this year to 
improve the analysis capabilities of VA's Enrollee Health Care 
Projection Model? How much confidence does VA have in the model's 
estimates?

    Response: VA is confident in the Model's estimates of veteran 
demand for VA health care. The Model is supported by an extensive array 
of in-depth analyses of the factors that drive demand for VA health 
care, including those listed below. These analyses and the study 
methodology are updated annually or as new data become available.

      Impact of income, unemployment rates, distance from VA 
facilities on enrollment rates
      Impact of unemployment rates on enrollee reliance on VA 
health care
      Impact of enrollee age, gender, morbidity, and geographic 
migration patterns
      Enrollee transition between enrollment priorities, i.e., 
movement into service-connected priorities and transitions due to 
changes in income
      Reliance on VA versus other health care providers
      Unique utilization patterns of Operating Enduring 
Freedom/Operation Iraqi Freedom/Operation New Dawn
      Enrollee attitudes towards VA health care.

    As a result of these analyses, the Model supporting VA's 2012/2013 
Budget Submission included an assumption to reflect the unique 
utilization pattern of enrollees in the first year of enrollment. This 
will improve the Model's capability to model for enrollee cohorts with 
significant new enrollment.

    Question 18: What is the total number of new Priority 8 veterans 
enrolled in the VA health care system whose income exceeds the 
geographic HUD index threshold, but were able to enroll as a result of 
the relaxed income restrictions?

    Response: As of February, 2011 the total count is 19,810.

    Question 18(a): Please provide a breakdown of the number of new 
priority 8's who have come into the system since Secretary Shinseki 
relaxed the income restrictions.

    Response: There is a total of 65,760new Priority Group 8 
enrollments since 6/15/2009. A breakout by Fiscal Year (FY) is as 
follows: FY09--18,858, FY 2010 -- 33,231, FY 2011 through February--
13,671.

    Question 18(b): What is the assumption for new priority 8's in FY 
2011? What is the assumption for FY 2012 and 2013?

    Response: The projected number of new Priority 8 enrollees is 
approximately 40,000 in FY 2011. The projected number of new Priority 8 
enrollees is approximately 26,000 and 86,000 for FY 2012 and FY 2013, 
respectively, according to the 2010 Enrollee Health Care Projection 
Model (Base Year 2009).

    Question 18(c): How do the assumptions VA used for the number of 
new priority 8's compare with the actual number enrolled in FY 2009, FY 
2010, and thus far in FY 2011?

    Response: Previously, we projected a surge in enrollment when the 
suspension on Priority 8's was lifted and veterans who had not been 
able to enroll took advantage of the new opportunity. In light of 
recent experience, this assumption has been significantly scaled back 
in the 2010 Model. The projected number of new Priority 8 enrollees 
coming into the system was approximately 21,000 for FY 2010 per the 
2010 Model (Base Year 2009), where the actual number of new Priority 8 
enrollees closely mirrored that at approximately 17,000 for FY 2010.

    Question 18(d): What resources were budgeted for FY 2009, FY 2010, 
and FY 2011 for health care services for new priority 8's and how do 
the actual amounts obligated compare? What is budgeted for new priority 
8's in FY 2012 and FY 2013?

    Response: See table below.


----------------------------------------------------------------------------------------------------------------
                                                        FY 2009     FY 2010    FY 20111     FY 2012     FY 2013
----------------------------------------------------------------------------------------------------------------
Budget                                                      $74         $66        $161        $203        $432
----------------------------------------------------------------------------------------------------------------
Actual                                                      $61         $92         $58

----------------------------------------------------------------------------------------------------------------
1 Actuals as of end of January 2011.
 FY 2009 Budget Estimates: 2008 Base, 2011 President's Submission.
 FY 2010-FY 2013 Estimates: 2009 Base, 2012 President's Submission.


    Question 19: GAO Report 11-205 regarding the model used to develop 
the VA health care budget indicated that OMB provided VA with estimates 
of the savings associated with a Presidential initiative for a 
government wide emphasis on reducing operating costs associated with 
maintaining surplus property for fiscal year 2011.

    Question 19(a): What was the OMB estimate of the savings associated 
with reducing these operating costs and did VA achieve those savings?

    Response: The estimated real property operating costs reduction in 
FY 2011 was $7 million. VA is in the process of implementing this 
initiative and intends to fully achieve the projected savings.

    Question 20: Has VA conducted a long-term analysis of the impact 
the Patient Protection and Affordable Care Act (Public Law 111-148) 
will have on the VA health care system? Please share that analysis, if 
any.

    Response: VA has not conducted a long-term analysis of the impact 
of the Patient Protection and Affordable Care Act (Public Law 111-148) 
will have on the VA health care system. A task force was assembled to 
conduct a preliminary assessment. The task force has recommended that 
VA conduct an in depth analysis to quantify the law's effect on 
veterans and the VA health system.
Inspector General
    Question 1: What was the rationale for flat lining the budget 
request for the IG given the government-wide emphasis on reducing 
wasteful and fraudulent spending?

    Response: The VA Inspector General (IG) has received a $20.6 
million (23 percent) increase in 2012 compared to 2009. This is an 
average increase of 7.7 percent per year, which is comparable to the 
General Administration staff office 3-year average increase of 8.8 
percent when excluding the President's government-wide acquisitions 
initiative. In addition, employment for the VA OIG has increased by 103 
FTE over the 2009 level (20.2 percent).
Benefits & Memorial Affairs
    Question 1: Have any of the National Cemeteries ever undergone an 
energy audit to review the energy usage and look for more efficient 
ways to conduct operations?

    Response: Energy audits were conducted at national cemeteries 
between 2007 and 2009. Energy audits will be conducted at the national 
cemeteries every 4 years, and new audits began in July 2010. Cemeteries 
will be reviewed to identify additional energy reduction measures.

    Question 2: What steps is NCA taking to reduce energy costs at 
national cemeteries?

    Response: Energy improvements at the national cemeteries include 
the following actions:

      Programmable thermostats.
      Replacing incandescent bulbs with compact florescent 
bulbs.
      Replacing older 4-foot florescent tubes with newer, more 
efficient ones.
      Replacing older electronic devices with more efficient 
ones (Energy Star rated), such as computers, printers, fax machines, 
copiers, and hot water heaters.
      Tuning up furnaces and air conditioning.
      Replacing older furnaces and air conditioning systems 
with more efficient systems (Energy Star rated).
      Installing programmable irrigation controllers to reduce 
irrigation water use, which lowers water pumping costs.

    NCA has implemented the use of pre-placed crypts, that preserve 
land and reduce operating costs, and water-wise landscaping that 
conserves water and other resources. Photovoltaic solar systems have 
been installed at Calverton (Long Island) and San Joaquin Valley 
National Cemeteries. Two additional photovoltaic solar systems are 
under contract for Riverside and Sacramento Valley National Cemeteries, 
and a system is planned for Fort Rosecrans (San Diego) National 
Cemetery. A wind turbine has been installed at Massachusetts National 
Cemetery.
    Geothermal heat pumps, using heat stored in the ground instead of 
air, are being evaluated for new and existing cemetery buildings. 
Geothermal heat pumps save approximately 40 percent of energy 
consumption compared to regular heat pumps.

    Question 3: Please explain Integrated Objective 1(A)(1), 
``Percentage of applications for headstones and markers that are in 
processed within 20 days for veterans who are not buried in a national 
cemetery,'' which suggests a reduction in performance from 93 percent 
in FY 2009 to 74 percent in FY 2010.

    Question 3(a): What accounts for the deterioration in performance?

    Question 3(b): How will requested funds for FY 2012 improve 
performance to that achieved in FY 2009?

    Response: FY 2010 performance was impacted by staff vacancies and 
intermittent system network issues which contributed to reduced 
performance. NCA has hired staff to fill the vacant positions and used 
overtime to reduce the number of days to process applications. We have 
worked to minimize system disruptions. Additionally, there were some 
weather-related events that shut down operations temporarily at several 
satellite offices. An alternative worksite initiative has now begun to 
ensure a continuity of operations when future weather related closures 
occur. Current FY 2011 performance is slightly above the target of 90 
percent. NCA expects to maintain current performance in FY 2011 and 
expects to meet the target in FY 2012 of 90 percent.

    Question 4: With a near flat line funding for the NCA Operations 
and Maintenance accounts in FY 2011 and in the FY 2012 request, how 
will NCA meet its Integrated Objective 1(A)(4) ``Percent of headstones, 
markers, and niche covers that are clean and free of debris or 
objectionable accumulations'' by increasing performance from 85 percent 
in FY 2010 to the planned 90 percent in FY 2011 and FY 2012?

    Response: In addition to the funding included in the FY 2010 budget 
and funding provided by the American Recovery and Reinvestment Act, the 
FY 2011 budget includes $36.9 million and the FY 2012 budget request 
includes $32.9 million for gravesite renovation projects that include 
cleaning headstones/markers. The impact of these funds on performance 
will be realized within 2 years of contract award as projects are 
completed. With this funding, NCA expects to increase performance to 
the planned 90 percent in FY 2011 and FY 2012.

    Question 5: Please explain the reasoning for the increase in Senior 
Executive Service Level employees at NCA from four in FY 2010 to 11 in 
the FY 2012 request.

    Response: The new SES positions reflect the growing scope and 
complexity of NCA operations. We are not requesting any additional 
funding or FTE for the positions.
    Five of the seven positions are for our regional office directors. 
Workload has increased considerably in the field. For example, in the 
last decade NCA has opened 15 new national cemeteries, a national 
training center, and a national scheduling center.
    Another of the new positions is for the Memorial Programs Service 
(MPS) director. In FY 2010, this office processed nearly 400,000 
headstone/marker applications and over 800,000 Presidential Memorial 
Certificates. MPS responsibilities have expanded to include the First 
Notice of Death function and the new medallion benefit.
    The final position restores an SES management slot that was 
available to NCA prior to FY 2010.
    These new positions are necessary to reflect current management 
requirements and will ensure the recruitment and retention of top 
managers.

    Question 6: What is the reasoning of increasing the appropriation 
for Headquarters staff and operations by $327,000 from FY 2010 level to 
the FY 2012 request?

    Response: The increase represents estimated payroll changes 
associated with grade and step increases for existing employees. The 
comparison is less than a 1-percent increase and does not reflect an 
increase in Headquarters FTE.

    Question 7: What is the reasoning for increasing the employee 
travel budget by $191,000 from FY 2010 level to the FY 2012 request?

    Response: The increase of $191,000 (7.5 percent) is due to 
projected cost increases associated with all modes of transportation. 
NCA is a national organization with 131 cemeteries in 39 states and 
Puerto Rico; State cemeteries in 38 states, Guam and Saipan; a national 
training center; and a national scheduling center. Travel funding is 
critical to ensure appropriate operational oversight, training, and 
organizational communication. Employee travel is approved based on 
program and training requirements. Approximately 480 NCA employees 
travel in a year.

    Question 8: How will NCA define the ``urban core'' in regards to 
planning for the new urban initiative?

    Response: NCA developed a set of criteria for establishing urban 
initiative facilities in densely populated areas. These ``urban core'' 
areas were identified by using the top 50 metropolitan areas by 
population as defined by the U.S. Census Bureau. NCA used this list to 
identify high population, urban areas currently served by a national 
cemetery. We identified existing national cemeteries that were 50 miles 
or more from the urban core of the top 50 cities by population. 
Additional urban initiative requirements included travel time of 1 hour 
or more from the urban core, documented veteran utilization rates of 
less than 20 percent for at least two of the last 3 years, and 
documentation that clients cite travel time and/or distance as an 
access barrier at least 5 percent above the national average on the 
Survey of Satisfaction with National Cemeteries for at least two of the 
last three surveys.

    Question 9: The FY 2012 budget request listed four cemeteries that 
would be eligible for expansion at an urban core under a new urban 
initiative yet the minor construction budget only contains funds for 
the Chicago cemetery in FY 2012.

    Question 9(a): How was Chicago selected over the other sites?

    Question 9(b): What is the timeline for construction of the other 
sites?

    Response: Two of the urban initiative sites will be funded from the 
major construction budget. The FY 2011 budget includes funding to 
construct a columbarium expansion project at Los Angeles National 
Cemetery, which is currently a closed cemetery. This project will serve 
the Los Angeles area. The FY 2011 budget also includes design funding 
for a columbarium at Alameda Point, California, which will serve 
veterans in the San Francisco/Oakland/San Jose area. Construction 
funding for the Alameda project will be requested in a future budget 
request.
    Minor construction funding for the Chicago area is included in the 
FY 2012 budget request, and minor construction funding for the New York 
City area will be requested in a future budget request. Chicago was 
selected for FY 2012 funding because it is believed that property will 
be easier to acquire in that area than in New York City. VA is 
currently advertising for land in New York City. VA will consider 
adjusting its plan if circumstances warrant.

    Question 10: How has NCA used the appropriation for the land 
acquisition account since its inception? Please describe if and when 
there has ever been a carryover in this account in the last three 
fiscal years.

    Response: Funding for the land acquisitionline item was first 
requested in 2009 to provide the flexibility to acquire land when an 
opportunity arises. Carryover funds are available in this account; 
however, they have been allocated for land purchases.
    VA is currently pursuing land for two existing cemeteries: an 
expansion of Willamette National Cemetery in Oregon and a replacement 
cemetery for Puerto Rico. Specific parcels have been identified and the 
acquisition process is underway.
    Land acquisition for five new national cemeteries is also in 
progress: Southern Colorado; Tallahassee, Florida; Central East 
Florida; Omaha, Nebraska; and Western New York. Funds have been 
obligated for due diligence. Using funds in the land acquisitionline 
item, NCA plans to purchase land for these new cemeteries in 2011 and 
2012.

    Question 11: What is your view of expanding the State Cemetery 
Grant Program to eligible local and municipal governments who have 
shown that they have the financial resources to maintain to NCA 
standards of upkeep at these cemeteries after construction?

    Response: Any expansion of eligibility for the State Cemetery 
Grants Program would require legislation. If such legislation is 
introduced, VA will respond to the Committee's request to provide 
views.

    Question 12: Please explain the reason that the FY 2012 request 
anticipates a drop of $2.5 billion in survivor benefits.

    Response: This decrease in survivor benefits is primarily due to 
the expectation of paying the Agent Orange retroactive veteran and 
survivor claims in 2011 in addition to the veterans currently receiving 
compensation and potential veteran and survivor accessions. Discounting 
the effects of Agent Orange claims in 2011, caseload and average 
payment for both veterans and survivors resume the normal annual trend 
in 2012.

    Question 13: Please explain the projection of a $3.2 million 
increase in clothing allowances.

    Response: Based on historical data, VA assumes that 2.85 percent of 
veterans on the rolls will receive a clothing allowance. Applying this 
percentage to the estimated FY 2012 veteran caseload results in an 
increase of 3,589 clothing allowance recipients over the FY 2011 level. 
This increase in caseload results in an additional cost of $2.6 million 
in FY 2012. A cost of living adjustment of 0.9 percent in 2012 
increases the expected clothing allowance cost by an additional $0.6 
million.

    Question 14: What factors contribute to the 12 percent rise in 
veterans who received an increased disability rating in FY 2010 
compared to FY 2009?

    Response: In 2009, of the total veterans on the rolls for 
compensation benefits, approximately 5.6 percent, received an increase 
in their disability rating. In 2010, this percentage increased to 6 
percent of the total veterans receiving compensation. Contributing 
factors are increasing average age of veterans from earlier war 
periods, additional regulations, legislation, and the increasing 
numbers of issues per claim.

    Question 14(a): Does this budget predict a similar outcome for FY 
2011 and FY 2012.

    Response: Based on historical data, the average degree of 
disability is forecasted to increase through 2012 and the outyears. The 
budget request considers the increasing average degree of disability in 
conjunction with estimated VA workload projections.

    Question 15: Please elaborate on how P.L. 111-377 will affect the 
budget account estimates for programs under:

    Question 15(a): Chapter 30 of title 38, United States Code.

    Question 15(b): Chapter 33 of title 38, United States Code.

    Question 15(c): Chapter 35 of title 38, United States Code.

    Response: The impact of Public Law 111-377 to the Readjustment 
Benefits account is currently being assessed by VA staff and will be 
fully incorporated into the release of the 2012 Mid Session Review 
Budget.

    Question 16: Since the President has taken office the backlog of 
disability claims has grown by 103 percent, and this budget projects 
that the average days to complete a claim will rise from 165 days in FY 
2010 to 230 days in FY 2012. With the knowledge that it takes new 
claims examiners close to 2 years to become fully productive, and the 
Veterans Benefits Management System is years away from being completed, 
what is the short term plan to address this increasing backlog?

    Response: VA is not waiting for the implementation of the Veterans 
Benefits Management System (VBMS) to take aggressive action toward the 
goal of completing all claims within 125 days at 98 percent accuracy. 
VA's multi-tiered approach for addressing the dramatically increasing 
volume of incoming claims includes a number of innovations. VA deployed 
two rules-based calculators to streamline and improve decision quality, 
with more tools in the pipeline. Providing veterans with improved 
online access to claims status information and other self-service 
options (such as ordering copies of discharge records) increases client 
satisfaction while freeing VA staff to work on claims. The Agent Orange 
(AO) Miner Tool links AO-related databases together and facilitates 
data search in developing veterans' AO claims. New evidence-gathering 
tools such as the Disability Benefits Questionnaires sharpen the focus 
in medical examinations to ensure all information needed to rate the 
claim is gathered the first time in the medical examination process and 
is presented succinctly. The Fully Developed Claims (FDC) program puts 
veterans in the driver's seat for submitting claims that are ready to 
rate when received by allowing them to certify that their claim 
includes all available evidence in exchange for expedited processing by 
VA.
    It is estimated that in late 2012, production will begin to outpace 
receipts. At that same time, we plan to begin the deployment phase of 
VBMS. VBMS will provide powerful new tools to claims examiners to boost 
efficiency and productivity. Gains in accuracy through rules-based 
processing will reduce re-work and appeals. Rules-based processing and 
calculator tools also speed the rating process, which will increase 
employee productivity and provide more staff hours to rate other 
claims.

    Question 17: Can you please address reports that in several 
regional offices that all pending disability benefits claims have been 
put aside to work Agent Orange claims?

    Response: In response to VA Secretary Shinseki's announcement of 
October 13, 2009, which added three new presumptive conditions to 
disabilities currently presumed service-connected based on exposure to 
herbicides in the Republic of Vietnam (ischemic heart disease, 
Parkinson's disease and Hairy Cell (B-Cell) leukemia), VBA shifted the 
mission of the 13 Resource Centers (RC) in addition to a few employees 
at the St. Paul Regional Office. The mission of these nationwide 
processing centers, originally established to review, develop, and 
promulgate pending claims for service-connected benefits, shifted to 
focus on processing decisions on the 94,000 cases that fall under the 
Nehmer Readjudication Project.
    This work is necessary to comply with VA's obligations under the 
Nehmer Stipulation and Order, and judicial decisions issued in this 
class action lawsuit.
    Over the last several years, these Resource Centers have been 
allocated additional staff to allow them to work the national missions 
separate and apart from the local regional offices' workload. These 
resource centers were designed to improve the timeliness, consistency, 
and accuracy of national workload while allowing regional offices to 
focus more resources on processing local disability compensation 
claims. VA currently has over 1,300 employees at these resource centers 
around the country devoted to the readjudication of Nehmer claims. The 
current workload and mission (Nehmer Readjudication) of the Resource 
Centers will be national and temporary in scope, but will also service 
local veterans with pending Nehmer claims.
    In addition, approximately 1,800 VA employees across VA's 57 
regional offices that have been adjudicating the numerous new Nehmer 
Agent Orange claims received between October 13, 2009 and August 31, 
2010. These regional office employees continue to process local pending 
disability claims, in addition to the new Nehmer claims.

    Question 18: We have also heard reports that medical appointments 
are being rescheduled so Agent Orange related disability rating exams 
can take place. Is this true and if so could you please explain the 
rationale for this decision?

    Response: VHA has not issued any guidance giving Nehmer claimants 
priority for compensation and pension appointments. Veterans' scheduled 
compensation and pension appointments are not being cancelled. To cut 
down the backlog of pending compensation and pension disability 
examination requests, one VISN is reassigning clinicians in VHA primary 
care clinics to perform disability examinations 1 week per month. This 
exercise is taking place from March 2011 to May 2011. They will perform 
all C&P disability examinations, not just those related to Nehmer 
claims. However, primary care is still being provided. The decision to 
reassign clinicians is within the individual authority of the VISN.

    Question 19: Please discuss VA's current efforts to standardize the 
private medical questionnaires for disability benefits claims and how 
these forms will have an impact on the backlog of disability benefits 
claims.

    Response: VA is developing Disability Benefits Questionnaires 
(DBQs) to streamline the process by which veterans submit relevant 
medical evidence to VA. The targeted questions in the DBQs will improve 
the quality and timeliness of medical evidence necessary to support a 
veteran's claim for disability benefits, which will enable VA to 
adjudicate claims faster. Use of the streamlined medical questionnaires 
by private physicians, at the request of veterans, as well as by VA 
contractors and VHA physicians, will create an aggregate timeliness 
advantage for claims processing and thus help alleviate the claims 
backlog. It also offers the long-term potential for VBA to 
electronically pull the data directly into its systems to aid in the 
claims process.

    Question 19(a): How many of these questionnaires have been approved 
for use?

    Response: VA developed the first three DBQs related to the new 
Agent Orange presumptive service-connected conditions of ischemic heart 
disease, Parkinson's disease, and hairy cell and B-cell leukemias. They 
were released to the public on October 6, 2010.

    Question 19(b): How many of these questionnaires are under review?

    Response: VA is working on an additional 81 DBQs, in four stages of 
development. Fourteen DBQs were published in the Federal Register on 
February 15, 2011, for the initial 60-day public comment period. We 
estimate that they will be available for public use in September 2011. 
The remaining DBQs are in the process of development, review by 
Veterans Service Organization representatives and physicians, 
amendment, and formal public comment, with the plan for final 
publication of all DBQs by June 2012.

    Question 19(c): What is the cost or savings associated with using 
these questionnaires?

    Response: The savings related to this initiative will be impacted 
by how many VHA initial exams are no longer needed due to exams being 
completed by private physicians. To date, VBA has received 2,441 DBQs 
from outside of the traditional VA disability examination process. 
Savings will be further impacted by how many follow-up VA exams can be 
avoided by increasing the adequacy of initial VA examinations. VA is 
assessing potential savings in a field study based on the DBQs 
currently in use. The long-term savings will potentially increase as VA 
is able to pull exam information electronically directly into its 
systems to assist in the eligibility determination process.

    Question 19(d): What is the timeline for the rollout of these 
questionnaires?

    Response: The remaining DBQs are in the process of development, 
review by Veterans Service Organization representatives and physicians, 
amendment, and formal public comment, with the plan for final 
publication of all DBQs by June of 2012.

    Question 19(e): Has there been any external feedback from the 
private medical community on the effectiveness of the questionnaires?

    Response: There has been no external feedback to date from the 
private medical community. VA currently is working on an electronic 
portal for the private medical community to submit DBQs and provide 
feedback. This iterative process will assist veterans and physicians in 
providing evidence that meets the requirements of the VA Schedule for 
Rating Disabilities, helping VBA to increase consistency and timeliness 
of disability decisions.

    Question 19(f): How will you measure success in this program?

    Response: VBA is conducting a field study to quantify the time 
differential between utilizing DBQs compared to traditional medical 
examination templates by both VHA examiners and VBA rating veterans 
service representatives. It is also evaluating the adequacy of the 
examinations and consistency of disability determinations.

    Question 20: What steps is VBA taking to provide better customer 
service for veterans who live overseas and have a claim pending for 
disability benefits?

    Response: VA provides benefits information and assistance to 
veterans and their families residing overseas through the American 
embassies and consulates under the Foreign Services Program (FSP).
    The Pittsburgh Regional Office has jurisdiction of claims from 
veterans residing in Europe, Asia, Australia, and Africa. The 
Pittsburgh RO has a designated telephone line that veterans residing in 
foreign countries may use to contact the RO about their claims. A 
second shift was established at the beginning of fiscal year 2010, with 
the goal of providing better service and greater access for veterans 
residing in foreign countries.
    Additionally, the Pittsburgh RO is assisting the Veterans Health 
Administration (VHA) in the coordination of a pilot program in which 
VHA clinicians will travel to foreign countries to conduct VA medical 
examinations in order to expedite the examination process.

    Question 21: When will all of the Nehmer-related cases be completed 
and what are the mandatory and discretionary costs associated with re-
adjudicating these claims?

    Response: For mandatory benefits, VA estimates that the majority of 
the approximately 94,000 Vietnam beneficiaries, whose claims require 
readjudication under Nehmer, and the many claimants who have filed new 
Nehmer claims (approximately 50,000), will have their claims 
readjudicated or adjudicated in 2011. This amounts to an estimated 
$12.3 billion in Nehmer retroactive payments.
    VA has devoted extensive resources to the task of adjudicating and 
readjudicating the approximately 144,000 Nehmer claims involving 
ischemic heart disease, Parkinson's disease, and hairy cell and other 
chronic B-cell leukemias. VA is continuously reevaluating this process 
to ensure that we adjudicate claims as quickly and accurately as 
possible.
    Secretary Shinseki established a goal of adjudicating the 
approximately 144,000 Nehmer claims by September 30, 2011; however, 
there are many factors affecting VA's ability to meet that goal. The 
complexity of the workload and the resources required to be devoted to 
completion of the project may impact VA's ability to fully adjudicate 
every Nehmer claim by that date.
    VA currently has over 1,300 employees at 13 resource centers around 
the country devoted to the readjudication of Nehmer claims. In 
addition, approximately, 1,800 VA employees at the 57 VA regional 
offices have been adjudicating the new presumptive claims that VA 
received between October 13, 2009 and August 31, 2010 that are also 
subject to the Nehmer provisions. As of March 22, 2011, VA has 
processed over 68,000 Nehmer claims. VBA does not separately track the 
discretionary costs related to Nehmer claims processing.

    Question 22: What funds will VBA need to implement the provisions 
of P.L. 111-377? How much of that need is part of the FY 2012 request?

    Response: In FY 2012, VBA has requested $17.5 million to fund the 
discretionary costs associated with implementing the provisions of P.L. 
111-377. The Post-9/11 GI Bill required VA to significantly increase 
staffing in the short term until a new, robust IT environment is 
developed, deployed, and proved successful. To support the 
implementation of the Post-9/11 GI Bill, VA hired 530 temporary claims 
processors. Public Law 111-377 modifies aspects of the Post-9/11 GI 
Bill. In order to implement the new law, changes need to be made to the 
Long Term Solution (LTS) for processing Post-9/11 GI Bill claims. As a 
result, automation of end-to-end processing for some reenrollments, 
functionality planned for release in June 2011, will not be available 
until the third quarter of FY 2012. This delay increases the number of 
FTE needed to process education claims. Our budget request reflects the 
need to retain 274 of the claims examiners to remain through FY 2012 to 
maintain current claims processing efficiencies.

    Question 23: What automation enhancements for education claims 
processing have been delayed because of the enactment of P.L. 111-377 
and what is the new timeline for deploying these enhancements?

    Response: Public Law 111-377, the Post-9/11 Veterans Educational 
Assistance Improvements Act of 2010, modifies certain aspects of the 
Post-9/11 GI Bill. The enactment of this law impacts the development of 
the Long Term Solution (LTS) for processing Post-9/11 GI Bill claims 
and our ability to fully automate the delivery of benefits. The 
capability to conduct automated end-to-end processing on some 
reenrollments was tentatively planned for June 2011. This capability 
would create a subset of claims that do not require manual 
intervention. Because all efforts will now be directed to implementing 
the changes in the new law, we anticipate this functionality will not 
be available until the third quarter of fiscal year (FY) 2012.

    Question 24: How will the Vet Success on Campus program differ or 
interact with the centers of excellence for veteran education pilot 
program that is being run by the Department of Education?

    Response: The VetSuccess on Campus program places a full-time VA 
Vocational Rehabilitation Counselor (VRC) on campus. The counselor is 
trained and proficient in all aspects of VA benefits, and provides 
adjustment counseling, career counseling, assistance with benefits, or 
referrals for other services to the student veteran population. The 
VetSuccess on Campus program also includes a part-time Vet Center 
Coordinator, who provides peer-to-peer counseling services and 
referrals. The Centers for Excellence for Veteran Education pilot 
program, run by the Department of Education, is a grant program that 
provides funding to colleges interested in setting up a Center of 
Excellence on campus to provide comprehensive services to veteran 
students. The primary difference between the two programs is that, 
while there are standard criteria for a college to receive funding for 
a Center for Excellence, the universities receiving the funding do not 
have a standardized setup or staffing model for the centers, nor are 
the centers staffed by VA employees. The VetSuccess on Campus program 
provides a standardized program across each college campus that is 
staffed with VA employees who can provide direct VA benefits assistance 
and support to the veteran students. VR&E is interacting with the 
Department of Education to determine how best to collaborate with the 
Centers for Excellence program.

    Question 25: What type of faith-based organizations is the VR&E 
service planning to partner with under the budget request?

    Response: The VR&E Faith-based and Neighborhood Partnerships (FBNP) 
Program is working diligently with the Center for FBNP. Four veterans 
roundtable events are facilitated each year at different VA regional 
offices. VR&E collaborates with FBNP organizations such as non-profit 
social service, charitable, and religious organizations in the 
community. These organizations complement VR&E services by providing 
ancillary support services to veterans. FBNP organizations also work 
with VR&E counselors and employment coordinators to recruit and hire 
veterans into their program vacancies.

    Question 26: What is the explanation for the apparent promotion of 
the following VBA employees from certain GS ratings?

      A loss of 131 GS-5 level employees with an increase of 
131 GS-7 level employees
      A loss of 991 GS-9 level employees with an increase of 
934 GS-10 level employees
      A loss of 100 GS-11 level employees with an increase of 
103 GS-12 level employees

    Question 26(a): Was this step made to provide these employees with 
an increase in salary before the President but a freeze on civil 
service raises?

    Response: No, these promotions reflect the normal career 
progression of claims assistants (career path of GS 5 to 7), veterans 
service representatives (career path of GS 7-9-10, test for GS 11), and 
rating veterans service representatives (career path of GS 9-10-11, 
test for GS 12).

    Question 26(b): Are promotion rates of what is outlined above 
typical?

    Response:Yes, these are the normal career paths for the majority of 
VBA's claims processors.

    Question 27: How many regional office directors are not SES level 
employees?

    Question 27(a): Which offices do not have a SES level employee as a 
director?

    Response: The following ROs have a GS-15 director:

      Hartford, CT
      Manchester, NH
      Newark, NJ
      Providence, RI
      Togus, ME
      Huntington, WV
      Des Moines, IA
      Fargo, ND/Sioux Falls, SD (combined as the Dakotas RO)
      Wichita, KS
      Boise, ID
      Honolulu, HI
      Reno, NV
      Albuquerque, NM

    Question 27(b): How are the regional offices chosen to have SES 
level director vs. a GS-14 or GS-15 level director?

    Response: In determining whether an SES director is needed to lead 
a regional office, the factors that are considered include workload, 
programs administered, number of employees, complexity and scope of 
operations, and special national missions, such as the resource centers 
previously mentioned, the consolidated processing of specific 
categories of claims (e.g., Camp Lejeune water contamination claims and 
radiation claims), the National Call Centers, and the Tiger Team for 
claims from veterans over 70 years old or pending over 1 year.

    Question 27(c): Is there a different level of training for an SES 
level director vs. a GS-14 or GS-15 level director?

    Response: There are no GS-14 directorships. The first assignment 
for our newest directors is frequently a GS-15 directorship. This 
allows newly appointed directors to gain experience in managing a less 
complex office before taking on the challenge of managing one of our 
larger and more complex regional offices at the SES-level. Most of our 
newly appointed directors, whether appointed to a GS-15 or SES 
position, have participated in VA's SES Candidate Development Program, 
through which they receive extensive training, mentoring, and 
development opportunities that include temporary assignments to SES-
level positions. Many of them have also completed VBA's Assistant 
Director Development Program and have served as Assistant Regional 
Office Directors.

    Question 28: Please provide the average GS level for the following 
positions at a VBA regional office:

    Question 28(a): Director

    Response: On average, Directors are at the SES level.

    Question 28(b): Assistant Director

    Response: On average, Assistant Directors are at the GS-15 level.

    Question 28(c): Service-Center Manager

    Response: On average, Service-Center Managers are at the GS-15 
level.

    Question 28(d): Vocational Rehabilitation Counselor

    Response: On average, Vocational Rehabilitation Counselors are at 
the GS-12 level.

    Question 28(e): Unit Chiefs

    Response: On average, Unit Chiefs are at the GS-13 level.

    Question 29: With the renewed efforts to remove VBA from paper-
based systems and VA's constant overestimation of this account for the 
past three fiscal years, why is the budget line for VBA printing costs 
under General Operating Expenses for VBA going up by $608,000?

    Response: Printing costs increase primarily for Education Service 
to develop a Post-9/11 pamphlet/booklet for national distribution. 
Also, in continued efforts to standardize training information provided 
to School Certifying Officials (SCOs), Education Service is developing 
a comprehensive School Certifying Official Guide to be the official 
handbook for all SCOs. Distribution will be to all institutions of 
higher learning (IHLs) and non-college degree institutions (NCDs), as 
well as State Approving Agencies and Education Liaison Representatives.

    Question 30: What is included in the ``other services'' line item 
under VBA's General Operating Expenses and what is the justification 
for increasing this amount by $95 million?

    Response: The other services budget category funds service and 
maintenance contracts, Homeland Security and GSA services, and other 
miscellaneous contracts and agreements. The $95 million increase funds 
a $60.8 million increase for contract exams, $27.8 million for the 
Claims Transformation Plan, $5 million for the Integrated Disability 
Evaluation System (IDES) initiative, $2 million for a business process 
reengineering contract for the VR&E program, and $600,000 in 
miscellaneous reductions.

    Question 31: Please explain the $300,000 drop in rent, 
communications, and utilities for the Insurance Service.

    Response: Insurance Services is co-located with the VA Regional 
Office in Philadelphia; therefore, Insurance's rent, communications, 
and utilities consist of Insurance's share of the building-wide amenity 
spaces in addition to the cost per square foot for the space that it 
occupies.

    Rent, communications, and utilities decrease by $300K from FY 2010 
to FY 2012 due to lower standard level user charges (SLUC) associated 
with the projected decline in the ratio of Insurance to building-wide 
FTE.

    Question 32: For FY 2011 the budget shows that Compensation and 
Pension Service was given (or is expected to be given under a full-year 
CR) an additional appropriation for total administrative obligations 
over the FY 2011 request. Please explain why the FY 2012 request shows 
a re-estimate of Direct FTE for the Compensation and Pension Service of 
1,109 FTE under the ``CR'' when compared with the FY 2011 request. If 
C&P plans to spend more money than budgeted, but on fewer staff, what 
is that money going towards?

    Response: In FY 2011, VBA will realign approximately $57 million 
from personal services to other services and apply $19 million in 
carryover funding for the exploration of alternatives to FTE to assist 
in eliminating the claims backlog.

    Question 33: Please provide a detailed summary of the type of work 
and GS level that the new 109 Management Direction and Support FTE's 
from the FY 2010 level for the Compensation and Pension Service will be 
providing under the request.

    Response: The additional FTE, ranging in grades from GS-5 to SES, 
will perform mission-essential functions, primarily in support of VBMS, 
VRM, the Claims Transformation Plan, and outreach. Duties range from 
senior oversight, supervision, program management and analysis, project 
development and oversight, change management and implementation, 
process analysis and refinement, and administrative support.

    Question 34: What changes does this budget request support to 
account for the estimated reduction in the average days to complete 
pension entitlement claims from 125 days under the ``CR'' to 90 days in 
FY 2012?

    Response: Contractor support is being acquired to assist in 
reengineering business processes at the Pension Management Centers 
(PMCs). This project, known as the Pension Transformation Plan, will 
document the distinct workflows in place at the PMCs. The contractor 
will analyze these workflows, along with other inputs (stakeholder 
interests, policies, procedures, regulations) and produce a common, 
optimized ``to be'' process that will be implemented at all three PMCs.
    In addition to the Pension Transformation Plan, the ``average days 
to complete'' for pension entitlement claims in 2012 will be influenced 
by the rollout of the Rules-Based Processing initiative. Under this 
initiative, new tools will process some claims actions end-to-end, 
outside of the current people-centric system. These rules-based tools 
will deliver results by streamlining pension claims processing.
    Additionally, the pension program policy and oversight functions 
are being separated from the compensation program functions in the VBA 
Headquarters organization. A separate Pension and Fiduciary Service is 
being created to give greater oversight and management attention to the 
pension and fiduciary programs.

    Question 35: Why do you believe that the number of cases claiming 
eight issues or more has expanded from 22,776 in 2001 to 70,620 during 
2010?

    Response: Several factors likely contribute to the growth of the 
number of issues claimed by veterans and Servicemembers. We believe 
that the increase stems from a general increased awareness of the 
availability and importance of disability compensation.
    Improved and Expanded Outreach: The Department of Veterans Affairs 
(VA), Department of Defense (DoD), Department of Labor (DoL), and other 
Federal agencies have combined outreach efforts to Servicemembers 
recently released from active duty, or those not yet released. Benefit 
programs for those injured during service are discussed in such 
programs as:

      Federal Recovery Coordinator Program
      Wounded Warrior Program
      The Army Reserve Family Program
      DoD's Transition Assistance Program (TURBOTAP) Web site, 
which contains links, application forms, information, phone numbers, 
etc.
      Yellow Ribbon Reintegration Program
      VA teams that attend demobilization briefings

    Increase in VA Programs Focused on Transition: VA and DoD have 
joint initiatives to help Servicemembers apply for VA disability 
benefits early in their transition process. Pre-discharge programs like 
Benefits Delivery at Discharge (BDD), Quick Start, Very Seriously 
Injured/Seriously Injured (VSI/SI) case management, and the Integrated 
Disability Evaluation System (IDES) begin the claims process before 
discharge, so that the benefits can be paid promptly after release from 
active duty. Examinations and exchange of medical evidence between the 
agencies also promote quicker service and encourage the filing of 
disability claims prior to release from active duty.
    Media: The Internet provides Servicemembers with access to benefits 
information through VA and DoD Web sites. News programs discuss the 
current wars, their effect on the health of Servicemembers and 
veterans, and benefit programs available. Military installations 
distribute brochures and other outreach materials to explain VA 
benefits. veterans service organizations, as well as other 
transitioning Servicemembers and veterans, also discuss and share 
disability benefit information.

    Question 35(a): Do you have any data on how many of these eight 
issue cases have been granted or denied?

    Response: In FY 2010, 91 percent of all claims with eight or more 
issues were granted service-connection for one or more disabilities. 
For the same group of claims, 54 percent of all claimed issues were 
granted.

    Question 36: What steps have been taken to finalize the skills 
certification testing requirements for all claims adjudicators and 
managers under P.L. 110-389?

    Response: VBA leadership is scheduled to meet with AFGE 
representatives for mid-term bargaining the week of April 11, 2011. The 
purpose of these negotiations is skills certification issues, to 
include the statutory requirement for VBA to provide for examinations 
of appropriate employees and managers who are responsible for 
processing claims for compensation and pension benefits. After 
conducting pre-decisional involvement with our labor partners, VBA will 
finalize a policy to require all claims adjudicators and managers to 
participate in skills certification.

    Question 36(a): What steps have been taken to provide remediation 
to approximately 3,432 employees who have not passed the skills 
certification?

    Response: In addition to the standard training curriculum for new 
claims processing employees, Veterans Service Representatives (VSRs) 
are provided an additional 20 hours of training conducted within 60 
days prior to the test date that includes a review of the VSR Skills 
Certification Training Guide and the Boot Camp Training test. The 
expectation is that VSRs at the GS-10 level will sit for certification. 
However, it has been determined that there is a sufficient amount of 
work at the VSR GS-10 level for those employees who are not successful 
in the skills certification testing since they continue to add value to 
the organization. Rating Veterans Service Representatives (RVSRs) are 
now required to pass the Basic RVSR skills certification as a condition 
of employment in the position. RVSRs who have completed the RVSR 
training curriculum, are meeting the local trainee performance 
standard, and have been in the position for a minimum of 6 months and a 
maximum of 24 months are eligible to take this test. More recent skills 
certification testing for experienced RVSRs, Decision Review Officers, 
and managers are currently utilized to identify training concerns and 
increase proficiency. Feedback is provided to all employees on the 
areas where questions were answered incorrectly. The intent of skills 
certification is to require that employees demonstrate a certain level 
of proficiency. However, in requiring that a certain level of 
proficiency be demonstrated, VBA has to consider and provide for the 
possibility that some employees will be unable to demonstrate 
proficiency on a test even though they may be performing successfully 
on the job. Thus, skills certification feedback is given and used for 
training purposes.

    Question 36(b): If a person does pass the skills certification test 
do they receive a GS rating promotion?

    Response: If an employee was hired into a position that requires 
passing the skills certification to reach full promotion potential, 
they are promoted upon passing the skills certification test along with 
meeting time in grade requirements.

    Question 36(c): What types of skills certification tests are 
required for new employees who have completed the basic standardized 
training before they can begin working live cases?

    Response: VBA has developed and implemented a standardized training 
curriculum for new claims processing employees, referred to as the 
Challenge training program. The Challenge program is a national 
technical training curriculum that provides new Veterans Service Center 
employees the skills they need to function effectively in their 
positions as Veterans Service Representatives (VSRs) or Rating Veterans 
Service Representatives (RVSRs). The Challenge program is delivered in 
a blended learning fashion in three phases. These phases require 
completion of knowledge-based prerequisite training at home stations 
using lectures, demonstrations of computer applications, and team-
learning through VBA's Training and Performance Support Systems (TPSS), 
along with centralized classroom training. Centralized training 
provides hands-on training with computer applications and advances the 
new employees through progressively more challenging practice claims. 
Every new employee handles sample claims just as they will when they 
return to their home stations. Additionally, post-tests are built into 
TPSS to confirm learning achievement. As part of the continued 
training, new employees working live cases do so under the constant 
guidance of experienced employees.

    Question 36(d): Does VBA provide the skills certification to all 
direct FTE or just ones that want to move up a GS rating?

    Response: Employees recently hired as Rating Veterans Service 
Representatives (RVSRs) are required to pass the Basic RVSR skills 
certification test as a condition of their retention in the position. 
Veterans Service Representatives (VSRs) must pass the VSR skills 
certification test to be promoted to the GS-11 level. The results of 
recently established testing for experienced RVSRs, Decision Review 
Officers, and Managers is used for feedback and training.

    Question 37: The Committee has received many complaints about the 
level of service and performance of many of VA's assigned fiduciaries. 
What non-workload performance metrics are in place for this budget for 
fiduciaries and how can this system be improved?

    Response: VA has established three key components for FY 2012 to 
address fiduciary performance.

      Training: Centralized training for fiduciary personnel is 
anticipated to begin in FY 2012. The centralized training will provide 
field examiners and legal instruments examiners with the knowledge and 
skills to better select and instruct fiduciaries. Additionally, this 
standardized training will provide fiduciary personnel with the tools 
necessary to identify and address any performance issues with 
fiduciaries earlier in the process.
      Technical Support: VA will undertake activities to 
support the replacement for the Fiduciary Beneficiary System (FBS) in 
FY 2012. FBS is the computer program used by the fiduciary program to 
manage workload and track fiduciary performance. The new version of FBS 
is being designed to significantly enhance workload management and 
provide a historical record of fiduciary performance. This tool will 
allow for greater oversight of fiduciaries and better selection based 
on valid data.
      Communications: In FY 2011, VA launched a fiduciary 
Internet site. This site provides fiduciaries with information 
regarding their duties and responsibilities, references, forms, and 
frequently asked questions. Plans for FY 2012 include enhanced 
communications to veterans and beneficiaries who have been determined 
unable to manage their financial affairs. These communications will 
include written information regarding their rights and responsibilities 
and increased sharing of information regarding estate balances. Future 
plans for the Internet site include incorporating online training and 
eventually a certification process for professional fiduciaries.

    Question 38: Please provide a detailed account of how the 
$29,929,000 in requested funding for the Claims Transformation Plan 
will provide accountability and oversight over the 40 pilots that are 
underway to test policies and procedures to increase timeliness and 
accuracy for disability benefit claims.

    Response: The $29,929,000 is requested to support non-IT 
requirements associated with the Claims Transformation Plan. It 
includes funding for 10 FTE for the Office of Strategic Planning to 
oversee initiative development, testing, assessments, and deployment; 
travel associated with deployment and oversight of all 40+ initiatives; 
contract support of the initiatives (private medical records vendor, 
project management support, strategic and communications support 
services); and supplies, materials, and equipment.

    Question 39: How will the enactment of P.L. 111-377 and delaying of 
certain automation for processing Chapter 33 claims affect the 
performance measures for adjudicating original and supplemental 
education claims?

    Response: We expect to have most of the automation to support P.L. 
111-377 in place prior to the fall semester of school year 2011-2012 
and therefore expect minimal impact on performance measures. As with 
any change, training and experience are required to administer 
benefits. We anticipate a slight increase in timeliness for processing 
Chapter 33 claims due to the enactment of P.L. 111-377, but expect 
timeliness rates to return to current levels by the end of the fall 
semester. While delaying previously scheduled automation enhancements 
to support implementation of P.L. 111-377 will not impact current 
processing timeliness, it will delay realization of the efficiency and 
processing timeliness gains we expect to achieve through the fully 
automated functionality to be developed in the LTS.

    Question 40: P.L. 110-389 required VA to conduct two studies, a 
study on the completion of VR&E training programs and a 20-year 
longitudinal study of three cohorts of veterans.

    Question 40(a): Was funding allocated for either of these studies 
in FY 2011?

    Response: Due to the fact that P.L. 110-389 was passed after the FY 
2011 budget request was submitted, both studies were identified as 
unfunded requirements.

    Question 40(b): What is the status of those studies?

    Response: Section 333 (Study on Measures to Assist and Encourage 
Veterans in Completing Vocational Rehabilitation) was completed and 
submitted to Congress on June 18, 2010. In response to Section 334 
(Longitudinal Study), VR&E Service is currently preparing the July 2011 
Longitudinal Study report using limited VA data from the FY 2010 
cohort.

    Question 40(c): Has funding been allocated in the FY 2012 budget 
and, if so, what will that funding provide?

    Response: VA has included $1.2 million in the FY 2012 budget 
request for implementation of P.L. 110-389. These funds will allow VR&E 
Service to begin the longitudinal study. The study will enable VR&E to 
analyze trends among veterans receiving services and respond with 
forward-looking initiatives that adapt services to the changing needs 
of veterans.

    Question 41: Counting the time to receive a disability rating and 
to be evaluated for Vocational Rehabilitation, it takes nearly a year 
for a veteran to begin receiving VR&E benefits. Page 4E-6 of the 
President's budget mentions Business Process Reengineering (BPR) as a 
means to shorten that time and to simplify administration. Please 
provide some examples of changes that have been made under BPR and the 
results of those changes?

    Response: The Business Process Reengineering (BPR) project is 
designed to identify process improvements and reduce cycle time; review 
and revising staffing roles and performance metrics; and enhance case 
management with new technologies. All efforts of the BPR are focused on 
improving veterans' experiences and increasing successful outcomes 
through the VR&E program.

    As of mid-February, the following accomplishments have been 
achieved:

      Knowledge Management Portal (KMP)--An inventory and 
mapping of program reference materials that include a VR&E Central 
Office workflow component. It is scheduled to be released for VR&E 
field and Central Office use on March 31, 2011. The KMP will allow VR&E 
counselors to more quickly research the answers to regulatory and 
procedural questions, thus streamlining the delivery of benefits to 
veterans.
      Remote Counseling--VR&E Service identified and tested 
equipment to conduct remote counseling services via a secure video 
connection. The equipment was successfully pilot-tested in 3 regional 
offices. VR&E Service is developing an expansion plan to roll out 
remote counseling nationally. Remote counseling will allow veterans in 
rural and remote areas to receive more timely counseling and case 
management services by eliminating the travel requirement.
      Integrated Disability Evaluation System (IDES) ratings--
VR&E Service revised policy to allow IDES Proposed Ratings to be 
utilized in lieu of memorandum ratings, allowing transitioning 
Servicemembers to receive VR&E services in an expedited fashion.

    Question 42: The 2004 VR&E Task Force made about 120 
recommendations to improve the VR&E program. How many of the 
recommendations have been implemented, how many remain, and what are 
VA's intentions on the remaining recommendations?

    Response: The 2004 VR&E Taskforce made 110 recommendations. The 
VR&E Service implemented 100 of the 110 VR&E Task Force 
recommendations. Three additional recommendations are being further 
developed for implementation. VR&E Service determined that 7 of the 
recommendations were not feasible for implementation.

    Question 43: Since 2005, the number of veterans completing the 
Independent Living program has dropped from 2,693 to 1,880, a 30 
percent drop. That seems counter-intuitive with aging of Vietnam-era 
veterans and the current wars in Iraq and Afghanistan (and resulting 
injuries). Has there been a decrease in applications for the 
Independent Living Program? If not, to what do you attribute the 
decrease?

    Response: VR&E Service anticipates that as new veterans continue to 
return from combat with complex injuries and Vietnam veterans suffer 
additional disabilities determined related to Agent Orange exposure or 
exacerbations of existing disabilities, we will continue to focus on 
providing IL services to veterans who are unable to work due to the 
most significant service-connected disabilities.
    Over the past 3 years, VR&E Service has given significant attention 
to ensuring the IL program is being appropriately administered to 
provide the best services possible to the most deserving veterans. Last 
year 2,456 IL plans were initiated.
    In addition, as assistive technologies continue to progress, 
enabling veterans with more significant disabilities to enter the world 
of work; we are developing more employment plans that include 
independent living services as part of our holistic approach to 
rehabilitation. Employment plans, even when independent living services 
are included, are not counted separately under the independent living 
track.

    Question 44: Please provide the following data:

    Question 44(a): Number of veterans who were receiving VR&E benefits 
and/or services on October 1, 2010.

    Response: As of October 1, 2010, 105,253 veterans were receiving 
VR&E benefits and services across all statuses, including applicant 
status.

    Question 44(b): Number of veterans you estimate who will be 
determined to be eligible for VR&E benefits and/or services from 1 Oct 
2010 to Sep 30, 2011.

    Response: VBA estimates that 70,053 veterans will be found eligible 
in FY 2011. Approximately 43,157 of these eligible veterans will 
complete their evaluations and be found entitled, and approximately 
29,299 of the entitled veterans will begin participation in a 
rehabilitation plan during the same time frame

    Question 45: The Department of Education funds a grant program 
called Veterans Centers of Excellence which competitively funds 
programs on college campuses that are similar to the Vet Success on 
Campus program. Is VA coordinating the Vet Success on Campus program 
with the Department of Education?

    Response: Where Veterans Centers of Excellence exist, VR&E 
counselors coordinate with these programs to provide Veteran-students 
with referrals for tutors, remedial classes, and the development of 
computer skills. As VetSuccess on Campus sites are established, 
coordination occurs with the college veterans services centers, 
including Veterans Centers of Excellence. Coordination ensures that 
services are complementary as opposed to duplicative.

    Question 46: How many professional level VR&E staff will the 
proposed budget support, what will be the resulting average caseload, 
and what performance improvements will the budget provide? Will those 
performance improvements include job placement services?

    Response: The FY 2012 budget request supports a professional 
counseling staff of 893 FTE. The projected average caseload for each 
counselor in FY 2012 is 136 cases. VR&E Service estimates the increase 
in FTE will lead to improvements in the national rehabilitation and 
national employment rates and the speed of entitlement decisions, as 
well as support the implementation of the Integrated Disability 
Evaluation System (IDES) and VetSuccess on Campus (VSOC) initiatives.

    Question 47: VA hired nearly 1,000 temporary and full-time 
education claims processors as a result of passage of the Post-9/11 GI 
Bill. With the fielding of the new Post-9/11 IT system, how does the 
proposed budget reflect those employees?

    Response: The Post-9/11 GI Bill required VA to significantly 
increase staffing in the short term until a new, robust IT environment 
is developed, deployed, and proven successful. To support the 
implementation of this bill, VA hired 530 temporary claims examiners 
with funds from the Supplemental Appropriations Act of 2008, and 428 
temporary claims examiners with American Recovery and Reinvestment Act 
(ARRA) funding. While the ARRA employees were retained through FY 2010, 
VA anticipated the remaining temporary claims examiners would be 
retained through the end of FY 2011.
    Public Law 111-377, the Post-9/11 Veterans Educational Assistance 
Improvement Act of 2010, modifies aspects of the Post-9/11 GI Bill. In 
order to implement the new law, changes need to be made to the Long 
Term Solution (LTS) for processing Post-9/11 GI Bill claims. As a 
result, automation of end-to-end processing for some reenrollments, 
functionality planned for release in June 2011, will not be available 
until the third quarter of FY 2012. This delay increases the number of 
FTE needed to process education claims. Our budget request of 1,429 FTE 
reflects the need for 324 of the 530 temporary claims examiners to 
remain through FY 2012 to maintain current claims processing 
efficiencies.

    Question 48: What is the funding devoted to reducing the number of 
foreclosures of homes purchased with a VA-guaranteed loan and does that 
funding support any new initiatives?

    Response: Total funding of $28.56 million will be devoted to 
reducing the number of foreclosures in 2012. This includes $23.63 
million for FTE with responsibilities related to loan servicing 
activities and $4.93 million for VA Loan Electronic Reporting 
Interface. This funding does not support any new initiatives.
General Administration
    Question 1: At the Committee's February 17, 2011, budget hearing 
Secretary Shinseki testified that the budget for the Office of the 
Secretary had increased significantly since 2009 due, in large part, to 
the fact that staff formerly detailed to the Secretary's Office (and 
accounted for elsewhere within VA) were now being accurately reflected 
as employees working within that Office.

    Question 1(a): How many detailed employees now work within the 
Office of the Secretary full time? Please provide the number of 
detailed employees who have worked within that Office for each of the 
last 5 years.

    Response: As of March 30, 2011, two persons are currently on short-
term detail to the Office of the Secretary. Over the past 5 years, 12 
persons were on detail to the Office of the Secretary in 9 distinct 
positions. Duration of these details varied. Three of these detail 
positions were converted to full time positions in the Office of the 
Secretary, and six of the detail positions were eliminated. The 4-
person Center for Faith-Based and Neighborhood Partnerships was also 
transferred from the Office of Public and Intergovernmental Affairs to 
the Office of the Secretary during this 5-year period. This transfer 
also involved temporary detailing of Center employees until funding 
adjustments were coordinated. All Center employees now work in, and are 
funded by, the Office of the Secretary.

    Question 1(b) Please provide a breakdown of the salaries of the 
formerly detailed employees now converted to full-time employees 
working within the Office of the Secretary.

    Response: Two detail positions were transferred and reassigned to 
the OSVA in FY 2010 and one in FY 2011. These positions were included 
in the OSVA FTE total for that fiscal year. The respective salaries for 
each of the employees reassigned in FY 2010 were approximately $124,000 
and $85,000 and $141,000 for FY2011.

    Question 1(c) When detailed employees are transferred back to their 
primary office, how are they reflected in the budget? Or, have they 
always been reflected and, therefore, there is no net effect of FTE 
increase or decrease?

    Response: Employees on detail are and continue to be reflected in 
the FTE numbers of their original office.

    Question 2: Please explain the justification for the following 
proposed 3-year budget increases (FY 2009 to FY 2012), then detail the 
performance measures used to justify these increases:

    Question 2(a): 23.1 percent for the Office of Management

    Response: The balance of the increases during this period went (or 
will go) to VA-wide financial management initiatives in the areas of 
financial systems, audit readiness and enterprise-wide cost 
accountability; a VA-wide Integrated Operating Model; OMB A-123 audits; 
VA's enhanced use lease program; and greening and renewable energy 
projects. Included in the 2012 request is $1.6 million for audits for 
the non-VA care (fee) program.
    VA has made significant progress in financial management 
performance. Most notable is the elimination of three longstanding 
material weaknesses.

    Question 2(b): 20.1 percent for the Office of Human Resources

    Response: The $12.4 million increase in the budget for the Office 
of Human Resources (HR&A) from FY 2009 to FY 2012 is primarily due to 
payroll ($3.1 million), other services ($1.5 million), rent, 
communication and utilities ($4.4 million), and the change in 
unobligated balances ($2.9 million).
    The payroll increase reflects costs associated with the pay raise 
in FY 2010 and the salary requirements for 302 FTE funded through 
General Operating Expenses. This FTE level includes 16 FTE hired in FY 
2010 for the Office of Resolution Management for several initiatives 
aimed at increasing the effective use of Alternative Dispute Resolution 
(ADR) throughout VA. Additional full-time employees to serve as 
conflict coaches, facilitators, mediators and trainers were deployed to 
VISNs 4, 8, 12, 15, 16, and 23 to provide more ADR access at the 
facility level, meet the increased utilization of ADR to address 
workplace disputes, and maintain satisfaction with the process. These 
dedicated resources have improved the efficiency and effectiveness of 
the ADR program by reducing average processing time for ADR requests in 
three of the six VISNs and increasing the ADR participation rate in 
four of the six VISNs. Due to these efforts, VA employees had increased 
opportunities for early resolution of complaints and grievances. Also, 
ORM staff stood up a full-service hotline, designed to provide 
employees and managers a forum to ask general questions or questions 
related to Transformation-21 initiatives, and learn about avenues to 
address workplace conflict and disputes. In 2010, the call center 
answered over 1,000 calls and 200 emails. This new service is a 
separate and distinct service from the EEO complaint processing toll-
free line. It is not designed to replace the complaint hotline or 
bypass other dispute resolution avenues (local union, facility program 
manager, workplace ADR). Benefits of the call center include increased 
use of ADR, decreased EEO complaint activity, increased opportunities 
to market and distribute accurate information about T-21 initiatives, 
and improved ability to educate employees and managers on a variety of 
issues that often result in workplace disputes.
    The increase in other services is for increased funding of 
contracts, including establishing contracts to maintain the ADR Call 
Center and for an EEO/ADR dashboard. The EEO/ADR Dashboard was 
developed to provide VA leadership an access panel to EEO data that can 
serve as a barometer of the work environment. The dashboard leverages 
technology by pulling from various data systems to display key 
indicators that provide valuable, real time information for managers to 
determine if there are opportunities for intervention that will improve 
the work climate. A 90-day dashboard pilot was implemented on September 
30, 2010, at VISNs 8, 9 and 16. It will be evaluated and measured using 
customer surveys, customer feedback from dashboard links and monthly 
usage reports. The intended goal of the dashboard is to provide a 
management tool that identifies trends and affords managers the 
opportunity to align strategies and organizational goals that 
ultimately impact the quality of services VA provides to veterans. In 
2011, an Executive Dashboard will be developed to provide executive 
level staff a snapshot of the aforementioned information, while 
providing restricted access for highly sensitive information.
    ADR participation in the EEO complaint process in the last fiscal 
year has increased from 48 percent in 2009 to 52 percent at the end of 
2010, significantly avoiding costs to the Department. The cost of 
handling a discrimination case through the formal complaint process 
ranges from $18,000 per complaint to $60,000, excluding the cost of 
damages that may be payable in the event of a finding of 
discrimination. In 2010, participation in the ADR process resulted in 
the resolution of 1,094 disputes outside of the traditional EEO 
complaint process, resulting in 86 percent of these workplace disputes 
being resolved using ADR. The overall resolution rate for ADR to 
include its use before, during, and in lieu of the EEO complaint 
process increased from 54 percent in 2009 to 60 percent in 2010. VA 
estimates cost avoidance of $82 million as a result of increased use of 
ADR to resolve workplace disputes.
    The rent, communication and utilities increase is primarily related 
with ongoing rents and other services required to operate VA 
headquarters. Rent includes payment to GSA for buildings occupied by VA 
and its employees. Office space rental estimates are based on the 
amount prescribed by GSA in accordance with established fair annual 
rental appraisals and are in accordance with GSA's current projections. 
The obligation increase is for estimated rental costs beyond the normal 
non-payroll inflation increase.

    Question 2(c): 96.2 percent for the Office of Policy and Planning

    Response: Since 2009, staffing increases and funding have allowed 
the Office of Policy and Planning (OPP) to establish the Office of 
Corporate Analysis and Evaluation (CA&E) and the Transformation and 
Innovation Service (TIS). We have also dedicated additional resources 
to the National Center for Veterans Analysis and Statistics (NCVAS) and 
the VA/DoD Collaboration Service.
    As a result of these additional resources, OPP has been able to 
improve outcomes to veterans during fiscal year (FY) 2010 and FY 2011 
in support of the four key integrated strategies articulated in the VA 
Strategic Plan.

    a.  Enhance our understanding of veterans' and their families' 
expectations by collecting and analyzing client satisfaction data and 
other key inputs.

        Completed the National Survey of Veterans, a 
comprehensive nationwide survey of veterans, active duty 
Servicemembers, activated National Guard and Reserve members and family 
members and survivors. Data collected through the National Survey 
enables VA to compare characteristics of veterans who use VA benefits 
and services with those of veterans who do not; and study VA's role in 
the delivery of all benefits and services veterans receive.
        Established VA data governance policy and processes to 
ensure VA enterprise data and information are available, current, 
reliable, readily accessible, and useful. Developed and implemented 
business intelligence capabilities and tools to transform data into 
information to support data-driven planning, analysis, and decision-
making activities.

    b.  Anticipate and proactively prepare for the needs of veterans, 
their families, and our employees.

        Improved VA policy toward Gulf War veterans by 
advocating for the implementation of recommendations made by the 
Advisory Committee on Gulf War veterans. Produced a comprehensive 
annual report on the use of selected VA benefits and services by pre-9/
11 Gulf War Era veterans. The recommendations included presumptive 
criteria for a number of serious illnesses for which veterans will now 
be eligible to receive treatment from VA.
        Completed the Program Evaluation of VA's Mental Health 
Program. This study provided VA with information about the services it 
provides, the impact on veterans, how VA compares to the private 
sector, patient outcomes, and costs. Study findings and recommendations 
are used to refine and improve VA services by suggesting policy and 
operating changes.

    c.  Create and maintain an effective, integrated Department-wide 
management capability to make data-driven decisions, allocate 
resources, and manage results.

        Began the implementation of planning, programming, 
budgeting, and evaluation (PPBE) capabilities to implement multi-year 
strategic resource allocation system across the Department and 
independent analysis to inform senior level decision-making on resource 
options. CA&E is an independent body dedicated to aligning VA resource 
allocations with investments that best serve our veterans, their 
families, dependents, and survivors.
        Implemented the new strategic management process for 
VA. This process uses strategy to drive the budget and performance 
plans, and aligns the execution of VA strategy with performance 
management and organizational and individual accountability in an 
iterative way. This process centers on implementing the strategic 
goals, integrated objectives, and integrated strategies throughout VA.
        Ensured the success of Departmental transformation 
initiatives via collaboration, oversight, and monitoring of the $2.5 
billion portfolio of 16 major transformation initiatives (list of 
initiatives at end of this response) and 20 supporting initiatives. 
This included assisting in the development of operating plans, 
intensive mid-year reviews, and problem solving sessions with the 16 
major initiatives that provided independent assessment of progress, 
identified barriers to success, helped define solutions, and elevated 
issues to senior leadership, as required.

    d.  Create a collaborative, knowledge-sharing culture across VA and 
with DoD and other partners to support our ability to be people-
centric, results-driven, and forward-looking at all times.

        Contributed to transforming VA/DoD Collaboration by 
coordinating the development and implementation of joint programs such 
as the expansion of the virtual lifetime electronic record (VLER) 
pilots; the expansion of the integrated disability evaluation system 
(IDES) pilot to worldwide deployment; the development of the integrated 
mental health strategy (IMHS) and its 28 joint strategic actions; the 
increased access of Servicemembers to VA benefits and service 
information through e-Benefits; the development of joint policy for the 
implementation of separation health assessments for all Servicemembers; 
and significant improvements to the transition assistance program 
(TAP).

    Additionally, OPP continued to provide ongoing services and 
capabilities to the VA and to veterans that included the following 
outcomes:

      Provided statistical and geospatial analysis to support 
recurring and ad-hoc reporting. Examples of these statistical products 
include the Geographical Distribution of VA Expenditures Report, the 
Unemployment Rate of veterans Report: 2000 to 2009, the Labor Force 
Participation Rates of veterans Report: 2000 to 2009, The VA 
Information Pocket Guide; the Gulf War Era veterans: pre-9/11 Report, 
and the VA-DoD Disability Evaluation System Trend Analysis.
      Provided actuarial services to the Department on an 
ongoing basis. FY 2010 efforts included development of the VA 
compensation and pension liability model.
      Updated VA's official estimates and projections of the 
veteran population by State, county and congressional district from 
2009 to 2039. Veteran population estimates are projected with 
characteristics such as: age, gender, period of service, race, 
ethnicity, rank (officer/enlisted), and branch of service.
      Conducted a nationwide management analysis/business 
process reengineering study of sanitation operations (8,831 FTE) and 
biomedical engineering (990 FTE) services across VHA and monitored the 
implementation of the recently reengineered plant operations and 
grounds maintenance (7,269 FTE) functions.

    The nine FTE within CA&E in FY 2011 are not sufficient to implement 
a Department-wide programmatic efforts, conduct independent assessments 
of resource requirements needed to meet planned veteran outcomes, and 
fully integrate PPBE across a 300,000 person organization with three 
distinct administrations (VBA, VHA, and NCA).
    The additional 12 FTE to bring the budget authority FTE to 105 in 
FY 2012 are requested to meet the emerging requirements identified 
above. First, to fully integrate and establish the PPBE methodology in 
the Department, it is necessary to expand the CA&E office from nine to 
13 personnel. CA&E is still an exceptionally lean and efficient, 
operation in relation to comparable governmental agencies. For example, 
CA&E staffing of 13 provides strategic resource management and 
independent analysis and oversight of a program budget in excess of 
$132 billion and a workforce in excess of 300,000. By comparison, the 
Office of Program Analysis and Evaluation (PA&E) at the Department of 
the Army is staffed with approximately 100 personnel and supports a 
similar sized program/budget of $149 billion in FY 2012. Second, the 
VA/DoD Collaboration Service is expanding from 13 to 16 personnel to 
address the growing number of issues associated with VA/DoD 
collaboration including IDES, VLER, electronic health records, IMHS, 
TAP, etc. Finally, we are establishing a new capability within the 
Office of Policy to conduct long-term policy analysis and alternative 
futures development in coordination with DoD and other Federal 
agencies.
    The additional 12 FTE requested for 2012 will enhance capabilities 
primarily in three areas:

      The Office of Corporate Analysis and Evaluation will 
continue implementation of a Department-wide strategic resource 
management system to help inform VA leadership with analysis and 
options for future funding of veterans' needs. CA&E provides the 
Secretary, and VA senior leadership with independent and objective 
analysis of resource requirements and options for funding veterans' 
needs across the spectrum of health care, benefits, and memorial 
services. Through independent analysis and evaluation, CA&E provides an 
added level management insight on the effectiveness and efficiency of 
VA programs and budgets and measurable impact to the veteran.
      The Office of VA/DoD Collaboration will expand its 
development and monitoring of joint policies and programs such as the 
expansion of the VLER pilots; the expansion of the IDES pilot to 
worldwide deployment; the development of the IMHS and its 28 joint 
strategic actions; the increased access of servicemembers to VA 
benefits and service information through e-Benefits; the development of 
joint policy for the implementation of separation health assessments 
for all servicemembers; and significant improvements to TAP. These 
activities will protect the equity of veterans as they transition from 
servicemembers; producing better outcomes in health care delivery and 
benefit service for veterans, servicemembers, military retirees, and 
eligible dependents.
      Finally, we are establishing a new capability within the 
Office of Policy to conduct long-term policy analysis and alternative 
futures development in coordination with DoD and other Federal 
agencies. It will develop policy analysis capability to evaluate range 
of future policy issues and requirements over next 10 years, i.e. 
policy challenges due to population trends, changing demographics and 
implications to VA infrastructure and capabilities such as the impact 
of health care reform on veterans, and implementation of Caregivers 
Legislation.

    16 Major Initiatives

     1.  Eliminate veteran homelessness.
     2.  Enable 21st century benefits delivery and services.
     3.  Automate GI Bill benefits.
     4.  Create Virtual Lifetime Electronic Records.
     5.  Improve veterans' mental health.
     6.  Build VRM capability to enable convenient, seamless 
interactions.
     7.  Design a veteran-centric health care model to help veterans 
navigate the health care delivery system and receive coordinated care.
     8.  Enhance the veteran experience and access to health care.
     9.  Ensure preparedness to meet emergent national needs.
    10.  Develop capabilities and enabling systems to drive performance 
and outcomes.
    11.  Establish strong VA management infrastructure and integrated 
operating model.
    12.  Transform human capital management.
    13.  Perform research and development to enhance the long-term 
health and well-being of veterans.
    14.  Optimize the utilization of VA's Capital Portfolio by 
implementing and executing the Strategic Capital Investment Planning 
(SCIP) process.
    15.  Health Care Efficiency: Improve the quality of health care 
while reducing cost.
    16.  Transform health care delivery through health informatics.

    Question 2(d): 50.4 percent for the Office of Congressional and 
Legislative Affairs

    Response: The Office of Congressional and Legislative Affairs 
(OCLA) has a critical role in keeping Congress informed of VA's work on 
behalf of veterans. OCLA is the lead VA office responsible for 
maintaining open communications with Congress through briefings, 
meetings, calls, hearings, site visits, written communications, 
reports, and responses to member and Committee requests for 
information. OCLA also maintains constituent casework offices on 
Capitol Hill to support Congressional offices' veterans, dependents, 
and survivors casework. Additionally, OCLA is responsible for liaison 
with the U.S. Government Accountability Office (GAO) and coordinates 
all meetings and correspondence with the agency. For a number of years 
OCLA was not staffed sufficiently to keep pace with Congress' 
increasing requests for information. OCLA's budget requests over the 
last 3 years were focused at placing additional personnel towards 
accomplishing the office's mission and meeting the needs of Congress.
    During FY 2010, OCLA supported 105 hearings, 322 information 
briefings, coordinated the responses to over 1,240 questions for the 
record, responded to over 7,100 written and over 15,000 telephonic 
requests for information, and countless e-mails, and supported 
approximately 100 oversight visits. In FY 2010, OCLA also coordinated 
the VA response to 50 GAO reports that focused on VA issues.
    In October 2010, OCLA produced its Operating Plan which implemented 
performance measures and metrics for the office for FY 2011-2013. These 
measures and metrics were created to improve OCLA's responsiveness to 
Congressional requests for information and set goals for the office to 
achieve in the out years that support VA's Strategic Plan. These 
measures and metrics will be the standard to measure OCLA's progress 
and are reviewed on a monthly, quarterly, and annual basis. OCLA also 
published a new Standard Operating Procedures (SOP) Manual that 
followed a comprehensive review of all of the office's internal 
processes. Since the implementation of the Operating Plan, and 
publication of the SOP, OCLA has improved its responsiveness to 
Congressional requests for information. As an example, OCLA has 
revitalized the questions for the record process. OCLA assigned new 
program analysts to assist with implementing the new collaborative 
processes outlined in the SOP that streamlined the overall QFR process 
and turned an underachieving performance throughout FY 2010 into a 
process that is exceeding its targeted goal in FY 2011. In FY 2010, 
OCLA submitted 16 percent of the QFRs on time. Through the first 5 
months of FY 2011 OCLA has submitted a 100 percent of the QFRs on time. 
OCLA supported 322 congressional briefings in FY 2010. These briefings 
are predominantly in response to Committee or member office requests. 
Through the first 5 months of FY 2011, OCLA coordinated 173 briefings, 
which is a 60 percent increase over the same period last FY. The added 
briefings were a result of the greater depth and breadth on issues 
staffed by the additional congressional relations officers and 
congressional liaison officers. These new personnel have also 
contributed to ensuring OCLA improved its performance submitting VA 
witness written testimony on time. In FY 2010, OCLA submitted only 60 
percent of testimony on time. Through the first 5 months of FY 2011, 
OCLA has submitted 100 percent of testimony on time. VA is committed to 
providing Congress accurate and timely information and the increase in 
personnel are necessary to achieve that goal.
    There are two main indicators that suggest increased staffing is 
required. OCLA monitors the feedback members of Congress and 
Congressional staffs provide on the timeliness and completeness of the 
information VA delivers to Congress. While OCLA has made significant 
improvement, there are still additional improvements to be made to 
decrease the time it takes to respond to requests for information. The 
other main indicator is OCLA's All Employee Survey results. These 
results indicate additional personnel are needed to balance workload 
within the office. The results of the survey indicated employees 
realize the importance of their jobs, but are impacted by the high 
volume of work and the very dynamic environment they operate in. These 
factors were considered in reorganizing OCLA's structure to provide 
greater depth and breadth on issues, adding positions to support the 
most over-worked areas, and rebalancing existing duties and 
responsibilities. OCLA requested additional funding and staff to 
accomplish these actions. However, in FY 2009 and FY 2010, OLCA was 
unable to achieve its authorized number of employees due to high 
employee turnover. In FY 2009, OCLA was authorized 38 FTEs, only 34 
were in fact filled. In FY 2010, OCLA was authorized 42 FTEs, and only 
filled 36. As of March 2011, OCLA has increased the number of personnel 
to 43 and should be able to achieve our authorized strength of 46 
employees before the end of the fiscal year. In FY 2012, OCLA requests 
additional funding to support three additional personnel, which 
includes the Office of Advisory Committee Management. In the FY 2012 
budget request, OCLA will assume the funding for the Office of Advisory 
Committee Management, which is responsible for supporting the VA's 
advisory committees. The Office of Advisory Committee Management 
supported 23 advisories committees and 54 advisory committee meetings 
during FY 2010. As a result of the office's grade structure, FY 2012's 
requested funding would increase the office's overall FTE to 49 vice 
52.
    In FY 2010, OCLA added four positions to its organizational 
structure.

    Congressional Relations Officer--GS-14
    Congressional Relations Officer--GS-14
    Congressional Liaison Officer--GS-13
    Congressional Liaison Officer--GS-13
    In FY 2011, OCLA will add four positions to its organizational 
structure.
    Director, Benefits Legislative Affairs--GS-15
    Program Analyst--GS-9
    Program Analyst--GS-9
    Congressional Liaison Assistant--GS-8

    In FY 2012, OCLA is requesting to add three positions to its 
organizational structure.

    Director, Health Legislative Affairs--GS-15
    VA Advisory Committee Management Officer--GS-14
    VA Advisory Committee Program Analyst--GS-11

                        Questions for the Record
                       The Honorable Jeff Denham

    Question 1: In your budget request, you requested $10 million for 
the National Cemetery Administration Acquisition Fund. Can you 
elaborate on where these additional cemeteries will be constructed and 
the timeline in which you expect to see the completed?

    Response: VA is currently pursuing land for two existing 
cemeteries: an expansion of Willamette National Cemetery in Oregon and 
a replacement cemetery for Puerto Rico. Land acquisition for five new 
national cemeteries is also in progress: Southern Colorado; 
Tallahassee, Florida; Central East Florida; Omaha, Nebraska; and 
Western New York. Using funds in the land acquisition line item, NCA 
plans to purchase land for these cemeteries in 2011 and 2012. Funding 
is available for advance planning, and construction funds for the 
cemeteries will be requested in future budget requests.

    Question 2: According to the Veterans Affairs budget request, the 
VA has asked for an increase in operating expenses over the 2010 
budget. What is the Department of Veterans Affairs doing to increase 
efficiency in the administrative offices as a means to reduce the 
General Operations budget? Additionally, what is being done to reduce 
the Secretary's office operating costs?

    Response: VA is committed to increasing the value of every dollar 
to which we are entrusted by Congress and the American taxpayer. In 
developing the 2012 budget, we have carefully reviewed requirements in 
our non-medical programs. VA has implemented a systematic process to 
evaluate and prioritize our most critical safety and security needs in 
our capital program. In addition, we are working to implement the best 
long-term IT solutions and are adopting new acquisition strategies for 
goods and services, including consolidation and economies of scale.
    In the staff offices area, all initiatives included in the budget 
were developed to provide direct support to veterans or VA's core 
mission. All initiatives in the General Administration budget will 
improve efficiency, accountability, veteran and employee safety, and 
security of VA facilities. A list of the staff office initiatives are 
identified on page 5A-6 in Volume 3 of VA's 2012 Budget Submission.
    We have also closely examined appropriated funding for travel and 
other supplies. The 2012 General Administration travel estimate of $8.4 
million is less than the 2008 travel level of $10 million. In addition, 
the 2012 General Administration estimate for supplies and equipment are 
both less than the levels in 2010 ($556K and $107K respectively).
    For the Office of the Secretary, the 2012 request reflects a 
reduction from the 2011 estimate in all non pay categories, including 
travel, contractual services and supplies. The only increase is in 
payroll--to support the existing on-board staff of 89. In addition, the 
89 FTE in the Secretary's 2012 President's budget is 5 FTE less than 
the original 2011 request.

    Question 3: The amount of $953 Million has been requested for the 
medical contingency fund so that this money can be used when needed. 
Why has the VA adopted this new process for additional funds instead of 
using the appropriations process? Additionally, what process would the 
VA utilize to obtain additional funding if all the money in the 
contingency fund is spent within the fiscal year?

    Response: The $953 million contingency fund, estimated in the VA's 
Enrollee Health Care Projection Model, was created to address the 
potential demand increase for medical care services due to changes in 
economic conditions. The fund will only become available for obligation 
if the Administration determines the anticipated changes in economic 
conditions, as estimated by the Model, materialize in 2012. This 
economic impact was incorporated into the Model for the first time this 
year. Based upon experience from 2010, the need for this funding will 
be carefully monitored in 2012. This cautious approach recognizes the 
potential impact of economic conditions as estimated by the Model while 
acknowledging the uncertainty associated with the estimates.

    Question 4: Given the current economic conditions of our country, 
how is the VA prepared to handle the potential increase in veterans 
seeking care and usage of VA benefits while reducing the VA's operating 
costs?

    Response: Claims for disability compensation and pension benefits 
continue to dramatically increase, and economic conditions are only one 
of numerous factors contributing to the increase. Annual claims 
receipts increased 51 percent from 2005 to 2010. VA's transformational 
initiatives now in progress will enable VA to meet that growing demand. 
Production will begin to outpace receipts beginning in late 2012. 
Through its Claims Transformation initiatives, VBA is laying 
technological and business transformation groundwork to streamline 
claims processing and eliminate the claims backlog. VA's end goal is a 
smart, paperless, electronic claims processing system.
    Our approach to transformation is a holistic approach that changes 
our culture, improves our processes, and integrates innovative 
technologies. While we work to develop the paperless system, we are 
making immediate changes to improve the efficiency of our business 
activities. New calculators guide claims decision makers with 
intelligent algorithms similar to tax preparation software or through 
simple spreadsheet buttons and drop-down menus. A growing body of 
evidence-gathering tools, called Disability Benefits Questionnaires, 
brings new efficiencies to collection of medical information needed to 
rate each claim. The Fully Developed Claims program speeds the decision 
process by empowering veterans and helping them submit claims that are 
ready for a VA decision as soon as they are received.
    See response to Question 3. VA's FY 2012 Medical Care appropriation 
request of $50.851 billion includes a contingency fund of $953 million. 
The $953 million contingency fund, estimated in the VA's Enrollee 
Health Care Projection Model, was created to address the potential 
demand increase for medical care services due to changes in economic 
conditions. The fund will only become available for obligation if the 
Administration determines the anticipated demand materializes in 2012. 
The FY 2012 total appropriation request will provide services for over 
6 million veterans and assumes over $1.2 billion in operational 
improvements. In FY 2013, VA's Medical Care appropriation request is 
$52.541 billion to provide services for over 6.3 million veterans.

    Question 5: How will the Veterans Affairs Administration work to 
better reach military personnel who have returned home from service to 
notify them of the services the VA can provide them?

    Response: The Department of Veterans Affairs created the National 
Outreach Office within the Office of Public and Intergovernmental 
Affairs (OPIA) in FY 2010 to standardize how outreach is being 
conducted throughout the department and have made considerable progress 
in researching and analyzing VA's outreach programs and activities. The 
National Outreach Office has developed a framework to guide us through 
creating a more efficient and effective approach to boost our reach to 
veterans and returning military personnel, in support of VA's major 
initiatives.
    The Department's outreach activities purpose is to increase access 
to VA health care and benefits by optimizing linkages to VA services 
for all new veterans through targeted programs. VA reaches out to 
veterans at 7 different venues throughout the deployment cycle from 
pre-deployment, immediately at demobilization, and post-deployment. 
Each of these initiatives is described below. The initiatives provide 
the opportunity to engage veterans and families with a face to face 
encounter at 7 different points to deliver the One-VA message within 
the first 6 months of returning home and as they separate from service. 
Using in-person outreach events as well as the Web and phone-based 
resources, VA works to enroll and register veterans for their health 
care services as soon as they separate from active duty. Getting 
enrolled quickly is critical to accessing important benefits. For 
instance, National Guard and Reserve members returning from combat are 
entitled to 5 years of free VA health care for any condition related to 
their service in the Iraq/Afghanistan theater and have 180 days to 
obtain an appointment for a one-time dental evaluation and treatment.
    Combat veterans are always eligible to access services at VA Vet 
Centers located in communities and through mobile vans.

    1.  Reserve Component Demobilization Initiative at 63 
Demobilization Sites

    In May 2008, VA created an initiative to inform demobilizing 
reserve component (RC) combat veterans of their enhanced VA health care 
and dental benefits during their mandatory demobilization separation 
briefings. The purpose is to provide and offer Servicemembers 
assistance with the completion of their enrollment forms for VA health 
care. Servicemembers returning from the combat zone are introduced to 
VA during the out processing period at the demobilization sites. They 
receive a standardized 46-minute briefing on VA services and benefits 
and are encouraged to enroll into the VA health care system. All 
members leave the demobilization site for home with the names of their 
local OEF/OIF Program Managers to contact or who will contact them to 
set up their initial health and dental appointments at the VA Medical 
Center (VAMC) nearest to their homes. As of October 2009, this 
initiative has been implemented at 15 Army, 4 Navy, 5 Marine Corps, 36 
Air Force and 3 Coast Guard Reserve demobilization sites. In 
collaboration with the Veterans Benefits Administration, VHA developed 
a standardized slide presentation, and staff provides educational 
materials to all new veterans. VA staff has reached out to 152,204 
returning Servicemembers and enrolled 143,448 (94 percent) into the VA 
health care system since May 2008.

    2.  Individual Ready Reserve Muster (IRR) Initiative for U.S. 
Marine Corps and U.S. Army Reserve Veterans

    In May 2009, VA created an initiative to inform Individual Ready 
Reserve (IRR) Army Reserve soldiers and Marines of their enhanced VA 
health care and dental benefits during their mandatory IRR Muster. 
Prior active duty members who are in the IRR are introduced to VA 
during this event. VA staff has 20 minutes to brief on VA services and 
benefits and provide assistance with the completion of enrollment forms 
for the VA health care system. VA encourages 100 percent enrollment of 
all those attending the IRR Muster. All members leave the IRR muster 
with the names of their local OEF/OIF Program Managers to contact or 
who will contact them to set up their initial health and dental 
appointments at the VAMC closest to their homes. VA has reached out to 
22,596 members and enrolled 6,712 (30 percent) since May 2009.

    3.  Post-Deployment Health Reassessment (PDHRA) Initiative for the 
National Guard and Reserve Components

    In early 2005, DoD mandated the Post Deployment Health Reassessment 
(PDHRA), a health care screening (DD-2900), for all National Guard & 
Reserve Servicemembers returning from deployment. The PDHRA is a global 
health assessment, with an emphasis on behavioral health and service-
related conditions that is designed to be conducted between 90 and 180 
days post-deployment. The intent of the PDHRA is to identify 
deployment-related physical health, mental health and readjustment 
concerns, and to identify the need for follow-up evaluation and 
treatment.
    VA has been an active partner in this outreach initiative. RC Units 
conduct the PDHRA through three primary modes: on-site events conducted 
by DoD contract health care providers; on-site call center events; and 
from a 24/7 Call Center operation. VAMC and Vet Center staff conduct 
briefings, staff table-top information displays, enroll veterans in the 
VA health care system and arrange follow-up appointments at VAMCs and 
Vet Centers. VA has supported over 2,200 PDHRA events and the DoD PDHRA 
24/7 Call Center since November 2005, resulting in over 70,000 
referrals to VAMCs and over 27,000 referrals to Vet Centers.

    4.  Combat Veterans Call Center Initiative

    On May 1, 2008, VHA began the Combat Veteran Call Center initiative 
help OEF/OIF combat veterans become aware of the available VA services 
and benefits. Veterans are provided information about VA benefits, 
services, and employment opportunities. They are also offered the 
opportunity to be assigned a care manager. In FY 2010, 91,833 calls 
were placed and VA staff spoke with 9,679 veterans. Of that, 2,294 
requested and were sent information packets.

    5.  Department of Defense Yellow Ribbon Reintegration Program 
Support Initiative for National Guard and Reserve Components

    The DoD Yellow Ribbon Reintegration Program (YRRP) is a DoD-wide 
effort to support National Guard and Reserve Servicemembers and their 
families with information on benefits and referrals throughout the 
entire deployment cycle, before, during and after deployments. YRRP 
events are hosted by military units and held throughout the year in 
every State.
    VA is a major support partner of the YRRP. VA staff attends YRRP 
events to provide support and information on benefits, services, and 
programs available to Guard and Reserve members; enroll veterans in the 
VA health care system; and coordinate referrals to other VA services 
and/or programs. VA staff may also provide specialized briefings on 
issues like PTSD and TBI upon request. Additionally, VA has placed a 
dedicated, full-time liaison in the YRRP Office at the Pentagon.

    6.  VA, National Guard, and the Transition Assistance Advisors 
(TAAs) Initiative

    VHA assists the National Guard (NG) in the training of their 62 
National Guard Transition Assistance Advisors (TAAs) that serve as 
liaisons in the field at the State level to assist NG Servicemembers, 
veterans, and their families with questions; and provide assistance to 
access VA benefits and services, VA Medical Centers, and VBA Regional 
Offices.

    7.  OEF/OIF Internet Web Page Initiative

    To support VA programs and services, VA developed a new internet 
webpage for OEF/OIF veterans. In addition to providing information 
about VA benefits and services, the site contains blogs and other 
social media tools to engage this new generation of veterans. There is 
also a section on the Web site for family members. There have been over 
1 million visits to this site. The Web site is: www.oefoif.va.gov.

    Question 6: What legislative or regulatory limitations are 
preventing the VA from being able to successfully reach out to 
returning servicemembers? How is the VA limited in conducting its 
outreach due to the budget?

    Response: None at present. VA is currently conducting and the 
Budget request allows for the following ongoing efforts to be able to 
be sustained:
    Since FY 2010, OPIA has awarded several marketing/public relations 
contracts to assist the Department of Veterans Affairs in developing 
outreach plans and campaigns. The campaigns cover topics from 
Paralympic sport to veteran homelessness, and suicide prevention and 
target various generations of veterans. For example, VA launched a 
national advertising campaign in the fall of 2010 with two commercials, 
``What Lies Ahead'' and ``Care Package,'' which targeted returning OEF/
OIF/OND veterans and their families and highlighted VA services such as 
health care, education, job assistance, and home loans. Through the 
continuance of these campaigns and other outreach initiatives, OPIA 
plans to increase veteran awareness, improve education, and increase 
client confidence using specific and targeted outreach activities and 
communication materials and products.

                        Questions for the Record
                        The Honorable Jon Runyan

    Question 1: Mr. Secretary, since the President has taken office the 
backlog of disability claims has grown by 103 percent, and this budget 
projects that the average days to complete a claim will rise from 165 
days in FY 2010 to 230 days in FY 2012. With the knowledge that it 
takes new claims examiners close to 2 years to become fully productive, 
and the Veterans Benefits Management System is years away from being 
completed, what is the short term plan to address this increasing 
backlog?

    Response: VA is not waiting for the implementation of the Veterans 
Benefits Management System (VBMS) to take aggressive action toward the 
goal of completing all claims within 125 days at 98 percent accuracy. 
VA's multi-tiered approach for addressing the dramatically increasing 
volume of incoming claims includes a number of innovations. VA deployed 
two rules-based calculators to streamline and improve decision quality, 
with more tools in the pipeline. Providing veterans with improved 
online access to claims status information and other self-service 
options (such as ordering copies of discharge records) increases client 
satisfaction while freeing VA staff to work on claims. The Agent Orange 
(AO) Miner Tool links AO-related databases together and facilitates 
data search in developing veterans' AO claims. New evidence-gathering 
tools such as the Disability Benefits Questionnaires sharpen the focus 
in medical examinations to ensure all information needed to rate the 
claim is gathered the first time in the medical examination process and 
is presented succinctly. The Fully Developed Claims program puts 
veterans in the driver's seat for submitting claims that are ready to 
rate when received.
    It is estimated that in late 2012, production will begin to outpace 
receipts. At that same time, we plan to begin the deployment phase of 
VBMS. VBMS will provide powerful new tools to claims examiners to boost 
efficiency and productivity. Gains in accuracy through rules-based 
processing will reduce re-work and appeals. Rules-based processing and 
calculator tools also speed the rating process, which will increase 
employee productivity and provide more staff hours to rate other 
claims.

    Question 2: Mr. Secretary, given the historic budget increases in 
the past 5 years and the important oversight and accountability role of 
the Inspector General (IG), what was the rationale for flat lining the 
budget request for the IG?

    Response: The VA Inspector General (IG) has received a $20.6 
million (23 percent) increase in 2012 compared to 2009. This is an 
average increase of 7.7 percent per year, which is comparable to the 
General Administration staff office 3-year average increase of 8.8 
percent when excluding the President's government-wide acquisitions 
initiative. In addition, employment for the VA OIG has increased by 103 
FTE over the 2009 level (20.2 percent).

    Question 3: Mr. Secretary, can you please address reports that in 
several regional offices that all pending disability benefits claims 
have been put aside to work Agent Orange claims? We have also heard 
reports that medical appointments are being rescheduled so Agent Orange 
related disability rating exams can take place. Is this true and if so 
could you please explain the rationale considering that you have 
highlighted in your testimony the new on-line application and 
processing system for these claims?

    Response: There are three categories of disability claims related 
to VA Secretary Shinseki's announcement of October 13, 2009, which 
added three new presumptive conditions to disabilities currently 
presumed service-connected based on exposure to herbicides in the 
Republic of Vietnam (ischemic heart disease, Parkinson's disease and 
Hairy Cell (B-Cell) leukemia), Nehmer readjudication claims, Nehmer 
adjudication claims, and new or non-Nehmer classified claims. Nehmer 
readjudication claims are under the court orders and final stipulation 
and order of the U.S. District Court for the Northern District of 
California (the ``Court'') in Nehmer v.  U.S. Department of Veterans 
Affairs, 712 F. Supp. 1404, 1409 (N.D. Cal. 1989). As a result of the 
Nehmer litigation, VA must readjudicate previously denied claims for 
IHD, PD, or HCL filed by Nehmer class members (Vietnam Veterans and 
their survivors) and provide retroactive benefits pursuant to 38 C.F.R. 
Sec. 3.816. This requirement involves claims filed or denied from 
September 25, 1985, to the date of Secretary Shinseki's announcement of 
October 13, 2009. Approximately 94,000 cases were identified as fitting 
this criteria, and approximately 50,000 new Nehmer claims have been 
received between the Secretary's announcement of his decision to add 
these three new presumptive diseases and the issuance of VA's final 
regulation adding those diseases to its list of conditions which 
qualify for presumptive service-connection based on exposure to 
herbicides used in Vietnam. Due to the complexity of readjudicating 
claims in this category, all Nehmer readjudication claims are currently 
being reviewed and readjudicated by VBA's 13 nationwide Resource 
Centers along with some employees at the St. Paul Regional Office.
    Nehmer adjudication claims are those claims for the three new Agent 
Orange presumptive conditions that were received after Secretary 
Shinseki's announcement on October 13, 2009, and the date VA published 
the final regulation establishing a presumption of service-connection 
for the foregoing diseases on August 31, 2010. While these cases were 
not previously denied by VBA, because they were received prior to the 
publication of the final regulation, they qualify for adjudication 
under Nehmer provisions, as they were pending before VA issued the 
final rule adding the three new conditions. Approximately 50,000 cases 
were received during this time period. These Nehmer claims are being 
processed by the local regional office of jurisdiction. Special teams 
were established to process these claims expeditiously and as of March 
22, 2011, less than 7,000 Nehmer adjudication claims remain pending.
    Non-Nehmer or new claims are those claims for the three new Agent 
Orange presumptive conditions that have been received after the 
publication of the final regulation on August 31, 2010. All ``Non-
Nehmer'' claims for the three new Agent Orange presumptive conditions 
are being processed by the local regional office of jurisdiction with a 
portion of those claims processed through the new Fast Track Claims 
Processing System. The Fast Track Claims Processing System has been 
operational since October 29, 2010, and accepts claims for the three 
Agent Orange presumptive conditions. Veterans may file claims for these 
conditions electronically into the system through the web-based portal, 
or traditionally by mail or fax to the Regional Office or the intake 
facility in Rocket Center, WV. Through the use of Disability Benefits 
Questionnaires, the system automatically generates recommended rating 
decisions to assist VA decision makers.
    Although disability Benefits Questionnaires have been utilized in 
the Fast Track program for new claims for benefits, they were neither 
available nor prudent to use for the Nehmer readjudication and Nehmer 
adjudication claims. Therefore, many of those claims required VA 
medical examinations which were requested through the traditional 
examination process.

    Question 4: Mr. Secretary, please discuss VA's current efforts to 
standardize the private medical questionnaires for disability benefits 
claims and how these forms will have an impact on the backlog? What is 
the timeline for the rollout of these questionnaires?

    Response: VA is developing Disability Benefits Questionnaires 
(DBQs) to streamline the process by which veterans submit relevant 
medical evidence to VA. The targeted questions in the DBQs will improve 
the quality and timeliness of medical evidence necessary to support a 
veteran's claim for disability benefits, which will enable VA to 
adjudicate claims faster. Use of the streamlined medical questionnaires 
by private physicians, at the request of veterans, as well as by VA 
contractors and VHA physicians, will create an aggregate timeliness 
advantage for claims processing and thus help alleviate the claims 
backlog. It also offers the long-term potential for VBA to 
electronically pull the data directly into its systems to aid in the 
claims process.
    VA developed the first three DBQs related to the new Agent Orange 
presumptive service-connected conditions of ischemic heart disease, 
Parkinson's disease, and hairy cell and B-cell leukemias. They were 
released to the public on October 6, 2010. VA is working on an 
additional 81 DBQs, in four stages of development. Fourteen DBQs were 
published in the Federal Register on February 15, 2011, for the initial 
60-day public comment period. We estimate that they will be available 
for public use in September 2011. The remaining DBQs are in the process 
of development, review by Veterans Service Organization representatives 
and physicians, amendment, and formal public comment, with the plan for 
final publication of all DBQs by June 2012.
    VA is putting feedback mechanisms in place to make future 
improvements to the DBQs. This iterative process will assist veterans 
and physicians in providing evidence that meets the requirements of the 
VA Schedule for Rating Disabilities, helping VA to increase consistency 
and timeliness of disability decisions.

                        Questions for the Record
                       The Honorable Bill Flores

    Mr. Secretary, in the recent budget that you submitted for fiscal 
year 2012 I noticed that you are spending $124 million on ``Greening 
the VA''.

        $27 million for solar photovoltaic projects
        $51 million in energy infrastructure projects
        $21 million in renewably fueled cogeneration using biomass
        $1 million in sustainable building
        $14 million for wind projects
        $10 million for alternative fueling projects and expansion of 
        environmental management system
        TOTAL = $124 million

    Question 1: Has the Veterans Administration done a cost-benefit 
analysis of ``Greening the VA''? If the VA has not I would request one 
should be done immediately.

    Response: VA performs cost-benefit and other analyses on all 
proposed projects. When assessing any energy or environmental project, 
VA's primary concern is whether the project will enhance the 
Department's ability to care for veterans. Criteria evaluated when 
assessing the feasibility of a project include the amount of savings to 
be realized from reduced maintenance and repair, utility bill savings, 
and simplified operations and maintenance. Other factors include the 
degree to which a project contributes to energy security and how it 
affects VA's ability to continue operations under a variety of adverse 
scenarios via on-site generation of electricity. In addition, VA also 
considers factors that are very important to veterans, but that are not 
easily quantified. These factors include indoor air quality, infection 
control, and improvements to patient comfort. Prospective projects are 
compared to other proposed projects and then ranked in order of how 
well they score in terms of getting the most benefit with the least 
investment.
    The process of identifying, evaluating and selecting projects 
involves pre-screening, energy audits, feasibility studies, 
environmental assessments, and the calculation of return on investment 
and the use of other key statistics. This process enables VA to meet 
multiple goals, such as security and cost-control as well as to meet 
Congressional mandates.

    Question 2: Also, I would like to know how long this initiative has 
been going on within your Department and how much funding it has 
received to date.

    Response: VA has been striving to achieve compliance with 
environmental, energy, and transportation laws, regulations, and 
executive orders (EO) since 1970, when Congress enacted the National 
Environmental Policy Act. Additional environmental statutes, including 
the Resource Conservation and Recovery Act of 1976, the Comprehensive 
Environmental Response, Compensation, and Liability Act of 1980, and 
the Superfund Amendments and Reauthorization Act of 1986, have added to 
the base level of resources necessary for VA to operate our hospitals, 
cemeteries and other facilities in an environmentally responsible 
manner.
    In recent years, VA has worked diligently to comply with energy 
legislation including the Energy Policy Acts of 1992 and 2005, and the 
Energy Independence and Security Act (EISA) of 2007. Revisions to EISA 
codified President George W. Bush's Executive Order 13423, 
Strengthening Federal Environmental, Energy, and Transportation 
Management (signed January 2007).
    The following table summarizes VA's Green Management Program budget 
requests for FY 2006 through FY 2012.


------------------------------------------------------------------------
                Fiscal Year                         Budget Request
------------------------------------------------------------------------
2006                                                        $25,000,000
------------------------------------------------------------------------
2007                                                        $25,000,000
------------------------------------------------------------------------
2008                                                        $24,587,000
------------------------------------------------------------------------
2009                                                        $27,600,000
------------------------------------------------------------------------
2010                                                       $151,683,000
------------------------------------------------------------------------
2011                                                       $272,396,000
------------------------------------------------------------------------
2012                                                       $144,564,000
------------------------------------------------------------------------


    The steep increase in FY 2010 resulted from integrating the 
previously separate budget for energy infrastructure improvement 
projects into the Greening VA program budget request for enhanced 
tracking of VA investment in energy efficiency and renewable energy.
    Energy infrastructure improvements represent 35 percent of the FY 
2012 Greening VA budget request, 40 percent of the FY 2011 budget, and 
48 percent of the FY 2010 budget. Examples of projects thus funded 
include HVAC system upgrades at the Waco VA Medical Center (VAMC); 
steam and chilled water distribution system improvements at Big Spring 
VAMC; HVAC system upgrades at the Houston and San Antonio VAMCs; and 
boiler system improvements at the Kerrville VAMC.
    As part of the Green Management Program, VA invested $115 million 
in fiscal years 2009 and 2010 for advanced metering and utility bill 
auditing, covering facilities nationwide. These systems help VA 
identify both problems (e.g., water leaks) and opportunities (e.g., 
qualifying for more favorable utility rates), resulting in better 
management of energy and water systems and utility cost savings. With 
metering and billing data and analysis at their fingertips, managers 
are able to target investments more precisely and gain maximum control 
of consumption and costs.

    Question 3: At its current $124 million funding level, where does 
``Greening the VA'' rank in the Department of Veterans Affairs funding 
priorities? Specifically, in respect to reducing the backlog of claims 
and providing more care for veterans.

    Response: When developing its budget request, VA assesses all of 
its programs and allocates funds to a multiplicity of programs to 
address veterans' needs fully. While ``Greening the VA'' is important 
to the Department, the requested level of funding in FY 2011 is far 
below what VA has dedicated to improving compensation and pensions 
claims processing or increasing access to health care for veterans.
    To reduce the claims backlog, VA requested an increase to its 
investment in the administration of Compensation and Pensions benefits 
by $369 million, or nearly 23 percent compared to FY 2010, to just 
under $2 billion in obligations. This increase, sustained in each 
Continuing Resolution enacted for FY 2011 to date, provides a 5 percent 
increase in the Compensation and Pensions workforce. Part of the 
increase supports an approximately $75 million contract for external 
claims processing support. $43 million for Veterans Benefits Management 
System (VBMS) business process re-engineering and training will also 
contribute to the near term reduction of the backlog. These VBA 
investments are matched with Information Technology account allocations 
of $148 million to be invested in the Veterans Benefits Management 
System and another $70 million to be invested in the Virtual Lifetime 
Electronic Record initiative.
    VA is also making improvements to health care access through an 
investment of $939 million to reduce veteran homelessness, up 15 
percent from FY 2010. Inpatient, outpatient, and residential mental 
health programs are receiving an investment of $6.2 billion, up $459 
million, over 7 percent over FY 2010. Another $6.9 billion will be 
invested in long term care improvements, up $597 million or nearly 9 
percent from FY 2010, of which $146 million will be invested in 
telehome health care to facilitate near instant access to care. Women 
veterans programs will receive $270 million, an increase of 10 percent.
    Conversely the $144 million for Greening VA projects is less than 
0.1 percent of the Department's total FY 2012 budget request. Greening 
VA is a ``supporting initiative'' cited in the Department's FY 2011-
2015 Strategic Plan. It supports Integrated Initiative 3--``Build our 
internal capacity to serve veterans, their families, and other 
stakeholders efficiently and effectively.''
    Funding Greening VA directly impacts the quality of care provided 
to veterans by improving the infrastructure of facilities where 
services are provided. Providing veterans with optimum services 
requires regular maintenance and periodic upgrades of our 
infrastructure to ensure efficient and effective operations of basic 
amenities such as the provision of hot water and air-conditioning. 
Ensuring sterile environments where needed and preventing infection 
requires reliable, secure electricity, clean water, and indoor air 
quality that meets or exceeds health care standards.
    Investments designed to improve energy and water efficiency have an 
impact on operating costs immediately upon project completion. These 
investments make a long-term, ongoing, and compounding contribution 
toward reducing and managing utility services costs. These efforts make 
VA a more sustainable Department, thereby helping us to reduce and 
better manage operating costs and protect the resources that enable VA 
to better serve veterans.

    Question 4: Could the $124 million dollars for ``Greening the VA'' 
help with the current back log problem the VA currently faces or help 
veterans gain more access to care?
    The job of the Veterans Administration is to serve veterans who 
have sacrificed their lives for our freedom.
    I believe the proposed budget is growing bureaucracy and picking 
and choosing initiatives that do not may not have giving veterans more 
access to their health care as their primary purpose as well as solving 
problems that the VA currently faces.
    ``Greening'' initiatives and growing the bureaucracy at the 
Veterans Administration should not come at the cost of those who were 
called upon to serve in the interest of protecting the country we love 
and the freedom we cherish.

    Response: While additional resources for either reducing the claims 
back log or improving access to health care could always be applied 
with some benefit, our currently proposed investments in FY 2012 
already optimize the return on investment in both those areas. The 
marginal improvement we might see in either area is more than offset by 
the valued added by the ``Greening the VA'' investment of $124 
million--less than one tenth of 1 percent of total proposed VA 
obligations in 2012.

                                 

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                      March 7, 2011

The Honorable Eric K. Shinseki
The Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420

Dear Mr. Secretary:

    In reference to our Full Committee hearing entitled ``U.S. 
Department of Veterans Affairs Budget Request for Fiscal Year 2012,'' 
that took place on February 17, 2011, I would appreciate it if you 
could answer the enclosed hearing questions by the close of business on 
April 11, 2011.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Debbie Smith by fax your responses at 202-225-2034. If you have any 
questions, please call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                          Ranking Democratic Member
DMT:ds

                               __________

                        Questions for the Record
                        The Honorable Bob Filner
                  House Committee on Veterans' Affairs
 ``U.S. Department of Veterans Affairs Budget Request for Fiscal Year 
                                 2012''

                           February 17, 2011

Contingency Fund
    Your Enrollee Health Care Projection estimated the need for an 
additional $953 million to address potential demand increases due to 
economic conditions. The VA budget submission states that the ``fund 
will only become available for obligation if the Administration 
determines the anticipated changes in economic conditions, as estimated 
by the Model, materialize in 2012.''

    Question 1: Specifically, what economic changes would have to occur 
to trigger a determination to obligate these funds?

    Response: Section 226 of the Administrative Provisions state that 
``. . . such funds shall only be available upon a determination by the 
Secretary of Veterans Affairs, with the concurrence of the Director of 
the Office of Management and Budget, that:
    a.  The most recent data available for:

      1.  National unemployment rates,
      2.  Enrollees' utilization rates, and
      3.  Obligations for Medical Services,

        validates the economic conditions projected in the Enrollee 
Health Care Projection Model, and

    b.  Additional funding is required to offset the impact of such 
factors.''

    Question 2: What economic data was placed in the Model and how 
exactly does the Model come to a decision?

    Response: Estimates of unemployment rates and how they are expected 
to influence Veterans reliance on VA for care were included in the 
Model.

    Question 3: How confident are you that your Model can accurately 
engage in economic forecasting?

    Response: The Model does not engage in economic forecasting. The 
Model uses Government estimated unemployment rates to estimate the 
impact they will have on Veterans reliance on VA for health care.

    Question 4: If the Administration determines that the ``economic 
conditions'' do not take place what will the VA do with this funding?

    Response: In this case, the funds would expire and be returned to 
the Treasury.

    Your budget estimates a FY 2012 current services level for medical 
care of $54.5 billion. This current services level is funded by total 
budget authority of $53.9 billion, and the addition of $570 million in 
savings. The contingency fund is included as part of the total 
budgetary resources available for 2012.

    Question 5: It looks like the ``contingency fund'' is already 
required to meet your current services estimate for 2012. Why didn't 
you just add this amount to your bottom line request for the Medical 
Services account?

    Response: The contingency fund is included in the bottom line 
request for the Medical Services account. The $953 million contingency 
fund, estimated in VA's Enrollee Health Care Projection Model, was 
created to address the potential demand increase for medical care 
services due to changes in economic conditions. The fund will only 
become available for obligation if the Administration determines the 
anticipated changes in economic conditions, as estimated by the Model, 
materialize in 2012. The current services level for medical care of 
$54.5 billion includes the contingency fund of $953 million.
Carryover Funding
    Prior to the advent of advance appropriations for VA medical care, 
appropriations bills routinely provided authority for a small amount of 
the appropriation provided in one fiscal year to be expended in during 
the course of the next fiscal year. This authority was provided as a 
budgeting tool enabling the VA to better weather disruptions that might 
be caused by the necessity to rely upon temporary funding bills. The 
last time this authority was provided was for amounts appropriated for 
FY 2010, with the expectation that these amounts would be expended in 
FY 2010 and FY 2011. You state in your testimony that you require 
carry-over authority from FY 2011 in order to provide a sufficient 
budget for FY 2012 and FY 2013 and that the failure to provide this 
authority will necessitate an increase in appropriations for 2012 and 
2013.

    Question 1: Can you provide us with the specifics as to the amounts 
and the rationale behind projecting unobligated balances at the end of 
this fiscal year?

    Response: At the end of FY 2010, we had an unobligated balance of 
$1.449B ($1.208B in Medical Services, $132M in Medical Support and 
Compliance, and $109M in Medical Facilities). These amounts were 
related to numerous factors such as: equipment purchases planned for FY 
2010 but were executed in FY 2011, non-recurring maintenance projects 
planned for FY 2010 that had to be moved to FY 2011, contracts that 
were not awarded in FY 2010 as planned but were awarded in FY 2011, and 
full year hiring actions planned for FY 2010 that did not occur as 
planned. The estimated unobligated balances at the end of FY 2011 are 
$1.1B ($1.0B in Medical Services, and $100M in Medical Facilities). 
These estimated amounts reflect anticipation of similar factors 
described for FY 2010 and are consistent with the actual carry-over 
balances from prior years.

    Question 2: Of the $1 billion in carryover authority provided in 
the Medical Services account in the FY 2010 appropriations act, how 
much has been obligated as of February 1, 2011?

    Response: As of January 31, 2011, $719.6M had been obligated. As of 
February 28, 2011, $731.5M had been obligated.

    Question 3: [If there is any remaining] Of the amount remaining do 
you anticipate obligating this amount by September 30, 2011?

    Response: Yes.

    Question 4: Do you still plan on having unobligated balances that 
could be carried over in FY 2013 in light of the reduction in your 
estimates as to collections of $473 million?

    Response: The President's Budget estimates that $500M will be 
carried over at the end of FY 2012 into FY 2013 and that zero would be 
carried over at the end of FY 2013.
Collections
    Your estimates as to collections have been substantially reduced, 
leaving a shortfall in expected revenues for 2011 and 2012. For FY 2011 
you had estimated $3.4 billion but your current estimate is for $2.9 
billion. For 2012, you had estimated $3.7 billion but now expect $3 
billion.

    Question 1: Can you explain to us what has caused this decrease in 
your collection levels and estimates and how are you going to fill the 
budgetary holes these lower amounts have created?

    Response: There are a number of factors that have caused the 
decrease in collection levels for FY 2011 and estimates for FY 2012. 
These factors include, but are not limited to, the following:
    Poor economic conditions--Growth in national unemployment (from 7.7 
percent in the First Quarter of FY 2009 to 9.8 percent at the end of 
the First Quarter of FY 2011) will continue to impact both first party 
collections (Veteran out-of-pocket costs) and third party collections 
(unemployment and resultant loss of health insurance coverage).
    Hardship waivers and exemptions from copayments are increasing--
Veteran first party copayment economic hardship waivers and exemptions 
were at their highest levels in FY 2010 (the most recent completed 
year) than in any prior year, and this is expected to continue with the 
current economic conditions.
    Third party ``Collections to Billings'' (CtB) ratios are down 
nationally--CtB ratios are expected to continue a downward trend, 
reducing third party collections. CtB decreased from 43.1 percent in 
January 2009 to 39.1 percent in January 2011, and was influenced by the 
continued shift by insurers of payment responsibility to the patient 
(i.e., higher deductibles, increased copayments, etc.). Section 1729 of 
title 38 prevents VA from billing the Veteran if the insurance company 
does not pay. Each 1 percent decrease in CtB represents a $55 million 
loss in revenue.
    Priority Group migration from lower to higher status--National 
Priority Group migration over the past 2 years has shown a sharp 
decrease in collections for Veterans in Priority Group 8, which are the 
primary drivers of both first and third party collections.
    Veterans aging to 65 years and older--FY 2012 begins to reflect the 
shift in workload for Vietnam Era Veterans aging to 65 years and older. 
Once a Veteran is Medicare-eligible, Medicare becomes the primary 
insurance coverage and VA can bill insurance companies only for the 
portions Medicare does not cover (typically their deductibles). This 
significantly reduces the amount VA can collect.
    The decrease in the collections estimate for FY 2011 of $473 
million is offset by a lower overall requirement (-$140 million) and 
increased utilization of carryover funds for FY 2010 (+$349 million). 
The lower overall requirement takes into consideration operational 
improvements in FY 2011. The decrease in the collections estimate for 
FY 2012 of $601 million is offset by increases in the Reimbursement and 
Prior Year Recoveries estimate (+$1 million) and utilization of 
carryover funds (+$600 million). The revised FY 2012 estimate includes 
an offset of $713 million for the pay freeze rescission.


                                              Dollars in Thousands
----------------------------------------------------------------------------------------------------------------
                                            2011 Estimate                            2012 Estimate *
                             -----------------------------------------------------------------------------------
         Description           2011 Pres.    2012 Pres.     Increase/    2011 Pres.    2012 Pres.     Increase/
                                  Subm.         Subm.       Decrease        Subm.         Subm.       Decrease
----------------------------------------------------------------------------------------------------------------
Total Obligations             $51,865,000   $51,724,974    ($140,026)   $54,631,985   $54,871,985      $240,000
----------------------------------------------------------------------------------------------------------------
Funding Sources:
----------------------------------------------------------------------------------------------------------------
Appropriation                 $48,183,000   $48,168,000     ($15,000)   $50,610,985   $50,850,985      $240,000
(Including Transfers)
----------------------------------------------------------------------------------------------------------------
Collections                    $3,355,000    $2,882,000    ($473,000)    $3,679,000    $3,078,000    ($601,000)
----------------------------------------------------------------------------------------------------------------
Reimbursements & PY              $327,000      $326,000      ($1,000)      $342,000      $343,000        $1,000
 Recoveries
----------------------------------------------------------------------------------------------------------------
Use of Carryover Funds                 $0      $348,974      $348,974            $0      $600,000      $600,000
----------------------------------------------------------------------------------------------------------------
Total                         $51,865,000   $51,724,974    ($140,026)   $54,631,985   $54,871,985      $240,000
----------------------------------------------------------------------------------------------------------------
*In 2012, $953 million will be obligated if the Administration determines the requirements for the contingency
  fund are met.


Operational Improvements
    Question 1: VA is proposing $1.5 billion in new initiatives for FY 
2012 that will be partly paid for by $1.2 billion in operational 
improvements started in 2011. Some of these initiatives are very vague 
such as, ``expanding health care access to veterans which aims at 
creating care alternatives, including implementation of Systems 
Redesign and using new technologies.'' Can you explain to the Committee 
what that means?

    Response: Access to health care is vital to the Department's 
overall mission of providing exceptional health care to Veterans. VA is 
the largest integrated provider of health care in the country, with 
over 5.4 million Veterans each year receiving care at over 1,100 
locations, including inpatient hospitals, health care centers, 
residential facilities, community based outpatient clinics (CBOCs), and 
in their homes. It is VA's commitment to provide clinically-
appropriate, quality care for eligible Veterans when they want and need 
it. This will be accomplished through Systems Redesign which involves 
multiple strategies addressing transportation, use of advancements in 
medical technology, workforce challenges, and partnerships in rural 
communities. It is the intent to develop a culture nationally within VA 
which pursues continuous improvement so that staff is empowered to 
solve problems at the front line or at whatever point the Veteran 
accesses the health care system.
    A few years ago, it was felt that the VA was using ever-increasing 
estimates of savings resulting from ``management efficiencies'' in 
order to, on paper, cover the increasing gulf between appropriated 
dollars and the actual fiscal requirements of providing health care to 
veterans.

    Question 2: Can you provide real details regarding these 
``operational improvements''?

    Response: To improve VA health care operations and improve the 
value of services provided to the Veterans and their families as well 
as recognizing the Federal deficit challenge this Nation faces, VA has 
proposed a number of management actions. Many of these proposals will 
improve VA's medical services delivery over the long-term.
Fee Care Payments Consistent with Medicare
      (-$315 million in 2012)
      (-$362 million in 2013)

    Dialysis Regulation Savings and other care services are the 
estimated cost savings from purchasing dialysis treatments and other 
care from civilian providers at the Centers for Medicare and Medicaid 
Services rates instead of current community rates.
Fee Care Savings
      (-$200 million in 2012)
      (-$200 million in 2013)

    Fee care savings will be generated through application of the 
following initiatives: use of electronic repricing tools, use of 
contract and blanket ordering agreements, decrease contract hospital 
average daily census, decrease duplicate payments, decrease interest 
penalty payments, and increase revenue generation through the use of 
automated tools.
Clinical Staff and Resource Realignment
      (-$151 million in 2012)
      (-$151 million in 2013)

    Conversion of selected physicians to non-physician providers; 
conversion of selected registered nurses to licensed practical nurses; 
and to more appropriately align the required clinical skills with 
patient care needs.
Medical & Administrative Support Savings
      (-$150 million in 2012)
      (-$150 million in 2013)

    These savings will be achieved by more efficiently employing 
resources to reduce administrative and support costs across VA's 
medical facilities. The intent is to invest these savings in direct 
patient care and thereby enable VA to provide health care services to 
Veterans more effectively and efficiently.
Acquisition Improvements
      (-$355 million in 2012)
      (-$355 million in 2013)

    VA has eight ongoing initiatives. A brief description of each is as 
follows:

      Consolidated Contracting--This initiative consists of 
multi-facility, VISN, and Regional Contracts. It also involves 
contracts being administered at the VHA Health Administration Center 
(HAC). Contract savings result from combining requirements and 
obtaining lower unit pricing.
      Increasing Competition--This initiative relates to 
competing contracts that were formerly awarded on a sole source basis. 
The majority of the savings in this category come from competing 
requirements among Service-Disabled Veteran-Owned Small Business firms.
      Bring Back Contracting In House--Under this initiative, 
VHA is bringing contracting workload back into VHA contracting offices 
from the Army Corps of Engineers. By bringing the workload back, VHA 
avoids paying the Corps of Engineers administrative charges.
      Reverse Auction Utilities--Several VHA facilities are 
participating in a program administered by GSA, whereby utilities are 
procured using reverse auctions. This has produced savings in utility 
pricing.
      MED PDB/EZ Save--Through a consolidated effort with DoD, 
VHA has been able to obtain visibility of the most favorable government 
pricing overall. This has allowed VHA to procure needed supplies at the 
identified lower price.
      Reduce Contracts--This effort involves canceling/avoiding 
contracts by performing the required services in house.
      Property Re-utilization--This initiative brings back the 
practice of considering ``excess as the first source of supply.'' VHA 
has been able to avoid procurement of new equipment by reutilizing 
excess equipment.
      Prime Vendor--VHA has been able to use the med/surg prime 
vendor to achieve additional price concessions. Additionally, the prime 
vendor provides improved inventory management thereby eliminating the 
procurement of unneeded supplies.

VA Real Property Cost Savings and Innovation Plan
      (-$66 million in 2012)
      (-$66 million in 2013)

    VA Real Property Cost Savings and Innovation Plan includes the 
following initiatives for VHA: Repurpose Vacant and Underutilized 
Assets--VA has identified 17 vacant or underutilized buildings to 
repurpose for homeless housing and other enhanced-use lease (EUL) 
initiatives. Demolition and Mothballing--VA has identified 116 vacant 
or underutilized buildings to demolish or mothball which will reduce 
operating costs after the cost of demolition. Energy and 
Sustainability--VA will achieve these savings by regionally pooling 
energy commodity purchasing contracts, aggressively pursuing energy and 
water conservation, and investing in the co-generation of electric and 
thermal energy on-site. Procurement Savings--VA will achieve savings by 
engaging in the direct purchase of building supplies and equipment, and 
regionalizing certain building service contracts.
    In your budget proposal, for example, you portray the operational 
improvement amounts as the same for both 2012 and 2013, for acquisition 
improvements. This is projected to save VA $355 million in 2012 and 
$355 million in 2013.

    Question 3: Does this mean that over the course of 2 years that VA 
will save over $700 million in real dollars by implementing those 
improvements?

    Response: Yes, as reflected in the budget, VA estimates acquisition 
improvements to save $355 million in FY 2012 and $355 million in FY 
2013.

    Question 4: Can you provide us with the estimated overall savings 
that each improvement is expected to save regardless of fiscal year?

    Response: As reflected in the budget, VA estimates the operational 
improvements to provide overall savings of $746 million in FY 2011, 
$1.237 million in FY 2012, and $1.284 million in 2013.

                           Dollars in Millions
------------------------------------------------------------------------
                                2011 Current
          Description             Estimate        2012          2013
                                                Estimate      Estimate
------------------------------------------------------------------------
Fee Care Payments Consistent         ($275)        ($315)        ($362)
 with Medicare
------------------------------------------------------------------------
Fee Care Savings                     ($150)        ($200)        ($200)
------------------------------------------------------------------------
Clinical Staffing and                 ($44)        ($151)        ($151)
 Resources Alignment
------------------------------------------------------------------------
Medical & Administrative             ($100)        ($150)        ($150)
 Support
------------------------------------------------------------------------
Acquisition Improvements             ($177)        ($355)        ($355)
------------------------------------------------------------------------
VA Real Property Cost Savings            $0         ($66)         ($66)
  & Innovation Plan
------------------------------------------------------------------------
Total                                ($746)      ($1,237)      ($1,284)
------------------------------------------------------------------------


Health Informatics
    In transforming the VA into a 21st Century organization, your 
testimony states the ``Our health informatics initiative is a 
foundational component for VA's transition from a medical model to a 
patient-centered model of care. The delivery of health care will be 
better tailored to the individual veteran.''

    Question 1: Can you explain in detail what health informatics 
initiatives you reference here?

    Response: VA Major Initiative: Transforming Health Care Delivery 
through Health Informatics.
    Transforming Health Care Delivery through Health Informatics 
(Health Informatics) is a new VA Major Initiative (Initiative) that was 
formally launched on October 1, 2010. The purpose of the Initiative is 
two-fold: To assist with VHA's transition from a medical model of care 
to a patient-centered model of care; and, to build a sustainable and 
effective collaboration between the Veterans Health Administration 
(VHA) and the VA Office of Information and Technology (OIT).
    The Initiative is the vehicle for promoting and fostering open, 
transparent communication between health care providers and software 
development teams through shared responsibility and accountability. The 
Health Informatics Initiative is composed of three major projects:

    A.  Adopt a Health/IT Collaborative supporting rapid product 
development and delivery. This effort restructures the working 
relationship between VHA and OIT and provides an organizational 
foundation for reengineering existing processes and piloting VHA 
clinical software prototypes in a rapid, agile and iterative fashion.
    B.  Build a Health Management Platform to transform patient care. 
This effort integrates informatics and health information technology 
(IT) in the delivery of health care. It provides a succession plan to 
transition the Computerized Patient Record System (CPRS) to the next 
generation of browser-based Electronic Health Record (EHR).
    C.  Create Health Informatics Capacities. This effort develops the 
Health Informatics workforce and enhances organizational informatics 
literacy through competency, career and community development.
Capital Infrastructure
    The VA has recently rolled out the Strategic Capital Investment 
Planning (SCIP) process to help strategically plan their infrastructure 
needs for the next 10 years. I understand that this process is one that 
encompasses all three administration's needs.

    Question 1: Can you please explain the difference between SCIP and 
the Capital Asset Realignment for Enhanced Services (CARES) process?

    Response:

      The CARES process was focused chiefly on the realignment 
of clinical services to provide for the delivery of health care.
      SCIP is not a replacement for CARES, rather it is an 
enhancement which builds off of the important lessons learned through 
the CARES process.
      CARES and SCIP both identify performance gaps 
(utilization, access, space, facility condition) and lead to the 
development of long term capital plans to meet the gaps.
      SCIP is more flexible in its approach as it places 
emphasis on looking at non-capital solutions (longer hours of 
operation) as well as infrastructure improvements to meet identified 
gaps.
      SCIP looked at disposing or repurposing of individual 
underutilized buildings (not entire campuses as in CARES).
      CARES did not produce a comprehensive, integrated list of 
capital investments that identified the highest priority medical and 
non-medical capital needs within VA.

    SCIP ultimately resulted in a 10-year capital plan for all programs 
(Major, Minor, NRM, and leases) which includes specific investments 
necessary to close all ``gaps'' currently identified by VA 
Administrations, Regions and facilities.
Veterans Benefits
    Question 1: With the very recent reorganization implementation of 
the Veterans Benefits Administration is there adequate allocation of 
Full Time Equivalent (FTEs) or are additional FTEs going to be needed? 
Please elaborate on what you believe the numbers might be.

    Response: The reorganization is being accomplished within existing 
resource levels. The change in VBA Headquarters structure does not 
result in any change to the VBA field structure, nor is there any 
direct impact on VBA's FY 2012 budget request.
    The Veterans Benefits Management System (VBMS) is the cornerstone 
of VA's plans to address disability claims processing in a paperless 
manner.

    Question 2: Would you briefly tell us about this system and how has 
it impacted the claims process to date?

    Response: The VBMS is a business transformation initiative designed 
to assist VA in eliminating the claims backlog. The centerpiece of VBMS 
is a paperless system, which will be complemented by improved business 
processes and workflows.
    VBMS will dramatically reduce the amount of paper in the current 
claims process, and will employ rules-based claims development and 
decision recommendations where possible. Additionally, by using a 
services-oriented architecture (SOA) and commercial off-the-shelf 
(COTS) products, VA will be positioned to take advantage of future 
advances in technology developed in the marketplace to respond to the 
changing needs of Veterans over time.
    The first iteration of the software is currently being tested at 
the Providence Regional Office (RO). Claims processors at the 
Providence RO are using the new software to validate and harden the 
business requirements, as well as to generate new business requirements 
for future software releases. They are utilizing a new graphical user 
interface, electronic claims repository, and scanning solution, which 
are integrated with existing core business applications (VETSNET) that 
support claims processing.
    Additional development and testing will continue throughout 
calendar year 2011 and into 2012 at additional sites. Full national 
deployment is scheduled to begin in calendar year 2012.
    In their written statement, the Disabled American Veterans (DAV) 
admits that a modern information technology system to process claims in 
a paperless environment is long overdue, but they have reservations 
about whether the Veterans Benefits Management System (VBMS), VA's 
answer to paperless claims processing, is being rushed to meet ``self-
imposed'' deadlines in order to show progress toward the backlog.

    Question 3: Can you address these reservations?

    Response: The project schedule for the VBMS initiative, while 
aggressive, ensures a strategic approach to enhancing claims 
processing. The initiative has a deliberate schedule with specific 
goals along the timeline. For instance, the software is being 
developed, deployed, and tested in a phased approach that began with 
the Virtual Regional Office and continues today with testing of the 
first iteration of production software at the Providence Regional 
Office.
    VA ensures an appropriate level of transparency and accountability 
for the VBMS initiative through the Operational Management Review (OMR) 
process. The OMR is a collaborative process where VA senior leaders 
come together on a regular basis in a structured forum to problem 
solve, achieve closure on any major initiative issues, and provide 
insights and transparency for all of the Department's major 
initiatives.
    As part of the OMR process, the VBMS initiative leader and 
executive sponsor meet with the VA Deputy Secretary on a monthly basis 
to discuss performance, schedule, and cost. Key challenges and 
mitigations are discussed, as well as lessons learned and best 
practices that may be useful to other initiatives. Any challenges or 
refinements needed to the schedule are discussed and resolved through 
the OMR.
    As you know, stakeholders are a very important part of a change 
process. DAV mentions in their testimony their frustration with the 
VBA's failure to fully integrate service organizations in reforming the 
claims process and the development of the draft regulations for the 
updated rating schedule.

    Question 4: How do you respond to that?

    Response: VA held four medical and scientific forums on updating 
the rating schedule in January and February of this year. The Veterans 
Service Organizations (VSOs) were given the opportunity to provide 
formal presentations in 2-hour sessions at each of the forums. In 
addition, the VSOs participated in the working group panel sessions and 
offered numerous and significant contributions during each body system 
review. Our plan is to follow this process in all future forums.
    The Independent Budget veterans service organizations have 
expressed concern with the oversight by the Veterans Benefits 
Administration to ensure the required training is completed or to 
assess the adequacy and consistency of the training.

    Question 5: Would you address the annual training requirement that 
has only been met by one VA Regional office and an additional nine VA 
regional offices that had less than half of their employees meet the 80 
hours of training requirement?

    Response: Improved monitoring procedures and emphasis on training 
by leadership increased the number of claims processors that completed 
the annual training requirement from 68 percent in FY 2009 to 81 
percent in FY 2010. This 13 percent improvement is on top of absorbing 
nearly 1,900 new Compensation and Pensions employees in FY 2010, many 
of whom were not available for training for a full year.

    Question 6: How many veterans have used the Fully Developed Claims 
initiative?

    Response: Since the pilot started in June 2010, 5,193 claims have 
been completed through the Fully Developed Claims program as of March 
9, 2011.
    The expansion to the Integrated Disability Evaluation System (IDES) 
Program that will include a component on Vocational Rehabilitation and 
Employment (VR&E) services for those active duty Servicemembers 
transitioning through the IDES will require an additional 110 FTE to 
support. The budget has requested $16.2 million to cover this increase.

    Question 7: Given the big plan to expand IDES to all Military 
Treatment Facilities (MTFs) by the end of FY 2011, do you believe the 
additional 110 FTE is enough to meet the demand?

    Response: In collaboration with DoD, VA will assign the 110 
Rehabilitation Counselors at some, but not all, of the IDES locations. 
During this expansion of the VR&E IDES initiative, VA will collect data 
regarding workload, services provided, and outcomes to be considered in 
future expansion efforts.
Office of Inspector General
    The President's 2011 and 2012 Budget Requests reflected significant 
increases for VA offices in the General Administration (GOE) account. 
The increases ranged from 3 to 57 percent and averaged 17 and 13 
percent, respectively. Additionally, all of these offices received 
substantial increases going from 2009 to 2010. The Administration 
places great emphasis on the need for increased accountability, 
transparency, internal controls, and minimizing improper payments.

    Question 1: In view of the expansion of benefit programs and the 
expanded budget authority for most VA offices, could you tell us why 
the VA Office of Inspector General funding has not also increased in a 
similar fashion since 2010?

    Response: The VA OIG has received a $20.6 million, or 23 percent, 
increase in 2012 compared to 2009. This is an average increase of 7.7 
percent per year, which is comparable to the General Administration 
staff office 3-year average of 8.8 percent when excluding funding for 
the President's government-wide acquisitions initiative. In addition, 
the VA OIG FTE has increased by 103 over the 2009 level (20.2 percent).

                                 

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                      March 7, 2011

Carl Blake
National Legislative Director
Paralyzed Veterans of America
801 18th Street, NW
Washington, DC 20006

Raymond C. Kelley
Director, National Legislative Service
Veterans of Foreign Wars of the United States
200 Maryland Avenue, NE
Washington, DC 20002-5799

Joseph A. Violante
National Legislative Director
Disabled American Veterans
807 Maine Avenue, SW
Washington, DC 20024

Christina M. Roof
National Acting Legislative Director
AMVETS
4647 Forbes Boulevard
Lanham, MD 20706

Dear Members of the Independent Budget:

    In reference to our Full Committee hearing entitled ``U.S. 
Department of Veterans Affairs Budget Request for Fiscal Year 2012,'' 
that took place on February 17, 2011, I would appreciate it if you 
could answer the enclosed hearing questions by the close of business on 
April 11, 2011.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response by 
fax at 202-225-2034. If you have any questions, please call 202-225-
9756.

            Sincerely,

                                                         BOB FILNER
                                          Ranking Democratic Member
DMT:ds

                               __________

                                                 Independent Budget
                                                    Washington, DC.
                                                      April 7, 2011

Honorable Bob Filner
Ranking Minority Members
House Committee on Veterans' Affairs
338 Cannon House Office Building
Washington, D.C. 20515

Dear Ranking Member Filner:

    On behalf of The Independent Budget, we would like to thank you for 
the opportunity to present our views on the FY 2012 budget for the 
Department of Veterans' Affairs (VA). We are pleased to see that the 
Committee has chosen to provide Views and Estimates in a bipartisan 
manner this year; however, we believe that much work remains to ensure 
that the VA receives a sufficient budget for FY 2012 and FY 2013. Only 
through cooperation between the veterans' service organizations and the 
Members of the Committee can we hope to attain a sufficient, timely, 
and predictable budget for the VA.
    We have included with our letter a response to each of the 
questions that you presented following the hearing on February 17, 
2011. Thank you very much.

            Sincerely,

                                                  Christina M. Roof
                               National Deputy Legislative Director
                                                             AMVETS

                                                 Joseph A. Violante
                                      National Legislative Director
                                         Disabled American Veterans

                                                         Carl Blake
                                      National Legislative Director
                                      Paralyzed Veterans of America

                                                  Raymond C. Kelley
                                      National Legislative Director
                      Veterans of Foreign Wars of the United States

                               __________

    VA is proposing $1.5 billion in new initiatives for FY 2012 that 
will be partly paid for by $1.2 billion in operational improvements 
started in 2011. Some of these initiatives are very vague and the 
``operational improvements'' are not actual realized savings, yet. An 
example of very vague language in the operational improvements category 
is contained in the Medical and Administrative Support savings 
narrative, ``indirect cost savings will be produced by more efficiently 
employing the resources in various medical care, administrative, and 
support activities at each medical center and in VISN and central 
office operations.'' VA says they will save $150 million dollars by 
implementing this. In light of the fact that many of VA's budgets in 
the past were based on failed ``management efficiencies'' savings:

    Question 1: In your experience, what is the impact of ``operational 
improvements'' to the veteran trying to gain access or get an 
appointment at a local VA medical center?

    Answer: Gauging the real impact of ``operational improvements'' can 
be particularly difficult. In theory, steps taken to make the delivery 
of health care more efficient would seemingly benefit veterans seeking 
care. However, the impact upon veterans is usually a secondary 
consequence of the inability of the VA to actually properly and 
effectively implement operational improvements.
    Generally, the Administration recommends ``operational 
improvements'' in order to realize some savings in real dollars. 
Unfortunately, as has been the case with previous Administrations that 
have proposed similar gimmicks, the VA typically does not actually 
achieve those savings. As a result, the proposed VA budget would then 
be short of the funding needed to effectively deliver timely, quality 
health care. The immediate impact on veterans is then a rationing of 
care. Veterans will find it harder to make appointments in a timely 
manner and in some cases the VA will be forced to reduce the services 
it delivers. In a worst case scenario, the VA could be forced to take 
steps similar to those taken in 2003 when the VA chose to close 
enrollment into the health care system for Priority Group 8 veterans--
steps that have still not been fully overturned.

    Question 2: Would you care to comment on the feasibility of VA 
actually realizing $1.2 billion dollars in ``operational 
improvements?''

    Answer: In order to appropriately address the question, each of the 
individual ``operational improvements'' proposed by the VA must be 
looked at separately. These proposals include Fee Care Payments 
Consistent with Medicare ($315 million in 2012); Fee Care Savings ($200 
million in 2012); Clinical Staff and Resource Realignment ($151 million 
in 2012); Medical and Administrative Support Savings ($150 million in 
2012); and Acquisition Improvements ($355 million in 2012).
    First, the VA proposes to realize cost savings by reimbursing 
contract providers of dialysis and other care services at the Medicare 
reimbursement rate. This proposal intends to replace current 
unpredictable and financially vulnerable fee-basis reimbursement rates 
with Medicare reimbursement rates for ambulatory surgical center care, 
anesthesia, clinical laboratory, hospital outpatient perspective 
payment systems, and end stage renal disease. While this may be a fair 
assumption on the surface, the VA ignores the likelihood that this will 
not actually happen. The fact is that contract providers who would be 
affected by this change are adamantly opposed to this proposal, which 
could undermine the VA's ability to actually make this change. As a 
result, veterans will almost certainly be negatively impacted by this 
proposal as some providers will likely refuse to accept new veteran 
patients because they will not accept the Medicare reimbursement rate.
    Additionally, while existing contracts will not be affected now, 
they will be up for review in the future and VA may opt out of renewing 
existing contracts and use Medicare reimbursement rates. Our concern 
with this proposal is that it will reduce veteran patients access to 
care in the community where providers are not accepting Medicare 
patients in greater numbers. Specifically, current non-VA providers may 
be subjected to significant rate reductions. To remain viable, these 
providers may need to make changes to their patient case mix which 
could be detrimental to veteran patients if the applicable 
reimbursement rates are non-competitive.
    Questions have also been raised over VA's ability to 
administratively implement and adjust to Medicare's soon to be released 
``bundled payment system,'' which in and of itself is complex in 
application by the Centers for Medicare and Medicaid as well as to 
multiple providers across many settings. It is noteworthy however, that 
there are significant savings to CMS under this new payment system and 
there is incentive for community providers to coordinate care in a more 
cost-effective manner would serve to address the veteran communities 
long-standing concern over quality standards, care coordination and 
health information sharing in VA's fee-based care.
    We also understand that VA has submitted requests through the 
Office of Information and Technology procurement process for a complete 
systems modernization to provide automation support for this critical 
business process. The Veterans Health Administration (VHA) is also in 
the process of deploying the Fee Basis Claims Systems as an interim 
technical support solution. Likewise, VHA is also developing a pilot 
program for one Veterans Integrated Service Network (VISN) to partner 
with the Financial Services Center (FSC) for processing of all non-VA 
Fee claims. Finally, VHA will continue to assess alternatives for 
improving administration of the Fee program to include opportunities 
for consolidation of the claims processing function.
    The Independent Budget is aware that some temporary stand-alone 
information technology systems have been put in place, but they lack 
the functionality for centralized reporting, recording, and decision 
support systems. Clearly, what VA leadership expects of IT today to 
manage this program for decision-making, policy change, etc., is not 
being provided by the interim solution. In light of the need for 
significant changes to be made to the overall infrastructure, the 
short-term ``band-aid'' approach may be adequate, but it is not in the 
best interest of veteran patients or VA to provide timely access to 
quality health-care services.
    VA currently has three pilot projects to select one automated 
claims system for its Fee Program. We are pleased that the VHA has 
initiated these efforts in moving toward fee claims automation but are 
concerned about the process being used to establish these pilots and 
how VA will determine the approach and software that will be 
implemented nationwide. There appears to be no coordinated effort with 
a single point of accountability or an approved plan for how to 
evaluate these pilots' performance in order to ensure VA makes the best 
decision on how to automate the fee claims. There is not a publicly 
available plan defining specific VHA objectives and the metrics that 
will be used to evaluate each pilot.
    The IBVSOs would have preferred that before any pilot program or 
other project was initiated, a project plan with defined milestones and 
desired results, performance metrics, and evaluation methodology would 
have been established, analyzed, and approved--as is now required under 
VA's Performance Management and Accountability System (PMAS) to 
strengthen our IT oversight and performance. It appears that each pilot 
program is being implemented separately, without a single point of 
Office of Information Technology and program oversight or management of 
the objectives, costs, schedule, and performance, and without a 
consistent evaluation framework that holds each pilot accountable for 
achieving comparable results.
    We also believe that savings from Clinical Staff and Resource 
Realignment could be problematic. As explained by the American 
Federation of Government Employees in testimony before the Senate 
Committee on Veterans' Affairs on March 2, 2011, it remains unclear 
``whether these proposed conversions to lower skilled positions will 
result in a more efficient use of scarce VA medical dollars, or a 
harmful de-skilling of the care provided to veterans.'' Unfortunately, 
similar efforts to achieve these types of savings in the past have 
merely led to reduced access and quality of care. Likewise, as the VA 
transitions to the Patient Aligned Care Team (PACT) delivery model, we 
are concerned that this effort has already been hindered by short 
staffing and poor coordination, which leads us to question how the VA 
will realize cost savings from a proposed staff realignment in light of 
these difficulties.
    Additionally, The Independent Budget believes that estimated 
savings from the Medical and Administrative Support Savings are dubious 
at best. In the FY 2012 Budget Request, the Administration proposes to 
save money by ``more efficiently employing the resources in various 
administrative, medical, and support activities'' at all levels. And 
yet, the VA outlines no real plan as to how it will ``efficiently 
employ'' these resources. Previous Administrations also proposed 
``management efficiencies'' that would presumably save the VA money in 
much the same manner. However, the VA never seemed to achieve those so-
called efficiencies, arguably leaving the VA budget short each year.

    Question 3: VA's budget request contains a $1.1 billion carryover 
from the previous Fiscal Year. I would like to ask this panel if they 
have heard from the field, anecdotally, concerns with hiring freezes, 
programs that were not adequately funded, or any other type of services 
shortages that were attributed to a ``funding shortfall'' by the VA 
medical centers or VISNs.
    Answer: First, we would like to express our serious concern with 
the fact that the VA has identified such a significant amount of money 
that it apparently has not spent from the previous fiscal year. Given 
the growing pressure of demand from new veterans entering the VA health 
care system as well as the continued emphasis by Congress and other 
stakeholders to improve mental health services, women veterans' 
services, and rural health care delivery, it is incomprehensible to The 
Independent Budget co-authors that the VA would have appropriated 
dollars still available.
    We have in fact been hearing from staff in the field who report 
that VA medical facilities have placed freezes on hiring new staff. 
Similarly, we have received reports that facilities are instituting 
staffing caps when there is an obvious need for professional staff. For 
example, there continues to be a shortage of nurse staffing across the 
VA system, particularly in specialized services such as the spinal cord 
injury service. By establishing staffing caps, VA facilities are not 
filling staff positions that become open as a result of retirements and 
staff departures. We even received information from a particular 
facility where the medical center director outlined a plan that would 
replace two similar open positions with one full-time equivalent 
employee. For example, if two registered nurses (RN) working in a 
particular hospital unit leave the VA, that facility will only hire one 
new RN to handle the responsibilities of those two positions.
    We have also been told by nurses in various medical centers that 
the VA is not fulfilling promises made during their recruitment and 
retention negotiations. Specifically, we have heard complaints about 
the VA offering education program reimbursements through the Education 
Debt Reduction Program (EDRP) and then not providing these recruitment 
and retention incentives to nurses once they have been locked into 
their positions.

                                 

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                      March 7, 2011

Tim Tetz
Director, National Legislative Commission
The American Legion
1608 K Street, NW
Washington, DC 20006

Dear Tim:

    In reference to our Full Committee hearing entitled ``U.S. 
Department of Veterans Affairs Budget Request for Fiscal Year 2012,'' 
that took place on February 17, 2011, I would appreciate it if you 
could answer the enclosed hearing questions by the close of business on 
April 11, 2011.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Debbie Smith by fax at 202-225-2034. If you have any questions, please 
call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                          Ranking Democratic Member
DMT:ds

                               __________

                                                    American Legion
                                                    Washington, DC.
                                                     April 11, 2011

Honorable Bob Filner, Ranking Member
U.S. House of Representatives
Veterans' Affairs Committee
333 Cannon Office Building
Washington, DC 20515

Ranking Member Filner:

    This letter is in response to your post-hearing questions from the 
February 17th hearing that The American Legion testified at regarding 
U.S. Department of Veterans Affairs Budget Request for Fiscal Year 
2012.

      In your experience, what is the impact of ``operational 
improvements'' to the veteran trying to gain access or get an 
appointment at a local VA medical center?

        Operational improvements can be difficult to properly 
define, so it is difficult to state definitively if such ``operational 
improvements'' bring direct benefit to the veteran, although often it 
would seem that this is contrary to the case. VA, to their credit, has 
made strides over the past few years in reducing wait times for 
appointments; however, greater problems have potentially appeared on 
the horizon. As discussed later, reports have surfaced noting that 
perhaps VA facilities are not able to fill their allotted number of 
beds, which could mean that veterans are not receiving full access to 
care as intended.

         It is important to recognize, however, that there is not a 
direct correlation between spending and service to the veteran. Despite 
record budget increases for veterans, massive hiring increases, and the 
throwing of every available Congressional resource at VBA for the 
purposes of reducing the backlog of veterans' claims, the backlog is 
paradoxically increasing. Secretary Shinseki has stated an ambitious 
goal of ensuring that no claim is pending over 125 days, while 
increasing VA's accuracy rate to 98 percent. Over the past year, VA 
failed in both of those categories, seeing even their own generous, 
internal accuracy numbers drop from 86 percent accuracy to below 84 
percent while the number of claims pending over 125 days rose from 
under 180,00 to over 290,000.

         While VA maintains they are maneuvering into position to deal 
with the backlog via IT solutions and business model solutions, there 
is little hard evidence thus far to indicate that operational 
improvements have been made, and with over 40 pilot programs in 
operation last year, there has yet to be any kind of indication what 
lessons were learned towards improvement of operations through those 
pilot programs. For now, it would seem wise to adopt a ``wait and see'' 
mindset in determining whether or not VA is capable of providing 
operational improvements, be they towards the operation of medical 
centers or the claims offices of the VBA.

      Would you care to comment on the feasibility of VA 
actually realizing $1.2 billion dollars [sic] in ``operational 
improvements''?

        As indicated by the skepticism expressed above, the 
ability of VA to make substantive operational improvements, much less 
improvements capable of delivering more than $1.2 billion in savings, 
is in question. The American Legion has concerns that ``operational 
improvements'' may consist more of consolidation of activity within the 
realm of VA Central Office, and not of actual improvements distributed 
out to the individual regions of operation and the veterans therein.

         Further question must be raised when VA claims $1.2 billion in 
``operational savings'' yet requests to hold just under $1 billion in 
reserve as a ``contingency fund'' which would seem to indicate that 
VA's own planners doubt the ability to achieve real savings and must 
hold onto a reserve fund to compensate for overambitious estimates of 
achievable savings.

         While The American Legion supports the bottom line of the 
budget, VA could better serve veterans by targeting that contingency 
money to real projects, such as fully funding a Major and Minor 
Construction budget slashed by over half from the previous 2010 levels.

      VA's budget request contains a $1.1 billion dollar [sic] 
carryover from the previous Fiscal Year. I would like to ask this panel 
if they have heard from the field, anecdotally, concerns with hiring 
freezes, programs that were not adequately funded, or any other type of 
services shortages that were attributed to a ``funding shortfall'' by 
the VA medical centers or VISNs.

        The American Legion has also heard concerning stories 
anecdotally of letters from VISN and Medical Center Directors 
expressing hiring freezes due to inadequate funding. While Indianapolis 
and Cleveland are certainly areas of concern, recent testimony 
delivered by American Federation of Government Employees (AFGE) 
representative Maryann D. Hooker, MD to the Senate Committee on 
Veterans' Affairs explicitly highlighted this exact problem, stating in 
part in her written testimony:

           As mentioned above, emergency care has suffered 
tremendously because of inadequate staffing. The goal is no longer to 
provide care to the veteran in the emergency department, but to refer 
the patient outside the VA system for care. At Wilmington, VA, we 
recently learned that the emergency department is slated to increase 
its maximum capacity from six to 14 patients, yet administration wants 
to provide zero increase in nursing or physician staff. Recently, five 
patients each spent over 48 hours in the emergency department, 
including one who received two blood transfusions while he lay on a 
stretcher for 2 days. Meanwhile a 25-bed ward has sat idle for the past 
3 years because of too few floor nurses.

         Such conditions raise serious concerns about the ability to 
provide quality care to veterans. When questioned about these 
shortfalls, Dr. Robert A. Petzel, the Undersecretary for Health, 
responded that ``there may be gaps between what these Directors want 
and what they are getting, but not between what they need and what they 
are getting. There are no shortfalls in any of the VISN budgets.'' 
Clearly the reality as indicated by the testimony above would indicate 
otherwise. The American Legion urges Congress to initiate more 
oversight into this area.

         By no means, however, are the stories of shortfalls limited to 
those necessary for hiring positions to adequately staff existing 
facilities to fully implement their allotted bed spaces. The American 
Legion has received other reports of new facilities falling short of 
needed ``activation monies'' required to bring these new facilities 
online. The failure to fund needed startup costs of a facility is 
tantamount to the failure to build the facility to begin with, as this 
prevents veterans from accessing the resources that have been built to 
service their needs. The American Legion urges Congress to use their 
oversight powers to investigate how widespread this situation is and to 
encourage VA to rectify this situation. If these cuts in costs are a 
portion of VA's proposed slashing of construction costs by over half in 
the proposed FY 2012 budget, then The American Legion urges Congress to 
ensure that those funding numbers are increased to proper levels so 
that veterans aren't denied the long sought access to care provided by 
these new facilities.

         As this Committee is well aware, The American Legion regularly 
performs inspection visits of VA Medical Facilities for field research 
compiling our annual ``System Worth Saving'' reports on the state of VA 
Health Care delivery. The American Legion reminds the Committee we will 
gladly partner with any member of Congress or any staff of the 
Committee who wish to delve further into this area and determine 
whether or not the funding designated by Congress is truly reaching the 
veteran at ground level. Dedicated field research is essential to 
finding ``ground truth'' in matters such as this.

    The American Legion thanks the Committee for the opportunity to 
provide answers to these questions and remains ready and willing to 
work with the Committee to determine further answers to these or any 
other questions.

            For God and Country,

                                                           Tim Tetz
                                                           Director
                                    National Legislative Commission

                                 
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