    [Senate Hearing 114-558]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-558

                         HEARING ON PENDING LEGISLATION

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

                                    HEARING

                                   BEFORE THE

                         COMMITTEE ON VETERANS' AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 MARCH 15, 2016

                                   __________

           Printed for the use of the Committee on Veterans' Affairs

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                         COMMITTEE ON VETERANS' AFFAIRS

                       Johnny Isakson, Georgia, Chairman
    Jerry Moran, Kansas                  Richard Blumenthal, Connecticut,
    John Boozman, Arkansas                   Ranking Member
    Dean Heller, Nevada                  Patty Murray, Washington
    Bill Cassidy, Louisiana              Bernard Sanders, (I) Vermont
    Mike Rounds, South Dakota            Sherrod Brown, Ohio
    Thom Tillis, North Carolina          Jon Tester, Montana
    Dan Sullivan, Alaska                 Mazie K. Hirono, Hawaii
                                         Joe Manchin III, West Virginia
                           Tom Bowman, Staff Director
                     John Kruse, Democratic Staff Director

                                C O N T E N T S

                                  ----------

                                 March 15, 2016
                                    SENATORS

                                                                       Page
    Isakson, Hon. Johnny, Chairman, U.S. Senator from Georgia........   1,7
    Tester, Hon. Jon, U.S. Senator from Montana......................     6
    Tillis, Hon. Thom, U.S. Senator from North Carolina..............     6
    Blumenthal, Hon. Richard, Ranking Member, U.S. Senator from
      Connecticut....................................................     9
    Sullivan, Hon. Dan, U.S. Senator from Alaska.....................     9
    Cassidy, Hon. Bill, U.S. Senator from Louisiana..................    23
    Rounds, Hon. Mike, U.S. Senator from South Dakota................    31
    Boozman, Hon. John, U.S. Senator from Arkansas...................    33

                                   WITNESSES

    Burr, Hon. Richard, U.S. Senator from North Carolina.............     1
        Prepared statement...........................................     4
    McDonald, Hon. Robert A., Secretary, U.S. Department of Veterans
      Affairs, accompanied by: Laura Eskenazi, Executive in Charge
      and Vice Chairman, Board of Veterans' Appeals; Baligh Yehia,
      MD, MPP, MSHP, Assistant Deputy Under Secretary for Community
      Care, Veterans Health Administration; and Meghan Flanz, Deputy
      General Counsel, Legal Operations and Accountability, Office of
      General Counsel................................................    10
        Prepared statement...........................................    14
        Response to posthearing questions submitted by:
          Hon. Bill Cassidy..........................................    35
          Hon. Sherrod Brown.........................................    36
          Hon. Mazie K. Hirono.......................................    37
    Celli, Louis, Director of Veterans Affairs and Rehabilitation,
      The American Legion............................................    39
        Prepared statement...........................................    40
    Fuentes, Carlos, Senior Legislative Associate, Veterans of
      Foreign Wars...................................................    44
        Prepared statement...........................................    45
    Atizado, Adrian, Assistant National Legislative Director,
      Disabled American Veterans.....................................    50
        Prepared statement...........................................    51

                                    APPENDIX

    Daines, Sen. Steve, U.S. Senator from Montana; prepared statement    59
    American Federation of Government Employees, AFL-CIO; prepared
      statement......................................................    59
    Porter, Clifton J., II, Senior Vice President of Government
      Relations, American Health Care Association; letter............    62
    American Medical Association; prepared statement.................    65
    National Association of State Directors of Veterans Affairs;
      letter.........................................................    68
    Nurses Organization of Veterans Affairs; letter..................    69
    Metoxen, Kerry, Manager, Oneida Nation Veterans Department;
      prepared statement.............................................    69
    Stier, Max, President and CEO, Partnership for Public Service;
      prepared statement.............................................    70
    Paralyzed Veterans of America; prepared statement................    75
    Senior Executives Association; prepared statement................    80
    Weidman, Richard, Executive Director for Policy and Government
      Affairs, Vietnam Veterans of America; prepared statement.......   104

                         HEARING ON PENDING LEGISLATION

                                  ----------

                            TUESDAY, MARCH 15, 2016

                                           U.S. Senate,
                                Committee on Veterans' Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 2:16 p.m., in
    room 418, Russell Senate Office Building, Hon. Johnny Isakson
    presiding.
        Present: Senators Isakson, Boozman, Heller, Cassidy,
    Rounds, Tillis, Sullivan, Blumenthal, Brown, Tester, Hirono,
    and Manchin.
        Also present: Senator Burr.

                    HON. JOHNNY ISAKSON, CHAIRMAN,
                       U.S. SENATOR FROM GEORGIA

        Chairman Isakson. I will call this meeting of the Senate
    Veterans' Affairs Committee to order, and at the outset I want
    to thank all the members who are here and the ones that are
    coming for their participation. This is a very important
    hearing, and I want everybody to be here for as much of it as
    they possibly can be. I want to thank the Secretary for
    rearranging his schedule so he can be here for the complete
    hearing and for his testimony as well.
        We are going to go a little bit out of order. I am going to
    recognize Senator Burr in just a second because he is our
    Chairman of the Intelligence Committee. He is doing some
    important intelligence work, and he needs to get back. I am
    going to let him make a few comments on his legislation that he
    has worked on with Senator Tester.
        Afterward, I will make an opening statement, then Senator
    Blumenthal will make an opening statement, then we will go to
    Senator Sullivan and Senator Tester to make brief opening
    statements before Secretary McDonald. That way, everybody who
    has legislation that is to be discussed today will have their
    say and we will all have had a chance to hear it.
        Without further ado, I introduce Senator Burr from North
    Carolina. Welcome.

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

        Senator Burr. Thank you, Mr. Chairman, Ranking Member
    Blumenthal, and to my colleagues on the Committee. I thank you
    for holding this hearing and for providing me the opportunity
    to testify about the Veterans Choice Improvement Act.
        I introduced this legislation with Senator Ayotte, Boozman,
    Crapo, Daines, Hoeven, Moran, and Tillis. It is my
    understanding, Mr. Chairman, as of right now, we have a
    bipartisan agreement, and that means hopefully there is an
    opportunity for this to be marked-up in the context of your
    next markup legislation. It would be helpful if those who
    really are not focused on veterans health care would stand down
    and let us focus on substance in this bill that really does
    focus on the quality of care delivered and the efforts that the
    VA continues to make to provide that care for our veterans.
        In 2014, when I was the Ranking Member of this Committee,
    Congress passed the Veterans Access, Choice, and Accountability
    Act, which created the Veterans Choice Program, to make sure
    our veterans get the health care they need and that they get it
    expeditiously. This legislation was in response to a systemic
    problem throughout the VA health care system that had been
    uncovered in early 2014. We recognized at the time that the
    only way to make certain that veterans got the care they needed
    was to enable them to go to the doctor outside the VA if, in
    fact, they were on a wait list or lived a certain distance from
    a VA facility. I was proud to help author the Veterans Choice
    Program, and I know that program has helped many veterans get
    health care without having to wait or to drive far.
        However, nearly 2 years later, veterans are still
    experiencing serious frustrations and delays in getting health
    care. Just this October a CNN reporter found that appointment
    wait times at the VA were not getting better even after
    billions of dollars flowed into the agency.
        I know every Senator here today is hearing about these
    problems from veterans living in their own States. I certainly
    do, and let me give you an example.
        As recently as last month, Charlotte WBTV reported that a
    veteran named Jim Bancroft had waited more than a year to
    receive a referral from the VA to see a spine specialist. Mr.
    Bancroft was finally given a referral and allowed to see an
    outside specialist. When Mr. Bancroft called to make the second
    appointment, he was told he could not see the doctor because
    the doctor was no longer accepting veterans under the Choice
    Act. Why? Because the VA had continually failed to pay the
    doctor for seeing veterans.
        This is just one example of thousands and why I introduced
    the Veterans Choice Improvement Act. We must fix this, and we
    must get it right for our veterans.
        The first problem that the Veterans Choice Improvement Act
    seeks to fix is the confusing nature of receiving care outside
    of the VA. Currently, the VA offers care to veterans outside of
    the VA through a number of different programs and contracts.
    The laws and regulations that govern these programs differ in
    substantial ways, and this is confusing to the veteran,
    confusing to the doctor, the hospitals, and oftentimes it is
    confusing to the VA itself.
        That is why the Veterans Choice Improvement Act
    consolidates all of these programs into one permanent program,
    the Veterans Choice Program. This program will be the one
    program for veterans to receive care in their community. It is
    designed to be easily understandable by the veterans so that
    they will know when they are eligible to go outside of the VA
    for care.
        The Veterans Choice Improvement Act will also make
    significant reforms to the VA medical claims and reimbursement
    process to make sure that medical providers get paid for the
    services they provide to our Nation's veterans. This, in turn,
    will ensure veterans will be able to get the timely, quality
    health care they have earned.
        In North Carolina, we have already seen hospitals stop
    seeing veterans under the current Veterans Choice Program
    because the VA consistently failed to pay reimbursements for
    hospital services. I know this is a problem in other States as
    well, and that is why we reformed the claims process in this
    bill.
        We have set a standard for how long the VA has to reimburse
    a claim, and if they fail to meet the standard, interest begins
    to accrue on the claim. We require the Secretary to notify
    medical providers of what information a claim must contain for
    a quick reimbursement and also notify providers if that
    information requires changes. We also mandate that the VA
    establish an electronic system to receive medical claims from
    outside providers, but we give the VA until 2019 to put that in
    place. That is more than sufficient time to get it right, even
    for the Federal Government.
        As the Members of this Committee know, the VA has had a
    significant accounting problem as more and more veterans have
    been allowed to receive care outside the VA. In May 2015, the
    VA came to Congress and told us that they may have a funding
    problem but that they were not really sure, so they hired
    outside accounting firms to help them understand what was
    happening.
        Then in late July 2015, the VA came back and informed us
    that they were nearly $3 billion short in their medical
    services account for the fiscal year. The VA also told us that
    unless Congress allowed a reprogramming of funds out of the
    Veterans Choice Act the VA would be forced to close hospitals.
    Congress, of course, allowed for the reprogramming in order to
    keep the VA medical facilities open, but to say that such
    incidences are unacceptable is a gross understatement.
        In the Veterans Choice Improvement Act, we make an effort
    to fix these accounting issues so that the incidences like the
    one I just described do not happen again. The Veterans Choice
    Program will be funded through a single appropriation account,
    and that funding will be provided a year in advance. This
    should help clear up some of the accounting issues and provide
    more transparency for congressional, and for public, oversight.
        Last, Mr. Chairman, I would like to thank Senators Hoeven
    and Manchin for their legislation on provider agreements, which
    is part of this bill. I believe that this will make a real
    difference for veterans who live in rural America. These
    provider agreements will allow the VA to have a standing
    agreement with local doctors and hospitals to provide certain
    medical services to our Nation's veterans. This will alleviate
    the burden on veterans who currently have to travel distances
    for minor medical issues that can easily be addressed closer to
    home.
        There is simply no reason that veterans are driving four
    and 5 hours each way to get a new pair of eyeglasses. I give a
    great deal of credit to Senator Crapo for passionately
    advocating for veterans in Idaho and telling me the story of
    how veterans there were driving three and 4 hours to Salt Lake
    City to get fitted for hearing aids when there is a private
    hospital just down the road that could easily do the same
    thing.
        We can do better for our veterans, and that is why I also
    give the VA credit for requesting this ability and
    acknowledging that this is necessary and will help our Nation's
    veterans.
        I will close by saying this, that the Veterans Choice
    Improvement Act will help veterans across America get the best
    health care we have to offer, and they get it without having to
    wait long or to drive far, regardless of whether they live in
    an urban area or a rural town. This bill will help all.
        Mr. Chairman, I also want to thank Senator Tester. We have
    worked aggressively over the last week to put together a
    bipartisan bill, and I was told before I walked in the door
    that we are there. I am sure he will have an opportunity to
    speak, and he can reconfirm that.
        Our effort is simply this: through the VA and through this
    wonderful medical infrastructure that we have in this country,
    to make sure that veterans receive the highest quality of care.
    This is not an attempt to eliminate or to bypass, it is to put
    together the best health care system that we can provide for
    those who have given of themselves for this country.
        I thank the Chair. I thank the Ranking Member. I thank my
    colleagues.
        [The prepared statement of Senator Burr follows:]
               Prepared Statement of Senator Richard Burr (R-NC)
        Chairman Isakson and Ranking Member Blumenthal, thank you for
    holding this hearing and for providing me with the opportunity to
    testify about the Veterans Choice Improvement Act, which I introduced
    with Senators Ayotte, Boozman, Crapo, Daines, Hoeven, Moran, and
    Tillis. I'd also like to thank Senator Tester for his work on this
    issue as well.
        In 2014, when I was the Ranking Member of this Committee, Congress
    passed the Veterans Access, Choice and Accountability Act, which
    created the Veterans Choice Program to make sure our veterans could get
    the health care they need when they needed it. This legislation was in
    response to the systemic problems throughout the VA health care system
    that had been uncovered in early 2014. We recognized at the time that
    the only way to make certain that veterans got the care they needed was
    to enable them to go to a doctor outside the VA if they were on a
    waitlist or lived far from a VA facility. I was proud to help author
    the Veterans Choice Program, and I know that program has helped many
    veterans get health care without having to wait long or drive far.
        However, nearly two years later, veterans are still experiencing
    serious frustrations and delays in getting health care. Just this
    October, a CNN reporter found that appointment wait times at the VA
    were not getting better, even after billions of dollars flowed into the
    agency. I know every Senator here today is hearing about these problems
    from veterans living in their state. I certainly do. Let me give you an
    example:

              As recently as last month, Charlotte's WBTV reported that a
            veteran named Jim Bancroft had waited more than a year to
            receive a referral from the VA to see a spine specialist. Mr.
            Bancroft was finally given a referral and allowed to see an
            outside specialist, but when Mr. Bancroft called to make a
            second appointment, he was told he could not see the doctor
            because the doctor was no longer accepting veterans under the
            Choice Act. Why? Because the VA had continually failed to pay
            the doctor for seeing veterans.

    This is just one example of thousands and why I introduced the Veterans
    Choice Improvement Act. We must fix this and get it right for our
    veterans.
        The first problem that the Veterans Choice Improvement Act seeks to
    fix is the confusing nature of receiving care outside of the VA.
    Currently, the VA offers care to veterans outside of the VA through a
    number of different programs and contracts. The laws and regulations
    that govern these programs differ in substantial ways, and this is
    confusing to the veteran, confusing to doctors and hospitals, and
    oftentimes, confusing to the VA itself. That is why the Veterans Choice
    Improvement Act consolidates all of these programs into one permanent
    program, the Veterans Choice Program. This program will be the one
    program for veterans to receive care in their community. It is designed
    to be easily understandable by the veteran so that they will know when
    they are eligible to go outside the VA for care.
        The Veterans Choice Improvement Act will also make significant
    reforms to the VA's medical claims and reimbursement process to make
    sure medical providers get paid for the services they provide to our
    veterans. This, in turn, will ensure veterans will be able to get the
    timely, quality health care they've earned.
        In North Carolina, we have already seen hospitals stop seeing
    veterans under the current Veterans Choice program because the VA has
    consistently failed to reimburse the hospitals for services rendered. I
    know this is a problem in other states as well, and that is why we
    reform the claims reimbursement process in this bill. We have set a
    standard for how long the VA has to reimburse a claim, and if they fail
    to meet that standard, interest begins to accrue on the claim. We
    require the Secretary to notify medical providers of what information a
    claim must contain for quick reimbursement and also notify providers if
    that information requires changes. We also mandate that the VA
    establish an electronic system to receive medical claims from outside
    providers, but we give the VA until 2019 to put it into place. That is
    more than sufficient time to get it right, even for the Federal
    Government.
        As the Members of this Committee know, the VA has had significant
    accounting problems as more and more veterans have been allowed to
    receive care outside the VA. In May 2015, VA came to Congress and told
    us that they may have a funding problem, but that they were not really
    sure, and so they had hired outside accounting firms to help them
    understand what was happening. Then, in late July 2015, the VA came
    back to Congress and informed us that they were nearly $3 billion short
    in their medical services account for that fiscal year. The VA also
    told us that unless Congress allowed for a reprogramming of funds out
    of the Veterans Choice Fund, the VA would be forced to close hospitals.
    Congress, of course, allowed for the reprogramming in order to keep VA
    medical facilities open, but to say that such incidents are
    unacceptable is a gross understatement.
        In the Veterans Choice Improvement Act, we make an effort to fix
    these accounting issues so that incidents like the one I just described
    do not happen again. The Veterans Choice Program will be funded through
    a single appropriations account, and that funding will be provided a
    year in advance. This should help clear up some of the accounting
    issues and provide more transparency for Congressional and public
    oversight.
        Last, I would like to thank Senators Hoeven and Manchin for their
    legislation on provider agreements, which is part of this bill. I
    believe this will make a real difference for veterans who live in rural
    America.
        These provider agreements will allow the VA to have a standing
    agreement with local doctors and hospitals to provide certain medical
    services to veterans. This will alleviate the burden on veterans who
    currently have to travel long distances for minor medical issues that
    can easily be addressed closer to home. There is simply no reason that
    veterans are driving four and five hours each way just to get a new
    pair of eyeglasses. I give a great deal of credit to Senator Crapo for
    passionately advocating for veterans in Idaho and telling me the story
    of how veterans there are driving three and four hours to Salt Lake
    City to get fitted for hearing aids when there is a private hospital
    just down the road that could easily do the same thing. We can do
    better for our veterans, and that is why I also give the VA credit for
    requesting this ability and acknowledging that this is necessary and
    will help veterans.
        I will close by saying that the Veterans Choice Improvement Act
    will help veterans across America get the best health care we have to
    offer, and get it without having to wait long or drive far. Regardless
    of whether they live in an urban center or a rural town, this bill will
    help them. Thank you again for allowing me to testify today.

        Chairman Isakson. Senator Burr, I know you have to go back
    to the Intelligence Committee, but could you let me amend my
    introduction a little bit? I want to go to Senator Tester.
        Before you got here, Senator Tester, I was going to give
    you and Senator Sullivan a chance to make opening statements as
    well, though following me and Senator Blumenthal. But, since
    you are now here, Senator Blumenthal can wait 5 minutes I
    believe, especially since you all worked so hard on this
    agreement.
        I want to tell everybody this is exemplary of the best in
    the U.S. Senate. Ten days ago we had an impasse. I sat down
    with Senator Tester, personally and I sat down with Senator
    Burr. I said, will you all do me a favor? Will you put your
    heads together and see if you can find common ground and make
    this happen? For the record, I want to compliment both of you
    today on doing exactly that.
        With the Ranking Member's indulgence, we will go ahead and
    let Senator Tester make his remarks now.
        Senator Tester.

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

        Senator Tester. I will be very brief, Mr. Chairman.
        First of all, I want to thank you and I want thank the
    Ranking Member, but particularly you, Mr. Chairman. That is
    leadership, and I appreciate it. You allowed Senator Burr and
    myself the space to be able to get something done. You just did
    not say no. You said, go talk, get it done.
        I think Senator Burr's staff and my staff have worked hard.
        I think you know the problem here and we all know it,
    sitting around this dais; Senator Burr knows this. Choice is
    broken. We have to figure out how to make it work. Our veterans
    are suffering because of it, which is unacceptable. We need to
    make sure that things are done right with the VA not only
    because our veterans deserve it but because we should be
    talking about something else. That program should be done and
    working; we should be talking about the next challenge.
        I want to thank Senator Burr, in particular, for his good
    work and look forward to finding a path to get this across the
    finish line and on to the President's desk, so we can really
    make some things happen.

           HON. THOM TILLIS, U.S. SENATOR FROM NORTH CAROLINA

        Senator Tillis. Mr. Chairman?
        Chairman Isakson. Yes.
        Senator Tillis. May I just thank the senior Senator from
    North Carolina for coming up here and fighting for veterans? He
    is actually in a contested primary today. Votes are going on,
    and he is up here, which I appreciate.
        Chairman Isakson. We all appreciate the job both you and
    Senator Tester have done. Thank you for your commitment. Now,
    go back to the Committee on Intelligence and keep us safe.
        Senator Burr. Thank you, Mr. Chairman.
        Chairman Isakson. Now, I am going to make my opening
    remarks. Then I am going to turn it over to Senator Blumenthal.
    Then, Senator Sullivan, you will be recognized to make yours. I
    think you knew that was coming.
        Senator Sullivan. Yes, sir, Mr. Chairman. Thank you.

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

        Chairman Isakson. Secretary McDonald, thank you again for
    being here and changing your schedule so you could go through
    this.
        I want to thank the Ranking Member. Over the last month we
    have had three conversations by phone as things have progressed
    in our effort to try to find a way to do accountability in the
    Veterans Administration, to do caregivers in the Veterans
    Administration, to fix the Choice Program in the Veterans
    Administration, and to speed up the consideration of claims and
    appeals in the Veterans Administration.
        We have all had lots of different ideas, and we have had
    places where we could find an impasse. But, we have tried
    through communication to find ways to find common ground, and
    we are on the cusp--we are not there yet, but we are on the
    cusp--of being able to bring to the floor of the U.S. Senate a
    major comprehensive omnibus veterans bill, get it passed
    through the Senate, get it to the House, find out where, if any
    place, we are going to have disagreements, and then get it to
    the President's desk for signature.
        I have had the privilege of knowing Denis McDonough since
    he became Chief of Staff, and I have taken the liberty of
    including him in discussions over the past 3 or 4 weeks and
    talked to him as late as this morning about where we were.
        Our goal is to have an omnibus bill that this Committee,
    Democrat and Republican alike, agrees to, and to get it to the
    leaders so they can get a Rule 14 to the floor of the Senate.
    Then, we can have action on the floor of the Senate before we
    get too far in the year, certainly so we can, by Memorial Day,
    have a signing ceremony somewhere to let our veterans know we
    do want accountability in the VA. Do want Choice to work, we
    want caregivers providing care to those injured prior to 9/11/
    2001 to have the same benefits as those afterwards, and all
    other things that we have worked upon. We are close to getting
    there.
        I want to thank every Member of the Committee for their
    help and their input.
        Now we will not get everything in the omnibus bill, but we
    will get a lot of things we never thought we could have. We
    will include a lot of the things Secretary McDonald has asked
    for, which he knows because we have been meeting on a private
    basis--Senator Blumenthal, myself, the Ranking Member in the
    House, and the Chairman in the House--to see to it we come up
    with a good bill.
        We have our differences still, but patently we want to make
    sure that we send the signal to the American people and the
    American media that accountability at the VA is now something
    that is meaningful.
        Every morning when I wake up and I turn on my television in
    my condominium or at home, and the first story is about a
    veteran who did not get an appointment or a veteran who passed
    away or a mental health patient who got an answering machine
    rather than a person on the hotline. It grieves my heart
    because I know every day of the 314,000 employees in veterans
    health care 99.9 percent of them are doing a terrific job and
    those stories are not representative. Because they are
    sensational, because they can make the news, they continue to
    perpetuate an image that is not true of the VA.
        I think if we have an accountability provision which we are
    going to talk about today and I know the Secretary is going to
    talk about it in his remarks, we can send the signal to the
    American people that we are giving the Secretary the ability to
    hire and the ability to terminate and the ability to appeal but
    in the way you would want to have an accountable organization.
        I believe that all the SES employees should be under Title
    38 and should have the right to be hired by the Secretary, and
    the Secretary should have the right to discipline them, and if
    he disciplines them or fires them they should have the right of
    an appeal, but it ought to be to the Secretary.
        The Merit Systems Protection Board has its place, and there
    are lots of places I think it works well, but I think one of
    the things we have tried to do is see to it when it comes to
    SES employees and Title 38 that we have the Secretary have the
    ability to hire and the Secretary the ability to fire.
        Now I am not one that likes to fire people. I want to go on
    the record as saying, I ran a company for 30 years; the hardest
    thing I ever did was terminate people, but from time to time
    you have to.
        But, oftentimes, the fact that termination is a possibility
    if you do not perform, you set an atmosphere in an organization
    where everybody works hard and pulls together. I know that is
    what Bob McDonald wants in the VA, and I know that is what he
    is going to deliver.
        I am proud that Senator Patty Murray has worked so hard
    with me. I am sorry she is not here for me to brag about her to
    her face, but she has brought this caregivers bill to the point
    where we now can incorporate it.
        We have a lot of things on veterans appeals that we want to
    incorporate. Senator Blumenthal, Senator Moran, and other
    Senators on the Committee have done lots of things that will be
    included in the omnibus bill.
        With the good Lord willing and the creek don't rise, by the
    time we return in the first of April, we will have an omnibus
    bill ready for everybody to sign off on; we will begin to move
    it forward to the Senate floor in process. Then, we will be
    able to go home to our communities on Memorial Day and say that
    we brought about accountability in the Veterans Administration.
    Employees that should shine are shining and those that need
    more inspiration will have that inspiration, and Bob McDonald
    will have the authority to run the agency as the Secretary
    should have.
        That is our goal today. I am very proud of what we have
    today, and I hope I do not--knock on wood--spoil our progress
    so far.
        I thank the Ranking Member again for his cooperation, his
    leadership, and his advice on how we get from where we were to
    where we want to be.
        Now I will introduce Senator Blumenthal.

      STATEMENT OF HON. RICHARD BLUMENTHAL, RANKING MEMBER, U.S.
                        SENATOR FROM CONNECTICUT

        Senator Blumenthal. Thank you, Mr. Chairman, and thank you
    for your kind words but, most importantly, for your leadership,
    your vision, and your determination to reach this breakthrough
    moment. It really is a breakthrough moment for the Veterans
    Choice Program and for health care provided by the VA.
        It is a moment. It is a good step, a very positive way
    forward, a path that ought to be pursued. There will be a lot
    more after today to be done, and we are near the finish line. I
    hope that we can cross it.
        In the meantime I want to thank you for your very
    collaborative and bipartisan leadership, which has emphasized
    the importance of good ideas regardless of who has them.
        It is the same spirit that our military men and women have
    when they go into serve and sacrifice for our country. It is
    the same attitude that they have when they seek health care.
    They do not care about party labels or partisanship.
        It is the same attitude that the dedicated doctors and
    other health care providers in the VA have when they meet those
    health care needs. What we need to do is partly enable and
    empower them, and partly get out of their way, but at the same
    time hold them accountable. We are absolutely unified in the
    view that accountability has to be improved, and we are simply
    seeking the best way to do it consistently with fairness and
    due process.
        I am indebted to everyone on this Committee for their role.
    Every Member of this Committee has played a role in reaching
    this point. Everyone seated here today has been a participant
    in the efforts to consolidate all of the community programs
    that include the Veterans Choice Program, in seeking to speed
    and improve the appeals of disability claims, in enforcing
    accountability, and raising the standards and performance of
    the caregivers' aid to families and others who provide care to
    our veterans.
        I am hopeful that we will meet that timetable. I believe we
    can.
        I continue to look forward to working together. I know we
    will. Again, I want to thank you for your leadership.
        Chairman Isakson. Thank you very much, Senator Blumenthal.
        Senator Sullivan, you are recognized for up to 5 minutes,
    but not more.

                OPENING STATEMENT OF HON. DAN SULLIVAN,
                        U.S. SENATOR FROM ALASKA

        Senator Sullivan. Thank you, Mr. Chairman. I will try and
    keep it within that timeframe.
        I want to thank you and Ranking Member Blumenthal and
    fellow Members of the Committee for the opportunity to discuss
    my bill, Senate Bill 2473, the Express Appeals Act of 2016.
        Mr. Chairman, Secretary McDonald, we have all heard the
    statistics. The Veterans Benefits Administration will have 11
    to 12 percent of the claims decisions that they make will be
    generally appealed, and that is not surprising.
        What is surprising I believe to many of us, and also
    unacceptable, is the wait time that we have seen for the VA to
    resolve an appeal. On average, nearly 1,000 days, almost 3
    years. I think creating a less bureaucratic system is something
    that we all agree on.
        What Senate Bill 2473 does is it directs the VA to carry
    out a 5-year pilot program that will provide an option for
    veterans to use an express appeal procedure referred to as the
    Fully Developed Appeal Process. It is completely voluntary. It
    empowers veterans to make their own case to obtain an expedited
    result to their appeal. Importantly, what we think we should be
    looking for is that it should be a fast lane not to know but a
    fast lane to fix our appeals process.
        I want to thank my colleagues, in particular those on the
    Committee--Senators Tester, Heller, Moran, plus Senator Casey,
    and Co-Chairs of the Senate VA Backlog Working Group--and some
    of the service organizations that are supportive of my bill
    like Disabled American Veterans, for their staunch support and
    advocacy.
        Mr. Secretary, we do want to work together. As you know, I
    have raised this issue a number of times. We are getting a
    little bit of mixed signals. I think there was support from the
    VBA on the House version of this bill. My understanding your
    testimony now is there might not be support because it does not
    go far enough.
        Well, trust me, I am all ears on suggestions from the VA to
    go further so we can get your support, but I think all of us
    agree that having the option of a Fully Developed Express
    Appeals is something that we should be working on together.
        I am very interested in working with you and working with
    the Committee to make sure that this is something the VA does
    support. I am a little confused on whether you do or do not
    support it at this juncture and if there are suggestions from
    the VA experts to make this go further in terms of express
    appeals. I believe the Committee and my staff are all ears.
        Thank you again, Mr. Chairman.
        Chairman Isakson. Thank you very much.
        It is now my privilege to introduce Secretary McDonald, who
    is accompanied by Ms. Meghan Flanz; Dr. Baligh Yehia, we are
    glad to have you back again; and Ms. Laura Eskenazi?
        Secretary McDonald. It is Eskenazi.
        Chairman Isakson. I did pretty well.
        Secretary McDonald. You did very well.
        Ms. Eskenazi. Not bad.
        Chairman Isakson. Mr. Secretary, the microphone is yours,
    and you can take as much time as you want to consume.

         STATEMENT OF HON. ROBERT A. MCDONALD, SECRETARY, U.S.
    DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY LAURA ESKENAZI,
       EXECUTIVE IN CHARGE AND VICE CHAIRMAN, BOARD OF VETERANS'
       APPEALS; DR. BALIGH YEHIA, ASSISTANT DEPUTY SECRETARY FOR
      COMMUNITY CARE, VETERANS HEALTH ADMINISTRATION; AND MEGHAN
          FLANZ, DEPUTY GENERAL COUNSEL, LEGAL OPERATIONS AND
               ACCOUNTABILITY, OFFICE OF GENERAL COUNSEL

        Secretary McDonald. Thank you, Chairman Isakson, Ranking
    Member Blumenthal, and Members of the Committee. Thanks for
    this time to discuss VA's legislative priorities for veterans.
        I ask that my written statement be submitted for the
    record.
        Chairman Isakson. Without objection.
        Secretary McDonald. Thank you, sir.
        Over these three decades in the private sector, I learned
    firsthand what it takes to make a high performance
    organization. Our team of talented business and health care
    professionals are well equipped with the advanced business
    skills necessary to build the high performance organization
    veterans deserve and taxpayers also expect.
        That is what our five MyVA transformation strategies are
    about: modernizing the VA; improving the veteran experience;
    improving the employee experience; improving internal support
    services; establishing a culture of continuous improvement, and
    expanding strategic partnerships. That is also what our 12
    Breakthrough Priorities for 2016 are about.
        We appreciate your time in January, helping us shape these
    priorities. That goal is within our reach, we believe, and we
    are as committed to giving veterans a high performing
    organization as we are convinced that we can get there with
    your help.
        But, as I have testified, important priorities for
    transformational changes require congressional action, and our
    window of opportunity will not be open indefinitely. More than
    100 legislative proposals in the President's 2017 budget and
    2018 advance appropriations request for VA require
    congressional action. Over 40 of these are new this year, and
    some are absolutely critical to maintaining our ability to
    purchase non-VA care.
        I would like to focus on seven priorities for veterans.
        One, modernizing VA's purchase care authorities. We need
    your help to modernize and clarify VA's purchase care
    authorities, and we appreciate the legislation introduced to
    address this issue. Above all else I address today, this needs
    to get done; and it can be done in this Congress, to ensure a
    strong foundation for veterans access to Community Care.
        We need to be able to contract with providers on an
    individual basis in communities where veterans are served
    without forcing those who want to serve veterans to meet
    excessive and unnecessary bureaucratic standards. This proposal
    is about maintaining veterans access to timely Community Care
    everywhere in the country. We provided detailed legislation
    addressing this change 10 months ago, and I have been
    consistent and vocal in identifying it as a top priority.
        Number 2, streamlining Care in the Community. To best serve
    veterans, we need your help streamlining VA's Care in the
    Community systems and programs. Last October we submitted our
    plan to consolidate and simplify the overwhelming number of
    varying programs and improve access to Care in the Community.
        My written statement sets out a number of ways to improve
    those programs right now. I will highlight three:

        First, make VA the primary payer to give providers faster
    and more accurate payments.
        Second, allow VA to obligate funding at the time of
    payment. This small change can make a huge difference in
    efficiently using the resources Congress provides.
        Third, provide funding flexibility so all Care in the
    Community comes from one single account.

        Now we do have some significant concerns with the Veterans
    Choice Improvement Act of 2016 as currently written. I address
    these concerns in detail in my written submission, but four are
    particular troublesome. I think we may have already worked
    through those four. I have to catch up with Senator Tester and
    Senator Burr because these are fast-breaking changes.
        Here were our four concerns of the original act:

        First, the proposed limitations on networks compromised the
    great potential for veterans that the network model represents.
    We have discussed this with Senator Tester and Senator Burr. We
    think they understand this. We think the changes are being
    made, but we have not seen their next round of work.
        Second, the proposed extension to Project ARCH until August
    2019 is both unnecessary and financially unsound.
        Third, the legislation does not afford the rate flexibility
    necessary to respond to local market conditions.
        Fourth, the proposed 90-day timeline between establishing
    presumptions and providing compensation is an unrealistic
    expectation that will not serve veterans well.

        These discussions are ongoing, as I said. I am sure we are
    making progress as we go forward and coming to a consensus
    point of view. We look forward to helping ensure the
    legislation is exactly right for veterans.
        Number 3, the appeals reform. The statutory appeals process
    is archaic. It is not serving veterans well. Last year the
    board was still adjudicating an appeal that originated 25 years
    ago and had been decided more than 27 times. It is simply
    inappropriate that only 2 percent of veteran claimants are
    creating 45 percent of the appeals.
        Let me say that again. Only 2 percent of veteran claimants
    are creating 45 percent of the appeals.
        What we all learned in the military was you put the needs
    of the organization above yourself. This is not happening.
        Nearly 74 percent of appeals are from veterans who are
    already receiving VA disability. In fact, 12 percent of
    veterans with a pending appeal are already receiving benefits
    at the 100 percent disability rate.
        The proposed express appeals act is a good start. It is a
    good start, but as written it does not achieve the fundamental
    reform we need to achieve in order to fix this broken process
    that is over 80 years old and to improve the veteran
    experience.
        The fiscal year 2017 budget proposes a simplified,
    streamlined, and fair appeals process. In 5 years, veterans
    could have appeals resolved within 1 year of filing.
        Last week we spent three solid days working hard with
    Veterans Service Organizations, members of the VA, members of
    your staffs, shaping a genuine reform. I want to thank our
    Veterans Service Organizations, the National Association of
    State Directors of Veterans Affairs, the National Association
    of County Veteran Service Officers, for rolling up their
    sleeves with us. We have another meeting beginning later this
    week on Thursday, and we are going to continue to drive toward
    a consensus point of view.
        We welcome the Committee staff also who have come to hear
    about this and participate with us firsthand.
        It is a work in process. We are keeping at it. Why do we
    need to keep at it? Because failure to take full advantage of
    this rare opportunity for sweeping change in the appeals
    process fails veterans.
        Number 4, VHA personnel authorities. We compete with the
    private sector for talent, especially in health care. We are
    proposing flexibility on the 80-hour pay period maximum for
    certain medical professionals and compensation reforms for
    network and hospital directors. The 80-hour restriction does
    not give VA the industry standard 12-hour shifts that can
    improve hospital operations and attract the best staff who
    prefer flexible schedules. That is one reason that when Sloan
    Gibson came on board, then I came on board, we found VA had so
    many outsourced emergency room departments.
        Likewise, we need to treat health care career executives
    more like their private sector counterparts. We would like to
    expand the Title 38 hiring authority to VHA senior executive-
    level medical center directors, VISN directors, and other
    health care executive leadership positions. These employees
    could be hired more quickly with flexible salary ranges
    competitive with the private sector, and they would operate
    under accountability policies comparable to those of the
    physicians and dentists that they lead.
        Number 5, budget flexibility. We have to be more responsive
    to veterans emerging needs. We are asking for measured
    flexibility to overcome artificial funding restrictions on
    veterans care and benefits. The budget proposes a general
    transfer authority for up to 2 percent of discretionary funding
    across accounts, including medical care.
        Number 6, West Los Angeles legislation. To get positive
    results for homeless veterans in great need, we are asking
    Congress to pass special legislation for our West Los Angeles
    Campus where years of debate and court action have been
    unproductive. We now have a community-agreed master plan for
    the campus to build housing for about 1,200 homeless and
    vulnerable veterans. Developers are ready to put spades in the
    ground and begin construction. We are waiting on the
    legislation.
        Number 7, construction and leasing. Finally, I will
    reiterate priorities for leases and construction. We need
    congressional authorization for 18 leases submitted in VA's
    2015 and 2016 budget requests. These will make a big difference
    in expanding access to care for veterans in Florida, Alabama,
    Georgia, South Carolina, North Carolina, Virginia,
    Massachusetts, Maine, Michigan, Colorado, Montana, and
    California. We need authorization for eight major construction
    projects included in VA's 2016 request and the six additional
    replacement major medical facility leases in the 2017 budget.
        These are only a few of the many opportunities for
    transformational change. This Congress, with today's VA
    leadership team, can make these changes and more for veterans.
    Then we can all look back on this year and look at this year as
    a turnaround for the Department of Veterans Affairs.
        On behalf of veterans and VA employees serving them every
    single day, I would like to thank this Committee and the
    Chairman and Ranking Member for their bipartisan leadership in
    getting this done.
        I look forward to your questions, sir.
        [The prepared statement of Secretary McDonald follows:]
           Prepared Statement of Hon. Robert A. McDonald, Secretary,
                      U.S. Department of Veterans Affairs
        Good afternoon, Chairman Isakson, Ranking Member Blumenthal, and
    Distinguished Members of the Senate Veterans' Affairs Committee.
    Accompanying me today are Dr. Baligh Yehia, Assistant Deputy Under
    Secretary for Community Care, Veterans Health Administration, Ms. Laura
    Eskenazi, Executive-in-Charge and Vice Chairman, Board of Veterans
    Appeals, and Ms. Meghan Flanz, Deputy General Counsel, Legal Operations
    and Accountability, Office of General Counsel.
        Thank you for the opportunity to come before you today to discuss
    the Department's legislative priorities. I know the Committee is
    working to move an ``omnibus'' measure which will address many of the
    immediate needs of the Department of Veterans Affairs in serving
    Veterans.
        Our pressing needs are items that we have outlined in letters to
    the Committee, in previous testimony, and in countless meetings with
    the Committee and Members staffs, which support the MyVA Breakthrough
    Priorities. Some of these critical needs are addressed in bills you are
    considering in today's hearing, but we'd like to work with you on the
    particular language to ensure that, as enacted, the language will have
    the desired effect of helping the Department best serve Veterans.
        I believe it is critical for Veterans that we all work together and
    gain consensus on a way forward for these legislative proposals that
    will provide VA with the tools necessary to deliver care and benefits
    at the level expected by Congress, the American public, and deserved by
    Veterans.
                         improve care in the community
        We need your help, as discussed on many occasions, to overhaul our
    Care in the Community programs. Our Plan to Consolidate Programs of
    Department of Veterans Affairs to Improve Access to Care (the Plan) as
    required by Title IV of Public Law 114-41, the VA Budget and Choice
    Improvement Act, was delivered on October 30, 2015.
        Determining the details of a program that could replace the current
    and temporary Veterans Choice program enacted in August 2014 will
    require close study and collaboration with Veterans, Veterans Service
    Organizations (VSO), the Congress and other stakeholders and experts.
        That is why VA staff and subject matter experts have communicated
    regularly with Committee and Member staffs to further discuss concepts
    and specific concerns. While we know further discussions are required
    to get us to a fully streamlined program, we have identified components
    of the plan that could be enacted now and would improve Veterans
    experiences' with, and VA's performance under, the existing Veterans
    Choice Program.
        We believe that together we can accomplish the necessary
    legislative changes to streamline the overwhelming number of varying
    Care in the Community programs before the end of this session of
    Congress. Many of the concepts are addressed in some way by two of the
    bills on your agenda today--S. 2646, the Veterans Choice Improvement
    Act of 2016, and S. 2633, the Improving Veterans Access to Care in the
    Community Act.
                              provider agreements
        Both bills encompass aspects of VA's most urgent legislative
    priority, addressing deficiencies in VA's general non-VA care
    authorities outside of the Veterans Choice program. VA's May 1, 2015,
    proposed Department of Veterans Affairs Purchased Health Care
    Streamlining and Modernization Act, would most ideally clarify VA's
    ability to form agreements with providers in the community on an
    individual basis that are not subject to certain provisions of law
    governing Federal contracts, so that providers are treated similarly to
    providers in the Medicare program. Put simply, this would allow VA to
    contract with providers on an individual basis in the community,
    without pulling in all of the requirements usually attached to Federal
    procurement.
        VA's proposal accomplishes this through ``Veterans Care
    Agreements,'' or VCAs. VCAs would be used only when care directly from
    VA or from a non-VA provider with a FAR-based agreement in place is not
    feasibly available. Already, we have seen certain nursing homes not
    renew their contracts with VA because of the excessive compliance
    burdens, and as a result, Veterans are forced to find new nursing home
    facilities for residence. VA sent proposed legislation to Congress to
    address this issue more than 10 months ago, and the problems, I assure
    you, are not getting better with time. We again urge Congress to come
    together on legislation to address deficiencies in VA's basic
    purchasing authorities outside of the Veterans Choice Program.
        VA believes the omnibus legislation the Committee moves forward
    with should reflect the approach to Veterans Care Agreements in
    S. 2633, due to its application of employment nondiscrimination and
    equal employment laws to VCAs and its inclusion of corresponding
    reforms for State Veterans Homes, which were requested in VA's May 1,
    2015 legislative proposal. We have concerns about whether Veterans Care
    Agreements would be subject to the more restrictive criteria and rates
    that would be applicable to care furnished under the Choice program in
    S. 2646.
        VA also supports and strongly recommends inclusion in any omnibus
    bill, the following other elements of S. 2633:

         Allowing use of the Veterans Choice Fund for all non-VA
    care programs, allowing VA to use the funding as was intended without
    strict limitations;
         Increasing the accuracy of funding by recording Community
    Care obligations at payment;
         Streamlining Community Care funding by adapting the
    current model used for funding VA's Consolidated Mail Outpatient
    Pharmacies and applying it to payment for community care;
         Aligning with best practices on the collection of health
    insurance information;
         Promoting timely payments to non-VA providers by
    formalizing alignment with current industry guidelines established by
    States;
         Allowing VA to serve as primary payer for care, subject to
    resourcing concerns, under the current Veterans Choice program, which
    will result in a less cumbersome billing process which has been a
    source of frustration for Veterans and a barrier to effective
    implementation of Veterans Choice;
         Making Veterans currently enrolled in ARCH eligible for
    Choice, ensuring that these Veterans have minimum disruption in care
    during the necessary process to streamline overlapping and duplicative
    programs; and,
         Requiring VA to be treated as a ``participating provider''
    for reimbursement for non-service-connected outpatient care.

        VA has significant concerns on the following provisions within
    S. 2646, and urges the Committee to exclude them from any omnibus
    legislation designed to help VA serve Veterans:

         Imposing severe limitations on tiered networks are a
    serious concern, as that concept is a central element in the Plan.
    Tiered networks are essential to enhance VA's coordination of care,
    allow better oversight of providers, help ensure Veteran satisfaction,
    as well as ensure VA's teaching and training mission that is a key part
    of training for the Nation's health care system as a whole is
    maintained;
         Extension of the pilot program known as Project ARCH for
    three years, until August 7, 2019, is inconsistent with the fundamental
    aim of the Plan, especially when the bill also deems Veterans enrolled
    in project ARCH as eligible for Veterans Choice. While providers prefer
    ARCH due to a higher reimbursement rate than other care in the
    Community programs, VA has an obligation to be responsible with
    taxpayer dollars. This can be done by enrolling ARCH eligible Veterans
    in the Choice program;
         Limiting flexibility on rates, restricting VA's ability to
    pay rate differentials when necessary in certain markets; and,
         Imposing a 90-day timeframe between the date VA
    establishes a presumption and then provides compensation for certain
    illnesses and conditions is an unachievable timeline. VA would not be
    able to identify all entitled individuals within the first 90 days
    following establishment of the presumptive. Even with the establishment
    of a presumptive condition, many claims still require additional
    development, including verification of the requisite conditions of
    service and medical examinations to determine the level of disability.
                      overhaul the claims appeals process
        In any omnibus legislation that may move forward, Veterans need
    legislation that sets out structural reforms at VA that will allow the
    Veterans Benefits Administration (VBA) and the Board of Veterans
    Appeals to provide Veterans with the timely, fair, and quality appeals
    decisions they deserve, thereby addressing the growing inventory of
    appeals. In the Committee's hearing on VA's Fiscal Year 2017 Budget, I
    noted we had already begun preliminary informal discussions on VA
    proposals with the Committee and Members and their staffs, as well as
    VSOs. Those conversations have continued, and we invited the
    Committee's staff to join us and the VSOs for a working meeting last
    week. Those collaborations need to continue until we can identify what
    is best for Veterans and taxpayers.
        The 2017 Budget proposes a Simplified Appeals Process--legislation
    and resources (i.e., people, process, and technology) that would
    provide Veterans with a simple, fair, and streamlined appeals process
    in which the vast majority would receive a final decision on their
    appeal within one year from filing the appeal by FY 2021.
        For this hearing, the Committee has identified a bill, S. 2473, the
    Express Appeals Act, which would establish a pilot program for what are
    called Fully Developed Appeals (FDA), which would limit new evidence
    filed after the point of appeal through a voluntary program. VA has
    supported the FDA pilot in the past, but at this point, we believe the
    growing appeals challenge requires much more widespread reform that
    will address all future appeals, not just the voluntary participants
    that may elect the FDA pilot.
        S. 2473 will not reduce the pending appeals inventory and will not
    significantly address the future appeals inventory. As a pilot for
    voluntary participants, we believe it does too little to streamline the
    VA appeals process for all veterans, or to provide an improved
    experience for all Veterans. The current VA appeals process is lengthy,
    complex, confusing, and frustrating for Veterans. All Veterans, not
    just those who elect to participate in an optional FDA pilot program,
    deserve an efficient, transparent, and streamlined appeals experience.
    The FDA pilot program in its current form is not enough to change the
    current broken VA appeals system. True comprehensive legislative reform
    that is as ambitious as that presented in the President's 2017 Budget
    is required.
        Without legislative change, VA will face a soaring appeals
    inventory, and Veterans will wait even longer for a decision on their
    appeal. Last week VA led an encouraging and intensive three-day appeals
    summit with VSOs and veterans advocacy groups on the topic of appeals
    reform, looking at the entire system, including the period prior to
    filing an appeal. The group is committed to continuing the momentum
    from those intensive discussions to further refine a new appeals
    framework. We were very pleased that Committee staff joined the group
    near the end of the session to gain first-hand observations from
    Veteran advocates and VA representatives as to the progress made in
    those three days. We would like to collaborate with the Committee as
    those discussions progress. We do know if the status quo remains,
    Congress would need to provide resources for VA to more than double its
    appeals FTE. The prospect of such a dramatic increase, while ignoring
    the need for structural reform, is not a good result for Veterans or
    taxpayers.
                 accountability for va senior executive leaders
        VA understands the desire for an omnibus bill to contain language
    enhancing provisions to hold senior executives accountable. We remain
    supportive of continued dialog with the Committee on how best to
    accomplish this, but believe that the discussions should include the
    full description of accountability, rather than just its use in
    shorthand as ``firing people.''
        If we define ``accountability'' only in the narrower way--in terms
    of the number of employees we remove from their jobs serving Veterans--
    then success on the accountability front means failure in our core
    mission, service to Veterans. Overemphasis on punitive measures
    prevents us from recruiting and retaining the best and brightest
    employees to serve Veterans. I am not interested in a definition of
    success that requires us to decimate our workforce, rob the VA of the
    senior executive talent it needs to serve Veterans, and, ultimately, to
    close our doors.
        We continue to approach employee discipline with a commitment to do
    what is right and necessary to rebuild Veterans' trust in VA programs
    and services. Through the MyVA initiative, we are transforming the
    Department, and in turn, we need to be able to treat VA career
    executives more like their private-sector counterparts. We need to have
    the ability to compete for top talent--through flexibility in hiring
    authorities, compensation, and other tools--and not drive them away
    through a focus on firing people.
        The draft language submitted to you was not the Department's, nor
    the Administration's, proposal. It was an idea brought up due to
    internal collaborative discussions, which are fostered as part of the
    MyVA culture, and was sent to the Committee for discussion purposes.
        However, it is important to consider the second and third order
    effects of this and other proposals, and how they could impact the
    long-term health of the Department. In considering these consequences,
    and our overall goal of providing the tools needed for VA to transform
    the Department into a Veteran-centric organization, we have identified
    a series of new provisions that we recommend. These new provisions were
    the subject of a joint briefing to your committee staffs at the end of
    last week.
        Under the revised construct, we would expand the Title 38 hiring
    authority that currently exists for physicians and dentists to VHA
    Senior Executive level Medical Center Directors, VISN Directors, and
    other health care executive leadership positions. Under this system,
    employees in these senior healthcare positions would be hired more
    quickly, have flexible salary ranges to compete with the private
    sector, and be subject to disciplinary processes comparable to those
    now applicable to VA physicians and dentists, where appeals on
    disciplinary actions are adjudicated by the VA Secretary as opposed to
    the Merit Systems Protection Board (MSPB).
        For those remaining Senior Executives elsewhere in the VA who are
    not hired under Title 38, we would propose changes which we believe
    will better align the MSPB appeal process with VA's ongoing
    transformational efforts. These changes include requiring MSPB to apply
    an evidentiary standard that affords greater deference to the VA
    Secretary's decisions to remove or demote VA Senior Executives based on
    misconduct or poor performance. Changes discussed would also authorize
    the Presidentially-appointed MSPB board members, rather than lower-
    level administrative judges, to decide VA executives' appeals. In
    addition, VA would take a number of actions under its existing
    authorities to drive strong performance management and accountability
    practices.
        To be clear--accountability alone will not solve all VA's problems,
    nor will it enhance our ability to serve Veterans. Reforms to VA's
    personnel system must come alongside similar legislative reforms,
    discussed here, which provide VA with the necessary authority to
    operate in a way that best serves Veterans.
                                    leasing
        Another priority that needs to be included in any legislation
    moving forward is authorization of 18 major medical leases: in Florida
    (actually three leases), Michigan, Alabama, Colorado, Virginia,
    Massachusetts, Montana, California, Georgia, Maine, South Carolina and
    North Carolina. We ask Congress to act soon on construction and leasing
    authorization legislation, which will make a big difference in
    expanding access to care for Veterans in those States.
              special legislation for va's west los angeles campus
        Any omnibus package moving forward needs to incorporate requested
    legislation to provide the enhanced use leasing authority necessary to
    implement the Master Plan for our West Los Angeles Campus. That plan
    represents a significant and positive step for Veterans in the Greater
    West Los Angeles area, especially those who are most in need. We
    appreciate the Committee's hearing in December 2015, on legislation to
    implement that Master Plan, and urge your support for expedited
    consideration of this bill to secure enactment of it in this session of
    Congress. Enactment of the legislation will allow us to move forward
    and get positive results for the area's Veterans after years of debate
    in the community and court action. The bill proposed would reflect the
    settlement of that litigation, and truly be a win-win for Veterans and
    the community. The Master Plan increases the campus utilization by
    1,200 beds, but we can't start work until the EUL legislation is
    passed. I believe this is a game-changing piece of legislation as it
    highlights the opportunities that are possible when VA works in
    partnership with the community.
                    improvement of vha personnel authorities
        VA has also presented its own proposals that can help make VA more
    competitive in attracting top-tier clinical and health care management
    professionals. As I continue to get letters from Members of this
    Committee and your colleagues urging us to hire a facility or VISN
    director overseeing their district more quickly, you are aware that
    recruitment continues to be a challenge. Given that ongoing challenge,
    we have requested special pay authority for VA Medical Center and
    Veterans Integrated Service Network (VISN) Directors to help VA recruit
    and retain the best talent possible in hospital system management. We
    appreciate the Committee's inclusion of this provision in S. 425, the
    Veterans Homeless Programs, Caregiver Services, and Other Improvements
    Act of 2015, and urge its inclusion in any omnibus proposal. As one
    technical note, VA would request the language in section 412 of S. 425
    include ``is not less than'' in place of ``does not exceed.''
        The 2016 Budget included a proposal to end an 80-hour biweekly work
    period requirement that is simply not appropriate nor efficient for
    many medical professionals, and out of step with health care in the
    private sector. Enactment will both improve the efficiency of hospital
    operations and improve VA's ability to recruit and retain critical
    professionals. We appreciate SVAC's inclusion of this provision in
    S. 425. Again, we urge you to include this provision in any legislative
    vehicle moving forward.
        Mr. Chairman, I appreciate your dedication to serving our Nation's
    Veterans, as well as that of the Ranking Member, and all the Members of
    the Committee. I believe with continued collaboration and partnership
    we can deliver the improvements that Veterans deserve.
        And as I have said before, there are things Congress can include
    now in legislation that will significantly impact the way VA serves
    Veterans:

         Provider Agreement Authority as written in VA drafted
    legislation or S 2633,
         Elimination of 80-hour work period requirement
         Flexibility around compensation for Medical Center and
    VISN directors
         Enhanced Use Authority for West LA Campus
         Fundamental reform of the Appeals process as set in
    statute
         Streamlining of care in the community, including
    provisions outlined above from S. 2633, which will help us achieve the
    goal of streamlining various overlapping programs to make things
    clearer for employees, for Veterans, and for their families.

        Thank you for the opportunity to appear before you today and for
    your continued steadfast support of Veterans. We look forward to your
    questions.

        Chairman Isakson. Thank you very much, Mr. Secretary.
        I want to start, if I can, on the accountability issue,
    which is the linchpin of everything we want to try to do and a
    lot of the things you just mentioned in your seven priorities
    are, in part or in whole, being dealt with if I am not
    mistaken. In fact, I think after you meet with Senator Burr and
    Senator Tester, most of the things that you mentioned you
    wanted to be sure were included are, in fact, included that you
    wanted.
        Secretary McDonald. Yes, sir, and we stand ready to work
    with your staff to go over and make sure everything is
    included.
        Chairman Isakson. West Los Angeles, I think without
    exception, is supported by the Committee in terms of getting
    that done.
        Secretary McDonald. Yes, sir.
        Chairman Isakson. Senator Feinstein has been a trooper on
    that, and I appreciate the effort that you have made.
        The accountability piece is kind of the linchpin for me,
    and I have harped on it the most, and you know that from the
    meetings that we talked about. I had some prepared remarks in
    my opening statements, where I was going to quote you and you
    could quote me, about some of the things we have said leading
    up to this hearing about accountability, but I did not do that
    because we are at a point where I really think we can move
    forward.
        I know Ms. Flanz is here, and you were in the meeting we
    had last time with the Secretary at his office, if I am not
    mistaken.
        Ms. Flanz. Yes, sir.
        Chairman Isakson. Legal counsel has been involved as well.
        I believe the American people expect, and I believe that
    the veterans of America expect, there to be an accountability
    mechanization that they understand. What happened in
    Philadelphia and what happened with the Merit Systems
    Protection Board overturning your action in those two
    situations sent a terrible signal across the country and
    misrepresented, in my judgment, what really goes on at the VA.
    Nonetheless, it was the story that was undeniable, that they
    had been overturned and that you did not have the ability to
    really discipline as you should and hold them accountable.
        On the same token, you need and deserve the flexibility
    that you asked for in terms of VHA personnel flexibility, the
    80-hour rule, the emergency room problems, finding the right
    help that you need to give our veterans health care, and that
    goes hand in hand with accountability. We need to be
    accountable to you to give you the tools you need to bring in
    the right people.
        You need to be accountable to us and, more importantly, to
    the veterans of the United States of America. If we have a bad
    egg in the senior executive leadership of the Veterans
    Administration, we are going to correct that egg and get a good
    egg in that place. They are going to get a fair hearing; they
    are going to get a right to appeal. It is going to fall back to
    you, and they are going to know that the buck stops at your
    desk, which is where it should, and any future Secretary as it
    should.
        That was not a question; that was a statement. But, that is
    my hope, that you will work with us in trying to make the
    language work in terms of accountability so that all the other
    things we want to do can come along and follow along behind it.
        Secretary McDonald. I think we are very close, Mr.
    Chairman, and if you like, I can describe where I think we are.
        Chairman Isakson. I would like to hear from you.
        Secretary McDonald. Sure. I think we are very close. I
    think we have achieved alignment that all of the individuals in
    the medical professional in the VA should be under Title 38.
    That was the intent of the Title 38 law. Today, we have medical
    center directors that you know are not Title 38, and as a
    result they are paid less than half what they would be in the
    private sector.
        Title 38 gives us the ability to hire directly, which will
    speed up the hiring process and make us competitive with the
    private sector. We have had a number of instances where we have
    tried to hire someone, but because of the length of time it
    took us to clear all of the red tape necessary they were
    scarfed away by some other for-profit medical system.
        Also, Title 38 will allow us to pay more competitively and
    recruit more competitively.
        Then, separately, what we have talked about is taking the
    Title 5 individuals who are not part of the health care system
    and changing the methodology of the process for disciplinary
    action and appeals, recognizing that in our opinion the Merit
    Systems Protection Board did not understand or did not get to
    execute the intention of Congress in the Choice Act. The way I
    look at this is, how do we improve the Choice Act?
        I will ask Meghan, if I may, to comment on that.
        Ms. Flanz. Thank you.
        What we are contemplating is amending the Choice Act
    Expedited SES Appeal Process to give the Merit Systems
    Protection Board the clarity in terms of what its obligations
    are to carry out the Secretary's accountability actions under
    that Act. We believe that there was perhaps greater adherence
    to Merit Systems Protection Board (MSPB) precedent less
    appropriate deference to the Secretary's actions in the cases
    that we have had so far. What we are contemplating is greater
    clarity around the rules that apply to the non-health care
    executives at the Department.
        Chairman Isakson. There was no deference in the
    Philadelphia case to the Secretary's authority in terms of what
    I saw, and that is what really magnified this particular issue.
    I know your proposal is to kind of bifurcate the SES employees
    from the medical employees to the other, I think you called
    them, Title 5. Is that right?
        Secretary McDonald. Yes, sir.
        Chairman Isakson. We will talk about that, but in the
    meantime that bone of contention we have got to work out
    because I want you to have the ability to hire and bring in the
    people that you need and also hold them accountable in a
    fashion that is fair but not so deliberate that you end up
    being neutered in your ability to lead and discipline the
    Department.
        Secretary McDonald. I want that as well, Mr. Chairman. The
    issue that we face is because of the restrictions in the Choice
    Act. The judges in the MSPB, I think if they were here to
    defend themselves, they would say the 21-day limit and the fact
    that they could not provide any remediated punishment. As a
    result, we think the changes that we will make will add greater
    clarity and give more weight to the Secretary's interest in the
    process.
        Chairman Isakson. I am not going to take any more time
    because I have talked already too much today except to say I
    think ultimate accountability to you as the best authority, as
    the leader. Those SES employees, I think there are 434 of them
    in the Agency if I am not mistaken.
        Secretary McDonald. Yes, sir.
        Chairman Isakson. That is the heart and soul of the
    discipline and the attitude and the MyVA program that you put
    together, which I do not want compromised in any way
    whatsoever.
        Senator Blumenthal.
        Senator Blumenthal. Thank you, Mr. Chairman.
        I want to focus on the appeals process. Assuming there is
    the reform that we are contemplating and the budget envisions,
    how quickly would it be implemented?
        Secretary McDonald. I will maybe ask Laura to comment on
    the details, but because of the difficulty and the changes
    required, we have put forward a plan where we would actually
    use extra people right now to brute-force some action on the
    appeals while putting in place the structure of the new plan,
    which would take a number of years to put in place.
        Ms. Eskenazi. Certainly. Thank you.
        Yes. Whether it is the Express Appeal Act or another form
    such as we have been discussing with the VSOs recently, what we
    are talking about is kind of a twofold process. We have the
    current inventory in the Department of approximately 445,000
    appeals, and we do not intend on changing the laws in which
    they were filed. That will require resources.
        For new appeals, though, we are hoping to not have them be
    prisoners of that current dense process and to put something in
    place that will, over time, lead to a sustainable, efficient
    process for all veterans.
        Senator Blumenthal. In Connecticut, as you know, just to
    take one example, appeals are currently on hold because of the
    shift of resources to the initial filings of disability claims.
    Now what I hear you saying is that you would move resources
    back to consider those appeals immediately. Is that correct?
        Ms. Eskenazi. In the local field offices I know that VBA
    this year is putting a great deal of effort on appeals, and
    they are working on some reallocations in the 2016 budget to
    really address those pending appeals. That is ongoing now.
        What we know is that to really address the large inventory
    across the Department we do have a need for increased
    resources, as reflected in the President's budget. We are also
    looking for a system of laws, a legal framework that is not so
    costly but yet provides something that is efficient, timely,
    and fair and transparent for veterans.
        Senator Blumenthal. My question goes not only to the
    reforms that have to be achieved. We are all in agreement that
    there needs to be streamlining and resources over the long
    term. But, what will be done right now and immediately,
    considering that those appeals are pending?
        The Secretary may be correct that some of them are
    receiving disability benefits right now, but they do not
    receive, potentially, all they deserve. So, what can we do
    immediately?
        Secretary McDonald. In our 2017 budget proposal and in the
    2016 budget proposal, we had put in place some requests for
    more headcount, for more people. We need those people.
    Unfortunately, given the system the way it is, the law the way
    it is, we need people. It is people, and if we can get those
    people, we can start to drive it down.
        We would be irresponsible if we did not tell you that
    adding more people is not the answer. With this law, we are
    going to have over two million appeals in a very short period
    of time, and that is just unacceptable. We have got to change
    the law.
        Senator Blumenthal. What you are saying is that in the
    short term more resources and more people will help stem the
    rising tide, but over the long haul there have to be changes in
    the law and the process.
        Secretary McDonald. Yes, sir, and the sooner the better.
    That is why we are trying to drive this working group to a
    consensus or at least a majority within the next couple of
    weeks so we can meet your and the Chairman's deadline.
        Senator Blumenthal. Are you satisfied, and can you commit
    to us that this plan will not just shift back to the initial
    claims process that huge backlog because of lack of resources
    there?
        Secretary McDonald. Yes, I am happy to commit to that.
        Laura?
        Ms. Eskenazi. What I can tell is one of the features of the
    current inventory and the inability to work it down in a timely
    fashion is we have a situation where the claims process is very
    entangled with the appeals process. We are looking at new ideas
    where we can segment claims from appeals, allow those appeals
    to move forward to a timely decision that preserves fairness,
    and also get those claims' new material handled in the claims
    stream.
        Senator Blumenthal. I appreciate those commitments. I think
    they are tremendously important because I think the credibility
    and faith in the VA really hinge on addressing this issue
    effectively. Even as health care is addressed through
    legislation, through accountability, and consolidating
    Community Care programs, this disability claims process is a--I
    am tempted to say--festering wound that really needs to be not
    just Band-aided but solved.
        Secretary McDonald. We could not agree with you more. This
    has been the elephant in the room for a long time. We have
    joined arms, and we have said, no longer. It cannot go on like
    this. It is not fair. It is not fair to veterans.
        Senator Blumenthal. It is not fair to veterans, and it is
    not fair to a lot of the dedicated men and women who work at
    the VA because their reputations are tarnished by a system that
    simply is not working.
        It has been, I agree, the elephant in the room, more like
    the tiger in the room that is dangerous to not only veterans,
    who cannot get the justice--it really is a matter of simple
    justice that they deserve and need--but also to the VA itself.
        Thank you.
        Chairman Isakson. I want to thank Senator Blumenthal for
    raising that question, and I am going to fudge a little bit and
    just ask an amplification if I can.
        Senator Sullivan, your proposal on appeals is a pilot
    program. Is that not correct?
        Senator Sullivan. That is correct, Mr. Chairman.
        Chairman Isakson. It is predicated on concessions the
    veteran makes in order to expedite the appeal. Is that correct?
        Senator Sullivan. That is correct and eliminates a number
    of standard elements that are normally in the appeal to bring
    down the timeline of the appeal.
        Chairman Isakson. Mr. Secretary, the Agency's adversity to
    that recommendation is that it is not a total fix. Is that
    correct?
        Secretary McDonald. Mr. Chairman, I would not even use the
    word that we are against it because we worked very hard with
    the Disabled American Veterans and others on that program when
    we thought that that was all we could get. I now think we can
    get more if we are willing to take a more aggressive stance
    than the pilot program would allow.
        The pilot program, in and of itself, is a good idea. I
    thought it was a good idea at the time. But, we are talking
    about an effect that is a relatively small effect relative to
    the 440,000 appeals that we have.
        What we would like to come up with is a law which would
    have a greater impact on those 440,000, but I am not opposed to
    that bill. I just think we can get more, and I think the time
    is right for us to get more.
        Chairman Isakson. I want to enforce the Tester-Burr Rule,
    and that is where there are differences there can be common
    ground. If you work with Senator Sullivan as we expedite the
    consideration of what we can do, maybe you can come up with
    that before we have the legislation done.
        Secretary McDonald. No question, we can do that.
        Chairman Isakson. If not, I see no problem at all in
    putting in what Senator Sullivan has talked about and you
    replacing it somewhere else down the line. I think we have got
    such a good template, what Senator Tester and Senator Burr have
    done, and this is such a big, big problem that it is important
    for us to do that.
        This is a humorous interlude, and I apologize for the time.
    My staff has been participating in some of those meetings you
    all have had over at the Agency, discussing appeals. I know you
    have had some of these charts on the wall, where you have been
    discussing different ways to solve the problem. On each one of
    these charts, there was an elephant being shot by somebody.
    [Laughter.]
        I was so afraid that was a partisan statement, but it is
    not. It is the elephant in----
        Secretary McDonald. Sir, I am sorry. We have to learn to
    strike that from our vocabulary, but in business we often say
    ``the elephant in the room'' or ``the elephant on the table,''
    and it is a business term. It has nothing to do with political
    parties.
        Senator Blumenthal. I think it is unfair to the elephants.
    [Laughter.]
        Chairman Isakson. I am sure we can work with Senator
    Sullivan on this.
        Senator Blumenthal. I would join, or offer to join, Senator
    Sullivan in working on this issue because I understand your
    position that a more streamlined, fair, efficient process is
    necessary for all veterans as soon as possible. Senator
    Sullivan's approach may make sense for a large body of those
    veterans, and maybe we can combine the two approaches.
        Chairman Isakson. My apologies for the interlude, but I
    think that was an important exchange.
        Secretary McDonald. You were just demonstrating how we in
    the VA now are applying tried and true business processes to
    the business of government.
        Chairman Isakson. Absolutely.
        Secretary McDonald. That is what you showed. That is
    process-mapping. That is what we are teaching. Lean Six Sigma,
    human-centered design is what we are teaching people in the VA.
        Chairman Isakson. It is the road to a solution; there is no
    question about it.
        Senator Cassidy.

             HON. BILL CASSIDY, U.S. SENATOR FROM LOUISIANA

        Senator Cassidy. Apropos of that what you just said,
    Secretary, there are going to be some amendments being advanced
    further about accountability. On page five of your testimony
    you speak about, implicitly, that you do not want to fire
    people, if we define accountability only in the narrow way, in
    terms of the number of employees removed from their jobs, et
    cetera.
        I am just curious. How many employees does the VA have?
        Secretary McDonald. If you include part-time employees, we
    have over 350,000.
        Senator Cassidy. How many have been fired in the last year?
        Secretary McDonald. Since I have been Secretary, we have
    had over 2,600 terminations.
        Senator Cassidy. That percent would be?
        Secretary McDonald. I did not include in that retirements,
    which would be another over 700.
        Senator Cassidy. One of the things that concerns us is, for
    example, I think the woman who headed the scandal at the
    Phoenix VA was allowed to retire with her bonus and two of the
    others who were collaborators have been still on the payroll,
    still working. We have seen the people who, frankly, acted out
    of venality in Philadelphia--I do not remember quite the
    details except it is just reprehensible what they did, and they
    are still on the payroll.
        I cannot believe in the private sector there would be such
    a reluctance to hold those who were venal and incompetent
    accountable to the degree that they would be let go.
        I have to dispute a little bit. You say decimate. By
    definition, that means 1 out of 10 is killed. It is hard for me
    to think that of those 300,000 employees, 30,000 would be venal
    and incompetent. I have to think it is a very small minority.
        Please explain to me. If it is really a small minority--we
    are frustrated. We have people who clearly are venal, who are
    allowed to stay employed, who are rude to veterans when they
    show up, who are allowed to stay employed.
        We are interested in accountability, and I am not sure I
    would characterize the ability to let go some as going to
    intimidate the rest. That implies that the rest are similarly
    ill-suited for employment. It has been my experience that it is
    about 1 percent that are bad and the 99 percent that are good
    and are tainted by those who are bad.
        Just kind of elaborate on that, please.
        Secretary McDonald. As I said, since I have been Secretary,
    we have terminated over 2,600 people. That does not include
    roughly 700-plus that have retired or done something else. As
    you know, in several instances where we have proposed
    disciplinary action, the individual has chosen to retire.
        You can try to pass a law to claw back a retirement benefit
    from someone, but my experience in the private sector is that
    will be unconstitutional and that will be decided, and that is
    what the case law says.
        I think the important point here is that the changes we are
    talking about in the new Title 38/Title 5 changes approach
    would end up with a different result, in my opinion, for Sharon
    Helman, the lady at Phoenix that you are describing. What
    happened in that case was the MSPB thought our evidence and our
    case for her mismanagement was not strong enough, and as a
    result she was terminated for accepting money from someone
    else. Let's use that as a test and see.
        Let me ask our attorney. Under the changes that we are
    proposing for Title 5, wouldn't the evidentiary standard be
    different and wouldn't the MSPB arrive at a different decision?
        Ms. Flanz. The evidentiary standard that we are proposing
    would, in fact, be more deferential to the Secretary's action,
    and it would be our hope that in that case we would have been
    able to sustain all of the charges. I will point out that with
    the case itself we did prevail and she was, in fact, terminated
    based on other misconduct.
        Senator Cassidy. And her two collaborators?
        Secretary McDonald. They are still employed, but we are
    very close to taking action with respect to them.
        Senator Cassidy. What about the folks in Philly who
    manipulated things so they were getting moving expenses and
    others--you know the details better than I.
        Ms. Flanz. Sure. That individual was returned to her
    position as a result of the judge finding that the charges were
    sustained, the action taken was based on sufficient evidence,
    but that under the circumstances, according to the judge, the
    penalty was unreasonable.
        Another part of our proposal is to provide greater clarity
    to judges around their authority to impose their own judgment
    with respect to a penalty. What we would propose is that the
    judge is to defer to the agency action unless the penalty
    imposed is beyond the tolerable bounds of reasonableness. That
    is a term of art that judges understand means that they are to
    defer to the agency penalty unless there is something simply
    untenable about it, it was imposed for improper reasons, or
    what have you.
        Senator Cassidy. Bottom line, would she have been able to
    be terminated?
        Ms. Flanz. We are talking about the Philadelphia
    individual?
        Senator Cassidy. Philly.
        Ms. Flanz. Well, the Secretary's proposal in that respect
    was actually not to terminate her. Based on the facts of the
    case and the evidence of that case, the proposal or the action
    taken was to demote rather than remove, and we did sustain the
    charges. To answer your question directly, the penalty, we
    would hope, would have been deferred to in that case.
        Senator Cassidy. OK.
        Secretary McDonald. What we are trying to do is take the
    Choice Act that had these provisions that the judges have found
    constraining and modify it just like we are in the Community
    Care discussion. Modify it so we can deal with what has
    happened, what we have learned from this MSPB action.
        Senator Cassidy. It may only be tangentially related, and I
    do not know the details well enough to pursue it further. But,
    as I recall, the person in Philadelphia actually lied and
    manipulated circumstances so that she could be reimbursed to
    her own advantage but to the disadvantage of the system.
        I guess my other question is: Why wouldn't she be
    terminated if that is how I remember?
        Secretary McDonald. What you remember is some of the
    reporting in the media. Sloan Gibson, the Deputy Secretary, who
    was the deciding authority on the punishment, he went through
    all the case file, and it was his opinion--and I obviously
    trust his opinion--that she should be demoted rather than
    terminated, that he did not find where she actually broke the
    law. But, what he did find is poor judgment, poor management
    judgment, and he thought demotion was more appropriate, and
    that is what the judge sustained.
        Senator Cassidy. I yield back. Thank you.
        Chairman Isakson. Senator Tester.
        Senator Tester. Thank you, Mr. Chairman.
        Thank you for being here, Mr. Secretary, and your team.
        When I spoke previously, there were a lot of people to
    thank, and there is somebody that I forgot to thank, and I
    think it is important that I do, and that is the Ranking
    Member. Senator Blumenthal has been great in the negotiations.
    His staff has been incredibly helpful, especially on the
    provider agreement stuff.
        We want to give you the due you deserve and thank you for
    that.
        Mr. Secretary, I want to talk about provider agreements and
    spending flexibility because I think a failure to act on those
    things in a timely manner would ensure that the changes you
    need to make to the Choice program would not be implemented. I
    want you to either confirm or deny that.
        Secretary McDonald. That is true, sir.
        Senator Tester. For those who believe that we are simply
    working to make the Choice Act permanently, could you explain
    how the ``Jon-Richard'' Bill would actually allow us to move
    well beyond Choice and to put in a framework that actually will
    work for our veterans?
        Secretary McDonald. I think as I understand the bill--and,
    of course, we have not caught up with the most recent version--
    --
        Senator Tester. Yes, right.
        Secretary McDonald [continuing]. That you and Senator Burr
    have been working. We know from the work that you have done on
    your bill that this idea of setting up this optimal network of
    medical providers for veterans will ensure our veterans get the
    very best care possible.
        Having one set of standards for payment will allow us to
    compete equally across the thing versus what we have today.
    Whereas, you and I know some of our programs are richer for
    providers and some are actually less fulfilling for providers,
    and cause the provider to propose one program versus another.
        Third, being able to be the primary payer allows us the
    ability to pay our bills more on time, allows us the ability to
    account for those payments more on time. It means the bills
    will be paid within 30 days as we have committed to do by the
    end of the year.
        Baligh, is there anything else you want to add to my
    explanation?
        Dr. Yehia. No. I think that is great.
        Senator, you had it right; there are some things that we
    need today to make the Choice program work today, this year,
    and then build the foundation for the future. I think the way
    that we are having this discussion of what has to occur this
    session and then how do we lay the foundation is the right
    framework.
        Senator Tester. OK. Thank you.
        Mr. Secretary, you were in front of Appropriations last
    week. You heard Senator Murkowski and others talk about
    consolidation of Community Care. Their skepticism was the same
    as mine initially, by the way, because frontier States like
    Alaska, like Montana, and others need flexibility to deliver
    that care.
        Just explain to me how consolidating Community Care would
    actually give States, frontier States like mine and Alaska, the
    flexibility that we need and that we had before Choice to
    ensure that veterans receive the care that they need?
        Secretary McDonald. We would work hard to make sure that we
    got into the network that I talked about the Alaska Native
    Health System, for example, where there are very outstanding
    providers. In fact, the Southern Foundation we are working on
    and trying to get more residencies in Alaska.
        In Montana, we would make sure we had the very best
    providers in the network so it would be very easy and very
    quick for a veteran to go to them.
        Dr. Yehia. I think there are two provisions in there
    specifically: The provider agreements which will allow us to
    work with individual providers that may not be part of a large
    national contracted network, that is critical. And, the ability
    to, as best as possible, try to link to Medicare but
    understanding in the frontier States that we might have to pay
    a different rate in order to get providers to work with us or
    for some specialties. So, building in the consistency as best
    as possible while allowing for flexibility in those locales.
        Senator Tester. OK. Thank you.
        Montana is one of the few States, I think Maine is another
    one, that serves veterans under Project ARCH. Project ARCH, for
    the most part, has been pretty well accepted. Can you tell me
    why we should not indefinitely just extend the life of that
    program and why it makes more sense to incorporate that program
    into consolidated Community Care?
        Secretary McDonald. We have also learned a lot about ARCH.
    If we were to simply extend ARCH, none of us would like the
    cost or the scoring because ARCH, while it was a good program,
    does not necessarily differentiate between the urban and the
    rural areas in the way the reimbursement costs go, and as a
    result the cost could be astronomical.
        I think what you have done in your legislation and what we
    have tried to advise is to put the best components of ARCH in
    the legislation but leave those that would raise the cost to an
    astronomical figure out.
        Senator Tester. OK. One last thing and then I will shut it
    down, Mr. Chairman, and that is every once in a while you get
    to feel good about stuff we do in this body. This is one of
    those moments where my staff, Burr's staff, the Secretary's
    staff, both of your staffs have helped us, get to a point where
    we have got something that we think is acceptable.
        To be honest with you, we have not accomplished one thing
    yet. Hopefully, with the leadership of the two people to my
    left we can get this thing done and over. Then, hopefully, get
    the House's concurrence or some manner --if they do some work
    over there, if they are ever in--and get it to the President's
    desk.
        I say that because, you know, we have got a lot of veterans
    who are sitting in the audience today that represent a ton of
    veterans across this country, and we all know that Choice is
    not doing it. We are all getting the letters. We are all
    getting the e-mails. We are all getting the phone calls. We are
    all getting stopped on the street. The quicker we can get this
    fixed the better it is going to be for the country.
        Thank you, Mr. Chairman.
        Chairman Isakson. Let me just say--and Richard can answer
    too--the Ranking Member and I are committed to seeing that we
    bring this home, and we would like to bring it home heavy, not
    light. We are not going to let a difference of opinion on one
    issue thwart us from the overall goal, which is to include the
    big things that we have talked about. I appreciate your
    comments, and I remain committed to doing exactly that. Our
    veterans, on Memorial Day, deserve a new VA set of standards
    and the hope of accountability that is meaningful and real.
        Senator Blumenthal. I agree with the Chairman completely.
    Compromise is not a four-letter word, and we ought to be ready
    to move forward with your incredibly important leadership.
        Thank you, Senator Tester.
        We will strike from the record the words ``if they are ever
    in,'' referring to the House of Representatives. [Laughter.]
        Secretary McDonald. Ranking Member Blumenthal, in defense
    of Chairman Miller, I have spoken with him. I called him the
    day he announced his retirement, and we all agreed that this is
    the moment in time that we need to get something big done. So,
    I can tell you that Chairman Miller and Ranking Member Brown
    are on board as well.
        Senator Blumenthal. Thank you.
        Chairman Isakson. We have one example already, the Denver
    hospital. I mean, they said we could not get that done a year
    ago. We brought it home and got it done, and the House came
    along, too. We can do it twice in one Congress, I am convinced.
        Senator Sullivan.
        Senator Sullivan. Thank you, Mr. Chairman.
        I appreciate your comments, Mr. Secretary, Ranking Member
    Blumenthal, on the whole idea of getting together soon and
    really hashing out some of the issues that relate to appeals. I
    think there is widespread agreement that this is a big issue,
    an important issue. We do not want it to be the next
    problematic issue. We want to be able to preempt it.
        Mr. Secretary, I will take you up on your offer. Senator
    Blumenthal, I will certainly take you up on that offer and look
    forward to working with all of you.
        In terms of kind of trying to look at the parameters that
    we are talking about, you mentioned the bill that I and a
    number of Members on the Committee have introduced, that it is
    a good start; it does not go far enough. I am fine with that,
    especially if you guys want to be more ambitious, and more
    creative and effective in terms of the problem we are trying to
    solve.
        Let me ask a basic threshold question. Is your concern that
    because it is a pilot program, it is going to only impact a
    certain number of veterans; therefore, it is not really
    covering the broader category of all veterans? Or, is it the
    substance itself, that it is not creating enough efficiencies,
    enough reforms in the process?
        Those are two different things, right? It is either not
    covering enough. Because it is a pilot program, by definition,
    it is not covering. Sometimes we do that here, though, because
    we want to see if something works. Or, is it that the reforms
    are not ambitious enough? Or, a combination of both.
        Secretary McDonald. Again, I do not want to disparage the
    bill or the work that you have done with the Disabled American
    Veterans and others because I do think it is outstanding work
    and it has led to this new approach, which may be considered
    more aggressive.
        I would add one more thing to it. It is voluntary.
        Senator Sullivan. Right.
        Secretary McDonald. Which, the two things you mentioned add
    to it: it is voluntary; and it will take some time to do.
        I think there is an opportunity to do even more, faster,
    but again, I think that program is the basis of what we have
    done.
        Laura, do you want to make any more specific comments?
        Ms. Eskenazi. Certainly. Thank you.
        We started working with the VSOs on this concept 2 years
    ago.
        Senator Sullivan. Yeah.
        Ms. Eskenazi. Certainly one of the limitations is that it
    is voluntary, and we always knew that. We always knew that it
    was not going to be the silver bullet, but it would sort of
    show--it would sort of model out perhaps other changes that
    could be taken.
        One of the things that has happened in the past year,
    working under our Secretary and our Deputy Secretary, is we
    were charged this year when we were putting together our budget
    request to kind of come up with a requirement for appeals. One
    of the things that appeals has never had is any sort of
    timeframe.
        Senator Sullivan. Yeah.
        Ms. Eskenazi. Not that it is all about time. Fairness is
    certainly paramount. But in doing so, that is when we saw the
    stark picture that the Secretary has presented in other
    hearings, that if we continue on this path we are not going to
    be sitting on 450,000 appeals.
        Senator Sullivan. Right.
        Ms. Eskenazi. We will be sitting on over two million.
        Senator Sullivan. No. It is the bulge, right? I mean, it is
    a real----
        Ms. Eskenazi. That was sort of the shock factor.
        Senator Sullivan. Yeah.
        Ms. Eskenazi. Which caused us to take a different look not
    just at amending what we currently have but sort of putting it
    aside, focusing on the attributes that veterans are looking
    for--timeliness, fairness, transparency--and looking to design
    a new type of an appeals process.
        Senator Sullivan. Good. Well, again, we look forward to
    working with you and the service organizations because I know
    they have been very, very involved in this as well.
        You know, Mr. Chairman, we are talking about
    accountability.
        Mr. Secretary, I want to go back to a topic that I know you
    are very focused on, we have all been very focused on, and you
    see it manifest itself in different ways. The issue I have
    raised a number of times is with payments to the providers.
    That is a problem.
        That has been a problem, as we have talked about, where the
    veteran himself or herself gets stuck with the bill because the
    VA goes after them--or the provider goes after them because
    they are not getting paid. It is also a huge issue for the
    providers.
        I was just informed of an Alaska group, outstanding health
    care group. Actually, it is a consortium with some of the
    groups you were just talking about, South Central and others,
    where they are now experiencing up to 180 days of nonpayment. I
    was just informed of this a couple days ago--half a million
    dollars of nonpayment. I would like to actually provide you and
    others specifically with their case so you can address that.
        More broadly, you are saying 30 days. I think that is music
    to everybody's ears. Making sure that the veteran does not get
    caught in the middle, as we have talked about, and get,
    perhaps, his credit ruined and things like that.
        How do we get there when I already have constituents
    informing me that it sounds like it is getting worse on
    provider payment, not better?
        If this is going to be an accountability bill, do we need
    to take legislative action in conjunction with you so you can
    make that commitment about 30-day payments to our providers?
        I think we start addressing a lot of the problems out there
    if we can really strongly not only commit to that but make it
    happen. How do we do that?
        Secretary McDonald. There are a number of things that we
    have done in the short term. Number 1, we no longer require the
    paperwork before we make the payment. We have gone to the best
    practice of the private sector, where we now will pay when the
    service is done, at least a good portion of it. We did that
    about a week ago. I think it was about a week ago we made that
    change. Already you are going to start seeing the backlog of
    bills dropping as the payments are made.
        Senator Sullivan. OK.
        Secretary McDonald. Second, we instituted a crisis credit
    hotline for veterans----
        Senator Sullivan. Right.
        Secretary McDonald [continuing]. So that no veteran's
    credit could be affected by this.
        Again, these steps are steps we can take. We are taking
    them quickly to try to get this alleviated.
        The important thing is we built this bill so that we
    eliminate this issue altogether. We become the primary
    provider, the primary payer.
        Why don't you go ahead and describe the details?
        Dr. Yehia. Sure. Thank you, Senator. We would love to get
    those names.
        We actually have a team that goes out and works with those.
    When we sit down with providers we hear all of them want to
    serve veterans. That is without question. I mean, we always
    hear that.
        One of the things that we learn is that they have a lot of
    things on their books that we will never pay because we are not
    allowed to pay by law, and that is the whole idea of getting to
    one way of paying care. For example, in emergency room care, in
    some circumstances we are the primary payer; in other
    circumstances we are the payer of last resort, and we only pay
    a certain portion, but they think we are going to pay 100
    percent of the bill. Getting to one system that makes sense
    will make sure that folks know exactly what they get to pay.
        Then the next piece is: How do we pay timely and
    accurately? There are, in both versions of the Choice
    consolidation bill, good things in there that I think will help
    us get to a system where we can pay timely and accurately.
        I would divide them into two things. One is, we have to
    make the system less complex, become the primary payer, and the
    other one is to get the technology and the system in place so
    we can pay timely and accurately.
        Senator Sullivan. OK. Thank you, Mr. Chairman.
        Chairman Isakson. Thank you, Senator Sullivan.
        Senator Rounds.

            HON. MIKE ROUNDS, U.S. SENATOR FROM SOUTH DAKOTA

        Senator Rounds. Thank you, Mr. Chairman. Let me just begin
    by saying thank you to you and the Ranking Member for the work
    that you are doing. I think it always makes all of us feel good
    when we are working on a bill which is not partisan in nature,
    and I think we have a lot better chance of getting something
    done when it is done on a bipartisan fashion.
        Secretary McDonald, there seems to me to be a lot of
    confusion about the differences between the terms ``co-pay''
    and ``deductibles'' when referencing out-of-pocket payments
    made by veterans under the Choice program. The way I read the
    current law private providers are only allowed to charge
    veterans co-pays equal to what the VA would charge at one of
    your facilities, which is a good thing.
        This is not true for deductibles, however, and as a result
    veterans under the Choice are being charged deductibles by
    providers in accordance with their private insurance policies
    when seeking care for nonservice-connected disabilities. These
    deductibles could be in terms of thousands of dollars.
        Section 1729 of Title 38, meanwhile, forbids the VA from
    collecting deductibles for nonservice-connected disability care
    at VA facilities.
        Last week, I introduced a bill to eliminate this
    discrepancy. It makes the VA the primary payer under the
    Choice, as you suggested, and I am very pleased to hear that,
    and it directs the VA to pay for deductibles just like it would
    if the veteran received the care at a VA facility.
        Can you comment on how the VA would treat deductibles for
    veterans with private insurance under these bills currently
    before us today?
        Dr. Yehia. Thank you for that question, Senator.
        The way that the Choice law currently is, is that we are
    the secondary payer for nonservice-connected care and if they
    have another form of health insurance they have to first bill
    outside health insurance, then bill VA. As a result, some
    veterans will have to pay two co-payments--one to the VA and
    one to their outside health insurance. We do not want that, and
    we agree with you of helping us become the primary payer.
        I think our goal, too, is to make sure that there is parity
    between internal VA care and external VA care. When it comes to
    hospital care or medical services, if a veteran has to pay a
    co-payment in the VA, it should be the same outside. If they do
    not have to pay a co-payment in the VA, it should be the same
    outside. What we are hoping to do is to create an even playing
    field so if this is how they behave when they see a VA doctor
    it should be the same way in the community.
        Senator Rounds. OK. Let me just clarify this because there
    are two parts. There is co-pay, and there are deductibles. Are
    you excluding co-pay from your discussion, or are you including
    co-pay as being something which the VA should pick up?
        Dr. Yehia. First of all, only a small segment of the
    population has a co-payment. Usually, it is a set----
        Senator Rounds. Co-pay or deductible?
        Dr. Yehia. Co-payment. Co-pay. Category seven and eight.
    So, if you are getting seen for an----
        Secretary McDonald. Category 7.
        Dr. Yehia. Category 7 and 8.
        Senator Rounds. OK.
        Dr. Yehia. Thank you.
        Secretary McDonald. Category 7s and 8s.
        Dr. Yehia. If you are getting seen for an outpatient visit,
    you might have--I do not know what the exact number is, but you
    will have a certain amount that you have to pay. If you go in
    the community, we want it to be exactly the same, not higher,
    not lower, not different.
        If you do not have a co-payment at all, in the community it
    should be the same. You should not be required to pay anything.
        This is actually how traditional VA care worked before
    Choice.
        Senator Rounds. Now I want you to use the term
    ``deductible'' if you mean deductible because there is a
    difference between deductible and co-pay. Someone outside of
    the VA receiving services outside of the VA will have a
    deductible, and then they will have a co-pay under their
    insurance company. OK?
        What we are finding right now is that even if you go in as
    the primary provider, and if they are at a VA facility today,
    there is no deductible for the services being provided. But, if
    they are outside of a VA facility, before a co-pay starts,
    there is a deductible under an insurance policy plan. First
    dollar, or it could be thousands of dollars.
        Dr. Yehia. Yeah.
        Senator Rounds. If you want it equal to the services being
    provided inside of a VA facility versus outside of a VA
    facility, what I am proposing under our proposed legislation is
    that the deductible will also become the responsibility of the
    primary provider, which is the VA.
        Are you in agreement that the deductible should be paid by
    the VA rather than the veteran?
        Dr. Yehia. When we become the primary payer, the whole idea
    of a deductible, I think, is less of an issue. I do not think
    it really becomes more of an issue.
        It is an issue in the secondary payer situation, where you
    have to pay. If you do have a deductible, you have to pay it
    and the co-payment.
        But, when we become the primary payer as it is in fee care,
    that is less of a concern. There is not a deductible.
        Senator Rounds. There is not a deductible.
        Dr. Yehia. Right.
        Senator Rounds. Very good.
        Secretary McDonald. There is no deductible.
        Senator Rounds. That is what I wanted to get at--under the
    proposals, if we make you the primary payer, the deductible is
    eliminated for these veterans that right now are in some cases
    paying thousands of dollars.
        Dr. Yehia. Yeah, the deductible to the outside health
    insurance will be eliminated.
        Senator Rounds. There we go. Thank you.
        Thank you, Mr. Chairman.
        Chairman Isakson. Thank you, Senator Rounds.
        Senator Boozman.

             HON. JOHN BOOZMAN, U.S. SENATOR FROM ARKANSAS

        Senator Boozman. Thank you, Mr. Chairman. I apologize to
    you and the Ranking Member for being late, and I have to sneak
    out again. I have got another hearing that is going on.
        I want to thank you, Secretary McDonald, for your
    willingness to come and testify before Congress. I think I have
    probably been with you five or six times in the last 2 or 3
    weeks between the appropriations, this process, and others, and
    that really is very important.
        The comment and question that I would like to make is that
    it seems like in the last few weeks, as the Choice Program is
    starting to kick in, that the comments I hear from--I am an
    optometrist by training. My brother was an ophthalmologist.
        As I talk to my friends, their concern is that they feel
    like, as providers--and these are folks that realize that we
    are at war now--they want to do the right thing, and they want
    to participate. You know, I can shame them into doing the right
    thing.
        The problem is that they almost feel like you want them to
    go to work for the VA. They deal with Medicare. They deal with
    Medicaid, programs for the elderly, programs for the poor. They
    deal with all kinds of private insurance.
        But there is something going on right now with the
    structure that we have that makes it more difficult, and I do
    not know exactly what that is.
        I would really encourage you to--and we are talking about
    small and medium practices. These are not the clinics that are
    large, you know, that do a great job. We are talking about
    small clinics and medium clinics because these are in the
    communities where veterans do not have access.
        So, I would really encourage you to get out and send some
    of your folks to literally camp out there for a week or so and
    see what is going on because it is just hard.
        We have growing pains and all of that. I realize that. That
    is just the way it is. I am afraid we are in a situation now
    where we are having, in some cases, really bad experiences.
        The payment issue we have talked a lot about. I think you
    are doing a better job of that. I know you are working hard on
    that, but there are other things.
        It is the key staffer that spends a lot of time on the
    phone dealing with problems that they feel like are fairly
    insignificant compared to these other insurance programs. It
    really is a problem.
        Secretary McDonald. Senator Boozman, we agree entirely. We
    think that the changes we have proposed to the law, which I
    know Senator Burr and Senator Tester have been working on, will
    address a lot of this and, I hope, will solve it.
        We, frankly, have been disappointed with the performance of
    one of our third-party providers, Health Net. I have met with
    their CEO, but we are still disappointed. Regarding the law,
    the way the Choice Act is structured today, does not permit us
    to take back the responsibility from the third-party provider
    because it is written into law.
        This new bill would allow us to take that back and would
    allow us to own the customer service. We are in a customer
    service business. Our vision is to be the best customer service
    organization in the government. We cannot outsource our
    customer service, so I am hoping we will see lots of changes.
        I notice--I think you meant it euphemistically--that we are
    trying to make them VA employees. I am out there recruiting. I,
    unashamedly, am out there recruiting. As you know, I have been
    to over two dozen medical schools. So, if there are people who
    would like to join the VA, we would love to hire them.
        Senator Boozman. I understand. No, these are people that,
    like you say, they want to provide service, but they do not
    want the same restrictions.
        Secretary McDonald. Yes, sir.
        Senator Boozman. The same, you know, all that goes through
    with the people that are working very hard at the VA as
    providers.
        Again, it does seem to be unique, and it is enough--there
    is enough smoke that there is some fire there.
        Dr. Yehia. Senator, if I may.
        Senator Boozman. Sure.
        Dr. Yehia. That is exactly what we are doing. I was in
    Orlando, FL, a couple weeks ago, where we hosted a roundtable
    with those small- and medium-size practices just to hear
    directly from them what is going on.
        Our intention with the plan and where we hope to go is we
    do not want VA to be so different than everyone else. So, we
    are trying to figure out what the best practices in industry
    and as best as possible conform to those because if you are a
    small practitioner and you have to deal with multiple different
    insurance plans, each operating in a different way or a similar
    way except for the VA----
        Senator Boozman. Right.
        Dr. Yehia [continuing]. Why do you want to work with us? I
    think we want to figure out how we can be good partners to
    community providers.
        Senator Boozman. Right. Well, thank you very much. I
    appreciate it.
        Thank you, sir.
        Chairman Isakson. Mr. Secretary, I hope that the next time
    that we meet we will be discussing our mutual joy and success
    at coming up with significant legislation for the Veterans
    Administration that addresses the needs of our veterans,
    assures the American public there is accountability within the
    VA administration, deals with the caregivers, deals with all
    the things that Senator Burr and Senator Tester have done and,
    in particular, Choice.
        I appreciate your changing your schedule to be with us for
    the entire hearing this afternoon. We are very grateful to you
    and appreciate all your staff for being here as well.
        Senator Blumenthal. Could I please ask one last question,
    Mr. Chairman?
        Chairman Isakson. Certainly.
        Senator Blumenthal. Thank you.
        Looking at the budget for this year and the question of how
    to pay for additional Care in the Community after the emergency
    Choice Act funding expires, could you explain how you will
    cover that expense? Because the budget submission that you have
    made seems to have a shortfall of $9 billion in the fiscal year
    2018. Am I correct?
        Secretary McDonald. In 2017, I think it was, we put in $12
    million. In 2018, we do have a shortfall there, and the
    shortfall is because we were not sure what legislation would
    come out of the Committee and we did not want to put a number
    in there that would be wrong. As soon as we work together and
    figure out this legislation and get it done, we will put a
    number in that hole and talk about that because we will have a
    better idea what it will be. There are several options in the
    legislation, and those options each have a different cost with
    them.
        Senator Blumenthal. But, you can assure us that you will
    cover that cost without cannibalizing other VA services.
        Secretary McDonald. We will deal with it when we get back
    to the second bite, so to speak, because it will be part of the
    budget.
        Senator Blumenthal. Thank you.
        Secretary McDonald. Yes, sir.
        Chairman Isakson. Secretary, I thank you and your staff
    very much.
        Secretary McDonald. Thank you, Mr. Chairman.
      Response to Posthearing Questions Submitted by Hon. Bill Cassidy to
      Hon. Robert McDonald, Secretary, U.S. Department of Veterans Affairs
        Secretary McDonald, during the March 15th hearing you testified
    that 2,600 VA employees have been terminated since your appointment.
    This statistic seemed to represent the total number of adverse actions
    taken, not the total number of terminations. The September 1, 2015,
    Assessment L, which was part of the Independent Assessment of the
    Health Care Delivery Systems and Management Processes of the Department
    of Veteran Affairs, specifically criticizes the VA on the topic of
    terminating Senior Executive Service (SES) employees. The March 3, 2016
    weekly report on adverse actions initiated since June 3, 2014 shows
    that only 96 employees were subject to removal. This is in stark
    contrast to the 2,600 you referred to during your testimony, and still
    significantly different from the ``Removal'' totals on the FY 2015
    Adverse Actions Totals that were provided to Congress.

        Question 1. What is the accurate number of terminations since your
    appointment on July 30, 2014 (including and excluding resigned and
    retired in lieu of)?
        Response. VA's Office of Accountability Review maintains a database
    to track disciplinary actions, including but not limited to removals,
    throughout the Department. The data is input by human resources
    officers at VA medical centers, regional offices, and other facilities
    and program offices across the VA system. That database reflects that,
    as of April 11, 2016, a total of 3,144 VA employees have been removed
    or terminated during their probationary period since July 30, 2014. An
    additional 874 employees have resigned or retired in lieu of
    involuntary separation.

        Question 2. Since that time, how many of those terminations have
    been SES employees?
        Response. Within the population described in the response to
    question 1, nine Senior Executive Service (SES) employees have been
    removed or retired or resigned in lieu of involuntary separation.

        Question 3. Why is there such variation in the statistics provided
    during testimony, those provided in writing to Congress and the
    Department's weekly report?
        Response. The numbers are different because they are responding to
    very different questions.
        As stated on the cover sheet VA provides with each weekly report,
    the information provided in that report responds to a June 3, 2014,
    oversight request from the House Veterans' Affairs Committee (HVAC)
    requesting information about disciplinary actions proposed or taken on
    the basis of specified types of misconduct: patient scheduling, record
    manipulation, appointment delays, and/or patient deaths. That report
    does not reflect disciplinary actions based on other types of
    misconduct because the June 3, 2014, HVAC oversight request did not ask
    for information about actions proposed or taken on other bases.
        The Secretary's count of all employee removals includes actions
    taken on any basis, not just the specific types of misconduct covered
    by the June 3, 2014, HVAC request or the responsive weekly report.

        Question 4. Why does the VA, the agency with the most scandals,
    have on average a termination rate for SES employees that is 10 times
    lower than other agencies?
        Response. It is not clear from the Question for the Record where
    the figures supporting the underlying assertion arose. You can review
    the Office of Personnel Management's Fiscal Year (FY) 2015 data
    reporting online at www.fedscope.opm.gov. This website shows provides
    information for all agencies (as defined in FedScope).
                                     ______

     Response to Posthearing Questions Submitted by Hon. Sherrod Brown to
      Hon. Robert McDonald, Secretary, U.S. Department of Veterans Affairs
        On December 15, 2015, President Obama issued an Executive Order,
    ``Strengthening The Senior Executive Service,'' to ``periodically
    explore and promote new selection methods that effectively and
    efficiently identify the most capable and talented candidate for
    executive leadership.''

        Question 5. What steps has the VA taken, in conjunction with OPM,
    to respond to the following requirements delineated in the Executive
    Order?

              (ii) The heads of agencies with SES positions that supervise
            General Schedule (GS) employees shall implement policies, as
            permitted by and consistent with applicable law and regulation,
            for initial pay setting and pay adjustments, as appropriate,
            for career SES appointees to result in compensation exceeding
            the rates of pay, including locality pay, of their subordinate
            GS employees. Similar policies shall be implemented by heads of
            agencies for Senior Professional (i.e., SL or ST) employees
            that supervise GS employees. Such policies and practices
            support, recognize, and reward agency executives, especially
            top performers, in a manner commensurate with their roles,
            responsibilities, and contributions, and may increase the
            competitiveness of SES positions with comparable positions
            outside of Government.
              (iv) Within 120 days of OPM issuing the guidance described in
            section 3(a)(iii) of this order, the heads of agencies with SES
            positions shall examine the agency's career SES hiring process
            and make changes to the process to make it more efficient,
            effective, and less burdensome for all participants. Agencies
            shall simplify the initial application requirements for SES
            positions consistent with the guidance issued in section
            3(a)(iii) of this order, and should only request critically
            necessary technical qualifications, with the goal of minimizing
            requirements that may deter qualified applicants from applying.
            Agencies shall also monitor time to hire of SES positions, and
            identify appropriate process improvements or other changes that
            can help reduce time to hire while ensuring high quality of
            hires.

        Response. With respect to section (ii), VA drafted a pay setting
    and pay adjustment policy based on an overarching compensation
    philosophy for its SES and equivalent positions.
        The philosophy is based largely on the use of tiers for VA
    executive positions, which align to criteria by which VA differentiates
    among and categorizes SES positions. The tiers represent different
    levels of responsibility and complexity/scope of work yet are based on
    established criteria, which allows for transparency and consistency
    when setting pay. It also recognizes there are additional flexibilities
    through pay-for-performance, which the VA will begin to consider more
    broadly. This includes opportunities for larger percentages used for
    performance-based increases and awards. We note that these VA policies
    must be consistent with performance-basis mandated by law and pay
    differentiation based upon performance required for certification of
    appraisal systems
        When setting pay, many factors are considered to include the tier
    of the position; the candidate's experience, pay history and
    qualifications; rate of pay, which is fair and equitable amongst
    similarly situated employees; the pay of subordinate GS employees; and
    the potential room for growth for the candidate for performance-based
    increases within the pay band.
        With respect to section (iv), VA has initiated several Rapid
    Process Improvement Working groups to consider the agency's career SES
    hiring process and ways to make it less burdensome for applicants,
    especially for those applying to our Medical Center Director positions,
    as these positions have a high vacancy rate, are crucial to carrying
    out the VA's mission, and historically have been difficult to fill. The
    VA also continues to monitor and now reports monthly the time-to-hire
    of SES positions to the Deputy Secretary.

        Question 6. Please describe how things would change if the
    executives are moved from Title 5 to Title 38?
        Response. The Administration supports legislation to appoint, pay,
    appraise, and discipline, under Title 38, senior executives holding
    positions as Medical Center Director, Veterans Integrated Service
    Network Director, and any other critical senior health care executive
    position within VA's Veterans Health Administration (VHA).
        VHA Medical Center and VISN Directors are in a unique position to
    help lead and shape the way VA provides world-class health care to our
    Nation's Veterans. Typically, these individuals are compensated at a
    much higher rate in the private sector. For example, most VA Medical
    Center Directors have their salary capped at $185,100. Whereas,
    according to the 2015 Hay Group Integrated Health Systems Report
    survey, the average annual base salary of a similar position in the
    private sector is $345,100. Likewise, most VA Medical Center Director
    positions take an average of 230 days to fill. Whereas, a similar
    position the private sector takes around 60 to 120 days to fill.
        Under the Administration's proposal, VA Medical Center Director,
    VISN Director, and any other critical senior health care executive
    would be treated in a similar fashion as their private sector
    counterparts and Title 38 health care provider peers. Indeed, the
    Administration's proposal is based on the appointment, compensation,
    and disciplinary statutory authorities that exist for Title 38 health
    care providers, including doctors and dentists. Under the
    Administration's proposal, VHA Medical Center and VISN Directors would
    be appointed based on the qualifications that VA sets; be evaluated
    according to the agency's priorities and goals; have their pay set
    based on relevant market factors and on their achievement of identified
    performance goals; and be disciplined in a fashion that respects the
    employee's rights while also being reasonable given the importance of
    the individual's work to the agency's mission.
        As the Secretary has stated, organizational change cannot only be
    accomplished through employee terminations and discipline. Instead,
    success requires the use of a broad spectrum of resources to drive
    organizational performance and improvement through hiring, training,
    compensating, evaluating, and rewarding exceptional employees. The
    Administration's proposal would give VA similar tools and incentives as
    the private sector, which would allow VA to better perform its mission.
                                     ______

    Response to Posthearing Questions Submitted by Hon. Mazie K. Hirono to
      Hon. Robert McDonald, Secretary, U.S. Department of Veterans Affairs
        Question 7. Secretary McDonald, last September I raised the issue
    of a catch-22 of sorts in one of our committee hearings. Current law
    imposes a requirement that veterans must have received VA care within
    the preceding 24 months in order to be eligible for emergency treatment
    reimbursement from the VA. This means that recently enrolled veterans
    who would otherwise be eligible for emergency treatment, but have not
    received VA care or services due to wait times associated with their
    initial appointment are not eligible for non-VA emergency treatment.
    Furthermore I have introduced the VA's proposal (S. 1693) to exempt
    newly enrolled veterans from this requirement. Would VA support
    including S. 1693 in comprehensive legislation related to non-VA care?
        Response. Please see the excerpt below from VA's testimony before
    the Senate Veterans' Affairs Committee on September 16, 2015. In that
    testimony, we expressed support for S. 1693 but asked the Committee to
    forbear consideration of the bill to allow for further discussion in
    the context of VA's comprehensive review of its Care in the Community
    programs. The Plan to Consolidate Community Care Programs was provided
    to the Committee on October 30, 2015, and we appreciate the
    opportunities to discuss the Plan with the Committee, including a
    December 2, 2015, hearing on Consolidating Non-VA Care programs. That
    testimony included discussion of expanded access to emergency treatment
    and care. VA supports measures to improve access to emergency care for
    Veterans, contingent on the provision of the additional resources, and
    would be happy to further discuss emergency care reforms, including in
    discussion of the Committee's pending omnibus bill. VA supports
    S. 1693, as expressed in our September 16, 2015, testimony.
    Excerpt from VA testimony before the Senate Veterans' Affairs Committee
            on September 16, 2015:

              VA supports S. 1693 but, as discussed below, requests that no
            further action be taken at this time. We recognize that some
            Veterans have been enrolled in VA's health care system but
            unable to become actual users of the system because they have
            not been able to receive their ``new patient examination'' due
            to waiting periods (in appointment scheduling) for care in VA.
            As a result, although enrolled, they fail to meet the full
            statutory definition of an ``active Department health-care
            participant'' for purposes of being able to receive
            reimbursement under section 1725. The bill would provide a fair
            remedy for those whose section 1725 claims are denied solely
            because VA scheduling procedures and wait times prevented them
            from receiving VA care within the 24-month period preceding
            their receipt of non-VA emergency treatment.
              While the goal of this bill is well-intentioned, we believe
            it premature for Congress to take any action on this measure
            until VA has completed its comprehensive review of the
            Department's Care in the Community programs, which includes a
            review of the monetary benefits available under section 1725.
            For that reason, we respectfully request that the Committee
            forbear consideration of S. 1693 (and any similar measure)
            until VA has an opportunity to complete its review and share
            the results, including recommendations, with the Committee.

        Question 8. Secretary McDonald, would you be able to comment on how
    the VA would implement the reforms outlined in S. 2633 related to
    access to emergency care, and do you have any indication as to what
    extent this would reduce out-of-pocket costs for enrolled Veterans?
        Response. The implementation of this bill, S. 2633, Section 102:
    Expansion of reimbursement of veterans for emergency treatment and
    urgent care would remove certain eligibility requirements, expand
    benefits, and establish VA as the primary payer for Veterans to access
    emergency treatment, urgent care, and emergency transportation in the
    community. The impact of this provision would reduce enrolled Veterans'
    out-of-pocket costs by not holding them personally liable for the
    payment of emergent treatment, urgent care, and emergency
    transportation. S. 2633 should work to reduce administrative barriers
    for obtaining such health care in the community. In order to implement
    this legislation, VA would need to develop supporting regulations,
    processes, and procedures. VA would also require system redesign and
    solution enhancements to care coordination, customer service, claims
    processing, and payment systems. Finally, a comprehensive
    communications strategy would be required for conducting appropriate
    outreach to affected Veterans, providers, and stakeholders, and VA
    would need significant additional resources, estimated at $2.4 billion
    in FY 2017 and $14 billion over five years for this expanded benefit,
    including urgent care, emergency care, and treatment.

        Question 9. S. 2633 contains provisions seeking to address the
    problem of the Department of Veterans Affairs not being reimbursed by
    insurance companies in instances in which the VA treats enrolled
    veterans for non-service-connected treatments, as they were not
    classified by these particular companies as ``in network'' or as a
    participant provider. Secretary McDonald, could you comment on the
    importance of addressing this issue, the approximate amount of
    recovered revenue and the benefit that it would bring to VA and
    veterans that seek these kinds of treatments through the VA?
        Response. Currently, if an agreement is not in place with a third
    party payer, VA is seen as an out-of-network provider and therefore,
    benefits are either limited or non-existent. This proposal would
    prevent a health insurer or third party payer from denying or reducing
    payment, absent an existing agreement between VA and any health
    maintenance organization, competitive medical plan, health care
    prepayment plan, preferred provider organization, or other similar
    plan, based on the grounds that VA is not a participating provider.
    Providing this authority would increase collections from third party
    payers. The increased revenue to individual VA medical centers could
    then be used to continue improving the Veteran experience.

                                    ------

        Chairman Isakson. Our second panel is welcome to come
    forward. [Pause.]
        Chairman Isakson. I would like to welcome our VSOs for our
    second panel today. First, we will hear from Louis Celli, the
    Director of Veterans Affairs and Rehabilitation at The American
    Legion.
        Carlos Fuentes, Senior Legislative Associate at Veterans of
    Foreign Wars.
        And, Adrian Atizado, Assistant National Legislative
    Director for Disabled American Veterans.
        We are so glad to have you here today. Welcome to all of
    you.
        We would ask you to try to hold your testimony to 5
    minutes. All preprinted statements will be put in the record
    automatically.
        Mr. Celli, you are recognized.

      STATEMENT OF LOUIS CELLI, DIRECTOR OF VETERANS AFFAIRS AND
                  REHABILITATION, THE AMERICAN LEGION

        Mr. Celli. It is an exciting time right now as we work
    toward bettering the resources and services that veterans in
    this country have earned.
        Chairman Isakson, Ranking Member Blumenthal, and Members of
    the Committee, on behalf of National Commander Dale Barnett and
    the over two million veterans that make up The American Legion,
    we welcome this opportunity to comment on bills and discuss VA
    oversight, access to health care, and the structure of claims
    and appeals management.
        Lately, this has been a fast-moving train. In the last 2
    weeks alone, we have furthered efforts to make improvements and
    advancements for veterans that seek access to high quality
    health care as well as help define necessary improvements that
    need to be made in the area of veterans disability claims and
    appeals.
        The bills presented today underscore a commitment and
    dedication that this Committee has shown to ensure that
    veterans receive care and attention that they have earned, and
    The American Legion is proud to be working closely with our
    Congress as well as the Department of Veterans Affairs in order
    to streamline many of the services that have not been updated
    in close to 50 years.
        In our written testimony, we look at Senate Bill 2633 and
    2646, and we highlight the portions of each The American Legion
    believes will make the greatest impact on veterans who use and
    enjoy VA health care. In our testimony, you will see that we
    reviewed eligibility, network structure, prompt payment
    requirements, and emergency and urgent care reimbursement. We
    also acknowledge that both bills provide the necessary funding
    in order to support the programs.
        One major point of discussion has been the concept of the
    tiered network. Some are concerned that VA lacks the
    infrastructure or expertise to support building a provider
    network organically while others criticize the existing TPA
    model as dysfunctional.
        This is a complicated proposal, and The American Legion
    cannot attest to VA's capabilities one way or the other that
    would support or deny success, but we can say that if VA is
    capable of building such a network as they propose it will be
    more cost effective and support VA's mission to be in a better
    position to provide better and more seamless health care
    experiences for veterans. Based on our experience with ARCH and
    PC3 and community-contracted care, in many ways, they are
    already doing it.
        Last week, The American Legion agreed to be sequestered
    away in a room with no windows over at the Board of Veterans'
    Appeals for three solid days to help propose streamlining the
    appeals process. It was painful. A good portion of the initial
    time was spent developing trust, not only from the VSOs' and
    advocates' standpoint, but also from the VA.
        While we did not cure the ills of the world in 3 days, what
    we were able to accomplish was everyone's ability to just get
    it all out onto the table and deal with what was there. By the
    end of the 3-day session, the group was able to agree on a path
    to move forward, a basic framework for what an improved program
    might look like, and a fundamental understanding that there is
    no better opportunity for positive change to take place than
    for the betterment of veterans in the claims appeals process
    than now.
        Some of the participants have continued to work together to
    this end and are meeting to discuss this framework tomorrow,
    and the group as a whole has agreed to meet again on Thursday.
        Again, it is an exciting time right now as we all work
    together to improve the programs that serve and support our
    veterans. This Committee has shown that we have your support.
    The House Veterans' Affairs Committee has pledged their support
    for change. The Veterans Service Organizations have committed
    to working with Congress and VA to improve our programs. And,
    VA has committed to Congress and the VSOs to work
    comprehensively together to design and support change. And, the
    President of the United States has charged us all with making
    it happen.
        Senators, The American Legion is actively supported by 10
    percent of all living American veterans, and that does not take
    into account our family members, the Auxiliary, and the Sons of
    The American Legion. As clearly stated by National Commander
    Dale Barnett just last month during our congressional
    presentation, the word of the day is ``accountability.''
        Finally, on the proposal that would allow VA to convert
    certain senior executive positions to another hiring authority
    within the U.S. Code, specifically Title 38, The American
    Legion supports any measure that will allow greater hiring
    flexibility, greater oversight and authority, and
    simultaneously empower VA to be more competitive in the areas
    of the country that are difficult to recruit in.
        We caution that any program changes of this magnitude need
    to be clear on issues of oversight, authority, and
    accountability, and specifically review and tailor things like
    the appellate authority and timeliness to take into
    consideration VA's unique mission and honored customer base
    before making any final decisions.
        That is all I have, and thank you.
        [The prepared statement of Mr. Celli follows:]
    Prepared Statement of Louis J. Celli, Jr., Director, National Veterans
            Affairs and Rehabilitation Division, The American Legion
        Chairman Isakson, Ranking Member Blumenthal, and distinguished
    Members of the Committee; On behalf of our National Commander, Dale
    Barnett, and the over 2 million members of The American Legion, we
    thank you for this opportunity to testify regarding The American
    Legion's positions on pending legislation before this Committee. We
    appreciate the Committee focusing on these critical issues that will
    affect veterans and their families.
             burr--s. 2646: veterans choice improvement act of 2016
    To amend title 38, United States Code, to establish the Veterans Choice
            Program of the Department of Veterans Affairs to improve health
            care provided to veterans by the Department, and for other
            purposes.
    tester--s. 2633: improving veterans access to care in the community act
    To improve the ability of the Secretary of Veterans Affairs to provide
            health care to veterans through non-Department health care
            providers.
                                   background
        The American Legion believes in a strong, robust veterans'
    healthcare system that is designed to treat the unique needs of those
    men and women who have served their country. However, even in the best
    of circumstances there are situations where the system cannot keep up
    with the health care needs of the growing veteran population requiring
    VA services, and the veteran must seek care in the community. Rather
    than treating this situation as an afterthought, an add-on to the
    existing system, The American Legion has called for the Department of
    Veterans Affairs (VA) to ``develop a well-defined and consistent non-VA
    care coordination program, policy and procedure that includes a patient
    centered care strategy which takes veterans' unique medical injuries
    and illnesses as well as their travel and distance into account.'' \1\
    ---------------------------------------------------------------------------
        \1\ Resolution No. 46 (2012): Department of Veterans Affairs (VA)
    Non-VA Care Programs
    ---------------------------------------------------------------------------
        Over the years, VA has implemented a number of non-VA care programs
    to manage veterans' health care when such care is not available at a VA
    facility, could not be provided in a timely manner, or is more cost
    effective through contracting vehicles. Programs such as Fee-Basis,
    Project Access Received Closer to Home (ARCH), Patient-Centered
    Community Care (PC3), and the Veterans Choice Program (VCP) were
    enacted by Congress to ensure eligible veterans could be referred
    outside the VA for needed, and timely, health care services.
        Congress created the VCP after learning in 2014 that VA facilities
    were falsifying appointment logs to disguise delays in patient care.
    However, it quickly became apparent that layering yet another program
    on top of the numerous existing non-VA care programs, each with their
    own unique set of requirements, resulted in a complex and confusing
    landscape for veterans and community providers, as well as the VA
    employees that serve and support them.
        Therefore, Congress passed the Surface Transportation and Veterans
    Health Care Choice Improvement Act of 2015 (VA Budget and Choice
    Improvement Act) in July 2015 after VA sought the opportunity to
    consolidate its multiple care in the community authorities and
    programs. This legislation required VA to develop a plan to consolidate
    existing community care programs.
        On October 30, 2015, VA delivered to Congress the department's Plan
    to Consolidate Community Care Programs, its vision for the future
    outlining improvements for how VA will deliver health care to veterans.
    The plan seeks to consolidate and streamline existing community care
    programs into an integrated care delivery system and enhance the way VA
    partners with other Federal health care providers, academic affiliates
    and community providers. It promises to simplify community care and
    gives more veterans access to the best care anywhere through a high
    performing network that keeps veterans at the center of care.
        Generally, The American Legion supports the plan to consolidate
    VA's multiple and disparate purchased care programs into one New
    Veterans Choice Program (New VCP). We believe it has the potential to
    improve and expand veterans' access to health care.
                               burr/tester bills
        The American Legion commends Senators' Burr and Tester for
    sponsoring legislation to fix the Choice program and codify the New VCP
    and we commend the Committee for expeditiously considering these bills.
    Both bills address deficiencies in current law, as well as provide a
    comprehensive framework and foundation for consolidating the purchase
    of care in the community in those circumstances where it is not readily
    available from VA through contracts or existing sharing agreements.
        There is a great degree of overlap and a lot to like in these
    bills. We look forward to a final compromise bill which incorporates
    the best of both. Where there are differences, The American Legion will
    highlight below what we would like to see in the final legislative
    package.
    Veteran Eligibility
        Eligibility requirements are almost the same in both bills.
    However, the Tester bill has an additional requirement that should be
    kept, i.e., The veteran has a primary care provider under section 1705A
    that is not a health care provider of VA.
    Network Structure
        The American Legion supports Tester's language allowing VA to set
    up tiered networks. As we understand it, this structure is meant to
    empower veterans to make informed choices, provide access to the
    highest possible quality care by identifying the best performing
    providers in the community, and enabling better coordination of care
    for better outcomes. However, it does not dictate how veterans will use
    the network.
        The American Legion wants to make clear, though, that we do not
    support a wholesale option to circumvent the VA infrastructure or
    healthcare system entirely.
    Prompt Pay
        From the Burr bill, we support the provision mandating that all
    claims be made electronically by January 1, 2019. From the Tester bill,
    an eligible provider should submit claims to Secretary within 180 days
    of furnishing care or services.
    Episode of Care
        We support the Burr provision ensuring that an eligible veteran
    receives such care and services through the completion of the episode
    of care, including all specialty and ancillary services deemed
    necessary as part of the treatment recommended in the course of such
    care and services.
    Funding for Program
        The American Legion is pleased to see that both bills call for
    advanced appropriations for VA's Care in the Community beginning in
    Fiscal Year 17.\2\
    ---------------------------------------------------------------------------
        \2\ Resolution No. 16: Assured Funding for VA Medical Care
    ---------------------------------------------------------------------------
    Emergency/Urgent Treatment
        The American Legion supports the inclusion of the Tester provision
    requiring VA to reimburse veterans for the reasonable value of
    emergency treatment or urgent care furnished in a non-Department
    facility in a final bill.\3\
    ---------------------------------------------------------------------------
        \3\ Resolution No. 100: Non-Department of Veterans Affairs
    Emergency Care
    ---------------------------------------------------------------------------
    Conclusion
        Ensuring veterans have access to appropriate, timely, high-quality
    care is critical. VA needs to overhaul its outside care reimbursement
    programs, consolidating them into a more efficient bureaucracy able to
    dynamically interact with the network of Federal, public, and private
    providers that are to supplement VA direct provided care.
        The American Legion believes that together we can accomplish
    legislative changes to streamline Care in the Community programs before
    the end of this session of Congress. We can't let another year slip
    away. Our veterans deserve the same sense of urgency now that Congress
    has shown numerous times since the VA scandal first erupted in 2014.
                      s. 2473: express appeals act of 2016
    To direct the Secretary of Veterans Affairs to carry out a pilot
            program to provide veterans the option of using an alternative
            appeals process to more quickly determine claims for disability
            compensation.
        This act, while well-intentioned, may ultimately have a negative
    impact upon veterans. Under the current proposal, veterans will have
    the option to elect to pursue a claim in a ``fully developed appeal
    (FDA)'' format. Through electing to have a claim adjudicated via FDA, a
    veteran opts to not submit any additional evidence for the record
    following the submission of the Notice of Disagreement (NOD).
        The Express Appeals Act is designed to expedite the appellate
    process within VA. With a growing inventory of claims, VA and veterans
    service organizations (VSOs) have been working to discover a program
    that reduces the amount of time that veterans wait to have an appealed
    claim adjudicated.
        In order for a veteran to receive benefits for a service connection
    condition, the following criteria must be met:

         A current diagnosis (exception: Gulf War Illness)
         An incident in service
         A nexus statement linking the current condition to either
    service or a previously service-connected condition

        Unfortunately, VA adjudication letters are often incomplete and
    unclear to veterans. They are uncertain why they were denied benefits;
    more importantly, they often do not know what information is needed to
    successfully overturn the previous decision by the VA regional office.
    Through passage of H.R. 732, VA will be compelled to find the most
    expeditious means to adjudicate an appealed claim. The American Legion
    strongly supports increased transparency in the adjudication of
    claims.\4\
    ---------------------------------------------------------------------------
        \4\ Resolution No. 128: Increase the Transparency of the Veterans
    Benefits Administration's Claims Processing
    ---------------------------------------------------------------------------
        The current bill could allow the following to occur:

         Veteran receives decision denying the benefit with little
    explanation regarding how VA arrived at its denial
         Veteran elects to appeal via FDA
         Veteran is denied the benefit sought at the BVA due to not
    knowing what information to submit

        While decisions at the VA regional offices are lacking regarding
    how a claim is decided, Board of Veterans Appeal (BVA) decisions are
    lengthy and filled with language common in the legal profession,
    however, it is confusing to veterans who have no legal background.
    Ultimately, a veteran could file a claim, have it denied at a VA
    regional office, utilize the appellate process and have a claim
    adjudicated at BVA meanwhile having little or no understanding of why
    the claim was denied.
        The American Legion believes the FDA program is a program that with
    some adjustments could hold value. Discussions between The American
    Legion and VA have occurred regarding the adequacy of the adjudication
    notification letters. VA Secretary Robert McDonald has agreed to
    formulate a group of concerned veteran's service organizations to draft
    a letter to create an adjudication notification that properly advises
    veterans of the information needed to gain service connection for the
    condition.
        The American Legion is working closely with VA and other VSOs to
    develop an appeals process that is expeditious meanwhile not
    shortcutting veterans' due process rights. The American Legion could
    support this legislation provided the working group makes helpful and
    productive changes to the notification letter process.
        The American Legion could support this legislation, provided it
    follows the caveats mentioned above.
                                discussion draft
    On title 38, United States Code, appointment, compensation, performance
            management, and accountability system for senior executive
            leaders in the Department of Veterans Affairs.
        The American Legion supports any mechanism that ensures added
    accountability while providing VA the freedom to hire the best
    qualified medical and administrative staff. While we are excited and
    intrigued about VA's recommendation to convert the Senior Executive
    Service positions to an alternate hiring authority contained within the
    United States Code, we remain apprehensive until we are able to fully
    evaluate how the new program would be implemented in this special
    circumstance. The ability to convert positions, promote, demote,
    expedited hiring, as well as removal from government service
    capabilities need to be clearly outlined, to include an appellate
    process that is fair and equitable to the government employee, the
    veteran seeking quality services, and the American taxpayer. The
    American Legion looks forward to working closely with this Committee
    and VA to review this proposed plan.
                                   conclusion
        As always, The American Legion thanks this Committee for the
    opportunity to explain the position of the over 2 million veteran
    members of this organization. For additional information regarding this
    testimony, please contact Mr. Warren J. Goldstein at The American
    Legion's Legislative Division at (202) 861-2700 or
    wgoldstein@legion.org.

        Chairman Isakson. Thank you very much, Mr. Celli, and
    thanks for all the input. I held up the poster that you all did
    when you were referring to the meetings at the VA before. They
    were graphically very pretty, but they also obviously showed a
    road map we need to follow to get to a solution on disability
    claims. I appreciate The Legion's willingness and ability to do
    that.
        Mr. Fuentes.

      STATEMENT OF CARLOS FUENTES, SENIOR LEGISLATIVE ASSOCIATE,
                        VETERANS OF FOREIGN WARS

        Mr. Fuentes. Mr. Chairman, on behalf of the men and women
    of the VFW and our auxiliaries, I would like to thank you for
    the opportunity to present our views on today's legislation. I
    would also like to thank you for considering legislation that
    would supplement, not supplant, the excellent health care
    veterans receive from the VA.
        We are pleased to see that the Improving Veterans Access to
    Care in the Community Act consolidates the best aspects of the
    Choice Program and other Community Care programs. This would
    ensure VA employees, private sector providers, and veterans are
    able to understand and easily navigate VA Community Care.
        The VFW has also heard from too many veterans who live more
    than 40 miles from a VA primary care provider but are required
    to travel further for Choice Program care than they would for
    VA care. That is why the VFW supports Section 302, which would
    improve how the 40-mile rule is applied.
        Instead of measuring 40 miles from a VA medical facility,
    this legislation would make veterans the center of the 40-mile
    rule. Doing so would require VA to properly size its networks
    to ensure veterans have primary care providers within 40 miles
    of their home.
        The VFW continues to hear from veterans that VA refuses to
    pay the cost of their emergency room visits. This is why the
    VFW strongly supports expansion of emergency and urgent care.
    However, this legislation would require veterans to be active
    users of VA care. This barrier to access could cause an undue
    hardship for veterans who are enrolled in VA health care but
    have been denied access due to wait times.
        VA is aware of this problem and has requested authority to
    make an exemption to the 24-month rule for veterans who find
    themselves in this situation. The VFW agrees with the VA, and
    this barrier must be eliminated for veterans who are not able
    to receive VA health care because of long appointment wait
    times.
        The VFW supports many of the modifications that the
    Veterans Choice Improvement Act of 2016 would make to VA
    Community Care, such as ensuring a veteran is able to receive
    follow-up care to complete an episode of care without having to
    cut through bureaucratic red tape. However, this legislation
    would retain the Choice Program's 40-mile standard for
    determining when veterans access Community Care. The VFW
    recommends this Committee adopt Section 302 of Senator Tester's
    bill in lieu of the current 40-mile standard to ensure the 40-
    mile rule is veteran-centric rather than VA-centric.
        Another lesson learned from the Choice Program is that VA
    provides health care specialties that do not have Medicare
    rates, such as gynecological care. That is why we recommend the
    Committee authorize VA to establish a fee schedule for services
    it provides that are not covered under Medicare.
        Section 301 would expedite the process for adjudicating
    disability claims for veterans exposed to contaminated water at
    Camp Lejeune. VA recently announced that it will classify eight
    medical afflictions as presumptive disabilities for these
    veterans.
        However, it is unacceptable that VA would require Camp
    Lejeune veterans to wait an entire year before being able to
    submit claims. The VFW recommends this Committee require VA to
    issue interim final regulations within 90 days of establishing
    a presumptive for service connection and start accepting claims
    the day the interim final regulations are published.
        The VFW is pleased to see the Express Appeals Act includes
    reporting requirements on the efforts of the Secretary to
    provide more clear rating decisions and improve disability
    rating notification letters. However, the VFW cannot fully
    support the fully developed appeals initiative until veterans
    have sufficient information to understand why VA denied their
    claims. Simply put, without adequate notice, there can be no
    knowledgeable waiver.
        The VFW strongly supports the hiring retention provisions
    of the discussion draft proposal regarding VA SES employees.
    The VFW strongly believes that employee accountability is
    critical to correct the past problems at VA and restoring
    veterans' trust and confidence.
        However, the VFW does not believe that a panel of SES
    employees would effectively determine the veracity of adverse
    actions being considered against their peers, especially if the
    Secretary is the final arbiter of that decision. While the VFW
    has full faith and confidence that Secretary McDonald will
    strengthen rather than erode VA's SES Core, the VFW does not
    want future political appointees to politicize VA's career
    civil servants.
        Mr. Chairman, this concludes my testimony. I am happy to
    answer any questions you or the Members of the Committee may
    have.
        [The prepared statement of Mr. Fuentes follows:]
      Prepared Statement of Carlos Fuentes, Senior Legislative Associate,
     National Legislative Service, Veterans of Foreign Wars of The United
                                     States
        Chairman Isakson, Ranking Member Blumenthal and Members of the
    Committee, on behalf of the men and women of the Veterans of Foreign
    Wars of the United States (VFW) and our Auxiliaries, I would like to
    thank you for the opportunity to testify on today's pending
    legislation.
        The VFW strongly believes that veterans have earned and deserve
    timely access to high quality, comprehensive, and veteran-centric
    health care. In most instances VA care is the best and preferred
    option, but we acknowledge that VA cannot provide timely access to all
    services to all veterans in all locations at all times; that is why VA
    must leverage private sector providers and other public health care
    systems to expand viable health care options for veterans.
        Before discussing the individual bills being considered by the
    Committee, I would like to first thank the Members of this Committee,
    specifically Senators Tester, Moran, Blumenthal, Boozman, Brown, and
    Tillis for sponsoring or cosponsoring legislation being considered
    today that would improve how veterans access community care options and
    ensure the private sector supplements, not supplants, the excellent
    health care veterans receive from VA health care professionals. The VFW
    truly believes these proposals would lead to better health care
    outcomes and would build on VA's holistic approach to medicine. The VFW
    is also pleased both community care bills being considered today are
    closely aligned with recommendations the VFW has made to improve VA
    community care.
          s. 2633, improving veterans access to care in community act
        This legislation would, among other things, consolidate VA's
    community care authorities, expand VA's authority to provide emergency
    room and urgent care, and improve VA community care. The VFW supports
    this legislation and would like to offer suggestions to strengthen it.
        The Veterans Choice Program has faced a number of challenges since
    it was implemented in November 2014. The VFW has made a concerted
    effort to evaluate what aspects of the Veterans Choice Program have
    worked and identify common sense solutions to aspects of the program
    that have not worked as intended. That is why we are pleased to see
    that this legislation would incorporate many of the lessons learned
    from the Veterans Choice Program and other community care programs,
    such as consolidating all of VA's community care authorities to ensure
    veterans, VA employees and private sector providers understand how to
    navigate VA's community care program.
        Similar to the consolidation plan VA was required to submit to
    Congress, this legislation would move away from federally mandated
    standards to determine how long a veteran must wait for care before
    being offered community care options. This legislation would ensure
    veterans receive community care options when clinically necessary,
    regardless of whether the care is delivered by VA or community care
    providers.
        The VFW has heard from too many veterans who live more than 40
    miles from a VA primary care provider, but are required to travel
    farther for community care than they would for VA care, because the
    Choice network does not have viable options within 40 miles. That is
    why the VFW supports section 302 of this legislation, which would
    improve how the 40-mile rule is applied.
        Instead of placing a 40-mile bubble around VA medical facilities,
    this legislation would make veterans the center of the 40-mile rule.
    Doing so would require VA to ensure a veteran who lives more than 40
    miles from a VA primary care provider is assigned to a community
    primary care provider that is within 40 miles of his or her home. To
    avoid confusion on how the 40-mile rule is applied and when veterans
    are eligible for the Veterans Choice Program, the VFW recommends that
    the Committee amend this legislation by striking the original 40-mile
    rule in favor of section 301. The VFW does not believe that this change
    would impact how many veterans are eligible for the Veterans Choice
    Program. However, VA would be required to ensure a veteran who is
    eligible for community care is offered viable community primary care
    options within 40-miles of the veteran's home.
        In 2010, VA implemented its Patient Aligned Care Team initiative to
    improve VA primary care. This holistic, patient-centered and integrated
    approach to delivering health care ensures that a veteran's primary
    care team is able to track the progress and evaluate the outcomes of
    all the care the veteran receives. As a result, the quality of care
    veterans receive from VA has improved. To ensure the benefits of VA's
    patient-centered medical home model are not eroded, the VFW strongly
    believes that VA must remain the coordinator and guarantor of care
    veterans receive through VA, regardless of where that care is
    delivered. That is why the VFW supports the establishment of procedures
    for VA to coordinate the care veterans receive from community care
    providers and ensure VA receives the health records from these episodes
    of care.
        The VFW continues to hear from veterans that VA refuses to pay the
    cost of their emergency room visits which may have saved their lives or
    was their only option for receiving the urgent care they needed. That
    is why the VFW supports this legislation's expansion of emergency and
    urgent community care. Specifically, the VFW is pleased to see that
    this legislation would ensure copayments associated with emergency and
    urgent community care would be equal to the copayments paid by veterans
    at VA medical facilities. This would ensure veterans are not punished
    for using community care.
        However, this legislation would require veterans to have received
    VA care with the past 24-months in order to be eligible to receive
    reimbursement for the cost of community emergency and urgent care,
    which is similar to the eligibly requirements under VA's current
    emergency care reimbursement program. This barrier to access has caused
    undue hardship on veterans who enroll in VA health care, but have been
    denied access due to wait times, and subsequently require emergency
    services. VA is aware of this problem and has requested the authority
    to make an exemption to the 24-month requirement for veterans who find
    themselves in this situation. The VFW recommends that the Committee
    amend this legislation to ensure veterans who face long appointment
    wait times are not precluded from seeking the emergent and urgent care
    they need.
        The VFW is also glad to see that this legislation would expand VA's
    authority to quickly provide community care options by establishing
    veterans care agreements. These agreements are a necessary tool to
    allow VA to meet the wide-ranging and unique health care needs of
    veterans. However, it is important that these contracts be used as last
    resort. Doing so would ensure veteran care agreements do not impede the
    success of this legislation's consolidated community care program. That
    is why the VFW supports this legislation's requirement that VA exhaust
    all other avenues of furnishing community care before using veteran
    care agreements.
                s. 2646, veterans choice improvement act of 2016
        This legislation would, among other things, expand the Veterans
    Choice Program, improve how VA reimburses emergency medical
    transportation costs and expedite Camp Lejeune disability compensation
    claims. The VFW supports sections 102 through 205. The VFW supports the
    intent of sections 101 and 301 and would like to offer suggestions to
    improve them.
        Section 101 would make a number of improvements to the Veterans
    Choice program, to include ensuring a veteran's continuation of care is
    not interrupted by bureaucratic rules. This legislation would allow
    veterans who receive authorized care from a community care provider to
    continue to see their community care provider or another community care
    provider to complete an episode of care, or enter into follow-up
    treatment without the need to request additional authorization.
        The VFW has heard from too many veterans that the community care
    provider they choose to use through the Veterans Choice Program has
    billed them for the cost of their care. The most common billing
    complaint occurs when a veteran is authorized to use the Veterans
    Choice Program for an episode of care that requires follow-up care that
    is outside of the scope of the original authorization. In these cases,
    the veteran's doctor is required to submit a request for additional
    services, and the program's contractors must work with VA to get the
    additional services authorized before the care can be delivered. This
    is where the program often fails veterans.
        When the care is not authorized before a veteran arrives at his or
    her follow-up appointment, the veteran is required to either
    reschedule, assume liability for the care, or all too often, the
    provider and the veteran are unaware of this requirement, so the
    veteran is left with the bill. This legislation would remove this
    barrier by authorizing veterans to complete their episode of care or
    follow-on care without specific authorization.
        This legislation would also require veterans to provide VA with
    their health insurance information when receiving VA health care. The
    VFW thanks Senator Burr for ensuring VA does not withhold care from
    veterans who may not know their insurance status has changed or are
    unable to disclose health insurance information. To ensure VA medical
    collections are maximized, the VFW urges VA to improve its medical
    billing process. The VFW also recommends that the Committee consider
    authorizing VA to verify whether a veteran has health insurance
    coverage by entering into a data sharing agreement with the Internal
    Revenue Service (IRS), who receives veterans' health insurance
    information through annual IRS health coverage exemptions.
        As discussed above, the VFW has made a concerted effort to evaluate
    the Veterans Choice Program and determine whether eligibility
    requirements are aligned with veterans' options, perceptions and
    expectations when receiving VA health care. In conducting site visits
    to VA medical facilities around the country, the VFW found that VA
    community care staff were unable to authorize veterans to use the
    Veterans Choice Program when their VA medical facility was unable to
    provide the service veterans need. Thus, veterans who were not eligible
    for the Veterans Choice Program under the 40-mile rule were unable to
    receive Choice care because the facility was unable to schedule an
    appointment that would trigger wait-time eligibility. To correct this,
    VA has requested the authority to offer veterans the opportunity to use
    the program when a VA medical facility is unable to provide the service
    they need. The VFW recommends the Committee amend this legislation to
    include this change.
        The VFW is glad to see that this legislation includes improvements
    to the eligibility criteria for the Veterans Choice Program, such as
    the Secretary's authority to determine that there is a compelling
    reason for a veteran to use community care in lieu of VA care. However,
    the VFW does not agree with the legislation's 40-mile standard to
    determine when veterans are afforded the opportunity to access
    community care. The VFW believes that the distance a veteran is
    required to travel for health care should be determined by the veteran
    in consultation with his or her health care provider. However, if the
    Committee intends to continue to use 40 miles as a standard to measure
    geographic accessibility, the VFW recommends the Committee adopt
    section 302 of S. 2633 to ensure the 40-mile rule is veteran-centric
    rather than VA centric. Doing so would ensure VA affords veterans the
    opportunity to receive veteran-centric and coordinated community care
    within 40-mile of their home.
        Another lesson learned from the Veterans Choice Program is that VA
    provides health specialties that do not have a Medicare rate, including
    obstetrics and gynecological care. While the VFW understands the need
    to set limits on the amount VA is authorized to reimburse community
    care providers, the VFW believes that a consolidated community care
    program should authorize VA to provide community care options for every
    health care specialty it delivers. That is why we recommend the
    Committee amend this legislation authorizing VA to establish a fee
    schedule for services it provides that do not have a Medicare rate.
        Section 301 would require VA to begin processing disability claims
    within 90 days of establishing a condition as being presumptive to Camp
    Lejeune toxic water exposure. VA recently announced that it will
    classify eight medical afflictions as presumptive disabilities for
    purposes of adjudicating compensation benefits for veterans who were
    exposed to contaminated water at Camp Lejeune between 1953 and 1987.
        However, VA estimates that veterans will have to wait a year from
    when VA announced its decision before VA regional offices can begin
    adjudicating these claims. While the VFW agrees that a year is too
    long, we do not believe 90 days gives VA enough time to process
    regulations and start compensating veterans for such conditions. The
    VFW recommends that the Committee amend this bill to require VA to
    issue interim final regulations within 90 days of establishing a
    presumption of service connection and start accepting presumptive
    claims the day the interim final regulations are published.
                      s. 2473, express appeals act of 2016
        This legislation would direct VA to carry out a five-year pilot
    program to provide veterans with the option to appeal claims for
    disability compensation through an expedited process. Appeals filed
    under this program would be known as Fully Developed Appeals (FDA).
    While the VFW supports the concept of the FDA initiative, we remain
    concerned that notification letters currently issued by the Veterans
    Benefits Administration (VBA) contain insufficient information to allow
    veterans to make educated decisions on whether to participate in the
    pilot or file through the traditional appeals process.
        Under the Express Appeals Act, the FDA initiative would give the
    claimant the choice to waive receipt of a Statement of the Case,
    Decision Review Officer review, a hearing before a Board of Veterans
    Appeals (BVA) panel and other developmental and review opportunities
    currently existing in the VA appeals process. The claimant, at the
    Notice of Disagreement stage, would have a one-time opportunity to
    submit additional evidence and argument. In exchange for this waiver,
    the appeal would bypass all regional office activity and move directly
    to the BVA, where it would be placed on a separate docket to be
    considered in the order it was received. This approach has the
    advantage of bypassing nearly three years of delay at the regional
    office.
        However, it must be recognized that a speedy decision by the BVA
    may not be advantageous to all claimants. During that three-year wait
    at the regional office, claimants have an unlimited opportunity to
    submit additional evidence, undergo new treatment and examinations,
    produce fresh argument and in other ways help perfect the record prior
    to BVA review. Under law favorable to veterans, the record remains open
    and subject to amendment almost up to the point of decision by the BVA.
    In addition, the BVA has unrestricted authority to remand appeals to
    correct deficiencies in development by VA and to acquire new evidence.
        To be successful, the FDA initiative must be an avenue for veterans
    who truly do not need to submit additional evidence, and not simply an
    expedited path to denial for those who do. The VFW strongly believes
    that improving the current notification letter is the lynchpin to
    ensure this happens. Veterans and other claimants must have sufficient
    information to understand what VA decided, what specific evidence was
    used, how it was weighed and the reasons (not just conclusions) for the
    decision. Simply put, without adequate notice, there can be no
    knowledgeable waiver.
        While the VFW is pleased to see that S. 2473 includes reporting
    requirements on ``the efforts of the Secretary to provide clear rating
    decisions and improve disability rating notification letters * * *'' we
    are still concerned that VA has not done enough to improve the
    notification letters.
        In recent years, VBA has significantly restricted the amount of
    information it provides in decision letters to claimants. Starting with
    the Simplified Notification Letter initiative by VBA in 2012, VA worked
    to reduce most notice letters to pattern words and phrases instead of
    original claims specific content. In testimony before the House
    Veterans' Affairs Committee at the time, the VFW protested this move in
    strong terms. While VA made cosmetic changes, the Simplified
    Notification Letter and its progeny remain largely in place.
        The VFW continues to believe that most current notice letters are
    deficient and certainly inadequate for the purposes of the FDA
    initiative. In a Simplified Notification Letter, the ``summary of
    evidence'' is simply a list of documents, such as treatment records.
    The ``reasons for decision'' in the notice letters are almost always
    simple conclusions that lack an adequate explanation of the evidence
    considered, how it was weighed and reasons for the decision. VA must
    improve them in order to provide information which allows claimants and
    their representatives to understand the evidence used in making the
    decision, an explanation of the analysis, and reasons and bases for the
    decision. Without this information, a claimant does not have the tools
    necessary to decide what evidence was used, how it was analyzed and why
    VA made its decision, and therefore cannot knowledgeably waive his or
    her rights.
        With an improved disability rating notification letter, the VFW
    believes that the FDA initiative would be an effective tool to help
    reduce the backlog of 444,500 pending appeals in a timely and accurate
    manner, while protecting the due process rights of veterans and other
    claimants.
        discussion draft on title 38, united states code, appointment,
      compensation, performance management, and accountability system for
         senior executive leaders in the department of veterans affairs
        This discussion draft would move VA's Senior Executive Service
    (SES) corps from title 5, United States Code (U.S.C.) to title 38,
    U.S.C., and expand VA hiring, compensation and accountability
    authorities. The VFW supports the discussion draft's intent and has a
    suggestion to improve it.
        The VFW agrees that the current hiring and compensation structure
    for SES employees puts VA at a disadvantage when recruiting and
    retaining the best and brightest executives. That is why the VFW
    strongly supports expanding VA's authorities to hire SES employees and
    pay them salaries that are more competitive to their private-sector
    counterparts.
        The VFW strongly believes that employee accountability is critical
    to correcting past problems at VA and restoring the trust of the
    veterans they serve. This includes authorizing the Secretary of
    Veterans Affairs to properly discipline VA executives who deliberately
    delay or withhold care from a veteran. While the overwhelming majority
    of VA executives are excellent leaders who deserve to be praised for
    their tireless work to improve the lives of our Nation's veterans,
    those who commit malfeasance should be held accountable for their
    actions.
        This discussion draft proposes establishing disciplinary appeals
    boards, made up of SES employees, to review disciplinary actions
    against VA SES employees. While these types of boards are relatively
    effective in determining the professional conduct or competence of VA
    health care professionals, which this proposal is modeled after, the
    VFW does not believe a panel of SES employees would effectively
    determine whether adverse actions being considered against their peers
    would effectively determine the veracity of such adverse actions----
    especially if the Secretary is the final arbiter of the decision.
        According to a Congressional Research Service report entitled ``The
    Senior Executive Service: Background and Options for Reform'' the SES
    corps was established to serve as ``a link between political appointees
    who run agencies and the career government workers in the agencies.''
    To the VFW, this means that SES employees were not intended to be
    politicized. The VFW believes that the establishment of peer-review
    boards for SES employees without having an independent third party
    entity serve as the final arbitrator of adverse actions would result in
    SES employees serving at the whims of political appointees. While the
    VFW has full faith and confidence that Secretary McDonald would
    strengthen rather than erode VA's SES corps, the VFW would not want
    future political appointees to be able to politicize VA's career civil
    servants.
        However, the VFW acknowledges that the Merit System Protection
    Board may not be the best arbiter of adverse actions under title 38
    authority. That is why the VFW urges the Committee to consider
    establishing a new independent agency to review appeals of major
    adverse actions against title 38 employees.

        Mr. Chairman, this concludes my testimony and I will be happy to
    answer any questions you or the Committee members may have.

        Chairman Isakson. Thank you, Mr. Fuentes.
        Mr. Atizado.

      STATEMENT OF ADRIAN ATIZADO, ASSISTANT NATIONAL LEGISLATIVE
                  DIRECTOR, DISABLED AMERICAN VETERANS

        Mr. Atizado. Thank you, Mr. Chairman. First of all, I would
    like to thank you for inviting DAV to testify at this
    legislative hearing.
        As you know, DAV believes that by putting their lives on
    the line in defense of this country and our freedom that
    veterans have earned and deserve timely access to effective
    benefits and services, which these bills under consideration
    today do intend to facilitate.
        DAV thanks the sponsors and cosponsors of the three bills
    under consideration, particularly Senator Burr, Senators Tester
    and Sullivan, and their staff, and of course, your leadership,
    Mr. Chairman, and your dedicated committee staff, to working
    with us on these measures.
        It is well documented in numerous studies of the VA health
    care system and the quality of care it delivers to millions of
    veterans. While VA has many challenges, some of them quite
    serious, it somehow continues to outperform the U.S. health
    care sector on nearly every metric of quality. This unique
    accomplishment in the face of the access crisis, we believe,
    must not be compromised.
        We are pleased to support both S. 2646 and provisions of
    S. 2633 which both contain some of our recommendations to
    reform the VA health care system while preserving and
    strengthening the VA for the future. For the sake of brevity, I
    will only speak to a few key items out of several that DAV
    believes the Committee should include in the omnibus measure it
    is working to move.
        We believe the health care network contemplated in S. 2633
    would most likely yield a tailored network that optimizes the
    strength of all health care resources, seamlessly integrate
    Community Care into the VA health care system, and allow VA to
    best meet the expectations of veteran patients at the most
    local level.
        However, we also believe that 2646 offers an important
    provision that prohibits VA from requiring veterans to receive
    care from a specific entity in a specific tier. This, we
    believe, is necessary because we are strongly urging this
    Committee to ensure that the current arrangement under the
    Choice program, which has effectively dismantled care
    coordination in many places, does not become a permanent
    fixture in the future.
        See, this disconnect to getting Care in the Community is
    the single greatest source of complaints and frustration among
    veterans. VA must be made the coordinator and principal
    provider of care, and that responsibility must not be given to
    VA lightly.
        Now in addition to the authority to reform how veterans
    access Care in the Community, DAV urges the Committee to ensure
    any omnibus measure includes the authority for VA to use
    provider agreements. There is no doubt that as we discuss the
    future of VA health care today veterans are being denied the
    care they have chosen in the community and are being displaced.
    We must act, and we urge the Committee to consider our
    recommendations in this provision and move it without further
    delay.
        DAV also applauds the sponsors and cosponsors of 2633 for
    including our recommendations to make urgent care part of VA's
    medical benefits package and to better integrate emergency and
    urgent care within the health care delivery system.
        We are pleased that legislation would limit the imposition
    of co-payments for this care because our organization, frankly,
    is opposed to co-payments. We believe it should be reduced or
    altogether eliminated. But, nonetheless, we strongly oppose the
    provision that would force veterans to pay co-payments while
    allowing VA to collect on their health insurance.
        Finally, Mr. Chairman, because of the year-long
    collaborative effort put into this proposal by Veterans Service
    Organizations and VA, I would like to spend a few precious
    moments on S. 2473, the Express Appeals Act of 2016.
        Now it is worthy to note this Committee's House counterpart
    and, indeed, the full House believe in the merits of this
    measure by approving identical provisions in H.R. 677. This
    bill would establish a fully developed appeal program modeled
    after the successful fully developed claim program in which
    veterans voluntarily agree to develop private evidence to
    substantiate their claim in exchange for expedited processing.
    With broad bipartisan support, we urge this Committee to
    approve this important legislation.
        Mr. Chairman, I have to note, though, I understand that
    this is a pilot program. I understand it is small right now.
    But, just like the fully developed claims process, which also
    is voluntary, the initial host for the program was maybe 10
    percent of the total claims being submitted. It has now grown
    to over 50 percent and has done tremendous impact on the claims
    backlog. We hope that great things come in small packages and
    this is going to be one of those things.
        Mr. Chairman, this concludes my statement. I would be happy
    to answer any questions you have.
        [The prepared statement of Mr. Atizado follows:]
       Prepared Statement of Adrian Atizado, Deputy National Legislative
                      Director, Disabled American Veterans
        Mr. Chairman and Members of the Committee: Thank you for inviting
    DAV (Disabled American Veterans) to testify at this legislative
    hearing, and to present our views on the bills under consideration. DAV
    is a congressionally chartered national veteran's service organization
    of 1.3 million wartime veterans, all of whom were injured or made ill
    while serving on behalf of this Nation, and dedicated to a single
    purpose: empowering veterans to lead high-quality lives with respect
    and dignity.
        We believe ill and injured veterans earned and deserve timely
    access to high-quality, comprehensive and veteran-centric health care
    designed to meet their unique circumstances and needs. Because numerous
    studies on the quality of care the VA health care system delivers as
    well as the studies mandated by Public Law 113-146, ``the Veterans
    Access, Choice, and Accountability Act of 2014,'' show that while the
    VA has a numerous challenges and problems, it continues to outperform
    the rest of the U.S. health care sector on nearly every metric of
    quality. This unique accomplishment in the face of the access crisis
    must not be compromised.
           s. 2646, the veterans choice improvement act of 2016, and
      s. 2633, the improving veterans access to care in the community act
        DAV deeply appreciates the commitment and work of the members and
    staff of this Committee and the Senators for sponsoring the two bills
    being considered in today's hearing. Both bills seek to improve
    veterans access to community care by, among other things, consolidating
    some of VA's purchased care authorities, ensure coordination of care
    and health information sharing, and improving emergency care. DAV is
    pleased both bills contain some of our recommendations to reform the VA
    health care system while preserving and strengthening it so that DAV
    members and all eligible veterans may continue to enjoy the unique
    benefits and vital services VA provides well into the future.
        Over the past year, DAV and our Independent Budget (IB) partners
    developed a comprehensive framework to reform VA health care based on
    the principle that it is the responsibility of the Federal Government
    to ensure that disabled veterans have proper access to the full array
    of benefits, services and supports promised to them by a grateful
    Nation. In order to achieve this goal, our comprehensive framework has
    four pillars--Restructure, Redesign, Realign, and Reform. We offer our
    views on specific provisions of S. 2633 and S. 2646 that we believe fit
    within this framework and recommend it be part of the final legislation
    this Committee passes to reform VA health care.
    I. Restructure our Nation's system for delivering health care to
            veterans, relying not just on a Federal VA and a separate
            private sector, but instead creating local Veterans-Centered
            Integrated Health Care Networks that optimize the strengths of
            all health care resources to seamlessly integrate community
            care into the VA system to provide a full continuum of care for
            veterans.
                Veterans-Centered Integrated Health Care Networks
        To this end, we believe the health care network contemplated in
    S. 2633 would most likely yield the local Veterans-Centered Integrated
    Health Care Networks. Like private sector health care plans and larger
    provider systems that offer health coverage, the proposed Subsection
    1730A(c)(3) of this measure will allow VA to create a tiered network
    that would best meet the expectations of veteran patients at that local
    level.
        This kind of integrated network should provide veterans information
    they would need to make an informed decision. For example, information
    about the quality of the community providers in this network will give
    veterans the ability to discern between those community providers that
    are more knowledgeable about the veteran experience and unique needs,
    information about the satisfaction rating from other veterans who have
    seen that provider, and whether there is a good working relationship
    with the VA that facilitates care coordination.
        This integrated network would create and preserve the kind of
    community-VA provider partnership that mirrors the care our members
    value most in the VA health care system. However, we believe S. 2646
    offers an important provision that would prohibit VA from requiring
    veterans to receive care or services from an entity in a specific
    tier.\1\
    ---------------------------------------------------------------------------
        \1\ Sec. 1703A(n)(2) as proposed in S. 2646.
    ---------------------------------------------------------------------------
        To ensure formation of the local Veterans-Centered Integrated
    Health Care Networks allows for the function of a high performing
    network, our framework places VA as the coordinator and principal
    provider of care, which we discuss immediately below. VA's primary care
    (medical home) model with integrated mental health care, is more likely
    to prevent and treat conditions unique to or more prevalent among
    veterans, particularly those with disabilities or chronic conditions.
    II. Redesign the systems and procedures by which veterans access their
            health care with the goal of expanding actual, high-quality,
            timely options; rather than just giving them hollow choices:

                Care Coordination
        We strongly urge the Committee to preserve the organizational model
    required in Section 106 of the Veterans Access, Choice, and
    Accountability Act of 2014 (Public Law 113-146; 38 U.S.C. 1701 note) in
    any future consolidation of VA's purchased care authorities. Section
    106 effectively created a ``wall'' that separated the financial and
    clinical operations of the current Choice program, which better
    insulated front-line clinicians, such as VA Community Health Nurse
    Coordinators, social workers, or other VA health care professionals
    against the fiscal pressures that have been known to sway clinical
    decisions and delay or deny community care to veterans.
        DAV also strongly urges the Committee to discontinue the current
    arrangement under the Choice program that has effectively removed a
    critical part of the care coordination responsibility away from VA
    front-line clinicians. VA Community Health Nurse Coordinators are the
    veteran's case manager and coordinators of care who work with the
    veteran's health care team to provide for the veteran patient's
    medical, nursing, emotional, social and rehabilitative needs as close
    to and/or in the veterans home.
        While VA Community Health Nurse Coordinators are now better able to
    exercise their clinical authority due to the Section 106
    reorganization, they are frustrated having lost their ability under the
    current Choice program to act as a liaison between community providers
    and VA and as an advocate for their veteran patients--who themselves
    have unsuccessfully tried to exercise their Choice option and asked for
    assistance from their VA nurse coordinator--to get the care they need
    in the community.
        We strongly recommend the Committee ensure VA remains the
    coordinator of veterans care especially if that care is provided in the
    community and paid for by the Department.
                Community Care Eligibility
        For veteran patients, waiting for a health service begins when the
    veteran and the appropriate clinician agree to a service, and when the
    veteran is ready and available to receive it. We believe it is time to
    move toward a health care delivery system that keeps clinical decisions
    about when and where to receive care between a veteran and his or her
    doctor--without bureaucrats, regulations or legislation getting in the
    way.
        As both S. 2633 and S. 2646 proposes an additional hurdle for
    veterans to receive clinically necessary in the community, we stand
    ready to work with the Committee to ensure veterans, and especially
    service-connected veterans are not any more encumbered in receiving
    care in a reformed VA health care system. We applaud the veteran-
    centric approach in using a geographic distance around the veteran as
    described in Section 302 of S. 2633. Moreover, if clinical access to a
    primary care provider is to be used, we recommend language employed in
    S. 2633 of a full-time primary care ``provider'' rather than
    ``physician.'' This would ensure uniformity with the private sector
    practice of using non-physician providers in primary care settings.
        We also support the provisions in both S. 2633 and S. 2645 to make
    eligible to receive care in the community those veterans enrolled in
    Project ARCH so they do not experience a disruption in the care they
    have been receiving when the authority for the program is consolidated.
                Veterans Care Agreements
        Section 201 of both S. 2633 and S. 2644 would authorize the
    establishment of ``Veterans Care Agreements,'' and would prescribe the
    types of providers eligible for participation. We support the
    establishment of such agreements, but we are concerned that VA would be
    required to first exhaust other acquisition strategies before being
    allowed to pursue such agreements under S. 2646. In addition, different
    terms are used for paragraph (4) in both bills. We recommend the term
    ``provider'' be used rather than ``health care provider'' for
    consistency and ease of implementation of this section by the
    Department.
        We agree with VA's assessment regarding the need for this authority
    to be enacted into law without delay and applaud this Committee's work
    to include similar language in S. 425; however, there are limitations
    in that measure that we believe will work against the consolidation of
    VA's purchased care authorities as contemplated in the two bills under
    consideration today.
        Mr. Chairman, there is one other note of concern as you consider
    legislation restructuring VA's relationship with non-VA community
    providers. Both S. 2633 and S. 2646 have provisions authorizing
    provider agreements with community providers, but there is a provision
    in S. 2633 (Sec. 202) addressing State Veteran Home provider agreements
    which does not have a corresponding provision in S. 2646. When this
    Committee approved S. 425 on December 9, 2015, in addition to
    authorizing new provider agreement authority for VA, it also included a
    conforming amendment to protect existing provider agreements that VA
    has with all State Veterans Homes for the provision of skilled nursing
    care to severely disabled veterans rated 70 percent or higher. As you
    know, it took several years, two public laws (P.L. 109-461 & Public Law
    112-154) and an Interim Final Rule (RIN 2900-AO57) to achieve Congress'
    original intent of offering the most severely disabled veterans the
    option to receive extended care at State Veterans Homes. As the
    Committee and the Senate move forward, it is important to ensure that
    any legislation that addresses VA's provider agreement authority with
    community providers does not modify, diminish, endanger or eliminate
    State Veterans Homes existing provider agreements authorizing them to
    provide these critical long term care services to thousands of severely
    injured and ill veterans.
                Emergency and Urgent Care
        DAV applauds the sponsors and cosponsors of S. 2633 for including
    our recommendations to make urgent care part of VA's medical benefits
    package and to better integrate emergency and urgent care with the
    overall health care delivery system. DAV believes a health care benefit
    package is incomplete without provision for both urgent and emergency
    care.
        We support the proposal in both bills to address the eligibility
    and payment issues that veterans and community providers face. This
    Committee is aware of our organization's long standing position
    opposing any and all copayments imposed on veterans and support
    legislation reducing the copay amount. In light of the latter, we are
    pleased the legislation would limit the imposition of emergency and
    urgent care copayments had veterans sought this type of care at VA
    medical facilities.
        However, DAV opposes the provision that would force veterans to pay
    copayments while their health insurance reimburses VA for emergency or
    urgent care. VA should be applauded and allowed to continue its current
    practice of offsetting a veteran's copayment debt with monies VA
    receives from billing the veteran's health insurance plan.
        We also oppose the provision in S. 2633 that would require veterans
    to have received VA care within the last 24-months prior to receiving
    emergency care to be eligible for the emergency and urgent care
    benefit. This requirement unduly discriminates against otherwise
    healthy veterans who need not seek care at least once every 24 months,
    yet is required to make an otherwise unnecessary medical appointment in
    order to be eligible for payment or reimbursement for non-VA emergency
    treatment. We urge the Committee provide greater flexibility by
    including an exemption authority to the 24-month requirement for this
    and other unforeseen circumstances.
                Emergency Care Defined
        Carrying out the multiple and complex authorities \2\ for VA to pay
    or reimburse emergency care under title 38 are a source of continuous
    complaints and can drive ill and injured veterans and their families to
    financial ruin.
    ---------------------------------------------------------------------------
        \2\ 38 U.S.C. Sec. Sec. 1703, 1725 and 1728
    ---------------------------------------------------------------------------
        According to VA, ``In FY 2014, approximately 30 percent of the 2.9
    million emergency treatment claims filed with VA were denied, amounting
    to $2.6 billion in billed charges that reverted to Veterans and their
    [Other Health Insurance]. Many of these denials are the result of
    inconsistent application of the ``prudent layperson'' standard from
    claim to claim and confusion among Veterans about when they are
    eligible to receive emergency treatment through community care.''
        One of the by-products of Emergency Medical Treatment and Labor Act
    (EMTALA) was the prudent layperson standard in response to a critical
    payer issue of the day--payment denials for the lack of prior
    authorization. To address the inconsistent application of the prudent
    layperson standard, DAV recommended the ``emergency condition'' be
    defined using EMTALA, with a minor amendment to include behavioral
    conditions, so that the definition of an emergency condition for VA
    purposes would be:

            ``A medical [or behavioral] condition manifesting itself by
            acute symptoms of sufficient severity (including severe pain)
            such that the absence of immediate medical attention could
            reasonably be expected to result in placing the individual's
            health [or the health of an unborn child] in serious jeopardy,
            serious impairment to bodily functions, or serious dysfunction
            of bodily organs. With respect to a pregnant woman who is
            having contractions that there is inadequate time to effect a
            safe transfer to another hospital before delivery, or that
            transfer may pose a threat to the health or safety of the woman
            or the unborn child.''
                Claims Processing and VA as Primary Payer
        In addition, VA's processing of claims has been a significant
    weakness to the Department's community care programs resulting in
    costlier care, inappropriate billing of veterans and strained
    partnerships with community providers. Government Accountability Office
    reports throughout the years have consistently highlighted disturbing
    limitations in the Department's claims processing system as having
    unnecessary manual operations rather than automatically applying
    relevant information and criteria to determine whether claims are
    eligible for payment and notifying veterans and community providers
    about the results of the determination, payment, and appeal procedures.
        Many veterans worry about claims that are not paid promptly or are
    left unpaid, and they are left in a difficult position of trying to get
    claims paid or be put into collections. These delays or denials create
    an environment where community providers are hesitant to partner with
    VA for fear they will not be paid for services provided. Hospitals and
    community providers have also expressed concern that prompt payment
    laws do not apply to care that is provided to veterans if they do not
    have a contract with VA. We have also heard complaints from veterans
    regarding section 101(e) of the current Choice program, which places on
    them greater financial burden and emotional stress while trying to
    recover from injuries and illnesses. We believe the responsibility of
    the government as first-payer and prompt payer for care and services
    should be reaffirmed.
        Thus, DAV supports the required claims processing system in Section
    103 of S. 2646, which would apply the prompt payment act to all
    services under the new Veterans Choice Program, govern claims
    management and payments to providers under the Choice Program, and
    would set a firm date after which VA would not accept claims in other
    than electronic form. This section would mandate the establishment of
    an electronic interface to enable private providers to submit
    electronic claims as required by the section. To further strengthen
    this proposal, we recommend adding certain provisions in S. 2633
    requiring VA be primarily responsible for payment of services, an
    eligible provider to submit claims to VA within 180 days of furnishing
    care or services and how paper claims will be treated in the interim.
    These factors are critical elements in high performing Veterans-
    Centered Integrated Health Care Networks.
    III. Realign the provision and allocation of VA's resources so that
            they fully meet our national and sacred obligation to make
            whole those who have served.
        We support the provisions in both S. 2633 and S. 2646 which would
    require the Administration to submit in its annual budget requests for
    advance appropriations for the Veterans Health Administration, Care in
    the Community program to begin in fiscal year 2017.
    IV. Reform VA's culture to ensure that there is sufficient transparency
            and accountability to the veterans this system is intended to
            serve.
        In line with our recommendation to maintain the financial and
    clinical reorganization under Section 106 of the Veterans Access,
    Choice, and Accountability Act of 2014 (Public Law 113-146; 38 U.S.C.
    1701 note), we believe it is beneficial to require, rather than make
    discretionary, the transfer of funds and payment of services to the
    Chief Business Office of the Veterans Health Administration. This would
    help ensure transparency and accountability to a single entity when
    conducting oversight.
                      s. 2473, express appeals act of 2016
        S. 2473, the Express Appeals Act of 2016, introduced by Senators
    Dan Sullivan (AK), Robert Casey (PA), Dean Heller (NV) and Jon Tester
    (MT) would establish a new pilot program to allow veterans to file
    ``fully developed appeals'' (FDA) which would receive expedited
    processing by the Veterans Benefits Administration (VBA) and the Board
    of Veterans Appeals (Board). An identical House bill (H.R. 800) was
    incorporated into an omnibus bill (H.R. 677) approved by the full House
    on February 9, 2016.
        The FDA program was developed through a year-long collaborative
    effort among stakeholders that included DAV, VFW, The American Legion
    and other major veterans organizations, as well as leaders of both VBA
    and the Board. The FDA is modeled on the successful Fully Developed
    Claims (FDC) program in which veterans agree to undertake the
    development of private evidence necessary to substantiate their claims
    in exchange for expedited processing. Similarly, to participate in the
    FDA program, appellants would agree to develop and submit any private
    evidence necessary for the Board to make its decision, thus relieving
    both VBA and the Board of that development workload. The appellant
    would be required to submit all such new evidence, as well as any
    argument and other required certifications, at the time they submit
    their FDA.
        In addition, the appellant would agree to an expedited process at
    VBA that eliminates the Statement of the Case (SOC), Form 9, any
    hearing before the VBA or the Board and the Form 8 certification
    process. The elimination of these processing steps alone could save
    some veterans up to 1,000 days or more waiting for their appeals to be
    transferred from VBA to the Board.
        During stakeholder negotiations over the FDA it was agreed that the
    Board would retain its ``duty to assist'' in the development of any
    necessary Federal records. If new Federal records are obtained, or new
    exams or independent medical opinions ordered, the appellant would not
    only be given copies of all such evidence, but would have 90 days to
    review it and submit additional argument and evidence in response,
    including private evidence.
        A key attribute of the FDA program is that it is a voluntary
    program with the appellant retaining the absolute right to withdraw
    from the FDA program and revert their appeal back to the standard
    appeal processing model at any time prior to disposition by the Board.
    Such a reversion would then allow the appellant to submit any
    additional evidence, have their appeal heard by a Decision Review
    Officer (DRO) or request a hearing by the Board.
        In accordance with DAV Resolution No. 091 to improve the claims and
    appeals process, DAV strongly supports the creation of a ``fully
    developed appeals'' pilot program through enactment of H.R. 2473. This
    innovative and pragmatic legislation would alleviate workload at the
    Board and VBA, provide some veterans with a new option to expedite
    their appeals by up to 1,000 days, while fully protecting the due
    process rights of veterans so that they can receive all the benefits
    they have earned through their service. H.R. 2473 has broad and
    bipartisan support and we urge the Committee to approve important
    legislation to improve the appeals process.
        discussion draft on title 38, united states code, appointment,
      compensation, performance management, and accountability system for
        senior executive leaders in the department of veterans affairs.
        Delegates to our most recent national convention passed two
    resolutions that may be relevant to this informal ``discussion''
    proposal. DAV Resolution No. 126 calls for modernization of VA human
    resources management system to enable VA to compete for, recruit and
    retain the types and quality of VA employees needed to provide
    comprehensive health care services to sick and disabled veterans. DAV
    Resolution No. 214 calls for meaningful accountability measures, but
    with due process, for employees of the Department of Veterans Affairs--
    by requiring that any legislation changing the existing employment
    protections in VA must strike a balance between holding civil servants
    accountable for their performance, while maintaining VA as an employer
    of choice for the best and brightest.
        The discussion draft would apply personnel laws for Senior
    Executive Service (SES) members now working under title 5, United
    States Code, which covers most civil servants, to title 38, which
    allows greater pay flexibility to provide more competitive wages.
    Hiring under title 38 would also give the Secretary more authority to
    expedite hiring. These are key issues when competing against other
    Federal agencies and the private sector for top talent. DAV supports
    the intent of these provisions.
        However, there may be some issues when hiring individuals under
    title 38, which is generally reserved for personnel in health related
    fields, and applying those standards to those who would lead the
    Veterans Benefits Administration, National Cemetery Administration, and
    VA staff offices. In addition, while the proposed reform would allow
    expedited SES hiring, DAV asks the Committee to carefully consider
    whether the proposed executive compensation, which would still lag far
    behind that of chief executives in private sector health care, is
    nearly sufficient to offset the new risks being created by other parts
    of this proposal.
        In the final analysis, these individuals would serve at the
    pleasure of the VA Secretary with little protection that is now
    available under current law to guarantee their status under title 5 to
    appropriately protect their due process rights and provide them retreat
    rights to lower-level assignments and to insulate them from politically
    motivated decisions--all hallmarks of the origins of the SES as
    envisioned in the Civil Service Reform Act of 1978. That act
    established the SES, the Merit Systems Protection Board, and created an
    array of procedures and requirements that govern the entirety of the
    SES program and many other aspects of Federal personnel law.
        Mr. Chairman, DAV and our members urge serious reform of the VA
    health care system to address access problems while preserving the
    strengths of the system and its unique model of care. We appreciate
    this Committee's hard work and are pleased that many of our
    recommendations have been incorporated into the measures under
    consideration today so that veterans will have more options to receive
    timely, high-quality care closer to home.

        Thank you for inviting DAV to submit this testimony. We would be
    pleased to further discuss any of the issues raised by this statement,
    to provide the Committee additional views, or to respond to specific
    questions from you or other Members.

        Chairman Isakson. Thanks to all three of you for your
    testimony and for your patience, and we appreciate your being
    here today and your input. Thank you for the input you give us
    on a daily basis as we deliberate.
        Each one of you referred to the inclusion that either the
    Department or the Committee or both have done with your
    organizations as we develop many of these platforms and many of
    these changes in the law for the Veterans Administration. We
    appreciate that acknowledgement, and we could not do it if not
    for your help.
        Mr. Fuentes, let me ask you a question. You made a
    reference to Camp Lejeune and the eight presumptions the
    Secretary approved for coverage about a year ago or about 6
    months ago, but you made a reference to you wanted them to be
    able to allow them to file claims and they were not allowed to
    file claims for another year. Is that correct?
        Mr. Fuentes. That is correct, Mr. Chairman. I may be wrong,
    but I think it was a couple weeks ago that the Secretary
    decided to consider eight conditions as presumptive and being
    caused by the contaminated water in Camp Lejeune. What this
    does is it expedites or reduces the burden of proof that
    veterans have to present when applying for disability claims.
    However, because of the regulatory process, it is estimated to
    take about a year until veterans can actually start applying,
    which we feel is unacceptable.
        Chairman Isakson. Mr. Secretary, I know you are in the
    audience and not testifying. But, can you address that for a
    second?
        Secretary McDonald. I can, Mr. Chairman. There is something
    called an interim----
        Chairman Isakson. I got him on his knees already. That is a
    good sign. [Laughter.]
        Secretary McDonald. Mr. Chairman, I am always on my knees
    for you.
        There is something called an interim final rule, and like
    we did with C-123 for Agent Orange, I would like to do an
    interim final rule so that veterans can apply as quickly as
    possible.
        Mr. Fuentes is right. It does take a period of time to run
    these regulations and rules through the government structure,
    but if we do the interim final rule we can speed up that
    process, and that is what we want to do, obviously.
        Chairman Isakson. Thank you very much.
        Secretary McDonald. Yes, sir.
        Chairman Isakson. Each one of you made a positive
    reference, in particular Mr. Celli and Mr. Fuentes, to the
    accountability portion of what we are trying to do in the
    omnibus bill and made statements making sure that we did not
    have a negative effective on career Civil Service employees
    within the Veterans Administration. There is no intention of
    this Committee to have any negative impact on career civil
    servants of the Veterans Administration.
        It is clearly our goal to see to it that there is a
    mechanism for the Secretary to, first of all, hire the
    professionals he needs to be able to run the Veterans
    Administration and perform the medical services within the
    Veterans Administration under Title 38, and that where in SES
    employees there is a problem the Secretary has the ability for
    discipline and the ability for future employment depending on
    the merits of the case that he determines, not determined by
    some third party.
        There are a lot of people that always feel when you talk
    about firing somebody that it is something that just gives
    somebody a big thrill to say ``I am going to go fire a few
    people today.'' That is not what we are looking for at all.
        But, what we are looking for is an explanation, for which
    there is none to this moment, for some of the egregious things
    that have happened over the last few years--prior to Secretary
    McDonald's service, I might add--because we end up dealing with
    these things 2 and 3 and 4 years after the time they take
    place.
        I appreciate your testimony and your support for the
    accountability piece, which will be the linchpin that will
    allow us to do caregivers, will allow us to do West L.A., will
    allow us to do the fully expedited claims, will allow us to
    improve disability claims and improve the processing of those,
    which is exactly what we want to do.
        I want to thank you for being here today and thank you for
    your testimony. The record will remain open for five days if
    you have any additional testimony you want to add or any
    additional things that need to be said.
        We appreciate your service to the United States of America
    and your testimony today. God bless you and thank you.
        [Whereupon, at approximately 4:02 p.m., the Committee was
    adjourned.]

                                A P P E N D I X

                                  ----------

       Prepared Statement of Hon. Steve Daines, U.S. Senator from Montana
        Chairman Isakson, Ranking member Blumenthal and Members of the
    Committee; Thank you for allowing me to submit testimony on the
    importance of the Veterans Choice Improvement Act of 2016, S. 2646,
    introduced last week by Senator Burr, myself, and five other Senators.
    Issues with the Choice Act are the top concerns I hear from veterans in
    my home state of Montana and I am extremely pleased to see that our
    legislation designed to fix it has been brought before the Committee
    today.
        Our legislation seeks to improve the Choice Act passed in 2014 by
    creating one easy to understand program that allows veterans to get
    care outside the VA. It was clear that the redundant and bureaucratic
    layers of programs previously provided to our veterans was failing
    them, and failing local medical providers throughout the country.
        In Montana, we started seeing providers pull out of the Choice Act
    because they were not being paid back. This created a chain reaction of
    more problems for veterans, who found themselves traveling past
    multiple qualified doctors to get to one that was accepting the VA's
    horrific track record of reimbursements. Furthermore, veterans started
    seeing their own credit history being impacted due to failed payments.
    By holding the VA accountable for reimbursements and setting strict
    time standards, our bill fixes this. S. 2646 ensures providers outside
    the VA want to enter into these partnerships and blocks them from the
    painful regulations that come with being labeled a Federal contractor.
        Additionally, one of the key parts to the Veterans Choice
    Improvement Act is that it is the best suited for veterans in rural
    areas. Montana is home to one of the original pilot programs for
    veterans' healthcare in rural communities, the Access Received Closer
    to Home (ARCH) program--which is now incorporated and made permanent
    with S. 2646. ARCH works to find healthcare in small local communities
    for veterans, and is a program that could be negatively impacted if the
    VA is allowed to enter into the ``tiered network.'' A tiered network
    would restrict a veteran's ability to choose among providers, and is
    something our legislation strictly prohibits.
        Ensuring veterans can get the best care possible, close to home and
    without delay is of the utmost importance as we see our servicemembers
    return home. In Montana, where we are home to the second most veterans
    per capita, it is a top priority. The Veterans Choice Improvement Act
    takes drastic steps to ensure our veterans are getting the top care
    possible, and I am proud to submit this testimony today in support of
    it.
                                     ______

    Prepared Statement of American Federation of Government Employees, AFL-
                                      CIO
        Chairman Isakson, Ranking Member Blumenthal, and Members of the
    Committee, Thank you for the opportunity to present the views of the
    American Federation of Government Employees, AFL-CIO and its National
    Veterans Affairs Council (AFGE) regarding pending legislation. AFGE
    represents over nearly 700,000 Federal employees, including nearly
    230,000 employees of the Department of Veterans Affairs. AFGE's
    representation of non-management, front line employees working in
    virtually every non-management VA position allows us to share a unique
    perspective with the Committee.
                                    s. 2646
        It appears that S. 2646 would immediately repeal the current pilot
    program established by Section 101 of the Veterans Choice, Access and
    Accountability Act of 2014 (Choice Act), and replace it with a
    permanent Veterans Choice Program. AFGE strongly believes that it is
    premature to establish a permanent Choice program at this time. AFGE
    urges the Committee to defer any action that would make what reports
    suggest is a flawed temporary program permanent less than halfway
    through its authorization period. Instead, Congress should conduct
    immediate oversight of the many serious problems that veterans are
    experiencing in trying to access non-VA care under the current pilot
    program.
        Congress established the current Choice program as a temporary fix
    to what was perceived to be severe access problems. The current Choice
    program does not expire until the end of FY 2017. It is too early to
    determine whether the current pilot program has been a success or
    failure or whether its high price tag and adverse impact on VA's own
    capacity justifies its continuation.
        The Choice Act also provided additional funding to address chronic
    staffing shortages. Since enactment of the Choice Act, the Department
    has made significant progress toward its goal of hiring more front-line
    clinicians and support personnel who provide veterans with the
    exemplary health care services that they rate highly and strongly
    prefer. In addition, five months ago, the VA rolled out its
    Congressionally-mandated plan to consolidate non-VA care programs, and
    Chairman Isakson called its implementation a top priority for 2016.
        Veterans deserve great care and strong accountability from VA and
    non-VA providers alike. Therefore, we strongly recommend that the
    Committee take adequate time to address the many troubling reports
    regarding the Choice Act that have been made by veterans and the VA
    health care personnel trying to assist them. These include the pilot
    program's alleged failure to provide community clinics with consults
    containing diagnoses and physician instructions, or alert veterans that
    their evaluations have been scheduled, or notify the VA that a non-VA
    appointment has been made. This last item has resulted in many wasted
    in-house appointment slots.
        Veterans have reported that they are being harassed by bill
    collectors in connection with Choice Act care. In addition, as a
    consequence of the Choice pilot program, veterans are facing longer
    waits for in-house VA care because the VA employees assisting them
    often have to spend hours on the phone trying to deal with HealthNet
    and TriWest. Similarly, short staffing at VA's own primary clinics has
    worsened because staff have to be diverted to the time-consuming Choice
    referral process.
        OFCCP Jurisdiction: Section 201 of this bill would exclude VA-
    provider contracts from Office of Federal Contract Compliance Program
    (OFCCP) jurisdiction. AFGE strongly opposes the elimination of anti-
    discrimination protections for veterans and other covered employees who
    work for VA health care contractors.
        OFCCP plays a critical role in protecting veterans who work for
    Federal contractors. This office enforces the Vietnam Era Veterans'
    Readjustment Assistance Act of 1974 (VEVRAA) that requires Federal
    contractors to take steps to recruit, hire and promote protected
    veterans. Veterans protected under VEVRAA include: disabled veterans,
    veterans who served on active during a war, recently separated
    veterans, and veterans who received an Armed Forces service medal.
        Many veterans transition from having been medics and corpsmen,
    saving lives on the battlefield, to civilian health care jobs. Those
    veterans who will work for contractors receiving millions and millions
    of VA dollars deserve to be protected against discrimination that may
    occur simply because of their veteran status. OFFCP ensures that
    veterans are protected throughout the employment process, including
    hiring, firing, pay, benefits, job assignments, promotions, layoffs,
    training and other employment related activities. OFFCP also enforces
    laws prohibiting discrimination on the basis of race, sex, disability
    and national origin.
        How ironic it would be to enact a law that is specifically designed
    to protect veterans from job discrimination that would carve out the
    Department of Veterans Affairs' own health care agreements.
                                    s. 2633
        It appears that S. 2633 would establish a new Veterans Choice
    program after termination of the current pilot program. While AFGE
    supports bill provisions that would improve veterans' access to care,
    including authorization for tiered, integrated health care networks
    that enable veterans to make informed choices, we believe that
    establishing a new program at this time is premature. As already
    stated, veterans are experiencing serious problems accessing
    appropriate, timely care under the current pilot program. We urge the
    Committee to instead conduct extensive oversight during the remaining
    18 months of the pilot in order to properly evaluate its strengths and
    weaknesses.
      discussion draft on title 38 appointment, compensation, performance
            management, and accountability for va senior executives
        AFGE strongly opposes the Administration's proposal to move all VA
    senior executives (SES) from the Title 5 personnel system to the Title
    38 personnel system. Title 5 provides adequate flexibility to provide
    market pay to senior executives under Title 5. Section 5377 of Title 5
    authorizes agencies to increases SES pay up to Level I of the SES scale
    if a position ``requires expertise of an extremely high level in a
    scientific, technical, professional, or administrative field'' or ``is
    critical to the Agency's successful accomplishment of an important
    mission.''
        Conversion of VA SES positions to Title 38 would result in the
    elimination of all rights to appeal to the Merit Systems Protection
    Board (MSPB). AFGE strongly opposes the reduction of MSPB rights or
    other due process rights for any VA employees. The Choice Act provided
    the Secretary with an expedited process for removing and disciplining
    SES personnel (that only allows the MSPB administrative judge to accept
    or reject the discipline imposed by the Department). Alternatively, the
    Secretary can still use the process provided by 5 U.S.C. 7543(b) that
    allows the MSPB to lower the penalty as appropriate instead of
    completely reinstating the SES employee if it finds that the penalty
    was too severe.
        AFGE urges the Committee to reject further attempts to eliminate VA
    employee rights, and instead, enact management improvement provisions
    included in H.R. 2999.
                                     ______

     Letter from Clifton J. Porter II, Senior Vice President of Government
               Relations, American Health Care Association (AHCA)

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                     ______

             Prepared Statement of the American Medical Association
              s. 2646, veterans choice improvement act of 2016 and
        s. 2633, improving veterans access to care in the community act
        The American Medical Association (AMA) appreciates the opportunity
    to submit this statement for the record with regard to the Senate
    Committee on Veterans' Affairs' hearing today on draft legislation,
    S. 2646, the ``Veterans Choice Improvement Act of 2016,'' which was
    introduced by Senators Burr, Tillis, Boozman, and Moran, and S. 2633,
    the ``Improving Veterans Access to Care in the Community Act,'' which
    was introduced by Senators Tester, Blumenthal, and Brown. The AMA is
    strongly committed to helping Congress and the Department of Veterans
    Affairs (VA) ensure the comprehensive delivery of, and timely access
    to, primary and specialty health care for our Nation's veterans. The
    AMA was an early supporter of the Veterans Access, Choice, and
    Accountability Act of 2014 (VA Choice Act), which created the Veterans
    Choice Program (VCP), and we applaud the Committee's ongoing efforts to
    reform and improve our Nation's veterans' access to quality health
    care, as well as enhance the ability of non-VA physicians and other
    providers to deliver such care.
                           consolidation of programs
        We agree with the VA and the Committee that the VCP has not been
    working as intended, and we strongly support provisions in both S. 2646
    and S. 2633 to consolidate the VCP and all existing community care
    programs into one streamlined program. While the VA has the legal
    authority to send veterans outside of the VA for care, there are
    multiple programs, contracts, laws, and regulations. We think that the
    poor response to the existing VCP has in part been due to confusion by
    veterans and physicians between the VCP and the other existing
    community care programs, such as the Patient-Centered Community Care
    (PC3) Program. Streamlining and consolidating the different programs
    would improve care by creating efficiencies and eliminating duplication
    and costs in administering the new VCP, especially with regard to
    billing, the reimbursement process, eligibility criteria, and clinical
    and administrative systems.
                       veterans' access to specialty care
        Veterans have had longstanding issues with access to specialty care
    outside VA facilities. The VA Choice Act, S. 2646, and S. 2633 include
    the same problematic provisions with respect to veterans' eligibility
    for specialty care--the requirement that the veteran must live more
    than 40 miles driving distance from a VA medical facility, including
    ``community-based outpatient clinic.'' This has been interpreted by the
    VA in some instances as preventing a veteran from going to a facility
    or physician further away for specialty care, because a VA community-
    based outpatient clinic is within 40 miles, even if it does not provide
    the specialty care needed. While S. 2646 includes new language
    acknowledging that such facilities must have a full-time primary care
    physician, we recommend that the language also include a reference to
    necessary specialists.
                      agreements/contracts with providers
        In order to be effective, the VA's partnerships with private
    physicians in the community need to be simple and easy to navigate for
    physicians. We believe that the most straightforward way to authorize
    care and services by non-VA physicians is through provider agreements,
    similar to those used in the Medicare program, as recognized by the
    provisions in the VA Choice Act that created the VCP. Section 101(d)(3)
    authorizes the VA Secretary to enter into an agreement with non-VA
    providers using the procedures, including those procedures related to
    reimbursement, available for entering into provider agreements under
    the Social Security Act.
        It is also extremely important that, under such agreements,
    physicians and other providers are only subject to the same rules and
    regulations as Medicare and Medicaid providers. Generally, Federal
    contractors delivering supplies or services of $10,000 or more to a
    Federal entity have affirmative action obligations as prime contractors
    pursuant to Executive Order 11246, the Vietnam Era Veterans'
    Readjustment Assistance Act of 1974, and section 503 of the
    Rehabilitation Act of 1973. Each government contractor with 50 or more
    employees and $50,000 or more in Federal contracts is required to
    develop a written affirmative action plan, which must be updated
    annually. In addition to complying with multiple layers of affirmative
    action regulations, Federal contractors must comply with and prepare
    for the prospect of audits conducted by the Office of Federal Contract
    Compliance Programs (OFCCP). Medicare and Medicaid providers are not
    considered to be Federal contractors subject to these rules and
    procedures. Moreover, the VA Choice Act waived the OFCCP Federal
    contracting requirements for physicians and other providers entering
    into contracts and agreements to provide care and services, and we
    believe that any legislation to improve the VA Choice Program should do
    so as well. Without such protection, physicians in small private
    practices could be discouraged from entering into agreements to care
    for veterans. Accordingly, we support the provision in S. 2646
    providing that any contract entered into with non-VA providers for the
    care of veterans ``may not be treated as a Federal contract for the
    acquisition of goods or services and is not subject to any provision of
    law governing Federal contracts for the acquisition of goods or
    services'' (Section 101(d)(1)(C)).
                           billing and reimbursement
        With respect to reforming the VCP's billing and reimbursement
    processes, we generally support the provisions in S. 2646, except as
    noted below. According to the VA, ``The current VA claims
    infrastructure and claims process are complex and inefficient due to
    highly manual procedures, and VA lacks a centralized data repository to
    support auto adjudication'' (U.S. Department of Veterans Affairs, Plan
    to Consolidate Programs of Department of Veterans Affairs to Improve
    Access to Care,'' October 30, 2015, at page 49). The VA has more than
    70 centers processing claims across 30 different claims systems, and
    limited automation with paper-based processes that result in late and
    incorrect payments. Improving the VA's reimbursement processes would
    alleviate some of the complaints that physicians and other providers
    have had tied to the VCP, e.g., administrative hassles and delays in
    payment. Some of these problems have arisen with Health Net, one of the
    VCP managers, particularly with respect to billing and reimbursement
    delays in the New England region. Moving toward auto-adjudication and
    away from requiring medical records for reimbursement--a current VA
    requirement--should help to improve claims processing accuracy and
    predictability and allow claims to be paid promptly, thereby providing
    an incentive for physicians to join and remain in the provider network.
        We appreciate that both S. 2646 and S. 2633 include provisions
    requiring prompt processing and payment of claims. While we prefer the
    timeframes for processing and payment of claims in S. 2646, which are
    shorter than in S. 2633, we would note that with respect to clean
    claims submitted electronically, it should not take 30 days to
    reimburse a physician. Accordingly, we urge that this provision be
    changed to 14 days. Further, clean paper claims should be paid within
    30 days.
        In addition, while the AMA encourages the use of electronic claims,
    we do not support mandates on physicians or timetables for submitting
    all claims with no exceptions, and therefore we cannot support section
    103(b) of S. 2646. We note that although most Medicare claims are
    electronically submitted, there are certain exceptions allowed under
    Medicare, such as for claims from small providers (e.g., defined as
    providers with less than 25 full-time equivalent employees (FTEs) that
    are required to bill a Medicare intermediary, or physicians with fewer
    than 10 FTEs that are required to bill a Medicare Administrative
    Contractor), and for claims from providers that submit fewer than 10
    claims per month on average during a calendar year. Accordingly, we
    urge that the mandate provision in S. 2646 be deleted; at the very
    least, exceptions similar to those recognized by Medicare for small
    providers should be considered.
        Both S. 2646 and S. 2633 would standardize provider reimbursement
    rates to Medicare rates. While we think that this is moving in the
    right direction in terms of basing payment to providers on Medicare
    rates, the AMA supports the Medicare rate as a floor, not a ceiling,
    especially in areas where there are significant needs for service and
    limited available specialists. We appreciate that S. 2646 allows some
    regional variation, for veterans in highly rural areas, in Alaska, and
    in a state with an all-payer model agreement, but would urge more
    flexibility be allowed where needed, recognizing the varying expense of
    clinical practice in different geographic regions of the country.
                                tiered networks
        We are very concerned with the language allowing tiered networks in
    S. 2633, and therefore support the language in S. 2646 banning such
    networks for veterans receiving care from non-VA physicians. In its
    proposal for reform of the VCP, the VA indicated that they intended to
    provide veterans access to a tiered, ``high-performing network,'' which
    would reward providers for delivering ``high-quality care'' while
    promoting veteran choice and access. The VA indicated that it would
    apply industry-leading health plan practices for the tiered network
    design and that providers in the Preferred tier, versus the Standard
    tier, must ``demonstrate high-value care'' in order to be considered in
    the Preferred tier and to receive higher payment. It is unclear,
    however, how ``high-value care'' would be determined or demonstrated.
    Given some of the access issues that have arisen with the narrow
    networks offered in the exchanges under the Affordable Care Act and
    outside the exchanges, we believe that both the VA and the Committee
    need to proceed carefully in moving toward tiered networks. We are
    concerned that any tiering or narrowing of the networks in a reformed
    VCP will further exacerbate or create access problems. This is already
    occurring in certain states, in exchange plans and Medicare Advantage
    plans, with patients unable to find physicians in the top tiers in
    their areas or able to receive necessary specialized services because
    the tiering is specialty and not service or subspecialty specific. With
    many veterans requiring specialized services, such as mental and
    behavioral health care and orthopedics, which are already very limited
    in many places throughout the country, further tiering seems
    incompatible and actually in conflict with the direction of a reformed
    VCP program to provide greater and faster access to specialty care
    services in the community. Narrowing or tiering will do little to
    demonstrate confidence in the program and could deter participation by
    physicians in the community. If a prime goal of reforming the VCP is to
    increase participation and encourage ``high-value'' or ``high-quality''
    physicians to participate in the program, this tiering will likely have
    the opposite effect.
                     using value-based reimbursement models
        We are strongly opposed to any use of a value-based payment model
    (VBM) ``to promote the quality of care,'' as S. 2633 proposes for
    incorporation into agreements to provide care by non-VA providers. The
    VBM is currently incapable of accurately and equitably measuring and
    comparing the cost and quality of services provided by physicians. A
    number of the cost and outcome measures that are being used were
    created for hospitals and are inappropriate for use in physicians'
    offices with smaller and less heterogeneous patient populations.
    Several reports done for the Centers for Medicare & Medicaid Services
    suggest that practices with the sickest patients fare poorly under the
    VBM. There are problems with many aspects of the methodology, including
    risk adjustment attribution and communication of rules and results to
    physicians. We believe that more analysis and evaluation of the VBM and
    its underlying physician feedback reports is needed, and oppose its
    extension to other programs, such as the VCP.
                                   conclusion
        The AMA, on behalf of our physician and medical student members, is
    committed to helping ensure that our Nation's veterans receive
    comprehensive, timely, high-quality care. We applaud the Committee for
    its dedication to our Nation's veterans, and look forward to working
    with you to advance proposals to improve the Veterans Care Program and
    the care delivery experience for our veterans.
                                     ______

    Letter from National Association of State Directors of Veterans Affairs

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                     ______

      Prepared Statement of Nurses Organization of Veterans Affairs (NOVA)

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                     ______

               Prepared Statement of Mr. Kerry Metoxen, Manager,
                       Oneida Nation Veterans Department
        The Oneida Nation Veterans Dept. fully endorses an initiative to
    simplify the Appeals Process and supports VA's efforts to reform the
    Appeals Process to one that will better serve Veterans and tax payers.
    The current process is more than 80 years old and was implemented after
    WWI. Each appeal takes approximately 3-5 years to complete.
        The current process is failing Veterans, tax payers, and the
    American public.
                                     ______

              Prepared Statement of Max Stier, President and CEO,
                         Partnership for Public Service

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                     ______

              Prepared Statement of Paralyzed Veterans of America
        Chairman Isakson, Ranking Member Blumenthal, and Members of the
    Committee, Paralyzed Veterans of America (PVA) would like to thank you
    for the opportunity to submit our views on legislation pending before
    the Committee. The magnitude of the impact that veterans health care
    reform will have on present and future generations of veterans cannot
    be overstated, and we are proud to be part of this important
    discussion.
     s. 2633, the improving veterans access to care in the community act,
                                      and
              s. 2646, the veterans choice improvement act of 2015
        PVA's historical experience and extensive interaction with veterans
    around the country leads us to confidently conclude that veterans
    prefer to receive their care from the Department of Veterans Affairs
    (VA). We recognize, however, that while for most enrolled veterans VA
    remains the best and preferred option, VA cannot provide all services
    in all locations at all times. Care in the community must remain a
    viable option. As VA seeks to take the next major step in improving
    access to quality care for veterans, we appreciate the Committee's
    significant efforts in this matter and the Senators for sponsoring the
    legislation being considered during today's hearing. Both bills provide
    thoughtful approaches to incorporating community care and other health
    care resources in a consolidated and effective manner.
        As we consider legislation designed to reform VA health care, it is
    important to recognize that VA's specialized services, particularly
    spinal cord injury care, cannot be adequately duplicated in the private
    sector. Many advocates for greater access to care in the community also
    minimize, or ignore altogether, the devastating impact that pushing
    more veterans into the community would have on the larger VA health
    care system, and by extension the specialized health services that rely
    upon the larger system. Broad expansion of community care could lead to
    a significant decline in the critical mass of patients needed to keep
    all services viable. We cannot emphasize enough that all tertiary care
    services are critical to the broader specialized care programs provided
    to veterans. If these services decline, then specialized care is also
    diminished. The bottom line is that the SCI system of care, and the
    other specialized services in VA, do not operate in a vacuum. Veterans
    with catastrophic disabilities rely almost exclusively upon the VA's
    specialized services, as well as the wide array of tertiary care
    services provided at VA medical centers.
        Specialized services, such as spinal cord injury care, are part of
    the core mission and responsibility of the VA. As the VA continues the
    trend toward greater utilization of community care, Congress and the
    Administration must be cognizant of the impact those decisions will
    have on veterans who need the VA the most.
        PVA, along with our Independent Budget (IB) partners, Disabled
    American Veterans (DAV) and Veterans of Foreign Wars (VFW), developed
    and previously presented to this Committee a framework for VA health
    care reform. It includes a comprehensive set of policy ideas that will
    make an immediate impact on the delivery of care, while laying out a
    long-term vision for a sustainable, high-quality, veteran-centered
    health care system. Our framework stands on four pillars: 1)
    restructuring the veterans health care system; 2) redesigning the
    systems and procedures that facilitate access to health care; 3)
    realigning the provision and allocation of VA's resources to reflect
    the mission; and 4) reforming VA's culture with workforce innovations
    and real accountability. With this perspective, we offer our views on
    specific aspects of both S. 2633 and S. 2646, as well as the discussion
    draft legislation that would reform the Senior Executive Service (SES).
    I. Restructuring the system in a way that establishes integrated health
            care networks designed to leverage the capabilities and
            strengths of existing local resources in order to provide more
            efficient, higher quality and better coordinated care.
        PVA strongly supports the concept of developing high-performing
    networks that would seamlessly combine the capabilities of the VA
    health care system with both public and private health care providers
    in the community. The network structure proposed in S. 2633 is best
    suited to setting VA up for success in achieving this goal.
        By encouraging VA to develop a tiered network of eligible
    providers, the focus remains on providing not only increased access and
    choice, but the quality of care veterans earned and deserve. High-
    quality health care for veterans requires more than expanding options.
    Establishing a tiered network where VA is able to capture and
    synthesize information related to specific providers enables veterans
    to make informed decisions related to their care. This ultimately leads
    to better results. Consistent with this idea, a specific provision in
    S. 2646 alleviates situations where the ``best option,'' as indicated
    in VA's tiered network, might not be the best fit for the veteran due
    to his or her particular circumstances. The proposed language prevents
    VA from requiring a veteran to receive care or services from an entity
    in a higher tier than any other entity or provider network. We
    recommend this provision be incorporated in the final legislation this
    Committee passes.
        A tiered system also permits VA to identify culturally competent
    community providers who understand the unique needs of the veterans
    they serve. VA academic affiliates and the corresponding workforce
    training programs have long provided clinicians their first extensive
    exposure to the unique needs of the veteran patient community. As
    integrated networks are developed, it is important to recognize the
    value of having primary care providers in the community who have passed
    through the VA academic affiliate programs. It also gives VA a baseline
    for identifying community health care providers who have at least some
    level of cultural competency. Despite these long-standing partnerships,
    academic affiliates are conspicuously absent from the explicit list of
    eligible providers in S. 2646.
        Critical to such a restructuring is the ability to bring community
    care providers into the fold. S. 2633 and S. 2646 each address VA's
    request for authority to enter into non-Federal acquisition regulation
    (FAR) provider agreements. The current requirement that providers enter
    into agreements with VA governed by the FAR System have suffocated VA's
    attempts to expand access to care in a timely manner. Smaller health
    care provider organizations otherwise disposed to serve the veteran
    population are especially resistant to engaging in the laborious FAR
    process. And yet they remain a critical piece to filling the gaps in
    health care services in certain areas. PVA is concerned, however, that
    the implied directive in S. 2646 is for VA to exhaust FAR based
    acquisitions before turning to ``Veterans Care Agreements.'' To
    facilitate the efficient development of high-performing networks, we
    support the unambiguous language in S. 2633 which permits VA to utilize
    such agreements as it sees fit.
    II. Redesigning the systems and procedures that facilitate access to
            care in a way that provides informed and meaningful choices.
        PVA firmly believes that eligibility and access to care should be a
    clinically based decision made between a veteran and his or her doctor
    or health care professional. Once the clinical parameters are
    determined, veterans should be able to choose among the options
    developed within the high-performing network and schedule appointments
    that are most convenient for them. Access decisions dictated by
    arbitrary wait times and geographic distances have no comparable
    industry practices in the private sector. While both pieces of
    legislation contain the current 30-day wait time and 40-mile distance
    eligibility standards for care in the community, we highlight a subtle,
    but significant, shift in S. 2633's proposal to use the veteran's
    residence as the center of origin as opposed to the nearest VA
    facility. S. 2646 offers another enhancement by ensuring that any
    follow-up care, including specialty and ancillary services deemed
    necessary as part of the original treatment, is conducted by the same
    provider and considered one episode of care. This ensures that veterans
    are not shuttled back and forth between different providers, including
    VA, for ancillary services based on piece-meal eligibility
    determinations conducted on the basis of separate episodes of care.
        Effective care coordination is essential to producing high-value
    health care outcomes for veterans served by the proposed high-
    performing networks. Both bills propose measures aimed at streamlining
    the authorization process, payments to providers and the exchange of
    medical records. Modernizing these processes through automation and
    improved technology features will relieve stress on the current system
    and the veterans who fall victim to the financial distress
    inadvertently caused by lapses in the authorization and/or payment
    processes.
        Rather than employing the current Non-VA Care Coordination Program
    as proposed in S. 2646, VA should be permitted to modernize its care
    coordination efforts. VA's Choice Consolidation Plan spells out levels
    of care coordination administered based on the intensity of
    coordination needed. VA will directly manage care coordination for
    patients receiving care within its facilities and those eligible for
    care in the community based on wait times.
        For those veterans who are distance eligible for care in the
    community, a third-party administrator will be responsible for
    ``Basic'' care coordination. As a distance eligible patient's needs
    escalate, VA care coordination is available for ``Care/Disease
    Management'' and a more intensive level of oversight, ``Case
    Management.'' In light of VA's current proposals, we support the
    provision in S. 2633 which permits VA to establish procedures it
    considers appropriate to facilitating care coordination. The method
    proposed by VA offers the functionality and flexibility needed to
    ensure that patients with complex cases receive adequate attention and
    resources. It also allows VA to provide a level of care coordination
    that corresponds to each individual patient's complexity and needs,
    regardless of whether the veteran receives care in VA facilities or in
    the community.
        PVA applauds the sponsors and co-sponsors of S. 2633 for
    incorporating our proposals to expand access to emergency and urgent
    care. We have long opposed co-payments for veterans who are otherwise
    exempt, and we are glad to see this reflected in legislation.
        We do, however, continue our opposition to any requirement that a
    veteran have received VA care within the preceding 24 months in order
    to qualify for emergency and urgent care benefits. The strict 24-month
    requirement is problematic for newly enrolled veterans, many of whom
    have not been afforded the opportunity to receive a VA appointment due
    to appointment wait times, despite their timely, good-faith efforts to
    procure one. This barrier has caused undue hardship on veterans and has
    resulted in some receiving unnecessarily large medical bills through no
    fault of their own. Additionally, this provision discriminates against
    healthier veterans who otherwise do not need as much health care as
    other veterans and may go more than two years without being seen.
    III. Realigning the provision and allocation of VA's resources to
            reflect the mission.
        PVA supports the provisions in both bills which would require
    advance appropriations for the Veterans Health Administration, Care in
    the Community program to begin in fiscal year 2017. Not reflected in
    either piece of legislation is a plan for addressing VA's inability to
    take the long view toward strategic resource allocation and planning.
    Under the framework presented by PVA and our IB partners, we call for
    the implementation of a Quadrennial Veterans Review, similar to the
    Quadrennial Defense Review.
        Additionally, while much of the focus in this legislation is keyed
    to addressing smooth integration of community care, we would reiterate
    that the access issues plaguing VA have been exacerbated by staffing
    shortages within the VA health care system which impacts VA's ability
    to provide direct care. Evaluating VA's capacity to care for veterans
    requires a comprehensive analysis of veterans health care demand and
    utilization measured against VA's staffing, funding, and
    infrastructure. However, VA's capacity metrics are based on deflated
    utilization numbers that fail to properly account for the true demand
    on its system.
        For example, a shortage of nurses within the Spinal Cord Injury and
    Disease (SCI/D) system of care has precluded SCI/D centers from fully
    utilizing available bed space and has forced SCI/D centers to reduce
    the amount of veterans they admit. This has caused a decrease in the
    daily average census at some SCI/D centers and implies that there is a
    lack of demand on the system, when in reality veterans who want to
    access SCI/D care are turned away because those centers lack the staff
    to man available beds.
     discussion draft on title 38, united states code revisions for senior
                               executive service
    IV. Reforming VA's culture with workforce innovations and real
            accountability.
        PVA believes workforce innovation and accountability are critical
    to evolving the VA health care system into a truly dynamic system best
    suited to meet the demands of veterans. We applaud Secretary McDonald
    for acknowledging that employee experience is vital to its
    transformation efforts as a part of the MyVA initiative. The MyVA
    taskforce has developed a number of programs and initiatives to engage
    and empower VA employees. However, Federal hiring still reflects a
    mismatch between the skills desired and the compensation provided for
    many of the professionals VA recruits. If Congress is focused on
    bolstering VA's ability to fire poor-performing employees, Congress
    must also give VA the leverage to hire employees quickly and offer
    compensation commensurate with their skill level.
        With this in mind, we believe thoughtful consideration should be
    given to the draft proposal before the Committee, as put forward by the
    Secretary, which begins to address the question of workforce innovation
    and accountability, at least at the Senior Executive Service (SES)
    level. We do remain skeptical as to whether or not this draft
    legislation will produce meaningful accountability across the VA
    system, but we are convinced that the current system does not work.
    Additionally, while not contemplated by any of the bills on today's
    hearing agenda, workforce innovation and accountability are critical at
    all levels within the management structure of the VA. As VA is
    generally at a competitive disadvantage to hire and retain the best
    professionals in the health care field, the Committee should consider
    what additional incentives and tools the VA needs in order to enhance
    its ability to attract the best employees at every level, from the SES
    down to the bedside nurse.
        Last, as we have stated in previous testimony, we have consistently
    heard from veterans that their patient advocates are ineffective or
    seek to protect the medical facility's leadership instead of addressing
    their concerns. PVA believes that patient advocates cannot effectively
    meet their obligations to veterans if their chain of command includes
    VA medical facility staff that is responsible for the actions and
    policies they are required to address. If accountability is going to be
    a key tenet of reform, then PVA, along with our IB partners, recommend
    strengthening the Veterans Experience Office by combining its
    capabilities with the patient advocate program. Veterans experience
    officers would advocate for the needs of individual veterans who
    encounter problems obtaining VA benefits and services. They would also
    be responsible for ensuring the health care protections afforded under
    title 38, United States Code (U.S.C.), a veteran's right to seek
    redress through clinical appeals, claims under section 1151 of title
    38, U.S.C., the Federal Tort Claims Act, and the right to free
    representation by accredited veteran service organizations are fully
    applied and complied with by all providers who participate in Veterans-
    Centered Integrated Health Care Networks, both in the public and
    private sector.
                    s. 2473, the express appeals act of 2016
        PVA is pleased with the introduction of the Express Appeals Act in
    the Senate. This bill mirrors legislation recently passed in the House
    on February 9, 2016 (H.R. 800) as part of an omnibus bill (H.R. 677).
    We are glad to see that many of the recommendations we submitted in
    previous testimony were incorporated into the language prior to House
    approval, and those same recommendations are reflected in the Senate
    version presented here.
        This legislation is a good beginning and a framework for critical
    changes to the appeals process that may help veterans receive benefits
    they have earned more rapidly. While we understand there may be
    concerns about the fairness of allowing only new appeals, we strongly
    believe that limiting the participants to those entering the pilot at
    the initial Notice of Disagreement (NOD) stage will produce a much more
    accurate picture of the effectiveness of the process being tested.
        We also want to emphasize the importance of maintaining substantial
    veteran service organization (VSO) representative involvement
    throughout this process. Notifying VSO representatives who are working
    under a Power of Attorney of any actions or updates on their client's
    appeal is critical to ensuring veterans who opt in to this program do
    not miss out on the expertise VSO representatives bring to bear on
    their behalf.
        One of the strongest ways to impact the appeals process is to
    mandate that VA provide thorough notice of the basis for decisions on
    disability ratings. One cannot make an educated decision on whether to
    appeal a claims decision without knowing why it was denied. We support
    the provision in subsection (e)(2), which contemplates a review
    conducted in conjunction with VSOs as to the efforts of the Secretary
    to improve this aspect of the claims process.
        Finally, we maintain our position that a shift of employees from
    the Appeals Management Center (AMC) to the Board for purposes of
    developing claims should be done with strict oversight from this
    Committee. While it can be expected that reducing resources or manpower
    will have an impact on AMC's processing rate, we fear this may become
    an excuse by the Veterans Benefits Administration for why they are
    unable to complete traditional appeals.
                                     ______

              Prepared Statement of Senior Executives Association

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
                                     ______

     Prepared Statement of Richard Weidman, Executive Director For Policy
              and Government Affairs, Vietnam Veterans of America
        Mr. Chairman, Ranking Member Blumenthal and other distinguish
    members of the Senate Veterans' Affairs Committee, thank you for giving
    Vietnam Veterans of America (VVA) the opportunity to present our
    statement for the record regarding pending legislation before this
    Committee.
      s. 2633, the improving veterans access to care in the community act
        Responding to a crisis about access to VA health care, Congress
    enacted what is commonly referred to as the Choice Act in 2014.
    Expectations for this legislation were high, by Members of Congress,
    most VSOs, and veterans disgruntled with their treatment in VA medical
    centers and CBOCs.
        As with any startup, there were startup difficulties, that ought to
    have been anticipated, but weren't, beginning with the unrealistic
    demand that VA send out an initial mailing to all nine million or so
    veterans who use the VA for their health care needs. The essence of the
    new law was admirable: it was designed to fix a situation to provide
    timely and accessible care in communities where care could not be
    provided by a VAMC or CBOC in a timely manner. Ostensibly, a secondary
    benefit was to give the VA a handle on healthcare dollars expended
    outside of Veterans Health Administration facilities.
        However, there was also an unrealistic expectation in Congress of
    the demand for ``choice'' by the veterans this legislation was supposed
    to benefit; after all, the Choice Act responded to complaints of
    veterans in different parts of the country. In addition, at the time,
    there was inflexibility as to how the VA could spend a $10 billion pool
    of funds (which loosened only when VA Secretary Bob McDonald threatened
    to shutter or cut back operations of some VA hospitals because there
    were not enough funds on hand to meet demand for services in last
    quarter of FY15).
        The ``Improving Veterans Access to Care in the Community Act,
    introduced by Senator Jon Tester and colleagues Senators Blumenthal and
    Brown, seeks to further remedy situations when a VA healthcare facility
    is unable to furnish hospital care and medical services to eligible
    veterans for a variety of reasons.
        VVA endorses S. 2633 except for the provision in Title 1, 1703A (2)
    (F) that a veteran may be ``assigned a primary care provider * * * that
    is not a health care provider of the Department.'' Primary care,
    including a determination that a veteran may need mental health care,
    must be a direct function of the VA--to establish a viable electronic
    health record and to coordinate the best possible care for a veteran.
        Nowhere in this legislation is any requirement that the VA must
    refer management of non-VA care to a third party, e.g., HealthNet,
    TriWest. In fact, we see no real need to spend hundreds of millions of
    healthcare dollars to any outside entity to manage Choice. There is no
    reason why, with proper training and assistance of a traveling ``tiger
    team'' from VACO, each VAMC cannot establish arrangements and come to
    agreements with a network of healthcare providers in its area. Going
    through an outside entity to do this work is not an efficient and
    effective expenditure of limited healthcare dollars.
        The ``tweaks'' to Choice in S. 2633 are viable and valuable, and
    VVA endorses enactment of this legislation with the exception noted
    above.
              s. 2646, the veterans choice improvement act of 2016
        This bill is, in essence, competing legislation with S. 2633 as
    this bill has been introduced by Senator Richard Burr and cosponsors
    Senators Tillis, Boozman and Moran. In addition, whereas S. 2633
    sunsets on 31 December 2017, S. 2646 includes no deadline for Choice.
        Obviously, many in Congress--from both sides of the aisle--are less
    than enthusiastic at the present about the management capabilities of
    the VA, particularly the Veterans Health Administration. Still, an
    amalgam of the ``best'' provisions in S. 2646 and S. 2633 can be
    achieved, and will be of benefit to those veterans who will be best
    served by accessing health care in their community or within a more
    reasonable distance than a VA healthcare facility).
        The need for rationalizing purchased care outside of VHA is real.
    Congress, however, must note that the majority of veterans eligible for
    VA health care, are content and, in many cases, enthusiastic, about
    their treatment in a VAMC or CBOC. They appreciate the ``one-stop
    shopping'' at a VAMC. And those with special, or unique, needs--
    veterans with spinal cord injury, with amputations from combat or
    necessitated by disease, with blindness--can find superior health care
    at a VA facility, even if it means they have to travel more than an
    arbitrary 40 miles or have to wait more than 30 days for an
    appointment. In fact, Congress should note that making appointments for
    non-VA health care sometimes takes more than 30 days, as many veterans
    are finding out.
        Choice is, and must be, an adjunct to health care provided at a
    VAMC or CBOC. In fact, the VHA was purchasing more than $5 Billion in
    outside care before the Choice Act. Overall, the VA healthcare system,
    despite its well-publicized mis-steps, is the largest, and finest,
    integrated system in the country. Inasmuch as both S. 2646 and 2633
    attempt to improve healthcare delivery to eligible veterans--without
    supplanting the VA as primary healthcare provider--they are worthy of
    enactment into black-letter law. VVA can support this legislation as
    written.
                    s. 2473, the express appeals act of 2016
        Understandably, many veterans appealing the decision of a Veterans
    Benefits Administration (VBA) adjudicator are frustrated by how long it
    takes for the Board of Veterans Appeals (BVA) to render its decision.
    S. 2473, introduced by Senator Dan Sullivan, a Republican, with two
    Democrats and one Republican original cosponsors, is an attempt to
    break any logjam before it reaches crisis proportions (which some would
    argue already exists, with more than 450,000 appeals to be
    adjudicated).
        S. 2473, dubbed the ``Express Appeals Act of 2016,'' places the
    burden of filing a substantially developed appeal on the appealing
    veteran--in an attempt to rectify the VA's own folly in robbing
    resources from appeals to adjudicate claims to reduce a backlog that
    had been approaching 1 million. Sure, the VA, in responding to pressure
    from Congress and the VSO community, was able to eliminate this
    backlog. Nevertheless, as the VA gradually got a handle on processing
    claims, which now are down to a reasonable number, appeals have
    exploded. Lesson: the VA cannot continue to rob peter to pay paul.
        The major stakeholders in appeals of veterans' claims met for three
    full days last week to hammer out a framework that will speed veterans'
    appeals without compromising a veterans' right to due process under the
    law. Staff members from both sides of the aisle joined us on Thursday
    afternoon to see what had come of these intensive discussions thus far.
    The same group will re-convene on this coming Thursday to begin the
    effort to more fully develop agreement on the elements that need to be
    incorporated into this structure.
        VVA opposes S. 2473 in its current form, and urges the Committee to
    wait until we see whether all sides can come to agreement on a
    framework that will work from everyone's point of view. When such a
    tentative a document is reached, with input from your staff, we hope
    that the distinguished Senators on the Committee will consider the
    proposal(S), and move forward with any needed statutory changes.
       discussion draft, title 38 appointment, compensation, performance
     management, and accountability system for senior executive leaders in
                       the department of veterans affairs
        This potential bill is inspired, obviously, by the recent
    embarrassing mess when two senior VBA employees engineered transfers of
    two VA Regional Office directors so that they could then fill these
    positions themselves. Once this untoward and unethical affair was
    revealed, however, VA leadership stepped all over themselves as the
    current bureaucracy of appeals in effect rewarded rather than punished
    these two executives for their flagrant acts that benefited only
    themselves and not the veterans they are supposed to there to serve.
        This draft bill would, as it states up front, ``establish a
    comprehensive employment system under Title 38 for VA's Senior
    Executive level leadership positions.'' In addition, let us acknowledge
    what is known within the VA and in Congress: that serious flaw in VA
    leadership positions do exist, to the detriment of veterans.
        This goal of this potential bill is ``to ensure that VA can operate
    as a values-based high performance organization rather than a
    compliance-focused underperforming bureaucracy.'' It is obvious that
    this contemplated legislation is the product of business-oriented VA
    leadership starting at the top with a Secretary whose career has been
    primarily in corporate America. It would, in effect, give the VA
    Secretary the authority, as conceived in the Choice Act, to ``move
    quickly and decisively to remove or demote those VA executives whose
    misconduct or poor performance undermine veterans' trust in VA care and
    services.'' However, it also would add a degree of rationality in
    determining the compensation for senior executives based on ``the
    complexity of the position held; an analysis of the local labor market
    for similar positions in private and other Federal sector
    organizations; and the individual executive's experience and
    performance in the position and/or in other VA assignments.'' Ideally,
    enactment of the basic elements of this proposed legislation would
    upgrade leadership in critical positions of authority within the VA.
        If the intent is to attract and retain gifted individuals,
    compensation is, of course, a significant factor. Nevertheless, the
    language herein fails to acknowledge that many individuals join Federal
    service because of generous, and guaranteed, pensions, even if their
    rate of pay is not up to par with colleagues in private employ.
        Now, there are many reasons (see above) that such a significant
    change in how senior executives are recruited and retained is
    attractive. However, there are dangers inherent in any attempt to give
    a Secretary far more discretion in demoting or removing top executives
    from their positions, e.g., if an executive's decision on a particular
    issue are rational, logical, and necessary, a Secretary might cave to
    political opposition to silence such an executive.
        Another danger is inherent in the actual operation of good
    intentions. In the background of this bill is this: ``. . . VA must
    revamp its systems for assessing and rewarding performance to ensure
    executive-level leaders' performance ratings accurately reflect the
    performance of the enterprise. This requires both that we set
    meaningfully outcome-oriented performance goals and that we discipline
    ourselves in assigning ratings so that only the most outstanding and
    transformational leaders receive the highest marks'' (italics added).
    Because if the current system for awarding bonuses to senior executives
    is any indication, it is too easy to give just about everyone a bonus,
    even if they are failing in achieving positive results in the programs
    they oversee.
        This potential bill certainly is worthy of consideration by the
    SVAC and HVAC. On the other hand, a ``roundtable'' hosted by the
    Committee may be useful. Perhaps such discussions will lead to
    improvements in the bill, and strong support by VSOs and other
    stakeholders.

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