[Senate Hearing 114-735]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 114-735
 
    VA'S TRANSFORMATION STRATEGY: EXAMINING THE PLAN TO MODERNIZE VA

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 21, 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

                              ----------                              

                            January 21, 2016
                                SENATORS

                                                                   Page
Isakson, Hon. Johnny, Chairman, U.S. Senator from Georgia........     1
Blumenthal, Hon. Richard, Ranking Member, U.S. Senator from 
  Connecticut....................................................     3
Tillis, Hon. Thom, U.S. Senator from North Carolina..............    27
Tester, Hon. Jon, U.S. Senator from Montana......................    29
Moran, Hon. Jerry, U.S. Senator from Kansas......................    32
Heller, Hon. Dean, U.S. Senator from Nevada......................    34
Boozman, Hon. John, U.S. Senator from Arkansas...................    37
Sullivan, Hon. Dan, U.S. Senator from Alaska.....................    38
Murray, Hon. Patty, U.S. Senator from Washington.................    41
Rounds, Hon. Mike, U.S. Senator from South Dakota................    44
Manchin, Hon. Joe, U.S. Senator from West Virginia...............    47

                               WITNESSES

McDonald, Hon. Robert A., Secretary, U.S. Department of Veterans 
  Affairs; accompanied by David J. Shulkin, M.D., Under Secretary 
  for Health; and Danny Pummill, Interim Under Secretary for 
  Benefits.......................................................     4
    Prepared statement...........................................    10
        Appendix A-article from The Baltimore Sun................    21
    Response to posthearing questions submitted by:
      Hon. Johnny Isakson........................................    53
      Hon. Richard Blumenthal....................................    65
      Hon. Sherrod Brown.........................................    69

                                APPENDIX

American Federation of Government Employees, AFL-CIO (AFGE); 
  prepared statement.............................................    73
Zumatto, Diane M., National Legislative Director, AMVETS; 
  prepared statement.............................................    74
Concerned Veterans for America (CVA); prepared statement.........    78
Joy J. Ilem, National Legislative Director, DAV; prepared 
  statement......................................................    80
Paralyzed Veterans of America (PVA); prepared statement..........    84
The American Legion; prepared statement..........................    85
Fuentes, Carlos, Senior Legislative Associate, National 
  Legislative Service, Veterans of Foreign Wars of the United 
  States (VFW); letter...........................................    86


    VA'S TRANSFORMATION STRATEGY: EXAMINING THE PLAN TO MODERNIZE VA

                              ----------                              


                       THURSDAY, JANUARY 21, 2016

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:01 a.m., in 
room 418, Russell Senate Office Building, Hon. Johnny Isakson, 
Chairman of the Committee, presiding.
    Present: Senators Isakson, Moran, Boozman, Heller, Rounds, 
Tillis, Sullivan, Blumenthal, Murray, Brown, Tester, Hirono, 
and Manchin.

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

    Chairman Isakson. I want to call the meeting of the Senate 
Veterans' Affairs Committee together to get started, and I want 
to expedite our meeting. I would like for everybody to pay 
close attention so they do not think I am rushing the thing 
through. We have a storm coming. We have a vote at 10:30. We 
have a lot of people moving and a lot of pieces in place, 
including some of our witnesses that are here today. We are 
going to start promptly at 10, which we are doing. I will make 
a brief opening statement. If the Ranking Member is here in 
time, I will recognize him. If not, he can make his statement 
later on in the hearing.
    We will then go to Secretary McDonald, who has asked--and I 
have granted--for no limitation on time, so we do not have a 5-
minute red light. We are going to let him take the time he 
needs to make his testimony, which I think is only appropriate 
given the serious intent of this particular hearing. I would 
like to thank Senator Tillis and Senator Tester, the two who 
originated the idea of having the Secretary come to lay out the 
entire vision for the VA and the I-CARE program. I am glad the 
Secretary has come and agreed to do that. I am delighted to be 
able to--and the Ranking Member has made it, so you are lucky. 
You are not going to get cut out after all. [Laughter.]
    Any Member of the Committee, other than the Ranking Member 
and myself, who wants to make a statement can submit it for the 
record after the hearing is over. I will make a brief statement 
and then go to Senator Blumenthal, and then we will go directly 
to the Secretary. Hopefully, we can accomplish all of that 
before the 10:30 vote. We will then go to vote at 10:30 and 
rush back here for unlimited questioning until noon today. I 
thank everybody for being here.
    I want to, first of all, especially thank Dale Barnett. 
Dale, would you stand up for a second and remain standing? I 
just love to tell officers that. [Laughter.]
    Dale is The American Legion National Commander. He is from 
Douglasville, GA, which is the county next to my county of Cobb 
in the State of Georgia. He is from the Fayetteville Legion 
Post. Is that not correct?
    Mr. Barnett. That is correct.
    Chairman Isakson. We want to thank you for your service, 
and that of all of your members, to our country and for your 
continuing service to help support us on this VA Committee. You 
are the eyes and the ears in the clinics, in the CBOCs, and in 
the hospitals that give us the feedback for us to try and see 
to it that we hold the Veterans Administration accountable.
    Nobody has a better, more conscientious, more constructive 
view than The American Legion. I want to thank you for what you 
all have done. I appreciate you being here to hear this today 
and I will appreciate your comments. I have read some of them 
already, but after the hearing, any additional comments you 
have for the record, we will be happy to submit. Welcome, we 
are glad to have you here.
    Mr. Barnett. Thank you, Mr. Chairman.
    Chairman Isakson. I want to talk about three things in my 
opening remarks and three things only. I am interested in 
making Choice ultimately work for the veteran, the Veterans 
Administration, and for the taxpayer. We had some issues come 
up recently in anticipation of this hearing taking place, and I 
am going to make them public in my testimony so the Secretary 
can at a point in time in his testimony address those.
    We had a situation in New Hampshire in the past couple of 
weeks where we have lost providers, which I think Dr. Shulkin 
is already aware of. The issue basically gets down to prompt 
pay. We have got to get a situation in the Veterans 
Administration where a physician can reasonably anticipate a 
prompt payment for services rendered under the Choice Program, 
or Choice will not work. In my hearing that the Secretary was 
kind enough to come to in Hall County in Gainesville, GA--I 
guess back in December or November of last year--we learned 
that some of the cumbersome nature of the paperwork that is 
required by the third-party administrators to get an 
appointment set up has to be worked on between the VA and the 
third-party administrator. Once the appointment is set up and 
the bill is actually sent, the VA has to expedite or reasonably 
speed up the prompt payment so a doctor or a physician in a 
hospital will really want to provide that benefit. That is the 
goal I would like to see us continue to work on and do 
everything we can to do.
    We also had the CACI situation in my State of Georgia, 
which I think the Secretary is already familiar with, as well 
as the other Members. We continue to find cases where the 
Inspector General finds backlogs in terms of records. In the 
case of CACI, we had boxes of records that were supposed to 
have been scanned and put in the VA system that were stacked up 
in a corner, which was bad for veterans, bad for 
accountability, and something we need to work on to make sure 
we do.
    The point I am trying to make is that it is the little 
things that get you, not the big things. The big vision in 
terms of the VA for the Secretary is one I admire, and I am 
looking forward to hear from him. It is the little things that 
fall through the cracks that cause you the biggest problems, 
and I think for all of us on the Committee who are in our 
districts on a daily basis, it is prompt pay, it is 
accessibility to the Choice Program, and it is accountability 
within the VA. It is kind of a no excuses, ``the dog ate my 
homework'' type of environment, but instead a can-do type of 
environment.
    The Secretary has been a great leader for the Department 
since he was sworn in July, I think, of 2015. Is that not 
correct?
    Secretary McDonald. Yes, sir.
    Chairman Isakson. We have about 11 months to go under the 
current administration. We want to make every single month 
count for our veterans and for the taxpayer. I look forward to 
chairing the Committee as we work hand in hand to do that, 
overcome our obstacles, bring about accountability, and provide 
better service at a better cost to the veterans of the United 
States of America.
    With that, I will recognize Ranking Member Blumenthal.

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

    Senator Blumenthal. I am not sure that I would take that as 
a compliment because, frankly, Mr. Secretary, your job is a lot 
more difficult than ours. We thank you for your very diligent 
and dedicated work, and that as well of your colleagues who are 
with you today.
    Today is an important hearing because the VA is at a real 
milestone turning point. With the last stretch of the 
administration ahead, the opportunity to make fundamental 
cultural and institutional changes is fast disappearing. So, 
today's hearing is about your vision and the plan to achieve 
it. It is a tremendous opportunity because there is a lot of 
work to be done, but it is also a tremendous challenge. I know 
that you have been working at it very hard and very long.
    I am focusing on a number of changes that I think are very 
important. Obviously, consolidating care in the community, the 
VA has estimated the annual cost of care through the current 
Veterans Choice Program would be about $6.5 billion with an 
additional $7 billion in general community care. That is about 
$13.5 billion, which seems largely unsustainable at the present 
rate. So, something needs to be done.
    The inventory of appeals at the VA has skyrocketed to 
440,000. That is 440,000 claims that are under appeal and need 
to be in some way expedited. I am a supporter and a cosponsor 
of the Veterans Appeals Assistance and Improvement Act of 2015, 
which would change current law to expedite the most egregiously 
delayed claims, namely, those over 8 years old. It is hard to 
believe that some claims are over 8 years old, but if they are, 
there is simply no reason that they should not be expedited.
    And, finally, Rob Nabors in his report of June 2014 talked 
about the corrosive culture at the VA which has led to 
personnel problems across the board. Changing the culture is a 
big job, and partly it will impact the ability to fill VHA open 
positions, which I know has been one of your priorities. One of 
the goals of the Department in 2016 is to increase access to 
health care and reduce the amount of time it takes to fill open 
positions by 30 percent. That is a critically important goal 
because 900 vacancies, which I think is the last number that I 
saw, means there are 900 fewer people than there should be to 
be caring for our veterans.
    So, those are among my concerns, and we are looking forward 
to hearing from you, and, again, thank you for your work at the 
Department.
    Chairman Isakson. Secretary McDonald, you are recognized. 
The floor is yours.

     STATEMENT OF HON. ROBERT A. McDONALD, SECRETARY, U.S. 
    DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY DAVID J. 
 SHULKIN, M.D., UNDER SECRETARY FOR HEALTH; AND DANNY PUMMILL, 
              INTERIM UNDER SECRETARY FOR BENEFITS

    Secretary McDonald. Thank you. Chairman Isakson, Ranking 
Member Blumenthal, Members of the Committee, thank you for this 
opportunity to discuss the important transformation of VA, what 
we call ``MyVA.''
    My personal thanks also to Senators Tom Tillis and Jon 
Tester for meeting with us repeatedly to hone our 
transformation plans. I believe they know MyVA is about 
fulfilling the Nation's obligation to those who have served and 
that they share our vision for VA to become the number 1 
customer service agency in the Government. We have a lot of 
work to do to reach that goal, but we are making progress.

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    This chart reflects the tremendous work done by our 
Veterans Benefits Administration in reducing the backlog of 
disability claims, an almost-90-percent reduction in the 
backlog since March 2013.
    Our National Cemeteries Administration (NCA) is already 
rated number 1 in the Nation by the American Customer 
Satisfaction Index (ACSI). ACSI rates all customer service 
companies in the Nation, and NCA came out on top. We aim to 
make it so for all of VA.
    Last year, J.D. Power rated our consolidated mail 
outpatient pharmacy with the highest customer satisfaction 
score among the Nation's public and private mail-order 
pharmacies for the sixth year--higher than Kaiser, higher than 
Humana, higher than Walmart.
    That said, let me tell you about our framework to transform 
all of VA by combining functions, simplifying operations, and 
providing veterans care and services so that they see VA as 
their VA, MyVA, a world-class, customer-focused, veteran-
centered service organization.

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    This chart shows our five critical MyVA objectives. First, 
we want to improve the veteran experience. Every contact 
between veterans and VA should be predictable, consistent, and 
easy. It begins with respectfully receiving our veteran 
clients, but it is also a science. We are focusing on Human-
Centered Design, process mapping, and working with exceptional 
design firms and companies to make every interaction with our 
clients better.
    Second, we need to improve the employee experience. We 
cannot make things better for veterans without improving the 
work environment of employees. It is no coincidence that the 
best private sector service organizations are also the best 
places to work.
    Third, we need to improve internal support services. We 
must enable employees and leaders by bringing our IT 
infrastructure into the 21st century. Our scheduling system 
dates to 1985. Our financial management system is written in 
COBOL, a language I used in 1973. This is unacceptable, and it 
impedes our efforts to serve veterans.
    Fourth, we need to establish a culture of continuous 
improvement. We will apply Lean Six Sigma strategies and other 
performance improvement capabilities to help employees improve 
processes and build a culture of continuous improvement.
    Last, enhancing strategic partnerships. Expanding our 
partnerships will allow us to extend the reach of services 
available for veterans and their families.
    The MyVA is a framework for modernizing VA's culture, 
processes, and capabilities to put the needs and interests of 
veterans and their families first. Changes to leadership were 
also necessary. Ten of our top 16 executives are new since I 
became Secretary. All of them have substantial business 
experience. Our new leadership team feels comfortable having 
honest and sometimes tough discussions to transform VA. This 
team includes a former banking industry CFO and the president 
of the USO; a former CEO of Beth Israel Medical Center and 
Morristown Medical Center; a former chief executive of Jollibee 
Foods and president of McDonald's Europe; a former CIO of 
Johnson & Johnson and Dell; a former chief customer officer for 
the city of Philadelphia who spent 10 years at USAA; a retired 
Disney executive who spent 2010-11 at Walter Reed enhancing the 
patient experience; and I am the former chairman, president, 
and chief executive officer of the Procter & Gamble company.
    Our MyVA Advisory Committee, led by Chairman Joe Robles, a 
retired U.S. Army major general and former chairman and CEO of 
USAA, is also comprised of a diverse group of business leaders, 
medical professionals, and experienced Government executives. I 
knew that we needed outside expert advice on business and 
government transformation, so I recruited these leaders well 
before the independent commission was established to help 
advise our team on VA transformation.
    We are working collaboratively with many world-class 
institutions to capture ideas and best practices as we 
transform. As well, we are listening to key stakeholders, even 
those who are critical of VA.
    We are forming strategic partnerships with external 
organizations to leverage their good will, their resources, and 
their expertise to better serve veterans. VA cannot do 
everything itself. Over the last year, we have cultivated 
meaningful partnerships in employment, ending homelessness, 
wellness, and mental health, with dozens of productive 
partners. We are streamlining business processes with community 
care providers, reimagining how we obtain services such as 
billing, reimbursement, and information sharing. We must 
operate as part of a community of care.
    We know that VA has significant issues that need to be 
addressed, so we are listening to others' perspectives, and we 
are investing in our people. We are running the Government's 
second largest Department like a $181 billion Fortune 6 
organization should be run, balancing the near-term performance 
improvements while rebuilding the long-term organizational 
health of VA.

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    We have narrowed down our near-term focus to 12 
breakthrough priorities, as shown on this slide. On the left 
are eight veteran-facing priorities. On the right are four VA-
facing priorities. Make no mistake: All 12 are designed to 
improve the delivery of timely care and benefits to veterans. 
We had many accomplishments in these areas in 2015, but I will 
spend most of my time focusing on what we will accomplish in 
2016. These are the stretch objectives that we are committed 
to. We understand this will be a challenge, but we are 
committed to producing results for veterans.
    First, improve the veteran experience. In 2015, we named 
VA's first Chief Veteran Experience Officer and began staffing 
that office that will set customer service standards, spread 
best practices, and train employees. We are creating a national 
network of community veteran engagement boards to leverage non-
VA assets to meet veterans' needs. We have established 36 
communities with 15 more in development. In fact, the Ranking 
Member attended the event that we had in Connecticut where we 
established one of our very first Community Veteran Engagement 
Boards.
    In 2016, we will establish department-wide customer 
experience measurements to enable service improvements and 
increase veterans' trust in the VA from 47 percent--that is the 
baseline data that we have gotten--to 70 percent.
    We will also ensure our Veterans Experience Office is fully 
operational and expand our network of Community Veteran 
Engagement Boards to over 100. Our medical centers will be 
fully staffed at the front line with well-prepared, customer-
oriented employees.
    Second, increased access to health care. Last year, VA 
increased the number of veteran appointments by more than 1.2 
million and completed over 96 percent of appointments in 
October within 30 days of clinically indicated or veteran's 
preferred dates. By the end of this year, when veterans call or 
visit primary care at a VHA medical center, their clinical 
needs will be addressed that day. Enrolled veterans will 
conveniently get medically necessary care, referrals, and 
information from any VA medical center.
    Number 3, improve community care. In 2015, VA issued 
authorizations resulting in 12 million community care 
appointments, thanks to the flexibility of the Choice Act. In 
2016, pending legislation that we need, VA will begin 
consolidation and streamlining of access to our care in the 
community network. Veterans will see a community provider 
within 30 days of referral. Community care claims will be 
processed and paid within 30 days 85 percent of the time, and 
the claims backlog will be reduced to less than 10 percent of 
inventory.
    Number 4, deliver a unified veterans experience. Last 
November, VA launched the initial Vets.gov capability. This is 
a mobile-first, cloud-based Web site that will replace numerous 
other Web sites with a single log-in. In 2016, Vets.gov will 
provide veterans, their families, and caregivers with the top 
100 search terms found within one click. Additionally, 100 
percent of content, features, and forms from the current 
public-facing VA Web sites will be redesigned, rewritten in 
plain language, and migrated to Vets.gov, prioritized by 
veteran demand.
    Five, modernize contact centers, including the Veterans 
Crisis Line. Last year, the heroic staff of our Veterans Crisis 
Line in Canandaigua, New York, was featured in the Oscar-
winning documentary ``Crisis Hotline: Veterans Press 1.'' They 
answered over 490,000 calls, initiated the dispatch of 
emergency services to callers in imminent crisis over 11,000 
times, and provided over 81,000 referrals to VA suicide 
prevention coordinators. By the end of this year, veterans in 
crisis will have their call promptly answered by an experienced 
responder at the Veterans Crisis Line. All veterans will be 
able to access the VA contact centers 24 hours a day, know 
where to call to get their questions answered, receive prompt 
service and accurate answers, and be treated with kindness.
    Number 6, improve the Compensation and Pension Exam 
Process. Many veterans find the C&P Exam, often their first 
impression of VA, to be confusing. Last year, VBA, VHA, and our 
Veterans Experience team worked to redesign the process using 
Human-Centered Design and Lean techniques. By February, we will 
have a baseline metric in place to measure veteran satisfaction 
with the C&P Exam process, and by the end of 2016, we will 
complete a national rollout of initiatives demonstrating 
improvement in Veterans Experience with the C&P Exam.
    Number 7, develop a simplified appeals process. We have 
driven down the disability claims backlog to fewer than 82,000 
from a peak of 611,000 in March 2013, fully transitioning 
processing from paper to electronic, eliminating 5,000 tons of 
paper a year. We decided 1.4 million disability compensation 
and pension claims for veterans and survivors. That is the 
highest for VA in a single year.
    In 2016, subject to successful legislation, we will put in 
place a simplified appeals process enabling the Department to 
resolve 90 percent of appeals within 1 year of filing by 2021.
    Number 8, continue progress in reducing veteran 
homelessness. Last year, we provided services to more than 
365,000 homeless or at-risk veterans and placed almost 108,000 
in permanent housing or prevented them from being homeless. In 
2016, we will continue reducing veteran homelessness and 
demonstrate progress toward an effective end by assisting an 
additional 100,000 veterans and family members.
    Number 9--these are the internal-facing initiatives--
improve employee experience. In 2015, we launched a program 
called Leaders Developing Leaders, which trained over 5,000 
leaders. We also trained critical parts of our workforce in 
Lean and Human-Centered Design to improve and encourage problem 
solving. In 2016, we will continue improving the employee 
experience by developing engaged leaders who inspire and 
empower employees to deliver seamless, integrated, and 
responsive customer service and have over 12,000 leaders 
trained in these Leader Developing Leader principles. All VA 
employees will have a customer service standard in their 
performance plans.
    Number 10, staff critical positions. In 2015, we hired over 
41,00 employees, a net increase of almost 14,000 health care 
staff, or a 4.7-percent increase that included over 1,300 
physicians and 3,600 nurses. Additionally, we filled several 
critical leadership positions to include the Under Secretary 
for Health, the Chief Information Officer, and the Chief 
Veterans Experience Officer.
    In 2016, our targets include 95 percent of medical center 
director positions filled with permanent appointments and 90 
percent of other critical shortages addressed, while reducing 
``time to fill'' vacant positions standards by 30 percent.
    Number 11, transform our Office of Information and 
Technology. In July 2015, LaVerne Council was confirmed as our 
new Chief Information Officer. She has developed a multi-year 
plan for a world-class IT organization.
    In 2016, our key IT goals include ensuring 15 percent of 
our IT projects are on time and on budget. We will stand up an 
account management office and develop portfolios for all 
administrations. One hundred percent of IT's executive 
performance goals will be tied to strategy goals, and we will 
close 100 percent of current cybersecurity weaknesses. We will 
develop a holistic veteran data management strategy, implement 
an IT quality and compliance office, and finalize 
congressionally mandated interoperability requirements.
    Number 12, transform the supply chain. In 2016, we will 
build an enterprise-wide integrated medical surgical supply 
chain that leverages VA's scale to drive an increase in 
responsiveness and a reduction in operating costs, with $150 
million plus of cost avoidance, which we will redirect to 
priority veterans programs.
    Those are our 12 action steps for 2016, including the 
commitments that we have made to get them done. We are 
rigorously managing each of these breakthrough priorities by 
instituting a department-level scorecard, metrics, and tracking 
system. Each priority has a responsible individual and a cross-
department team that meets every other week with either the 
Secretary or the Deputy Secretary.
    Mr. Chairman, VA is grateful for your continuing support 
and appreciates your efforts to pass legislation enabling high-
quality veterans' care. We have identified a number of 
necessary legislative items that we need your help with in 
2016. Details are in my written statement, but we need 
assistance with consolidation of care in the community, 
flexible budget authority, support for the Purchased Health 
Care Streamlining and Modernization Act, special legislation 
for VA's West Los Angeles campus, and overhauling the claims 
appeals process. I also encourage the Committee to support 
other key legislative proposals in the President's 2017 budget 
that will be delivered on February 9.
    Last, we need your assistance in supporting the cultural 
change of MyVA to transform the Department. We need you to have 
the courage to help make the changes you are asking VA to make 
and that we must make. Your legislative support in these areas 
is critical to achieve irreversible momentum for our MyVA 
transformation.
    On behalf of the vast majority of VA employees who work 
hard and do the right thing for veterans every day, thank you 
again for this opportunity. We look forward to working together 
to solve what I believe is one of the most important national 
issues: caring for those who protect our freedom. We have the 
capability and determination to make a difference in veterans' 
lives, to make the Department the best it can be so that every 
veteran's experience with VA is world-class. We know we can do 
this.
    Thank you.
    [The prepared statement of Secretary McDonald follows:]
         Prepared Statement of Robert A. McDonald, Secretary, 
                  U.S. Department of Veterans Affairs
    Chairman Isakson, Ranking Member Blumenthal, and Members of the 
Committee. Thank you for the opportunity to discuss the radical 
transformation that the Department of Veterans Affairs (VA) is 
undergoing.
    I am accompanied today by Dr. David Shulkin, Under Secretary for 
Health, and Mr. Danny Pummill, Acting Under Secretary for Benefits.
    Mr. Chairman, our vision for the future is to be the No. 1 
customer-service agency in Government. Our cemeteries administration is 
already rated No. 1 in that respect by the American Customer 
Satisfaction Index. We aim to make it so for all of VA.
    In order to successfully transform VA, we are looking at the entire 
Department--not at incremental changes to parts of it. We began by 
immediately reinforcing the importance of our inspiring mission, caring 
for those ``who have borne the battle,'' their families, and our 
survivors. Then, we re-emphasized our exceptional I-CARE Values: 
Integrity, Commitment, Advocacy, Respect, and Excellence. Everything we 
do must be built on this rock solid foundation of mission and values to 
provide timely quality care and benefits for Veterans.
    I conducted an assessment of the status quo at VA in my first 
couple of months as Secretary. I shared the results of that assessment 
with President Obama and gained his input. During this time, I had 
discussions with you and other Members of Congress privately and during 
hearings. I spoke to thousands of Veterans, VA clinicians, and VA 
employees. I held dozens of meetings with VSOs and other stakeholders. 
I recognized from this assessment that we would need to change 
fundamental aspects of every part of VA to rise to excellence.
    We have a distinguished mission and the right, inspiring values--
but we were not demonstrating the attributes of a High Performance 
Organization (HPO):
                Chart 1: High Performance Organizations
                
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    This chart shows a model I developed over my many years in the 
private sector, where these attributes, or the lack of them, could make 
or break an organization. My assessment revealed VA had many issues 
blocking our path to becoming a High Performance Organization.

     Purpose, Values & Principles: We have a noble mission and 
outstanding values, but inconsistent behavior--a few in our workforce 
were not keeping our mission in mind and not adhering to our values. 
They are being held accountable. Due to a culture of risk aversion, 
fear, and reprisals, we were not always executing our mission as well 
as we could or living our values consistently.
     Technical Competence: VA was often plagued by misplaced 
priorities, staffing shortfalls, and severe hiring challenges. We have 
to give the workforce what they need to succeed.
     Passionate Leadership: We often suffered from a leader-
employee disconnect, an overly strict hierarchy, middle management 
complexity, and communications gaps.
     Sound Strategies: We had many of them, but all too often 
they were not effectively deployed.
     Robust Systems: Many of our existing systems acted as 
impediments rather than catalysts for effective service to Veterans.
     High Performing Culture: We found the culture within the 
Department formal and hierarchical, rules-based, with ineffective 
problem-solving systems.

    Despite these shortcomings, I found dedicated, purposeful people 
serving an inspiring mission everywhere I visited during my travels, 
which now include more than 264 trips to VA facilities and events in 
more than 100 cities. The face of VA looks very much like the face of 
each Veteran, family member, employee, student, researcher, and Member 
of Congress that it touches every day.
    In terms of VA healthcare, I've come to recognize the unique 
combination of what VA care provides: Research leading to major 
advances in medicine, such as pioneering and developing modern 
electronic medical records, developing the implantable cardiac 
pacemaker, conducting the first successful liver transplant, creating 
the nicotine patch to help smokers quit, artificial limbs that move 
naturally when stimulated by electrical brain impulse, and creating 
applied bar-code software for administering medications to patients--
the initiative of a VA nurse; training that is essential to building 
and maintaining proficiency of health care--70 percent of American 
doctors receive training from VA; and delivery of clinical care that is 
often Veteran-specific, including polytrauma care for some of our most 
seriously wounded Veterans and the treatment of Traumatic Brain 
Injuries and post-traumatic stress.
    We have an obligation to be transparent with the American people 
about both our strengths and weaknesses and to inform them about the 
exceptional work VA accomplishes each day for our Veterans. My views on 
the importance of VA health are best captured in my Baltimore Sun Op 
Ed, dated October 23, 2014 (see Appendix A).
    Since my initial assessment of the Department, subsequent studies 
and assessments, to include the $68 million Independent Assessment that 
Congress mandated as part of the Choice Act, have reinforced my 
findings. These assessments provided far greater detail into the 
challenges and opportunities which we are incorporating into our 
transformation.
    Informed by my initial assessment, we began what we called the 
``Road to Veterans Day 2014'' to:

     Rebuild Trust with Veterans and stakeholders.
     Improve service delivery, by focusing on Veteran outcomes.
     Set a course for long-term excellence and reform.

    We also designed and released VHA's ``Blueprint for Excellence''--
four broad themes and 10 essential strategies to improve the 
performance of VHA healthcare by:

     Developing a positive culture.
     Transitioning from ``sick care'' to ``healthcare'' in the 
broadest sense.
     Developing efficient, transparent, accountable, and agile 
business and management processes.

    I believe all these assessments and initiatives helped set the 
stage and build the momentum to begin delivering the changes that VA 
needs. They allowed us to develop the detailed framework to transform 
the entire Department by combining functions, simplifying operations, 
and providing Veterans care and services so that they see VA as MyVA--a 
world-class, customer-focused, Veteran-centered service organization.
                     Chart 2: The 5 MyVA Objectives
                     
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There are five critical MyVA objectives:
    1. Improving the Veteran experience: At a bare minimum, every 
contact between Veterans and VA should be at least predictable, 
consistent, and easy; however, we are aiming to make each touchpoint 
exceptional. It begins with receptionists who are pleasant to our 
Veteran clients, but there is also a science to this. We are focusing 
on human-centered design, process mapping, and working with leading 
design firms to learn and use the technology associated with improving 
every interaction with clients.
    2. Improving the employee experience--so we can better serve 
Veterans: VA employees are the face of VA. They provide care, 
information, and access to earned benefits. They serve with distinction 
daily. We cannot make things better for Veterans without improving the 
work experience of our dedicated employees. We must train them. We must 
move from a rules/fear-based culture to a principles/values based 
culture. I learned in the private sector that it is absolutely not a 
coincidence that the very best customer-service organizations are 
almost always among the best places to work.
    3. Improving internal support services: We will let employees and 
leaders focus on assisting Veterans, rather than worrying about ``back 
office'' issues. We must bring our information technology (IT) 
infrastructure into the 21st century. Our scheduling system, where many 
of our issues with access to care were manifest, dates to 1985. Our 
Financial Management System is written in COBOL, a language I used in 
1973. This is simply unacceptable. It impedes all our efforts to best 
serve Veterans.
    4. Establishing a culture of continuous improvement: We will apply 
Lean strategies and other performance improvement capabilities to help 
employees examine their processes in new ways and build a culture of 
continuous improvement.
    5. Enhancing strategic partnerships: Expanding our partnerships 
will allow us to extend the reach of services available for Veterans 
and their families. We must work effectively with those who bring 
capabilities and resources to help Veterans.
The MyVA Vision:
    MyVA puts Veterans in control of how, when, and where they wish to 
be served. It is a catalyst to make VA a world-class service provider--
a framework for modernizing VA's culture, processes, and capabilities 
to put the needs, expectations and interests of Veterans and their 
families first.
    This transformation is an enormous undertaking and will not happen 
overnight. By revamping our functions to fit Veteran needs, rather than 
asking Veterans to navigate our complicated internal structure, we are 
rededicating ourselves to the proposition General Omar Bradley 
expressed in 1947: ``We are dealing with Veterans, not procedures; with 
their problems, not ours.''
    A Veteran walking into any VA facility should have a consistent, 
high-quality experience. MyVA will buildupon existing strengths to 
promote an environment where VA employees see themselves as members of 
one enterprise, fortified by our diverse backgrounds, skills, and 
abilities. Moreover, every VA employee--doctor, rater, claims 
processor, custodian, support staff, or Secretary--will understand how 
they fit into the bigger picture of providing Veteran benefits and 
services. VA, of course, must also be a good steward of public 
resources. Citizens and taxpayers should expect to see efficiency in 
how we run our internal operations.
Changing the Culture: A New VA:
    We are already changing our culture and operating differently, 
starting with me. When I first arrived at VA, the way I was addressed 
by my colleagues and the very formal format of meetings made me feel 
like I came first, not Veterans. That is not the way the Department 
should operate.
         Chart 3: Organizational Hierarchy: Supporting Veterans
         
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    We want to turn the pyramid structure of VA upside down, consistent 
with the culture of a High Performance Organization that serves 
Veterans and their Families. This graphic reflects the way I see VA 
working--Sloan Gibson and I are at the bottom, not the top--supporting 
our subordinate leaders and our workforce. Veterans and their Families 
are at the top. This method of thinking and operating is a reminder to 
employees and other stakeholders that we are here to support our 
Veterans, not our bosses. Our bosses are there to support us. We have 
made other changes to systems and behavior which served to insulate our 
challenges rather than expose them. I routinely provide people with my 
personal phone number and email address so that they can contact me. 
Since August 2014, I have received more than 4,800 phone calls and over 
15,000 e-mails. Every query receives a response, and many of the calls 
and e-mails received today are to thank us for solving their issue.
    I believe that we can only address the challenges and accept the 
good ideas we know about. I believe our new leadership team feels 
comfortable having honest, if sometimes uncomfortable, discussions in 
order to transform the Department. We are working to ensure that this 
new ethos permeates every part of our enterprise.
    Changes to leadership were necessary. Of our top 16 executives, 10 
are new to their positions since I became Secretary. Included on our 
present team is extensive executive expertise from the private sector: 
A former banking industry Chief Financial Officer and President of the 
USO; the former Chief Executive Officer of Beth Israel Medical Center 
in New York City and Morristown Medical Center in New Jersey; a former 
Chief Executive of Jollibee Foods and President of McDonald's Europe; a 
former Chief Information Officer of Johnson & Johnson and Dell Inc.; a 
former partner in McKinsey & Company's Transformational Change and 
Operations Transformation Practices; a retired partner in Accenture's 
Federal Services Practice; a former Chief Customer Officer for the city 
of Philadelphia who previously spent 10 years at United Services 
Association of America (USAA), one of the best and foremost customer-
service organizations in the country; a former entrepreneur and CEO of 
multiple technology companies; and a retired Disney executive who spent 
2010-2011 at Walter Reed enhancing the patient experience, among many 
other capable individuals.
    I am the former Chairman, President, and Chief Executive Officer of 
Procter & Gamble. In addition, VA's new interim Chief of Staff, who 
assumed his new duties on January 15, has for over the past year co-led 
VA's MyVA Taskforce and been responsible for many of the 
accomplishments I will describe later.
    Combining these fresh perspectives with our more experienced 
government and health care executives has been and will continue to be 
powerful catalyst for change. Most members of the executive leadership 
team are Veterans themselves who have served in every era from Vietnam 
to Iraq and Afghanistan. Each member of our team is here because they 
demonstrate a personal commitment to our mission.
    To advise this new team on our transformation, we formed a MyVA 
Advisory Committee (MVAC) made up of a diverse group of business 
leaders, medical professionals, experienced government executives, and 
Veteran advocates. The Chairman is retired Major General Joe Robles, 
former Chairman and CEO of USAA and the Vice Chairman is Dr. J. Michael 
Haynie, Air Force Veteran, Vice Chancellor of Syracuse University and 
founder of the Institute for Veteran and Military Families (IVMF). The 
MVAC includes executives with deep customer service and transformation 
expertise from organizations such as Amazon, The Cleveland Clinic, 
McKinsey & Company, Johns Hopkins, Mayo Clinic, as well as a former 
Surgeon General, a former White House doctor for three U.S. Presidents, 
a university president who was a Rhodes Scholar from the Air Force 
Academy who currently serves as a reserve Air Force Lieutenant Colonel, 
and advocates for both the traditional VSOs and post-9/11 Veterans' 
organizations.
             Chart 4: Learning from the Best Organizations
             
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    We are working collaboratively with many world-class institutions 
to benchmark and capture ideas and best practices along our 
transformation journey. Institutions we have benchmarked include 
Procter & Gamble, USAA, Cleveland Clinic, Wegmans, Starbucks, Marriott/
Ritz Carlton, NASA, Kaiser Permanente, Hospital Corporation of America, 
Virginia Mason, DOD, and GSA among others.
    We are bringing in leadership experts to develop our leaders in new 
ways. We have already trained over 5,000 senior leaders while working 
with the University of Michigan on our ``Leaders Developing Leaders'' 
program. We are training critical pockets of our workforce on 
techniques, such as Lean and Human-Centered Design, leveraging various 
private sector experts to bring these cutting edge capabilities and 
skills to government. We are reinforcing our values and moving from a 
rule-based culture to a principles-based culture based on values, sound 
judgment and the courage to do ``harder right rather than the easier 
wrong.''
    We are encouraging different perspectives and listening to all of 
our key stakeholders, even those who are critical of VA. We continue to 
listen, learn, and grow.
    We have renewed and redefined the working relationships with our 
union partners. The union leaders are part of the team and have had 
significant input into MyVA. We continue to work with them to address 
issues and make sure our employees are involved as often and early in 
every major decision. In fact, at our MVAC meeting last October, 
leaders from our five major national unions presented to the Committee 
their intentions for helping to achieve the MyVA vision.
       Chart 5: Increasing Collaborations to Best Serve Veterans
       
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    We are forming strategic partnerships with external organizations 
to leverage the goodwill, resources, and expertise of valuable partners 
to better serve our Nation's Veterans. We understand that VA cannot do 
everything itself. Over the last year, we have cultivated meaningful 
partnerships to help address a wide variety of Veteran needs, 
including, but not limited to, employment, homelessness, wellness, and 
mental health. Our partners include the YMCA, the Elks, the PenFed 
Foundation, LinkedIn, Coursera, Google, Walgreens, other Federal 
agencies, academic institutions, and many more. These partnerships 
reflect our commitment to re-thinking how VA does business in order to 
leverage the strengths of others who also care for Veterans.
    As we continue to develop a robust provider network, we are also 
streamlining business processes. We are re-imagining how we obtain 
services, such as billing, reimbursement credentialing, and information 
sharing. We no longer operate in a vacuum, but as part of a community 
of care. In West Los Angeles, VA is teaming with the city and former 
plaintiffs to put Veterans first. After settling a long-standing 
lawsuit with those who disagreed with VA's vision for the 387-acre 
campus, VA reached out to them, and other community stakeholders, to 
reimagine usage of the land. Looking ahead, these new partners are 
working together to build new facilities and networks that will better 
assist homeless Veterans and other Veterans in southern California.
    We know that VA has significant issues that need to be addressed. 
As you can see, we are listening to various perspectives, bringing the 
very best America has to offer and we are investing in the long term 
capabilities of our people to ensure these skills and ideas continue 
long after individuals on the current leadership team are gone. We are 
running the government's second largest Department like a $170 billion, 
Fortune 6 organization should be run--balancing near term performance 
improvements, while rebuilding the long-term foundational 
organizational health of the Department.
Focus for 2016: 12 Priorities:
    While we have made progress, we are still on the first leg of a 
multi-year journey. We have narrowed down our near-term focus to 12 
``breakthrough priorities.''
                    Chart 6: Breakthrough Priorities
                    
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    Many of these reflect issues which are not new--they have been 
known problems, in some cases, for years. We have already seen some 
progress in solving many of them. However, we still have much work to 
do.
    The following are our 12 priorities, major 2015 accomplishments for 
each, and the 2016 outcomes to which we aspire. We understand that it 
will be a challenge to accomplish all of these goals this year, but we 
have committed ourselves to producing results for Veterans:

Veteran Facing Goals
1. Improve the Veteran Experience.
     2015 Accomplishments:
        - VA named the Department's first Chief Veteran Experience 
        Officer and began staffing the office, which will work with the 
        field to set customer service standards, spread best practices, 
        and train our employees on advanced capabilities, such as Lean 
        and Human Centered Design.
        - We are enabling a national network of Community Veterans 
        Engagement Boards, designed to leverage all community assets, 
        not just VA assets, to meet local Veteran needs. Thirty-six 
        communities are fully formed and 15 communities are in 
        development.
     Breakthrough Outcome for 2016:
        - Strengthened trust in VA to fulfill our country's commitment 
        to Veterans; currently measured at 47 percent, we want it to be 
        70 percent by year end.
        - Establish a Department-wide customer experience measurement 
        framework to enable data-driven service improvements.
        - Make the Veterans Experience office fully operational.
        - Expand the network of Community Veteran Engagement Boards to 
        100+.
        - Additionally, in order to deliver experiences to Veterans 
        that are effective, easy, and where they feel valued, medical 
        centers will ensure they are fully staffed at the frontline 
        with well-prepared employees who have been selected for their 
        customer service orientation. Functionally, this means new 
        frontline staff will be assessed through a common set of 
        customer service criteria, hired within 30 days of selection, 
        and provided a nationally standardized on boarding and training 
        program.
2. Increase Access to Health Care.
     2015 Accomplishments:
        - Increased the number of Veteran appointments by more than 1.2 
        million.
        - Completed over 96 percent of appointments in October 2015 
        within 30 days of clinically indicated or Veteran's preferred 
        date.
     Breakthrough Outcome for 2016:
        - When a Veteran calls or visits primary care at a VA Medical 
        Center, their clinical needs will be addressed that day.
        - Veterans will be able to conveniently get medically necessary 
        care, referrals, and information from any VA medical center, in 
        addition to the facility where they typically receive their 
        care utilizing existing VISTA technology.
3. Improve Community Care.
     2015 Accomplishments:
        - Issued authorizations resulting in 12 million appointments 
        for non-Department care, thanks to the expanded flexibility of 
        the Choice Act.
     Breakthrough Outcome for 2016: Improve the Veterans' 
experience with non-Department Care. Pending legislation, by the end of 
the year:
        - VA will begin to consolidate and streamline its non-
        Department Provider Network and improve relationships with 
        community providers and core partners.
        - Veterans will be able to see a community provider within 30 
        days of their referral.
        - Non-Department claims will be processed and paid within 30 
        days 85 percent of the time.
        - Claims backlog will be reduced to less than 10 percent of 
        total inventory.
        - Referral and authorization time will be reduced.
4. Deliver a Unified Veteran Experience.
     2015 Accomplishments:
        - On November 11, VA launched the initial capability of 
        Vets.gov, a modern, mobile-first, cloud-based website that will 
        replace numerous other websites and will replace multiple 
        website logins to a single easy to navigate location. Developed 
        with support from the U.S. Digital Services Team and with 
        extensive feedback from Veterans, the website puts Veteran 
        needs and wishes first.
     Breakthrough Outcome for 2016: 
        - Vets.gov will be able to provide Veterans, their families, 
        and caregivers with a single, easy-to use, and high-performing 
        digital platform to access the VA benefits and services they 
        have earned.
        - The top 100 search terms will all be addressed within one 
        click.
        - All current content, features and forms from the current 
        public facing VA websites will be redesigned, rewritten in 
        plain language, and migrated to Vets.gov prioritized based on 
        Veteran demand.
        - Additionally, we will have one authoritative source of 
        customer data; eliminating the disparate streams of 
        Administration-specific data that require Veterans to replicate 
        inputs.
5. Modernize our Contact Centers (Including Veterans Crisis Line).
     2015 Accomplishments:
        - The amazing heroes who staff our Veterans Crisis Line (VCL) 
        in Canandaigua, NY were featured in the Oscar winning 
        documentary ``Crisis Hotline: Veterans Press 1.''
        - The VCL answered over 490,000 calls and initiated the 
        dispatch of emergency services to callers in imminent crisis 
        over 11,000 times. VCL answered over 58,000 and 16,000 requests 
        for chat and text services respectively. VCL provided over 
        81,000 referrals to local VA medical facility Suicide 
        Prevention Coordinators ensuring Veterans are connected to care 
        in their community.
     Breakthrough Outcome for 2016:
        - By the end of this year, every Veteran in crisis will have 
        their call promptly answered by an experienced responder at the 
        Veterans Crisis Line.
        - Veterans will be able to access the VA system 24 hours a day, 
        know where to call to get their questions answered, receive 
        prompt service and accurate answers, and be treated with 
        kindness and respect. VA will do this by establishing the 
        initial conditions necessary for an integrated system of 
        customer contact centers.
6. Improve the Compensation & Pension Exam Process.
     2015 Accomplishments:
        - The Compensation and Pension Examination (C&P Exam) exam is 
        often a Veteran's first impression of the VA when separating 
        from service. We have received consistent feedback this is a 
        confusing and uncomfortable experience. Last year, VBA, VHA and 
        our Veterans experience team worked together to redesign this 
        process using Human Centered Design and Lean techniques.
     Breakthrough Outcome for 2016:
        - Improved Veteran satisfaction with the C&P Exam process. We 
        will have a baseline satisfaction metric in place by February 
        and will set a goal for significant improvement once we know 
        our baseline.
        - VA will have a national rollout of initiatives to ensure the 
        experience is standardized across the Nation.
7. Develop a Simplified Appeals Process.
     2015 Accomplishments:
        - Drove down the disability claims backlog to under 81,717, 
        from a peak of 611,000 in March 2013.
        - Guaranteed a record 631,000 home loans totaling $153 billion 
        and assisted 90,000 Veterans in avoiding foreclosure, saving 
        taxpayers over $2.8 billion.
        - Reduced the time for Home Loan Certificate of Eligibility 
        processing from 26 business days to 2 business days and 
        automated the processing of dependency claims filed online, as 
        well as burial and death benefits for certain surviving 
        spouses.
        - Automated burial benefits were paid to surviving spouses 
        within 6 days (down from 190 days).
        - VA transitioned disability compensation claims processing 
        from a paper-intensive process to a fully electronic processing 
        system; 5,000 tons of paper per year were eliminated.
        - Decided 1.4 million disability compensation and pension 
        (rating) claims for Veterans and survivors--the highest in VA 
        history for a single year.
     Breakthrough Outcome for 2016:
        - Subject to successful legislative action, put in place a 
        simplified appeals process, enabling the Department to resolve 
        90 percent of appeals within one year of filing by 2021.
        - Increase current appeals production to more rapidly reduce 
        the existing appeals inventory.
8. Continue Progress in Reducing Veteran Homelessness.
     2015 Accomplishments:
        - Provided services to more than 365,000 homeless or at-risk 
        Veterans in VHA's homeless programs.
        - Placed almost 107,500 Veterans in permanent housing or 
        prevented them from becoming homeless.
     Breakthrough Outcome for 2016:
        - Continue progress toward an effective end to Veteran 
        homelessness by permanently housing or preventing homelessness 
        for an additional 100,000 Veterans and their family members,
VA Internal Facing Goals
9. Improve Employee Experience (Including Leadership Development).
     2015 Accomplishments:
        - Launched Leaders Developing Leaders (LDL) which has already 
        trained over 5,000 leaders in applying LDL principles.
        - Additionally, to improve and encourage problem solving, we 
        are already training critical pockets of our workforce on 
        techniques, such as Lean and Human-Centered Design.
     Breakthrough Outcome for 2016:
        - Continue to improve employee experience by developing engaged 
        leaders at all levels, who inspire and empower all employees to 
        deliver a seamless, integrated, and responsive VA customer 
        service experience.
        - Over 12,000 engaged leaders skilled in applying LDL 
        principles, concepts, and tools will work projects and/or 
        initiatives to make VA a more effective and efficient 
        organization.
        - Improve VA employee experience by incorporating LDL 
        principles into VA's leadership and supervisor development 
        programs and courses of instruction.
        - VA Senior Executive performance plans will include an element 
        that targets how to improve employee engagement and customer 
        service, and all VA employees will have a customer service 
        standard in their performance plans.
        - All VA supervisors will have a customer service standard in 
        their performance plans.
        - VA will begin moving from paper-based individual development 
        plans to a new electronic version, making it easier for both 
        supervisors and employees.
10. Staff Critical Positions.
     2015 Accomplishments:
        - VHA hired 41,113 employees, for a net increase of 13,940 
        healthcare staff, a 4.7 percent increase overall , including 
        1,337 physicians and 3,612 nurses.
        - Additionally, we filled several critical leadership positions 
        to include the Under Secretary of Health, Chief Information 
        Officer, and Veterans Experience Officer.
     Breakthrough Outcome for 2016:
        - Achieve significantly improved critical staffing levels that 
        balance access and clinical productivity, with targets of 95 
        percent Medical Center Director positions filled with permanent 
        appointments (not acting) and 90 percent of other critical 
        shortages addressed--management as well as clinical.
        - Work to reduce ``time to fill'' standards by 30 percent.
11. Transformation the Office of Information & Technology (OIT).
     2015 Accomplishments:
        - In July, LaVerne Council was confirmed as our new Chief 
        Information Officer (CIO).
        - LaVerne has developed a multi-year plan for creating a world 
        class Information Technology organization.
     Breakthrough Outcome for 2016: Achieve key milestones on 
the path to creating a world-class Information Technology (IT) 
organization that improves the support to business partners and 
Veterans.
        - 50 percent of projects on time and on budget.
        - Stand up an account management office.
        - Develop portfolios for all Administrations.
        - All supervisors and executives performance goals tied to 
        strategy goals.
        - Close all current cybersecurity weaknesses.
        - Develop a holistic Veteran data management strategy.
        - Implement a quality and compliance office.
        - Deploy a transformational vendor management strategy.
        - Ensure implementation of key initiatives to improve access to 
        care.
        - Strengthen EHR Strategy.
        - Establish one authoritative source for Veteran contact 
        information, military service history, and Veteran status.
        - Finalize the Congressionally mandated DOD/VA Interoperability 
        requirements.
12. Transform Supply Chain.
     2015 Accomplishments:
        - VA's Consolidated Mail Outpatient Pharmacy received the 
        highest customer satisfaction score among the Nation's public 
        and private mail-order pharmacies for the sixth year in a row 
        according to J.D. Power; while having an average unit price far 
        below national average in both branded and generic drugs. This 
        is a powerful example of what the VA is capable with when our 
        supply chain leverages our scale.
     Breakthrough Outcome for 2016:
        - VA will build an enterprise-wide integrated Medical-Surgical 
        supply chain that leverages VA's scale to drive an increase in 
        responsiveness and a reduction in operating costs. Over $150 
        million in cost avoidance will be redirected to priority 
        Veteran programs.

    We are rigorously managing each of these ``breakthrough 
priorities'' by instituting a Department level scorecard, metrics, and 
tracking system. Each priority has an accountable and responsible 
official and a cross-functional, cross-Department team in support. Each 
team meets every other week in person with either the Secretary or 
Deputy Secretary to discuss progress, identify roadblocks, and problem 
solve solutions. This is a new VA--more transparent, collaborative, and 
respectful; less formal and bureaucratic; more execution and outcome-
focused; principles based, not rules-based.
    Thanks to the continuing support of Congress, VSOs, union leaders, 
our dedicated employees, states, and private industry partners, we have 
made tremendous headway over the past 18 months. Congress has passed 
key legislation, such as the Veterans Access, Choice, and 
Accountability Act and the Clay Hunt Suicide Prevention for American 
Veterans Act, which gives VA more flexibility to improve our culture 
and ability to execute effectively.
    The Department is grateful for your continuing support of Veterans 
and appreciates your efforts to pass legislation enabling VA to provide 
Veterans with the high-quality care they have earned and deserve. We 
have identified a number of necessary legislative items that require 
action by Congress in order to best serve Veterans going forward in 
2016:

    1. Consolidate Care in the Community: We need your help, as 
discussed on many occasions, to help overhaul our Care in the Community 
programs, specifically, to consolidate the seven existing programs, 
each with its own rules and requirements. VA staff and subject matter 
experts have communicated regularly with congressional staff to discuss 
concepts and concerns as we shape the required plan and 
recommendations. We believe that together we can accomplish legislative 
changes to streamline Care in the Community programs before the end of 
this session of Congress.
    2. Flexible Budget Authority: We need flexible budget authority to 
avoid artificial restrictions that impede our delivery of care and 
benefits to Veterans. Currently, there are over 70 line items in VA's 
budget that dedicate funds to a specific purpose without adequate 
flexibility to provide the best service to Veterans. These include 
limitations within the same general areas, such as health care funds 
that cannot be spent on health care needs and funding that can be used 
for only one type of Care in the Community program, but not others. 
These restrictions limit the ability of VA to deliver Veterans with 
care and benefits based on demand, rather than specific funding lines.
    3. Support for the Purchased Health Care Streamlining and 
Modernization Act: This legislation would allow VA to contract with 
providers on an individual basis in the community outside of Federal 
Acquisition Regulations, without forcing providers to meet excessive 
compliance burdens and while maintaining essential worker protections. 
Already, we have seen certain nursing homes not renew their agreements 
with VA because of these burdens, requiring Veterans to find new 
facilities for residence. VA further requests your support for our 
efforts to recruit and retain the very best clinical professionals. 
These include, for example, flexibility for the Federal work period 
requirement, which is not consistent with private sector medicine, and 
special pay authority to help VA recruit and retain the best talent 
possible to lead our hospitals and health care networks.
    4. Special Legislation for VA's West Los Angeles Campus: VA has 
provided technical assistance on special legislation connected to the 
use of VA's West Los Angeles Campus in a way that will most benefit 
area Veterans, especially homeless Veterans. VA urges your support for 
this bill, which 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. This bill would reflect the settlement of that 
litigation, and truly be a win-win for Veterans and the community. 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.
    5. Overhaul the Claims Appeals Process: We need legislation that 
permits 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, which currently stands at over 444,000. The antiquated 
appeals process set in law is failing Veterans,--and American 
taxpayers. It is too complex and causes Veterans to wait far too long 
for final resolution on an appeal. Fundamental legislative reform to 
modernize the appeals process is critical to ensure that Veterans are 
provided with a fair, streamlined, and understandable appeals process 
in which most Veterans can be assured of receiving a final appeals 
decision within one year of filing that appeal.
    6. President's FY 2017 Budget Legislative Proposals: I encourage 
the Committee to support other key legislative proposals that will be 
included in the President's FY 2017 Budget that will be delivered to 
Congress on February 9th.
    7. Cultural Change: Last, let me again remind everyone that the 
vast majority of VA employees are hard workers who do the right thing 
for Veterans every day. However, we need your assistance in supporting 
the cultural change we are trying to drive. We are working to change 
the culture of VA from one of rules, fear, and reprisals to one of 
principles, hope, and gratitude. We need all stakeholders in this 
transformation to embrace this cultural transformation, including 
Congress. In fact, I think Congress, above all, recognizes the policy 
window we have at hand and must have the courage to make the type of 
changes it is asking VA and our employees to make. Congress can only 
put Veterans first by caring for those that serve Veterans.

    Our dedicated VA employees, if given the right tools, training, and 
support, can and do go out of their way to provide the best care 
possible to our Veterans and their families.
                   Chart 7: VA Exceptional Employees
                   
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Three of them are pictured above. Last month, Registered Nurse 
Sharon Levenson, who works in a clinic in Battleboro, Vermont, noticed 
that one of her regular patients did not come in as scheduled. She 
could have been thankful for a lighter workload that day, but instead, 
she called her patient. He did not answer so she grew concerned. She 
contacted the VA Police. When VA Police Chief John A. Richardson 
received Ms. Levenson's request for a home welfare check, he cited the 
rules and informed Nurse Levenson that unless there was a threat of 
harm, they were not supposed to conduct home welfare checks.
    Chief Richardson could have been satisfied that he followed the 
rules. Instead, he directed Officer Guy Gardner to investigate. Officer 
Gardner also failed to reach the Veteran. He could have stopped there. 
Instead, he decided to call the Veteran's emergency point of contact. 
The point of contact visited the Veteran's home, but no one answered. A 
lack of tracks in the snow indicated no one had recently come or gone 
from the home. Concerned, Officer Gardner called local police and 
requested a welfare check. Local police entered the home and found the 
Veteran, unconscious but alive. He was rushed to the hospital where he 
was revived and is regaining his health.
    These three VA employees demonstrated every bit of the Veteran-
focused cultural change VA is undergoing. I hear stories like this 
every day. These are the stories that don't make the newspapers and 
blogs, but make a difference in the lives of Veterans. We are 
celebrating the kind of initiative displayed by these employees and 
herald their stories to inspire our other employees to be led by 
principles and values rather than rules and fear.
    Thank you again for this opportunity and thank you for all you do 
for Veterans. We are extremely grateful for having this two-way dialog 
and we look forward to working together to solve what we believe is 
one, if not the, most important issue our country faces . . . caring 
for those who protect our freedom.
                               Appendix A
                           THE BALTIMORE SUN
                  VA is Critical to Medicine and Vets
                         by robert a. mcdonald
                            october 23, 2014
    During preparation for my confirmation as secretary of Veterans 
Affairs (VA), I was repeatedly asked, ``Why doesn't VA just hand out 
vouchers allowing veterans to get care wherever they want?'' For a 
department recovering from serious issues involving health care access 
and scheduling of appointments, that was a legitimate question.
    After nine weeks at VA, travel to 31 VA facilities in 15 cities, 
discussions with hundreds of veterans and VA clinicians, meetings with 
75 Members of Congress, two hearings before the Senate and House 
Veterans' Affairs committees and dozens of meetings with Veterans 
Service Organizations and other stakeholders, I can answer that 
question.
       veterans need va, and many more americans benefit from va.
    Almost 9 million veterans are enrolled to receive health care from 
VA--a unique, fully-integrated health care system, the largest in the 
Nation. The VA stands atop a critical triad of support--three pillars 
that enable holistic health care for our patients: research, leading to 
advances in medical care; training that's essential to build and 
maintain proficiency of care; and delivery of clinical care to help 
those in need.
    VA's accomplishments on all three pillars and contributions to the 
practice of medicine are as broad, historically significant and 
profound as they are generally unrecognized.
    VA is affiliated with over 1,800 educational institutions providing 
powerful teaching and research opportunities. And our research 
initiatives, outcomes and honors are tremendous. Few understand that VA 
medical professionals:

     Pioneered and developed modern electronic medical records;
     Developed the implantable cardiac pacemaker;
     Conducted the first successful liver transplants;
     Created the nicotine patch to help smokers quit;
     Crafted artificial limbs that move naturally when 
stimulated by electrical brain impulses;
     Demonstrated that patients with total paralysis could 
control robotic arms using only their thoughts--a revolutionary system 
called ``Braingate;''
     Identified genetic risk factors for schizophrenia, 
Alzheimer's and Werner's syndrome, among others;
     Applied bar-code software for administering medications to 
patients--the initiative of a VA nurse;
     Proved that one aspirin a day reduced by half the rate of 
death and nonfatal heart attacks in patients with unstable angina;
     Received three Nobel Prizes in medicine or physiology; 
seven prestigious Lasker Awards, presented to people who make major 
contributions to medical science or public service on behalf of 
medicine; and two of the eight 2014 Samuel J. Heyman Service to America 
medals.

    No single institution trains more doctors or nurses than VA. More 
than 70 percent of all U.S. doctors have received training at VA. Each 
year, VA trains, educates and provides practical experience for 62,000 
medical students and residents, 23,000 nurses and 33,000 trainees in 
other health fields--people who go on to provide health care not just 
to veterans but to most Americans.
    The 278,000 employees of the Veterans Health Administration work in 
a system spanning all 50 states and beyond, providing--from Maine to 
Manila--a high volume of quality, clinical care. Our 150 flagship VA 
medical centers are connected to 819 Community-Based Outpatient 
Clinics, 300 Vet Centers providing readjustment counseling, 135 
Community Living Centers, 104 Residential Rehabilitation Treatment 
Centers, and to mobile medical clinics, mobile Vet Centers and 
telehealth programs providing care to the most remote veterans.
    That network of facilities allows VA to deliver care to veterans 
from the greatest generation of World War II to the latest generation 
from Afghanistan and Iraq. In 2013, VA provided over 90 million 
episodes of care; that's an average of over 240,000 each day. And since 
2004, the American Customer Satisfaction Index survey has consistently 
shown that veterans receiving inpatient and outpatient care from VA 
hospitals and clinics give a higher customer satisfaction score, on 
average, than patients at private sector hospitals.
    Finally, VA is uniquely positioned to contribute to the care of 
veterans with Traumatic Brain Injury (TBI), prosthetics, PTSD and other 
mental health conditions, and the treatment of chronic diseases such as 
diabetes and hepatitis. The work we do in these areas, as well as many 
others, produces results and life changing improvements in care for 
veterans--and for all Americans and people around the world who suffer 
from these conditions.
    Fixing access to VA care is important; we have a plan to do that 
and are dedicated to implementing it. That process will take time--but 
it must be done, and we will be successful. Those who fully understand 
the value of the department in research, training, and clinical care 
understand that veterans and all Americans need and deserve their VA to 
continue providing exceptional care to those we serve.

    Chairman Isakson. Well, thank you, Mr. Secretary. I 
appreciate your testimony.
    We are going to open to as many rounds of questions as we 
can do between now and noon. When the vote is called, I am 
going to ask if Senator Tillis would, as soon as the vote is 
called, if he would go vote, then he would come back and take 
my place as Chairman to continue the hearing so we can keep 
going all the way through. I would appreciate it. When the bell 
rings, if you will show us your North Carolina sprint and get 
over there and get back in time for me to vote, I would 
appreciate it. [Laughter.]
    Senator Tillis. I will do my best Jonathan Stewart run. 
[Laughter.]
    Chairman Isakson. Do your best Carolina Panther run. If you 
do as good as they did, you will be fast. I can tell you that.
    Secretary McDonald, thank you for your testimony. You 
referred to some of the specific suggestions that you had in 
your testimony to address your seven goals. I want to talk 
about two of those to start with.
    One, on the cultural change, I think the quote is you 
``need our help'' for you to make the cultural change within 
the VA. We want to help you make that change, as much as you 
can coordinate with us on decisions that you make before the 
proverbial banana hits the fan, we would appreciate it, because 
we are in a reactive mode as a body. We can do nothing but be 
critical. If we are in partnership mode, we can do a lot to 
help, and there are things that you might want to do that we do 
not know about that might get a totally different response if 
you consulted with us first. I am not saying that you do not, 
but I know there are some big things in here that you are going 
to want to do to accomplish that are going to require 
consultation with us.
    For example, I am assuming that when you want to make a 
breakthrough, in terms of subject to legislative action being 
put in place, you want to resolve 90 percent of appeals within 
1 year of being filed. Is that correct?
    Secretary McDonald. Yes, sir, that is correct, and that 
will require legislation.
    Chairman Isakson. Is that the legislation that would allow 
you to not allow additional information to be submitted at the 
time--after a claim has been originally filed?
    Secretary McDonald. Well, we would like to work with you on 
that legislation.
    Chairman Isakson. That is the fully-developed claim?
    Secretary McDonald. Fully-developed claim. We would like to 
work with you on that. We think there are steps that can be cut 
out of the process. I am sure Danny could go into greater 
detail if you would like, but we would like to work with you on 
that legislation. I pledge to you that we will work together as 
partners, and I think this hearing is great evidence that we 
are doing that today. I appreciate you scheduling this hearing.
    Chairman Isakson. It is also great evidence that Dale is 
here from The American Legion, the commander of The American 
Legion. You are going to need to be a part of that particular 
issue. We all want to be able to resolve claims within a year. 
Everybody wants to do that. But the fully developed claim 
process, which I am not necessarily opposed to at all, but that 
is going to be a major move forward that would need the VSOs 
support, or else we would never be able to get it done, because 
it involves reasonable cutoff periods for data to be submitted 
for a claim to be finally resolved. Is that not correct?
    Secretary McDonald. Absolutely, and we have involved the 
VSOs in all of our work on fully-developed claims. As recently 
as yesterday morning, I think it was, I had breakfast with the 
Veterans Service Organizations leaders. Dale graduated from 
West Point a year ahead of me, so I am used to him hazing me. 
[Laughter.]
    So, we look forward to working with him on this.
    Chairman Isakson. Well, I want to get all of the frogs in 
the wheelbarrow to begin with rather than afterwards, so as 
quickly as we can get a representative of The Legion that Dale 
thinks is appropriate, including himself if possible, we can 
involve some Members of the Committee from both sides of the 
aisle, a change like that is going to take significant 
legislative willpower and cooperation to do, but it is 
achievable. It is achievable if we are working together.
    Secretary McDonald. It is achievable. Mr. Chairman, if I 
just may add that only about 11 or 12 percent of claims are 
appealed, so it is a relatively small percentage of the total. 
But, because veterans continue to add information to their 
files, many of these claims go on for years and years and 
years. And, generally, the people who are appealing are people 
who are already getting disability payments from the VA.
    So, you know, what we have got to do is get a process which 
is manageable where we can get them adjudicated quickly, but 
where the continuing process does not get in the way of getting 
these claims resolved quickly.
    Chairman Isakson. I concur, and I appreciate you making 
that one of your seven priorities.
    Mr. Pummill, you have got a new job. You are one of the 10 
of 16, I guess. Is that correct? You said you had 10 new 
critical people out of the 16?
    Secretary McDonald. Yes, sir, he is. Yes, sir.
    Chairman Isakson. Well, if you can do as good a job as Dr. 
Shulkin, we are going to be all right. He has done an excellent 
job taking over his position, as has Ms. Council in terms of 
IT. Which leads me to a suggestion, because I am going to run 
out of my first 5 minutes in just a second. Tell her to get in 
touch with Georgia Tech. I told you before the hearing, they 
are developing an interoperable coordinator translator that 
will allow non-working, non-functional IT systems to talk to 
each other in terms of medical IT. If we can break through 
that, we can end the DOD/VA problem where a DOD veteran leaves 
active duty, goes to Veterans Affairs and the two systems do 
not talk to each other. It is very important for us to be able 
to do that. I would appreciate your having her give me a call, 
then I will tell her the right people to contact.
    Secretary McDonald. We will do that.
    Chairman Isakson. Last, we want to be a part of the 
cultural change. It is important to make that change happen, 
and it is important to see to it that we are partners in it. It 
means we address the tough questions.
    My last comment is there was an exchange of letters from 
Senator Moran and the Chairman in the House, and I know you 
have got a response today in the Wall Street Journal, which is 
healthy in strengthening our relationship to air our 
differences and air our answers to those differences. I agree 
with your letter in that you say you cannot fire your way into 
success. I would also agree that if we do not have a recognized 
system of accountability that people can see actually working 
within the Veterans Administration. There will always be 
somebody to throw up a news story that slows down our cultural 
change within the organization; so, we need to work on that as 
much as we can.
    Secretary McDonald. We agree, Mr. Chairman. As you know and 
as we have talked, we have terminated over 2,600 employees 
since I have been Secretary. After 33 years in the private 
sector, I have done many restructurings, and I know the 
importance of making sure we get people who violate our values 
out of the organization. We are doing that. We are doing it 
consistent with what they have done, and we are doing it 
consistent with due process. We know that is necessary for 
cultural change.
    Chairman Isakson. Thank you for being with us.
    Senator Blumenthal?
    Senator Blumenthal. Thank you, Chairman. Let me begin with 
your chart which shows a reduction in VA disability claims. In 
a sense, those claims now have caused an increase in the number 
of appeals, which demonstrates in a sense that you have reduced 
the numbers, but simply shifted the problem. That is an 
oversimplistic way of putting it, but as a lawyer, in the 
Federal courts, or State courts, for that matter, if a backlog 
were cleared simply by moving that great mound of work to the 
appellate process where appeals languish for years and years 
and years, it would not be regarded as a success story. So, the 
440,000 appeals that currently are pending are, in my view, 
unacceptable.
    Secretary McDonald. That is exactly why it is one of our 
breakthrough objectives. As we have said, assuming we can work 
together on the legislation, we are planning to get 90 percent 
of appeals resolved within 1 year, and I think we can all sign 
up for that objective.
    Senator Blumenthal. Just as a qualification to the point 
that you just made, many of those veterans are receiving 
benefits.
    Secretary McDonald. Yes.
    Senator Blumenthal. But they may be nowhere near the amount 
of benefits that they deserve and need. So, simply to say, 
``Well, they are already getting something,'' does not mean 
they are getting everything that they need and deserve.
    Secretary McDonald. That was a statement of fact. There was 
not any intent to downgrade the importance of getting them what 
they deserve.
    Senator Blumenthal. I understand. So, let me come to the 
question that you have just raised. Could you give us the 
details--I assume that you would support the measure that I 
mentioned earlier that Senator Shaheen, myself, and others have 
supported to expedite those appeals, other additional 
authorities that you need to get this job done?
    Secretary McDonald. We will have to overhaul the appeal 
process. It is really that simple. The law was created at the 
turn of the century--the turn of the previous--well, in the 
early 1900s----
    Senator Blumenthal. The turn of the last century.
    Secretary McDonald. Yeah, the last century. I am sorry. You 
used to be able to say that. So, the basis of it is antiquated 
technology and many other things that are no longer applicable. 
We have used our process mapping techniques, the Lean Six Sigma 
I talked about. We have process mapped the process. We think 
there are steps we can take out, but it will require a change 
in legislation.
    Do you want to say anymore, Danny?
    Mr. Pummill. Yes, Senator, it will require a change in 
legislation, and we are going to have to put some more people 
against the problem, too, in order to tackle it.
    Senator Blumenthal. My question is: specifically, what 
legislative changes are necessary?
    Mr. Pummill. I think the legislative changes that we are 
working with the Veterans Service Organizations right now to 
close the record. I think if we can get that in place, I think 
that will go a long way to solving the problem. I really 
believe, looking at the figures they have shown us, that we can 
do veterans appeals in 1 year. We just have to continue to work 
with the VSOs to make sure we are doing that the right way.
    I have not had a chance to look at the legislation that has 
been proposed, the 8-year legislation. That sounds like a great 
idea to expedite the ones like--that is what we did with the 
backlog. We did the oldest ones first. Right now they are doing 
it by docket order. We have to make sure that that does not 
inadvertently harm a veteran. That is all.
    Senator Blumenthal. Well, you know, let me make a 
suggestion to you. I am just a country lawyer from Connecticut. 
In Connecticut, in criminal matters, because of the backlog, a 
rule was adopted that the failure to prosecute within a set 
amount of time would result in a dismissal--the speedy trial 
rule--and I think that became law in various forms in the 
Federal system as well. In other words--and do not hold me to 
the details, but deadlines were set, timelines were 
established. The failure to proceed within that timeframe meant 
that the Government's case in effect would be dismissed, and 
the burden was on the Government to prosecute the matter.
    At some point, an appeal that is pending for that amount of 
time within a Government structure or process perhaps should 
result in the Government losing the case.
    Secretary McDonald. Senator, I would rather work, like the 
Chairman said, on coming up with good legislation and also 
systemic changes to the way we do our work rather than just 
setting a somewhat arbitrary 8-year limit. I mean, I understand 
the legislation. I understand the 8 years. But the legislation 
does not say how you do it.
    As a business guy, the biggest challenge is always figuring 
out how you do it, and so I would rather work with you and the 
Chairman to figure out how we do it and then make sure we put 
the legislation in place that we need to get it done.
    Senator Blumenthal. I am not advocating arbitrary 
deadlines. I am not suggesting that I am supporting a system 
now. But at some point, if this problem is not alleviated, that 
kind of approach is going to be necessary.
    To go back to your days in the private sector, if you could 
not get products to the shelf, you were penalized. Nobody said, 
``We are going to keep the stores closed until P&G has its 
products ready to go on the shelves.'' So, there is a burden of 
proof, so to speak, a burden of going forward, a burden of 
proceeding, a burden of fulfilling the Government's obligation 
here. I do not want to go on at great length, but what I am 
suggesting is that the remedies for delay may well be that the 
veteran receives what his claim is because he is the one who is 
prejudiced. The Government is not. Delay works in the 
Government's favor, just as it did in the criminal context, 
because very often the criminal defendant was kept without 
bail, or with bail but could not be made, or under the great 
burden of charges pending. These kinds of deadlines for 
proceeding, whether in the civil or criminal context, in the 
judicial world may have applicability here. That is what I am 
suggesting. We may not be at that point yet, but we may soon be 
there.
    Secretary McDonald. We have identified it as one of our 12 
priorities for the year. Let us work together on it, and 
hopefully by the end of the year we will get to a point where 
90 percent of appeals are resolved in a year.
    Senator Blumenthal. Thank you.

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

    Senator Tillis [presiding]. Thank you. Actually, I am next 
in the order, so I am not taking any sort of the Chairman's 
prerogative here, Senator Hirono.
    First, I want to thank you for being here. I want to thank 
you for the time you spent in my office. We have had several 
meetings, along with Senator Tester, in the office. I think 
they have been very productive. I like what you have laid out.
    I do have a couple of questions for you. I know that 
because of, I guess, the limitations of the room, one thing 
that we ought to talk about as you go forward is how members 
will have the ability to track progress on these initiatives. 
These are not just pretty pictures in a PowerPoint 
presentation, but they are a map to initiatives. I think it was 
Mike who outlined some of the online access that we will have 
where we can see red, yellow, green, and see where you are 
making progress, particularly on the priority projects. I think 
it is very important to do that.
    Another thing going forward that I think is important is to 
make sure that when we make requests of you, in addition to 
what you have in this transformation--we are going to have day-
to-day things we are going to complain about. We are going to 
mess your hair up in Committee meetings and do all that we have 
to do as a part of oversight. You all need to make sure that 
you are very direct when we make requests of you that all of a 
sudden puts something else in the critical path of these things 
that we should be able to watch on your project dashboard. That 
is a very important part of the back-and-forth as we go 
forward.
    One question that I have is the discussion and some concern 
that we have had expressed to us--and I mentioned this briefly 
when we met last week, Mr. Secretary--about some of the 
consolidation of the providers who may have had a point of 
entry, been in a relationship with Choice. You are trying to do 
a better job of consolidating that, I guess, as non-VA 
providers, concerns we are hearing about in terms of 
reimbursement, those sorts of things.
    Can you give the veterans who may be concerned with the 
providers, some sense of why this is better for them over time 
and why it is an important part of what you are trying to 
accomplish?
    Secretary McDonald. Thank you, sir, I will, and thanks 
again to Senator Tillis and Senator Tester for meeting with us 
repeatedly and honing these plans.
    As you know, we do have a dashboard that you can drill down 
on. We shared that with you in your office. I would love to be 
able to provide that to this Committee. I just would ask that 
we work together so that I am not spending more time answering 
questions of you drilling down on the dashboard than I am 
solving problems for veterans. If we can come to that kind of 
arrangement, then I have no issue in sharing the dashboard, 
because that is, in essence, how you are going to evaluate us, 
and these are the commitments we have made for the year.
    Senator Tillis. I think over time it should be rolled up to 
a level to where we are not sweating the details but really 
just looking at trending----
    Secretary McDonald. Just the 12.
    Senator Tillis [continuing]. And where you are off track so 
that we can dedicate----
    Secretary McDonald. I agree.
    Senator Tillis [continuing]. It to the stakeholders.
    Secretary McDonald. Just the 12 priorities, yeah.
    Relative to providers, I am going to ask David to comment, 
but I think one of the most important things that we can do in 
2016 is develop a network of providers, including Department of 
Defense, VA, Indian Health Service, private sector, so that by 
the end of the year we have a network that--and academic 
affiliates--that we have a network that we all feel good about, 
where billing is not an issue anymore, where paying bills is 
not an issue, and where we can move forward on behalf of 
veterans.
    We have had some providers move out of the network. I was 
recently in Massachusetts where we were having a discussion 
with one of our academic affiliates because the hospital did 
not want to accept Medicare rates for veterans. Well, you know, 
these are the rates that we have to pay.
    So, we have to find a way to get to this, and I know David 
is working hard on it.
    Senator Tillis. Dr. Shulkin, as you respond to that, you 
are not going to be able to see this. This is my redneck 
PowerPoint. One thing that I want to make sure--I put this 
together while you were doing your opening statement. One thing 
that I think we need to do is always talk--I think that there 
is a place for Choice long term. The question is, to what 
extent in the pyramid--and this is the provider network, not 
all of VA. To what extent does this increase or decrease based 
on the State that you are operating in, based on the nature of 
the veterans population that you are serving? We want to make 
absolutely certain that we are communicating, that at the end 
of the day this is about getting the veteran to a point of care 
that they are comfortable with as quickly as possible.
    Dr. Shulkin. Senator, we would appreciate a copy of your 
PowerPoint. We would like to use that. Thank you.
    But I think we are on the same page here, which is that we 
need providers to want to work with VA, because, frankly, 
veterans need the private community. We have recognized that 
this is a partnership.
    I have spent my career in the private sector trying to get 
paid most of the time from payers. So, my sympathies actually 
go with the providers who are providing a service then having a 
delay in payment. We recognize we have a problem. Today we are 
at 72 percent payment within 30 days. That is not good enough.
    We are going to take some dramatic actions in the next 
couple weeks in order to improve that. The major issue here, 
frankly, is that we are only getting 40 percent of our claims 
electronically. We should be getting 100 percent. The reason 
for that is that we demand that not only do we get a bill, but 
we get all the medical record documentation in paper. We are 
going to have to change that policy, and we should so that we 
can pay providers in a faster timeframe.
    Senator Tillis. Thank you. My time is up. Just a final 
comment. The other things that I hope that we see come through 
in this transformation are leveraging best practices from 
similar operations like Medicare, in terms of the relationship 
with the providers, the onboarding, and all of those sorts of 
things. I hope we are not reinventing the wheel, and I think 
that you all are focused on that.
    Secretary McDonald. We totally agree.
    Senator Tillis. Senator Tester.

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

    Senator Tester. Thank you, Chairman Tillis. Since you are 
in that position--and thank you guys for being here. I think it 
is appropriate that I ask the Secretary of the VA, there are 
four teams that may win the Super Bowl. Who are you rooting 
for?
    Secretary McDonald. Which one are you for? [Laughter.]
    Senator Tester. I think it is more important you take a 
look at who is in the chair.
    Secretary McDonald. Thank you. Carolina. Carolina for sure.
    Senator Tillis. You are a great American. [Laughter.]
    Senator Tester. Thank you all for your work. I appreciate 
being able to be in on some of the plans that you have been 
putting forward, and I do mean that. Thank you. I can tell you 
that I met with Dr. Shulkin yesterday, and there are still 
plenty of issues out there we need to deal with as far as care 
to the veterans on the ground, and we are going to continue to 
pester until we get to that point.
    But we passed a number of bills out of here, and I do not 
know that any of them have made it to the floor yet. We are not 
exactly the gold standard when it comes to efficiency here in 
Congress. Do you have contingency plans if we do not pass some 
of the bills that you need?
    Secretary McDonald. We do. It will cause us to dial back on 
what our outcome goals will be. I wanted to take the MyVA 
transformation, which, arguably, is a big, multi-year process, 
and boil it down to what are we going to accomplish by December 
31st. What I have given you is what I think we can accomplish 
by December 31; and I think, arguably, there are good outcomes 
there for veterans. But we are going to need the legislation 
that we have identified. If we do not get that, we will have to 
dial back.
    Senator Tester. OK. If you have covered this before I got 
here, I can go back and read the record on it. But what are 
maybe three of the most significant short-term deadlines?
    Secretary McDonald. The first is provider agreements. We 
have long-term-care facilities right now refusing to do 
business with us because they are too small to deal with the 
Federal acquisition rules. That is number 1.
    Second, I would have to add the consolidation of care in 
the community. You all have had a hearing on it. I thought it 
was a very good hearing. I think the plan we put forward is a 
good plan. We cannot get to that ideal, optimum network of 
providers, including private sector providers, until we get 
that rule, that law done, because right now, as you know, there 
are many different programs, seven different programs, all with 
different criteria, specifications, and, importantly, all with 
different payment schedules, which really confuses veterans, 
and it confuses employees. It is distorts incentives, because 
people want the program that is the most expensive. I think 
that is number 2.
    Number 3, I would say flexible budget authority. Last year, 
I had to come to the House Committee and the Senate Committee 
begging for money for care in the community, for hepatitis C, 
this new miracle drug, because we had money in a separate pot 
that was designed for that purpose, but I do not have the 
authority to move that money. I think as long as it is about 
caring for veterans, I should have the ability to use the money 
to care for veterans.
    Senator Tester. OK. Of those three short-term deadlines, 
how many can be done without action from the Congress?
    Secretary McDonald. Well, the consolidation of care, as 
soon as we get that, we can--I mean, it is huge.
    Another, a fourth one--I am sorry.
    Senator Tester. Go ahead.
    Secretary McDonald. The West Los Angeles campus extended 
use leasing (EUL), the minute we get that passed, we can put 
spades in the ground in West Los Angeles and start building 
buildings with private sector partners.
    Senator Tester. I got you. Here is the point I am trying to 
make, Mr. Secretary. That is that you can have all the greatest 
ideas you want, your management team can have all the greatest 
ideas, and the folks at the different regions can have the best 
of ideas, but I think you need to be very, very direct with 
this Committee as to what needs to pass if you are going to 
meet the needs of the veterans out there. That is all I will 
tell you, because, quite frankly, if you cannot do what you are 
going to do, we are just talking to one another, and we are not 
getting to where we need to be.
    Secretary McDonald. I agree. Senator, in my written 
testimony and in my oral testimony, I said pending legislation 
purposely for a number of the outcomes that we cited.
    Senator Tester. Right.
    Secretary McDonald. So, anybody who wants that information 
can go back to the written testimony, and you can see how the 
legislation is tied to those outcomes for veterans.
    Senator Tester. We can also connect up with you for that, 
too. I just think it is really, really important that we can 
talk about changing the VA. We can talk about providing better 
service, but part of that talk is actually getting something 
done, too. OK. Thank you.
    Look, I talked to Dr. Shulkin about this yesterday. Could 
you give me any sort of update? You have got a lot of 
leadership positions that were open, maybe still are open. Give 
me some kind of update on where we are at on that and what we 
are doing to help fill those vacancies.
    Secretary McDonald. I would like to ask David to do that.
    Dr. Shulkin. Senator, thank you for the question. I know 
the Chairman had some comments about this as well.
    Our biggest challenge is getting the right leadership in 
place and then getting critical positions filled within the VA 
system. As of last evening, we had listed 43,000 recruits for 
the VA health system, and we are desperately trying to attract 
the top-quality professionals to come in. We have in our 
medical centers 34 medical center director positions that are 
open. Now, you know, running a health care system without 
having permanent leadership in place is a challenge.
    One of the legislative authorities that we have asked for 
is just one of the ones listed in the testimony is to give us 
the flexibility to use Title 8 funding to be able to recruit 
medical center directors and network directors. Frankly, I have 
had a significant challenge convincing any of my colleagues 
from the private sector to look at VA as a career, and I 
desperately need that talent.
    We are working very hard to hire physicians, nurses, 
pharmacists, psychologists, mental health workers, and leaders 
of our system. Those are our priorities. I know the Secretary 
in particular, every day talking about what a privilege it is 
to join the VA, and if anyone knows of people who want to join 
the VA, we try to talk to them on a daily basis to come and 
join us.
    Secretary McDonald. I would like to add three other things, 
if I may, very quickly.
    Number 1, I asked in my opening testimony about the 
Congress helping us with this cultural change. To the degree 
that we continue to see negative news articles and other 
things, the number of people applying for VA positions is about 
three-quarters lower than it was 2 years ago before the crisis 
occurred.
    Number 2, recruiting. I have asked Members of Congress to 
go recruit with me. You have done that. You and I went to the 
University of Montana together. This is very important, and 
Senator Isakson has come to VA to talk to town hall meetings. 
It is very important to show our employees that we are all 
together and our prospective employees that we are all 
together. I have been to over two dozen medical schools, and I 
have recruited many people right on the spot.
    The third point is we are leaving positions vacant because 
we do not want to add more people than we need, and we are in 
the process of trying to figure out how to reduce the levels 
and how to become more productive. For example, we recently 
realigned our VISNs, which are our regional medical networks. 
We eliminated three of them. So, what we want to do is make 
sure we are only recruiting for positions we want to fill 
rather than all positions that may be vacant.
    Senator Tester. I got you and I appreciate that. I can tell 
you I do not know what is going on in North Carolina or Georgia 
or Connecticut, but I have a pretty good idea what is going on 
in Montana. For the record, the vets who go to Fort Harrison 
love those people, but they are also quick to point out we are 
burning them out because we do not have enough staff. I think 
it is really critically important. We can talk about it, but we 
have got to do it. It is really important.
    I will walk hand in hand with you if it comes to 
recruitment because these folks have done a lot for us. We owe 
it to them. Thank you.
    Chairman Isakson [presiding]. Senator Moran?

                STATEMENT OF HON. JERRY MORAN, 
                    U.S. SENATOR FROM KANSAS

    Senator Moran. Mr. Chairman, thank you very much. Mr. 
Secretary, welcome.
    Secretary McDonald. Good morning.
    Senator Moran. Good morning. Please consider me an ally 
when it comes to trying to accomplish the things that you 
outlined in MyVA in your testimony this morning. I am anxious 
to see a transformation at the Department of Veterans Affairs, 
and that transformation is that those who served our country 
receive the care, treatment, and benefits that they are 
entitled to. And do so in a timely, cost-effective way for the 
taxpayers and that they receive quality service. That is what 
your statements were all about this morning, and I certainly 
support that outcome.
    What I want to again focus on is the current circumstance 
in which I find myself trying to help veterans. We did have a 
hearing with Under Secretary Gibson on December 2 on 
consolidation of those community-based programs. Clearly, I 
understand the value of consolidating. We have over time 
created too many programs that cannot be administered 
efficiently.
    Secretary Gibson committed to me during that hearing to do 
several things which have not yet happened, and I am asking you 
for your help to see that they do. On his own volition, he 
volunteered--we had a conversation about veterans who were not 
qualifying for the Choice Act, and his offer of his own 
volition was that he would provide me with a list of those 
veterans who qualify for Choice in Kansas. That seems a very 
generous offer, but it has not happened. Perhaps it was too 
generous. But if you could help me in that regard--because we 
have, again, those who are caught in the process of calling the 
third-party vendor and being told they do not qualify, or being 
told they do not qualify because they live within 40 miles. 
Then, you start digging down, and neither one of those things 
are true. I guess the goal here is to try to figure out who 
does qualify so that there is an understanding by the person on 
the end of the phone who is telling a veteran whether he or she 
can access the Choice Act. So, that was one request we had--or 
an offer that Secretary Gibson indicated.
    Also, the conversation occurred about the number of people 
who have been abandoned, and what I asked for was something I 
think the VA calls their ``abandonment rate.'' I was originally 
concerned about what was said by the Under Secretary several 
months ago, a long time ago when Choice was new. One of the 
comments in a hearing was that Choice is not popular with 
veterans, they do not want Choice.
    What worried me about that is that I did not want to see 
the VA create a circumstance in which the Choice Act became so 
unappealing that veterans decided they did not want it. Give it 
a chance to work. We will let our veterans decide. I have a 
clear sense that it will be very valuable. Part of that is the 
geography and demographics of a State like mine.
    One of the things that I have asked for is what that 
abandonment rate is. Just as an analogy, a long time ago I was 
in the State legislature, and the railroad started reducing the 
services available to my community, my home town. Over time, 
customers decided they did not use the rail service because it 
was not any good. Then, the railroad goes to the regulators and 
says, ``Well, nobody uses the rail line. Let us get rid of 
it.'' I want to make certain that that is not the intention of 
VA, and I do not have the sense or the fear that I had some 
time ago. It seems to me the VA is more and more embracing 
community care, and I appreciate that. But when we see these 
numbers about people served, what I want to make certain is 
that we are taking care of those who have just given up. That 
is one of the most common conversations I have with Kansans. 
They tried the Choice Act, and either they were told they did 
not qualify, and they try again and still--or they are told 
they live within 40 miles, and more recently it has been, 
``Well, I used the Choice Act. They provided me with my 
hometown provider, but then when the hometown provider insisted 
that I see a specialist, then I had to go through it all over 
again, and I was denied the chance to go have the radiologist 
look at my X-rays.''
    It may work initially and then, again, fall apart in the 
process. I want to make certain we do not discourage veterans 
from using the program because it is not working up front. That 
abandonment rate, which I was told I would be provided, I would 
like to have to see how many people are walking away, not 
really because they want to but because it is not meeting their 
needs.
    Also, Secretary Gibson and I had a conversation about ten 
specific cases in Kansas. It was his willingness to take those 
cases on and solve the problems, and I appreciate what he said. 
He said, ``We are committing to fix it, and if we are not 
executing, shame on us, bad on us.'' He offered to take care of 
the ten cases that had come into our office that week dealing 
with Choice. The ultimate outcome was that somebody from the VA 
called our caseworkers and said, ``What do we need to do?'' So, 
it ended up back in our office as compared to the VA stepping 
in and solving the specific problem. I would highlight that 
opportunity for the VA to see--maybe this is just a pilot 
program in which you can see what kind of conversations I have 
with veterans and how the Choice Act is failing them. Maybe 
these ten examples would be useful to you as you try to solve 
the problems systemwide. So, I would appreciate that help.
    Again, we want good things to happen at the VA. The 
challenge that you will have as you are trying to reinvigorate 
the VA, alter its course, and change quality, day-to-day 
veterans are being left behind. Those are problems we have to 
solve while we transform into the future.
    Secretary McDonald. Absolutely, and we will get on those 
three things you mentioned, Senator Moran. There is no question 
by any of us that care in the community is absolutely essential 
for us to have a network of providers in this country to care 
for veterans. Absolutely no question. In fact, earlier, when 
Senator Tillis was sitting as Chairman, I meant to say we have 
a map of the United States, a dynamic map that lays out where 
we think the veterans live and where we think they are going to 
live, where the providers are, whether they are DOD, VA, 
private sector. It would be good to have that discussion with 
each Member of the Committee, eventually each Member of 
Congress, so you see the kinds of capability we are trying to 
put in place. We do not want anybody to be abandoned, and so we 
are very much----
    Senator Moran. Mr. Secretary, thank you for saying that, 
and I would tell you that I think every Republican Member of 
this Committee, at least on the staff level, we asked for a 
meeting with somebody from the VA to describe to us, to 
explain, and to have a consultation on the definition of a 
full-time position or a full-time facility, and that was to 
take place. It as not taken place yet. We asked for it, and I 
think every Republican member would like to be--has asked to 
join us in that request, to have a meeting with somebody from 
the VA, not you, not necessarily Secretary Gibson, just someone 
who can tell us how the new definition--and I would respond to 
what you just said, and----
    Secretary McDonald. Sir, I was not familiar with that. I 
would be happy to meet with every member. I have met with 
caucuses. I have met with doctors' caucuses. I would be happy 
to do that.
    Senator Moran. Great. What I would conclude by saying is 
that the Choice Act is a way for the VA to solve some of its 
professional inabilities. One of the theories was we will take 
care of veterans where they live, but the other component of 
why we approved the Choice Act was to help the VA meet the 
needs because of the shortage of professionals. So, if we can 
utilize those professionals in the community, it reduces the 
challenges you face in recruiting.
    Thank you.
    Chairman Isakson. Senator Heller.

           HON. DEAN HELLER, U.S. SENATOR FROM NEVADA

    Senator Heller. Mr. Chairman, thank you. To the Secretary, 
thank you for being here today. You know, we have seen some 
improvements out in the State of Nevada, and I want to thank 
you for that. We have a pretty good team out there. Not this 
weekend but next weekend, we have the Pahrump Health Clinic 
finally--I have been working on this since I was in the House, 
so you can imagine how many years it has taken. I am glad to 
see that. We have a new director in the regional office there 
in Nevada, very helpful, and we are looking forward to good 
things. Also a new director in the hospital down in southern 
Nevada. Seeing those changes, moving in the right direction, I 
certainly do appreciate it.
    But I do have a couple questions for you. If you are a 
California veteran and you are in the Chairman's State of 
Georgia and you need immediate health care, is there a problem 
with them going to a VA hospital in Georgia to get that health 
care?
    Secretary McDonald. This is a very relevant and insightful 
question. No, it is not a problem, but today we do not yet have 
the--we have not yet built the capability to allow that to 
occur. One of our breakthrough objectives here is by the end of 
the year a veteran can go anywhere they want and we will serve 
them. So, that is one of the things we have identified that we 
want.
    David, do you want to talk about that a little more?
    Dr. Shulkin. Senator, we call this ``seamless care.'' It is 
exactly what we want, which is that if you are a veteran, you 
should be able to be cared for at every facility. We do have 
some challenges to doing that, but all but three of our 
facilities have what is called a ``traveling veteran 
coordinator.'' So, a veteran can ask to speak to them, and 
their job is to help facilitate it. Our goal is to make sure 
that you do not need to contact a person, that our systems 
recognize you as a veteran, and you should be able to get care 
wherever you walk into a facility.
    Senator Heller. What is the timeline for putting that 
system in place?
    Dr. Shulkin. December 31, 2016.
    Senator Heller. 2016, by the end of the year.
    Dr. Shulkin. By the end of the year.
    Senator Heller. Would you care if a veteran say in Ely or 
Elko, NV, went to Salt Lake? I mean, I guess when the system is 
in place, would it matter if they went to Reno or went to----
    Secretary McDonald. It will not matter where they go. It 
will just be like you get your prescription at CVS or 
Walgreen's, and you go to a different State and get the same 
thing.
    Senator Heller. We are getting some feedback, just so you 
know the purpose of this question, out of Mesquite, which is 
right on the Nevada-Utah border. Some of them want to go to St. 
George, and some of them want to go to Las Vegas. It is a lot 
further to Las Vegas than it is to St. George. So, you are 
saying----
    Secretary McDonald. We want to be agnostic. We want the 
veteran to be able to decide where they go.
    One of the things we have talked about here which is also 
critical to this issue is that today if you are veteran and you 
move and have to change your address with VA, you have to 
change it in about nine different places. We want to move to 
one data backbone for all of VA, what is called a ``consumer 
response system,'' where if you go online to populate a form, 
we automatically populate it from the data backbone we have so 
you do not have to write the information in. We do not have 
that single data backbone today, but it is one of our 
objectives that we are taking on for this year.
    Senator Heller. OK. So, I can go to Mesquite and talk to 
them and say, you know, sometime around the end of the year you 
would be comfortable going to either hospital of your choice? 
Is that fair?
    Dr. Shulkin. Yes. You should today be able to--you should 
today. It is just going to be more painful than we want it.
    Senator Heller. OK.
    Dr. Shulkin. We are trying to make the system actually 
support what you are asking.
    Senator Heller. Right now some of our veterans in that 
particular area are being restricted, telling them that they 
have to travel the extra mileage--45 minutes--as opposed to 
going to St. George. I would certainly like to see that change.
    I have one other question based on your IG's report and the 
question that they have relative to your backlog. They say they 
do not trust the data. You know, in the State of Nevada, we 
were ground zero for the problems with these backlogs, and we 
are seeing some improvement. Can you assure me that the 
Inspector General is not accurate on some of this data that 
they claim that they do not trust?
    Secretary McDonald. I am not sure of the date of that 
report, but I imagine it was probably in 2014. I believe the 
data is accurate.
    Senator Heller. Today you are painting a rosy picture, if I 
understand correctly. Is that----
    Secretary McDonald. We go through it every day. Danny?
    Mr. Pummill. Senator, I would disagree with the IG on their 
assessment that they do not trust the data for the backlog. The 
one thing that we have tons of in VBA is data, and I can tell 
you that the data on the backlog is accurate. It is still not 
where we want it to be, and we are going to continue to drive 
it down, the same thing with appeals. But I believe that the 
data is accurate data.
    Senator Heller. The Nevada VFW had their midwinter 
conference last Saturday, and I had a chance to address them, 
and this was one of the concerns that they brought up. They are 
concerned that we are painting too good of a picture. They are 
obviously on top of this IG report saying that perhaps the data 
is not as accurate as being reported back to them and to the 
State.
    Secretary McDonald. Every time I get one of those questions 
or commission--and as you know, I have given out my cell phone 
number publicly. I encourage people to call me. I always ask, 
you know, give me the instance, give me the date, who did you 
deal with, because a lot of this is just simply that--we have 
got to continue to work to rebuild trust, but a lot of this is 
the trust that was lost in 2014.
    A lot of the IG reports coming out right now date to some 
time ago and have already been remediated. But, anyway, I would 
be happy to get together on that one and get into great detail.
    Senator Heller. Mr. Secretary, thank you for being here.
    Secretary McDonald. Thank you.
    Senator Heller. Mr. Chairman, thanks for the time.
    Chairman Isakson. Senator Boozman.

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

    Senator Boozman. Thank you, Mr. Chairman. Thank you so much 
for being here. We do appreciate your hard work.
    In Arkansas, we have got two VA hospitals where they work 
really hard at serving veterans and do a good job. One of the 
huge problems that we have got is that right now, because of 
the turnover in leadership throughout the system, either people 
retiring that are my age and, you know, not wanting to fight 
the battle anymore, or good people being taken to other jobs 
that perhaps are a little bit more important, more authority 
within the bigger system. But it is a huge problem, and right 
now, you know, most of the people in key positions are acting 
people, and they simply do not have the authority. They do and 
they do not. You know, it is just very difficult when you are 
the acting head versus the other. When tough decisions come up, 
you know, the tendency is to put those aside to let somebody 
else deal with them. How can we resolve that? I know it is true 
in Arkansas; I am sure it is true throughout the system.
    Secretary McDonald. We talked a little bit about this 
previously, and I will ask David to comment. But I think there 
are a number of things that we can do together.
    Number 1, I would encourage that when you are in the 
district--and I will go there with you--let us recruit 
together. Let us go to the medical schools. Let us go to the 
hospitals. Let us recruit people for the VA together. I think 
it really is a very positive sign when Members of Congress and 
the VA leadership are together. I have been to over two dozen 
medical schools. I would like to get to more.
    Second, we have put in, as part of our proposed 
legislation, legislation that would allow us to treat medical 
center directors as Title 38. Many of our medical center 
directors are not doctors; they are not Title 38. As a result, 
they are paid significantly less than the private sector. That 
is a very important job. It should be Title 38, and we would 
like your help to make it that so we can pay them 
competitively.
    David?
    Dr. Schulkin. I think the Secretary has identified key 
issues. We are trying to attract new professionals into the VA 
to see this as a career because many of our people, Senator, 
are retiring, and, unfortunately, some people are leaving the 
system. We have put out a call to the private sector to answer, 
which is to come and serve your country. You can serve your 
country in many ways, one of those would be to join the VA 
system. We have actually had a pretty good response, so we are 
looking at trying to decrease our hiring time to bring in new 
people into the system. It is one of our initiatives. We would 
appreciate your support on the pay authority that the Secretary 
just mentioned and creating an environment that people feel 
that they can be successful in. That is where I think much of 
the dialog today about us being on the same page and you 
helping us recruit would make a difference.
    Senator Boozman. Switching gears a little bit, you do have 
a lot of people who want to come forward, some people that have 
come forward in the past, and the whistleblowers really in the 
VA system have a reputation of not getting a very good rap. 
That comes from, I think, just circumstances, you know, cases 
that have come up.
    Also, when you look at the agency where you appeal, in 
visiting with them, they say that probably the majority of 
their caseload throughout Government comes from the VA. It is 
not a good situation.
    Can you talk a little bit about what you are trying to do 
to address the problems with the retaliation and then, again, 
encouraging others in a non-hostile environment to come forward 
so that we can make things better?
    Secretary McDonald. Surely. We have trained over 450 people 
in something we call ``Leaders Developing Leaders.'' It is a 
program we put together in conjunction with a professor at the 
University of Michigan, and it is a program where we actually 
train the leaders in 3 days. We train them in leadership, we 
train them in whistleblowing, we train them in everything we 
can. The cultural change we want from that is that we want 
every employee at VA feeling enabled to come forward with their 
criticisms. We want our employees to redesign the systems they 
work on. That is one of the reasons we are training our 
employees in Lean Six Sigma.
    You know, a good customer service organization cannot 
survive unless it is a great place to work, and the people have 
to be trained and enabled to do that.
    I would also say we were the first agency to get 
certification from the Office of Special Counsel on 
whistleblowers. We also have rewarded and called out 
whistleblowers who have helped us. It is something we are 
working very, very hard on to make sure that there is no 
retaliation, or if there is, that those who retaliate receive 
the appropriate discipline.
    Senator Boozman. Very good. Thank you, Mr. Chairman.
    Secretary McDonald. Thank you.
    Chairman Isakson. Senator Sullivan.

          HON. DAN SULLIVAN, U.S. SENATOR FROM ALASKA

    Senator Sullivan. Thank you, Mr. Chairman, and thank you, 
gentlemen, for your testimony today.
    I want to compliment Dr. Shulkin. Mr. Secretary, I have 
spent a lot of time with him in the last year, really, in 
Alaska and Phoenix, in my office, and we have a lot of work to 
do, but I think he is somebody who is doing a good job.
    Secretary McDonald. I apologize for my trip to Alaska 
coinciding with your service in the military.
    Senator Sullivan. Well, you know, sometimes you cannot 
always pull it off, but we will get you up there next time when 
I am there.
    I do appreciate the fact that both of you have been up 
there recently. Dr. Shulkin, you and I got all over the State. 
Mr. Chairman, thanks again for allowing me to hold a VA hearing 
up there. And, you know, you saw the level of frustration, both 
of you. You saw that the Choice Act, which in many ways got 
ideas in the Choice Act from what was working in Alaska, came 
in and then when it was implemented in Alaska, it just kind of 
was a fiasco. I think everybody recognizes that. So, then you 
committed to this pilot program in Alaska that was going to be 
up and running initially you committed to me in November. We 
missed that deadline. I mean, not we. You. But it is starting 
to take hold. I would just like an update on where we are on 
that pilot program. You know, Mr. Secretary, from a broader 
strategic perspective, if we are able to fix the big issues in 
Alaska, I think it is going to give you a good sense of how to 
fix things nationally. But if we are not in Alaska, I think it 
is going to spell trouble for what every Member of this 
Committee cares about and that you care about, which is fixing 
the Choice Program so it is serving our veterans. Right now it 
is still not in my State, and I would like an update just on 
the timeline and how you see that pilot program going forward.
    Dr. Shulkin. Well, Senator, first of all, I do want to 
thank you and acknowledge you have been a great partner in 
this. You have been very clear with the problems, and that you 
expect solutions, but you have been working with us all along, 
so I thank you for that.
    You are correct that we agreed upon a solution that we 
would try this pilot program in Alaska, which can serve as a 
model for the rest of the country. It was delayed. The reason 
for its delay was actually Federal contracting rules. It was 
very tough for us, once you are in a contract, to actually get 
agreement to change the rules. We finally got that done, and as 
you may be aware, January 11th, the pilot went live in Alaska. 
We now have actually embedded staff where actually the third-
party administration (TPA) staff are in our medical centers----
    Senator Sullivan. Are those temporary hires, or are you 
going to move to permanent hires? I know there is a bit of 
confusion on that.
    Dr. Shulkin. Right. Well, the staff in the VA are permanent 
staff, and the TPA is committing to getting permanent hires in 
there. TriWest moved very, very quickly to make sure we did not 
miss the January 11 date that we had our second commitment to 
you, and we are now taking this up to a new level. We have to 
have, again, an additional contracting approval. There is one 
more approval to get the full pilot in place, and that is to 
have VA staff do the care coordination.
    Senator Sullivan. When do you anticipate being able to make 
that commitment? What date?
    Dr. Shulkin. Well, we are pushing--I hesitate to give you a 
specific date because it has to do with contracting----
    Senator Sullivan. Well, I like dates.
    Dr. Shulkin. Yeah, yeah. I will get back to you with the 
specific date.
    Senator Sullivan. OK.
    Dr. Shulkin. Everybody knows that is the final piece to get 
done, and we do believe--we were talking to Senator Tester 
yesterday about potentially in Montana doing a similar pilot.
    Senator Sullivan. OK. It would be good to get back to us. I 
would like the specific dates on that.
    I wanted to turn to the issue of--and I know we have been 
talking about it here today--shortage of professionals, 
particularly medical professionals. As you know, Mr. Secretary 
and Dr. Shulkin, we have talked about this. It is particularly 
acute in States that actually do not have medical schools. What 
we have been doing is working on legislation that can help 
States--particularly rural States without medical schools like 
Alaska, but I know there are other members on the Committee 
that would benefit from this--that would encourage the 
partnership that, Mr. Secretary, you talked about when you were 
in Alaska, with the different health organizations, 
particularly the tribal organizations in Alaska. I would like 
your commitment to work with us. We have some legislation 
already drafted up looking to maybe get it marked up here soon, 
but I would like to get your commitment to work with my team on 
making sure the VA is good to go with it. I think you would be. 
But we would like to do that with you soon.
    Secretary McDonald. We agree. We actually worked on that 
together when I was in Alaska with the----
    Senator Sullivan. South Central.
    Secretary McDonald. South Central Foundation.
    Senator Sullivan. They have been back, and they have been 
working with us.
    Secretary McDonald. I think it is a great plan. I could not 
agree with you more. I am sorry Senator Heller is not here, 
because we are working together to set up a medical school in 
Las Vegas, NV. We have got to have more medical schools in 
these States if we are going to expect doctors to locate in 
these States. I thought this was a great program.
    Dr. Shulkin. If I could just add, I actually think that the 
critical factor to getting somebody to take a job in the VA is 
having your residency program.
    Senator Sullivan. Right.
    Dr. Shulkin. It is your post-graduate training that is 
important in addition to medical schools. That is what we are 
trying to do with South Central.
    Senator Sullivan. Yes, and that is what our legislation is 
looking at.
    Dr. Shulkin. We could use some help with legislation. What 
we found is there were 1,500 new graduate medical education 
spots given to VA through the VACAA legislation. We have only 
filled 372 of those spots, and the reason is that what we 
learned is that VA needs the ability to actually help the 
private hospitals in paying for these spots. They are over 
their caps, so they do not get reimbursement, and that has been 
the limitation.
    The hospitals and foundations want to increase training. We 
want to increase training, however, we could use some 
legislative fixes.
    Senator Sullivan. Thank you. Mr. Chairman, just if I may 
one other quick--and it is just a commitment from the 
leadership here. I was back home recently and once again heard 
about the issue of providers not getting paid and, therefore, 
dropping out, which I think has been a problem in Alaska. Dr. 
Shulkin, you remember--and I heard about it again, which is 
veterans who get commitments from the VA to go to providers, 
and then have their medical procedures completed, the providers 
do not get paid, and these guys are being dogged by credit 
agencies to pay $25,000, $30,000 bills. I have heard about it 
again where our veterans who got permission to move forward on 
a procedure are the guys getting the credit agencies coming 
after them. As you know, that is incredibly stressful. You and 
I heard about it in Alaska, and I heard about it the last time 
I went home.
    So, I really want to work with the two of you--I am sorry, 
Mr. Chairman, this is a big deal--just to get your commitment 
to being able to work on some ways to just stop this. I mean, 
it is--you heard it. It is outrageous.
    Dr. Shulkin. Well, thank you. You are calmer than the last 
time that you expressed this to me, and, look, there is no 
excuse. We should never be putting the veteran in the middle of 
this. So, we are setting up a special team to deal with 
veterans who find themselves in this situation so they can 
reach us. We cannot put them in the middle of this. We 
recognized before you came in we have to fix the provider 
payment issue as well.
    Senator Sullivan. OK.
    Secretary McDonald. We committed in one of our breakthrough 
goals to pay our providers within 30 days, 85 percent by the 
end of the year.
    Senator Sullivan. Great.
    Secretary McDonald. That would be a breakthrough.
    Senator Sullivan. OK. Thank you, Mr. Chairman.
    Chairman Isakson. Well, I appreciate your raising the 
question because the first question I raised in my time was 
exactly the same thing. What has happened in Alaska has 
happened in New Hampshire and other places around the country. 
Prompt pay is a huge issue that we have got to address if we 
are going to deliver choice to our veterans. Thank you.
    Senator Murray?

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

    Senator Murray. Thank you very much, Mr. Chairman. I ask 
unanimous consent to put my full statement in the record.
    Chairman Isakson. Without objection.
    Senator Murray. Thank you.
    [The prepared statement of Senator Murray follows:]
                Prepared Statement of Hon. Patty Murray
    Thank you, Mr. Chairman, for holding this hearing and thank you to 
the witnesses appearing here today.
    I think everyone in this room agrees that our country has a duty to 
do everything it can to care for its veterans. Unfortunately, when it 
comes to VA care, we know our Nation continues to fall far short of its 
goal of honoring our veterans.
    It's particularly frustrating, because many of the concerns I hear 
about from veterans in my home state are the same year after year.
    So, we know that the current system is not working. The question I 
pose today: is VA ready to step up and change course?
    Now, I was encouraged in 2014, when the VA announced the MyVA 
program to take a serious look at the systemic problems and cultural 
shortfalls of VA.
    I look forward to hearing more today about how that plan is 
progressing, especially the challenges you've overcome and the 
successes you've had in the last 15 months. We must continue the 
forward momentum.
    I know a number of critical goals have been set for 2016, and as 
this plan moves forward I remain hopeful that it will produce the VA 
our veterans deserve.
    Here's what I am hearing in my home state of Washington, and what I 
am particularly interested in seeing happen:

     VA must continue to make significant efforts to address 
staffing shortages,
     ensure retention of critical personnel, and;
     guarantee high quality mental health care for all 
veterans--including oversight and coordination of care.

    It is also essential, as VA looks to implement these proposals, it 
is transparent with Congress and outside stakeholders about what it 
needs for these changes to be effective.
    I want to emphasize that point--this Committee, and this Congress, 
wants to help VA in this effort. Because I think we all agree that this 
country needs to fulfill its promise to take care of veterans.
    As I've said before, this is a pivotal time for the VA, and the 
demands on the system will only go up as wars continue to wind down and 
the Vietnam-era veterans continue to seek more care for the injuries 
and illnesses they suffer from.
    This is why I have long urged the VA to commit to improve the 
veteran experience, and create a culture that is focused on serving the 
veteran while strengthening performance and partnerships. Veterans 
deserve a system that works.
    We know veterans want to receive care within the VA and that the 
answer isn't just to dismantle the VA and leave veterans to fend for 
themselves, as some proposals would do.
    I know that together we can work to truly meet the needs of our 
veterans and restore the trust and confidence that they have in the 
Nation that they served.

    Thank you, Mr. Chairman.

    Senator Murray. Secretary McDonald, thank you. In your time 
as Secretary, you have talked about moving VA's focus to the 
individual veteran's experience trying to get care and 
benefits. That is the right move, getting the VA away from 
focusing on its bureaucracy and procedures. But, I am really 
concerned that those changes are not really taking hold. Over 
the last year, in my homestate of Washington, I have gotten 
complaints of the Seattle VA refusing to help a veteran who was 
in serious pain with a broken foot get from the sidewalk to the 
ER and instead making him wait for an ambulance to show up. I 
have heard of elderly and sick veterans who are being forced to 
wait outside in the rain and freezing temperatures while they 
were waiting for a shuttle; veterans seeking care at a clinic, 
including one with a dangerously high heart rate, rudely turned 
away from the clinic with only, ``We are not taking new 
patients''; and a veteran with shooting pains in his arm who 
had to wait for 2 months to get an MRI and then a year and a 
half for someone to read the results. Those are just a few of 
the problems I am hearing, and they are deeply disconcerting.
    Secretary McDonald. They are disconcerting to us as well. 
Get me the names, the dates, the individuals involved. That is 
the only way we can do anything with it. The situation you 
talked about, about the individual in the car that was told to 
call 911, we actually have used that in all of our training. We 
talked earlier before you got here about our Leader Developing 
Leader training. We have now trained thousands of people in the 
organization. We use that episode as exactly what we do not 
want to do.
    We have an organization that is rules-based, and we need an 
organization that is principle-based. The best customer service 
organizations run on principles, not rules. this individual 
thought they were following a rule. That is the wrong thing to 
do. We are training our leaders in this, and we are going to 
make a difference. That is one of the commitments we have made.
    Senator Murray. OK. I love the words that you say. I do. 
But how do you have accountability for that?
    Secretary McDonald. Well, like I said, you need to give me 
the dates, the names, and then I have a discussion. In the case 
of the person that told the person to call 911, we actually 
conducted an investigation to find out what disciplinary action 
we should take against the person who did that, because that is 
unacceptable.
    Senator Murray. OK. I appreciate that. It is just really 
hard to say to all of our vets, ``If you have a problem, call 
your Senator. They will get hold of the VA.''
    Secretary McDonald. Have them call me.
    Senator Murray. I will.
    Secretary McDonald. My telephone number is on the Internet.
    Senator Murray. I appreciate that.
    Secretary McDonald. People call me every day.
    Senator Murray. You have been accessible. I appreciate that 
when we pass them along. What I am saying is that we cannot 
have the message be, ``If you have a problem, call your 
Senator. They will pass it on.'' We need to make sure that 
those people are held accountable at the very basic level so 
these do not occur.
    Secretary McDonald. I agree. As I told you, we ran an 
investigation on that one lady.
    Senator Murray. Right.
    Secretary McDonald. The other thing we have got to do is we 
have got to train people.
    Senator Murray. OK.
    Secretary McDonald. VA has not been doing enough training. 
In fact, in 2014----
    Senator Murray. How does that happen and when?
    Secretary McDonald [continuing]. We spent $100 a person 
training. If I did that running the Procter & Gamble, I would 
be fired. We are taking people offsite, we are training them, 
and that is the way you change a culture. Holding people 
accountable, I agree, but training.
    Senator Murray. OK. That is happening, so we are going to 
see less of this?
    Secretary McDonald. It is happening. If you go to your 
facilities and ask the people what they thought about their 
Leader Developing Leader training, I think you would get 
positive feedback.
    Senator Murray. OK. We will do that, and we will pass on 
the results to you, too, because it has to get down on the 
ground.
    Dr. Shulkin. Senator, let me just add this one example, 
which is exactly what you had talked about in Seattle with 
somebody not being helped in the parking lot. The Deputy 
Secretary sent a memo, an email to every single employee in the 
VA talking about how that did not honor our principles. So, we 
are getting that message out.
    Senator Murray. OK. I very much appreciate that.
    Mr. Secretary, one of your 2016 breakthrough goals is to 
continue to decrease the number of homeless veterans and 
families, which I applaud. Last year, the Senate passed 
unanimously my Homeless Veterans Services Protection Act, which 
you know will allow VA to continue funding homeless services to 
thousands of veterans. It is sitting over in the House waiting 
for action. How important to your goal is it to get that passed 
out of the House?
    Secretary McDonald. It is important, I mean, anything we 
can do to house homeless veterans. We talk about the fact that 
we have decreased the number of homeless veterans by 36 percent 
since 2010, but there are still 47,000 homeless veterans. Those 
that are homeless now generally have issues, medical issues, 
that we have to care for--drug addiction, mental illness. So, 
as we committed here, we are going to continue to cause the 
number of homeless veterans to decline, but we need your help 
to do that. One of the----
    Senator Murray. We need that legislation passed.
    Secretary McDonald. Yes, and one of the big helps we need 
is the EUL legislation for Los Angeles, because we are 
paralyzed from our ability to build the buildings we need 
without that legislation.
    Senator Murray. OK. Mr. Chairman, if you would not mind, I 
just want to ask about filling the vacancies in the health care 
system, because, again, in my State the Spokane Medical Center 
has been without a permanent director since May of last year. 
They do not have a permanent associate director for patient 
care or a chief of surgery. The slow hiring, I am told, is 
leaving a lot of these positions unfilled and has now forced 
the hospital to cut hours back.
    So, it is a critical goal you have set. What are we doing 
to make sure those positions are filled?
    Dr. Shulkin. Senator, the Chairman and several of your 
colleagues have also mentioned this. This is not only important 
to you----
    Senator Murray. Sorry I was late to the hearing.
    Dr. Shulkin. This is absolutely one of our key priorities. 
We have put out a call for help. We have asked for any of your 
help in recruitment. We are trying to identify individuals. We 
have asked for several things to be able to help do that, 
including giving Title 38 authority to us to use funding to 
compensate medical center directors and network directors.
    Unfortunately, we are so below market that has become a 
barrier to us. The culture in VA and all of the negative 
attention that we received has hurt our recruiting. We are 
working very, very hard to give an accurate picture of what it 
is to serve in VA, which is a tremendous privilege. It is a 
fantastic institution, and leaders, I think, would be very 
attracted if they took a look at us. So, we are working very 
hard. We have 34 medical center spots open, the director spots. 
That is far too many. I cannot tell you--there is not a day 
where I am not calling people to ask them to come and help us.
    Senator Murray. OK. All right. We have got to keep it up. 
Thank you very much. I really appreciate it.
    Chairman Isakson. Senator Rounds.

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

    Senator Rounds. Thank you, Mr. Chairman.
    I just want to go back a little bit. I think back about the 
goals that you have got here and the layout that you have put 
together with regard to the MyVA. As an integrated plan, you 
have laid this out. As I am looking at it, it looks to me like 
you are trying to change the culture in the VA. First I would 
like to know initially what your thought is. What is it going 
to take to actually change that culture, the specifics of how 
do you actually get that message across? You have got over 
300,000 employees right now.
    The second part I guess I would have is, is it time to 
actually look at integrating the areas of excellence, the 
Centers of Excellence that you do have within the VA and 
integrate those within the community health care services that 
the rest of our citizens in the United States actually utilize 
today? Can we do that? What is the challenge for you right now, 
number 1, in changing the culture? Second of all, can you 
integrate that into the existing health care we have out there 
for the rest of our citizens in the U.S. today?
    Secretary McDonald. Well, Senator, I think we are changing 
the culture. I obviously do not think the work is done yet, but 
the plan I laid out will have a huge culture change by the end 
of 2016.
    What we have talked about is creating the irreversible 
momentum by the end of 2016 so that no matter what happens when 
the administration changes and the Government changes, the VA 
employees can carry this on, because as I covered in my opening 
statement and written statement, this is the first time, I 
think, that the business acumen and the leaders with business 
experience have been brought to bear on the sixth largest 
company in the country. VA, if it were a company, is the sixth 
largest company in the country. We are not going to have 
another CIO of the VA who has been the CIO at Johnson & Johnson 
and Dell. If we are going to get it done, we need to get it 
done now, and we need to get it done this year. We laid out the 
steps to do that.
    How do you accomplish culture change? Well, there are lots 
of things. Number 1, you have to raise standards. Our standards 
have been too low. Many of our leaders, when I first looked at 
their performance evaluations, everybody rated everybody 5, 
Outstanding. How can you be rated Outstanding when your 
employees rate your organization as one of the worst in 
Government? That does not make sense.
    That is why we have created this Leaders Developing Leaders 
training, to take our leaders offsite and say, ``Here is the 
way you run a performance management system.'' It is not about 
everybody getting rated wonderfully. It is about identifying 
what we can do to help train people. It is about holding people 
accountable. It is about providing the customer service. That 
training, we gave it to 450 individuals, and that is now 
cascading through the organization.
    What we did was we enabled the leaders of the organization 
to go train their leaders and their subordinates. That is why I 
say it is cascading through the organization right now. You can 
check on your own facility.
    You wanted to say something?
    Senator Rounds. Yes, I am just thinking, in looking at the 
timeline that you have laid out for the MyVA plan, full 
implementation goes well beyond 2016. I like the idea that you 
are looking long term on it. If you are going to get past not 
only this administration but into the next administration as 
well, it would seem that some of the tools that you may need 
might be statutory changes, or additional tools. Have you laid 
out--or is there a layout specifically that you need, that you 
have got to have, to get the MyVA in?
    Secretary McDonald. Yes, sir. In my written testimony, it 
lists about nine different statutory changes that we need. In 
my oral testimony I talked about consolidation of care in the 
community, flexible budget authority, and the Purchased Health 
Care Streamlining and Modernization Act. David talked about 
Title 38 authority for medical center directors. I talked about 
the EUL, the extended use leasing, on the West Los Angeles 
campus, and overhauling the claims appeal process, which we 
guaranteed by the end of the year. If we can get that done, 90 
percent of appeals will be solved in 1 year.
    We laid it all out, and as the Chairman has rightly pointed 
out, we will work together and partner with you to get that 
done. We know you cannot do it by yourself. We know we cannot 
do it by ourselves. We need to work together.
    Senator Rounds. I hope that one area that we are successful 
in is actually integrating and getting a system in place so 
that the veterans, regardless of whether they are in rural 
areas or urban areas, they can use the health care facilities 
that are closest to them, not just VA facilities but the other 
facilities as well. I know that is the goal, but I am wondering 
sometimes if we are working against ourselves when we are 
talking about trying to establish and build new facilities, 
modernize existing facilities, while at the same time 
suggesting that we still want these veterans to be able to go 
to their local facilities as well. Are we working at--do we 
have two different goals that may be inconsistent with one 
another?
    Secretary McDonald. I do not think so. I think we are after 
building the very best network with the veteran at the center 
of it. I mean, forget all the politics, and look at it simply 
from the veteran's standpoint. We want the veteran to be able 
to go where they want to go to get the service that they 
demand. We are in the process of building the optimum network 
across the country.
    Earlier, I talked about the fact that we have a map of the 
country where we have the various affiliates identified, 
whether it is the medical schools we do business with, whether 
it is the Indian Health Service, the Department of Defense. We 
partner with all of these folks in addition to the private 
sector, the TriWest or Health Net. We look at that every day to 
see what specialties are necessary in what areas in order to 
try to recruit the professionals we need to get that job done.
    Senator Rounds. So, still committed to the idea of Centers 
of Excellence?
    Dr. Shulkin. Yes, Senator. I think the goal, as the 
Secretary said, is to give the veteran the very best care that 
can be given in the VA and the very best are that, frankly, can 
be given in the community. Whatever the answer is, that is 
where the veteran should go.
    I have a unique perspective on this, having spent my time 
in the private sector, now coming to the VA, now starting to 
practice as a physician in the VA. Since I worked on this 
chart, I really want to use it just for a second.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    This is really quite a surprise to me, how much a veteran 
gets in the VA system that is not available in the private 
sector. That is why we believe strongly in building the things 
that are great in the VA and investing in those. We are not 
trying to dismantle the VA in this plan; we are trying to do 
the right thing for the veteran, and that is going to mean 
supporting our Centers of Excellence programs that you cannot 
find in the private sector.
    Senator Rounds. Thank you, Mr. Chairman.
    Senator Murray. Tell us what is on that chart.
    Dr. Shulkin. I am sorry. When you are in the private sector 
versus the VA, you can see we provide peer support. You cannot 
find that in the private sector. Our crisis lines that are not 
available in most hospitals. Transportation services, if you 
cannot get to your doctor or your hospital, you cannot get good 
care. Caregivers, not available readily, and we provide that 
support. Homelessness, obviously, as the Secretary talked 
about. Medication support. Behavioral health integration into 
primary care, rare in the private sector. Clothing allowances. 
These lifelong relationships. The single EMR, as you know 
about. The fact that we work with almost every leading academic 
medical center, there is no health system in the country who 
can say that. We are getting intellectual property and input 
from every leading academic medical center to help veterans in 
these Centers of Excellence. So, these are just some of the 
reasons why the VA is unique and, frankly, why we need the VA 
to be strong.
    Senator Murray. Thank you.
    Chairman Isakson. Senator Manchin.

     HON. JOE MANCHIN III, U.S. SENATOR FROM WEST VIRGINIA

    Senator Manchin. Thank you, Mr. Chairman. I thank all of 
you. Let me say, Mr. Secretary, I know your commitment; I have 
seen it up close and personal. I know the desire you have, and 
can tell you it resonated with all of the veterans in West 
Virginia when you came there. Basically, you have done some 
things that have changed, and it lets them know that you care. 
By doing that, you were able to put a portable medical center 
that we needed around rural West Virginia. We did not have one 
in the south because we lost one of our CBOCs, if you will. A 
temporary one has been opened, so we are moving in the right 
direction. I support what you are doing, and I want to make 
sure that we facilitate what is needed to make these changes. 
It is like turning the Titanic. I understand what you are 
dealing with in the bureaucracy, but we have to cut through 
that.
    I do not think there is one of us who believes that there 
should be one veteran that is homeless. There should not be a 
veteran without a job.
    Now, with that, sometimes there are problems that 
accentuate what we have to address, and I think you are trying 
to do all of that.
    There are two things I wanted to ask. I had someone bring 
something to my attention, and he was complaining about income-
based service. He was led to believe that if his income, if he 
had done better in life, he is not afforded the same service. 
He said, ``Now, wait a minute, Joe. I put on the uniform. I 
would have taken the same bullet that a person that when they 
got out of the service did not do quite as well as me. I was 
very lucky, but, still, it made me feel like now I am not 
expected to get the service because I did too well in the 
private sector.''
    I cannot answer that. It does not make sense to me. It is 
like we have scholarships, and if you do well and you exceed in 
school, you should get a scholarship. Well, if your mom and dad 
make this much, maybe you should get it, but you really do not 
need it, so we cannot give it to you. We are not rewarding for 
excellence.
    Is that a problem?
    Secretary McDonald. That is a true statement, Senator.
    Senator Manchin. OK. Well, he hit me hard then.
    Secretary McDonald. I am a veteran. I went to West Point. I 
served 5 years in the 82nd Airborne Division. I cannot be 
served at the VA because I am in a category called 8-Plus. I 
have too much net worth.
    Senator Manchin. Is that----
    Secretary McDonald. It is basically----
    Senator Manchin. It is a fact of life, what we are dealing 
with, need-based?
    Secretary McDonald. Well, I think what we deal with is we 
deal with requirements versus budget. You know, we would not 
have enough budget to serve all the Category 8's.
    Senator Manchin. Right. I know that.
    Secretary McDonald. So, the question is, you know, where is 
the balance?
    Senator Manchin. We have accepted that as a policy, and I 
would say that the majority of vets who have done extremely 
well in life and God has blessed them would probably forsake 
that, anyway, or even pay.
    Secretary McDonald. Well, it is, frankly, even worse than 
that, in a sense. We have policies that are written in the law 
that, obviously, if an individual gets cured, they would not 
get the disability payment for the ailment that was cured. It 
seems like the incentive there is to not be cured. These are 
the kinds of things that, if we work together, I think we can, 
you know, make the laws better so we do not have these----
    Senator Manchin. The big thing I want to talk about in my 
State is the prescription drug addiction that we have.
    Secretary McDonald. Yes, I know it is a huge issue.
    Senator Manchin. It is huge throughout the services. I 
understand that, too. You know, if you go back in history, I 
think that chronic pain was something that the VA acknowledged 
early, and it was one of the factors as far as wellness that 
basically we said there are other ways to treat. I think that 
is when this onslaught of opiates came onto the market, in the 
1980s and 1990s. If that is the case, we know the detriment it 
has had to society. I truly believe that the VA could change 
the culture of America, of how we treat chronic pain. I am 
imploring any way, shape, or form that we can support you, that 
these service people do not go to prescriptions first but 
prescriptions last.
    Secretary McDonald. As you and I have talked when we were 
together in West Virginia, we could not agree more. When you 
look at what the VA is doing on an evidence-based basis, equine 
therapy works with some veterans. Acupuncture works with some 
veterans. Some stimulation technology works with some veterans. 
Yoga works with some veterans. There are so many things we are 
learning that we can use to substitute for the opioids, and we 
track this every day. We track how many opioids we are using, 
and David tracks it to make sure we are going down. There is a 
lot that American medicine can learn from what we are doing.
    Senator Manchin. Well, we need to change code here as far 
as in the general public, but basically the policy that you all 
can adopt can lead to the cultural change that needs to be 
done. And, also, as far as the education that these doctors are 
not getting in how they are prescribing----
    Secretary McDonald. Right.
    Senator Manchin. You go for a toothache, you get 30 days of 
OxyContin. If you go----
    Secretary McDonald. Well, as you know----
    Senator Manchin [continuing]. For a headache, you get 30 
days of OxyContin.
    Secretary McDonald [continuing]. We train 70 percent of the 
doctors in the country, so why can't we take the knowledge we 
have and train them? That is what we want to do.
    Dr. Shulkin. We see our role as a leadership role in the 
country on this issue, and we are doing several things. 
Evidence-based therapy, we have protocols that the VA has put 
out. We have to be open to new innovations because, quite 
frankly, there are new technologies coming out that could help. 
Third, we are doing what is called academic detailing. We have 
mandated that VA doctors get academic detailing. That means 
teaching them on the right way to use opioids.
    Senator Manchin. And continuing education. They get no 
continuing education on dispensing of opiates. None. If you ask 
any of the doctors, they maybe get less than 1 week in medical 
school out of probably a 5-year rotation. It is just awful.
    So, I would encourage you--we are not going to change 
unless you all take the lead on this and do it, because going 
through our process is quite cumbersome at times to get 
something passed that makes sense. But you all have experience, 
and basically you have had success, have you not, as far as an 
alternate care of chronic pain?
    Secretary McDonald. Yes.
    Senator Manchin. It has helped with PTSD, also?
    Secretary McDonald. Yes.
    Senator Manchin. So, those who might have some mental 
challenges, you know you can cure them, work on that.
    Secretary McDonald. Yes. We have a leadership role in 
American medicine, as David said, and this is a big innovation 
for us that we can help American medicine.
    Senator Manchin. Mr. Chairman, if I may say one more thing. 
How difficult--you have come from the private sector at the 
highest level, running a large corporation, and a very good 
corporation, Procter & Gamble. They just chose West Virginia as 
their new site, so it is a very smart, very good corporation.
    With that being said, the difference in management of what 
you are able to do and the public sector versus the private 
sector--we know that they do not operate the same--we have got 
to allow you to have your top management changes and 
flexibility. How much is protected by the civil service that 
you cannot even touch? How far down in the pecking order can 
you get to make the systemic changes you need to make?
    Secretary McDonald. I think the difficulty of this 
challenge of changing the VA is a difficulty of scale. This is 
the sixth largest business in the country. It is a challenge of 
time, because I was with the same company for 33 years, during 
that time the stock price went from $2.32 to $81 when I 
retired. So, you know, it takes time.
    But I think that having somebody with experience in 
business is critically important. What I joke with----
    Senator Manchin. If you cannot make the changes that you 
made--if someone--I think we gave legislation that you could 
fire some of the people who are----
    Secretary McDonald. We have enough authority to fire 
people.
    Senator Manchin. You do?
    Secretary McDonald. I do not think----
    Senator Manchin. At the top level, you can move people 
around and----
    Secretary McDonald. Listen, that is not the most--as I said 
in my opening statement, 10 of my 16 top leaders are new since 
I was Secretary. That is, what, 18 months ago. We have been 
able to change the leadership. We have been able to do the 
things we need to do.
    I think the question this raises is: should we treat this 
like a business, and should we make sure that somebody--whoever 
is Secretary--has business experience? Because this is a very, 
very large business. What is at stake here is veterans' lives.
    Senator Manchin. Thank you.
    Secretary McDonald. Thank you, Senator.
    Chairman Isakson. Well, thank you, Senator Manchin, for 
your focus on opioids and addiction. You have been a real 
leader in that and helped us in the changes we made vis-a-vis 
Tomah.
    It is also important to point out that 72 percent of the 
physicians practicing in America today go through the Veterans 
Administration in their training. If there was one place we 
could make a cultural change, that is the place, and I think 
his emphasis on that is a good lesson to all of us to do that, 
to make that change.
    Mr. Secretary, thank you for being with us today. I want to 
thank the members who--Senator Tillis?
    Senator Tillis. I appreciate you all being here. I do have 
a few more homework assignments that I need to elaborate.
    One, I think it is very important--Senator Rounds asked a 
question, I think a couple of the other Senators, too. I think 
it would be very helpful to map actions that we need to take, 
legislative actions, to these 12 breakthrough priorities.
    Secretary McDonald. You got it.
    Senator Tillis. Please make it very clear, either draft 
legislation or legislation that needs to be drafted that puts 
these--that are on the critical path, but for them you will not 
accomplish the goals, so that you put----
    Secretary McDonald. That is a great idea. We can have that 
this afternoon.
    Senator Tillis. Thank you. I think it is also very 
important in terms of stakeholder management--we talked a 
little bit about this--that we get to the VSOs. I think they 
are--some are interested in what you have to say, some are 
concerned with what you have to say. We have to find what that 
stakeholder plan looks like so that I can look to my VSOs and--
--
    Secretary McDonald. Sir, we have been doing that. I have a 
breakfast with the VSO leaders every month, and we have been 
sending out our MyVA team----
    Senator Tillis. I would like to get----
    Secretary McDonald [continuing]. To meet with the VSOs.
    Senator Tillis. I hear it. You know, I am just hearing some 
feedback. I do not know what level it rises to in terms of a 
general concern, but I would like to know a lot of the major 
stakeholders that are an integral part of what we are doing 
here.
    Secretary McDonald. Yes, absolutely.
    Senator Tillis. In fact, I wanted to include that in my 
redneck PowerPoint, the VSOs' role and the care that we are 
providing out in the field.
    Secretary McDonald. But if you hear of someone who thinks 
they are being excluded, let us know.
    Senator Tillis. We will.
    Secretary McDonald. Because we will make sure they are 
included.
    Senator Tillis. I also wanted to underscore your point 
about training, because people talk about the top-line number 
for training. It looks like a big number. But when it is $100 
on a per person basis, we are talking about better treatment 
for pain medicine and other things, I think you need to really 
emphasize that it may look like a big number, but when you are 
talking about the sixth largest organization in the U.S. 
business operation.
    The last thing--two other things. With the CIO Council?
    Secretary McDonald. Yes.
    Senator Tillis. I would like to see a matrix going forward 
of any of the infrastructure or technical decisions that you 
are making. I would like to see a running list of the buy 
versus build decision. You all know that if you have got a 
build decision, boy, you better have a really good reason for 
why you are building versus buying.
    Secretary McDonald. Well, you know our prejudice because we 
have talked----
    Senator Tillis. I know that LaVerne Council--but I want to 
see it in writing, because you hear things about, well, you 
know, people are saying it is not going to--look, scheduling 
systems, those sorts of things, the private sector has got it 
down. I would like to see a running list of that.
    The last thing would be to extend into the other areas such 
as Womack, other capacity. When you are looking at your capital 
expenditure going forward, optimizing that and making sure you 
are getting creative about maybe even collaborations with the 
DOD where they have capacity. I am thinking about Fayetteville, 
and I am thinking about Womack. But, making sure that that is 
all articulated.
    A final thing--I said that was final, but this is the final 
one. Organizational comparison. This speaks to something that 
Senator Manchin discussed. I would like to see what that 
organizational model looks like as you get to a full 
transformation. Does it have the kind of elements of a pyramid 
that you would see in business? Is the bureaucracy that we find 
in the middle that I think sometimes is problematic being 
thinned out, pushing more of those resources down to providing 
care? The organizational transformation model is something we 
have not really talked about to the extent that it involves 
reorganizing the VISNs. All of those things I think would be 
very helpful for us to see, and I would like to be able to 
measure it on some basis that makes sense.
    The final thing--this is truly the final thing--has to do 
with the toxins at Camp Lejeune. I am going to--Senator Burr 
and I are going to communicate out to your office. There is a 
potential issue with timing. We like the work that you have 
done. Now the timing of really getting that stuff online. I 
have heard things that I am not going to react to, but I just 
want to let you know we are going to be in touch with your 
office.
    Secretary McDonald. OK. Do not write me a letter. Let us 
get together and talk. I get too many letters.
    Senator Tillis. Yes. Well, we need to get--we will get our 
office together fairly quickly. I think it was Senator Burr's 
inclination to write a letter. I am happy to have a phone call 
if it is not on that track.
    Secretary McDonald. Let us get it done quickly.
    Senator Tillis. Thank you.
    Secretary McDonald. We will reduce the middle management. 
Organizations today do not need the middle management that they 
have had historically because of information technology, so we 
will do that.
    Senator Tillis. I find it hard to believe that one VISN 
needs to be fundamentally different from another.
    Secretary McDonald. They should not be.
    Senator Tillis. Today I do not think that that is the case.
    Secretary McDonald. They should not be.
    Senator Tillis. Thank you.
    Secretary McDonald. My principle is you standardize and get 
scale as much as you can, but you customize when you need to, 
to meet a certain customer need.
    Senator Tillis. Thank you, Mr. Chair, for holding this 
important meeting.
    Chairman Isakson. Well, thank you for raising the question 
of the VSOs, and for your edification. The first remarks I made 
in my opening statement were that the VSOs are the 
representatives of our customers, and in the changes 
legislatively that are being talked about, the seven items the 
Secretary outlined in his remarks. It is going to be critical 
to have the input of the VSOs and have them be partners in 
making this change. Some of the changes are going to take hard 
decisions that affect our customers. We need to make sure our 
customers have some input before the fact and be a team player 
in the culture change rather than after the fact being 
reactionary. I am going to see to it that it is all hands on 
deck when we make those decisions.
    Mr. Secretary, thank you very much for your testimony. To 
all of you, thank you for being here.
    Secretary McDonald. Thank you, Mr. Chairman.
    Chairman Isakson. Commander, thank you very much, and we 
will get back to Georgia before the snowstorm hits.
    We stand adjourned.
    [Whereupon, at 11:53 a.m., the Committee was adjourned.]
Responses to Posthearing Questions Submitted by Hon. Johnny Isakson to 
Hon. Robert A. McDonald, Secretary, U.S. Department of Veterans Affairs
    Question 1.  Earlier this month, the VA Inspector General released 
a report finding that there was a significant backlog of unprocessed 
veteran material at a scanning contractor's facility in Georgia, which 
in part resulted from VA regional offices sending the contractor 
unorganized boxes of documents that were not ready for scanning. The 
Inspector General also found that the contractor was improperly storing 
papers containing veterans' sensitive information, making it subject to 
loss, theft, or misuse.
    a. Would you please give us an update on what has been done to 
protect veterans' personally identifiable information at that facility 
and to ensure that mail can be scanned in a timely manner?
    Response. Veteran privacy is an extremely important component of 
the scanning process and at no time was any Veteran information 
compromised or in danger of being compromised. All boxes were sealed 
and tracked during transit and were opened only inside the scanning 
facility, and only handled by cleared vendor personnel. Each vendor 
employee receives VA-mandated privacy awareness training and a 
background investigation consistent with Federal employment. 
Additionally, the security protocols in place at each of the scanning 
vendors' facilities are more robust than most regional offices. Some of 
these protocols include:

    1. Vendor staff members are prohibited from taking backpacks, bags, 
lunchboxes or other containers into the production area.
    2. Vendor staff members are prohibited from taking paper in or out 
of the production area.
    3. Vendor systems track exactly which employee reviews each 
document, ensuring accountability in the event of an issue.
    4. Each facility is protected by a third party alarm vendor. The 
alarms are enabled at the end of each shift when the facility will be 
vacant and de-activated by authorized personnel prior to the next 
scheduled shift arrival.
    5. Each facility is equipped with Close Circuit Television systems. 
Cameras are positioned inside the exterior entrances of each facility 
and throughout the interior of the production facility.
    6. All external doors use a proximity card system with employee-
specific badges to limit physical access based on clearance level, 
tour-of-duty, and business need.

    The improperly stored materials pictured in the OIG report were 
characterized as original claims materials; however, those materials 
actually consisted of document separator sheets, internal operational 
documents, and training materials specific to the vendor. There was one 
box of contractor-generated photocopies of Veterans' documents which 
were created by the vendor in an effort to meet VA's required image 
quality requirements. As the contract did not instruct CACI on specific 
storage requirements of internal business practices, VA was limited in 
its response to the improper storage of materials, including the one 
box of copies of claims materials. However, VA took several immediate 
actions:

    1. Audited the stored material to ensure it did not contain VA 
source materials.
    2. Directed the vendor to reorganize their storage space and 
properly dispose of contractor materials no longer used. For reference, 
the referenced area was cleaned and reorganized by 6am on January 22, 
2015 (while the OIG was still onsite at CACI).
    3. Followed-up to ensure CACI completed handling of those 
documents. As those documents were CACI materials, CACI entered into a 
contract with a local company to dispose of the documents identified by 
the IG, as well as any photocopies of documents created as part of 
ongoing operations. CACI has since provided certificates of disposition 
to demonstrate the documents were disposed of properly. (Certificates 
are dated 7/13/2015 and 7/20/2015).
    4. Increased the frequency of VA's scheduled and unscheduled site 
audits.
    5. Logged the contractor's performance in the monthly Performance 
Based Service Assessment (PBSA).

    VA's contract with the scanning vendor required a five day turn 
around for a specific volume of material. During the timeframe 
identified by the OIG report, VA sent the Newnan, Georgia facility a 
much greater volume of material than covered under the contract. Much 
of the volume consisted of inactive records
    (i.e. files without active claims) which were shipped and 
subsequently scanned to reduce overcrowding at various facilities, and 
to allow VA to respond more rapidly when a Veteran files a claim. The 
vendor's actual scan time during the period was 2.97 days for mail and 
13.66 days for active claims, while some boxes were there for much 
longer, those boxes were of inactive records. Since VA had shipped a 
greater quantity than covered in the contract, VA and the contractor 
worked together to ensure active claims were scanned first without 
sacrificing accuracy.
    VA welcomes an ongoing dialog concerning this mission-essential 
program, to include onsite reviews of any scanning or storage site 
affiliated with this program.

    Question 2.  VA call centers have made news in the past for an 
extremely high call ``block rate'' (the number of calls that are not 
connected) with over 50 percent of veterans unable to get through to a 
representative.
    a. With regard to call centers, how are you measuring customer 
satisfaction?
    Response. VA operates Call Centers that provide a variety of 
services (e.g., pharmacy, claims, memorials) to Veterans. Call center 
performance metric goals are established and measured for each of the 
enterprise call centers. J.D. Power, an industry leader in customer 
market research, is one of the providers VA uses to provide an 
independent and comprehensive understanding of customer satisfaction at 
these centers.
    Additionally, an enterprise initiative, being run by the Veteran 
Experience Office, is underway to standardize the customer satisfaction 
method of collection, measurement, and goals based on industry best 
practices in order to provide an aggregate view of the Veteran 
experience. The VA is currently focusing this standardization on 
understanding how Veterans feel about the following:

      How effective was the service provided? Did you get the 
correct, complete answer?
      How easy was to reach VA?
      How much effort did you personally need to expend to 
resolve your inquiry?
      Do you trust VA to address your problems?

    b. How are you improving your call centers to ensure all veterans 
are able to have their calls answered in a timely manner?
    Response. VA is currently undertaking an initiative, titled 
``Breakthrough Initiative for Call Centers,'' that is reviewing all 
aspects of all call centers' performance to ensure calls are answered 
in a timely manner. Where improvements are needed, the team is 
onboarding additional staff, improving self-service options for 
Veterans (e.g., website, mobile applications, automated telephone 
service), enabling Veterans to utilize non-phone communication channels 
(e.g., chat, text, etc.), providing additional training, and enhancing 
existing tools (e.g., Knowledgebase, Customer Relationship Management). 
Additional targeted initiatives are being undertaken at the tactical 
level to ensure calls are answered, including utilizing continuous 
feedback loops whereby call center representatives and Veterans provide 
direct feedback to the call center management that can be acted upon 
immediately. The call centers recognize that Veterans contact VA for a 
variety of reasons (e.g., health, benefits, memorials), and, where 
possible, are tailoring the services provided to best meet the 
Veterans' needs.

    c. What security and fraud protection measures do you have in place 
for Veterans personal information?
    Response. VA requires all Government and Contractor personnel to 
undergo annual training on the proper use, and protection of personally 
identifiable information (PII). VA requires that PII be protected at 
all times by all personnel, and only accessed when personnel have a 
need to know information about a specific Veteran. Moreover, call 
centers have specialized procedures for validating, and verifying a 
caller's identity prior to providing information regarding a Veteran. 
Typically, these procedures restrict disclosure of PII to the record 
holder (e.g., the Veteran, Beneficiary) or those specifically 
authorized by the record holder in accordance with the Privacy Act of 
1974 and other legal statues. Moreover, VA has a Privacy Office in 
place that develops privacy protection policies, and follows up on any 
suspected Privacy incidents to determine if PII was released, address 
spillage (if the release was verified), and implement lessons learned. 
VA Office of Information Security (OIS) under the Office of Information 
and Technology (OIT) oversees the security posture of all VA systems.

    d. To what extent are you using commercial best practices to ensure 
better response?
    Response. Call Center teams are leveraging best practices for all 
aspects of the call center operations and improvement initiatives. For 
example, VA is working to incorporate International Customer Management 
Institute (ICMI), and Utilization Review Accreditation Commission best 
practices which govern speed, timeliness, and accuracy of response. We 
leverage best practices to improve our knowledge management solution 
that provides employees the ability to respond to Veterans with the 
right answer, or route them to the right location the first time. 
Recently, on April 28, 2015, the Health Resource Center was awarded a 
2-year ICMI site certification. They continuously invest in their most 
important resource--their employees, which is evidenced by the 
incorporation of Lean Six Sigma White Belt training into their New 
Employee Orientation program, in addition to their existing 
comprehensive recruitment and training program.

    e. How do you benchmark commercial best practices?
    Response. VA collects and reviews best practices by meeting with 
representatives from the New York City and Philadelphia 311 systems to 
understand how they transformed their contact center systems. We have 
also hired personnel, such as our Enterprise Contact Center lead, who 
have experience with best practice call center organizations such as 
United Services Automobile Association. We also have partnered with 
organizations that have either collected from, or worked with, best 
practice commercial organizations such as Zappos, and Lands' End, as 
well as government agencies such as Centers for Medicare and Medicaid 
Services, Consumer Financial Protection Bureau, and Centers for Disease 
Control and Prevention. Both our government and contractor personnel 
have also attended conferences on call centers such as the ICMI to 
gather best practices as well.

    Question 3.  In your testimony, one of the ``breakthrough outcomes 
for 2016'' for the Office of Information and Technology (OI&T) is that 
50 percent of projects be on time and on budget. VA has a less than 
stellar track record when it comes to the implementation of IT 
projects.
    a. What is the percentage of IT projects are completed on time and 
on budget now?
    Response. The Veteran-Focused Integration Process (VIP) replaces 
the Project Management Accountability System (PMAS) for enterprise IT 
management of products and services, which VA has used since 2009, to 
oversee its information technology (IT) project delivery. The move from 
PMAS to VIP takes a generational leap forward in VA's commitment to 
serve our Nation's Veterans. Using PMAS criteria (which measures work 
product delivery), VA currently has a 78 percent on-time rate for 
delivering increments of work within IT projects.
    However, the evolution to VIP greatly expands the scope and span of 
what VA will be measuring, while reducing the paperwork requirements by 
88 percent. Under VIP, VA is reorganizing a portfolio management 
construct focused on measuring end product delivery rather than 
increments of work. The near-term (6-18 months) goal for VIP is 
targeting 50 percent on-time and on-budget delivery, higher than the 
industry standard of 45 percent.

    b. You state in your testimony that 95% of the current content and 
features will be redesigned and migrated to vets.gov. How long and at 
what cost will this migration take before vets.gov is fully functional?
    Response. The current plan is to have 100 percent of the current 
Veteran-focused content and access to services redesigned and migrated 
to www.vets.gov by December 2016. We expect www.vets.gov to continue to 
evolve and develop beyond December 2016, as we respond to Veteran 
feedback, develop new online capabilities, and continue work on backend 
system migrations and technical platform enhancements. This effort is 
fully funded.

    Question 4.  As we discuss modernization of the Department of 
Veterans Affairs, I'd like to specifically discuss a recent GAO report 
regarding Total Disability Individual Unemployability (TDIU) benefits. 
According to GAO, this disability supplement program increased 30 
percent over a 5-year period with annual outlays of over $11 billion. 
GAO concluded that VA procedures do not ensure that Individual 
Unemployability benefit decisions are well-supported, and given the 
amount of growth and size of this program, that is concerning. To quote 
GAO:

        ``VA does not use available third-party earning data to verify 
        veterans' self-attested employment history and income 
        information. Without such verification, VA cannot adequately 
        ensure that the eligibility standards are being met, which 
        places these benefits at risk of being awarded to ineligible 
        veterans . . . Having a strong framework for program integrity 
        is important for any Federal program, and in light of the 
        multi-billion dollar--and growing--TDIU benefit, taking steps 
        to ensure payments are properly awarded to veterans is 
        essential.''

    a. What progress has the VA made specifically regarding GAO's 
recommendation that VA verify veterans' self-reported income through 
the use of available third-party data sources to independently verify 
income and improve integrity in this program?
    Response. To verify Total Disability Based on Individual 
Unemployability (TDIU) claimants' reported employment history and 
income information, VA has expanded its data sharing agreement with the 
Social Security Administration (SSA). The expanded agreement allows VA 
to obtain Federal tax information from SSA in order to compare 
claimants' reported income with their tax information, including 
employment wages.
    To leverage this expanded data agreement, VA is developing an 
upfront income verification process. Under its new process, VA will 
verify with SSA claimants' reported income at the time they file a TDIU 
claim. The new verification process is expected to take approximately 
10 to 16 days. User Accepted Testing (UAT) of the new process is 
scheduled to be completed by April 30, 2016. VA anticipates conducting 
national training of Veterans Benefits Administration (VBA) personnel 
on the new process by June 2016, with a targeted implementation date of 
June 30, 2016.
    In addition, VA is developing technical requirements to verify 
income for Veterans who are currently receiving TDIU benefits. 
Scheduled UAT of the data match, processes, and validations is 
scheduled to be completed by April 1, 2016, with national training of 
VBA personnel expected by September 2016. Wage income verification for 
TDIU recipients will resume on an annual basis in fiscal year (FY) 
2017, and continue thereafter.

    b. Has VA done any analysis regarding the estimated level of 
improper payments associated with this program?
    Response. VA has not identified TDIU payments as a root cause of 
improper payments in its testing and program reviews under the Improper 
Payment Information Act of 2002, as amended by Improper Payments 
Elimination and Recovery Act and Improper Payments Elimination and 
Recovery Improvement Act. As a result, there are no calculations 
available relating to TDIU payments constituting improper payments. 
With resumption of wage income verification for TDIU recipients in FY 
2017, VA will collect and analyze data on improper payments associated 
with TDIU.

    Question 5.  In 2015, the VA's Office of Inspector General 
completed two reports about VA's Fiduciary program, raising concerns 
with the potential misuse of beneficiary funds and the waiting lists 
and the caseloads of field examiners. In addition, the Committee has 
heard anecdotal evidence that VA's current policies have led to a 
trimming-back of the caseloads of larger, private fiduciaries who serve 
veterans. Although VA did not identify the Fiduciary program as a top 
12 priority, it is an area that deserves scrutiny.
    a. Could you please explain VA's current position on whether it 
intends to reduce the cases that it allows private fiduciaries (such as 
those that might serve more than 200 veterans) to manage?
    Response. Under current VA regulations, the number of beneficiaries 
for whom an individual may serve as a fiduciary is limited to the 
number that the fiduciary may reasonably be expected to properly serve. 
38 Code of Federal Regulations, Section 13.69. It is the fiduciary hub 
manager who exercises his or her discretion when appointing fiduciaries 
to serve in the best interest of beneficiaries. If the fiduciary hub 
manager determines the number of beneficiaries served by a fiduciary 
could negatively impact the welfare of beneficiaries in the fiduciary 
program, no additional information is considered.
    In VA's proposed rewrite of its fiduciary regulations, this issue 
is addressed in Section 13.100(d). VA did not propose to prescribe a 
specific limit on the number of beneficiaries a single fiduciary may 
serve. Rather, each hub manager would have discretion to determine 
whether it is in a beneficiary's interest to appoint a particular 
fiduciary after carefully considering any potential degradation of 
service to any other beneficiary in the fiduciary program.

    b. Has VA considered allowing certain highly-rated, private 
providers to serve greater numbers of veterans--for example, being a 
``consolidated'' provider for an entire Hub?
    Response. While VA does not prescribe a specific limit on the 
number of beneficiaries a single fiduciary may serve, the hub manager 
must consider whether the fiduciary has the capacity to manage 
additional appointments without degrading the service that the 
fiduciary provides to any other beneficiary. In addition to services 
potentially degraded due to exceeding a fiduciary's capacity, service 
to other beneficiaries could be disrupted if a fiduciary with a large 
number of beneficiaries suddenly decides that it wants to get out of 
the business of providing fiduciary services. Such a decision could 
interrupt VA's delivery of benefits to affected beneficiaries if VA is 
unable to timely appoint a large number of successor fiduciaries.

    c. Could you briefly identify the top five changes or initiatives 
that VA is pursuing to modernize its Fiduciary program?
    Response. VA continues to work hard to develop and implement 
fiduciary program improvements to enhance service delivery and protect 
our beneficiaries. Please find enclosed the Fiduciary Program 
Modernization Plan for FY 2016 (Attachment One), which details our 
focus on improving and enhancing oversight of beneficiaries to ensure 
their well-being, and overseeing the activities of the fiduciaries who 
manage their benefits. Our modernization efforts include the following 
five priority initiatives:

      Clarifying and strengthening policies and procedures:
        - Publishing the final fiduciary regulations.
        - Rewriting the Fiduciary Program Manual.
      Modernizing information technology systems:
        - Deploying Beneficiary Fiduciary Field System (BFFS) 3.0 with 
        an enhanced business intelligence platform and comprehensive 
        real-time data analytics.
        - Replacing the current telephone system to improve call 
        routing and reporting capabilities and allow for the recording 
        of telephone calls for quality monitoring.
      Strengthening oversight of operations:
        - Expanding the fiduciary quality assurance program to include 
        the tasks associated with investigating fiduciary misuse of 
        beneficiary funds.
        - Conducting Targeted Program Reviews to identify best 
        practices and the need for national areas of improvement, to 
        include IT enhancements, training, operations, and policy and 
        procedures.
      Training fiduciary program personnel:
        - Providing training on implementing policy and procedure 
        changes in the new fiduciary regulations and revised Fiduciary 
        Program Manual.
        - Developing a BFFS user-guide and providing training on the 
        BFFS 3.0 enhancements.
      Improving VA communication with beneficiaries and 
fiduciaries:
        - Publishing beneficiary training videos to prepare for the 
        personal visit with a field examiner.
        - Improving the language and increasing the frequency of 
        accounting letters to notify fiduciaries of the importance of 
        submitting timely and correct accountings.
        - Developing training videos targeted to fiduciaries required 
        to provide an accounting.
                             Attachment One

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 ______
                                 
Responses to Posthearing Questions Submitted by Hon. Richard Blumenthal 
  to Hon. Robert A. McDonald, Secretary, U.S. Department of Veterans 
                                Affairs
    Question 6.  Over the last fiscal year, VHA has been able to 
increase its health care staff by 4.7 percent. This means the 
Department has increased its capacity to see veterans within its wait 
time standard. One of the Department's 2016 goals is to increase access 
to health care by reducing the amount of time it takes to fill open 
positions by 30 percent. While this goal is commendable, I fear it is 
unrealistic considering the fact in mid-September last year VHA had 
more than 900 vacancies across Human Resource positions--these are the 
staff who actually post notices for employment opportunities, set up 
interviews, and process general paperwork related to hiring. How does 
the Department intend to reduce fill times for open VHA positions when 
it lacks so many critical human resources (HR) staff?
    Response. VHA continually employs an aggressive, multi-faceted 
approach to attract top quality candidates for human resource 
positions. As of March 10, 2016, VHA has an estimated 452 vacancies in 
human resources positions. While filling these HR positions will be 
critical to the success of reducing hiring timeframes, VHA has also 
implemented other strategies such has providing the HR community best 
practices on reducing hiring timeframes such as appropriately utilizing 
recruitment authorities such as non-competitive hiring under Title 38 
and Veteran hiring authorities, improving tracking of recruitment 
actions, and providing reporting tools which assists HR in identifying 
barriers within the recruitment process. In addition, VA's HR Academy 
supports the development of a qualified and effective community of HR 
professionals through the delivery of training designed to improve HR 
professional's proficiency and reduce competency gaps.

    Question 7.  VA's written testimony identifies improving community 
care as a breakthrough priority for improving VA and highlights the 
need for legislation in order to implement such a change to care that 
VA provides through community providers. Improving veterans' access to 
care is going to require long-term sustainability across the different 
care options. In FY 2015, VA estimated that care in the community would 
cost just shy of $10 billion for FY 2016, which included $3.3 billion 
in Veterans Choice Funding. As a part of the rollout of VA's plan for 
consolidating care in the community, VA estimated that the annual cost 
of care through the amended Veterans Choice Program in FY 2017 would be 
about $6.5 billion with an additional $7 billion in general community 
care. That is about $13.5 billion--not including the changes to urgent/
emergency care that have been desperately needed. This figure seems 
difficult to sustain. In your vision of turning VA into a high-
performing organization, how will the business processes you plan to 
put into place help to better monitor the appropriate care levels to 
make sure that VA is providing high-quality, appropriate care to 
veterans without engaging in wasteful spending practices?
    Response. The consolidation of community care programs will enable 
VA to better implement standardized business processes for monitoring 
and regulating spending on Veterans' health care. This new program will 
use a single set of eligibility criteria, with standardized and 
negotiated provider reimbursement rates, allowing VA to conduct 
necessary oversight to ensure Veterans are receiving timely and high-
quality care within the community. VA will be able to integrate a 
single set of business rules into critical systems, improving VA's 
ability to identify potential areas of risk and reduce wasteful 
spending. By establishing a single program, VA will be able to manage 
oversight through the entire community care process. The future state 
will leverage robust analytics to improve VA's ability to identify 
waste, fraud, and abuse. For example, VA will be able to more easily 
identify duplicative claims and authorizations. By streamlining these 
programs into one single program, VA will be able to better monitor the 
care that is being provided, and the funds that are being spent on this 
care, allowing them to properly plan for the future of care delivery.

    Question 8.  At present, VA's website is challenging to navigate. 
Often users have a better chance of locating VA information by using a 
search engine like Google. In addition, when users find the relevant 
information, it can be out-of-date, frustrating the veteran and 
potentially leaving them with a bad first impression or inaccurate 
information. Given VA's intent to create a single authoritative website 
to improve user experiences, please provide information on how the 
interface will be user friendly and what efforts VA will make to ensure 
the information it provides is accurate.
    Response. Veteran research and feedback drives all of our design 
and development work. The reason we launched such a small portion of 
www.vets.gov back in November 11, 2015, is so we can make sure we are 
getting Veteran feedback throughout our deployment. So our ``agile'' 
and ``developing in the open'' approach is to build a small portion of 
www.vets.gov, then go talk to Veterans and see what they think. Then 
our team modifies vets.gov based on that data. That's the approach we 
plan to use for everything we do on www.vets.gov. It is the only way to 
make sure that Veteran needs are the primary driver of our design and 
features.
    We talk to Veterans every week. We use a combination of methods: 
in-person meetings, remote sessions, group and individual activities. 
In January, we visited a homeless shelter in Seattle, Washington and 
talked to a group of Veterans, and we conducted multiple interviews and 
usability sessions here in the District of Columbia (at city libraries) 
and remotely. We do these types of activities every week. We have to 
work with Veterans at every step of deployment, or we won't be 
successful. Our email is [email protected] for any Veteran who 
would like to give us feedback. Sessions are scheduled at the 
convenience of the Veteran and take only 30-60 minutes.
    Our goals and methods for creating the most user-friendly website 
in the Federal Government are posted publicly on the www.vets.gov 
Playbook website (www.vets.gov/playbook). Vets.gov combines human 
centered design with agile development to deliver products grounded in 
customer need and supported through cycles of continuous improvement. 
This methodology is intended for teams designing new products for 
vets.gov and for those migrating existing tools and content from VA 
websites. The framework, while not prescriptive, is a best practice 
model that aligns human-centered design with the vets.gov development 
and migration process. The activities of cross-functional teams are 
detailed out by phase as well as specific VA stakeholder engagement 
points with the Vets.gov team. The result will be information and 
experiences that are understandable and easy to find and complete.

    Question 9.  VA's written testimony mentions that a key goal of 
Secretary McDonald's plan to transform VA is to change the culture of 
VA from one of ``rules, fear, and reprisals'' to a ``principles-based 
culture.'' What metrics is the Department using to determine whether VA 
is meeting this goal?
    Response. Crucial to changing the VA culture from one of ``rules, 
fear, and reprisals'' to a ``principles-based culture,'' requires 
improving the Employee Experience. Considered so important to the VA 
transformation efforts, it has been identified as one of the VA's 
Agency Priority Goals (APG).

        Improve VA's Employee Experience by developing engaged leaders 
        at all levels that inspire and empower all VA employees to 
        deliver a seamless, integrated, and responsive VA customer 
        service experience.

    Leader and managerial actions can help boost job satisfaction and 
ultimately improve business outcomes. Strong leaders are important to 
creating a positive organizational culture and climate. Employees who 
are regularly engaged with their leaders are more innovative than 
others, more likely to want to remain with their employer, absent less 
often, enjoy greater levels of personal well-being, and perceive their 
workload to be more sustainable than others. Ultimately, our customer, 
the Veteran, will enjoy a higher level of satisfaction with VA services 
as a result of an improved Employee Experience.
    VA is committed to creating a work environment which provides all 
employees with a more consistent, positive Employee Experience, which 
ultimately improves the Veteran's experience with our organization. 
Studies indicate that employees who are satisfied with leadership 
behaviors provide a higher level of positive responses on employee 
surveys.
    To measure and evaluate progress toward this goal, and to 
operationalize this APG, VA will use six questions from the Federal 
Employment Viewpoint Survey (FEVS) to pulse VA employees on a quarterly 
basis about their experience with VA leaders. The six questions were 
selected after a thorough review and assessment of what leadership 
behaviors can drive the biggest improvements in employee engagement and 
job satisfaction. The responses to the survey questions will help 
determine to what extent VA programs are impacting leadership 
excellence and overall Employee Experience.
    Success by September 30, 2017, will be measured by an increase of 
four percentage points or more of positive responses by VA employees 
(over VA's FY 2015 baseline) to these six statements:

    1)  My supervisor provides me with constructive suggestions to 
improve my job performance.
    2)  In my work unit, steps are taken to deal with a poor performer 
who cannot or will not improve.
    3)  Employees have a feeling of personal empowerment with respect 
to work processes.
    4)  I feel encouraged to come up with new and better ways of doing 
things
    5)  How satisfied are you with the information you receive from 
management on what's going on in your organization?
    6)  My organization's leaders maintain high standards of honesty 
and integrity

    Annual targets for the six pulse survey questions are:

 
------------------------------------------------------------------------
             Survey Question                FY16 Target     FY17 Target
------------------------------------------------------------------------
#1......................................   60.12 percent   62.12 percent
#2......................................   29.47 percent   31.47 percent
#3......................................   41.51 percent   43.51 percent
#4......................................   55.40 percent   57.40 percent
#5......................................   45.05 percent   47.05 percent
#6......................................   45.50 percent   47.50 percent
------------------------------------------------------------------------


    Transformational leaders engage in relationship-building and 
relationship maintaining behaviors with their employees. Strong leaders 
tend to have the ability to motivate employees, establish trust, 
communicate goals, and generate commitment. Changing an organization's 
culture may take a decade or longer, especially with a large 
organization such as VA. This APG, which covers only the 2-year time 
period 2016-2017, focuses on a strategy that primarily addresses 
improving leadership practices, and that can bring about measurable 
changes in a relatively short period of time.
    To create an improved Employee Experience, VA shall implement a 
strategy that will enhance leadership skills in collaboration and 
communication with employees. One new key initiative, Leaders 
Developing Leaders (LDL), is VA's vanguard effort to not only train 
senior leaders, but also to cascade the training to lower-level 
leaders. LDL, combined with myriad other leadership development 
programs, should help raise the level of positive responses to the six 
employee survey questions. VA will conduct quarterly employee surveys 
to monitor the positive responses to those six APG questions on 
leadership.
    The following are project milestones as of February 25, 2016 and 
measures for LDL program; the key initiative supporting this APG:

      Milestone: LDL follow-up session conducted for select 
leaders (approx. 450 attendees).
        - Completed: February 29, 2016.
      Milestone: Cascade session and a leaders ``100-day'' 
project are completed by LDL participants.
        - Target: April 30, 2016.
      Milestone: Strategies developed for broad roll-out of LDL 
concepts and tools beyond leadership levels to front-line supervisors/
employees and for embedding in daily operations.
        - Target: April 15, 2016.
      Milestone: Strategy established for an enterprise 
approach to leadership development.
        - Target: September 15, 2016.
      Measure: Number of VA leaders who receive LDL training by 
30 September 2016.
        - Target: 10,000-12,000 leaders.
      Milestone: LDL concepts and tools provided to 
supervisors, and embedded in daily operations.
        - Target: November 30, 2016.
      Milestone: All VA employees exposed to LDL and understand 
how to leverage the concepts and tools in their work to serve Veterans.
        - Target: December 31, 2016.

    The desired outcomes of this program by December 2016 are:

      Improved leadership capabilities of VA leaders.
      Engaged Employees make principle-based decisions that 
positively impact the Veteran's experience.
      LDL concepts and tools provided to supervisors and 
embedded in day-to-day operations.
      Employee behavior demonstrates the MyVA priorities 
(Veterans Experience and Employee Experience) in day-to-day activities.
      LDL's impact is sustained by, and embedded in, an 
enterprise approach to leadership development.

    The strategic objective beyond 2016 is to transform VA from a 
rules-based to a principles-based organization by developing authentic 
servant leaders who inspire and empower engaged employees, foster an 
environment based on trust and accountability, and work collaboratively 
to provide a superior Veteran experience.
    In addition to the metrics above, another way the VA measures the 
transformation of VA culture from one of ``rules, fear, and reprisals'' 
to a ``principles-based culture,'' is to review metrics related to 
psychological safety, which looks at an employee's ability to speak up 
and address mistakes or errors without fear of harsh treatment by 
supervisors or peers.
    The VA monitors psychological safety using question 17 on FEVS to 
measure success in this area. The results of the FEVS are publically 
accessible (http://www.fedview.opm.gov/) and offer data comparisons of 
VA to other Federal agencies.

        Q17: Psychological Safety (Fear of Reprisal): I can disclose a 
        suspected violation of any law, rule or regulation without fear 
        of reprisal.

    The VA also uses the VA All Employee Survey (AES) to measure the 
transformation of VA culture from one of ``rules, fear, and 
reprisals.'' The AES measures psychological safety within workgroups 
and between an employee and supervisor through employee responses to 
the following questions:

                     workgroup psychological safety
      Psychological Safety (Bring Up Problem): Members in my 
work group are able to bring up problems and tough issues.
      Psychological Safety (Try New Thing): It is safe to try 
something new in this work group.
      Workgroup Communication: Members of my work group 
communicate well with each other.
                    supervisory psychological safety
      Psychological Safety (Disagreement): My supervisor 
encourages people to speak up when they disagree with a decision.
      Psychological Safety (Comfort Talking): I feel 
comfortable talking to my supervisor about work-related problems even 
if I'm partially responsible.

    Additionally, moving the VA to a ``principles-based culture,'' is 
also assessed through the VA's ICARE qualities (Integrity, Commitment, 
Advocacy, Respect, and Excellence), culture of engagement, and servant 
leadership principles. Enclosure 2, reflecting analysis by the VA's 
National Center for Organizational Development, shows a mix of AES and 
FEVS items that show employee responses related to the ICARE concepts. 
Enclosure 3 reflects data on the Servant Leadership Index which is a 
mix of 11 AES items. Analysis of these data groupings reflects the VA's 
efforts to transform the VA into a principles-based culture.
    Finally, VA has implemented and continues to implement numerous 
strategies to enhance the VA culture through MyVA Transformation, and 
specifically its focus on People and Culture. Notably in 2015, VA 
achieved Office of Special Counsel certification for notifying all VA 
employees of Whistleblower Protection rights and implementing mandatory 
Whistleblower Protection training to all VA supervisors, managers, and 
executives. VA's Office of Diversity & Inclusion (ODI) is enhancing the 
Whistleblower content in its mandatory Workplace Harassment Prevention 
and No FEAR training for all employees, and biennial EEO, Diversity & 
Inclusion, and Conflict Management training for Managers and 
Supervisors. ODI continues to expand its training portfolio in areas 
such as cultural competency, workforce diversity, organizational 
inclusion, unconscious bias awareness, and psychological safety. It has 
launched its new World Cafe initiative which is a series of employee 
dialogs on race relations and other timely workplace culture issues.
    To gauge our progress in these areas, ODI implemented its 
groundbreaking Diversity and Inclusion Indices, holds quarterly 
Diversity & Inclusion Council meetings, and collaborates with the VA 
Office of Human Resources Management to promulgate its new Employee 
Engagement Playbooks for managers and employees. The Diversity index is 
a measure of VA's aggregate workforce diversity in terms of race, 
ethnicity, and gender, as compared with the corresponding demographic 
groups in the U.S. Civilian Labor Force (CLF). The Inclusion Index is a 
measure of organizational inclusion as indicated by favorable employee 
responses to 20 validated items relating to workplace inclusion on the 
FEVS. The target benchmark for the Diversity Index is 90 percent and 
the target goal for the Inclusion Index is 56percent VA's 2015 
Diversity index is currently 87.84 percent (U.S. Civilian Labor Force -
based) and its 2015 Inclusion Index is 53 percent.
    ODI is partnering with the Veterans Health Administration to roll 
out its Just Culture and Stop the Line initiatives VA-wide to move the 
VA culture to one of shared accountability committed to Veteran and 
employee safety. Additionally, VA stood up its new Office of 
Accountability Review and Anti-Harassment Office in 2015 to ensure 
accountability for leadership misconduct and negligence, and for 
promptly responding to employee allegations of harassment, 
respectively.

    Question 10.  VA's written testimony discusses how VA needs 
additional statutory authority to modernize the disability claims 
appeals process. Following the hearing, Secretary McDonald issued a 
statement on VA needing legislation ``to put in place a simplified 
appeals process that enables the Department to resolve the majority'' 
of appeals in a reasonable timeframe for veterans. The Secretary's 
statement, however, did not specify which statutory changes are 
necessary to reform the appeals process. What specific authority does 
VA need to reform the disability claims appeals process?
    Response. VA's current appeals process is too complex, lengthy, and 
contains too many unnecessary and duplicative steps. It is confusing 
and frustrating for Veterans. The legislative proposals in the 
President's 2017 Budget supports the development of a simplified 
appeals process, which would provide most Veterans a final decision on 
their appeal within one year of filing by FY 2021. We intend that these 
proposals will be the starting point for the broader conversation about 
how the Department, Congress, Veterans Service Organizations, and other 
stakeholders can work together to provide Veterans with the timely 
appeals process they deserve.
                                 ______
                                 
 Responses to Posthearing Questions Submitted by Hon. Sherrod Brown to 
Hon. Robert A. McDonald, Secretary, U.S. Department of Veterans Affairs
    Question 11.  Secretary McDonald, at a critical time for the VA, 
post-Phoenix, Congress provided the Department with additional 
flexibility though the Choice Act. Veterans are now able to receive 
care from non-VHA facilities, but there are still some concerns 
regarding the process and authorizations for these appointments. What 
steps has the VA taken to ensure that all employees are properly 
trained regarding the policies associated with the CHOICE Act, and how 
can the Department encourage third party providers to approve 
authorizations more quickly?
    Response. The Veterans Health Administration (VHA) is working with 
the third party administrators in several key areas to expedite the 
approval of authorizations that leads to improved access to care for 
our Veterans. A Referral and Authorization Tiger Team performed a 
review of the current process and has identified enhancement 
opportunities. VHA continues to utilize the contractual agreement as a 
means to evaluate compliance and expedite care for Veterans. When third 
party administrator issues arise, contractual remedies help address 
these and provide resolution and direction to our business processes.
    In addition VHA has created training sessions for the field to 
include guidance, standard operating procedures and fact sheets related 
to sending accurate clinical documentation to the third party 
administrators. VHA communicates changes in processes and regulations 
through a bimonthly Choice Champion call, this allows for relay of 
information related to new processes, regulations, and updates to be 
discussed in an open forum. VHA has assigned subject matter experts to 
each Veterans Integrated Service Network (VISN) to address, their 
individual concerns and training ne each subject matter expert meets 
biweekly with the their VISN points of contacts to discuss and develop 
forward thinking plans for training needs, based on the current known 
barriers.

    Question 12.  Finally, you mention that Department needs additional 
legislation to move forward on several of your ``Breakthrough goals for 
2016'' including, the ability to see a community provider within 30 
days, non-department claims processing, and reducing claims backlog, 
referral and authorization time. What legislative help do you need from 
the Committee to make this happen?
    Response. VA submitted to Congress on October 30, 2015 its ``Plan 
to Consolidate Programs of Department of Veterans Affairs to Improve 
Access to Care,'' as required by Title IV of the Surface Transportation 
and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41) 
(the Plan). The Plan included a detailed thorough treatment of policies 
for Congress to consider to transform VA Community Care, with a 
relatively detailed description of legislation necessary to carry out 
those ideas. VA would also refer the Committee to the discussion on 
Community Care in Volume II of its FY 2017 Budget Submission, beginning 
at page VHA-165.
    VA is eager to continue its active engagement with the Committee 
through informal discussions on the Plan and associated legislation. A 
formal VA legislative proposal is under review and forthcoming.

    Question 13.  I have heard from one veteran who says that he's had 
a pending claim appeal for over three years. Last year, the VA told him 
the appeal would be settled no later than May 2015, two years from the 
original application. After working with a VSO representative to track 
his case, he discovered that his settlement day was again delayed.
    The VA told him that his case may not be settled until May of this 
year. The reason he was given was a backlog in cases. In your testimony 
you say that additional legislation is needed to simplify the appeals 
process to resolve appeals within one year of filing.
    a. What would this legislation entail and what other steps are you 
taking to address the backlog crisis?
    Response. VA's present legal appeals framework is complicated and 
ineffective, and is confusing for Veterans who wait much too long for a 
final resolution of their appeal. The average processing time for all 
appeals resolved in FY 2015 was three years. For those appeals reaching 
the Board of Veterans' Appeals, Veterans wait on average at least five 
years for a decision, with thousands of Veterans waiting much longer. 
The current statutory appeal process is failing Veterans. Over the 
years, laws have changed to add layers of process, perceived as being 
necessary to protect the interests of Veterans; however, those 
perceived protections have crippled the system and are no longer 
serving Veterans well. Many find it confusing and are frustrated by the 
endless process and the length of time it can take to get an answer.
    We are applying lessons learned from the transformative changes 
that allowed us to reduce the disability claims backlog. Like our work 
with the claims processing, the appeals process will need changes in 
people, process and technology. Upgraded technology will make changes 
to our mail system and paper records, and incorporate some efficiency 
in the way appeals are managed and processed. Retraining and increased 
staff will be necessary. But these measures will not be enough. 
Fundamental legislative reform is essential to ensure that Veterans 
have a timely, fair, and quality appeals process. To this end, the 
President's 2017 Budget proposes a simplified appeals initiative--
legislation and resources--to provide most Veterans a final decision on 
their appeal within one year of filing by FY 2021. We intend that the 
legislative proposals in the Budget will be the starting point for the 
broader conversation about how the Department, Congress, Veterans 
Service Organizations (VSO), and other stakeholders can work together 
to provide Veterans with the timely appeals process they deserve.

    b. Would H.R. 800, the Express Appeals Act, accomplish these goals?
    Response. For more than 2 years, VA has worked with VSOs in their 
efforts to develop the pilot that has become known as the Fully 
Developed Appeals pilot 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.
    This proposal 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.

    Question 14.  Too many veterans don't believe that they have had a 
voice to present concerns back to the VA. And that is why I applaud 
your Community Veterans Engagement Boards initiative. Hearing from 
Veterans should be a mandatory part of any VA Secretary's job (and it 
should be part of our job, too). Do you receive feedback from these 
meetings, and if so is it used to inform any changes made to the MyVA 
initiative?
    Response. Receiving input and feedback from Veterans, 
Servicemembers and their families is one of the key functions of a MyVA 
Community. What's different about the MyVA Communities initiative is 
that our leaders on the ground are taking immediate, local actions to 
improve Veterans' experiences based on the feedback they receive. We do 
not wait for the information to funnel up to headquarters before 
something can be done about it. The MyVA Communities model is about 
improving Veterans' experiences and outcomes. It is about getting the 
people who can make a difference at the same table and empowering them 
to make a difference. VA has heard anecdotes about Veterans who 
benefited from the local collaboration in these communities to overcome 
complex issues which could not be resolved by one organization alone. 
VA expects as the initiative matures to hear more and more about the 
positive impact of these boards.
    While the Veteran feedback obtained through community Veterans 
engagement boards is acted on swiftly by local leaders, we also are in 
the process of developing a mechanism for these boards to elevate 
important systemic or national issues to the Veterans Experience Office 
for enterprise level action. We also recognize the need for a mechanism 
to share best practices between communities so that they can learn from 
one another, so we are looking into the best way to support this type 
of information sharing.

    Question 15.  I wanted to specifically ask you about the ways that 
the Department will measure its commitment to veterans. On page nine of 
your testimony, you say you'd like to strengthen trust in VA's ability 
to ``fulfill our country's commitment to veterans,'' from 47 percent to 
70 percent. Can you breakdown the metrics that the department is using 
to measure whether veterans believe that goal will be met?
    Response. Trust in VA is built one interaction at a time based on 
experiences that are effective, easy and engaging, reflective of a 
valued, personal relationship with our Veterans. To measure VA's 
progress in strengthening Veterans trust, the Veterans Experience 
Office developed and tested four new survey questions to ask every 
Veteran, for every line of business, and across every channel of 
interaction. Veterans will be asked their level of agreement (Likert 
scale) with four statements, one assessing overall trust in VA, and 
three capturing specific aspects of their experience with VA. The four 
statements are ``I trust VA to fulfill our country's commitment with 
Veterans,'' ``I got the service I needed,'' ``It was easy to get the 
service I needed,'' and ``I felt like a valued customer.'' VA began 
adding these four questions to new and existing customer experience 
surveys; Veterans responses to these questions will be used to 
establish a baseline by quarter 3 of FY 2016 and measure VA's progress 
toward achieving its goal of strengthening trust in VA.

    Question 16.  Historically the VA has not received the funding or 
support that it needs to properly prepare for the growing and aging 
veteran population. You have laid out a detailed and comprehensive plan 
to reestablish confidence in the VA. There is only one more year in 
this Administration. Can you walk us through the timeline that you are 
using to ensure that these goals are met by the end of the year?
    Response. The Secretary selected the twelve breakthrough 
initiatives from an initial set of 28 candidate initiatives. These 
breakthrough initiatives represent the 12 most impactful of the 28; 
combining benefits to Veterans, Employees, and Tax payers while rating 
highest for feasibility achieving results in calendar year (CY) 2016 
that contribute to sustained transformational momentum in CY 2018.
    The twelve initiative outcomes are achieved through separate, but 
coordinated, timelines of events each managed via individual bi-weekly 
executive forums (i.e., for each initiative a bi-weekly oversight 
meeting is chaired by either the Secretary or Deputy Secretary).
    The twelve timelines generally follow the sequence below:

    1. Establishment of a weekly senior leader coordination forum 
comprised of the Secretary, Deputy Secretary, Under Secretaries and 
Assistant Secretaries (established FY 2015).
    2. Establishment of bi-weekly executive forums for each 
breakthrough initiative (Quarter 1, FY 2016).
    3. Assignment of the accountable executive leader (Quarter 1, FY 
2016). Assigned by the Secretary and answerable for the accomplishment 
of the assigned initiative. Required tasks include:

        - Verifies/approves the final wording of the initiative(s).
        - Confirms identify of the Responsible, Accountable, Consulted 
        and Informed leader ( RACI) information with particular 
        attention to the consulted (dependency) assignments.
        - Completes the definitions for the department-level metric 
        (description, baseline, current, 2016 goal, strategic goal) for 
        the assigned initiative.
        - Provides status, assessments and recommendations for 
        resources, dependencies, execution, overall and projection.
        - Provides information on milestones, resources, dependencies, 
        and status by completing the management dashboard.
    4. Definition of effective metric(s) to assess attainment of 
objective (Quarter 1, FY 2016).
    5. Establishment of performance indicators (Quarter 2, FY 2016).
    6. Reallocation of required FY 2016 resources (Quarter 2, FY 2016).
    7. Coordination for support from internal and external 
organizations (e.g., administrations, staff offices within the 
Department, Office of Personnel Management) (Quarter 2, FY 2016)).

                            A P P E N D I X

                              ----------                              


Prepared Statement of American Federation of Government Employees, AFL-
                                  CIO
    Chairman Isakson, Ranking Member Blumenthal, 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 VA Transformation. AFGE 
represents over 670,000 non-management Federal employees. Over forty 
percent of AFGE members are veterans working in the VA, Department of 
Defense, Department of Homeland Security and other agencies. AFGE 
represents more than 220,000 VA employees working in the Veterans 
Health Administration (VHA), Veterans Benefits Administration (VBA), 
and National Cemetery Administration (NCA).
    AFGE and its National VA Council (AFGE) believe that the MyVA 
Transformation initiative has a great deal of potential to make needed 
improvements to the VA. AFGE was a true partner with VA leadership 
during the highly successful transformation carried out by 
Undersecretaries Kizer, Garthwaite and Murphy. In contrast, our role in 
the current transformation process is more superficial and uneven for a 
number of reasons. As a result of less meaningful employee engagement, 
the current Transformation effort's likelihood of success is more 
limited.
    For example, AFGE represents more than 220,000 VA employees working 
in every VA occupation but has only assigned one seat on MyVA. The 
other unions participating in MyVA each have one seat even though they 
represent only a small percentage of the workforce in far fewer 
occupations. At the same time, twenty or more management 
representatives typically participate in these work groups. The number 
of consultants who are completely outside the VA workforce also far 
exceeds the number of employee representatives. AFGE has requested that 
the VA allot employee representative slots on MyVA that are 
proportionate to the number of employees represented by each union; 
that request is still outstanding.
    AFGE is also frustrated by the VA's recent decision to eliminate 
the Robert W. Carey Performance Excellence Awards Program that 
recognized high performing organizations within the Department. In the 
past, AFGE served as a full partner in this valuable program that based 
its awards on Baldridge Criteria for Performance Excellence. AFGE 
helped evaluate nominees, made site visits and trained examiners 
through the National Quality Council.
    To ensure more meaningful labor-management collaboration on VA 
quality improvement initiatives, we urge the Department to build in 
more incentives and recognition for labor participants in its current 
performance improvement projects associated with leadership development 
programs.
    One would think that of all the VA transformation activities, the 
unions would have the most active roles in initiatives around employee 
engagement and improving the employee experience. Unfortunately, that 
is often not the case. For example, we recently learned inadvertently 
about a management-only workgroup on physician engagement and its focus 
on two issues that AFGE has raised with the Administration and Congress 
on numerous occasions: excessive computer view alerts and an inflexible 
leave policy. It appears that this workgroup never contacted AFGE to 
get the input of non-management front-line physicians even though our 
union represents physicians at most medical centers around the country.
    A recent survey of local union presidents by the National 
Partnership Council confirms that true employee engagement is still 
lacking. The vast majority of respondents indicated that they are not 
involved in MyVA, ICare or other purported employee engagement 
initiatives at any level. As one AFGE local president noted, even when 
management at the facility level does hold town hall meetings or other 
efforts to solicit employee input, they often do so in a ``robotic'' 
manner as if they are merely going through the motions. For example, 
employees can rarely attend town hall meetings because facilities are 
so short staffed. Management should work with the unions to identify 
ways to make these town hall meetings more accessible to employees who 
want to attend.
    Our members also feel that their suggestions for reducing 
bureaucracy are not adequately considered. For example, a local AFGE 
president was recently told by her director that the new ``consult 
clinics'' that seemed to add an unnecessary administrative layer to the 
appointment process were going to be dissolved. Once that director 
left, the AFGE local president received no other updates.
    Our local leaders expressed similar concerns about unnecessary 
management layers created by the ``New Matrix Redesign'' and Primary 
Care Clinical Practice Management Groups. At the same time, the primary 
care ``PACT'' teams continue to be chronically understaffed with long 
term vacancies for front-line, non-management provider and nurse slots. 
There is also widespread frustration with VHA's longstanding practice 
of mandating new positions without additional funding.
    On the VBA appeals front, AFGE recently conducted a membership 
survey and received responses from Decision Review Officers (DRO) on 
the progress of the Veterans Benefits Management System (VBMS) and the 
need for additional improvements. We ask that Congress and VBA in its 
MyVA plan create an effective feedback protocol for employees and the 
union to provide regular recommendations on improving VBMS. Several 
DROs claimed that VBMS has helped productivity with initial disability 
claims but the system still presents glaring issues for more complex 
appeals cases. AFGE members' suggestions for VBMS included:

     Alerts: Many members requested meaningful alerts in VBMS 
to notify the user of pending appeals or that another user working the 
claims.
     System Delays and Capability: Members requested additional 
emphasis and assistance in VBMS for appeals which are often far more 
complex. System delay and equipment issues particular hurt DROs.
     Document Viewing: Increase the ability to view multiple 
documents at once for appeals.

    Thank you for the opportunity to share AFGE's views on VA 
Transformation Strategies.
                                 ______
                                 
Prepared Statement of Diane M. Zumatto, National Legislative Director, 
                                 AMVETS
    Distinguished members of the Senate Veterans' Affairs Committee, On 
behalf of the 23 million American Veterans in this country, AMVETS, a 
leader since 1944 in preserving the freedoms secured by America's Armed 
Forces and providing support for Veterans, Active Duty military, the 
National Guard/Reserves, their families and survivors, it is my 
pleasure, to offer this `Statement for the Record' concerning VA's 
Transformation Strategy.
    According to a June 2015 VA Patient Access Progress Update, the VA 
increased the number of appointment by 2.7 million over the previous 
year's same time-frame, for a total of more than 51 million completed 
appointment between 1 June 2014 and 30 April 2015. During this same 
time-frame, the VA's Electronic Wait List saw an encouraging 45% 
reduction, going from a high of over 56,000 appointments down to 
30,520.
    The VA also saw a nearly 12% increase in the usage of its 
Telehealth services, serving more than 717,000 veterans and 2 million 
telehealth visits. Not surprisingly, roughly 45% of those utilizing 
telehealth services were rural veterans.
    VA also authorized over 2.8 million Veterans, a 45% increase from 
the previous year, to receive care in the private sector between 
June 1, 2014 and May 15, 2015.
    With this kind of encouraging data coming out of the VA, no one can 
doubt their good intentions in continuing to transform the current VA 
into a new and improved VA. AMVETS is encouraged and optimistic, that 
given time, the VA will achieve its goals.
    Let me briefly touch on the 5 areas of focus of the MyVA plan:
    1. Improving the Veteran experience
    2. Improving the employee experience, and achieving ``people 
excellence'' so they can better serve Veterans
    3. Improving our internal support services
    4. Establishing a culture of continuous improvement
    5. Enhancing strategic partnerships

    The list above clearly shows that the VA is not only fully aware of 
its shortcomings, but is equally invested in improving the current 
system. AMVETS appreciates the time, effort and the of multiple data 
sources that went into the development of this fresh and aggressive 
plan to improve the VA.
    I'd like to break the VA's focus areas into two groups: a. 
Improving the Veteran Experience; and b. Improving the Employee 
Experience, because we believe the other three areas can be fairly 
treated under these two broader headings.
a. Improving the Veteran Experience:

    AMVETS feels that this is the most critical facet of the VA's 
improvement plan, since the whole VA system was created specifically to 
care for and meet the needs of veterans. If veterans are not having 
positive and beneficial interactions with the VA, whether in 
healthcare, education, benefits, etc., then the system is a failure and 
needs to be fixed. This is where the VA's improvement plan comes into 
play.
    The VA's previously quoted data (see above) should go a long way 
toward providing veterans with the world class healthcare they have 
earned, deserve and were promised. By increasing both internal and 
external access to healthcare, working toward more timely appointments 
and accommodating the specific needs of rural veterans should all 
increase overall veteran satisfaction.
    Another critical area that AMVETS is pleased to see the VA address 
in their improvement plan is the lack of continuity across the VA 
system. Though the VA has a number of strengths, they seem to be found 
only in isolated pockets. We've all heard widely varying reports of 
exceptional VA service, as well as, sub-optimal service from various VA 
medical centers around the country.
    Since every veteran is entitled to a positive experience when using 
the VA, it is absolutely critical that VA's operations be standardized 
across all of their business lines and that anyone `doing it right' 
should be recognized and required to share their best practices 
nationally.
    Perhaps the most important part of the VA's efforts to improve 
itself, is the creation of the MyVA Task Force. This body is meant to 
be nimble and quick, creative, thoughtful and ultimately will be 
responsible for turning ideas into reality, while simultaneously 
preserving those things which VA does best and ensuring 
interoperability of all processes. In a nutshell, their job is to `make 
things happen'. Never an easy task to accomplish, the Task Force, which 
is comprised of both leadership and staff members, will have two years 
to bring the VA, and all its business lines, into the 21st century.
    AMVETS applauds the VA for establishing a new system-wide customer 
service organization whose mission is to design and implement a 
superior Veteran Experience, to include integrating the mechanisms to 
deliver it. A Chief Veteran Experience Officer, who reports to the 
Secretary, will lead this organization. We believe this is a critically 
needed improvement, which should pay huge dividends for veterans.
    Additionally, the creation of the national network of Community 
Veteran Advisory Councils (CVACs) to coordinate better service delivery 
with local, state and community partners will play an important role in 
helping to rebuild trust between the VA and the veterans it serves.
    Change and employees who are willing and able to effect that change 
are vital for the success of any business, but the best laid plans can 
die a slow death without the `buy-in' of every employee at every level. 
Every organization has its own specialized culture and historically the 
VA's culture has been part of its problem. A negative or close-minded 
culture stifles innovation and hinders progress and merely changing the 
top dog alone is not enough to break through this kind of inertia. 
Until every VA leader and every employee is held responsible and 
accountable for their contributions to the organization as a whole, as 
well as their actions (or lack thereof), nothing will change for the 
better. It is for this reason that AMVETS is glad to see that this 
issue has been recognized by the Secretary and that the VA's 
improvement plan contains a framework to address this concern.
    Though to some, the following features of the VA's plan to improve 
the veteran experience may seem somewhat trivial, in the grand scheme 
of things, the positive benefits are cumulative and include:

     the development of user-friendly, consistent and accurate 
signage at all VA facilities;
     Wi-Fi access at VHA facilities;
     Integrated (VHA, VBA & NCA), Local Town Halls;
     Improved organizational phonebook search capability;
     development of a single customer-facing website;
     implementation of ``VA311'' so veterans can more easily 
get information via phone; and
     installing a VBA presence at VHA facilities
b. Improving the Employee Experience:

    While AMVETS acknowledges that without employees, there would be no 
VA, it is somewhat frustrating that every conversation about veterans 
and VA accountability generally seems to focus more on VA employees and 
their needs than on the needs of veterans. AMVETS is also aware that a 
large number of VA employees are also veterans, but VA's employees are 
represented by a union which advocates for them, so we believe their 
interests are already being addressed. In general, AMVETS believes VA 
employees are more than adequately compensated for the work they do. To 
the best of our understanding, VA employees are not required to risk 
their lives on a daily basis, face deployments, work in the extremes of 
heat or cold, leave their families, etc., yet they enjoy employment 
protections that non-Federal workers don't.
    This does not mean that AMVETS condones unfair treatment of any 
kind for any Federal, military or civilian employees, we support equity 
and justice for all workers; it merely means that our specific job, as 
a Veteran Service Organization, is to focus only on our veterans and 
their needs.
    AMVETS acknowledges that a fairly compensated, knowledgeable and 
well trained staffs that have the proper tools to accomplish their 
mission make the best employees. Therefore we are encouraged to see the 
VA reviewing their employee evaluation and hiring processes so that 
only the best and the brightest will be hired, which ultimately will 
greatly improve the veteran experience.
    All this being said, AMVETS is encouraged by the VA's plan to 
harness the expertise of its own employees by creating `performance 
improvement teams', which will help to eliminate or improve any 
processes that impede excellent customer service or service delivery.
    Not sure where the consolidating of VA's various maps falls within 
these focus areas, but AMVETS is happy to see VA's many organizational 
maps restructured into one map with five regions. This single regional 
framework should make it easier for both veterans and VA employees to 
navigate the VA's convoluted system while simultaneously improving 
communications, optimizing productivity and more efficiently 
coordinating VA services. AMVETS also supports the downsizing of the 
VISNs from 21 to 18 for the same reasons.
    Some of the additional employee related features that VA hopes to 
have in place by the end of 2016 which AMVETS fully endorses include:

     VA 101 training to improve employee knowledge and 
understanding of VA's history and its various services;
     improved customer service training for front line 
employees;
     expanded leadership development opportunities;
     improved line of communications between management and 
employees;
     streamlined hiring process; and
     improved evaluation and performance measures

    Inevitably, these efforts will not only improve the morale and 
competence of VA employees, but the end result should help to improve 
the veteran experience.
    The last thing AMVETS wants to do is to gratuitously criticize the 
VA, so I'd like to take this opportunity to briefly focus on some of 
the positives of the VA healthcare system. Those positives include the 
fact that:

     VA is the largest direct provider of health-care services 
in the Nation;
     VA provides the most extensive training environment for 
healthcare professionals;
     VA is the Nation's most clinically focused setting for 
specialized medical and prosthetics research;
     VA provides specialized health-care services in a number 
of areas that cannot be adequately duplicated in the private sector, 
including: spinal cord injury/dysfunction; blind rehabilitation; 
Traumatic Brain Injury; prosthetic services; mental health; and war-
related poly-traumatic injuries;
     VA is among the most efficient and cost-effective 
healthcare system in the Nation;
     VA sets the standards for quality and efficiency and does 
so at or below the Medicare rates, while simultaneously serving a 
population that is older and has a higher percentage of individual 
health problems.

    What is needed now more than ever to effect beneficial changes 
within the VA are cool heads and creative thinkers, to include the VA 
and all it stakeholders. This is where the MyVA plan comes into play.
    AMVETS too has some suggestions, that some of you may have 
previously seen, which we would like to reiterate before closing out 
these remarks. I believe there are some commonalities with the MyVA 
plan.
AMVETS Specific Recommendations:
    1. Ensure that both advanced appropriations and discretionary 
funding for VA keeps pace with medical care inflation and healthcare 
demand as recommended in the IB so that all veterans healthcare needs 
can be adequately met;
    2. Maximize the use of non-physician medical personnel as a way to 
mitigate physician shortages, while always maintaining the highest 
level of patient safety and reduce patient wait times especially while 
utilization of the VA system continues to rise;
    3. Ensure that VA makes more realistic third-party medical care 
collection estimates so that Congress doesn't end up under-
appropriating funds based on false expectations which in turn 
negatively impact veteran care. Additionally, VA needs to redouble its 
efforts to increase its medical care collections efforts, because taken 
together, the cumulative effects of overestimating and under-collecting 
only degrade the care available to our veterans. Furthermore, VA needs 
to establish both first- and third-party copayment accuracy performance 
measures which would help minimize wasted collection efforts and 
veteran dissatisfaction;
    4. VA needs to incorporate civilian healthcare management best 
practices and include a pathway to VA hospital/clinic management for 
civilians as part of their succession plan requirements, so that VA 
will be able to attract the best and the brightest healthcare managers 
in the industry;
    5. VA could immediately increase its doctor/patient (d/p) ratio to 
a more realistic and productive levels in order to cut wait times for 
veterans needing treatment and/or referrals. While the current VA (d/p) 
ratio is only 1:1200, the (d/p) ratio for non-VA physicians is close to 
1:4200. Instituting this one change would drastically improve our 
veterans access to needed healthcare;
    6. VA needs to improve its patient management system so that 
veterans have more appointment setting options available to them, which 
could reduce staffing errors and requirements. VA should also consider 
utilizing a hybrid system whereby half the day might consist of 
scheduled appointment and the other half would be for walk in or same-
day appointment. The elimination of the need for non-specialty 
appointments would allow veterans quicker access to their primary care 
providers;
    7. The current VA healthcare system appears to be top-heavy with 
administrative staff and short-handed when it comes to patient-focused 
clinical staff. This imbalance can only exacerbate veteran wait times;
    8. The VA needs to thoroughly review its entire organizational 
structure in order to take advantage of system efficiencies and to 
maximize both human and financial resources, while also minimizing 
waste and redundancies;
    9. VA needs to collaborate with HHS (Health & Human Services) so 
that it can utilize/share the benefits of the UDS (Uniform Data 
System). The UDS is a core set of information appropriate for reviewing 
and evaluating the operation and performance of individual health 
centers. The ability to track, through the UDS system, a wide variety 
of information, including patient demographics, services provided, 
staffing, clinical indicators, utilization rates, costs, and revenues 
would be invaluable in improving the overall VA healthcare system;
    10. Rather than have veterans go unseen or untreated due to limited 
appointment or physician availability, veterans should be allowed to 
utilized the currently existing system of FQHCs (federally Qualified 
Health Centers). FQHCs include all organizations receiving grants under 
section 330 of the Public Health Service Act, certain tribal 
organizations, and they qualify for enhanced reimbursement from 
Medicare and Medicaid, as well as other benefits. FQHCs are required 
to: serve an underserved area or population; offer a sliding fee scale; 
provide comprehensive services; have an ongoing quality assurance 
program; and to have a governing board of directors. Allowing veterans 
to seek care, even on a temporary basis, until the VA appointment 
backlog is eliminated, would provide our veterans with immediate care 
and would relieve some of the pressure on the VA system;
    11. VA should review, and consider adopting, civilian medical 
management best practices as a tool for improving its own healthcare 
operations;
    12. VA must immediately improve its recruitment, hiring and 
retention policies to ensure the timely delivery of high quality 
healthcare to our veterans. VA currently utilizes a cumbersome and 
overly-lengthy hiring process which reduces its ability to deliver 
critical services. VA need to consider adopting a more expedient 
hiring/approval process which could include some form of provisional 
employment;
    13. VA needs to have, and utilize, the option to terminate non-
performing employees at all levels of the organization so that only 
dedicated, accurate, motivated employees will remain in service to our 
veterans; and
    14. Finally, VA needs to reform their incentive programs so that 
only high-performing employees receive appropriate bonuses for their 
excellence in serving our veterans.

    In closing, it is interesting to note that in the last couple of 
years, numerous entities have developed a variety of proposals for 
addressing the shortcomings within the VA. While no individual plan has 
been ``perfect'', they are worth reviewing and perhaps incorporating 
specific recommendations on a case-by-case basis. Perhaps most 
importantly, the Commission of Care has not yet completed their mission 
and their recommendations will have to be incorporated into the VA's 
overall redesign.
    This completes my statement at this time and I thank you again for 
the opportunity to offer our comments on pending legislation. Feel free 
to reach out to me if have any questions.
                                 ______
                                 
          Prepared Statement of Concerned Veterans for America
    Chairman Isakson, Ranking Member Blumenthal, and Distinguished 
Members of the Committee, Thank you for this opportunity for CVA to 
provide a statement for the record regarding the Department of Veterans 
Affairs' (VA) ``MyVA'' initiative.
    In November 2014, following significant scandals causing then-VA 
secretary Eric Shinseki to step down, VA announced--to much fanfare--an 
initiative ostensibly aimed at improving the veteran's experience when 
dealing with VA. In a fifty-page document entitled the MyVA Integrated 
Plan, released last July, VA details the plan with the stated goal of 
``provid[ing] a seamless, unified Veteran Experience across the entire 
organization and throughout the country.''\1\ Top-line priorities of 
the plan include: ensuring that veterans receive uniform and consistent 
care across VA; improving the overall veteran experience; and improving 
the VA employee experience.
---------------------------------------------------------------------------
    \1\ Department of Veterans Affairs. ``MyVA Integrated Plan.'' 
http://www.va.gov/opa/MyVA/docs/MyVA_integrated_plan.pdf (accessed 
January 19, 2016) 3.
---------------------------------------------------------------------------
    This is to be done in three ``horizons'': the first will ``leverage 
existing programs and initiatives'' that are performing well, in order 
to deliver better services to veterans. The second will be to 
concentrate ``on a relatively small set of catalytic efforts'' aimed at 
accelerating ``transformation already underway,'' among them, ensuring 
that support services are functioning optimally, cultivating a 
``culture of continuous improvement,'' and ``enhancing strategic 
partnerships.'' The third will focus on ``optimizing and scaling MyVA'' 
which entails the utilization of a ``MyVA Task Force'' that will 
``coordinate initial operational planning'' and will continue to work 
through 2016 and 2017 until implementation is complete.
    Looking deeper into the specifics, many are commendable. A single, 
easy-to-use website is long overdue, for example; improved customer 
service training for VA employees is needed; and every taxpayer will be 
grateful that VA is taking seriously its responsibility to be a good 
steward of public resources.
    However, these changes do little in terms of providing a real basis 
for systemic change. While it is touted as a comprehensive overhaul, it 
seems to be, in truth, little more than a customer service plan. In 
fact, Secretary McDonald described it as a customer service plan in his 
announcement, saying MyVA will be ``a seamless, integrated and 
responsive customer service experience.''\2\
---------------------------------------------------------------------------
    \2\ Daly, Matthew ``VA announces `MyVA' plan, largest 
reorganization in department's history.'' PBS http://www.pbs.org/
newshour/rundown/va-announces-MyVA-plan-largest-reorganization-
departments-history/ (accessed January 14, 2016).
---------------------------------------------------------------------------
    Improved customer service is, of course, desperately needed at VA, 
and a plan to improve customer service is appreciated. But the question 
that needs to be asked whether MyVA--assuming that can be implemented 
comprehensively and relatively effectively, which, by the plan's own 
admission is less than clear \3\--will solve the difficulties faced by 
VA. Does the plan get to the root of the problem? Unfortunately, the 
answer is no. The challenges faced by VA are deep and systemic--
problems that cannot be solved by a mere customer service plan, no 
matter how sweeping.
---------------------------------------------------------------------------
    \3\ The Risk Assessment included in the plan recognizes a 
``moderate-high'' risk that ``stakeholders will not accept the MyVA 
initiative as a viable solution for correcting VA's perceived 
shortfalls;'' a ``moderate-high'' risk that ``stakeholders will 
question whether or not we should be spending the money on this 
transformative effort;'' a ``high'' risk that MyVA initiatives will not 
be completed on time due to personnel resource constraints resulting 
from challenges in the hiring process;'' a ``moderate'' risk that 
``MyVA progress will be limited due to funding challenges;'' and a 
``moderate-high'' risk that ``MyVA progress will be limited due to 
finite leadership capacity.'' MyVA Integrated Plan, 32-33.
---------------------------------------------------------------------------
    Last fall, VA released the Independent Assessment, a report 
mandated by the Veterans Access, Choice, and Accountability Act of 2014 
and conducted by analysts including Mitre Corp., Rand Corp. and 
McKinsey & Co. The over 4,000 page report shows structural 
misalignment, bloated bureaucracy plagued by cultural problems, 
leadership failings, and an unsustainable budget to be major factors in 
VA's mismanagement and inefficiency.
    Specifically, the integrated report of the assessment enumerates 
four ``systemic findings that impact mission execution'': (i) ``A 
disconnect in the alignment of demand, resources, and authorities;'' 
(ii) ``Uneven bureaucratic operations and processes;'' (iii) ``Non-
integrated variations in clinical and business data and tools;'' (iv) 
``Leaders are not fully empowered due to a lack of clear authority, 
priorities, and goals.'' \4\
---------------------------------------------------------------------------
    \4\ CMS Alliance to Modernize Healthcare, (September 1, 2015) 
Independent Assessment of the Health Care Delivery Systems and 
Management Processes of the Department of Veterans Affairs, Volume 1: 
Integrated Report, xiii.
---------------------------------------------------------------------------
    Clearly, these are not problems that can be righted through a 
customer service plan--deep structural changes are necessary. VA needs 
to transition from a government organization attempting to do 
healthcare to a healthcare organization chartered and funded by the 
government to care for veterans. In a word, VA needs to modernize.
    The staid state of VA health care is the result of inherent 
problems in the way VA has developed since its inception nearly a 
century ago. Moreover, entrenched interests often stand in the way of 
the kind of real reform that would transform VA into, as the 
Independent Assessment puts it, a ``High-Performing Healthcare 
System.''\5\ If the Independent Assessment is correct, VA's problems 
are structural, not merely aesthetic; and structural problems require 
systemic solutions. Healthcare delivery has changed dramatically in 
recent years, but VA still remains tied to outdated structures and 
methods. VA would do well to examine the highest functioning healthcare 
organizations in the country, such as the so-called ``Accountable Care 
Organizations (ACO),'' \6\ and remain open to implementing best 
practices gleaned from them. Congress would do well to examine the 
structures utilized in those organizations and consider legislatively 
restructuring VA along those lines.
---------------------------------------------------------------------------
    \5\ Independent Assessment Integrated Report, 61.
    \6\ For more on this, see e.g. https://www.cms.gov/Medicare/
Medicare-Fee-for-Service-Payment/ACO/index.html and http://www.npr.org/
2011/04/01/132937232/accountable-care-organizations-explained
---------------------------------------------------------------------------
    The Independent Assessment details a number problems with the 
current state of the system and offers a number of recommendations. On 
page 61 of the report, under the section ``Transformation,'' the 
Independent Assessment quotes the CVA-sponsored Fixing Veterans Health 
Care Task Force Report \7\ saying ``Minor tweaks to the current system 
may incrementally improve health care in the near term, but the 
monopolistic VHA bureaucracy is likely to return to a standard 
operating model heavily influenced by the desires and concerns of the 
institution and its employees. Only fundamental reform will break the 
cycle and empower Veterans.'' \8\ The Fixing Veterans Healthcare Task 
Force Report provides a comprehensive plan to overhaul the VA 
healthcare system in a way that is consistent to the above-mentioned 
ACOs. This kind of transformation is what CVA firmly believes is 
required in order to fix veterans' healthcare. Anything less, including 
the MyVA plan, will be insufficient over the long term.
---------------------------------------------------------------------------
    \7\ Kussman, M. et al. (2015, February). Fixing Veterans Healthcare 
Report. Fixing Veterans Health Care Task Force. http://cv4a.org/
veterans-health-care-report/.
    \8\ Independent Assessment Integrated Report, 61.
---------------------------------------------------------------------------
    The recommendations included in the Independent Assessment contain 
a significant amount of overlap with the structural realignments 
recommended in the Fixing Veteran Health Care Task Force Report. For 
example, on page 26, the assessment quotes the 2009 Commission on the 
Future for America's Veterans: Preparing for the Next Generation \9\ 
report which recommends placing VHA under a new kind of governance: 
``Congress [should] `establish a new entity with characteristics not 
unlike a Federal Government ``not for profit'' corporation' that would 
be empowered with `unencumbered' authority to use all the assets of VHA 
to `maximize benefits to Veterans.' '' \10\ This is remarkably similar 
to the recommendation of the Fixing Veteran Health Care Report. Such a 
model would avoid disputes about, for example, the closing of certain 
obsolete or underused VA facilities, which as the Assessment notes, 
``can meet strong resistance from multiple groups.'' \11\ Such a 
governance system would allow VA to address many of the problems it 
faces in a rational way, doing what is best for the veteran, rather 
than focusing on how to sustain the system as it currently exists.
---------------------------------------------------------------------------
    \9\ Walters, H. et al. (2009, December). Commission on the Future 
for America's Veterans: Preparing for the Next Generation. Commission 
on the Future for America's Veterans.
    \10\ Independent Assessment Integrated Report, 26.
    \11\ Independent Assessment Integrated Report, 26.
---------------------------------------------------------------------------
    VA is not beyond saving, but doing so will require bold thinking 
and a willingness to consider a broad range of reform possibilities, 
including--and especially--those that offer systemic changes to address 
systemic problems.
    That is why CVA asks all stakeholders to join with us in striving 
for a VA system that serves veterans comprehensively, efficiently, and 
effectively. Only then will VA be able to fully and effectively meet 
the healthcare needs of veterans in a truly customer service-oriented 
manner.
                                 ______
                                 
 Prepared Statement of Joy J. Ilem, National Legislative Director, DAV
    Thank you for inviting DAV (Disabled American Veterans) to submit 
this statement for the record of today's hearing. As you know, 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.
    Your invitation letter indicated the focus of today's hearing is to 
assess the Department of Veterans Affairs (VA) and its efforts and 
plans to modernize its benefits and health care system. You asked that 
we identify any issues or barriers that we believe VA may face in 
advancing its planned and proposed reforms. We appreciate the 
opportunity to share our views and recommendations in this regard.
    Mr. Chairman, in recent years, VA has undertaken a number of 
modernization initiatives, including a claims processing transformation 
that has helped to reduce the backlog of claims by more than 80 
percent, and is now shifting to focus on appeals. Another major system-
wide effort is the MyVA initiative. Launched by the VA on September 2, 
2014, the MyVA Integrated Plan was designed to reorient VA around 
veteran needs and empower employees to assist in providing them with a 
seamless, integrated and responsive customer service experience--
whether they arrive at VA digitally, by phone or in person. MyVA it is 
the largest department-wide transformation in VA's history and is 
intended to coalesce ideas and insights shared by veterans, employees, 
Members of Congress, veteran service organizations, and other 
stakeholders. VA's goal is to modernize its culture, processes and 
capabilities in addition to consolidating its community care programs.
    The MyVA framework for restructuring includes four basic pillars:

    1. The establishment of a new VA-wide customer service 
organization, led by a chief customer service officer who will report 
to the Secretary;
    2. The incorporation of a single, regional framework to allow 
veterans to more easily navigate the VA through simplified internal 
coordination;
    3. The creation of Community Veteran Advisory Councils that will 
work to coordinate veteran-related service delivery with local, state 
and community partners; and
    4. The identification of opportunities to restructure internal 
business processes into a shared services model, thereby improving 
efficiency and productivity and reducing costs.

    According to VA the first phase of the MyVA plan includes creating 
a task force and building the team to support the mission and an 
organizational change of this breadth with a focus on five key areas of 
improvement:

     Improving the veteran experience;
     Improving the employee experience so they can better serve 
veterans;
     Improving internal support services;
     Establishing a culture of continuous improvement; and
     Enhancing strategic partnerships.

    VA reports that veterans are already seeing the impacts of changes 
made through the MyVA initiative. At the suggestion of VA employees, 
the Department notes it has recently improved customer service at call 
centers; started up VA 101 training for employees; improved veteran 
access to audiology and optometry appointments; modernized Veterans 
Crisis Line (VCL) operations; implemented memorial affairs pre-need 
eligibility screening; and stopped printing and mailing certain 
unnecessary and costly paper reports.
    VA reports that by the end of 2016, MyVA should accomplish the 
following improvements for veterans:

     A single customer facing website that veterans can use to 
do business with VA (initial capability in fall 2015, with additional 
incremental capability being built through June 2017);
     A unified ``VA311'' enterprise-wide approach that veterans 
can use to easily find information via telephone;
     A way for veterans to update or change their authoritative 
data in one place, one time, and have that information available and 
securely shared throughout VA;
     Greater VBA presence in VHA facilities to increase 
benefits access and enhance service;
     100+ MyVA Communities established across the Nation;
     A more consistent level of customer service in every 
interaction--enabled by consistent front-line training across VA and 
measured by operational metrics; and
     The establishment of a Veterans Experience (VE) office at 
both national and district levels to bring a new lens to how VA 
analyzes and designs the services provided to veterans. According to 
VA, the VE office is not intended to be another layer of management or 
bureaucracy, but will:

        - Work collaboratively with local facilities in analyzing and 
        designing better customer interactions and the tools that 
        support them;
        - Develop and deliver customer service training curricula and 
        methodologies;
        - Keep a close eye on customer service performance to make sure 
        the right issues are being addressed in the right ways; and
        - Implement better ways to help veterans navigating through the 
        range of services within VA.

    Additionally, by the end of 2016, VA intends to accomplish the 
following for employees:

     Deliver VA 101 training to approximately 50 percent of 
employees to improve their knowledge and understanding of VA's history 
and services;
     Conduct front line customer service training pilots in 
each of its five Districts;
     Expand leadership development programs;
     Vastly improve employee communications;
     Complete standardized staffing models, with vacancies 
filled for mission critical occupations;
     Improve and streamline recruitment and hiring practices 
for VA facilities; and,
     Establish better linkage of organizational and performance 
measures to VA Goals and Objectives.

    VA also intends to fully transition to a five-district 
configuration to align unequal organizational boundaries of the 
Department into a single framework based upon state boundaries. The 
goal is to:

     Ease internal coordination challenges;
     Enhance collaboration amongst all of VA's nine business 
lines, which will continue to remain responsible for their respective 
services and benefits;
     Standardize performance measurement;
     Enhance collaboration with external stakeholders; and 
finally
     Prepare for the rollout of the VE office, which will 
support VA product and service lines in the delivery of excellent care 
and benefit experiences.

    VA notes if done properly, it will build a high-performing 
organization that will be nimble enough to continually change and 
improve. The Secretary came into VA during a crisis and a low point for 
the Department and we acknowledge his hard work and that of his team to 
properly assess and lay out a comprehensive plan to improve systemic 
business practices as well as his dedication to the VA's core mission 
of serving veterans and efforts to improve the veterans experience. DAV 
believes the Secretary's plan is thoughtful and heading in the right 
direction. Most importantly it focuses, at its core, on the veteran, as 
it should. We concur with VA that this transformation will take time. 
The question now before us is VA's estimated timeline and progress 
toward accomplishing its goals, and what needs to be done by the 
Administration and by Congress to aid and support these proposals. In 
addition, we must be cognizant of the time required for such major 
changes to fully take effect. As the Independent Assessment of the VA 
health care system produced last year by MITRE, Rand and other 
cautioned, ``Most transformations take at least 12 to 18 months for 
initial impact, and transformations of the magnitude needed at VHA may 
take 5 to 10 years to fully take hold.'' (Independent Assessment, 
Integrated Report, page 61)
    We believe that the current MyVA initiative taking place will go a 
long way toward improving the veteran's experience and satisfaction 
with VA. Furthermore, we recommend that Patient Advisory Councils be 
established to act as a catalyst advocating integration of patient-
centered care across the facility. Such councils are not new and have 
been proven to be an effective strategy for involving patients and 
their family to improve the quality in patient care. Veteran patients 
and their family caregivers are often the most knowledgeable members of 
the VA health care team, and can offer unique perspectives and valuable 
feedback regarding the standard of care they receive.
    Mr. Chairman, the other major transformation that must take place 
is to evolve the VA health care system to address longstanding access 
issues that erupted two years ago in Phoenix. As Congress, the media 
and ultimately VA discovered, thousands of veterans had been waiting 
too long to access the VA health care system to receive medical 
services they had earned. In response, Congress rushed to pass the 
Veterans Access Choice and Accountability Act (VACAA) to create a new 
procedure to provide non-VA health care access to veterans on an 
emergency and temporary basis, appropriating $10 billion in emergency 
funding for a new ``choice'' program. The law also provided $5 billion 
for VA to rebuild its internal capacity to deliver care, primarily by 
expanding usable treatment space and hiring more doctors and nurses. As 
noted previously, it required an independent assessment of the VA 
health care system and established a Commission on Care to develop 
recommendations for providing quality, accessible health care to 
veterans over the next 20 years.
    Since the troubling events in Phoenix, DAV has presented our views 
and recommendations to the VA Secretary of Veterans Affairs (VA) and 
other senior VA officials, as well as to this Committee and others in 
Congress, on numerous occasions. Our focus has always remained the 
same: what is best for veterans. Based on our experience and the needs 
of millions of injured and ill veterans, we have repeatedly called for 
preserving, strengthening and reforming the veterans health care system 
so that DAV members and all eligible veterans may continue to enjoy the 
unique benefits and vital services provided by VA well into the future.
    At the same time, we recognize that VA has flaws and shortcomings 
that must continually be addressed through cultural and systemic 
reform. For decades DAV has worked in conjunction with our partner 
organizations in the Independent Budget (IB) to highlight necessary 
systemic changes and the need for modernization of VA's H.R. policies, 
aging infrastructure and IT systems.
    Over the past year, DAV and our IB partners have developed a 
comprehensive framework for VA health care reform 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. 
This view was clearly echoed in DAV's national Pulse Survey released 
last November, in which the vast majority of veterans (87%) responded 
that the Federal Government should provide a health care system 
dedicated to the needs of ill, injured and wounded veterans. Such a 
system must provide high-quality, accessible, comprehensive, and 
veteran-centric health care designed to meet the unique circumstances 
and needs of those who served. In order to achieve that goal, DAV and 
our partners in the IB have developed a comprehensive framework for 
such reform that has four pillars:

    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 a local community networks that optimize 
the strengths of all health care resources to best meet veterans' 
needs;
    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;
    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; and
    IV. Reform VA's culture to ensure that there is sufficient 
transparency and accountability to the veterans this system is intended 
to serve.

    The framework we have proposed is consistent with VA's New Veterans 
Choice Plan sent to Congress. In addition to consolidating most non-VA 
community care programs, the new VA plan also seeks to create a network 
of both VA and community providers to provide veterans a seamless 
system in the future. In our framework, we proposed creating local 
Veterans-Centered Integrated Health Care Networks to seamlessly 
integrate community care into the VA system to provide a full continuum 
of care for veterans. VA would be the coordinator and principal 
provider of care, particularly its primary care model with integrated 
mental health care, which is more likely to prevent and treat 
conditions unique to or more prevalent among veterans, particularly 
those with disabilities or chronic conditions.
    VA has also proposed that an urgent care benefit for veterans be 
established. In our framework, we had proposed that VA increase its 
capacity to deliver urgent care at existing VA medical facilities and 
develop additional capacity by establishing urgent care clinics around 
the country to create new options in the treatment space between 
emergency care and primary care.
    Another critical component of our framework recommends moving away 
from arbitrary Federal access standards, such VA's current 40-mile and 
30-day standards. For too many veterans, particularly those with severe 
disabilities and chronic conditions, 40 miles may be too far to travel 
and 30 days far too long to wait for urgent conditions. Rather than a 
system that empowers bureaucrats, any future veterans health care 
system must ensure that access to care is a question for veterans and 
their doctors. Decisions about when and where veterans can receive 
medical treatment are clinical decisions that should be made between 
the veteran and his or her doctor, not legislators, regulators or 
bureaucrats. We note that VA is already moving in this direction based 
on the guidance provided with their newest choice regulations.
    Overall, we are pleased that many of our recommendations have been 
incorporated into VA's new plan; however, unless VA has the resources 
to implement these or better plans, real reform will not be possible.
    There were several critical findings in Independent Assessment 
worth noting. Initially, ``. . . increases in both resources and the 
productivity of resources will be necessary to meet increases in demand 
for health care over the next five years . . .'' with a core 
recommendation of ``increasing physician hiring . . .'' (Page B-3) They 
also identified the key barriers that limited provider productivity, 
including ``a shortage of examination rooms and poor configuration of 
space'' and ``insufficient clinical and administrative support staff,'' 
all of which would require additional funding for the VA health care 
system. Furthermore, the Independent Assessment found that the, ``. . . 
capital requirement for VHA to maintain facilities and meet projected 
growth needs over the next decade is two to three times higher than 
anticipated funding levels, and the gap between capital need and 
resources could continue to widen.'' (Page K-1) and they estimated this 
gap at between $26 and $36 billion over the next decade. The findings 
of this Independent Assessment are fully consistent with what DAV and 
our IB partners have said for more than a decade: the resources 
provided to VA health care have been inadequate to meet the mission to 
care for veterans, which fueled access problems.
    To be clear, we do not believe that simply increasing funding by 
itself--without making some significant reforms to the VA--will lead to 
better health outcomes for veterans over the next 20 years. However, no 
VA reform plan has any chance of success unless sufficient resources 
are consistently provided to meet the true need and demand for services 
by veterans, when and where they need them. VA recently testified that 
by improving access to care, their New Choice Plan will increase both 
enrollment and utilization of the VA health care system, and would cost 
up to an additional $10 billion per year to meet the increased demand 
of current and new veterans. We believe additional funding will be 
essential for success as will some additional flexibility.
    As you will recall, last year VA reported a funding shortfall due 
to a significant increase for new medical treatment for hepatitis C 
patients and of veterans seeking care both inside VA and through 
community care programs. By last summer, it became clear that numerous 
facilities had spent so much money on contract and fee-basis services 
from their Medical Services appropriation (outside the fenced Choice 
Fund) that they were running out of funds to operate facilities. 
However, even though there was sufficient money in the Choice Fund, VA 
had no ability to utilize those funds to provide necessary care to 
veterans. Ultimately, legislation was enacted to make a one-time 
transfer to meet VA's shortfall. That same law also required VA to 
produce a plan to consolidate non-VA care programs, which was discussed 
above. To avoid the possibility of such a crisis occurring again, 
Congress must work with VA to ensure there is sufficient flexibility in 
law or regulation to allow such contingencies to be quickly resolved, 
while ensuring proper oversight and accountability to the clear 
purposes of every Congressional appropriation.
    In order to ensure VA has the capacity to meet veterans' demand for 
health care services VA must also modernize its personnel practices by 
removing unnecessary and often counterproductive restrictions to its 
hiring process. Some of these restrictions are embedded in 
appropriations law; others, in civil service law or in title 38 of the 
Code. In order to help VA to attract and keep quality employees needed 
by VA to implement the new plan, these restrictions must be lifted. 
With morale so low after two years of scandal and negative media 
coverage, it is vitally important that VA be given new tools to hire 
the best and brightest to care for our nations heroes.
    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 VA system and its unique model of care. An overlooked 
finding from the Independent Assessment is its analysis of VA's 
quality, which confirmed what we, other veterans organizations and most 
studies have been saying for years: when veterans get access to VA 
care, the quality is high. Specifically, the Independent Assessment 
found that:

        ``In new analyses comparing VHA's quality with non-VA 
        providers, VHA performed the same or significantly better on 
        average than the non-VA provider organizations on 12 of 14 
        effectiveness measures (providing recommended care) in the 
        inpatient setting, and worse on two measures. On average, VHA 
        performed significantly better on 16 outpatient Healthcare 
        Effectiveness Data and Information Set (HEDIS) measures of 
        effectiveness compared with commercial health maintenance 
        organizations (HMOs); on the 15 outpatient HEDIS measures of 
        effectiveness that were available for Medicaid HMOs; and on 14 
        of 16 outpatient effectiveness measures compared with Medicare 
        HMOs.''

    While VA outperforms the private sector on average--the IA notes 
that across the system the quality of care is quite variable, 
reflecting there is much work to be done.
    In conclusion, overall, we are pleased that many of our 
recommendations have been incorporated into VA's new plan, although our 
framework goes farther, addressing such matters as infrastructure, 
planning and budgeting, all explained in greater depth in the IB 
Framework for Veterans Health Care Reform, previously presented to this 
Committee. We feel confident that if the VA plan is enacted, with our 
recommendations and improvements, veterans will have more options to 
receive timely, high-quality care closer to home in the future.

    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.
                                 ______
                                 
          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 the Department of Veterans 
Affairs' (VA) plans and efforts to modernize under the MyVA initiative. 
We appreciate the Committee focusing on this critical issue that will 
affect veterans and their families for years to come.
    The MyVA Integrated Plan established on July 30, 2015 is focused on 
restructuring VA to better serve the veteran population. After careful 
review, the plan demonstrates a well thought out process that if 
properly implemented would ultimately ease access to quality health 
care, reduce VA claims backlog, and make interactions between veterans 
and the VA more fluid. Unfortunately, the roll out of this plan appears 
to have fallen flat. Despite Secretary McDonald's constant reiteration 
and discussion of the plan with congress, countless veterans have never 
heard of this initiative.
    As we continue to see the MyVA initiatives unfold, we cannot forget 
the circumstances surrounding the reasons why this plan was formulated. 
At the time this initiative was created, VA was under fire for the 
horrendous lack of care and the extended wait times seen at VA medical 
facilities across the Nation. Despite moving in the right direction, 
this initiative has a long way to go before the underlying concerns are 
fully resolved.
    Within the MyVA Integrated Plan, Secretary McDonald established a 
Veterans Experience Office (VEO). The focus is on supporting VA 
employees in the delivery of excellent health care and benefit 
experience. Although it appears to be geared toward ensuring that 
veterans and their dependents have the most pleasant interactions with 
the department, at its roots it is another potential level of 
bureaucracy that must be navigated to resolve issues. One example of 
this would be a veteran who may experience an issue at a medical 
facility. If the veteran was to bring the issue to the VEO, the VEO 
would not have the power to resolve the issue but instead would have to 
refer the veteran to the patient advocate office. Similarly, we have 
consistently heard from veterans that their patient advocates are 
ineffective, or they seek to protect the medical facility leadership 
instead of addressing their concerns. It is clear 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. 
Nor can the VEO provide better experiences for our veterans without 
being empowered to resolve issues rather than just fielding complaints.
    PVA along with the co-authors of The Independent Budget--Disabled 
American Veterans and Veterans of Foreign Wars--have previously laid 
out a framework which includes 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 that the following rights 
and laws are fully complied with by all providers who participate in 
Veterans-Centered Integrated Health Care Networks, both in the public 
and private sector:

    1. Health care protections afforded under Title 38
    2. The right to seek redress through clinical appeals
    3. Claims under 38 U.S.C. Sec. 1151
    4. The Federal Tort Claims Act
    5. The right to free representation by accredited veteran service 
organizations.

    Finally, any plan to reform the culture of VA must also take into 
consideration the need to modernize VA's workforce and ensure VA 
employees serve the interest of the veterans' community. While Congress 
has focused on firing underperforming employees, PVA believes that the 
situation is more complicated and demands a holistic approach to 
workforce development that allows VA to recruit, train, and retain 
quality professionals capable of caring for our veterans, while 
simultaneously ensuring that VA has the authority to properly 
discipline employees when appropriate.
    PVA applauds the MyVA taskforce for acknowledging that employee 
experience is also vital to its transformation efforts. The 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.
    By focusing solely on disciplinary proceedings and failing to 
properly cultivate a motivated and compassionate workforce, we make VA 
an unattractive employer to potential recruits. PVA believes that we 
must build a framework that makes VA an attractive employment option 
for the best and brightest who want to care for our veterans.
    Although it is understandable that all of the issues with the VA 
cannot be resolved over night, it is essential that this plan be 
implemented with more vigor and transparency. Currently the MyVA plan 
is not set to fully evolve until well into the 2017 fiscal year. While 
it is great to see VA moving forward and becoming more efficient, this 
plan must move faster and with more tenacity. The Nation's veterans 
cannot wait two or more years for access to the health care benefits 
they so desperately need and deserve. Once again, we appreciate the 
opportunity to discuss PVA's views on the MyVA initiative. We would be 
happy to take any questions for the record you may have.
                                 ______
                                 
               Prepared Statement of The American Legion
    The Department of Veterans Affairs (VA) states ``Communication'' is 
one of their Core Values, and to define it they state:

        ``We will listen to our veterans, to each other, and to people 
        outside of our organization. We will be candid, accurate, and 
        quick to heed their counsel and respond to their concerns. We 
        will never stop trying to improve.'' \1\
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    \1\ http://www.va.gov/JOBS/VA_In_Depth/mission.asp

    The American Legion strongly believes listening to the voice of 
veterans is one of the most critical components of a successful VA. 
Unfortunately, ``MyVA,'' VA's plan to transform their way of doing 
business to ``one that puts Veterans in control of how, when, and where 
they wish to be served'' \2\ missed the mark right out of the gate, 
raising concerns about its ability to make VA the responsive entity it 
needs to be to meet the needs of veterans.
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    \2\ http://www.va.gov/opa/MyVA/docs/
MyVA_integrated_plan_overview.pdf
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    Chairman Isakson, Ranking Member Blumenthal, and distinguished 
Members of the Committee, on behalf of National Commander Dale Barnett 
and the over 2 million members of The American Legion, the Nation's 
largest wartime veterans' service organization, thank you for taking 
the time to focus attention on VA's modern transformation strategy, and 
for soliciting insight from the key stakeholders, the veterans, as to 
whether this plan can be successful.
    ``MyVA'' is what VA calls their transformation plan to modernize 
and provide seamless service across the country. The plan is well 
intentioned, and recognizes and addresses real concerns. Veteran use of 
VA has been steadily increasing over not only the past decade of active 
war overseas, but over several decades as the Vietnam cohort of 
veterans ages and sees increasing health care needs. ``[This] large 
increase in the oldest segment of the veteran population will continue 
to have significant ramifications on the demand for health care 
services, particularly in the area of long-term care.'' \3\
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    \3\ http://www.agingstats.gov/main_site/data/2012_documents/
population.aspx
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    Before the onset of the MyVA plan, none of VA's regional 
authorities lined up with each other. Regional Offices (VAROs) that 
deal with benefits were not aligned in any real way with Veterans 
Integrated Service Networks (VISNs) that deal with healthcare delivery. 
This impacts communication and consistency. That VA recognized this 
obstacle and sought to change things deserves recognition.
    Unfortunately, one of the earliest acts in the MyVA plan was the 
creation of a MyVA Advisory Committee that minimized the input from 
Veterans Service Organizations (VSOs) by limiting their access to the 
creation process for long term strategies. While corporations and 
academic institutions were robustly represented on the Advisory 
Committee, VSOs were relegated to a single seat to be shared in 
rotation.
    As the National Commander of The American Legion Michael Helm 
pointed out in his March, 2015 letter to Secretary Bob McDonald:

        ``[The American Legion feels] that the lack of representation 
        by those with the most expertise, the major Veterans Service 
        Organizations, dooms any chance that the MyVA Advisory 
        Committee (MVAC) has for success . . . While The American 
        Legion welcomes the input and experience of leaders in the 
        academic and business communities, it is the veterans that are 
        the biggest stakeholders in VA . . . As accomplished and 
        impressive as the current committee members are, nobody can 
        match the collective wisdom and expertise of The American 
        Legion and other VSOs when it comes to relating to veterans.'' 
        \4\
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    \4\ http://valegion.org/wp-content/uploads/2015/03/Cmdr-Helm-to-
Sec-McDonald-RE-MyVA-03302015120719.pdf

    It is still too early to tell what, if any success in meeting the 
needs of veterans the MyVA plan is delivering. Anecdotally, discussing 
VA with thousands of veterans in communities across the country, The 
American Legion has found little difference in delivery of service now 
from when MyVA was initiated. To be fair, this is still early in the 
implementation and change does not occur overnight.
    It is possible that MyVA may in fact change VA and provide a better 
experience for veterans. It is also possible that it will only add 
another layer to an already bloated bureaucracy. In this, only time 
will tell. What is clear is that the voice of those who matter, the 
veterans themselves, has been somewhat softened by diminished input in 
crafting their own VA for their own future, and that's not what America 
needs to build the best system to serve veterans.
    The American Legion staunchly believes in a strong and robust VA to 
serve the needs of veterans nationwide, in delivery of healthcare, 
benefits and a wide range of services. The American Legion is deeply 
committed to working with all stakeholders to ensure that a robust VA 
is built, maintained and operated with the needs of veterans first and 
foremost in its goals. To build that system, the voice of veterans must 
be robust. The voice of the principal consumers of the system must be 
the most important voice in planning the road ahead.

    The American Legion thanks this Committee for their diligence and 
commitment to examining VA's roadmap to the future.
                                 ______
                                 
  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 VA's efforts and plan to 
modernize.
    Soon after being confirmed as Secretary of Veterans Affairs, Robert 
A. McDonald began his ambitious mission to transform the Department of 
Veterans Affairs (VA) into an exemplary Federal agency. The VFW is glad 
to see that Secretary McDonald has been inclusive of the major veterans 
service organizations (VSOs) from the very beginning. In an effort to 
shape his transformation plan, known as MyVA, Secretary McDonald turned 
to the VFW and our VSO colleagues to help him improve the veteran 
experience and identify barriers that adversely impact VA's ability to 
serve veterans.
    As a direct result, many of the programs and incentives being 
championed by the MyVA Task Force reflect issues the VFW has 
highlighted for many years, including unsatisfactory customer service 
at VA facilities across the country and a disconnect between different 
administrations and programs, which leads to bureaucratic processes 
that place unnecessary burdens on veterans. The MyVA Task Force has 
established and begun to implement numerous programs geared toward 
veteran experience, employee experience, support service excellence, 
performance improvement, and strategic partnerships. Due to our mission 
as veteran advocates, our testimony will mainly focus on the veteran 
experience pillar of the MyVA transformation plan.
    The VFW has consistently said that veterans do not see VA as three 
independent administrations. One of the many benefits of having the 
overwhelming majority of veterans' benefits and services administered 
by one agency is the seamless experience it is able to provide veterans 
who access multiple benefits and services. For example, when a veteran 
applies for disability compensation through the Veterans Benefits 
Administration (VBA), VA has the ability to access the veteran's 
Veterans Health Administration (VHA) health care records and, even 
though the compensation and pension examination process has significant 
issues that need to be addressed, VBA is able to schedule a veteran's 
compensation and pension examination at a VHA health care facility 
without requiring the veteran to transfer the medical documentation 
from VHA to VBA or request a VBA appointment through VHA. However, 
there are a number of areas where the interaction between program 
offices can be improved. The VFW is glad that the MyVA Task Force has 
established the Veterans Experience Office to identify and address 
areas where veteran experiences and interaction with VA can be 
improved.
    The Veterans Experience Office is independent of the three VA 
administrations, with a presence at VA central office and throughout 
VA's five districts. The Chief Veterans Experience Officer reports 
directly to the Secretary and coordinates an enterprise customer 
experience strategy, develops employee customer service training, and 
advises the three VA administrations. The field teams are tasked with 
building relationships, identifying systemic issues, and supporting 
national initiatives. While the VFW fully supports the Veterans 
Experience Office's current mission, we believe that the office could 
be strengthened by integrating the Patient Advocacy Service into its 
mission.
    The Veterans Experience Office's mission already includes 
navigation and advocacy. Through a planned cadre of 34 employees, the 
Veterans Experience Office intends to ensure veterans' concerns 
regarding the benefits and services they receive are properly 
addressed. While the VFW believes this is a step in the right 
direction, we would ideally like to see the entire Patient Advocacy 
Service reorganized under the Veteran Experience Office of Navigation 
and Advocacy. Local patient advocates would remain embedded at VA 
medical centers (VAMC) on a day-to day basis, but fall under the 
Veterans Experience Office's chain of command, rather than that of 
their detailed VA facility.
    In speaking to VFW members from around the country, we find that 
patient advocates often assume the role of apologizing for VA medical 
center shortcomings rather than aggressively working to fix them. We 
strongly suspect that this is a function of the fact that they are 
ultimately employees of medical center directors, and are, therefore, 
hesitant to expose shortcomings in the administration of their 
facilities. Making the Patient Advocacy Service completely independent 
of the VAMC chain of command would mitigate this problem. We envision 
the Veterans Experience Office using the Patient Advocacy Service as 
their eyes and ears to provide the Secretary with a better 
understanding of the veteran experience on the ground, and address 
acute and systemic problems as they arise.
    Ideally, the Veterans' Experience Office would then be able to 
aggregate patient advocacy casework and generate periodic public 
reports on the challenges veterans face from their perspectives. These 
reports could also be used to generate legislative requests to 
alleviate the problems veterans experience in timeliness of 
appointments, securing referrals for community care, access to 
benefits, and overall satisfaction. Conveniently, all the employees 
needed to execute this model are already in place at VA medical 
facilities around the country. Reorganizing them under an office that 
reports directly to the Secretary would maximize their usefulness to 
veterans, Congress and VA.
    Another program geared toward improving the veteran experience is 
the Veteran Economic Communities Initiatives (VECI). Established to 
``increase the number of education and employment opportunities 
available to Veterans and their families in their communities,'' VECI 
relies on economic liaisons around the country to incentivize employers 
to hire veterans and connect veterans to organizations and programs 
that help them overcome education and career challenges. Although the 
VFW strongly supports efforts to ease the transition from military 
service to the civilian workforce, we feel that many efforts by the 
VECI are duplicative of programs and services administered by the 
Department of Labor (DOL) Veterans' Employment and Training Service 
(VETS). In recent years, VETS has made significant progress toward 
reducing veteran unemployment across key demographics. While there is 
still work to be done, VETS programs are embedded in with Department of 
Defense (DOD) through the transition assistance program and integrated 
in communities across the country through its presence at American Job 
Centers and its Jobs for Veterans State Grants program. One of the key 
advantages to VETS is that they are able to provide services to 
vulnerable veteran populations who may not be eligible for VA services, 
such as homeless veterans with other than honorable discharges. The VFW 
feels that a parallel employment service administered by VA is 
unnecessary and runs the risk of creating confusion for transitioning 
servicemembers. Instead, we encourage VA and DOL to adopt better 
coordination and referral for the services each agency provides.
    Still, the VECI initiative contains certain programs that are 
beneficial to transitioning servicemembers and should be continued. The 
VECI Accelerated Learning Programs (ALP) and VA Learning Hubs allow 
veterans to receive free certifications in high demand fields through 
public-private partnerships, without tapping into their VA educational 
benefits. The VFW supports these programs and believes they should be 
expanded, perhaps under the VA Office of Economic Opportunity. With 
full coordination between VA and DOL VETS, ALPs and Learning Hubs could 
be integrated into DOL VETS programs and services to ensure veterans 
are maximizing the employment and education benefits they have earned 
and deserve.
    An important measure of success for the MyVA Task Force will be its 
ability to incorporate local stakeholders into the transformation plan. 
The MyVA Task Force seeks to accomplish this goal through the creation 
of MyVA communities around the country. Each MyVA community will 
include local representatives from the three VA administrations; VSOs; 
local, state and Federal Government; Department of Defense and National 
Guard; and other organizations that represent the local community's 
interests and priorities. The VFW has been an active participant in 
many of the MyVA communities around the country. In San Diego, our 
service officers report that the One VA Community Advocacy Board, which 
was the inspiration for the MyVA Communities Initiative, has served as 
a platform for veteran-centric organizations to share ideas and 
concerns at a leadership level sufficient to make true progress.
    The VFW supports the MyVA Communities Initiative and recommends 
that they be expanded to every VA medical center and regional office. 
Doing so allows VA to leverage the expertise and experience of local 
stakeholders to improve the benefits and service it provides veterans.
    Another vital pillar of the MyVA transformation is improving 
employee experience. The VFW agrees with VA that veteran experience is 
largely dependent on employee experience. We have constantly heard from 
veterans that VA employees lack customer services training and often 
turn veterans away when they should look for opportunities to help. We 
agree with Secretary McDonald that VA's rules-based culture must be 
transformed into a people-based culture that empowers VA employees to 
treat veterans as they would want to be treated.
    The MyVA Task Force has established a number of programs geared 
toward changing culture at VA. The first is a ``training the trainer'' 
program called Leaders Developing Leaders. This program aims to ensure 
VA leaders at all levels are incorporated into the transformation 
effort and have the proper training and tools to improve the esprit de 
corps among VA employees. This includes providing local leaders the 
tools they need to improve VA benefits and service for the veterans 
they serve and empowering them to use those tools when needed. The VFW 
supports the Leaders Developing Leaders program and believes it has the 
potential of breaking through the institutional resistance of middle 
management officials who are only concerned with their day-to-day 
duties and disseminate the MyVA culture change to all VA employees. 
However, we have urged VA to incorporate outside stakeholders into the 
program's workshops to ensure VA leaders at all levels are aware of the 
benefits and services offered by veteran service organizations and 
other stakeholders whose main mission is to serve veterans.
    The VFW also supports requiring all VA employees to receive VA 101 
training, which gives them an overview of the full array of benefits 
services VA provides veterans. While such training helps VA employees 
understand the important part they play in the VA system, it also 
enables VA employees to inform veterans of the benefits and services 
they may not have known they were eligible to receive.
    The MyVA Task Force has also established programs to improve VA's 
supports services, establish a culture of continuous improvement, and 
enhance strategic partnerships. The VFW supports VA's efforts to 
leverage economies of scale to reduce its supply chain costs by 
ensuring all VA facilities are able to quickly obtain high-level goods 
and services at reasonable prices. We commend VA for its plan to 
leverage the district model to consolidate and integrate support 
services, such as information technology, human resources, and 
procurement to ensure seamless operation and coordination among the 
three administrations. We also support VA's adoption of lean six sigma 
to improve problem solving at all levels throughout VA, and create a 
culture where VA employees seek to constantly streamline programs and 
processes to maximize their performance.
    The VFW also supports VA's efforts to integrate outside 
stakeholders into its programs and services. Through its strategic 
partnerships, VA is able to ensure veterans who are using services 
through private or non-profit organizations are made aware of the full 
suite of veterans' benefits and services available to them. Through 
such partnerships VA is also able to ensure outside organizations who 
assist veterans receive the training they need to provide veteran-
centric services.
    The VFW understands that VA will not be able to change its culture 
overnight and that the numerous MyVA transformation programs must be 
given time to mature. However, we are pleased to see that the MyVA Task 
Force has begun to implement many of its proposed programs and has set 
appropriate milestones and reasonable expectations to ensure these 
programs succeed. The VFW will continue to evaluate the MyVA programs 
and report on what is working and what needs to improve.
    The VFW is concerned, however, that the impending change at the 
White House may stall the MyVA Task Force's hard work. While the Task 
Force has made a concerted effort to build momentum that cannot be 
stopped, a new president may refocus the Task Force's mission and erode 
the successful programs it has established. That is why the VFW has 
urged the Presidential candidates to ensure they continue Secretary 
McDonald's MyVA transformation plan if they are elected.
    We urge this Committee to use its legislative authority to ensure 
transformation programs and plans established by Secretary McDonald and 
the MyVA Task Force receive the resources and support needed to 
succeed.