[Senate Hearing 114-611]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 114-611

           THE FISCAL YEAR 2017 BUDGET FOR VETERANS' PROGRAMS

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 23, 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

                              ----------                              

                           February 23, 2016
                           
                           
                                SENATORS

                                                                   Page
Isakson, Hon. Johnny, Chairman, U.S. Senator from Georgia........     1
Blumenthal, Hon. Richard, Ranking Member, U.S. Senator from 
  Connecticut....................................................     2
Rounds, Hon. Mike, U.S. Senator from South Dakota................    58
Tester, Hon. Jon, U.S. Senator from Montana......................    60
Moran, Hon. Jerry, U.S. Senator from Kansas......................    62
Brown, Hon. Sherrod, U.S. Senator from Ohio......................    64
Tillis, Hon. Thom, U.S. Senator from North Carolina..............    66
Sullivan, Hon. Dan, U.S. Senator from Alaska.....................    69
Cassidy, Hon. Bill, U.S. Senator from Louisiana..................    71
Boozman, Hon. John, U.S. Senator from Arkansas...................    73

                               WITNESSES

McDonald, Hon. Robert A., Secretary, U.S. Department of Veterans 
  Affairs; accompanied by Hon. David J. Shulkin, M.D., Under 
  Secretary for Health; Danny Pummill, Acting Under Secretary for 
  Benefits; Ronald E. Walters, Interim Under Secretary for 
  Memorial Affairs; Hon. LaVerne Council, Assistant Secretary for 
  Information and Technology and Chief Information Officer; and 
  Ed Murray, Interim Secretary for Management and Interim Chief 
  Financial Officer..............................................     3
    Prepared statement...........................................     7
    Response to prehearing questions submitted by Hon. Johnny 
      Isakson....................................................    34
    Response to posthearing questions submitted by:
      Hon. Johnny Isakson........................................    75
      Hon. Dean Heller...........................................   172
      Hon. Mike Rounds...........................................   172
      Hon. Dan Sullivan..........................................   172
      Hon. Richard Blumenthal....................................   174
      Hon. Sherrod Brown.........................................   182
      Hon. Mazie K. Hirono.......................................   183

                   Independent Budget Representatives

Blake, Carl, Associate Executive Director, Government Relations, 
  Paralyzed Veterans of America..................................   234
    Prepared joint statement of IBVSOs...........................   239
Varela, Paul, Assistant National Legislative Director, Disabled 
  American Veterans..............................................   236
    Response to request arising during the hearing by Hon. Johnny 
      Isakson....................................................   261
Kelley, Ray, Director, National Legislative Service, Veterans of 
  Foreign Wars of the United States..............................   237

                  Other Veterans Service Organizations

Celli, Louis J., Jr., Director, National Veterans Affairs and 
  Rehabilitation, The American Legion............................   255
    Prepared statement...........................................   256

 
           THE FISCAL YEAR 2017 BUDGET FOR VETERANS' PROGRAMS

                              ----------                              


                       TUESDAY, FEBRUARY 23, 2016

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:02 a.m., in 
room 418, Russell Senate Office Building, Hon. Johnny Isakson, 
Chairman of the Committee, presiding.
    Present: Senators Isakson, Moran, Boozman, Cassidy, Rounds, 
Tillis, Sullivan, Blumenthal, Brown, Tester, Hirono, and 
Manchin.

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

    Chairman Isakson. Welcome to the Senate Committee on 
Veterans' Affairs. Thank you for being here today. Mr. 
Secretary, thank you for coming today and bringing your cast of 
thousands. You have got a lot of support here today. We have 
got the Secretary--big budget, big support.
    We are proud to have Secretary McDonald here today. We are 
proud to have Danny Pummill, Dr. Shulkin--great to have you 
here, and thanks for the great job you are doing--Ronald 
Walters, LaVerne Council, and Ed Murray. We appreciate all of 
you being here. With all that support, Mr. Secretary, I am sure 
you are going to do a great job.
    I will make my opening statement and then turn to Senator 
Blumenthal, and then we will go straight to your testimony. As 
in the last case, Mr. Secretary, I do not want you to feel 
compelled by our customary 5-minute standard. I want you to be 
able to say what you have to say, understanding the average 
attention span of a U.S. Senator is probably about 9 minutes. 
[Laughter.]
    After that, we all start blinking. Speaking for myself; 
that is a self-imposed limitation.
    Thank you very much, Mr. Secretary, for being here today. 
We are looking forward to discussing the $182 billion budgetary 
appropriation for the Veterans Administration, an 8.9-percent 
increase over the fiscal year 2016 budget. Should it be 
adopted, medical care funding would increase by $3.8 billion, 
or 6.3 percent.
    The Office of Information Technology, or IT, would be 
increased by $145 million. I am very encouraged that you have 
embraced a program to merge the non-VA programs to see to it 
that Choice is delivered correctly and appropriately and funded 
well. We look forward to hearing your discussion on that.
    Your testimony also talks a little bit about 
accountability. In fact, I read the information. 
``Accountability'' is a word that is used one time, but it is 
probably the most important thing that this Committee is really 
interested in.
    You and I had a great meeting at your office last week, Mr. 
Secretary, and I want to acknowledge publicly with the Members 
of the Committee to thank Senator Blumenthal and Senator 
Murray's staff for the work they are doing.
    I have stated publicly--and I am doing it again right now 
publicly--that my goal is to see to it that by the end of March 
we have an accountability bill for the Veterans Administration 
employees that is right for the veterans and right for those 
employees, and that we look to the future to see to it, if we 
have problems in the future--which I hope we will never have 
them, but life is life; you are going to have them--that we 
have a defensible accountability system within the Department 
to correct a wrong and make it not happen again.
    We have had too many cases, most of them, if not all of 
them are pre-your service, Mr. Secretary. The Inspector General 
reports from 2 and 3 years ago that are impossible to explain, 
highlight lack of accountability and implementation that is 
impossible to understand. We want to put that behind us for the 
future and build a platform that is good for the employees, 
good for middle management, and good for the Veterans 
Administration, but, most importantly, good for the veterans 
themselves. They need to know they are getting quality services 
and quality accountability. It is very important that we do 
that. That is the most important thing that we can do.
    Last, you talked about reforming the appeals process. I 
hope you will address that in your remarks. That is something 
we have talked about many times, have not done, and it is 
something we rightfully need to do. I would love to know as 
much specifics about what you are going to recommend as 
possible.
    We are glad you are here today. We appreciate your service 
to the country. It is an honor for me to now introduce the 
Ranking Member, Senator Blumenthal.

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

    Senator Blumenthal. Thanks, Mr. Chairman, and I want to 
second your remarks about the need for an accountability bill 
which is, I think, making progress with very close bipartisan 
cooperation between our staffs and ourselves. I want to thank 
the Secretary and the President for a very robust and 
profoundly significant budget. The VA is going through major 
changes as it looks toward the future and prepares for an even 
more challenging future so far as the needs of our veterans are 
concerned in areas of not only health care but also jobs, job 
training, and skill preparation and, of course, homelessness. 
Connecticut, I am very delighted to say, is at the forefront of 
that effort, in fact, announced just last week that we have 
ended homelessness for veterans in Connecticut. Of course, that 
is a continuing effort. It is a milestone, not a finish line, 
and we need to continue to provide permanent housing for all of 
our veterans, not just a temporary or transitional forms of 
housing.
    This budget request focuses, fortunately, on a number of 
areas that I think are important, breakthrough priorities such 
as community health care, accountability, and the appeals 
process. I also think that in terms of our medical care, the 
challenges of Post Traumatic Stress and the research and 
outreach that needs to be done need to be given priority.
    I hope that this hearing will be an opportunity to hear 
from you about more of the details of this proposal, but I also 
think that the vision for the future is tremendously important 
not only this year but looking beyond this year, just as you 
would at a company like Proctor & Gamble--beyond this quarter, 
beyond this year--to think about what this enterprise is going 
to look like in 5 years, in 10 years. Now is the time to build 
for the veterans who will be coming out of the service, and 
there will be more and more of them over the next few years as 
we downsize our active-duty force.
    So, I thank you for being here. I am looking forward to 
hearing from you and from the veterans service organizations 
that perform such an important and vital role in keeping us 
informed about veterans' needs while making sure that all of us 
are held accountable.
    Thank you.
    Chairman Isakson. Thank you, Senator Blumenthal.
    Mr. Secretary, it is all yours.

     STATEMENT OF HON. ROBERT A. MCDONALD, SECRETARY, U.S. 
 DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY HON. DAVID J. 
   SHULKIN, M.D., UNDER SECRETARY FOR HEALTH; DANNY PUMMILL, 
ACTING UNDER SECRETARY FOR BENEFITS; RONALD E. WALTERS, INTERIM 
  UNDER SECRETARY FOR MEMORIAL AFFAIRS; HON. LAVERNE COUNCIL, 
 ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY AND CHIEF 
   INFORMATION OFFICER; AND ED MURRAY, INTERIM SECRETARY FOR 
         MANAGEMENT AND INTERIM CHIEF FINANCIAL OFFICER

    Secretary McDonald. Thank you, Mr. Chairman.
    Chairman Isakson, Ranking Member Blumenthal, and Members of 
the Committee, thanks for the opportunity to present the 
President's 2017 budget and 2018 advance appropriations 
requests for the Department of Veterans Affairs. I have a 
written statement that I ask be submitted for the record, Mr. 
Chairman.
    Mr. Chairman, the President's proposal is another strong, 
tangible sign of his devotion to veterans and their families. 
It proposes $182.3 billion for the Department in fiscal year 
2017, which includes $78.7 billion in discretionary funding, a 
4.9-percent increase above the 2016 enacted level, largely for 
health care. It includes $12.2 billion for care in the 
community and a new medical community care budget account 
consistent with the VA budget and Choice Improvement Act. It 
includes $103.6 billion in mandatory funding for veterans 
benefit programs and $103.9 billion in advance appropriations 
for our three major mandatory veterans benefit accounts.
    It supports VA's four agency priority goals and our five 
MyVA transformational objectives to modernize VA and improve 
the veteran experience, improve the employee experience, 
improve internal support services, establish a culture of 
continuous improvement, and expand strategic partnerships. 
Those five transformational objectives are about growing VA 
into the high-performance organization veterans deserve and 
taxpayers expect.
    I learned over three decades in the private sector at 
Procter & Gamble what makes a high-performance organization. It 
takes a clear purpose, strong values, enduring principles, and 
technical competence. High-performance organizations depend on 
sound strategies. They thrive with passionate leaders who are 
willing to take tough decisions and make bold changes to 
improve. High-performance organizations require responsive 
systems and processes designed and managed in a high-performing 
culture.
    Well, VA has a clear purpose in our most noble mission to 
care for those who have borne the battle. We have strong core 
values: integrity, commitment, advocacy, respect, and 
excellence. Our strategic plan makes clear that we are a 
customer service organization. We serve veterans.
    Our 5 MyVA transformational objectives and our 12 
breakthrough priorities for 2016 are about accomplishing that 
strategy. Ten of our top 16 executives are new since I became 
Secretary. They are part of a growing team of talented, 
enthusiastic former business leaders and experienced Government 
and health care professionals. They are making innovative 
changes and creating opportunities for even greater progress.
    We are making the sweeping changes necessary for VA to be a 
high-performing organization, and we will know we are getting 
there when, by design, veterans' needs shape our systems, our 
processes, and our culture.
    For example, a responsive health care system for veterans 
means: veterans have 24/7 access to VA systems and know where 
to get accurate answers, whether that is their Veteran Contact 
Center or the Veterans Crisis Line; veterans calling or 
visiting primary care facilities and medical centers have their 
clinical needs addressed the very same day; veterans calling 
for new mental health appointments receive suicide risk 
assessments and immediate care, if needed; and veterans already 
engaged in mental health care who need urgent attention speak 
to a provider the very same day.
    For employees serving veterans, it means a high-performing 
culture where continuous improvement drives responsive, forward 
thinking and innovative change. It means training our workforce 
on advanced business techniques. It means responsive 
performance management systems that resonate with employees and 
encourage rather than discourage continuous improvement and 
excellence. It means proper employee placement, clear 
performance expectations, continuous feedback, and employees 
equipped with the tools to achieve excellence. It means 
executive performance ratings and bonuses that reflect actual 
performance and take into account relevant inputs like veteran 
outcomes, results of employee surveys, and 360-degree feedback. 
It means modern automated systems in place of antiquated, 
cumbersome, and costly paper processes. These are a few 
characteristics of high-performing systems, processes, and 
culture. We are advancing along these lines and many others.
    We launched our cascading Leading Developing Leaders 
training last year with 450 senior field leaders. It is not a 
single event. It is a continuous enterprise-wide process of 
leaders teaching leaders teaching leaders in order to inculcate 
lasting change. So far, we have trained more than 5,000 
employees. By the year's end, we will have trained over 12,000 
senior leaders, empowering teams to dramatically improve care 
and service delivery to veterans while creating better work 
environments for employees.
    Private sector leadership experts are developing VA teams 
in new ways with cutting-edge business skills like Lean Six 
Sigma and Human Centered Design. We are using Human Centered 
Design and Lean Six Sigma right now to redesign the 
compensation and pension process because veterans find it 
confusing and burdensome. We are looking at industry best 
practices and planning for an automatic performance management 
solution for general schedule employees. We can streamline that 
process, improve rating accuracy, and interface with OPM. All 
of this is focused on moving VA into the ranks of high-
performing organizations. That goal is in reach, but we need 
your continued support to achieve it.
    I appreciate our extensive discussion at the end of January 
on our MyVA 12 breakthrough priorities for 2016. The proposed 
budget continues support of those priorities into 2017. It 
provides $65 billion for veterans' medical care, a 6.3-percent 
increase over 2016. It provides $66.4 billion in advance 
appropriations for the VA medical care programs in 2018. That 
is a 2.2-percent increase above the 2017 request. It provides 
$7.8 billion for mental health, funds Veteran Contact Centers 
in the field and Veterans Crisis Line modernization. It funds 
telehealth access, enhances health programs for women veterans, 
and provides an incredibly effective hepatitis C treatment to 
an expected 35,000 veterans.
    To help integrate all the MyVA initiatives across the 
enterprise, it provides $2.6 million for the MyVA program 
office. To continue training field employees on advanced 
business skills and establishing high customer service 
standards, it increases funding for our Veteran Experience 
Office by 47 percent.
    We will continue doing all we can to squeeze as much as 
possible out of every single budget dollar.
    Our pharmacy benefits management program avoided $4.2 
billion in unnecessary drug expenditures last year. We saved 
over half a billion dollars in travel spending since 2013, 
exceeding goals of the President's campaign to cut waste. We 
have reduced employee award spending $150 million, and we have 
reduced SES bonuses 64 percent between 2011 and 2015 by 
rigorously linking awards to performance.
    Since 2011, we have saved $16.6 million using more 
efficient training and meeting methods. We are already saving 
$10 million annually under our MyVA's five-district structure 
that we announced in January 2015.
    We have saved approximately $5.5 million from 2011 to 2015 
by strengthening controls over permanent change-of-station 
moves. Now that we have implemented electronic claims 
processing, we will save millions of dollars each year in paper 
storage.
    We are committed to doing everything we can with everything 
we are given, but many, many important priorities for 
meaningful change require substantial congressional action. 
There are more than 100 legislative proposals in the budget. 
Over 40 of them are new this year, and some are absolutely 
critical just to maintain our current ability to purchase non-
VA care.
    It is critical that VA is competitive with the private 
sector so we can attract top talent. Nowhere is that more 
important than in health care. So, among other VHA personnel 
authority adjustments, we are proposing flexibility on the 
maximum 80-hour pay period requirement for certain medical 
professionals. It will help improve hospital operations and 
attract the best possible hospital staff who prefer more 
flexible schedules. We are proposing critical compensation 
reforms for network and hospital directors.
    Likewise, the Title 38 SES proposal we are working on is 
about being competitive with the private sector in recruiting 
and in compensation. It is not just about firing people. It is 
about treating VA career executives more like their private 
sector counterparts. It is the kind of flexibility that 
attracts top performers in the private sector as well. VA needs 
that flexibility, too.
    We need your help to transform and streamline VA's care in 
the community systems and programs to best serve veterans. We 
need your help modernizing and clarifying VA's purchase care 
authorities to maintain veterans' access to timely community 
care everywhere in the country. We have provided Congress with 
detailed legislation addressing this challenge more than 9 
months ago, and I have consistently identified it as a top 
legislative priority. Above all, this needs to get done in this 
Congress to ensure that strong foundation for access to 
community care.
    Artificial funding restrictions are unresponsive to 
veterans' needs, so we are proposing a general transfer 
authority that allows me some measured spending flexibility to 
respond to the veterans' emerging needs.
    The appeals process set by statute is archaic, 
unresponsive, and not serving veterans well. Last year, the 
Board was still adjudicating an appeal that originate 25 years 
ago and had been decided more than 27 times. The budget 
proposes a simplified, streamlined, and fair appeals process so 
that 5 years from now veterans have appeals resolved within 1 
year of filing. While requiring short-term staffing increases 
to contend with the 445,000 pending appeals, legislating a 
simplified appeals process can save more than $139 million 
beginning in 2022.
    We need congressional authorization of 18 leases submitted 
in VA's 2015 and 2016 budget request as well as authorization 
of eight major construction projects included in the fiscal 
year 2016 budget.
    We need your support for six additional replacement major 
medical facility leases, two major construction projects, and 
four cemetery projects in the 2017 budget. Passing special 
legislation for VA's West Los Angeles campus will get us 
positive results for veterans in that community who are most in 
need.
    I have outlined a few opportunities for change here. This 
Congress, with today's VA's leadership, can make these changes 
and more for all veterans and for veterans in the future. Then 
we can look back on this year as the year that we turned the 
corner.
    I appreciate the support you have shown veterans, the 
Department, and the MyVA transformation. On behalf of veterans 
and the VA employees serving them every single day, thank you 
for this opportunity. We look forward to your questions.
    Thank you, Mr. Chairman.
    [The prepared statement of Secretary McDonald follows:]
       Prepared Statement of Hon. Robert A. McDonald, Secretary, 
                  U.S. Department of Veterans Affairs
    Good morning, Chairman Isakson, Ranking Member Blumenthal, and 
Distinguished Members of the Senate Veterans' Affairs Committee. Thank 
you for the opportunity to present the President's 2017 Budget and 2018 
Advance Appropriations (AA) requests for the Department of Veterans 
Affairs (VA). This budget continues the President's faithful support of 
Veterans and their families and survivors, and it sustains VA's 
historic transformation. It will provide the funding needed to enhance 
services to Veterans in the short term, while strengthening the 
transformation of VA that will better serve Veterans in the future.
                        a vision for the future
    VA's vision for the future is to be the No. 1 customer-service 
agency in the Federal Government. The American Customer Satisfaction 
Index already rates our National Cemetery Administration No. 1 with 
respect to customer service. In addition, for the sixth year in a row, 
VA's Consolidated Mail Outpatient Pharmacy received J.D. Power's 
highest customer satisfaction score among the Nation's public and 
private mail-order pharmacies. These are compelling examples of 
excellence. We aim to make that so for all of VA.
    We are transforming the entire Department, not just making 
incremental changes to parts of it. We began in July 2014 by 
immediately reinforcing the importance of our inspiring mission--caring 
for those ``who shall have borne the battle,'' their families, and 
their survivors. Then, we re-emphasized our commitment to our 
exceptional I-CARE Values--Integrity, Commitment, Advocacy, Respect, 
and Excellence. To provide timely quality care and benefits for 
Veterans, everything we are doing is built, and must be built, on the 
rock-solid foundation of mission and values.
    MyVA is the catalyst making VA a world-class service provider. It 
is a framework for modernizing VA's culture, processes, and 
capabilities so we put the needs, expectations, and interests of 
Veterans and their families first, and put Veterans in control of how, 
when, and where they wish to be served.
    Listening to others' perspectives and insights has been, and 
remains, instrumental in shaping our transformation. We have taken 
advantage of an unprecedented level of outreach to the field and our 
stakeholders.
    In my first months as Secretary, I assessed VA and recognized that 
we would need to change fundamental aspects of every part of VA in 
order to rise to excellence. I shared my assessment's results with 
President Obama and received his guidance. I discussed my findings with 
you and other Members of Congress--privately and during hearings. And I 
consulted with literally thousands of Veterans, VA clinicians, VA 
employees, and Veteran Service Organizations (VSOs) and other 
stakeholders in dozens of meetings.
    Since my July 29, 2014, confirmation, I have made 277 visits to VA 
field sites in more than 100 cities, including 47 visits to VA medical 
centers, 30 visits to homeless Veterans program sites, 16 visits to 
Community Based Outpatient Clinics, 15 Regional Offices, and 9 
Cemeteries. I have attended 61 Veteran engagements through public and 
private partnerships and 60 stakeholder events to hear firsthand the 
problems and concerns impacting our Veterans. To recruit individuals to 
work for VA as medical professionals and in other critical fields, I 
have visited 50 medical schools, universities, and other educational 
institutions. This kind of outreach, partnership, and collaboration 
underpins our department-wide transformation to change VA's culture and 
make the Veteran the center of everything we do.
Progress
    Transforming an organization of this size is an enormous 
undertaking. It will not happen overnight. But we are now running the 
government's second largest Department like a $166 billion Fortune 6 
organization should be run. That is, balancing near term performance 
improvements while rebuilding VA's long-term organizational health.
    Effective change often requires new leadership, and we have made 
broad changes. Of our top 16 executives, 10 are new to their positions 
since I became Secretary. Our team today includes 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 National Military Medical Center enhancing the 
patient experience.
    Most members of the executive leadership team are Veterans 
themselves. They have served from Vietnam to Iraq and Afghanistan, and 
each is here because he or she demonstrates a personal commitment to 
our mission. These fresh, diverse perspectives, combined with our more 
experienced government and health care executives, will continue to 
catalyze innovation and change.
    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. In 2015, we made 
notable progress building the momentum that will begin delivering 
transformational changes that VA needs.
    Congress has passed key legislation--such as the Veterans Access, 
Choice, and Accountability Act and the Clay Hunt Suicide Prevention for 
American Veterans Act--that gives VA more flexibility to improve our 
culture and ability to execute effectively.
    Consistent with the culture of a High Performance Organization that 
serves Veterans and their families, we have turned VA's structural 
pyramid upside down. Veterans and their families are at the top. The 
Office of the Secretary is at the bottom, supporting subordinate 
leaders and the workforce who are serving Veterans. This method of 
thinking and operating is a reminder to all employees and stakeholders 
that we are here to support our Veterans, not our bosses.

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    While reinforcing our I-CARE Values, we are transitioning from a 
rules-based culture that may neglect the human dimension of service to 
a principles-based culture grounded in values, sound judgment, and the 
courage and opportunity ``to choose the harder right instead of the 
easier wrong . . ..''
    We formed a MyVA Advisory Committee (MVAC) to advise us on our 
transformation. The MVAC is comprised 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. 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 US 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.
    Private sector leadership experts are bringing cutting-edge 
business skills and developing VA teams in new ways. We are training 
critical pockets of our workforce on advanced techniques like Lean and 
Human Centered Design. For example, working with the University of 
Michigan, we have already trained more than 5,000 senior leaders across 
the Nation in our ``Leaders Developing Leaders.'' The Veterans Benefits 
Administration (VBA), Veterans Health Administration (VHA), and our 
Veterans Experience team collaborated using Human Centered Design and 
Lean techniques to redesign the Compensation and Pension Examination 
(C&P Exam) process because we received consistent feedback that the 
process--often, a Veteran's first impression of the VA when separating 
from service--can be a confusing and uncomfortable experience.
    Across VA, we are encouraging different perspectives and listening 
to all of our key stakeholders, even those who are critical of VA. To 
benchmark and capture ideas and best practices along our transformation 
journey, we have been working collaboratively with world-class 
institutions like Procter & Gamble, USAA, Cleveland Clinic, Wegmans, 
Starbucks, Disney, Marriott and Ritz-Carlton, NASA, Kaiser Permanente, 
Hospital Corporation of America, Virginia Mason, DOD, and GSA, among 
others.

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    VA named the Department's first Chief Veteran Experience Officer 
and began staffing the office that will work with the field to 
establish customer service standards, spread best practices, and train 
our employees on advanced business skills.
    Rather than asking Veterans to navigate our complicated internal 
structure, we are redesigning functions and processes to fit Veteran 
needs in the spirit of General Omar Bradley's 1947 proposition that 
``We are dealing with Veterans, not procedures; with their problems, 
not ours.''
    We are realigning VA to facilitate internal coordination and 
collaboration among business lines--from nine disjointed, disparate 
organizational boundaries and organizational structures to a single 
framework. That means down-sizing from 21 service networks to 18 that 
are aligned in five districts and defined by state boundaries, except 
in California. This realignment means opportunities for local level 
integration, and it promotes consistently effective customer service. 
Veterans from Florida to California, Puerto Rico to Maine, Alaska and 
Guam, and all parts in between, will see one VA.
    We have developed a multi-year plan for creating a world-class 
Information Technology organization, and on November 11, Veterans Day, 
we launched the Vets.gov initial capability. Developed with support 
from the U.S. Digital Services Team and informed by extensive feedback 
from Veterans, Vets.gov is a modern, mobile-first, cloud-based website 
that will replace numerous other websites and website logins with a 
single, easy to navigate location. The website puts Veteran needs and 
wishes first, and we will continue to add the capability that's 
required to improve its accessibility and usefulness. As Vets.gov 
evolves, it will simplify the Veteran experience by re-using and making 
consistent Veteran information, including mailing address and phone 
number, across the agency.
    At VA, we know that serving Veterans is a collaborative exercise, 
so we will not function in a vacuum. We are operating as part of a 
community of care, forming strategic partnerships with external 
organizations to leverage the goodwill, resources, and expertise of 
valuable partners to better serve our Nation's Veterans and help 
address a wide variety of Veteran needs, including employment, 
homelessness, wellness, and mental health. Partners include respected 
organizations like the YMCA, the Elks, the PenFed Foundation, LinkedIn, 
Coursera, Google, Walgreens, academic institutions, other Federal 
agencies, and many more. These partnerships reflect our commitment to 
re-thinking how VA does business so we can leverage the strengths of 
others who also care for Veterans.
    We have enabled 39 Community Veterans Engagement Boards, a national 
network designed to leverage all community assets, not just VA assets, 
to meet local Veteran needs. Sixteen more communities are in 
development right now.


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    We have renewed and redefined working relationships with our union 
partners, and 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 often and early in 
every major decision.
    We are continuing to develop a robust provider network while we 
streamline business processe s and re-imagine how we obtain services 
such as billing, reimbursement credentialing, and information sharing.
    We continue to listen, learn, and grow.
                       va's agency priority goals
    In 2015, we were guided by and made notable progress toward 
reaching our three Agency Priority Goals (APGs)--(1) Improve Veteran 
Access to VA Benefits and Services, (2) End Veteran Homelessness, and 
(3) Eliminate the Disability Backlog. These accomplishments toward 
achieving our APGs demonstrate VA's commitment to using our resources 
effectively to improve care and benefits for Veterans.
Access
    We expanded capacity by focusing on staffing, space, productivity, 
and VA Community Care.
    Access. Since discovering the access challenges in Phoenix, 
Arizona, we have aggressively improved access to care, not just in 
Phoenix but across VA as a whole. For instance, in the first 12 months 
after discovering the Phoenix appointment backup, from June 2014 to 
June 2015, we completed 7 million more appointments than during the 
same period the year prior: 2.5 million of those appointments were at 
VA; 4.5 million appointments were in the community. Altogether in FY 
2015, we completed 56.7 million appointments, nearly 2 million more 
than FY 2014. More than 97 percent (55 million) of those 56.7 million 
appointments were completed within 30 days of the clinically indicated 
or Veteran's preferred date, an increase of 1.4 million over FY 2014 
numbers.
    Veteran access is one of the five critical priorities supporting VA 
health care transformation with far-reaching impact across VA that 
Under Secretary for Health, Dr. David J. Shulkin announced in 
September 2015. With the Access Stand Downs, VHA is empowering each 
facility to focus on the needs of its specific population and 
refocusing people, tools, and systems on a journey of continuous 
improvement toward same-day access for primary care and urgent 
specialty care. The immediate goal is that no patients with urgent 
appointment requests in VA clinics with the most critical clinical 
needs, such as cardiology, urology, and mental health, are waiting more 
than 30 days.
    From November 9, through November 13, 2015, VHA conducted a 
complete review of all Veterans waiting for appointments--with a focus 
on those Veterans waiting for clinically important and acute services--
to ensure that the wait was clinically appropriate as determined by the 
Veteran's treatment team. This process culminated with the VHA's first 
Access Stand Down on November 14th--a nationwide effort to ensure 
Veterans get the right care at the right time.
    In the first Access Stand Down, VHA reviewed nearly 55,800 of the 
more than 56,000 Level One, stat, consults that were open more than 30 
days (as of November 6, 2015), a herculean effort. Of those 55,800 
urgent open consults reviewed, 82 percent (45,849) were scheduled or 
closed by the end of that first Stand Down.
    Building on the November 14th Access Stand Down momentum and 
success, VHA is continuing to maximize accessibility to outpatient 
services with the coming February 27th, 2016 Access Stand Down. The 
February Stand Down is an opportunity to make another significant leap 
in dramatically enhancing Veterans' access to care. Clinical operations 
will meet customer demand through resource-neutral, continuous 
improvement at the facility-level and scaling-up excellence across the 
enterprise.
    VetLink data is another way we are listening to Veterans. Since 
September 2015, VHA has analyzed preliminary data from VetLink, our 
kiosk-based software that allows us to collect real-time customer 
satisfaction information. In all three separate VetLink surveys to 
date--related to nearly half-a-million appointments--Veterans told us 
that about 90 percent of the time, they are either ``completely 
satisfied'' or ``satisfied'' with getting the appointment when they 
wanted it. However, about 3 percent of Veterans who participated in the 
survey were either ``dissatisfied'' or ``completely dissatisfied,'' so 
we have more work to do.
    Staffing. We increased net VHA staffing. VHA hired 41,113 
employees, for a net increase of 13,940 health care staff, a 4.7 
percent increase overall. That increase included 1,337 physicians and 
3,612 nurses, and we filled several critical leadership positions, 
including the Under Secretary of Health.
    Space. We activated 2.2 million square feet in FY 2015, adding to 
more than 1.7 million square feet of clinical space activated in FY 
2014.
    Productivity. We increased physician work Relative Value Units 
(RVUs) by 9 percent. VA completed more than 1.4 million extended hour 
completed encounters in primary care, mental health and specialty care 
in FY 2014 and more than 1.5 million in FY 2015, an increase of 5.7 
percent in extended hour encounters.
            Care in the Community
    In 2015, VA obligated $10.5 billion for Care in the Community, 
including resources provided through the Veterans Choice Act--an 
increase of $2.3 billion (28 percent) over the 2014 level--which 
resulted in nearly 2.4 million authorizations for Veterans to receive 
Care in the Community from December 3, 2014 through December 2, 2015. 
Programmatically, this included care in the community for Veterans' 
dialysis, state home programs, community nursing care, Veterans home 
programs, emergency care, private medical facilities care, and care 
delivered at Indian health clinics. It also includes care under VA's 
CHAMPVA program for certain dependents who were entitled for that care.
Homelessness
    Veteran homelessness has continued to decline, thanks in large part 
to unprecedented partnerships and vital networks of collaborative 
relationships across the Federal Government, across state and local 
government, and with both non-profit and for-profit organizations. 
Ending and preventing Veteran homelessness is now becoming a reality in 
many communities, including: the Commonwealth of Virginia; the State of 
Connecticut; New Orleans, Louisiana, Houston, Texas; Las Vegas, Nevada; 
Philadelphia, Pennsylvania; Syracuse, New York; Winston-Salem, North 
Carolina; and Las Cruces, New Mexico. In collaboration with our Federal 
and local partners, we have greatly increased access to permanent 
housing; a full range of health care including primary care, specialty 
care, and mental health care; employment; and benefits for homeless and 
at-risk for homeless Veterans and their families.
    In FY 2015 alone, VA provided services to more than 365,000 
homeless or at-risk Veterans in VHA's homeless programs. Nearly 65,000 
Veterans obtained permanent housing through VHA Homeless Programs 
interventions, and more than 36,000 Veterans and their family members, 
including 6,555 children, were prevented from becoming homeless.
    Overall Veteran homelessness dropped by 36 percent between 2010 and 
2015, based on data collected during the annual Point-in-Time (PIT) 
Count conducted on a single night in January 2015. We saw a nearly 50 
percent drop in unsheltered Veteran homelessness. Since 2010, more than 
360,000 Veterans and their family members have been permanently housed, 
rapidly rehoused, or prevented from falling into homelessness.
Backlog
     VA transitioned disability compensation claims processing from a 
paper-intensive process to a fully electronic processing system; as a 
result, 5,000 tons of paper per year were eliminated.
    In FY 2015, VA decided a record-breaking 1.4 million disability 
compensation and pension (rating) claims for Veterans and their 
survivors--the highest in VA history for a single year. As of 
December 31, 2015, VA had driven down the disability claims backlog to 
75,480, from a peak of over 611,000 in March 2013.

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2016-2017 VA's Agency Priority Goals
    In a collaborative, analytic process, VA has established our four 
new Agency Priority Goals (APGs). In FYs 2016 and 2017, our four APGs 
buildupon and preserve progress we made in 2015. The new APGs will help 
accelerate transformation to MyVA and advance our framework for 
allocating resources to improve Veteran outcomes. Our new APGs are to 
(1) Improve Veterans Experience with VA, (2) Improve VA Employee 
Experience, (3) Improve Access to Health Care as Experienced by the 
Veteran, and (4) Improve Dependency Claims Processing. While no longer 
APGs, VA will continue to buildupon the progress it has already made 
related to ending Veterans' Homelessness and eliminating the 
compensation rating claims backlog.
                         fy 2017 budget request
    Our 2017 budget requests the necessary resources to allow us to 
serve the growing number of Veterans who selflessly served our Nation.
    The 2017 Budget requests $182.3 billion for VA--$78.7 billion in 
discretionary funding (including medical care collections) and $103.6 
billion in mandatory funding for Veterans benefit programs. The 
discretionary request reflects an increase of $3.6 billion (4.9 
percent) over the 2016 enacted level. The budget also requests 2018 
advance appropriations (AAs) of $66.4 billion for Medical Care and 
$103.9 billion for three mandatory accounts that support Veterans 
benefit payments (i.e., Compensation and Pensions, Readjustment 
Benefits, and Insurance and Indemnities).
    We value the support that Congress has demonstrated in providing 
the resources needed to honor our Nation's Veterans. We are seeking 
your support for legislative proposals contained in the 2017 Budget--
including many already awaiting Congressional action--to enhance our 
ability to provide Veterans the benefits and services they have earned 
through their service. The Budget also proposes a new General Transfer 
Authority that would allow VA to move discretionary funds across line 
items. Flexible budget authority would give VA greater ability to avoid 
artificial restrictions that impede our delivery of care and benefits 
to Veterans.
                 rising demand for va care and benefits
    Veterans are demanding more services from VA than ever before. As 
VA becomes more productive, the demand for benefits and services from 
Veterans of all eras continues to increase, and Veterans' demand for 
benefits has exceeded VA's capacity to meet it.
    In 2014, when the Phoenix access difficulties came to light, VA had 
300,000 appointments that could not be completed within 30 days of the 
date the Veteran needed or wanted to be seen. To meet that demand, VA 
rallied to add capacity to complete 300,000 more appointments each 
month, or about 3.5 million additional appointments annually.
    Despite these extraordinary measures to increase capacity, VA was 
unable to absorb Veterans' increasing demand for health care. The 
number of Veterans waiting for appointments more than 30 days rose by 
about 50 percent, to roughly 450,000 between 2014 and 2015, so we are 
aggressively working on innovative ways to address that challenge, and 
VHA's new Access Stand Downs are central to VHA's healthcare 
transformation efforts and addressing that challenge.
    The trend of a growing demand for VA health care is fueled by more 
than a decade of war, Agent Orange-related disability claims, an 
unlimited claim appeal process, demographic shifts, increased medical 
issues claimed, and other factors. Additionally, survival rates among 
Americans who served in conflicts have increased, and more 
sophisticated methods for identifying and treating Veteran medical 
issues continue to become available. And, VA now serves a population 
that is older, has more chronic conditions, and is less able to afford 
care in the private sector. Workload will continue to increase as the 
military downsizes and Veterans regain trust in VA.

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    In 2017, the number of Veterans receiving medical care at VA will 
be over 6 million. VA expects to provide more than 115 million 
outpatient visits in 2017, an increase of 8.4 million visits over 2016, 
through both VA and Care in the Community.
    Compared to FY 2009, the number of patients is projected to 
increase by 22 percent by FY 2017. And, as Veterans see the results of 
VA's transformation, we are confident that the number of Veterans 
utilizing VA services will continue to rise. Currently, 11 million of 
the 22 million Veterans in this country are registered, enrolled, or 
use at least one VA benefit or service.
    Veterans' health care and benefit requirements continue to increase 
decades after conflicts' end, and this fact is a fundamental, long-term 
challenge for VA. Forty years after the Vietnam War ended, the number 
of Vietnam Era Veterans receiving disability compensation has not yet 
peaked. VA anticipates a similar trend for Gulf War Era Veterans, only 
26 percent of whom have been awarded disability compensation.

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    Today, there are an estimated 22 million Veterans. The number of 
Veterans is projected to decline to around 15 million by 2040. However, 
while the absolute number may decline, an aging Veteran population 
requires greater care, services, and benefits. In 2017, 46 percent (or 
9.8 million) of the 22 million Veteran population will be 65 years old 
or older, a dramatic increase since 1975 when only 7.5 percent (or 2.2 
million) of the Veteran population was 65 years old or older.
    While the percent of the Veteran population receiving compensation 
was nearly constant at 8.5 percent for more than 40 years, over the 
past 15 years there has been a striking increase to 20 percent. The 
total number of service-connected disabilities for Veterans receiving 
compensation grew from 11.8 million in 2009 to 19.7 million in 2015, an 
increase of more than 67 percent in just six years. This dramatic 
growth, combined with estimates based on historic trends, predicts an 
even greater increase in claims for more benefits as Veterans age and 
disabilities become more acute.

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    The increase in Veterans receiving compensation is accompanied by a 
significant increase in the average degree of disability granted to 
Veterans for disability compensation. For 45 years, from 1950 to 1995, 
the average degree of disability held steady at 30 percent. But, since 
2000, the average degree of disability has risen to 49 percent. VBA's 
mandatory request for 2017 is $103.6 billion, twice the amount spent in 
FY 2009.

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    As VA continues to improve access and quality of care, more 
Veterans will come to VA for more of their care. Veterans today often 
choose VA for care either because of personal preference or because of 
VA's economic edge. Some 78 percent of enrolled Veterans at VA have 
other choices like Medicare, Medicaid, TRICARE, or private insurance. 
Out-of-pocket cost for Veterans at VA is often lower, and cost 
considerations are a key factor in Veterans' demand for VA health care. 
In 2014, Veteran enrollees received only 34 percent of their total 
health care through VA, accounting for about $53 billion in 2014 costs. 
Just a one percent increase in Veteran reliance on VA health care will 
increase costs by $1.4 billion.
               productivity improvements and stewardship
    The MyVA transformation will ensure VA is a sound steward of the 
taxpayer dollar. We are instituting operational efficiencies, cost 
savings, productivity improvements, and service innovations to support 
this and future budget requests. We are assessing all aspects of VA 
operations using a business lens and pursuing changes so VA will 
deliver care and services more efficiently and effectively at the 
highest value to Veterans and taxpayers. For instance, few realize that 
when it comes to the general operating expense of distributing over a 
hundred-billion dollars in benefits to over 5.3 million Veterans and 
survivors, VBA spends only about 3 cents on the dollar. By any measure, 
that's an excellent return on investment. Our Reports, Approvals, 
Meetings, Measurements, and Policies (RAMMPs) process identifies 
practices to streamline or, in some cases, eliminate entirely. To free 
capacity and empower employees to identify counter-productive or 
wasteful activities that management can eliminate, VA leaders at all 
levels of the organization are using RAMMP to address opportunities for 
improvement that employees have identified.

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    To boost efficiency and employee productivity, VA is quickly moving 
to paperless claims processing from its historically manual, paper-
intensive process. Modernizing to an electronic claims processing 
system has helped VBA increase claim productivity per claims processor 
by 25 percent since 2011 and medical issue productivity by 82 percent 
per claims processor since 2009. This significant productivity increase 
helped mitigate the effects of the 131 percent increase in workload 
between 2009 and 2015, when the number of medical issues rose from 2.7 
million to 6.4 million. VA's shift to electronic claims processing has 
meant converting paper files to eFolders. Between 2012 and 2015, the 
Veterans Claims Intake Program (VCIP) scanned nearly 6 million claims 
files into Veterans' eFolders in the Veterans Benefits Management 
System (VBMS). VBA has removed more than 7,000 tons of claims-related 
papers formerly undermining efficiency, hampering productivity, and 
cluttering workspace.
    In FY 2015, VBA deployed its innovative Centralized Mail Initiative 
to 56 regional offices (ROs) and one pension management center (PMC). 
Centralized Mail reroutes inbound compensation and pension claims-
related mail directly to Claims and Evidence Intake Centers at document 
conversion services vendor sites, an innovation that improves 
productivity and enabled digital analysis of more than four million 
mail packets. Through Centralized Mail, VBA can more efficiently manage 
the claims workload, and prioritize and distribute claims 
electronically across the entire RO network, maximizing resources and 
improving processing timeliness.
    To strengthen financial management and stewardship, in FY 2015 VA 
launched its multi-year effort to replace VA's antiquated, 30-year-old 
core Financial Management System (FMS) with a 21st century system that 
will vastly improve VA financial management accuracy and transparency. 
The modernization effort requires robust enterprise-wide support across 
the Department. In FY 2015, VA committed to using a shared service 
solution and engaged the Department of Treasury's Office of Financial 
Innovation and Transformation (FIT) to pursue a Federal Shared Service 
Provider that leverages existing, successful investments and 
infrastructure across the government and meets our financial management 
system needs while supporting VA's mission of serving Veterans. VA also 
stood up a Program Management Office, initially staffed with 5 FTE from 
existing resources to lead and manage the effort, and identified an OIT 
Project Manager. VA has worked to compile lessons-learned from other 
agencies engaged in this effort and from VA's previous attempts to 
modernize the FTE, to ensure the effort is successful. Tasks ahead 
include strategies, roadmaps, and project plans, business process re-
engineering, and engaging in significant change management activities.
    Recent challenges managing non-VA care program finances have 
demonstrated the great risks and immense burden of the FMS legacy 
system. FMS failure would severely impede the Department's ability to 
execute its budget, pay vendors and Veterans, and produce accurate 
financial statements.
                    closing unsustainable facilities
    It is well-past time to close VA's old, substandard, and 
underutilized facilities. VA's 2016 Budget testimony last year 
explained that VA cannot be a sound steward of taxpayer resources with 
the asset portfolio it carries, and each year of delay makes the 
situation more costly and untenable. No sound business would carry such 
a portfolio, and Veterans and taxpayers deserve better.

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    VA currently has 370 buildings that are fully vacant or less than 
50 percent occupied, which are excess to our needs. These vacant 
buildings account for over 5.2 million square feet of unneeded space. 
In addition, we have 770 buildings that are underutilized, accounting 
for more than 6.3 million square feet that are candidates to be 
consolidated to improve utilization and lower costs. This means we have 
to maintain over 1,100 buildings and 11.5 million square feet of space 
that is unneeded or underutilized--taking funding from needed Veteran 
services. We estimate that it costs VA $26 million annually to maintain 
and operate these vacant and underutilized buildings. For example, when 
attempting to demolish the vacant storage facility in Bedford, 
Massachusetts, VA encountered environmental issues that prevented the 
demolition, forcing VA to either pay costly remediation costs to 
demolish a building we no longer need or maintain facilities such as 
this across the system.

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     Bedford, Massachusetts--Vacant Storage Building, built in 1939

    As the Veteran population has migrated, VA's capital infrastructure 
has not kept pace. We continue to operate medical facilities where the 
Veteran population is small or shrinking. Our smallest hospitals often 
do not have sufficient patient volume and complexity of care 
requirements to maintain the clinical skills and competencies of 
physicians and nurses.
                    ensuring veterans access to care
    The President's 2017 Budget will allow VA to operate the largest 
integrated health care system in the country, including nearly 1,300 VA 
sites of health care and approximately 6 million Veterans receiving 
care; the eleventh largest life insurance provider, covering both 
active duty Servicemembers and enrolled Veterans; compensation and 
pension benefit programs serving more than 5.3 million Veterans and 
survivors; education benefits to more than one million students; 
vocational rehabilitation and employment benefits to more than 140,000 
disabled Veterans; a home mortgage program that will guarantee more 
than 429,000 new home loans; and the largest national cemetery system 
that leads the industry as a high-performing organization, with 
projections to inter more than 132,000 Veterans and family members in 
2017.
    The 2017 Budget requests $65 billion for medical care, an increase 
of $3.9 billion (6.3 percent) over the 2016 enacted level. The increase 
in 2017 is driven by Veterans' demand for VA health care as a result of 
demographic factors, economic assumptions, investments in access, and 
high priority investments for caregivers, new Hepatitis C treatments, 
and support for Veterans Health Information Systems and Technology 
Architecture (VistA) Evolution. The 2017 request supports programs to 
end and prevent Veteran homelessness, invests in strategic initiatives 
to improve the quality and accessibility of VA health care programs, 
continues implementation of the Caregivers and Veterans Omnibus Health 
Services Act, and provides for activation requirements for new or 
replacement medical facilities. The 2017 appropriations request 
includes an additional $1.7 billion above the enacted 2017 AA for 
Veterans medical care. The request assumes approximately $3.6 billion 
annually in medical collections in 2017 and 2018. For the 2018 Advance 
Appropriations for medical care, the current request is $66.4 billion.
Hepatitis C Treatment
    Although the Hepatitis C virus infection (HCV) takes years to 
progress, it is the main cause of advanced liver disease in the United 
States. Treatment of this disease remains a high priority because its 
cure dramatically lowers patients' risk of liver failure, liver cancer, 
and death.
    VA is the largest single provider of care in the Nation for chronic 
HCV, and over the next five years, VA will strive to provide treatment 
to all Veterans with HCV who are treatment candidates. For FY 2017, VA 
is requesting $1.5 billion for the cost of Hepatitis C drugs and 
clinical resources. With a budget of $1.5 billion in FY 2017, VA 
expects to treat 35,000 patients with HCV. At the beginning of FY 2016, 
almost 120,000 Veterans in VA care were awaiting HCV treatment, of whom 
approximately 30,000 have advanced liver disease.
    VA successfully negotiated extremely favorable pricing for both of 
the new treatments available--Harvoni and Viekira--from two different 
drug manufacturers by stressing VA's proven ability to deliver market 
share, VA's large HCV population, and the long-term impact that VA's 
physician residency programs can have on post-residency prescribing 
practices.
    During FY 2015, VA medical facilities treated more than 30,000 
Veterans for HCV with these new drugs with remarkable success, 
achieving cure rates of 90 percent, similar to those seen in clinical 
trials.
    VA clinicians have rapidly adopted new, more effective therapies 
for HCV as they have become available. New therapies are costly and 
require well-trained clinical providers and support staff, presenting 
resource challenges for the Department. VA will focus resources on the 
sickest patients and most complex cases and continue to build capacity 
for treatment through clinician training and use of telehealth 
platforms. Patients with less advanced disease are being offered 
treatment through the Veterans Choice program in partnership with 
community HCV providers.
Care in the Community
    VA is committed to providing Veterans access to timely, high-
quality health care. The 2017 Budget includes $12.2 billion for Care in 
the Community and includes a new Medical Community Care budget account, 
consistent with the VA Budget and Choice Improvement Act (P.L. 114-41). 
Of the total that will be spent on non-VA care in FY 2017, $7.5 billion 
will be provided through a transfer of the 2017 enacted AA from the 
Medical Services account to the new budget account, and $4.7 billion 
will be provided through the resources provided in the Veterans Choice 
Act for implementation of the Veterans Choice Program.
    The Choice Act increased VA's in-house capacity by funding medical 
personnel growth in VA facilities and expanded eligibility for Care in 
the Community to ensure access to care within 30 days and to provide 
care closer to home for enrollees residing more than 40 miles from a VA 
facility (the 40-mile group).
    This additional capacity facilitated an increase in enrollees' 
reliance on VA health care by more than half a percent over the level 
expected in FY 2015. This growth was the result of enrollees increasing 
their use of VA funded health care versus their use of other health 
care options (Medicare, Medicaid, commercial insurance, etc.).
    The FY 2015 growth in enrollee reliance was largely in Care in the 
Community, with the 40-mile group generating a more significant 
increase in care:

     In FY 2015, enrollees' reliance on VA health care 
increased by 0.7 percent overall. Reliance for the 40-mile group 
increased by 2.8 percent from 32.5 percent to 35.3 percent.
     The increase in reliance was mostly driven by growth in 
Care in the Community. Cost sharing levels in VA are lower than what is 
typically available elsewhere, which provides an incentive for 
enrollees to use VA-paid Care in the Community.
    Enrollee reliance on VA health care is expected to continue to 
increase in 2016 and beyond to service the unmet demand that the Choice 
Act was enacted to address.
    On October 30, 2015, VA provided Congress with a plan for the 
consolidation and improvement of all purchased care programs into one 
New Veterans Choice Program (New VCP). Consistent with this report, the 
2017 Budget will include legislative proposals to streamline and 
improve VA's delivery of Community Care.
Caregiver Support Program
    Caregivers give their time and love in countless behind-the-scenes 
ways. Whether they are helping with transportation to and from 
appointments, helping the Veteran apply for benefits, or helping with 
meals, bathing, clothing, medication, the spectrum of care is wide and 
compassion runs deep.
    The 2017 Budget requests $725 million for the National Caregivers 
Support Program to support nearly 36,600 caregivers, up from about 
30,600 in FY 2016. Funding requirements for caregivers are driven by an 
increase in the eligible Veteran population, with caregiver enrollment 
increasing by an average of about 500 each month.
                      ending veteran homelessness
    The ambitious goal of ending Veteran homelessness has galvanized 
the Federal Government and local communities to work together to solve 
this important National problem. Our systems are designed to help 
prevent homelessness whenever possible, and our goal is a systematic 
end to homelessness, meaning that there are no Veterans sleeping on our 
streets and every Veteran has access to permanent housing. Should 
Veterans become homeless or be at-risk of becoming homeless, there will 
be capacity to quickly connect them to the help they need to achieve 
housing stability.
    The 2017 Budget supports VA's commitment to ending Veteran 
homelessness by emphasizing rescue for those who are homeless today and 
prevention for those at risk of homelessness. The 2017 Budget requests 
$1.6 billion for VA homeless-related programs, including case 
management support for the Department of Housing and Urban Development 
(HUD)-VA Supportive Housing program (HUD-VASH), the Grant and Per Diem 
Program, VA justice programs, and the Supportive Services for Veteran 
Families program.
    In FY 2015 and FY 2016, VA committed more than $1.5 billion 
annually to strengthen programs that prevent and end homelessness among 
Veterans. Communities that have reached the goal or are close to 
effectively ending homelessness rely heavily on VA targeted homeless 
resources. Communities that have a sustainment plan are depending on 
those resources to be available as they continue to tackle homelessness 
and sustain the support for Veterans who have moved into permanent 
housing, ensuring that they maintain housing stability and do not fall 
back into homelessness.
    VA will continue to advocate for its continuum of homeless services 
to address the needs associated with preventing first-time 
homelessness, as well as the needs of those who return to homelessness, 
and focus on the root causes associated with homelessness, including 
poverty, addiction, mental health, and disability.
    Congress has an important role, as well, in ensuring adequate 
resources to meet the needs of those most vulnerable Veterans by 
enacting authorizations and other legislation to provide VA with a full 
complement of tools to combat homelessness--including legislation that 
is a prerequisite to carry out dramatic improvements to our West Los 
Angeles campus centered on the needs of Veterans.
                           benefits programs
    The 2017 Budget requests $2.8 billion and 22,171 FTE for VBA 
General Operating Expenses, an increase of $93.4 million (3.4 percent) 
over the 2016 enacted level. The request includes an additional 300 
full-time equivalent (FTE) employees for non-rating claims.
    With the resources requested in the 2017 Budget, VA will provide:

     Disability compensation and pension benefits for 5.3 
million Veterans and survivors, totaling $86 billion;
     Vocational rehabilitation and employment benefits to 
nearly 141 thousand disabled Veterans, totaling $1.4 billion;
     Education benefits totaling $14 billion to more than one 
million Veterans and family members;
     Guaranty of more than 429,000 new home loans; and
     Life insurance coverage to 1.0 million Veterans, 2.2 
million Servicemembers, and 2.8 million family members.

    Improving the quality and timeliness of disability claim decisions 
has been integral to VBA's transformation of benefits delivery. VBA 
successfully streamlined a complex and paper-bound compensation claims 
process and implemented people, process, and technology initiatives 
necessary to optimize productivity and efficiency. In alignment with 
the MyVA initiative, VBA is working to further improve its operations 
with a focus on the customer experience. We are implementing 
enhancements to enable integration across our programs and 
organizational components, both inside and outside of VBA.
    VBA has processed an unprecedented number of rating claims in 
recent fiscal years (nearly 1.4 million in 2015, and more than 1 
million per year for the last 6 years). However, its success has 
resulted in other unmet workload demands. As VBA continues to receive 
and complete more disability rating claims, the volume of non-rating 
claims, appeals, and fiduciary field examinations increases 
correspondingly.
     Non-rating claims. VA completed nearly 37 percent more 
non-rating work in 2015 than 2013--and 15 percent more than 2014. The 
2017 Budget requests $29.1 million for an additional 300 non-rating 
claims processors to reduce the non-rating claims inventory and provide 
Veterans with more timely decisions on non-rating claims.
     Appeals. Over the last 20 years, appeal rates have 
continued to hold steady at between 11 and 12 percent of completed 
claims. As VBA continues to receive and complete record-breaking 
numbers of disability rating claims, the volume of appeals 
correspondingly increases. As of December 31, 2015, there were more 
than 440,000 benefits-related appeals pending in the Department at 
various stages in the multi-step appeals process, which divides 
responsibility between VBA and the Board of Veterans' Appeals (Board)--
355,803 of those benefits-related appeals are in VBA's jurisdiction and 
85,682 are within the Board's jurisdiction.
    Under current law, VA appeals framework is complex, ineffective, 
and opaque, and veterans wait on average 5 years for final resolution 
of an appeal. The 2017 Budget supports the development of a Simplified 
Appeals Process to provide veterans with a simple, fair, and 
streamlined appeals procedure in which they would receive a final 
appeals decision within 365 days from filing of an appeal by FY 2021. 
The 2017 Budget provides funding to support over 900 FTE for the Board 
and proposes a legislative change that will improve an outdated and 
inefficient process which will benefit all veterans through expediency 
and accuracy. We look forward to working with Congress, Veterans, and 
other stakeholders to implement improvements.
     Fiduciary program. The fiduciary program served 29 percent 
more beneficiaries in 2015 than it served in 2014. Program growth is 
primarily due to an increase in the total number of individuals 
receiving VA benefits and an aging population of beneficiaries. 
Additionally, in 2015 the fiduciary program changed the way it captures 
beneficiary population data and now reports all beneficiaries served 
during the course of the fiscal year. In 2015, fiduciary personnel 
conducted more than 84,000 field examinations, and VBA anticipates 
field examination requirements will exceed 97,000 in 2017.
     Housing program. The 2017 Budget includes $34 million for 
the VA Loan Electronic Reporting Interface (VALERI) to manage the 2.4 
million VA-guaranteed loans for Veterans and their families. VALERI 
connects VA with more than 320,000 Veteran borrowers and more than 
225,000 mortgage servicer contacts. VA uses the VALERI tool to manage 
and monitor efforts taken by private-sector loan servicers and VA staff 
in providing timely and appropriate loss mitigation assistance to 
defaulted borrowers. Without these resources, approximately 90,000 
Veterans and their families would be in jeopardy of losing their homes 
each year, potentially costing the government an additional $2.8 
billion per year. VALERI also supports payment of guaranty and 
acquisition claims.

    The Budget requests the following advance appropriations amounts 
for 2018: $90.1 billion for compensation and pensions, $13.7 billion 
for readjustment benefits, and $107.9 million for insurance and 
indemnities. VA will continue to closely monitor workload and monthly 
expenditures in these programs and will revise cost estimates as 
necessary in the Mid-Session Review of the 2017 Budget, to ensure the 
enacted advance appropriation levels are sufficient to address 
anticipated veteran needs throughout the year.
                   the simplified appeals initiative
    The current VA appeals process is broken. The more than 80-year-old 
process was conceived in a time when medical treatment was far less 
frequent than it is today, so it is encumbered by some antiquated laws 
that have evolved since WWI and steadily accumulated in layers.
    Under current law, the VA appeals framework is complex, 
ineffective, confusing, and understandably frustrating for Veterans who 
wait much too long for final resolution of their appeal. The current 
appeals system has no defined endpoint, and multiple steps are set in 
statute. The system requires continuous evidence gathering and multiple 
re-adjudications of the very same or similar matter. A Veteran, 
survivor, or other appellant can submit new evidence or make new 
arguments at any time, while VA's duty to assist requires continuous 
development and re-adjudication. Simply put, the VA appeals process is 
unlike other standard appeals processes across Federal and judicial 
systems.
    Fundamental legislative reform is essential to ensure that Veterans 
receive timely and quality appeals decisions, and we must begin an 
open, honest dialog about what it will take for us to provide Veterans 
with the timely, fair, and streamlined appeals decisions they deserve. 
To put the needs, expectations, and interests of Veterans and 
beneficiaries first--a goal on which we can all agree--the appeals 
process must be modernized.

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    The 2017 Budget proposes a Simplified Appeals Process--legislation 
and resources (i.e., people, process, and technology) that would 
provide Veterans with a simple, fair, and streamlined appeals process 
in which they would receive a final decision on their appeal within one 
year from filing the appeal by FY 2021.
    The 2017 Budget requests $156.1 million and 922 FTE for the Board, 
an increase of $46.2 million and 242 FTE above the FY 2016 enacted 
level. This is a down-payment on a long-term, sustainable plan to 
provide the best services to Veterans. This policy option also 
represents the best value to taxpayers (as outlined in the chart, 
Analysis of Alternatives).
    Without legislative change or significant increases in staffing, VA 
will face a soaring appeals inventory, and Veterans will wait even 
longer for a decision on their appeal. If Congress fails to enact VA's 
proposed legislation to simplify the appeals process, Congress would 
need to provide resources for VA to sustain more than double its 
appeals FTE, with approximately 5,100 appeals FTE onboard. The prospect 
of such a dramatic increase, while ignoring the need for structural 
reform, is not a good result for Veterans or taxpayers.

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     Simplified Appeals Process: Ramp Up and Long-Term Sustainment

    While the Simplified Appeals proposal would require FTE increases 
for the first several years to resolve the more than 440,000 currently 
pending appeals, by 2022, VA would be able to reduce appeals FTE to a 
sustainment level of roughly 1,030 FTE (including 980 FTE at the Board 
and 50 at VBA), a level sufficient to process all simplified appeals in 
one year. Notably, such a sustainment level is 1,135 FTE less than the 
current 2016 budget requires, and is 4,070 FTE less Department-wide 
than would be required to address this workload with FTE resources 
alone. In addition, this reform would essentially eliminate the need 
for appeals FTE at VBA, allowing these resources to be redirected 
within VBA to other priorities.
    In 2015, the Board was still adjudicating an appeal that originated 
25 years ago, even though the appeal had previously been decided by VA 
more than 27 times. Under the Simplified Appeals Process, most Veterans 
would receive a final appeals decision within one year of filing an 
appeal. Additionally, rather than trying to navigate a multi-step 
process that is too complex and too difficult to understand, Veterans 
would be afforded a transparent, single-step appeal process with only 
one entity responsible for processing the appeal.

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  In today's Convoluted Appeals Process, Veterans Wait 5 Years for a 
                                Decision

    Essentially, under a simplified appeals process, as soon as a 
Veteran files an appeal, the case would go straight to the Board where 
a Judge would review the same record considered by the initial 
decisionmaker and issue a final decision within one year; informing the 
Veteran whether that initial decision was substantially correct, 
contained an error that must be corrected, or was simply wrong. If a 
Veteran disagrees with any or all of the final appeals decision, the 
Veteran always has the option of filing a new claim for the same 
benefit once the appeal is resolved, or may pursue an appeal to the 
Court of Appeals for Veterans Claims.
    Rapid growth in the appeals workload exacerbates this challenge. As 
VBA has produced record-setting claims-decision output over the past 
five years, appeals volume has grown commensurately. Between 
December 2012 and November 2015, the number of pending appeals rose by 
34 percent. Under current law with no radical change in resources, the 
number of pending appeals is projected to soar by 397 percent--from 
437,000 to 2.17 million (chart, Status of Appeals)--between 
November 2015 and FY 2027.

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    VA firmly believes that justice delayed is justice denied. In the 
streamlined appeals process proposed in the FY 2017 President's Budget 
(chart, Proposed Simplified Appeals), there would be a limited 
exception allowing the Board to remand appeals to correct duty to 
notify and assist errors made on the part of the Agency of Original 
Jurisdiction (AOJ) prior to issuance of the initial AOJ decision.

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                    medical and prosthetic research
    The 2017 Budget continues VA's program of groundbreaking, high 
standard research focused on advancing the health care needs of all 
Veterans. The 2017 Budget requests $663 million for Medical Research 
and supports the President's Precision Medicine Initiative (PMI) to 
drive personalized medical treatment and the evolving science of 
Genomic Medicine--how genes affect health. In addition to the direct 
appropriation, Medical Research will be supported through $1.3 billion 
from VA's Medical Care program and other Federal and non-Federal 
research grants. Total funding for Medical and Prosthetic Research will 
be more than $2.0 billion in 2017.
    VA research is focused on the U.S. Veteran population and allows VA 
to uniquely address scientific questions to improve Veteran health 
care. Most VA researchers are also clinicians and health care providers 
who treat patients. Thus, VA research arises from the desire to heal 
rather than pure scientific curiosity and yields remarkable returns.

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                The First Powered Ankle-Foot Prosthesis

    For more than 90 years, VA research has produced cutting-edge 
medical and prosthetic breakthroughs that improve the lives of Veterans 
and others. The list of accomplishments includes therapies for 
tuberculosis following World War II, the implantable cardiac pacemaker, 
computerized axial tomography (CAT) scans, functional electrical 
stimulation systems that allow patients to move paralyzed limbs, the 
nicotine patch, the first successful liver transplants, the first 
powered ankle-foot prosthesis, and a vaccine for shingles. VA 
researchers also found that one aspirin a day reduces by half the rate 
of death and nonfatal heart attacks in patients with unstable angina. 
More recently, VA investigators tested an insulin nasal spray that 
shows great promise in warding off Alzheimer's disease and found that 
prazosin (a well-tested generic drug used to treat high blood pressure 
and prostate problems) can help improve sleep and lessen nightmares for 
those with Post Traumatic Stress Disorder.
    Beyond VA's support of more than 2,200 continuing research 
projects, VA will leverage our Million Veteran Program (MVP)--already 
one of the world's largest databases of genetic information--to support 
several Precision Medicine Initiatives. The first initiative will 
evaluate whether using a patient's genetic makeup to inform medication 
selection is effective in reducing complications and getting patients 
the most effective medication for them. This initiative will focus on 
up to 21,500 Veterans with PTSD, depression, pain, and/or substance 
abuse.

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                VA's Million Veteran Program Recruitment

    The second initiative will focus on additional analysis of DNA 
specimens already collected in the MVP. More than 438,000 Veteran 
volunteers have contributed DNA samples so far. Genomic analysis on 
these DNA specimens allows researchers to extract critical genetic 
information from these specimens. There are several possible ``levels'' 
of genomic analyses, with increasing cost.
    Built into the design of MVP and currently funded within the VA 
research program is a process known as ``exome chip'' genotyping--the 
tip of the iceberg in genomic analysis. Exome Chip genotyping provides 
useful information, but newer technologies promise significantly 
greater information for improving treatments. VA proposes conducting 
the next level of analysis, known as ``exome sequencing,'' on up to 
100,000 Veterans who are enrolled in MVP. This exome sequencing 
analyzes the part of the genome that codes for proteins--the large, 
complex molecules that perform most critical functions in the body. 
Sequencing efforts will begin with a focus on Veterans with PTSD and 
frequently co-occurring conditions such as depression, pain, and 
substance abuse, and expand to other chronic illnesses such as diabetes 
and heart disease, among others. This more detailed genetic analysis 
will provide greater information on the biological factors that may 
cause or increase the risk for these illnesses.
    VA's research and development program improves the lives of 
Veterans and all Americans through health care discovery and 
innovation.
                            other priorities
Information Technology
    The 2017 Budget demonstrates VA's commitment to using cutting-edge 
information technology (IT) to support transformation and ensure that 
the Veteran is at the center of everything we do. The Budget requests 
$4.28 billion--an increase of $145 million (3.5 percent) from the 2016 
enacted level--to help stabilize and streamline core processes and 
platforms, eliminate the information security material weakness, and 
institutionalize new capabilities to deliver improved outcomes for 
Veterans. The request includes $471 million for new efforts to develop, 
improve, and enhance clinical and benefits systems and processes and 
supports VA's strategy to replace FMS. The 2017 Budget was developed 
through Federal IT Acquisition Reform Act (FITARA) compliant processes 
led by the Chief Information Officer (CIO), in concert with the Chief 
Financial Officer and Chief Acquisition Officer.
    In FY 2015, the Office of Information and Technology (OIT) 
developed an IT Enterprise Strategy and an Enterprise Cybersecurity 
Strategy. These strategies support OIT's vision to become a world-class 
organization that provides a seamless, unified Veteran experience 
through the delivery of state-of-the-art technology. OIT is 
implementing a new IT Security Strategy to improve VA's security 
posture and eliminate the Federal Information Security Management Act/
Federal Information System Controls Audit Manual material weakness.
    The 2017 Budget includes $370.1 million for information security, 
an increase of 105 percent over the FY 2016 funding level. In addition, 
the 2017 Budget includes $50 million to launch a new Data Management 
program to use data as a strategic resource. Under this program, VA 
will inventory its data collection activities--with the objective of 
requesting data from the Veteran only once--and dispose expired 
information in a secure and timely way. These two aspects will reduce 
VA costs for data storage and support safeguards for Veterans' 
information.
National Cemetery Administration
    The National Cemetery Administration (NCA) has the solemn duty to 
honor Veterans and their families with final resting places in national 
shrines and with lasting tributes that commemorate their service and 
sacrifice to our Nation. The 2017 Budget requests $286 million, an 
increase of $15 million (5.5 percent) to allow VA to provide perpetual 
care for more than 3.5 million gravesites and more than 8,800 developed 
acres. The Budget supports NCA's efforts to raise and realign 
gravesites and repair turf in order to maintain cemeteries as national 
shrines. The Budget also continues implementation of a Geographic 
Information System to enable enhanced accounting of remains and 
gravesites and enhanced gravesite location for visitors. The Budget 
positions NCA to meet Veterans' emerging burial and memorial needs in 
the decades to come by ensuring that Veterans and their families 
continue to have convenient access to a burial option in a National, 
state, or tribal Veterans cemetery and that the service they receive is 
dignified, respectful, and courteous.
                           va infrastructure
    The 2017 Budget requests $900.2 million for VA's Major and Minor 
construction programs. The Budget invests in infrastructure projects at 
existing campuses that will lead to seismically safe facilities, 
ensuring that Veterans are safe when they seek care. The capital asset 
budget request demonstrates VA's commitment to address critical Major 
construction projects that directly affect patient safety and seismic 
issues, and reflects VA's promise to provide safe and secure facilities 
for Veterans. The 2017 Budget also requests funding to ensure that VA 
has the ability to provide eligible Veterans with access to burial 
services through new and expanded cemeteries, and prevent the closure 
to new interments in existing cemeteries.
    VA acknowledges the transformation underway in the landscape for 
health care delivery. Our future space needs may be impacted by the 
changes we are already implementing in how we deliver care for 
Veterans. In addition, we plan to potentially incorporate any 
recommendations from the Commission on Care and their impact on our 
changing service delivery into our long-term infrastructure strategy.
    Leasing provides flexibility and enables VA to more quickly adapt 
to changes in medical technology, workload, new programs, and 
demographics. VA is also looking to Congress for authorization of 18 
leases submitted in VA's FY 2015 and 2016 Budget requests. The pending 
major medical facility lease projects will replace, expand, or create 
new outpatient clinics and research facilities and are critical for 
providing access for Veterans and enhancing our research capabilities 
nationwide. The 2017 Budget includes a request to authorize six 
additional replacement major medical facility leases under VA's 
authority in 38 U.S.C. Sec. Sec. 8103 and 8104 and with the anticipated 
delegation of leasing authority from the General Services 
Administration. The Department is awaiting authorization of its request 
to expand the definition of ``Medical Facilities'' in VA's authorizing 
statutes to allow VA to more easily partner with other Federal 
agencies. Another proposal that deserves attention is authorization of 
enhanced use lease (EUL) authority to encompass broader possibilities 
for mixed-use projects. This change would give VA more opportunities to 
engage the private sector, local governments, and community partners by 
allowing VA to use underutilized property that would benefit Veterans 
and VA's mission and operations.
Major Construction
    The 2017 Budget requests $528.1 million for Major Construction. The 
request includes funds to address seismic problems in facilities in 
Long Beach, California, and Reno, Nevada. These projects will correct 
critical safety and seismic deficiencies that pose a risk to Veterans, 
VA staff, and the public. Consistent with Public Law 114-58, the 
Department must identify a non-VA entity to execute these two projects, 
as they are more than $100 million. We have identified the U.S. Army 
Corps of Engineers as our construction agent to execute these projects.
    We must prevent the devastation and potential loss of life that may 
occur because our facilities are vulnerable to earthquakes--such as the 
one that occurred in 1971 in San Fernando, California. As shown, a 6.5-
magnitude earthquake caused two buildings in the San Fernando Medical 
Center to collapse and 46 patients and staff to lose their lives.

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               San Fernando Medical Center collapse, 1971

    These images show a known seismic deficiency at the San Francisco 
Medical Center--built in 1933--wherein the rebar does not extend into 
the ``pile cap.''

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               San Fernando Medical Center collapse, 1971

    The request also includes funding for new national cemeteries in 
western New York and southern Colorado, and national cemetery 
expansions in Jacksonville, Florida and South Florida. These cemetery 
projects support NCA's goal to ensure that eligible Veterans have 
access to a burial option within a reasonable distance from their 
residences.
     The new western New York national cemetery will establish 
a dignified burial option for more than 96,000 Veterans plus eligible 
family members in the western New York region.
     The new southern Colorado national cemetery will establish 
a dignified burial option for more than 95,000 Veterans plus eligible 
family members in the southern Colorado region.
     The Jacksonville National Cemetery expansion will develop 
approximately 30 acres of undeveloped land to provide approximately 
20,200 gravesites.
     The South Florida National Cemetery expansion will develop 
approximately 25 acres of undeveloped land to provide approximately 
21,750 gravesites.
Minor Construction
    In 2017, the Budget requests $372 million for Minor Construction. 
The requested amount would provide funding for ongoing projects that 
renovate, expand and improve VA facilities, while increasing access for 
our Veterans. Examples of projects include enhancing women's health 
programs; providing additional domiciliaries to further address 
Veterans' homelessness; improving safety; mitigating seismic 
deficiencies; transforming facilities to be more Veteran-centric; 
enhancing patient privacy; and enhancing research capabilities.
    The Minor Construction request will also provide funding for 
gravesite expansion and columbaria projects to keep existing national 
cemeteries open, and will support NCA's urban and rural initiatives. It 
will also provide funding for projects at VBA regional offices 
nationwide and will fund infrastructure repairs and enhancements to 
improve operations for the Department's staff offices.
Leasing
    The 2017 Budget includes a request to authorize six replacement 
major medical facility leases located in Corpus Christi, Texas; 
Jacksonville, Florida; Pontiac, Michigan; Rochester, New York; Tampa, 
Florida; and Terre Haute, Indiana. These leases will allow VA to 
provide continued access to Veterans that are served in these 
locations.
                          MyVA Transformation
    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. 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, or 
support staffer, or the Secretary of Veterans Affairs--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.

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    The FY 2017 budget will make investments toward the five critical 
MyVA objectives:

    1. Improving the Veteran experience: At a bare minimum, every 
contact between Veterans and VA should be 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 experience. 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 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 of 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.
Breakthrough Priorities for CY 2016
    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.''
    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.

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    The following are our 12 priorities 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 and creating irreversible momentum to continue the 
transformation in future years.
                         Veteran Facing Goals:
1. Improve the Veteran Experience.
     Breakthrough Outcome for 2016:

        - Strengthen the 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 
        more than 100.
        - Additionally, in order to deliver experiences to Veterans 
        that are effective, easy, and in which Veterans feel valued, 
        medical centers will ensure that they are fully staffed at the 
        frontline with well-prepared employees who have been selected 
        for their customer service. 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 onboarding and training 
        program.
2. Increase Access to Health Care.
     Breakthrough Outcome for 2016:

        - When Veterans call or visit primary care facilities at a VA 
        Medical Center, their clinical needs will be addressed the same 
        day.
        - When Veterans call for a new mental health appointment, they 
        receive a suicide risk assessment and immediate care if needed. 
        Veterans already engaged in mental health care identifying a 
        need for urgent attention will speak with a provider the same 
        day.
        - Utilizing existing VistA technology, 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.
3. Improve Community Care.
     Breakthrough Outcome for 2016: Improve the Veterans' 
experience with Care in the Community. Following enactment of our 
requested 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.
        - Health care 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.
     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.
        - Vets.gov will be data-driven and designed such that the top 
        100 search terms will be available within one click from search 
        results. The top 100 search terms will all be addressed within 
        one click on the site.
        - 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, in priority order 
        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).
     Breakthrough Outcome for 2016:

        - Veterans will have a single toll free phone number to access 
        the VA Contact Centers, 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.
        - By the end of this year, every Veteran in crisis will have 
        his or her call promptly answered by an experienced responder 
        at the Veterans Crisis Line.
6. Improve the Compensation & Pension (C&P) Exam Process.
     Breakthrough Outcome for 2016:

        - Improved Veteran satisfaction with the C&P Exam process. We 
        have a baseline satisfaction metric in place and have 
        established a goal for significant improvement.
        - VA will have a national rollout of initiatives to ensure the 
        experience is standardized across the Nation.
7. Develop a Simplified Appeal Process.
     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.
     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 the Employee Experience (Including Leadership Development).
     Breakthrough Outcome for 2016:

        - Continue to improve the 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.
        - More than 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's 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.
     Breakthrough Outcome for 2016:

        - Achieve significantly improved critical staffing levels that 
        balance access and clinical productivity, with targets of 95 
        percent of 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'' hiring standards by 30 
        percent.
11. Transformation the Office of Information & Technology (OIT).
     Breakthrough Outcome for 2016: Achieve the following key 
milestones on the path to creating a world-class IT organization that 
improves the support to business partners and Veterans.
        - Begin measuring IT projects based on end product delivery, 
        starting with a near-term goal to complete 50 percent of 
        projects on time and on budget.
        - Stand up an account management office.
        - Develop portfolios for all Administrations.
        - Tie all supervisors' and executives' performance goals to 
        strategic 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.
        - 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.
     Breakthrough Outcome for 2016:

        - 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. More than 
        $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.
                         legislative priorities
    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:

    1. Improve Care in the Community: We need your help, as discussed 
on many occasions, to help overhaul our Care in the Community programs. 
VA staff and subject matter experts have communicated regularly with 
congressional staff to discuss concepts and concerns as we shape the 
future 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 more than 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. These restrictions limit 
VA's ability to deliver Veteran care and benefits based on demand, 
rather than specific funding lines. The 2017 Budget proposes language 
to provide VA with new authority to transfer up to two percent of the 
discretionary appropriations for fiscal year 2017 between any of VA's 
discretionary appropriations accounts. This new authority would give VA 
greater ability to address emerging needs and overcome artificial 
funding restrictions on providing Veterans' care and benefits.
    3. Support for the Purchased Health Care Streamlining and 
Modernization Act: This legislation would clarify VA's ability to 
contract with providers in the community on an individual basis, 
outside of Federal Acquisition Regulations (FAR), without forcing 
providers to meet excessive compliance burdens, while maintaining 
essential worker protections. The proposal allows this option only when 
care directly from VA or from a non-VA provider with a FAR-based 
agreement in place is not feasibly available. Already, we have seen 
certain nursing homes not renew their agreements with VA because of the 
excessive compliance burdens, and as a result, Veterans are forced to 
find new nursing home 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 
inconsistent 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 
requested legislation to provide enhanced use leasing authority that is 
necessary to implement the Master Plan for our West Los Angeles Campus. 
That plan represents a significant and positive step for Veterans in 
the Greater West Los Angeles area, especially those who are most in 
need. We appreciate the Committee's hearing in December 2015 on 
legislation to implement that Master Plan, and VA urges your support 
for expedited consideration of this bill to secure enactment of it in 
this session of Congress. Enactment of the legislation will allow us to 
move forward and get positive results for the area's Veterans after 
years of debate in the community and court action. 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: As mentioned earlier, VA 
needs legislation that sets out structural reforms that will allow VBA 
and the Board to provide Veterans with the timely, fair, and quality 
appeals decisions they deserve thereby addressing the growing inventory 
of appeals.

    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 who serve Veterans.
    Our dedicated VA employees, if given the right tools, training, and 
support, can and go out of their way to provide the best care possible 
to our Veterans and their families.
                                closing
    VA exists to serve Veterans. We have spent the last year and a half 
working to find new and better ways to provide high quality care and 
administer benefits effectively and efficiently through responsible use 
of taxpayer dollars. We will continue to face enormous challenges, and 
this budget request will provide the resources needed to continue the 
transformation of this Department.
    This budget and associated legislative proposals will allow us to 
streamline care for Veterans and improve access by addressing existing 
gaps, develop a simplified appeals process, further the progress we 
have made to eliminate the VBA claims backlog and end Veteran 
homelessness, and improve our cyber security posture to protect Veteran 
and employee data. It will also allow us to continue implementing MyVA 
to guide overall improvements to VA's culture, processes, and 
capabilities.
    I have pledged that VA will ensure that the funds Congress 
appropriates to VA will be used to improve both the quality of life for 
Veterans and the efficiency of our operations. I am proud to continue 
this work and recognize there is much left to be done. We have made 
great strides and are grateful for the support of Congress through this 
transformation.

    Thank you for the opportunity to appear before you today and for 
your continued steadfast support of Veterans. We look forward to your 
questions.
                                 ______
                                 
 Response to Prehearing Questions Submitted by Hon. Johnny Isakson to 
                the U.S. Department of Veterans Affairs
    Question 1.  Women veteran gender-specific health care increased 
$40.4 million between fiscal years 2016 and 2017. Please break out the 
amount allocated to each category included under gender-specific health 
care for fiscal year 2016 as well as projections for fiscal year 2017.
    Please see attached.

                                 Sub Categories of Women's Gender Specific Care
----------------------------------------------------------------------------------------------------------------
                                                                                                  $         %
                                                              FY 2015    FY 2016    FY 2017   Increase  Increase
----------------------------------------------------------------------------------------------------------------
Genitourinary Care.........................................   $155,805   $167,175   $180,943   $13,768     7.6%
Neoplasms..................................................    $76,458    $82,550    $90,313    $7,763     8.6%
Osteoporosis...............................................    $13,330    $14,352    $15,686    $1,334     8.5%
Pregnancy and Childbirth...................................    $73,138    $82,986    $94,041   $11,055    11.8%
Women's Clinics............................................   $120,095   $127,953   $134,405    $6,452     4.8%
                                                            ----------------------------------------------------
  Subtotal.................................................   $438,825   $475,016   $515,387   $40,371
----------------------------------------------------------------------------------------------------------------


                          Percent of Gender Specific Care Provided through non-VA care
----------------------------------------------------------------------------------------------------------------
                                                        FY 2015    FY 2016    FY 2017
----------------------------------------------------------------------------------------------------------------
Genitourinary Care...................................        14%        15%        15%
Neoplasms............................................        42%        43%        44%
Osteoporosis.........................................        16%        17%        19%
Pregnancy and Childbirth.............................        72%        73%        73%
Women's Clinics......................................         0%         0%         0%
----------------------------------------------------------------------------------------------------------------


                         Days from Birth to last service provided in VHA or non-VA care
----------------------------------------------------------------------------------------------------------------
                                                        FY 2015    FY 2016    FY 2017
----------------------------------------------------------------------------------------------------------------
Neonates.............................................       9.74       9.74       9.74
----------------------------------------------------------------------------------------------------------------


    Question 2.  What percentage of women veteran specific care is 
provided at Department of Veterans Affairs (VA) facilities and what 
percentage is provided through non-VA care? Please break out each 
category included under gender-specific health care for fiscal year 
2016 as well as projections for fiscal year 2017.
    Response. Below are the disbursements for the following categories 
of women Veteran specific care as of February 13, 2016 as well as 
projections for the remainder of FY 2016 and FY 2017.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Question 3.  Please detail the total number of medical centers that 
have a gynecologist on staff and whether they are full-time, part-time, 
or contracted. Please provide a break out of facilities and their 
surgical complexity.
    Response. As of February 11, 2016, there are 80 health care systems 
with at least one full-time or part-time gynecologist on staff. A 
listing of all Inpatient and Ambulatory VHA surgery programs and their 
operative complexity designations is below, and available on the 
internet at the following web site http://www.va.gov/health/surgery/

 
------------------------------------------------------------------------
                                     Veterans
                                    Integrated
  VHA Surgical Program Location      Service       Operative Complexity
                                     Network           Designation
                                      (VISN)
------------------------------------------------------------------------
Anchorage, AK...................  20             Ambulatory-Basic
Birmingham, AL..................  7              Complex
Montgomery, AL..................  7              Standard
Fayetteville, AR................  16             Intermediate
Little Rock, AR.................  16             Complex
Phoenix, AZ.....................  18             Complex
Tucson, AZ......................  18             Complex
Fresno, CA......................  21             Intermediate
Martinez, CA....................  21             Ambulatory-Advanced
Sacramento, CA..................  21             Complex
Palo Alto, CA...................  21             Complex
San Francisco, CA...............  21             Complex
Loma Linda, CA..................  22             Complex
Long Beach, CA..................  22             Complex
San Diego, CA...................  22             Complex
West Los Angeles, CA............  22             Complex
Denver, CO......................  19             Complex
Grand Junction, CO..............  19             Standard
West Haven, CT..................  1              Complex
Washington, DC..................  5              Complex
Wilmington, DE..................  4              Intermediate
Bay Pines, FL...................  8              Complex
Cape Coral, FL..................  8              Ambulatory-Basic
Gainesville, FL.................  8              Complex
Jacksonville, FL................  8              Ambulatory-Basic
Lake City, FL...................  8              Ambulatory-Advanced
Miami, FL.......................  8              Complex
Lake Baldwin, FL................  8              Ambulatory-Advanced
Tampa, FL.......................  8              Complex
Viera, FL.......................  8              Ambulatory-Basic
West Palm Beach, FL.............  8              Intermediate
Augusta, GA.....................  7              Complex
Atlanta, GA.....................  7              Complex
Dublin, GA......................  7              Standard
Des Moines, IA..................  23             Intermediate
Iowa City, IA...................  23             Complex
Boise, ID.......................  20             Intermediate
Danville, IL....................  11             Ambulatory-Basic
Chicago-Jesse Brown, IL.........  12             Complex
Hines, IL.......................  12             Complex
North Chicago, IL...............  12             Intermediate
Marion, IL......................  15             Standard
Evansville, IN..................  15             Ambulatory-Basic
Fort Wayne, IN..................  11             Standard
Indianapolis, IN................  11             Complex
Leavenworth, KS.................  15             Intermediate
Topeka, KS......................  15             Standard
Wichita, KS.....................  15             Intermediate
Lexington, KY...................  9              Complex
Louisville, KY..................  9              Complex
New Orleans, LA.................  16             Ambulatory-Advanced
Pineville, LA...................  16             Ambulatory-Advanced
Shreveport, LA..................  16             Complex
Boston-Jamaica Plain, MA........  1              Ambulatory-Advanced
West Roxbury, MA................  1              Complex
Baltimore, MD...................  5              Complex
Togus, ME.......................  1              Intermediate
Ann Arbor, MI...................  11             Complex
Detroit, MI.....................  11             Complex
Saginaw, MI.....................  11             Ambulatory-Basic
Iron Mountain, MI...............  12             Ambulatory-Basic
Minneapolis, MN.................  23             Complex
St. Cloud, MN...................  23             Ambulatory-Basic
Columbia, MO....................  15             Complex
Kansas City, MO.................  15             Complex
St. Louis, MO...................  15             Complex
Biloxi, MS......................  16             Intermediate
Jackson, MS.....................  16             Complex
Billings, MT....................  19             Ambulatory-Basic
Fort Harrison, MT...............  19             Intermediate
Asheville, NC...................  6              Complex
Durham, NC......................  6              Complex
Fayetteville, NC................  6              Standard
Salisbury, NC...................  6              Intermediate
Fargo, ND.......................  23             Intermediate
Omaha, NE.......................  23             Complex
Manchester, NH..................  1              Ambulatory-Basic
East Orange, NJ.................  3              Complex
Albuquerque, NM.................  18             Complex
Reno, NV........................  21             Intermediate
Las Vegas, NV...................  22             Intermediate
Albany, NY......................  2              Complex
Buffalo, NY.....................  2              Complex
Syracuse, NY....................  2              Complex
Bronx, NY.......................  3              Complex
Brooklyn, NY....................  3              Complex
Northport, NY...................  3              Complex
New York, NY....................  3              Complex
Cincinnati, OH..................  10             Complex
Cleveland-ASC, OH...............  10             Ambulatory-Basic
Cleveland, OH...................  10             Complex
Columbus, OH....................  10             Ambulatory-Advanced
Dayton, OH......................  10             Intermediate
Muskogee, OK....................  16             Intermediate
Oklahoma City, OK...............  16             Complex
Portland, OR....................  20             Complex
Roseburg, OR....................  20             Ambulatory-Basic
Erie, PA........................  4              Ambulatory-Advanced
Lebanon, PA.....................  4              Intermediate
Philadelphia, PA................  4              Complex
Pittsburgh, PA..................  4              Complex
Wilkes-Barre, PA................  4              Intermediate
San Juan, PR....................  8              Complex
Providence, RI..................  1              Intermediate
Charleston, SC..................  7              Complex
Columbia, SC....................  7              Intermediate
Fort Meade, SD..................  23             Standard
Hot Springs, SD.................  23             Ambulatory-Basic
Sioux Falls, SD.................  23             Intermediate
Memphis, TN.....................  9              Complex
Mountain Home, TN...............  9              Intermediate
Murfreesboro, TN................  9              Ambulatory-Advanced
Nashville, TN...................  9              Complex
Houston, TX.....................  16             Complex
Dallas, TX......................  17             Complex
Harlingen, TX...................  17             Ambulatory-Basic
San Antonio, TX.................  17             Complex
Temple, TX......................  17             Complex
Amarillo, TX....................  18             Intermediate
El Paso, TX.....................  18             Ambulatory-Basic
Salt Lake City, UT..............  19             Complex
Clarksburg, WV..................  4              Intermediate
Hampton, VA.....................  6              Intermediate
Richmond, VA....................  6              Complex
Salem, VA.......................  6              Intermediate
White River Junction, VT........  1              Intermediate
Seattle, WA.....................  20             Complex
Spokane, WA.....................  20             Standard
Tacoma, WA......................  20             Ambulatory-Basic
Green Bay, WI...................  12             Ambulatory-Basic
Madison, WI.....................  12             Complex
Milwaukee, WI...................  12             Complex
Martinsburg, WV.................  5              Intermediate
Beckley, WV.....................  6              Standard
Huntington, WV..................  9              Complex
Cheyenne, WY....................  19             Standard
------------------------------------------------------------------------


                    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                                                 
                                                
                                                 
                    Facility Gynecologists Raw Data


                    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
                   


    Question 4.  Current law allows VA to cover care for newborns of 
eligible women veterans for the first seven days after birth. Please 
provide a break out of the average number of days VA has covered care 
for newborns in fiscal years 2014, 2015, and 2016, and projections for 
fiscal year 2017.
    Response. Listed in the table below is the average number of days 
the VA has covered for newborn care since FY 2014. These averages are 
consistent with the number of days the newborn was actually 
hospitalized.

 
------------------------------------------------------------------------
                  FY                           Average Auth Days
------------------------------------------------------------------------
2014.................................  2.8
2015.................................  3.0
2016.................................  3.2
2017 (Projected).....................  3.4
------------------------------------------------------------------------


    Question 5.  In the fiscal year 2017 budget request, the Veterans 
Health Administration (VHA) will create the VHA Transitional Care 
Program Office ``to develop and manage policies, procedures and 
performance metrics related to VHA transitional care.''
    A. How many full-time equivalent employees will be dedicated to 
this office for fiscal years 2017 and 2018?
    B. How much budgetary resources will be dedicated to this new 
office for fiscal years 2017 and 2018?
    C. Please detail the duties of this new office, including to whom 
the office will report.
    Response. The VHA Transitional Care Program Office is an 
aspirational project for the future. However, there is no specific 
resource or budget request for it at this time.

    Question 6.  The fiscal year 2017 budget request indicates that VA 
overestimated by $1.8 billion the obligations for fiscal year 2015 
``because the obligations did not have sufficient supporting 
documents'' and specifies VA would continue to identify the 
appropriations account and issue corrective actions.
    A. Has VA identified the appropriations account? If so, please 
provide a detailed explanation of what caused the overestimate.
    Response. Our financial audit identified that VA appropriations 
were possibly overstated by $1.8 billion in obligations due to the lack 
of supporting documentation. The FY 2015 financial audit required that 
an adjustment be made, but the audit did not indicate which specific 
appropriation account should be adjusted.
    Most of the likely overestimate occurred due to a lack of the 
subsidiary system for Purchased Care not being directly interfaced/or 
reconciled to the main accounting system. Other overestimates occurred 
in other programs due to a lack of a robust review of obligation 
balances.

    B. What corrective actions has VA taken in this matter?
    Response. VA has begun implementing a new, mandatory reconciliation 
process for FY 2016 for Purchased Care. This new reconciliation process 
was outlined as part of the Care in the Community certification process 
in a memorandum from the Acting Deputy Under Secretary for Health 
Operations and Management to all Network Directors. The subsidiary 
accounting system will be reconciled to the main accounting system on a 
monthly basis, and supporting documentation will be maintained to 
support the reconciliation process. Documentation for obligations will 
also be reviewed for reasonableness and validity as part of the 
reconciliation process to ensure the most accurate obligation balances.
    Other programs will be performing a more comprehensive review of 
obligations for FY 2016 to ensure adequate supporting documentation 
exists for all substantial obligation balances.

    Question 7.  Please provide an update on VA's agreement with the 
United States Army Corps of Engineers (USACE) to manage the seven major 
construction projects identified in Public Law 114-113, the 
Consolidated Appropriations Act of 2016, and VA's plan to ensure all 
future new medical facilities with a cost of $100 million or greater 
are managed by USACE.
    Response. VA has established a master Inter-Agency Agreement (IAA) 
with the U.S. Army Corps of Engineers (USACE) which was signed on 
July 14, 2015. The scope of that IAA requires USACE to provide 
planning, acquisition, design, engineering, and construction management 
services and related work, including all levels of contracting, 
planning and project management support as defined by CFM for VA's 
``super construction projects'' (projects over $100 million). IAA 
orders can be issued to the USACE for Exploratory, Design, and 
Construction requirements. To date, there are seven projects that are 
partnered with USACE through an IAA Task Order, or are in the process 
of entering the initial task order phase. To ensure that all future 
partnered projects are effectively managed, CFM and USACE are jointly 
developing an Enterprise Program Management Plan that will provide a 
framework and consistent approach to managing these projects. A Senior 
Executive Review Group consisting of CFM and USACE participants is 
scheduled, and this meeting will allow the participants to further 
define the partnership and to ensure alignment of all teams in our 
joint effort to ensure on time, on schedule and within budget project 
execution.

    Question 8.  The budget indicates that VA expects to fund 328 
Caregiver Support Coordinators in 2016. Does the fiscal year 2017 
budget request include an increase in Caregiver Support Coordinators?
    Response. Yes. The budget request does include an increase in 
staffing for the Caregiver Support Program. VA expects to fund 400 
Caregiver Support Coordinators in FY 2017, an additional 72 positions.

    Question 9.  Despite a projected decrease in the number of veterans 
to be served by the Grant and Per Diem Program, the fiscal year 2017 
budget request represents an increase from fiscal year 2016. Is this 
solely based on the expected increase of the per diem rate, or are 
there other factors contributing to the increase? If so, please list 
the factors.
    Response. The FY 2017 budget request for the Grant and Per Diem 
(GPD) program restores program funding at the fully authorized level. 
Even though the demand for GPD transitional housing beds is expected to 
decrease over time, the program still plays a vital role in the 
continuum of homeless services; providing supportive services to those 
Veterans who would otherwise be among the unsheltered homeless 
population, and ultimately transitioning to permanent housing. GPD 
funded providers have not had an increase in the per diem rate since 
December 2013; therefore, per diem costs for the program are 
anticipated to rise overall for operational programs as the nightly 
cost for per diem increases in the community.
    VA and its Federal partners are promoting the use GPD to support an 
operational model of transitional housing as bridge housing. Bridge 
housing, is defined as transitional housing used as a short-term stay 
when a Veteran has been offered and accepted a permanent housing 
intervention (e.g., Supportive Services for Veteran Families (SSVF), 
Department of Housing and Urban Development-VA Supportive Housing (HUD-
VASH), etc.) but is not able to immediately enter the permanent 
housing. Veterans accessing bridge housing would otherwise be street 
homeless; therefore, this model is an opportunity to provide safe, 
secure structured environment for these Veterans while they secure 
permanent housing. It is anticipated that the use of this model will 
increase the overall utilization of GPD funded projects.

    Question 10.  The 2015 point-in-time count indicated a 4 percent 
decline in veteran homelessness from 2014, and a 36 percent decline 
since 2009. Despite this decline, the fiscal year 2017 budget request 
for programs to prevent and end veteran homelessness represents an 
increase between fiscal years 2015 and 2016. Please explain, in detail, 
the reason for the funding increase at a time when homelessness is 
declining.
    Response. The fiscal year (FY) 2017 budget supports VA's commitment 
to ending Veteran homelessness by emphasizing rescue for those who are 
homeless today, and prevention for those at risk of homelessness. The 
FY 2017 budget requests $1.6 billion for VA homeless-related programs, 
including case management support for HUD-VASH, GPD, and SSVF.
    The requested increase in the FY 2017 VA homeless-services budget 
request is needed to support the $60 million in HUD-VASH vouchers that 
were appropriated to HUD in FY 2016. VA was not appropriated 
corresponding funding for case management. It is estimated that 
approximately 300 additional full-time equivalent employees will be 
required to support the Veterans who receive these vouchers. It is 
expected that approximately 85,000 HUD-VASH vouchers will be in use by 
the end of FY 2017. The increase in the GPD program budget request for 
FY 2017 restores the program to its fully authorized level.
    The kind of progress reflected in the declining Point-in-Time 
estimates affirms that the strategies and systems that VA has 
implemented are working. Additionally, VA has made unprecedented 
efforts to promote the services available to Veterans who are homeless 
or might become homeless. As a result of the success of the effort and 
targeted resources, more Veterans are seeking out the VA more than ever 
before. Since 2010, demand for VA homeless-related services has 
increased by 136 percent (FY 2010: 127,070--FY 2015: 300,108 Unique 
Veterans accessing VHA homeless services). There has been an 8.5 
percent increased demand for homeless services since this time last 
year (January 2015: 164,224; January 2016: 178,139). Communities that 
have reached the goal or are close to effectively ending homelessness 
rely heavily on VA targeted homeless resources. Communities that have 
developed a sustainment plan are dependent on those resources to remain 
available as they continue to tackle homelessness.
    Until we have an economy that benefits everyone, Veterans will 
still have housing crises and some will become homelessness. The 
systems we have in place will make sure that the experience is measured 
not in months or years, but in days if sustained. Therefore, VA remains 
focused on ensuring adequate resources that address the needs of 
Veterans who may become or are at-risk of homelessness and sustains the 
support for Veterans who have moved into permanent housing so that they 
maintain housing stability and do not fall back into homelessness.

    Question 11.  The fiscal year 2017 budget request includes this 
legislative proposal:
Clarify Evidentiary Threshold at Which VA is Required to Provide a 
        Medical Examination
    This proposal seeks to amend 38 U.S.C. Sec. 5103A(d) to clarify the 
evidentiary threshold for which VA, under its duty to assist 
obligation, is required to request a medical examination for 
compensation claims. This amendment would clarify section 5103A(d)(2) 
to require, prior to providing a medical exam, the existence of 
objective evidence establishing that the Veteran experienced an event, 
injury, or disease during military service. VA would still consider lay 
evidence as sufficient to show a current disability or persistent 
symptoms of a disability. However, except in special circumstances, 
objective evidence such as medical records, service records, accident 
reports, etc., must also be of record to trigger an exam. Benefit 
savings to the Compensation and Pensions account are estimated to be 
$120.1 million in 2017, $124.9 million in 2018, and $650.3 million over 
5 years and $1.4 billion over 10 years.
    A. Please provide the Senate Committee on Veterans' Affairs 
(Committee) with a breakdown of the savings expected from this proposal 
and the underlying assumptions used to calculate the expected cost 
savings, such as the expected reduction in the number of examinations 
that would be provided by VA each year and the expected impact on 
awards of compensation.
    Response. Requiring the existence of objective evidence 
establishing that the Veteran experienced an event, injury, or disease 
during military service prior to providing a medical exam is estimated 
to save $120.1 million in FY 2017, $650.3 million over five years, and 
$1.4 billion over 10 years.
    VA estimates approximately 505,478 disability exams will be 
conducted in FY 2017, and approximately 30 percent of these exams will 
result in denial of claimed conditions being associated with a 
Veteran's military service. VA assumes 113,732 exams (75 percent of 
denials) would no longer require a disability exam based on this 
proposal.
Cost Benefit Analysis:

                       Benefit Savings (Mandatory)
------------------------------------------------------------------------
                                              Caseload or      Savings
                                                Workload   -------------
                Fiscal Year                 ---------------
                                                  (as          ($000s)
                                              appropriate)
------------------------------------------------------------------------
2017.......................................     113,732       $120,082
2018.......................................     113,732       $124,875
2019.......................................     113,732       $129,860
2020.......................................     113,732       $135,044
2021.......................................     113,732       $140,435
                                            ----------------------------
  5-Year Total.............................     568,662       $650,296
                                            ----------------------------
2022.......................................     113,732       $146,041
2023.......................................     113,732       $151,872
2024.......................................     113,732       $157,935
2025.......................................     113,732       $164,240
2026.......................................     113,732       $170,798
                                            ----------------------------
  10-Year Total............................   1,137,325     $1,441,182
------------------------------------------------------------------------



                        GOE Costs (Discretionary)
             No GOE costs are associated with this proposal
------------------------------------------------------------------------
                                             Caseload or       Savings
                                               Workload    -------------
               Fiscal Year                -----------------
                                                 (as           ($000s)
                                             appropriate)
------------------------------------------------------------------------
2017.....................................               0            0
2018.....................................               0            0
2019.....................................               0            0
2020.....................................               0            0
2021.....................................               0            0
                                          ------------------------------
  5-Year Total...........................               0            0
                                          ------------------------------
2022.....................................               0            0
2023.....................................               0            0
2024.....................................               0            0
2025.....................................               0            0
2026.....................................               0            0
                                          ------------------------------
  10-Year Total..........................               0           $0
------------------------------------------------------------------------

Methodology:
    Approximately 30 percent of disability exams result in denial of 
claimed conditions being associated with a Veteran's military service. 
Compensation Service assumes 75 percent of these denials would no 
longer require a disability exam based on this proposal.
    This proposal would not result in GOE savings. VBA would increase 
its administrative efficiency by redirecting resources to other 
critical claims processing.
    Compared to the estimate provided in the FY 2016 President's 
Budget, savings in this updated estimate have increased as a result of 
Section 241 of Division I, Title II, of P.L.113-235 (enacted 
December 16, 2014), which proposes to expand the number of sites where 
contract medical exams could be funded by the C&P appropriation. The 
estimated cost savings in the FY 2016 Budget was based on an estimated 
165,000 exams completed under this authority. This revised cost savings 
estimate is based on 500,000 exams completed under this authority
    In addition to the change in Pub. L. 113-235 regarding the number 
of sites authorized to utilize contract medical exams, VBA plans to 
absorb all contract medical exams previously performed under VHA 
contracts. VHA historically used contractors to complete exams it did 
not have capacity to complete through its own clinicians. Moving 
forward, any exams VHA does not have capacity to complete will be 
completed by VBA's contractors. Therefore, the revised estimate of 
500,000 exams completed under VBA's mandatory funding authority 
includes approximately 200,000 exams VHA previously planned to have 
contractors complete.
    VHA will continue to be the primary provider of disability exams 
for VA, and VHA clinicians will continue performing disability exams 
for VA at current capacity levels. Contract exams are only utilized 
when VHA exam capacity is exceeded. VA will maintain current protocols 
to ensure distribution of exam capacity that results in use of VHA 
resources before contract resources are utilized. As such, only 
contract exams will be reduced as a result of this proposal, and VHA 
funding for exams performed by VHA employees on a non-contract basis 
will not be impacted.

    Question 12.  In the fiscal year 2017 budget request, VA seeks an 
additional 300 staff to process non-rating claims work.
    A. How many staff are currently dedicated to non-rating work (other 
than appeals), how many additional staff does VA expect will be brought 
on board for that purpose during fiscal year 2016, and how many 
employees in total would perform that function in fiscal year 2017 if 
the budget request is adopted?
    Response. Currently, VBA has 1,219 staff assigned to perform non-
rating work, which includes management, clerical, and direct-labor 
employees. This figure includes approximately 260 temporary employees 
who are assigned to work non-rating work. VBA is grateful for the 
authority to hire 320 FTE for non-rating work in FY 2016, which will 
permit conversion of its temporary employees to permanent status and 
hiring of an additional 60 FTE. VBA requested an additional 300 FTE in 
its FY 2017 budget request, which will bring our non-rating strength to 
1,579 FTE.

    B. On average, how many non-rating actions (other than appeals) are 
completed per year by individual non-rating staff, what are the 
performance targets for these employees, and how many actions per 
employee would you expect to be completed per year if funding for the 
additional staff is provided?
    Response. VBA does not budget FTE solely for rating or non-rating 
work. Production per FTE is based on all compensation and pension 
employees assigned to each regional office's claims processing 
workforce. Please see the chart below for production per FTE; in FY 
2016, compensation and pension FTE are prorated for four months to 
determine production per FTE.

 
------------------------------------------------------------------------
                                           Non-Rating Claim
                                                 and          Non-Rating
                                   FTE      Administrative    Production
                                          Actions Completed    per FTE
------------------------------------------------------------------------
FY 2014........................   14,307      2,699,264           188.7
FY 2015........................   15,121      3,112,379           205.8
FY 2016 as of Jan. 31..........    5,130        878,208           171.2
------------------------------------------------------------------------


    VBA estimates the additional 320 non-rating employees will not 
substantially increase the non-rating claims output because 
approximately 260 of these employees are already performing non-rating 
work. The additional 60 FTE are estimated to complete between 9,000 and 
13,000 additional non-rating claims and administrative actions in FY 
2016. However, the number of non-rating claims completed per FTE will 
initially decrease because of the hours devoted to training new 
employees and the lower production levels of these employees due to 
their inexperience. In FY 2016 and FY 2017, VBA expects non-rating 
claim production per FTE to decrease slightly from the FY 2015 average 
of 206 non-rating claims/actions per compensation and pension FTE.
    Individual employees have a production element in their performance 
standards based on their General Schedule grade level, time in 
position, and type of work. Once fully trained, these employees will 
complete approximately 7 to 10 actions on average per day. All actions 
lead to the completion of a claim, but some claims will require 
multiple actions to fulfill legal requirements to develop for 
additional evidence or provide due process notice.

    C. How many employees are currently dedicated to handling appeals 
at the Veterans Benefits Administration, how many additional appeals 
staff does the Veterans Benefits Administration plan to bring on board 
during fiscal year 2016, and how many employees in total would perform 
that function in fiscal year 2017 if the budget request is adopted?
    Response. In FY 2015, VBA had an average of 916 employees dedicated 
to appeals and has increased staffing to 1,178 employees as of 
January 31, 2016. VBA is grateful for funding to hire 100 appeals FTE 
in FY 2015 and 200 appeals FTE in FY 2016. However, additional FTE are 
not sufficient to address the existing or future workload for appeals. 
Under current law, VA appeals framework is complex, ineffective, and 
opaque, and Veterans wait on average five years for final resolution of 
an appeal. The 2017 Budget supports the development of a Simplified 
Appeals Process to provide Veterans with a simple, fair, and 
streamlined appeals procedure in which they would receive a final 
appeals decision within 365 days from filing of an appeal by FY 2021. 
The 2017 Budget also provides funding to support over 900 FTE for the 
Board and proposes a legislative change that will improve an outdated 
and inefficient process which will benefit all Veterans through 
expediency and accuracy. We look forward to working with Congress, 
Veterans, and other stakeholders to implement improvements.

    D. On average, how many appeal-related actions are completed per 
year by individual appeals staff, what are the performance targets for 
these employees, and how many appeal-related actions per employee would 
you expect to be completed per year if funding for the additional staff 
is provided?
    Response. The complex appeal process defined in current law 
involves multiple reviews of the evidence considered in the original 
decision as well as any new evidence received during the appeal. Please 
see the chart below for VBA's total completed appeal actions (such as 
statements of the case and appeal certifications) and appeals 
productivity; in FY 2016, compensation and pension FTE are prorated for 
four months to determine production per FTE.

 
------------------------------------------------------------------------
                                           Appeal Actions      Appeals
                                 VBA FTE      Completed     Productivity
------------------------------------------------------------------------
FY 2015........................    916        198,774               217
FY 2016 as of Jan. 31..........   1178         69,084               176
------------------------------------------------------------------------

    Employees processing appeals are typically VBA's most experienced 
disability claims processors, which mitigates productivity losses. VBA 
expects a short-term decrease in appeals productivity as employees new 
to processing appeals become familiar with the entire process but will 
mitigate that loss by utilizing overtime to process appeals. As 
previously noted, productivity per FTE is based on all compensation and 
pension employees assigned to regional offices, not just FTE processing 
appeals.
    The performance standard for Decision Review Officers is based on 
type of work and the number of issues addressed in each decision. At 
minimum, employees will complete three appeal actions per day to 
achieve the fully successful level of performance.
    To increase efficiency, VBA is working closely with the Board of 
Veterans' Appeals, Veterans Service Organizations, and Congress to 
identify legislative solutions to simplify the appeals process and 
improve the timeliness of appeal decisions.

    Question 13.  The fiscal year 2017 budget request includes an 
increase of $46 million for the Board of Veterans' Appeals to fund an 
additional 242 employees.
    A. How long is it expected to take to hire and train 242 new 
employees?
    Response. The Board will begin the recruitment process for the 242 
additional employees immediately upon enactment of the FY 2017 budget 
in order to support execution of the funding by the end of the Fiscal 
Year. In advance of the actual job announcement, the Board is working 
with OPM on an aggressive strategic recruitment plan, to ensure 
successful execution. The 242 additional employees will primarily 
consist of staff attorneys to draft appeals decisions, with an 
appropriate complement of administrative support staff and some 
additional judges. For new attorney staff, the Board has a 6-month 
training curriculum to ensure thorough training on veterans benefits 
law. New judges will undergo rigorous initial training with follow-up 
mentoring and continuing education for both legal training and 
leadership training. Administrative staff will also undergo new 
employee training specific to their business line.

    B. What positions would be filled by those new employees?
    Response. Most of the 242 employees would be staff attorneys. 
Specifically, the goal is for 145 attorneys, 24 judges, and 73 support 
staff.

    C. What challenges would the Board of Veterans' Appeals face in 
expanding rapidly if funding for this increase in staff is approved and 
how would those challenges be handled?
    Response. Taking lessons learned from the 2013 hiring surge of 100 
attorneys in a four month timeframe, the challenges faced would include 
human resources support, information technology (IT) support, training 
support, and office space. These challenges would be handled by having 
a strong recruitment plan in place this year, in advance of the budget 
enactment, with a tiger team of dedicated personnel to handle the 
recruitment and on-boarding. The IT needs would also be identified in 
advance, with a streamlined plan to have the necessary equipment in 
place in a timely fashion as new hires were on-boarded. The training 
needs would be handled by having a strong training plan in place, using 
lessons learned from the large training in 2013, and subsequent 
trainings. Finally, the office space training would be handled by a 
combination of repurposing existing space for storing paper claims 
files, and increasing telework for eligible employees.

    D. Would the Board of Veterans' Appeals expect any short-term 
decrease in productivity if there is a large influx of new employees 
during fiscal year 2017?
    Response. Eighty-five percent of the Board's budget is allocated to 
personnel costs; therefore, a large portion of any increase in funding 
will be applied to hiring to address the Board's pending inventory of 
appeals. A direct and proportional correlation exists between the 
number of Board employees and decision output. It is likely that the 
Board will experience a decrease in productivity during the on-boarding 
and initial training period, as existing Board staff will be needed to 
focus on training the new employees as expediently as possible. While 
the Board may experience a slight dip in productivity during the 
initial new attorney training period, the Board anticipates that any 
decline will be made up once the new employees are in place and are 
fully trained. In this regard, following the FY 2013 and FY 2014 hiring 
surges during which the Board recruited and onboarded approximately 170 
additional FTE, the Board saw a short term productivity dip during the 
training period, but a subsequent overall productivity increase, 
resulting in 55,532 dispositions in FY 2014 and 55,713 dispositions in 
FY 2015.
    In 2015, each Board FTE produced approximately 86 appellate 
decisions. The Board anticipates that the number of appellate decisions 
per FTE may increase slightly with technological enhancements as the 
appeals process is modernized provided that resources and enterprise 
support are intact. However, a competing force against that increase is 
the ever changing and complex legal landscape, along with increased 
evidence-gathering and readjudication at every stage in the multi-stage 
appeals process.

    E. Please provide a break out of the non-personnel costs that would 
be incurred to bring on board those employees, such as rearranging 
office space, equipment, office supplies, or training materials.
    Response. As noted above, 85 percent of the Board's budget is 
allocated to personnel costs. The balance of funds will allow the Board 
to pay for operating costs such as rent, security, and other 
administrative requirements. See chart below for further details.

                        Board of Veterans' AppealsPSummary of Employment and Obligations
                                             (dollars in thousands)
----------------------------------------------------------------------------------------------------------------
                                                                            2016                       Increase
                                                            2015   ----------------------    2017        (+)/
                                                           Actual     Budget    Current    Request   Decrease (-
                                                                     Request    Estimate                  )
----------------------------------------------------------------------------------------------------------------
Average Employment.....................................        646        669        680        922       +242
Obligations:
  Personal Services....................................     88,757     92,522     96,317    133,379    +37,062
  Travel...............................................        319        415        413        422         +9
  Transportation of Things.............................          0         80         94        129        +35
  Rents, Communications & Utilities....................      8,704      8,960      9,993     13,539     +3,546
  Printing & Reproduction..............................         40         90         94        135        +41
  Other Services.......................................      5,016      5,022      5,167      7,442     +2,275
  Supplies & Materials.................................        257        325        468        511        +43
  Equipment............................................         35        120        100        189        +89
  Insurance & Indemnities..............................          3        350        292        350        +58
                                                        --------------------------------------------------------
    Total Obligations..................................   $103,131   $107,884   $112,938   $156,096    $43,158
Reimbursements.........................................          0          0          0          0          0
SOY Unobligated Balance (-)............................    (7,300)          0    (3,156)          0     +3,156
EOY Unobligated Balance (+)............................      3,349          0          0          0          0
Transfer from Unobligated Balance (-)..................          0          0        102          0       -102
                                                        --------------------------------------------------------
    Budget Authority...................................    $99,180   $107,884   $109,884   $156,096    $46,212
----------------------------------------------------------------------------------------------------------------


    Question 14.  According to VA, the appeals process takes on average 
5 years between filing the appeal and receiving a decision by the Board 
of Veterans' Appeals.
    A. Of that 5-year timeframe, please provide a break out of how many 
days/months on average an appeal would be waiting for the Veterans 
Benefits Administration or the Board of Veterans' Appeals to take a 
required action on it.
    B. Of that 5-year timeframe, please provide a break out of how many 
days/months on average the Veterans Benefits Administration or the 
Board of Veterans' Appeals would be waiting for the appellant or his/
her representative to take a required action regarding an appeal.
    Response. In FY 2015, the average appeals processing time from the 
date of filing a Notice of Disagreement (NOD) to a Board adjudication 
(including grants, denials, and remands for further development) was 
approximately 5 years (1,771 days). The attached SVAC Pre-Hearing 
Presentation captures the average processing time in days for each step 
of the multi-step appeals process, including a breakdown of VSO and 
Board time for cases completed by the Board from FY 2005 to FY 2015. 
The data include only appeals decided by the Board, not those resolved 
at earlier stages of the appeals process.
    The chart below shows what a simplified appeals process would look 
like, as well as the corresponding VBA and Board processing times by 
2021, with implementation of the legislative proposals and resources 
requested in the 2017 President's Budget for 2017 and beyond.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Question 15.  In response to questions about the fiscal year 2016 
budget request, VA indicated that, during fiscal years 2014 and 2015, 
the Veterans Benefits Administration processed compensation and pension 
claims during overtime hours but did not process appeals during 
overtime hours. VA estimates that approximately 11 to 12 percent of 
individuals receiving a decision on their claims by the regional 
offices will appeal.
    A. What percent of claims processed during overtime did the 
Veterans Benefits Administration project would generate appeals?
    Response. VBA does not separately track claims processed on 
overtime and anticipates the overall ratio of appeals received divided 
by claims completed in a year will continue to be approximately 11 to 
12 percent, which includes claims completed during overtime. The 
appeals process established by current law allows Veterans to file 
appeals up to one year following VA's notice of a final decision. As 
such, many decisions rendered during FY 2015 are still within their 
appeal period.

    B. By opting to use overtime to process claims but not a 
commensurate proportion of appeals, did the Veterans Benefits 
Administration project that the appeals inventory at the Veterans 
Benefits Administration would increase during that time? If so, please 
share those projections with the Committee.
    Response. VBA did project its appeals inventory would increase in 
FY 2015 by approximately 30 percent. This projection was based on a 
historic level of 1.4 million disability rating claims completed and 
3.1 million non-rating claims and other administrative actions 
completed. VBA implemented new performance metrics for appeals output 
and increased staffing and to address the increase in appeals 
inventory.
    However, without legislative change or significant increases in 
staffing, VA will face a soaring appeals inventory, and Veterans will 
wait even longer for a decision on their appeal. If Congress fails to 
enact VA's proposed legislation to simplify the appeals process, 
Congress would need to provide resources for VA to sustain more than 
double its appeals FTE, with approximately 5,100 appeals FTE onboard. 
The prospect of such a dramatic increase, while ignoring the need for 
structural reform, is not a good result for Veterans or taxpayers.

    Question 16.  On January 21, our Committee held a hearing on the 
MyVA transformation. This initiative detailed priorities and strategies 
for transforming how VA interacts with veterans. The budget is largely 
silent on specifics related to spending and the MyVA initiative. Please 
provide a breakdown of the following:

    A. How much VA has spent and plans to spend on implementation of 
the MyVA initiative.

 
------------------------------------------------------------------------
                                                          Actual FY 2015
------------------------------------------------------------------------
Veteran Experience Stand-Up
  Veteran Experience Stand-Up Total....................   $10,236,182.62
Support Services
  Support Services Total...............................    $4,667,037.34
Performance Improvement
  Performance Improvement Total........................    $9,054,806.85
Strategic Partnerships (Not funded with reimbursable
 funds)
  Strategic Partnerships...............................      $137,243.16
MyVA Task Force PSO (Not funded with reimbursable
 funds)
  My VA Task Force PSO Total...........................   $10,005,171.00
MyVA Total
  MyVA Total...........................................   $34,100,440.97
------------------------------------------------------------------------


    These costs reflect direct costs incurred by the MY VA Task Force. 
Costs associated to the 12 Breakthrough Priorities are spread 
throughout the entire department.

    B. A specific breakdown of funding sources and any areas you have 
had to divert from other resources.

                         MyVA Funding by Account
------------------------------------------------------------------------
      Pro Rata Share of Reimbursements            FY 15         FY 16
------------------------------------------------------------------------
VHA.........................................   $31,297,500   $68,692,500
VBA.........................................     2,434,250     5,342,750
OIT.........................................       869,375     1,908,125
NCA.........................................       173,875       381,625
                                             ---------------------------
  Total.....................................   $34,775,000   $76,325,000
------------------------------------------------------------------------


    C. How many full-time equivalents are currently being utilized in 
the transformation and how many VA projects will be needed.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Question 17.  The budget requests almost $4.3 billion in 
information technology. One of the breakthrough priorities for the 
Secretary is that VA will complete 50 percent of information technology 
projects on time and on budget.
    What percentage of information technology 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 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% 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 re-organizing to a portfolio management 
construct focused on measuring end product delivery rather than work 
product delivery. The near-term (6-18 month) goal for VIP is targeting 
50 percent on-time and on-budget delivery, higher than the industry 
standard of 45 percent.

    Question 18.  The budget requests an additional 703 full-time 
equivalents for information technology. 599 of these employees will be 
staffing ``enterprise operations.'' Can you please provide further 
details on these projects and the specific program offices where the 
full-time equivalents will be needed?
    Response. Enterprise Operations (EO) is a computer operations and 
hosting function currently funded within the VA Franchise Fund. EO has 
been organizationally aligned within OI&T Service Delivery and 
Engineering (SDE) for several years. This realignment will not change 
OI&T budget requirements; funds that would have been transferred to the 
Franchise Fund will be directly obligated by OI&T instead.
    EO operates or contracts for the computing infrastructure for many 
of VA's software applications that directly serve Veterans, VA business 
lines that provide direct Veteran service, or internal administrative 
services. EO provides a full complement of technical solutions 
including service planning architecture, security services, service 
management, hosting, monitoring, business continuity and recovery, 
application management, and managed hosting. Most of the EO FTE that 
are organizationally aligned to SDE will be transferred to SDE for 
funding purposes. Operational management and functions will not be 
impacted. This is primarily a change from a Franchise Fund to the 
appropriated OI&T fund without a change in cost.
    The budget reflects a decision to migrate Enterprise Operations 
staff and data centers from the Franchise Fund to the IT appropriation 
(Net $0/0 FTE change). OI&T anticipates a transfer of 599 Enterprise 
Operations (EO) FTE from VA's Franchise Fund. This transfer was 
directed by VA Executive Leadership to improve efficiency and 
responsiveness of this critical infrastructure component. Sustainment 
was reduced by $151 million due to the transfer and moved into the 
staffing and support services account resulting in the 14% increase.

    Chairman Isakson. Well, thank you very much, Mr. Secretary. 
We are delighted to have you here today and appreciate your 
opening remarks. I will start the questioning, then we will go 
Republican to Democrat, after we go to the Ranking Member, all 
the way through.
    Your proposal has a unique system for senior executive 
employment within the Veterans Administration which would 
create a unique pay schedule and disciplinary system under 
Title 38. As I said in my opening remarks, accountability is 
the single most important thing we must accomplish, in my 
judgment, on this Committee and within the VA itself.
    Can you detail for the Committee the justification for the 
proposal and how you believe this solves the accountability 
problem at VA?
    Secretary McDonald. Yes, Mr. Chairman. As you know, we run 
a health care business. We run an organization that, if it were 
a company, would be Fortune 6 on the Fortune 500. We compete 
with health care professionals from the best health care 
systems in the country, whether they be medical centers that we 
are affiliated with like Duke Medical Center, or whether they 
be large health care companies like Mayo or Cleveland.
    We believe the best way to treat VA employees is as the 
health care professionals that they are, and the Title 38 
provision would give us that ability. We could pay them more 
competitively. Right now, our average medical center director 
is paid, at best, half what they can earn in the private 
sector, and we have lost several recently. We are paying them 
the best we can with the SES system.
    Separately, we can also recruit and appoint people more 
quickly because Title 38 would give us direct hiring authority. 
We believe that moving to Title 38 for all SES employees in VA 
would be a big step forward and make us competitive with the 
private sector and would improve care for veterans.
    Chairman Isakson. In the case of disciplinary action, how 
does Title 38 differ from what is now there?
    Secretary McDonald. The Title 38 in the case of 
disciplinary action would make me the appeal authority, so 
people would appeal to me. So, it would put appellate authority 
within the Department rather than in some external organization 
that looks across Government.
    Chairman Isakson. In a hypothetical example that is really 
not so hypothetical--in the Pennsylvania case that has just 
been adjudicated on appeal, that would have been appealed to 
you and not to MSPB?
    Secretary McDonald. That is correct, sir.
    Chairman Isakson. Next, we talked about the 440,000 pending 
appeals at the Veterans Administration. You made a statement in 
a House Committee meeting the other day that the proposals in 
here are really a straw man for something like that. Do you 
have specific proposals in terms of that in this budget 
proposal that you are offering?
    Secretary McDonald. Yes, sir. We have offered a specific 
proposal, but also, as we are talking right now, we have been 
meeting with veterans service organizations, Members of the 
Committee and other members of Congress, and are making 
progress in getting alignment as to what that proposal should 
look like. I suspect while the proposal we have submitted is a 
good one, we can make even further enhancements to it which 
could create a greater consensus moving forward. As we have 
discussed, we expect to have all that done by the end of March 
so we can get something done with this.
    Chairman Isakson. Are you moving away from the fully 
developed claim process?
    Secretary McDonald. No, sir. We think the fully developed 
claim is a good step on the way to a totally new appeals 
process. But, it does not fundamentally change the process to 
the degree that we think it needs change.
    Chairman Isakson. Using the word of the day, which is 
``accountability,'' I think it is important for our veterans to 
have accountability in the system to make sure if they have an 
appeal, that it is justified and is heard, but make sure also 
that one veteran or two veterans or a handful of veterans' 
appeals do not cause other veterans to get a slow response on 
an appeal that otherwise would not be an appeal to begin with. 
One of the things I have seen from talking with Dr. Shulkin and 
some of the others at the VA, there are a handful--and I use 
``handful'' as a reference--of appeals that over and over and 
over again, over a series of years, have still been active and 
in process. Every time one of those takes place, it takes time 
away from a claim that is recently filed by a veteran who 
deserves meritorious treatment in a hasty way.
    I personally am very supportive of us finding a way to give 
the tools necessary to ensure the veteran gets accountability, 
but also have some ability to cut that off so it is not an 
ongoing process.
    Secretary McDonald. Yes, sir, you are right. As you know, 
10 to 11 percent of veterans appeal the decisions. Of those 10 
to 11 percent, it is about 2 percentage points, 2 percent of 
all veterans that, when they appeal, drive multiple appeals, 
and their appeals comprise about 45 percent of all appeals. So, 
you are right. About 20 percent of veterans are creating about 
half of the work. That is an unacceptable situation and one 
that we should resolve to the benefit of all veterans. As we 
have committed in our 2016 end-of-year outcomes, we would like 
by the end of this year to be able to have a process in place 
that eventually would lead to 1 year for a veteran appeal.
    Chairman Isakson. Just one last comment. In your prepared 
remarks, you said that 10 of the 16 top leaders in the VA are 
new hires that you have brought in, people from hospitals, 
people from the private sector. Dr. Shulkin and Ms. Council, 
are they two of those ten?
    Secretary McDonald. Yes, sir, they are.
    Chairman Isakson. Well, let me make a comment. If the other 
eight of those ten are doing as good a job as those two are, we 
are going to be in much better shape at the VA, because 
publicly I want to acknowledge Dr. Shulkin's help in the 
meetings we have been having at the VA to deal with the 
accountability issue and some of the other things going on. 
They are doing a great job, and I appreciate the fact that they 
have been very responsive to us, as Ms. Council has done on the 
IT situation as well. So, thank you very much.
    Secretary McDonald. Mr. Chairman, as you know, we have an 
IG nominee who we all think very highly of, I think the 
Committee thinks very highly of. We would love that to get 
passed on the Senate floor.
    Chairman Isakson. For the record, I am meeting individually 
with people that I think need to be met with to try and see if 
we can't get that to a vote on the floor. We are not there yet, 
but we are making progress.
    Senator Blumenthal?
    Senator Blumenthal. Thanks, Mr. Chairman.
    I want to first just mention the elephant in the room, 
which is the potential hurdles and obstacles to approval of 
this budget in the potential gridlock and paralysis in the 
budget process overall. The VA illustrates to me the urgency of 
putting aside partisan differences, putting aside extraneous 
issues, and proceeding to a budget regardless of what our 
colleagues in the House of Representatives may think about the 
budgeting process and regardless of other issues relating to 
the Supreme Court or any other kinds of challenges that we face 
here. I think that you have come here in good faith to argue 
for some really urgent priorities that must be met, and they 
are commendably a part of this budget.
    Earlier this year, the Hartford VARO reached out to me 
because they were informed that there were no additional 
hearing dates, travel board or teleconference dates for 
Hartford in the remainder of the fiscal year in terms of the 
appeals process. After my inquiry, the BVA additional 
teleconference date has been added, which I appreciate. But, I 
think that that experience illustrates the importance of 
reforming the appeals process. The VSOs have focused on it, and 
I assume you agree it should be a priority.
    Secretary McDonald. Yes, sir, absolutely. I also agree on 
the budget. I would tell you that this is my second budget at 
the VA, but I feel better this year than I have ever before 
about connecting our strategies with the budget, with 
resources, with the legislation required, and with the 12 
priorities that we have listed for 2016.
    This is more than just a budget. This is the delivering of 
outcome for veterans. We need this budget in order to do that, 
but we also need the legislation and the other things that we 
have talked about as a group.
    Senator Blumenthal. Focusing for the moment on delivery of 
services to women veterans, there is a request for $515.4 
million for gender-specific health care for women and nearly 
$5.3 million in total care for women, which recognizes the need 
to consider the growing female veteran population in our 
country and provide care that is both welcoming, efficient, and 
proficient to meet their needs.
    I am still concerned that the culture of the VA and the 
ability to welcome female veterans and provide health care 
services to them in a sensitive and tailored manner may not be 
keeping pace with the number and the needs of those veterans.
    Could you please tell us how you intend to use the 
requested funding for women's health care to address, frankly, 
the pervasive feeling of many female veterans that the VA 
remains a male-focused culture and organization?
    Secretary McDonald. I am really glad you raise this, 
Senator Blumenthal. This is such an important topic to us. I 
really think this will be one of the seminal issues of 
transformation that we will be held responsible for as people 
look back years from now.
    As you know, since 2000, the number of women veterans 
seeking VA health care services has doubled, from 160,000 to 
over 447,000 in fiscal year 2015. This is a major focus for us.
    We have enhanced care for women. We have designated women's 
health providers at every site where women access VA health 
care. Currently, 100 percent of our medical centers and 94 
percent of our community-based outpatient clinics have at least 
one designated women's health provider. We need to get that to 
100 percent.
    We have trained over 2,400 providers in women's health to 
ensure that every woman veteran has the opportunity to receive 
her primary care from a women's health provider. We have women 
veteran program managers, maternity care coordinators at every 
health care facility. We provide gynecological care, including 
maternity care and 7 days of newborn care, to all women 
veterans either on-site--that is through 130 health care 
systems--or through care in the community.
    This is really a very important point to us, and we have to 
continue to make this transition over time, because as you have 
said, it is going to continue.
    Senator Blumenthal. Thank you very much. My time has 
expired. I have other questions that I may submit for the 
record, but thank you to you and your team for being here 
today.
    Thank you, Mr. Chairman.
    Chairman Isakson. Senator Rounds.

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

    Senator Rounds. Thank you, Mr. Chairman, and let me just 
begin by saying that I have appreciated the bipartisan approach 
by both the Chairman and Ranking Member Blumenthal as we move 
through the different and challenging issues before us, 
including the budget itself. I am optimistic that this 
Committee will work very favorably in moving forward in this 
particular budget process. I have only been here a year, but I 
have been encouraged by the way this group here has worked on 
these issues.
    One of the major challenges that has hampered the Choice 
Program has been the VA's shift of cost for care to the 
veterans who have been utilizing the Choice Program. Veterans 
are paying far more for their care under Choice than they 
traditionally paid under normal VA facility care or non-VA 
care, typically as a result of deductible and co-pay 
calculations that are different when they are seen in the 
private sector.
    As you consolidate the care in the community programs, do 
you envision veterans continuing to pay more out-of-pocket to 
be seen in the private sector?
    Secretary McDonald. Senator Rounds, it is a great point. We 
would like, when we consolidate care, to go to one payment 
system, one reimbursement system, so that we eliminate the 
complexity. You are right that when the Choice Act was created, 
veterans were forced to pay higher co-pays to use the Choice 
actual service in order to keep the costs down of the total 
Choice Act. If they use a VA service, there is no co-pay. If 
they use a Choice Act, there is a co-pay. So, we do think that 
change needs to be made.
    David?
    Dr. Shulkin. Yes, Senator, the primary difference is that 
the way the Choice legislation was written is that in Choice VA 
is the secondary payer. So, a veteran has to use their primary 
insurance, and they have to use their co-pays.
    What we have suggested in our legislative proposals is to 
make VA the primary payer and to consolidate all the care in 
the community. That would eliminate this disparity that 
veterans see today.
    Senator Rounds. In South Dakota, we continue to hear that 
timely provider payment under the Choice Program is a 
continuing issue. Recently, I heard from a private sector 
provider that has over $3.3 million in payments that have been 
outstanding for more than 90 days. What specific initiatives 
are you putting in place to accomplish your 2016 breakthrough 
priority of getting 85 percent of claims paid within 30 days? 
It looks to me like you have got quite a hill to climb.
    Secretary McDonald. First of all, please give us the name 
of that provider. We will go back and make sure they get paid.
    Second, the systemic change we need is to follow the best 
practices in the private sector, which is to pay the provider 
based on them providing the service, not waiting for the paper 
documents, which has been our past practice. Dr. Shulkin has 
put that change in place. We have another week or so until we 
actually activate it. But, that means providers will get 
payments virtually as soon as they provide the service.
    David?
    Dr. Shulkin. Yesterday we delivered to the two TPAs a 
proposal for them to sign that would decouple documentation 
from payment so we can make faster payments to providers.
    Senator Rounds. I have heard that in my State VHA has made 
the conscious decision to shift certain health care services 
over to the Choice Program and away from VHA facilities. 
Yesterday, we saw a similar story out of Cincinnati that 
contained allegations of services being switched to Choice in 
the community in order to make hospital finances look better.
    Whether that is the case or not, how do you reconcile 
shifting services over to the Choice Program and in the process 
eliminating capability to perform those services when Choice is 
clearly a temporary program designed to supplement VA care and 
its authorization expires next year?
    Secretary McDonald. The most important thing in making any 
of these decisions is what is best for the veteran. Nothing 
else should be a consideration. Unfortunately--and I am not 
saying this is happening because we have to investigate the 
allegation you described. Unfortunately, because of the fact 
that we have got 70 line items of budget where we cannot move 
money from one to the other, you may recall last year I had to 
come to this Committee and ask for the ability to move money 
from the Choice budget that was for care in the community to 
the VA budget that was for care in the community. Same purpose, 
but we had to ask your permission to move that money.
    What we have put in our 2017 budget proposal is a proposal 
to give us flexibility on only 2 percent of our funding so that 
we can move money between accounts--again, with the idea that 
we have got to get the best care for the veteran.
    Senator Rounds. Thank you. My time has expired. Thank you, 
Mr. Chairman.
    Chairman Isakson. Thank you, Senator Rounds.
    Senator Tester?

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

    Senator Tester. Thank you, Mr. Chairman.
    I want to go back to Title 38. Could you tell me, Mr. 
Secretary, how many medical center directors were either acting 
or without a position or director?
    Dr. Shulkin. I would be glad to. Today, Senator, we have 34 
medical centers without a permanent medical center director. I 
will tell you, being responsible for the health care 
organization, there is no way I can assure that we are doing 
the best for veterans with 34 open positions.
    Senator Tester. How many are acting? Or does that include 
acting?
    Dr. Shulkin. That includes acting. Those are ones that we 
need to fill.
    Senator Tester. Can you tell me how long it takes you to 
recruit and appoint an M.D., or a P.A. or a nurse right now?
    Dr. Shulkin. Approximately--they differ a little bit, but I 
am going to say, on average, 6 months?
    Senator Tester. Six months? OK. Now, if we make the changes 
that you have recommended, how long would it take you to 
recruit and appoint?
    Dr. Shulkin. Well, I think the change to Title 38 is going 
to help us get more candidates and better candidates. We have 
many medical centers that, frankly, have had openings for years 
and years because we do not have candidates. So, I think it is 
going to increase the pool. We have to--one of the Secretary's 
12 priorities is to streamline the hiring process, because we 
have to get to where the private sector is. We have to be able 
to match or beat where the private sector is to get the best 
candidates.
    Secretary McDonald. But, the Title 38 recruiting and hiring 
process is more streamlined than the SES process.
    Dr. Shulkin. Yes.
    Senator Tester. So, your hope is to get it down to what 
kind of a timeline?
    Secretary McDonald. I would like to break it in half.
    Senator Tester. OK.
    Secretary McDonald. I think we can do it.
    Senator Tester. OK. You put a number of legislative 
requests forward. Is it accurate to say that veterans' access 
to care has been impeded by the legal vulnerability associated 
with referring veterans to traditional fee care outside the 
Federal Acquisition Regulations?
    Dr. Shulkin. When you say ``legal,'' the complexity of the 
system, absolutely, that is correct.
    Senator Tester. OK. I believe we have a bill--maybe not 
totally what you want, but a bill to get that done I think has 
come out of this Committee. Is it accurate to say that the VA's 
efforts to improve the quality and delivery of care have been 
impeded by the number of director vacancies?
    Dr. Shulkin. Yes.
    Secretary McDonald. For sure, absolutely.
    Senator Tester. Is it also fair to say that from a medical 
personnel standpoint the appeals process has not been working 
like it should?
    Secretary McDonald. We would agree with that.
    Senator Tester. OK. Is it also more important to say that 
you need flexibility in your budget?
    Secretary McDonald. Yes, sir, we do.
    Senator Tester. To move money around.
    In July 2014, Mr. Secretary, you were confirmed by a 97-0 
nothing. Nobody in the Senate opposed you.
    Secretary McDonald. I am still looking for those three that 
did not vote.
    Senator Tester. They were probably out campaigning for 
President. But, at any rate----
    [Laughter.]
    Senator Tester. I would just say this: as a Committee--and 
I would be happy to work with the Chairman so it is on a 
bipartisan basis--we need to push the leadership to get these 
bills to the floor to hold this man accountable. We cannot hold 
him accountable if his hands are tied; I really think that it 
is important--I mean, he came from the private sector. Ten of 
his 16 folks have come from the private sector. If we want the 
VA to work, we have got to put our trust there. If he screws 
up, he is gone. But, the fact is I trust the Secretary; I 
believe that he can get this done. I think we need to give him 
the tools to get that done. It is going to require some floor 
action on these bills with a very limited amount of time for 
floor action.
    If it would take a letter, if it would take phone calls, if 
it would take a group meeting with Senator McConnell, I would 
be more than happy to join you in that.
    The only thing I would say--and this may be parochial in 
nature, but there is an issue with travel pay right now, where 
the veteran used to get travel pay immediately when they came. 
Now, because of people thinking they were going to try to game 
the system, they go to a kiosk. Now it is a month or longer to 
get their travel pay. I am hearing a lot about this. I am not 
sure that it solves any of the problems with pay going to a 
kiosk because if a guy wants to be a crook, he will be a crook 
on a kiosk just as well. What it is doing is it is stopping 
some of our veterans from being able to get the care timely. It 
may be hard to believe, but a lot of these guys need that 
travel pay and they need it quick. So, if we can do something 
on that, I would appreciate it.
    Dr. Shulkin. Senator, we will look into that. That is not 
an intentional delay, so we need to fix that.
    Senator Tester. The last thing I would say is--and I 
attribute this mostly to the third-party providers and not to 
the VA, which we have got to get this fixed. My staff just gave 
me a chart, and you can take a look at it: 53 percent of the 
work that we do is veterans work. It used to be a third. It is 
53 percent now. That is not happening because things are going 
smoothly. I think you guys know that. We need to get it fixed. 
I think this Committee needs to do its job to help you fix it, 
and then we need to hold you accountable for that.
    Thank you, Mr. Chairman.
    Chairman Isakson. In reference to your comment in the 
beginning about meeting with Leader McConnell, for your 
edification and information, I appreciate your raising the 
visibility of those bills that we have passed out which have 
not gotten through the Congress yet. We are working on, if you 
will, an omnibus proposal that we hope to, by the end of March, 
have finished and acted upon in the House and the Senate. That 
is an aggressive game plan, but we are trying to get all that 
done. Sen. Tester, I will take you as a volunteer to be on my 
team, we will make sure we use you to help us do that--in a 
bipartisan way, too.
    Senator Tester. I would be more than happy. I think that it 
is important for us to hold the agency accountable. I think it 
is also important for us to listen to the people that are at 
the head of it and make sure we give them the tools that they 
need to be successful and then hold them accountable.
    Thank you.
    Chairman Isakson. We have got to hold ourselves 
accountable.
    Senator Tester. That is correct.
    Chairman Isakson. That may be the biggest problem of all. 
We have got to correct that.
    Senator Moran?

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

    Senator Moran. Mr. Chairman, thank you very much. Mr. 
Secretary, welcome. Thank you for the telephone conversation 
that we had recently.
    I was interested in what Senator Tester had to say about 
case work. As you and I have talked, that has been a 
significant fact in our life, more veterans with more 
questions, I guess, and concerns. I appreciate Senator Tester 
raising that issue.
    Let me talk about a couple of items that are Kansas 
related. The Choice Act provided for a new CBOC in Johnson 
County, KS. Johnson County is the Kansas side of the Missouri-
Kansas line in Kansas City, our fastest-growing part of our 
State. The requirement, as I understand it, is for those 
proposed medical facility leases to be submitted to GSA. Then, 
the timeframe is seemingly extraordinarily long, like 5 years 
once the decision is made to begin that lease process.
    Is there something that we can do to help speed up this 
process? We have the same issue in Junction City. Junction City 
is a bedroom community of Fort Riley with lots and lots of 
veterans. The CBOC there is needing to move out of its current 
facility, and they are looking for space, which, to my 
knowledge, they have not found. Could you bring me up to date 
on both of those. The broader question is: is there something 
we can do to help speed up the process?
    Secretary McDonald. The process does take too long. We 
have, I think--is it 16 or 18 leases right now? We are 
waiting--16. We are waiting for authorization from you all to 
move forward on.
    Mr. Murray. Eighteen.
    Secretary McDonald. Eighteen. So, you know, if you could 
authorize those, we would really appreciate it.
    Senator Moran. In the case of at least Johnson County that 
I am talking about, it is authorized.
    Secretary McDonald. OK.
    Senator Moran. Then, having been authorized, I am told it 
is at least 5 years before----
    Secretary McDonald. No--well, it should not be. We have 
worked with GSA to streamline that process, but I am happy to--
we will come over and sit down with your staff and go through a 
streamlined timeline of how long it will take. It should not 
take 5 years.
    Senator Moran. OK. Well, there are two, if we could talk 
about the one in Junction City and the one in Johnson County.
    Mr. Secretary, let me raise a topic of construction of a 
new hospital in Leavenworth, again, a military community. The 
strategic capital investment plan lists Leavenworth inpatient 
facility as number 13 of the VA's priority list, but there were 
no funds requested in fiscal year 2017. What does that mean? 
What is the value of that 13th ranking and no funding?
    Secretary McDonald. Well, I think what it demonstrates, 
Senator, is we need more money in construction. Most of our 
priority projects are seismic projects or projects that deal 
with human safety. As I showed in my written testimony, we have 
had catastrophes happen because we have not been seismically 
ready.
    Sixty percent of our buildings are over 50 years old. We 
would love to get down through the total list, but that is 
going to require a disproportionate amount of capital to do 
that.
    Senator Moran. In that circumstance, is the VA open to 
public-private partnerships, a local entity that would build 
the facility and then lease it back? Does that speed up the 
process and help the budgetary constraints?
    Secretary McDonald. We are. There are actually two 
different processes, both of which we are looking at. One is 
something we already have experience with called ``extended use 
leasing.'' This is a process where, for example, there is a 
company called Core that built a building on our campus in 
Menlo Park that we are able to rent from them to house homeless 
veterans. That is the bill I need passed for Los Angeles, 
because I cannot do that in Los Angeles right now, and that is 
where we have the majority of homeless veterans.
    There is another process called ``public-private 
partnership,'' or ``P3,'' which we are currently exploring to 
move our San Francisco campus, which is landlocked and 
isolated. What we do not know yet is how CBO and OMB will score 
that and whether or not, because it is an extended use program, 
they will score it as if it were a capital project. We are 
looking into that. We should have an answer in March, and we 
will be back to you, because if we can do P3s, it will unlock a 
lot of capability for VA.
    Senator Moran. Maybe we can have that conversation where we 
talk about the CBOCs as well, because I think there is an 
opportunity for this kind of thing to occur in Kansas.
    My final question is: how does the CBOC issue affect the 
consolidation, Choice, community care plan? Are CBOCs any less 
valuable? Is there less emphasis as a result of Choice and 
consolidation, your program? Or----
    Secretary McDonald. No, I do not think so, but I think what 
it does is it speaks to something you and I have talked about 
before, which is when we improved access last year, we did 7.5 
million more completed health care appointments, that was in 
large part because we added over 2 million square feet of new 
space. So, every time you put a building out there, it creates 
access, advantages that you did not have before. But, what we 
have to do is we have to be more choice-ful--I do not mean a 
pun in that word, but we have to be more choice-ful about where 
we put them so we make sure we are taking advantage of all of 
our affiliates, like Indian Health Service, medical school 
affiliates, and others, and we are putting those only where 
they are required, being good stewards of taxpayer money.
    Senator Moran. I appreciate this conversation and look 
forward to having a future one.
    Secretary McDonald. Me, too, sir.
    Chairman Isakson. Senator Brown.

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

    Senator Brown. Thank you, Mr. Chairman. Welcome, Mr. 
Secretary and all of you. Thanks for your public service to our 
veterans and to our country, all of you.
    I want to address the very serious allegations Senator 
Rounds mentioned about Cincinnati of mismanagement of the VA 
medical center and leadership of VISN 10. You and I have 
talked, Mr. Secretary, a number of times for months and months 
about some of these allegations and issues--nepotism, lack of 
cleanliness, mismanagement, staffing shortages, and fear of 
whistleblower retaliation.
    First, it is about quality of care, as you have assured us, 
and I know how much you care when you took this job about that. 
I need your assurances first that while this investigation is 
going on and the issues and problems are being fixed, you will 
ensure that veterans receive better quality and good quality 
care throughout. I know you believe that. I just want your 
assurances, at the same time restoring faith in Cincinnati that 
veterans and their families feel compromised. I am glad that 
you have agreed to visit that VA as soon as our schedules 
permit both of us to go together. Thank you for that.
    I want to talk about whistleblower issues for a moment. For 
more than a year, a number of whistleblowers have talked to my 
Cincinnati office, talked to me personally, talked to a number 
of people in my office and others. The atmosphere is, some 
workers will say, ``toxic'' where workers fear they will be 
punished for doing their jobs well. When VA employees come 
forward to voice concerns regarding improper medical care or 
other issues, I am concerned that in too many cases VA 
management has retaliated against them.
    So, I want your commitment for a couple of things, Mr. 
Secretary: one, that no employee in Cincinnati VA who did the 
right thing and advocated for our veterans will be retaliated 
against for their actions; and I want your commitment that if 
any VA employee is retaliated against for speaking up on behalf 
of veterans and patients, that you will hold those people 
accountable.
    Secretary McDonald. First of all, relative to Cincinnati, 
as you noted, Senator, the investigation is ongoing. The 
Cincinnati facility has been a five-star facility historically 
in VA, one of our very best. I have visited it a couple of 
times myself over the last 2 years. It is an important 
facility. It has been historically a good facility. We need to 
dig into this and find out whether or not these allegations are 
supported and then take action as quickly as possible to 
remediate them if they are.
    Relative to whistleblowing, you know, we were the first 
Department certified by the Office of Special Counsel to have 
done the training on whistleblowing. We take it very seriously. 
In fact, we ask all of our employees to give us negative 
feedback as well as positive feedback so we can change. That is 
why we are training them in things like Lean Six Sigma so they 
can create change themselves.
    We do not tolerate retaliation and will deal with it if we 
see it. We just do not tolerate it, and we work very closely 
with the Office of Special Counsel to make sure whistleblowers 
are protected, that they are given good jobs moving forward, 
and that people who retaliate are held accountable.
    Senator Brown. That is what you say, and I believe you, but 
that----
    Secretary McDonald. That is what I say; that is what I do.
    Senator Brown [continuing]. Is not what some people--
apparently some people in Cincinnati that work at the VA have 
done. So, I do want the commitment that, if proven, people who 
have retaliated against whistleblowers will be held 
accountable.
    Secretary McDonald. They will. Anybody who retaliates 
against a whistleblower will be held accountable. But, again, 
what we are describing here are allegations.
    Senator Brown. I understand.
    Secretary McDonald. Let us do the investigation before we 
permit people----
    Senator Brown. That is why I said--I do not want to convict 
anybody. I did not mention names. I just said, if proven, I 
just wanted the commitment that you just gave me that----
    Secretary McDonald. Yes, just know that we get a lot of 
whistleblower----
    Senator Brown. I understand. I see that. When I was a 
Member of the House, I heard it in Brecksville. I heard it in 
Wade Park. Sometimes it was accurate, sometime it was not. 
Thank you for that.
    Let me talk briefly on--one, I want to echo Secretary 
McDonald's and Chairman Isakson's remarks about confirming Mike 
Missal at the IG. That is really important. When Cincinnati--I 
wrote to the VA about Cincinnati. Unfortunately, the letter 
went to Linda Halliday, the Deputy Inspector General, instead 
of the Inspector General. I appreciate all your comments on 
making that happen.
    Let me just close with a bit about staffing directly 
connected to Senator Rounds' comments. The report recommended 
the veterans--the required Section 301 report on staffing 
recommended 61 full-time equivalents be hired for the 
Cincinnati VA to properly meet the needs of veterans. There are 
reports that leadership at the Cincinnati VA may actually be 
abusing it by using it as an excuse to cut staff.
    Can you tell me about any of that specifically now at this 
point? Or is that something you need to share later once you 
know more?
    Secretary McDonald. We immediately sent the Office of 
Medical Inspection to Cincinnati. We do have a preliminary 
report from them, so we can--I am fine with updating you on 
that now.
    Senator Brown. OK.
    Dr. Shulkin. The other thing, Senator, that we did 
immediately was we removed the management authority from the 
VISN Director away from the Cincinnati VA to make sure that 
there was no ability to influence or to keep people from 
raising issues. So, we want this to be very transparent, and we 
will be glad, as soon as we get this final report, to review 
that with you.
    Senator Brown. How long will it take for these--whatever 
the number, up to and including the number 61, if there are 40 
or 60 or 20--how long will it take to bring in and train new 
providers?
    Dr. Shulkin. Well, it will depend on the type of providers 
that are there. Obviously, physicians and nurses take longer 
because of their orientation and credentialing period, then 
staff, front-line staff. So, there will be a spectrum along 
that line. But, the VISN and the medical center have been given 
their budget and do have the ability to hire the most critical 
positions that they need to hire right now.
    Senator Brown. All right. Thank you.
    Chairman Isakson. Senator Brown, just so it is clear on the 
record, I consider accountability to apply two ways: employee 
to supervisor, but supervisor to employee as well. We have got 
to have accountability on both sides, and that is what we are 
pushing so hard for. I appreciate your comment on that.
    Senator Tillis?

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

    Senator Tillis. Thank you, Mr. Chair. Thank you all for 
being here. To Secretary McDonald and the folks on the panel, 
thank you so much for the time you have invested coming to my 
office and working with me.
    I just want to emphasize what you have said that is 
critically important, that of the breakthrough priorities, 
there is very clearly instances where Congress sits in the 
critical path. If we do not take action to move forward on 
these legislative priorities, then it will either impede or 
prevent completely your ability to achieve the goals you have 
set out. I will continue to mention that and stand up for it.
    Ms. Council, I want to talk to you for a minute about IT. 
It is fantastic to have somebody with your professional 
experience in the role that you are in, and I am glad to have 
you there. Can you give me an idea of what your instincts are 
telling you as you look at this enormous IT base? You and I 
have talked about application portfolio, which we can talk in 
acronyms and most people would think it was a second language. 
Can you tell me what your gut tells you the IT platform looks 
like 5 years from now versus today in terms of off-the-shelf 
solutions, integrated platforms, those sorts of things that I 
think are, at least according to the Secretary and others, huge 
enablers to what you all are trying to accomplish?
    Ms. Council. Senator Tillis, it is great to talk to you as 
well. I will not use any acronyms this time.
    As we sort of look out into the future, one of the things 
that has become very clear, not just on intuition but on fact, 
is that we have a very complex architecture and a variety of 
different things in our midst. So, figuring out how to manage 
those today and move off of them toward the future is critical.
    One of the critical areas that I think that will look very 
different in the future is how we manage and use data and how 
we leverage that data in support of the veteran. I believe we 
have a prime opportunity with putting in a data management 
function, but putting in something that is very different than 
anyone has seen at this point that will move us forward to have 
much more agility related to our operations, related to what 
the veteran will need, increasing our ability to be much more 
mobile, have mobility being used by the veteran and our access 
to information as well as our ability to speak and engage with 
them.
    I think also when we look at our infrastructure, having a 
much more solid supply chain capability, a financial system 
that will enable much more visibility into an environment, but 
also ensuring that we have some best of breed capabilities 
wrapped around our health care as well as in our benefits 
areas.
    Senator Tillis. Well, one thing--and I want to try and get 
a lot in in the last couple of minutes, but one thing I would 
really like to see from you all over time that makes sense, not 
out of order for all the things you need to do to transform the 
IT operation, is something that would give me some sense that 
these duplicative or redundant platforms that are used out in 
the VISNs are consolidated when they make sense. There are very 
clear patterns that I can view when I take a look at these 
transition plans, and I would like to see that so I know we are 
making the organizational changes and the systems changes to 
make a lot of these things that are falling through the cracks 
and probably the root cause of a lot of the problems that we 
have. I appreciate the opportunity to maybe get briefed with 
you once you have gotten your legs there. I appreciate it.
    I want to go into a lightning round real quick because I 
want to try to stick to my time allotment.
    First, I just want to echo the sentiments here that we need 
to confirm the IG and do everything that I can to get the 
Inspector General there. It is a very vital role. We need 
somebody in a permanent position.
    Mr. McDonald, this organization chart seems to me to be an 
optimized state. I mean, it is a pyramid. It looks like you 
have got the right distribution, but today it seems to me like 
it is an obelisk. One thing that we really have not talked 
about here is the organizational change, and over time, unless 
you have data here, I would like to find out what we are doing 
in the middle to reorganize and either eliminate those 
resources or free up the resources to provide care out in the 
communities.
    Can you give me some idea--we have not talked much about 
that track. Can you give me some idea of what that looks like?
    Secretary McDonald. Well, the middle is the most important 
part, as you well know, of any organization. Number 1, 
training. We are training the leadership team. That training is 
now cascading through the organization. Twelve thousand senior 
leaders will have been trained. We are training leadership. We 
are training process mapping. We are training Lean Six Sigma, 
values, mission, all the important things. Three days of 
training.
    Number 2 is structure, spans and layers. We have to reduce 
the number of spans and reduce the number of layers.
    Senator Tillis. OK.
    Secretary McDonald. We talked about moving from 21 VISNs to 
18. That has already shown savings. That was in my oral 
testimony. But, the fact that we have so many open positions is 
an opportunity to reduce even more.
    So, with every open position, we really question, David and 
I question, and Sloan, whether or not we should fill it. We 
want to reduce spans, we want to reduce layers, and we can 
share that plan with you next time we----
    Senator Tillis. Thank you. I would like that. It is just 
because my time is short that I am cutting you off.
    Secretary McDonald. Yes, I see.
    Senator Tillis. I think seeing a measurable--instinctively, 
this organization looks like it is heavy in the middle, and 
with that comes cost and complexity and breakdowns and 
handoffs. I would like to see what that transformation looks 
like over time, both in terms of its structure and in terms of 
the people. To your point, many of them may be open, so it just 
means you no longer have a need for that position. I think that 
would be helpful so that people understand there is an 
organizational transformation that is going on.
    My last thing, just to follow up. When a veteran calls for 
help--let us say it is a distress call for a veteran who may be 
worried that they are thinking about suicide. How are these 
calls tracked? In other words, if I get reports, as I have in 
North Carolina recently, that a veteran called and was told to 
call back, how can I track that down; either make sure that 
person has been trained and has not done their job, therefore 
they should be fired, or that their supervisor has not gotten 
them the appropriate training to make sure that that is never 
an appropriate disposition, if, in fact, it is happening? What 
I want to do is at least go in and be proactive and say maybe I 
do not have the facts straight based on what has been reported 
on the ground. But, if those facts are right, then I want to go 
after that person for doing the wrong thing for a vet. I would 
like your advice on that, either in the Committee or 
afterwards.
    Secretary McDonald. Well, it is a very complex issue, so 
let me give you a headline, and then we will come over and talk 
about our Veterans Crisis Line.
    As you know, one of our priorities for this year is to fix 
the outreach to veterans and the Veterans Crisis Line. When all 
of us came, new people, to this organization, what we 
discovered was the Veterans Crisis Line, a recent IG report 
which was written starting on an investigation in May 2014, so 
before I was confirmed, found that we had a third party that we 
had contracted with that was using voicemail. Well, you do not 
use voicemail for a crisis line.
    We have put new leaders in place. We hired a person with 
experience on Philadelphia 311. They have come in. We have got 
new technology in place, new training in place. But, we have 
got to get out of the potential for a veteran being put on 
hold, having to call a different number.
    We still have some medical centers--and we are trying to 
discover which those are and then eradicate them--where if they 
call the medical center and there is an emergency, it says, 
``Please call this number,'' rather than immediately shifting 
that call. We are trying to identify where those are and then 
shift the call automatically rather than having them call back.
    So, this is a work in progress. We are happy to brief you 
on it. It is taking us longer than we would like. Yet, it is 
one of our goals for this year, and we do need the budget to do 
it.
    Chairman Isakson. Thank you, Senator Tillis.
    Senator Sullivan?

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

    Senator Sullivan. Thank you, Mr. Chairman. I appreciate the 
witnesses' focus on these very important issue. Mr. Secretary, 
good to see you again.
    Dr. Shulkin, I wanted to follow up on a couple things. Dr. 
Shulkin, I sent you a letter dated January 4, 2016. This is on 
the ongoing issue. It is a bit of a minor issue in some ways, 
but it is a huge issue also. I think you and I have seen this--
we have been talking about it for a while now, about veterans 
who are hounded by collection agencies for unpaid bills where 
the services were approved by the VA and now somehow our 
veterans are getting saddled with that. The letter had a number 
of--actually, pages of cases that last time we spoke--last time 
you testified, you mentioned to me to get you those specific 
examples. I did. Can you give me an update on where we are on 
that? This is something that I think we should just nip in the 
bud, kill. I mean, it is outrageous that we have vets going 
through that kind of stress.
    Dr. Shulkin. I absolutely agree, and I heard this directly 
from you and from veterans when we were together in Alaska as 
well. So, this is a short-term problem and a little bit longer-
term problem. Fortunately, I think we have solutions for both.
    The short-term issue, we do not want veterans put in the 
middle, and so we have established a toll-free number--I wish I 
had the number memorized, but I will get it to your office--
where if a veteran lets us know about that situation, we will 
intervene immediately. We have done over 400 interventions in 
the last 3 weeks since we put that number up.
    Senator Sullivan. Great. Thank you.
    Dr. Shulkin. We want to know from all your offices because 
we want to help, and----
    Senator Sullivan. Is there something legislatively we need 
to do to fix this at all?
    Dr. Shulkin. No.
    Senator Sullivan. Just let them know that if that is an 
issue, they should call you guys, and you will take care of it.
    Dr. Shulkin. What has happened is because we have had a 
problem in paying on time, the veteran has been put in the 
middle, and those are the ones that we want to stop. Right 
before you came in, we talked about we now actually have 
delivered to the TPAs yesterday the contract for them to sign 
that will decouple medical documentation from payment so we can 
get much better at making payments and keep these situations 
from happening.
    Senator Sullivan. OK. If you can follow up on the specific 
ones I have in that letter----
    Dr. Shulkin. Absolutely.
    Senator Sullivan [continuing]. That would be very useful.
    Dr. Shulkin. Yes.
    Senator Sullivan. I wanted to next go to the issue with 
regard to the appeals process. Mr. Secretary, I noted that the 
budget certainly focuses on this. It is an issue that--I know, 
you know the numbers, but 400,000 veterans have appeals pending 
as of January 2016; 80,000 of those are older than 5 years old; 
5,000 of those are older than 10 years old. I put forward a 
bill, S. 2473, with very strong bipartisan support on this 
Committee. I will not go through all the elements of it, but we 
certainly want to work with you. I think my staff has been 
working with your staff. I think you are supportive of the 
bill.
    Could you talk a little bit about how we get our arms 
around this appeals issue? Because it does relate, of course, 
to the backlog issue, and what we do not want to have happen is 
alleviate the backlog, then have the appeals become the 
problem. We think there are some good things in the bill that a 
number of us have cosponsored, but I would like your view on 
that, particularly because you do seem to be focused on it in 
the budget.
    Secretary McDonald. We do think moving forward with the 
fully developed appeals process makes sense. We are supportive 
of that. But, we do not think it goes far enough to get to what 
we think is a breakthrough--one of our 12 breakthrough 
objectives, which is to be able to decide an appeal in a year.
    Senator Sullivan. Yes.
    Secretary McDonald. To do that, what we put together here 
in this budget is a plan where we add more people now in the 
short term in order to knock the backlog down as much as we 
can, but at the same time we redesign the appeal law, which is 
over 80 years old, so that we can get to that point later where 
we deal with each appeal within a year. That will actually save 
us money. That will save the Government money and save 
taxpayers money.
    To do that, we are going to have to deal with the fact, as 
I said earlier, that there is only a small group of veterans 
that are gumming up the system for everyone else. Ten to 11 
percent of veterans appeal; 2 percent of veterans created about 
45 percent of the appeals. Some have appealed 25 times, 50 
times. The majority of those appealing, the majority, are 
already receiving some form of compensation--maybe the wrong 
amount, but they are already receiving some form of disability 
compensation. Many of them who are appealing are already rated 
100 percent disabled.
    So, you know, you want to get to the point where you can 
freeze the Form 9, as we call it, and cause the person to have 
to resubmit rather than having the same person appeal over and 
over and over again, recognizing that there is no recourse that 
we have to stop them from doing that.
    Senator Sullivan. OK. We would like to work with you. I 
appreciate that update and how you are laying that out more 
strategically. We will continue to work with your staff on 
S. 2473, which we think is--it is a pilot program. You may have 
seen the legislation. We think that it offers a good 
opportunity, similar to the pilot program that the VA is 
instituting in Alaska.
    Mr. Chairman, I will just ask, via posthearing questions 
for the record, an update on where we are on the Alaska pilot 
program as well.
    Senator Sullivan. Thank you, Mr. Chairman.
    Chairman Isakson. Senator Cassidy.

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

    Senator Cassidy. Thank you. Mr. Secretary, thank you for 
being here. I have kind of a smattering of questions all over 
the place.
    What is the VA currently paying for the cost of hepatitis C 
treatment, for a regimen of hepatitis C treatment?
    Dr. Shulkin. Less than we were.
    Senator Cassidy. I got that.
    Dr. Shulkin. Our drug pricing is proprietary, so, 
unfortunately, I cannot say exactly what it is. I will tell you 
that it is by far the best on the market. That is why it is 
proprietary.
    Secretary McDonald. We would be happy to tell you 
privately.
    Senator Cassidy. OK. I was just thinking about it. If 
$54,000 is what the latest regimen costs list and you are 
averaging 25 to 30 percent less, it seems like we should be 
able to treat more veterans for the $1.5 billion that we are 
giving if, ballpark, you are paying $30,000 per. It seems like 
we should be treating 50,000 veterans as opposed to 30,000 just 
to----
    Secretary McDonald. That is exactly the idea. We had a 5-
year plan, and we are now looking at, with lower costs, how do 
we compress that plan forward and get everyone treated.
    Senator Cassidy. So, the $1.5 billion you mentioned, and I 
think 35,000 plan to be treated, actually you hope that is 
elastic on the up side.
    Dr. Shulkin. There is no doubt that is the case. Thirty-
five thousand was what we submitted in the budget. We believe 
we can treat many more now.
    Senator Cassidy. I see. Thank you.
    Second, in this new regimen of folks, you know, having a 
new pay scale, government benefits are typically more generous 
than private sector benefits. So, if you increase--and I do not 
know if that is true for executive compensation.
    Dr. Shulkin. It is not.
    Secretary McDonald. I would argue that.
    Senator Cassidy. No, no. I am talking about retirement 
benefits. I am not talking about--so the retirement benefits 
would be roughly equivalent as well.
    Dr. Shulkin. Yes, sir.
    Senator Cassidy. OK. So, there is not a tail on this that 
is going to come back and bite us that would be greater than we 
would otherwise anticipate.
    Dr. Shulkin. No, sir.
    Secretary McDonald. No, sir.
    Senator Cassidy. OK. By the way, just to be sure, clearly 
when industry decides to downsize, a lot of middle management 
and top management also goes. But, obviously, our current civil 
service restricts the ability to release folks even when they 
are no longer needed. It is great for the individual. It is 
terrible for the taxpayer and, arguably, bad for the veteran. 
Under this new authority, if you downsize, if we no longer need 
this facility, for example, can you immediately release the 
person without having to go through a complicated process?
    Secretary McDonald. Title 38 gives us much more flexibility 
to do that.
    Senator Cassidy. Much more flexibility. Would it be as 
flexible as the private sector or----
    Secretary McDonald. Virtually as flexible as the private 
sector. I am trying to think. David?
    Dr. Shulkin. The private sector differs. Some people have 
extended contracts. Other are at will. Title 38 is going to be 
somewhere in between.
    Senator Cassidy. I get it. OK.
    Now, you mentioned in your testimony regarding closing 
unsustainable facilities, and we are actually interested in 
this, and we sent a poorly worded request and now we have a 
better worded request trying to figure out, you know, where 
these facilities are. You attempted to close one in 
Massachusetts, as you mentioned, but you ran into environmental 
issues. I think I have heard you say it before, but just for 
the record, tell me, if you have all these vacant and 
underutilized facilities, what are the three top obstacles in 
closing them, may I ask?
    Secretary McDonald. Number 1 would be congressional 
opposition, and congressional opposition born by perhaps 
veteran opposition. I mean, if you are a veteran and the 
hospital where you go is in a remote area and that hospital 
only serves five patients a day, it obviously is very expensive 
to run a hospital serving five patients a day. But, if you are 
one of the patients being served, you obviously want it to stay 
open.
    Senator Cassidy. You mentioned, though, that you have 370 
facilities which are either fully vacant or less than 50 
percent occupied, which presumably would not have to be 
completely shut down but, rather, could be, OK, this wing we 
are no longer using sort of thing. Of those that are fully 
vacant, what is the obstacle to closing those?
    Secretary McDonald. Again, congressional opposition----
    Senator Cassidy. Even for something fully vacant?
    Secretary McDonald. Yes, sir. Veteran opposition. Some are 
on the historic register of buildings because, remember, 60 
percent of our buildings are over 50 years old, so we have to 
come up with an alternate use for those historic structures 
unless there is some way to obviate that law or----
    Senator Cassidy. Now, let me ask, that could include just 
boarding up and putting a fence around it, I presume?
    Secretary McDonald. Yes, sir.
    Senator Cassidy. I am just saying that for the taxpayer, I 
mean, we are running this incredible deficit. We have got $26 
million that is not being used for patient care, but which is 
basically being used to not mothball buildings which should be 
mothballed.
    Secretary McDonald. Yes.
    Senator Cassidy. I would be an advocate for just putting 
the fence around it until, you know, something could be done, 
it could be sold or developed or something.
    Any other reasons? I am sorry I interrupted you.
    Secretary McDonald. No. Those are the primary reasons.
    Senator Cassidy. OK. Downsizing from 50 percent use to, you 
know, closing off a wing. What is the obstacle there?
    Secretary McDonald. Again, it depends on the historic 
structure of the building and what it is used for.
    Dr. Shulkin. Yes, we do close off wings in bigger 
buildings, but they still are very expensive for us to 
maintain. You still have to maintain the pipes and the heating 
and other types of things. So, what we normally refer to is the 
10 or 11 million square feet that costs us the $25 or $26 
million a year.
    I think in some cases we are being shortsighted in not 
putting in the capital investments to make the upgrades. When 
50 percent of our buildings--or 60 percent of our buildings are 
more than 50 years old, you know that we are maintaining 
systems that are very, very expensive to maintain that, using 
today's technology, we would be able to do a much better job by 
investing some money right now.
    Senator Cassidy. Well, typically, when they rebuild a new 
hospital, they tear it down because the code is so--you get 
grandfathered in until you break a wall, and then you have got 
to institute the whole code. I could see it would also be more 
cost-effective just to cut your losses.
    I yield back. Thank you.
    Chairman Isakson. Thank you, Senator Cassidy.
    Senator Boozman?

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

    Senator Boozman. Thank you, Mr. Chairman. Thank you all for 
being here, and we do appreciate your hard work. Also, I very 
much appreciate the ability to get in touch with you and you 
all being very accessible.
    You mentioned several accomplishments that you all have 
made, rightfully so, and I think that is one of those that 
people do not think about, but the accessibility really is 
important to Members of Congress.
    In going along with that, you also said that the systemic 
problems could not be fixed overnight. Can you talk a little 
bit about some of the biggest obstacles that you face in that 
regard? Is there need for additional legislation to help you in 
that regard?
    Secretary McDonald. Senator Boozman, thank you so much for 
the question, and thank you for the time we spent together. To 
me, job one of any leader is to get the right leadership team 
in place. Frankly, it has taken me too long to get 10 of the 16 
leaders in place since I came on board. I wish the nomination 
and confirmation process were more quick, which we have talked 
about the IG as an example of that.
    I will tell you also, within the organization, getting new 
leaders in place is job one, and that is why we have 
recommended taking the SESs from Title 5 to Title 38. We are in 
the process of revamping the recruiting process as well. But, 
for me, that is job one. We have got to get the right leaders 
in place.
    Senator Boozman. The latest decision by the Merit Systems 
Protection Board overturned disciplinary action. I think we 
have a situation now where they have overturned more than they 
have upheld.
    Secretary McDonald. They are batting a thousand. They have 
overturned every one.
    Senator Boozman. Which, you know, is sad. You were blessed 
and worked hard and got in a situation where you headed one of 
the biggest, most respected corporations in America. When we 
visited, I think you pointed out that if the VA were a 
business, it would be the sixth largest in the country.
    Secretary McDonald. Yes, sir, that is correct.
    Senator Boozman. Can you talk a little bit about how 
impossible it is to run an efficient entity where you simply do 
not have the ability to discipline people when they need to be 
disciplined? With that size, the reality is that there are 
going to be situations where people need to be disciplined, 
need to be held accountable. So, please talk to us a little bit 
about how we can help you in that regard to see if we can get 
this straight.
    Secretary McDonald. I will start with the last question 
first. We think the right approach is this proposal that we are 
all working on together, the White House and Congress----
    Senator Boozman. As far as legislation.
    Secretary McDonald [continuing]. On going from Title 5 to 
Title 38 for the SES employees. As I was sharing with the 
Chairman--I think we talked about this when we were together--
we have worked hard to connect performance with outcome. I 
talked in my testimony about how bonuses and rewards are down 
in the VA. We have a ranking of our----
    Senator Boozman. So, the old days of just handing out a 
check are over.
    Secretary McDonald. Over.
    Senator Boozman. Good.
    Secretary McDonald. The ranking of our performance by 
performance level is, I would argue, best-in-Government and 
fully equal to best in the private sector. So, for example, the 
top ranking, one, which would be considered the most 
outstanding, in 2012 over 25 percent of the people were rated 
that way. Today, it is around 10 percent. The steps that we are 
taking are giving people a good knowledge of what they have to 
accomplish, holding them responsible for doing that, then 
making the reward match that. That is part of the training that 
we are doing. This Leaders Developing Leaders training is all 
about that, accountability and responsibility. But, we think, 
again, changing the SESs from Title 5 to Title 38 would be a 
big help.
    Senator Boozman. Right. That is so important.
    You mentioned the VetLink program. I think about 3 percent 
were dissatisfied, which, again, that is a low number. What do 
we do about the 3 percent? How do we follow up on that?
    Secretary McDonald. Just in general, we are putting in 
place a standard veteran satisfaction measure across the 
enterprise, and this will be the first time ever that VA has 
had this, believe it or not. We will follow up with all the 
veterans who demonstrate some level of dissatisfaction by 
getting the verbatim comments and then acting to remediate what 
their verbatim comments are. That is what we are trying to do 
with VetLink, is to make sure we take those comments in. Then, 
the medical center director has got to react to them and make 
changes right on the spot.
    Senator Boozman. Very good. Well, again, thank you for 
being here.
    Secretary McDonald. Thank you.
    Senator Boozman. I appreciate your service.
    Thank you, Mr. Chairman.
    Chairman Isakson. Well, thank you, Senator Boozman, and 
thank you for bringing up the part about the accountability. 
Earlier in the hearing, the Secretary in his testimony 
addressed that subject and a number of Members have as well. I 
think the fact that you, Secretary McDonald, independently 
brought that up as your first comment--we are in a situation 
where you have got a toolbox that does not have all the tools 
you need in it to really run the agency the way you would like 
to and the way it should be. I commend you on the things that 
you have done, but let us stick to our goal of by the end of 
March getting a new toolbox and giving you the tools that you 
need to have accountability as a mechanism that works in the 
VA.
    Thank you, Senator Boozman. Thank you, Mr. Secretary.
    [The posthearing questions to Secretary McDonald follows:]
 Response to Posthearing Questions Submitted by Hon. Johnny Isakson to 
                  U.S. Department of Veterans Affairs
                     veterans health administration
    Question 1.  The Secretary testified that the Veterans Health 
Administration (VHA) is looking to expand capacity by ``focusing on 
staffing, space, productivity, and VA Community Care.'' Specifically, 
he noted the Access Stand Down VHA held last fall to review and 
schedule consults that were open more than 30 days, hired more than 
41,000 health staff, the activation of more than 2.2 million square 
feet of space, a nine percent increase in physicians' Relative Value 
Units, and 2.4 million appointments in the community.
    A. What other improvements has VA reviewed that would increase 
access, such as night and weekend hours for certain clinics; extending 
the hours of the operating rooms to match the private sector; or 
increasing a physician's panel size to also match the private sector?
    Response. The Department of Veterans Affairs (VA) is committed to 
providing timely access to Veterans as determined by their clinical 
needs. We strive for all Veterans to have safe, high-quality, 
personalized, and timely care wherever they receive their health 
services. VA has made progress in improving appointment availability. 
VA is currently completing more than one in five of its patients' 
appointment requests on a same-day basis. Additionally, we are making 
strides to reduce the number of Veterans waiting longer than 30 days by 
ensuring that all clinic management teams have the processes, 
structure, and resources to make real-time adjustments to address the 
needs of their specific population.
    As part of a large-scale and immediate effort to assess the urgent 
health care needs of Veterans, VA conducted a second ``Access Stand 
Down'' on February 27, 2016. The nationwide, one-day event resulted in 
VA reviewing the records of more than 80,000 Veterans to get those 
waiting for urgent care off wait lists. Newly released results of the 
Access Stand Down show that 93 percent of Veterans waiting for urgent 
care have been contacted, with many receiving earlier appointments. 
VA's ability to meet the primary and urgent health care needs of our 
Veterans is a priority for us, and is why we established MyVA, which 
focuses all that we do around our Veterans.
    Nationally, VA completed more than 57.36 million appointments from 
March 1, 2015, through February 29, 2016. This represents an increase 
of 1.6 million more appointments than were completed during the same 
time period in 2014/2015. VA completed 96.46 percent of appointments in 
February 2016 within 30 days of clinically indicated or Veteran's 
preferred date. VA increased its total clinical work (direct patient 
care) by 10 percent over the last 2 years as measured by private sector 
standards (relative value units). This increase translates to roughly 
20 million additional provider hours of care for our Veterans. VA is 
also working to increase clinical staff, add space, and locations in 
areas where demand is increasing and extending clinic hours into nights 
and weekends, all of which have helped increase access to care even as 
demand for services increases.
    Additionally, VHA's new initiative, MyVA Access, represents a major 
shift for VA by putting Veterans more in control of how they receive 
their health care. MyVA Access is a declaration from VHA employees to 
the Veterans they care for; it is a call to action and the 
reaffirmation of the core mission to provide quality care to Veterans, 
and to offer that care as soon as possible to Veterans how and where 
they desire to receive that care. MyVA Access ensures that the entire 
VA health care system is engaged in the transformation of VA into a 
Veteran-centered service organization, incorporating aspirational goals 
such as same-day access to mental health and primary care services for 
Veterans when it is medically necessary.

    B. Of the more than 41,000 employees VA hired, how many of those 
positions are funded through section 801 of the Veterans Access, 
Choice, and Accountability Act of 2014?
    Response. As of March 31, 2016, VHA had approximately 10,850 new 
full-time employees (FTEs) on board that are funded by Section 801 of 
VACAA hires, exceeding the hiring goal of 10,682 FTE. VHA continues to 
track VACAA onboards for financial reporting, but new hires for VACAA 
ceased at the end of pay period 26 on January 9, 2016.

    Question 2.  When VA submits the President's request for medical 
care accounts, VA frequently revises the amount for the current fiscal 
year request that was appropriated in advance. The process has been 
referred to as VA's ``second bite of the apple.'' According to 
testimony at the Committee's budget hearing, the Paralyzed Veterans of 
America (PVA) indicated they questioned VA whether the requested level 
for fiscal year (FY) 2018 would be sufficient to meet their needs. 
According to PVA, in response, VA ``half-heartedly admitted that they 
do not believe it is going to be sufficient either.'' PVA indicated 
that, since Congress has only revised the advanced appropriation amount 
twice, ``the track record does not lend itself to underestimating now 
to get it corrected later.''
    A. What is VA doing to ensure the advanced appropriation request VA 
submits to Congress reflects a more accurate amount going forward?
    Response. The Advance Appropriation allows VA health care to avoid 
the financial limitations of a Continuing Resolution or a lapse in 
funds that could lead to a shutdown of VA health care operations. 
Funding of the Advance Appropriation establishes an initial VA health 
care budget to continue operations until the full appropriation amount 
is enacted. The updated President's Budget request for adjustments to 
the Advance Appropriation (the ``second bite'') is intended for the 
administration to fully evaluate the resource requirements of the VA in 
context of the entire Federal budget. Estimates can also vary 
significantly in the year between requests based on updates to the 
Enrollee Health Care Projection Model, newly authorized benefits, 
emerging requirements such as Hepatitis C drugs, recommendations for 
changes generated by the Commission on Care, and sequestration limits.

    B. In the budget justification, VA indicated that the increases 
from FY 2017 to FY 2018 are ``offset by partial decreases from the 2017 
levels for other programs.'' Please list all programs that will offset 
the increase for FY 2018 and detail the reasons for the decreases in 
those programs.
    Response. The $1.386 billion dollar 2018 Advance Appropriation 
increase over the 2017 appropriation request is due to the following 
factors:

     Increases in the initial 2018 estimate are offset by 
partial decreases from the 2017 levels for other programs, including 
health care infrastructure enhancements, Hepatitis C treatment, and 
programs to end Veterans Homelessness (see below ``Programmatic 
Decreases, 2017 Revised Request vs. 2018 Advance Appropriation'').
     Care in the Community is maintained equally to the 2016 
Medical Services operating budget level.
     The 2017 level of core Medical Services FTE is sustained 
into 2018. The 2018 President's Budget will revisit the continuing 
costs of sustaining the new VACAA hires.
     Long-Term Services and Supports increase by $607 million, 
driven largely by cost estimates provided by the Enrollee Health Care 
Projection Model and projected State Nursing Home growth.
     CHAMPVA, Caregivers and other health care programs 
increase by $259 million to fund annual increases in workload.
                         Programmatic Decreases
          2017 Revised Request vs. 2018 Advance Appropriation

                         (Dollars in Thousands)


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Many of the reductions were the result of the funding level 
available under the budget agreement, with affordability across all 
programs being a key driver. For example, the reduction of Hepatitis C 
funding from fiscal year (FY) 2017 to FY 2018 is not based on reduced 
demand but on affordability within VA's Advance Appropriation request 
``top line'' funding level. Estimates for these programs will be re-
evaluated during the 2018 budget cycle.

    Question 3.  The budget justification indicates a future goal of 
VHA's is to create a Transitional Care Program Office within VHA to 
concentrate management of transition care programs.
    A. Please describe in detail the duties of this office and provide 
an organizational chart of the office and where it would be placed in 
VHA's organizational chart.
    Response. Care Management and Social Work Services (CM/SWS) 
proposes realigning the Federal Recovery Coordination Program (FRCP) 
back under the Transition and Care Management (TCM), CM/SWS, to 
integrate care coordination services under one leadership and create a 
synergy to further enhance care coordination services for 
Servicemembers and Veterans (SM/V) and their families. The Program 
Office will not only centralize care coordination services, but also 
support an inter-professional model of transitional care, which 
includes, but is not limited to, nurses, physicians, pharmacists, 
mental health clinicians, and social workers.
    VA operates a number of case management and care coordination 
programs that provide assistance to transitioning SM/V, including 
Transition and Care Management Services and the FRCP. These two 
programs assist wounded SM/V to navigate the recovery care continuum.
    Transition and Care Management Services leads two national 
programs:

    1) The VA Liaison Program consists of 43 VA Liaisons for Health 
Care at 21 Military Treatment Facilities (MTF) to facilitate ongoing VA 
health care for ill and injured Servicemembers transitioning from 
Department of Defense (DOD) to VA. Since the inception of the program, 
VA Liaisons for Healthcare have coordinated over 70,000 transitions. In 
FY 2015, VA Liaisons for Healthcare coordinated 11,221 transitions; 
provided 22,108 professional consultations and 2,543 briefings; and 
ensured that Servicemembers transitioning from DOD to VA received 
timely access to care by ensuring that 100 percent of Servicemembers 
who wanted VA health care had an initial VA appointment scheduled at 
the VA health care facility of their choice; and ensured that 89 
percent had appointments scheduled prior to leaving the MTF.
    2) The TCM Program consists of a TCM team at each VA Medical Center 
to provide comprehensive and specialized transition assistance and 
ongoing case management services to Post-9/11 Veterans as they 
reintegrate into their home communities and into VA health care. VA has 
approximately 400 TCM case managers nationwide providing case 
management services to almost 35,000 Veterans. In FY 2015, 90 percent 
of these Veterans were contacted regarding their individualized care 
management plan, resulting in over 367,000 contacts.

    The FRCP was developed as a joint program by VA and DOD, in 
January 2008, to provide care coordination services to SM/V who were 
severely wounded, ill, or injured after September 11, 2001. The program 
utilizes Federal Recovery Coordinators (FRCs), either social workers or 
nurses funded by VA Central Office, to monitor and coordinate clinical 
services, including facilitating and coordinating medical appointments; 
and non-clinical services, such as providing assistance in obtaining 
financial benefits or special accommodations needed by program 
enrollees and their families. FRCs currently serve approximately 400 
SM/Vs, of which 27 percent also have a VA Lead Coordinator (i.e., TCM 
Case Manager).
    Aligning the two entities providing care coordination services 
under one leadership would integrate the two programs and create a 
synergy to further enhance care coordination services for SM/V and 
their families.

    B. Please provide the Committee with the expected funding level for 
the office, the number of full-time equivalent employees (FTE) to 
include a break out of number of title 5 employees and number of title 
38 employees.
    Response. The VHA Transitional Care Program Office is an 
aspirational project for the future, with most (if not all) of its 
funding needs derived from current resources. However, there is no 
specific resource or budget request for it at this time.

    Question 4.  The number of unique patients VHA estimates will 
receive mental health care from a non-VA provider increased by 17 
percent above the FY 2016 current estimated level and by 50 percent 
above the FY 2017 advanced appropriations. However, the number of 
unique patients is expected to decrease by 9 percent in FY 2018. In 
addition, the number of unique mental health patients receiving care in 
the community shows significant increases between the FY 2017 budget's 
estimated level and the FY 2018 advanced appropriations estimate.
    A. Please explain, in detail, the reason for the significant 
changes in the estimated number of unique patients accessing care in 
the community.
    Response. In projecting future Veteran demand for VA health care, 
VA uses the Enrollee Health Care Projection Model to account for the 
unique characteristics of the Veteran population, VA health care 
system, environmental factors impacting Veteran enrollment, and use of 
VA health care services. Growth in expenditure requirements to provide 
care to enrolled Veterans has been primarily driven by health care 
trends, the most significant of which is medical inflation. Health care 
trends are key drivers of annual cost increases for all health care 
providers--Medicare, Medicaid, commercial providers, and the VA health 
care system.
    In 2015, the VACAA significantly expanded access to VA health care 
for enrolled Veterans. VACAA increased VA's in-house capacity by 
funding medical FTE growth in VA facilities, expanded eligibility for 
care in the community for enrollees residing more than 40 miles from a 
VA facility, and assured access to care within 30 days. This additional 
capacity facilitated an increase in current enrollees' reliance on VA 
health care over the level expected in 2015. At the end of FY 2015, the 
VA Budget and Choice Improvement Act further expanded eligibility for 
care in the community paid for by VA. As a result, enrollee reliance is 
expected to continue to increase beyond what would have been expected 
in the pre-VACAA environment. This expected increase in enrollee 
reliance significantly increased the projected resources required to 
provide care to enrolled Veterans in 2017 over the 2017 Advanced 
Appropriation level.
    Additionally, the number of Veterans who received mental health 
care from VA has grown significantly since 2005. This rate of increase 
is more than 3 times greater than what is seen in the overall number of 
VA users and the number of mental health encounters or treatment 
visits, from 10.5 million in 2005 to 19.6 million in 2014, has been 
even more dramatic--at 87 percent. As a consequence of these trends, 
the proportion of Veterans served by VA who receive mental health 
services has shifted substantially. In 2005, 19 percent of VA users 
received mental health services, and in 2013, the figure was 27 
percent. We anticipate VA's requirement for providing mental health 
care will continue to grow. The FY 2017 budget request ensures the 
availability of a range of mental health services, from treatment of 
common mental health conditions in primary care, to more intensive 
interventions in specialty mental health programs for more severe and 
persisting mental health conditions. We will continue to focus on 
expanding and transforming mental health services for Veterans to 
ensure accessible and patient-centered care, whether within a VA 
facility or in the community.

    B. Please provide the Committee the types of care provided, the 
non-VA care programs (i.e., Patient Centered Community Care, Veterans 
Choice Program, fee basis, etc.) utilized to provide care in the 
community, and the amount spent under each program.
    Response. See table below.\1\
---------------------------------------------------------------------------
    \1\ CHAMPVA: Civilian Health and Medical Program of the Department 
of Veterans Affairs  
FMS: Financial Management System / FMP: Foreign Medical Program / CWVV: 
Children of Women Vietnam Veterans

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Question 5.  The budget justification indicates a future goal of 
the Readjustment Counseling Service (Vet Centers) is to continue to 
expand access for readjustment counseling, particularly in underserved 
areas. Please explain in detail VA's plan to expand access, including 
any plans to increase the number of Mobile Vet Centers, and explain the 
need for expanding access.
    Response. The Senate Veterans' Affairs Committee broadly defines 
``the purposes of this readjustment counseling provision is to make 
fully available--and to encourage and facilitate the full use of--the 
resources of the VA's health-care system to those Vietnam-era Veterans 
[and now all combat and other eligible Veterans, eligible 
Servicemembers, and their families] who feel the need for counseling to 
help them in their readjustment to civilian life.'' Senate Report No. 
96-100 (April 27, 1979), accompanying Pub. L. 96-22, Veterans' Health 
Care Amendments of 1979.
    The House Veterans' Affairs Committee outlines `within the context 
of readjustment counseling, each Vet Center is tasked with three major 
functions: outreach, direct service delivery, and referral.' House 
Report No. 98-117, accompanying Pub. L. 98-160, Veterans' Health Care 
Amendments of 1983.
    VA estimates that it will continue to operate the same number of 
``brick and mortar'' Vet Centers in FY 2017 as it did in FY 2014. In FY 
2014, the Vet Center program did request and receive VHA approval for 
291 new FTE, 63 of which were specifically placed in areas with high 
concentrations of Active Duty Servicemembers. In addition, 10 new 
Mobile Vet Centers (MVC) were implemented, bringing the fleet total to 
80 MVCs.
    The 80 MVC's are a national asset and available upon request to 
participate and provide services at any event where Veterans, 
Servicemembers, families, and community stakeholders are present. In 
order to maximize the impact of the new assets, an overall assessment 
of the entire MVC fleet was conducted. The plan covered placement of 
the newly purchased MVCs and an assessment of current assets by having 
the entire MVC Fleet (70 vehicles) meet the following criteria:

     An MVC was stationed within a 120 minute drive time to all 
major Active Duty Military Installations and Demobilization Sites.
        - Major Active Duty Military Installations refer to any base 
        where the active duty servicemember population is over 10,000 
        and the primary function is not basic training or a national 
        training site. (i.e., Great Lakes Naval Station- basic training 
        location, 29 Palms Marine Air Ground Task Force Training 
        Command- national training location).
        - Demobilization sites are determined by DOD. In most 
        instances, major active duty military installations are also 
        demobilization sites.

     An MVC was stationed within a 120 minute drive time to 
counties with a Veteran population of 5,000-25,000.
        - The additional 20 vehicles will provide outreach and services 
        to over 180 counties that met these criteria; Furthermore over 
        84% of all counties within the United States will have access 
        to an MVC within a 120 minute drive time.

     Streamlined MVCs were distributed to locations where their 
size could best be utilized given Department of Transportation 
regulations, weather, terrain, and road conditions.

    There is one exception to the criteria. Ponce, Puerto Rico received 
a streamlined MVC due to the large National Guard and Reserve Component 
population. While these individuals may receive their initial 
demobilization processing in the continental United States, all follow 
up events are done in Puerto Rico.
    The Vet Center service mission is specific, unique, and purposely 
designed to address the needs of individuals readjusting to civilian 
life after service in or in support of combat operations, including 
those who experienced military sexual trauma.
    Since 2014, the focus for increasing access to Vet Center services 
has shifted from opening new ``brick and mortar'' Vet Centers to 
providing regularly scheduled services in Vet Center Outstations, with 
services available 40 hours per week using a small number of counselors 
and Community Access Points (CAP), with varying levels of service 
delivery dependent on community demand. These sites are located within 
the communities of underserved Veteran and Servicemember populations. 
Vet Centers are staffed with an average of 7 employees and incur 
overhead costs. Service delivery through Vet Center Outstations and 
Community Access Points are the most cost efficient methods to provide 
readjustment counseling in areas geographically distant with smaller, 
although significant, client populations. These areas simply do not 
justify a full Vet Center.
    Current State: As of the beginning of FY 2016, the program is 
operating 19 Vet Center Outstations with full-time services available. 
The program is operating 742 Community Access Points, with 401 sites 
offering services on a weekly basis, 189 sites offering services on a 
twice monthly basis, and 152 sites offering services on a monthly 
basis. As utilization increases/decreases the service level is adjusted 
accordingly.
    Ongoing Evaluation: In FY 2016, each of the 300 Vet Centers has 
been tasked with 2 evaluations:

    First, they must evaluate for appropriate service delivery levels 
at each of the existing Outstations/CAPs. This evaluation includes a 
targeted outreach plan to increase local awareness of service 
availability, including an advertised ``Open House'' and close 
collaboration with the local County Veteran Service Officer, local 
Veteran Service Organizations, and local Congressional office staffers. 
In addition, Readjustment Counseling Service, which oversees all Vet 
Centers, has developed and is implementing a plan to acquire broad 
access to professional media services for the overall purpose of 
increasing awareness and access to Vet Centers, and specifically 
targeting awareness of the local services available through Vet Center 
Outstations and CAPs.
    Second, each Vet Center has been tasked with identifying and 
implementing at least one new CAP in their catchment area this fiscal 
year. Funding is being made available for hiring additional staff at 
any site that does not have current staffing necessary to provide these 
services.
    Caregivers and other supports and services of PCAFC affected the 
perceived wellbeing of caregivers and their families.
    Aim 3 examined the use and value of the overall Caregiver Support 
Program and its component services to caregivers in either PCFAC or the 
Program of General Caregiver Support Services. The study design for Aim 
3 was a quantitatively-driven mixed method design, with qualitative 
semi-structured interview data, enhanced by survey findings. Survey 
data will describe frequency of use of services, ratings of 
helpfulness, and differences by individual and site-level 
characteristics (e.g., caregiver race, Veteran health status, 
geographic region, etc.). Interviews were utilized to inform 
interpretation of the quantitative findings and shed light on other 
important aspects of caregivers' experiences unanticipated with survey 
responses.
    Aim 4 complements the caregiver survey data on services used by 
detailing the full delivery costs of the Caregiver Support Program--
personnel, programming (e.g., stipend, CHAMPVA), and supporting costs. 
Preliminary operational costs will be based on a survey of Caregiver 
Support Coordinators (CSCs), capturing how their time is allocated 
across the various components of the Caregiver Support Program which 
they deliver at VAMCs.
    Final results will be delivered in summer 2016 and will inform the 
Caregiver Support Program about its return on investment and provide 
information on best practices for improving its programs. Understanding 
the impacts of the Caregiver Support Program on caregivers, Veterans, 
and VHA is expected to provide the Caregiver Support Program with 
information about highest value programs and services and an evidence 
base upon which to make program and planning decisions which optimize 
services while continuing to meet the requirements of title I of Public 
Law 111-163.

    Question 6.  The budget justification for Medical Support and 
Compliance indicates funding for the Veterans Integrated Service 
Networks (VISN) headquarters as decreasing by $11 million from the 
appropriated amount for FY 2017. Recently, VA announced that the number 
of VISNs would be reduced from 21 to 18.
    A. Please provide the Committee with the number of FTE at each VISN 
headquarters, broken out by VISN and by general schedule or title 38 
positions.
    Response. See attached.

 
------------------------------------------------------------------------
                          Number of FTE General   Number of FTE Title 38
          VISN              Schedule Positions           Positions
------------------------------------------------------------------------
1......................  33                       5
2......................  51                       3
4......................  41                       2
5......................  41                       12
6......................  39                       7
7......................  48                       13
8......................  46                       10
9......................  48                       8.5
10.....................  4                        80.56
12.....................  34                       6
15.....................  45                       11
16.....................  --                       --
17.....................  49                       4
18.....................  23                       11
19.....................  40                       16.25
20.....................  48                       11
21.....................  41.5                     8.2
22.....................  41                       8
23.....................  41                       11
------------------------------------------------------------------------


    B. Please provide a detailed plan to reduce the number of VISNs to 
18 and a justification why 18 is the appropriate number of VISNs 
needed.
    Response. With the goal of modifying the existing Veteran 
Integrated Service Network (VISN) structure to bring it in line with 
MyVA districts, a VHA workgroup comprised of Network Directors and 
relevant Program Office Directors explored options and models and 
determined that 18 is the appropriate number of VISNs. Several factors 
were weighed in the process, including alignment with state boundaries, 
and the number of healthcare systems within each VISN. Realignment 
within state boundaries allows for better collaboration and interaction 
with various political representatives, state officials, agencies, and 
VSOs. Realignment into 18 VISNs allows for a more reasonable span of 
control, with 6-11 health care systems in the majority of the VISNs, 
while simultaneously reducing variation in Veteran population, 
enrollees, users, and budget. Eighteen VISNs will allow for better 
collaboration, standardization, and sharing of best practices, while 
not increasing span of control beyond 6-11 health care systems.


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    Question 7.  The budget justification for Medical Support and 
Compliance indicates a decrease of approximately $35 million from the 
FY 2017 appropriated level for VHA Central Office (VHACO).
    A. Please provide the Committee with a detailed justification for 
the decrease in funding for VHACO.
    Response. For the past three fiscal years (FY 2013-2015), VHA has 
seen decreases in VHA Central Office (VHACO) actuals and has re-
estimated the out year projections accordingly. These reductions 
reflect Congressional rescissions (see below ``Rescissions, FY 2013-FY 
2015'') on overall funding including rescissions to the Medical Support 
and Compliance (MS&C) appropriation in the provision of 2-year funding 
in the budget year (see below example Public Law 113-76, Section 226). 
Because of an identified need for MS&C funding at the VA medical 
centers (VAMCs), and to help address the recent access crisis, the 
reductions to this appropriation were imposed on VHACO rather than 
field organizations.

                      Rescissions, FY 2013-FY 2015
                         (dollars in thousands)
------------------------------------------------------------------------
Fiscal                                                        Rescission
 Year                Public Law (PL)                 PL #       Amount
------------------------------------------------------------------------
  2013Consolidated and Further Continuing         113-6      ($2,039)
       Appropriations Act, 2013
  2014Consolidated Appropriations Act, 2014       113-76    ($50,000)
  2015Consolidated and Further Continuing         113-235    ($5,609)
       Appropriations Act, 2015
------------------------------------------------------------------------


                     Public Law 113-76, Section 226
    Sec. 226. (a) of the funds appropriated in division E of Public Law 
113-6, the following amounts which became available on October 1, 2013, 
are hereby rescinded from the following accounts in the amounts 
specified:
          (1) ``Department of Veterans Affairs, Medical Services'', 
        $1,400,000,000.
          (2) ``Department of Veterans Affairs, Medical Support and 
        Compliance'', $150,000,000.
          (3) ``Department of Veterans Affairs, Medical Facilities'', 
        $250,000,000.
    (b) In addition to amounts provided elsewhere in this Act, an 
additional amount is appropriated to the following accounts in the 
amounts specified to remain available until September 30, 2015:
          (1) ``Department of Veterans Affairs, Medical Services'', 
        $1,400,000,000.
          (2) ``Department of Veterans Affairs, Medical Support and 
        Compliance'', $100,000,000.
          (3) ``Department of Veterans Affairs, Medical Facilities'', 
        $250,000,000.

In addition, the 2016 amount reflects the request for an adjustment to 
the Advance Appropriation of $69.96 million that was not approved in 
the final enacted appropriation. The reduction of $35 million reflected 
in the most current submission for FY 2017 continues those projections, 
as the FY 2015 actual was $52.6 million less than the previous year 
(see ``VHA Central Office Obligations).

    B. Please provide the Committee with the number of FTE at VHACO the 
FY 2017 and FY 2018 budgets would support if this budget was adopted. 
Please indicate the number of title 5 employees and the number of title 
38 or hybrid-title 38 employees.
    Response. See table below.
 
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                           homeless veterans
    Question 8.  In the last several years, there has been significant 
momentum in efforts to end veteran homelessness. As the Secretary's 
testimony mentioned, veteran homelessness has declined by 36 percent 
since 2009.
    A. How does the budget request help focus efforts on those who are 
most difficult to reach, in addition to those who are at risk for 
homelessness?
    Response. VA's commitment to preventing and ending Veteran 
homelessness remains firm. VA will continue until the goal of all 
Veterans having permanent, sustainable housing with access to high-
quality health care and other supportive services is met. VA provides a 
seamless continuum of services for Veterans who are homeless or at risk 
of homelessness. While significant advances have been made in reducing 
Veteran homelessness, there are sub-populations of homeless Veterans 
who are hard to reach and engage in services (i.e., chronically 
homeless, those with serious mental illness and justice involved). The 
2017 President's Budget includes $1.6 billion for VA programs that 
prevent or end homelessness among Veterans including, funding for case 
management support for the nearly 80,000 existing Housing and Urban 
Development-VA Supportive Housing (HUD-VASH) vouchers, grant funding 
for community-based prevention, and rapid rehousing services provided 
through the Supportive Services for Veteran Families (SSVF) program, 
clinical outreach and treatment services through Health Care for 
Homeless Veterans (HCHV), service intensive transitional housing 
through the Grant and Per Diem (GPD) and prevention services to justice 
involved Veterans in the Veteran Justice Program (VJP); and employment 
supports. These funds are critical to ensure that once communities meet 
the goal of ending Veterans homelessness they will be able to sustain 
it and not jeopardize the progress to date or recreate the levels of 
homelessness among Veterans prior to the investment.
    VA has made unprecedented efforts to promote the services available 
to Veterans who are homeless or might become homeless. A continuum of 
services has been designed to assist every eligible homeless Veteran, 
as well as Veterans at risk for homelessness. This homeless continuum 
assists Veterans in acquiring safe housing, treatment services, 
clinical outreach, opportunities to return to employment, prevention 
and rapid re-housing, and benefits assistance. As a result of these 
efforts, VA is serving more Veterans than ever before with specialized 
services for Veterans who are homeless or at risk of homelessness. 
Since 2010, demand for VA homeless-related services has increased by 
136 percent. There has been a year to date, 8.4-percent increased 
demand for homeless services between January 2015 and January 2016 
(January 2015: 164,224; January 2016: 178,139).\1\
---------------------------------------------------------------------------
    \1\ Due to enhanced data capture from VA and community providers 
and continued refinement of VA's data systems homeless data is 
constantly refreshed which may cause changes in previously reported 
data. Updates to homeless data are reflected in monthly refreshes of VA 
data systems.
---------------------------------------------------------------------------
    Since 2010, more than 365,000 Veterans and their family members 
have been permanently housed, rapidly rehoused, or prevented from 
falling into homelessness as a result of VA's homeless continuum of 
services and targeted community resources. In FY 2015 alone, nearly 
65,000 Veterans obtained permanent housing through VA Homeless Programs 
(FY 2014: 50,730), and more than 36,000 Veterans and their family 
members were prevented from becoming homeless through the SSVF program, 
including 6,555 children. VA's ability to partner HUD, the U.S. 
Interagency Council on Homelessness, other Federal agencies, state and 
local governments, and volunteer organizations all contributed to this 
significant accomplishment.
    VA's programs serving homeless and at-risk Veterans, are outlined 
below:

    The HUD-VASH program subscribes to the principles of the ``Housing 
First'' model of care, an evidence based practice model, helps homeless 
individuals exit from homelessness, remain in stable housing, thus 
improving ability and motivation to engage in treatment strategies. 
This program has been successful at rapidly moving individuals into 
housing and then providing wrap around supportive services as needed. 
Program goals include housing stability while promoting maximum Veteran 
recovery and independence in the community for the Veteran and the 
Veteran's family. The HUD-VASH program targets the most difficult to 
reach and prioritizes chronically homeless Veterans. In FY 2015, more 
than 18,200 chronically homeless Veterans were admitted to HUD-VASH 
case management services.
    SSVF is designed to rapidly re-house homeless Veteran families and 
prevent homelessness for those at imminent risk due to a housing 
crisis. Funds are granted to private, non-profit organizations and 
consumer cooperatives that will assist very low-income Veteran families 
by providing a range of supportive services designed to promote housing 
stability. In FY 2015, SSVF assisted nearly 99,000 Veterans and their 
family members (over 157,400 individuals), which included over 18,200 
households with children (over 34,600 children). SSVF has the unique 
ability to shift funds from the rapid re-housing of homeless Veteran 
families to preventing homelessness for those at-risk. This allows SSVF 
to adapt to changing local needs and emphasize prevention assistance 
where local communities have met the Federal benchmarks to end 
homelessness.
    The HCHV program is our primary clinical outreach program to engage 
the most difficult to reach homeless Veterans and provide street 
outreach to these Veterans. In addition, case management and HCHV 
Contract Residential Services ensure that chronically homeless 
Veterans, especially those with serious mental health diagnoses and/or 
substance use disorders, are connected to health care and other needed 
services. Veterans are placed in VA or community-based programs that 
provide quality housing and services that meet the needs of these 
special populations.
    The GPD program plays a vital role in the continuum of homeless 
services by providing supportive services to those Veterans who would 
otherwise be among the unsheltered homeless population, and ultimately 
transitioning them to permanent housing. Grants offered by the GPD 
program promote the development and provision of supportive housing 
and/or supportive services with the goal of helping homeless Veterans 
achieve residential stability, increase their skill levels and/or 
income, and realize greater self-determination. The GPD program has 
more than 650 funding projects and over 14,500 beds nationwide. During 
FY 2015, 15,507 Veterans exited GPD programs with permanent housing 
placements.
    The VJP and the Health Care for Re-Entry Veterans (HCRV) are 
designed to target Veterans who are at great risk of becoming homeless 
due to involvement with the justice system. The Veteran Justice 
Outreach (VJO) Specialists conduct face-to-face outreach in 1,284 local 
jails (39 percent of the U.S. total), and staff nearly the entire 
Nation's Veteran Treatment Courts and other Veteran-focused courts. VJO 
Specialists have served over 120,000 justice-involved Veterans since FY 
2010, including 46,534 Veterans in FY 2015.
    The HCRV Specialists provide outreach to Veterans approaching 
release from State and Federal prisons. They briefly assess reentry 
Veterans' probable treatment needs, help the Veterans plan to access 
responsive services upon release, and provide post-release follow-up as 
needed to ensure Veterans are engaged with services to prevent 
homelessness. There are currently 44 HCRV Specialist positions 
nationwide, almost all of which are funded through Veterans Equitable 
Resource Allocation. While many are based at VAMCs, but they typically 
serve Veterans in areas much larger than a VAMC catchment, often 
conducting outreach to prison facilities in at least one entire State, 
and sometimes an entire VISN. Nationally, HCRV Specialists served over 
72,000 re-entry Veterans since FY 2007, including 15,580 in FY 2015.
    Low Demand/Safe Havens (LDSH) are a 24-hour per day/7-days per week 
community-based early recovery model of supportive housing that serves 
hard-to-reach homeless Veterans with severe mental illness who have 
been unable to participate in traditional treatment and supportive 
services. Four LDSH sites were funded as pilot programs in FY 2012 as 
development projects under the National Center for Homelessness among 
Veterans (NCHAV) with funding support made available through HCHV. 
Outcomes of fidelity reviews conducted by NCHAV warranted expansion of 
the model program to include an additional 18 sites in FY 2013 for 
chronically homeless Veterans with concurrent mental illness and 
substance use disorders.
    Homeless and at-risk Veterans also need access to employment 
opportunities to support their housing needs, improve the quality of 
their lives, and assist in their community reintegration efforts. The 
Homeless Veteran Community Employment Services (HVCES) program is the 
only employment program within VHA that specifically targets homeless 
Veterans. In FY 2015, the number of Veterans exiting homeless 
residential programs with employment (GPD, CWT/TR, and DCHV) increased 
by 9 percent. Continued investment in VA's homeless programs is needed 
to sustain the capacity to address the housing needs of Veterans and 
maintain the systems put in place to prevent homelessness.

    B. As the number declines, what is the vision for the future of VA 
homelessness programs?
    Response. VA's vision for ending homelessness among Veterans is to 
continue developing a systematic approach in communities whereby any 
Veteran experiencing a housing crisis may receive the housing and 
services they need to end their crisis as quickly as possible, while 
preventing those who are at risk from ever falling into homelessness. 
These systems enable communities to create a multi-pronged approach 
addressing the varying health and social situations experienced by 
Veterans and their families. These approaches must address Veterans 
with an acute housing crisis, as well as those Veterans who are at risk 
of homelessness; recovering from a chronic housing crisis; or chronic 
health, mental health, and substance use issues. VA and communities 
must have the systems and services in place to sustain and maintain 
access to permanent, sustainable housing, high quality health care and 
other supportive services.
    Ending Veteran homelessness does not mean that a Veteran will never 
again experience a housing crisis. At any given time, a Veteran may 
become homeless as a result of challenges in their lives. VA's goal is 
to make these challenges rare, brief and non-recurring. As homelessness 
among Veterans declines and the needs of Veterans change, VA will shift 
with the changing needs of Veterans and communities and increase the 
focus on preventing those who are at risk while maintaining Veterans 
who are already housed.
    VA and Federal partners are pleased by the successes being realized 
across the country. As of April 15, 2016, 23 communities, the State of 
Connecticut, and the Commonwealth of Virginia have announced an 
effective end to Veteran homelessness. In order to remain successful, 
VA and communities need to be able to sustain the gains that have been 
made.
    VA's vision is based on data collection and research. This approach 
provides valuable insight into the causes of Veteran homelessness, 
evidence based practices, and projecting the needs and changing 
demographics of Veterans. The results of these efforts will allow VA to 
continue to refine and target homeless programs to best prepare for 
increasing numbers of female Veterans, returning combat Veterans, as 
well as other changes in our Veteran population.

    C. What potential changes may be needed in the future to ensure the 
program size and services are appropriate for the level of need?
    Response. As VA, Federal, and community partners advance toward the 
goal of preventing and ending Veteran homelessness and the landscape of 
needs and services change, it is important to make certain that the 
housing resources and supportive services in each community are best 
suited to ensuring that homelessness among Veterans is rare, brief, and 
non-recurring. As the needs of homeless and at-risk Veterans evolve, VA 
will continue to transition its focus from ``rescue'' (i.e., outreach 
and support) to those seeking housing, to long-term case management of 
those trying to sustain housing and to prevention efforts. It is 
important to note that the target populations for VA homeless services 
are Veterans who are chronically homeless and/or have mental and 
physical health concerns. These Veterans require long-term, often 
intensive, case management and other clinical services that will 
prevent them from returning to homelessness. Therefore, once Veterans 
are permanently housed, VA will need to continue to provide the wrap 
around services necessary to ensure housing stability for the Veteran 
and their family.
    Through its research and data collection, VA continues to evaluate 
and monitor the needs of homeless and at-risk Veterans to ensure that 
those needs are being met. The areas where there have been large gains 
in ending Veteran homelessness have been in places that have benefited 
from targeted investment of resources. Conversely, areas where gains 
have been lost were in places where the focus shifted to other 
priorities. In order to sustain the gains and ensure that resources are 
allocated efficiently, VA will require flexibility in its 
authorization(s) to transition services at a level commensurate with 
the population shift (from literally homeless to at-risk) and 
geographic needs.
    In addition to the allocation of resources to meet targeted need, 
VA is focusing on three areas to enhance homeless services: 
programmatic transformation in the GPD program, adoption of Coordinated 
Entry Systems and the use of ``By Name Lists'' (BNLs), and maximum 
utilization of all HUD-VASH vouchers. Additionally, VA conducts 
research to inform the development of evidence-based services that meet 
the needs of various special populations.
    GPD Programmatic Transformation: The GPD Program has been VA's 
primary transitional housing program for over twenty years. As VA has 
added programs to the homeless continuum of services, and homelessness 
has decreased, it is clear that the GPD program must be refreshed to 
keep pace. VA is exploring an overall program refresh to allow VA to 
make GPD more efficient and effective as well as responsive to Veteran 
needs in their respective communities.
    In addition, VA has challenged GPD grantees to assess their 
programs and think about strategies that are currently available to 
them address needed changes. One option is to ask grantees to consider 
if Bridge Housing could work in their community. Provided below is a 
copy of the guidance VA issued to GPD grantees via an Open Letter on 
March 1, 2016 (see below).


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    Coordinated Entry Systems and the use of ``By Name Lists'' (BNLs): 
A vital strategy in the Federal approach to ending homelessness is the 
adoption of Coordinated Entry Systems and the use of BNLs. These 
approaches require the ability to share Veteran Protected Health 
Information with community partners in order to develop a fully 
comprehensive BNL and ensure that all homeless Veterans are prioritized 
for services in the community. VA is working to identify and implement 
secure methods for the digital sharing and storage of Veteran 
information in a way that dually maximizes Veteran security and 
community-level coordination of services.
    Maximum use of HUD-VASH vouchers: VA is working internally and with 
its Federal partners at HUD and USICH to ensure that we maximize 
utilization of all HUD-VASH vouchers. Efforts underway within HUD-VASH 
include targeted allocations for Veterans on Tribal lands and in rural 
areas, increased use of project-based vouchers, as well as exploratory 
discussions regarding vouchers for Other Than Honorable Veterans. 
Concurrently, VA is working on several HUD-VASH accelerator projects 
focused on cities with low vacancy rates and a backlog of voucher 
holders seeking housing. Ensuring that Veterans have the case 
management support in place as they exit homelessness is a critical 
component of this process. Continued investment in case managers (e.g., 
10,000 newly funded HUD-VASH vouchers) through funding provides 
Veterans with the access and quality services to successfully exit 
homelessness.
    Research: VA recognizes that research is critical to informing the 
development of evidenced-based services that meet the needs of various 
special populations (e.g., aging, women, Operation Enduring Freedom/
Operation Iraqi Freedom/Operation New Dawn, the chronically homeless). 
VA's National Center on Homelessness among Veterans is VA's hub for 
homeless Veteran research. For example, the National Center on 
Homelessness hosted several Homeless Evidence and Research Synthesis 
(HERS) symposiums bringing together policymakers, leaders in the field 
and researchers to discuss various evidence based practices and 
solutions.
    The final proceeding documents from previous HERS symposiums are 
embedded. These documents highlight the presentations, discussions and 
suggested recommendations from the events. Opinions expressed in these 
papers are provided to be thought provoking and challenging, as 
national policy are developed to address the needs of homeless 
Veterans. These recommendations do not reflect the current official VA 
policy.


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    In summary, the strategies outlined above are critical to ensuring 
that programs and services match Veteran need. Evidence and data show 
the importance of strategically aligning housing resources in such a 
manner as to create a crisis response system that quickly resolves an 
individual's or family's homelessness by providing the appropriate 
permanent housing option along with the necessary supports. Achieving 
such alignment challenges the provider community at all levels to 
develop new approaches and refine existing programs that are cost 
effective and in line with proven best practices.

    Question 9.  One of the ``Breakthrough Outcomes for 2016'' is to 
``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.''
    A. What is the total number of veterans for whom VA intends to 
provide permanent housing or prevent homelessness in 2016?
    Response. In FY 2015, nearly 65,000 homeless Veterans were 
permanently housed through VA's homeless programs. After including 
their family members, that number increased to over 100,000.
    Based on previous year's performance, VA expects to permanently 
house or prevent from homelessness approximately 100,000 people in 
2016. This number includes Veterans and their family members. Out of 
100,000 people, VA projects that approximately 73,000 Veterans will 
obtain permanent housing or be prevented from homelessness at exit from 
a VA homeless program.

    B. Of this number, how many does VA intend to place in permanent 
housing?
    Response. VA anticipates that all of the Veterans referenced above 
will be permanently housed or maintained in permanent housing. Veterans 
could be placed in permanent housing from any of VHA's homeless 
programs (HUD-VASH, SSVF, GPD, HCHV, Domiciliary Care for Homeless 
Veterans (DCHV), Compensated Work Therapy/Transitional Residence 
program (CWT/TR), and the justice programs).

    C. How many would be placed in transitional housing?
    Response. Transitional housing is not part of the Breakthrough 
Outcomes for 2016; however, transitional housing, available through the 
GPD program, will remain part of VA's continuum of homeless services. 
In FY 2015, 23,894 Veterans entered GPD programs, and there were 15,727 
exits to permanent housing. Through February 2016, there have been 
9,760 entries into GPD funded programs. During the same period, there 
have been 6,813 exits to permanent housing. It is anticipated that the 
use of VA transitional housing through the ``bridge housing'' model 
will increase the overall utilization of VA funded projects.

    D. How many would benefit from prevention services?
    Response. VHA implemented a national, health system-based universal 
screen for homelessness and risk of homelessness. The goal of this 
screener is to enhance the rapid identification of Veterans who very 
recently became homeless or are at imminent risk of homelessness, and 
to ensure that they access appropriate assistance to achieve housing 
stability. This instrument is administered by providers during 
Veterans' outpatient visits at VHA facilities across the country.
    During FY 2015, 3,529,695 Veterans responded to VHA's screener for 
homelessness and risk. Of those, 0.65 percent (n=23,103) screened 
positive for homelessness and 0.57 percent (n=20,230) screened positive 
for risk. Approximately three out of five Veterans who screened 
positive for homelessness or risk requested follow-up services to 
address their housing instability. Among Veterans who requested follow-
up, 71.5 percent of those who screened positive for homelessness, and 
65.1 percent of those who screened positive for risk received a follow-
up service within 30 days.
    Between the first quarter of FY 2013--when screening for 
homelessness and risk began--and the fourth quarter of FY 2015, the 
proportion of Veterans who screened positive for homelessness decreased 
by 32.9 percent and the rate of positive screens for risk decreased by 
57.8 percent. Of the Veterans who initially screened positive for 
either homelessness or risk and responded to a rescreen at least 6 
months later, 74.6 percent resolved their housing instability, and 92.1 
percent of Veterans who reported risk of homelessness screened negative 
during the subsequent screen.\2\
---------------------------------------------------------------------------
    \2\ Data as of March 31, 2016. Due to enhanced data capture from VA 
and community providers and continued refinement of VA's data systems, 
homeless data is constantly refreshed, which may cause changes in 
previously reported data. Updates to homeless data are reflected in 
monthly refreshes of VA data systems.

    E. How was this goal determined?
    Response. VA believes the goal of permanently housing or preventing 
homelessness for an additional 100,000 Veterans and their family 
members represents the best direct measurement of the initiative's 
national impact. The specific target of 100,000 was determined by 
examining the number of Veterans and family members permanently housed 
or prevented from homelessness in 2015 to establish a baseline for this 
measure. In 2015, the number of Veterans and family members permanently 
housed or prevented from homelessness was approximately 118,000. 
Because 2015 included several temporary ``surge efforts'' that 
generated large numbers of permanent housing placements that level of 
placements is unlikely to be repeated in 2016. Additionally VA's 
Homeless Gap Analysis model projects the 2016 homeless Veteran 
population to drop approximately 16 percent from 2015 levels; 100,000 
is therefore a cautiously ambitious target for 2016.

    Question 10.  The written testimony indicates that, in FY 2015, VA 
provided services to more than 365,000 homeless or at-risk veterans 
through VHA homeless programs. Please list how many veterans have been 
served through VHA homeless programs for each fiscal year, beginning 
with FY 2010.
    Response. VA has made unprecedented efforts in engaging, reaching 
and serving Veterans who are homeless or might become homeless. The 
Secretary's testimony references that in FY 2015, more than 365,000 
homeless or at-risk Veterans served through VHA's homeless programs. 
This number represents the total number of homeless and at-risk 
Veterans served in VHA and the Veterans Benefits Administration (VBA). 
The following chart outlines the total number of homeless and at-risk 
Veterans served by VA by fiscal year.\3\
---------------------------------------------------------------------------
    \3\ Data as of March 31, 2016. Due to enhanced data capture from VA 
and community providers and continued refinement of VA's data systems 
homeless data is constantly refreshed which may cause changes in 
previously reported data. Updates to homeless data are reflected in 
monthly refreshes of VA data systems.

 
------------------------------------------------------------------------
                                  Total number of homeless and at-risk
          Fiscal Year            Veterans served by VA (data as of March
                                                31, 2016)
------------------------------------------------------------------------
2015..........................  376,619
2014..........................  367,798
2013..........................  348,825
2012..........................  236,942
2011..........................  192,702
2010..........................  160,927
------------------------------------------------------------------------


    Question 11.  What metrics are used to determine the number of 
those who are prevented from becoming homeless?
    Response. The SSVF program, VA's primary homelessness prevention 
program, offers grants to non-profit organizations to not only rapidly 
re-house Veterans and their families, but directs substantial efforts 
to preventing homelessness. The following metric is used to determine 
the number of those who are prevented from becoming homeless:

     How many at-risk Veteran families receive SSVF homeless 
prevention services, and of those served, how many maintained permanent 
housing upon program exit.

    The SSVF program tracks outcome measures specifically tied to 
preventing homelessness as it offers services specifically designed to 
keep at-risk Veterans and their families in permanent housing. Data 
used for this metric is acquired from the Homeless Management 
Information System (HMIS). HMIS data is input by SSVF grantees and 
community providers.
    VA's homeless programs have always had a dual focus on housing 
unsheltered (street) homeless Veterans and increasing exits to 
permanent housing of sheltered homeless Veterans. The homeless 
programs' continuum of services includes both prevention and treatment 
services to assist those Veterans who are on the streets or in shelters 
today, and prevention for those at risk of homelessness from starting 
that downward spiral. Although other VA programs may not have such a 
singular focus as SSVF, VA considers many programs along the continuum 
as offering and providing prevention services. The primary goal of HUD-
VASH is to move Veterans and their families out of homelessness and 
into stable permanent housing (rescue), and then to provide the 
supports needed to sustain the Veteran and their family in their 
housing (prevention).
    VA also has several programs that provide time-limited housing to 
Veterans along with supportive services, treatment, vocational 
assistance, etc. These programs provide the necessary ``bridge'' 
between streets and permanent housing by providing transitional 
residence (rescue) and services designed to improve housing stability 
that will give Veterans the supports necessary to avoid re-experiencing 
homelessness (prevention). VJP prevents homelessness by providing 
outreach and linkage to VA services for Veterans at early stages of the 
justice system and address the community re-entry needs of incarcerated 
Veterans in order to reduce the impact of medical, psychiatric, and 
substance abuse problems upon community readjustment. HVCES program 
provides services to both homeless and at-risk Veterans that increase 
access to employment opportunities to support their housing needs, 
improve the quality of their lives, and assist in their community 
reintegration efforts.
                     medical care collections fund
    Question 12.  The budget indicates that the VHA Chief Business 
Office has implemented an expanded revenue enhancement plan that 
focuses on immediate, mid-term, and long-term improvements to business 
processes.
    A. When was this plan implemented?
    Response. The VHA Chief Business Office has historically adapted 
the expanded revenue enhancement plan that resulted in several key 
initiatives leading to improvements in revenue. The broader plan has 
resulted in several key initiatives and improvements including:

     Implementation of seven industry-modeled regional 
Consolidated Patient Accounting Centers (CPAC) standardizing and 
optimizing the billing and collections activity from 153 VAMCs; 
completed in FY 2012.
     Electronic denials management
     Implementation of electronic payments and remittance 
advices
     Electronic Pharmacy claims
     Establishment of a National Payer Relations Office

    B. What are the targeted improvements included in the plan?
    Response. Ongoing Key Revenue Operations initiatives include:

     Sustain and enhance Revenue Operations
     Maximize use of Payer Relations Office--conducting new or 
re-verifications of existing third party agreements. Implementation of 
a payer compliance tool that supports management oversight of insurance 
companies' compliance with established agreements.
     Continued work through legislative proposals to maximize 
revenue. Examples include recognizing VA as a participating provider, 
aligning with best practices on collection of health information 
exchange.
     Optimize business process through effective use of 
technology and advanced business analytics.
     Attract, develop, and retain skilled, engaged and 
empowered workforce.
     Develop and enhance technology to standardize and automate 
business rules and create efficiency.
     Implementation of Lean and Lean Six Sigma (Lean/LSS), 
continuous process improvement program. Tracking well in year 4 of a 5-
year maturity model.
     Planned implementation of Tiered Medication Copayment 
System.

    C. Is there a timeline over which the improvements will be pursued?

    D. How has this plan impacted collections?
    Response (C&D). While not all initiatives are directly tied to 
impact collections, the implementation of CPACs has resulted in 
substantial improvements to total collections. A 23-percent increase in 
total Medical Care Collection Fund (MCCF) collections was realized from 
FY 2012 to FY 2015. Other benefits achieved through consolidation are:

     Standardized, consistent and stable performance leading to 
stronger collections across all VAMCs
     Industry best practice internal control framework 
proactively prepares and positively positions CPAC for future audits
     Deployed LEAN/LSS across the CPACs supporting employee 
engagement, informed decisionmaking and an organizational change 
management approach that supports the CPAC infrastructure.

    Question 13.  VA is projecting an increase in Medical Care 
Collections Fund collections in 2016. Please explain, in detail, what 
factors contribute to the projected increase.
    Response. VHA utilizes the Integrated Collections Forecasting Model 
(ICFM) to estimate the 10-year collections as an input to the 
President's Budget. ICFM draws upon numerous predictive variables and 
historical data sources to forecast collections. Based on the model 
updates at the time of budget development, ICFM projected an increase 
of $87.5M in the MCCF for FY 2016. These estimates were not further 
adjusted for additional policy considerations such as the impact of 
Veteran Choice Program.
    The projected increase is due the net impact of the following:

     A FY 2015 collections baseline of $3.451B;
     Projected workload growth from FY 2014 Enrollee Health 
Care Projection Model (EHCPM) resulting in higher bill volumes;
     Anticipated increases to third party reasonable charges 
with a stable collections to billing ratio
                               caregivers
    Question 14.  The 2016-2018 ``Future Goals'' for the Caregivers 
Program indicate supporting the evaluation of program components under 
the Caregivers and Veterans Omnibus Health Services Act of 2010 through 
the Partnership Evaluation Center. Please explain, in detail, what 
aspects of the program will be evaluated, how they will be evaluated, 
and how VA will use the evaluation results to make improvements to the 
program.
    Response. The Caregiver Support Program National Office has 
partnered with VHA's Health Services Research and Development Service 
Quality Evaluation Research Initiative to collaboratively fund the VA 
Caregiver Support Program Partnered Evaluation Center (VA-CARES), a 
long-term project that will use a mixed methods approach to provide an 
evaluation of short- term impacts of the Caregiver Support Program. The 
research study is organized into four Aims, described below.

    In Aim 1, VA-CARES closely examined health care utilization through 
an analysis of medical records for VA-provided and VHA purchased care, 
comparing health care utilization of Veterans whose caregivers are 
participating in the Program of Comprehensive Assistance for Family 
Caregivers (PCAFC) to healthcare utilization of a control group, one 
year prior to and up to three years following application to PCAFC.
    Aim 2 considers caregiver well-being. VA-CARES distributed surveys 
to caregivers to assess how training, the stipend for eligible primary 
family caregivers, and other supports and services of PCAFC affected 
the perceived wellbeing of caregivers and their families.
    Aim 3 examined the use and value of the overall Caregiver Support 
Program and its component services to caregivers in either PCFAC or the 
Program of General Caregiver Support Services. The study design for Aim 
3 was a quantitatively-driven mixed method design, with qualitative 
semi-structured interview data, enhanced by survey findings. Survey 
data will describe frequency of use of services, ratings of 
helpfulness, and differences by individual and site-level 
characteristics (e.g., caregiver race, Veteran health status, 
geographic region, etc.). Interviews were utilized to inform 
interpretation of the quantitative findings and shed light on other 
important aspects of caregivers' experiences unanticipated with survey 
responses.
    Aim 4 complements the caregiver survey data on services used by 
detailing the full delivery costs of the Caregiver Support Program--
personnel, programming (e.g., stipend, CHAMPVA), and supporting costs. 
Preliminary operational costs will be based on a survey of Caregiver 
Support Coordinators (CSCs), capturing how their time is allocated 
across the various components of the Caregiver Support Program which 
they deliver at VAMCs.
    Final results will be delivered in summer 2016 and will inform the 
Caregiver Support Program about its return on investment and provide 
information on best practices for improving its programs. Understanding 
the impacts of the Caregiver Support Program on caregivers, Veterans, 
and VHA is expected to provide the Caregiver Support Program with 
information about highest value programs and services and an evidence 
base upon which to make program and planning decisions which optimize 
services while continuing to meet the requirements of title I of Public 
Law 111-163.
          health professionals educational assistance program
    Question 15.  Please list the top five positions for which benefits 
under the Health Professionals Educational Assistance Program, 
including the Education Debt Reduction Program, the Employee Incentive 
Scholarship Program, and the Health Professional Scholarship Program, 
were used in 2015 and how much funding went toward each position. What 
are the projections for 2016?
    Response. The Education Debt Reduction Program (EDRP) is a critical 
tool for recruiting physicians and other direct health care providers 
to work with VHA. VHA has the authority to offer education debt 
reduction payments for employees with qualifying loans for positions 
that are determined to be difficult for recruitment and retention based 
on local facility needs. Participants receive education debt reduction 
payments up to a maximum award amount of $120,000 over 5 years while 
they remain employed by VHA in a position that qualified them for the 
award.
    The following table shows the top five occupations for which new 
awards were approved in FY 2015 and the total award amounts projected 
for the associated awards. These participants are currently serving in 
their first service period and will receive their first EDRP 
reimbursement in FY 2016. VHA projects to offer a minimum of 900 
additional new awards this year, primarily in the occupations 
designated as mission critical by VA: physicians, nursing, psychology, 
physician assistant, and physical therapy.
    The average award amounts and overall funding needs of the program 
are increasing under the new maximum award amount of $120K (or $24K per 
year). In FY 2014, VHA made approximately 650 new awards, bringing the 
total number of EDRP participants to over 2,000. In FY 2015, EDRP 
reimbursed those participants nearly $11M (participants in these years 
were at the pre-VACAA maximum award amount of $12K per year or less). 
VHA anticipates reimbursing the current participants nearly $23M in FY 
2016, and $37M in FY 2017 based on the increase in program participants 
and average award amounts.

                                 FY 2015
                              (New Awards)
------------------------------------------------------------------------
                  Occupation                   Participants    Funding
------------------------------------------------------------------------
Medical Officer..............................       307      $30,120,574
Nurse........................................       210       $9,313,726
Pharmacist...................................       102       $9,447,553
Psychologist.................................        79       $6,949,085
Physician Assistant..........................        43       $3,875,563
------------------------------------------------------------------------

    The Employee Incentive Scholarship Program authorizes VA to award 
scholarships to employees pursuing degrees or training in health care 
disciplines for which recruitment and retention of qualified personnel 
is difficult. Participation in the program is field-driven and 
dependent on the number of employees recommended by facilities. The 
following table shows the top five occupations for which new awards 
were approved and will result in a service obligation period in those 
occupations. At the time of this report, VHA is conducting its second 
FY 2016 Application Cycle, and therefore, the FY 2016 figures below 
reflect only the new applications submitted and approved through 
October 31, 2015.

                                 FY 2015
                              (New Awards)
------------------------------------------------------------------------
                  Occupation                   Participants    Funding
------------------------------------------------------------------------
Registered Nurse (includes NP, CNS, aNd CNL).     1,234      $22,370,753
Licensed Practical/Vocational Nurse..........        11         $156,059
Physical Therapist...........................         7          $76,897
Pharmacist...................................         5         $131,096
Social Worker................................         5         $111,064
------------------------------------------------------------------------


                                 FY 2016
                   (New Awards--through Oct 31, 2015)
------------------------------------------------------------------------
                  Occupation                   Participants    Funding
------------------------------------------------------------------------
Registered Nurse (includes NP, CNS, and CNL).       610      $11,202,684
Licensed Practical/Vocational Nurse..........         8         $103,646
Physical Therapist...........................         8         $109,397
Physician Assistant..........................         4          $80,756
Occupational Therapist.......................         3          $59,854
------------------------------------------------------------------------

    Health Professionals Scholarship Program awards scholarships to VA 
and non-VA employees pursuing degrees of training in health care 
disciplines for which recruitment and retention of qualified personnel 
is difficult. Scholarship covers tuition, stipend and required fees; 
recipients are required to complete a service obligation at a VA health 
care facility after program completion. Health Professional Scholarship 
Program is currently accepting applications for Registered Nurses 
(including Nurse Practitioners). We anticipate that we will award 25 
scholarships.
                    construction and capital assets
    Question 16.  The budget notes that VA currently has 370 buildings 
that are vacant or less than 50 percent occupied, which costs VA $26 
million annually to maintain and operate. Please provide a list of 
these buildings.
    Response. The list is attached. The list is comprised of buildings 
that were predominantly vacant (more than 50 percent) at the end of FY 
2015. Most of the buildings are currently being used for swing space, 
as VA considers reuse alternatives or disposal options.


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    Question 17.  The FY 2017 budget requests $528 million in major 
construction to fund projects in Long Beach, California, and Reno, 
Nevada. The US Army Corps of Engineers (USACE) will be the construction 
agent for these two projects as now required by law for any project 
over $100 million. Please provide the Committee an update on the 
projects that USACE is the construction agent, to include the Denver 
project.
    Response. The Department of Veterans Affairs (VA) has entered into 
a master interagency agreement with the U.S. Army Corps of Engineers 
(USACE) to collaborate on 14 construction projects. USACE will have the 
lead in the execution of design and construction on the 14 projects. 
USACE has provided an approach to gaining insight and validation of all 
VA completed work prior to assuming the lead. The attached addendum 
outlines the process and provides the status of the agreement for each 
project.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Question 18.  The FY 2017 budget requests $30.2 million for the 
project in Long Beach, California, and states that this funding will be 
used for the construction of a Combined Heat and Power plant (CHP). 
Please provide details on the CHP, including a break out of the $30.2 
million for the project.
    Response. The FY 2017 budget requests $30.2 million for a proposed 
cogeneration (Combined Heat and Power (CHP)) system for the VA Long 
Beach Medical Center. This Cogen system consists of a natural gas 
engine that generates electricity locally to provide supplemental 
electricity to the campus carrying approximately 40 percent of the 
campus load during peak demand periods and up to 90 percent during 
normal operations. This will result in significant energy cost savings, 
reduction in carbon emissions and increased reliability. Currently, all 
electricity is supplied by the local utility company, Southern 
California Edison. The byproduct (waste heat) from the engine will be 
captured and used to provide steam to operate the steam turbine of a 
proposed steam-driven chiller, in turn; the steam-driven chiller will 
provide chilled water for campus space cooling. A new building will be 
constructed to house the proposed CHP system. The proposed CHP system 
output capacity will be between 1 and 3 megawatts of electrical power. 
The proposed CHP system will provide the following benefits:

    1. Lower energy cost by using natural gas to generate electricity 
locally as opposed to that from a central power station.
    2. Lower operating cost by utilizing the waste heat to produce 
steam.
    3. Reduce the greenhouse gas emissions normally associated with 
electricity and steam production.
    4. Improve the reliability of electric and steam services for the 
campus.

    The total FY 2017 amount requested is $30.2 million. Of that 
amount, $25.9 million is dedicated to the production of the CHP 
construction documents, and actual construction. The remaining amount, 
$4.3 million, is required to demolish Buildings 128 and 133.

    Question 19.  In the hearing, Secretary McDonald mentioned VA's 
efforts regarding public-private partnerships for construction 
projects. Please provide an update on VA's efforts in this area, 
including an analysis of its feasibility and any legislative changes 
that would need to be made.
    Response. VA is assessing strategic partnerships as part of the 
MyVA initiative. Partnerships provide VA with opportunities to expand 
upon, and maximize the utility of, existing resources in several 
operational areas; including real estate. VA is presently evaluating 
potential locations in which a form of a public private partnership 
(P3) would be helpful.
    First, VA has been exploring a potential public private partnership 
in San Francisco, California. In order to address issues relating to 
aging infrastructure, the San Francisco VA Medical Center (SFVAMC) has 
received funding for a major seismic construction project, and needs 
several other funded projects. VA assessed the total life cycle of 
SFVAMC's approved capital investment plan, against the discounted 
present value of potential capital P3 alternatives in the market. VA 
believes that a P3 could make financial and practical sense toward 
achieving VA's mission. It could also enable VA to assess prospects for 
minimizing upfront capital funds, reducing overhead costs, focusing on 
healthcare outcomes, and fostering VA's ability to better engage 
community partners, and create jobs and tax revenues for the local 
economy.
    Given the infrastructure costs and challenges at VA's existing 
campus in San Francisco, VA has determined that a partnership could be 
an effective, viable opportunity. VA is working with the Office of 
Management and Budget to develop partnership options while continuing 
to support various legislative efforts.
    Second, in Omaha, Nebraska, VA has received partial funding for a 
major construction project but likely will not receive full funding in 
the near term. Concurrently, VA has been made aware of donors in the 
community that would like to help finance and then construct a needed 
facility, and donate that facility to VA. Therefore, VA is exploring a 
P3 opportunity related to the construction of a facility on VA land, 
built to Federal construction standards. It is anticipated that a P3 in 
this location could efficiently serve Veterans and taxpayers, while 
reducing the Government's outlay of capital dollars.
    VA would require legislation to support both of the aforementioned 
P3 options and would need to ensure that its proposed approach is 
consistent with[ * * * ]Omaha would likely require authority for VA to 
enter into a joint agreement for construction of a new medical facility 
(as defined by 38 U.S.C. Sec. 8101), with a suitable decisionmaking 
process. San Francisco would require approval to enter into a long-term 
partnership agreement, which could involve a lease to VA in excess of 
the current 20-year maximum. VA would also need to ensure the budgetary 
treatment of P3 projects were compliant with lease scoring rules under 
Office of Management and Budget Circular A-11.
    Importantly, unless and until VA obtains the required authority, 
and has an opportunity to solicit feedback from the market, VA will not 
be able to act on potential P3 opportunities.
                        compensation and pension
    Question 20.  The criteria for survivor compensation are outlined 
on page VBA-68 of the FY 2017 budget request and include this as one of 
the potential paths to benefits: ``[T]he Veteran was a former prisoner 
of war who died after September 30, 1999.'' Please clarify whether the 
September 1999 cutoff was used in VA's budget projections and whether 
it is used in determining eligibility for survivor compensation.
    Response. 38 U.S.C. Sec. 1318 governs the criteria for survivor 
compensation, also known as Dependency and Indemnity Compensation 
(DIC). Section 603 of the Veterans' Benefits Act of 2010, Public Law 
111-275 (October 13, 2010) removed the qualifying phrase, ``who died 
after September 30, 1999'' from 38 U.S.C. Sec. 1318(b)(3), effective 
October 1, 2011. Therefore, this cutoff date is not used in determining 
eligibility for DIC and also was not used in VA's budget projections. 
This cutoff date will be removed from the eligibility requirements in 
future budget submissions.
                    veterans benefits administration
    Question 21. The large number of appeals pending at VA--about 
440,000--is a serious concern.
    A. The Inspector General's office recently testified that, in order 
to reduce the backlog of disability claims, VA ``re-allocat[ed] staff 
to process only claims that affect the backlog while sacrificing other 
types of claims such as those on appeal.'' What steps is VA taking to 
ensure that processing appeals is a priority for the Veterans Benefits 
Administration?
    Response. VBA has received and completed record-breaking numbers of 
disability compensation rating claims in recent years, which has 
resulted in corresponding increases in the volume of appeals. Over the 
past 20 years, VA appeal rates have held steady between 11 and 12 
percent of the total volume of completed disability rating claims. VBA 
continues to prioritize rating claims as well as place additional focus 
on appeals. VBA is grateful for the funding that allowed us to hire 100 
appeals FTE in FY 2015 and 200 appeals FTE in FY 2016. This fiscal 
year, VBA increased its appeals workforce from 1,195 employees to over 
1,490 employees as of February 2016, and has allocated $10 million in 
overtime funds to support the appellate workload. VBA's process 
improvements, such as the Veterans Benefits Management System (VBMS) 
and the National Work Queue (currently being deployed) are providing 
increased efficiencies in the claim process, and we are also focused on 
leveraging our technology initiatives in support of modernizing the 
appeals process. In a very short period of time, the NWQ-led 
efficiencies have resulted in the reduction in claims pending initial 
development, reduction in cycle times for claims waiting for a rating 
decision, and an equitable distribution of claims pending award and 
authorization. However, VA will not be able to provide Veterans with 
timely decisions on their appeals without legislative reform to 
streamline and modernize the appeal process and additional resources to 
timely work the current inventory of appeals. Without congressional 
action to authorize a new appeal process and appropriate funding for 
additional appeals FTE, VA's appeals inventory will continue to grow 
and Veterans will have to wait much longer for a resolution of their 
appeals. VA is working to streamline the appeals process, an initiative 
that is one of VA's ``12 Breakthrough Priorities.'' In addition, a 
legislative proposal that VA developed with Veterans Service 
Organizations and other stakeholders is currently being considered in 
both the House of Representatives (H.R. 5083 and H.R. 5620) and the 
Senate (draft bill--SVAC Ranking Member Blumenthal).
    VA has brought together the Nation's leading Veteran advocacy 
groups for their input. They are our steadfast partners in improving 
the way we deliver services to Veterans.
    As a result of that collaboration, VA has put forward a new 
proposal that would provide veterans with a simple, fair, and 
transparent appeals process in which, with the appropriate resources 
provided by Congress in future appropriations, the vast majority would 
receive a final appeals decision within one year of filing an appeal by 
2021. This disentanglement of process is enabled by one crucial 
innovation--giving veterans multiple paths to adjudicate disputes on a 
claim, while preserving the effective date that the initial claim was 
filed. VA's consensus proposal was put forward as a discussion draft by 
Ranking Member Blumenthal and was the subject of the Committee's 
May 24, 2016, legislative hearing.
    This legislation would modernize the veteran appeals process, 
better serving veterans, taxpayers, and the Nation for years to come.

    B. Some prominent lawyers from Georgia have offered to organize 
attorneys from the American College of Trial Lawyers to volunteer their 
services to help resolve the appeals backlog. Will VA commit to closely 
examining possible options for them to help alleviate the backlog of 
appeals?
    Response. VA is committed to looking for ways to streamline and 
improve the appeals process.
    The Board has worked closely with the American Legion to find a way 
that the American College of Trial Lawyers (ACTL) can assist them in 
representing Veterans who present some of the most complex issues. The 
Board and the American Legion recently signed a Memorandum of 
Understanding creating a framework for ACTL to prepare Informal Hearing 
Presentations (IHP or briefs) on behalf of the American Legion, in 
order to move Veteran's appeals more quickly to the Board for appellate 
review. The Board looks forward to receiving briefs in the near future 
from the attorneys of the ACTL.

    Question 22.  Over the past year, the Inspector General has issued 
at least 15 reports finding that the Veterans Benefits Administration 
has not been taking timely action to reduce or discontinue benefits 
when required by the law and evidence and as a result may disperse 
millions of dollars in overpayments. Please describe what steps VA is 
taking--or plans to take--to ensure that the Veterans Benefits 
Administration is being a good steward of taxpayer dollars.
    Response. As VBA continues to receive and complete record numbers 
of disability compensation rating claims, the result is a corresponding 
increase in the volumes of non-rating claims (to include benefit 
reduction cases). VBA completed 3.1 million non-rating actions in FY 
2015, the highest production of non-rating work in 20 years and 72 
percent more than in FY 2011. Benefit reviews and award adjustments 
involving reductions in benefits are often complex, multi-step 
processes that include due-process notifications prior to making the 
reductions. These cases frequently involve hearing requests and 
submission of additional evidence, which extends the processing 
timeframe. Overpayments can result from processing actions to remove a 
spouse or child; award adjustments required as a result of a Veteran's 
receipt of Reserve/National Guard drill pay, changes in income, and 
numerous other statutory requirements. VBA continues to work to 
automate and streamline its claims processes including those that 
relate to benefit reductions highlighted below.

     Removal of a dependent
        - Dependency Rapid Response Pilot--All VBA call centers now 
        have the capability to handle dependency adjustments at the 
        point of call, such as removing a spouse due to death or 
        divorce.
        - Online Dependency Claims--VBA developed the Rules-Based 
        Processing System (RBPS) to automate adjustments for adding or 
        removing dependents. Over 60 percent of the dependency claims 
        filed through RBPS are now automatically processed.

     Drill Pay Adjustments
        - By law, Veterans cannot receive VA benefits and drill pay 
        concurrently. VBA is working with DOD to streamline and 
        automate the drill pay offset process through an upfront 
        agreement from National Guard and Reserve members. This will 
        help reduce the impact of drill reductions and improper 
        payments per OMB Circular A-123 on improper payments.
        - VBA hired employees specifically to assist with non-rating 
        work, initially focusing on drill pay offsets.

     Adjustments to temporary 100 percent disability 
evaluations
        - VBA is developing a report that will enable ROs to more 
        easily identify and take timely action on cases with temporary 
        evaluations that require review to determine current level of 
        disability. Beginning in April 2016, this report will be 
        distributed to ROs on a weekly basis.

     Pension Income Adjustments
        - VA now has access to a claimant's SSA benefit information and 
        reviews the information when processing an original or 
        supplemental claim. VA also conducts annual computer matches 
        with SSA for the purpose of verifying claimants' social 
        security benefit rates to ensure that VA is counting the 
        correct rates.

    Question 23.  The FY 2017 budget request includes this information 
regarding disability claims processing: ``Increased automation now 
enables Veterans to file claims, upload evidence, and check the status 
of their claims on-line through eBenefits, helping to improve accuracy 
and productivity.'' (Page VBA-158)
    A. Please quantify the impact automation has had on accuracy and 
productivity to date.
    Response. please refer to response to Question 23B.

    B. Please quantify what impact improvements in automation funded by 
the FY 2017 budget request are expected to have on accuracy and 
productivity.
    Response. VBA has reduced the number of claims pending more than 
125 days by 86 percent, from a peak of 611,000 in March 2013 to 
historic lows--79,004 claims as of March 31, 2016. VBA's process 
improvements, such as VBMS and the National Work Queue (NWQ), continue 
to provide increased efficiencies in the claims process. By modernizing 
from a paper based system to an electronic claims processing system, 
VBA has increased its claim productivity per claims processor by 25 
percent since 2011 and medical issue productivity by 82 percent per 
claims processor since 2009. In 2017, VBA will build on the success of 
the transformation initiatives described below to continue this 
progress.
    Veterans Benefits Management System--VBMS, as VBA's key business 
transformation initiative, provides a paperless claims-processing 
environment and improved business processes to support timely, high-
quality decisions for Veterans and their dependents. VBA's shift to 
electronic folders in VBMS addressed the inefficiencies of the paper 
folders and the problems of misplaced files and records. Through a web-
based application, multiple, geographically separated users can view 
the electronic folders simultaneously, thereby minimizing the need for 
sequential processing and eliminating the delays of receipt of paper 
folders at ROs. VBMS also provides automation of processes such as the 
receipt of evidence, movement of claims to the next stage, and updates 
to the claims status, which means more Veterans are receiving faster 
decisions. As of March 7, 2016, VBA completed over 4.4 million rating 
decisions and processed over 2.5 million claims end-to-end in VBMS. In 
FY 2017, VBMS will focus on the delivery of electronic service 
treatment records, establishing one authoritative source for Veteran 
contact information, and collaborating with the Board of Veterans' 
Appeals to define the appeals functionality needed both at the regional 
offices and as part of the broader appeals modernization efforts.
    During FY 2017, VBA will continue expanding the delivery of the 
electronic service treatment records (STRs). In FY 2017, VBMS will be 
incorporating the Records Management Center (RMC) into VBMS in order to 
exchange electronic records. Benefits of this implementation include 
the ability to process requests from field end-users without using 
legacy systems. Additionally, field end-users will be able to view 
status requests, eliminating significant burden on the RMC to respond 
to inquiries and the cumbersome manual work needed in order to process 
an RMC records request using legacy systems.
    VBMS continues to enhance STRs requests from the Department of 
Defense (DOD). In FY 2017, this will include functionality previously 
received from legacy systems that would allow VBMS to obtain military 
service information and treatment records from the Health Artifact and 
Image Solution (HAIMS). Additional enhancements with the DOD includes 
receiving electronic STRs prior to discharge for Integrated Disability 
Evaluation Systems (IDES) claims as well as reporting functionality for 
subscriptions from VBMS to Data Access Service (DAS).
    On FY 2016, VBMS coordinated with US Digital Services to secure a 
five-percent level of effort in each VBMS release in support of the 
appeals modernization efforts. At this time, that five-percent level of 
effort will continue in FY 2017 to support the appeals modernization 
integration efforts in VBMS.

    Question 24.  The FY 2017 budget request (page VBA-162) includes 
this information regarding the Veterans Benefits Management System:

        [The Veterans Benefits Management System] has supported quicker 
        and more accurate delivery of benefits to millions of Veterans 
        and beneficiaries. In addition, the system has improved the 
        overall speed, accuracy, and consistency of decisions for 
        Veterans by providing the tools the workforce needs to meet 
        growing demand and claim complexity.

    A. Please quantify the impact the Veterans Benefits Management 
System has had on the speed, accuracy, or consistency of decisions to 
date.
    Response. Please refer to response to Question 23 under the 
paragraph ``Veterans Benefits Management System.''

    B. Please quantify what impact future improvements to the Veterans 
Benefits Management System are expected to have on the speed, accuracy, 
or consistency of decisions.
    Response. Ongoing positive impact to speed, accuracy, and 
consistency is expected with VBMS functionality planned for FY 2016 and 
FY 2017. One of VBA's priorities remains the reduction of reliance on 
legacy systems with a specific focus on decreasing the number of times 
a user would need to exit VBMS to perform claims processing tasks, 
allowing for greater consolidated processing.
    VA will retire legacy systems when mission needs change, when a new 
system (e.g. VBMS) has taken on the capabilities of an old system, when 
system consolidation will improve Veteran service delivery, or when the 
system is no longer supported by a vendor. As VBMS continues to 
progress and evolve, development of functionality to encompass other 
areas of work may provide the opportunity to decommission legacy 
systems.
    Rating Board Automation (RBA) 2000 is one of 11 applications 
included in the Veterans Service Network (VETSNET) suite. It was 
previously used to complete disability rating decisions, but these 
capabilities are now provided by VBMS. There are currently no active 
RBA 2000 users as this application was retired on January 21, 2016.
    While we are unable to provide a timeframe for retirement of other 
legacy systems, VBA expects to have identified the functionality needed 
to fully transition from the Modern Award Processing Development (MAP-
D) and VETSNET awards applications to VBMS by December 31, 2016. 
Efforts are also underway toward retirement of Virtual VA and future 
functionality in VBMS will support those efforts as well.
    VBA will collaborate with the VA Office of Information and 
Technology to accurately address cost and savings projections for IT 
Appropriations and provide a response by September 30, 2016.

    Question 25.  According to the FY 2017 budget request, VA is 
requesting $1.1 billion for ``Other Services'' for the Veterans 
Benefits Administration, a $219 million increase over the current 
estimate for FY 2016. (Page VBA-173) Please provide an itemized 
breakout of how those funds would be expended in FY 2017.
    Response. The discretionary request for $1.1 billion contains 
contract funding of $732.8 million that directly impacts or supports 
the delivery of disability compensation claims; $171.6 million to 
support the delivery of education, vocational rehabilitation and 
employment, and home loan benefits; and $178.0 million to support 
mission requirements:

     Contract Medical Examinations ($530.0 million)
     Veterans Claims Intake Program (scanning) ($138.7 million)
     Costs associated with centrally managed services to 
include Financial Service Center, Debt Management Center, National 
Archives and Records Administration, Homeland Security, and Human 
Capital Improvement Program ($110.1 million)
     Transition Assistance Program ($106.9 million)
     Support contracts to provide analytics and innovative 
Programmatic tools (VA Loan Electronic Reporting Interface, Real Estate 
Owned and Portfolio Servicing Contract (RPSC), and Appraisal Management 
Service (AMS)) for VA's Home Loan Program to service and protect loans 
for Veterans ($57.0 million)
     Program management and systems engineering support 
services for VBMS ($28.8 million)
     Centralized Mail Processing System ($26.7 million)
     Support contracts for strategic initiatives and solutions 
enabling an efficient operating environment ($21.9 million)
     Mission support contracts for VBA's 56 regional offices to 
include VR&E contract counseling, security, maintenance and repairs, 
GSA overtime utilities, and PCS related expenses ($29.3 million)
     Mission support contracts for VBA central office to 
include studies and analyses to improve delivery of benefits, technical 
expertise for key initiatives, and maintenance and repairs ($21.4 
million)
     Instructional methodologies and systems that support the 
training and skills development of the disability compensation 
workforce ($8.6 million)
     Coordination of business requirements to provide continued 
execution of VR&E programs and a longitudinal study and field staffing 
model to improve and enhance Veterans' programs and benefits ($3.0 
million)

    Question 26.  According to the FY 2017 budget request (page VBA-
192), Quality Review Teams completed 178,506 in-process reviews during 
FY 2015 and VA expects those teams to complete 240,000 in-process 
reviews each year during FY 2016 and FY 2017.
    A. How many employees were dedicated to Quality Review Teams during 
FY 2015 and how much in total was expended for that purpose?
    Response. In FY 2015, VBA obligated $71.3 million to support 771 
Quality Review Specialists (QRSs) assigned to the Quality Review Teams 
(QRTs).

    B. How many employees are expected to be dedicated to Quality 
Review Teams during FY 2016 and FY 2017 and how much in total would VA 
expect to expend for that purpose during those years?
    Response. As of March 2016, VBA has 784 QRT members. The ratio of 
QRSs to claims processors will remain unchanged, resulting in 
consistent staffing levels for FY 2016 and FY 2017. VBA estimates it 
will obligate approximately $73.9 million and $76.4 million, 
respectively.

    C. What factors account for the expected increase in the number of 
in-process reviews completed during FY 2016 and FY 2017?
    Response. In 2015, the QRTs were able to complete 178,506 in-
process reviews (IPRs) as a result of performing this task on overtime. 
In 2016, the QRTs will not be performing this task on overtime. The 
standard goal of required IPRs for each station is 10 percent of its 
monthly production; therefore, the anticipated number of IPRs for FY 
2016 is 120,000. The goal for completed IPR reviews nationwide for FY 
2016 and FY 2017 remains at 120,000 IPR reviews for each fiscal year, 
for a combined total of 240,000 IPR reviews.

    Question 27.  According to the FY 2017 budget request (page VBA-
203), more than 70,000 non-rating actions were completed by the 
Dependency Claims contractor during FY 2015.
    A. In total, how much has VA expended on the Dependency Claims 
contractor and how much, if any, does VA plan to expend during FY 2016 
and FY 2017?
    Response. VA spent approximately $4.8 million on the Dependency 
Claims contract from April 21, 2014, to January 20, 2016. VA 
anticipates spending approximately $2.4 million per year for FY 2016 
and FY 2017.
    B. How many non-rating actions does VA expect the Dependency Claims 
contractor to complete during FY 2016 and during FY 2017
    Response. In FYs 2016 and 2017, VA anticipates completion of 
approximately 30,000 non-rating actions per year.

    Question 28.  According to the FY 2017 budget request (page VBA-
54), VA uses Internal Revenue Service and Social Security 
Administration records to verify income levels of certain beneficiaries 
and that process ``is the most efficient and effective means VA has of 
verifying certain types of income, wages, interest, dividends, 
annuities, etc.'' On the other hand, the Government Accountability 
Office made this finding in a report last year:

        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.

    A. Please provide the Committee with additional information about 
the process currently used to verify beneficiary incomes and any 
additional options VA plans to explore if this budget is adopted.
    Response. Under current data sharing agreements with the Internal 
Revenue Service (IRS) and the Social Security Administration (SSA), VA 
utilizes an upfront income verification process, which allows pension 
management centers to verify a beneficiary's reported income. This 
approach allows VA to maintain the integrity of its program, while also 
reducing improper payments. VA is continuing to work with IRS and SSA 
to expand this process to all pension-related benefit claims, 
regardless of the issue, and disability compensation claims based on 
individual unemployability. VA anticipates expansion of this process by 
June 2016.
    In addition, VBA is transitioning from the paper-based Income 
Verification Match (IVM) process to a semi-automated, electronic post 
award audit (PAA) process. In FY 2012, VBA temporarily suspended the 
release of all paper IVM worksheets to allow for the development and 
implementation of the PAA process. The PAA process will provide more 
focused reviews of VA beneficiaries receiving benefits based on self-
reported income information to ensure continued program entitlement. 
VBA is working with VA's Office of Information and Technology to 
finalize the necessary system requirements and anticipates implementing 
the PAA process by September 2016.

    Question 29.  During FY 2015, how much in total did VA expend with 
respect to the Integrated Disability Evaluation System (IDES) and how 
many VA employees were dedicated to the IDES process? During FY 2016, 
how much in total does VA expect to expend with respect to IDES and how 
many VA employees will be dedicated to the IDES process? During FY 
2017, how much in total is VA requesting with respect to IDES and how 
many VA employees would that level of funding support?
    Response. VA's total for FY 2015 was approximately $75,777,099, 
which excludes VHA for the reasons listed below:

    Office of Policy and Planning (OPP)--During FY 2015, OPP spent 
approximately $1,177,099 which is comprised of $583,692 for a program 
management support contract, $573,407 in salary for 5 FTE, and $20,000 
in travel costs.
    Veterans Health Administration (VHA)--VHA does not provide separate 
funding for the IDES Program. Commencing in FY 2014, funding for this 
program has been included in VHA's Veterans Equitable Resource 
Allocation (VERA) model. Staffs located at the VA medical centers 
(VAMCs) are not solely dedicated to supporting the IDES process.
    Veterans Benefits Administration (VBA)--In FY 2015, VBA spent 
approximately $74.6 million for salaries and other GOE for 638 FTE 
dedicated to disability claims processing in the Integrated Disability 
Evaluation System (IDES). Compensation staff and Vocational 
Rehabilitation and Employment (VR&E) counselors are included in this 
count. Veterans filing claims through the IDES sites are captured in 
the nationwide Veteran caseload count and total compensation benefit 
obligations; therefore, mandatory funding cannot be separated for this 
program.

    Response. VA's estimated total for FY 2016 is $77,387,332 which 
excludes VHA for the reason listed below:

    OPP--During FY 2016, OPP should spend approximately $1,187,332, 
which is comprised of $586,242 for a program management support 
contract (Final Option Year), $581,090 in salary for 5 FTE, and $20,000 
in travel costs.
    VHA--VHA does not provide separate funding for the IDES Program. 
Commencing in FY 2014, funding for this program has been included in 
VHA's Veterans Equitable Resource Allocation (VERA) model. Staffs 
located at the VAMCs are not solely dedicated to supporting the IDES 
process.
    VBA--During FY 2016, VBA estimates it will spend approximately 
$76.2 million to support 638 FTE dedicated to disability claims 
processing in IDES.

    Response. VA's estimated total for FY 2017 is $79,030,375, which 
excludes VHA for the reason listed below:

    OPP--During FY 2017, OPP should spend approximately $1,230,374, 
which is comprised of $600,000 for a new program management support 
contract if needed, $590,374 in salary for 5 FTE, and $40,000 in travel 
costs. The increase in travel is to fund increased site visits to the 
field.
    VHA--VHA does not provide separate funding for the IDES Program. 
Commencing in FY 2014, funding for this program has been included in 
VHA's VERA model. Staffs located at the VAMCs are not solely dedicated 
to supporting the IDES process.
    VBA--It is expected that in FY 2017, VBA will maintain staffing at 
the Providence and Seattle Disability Rating Activity Sites (DRAS) at 
the same FY 2015/FY 2016 levels and $77.8 million will support 638 FTE.

    Question 30.  The budget notes that, in 2015, the Insurance Program 
contacted 1,900 veterans per month as part of a special outreach 
program. Among the veterans contacted in 2015, how many obtained 
insurance coverage?
    Response. In FY 2015, the special outreach program contacted a 
total of 23,033 Veterans (for an average of 1,919 per month). A total 
of 8,235 Veterans' Group Life Insurance policies were issued to those 
Veterans contacted, i.e., 35.8 percent were granted insurance coverage.

    Question 31.  To date, how many unique awards have been provided to 
an estate of a deceased Nehmer class member and what is the total award 
amount?
    Response. As of March 2016, VA has awarded $440,435,895 in monetary 
benefits to individuals or estates as survivors of deceased Nehmer 
beneficiaries as required under 38 CFR 3.816(f) to 11,991 individuals. 
This amount includes persons who paid funeral or last medical expenses 
on behalf of the Veteran's estate.
                       board of veterans' appeals
    Question 32.  According to the FY 2017 budget request (page BVA-
280), the Board of Veterans' Appeals is undertaking a number of 
initiatives other than legislative reforms to attempt to improve 
productivity. Please quantify what level of productivity improvements 
those efforts are expected to produce.
    Response.
                    transforming the appeal process
    VA has made significant progress on its goal to eliminate its 
disability claims backlog and improve the quality of its initial 
decisions on claims without seeking significant statutory changes. VBA 
Transformation Plan focuses on improving personnel performance, 
redesigning business processes, and replacing paperbound and manual 
systems with those that are digital and automated. As outlined in VA's 
appeals plan, VBA and the Board of Veterans' Appeals (Board) can deploy 
similar people, process, and technology innovations in the appeal 
process, but those innovations will not provide a real solution without 
stakeholder support. In this regard, the appeals problem is unique, and 
one should not view this preliminary plan as providing a comprehensive 
solution. Absent a comprehensive solution that considers the unique 
statutory procedures that govern VA's appellate system, VA will use its 
limited resources as efficiently as possible to decide appeals under 
the inefficient process required under existing law.
    Current law requires that VA maintain a non-linear, multi-step, 
open-record, administrative appeal process, with jurisdiction over 
various steps in the process split between VBA and the Board. There is 
no bright line distinguishing the end of VBA's claim adjudication 
process from the beginning of the appeal process. Unlike a typical 
appeal process in which the appellate body reviews the same record as 
the initial decisionmaker, VA's administrative appeal process has an 
open record. Under the current framework, appellants, at no cost and 
without limitation, may submit additional evidence at virtually any 
time during the pending appeal, regardless of whether the appeal is at 
VBA or the Board, and VBA must generally reevaluate the claim based 
upon the new evidence. This feature prolongs the amount of time that 
Veterans must wait for their appeal to be decided and commits extensive 
resources to each appeal. As a result, Veterans who receive their 
initial decisions from VBA in 125 days under the Transformation Plan 
will nonetheless endure an inefficient VA appeal process. The delays in 
a benefits system that delivers an initial decision within 125 days and 
an appellate decision on average in more than 1,000 days may outweigh 
any benefit to a multi-step, open-record system. Although some 
individual claimants may be able to take advantage of the current legal 
framework, it comes at the cost of failing to provide Veterans as a 
whole a timely resolution on their appeals.
    VBA's Transformation Plan for the initial claim process is 
structured for the future (more than one million claims annually, 
multiple complex medical issues in each claim, and electronic 
submission and processing), while the appeal process set out in current 
law is an accumulation of processes and procedures that have built up 
in stages since WWI. The legal framework of the appeal process precedes 
the all-volunteer military force, the computer revolution, and judicial 
review of VA's decisions on claims. For example, the Fully Developed 
Claims program encourages claimants and representatives to build and 
submit claims before VA renders a decision, while the appeal process 
encourages them to build their claims after a decision by allowing 
subsequent submission of evidence in a piecemeal fashion.
    VA's Appeals Transformation Plan requires integrated legislative, 
people, process, and technology initiatives designed to deliver a final 
agency decision for most Veterans within a year of filing by 2021. As 
noted above, the current VA appeals process which is set in law, is 
broken, and is providing Veterans a frustrating experience. It has no 
defined endpoint and requires continuous evidence gathering and re-
adjudication of the same or similar matter. The present legal framework 
is complex, inefficient, ineffective, and confusing, and Veterans wait 
much too long for final resolution of an appeal. Currently, we face an 
important decision about the future of appeals for Veterans, taxpayers 
and other stakeholders.
    If Congress accepts that the current VA appeals process is broken 
and that the status quo is unacceptable for Veterans, then there is a 
choice to be made regarding how to provide Veterans with a timely 
appeals decision. The 2017 Budget Request outlined that there are 
essentially two options for ensuring that Veterans receive timely 
appeals decisions: (1) implement legislative change to streamline the 
process for new appeals and provide a short-term increase in funding 
from 2017 to 2021 to address the currently pending 458,000 appeals, or 
(2) provide significant sustained funding (approximately $1B per year 
from 2017 on) to continue applying the current inefficient, complex, 
and confusing VA appeals process. Since submission of the 2017 Budget 
Request, VA participated in an appeals summit, during which 
representatives from a wide spectrum of stakeholder groups met with key 
officials from VBA and the Board to determine how to best reconfigure 
the current VA appeals process. The result of that summit was a new 
appeals framework, as encompassed in Senator Blumenthal's draft bill 
examined in the Committee's May 24 legislative hearing, which if 
enacted will provide Veterans with timely, fair, quality decisions. If 
we fail to act now, the magnitude of the problem will continue to 
compound, such that by the end of 2027, Veterans will be waiting on 
average 10 years for a decision on their appeal. However, VA cannot 
fully transform its appeal process without stakeholder support. VA 
intends to work with Congress and other stakeholders to pursue the 
comprehensive legislative change required to provide Veterans the 
timely appeals process that they deserve.
                           people initiatives
    VBA is grateful for funding to hire 100 appeals FTE in FY 2015 and 
200 appeals FTE in FY 2016. In FY 2016, VBA has increased its appeals 
workforce to 1,495 employees as of January 2016. To maximize 
productivity and accuracy of appeals decisions while at the same time 
minimize training on VA's complex appeals process, VBA hired new 
employees into the disability claim processing teams and moved seasoned 
claims processors into the appeals teams.
    In FY 2015, the Board was able to hire staff to continue supporting 
its mission to serve more Veterans and their families. Specifically, in 
order to both maintain staffing levels and increase capacity where 
possible, the Board hired 82 staff (including new hires and backfills 
for attrition), the majority of which were attorneys (68).
    If allocated by Congress, the Board will begin the recruitment 
process for the 242 additional employees immediately upon enactment of 
the FY 2017 budget in order to support execution of the funding by the 
end of the fiscal year. In advance of the actual job announcement, the 
Board is working with the Office of Personnel Management on an 
aggressive strategic recruitment plan, to ensure successful execution. 
The 242 additional employees will primarily consist of staff attorneys 
to draft appeals decisions, with an appropriate complement of 
administrative support staff and some additional judges. For new 
attorney staff, the Board has a 6-month training curriculum to ensure 
thorough training on Veterans benefits law. New judges will undergo 
rigorous initial training with follow-up mentoring and continuing 
education for both legal training and leadership training. 
Administrative staff will also undergo new employee training specific 
to their business line. Most of the 242 employees would be staff 
attorneys. Specifically, the goal is for 145 attorneys, 24 judges, and 
73 support staff.
    Taking lessons learned from the 2013 hiring surge of 100 attorneys 
in a 4-month timeframe, the challenges faced would include human 
resources support, information technology (IT) support, training 
support, and office space. These challenges would be handled by having 
a strong recruitment plan in place this year, in advance of the budget 
enactment, with a tiger team of dedicated personnel to handle the 
recruitment and on-boarding. The IT needs would also be identified in 
advance, with a streamlined plan to have the necessary equipment in 
place in a timely fashion as new hires were on-boarded. The training 
needs would be handled by having a strong training plan in place, using 
lessons learned from the large training in 2013, and subsequent 
trainings. Finally, the office space requirements would be handled by a 
combination of repurposing existing space for storing paper claims 
files, and increasing telework for eligible employees.
                          process initiatives
(a) Standard Notice of Disagreement Form
    On March 24, 2015, VA's final rulemaking, RIN: 2900-AO81, Standard 
Claims and Appeals Forms, became effective. This rulemaking requires 
claimants to initiate an appeal using a standard notice of disagreement 
(NOD) form in cases where such a form is provided by VA. The purpose of 
this standardization is to improve communications with appellants at 
the beginning of the appeal process and allow VBA personnel to easily 
identify and initiate the processing of an appeal. By using the 
standard form for initiating an appeal, VA need not undergo an 
inefficient interpretive exercise as to whether a given document is a 
NOD and can process appeals more expeditiously. By requiring the use of 
a standard NOD form, all appellants in the appeal process will benefit 
from shortened processing time and from increased accuracy in 
identifying contentions claimed.
    VA has also recently amended the NOD form to allow claimants to 
elect either de novo review or the traditional appeal process at the 
time the appeal is initiated. Appeals processing times will be reduced 
for those claimants who make the election on the form as VA will not 
have to wait an additional 60 days for the claimant to make the 
election to begin processing the appeal.
(b) Centralized Mail
    In May 2014, VBA and the Board initiated a plan to integrate the 
Board with VBA's Centralized Mail process. In June 2014, the Board 
formally partnered with VBA's Office of Business Process Integration 
(OBPI) to begin implementation of Centralized Mail at the Board. The 
Board has worked very closely with OBPI, leveraging best practices from 
VBA to implement similar change management strategies by having the 
Board's mailroom team jointly evaluate the current, As-Is state and 
develop the future, To-Be state to optimize efficiencies in mail 
processing. The Board is now currently piloting centralized mail with 
VBA, and is executing the first phase of this initiative. During this 
first phase, the Board is shipping appeals-related mail to the scanning 
vendor. Once scanned, the scanning vendor seamlessly uploads the mail 
to the Board's Centralized Mail portal, from which the mail can be 
electronically processed by Board staff.
    In the second phase of the Board's centralized mail initiative, 
Veterans will be able to send their appeals-related mail directly to a 
new mailing address established for the Board, which will be a P.O. Box 
affiliated with the scanning vendor. Once successful testing of use of 
the Board's new P.O. Box has been completed and verified, a regulatory 
change to the Code of Federal Regulations will be published to update 
the Board's mailing address.
(c) Board Hearings
    Current law entitles an appellant to an in-person hearing before 
the Board at its principal location in Washington, DC, or, more 
frequently, at the appellant's local VBA RO. 38 U.S.C. Sec. 7107(d) 
(1). The Board is also authorized to offer an appellant a 
videoconference hearing in cases where the appellant is at the RO and 
the Veterans Law Judge (VLJ) is in Washington, DC; however, an 
appellant must affirmatively choose this type of hearing. 
Statistically, videoconference hearings have been shown to have the 
same grant rate as in-person hearings. However, the wait times for in-
person hearings at ROs (also known as Travel Board hearings) are much 
greater than for videoconference hearings because VLJs must travel to 
conduct hearings.
    Beginning in June 2015, the Board hosted productive meetings with 
members of Veterans Service Organization (VSO) leadership to discuss 
general items of interest, including case inventory, the hearing 
workload, and hearing wait times. As a result of these meetings, VSO 
leadership agreed to take the lead on clarifying the validity of 
pending hearing requests with their clients. To facilitate the VSO 
initiative to clarify the validity of pending hearing requests with 
their clients, the Board provided the VSO workgroup members with 
hearing data, including a list of each VSO's clients with a pending 
hearing request, average hearing wait time data by RO, and hearing show 
rate data for each RO.
    VBA's Office of Field Operations is continuing to employ best 
practices for scheduling hearings. Additionally, to better align 
Veteran expectations with the current process, the workgroup has 
discussed implementation of moving hearing election from the VA Form 9 
to the arrival of case at the Board and discussed discipline in 
rescheduling hearings following a no show, or repeated requests for 
postponement.
    Despite these efforts to increase efficiency in scheduling and 
conducting Board hearings, significant legislative reform related to 
Board hearings is required. Senator Blumenthal's draft bill examined in 
the Committee's May 24 legislative hearing provides such reform. That 
legislation provides that the Board will determine whether a Board 
hearing will be held either (1) at the Board's principal location or 
(2) by picture and voice transmission at a VA facility with suitable 
facilities and equipment. Providing for these two types of Board 
hearings, the draft bill retains a Veteran's ability to present 
testimony before a Veterans Law Judge, but improves the appeals process 
by providing for two types of Board hearings which may be scheduled and 
conducted much more efficiently, and at decreased cost to the taxpayer, 
than in-person hearings at VA facilities other than the Board's 
principal location. If, after being notified of the type of hearing 
selected by the Board, a Veteran would prefer the other type of 
hearing; he or she may make such request, which will be granted by the 
Board. Veterans retain the ability to present testimony during a Board 
hearing, either in-person before a Veterans Law Judge in Washington, 
DC, or via videoconference, but the costly and inefficient in-person 
hearing at the RO (Travel Board hearing) is eliminated.
    The draft bill also improves the appeals process for Veterans who 
do not want a Board hearing. The cases of all Veterans, regardless of 
whether or not they have requested a Board hearing, must be decided in 
docket order, with an exception for cases that have been advanced on 
the docket. The draft bill, however, establishes two separate dockets; 
a hearing-option docket and a non-hearing option docket, and allows 
cases before the Board to be decided in regular order according to 
their respective place on either docket; retaining an exception for 
cases advanced on the docket. The creation of two separate dockets 
allows these two different types of appeals to be better managed, and 
will result in increased efficiency, particularly for those Veterans 
with cases on the non-hearing option docket.
(d) Allocation of Hearing Resources
    To ensure that available hearing resources are being maximized for 
Veterans and other appellants across the 56 ROs, the Board thoroughly 
re-evaluated hearing data regarding utilization rates, oldest docket 
date cases at each RO, and individual hearing demand by hearing type at 
each RO when creating the 2016 hearing schedule. With regard to Travel 
Board (TB) hearings (face-to-face hearings conducted at the RO), the 
approach was to ensure that available resources were maximized for 
Veterans by assigning hearing dockets based on each RO's historical 
hearing utilization rate and its pending TB hearing request volume. 
With regard to video teleconference hearings (conducted between the 
Board and the RO), the approach was to target ROs with the oldest 
pending hearing requests by focusing on those requests with a docket 
date that is within the Board's docket date range at the time of 
scheduling formulation. This data-driven model will ensure that limited 
hearing resources (i.e., approximately 16,000 available hearing 
opportunities per year with 65,000 Veterans currently awaiting a 
hearing) are being most efficiently allocated to address the growing 
volume of pending hearing requests.
(e) Customer Service Improvements
    Consistent with the MyVA initiative of improving the Veteran 
experience, in 2015, the Board initiated a ``Veteran Experience 
Workgroup'' to leverage Veteran feedback from the Board's ``Voice of 
the Veteran'' survey, and to make meaningful improvements for veterans 
as they navigate the appeals process. This group of employees from 
across the Board, including Judges, attorneys, administrative staff, 
and managers, is focused on identifying areas prime for improved 
customer service, including Contacts Experience, Hearing Experience, 
Decision Experience, and Appeals Process Experience. Through continued 
dialog on these critical areas, the group anticipates generating 
results-oriented solutions to improving the Veterans' experience with 
the VA appeals process.
                         technology initiatives
Appeals Modernization
    The Department is leading an Appeals Modernization initiative to 
better serve Veterans and their families and provide timely and quality 
appeals decisions. As a part of this broad initiative, information 
technology funds have been requested to develop robust paperless 
functionality in the VA appeals process. This effort is part of the 
Board's multi-pronged approach to leverage technology, people, process 
improvements, and long-needed sweeping legislative reform to most 
effectively serve Veterans and their families in the efficient 
processing of appeals.
    Appeals across the Department are currently processed in a hybrid 
environment--with continued reliance on paper, and multiple 
unsynchronized, outdated legacy systems. Manual data entry and lack of 
appeals-specific paperless functionality creates risk for the 
Department in workload management, as well as processing delays. 
Currently, there is minimal appeals-specific paperless functionality in 
the technology systems, which creates inefficiencies in end-to-end 
appeals processing.
    VA has seen the benefits of people, process and technology 
transformation at the claims level with increased claims decisions 
being issued and more Veterans being served--almost 1.4 million in 
2015; the same rigorous, multi-pronged efforts to modernize must be 
applied to the appeals process. The Board is leading this Appeals 
Modernization initiative, which includes robust IT and FTE components, 
in order to mitigate risks and to provide timely service to Veterans 
and their families. Notably, with appeals-specific technology 
functionality enhancements, Veterans and their families will directly 
benefit through issuance of more appeals decisions more efficiently. In 
addition, the Department anticipates gaining future cost savings by 
being able to retire or ``sunset'' outdated and unsynchronized legacy 
systems exclusively used for appeals processing, such as the Veterans 
Appeals Control and Locator System (VACOLS), which was created in the 
1980s.
    With FY 2016 IT funding enacted, the Department will be able to 
begin a multi-phase process of enhancing appeals functionality in the 
paperless environment. These enhancements are necessary to keep pace 
with the transformation of benefits processing that has occurred on the 
front end (i.e., claims) of the VA benefits system. Initial key 
appeals-specific functionalities in the paperless environment will 
focus on seamless integration of systems, and key accountability and 
workability features.
    The Department and Board are appreciative of the attention and 
funding that has been provided to directly address the technology voids 
that will become increasingly problematic without implementation of the 
proper solutions. In preparation for execution of FY 2016 funds, in FY 
2015, the Board performed the necessary due diligence and analysis of 
relevant business requirements to understand the current state of 
appeals processing and create the structure to enable delivery of 
technology capabilities in FY 2016 and beyond. In FY 2016, the United 
States Digital Service at VA (DSVA), using the approach described in 
detail below, will undertake the replacement of VACOLS system, created 
in the 1980s, and provide the Department with more secure and efficient 
processing capabilities. The new tool, called Caseflow, will consist of 
both commercial off the shelf (COTS) and custom-developed software, as 
dictated by the needs of the Department. The majority of funds in FY 
2016 are to be allocated to contractor support that will be working 
with the Digital Service Team to design and develop required technology 
components. These components will build on the first deliverable of FY 
2016, Caseflow Certification, which introduces automation and 
consistency to the process of transferring appeals from local field 
offices to the Board. The second most significant use of FY 2016 funds 
supports the planned acquisition of an eReader COTS product, a tool 
that will enable attorneys and Judges at the Board to efficiently and 
effectively review electronic appeals documents in a best-practice 
manner.
                 updates to vbms for appeals processing
Automation
    VBA's VBMS office is working on leveraging existing VBMS 
infrastructure to gain efficiencies in processing appeals using 
calculator tools and rules-based automation.
eFolder Infrastructure
    The VBMS eFolder is the electronic replacement for the legacy paper 
claims folder. The eFolder serves as the primary repository for all 
electronic documentation related to a particular Veteran. Users would 
access the eFolder to review all documentation relevant to a Veteran's 
claim. This would include internal and external stakeholders such as 
VHA practitioners and VSO representatives. Unlike the paper claims 
folder, the VBMS eFolder supports simultaneous access of multiple users 
to a single Veteran's eFolder.
Correspondence Component
    A key component of the new appeals system would be to leverage the 
new enterprise correspondence component, which is a highly customizable 
correspondence assembly engine that provides document design 
functionality and a business-rules engine that enables full automation 
of letter assembly.
  sweeping legislative reform needed to modernize the appeals process
    While VA is applying lessons learned from the transformative 
changes that allowed it to reduce the disability claims backlog, and 
applying people, process, and technology initiatives to the appeals 
process to gain efficiency in the way appeals are managed and 
processed, these measures will not be enough. Fundamental legislative 
reform is essential to ensure Veterans have a timely, fair, and quality 
appeals process. To this end, the President's 2017 Budget proposed 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. VA intended that the legislative proposals in the 
2017 Budget would be the starting point for the broader conversation 
about how the Department, Congress, VSO, and other stakeholders can 
work together to provide Veterans with a simple, timely, transparent, 
and fair appeals process.
    VA has brought together the Nation's leading veteran advocacy 
groups for their input. They are our steadfast partners in improving 
the way we deliver services to veterans.
    As a result of weeks of listening as a result of that 
collaboration, VA has put forward a new proposal that would provide 
veterans with a simple, fair, and transparent appeals process in which, 
with the appropriate resources provided by Congress in future 
appropriations, the vast majority would receive a final appeals 
decision within one year of filing an appeal by 2021. This 
disentanglement of process is enabled by one crucial innovation--giving 
veterans multiple paths to adjudicate disputes on a claim, while 
preserving the effective date that the initial claim was filed. VA's 
consensus proposal was put forward as a discussion draft by Ranking 
Member Blumenthal and was the subject of the Committee's May 24, 2016, 
legislative hearing.
    This simple change, along with a few others, will modernize the 
Veteran appeals process, better serving Veterans, taxpayers, and the 
Nation for years to come. However, since it was layer upon layer of law 
that got us tangled, VA will need Congress' help to untangle it, and 
has been working to make this legislative change a reality, and soon.
                         information technology
    Question 33.  The Secretary's testimony at the budget hearing notes 
significant investment in improving and automating processes related to 
claims for various benefits, including compensation, pension, and 
education benefits. The Committee has heard in previous testimony about 
how certain changes to benefits eligibility often incur relatively high 
costs just to modify processing systems to accommodate the new rules. 
Please explain where these various benefits claims systems are in their 
overall development timeline and what future changes to eligibility 
will look like in terms of time and cost once development is complete.
    Response. The Office of Information & Technology (OI&T) has 
utilized the Project Management Accountability System (PMAS) to ensure 
that VA is developing quality products and overseeing investments 
responsibly. However, the process has been found to be overly 
burdensome, administratively heavy, and has inadvertently contributed 
to increases in project length and overall cost.
    To decrease the time to market and lower the overall cost of 
development, OI&T is pursuing several alternate efforts. First and 
foremost, OI&T is working closely with VHA, VBA, and BVA on several 
system modernization efforts--including the BVA modernization effort--
that improve the business processes, application of rules, and the 
replacement of out-of-date software applications with new technology. A 
summary of these efforts is included in this response.
    OI&T is also introducing a new development process called the 
Veteran-focused Integration Process (VIP). VIP utilizes an agile 
approach to software development with one single, unified, streamlined 
release process to deliver high-quality, secure IT capabilities to our 
Veterans. The VIP process will be governed by the new Enterprise 
Portfolio Management Office (EPMO). The EPMO provides a consolidated, 
enterprise-wide approach to identifying, selecting, prioritizing, and 
successfully executing a technology portfolio of projects. It will also 
emphasize the accumulation of domain knowledge by VA resources and the 
appropriate allocation of those resources to ensure that OI&T can react 
more quickly and efficiently to business changes.
    Once development is complete on the current suite of Benefits 
products, the expectation would be that any future enhancements would 
be able to be done more quickly and at a lesser cost. This is owed to 
the fact that these are being developed with a Service Oriented 
Architecture in mind which helps ensure changes are less extensive to 
accommodate new eligibilities.

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                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Dean Heller to 
                  U.S. Department of Veterans Affairs
    Question 34.  As you know, at the end of 2015, the Senate passed 
legislation to extend the one-year protection from foreclosure in the 
Servicemembers Civil Relief Act through 2017.
    Unfortunately, although there was support in 2012 and 2014 to 
ensure this one-year protection was maintained, the House has not yet 
acted on this legislation, resulting in the expiration of this 
protection at the end of 2015. Now, servicemembers only receive 90 days 
of foreclosure protection, right in the midst of their transition to 
civilian life.
    Do you believe this one-year protection from foreclosure is 
beneficial to veterans who are transitioning to civilian life? Are you 
supportive of an extension of the one-year protection from foreclosure?
    Response. The Servicemembers Civil Relief Act (SCRA) is intended to 
ease the economic and legal burdens on military personnel during their 
active service or at the conclusion of active service by postponing, 
suspending, or mitigating various types of obligations, including 
mortgage loans. This assistance is critically important as military 
personnel transition out of active service. VBA supports the extension 
of the one-year protection from foreclosure.
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Mike Rounds to 
                  U.S. Department of Veterans Affairs
    Question 35.  The one-year protection from foreclosure in the 
Servicemembers Civil Relief Act expired at the end of 2015 and reverted 
back to 90 days. Congress acted in 2012 and 2014 to make certain the 
protection stayed at one year, and the Senate passed a bill to extend 
for two more years through 2017 but the House has not yet acted. Do you 
feel the one-year protection from foreclosure has been helpful to 
veterans as they re-acclimate to civilian life? Would you support an 
extension of the one-year protection from foreclosure?
    Response. The SCRA is intended to ease the economic and legal 
burdens on military personnel during their active service or at the 
conclusion of active service by postponing, suspending, or mitigating 
various types of obligations, including mortgage loans. This assistance 
is critically important as military personnel transition out of active 
service. VBA supports the extension of the one-year protection from 
foreclosure.
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Dan Sullivan to 
                  U.S. Department of Veterans Affairs
                 veterans' choice, alaska pilot program
    Question 36.  Secretary McDonald, please expand on what progress 
has been made on the Alaska pilot program as of March 7, 2016.
    Response. We are making progress with the Alaska Choice Pilot 
Program. As of March 7, 2016, the contract revisions have undergone 
legal review, and we are in the process of defining and gathering data 
points for measuring success of the pilot. Furthermore, the hiring of 
additional staff to accommodate the need of the pilot is currently at 
75 percent complete.
    The Community Care Office developed and submitted a contract 
modification to the Denver Acquisition and Logistics Center (DALC) 
supporting a VA pilot in Alaska. The pilot program allows for Alaska 
VAMC staff to directly coordinate and schedule care using the TriWest 
network of providers.
    The DALC and VA's Office of General Counsel (OGC) recently 
completed a joint risk assessment of the modification to remove the 
contactors scheduling requirement. As of March 15, 2016, the DALC is 
reviewing the modification document and will submit to OGC for final 
concurrence and submission to the contractor for negotiations.
    On November 2, 2015, contract modification number 13 was signed. 
This modification authorizes TriWest to embed staff at selected VAMCs. 
Embedded staffing cell composition consists of two Care Coordination 
Assistants positioned to provide non-clinical support related to 
authorization entry, appointing and medical documents; and one 
Operations Manager responsible for supervising embedded staff while 
acting as the primary liaison with on-site VA staff.
    Since implementation, TriWest and VA have embedded staff at the 
following locations:

      New Orleans, LA VAMC--January 2016
      Dallas, TX VAMC--January 2016
      Anchorage, AK VAMC--January 2016
      Harlingen, TX VAMC--February 2016; Phoenix, AZ VAMC--
February 2016.

    TriWest and VA are currently coordinating additional embedded 
staffing sites, which will be implemented over the next 60 to90 days in 
the following locations:

      Corpus Christi, TX Community-Based Outpatient Clinic 
(CBOC)
      McAllen, TX CBOC
      Fayetteville, AR VAMC
      Jackson, MS VAMC
      Gulfport, MS VAMC

    Initial feedback from VA sites that have already implemented 
TriWest embedded staff is positive because VA and TriWest are working 
together in a collaborative approach to improve customer service for 
Veterans, VA staff, and local providers.
                             accountability
    Question 37.  Secretary McDonald, you've repeatedly said that in 
your leadership experience, you need to approach challenges by 
``changing the culture.'' How does the reinstatement of directors Diana 
Rubens and Kimberley Graves speak to the larger process of changing the 
culture within the VA and how does it restore confidence in our 
veterans when it restores individuals with track records like theirs, 
to positions of leadership? How many employees have been fired within 
the VA workforce as of March 7, 2016 and how many are currently 
receiving disciplinary action?
    Response. The Department complied with an order by the Merit System 
Protection Board to restore Ms. Rubens and Ms. Graves as Directors in 
VBA's Philadelphia and Minneapolis regional offices . . .  The 
Department is demonstrably committed to improving accountability of its 
senior leaders within the established legal framework. While every 
outcome may not be what the Department envisions, these cases have not 
deterred our resolve to continue the reinvention of the Department's 
corporate culture. The Department will not tolerate misconduct on the 
part of its senior leaders and we will continue to seek corrective 
action where warranted.

     In calendar year 2014, VA terminated more than 1,100 
employees. In calendar year 2015, VA terminated more than 1,980 
employees. (Note: this includes removals and probationary 
terminations). As of June 28, 2016, we have 945 Probationary 
Terminations/Removals in calendar year 2016.
     VA has terminated 3,685 employees since Secretary McDonald 
was confirmed on July 29, 2014. (Note: this includes removals and 
probationary terminations as of 06/28/16).

VA has initiated 450 disciplinary actions on any basis related to 
patient scheduling, record manipulation, appointment delays, and/or 
patient deaths nationwide, since June 3, 2014 (as reported on the 
June 3, 2016).
                            debt collectors
    Question 38.  Dr. Shulkin, I sent you a letter dated January 4, 
2016, regarding the issue of veterans in my state who have been hounded 
by collections agencies for unpaid bills. I brought this issue up the 
last time we met, and you committed to me at the field hearing in 
Phoenix back in December, that your office would intervene to make sure 
that doesn't happen. You committed to me again at the hearing on 
February 23, 2016 that addressing these claims would be a priority. 
This letter had pages of cases that I haven't gotten the answers to and 
there has been no communication with my state or DC staff since 
February. How and when do you plan on helping these veterans?
    Response. VA acknowledges that delayed payments and inappropriately 
billed claims are unacceptable and have caused stress for Veterans and 
providers alike. As a result of this issue, Veterans can now work 
directly with VA to resolve debt collection issues resulting from 
inappropriate or delayed Choice Program billing. In step with MyVA 
efforts to modernize VA's customer-focused, Veteran-centered services 
capabilities, a Community Care Call Center has been set up for Veterans 
experiencing adverse credit reporting or debt collection resulting from 
inappropriately billed Choice Program claims. Veterans experiencing 
these problems can call 1-877-881-7618 for assistance.
    The new call center will work to resolve instances of improper 
Veteran billing and assist community care medical providers with 
delayed payments. VA staff is also trained and ready to work with the 
medical providers to expunge adverse credit reporting on Veterans 
resulting from delayed payments to providers.
    VA is urging Veterans to continue working with their VA primary 
care team to obtain necessary health care services regardless of 
adverse credit reporting or debt collection activity. The new call 
center is the first step in addressing these issues. Veterans can find 
this number on the Veterans Choice Program website, http://www.va.gov/
opa/choiceact/. VA also issued a news release regarding the call center 
and including the 800 number to call. Last, posters including 
information on the call center and the 800 number will be distributed 
to VAMCs and CBOCs nationwide.
    VA is urging Veterans to continue working with their VA primary 
care team to obtain necessary health care services regardless of 
adverse credit reporting or debt collection activity. There should be 
no administrative burden that stands in the way of Veterans getting 
care.
                                 ______
                                 
Response to Posthearing Questions Submitted by Hon. Richard Blumenthal 
                 to U.S. Department of Veterans Affairs
    Question 39.  VA's health care system, in particular, its research 
facilties, have historically been big draws to the best and brightest 
medical talent, but many clinicians are now discouraged from 
researching at VA because the facilities are in need of upgrading. The 
President's request for major and minor construction is $1.025 billion, 
including grants for state homes and cemeteries. This is a significant 
decrease from the $1.675 billion that was requested in FY 2016. Most 
noticeably, the major construction funding request dropped from $1.444 
billion in FY 2016 to $528 million in FY 2017. Given the sad state of 
VA's aging capital infrastructure, and its particular impact on 
researchers who often also provide direct care to veterans, how do you 
explain what amounts to an almost 40% decrease in your request for 
construction funding? Please provide your views on the recommendation 
in the Independent Budget that VA designate at least $50 million in its 
construction budget for upgrading its research facilities.
    Response. With the FY 2017 request, VA is continuing to fund 
critical Major construction projects that address access, patient 
safety, and seismic issues in Long Beach, California and Reno, Nevada. 
The request also includes new cemetery and expansion projects that 
expand the VA's ability to provide access to burial services and 
prevent the closure to new interments in existing cemeteries. VA is 
maximizing future flexibility by not committing to long-term solutions 
until the Department reviews the recommendations from the Commission on 
Care, expected June 2016.
    While the FY 2017 major construction funding request is less than 
last year, the request for all of VA's capital accounts--Major, Minor, 
and NRM--is only 5 percent less than the FY 2016 enacted level. VA is 
focusing on fixing our existing facilities by completing prior year 
minor and non-recurring maintenance (NRM) projects, including minor 
construction projects that enhance VA's research capabilities. VA is 
also exploring opportunities to engage partnerships opportunities that 
would reduce upfront capital expenses, resolve costly deferred 
maintenance, and provide potential lifecycle cost benefits. However, 
VA's authority to enter into such partnerships is presently limited to 
the Leasing, Enhanced Use Lease, and Historic Reuse programs. Expanded 
authority could support resolution of infrastructure deficiencies for 
some of VA's owned assets while providing an opportunity to realize net 
lifecycle savings.

    Question 40.  There is potential for care in the community to top 
$18 billion in FY 2018 (this was a figure derived from information 
contained in VA's October 30, 2015 report ``Plan to Consolidate 
Programs of the Department of Veterans Affairs to Improve Acess to 
Care''), which is $11 billion more than VA currently anticipates 
spending on traditional non-VA care.
    A. Please explain how VA expects to reduce spending on care in the 
community to $7.5 billion in FY 2018 without impacting access for 
veterans.
    Response. The FY 2018 Advance Appropriation request is an initial 
amount to enable VHA to begin the year if there is a continuing 
resolution, and VA expects to revisit the FY 2018 request in the FY 
2018 President's Budget. The Advance Appropriation allows VHA to avoid 
the functional limitations of operating under a Continuing Resolution 
or in the event of a government shut-down. Funding the Advance 
Appropriation allows VHA an initial budget to continue operations until 
the full appropriation amount is signed into law. The ``second bite'' 
is intended for the administration to fully evaluate the resource 
requirements of the VA in context of the entire Federal budget.

    B. Please provide an estimate of the number of veterans VA 
anticipates will be using care in the community and their estimated 
reliance on VA facilities and providers for receiving health care in FY 
2017 and in FY18.
    Response. Based on increases since FY 2010, our projections show 
the unique number of Veterans using Community Care in FY 2017 and FY 
2018 to be:

 
------------------------------------------------------------------------
                                                    Projected Unique
                      FY                                Veterans
------------------------------------------------------------------------
FY 2017.......................................                1,974,962
FY 2018.......................................                2,216,217
------------------------------------------------------------------------


    Question 41.  One of the criticisms of the current Choice Program 
has been the need for improved coordination of care. VA recognized this 
in the New VCP when it highlighted the importance of robust care 
coordination tailored to each veterans's unique needs. I am encouraged 
that VA recognizes the need to ensure veterans and providers have 
access to a customer service system to help resolve any inquiries 
regarding care coordination. It is critical that VA facilities have 
staff available to support successful implementation of these efforts. 
Please discuss the rationale for not requesting funds for additional 
staff to implement the enhanced coordination of care efforts and how 
you intend to support those efforts with the current staffing levels.
    Response. The FY 2018 Advance Appropriation request is an initial 
amount to enable VHA to begin the year if there is a continuing 
resolution, and VA expects to revisit the FY 2018 request in the FY 
2018 President's Budget. The Advance Appropriation allows VHA to avoid 
the functional limitations of operating under a Continuing Resolution 
or in the event of a government shutdown. Funding the Advance 
Appropriation allows VHA an initial budget to continue operations until 
the full appropriation amount is signed into law. The ``second bite'' 
is intended for the administration to fully evaluate the resource 
requirements of the VA in context of the entire Federal budget.

    Question 42.  The Veterans Service Organizations who publish the 
Independent Budget indicated in their written testimony that the 
Administration's proposal to simplify the VA disability claims appeals 
process raise many due process concerns. Please discuss the nature of 
the due process rights veterans have through entitlelemt to disability 
benefits and how the Administration's proposal to simplify the appeals 
process would affect these rights. Also, earlier this year, VA released 
a white paper on the Veteran Appeals Experience. This white paper 
seemed to indicate that veterans have little awareness of what their 
due process rights are. What steps is VA taking to preserve those 
rights in a way that veterans can understand?
    Response.
Veteran Appeals Experience: Voices of Veterans and their Journey in the 
        Appeals System
    In January 2016, VA Center for Innovation (VACI) completed a 
findings report on the appeals process for Veterans. To better 
understand how Veterans experience the appeals process--how the process 
fits into the context of their lives--a group of six researchers spoke 
at length with 92 Veterans whose service spanned the periods from World 
War II, Korea, and Vietnam, to the current conflicts in Iraq and 
Afghanistan.
    Researchers spoke to Veterans at every stage in the appeals 
process, from those receiving their initial decision to those with 
final, complete results from the Board. Some were new to the process. 
Others, such as those who had just had their hearings with the Board, 
were years into the process.
    Human-Centered Design methods were used to understand the needs, 
behaviors, and experiences of the Veterans in the appeal process. 
Researchers performed qualitative ethnographic and design activities, 
driven by a robust and evolving set of questions. Using design thinking 
and service design practices, researchers mapped, visualized, and 
synthesized the findings, which are detailed in the full report.
    After careful review of the Veteran interviews researchers formed a 
narrative on how Veterans view the appeals process. Veterans and their 
families struggle to understand the process or their place in it. They 
have little understanding of the relationship between steps in the 
process and sometimes don't even realize when they're making a 
decision--even if it might delay their appeal for years. They don't 
distinguish between Veteran Benefits Administration (VBA) and the 
Board; instead, they simply see VA. Even VSOs are occasionally viewed 
as part of VA. As is articulated in the Veteran Appeals Experience 
paper, Veterans do know that the VA appeal process is broken. 
Researchers found Veterans tended to see the process as adversarial, 
labor intensive, and filled with endless churn.
    VACI's research identified five key themes surrounding Veterans' 
needs, perceptions, and expectations in their experience with the 
appeals process. These insights can guide VA in redesign of appeals and 
related services that can better meet the needs of Veterans and their 
families.
    The themes, outlined in greater detail in the report, are:

    1) The length and labor of the process takes a toll on Veterans' 
lives.
    2) Like in the military, Veterans care deeply about the outcomes of 
other Veterans.
    3) Veterans feel alone in a process they don't understand.
    4) The appeals process feels like a fight.
    5) Veterans want to be heard.
Overview of the VA Appeal Process
    The VA appeals process, which is set in law, is a complex, non-
linear process that is unique from other standard appeals processes 
found in other judicial systems. The current VA appellate process has 
multiple steps, most of which occur at the agency of original 
jurisdiction (AOJ), such as, the VHA, VBA, or the National Cemetery 
Administration (NCA). If a Veteran is not satisfied with the initial 
AOJ determination, he or she may continue the appeal to the Board of 
Veterans' Appeals (Board) for a final agency decision. A feature of the 
current VA appeals process is an open record that, with only narrow 
exceptions, allows a Veteran, Survivor, or other appellant to submit 
new evidence and/or make new arguments at most points in the appeals 
process. Additionally, the duty to assist requires VA to develop 
further evidence on the Veteran's behalf and pursue new arguments and 
theories of entitlement. When new arguments are presented and evidence 
is added or obtained, VA generally must issue another decision 
considering the new arguments and evidence, which lengthens the 
timeline for final appellate resolution.
    The current VA appeals process takes too long, as there is no 
defined endpoint or timeframe; is too complex, as Veterans do not 
understand the process; and involves continuous evidence-gathering and 
re-adjudication that delays the Department in reaching a final 
decision. VA's appeals process essentially contains another claims 
process, as new contentions are picked up as part of the appeal, rather 
than initiated as a new claim.
    Sweeping legislative reform, in conjunction with modernization of 
appeals processing technology, is needed to ensure that Veterans 
receive timely and quality appeals decisions. With sweeping legislative 
reform, VA could provide Veterans with a simplified appeals process 
under which Veterans receive a final, fair appeals decision 
significantly faster than the current appeals process, which has no 
predictable end and can continue for many years. Conversely, if 
substantial legislative reform does not occur, Congress will need to 
provide significant sustained funding for VA to hire additional 
employees to apply the current inefficient process created by existing 
law to the constantly growing appeals workload.
    While business process improvements/initiatives will provide some 
assistance in streamlining the current inefficient appeals process, VA 
will not be able to keep up with the growing appeals workload without a 
significant sustained increase in resources or sweeping fundamental 
legislative reform. Such fundamental legislative reform is reflected in 
H.R. 5083. This legislation replaces the current appeals process with a 
new framework consisting of differentiated lanes, which give Veterans 
clear options after receiving an initial decision on a claim. One lane 
would be for a quick review of the same evidence by a higher-level 
claims adjudicator in the AOJ; one lane would be for submitting 
additional evidence with a new claim to the AOJ; and one lane would be 
the appeals lane for seeking review by a VLJ at the Board. Furthermore, 
hearing option and non-hearing option appeals at the Board would be 
handled on separate dockets so these distinctly different types of work 
can be better managed. In order to make sure that no lane becomes a 
trap for any Veteran that misunderstands the process or experiences 
changed circumstances, a Veteran who is not fully satisfied with the 
result of any lane would have one year to seek further review while 
preserving an effective date for benefits based upon the original 
filing of the claim. For example, a Veteran could go straight from an 
initial AOJ decision on a claim to an appeal to the Board. If that 
decision were not favorable, but it helped the Veteran understand what 
evidence was needed to support the claim, then the Veteran would have 
time to submit that evidence to the AOJ in a new claim without fearing 
an effective-date penalty for choosing to go to the Board first.
    Importantly, this legislative reform protects the due process 
rights of Veterans by ensuring that Veterans are provided clear and 
detailed notice when a claim is decided. This new design also contains 
a mechanism to correct duty to assist errors by the AOJ. If the higher-
level claims adjudicator or Board discovers an error in the duty to 
assist that occurred before the AOJ decision being reviewed, the claim 
would be returned to the AOJ for correction unless the claim could be 
granted in full. The Secretary's duty to assist would not apply to the 
lane in which a Veteran requests higher-level review by the AOJ or 
review on appeal to the Board. The duty to assist would, however, 
continue to apply whenever the Veteran initiated a new claim or 
supplemental claim. For Veterans who want to submit additional evidence 
following an AOJ decision on a claim, there would be two options; they 
could either submit additional evidence with a supplemental claim or 
file a timely appeal to the Board and elect the Board ``hearing option 
lane'' which would allow the Veteran to testify at a Board hearing and 
submit evidence at the Board hearing or within 90 days thereafter. 
Alternatively, a Veteran on the hearing option docket could choose to 
submit additional evidence within 90 days of filing a notice of 
disagreement without requesting a Board hearing. Stakeholder support is 
needed to provide appellants this modern, efficient appeal process that 
is consistent with VA's goals for the initial claims process.
History of the VA Appeal Process
    The current appeals adjudication process has evolved over nearly a 
century from the WWI system originally managed by the Bureau of War 
Risk Insurance. During most of this evolution, decisions on Veterans 
claims were final and no court had authority to review the agency's 
decisions. Veterans first received the right to seek judicial review of 
agency decisions on their claims in the 1988 enactment of the Veterans' 
Judicial Review Act (VJRA) (Public Law 100-687). The VJRA established 
judicial review of VA decisions in a new court now known as the United 
States Court of Appeals for Veterans Claims (CAVC); maintained the 
Board as the final adjudicator within VA; abolished the $10 limit on 
attorneys' fees for representing Veterans in certain claims; and 
created additional levels of judicial review in the United States Court 
of Appeals for the Federal Circuit (Federal Circuit) and the United 
States Supreme Court.
    Judicial review of VA's decisions has had both positive and 
negative effects for VA and claimants. Judicial review has been 
beneficial for Veterans by providing them with their ``day in court.'' 
It has also created a forum for debating the interpretation of Veterans 
benefits law and the validity of VA's regulations, resulting in a 
significant body of case law on Veterans' benefits issues.
    However, judicial review has also significantly complicated VA's 
administration of its benefits programs, resulting in significant 
delays in the initial claim and appeal processes. The processes that 
were developed in the decades after WWI were not designed to be 
compatible with judicial review. As a result, the interpretation of 
statutes and regulations that often date to WWI or WWII has led to many 
unexpected results that have been difficult to integrate into the 
decades of procedures that have accumulated. Specifically, the 
applicable law as developed primarily by precedential CAVC and Federal 
Circuit decisions is constantly increasing in complexity. As a result, 
Board decisions are lengthier, more complex, and require more time and 
resources to prepare than ever before. While there are a number of CAVC 
decisions that affect the timeliness of the claim and appeal processes, 
the most significant factor has been the CAVC's interpretation of VA's 
statutory duties to assist and notify, which have substantially 
increased the number of remands to the Board and VBA.
Current Statutory Framework
    It is important to understand the current framework that has been 
built up in stages since WWI. The VA appeals process divides 
responsibility between VBA and the Board. In brief, it is not a closed 
or linear process. The appeal process provides redundant reviews of the 
initial decision, and the process does not move in one direction to a 
set conclusion. The claimant pays no fee to utilize the VA appeals 
process and there is no limit to the number of appeals that can be 
submitted. New evidence may be submitted or obtained at virtually any 
time and an appeal may have to go through multiple cycles of 
development and re-adjudication to be resolved.
                                  vba
    A claimant may initiate VA's administrative appeal process by 
filing a NOD with VBA regarding a specific VBA decision. Section 
7105(b)(1) of title 38, U.S.C., provides claimants with a one-year 
period, beginning on the date that VA issued the decision, in which to 
file a NOD.
    Under section 7105(d)(1), when VBA receives a NOD, it initiates a 
fresh review and undertakes any development required for additional 
evidence submitted with the appeal in an attempt to resolve the 
disagreement. If VBA's further action regarding the appealed claim does 
not resolve the disagreement, it must issue a Statement of the Case 
(SOC), which must include a summary of the evidence, citation to 
pertinent laws and regulations, a discussion regarding how VBA applied 
the law to the facts of the claim, a decision on each issue in the 
appeal, and a summary of the reasons for the decision on each issue. 
Claimants may then file a substantive appeal within 60 days of the date 
VBA issued the SOC or within one year of the date of VBA's initial 
decision, whichever is later, which completes the formal appeal for 
certification and transfer of jurisdiction to the Board.
    VA has interpreted its authority under section 7105 as allowing 
claimants who filed an NOD to elect either a traditional appeals 
process or a first level of de novo review within VBA by a Decision 
Review Officer (DRO). If a claimant elects a DRO review, a VBA employee 
who processes appeals re-adjudicates the claim and issues a decision 
granting the benefits on appeal or an SOC confirming the prior 
decision. A claimant who elects a DRO review and remains dissatisfied 
with VA's decision may still file a substantive appeal to the Board and 
receive another de novo review of the claim.
    A claimant may submit additional evidence to support an appealed 
claim at virtually any point in the process, regardless of whether the 
appeal is pending at VBA or the Board. If additional evidence is 
received after the claimant files a NOD but before VA issues the SOC, 
the evidence will be reviewed by VBA and incorporated into the SOC (if 
VBA cannot grant benefits). Evidence that an appellant identifies after 
VBA issues an SOC will result in VA issuing a supplemental SOC (SSOC). 
Each time the claimant identifies additional evidence; VBA must 
reconsider its decision on the appealed claim and conduct any necessary 
development of the claim under its duty to assist the claimant. If 
VBA's reconsideration of the appealed claim does not resolve the 
disagreement, it will issue another SSOC.
    There is no limit to the number of times a claimant may identify 
additional evidence that may require VA to repeat this process. 
Accordingly, many appealed claims require several SSOCs, depending on 
the number of times that the claimant identifies additional evidence. 
Identification of additional evidence during the appeal process often 
results in multiple reviews and re-adjudications of an appeal before 
VBA is in a position to transfer it to the Board for its de novo 
review. In FY 2015, each additional SSOC added, on average, more than 
360 days to the total appeal processing time.
                               the board
    Under 38 U.S.C. Sec. 7104(a), VBA's decisions are subject to one de 
novo review on appeal to the Board. In general, this right of review 
requires evidence to be considered by VBA in the first instance before 
a case can proceed to the Board. However, when the Board receives an 
appeal, it reviews the entire record on the claim and does not give any 
deference to a prior VBA decision. The Board will either issue a 
decision granting or denying the benefit, or will remand the claim back 
to VBA for additional developmental action. Approximately 60 percent of 
the decisions that are remanded to VBA are a result of additional 
evidence or information becoming available, or a change in 
circumstances that arose after the claim was certified to the Board. As 
discussed above, claimants may submit additional evidence at virtually 
any time during the process, regardless of whether the appeal is at VBA 
or the Board. This submission of additional evidence and other inherent 
delays in the appeal process often cause the Board to remand the claim 
to VBA for a new examination or a search for previously unidentified 
records, which causes further ``churning'' of the appeal. Furthermore, 
if the Board identifies an error in evidence gathering, the case must 
be returned to VBA to repeat the development and adjudication process 
before being returned to the Board.
    In July 2003, VBA created its Appeals Management Center (AMC) for 
the purpose of consolidating remands from the Board at a single office 
for more efficient and consistent processing. The AMC has the authority 
to develop additional evidence regarding remanded claims and issue new 
decisions. If the AMC is unable to issue a full grant of benefits, it 
will issue a supplemental SOC and recertify the appeal to the Board for 
continuation of the administrative appeal process. Currently, the AMC 
processes approximately 65 percent of the Board's remands to VBA. VBA's 
regional offices process the remaining remands, including remands in 
claims where the appellant has asked for a hearing or a private 
attorney represents the claimant.
    The current process (see Figures 1 and 2) provides appellants with 
multiple reviews in VBA and one or more at the Board depending upon the 
submission of new evidence or whether the Board determines that it is 
necessary to remand the matter to VBA. Although VA has allocated 
significant resources to the appeals workload, the multi-step, open-
record appeal process set out in current law precludes the efficient 
delivery of benefits to all Veterans. Further, the longer an appeal 
takes, the more likely it is that the claimed disability will change, 
resulting in the need for additional medical and other evidence and 
further processing delays. As a result, the length of the process is 
driven by how many cycles and re-adjudications are triggered.
 Figure 1: Illustrating the entire appeal process, including judicial 
                                review.
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    ** In FY 2015, each additional SSOC added, on average, more than 
360 days to the total appeal processing time.

                               Figure 2: 
   Illustrating the complex administrative appeal process created by 
                              current law.

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                            judicial review
    As noted above, claimants have had the right to judicial review of 
VA's decisions on their claims since 1988. If an appellant is 
dissatisfied with a final Board decision on a claim, the appellant may 
appeal to the CAVC within 120 days of the date of the decision. 
Further, limited review is available in the Federal Circuit and Supreme 
Court. The 1988 legislation placed judicial review on top of the layers 
of procedures that had evolved since WWI.
                                 claims
    If the Veteran disagrees with any or all of the final appeals 
decision, the Veteran always has the option of filing a claim to reopen 
for the same benefit once the appeal is resolved.
Proposals for a New VA Appeals Framework
    There are three key elements that the new appeals framework would 
impact: VA's duty to assist, submission of evidence, and effective date 
provisions. Over the years, laws have changed to add layers of process 
to protect the interests of Veterans. However, those protections are no 
longer serving Veterans well since these laws have affected the timely 
and efficient resolution of appeals.
    Under current statutes, Veterans have the right to submit or 
identify evidence and pursue new arguments of entitlement at virtually 
any point throughout the appeals process. Under its statutory duty to 
assist, VA is obligated to develop and gather the evidence for the 
Veteran and re-adjudicate the appeal each time. Further, current 
effective date statutes provide an effective date of benefits that is 
retroactive to the date of the filing of the initial claim, as long as 
a Veteran files a timely appeal that eventually results in an award. 
Therefore, the current process incentivizes the continual submission of 
new evidence. Continuous evidence-gathering and the additional duty to 
assist triggered by the submission of evidence delay a final decision 
and result in many cycles of re-adjudication. In many instances, the 
additional steps in the process not only add little or no value, but 
actually harm Veterans by delaying an otherwise favorable decision 
while additional process is pursued. Hence, VA's appeal system differs 
from other Federal agency and judicial appeal processes, which limit 
the appeal review to evidence included in the record at the time of the 
initial decision.
    By modernizing and simplifying the appeals system, Veterans would 
be afforded a transparent appeals process with a single VA appeals 
owner, rather than trying to navigate a multi-step process that is too 
complex and too difficult to understand.
    VA has brought together the Nation's leading Veteran advocacy 
groups for their input. They are our steadfast partners in improving 
the way we deliver services to Veterans.
    As a result of that collaboration, VA has put forward a new 
proposal that would provide veterans with a simple, fair, and 
transparent appeals process in which, with the appropriate resources 
provided by Congress in future appropriations, the vast majority would 
receive a final appeals decision within one year of filing an appeal by 
2021. This disentanglement of process is enabled by one crucial 
innovation--giving veterans multiple paths to adjudicate disputes on a 
claim, while preserving the effective date that the initial claim was 
filed. VA's consensus proposal was put forward as a discussion draft by 
Ranking Member Blumenthal and was the subject of the Committee's 
May 24, 2016, legislative hearing.
    This legislation would modernize the Veteran appeals process, 
better serving veterans, taxpayers, and the Nation for years to come. 
And since it was layer upon layer of law that got us tangled, VA will 
need Congress' help to untangle it, and has been working to make this 
legislative change a reality, and soon. The principles of this 
consensus proposal are as follows:

   The New Appeals Framework Provides Five Key Benefits for Veterans
    I. Improved Communications: In order to make an informed and 
intelligent choice as to which review option is the most beneficial, 
Veterans will need a clear and detailed Decision Notice when a claim is 
decided. We have identified eight elements needed to draft a 
comprehensive notice to Veterans.
          1. Issues adjudicated
          2. Evidence considered
          3. Statutes and regulations considered
          4. Identification of findings favorable to the Veteran
          5. Findings as to which element(s) were found not to have 
        been satisfied leading to the denial of the claim including an 
        explanation of how the evidence was weighed
          6. Notice of how to obtain a copy/access to the evidence used 
        in making the decision
          7. Notice of the criteria that must be satisfied to grant the 
        claim
          8. Notice of appellate rights and all procedures available to 
        seek further review
    II. Effective Date Protection: The new system will protect a 
Veteran's potential effective date while he or she considers the 
different options available. Choosing one lane over another lane (See 
Choice below) does not prevent a Veteran from later choosing a 
different lane.
    III. Choice: The new model provides Veteran's with three options 
(Lanes) after every VBA Decision. These Lanes are designed to allow 
Veterans to choose the option that best suits their particular need.
          1. A Difference of Opinion Review/Higher Level Review by the 
        AOJ (within VBA)
          2. An option to submit New Evidence (within VBA)
          3. The right to Appeal to the Board of Veteran Appeals 
        (Board)
    IV. Early Resolution: The new approach is designed to facilitate 
early resolution of Appeals at the RO level--through options 1 and 2--
rather than driving Appeals through a single process which leads to and 
through the Board.
    V. Timely Resolution
          1. The focus on early resolution and a 125 day turn-around 
        goal within the two VBA lanes will dramatically reduce the time 
        to resolution for many Appeals.
          2. The Board will provide 1) an Expedited Review docket for 
        claimants who simply wish for a review on existing evidence, 
        and 2) an Alternate Review docket which allows for hearings and 
        the submission of new evidence.

    Question 43.  The American Legion's written testimony highlights 
the importance of the Decision Review Officers at the VA Regional 
Offices as one of the most efficient ways for a veteran to resolve an 
appeal. As VA has attempted to reduce the backlog of claims, many DROs 
have been assigned to focus on claims rather than appeals, reducing the 
number of employees available to process appeals. VA's proposal for 
reforming appeals seems to remove many of the functions of the Regional 
Office from the appeals process altogether. Under VA's proposal for a 
simplified appeals process, would DROs work on claims or appeals?
    Response. The new appeals framework described in H.R. 5083 sets up 
three ``lanes'' or options for Veterans following an unfavorable AOJ 
decision. The DRO review would be eliminated in the new appeals 
framework; however, Veterans would have two options for further review 
of their claim at the AOJ, by either choosing higher level review by 
the AOJ or by filing a supplemental claim with new evidence.
    Veterans would have up to one year from an initial claim decision 
to seek local review of the decision by a higher-level adjudicator. No 
new evidence or hearings would be permitted at this stage and the 
adjudicator would have the authority to grant the claim based upon a 
difference of opinion. However, the Veteran's representative would have 
the option to request an informal conference with the decisionmaker for 
the purpose of pointing out specific errors in the case.
    If during the review, the higher-level adjudicator finds a duty to 
assist error, and that error occurred prior to the AOJ decision being 
reviewed, the adjudicator would send the case back to the lower level 
to correct any errors found and re-adjudicate the claim.
    The level of the higher-level adjudicator would depend upon the 
complexity of the claim, but would be higher than that of the initial 
adjudicator. The Veteran could elect whether this adjudicator was from 
his or her local RO or from a different RO.
    The effective date of the initial filing of the claim would be 
protected if the outcome of the review is favorable to the Veteran. If 
the outcome of the review is unfavorable, the Veteran would have one 
year from the date of the higher-level review decision to submit new 
evidence with a supplemental claim or file an appeal with the Board.
    As an alternative to higher-level review, upon receiving a 
decision, Veterans would have up to one year to submit new evidence 
with a supplemental claim. The Veteran could also request a local 
hearing to submit testimony. An RO adjudicator would consider the new 
evidence and issue a new decision, while preserving the effective date 
associated with the initial claim. If Veterans remain dissatisfied with 
the decision, they would still have the option to appeal to the Board, 
seek local review by a higher-level RO adjudicator in the difference of 
opinion lane, or file another supplemental claim with new evidence.
    This new appeals framework allows Veterans who have received an 
unfavorable AOJ decision to make a choice regarding the most 
appropriate review for their situation, and provides more options than 
the current legal framework.
                                 ______
                                 
 Response to Posthearing Questions Submitted by Hon. Sherrod Brown to 
                  U.S. Department of Veterans Affairs
    Question 44.  As you know a 2014 HELP Committee report revealed 
that eight of the top 10 recipients of Post-9/11 GI Bill benefits are 
large, publicly-traded companies that operate for-profit colleges who 
had received 23 percent of all Post-9/11 GI Bill benefits ($975 
million) in 2012-13. Has this changed in the intervening time since 
this report was published? For the most recent year for which data is 
available, how many of the top 10 recipients of Post-9/11 GI Bill 
benefits are for-profit colleges?
    Response. Based on Fiscal Year 2015 data, five of the top 10 
recipients of Post-9/11 GI Bill tuition and fee payments are for-profit 
schools. These five schools received a total of $301,679,948 in tuition 
and fee payments and represent over 60 percent of the total tuition and 
fee payments to the top 10 recipients of the Post-9/11 GI Bill. These 
schools also represent 10 percent of all Post-9/11 GI Bill tuition and 
fee payments in 2015. Please see the table below for the top 10 highest 
paid schools.

 
------------------------------------------------------------------------
                                                          Total Tuition
        Name of Institution            Profit Status      and Fees Paid
------------------------------------------------------------------------
University of Phoenix-Online Campus  Private profit      $135,107,635.20
American Public University System..  Private profit       $55,544,751.53
University of Maryland-University    Public               $45,083,484.47
 College.
Full Sail University...............  Private profit       $40,276,319.58
Ashford University-On Line.........  Private profit       $39,886,727.16
Southern Utah University...........  Public               $38,084,999.78
Liberty University.................  Private non-         $37,246,788.32
                                      profit
Arizona State University-Tempe.....  Public               $34,169,659.32
University of Phoenix-Southern       Private profit       $30,864,515.37
 California Campus.
National University-San Diego......  Private non-         $29,959,505.74
                                      profit
------------------------------------------------------------------------
Data Source: 2015 CBS Report

    A. This same HELP Committee report also found that taxpayers are 
paying twice as much on average to send a veteran to a for-profit 
college for a year compared to the cost at a public college or 
university. Is this still the case?
    Response. Yes, with regard to tuition and fees paid to schools, VA 
pays twice as much on average to send a Veteran to a for-profit college 
for a year compared to the cost at a public college. Please see table 
below for the average amount paid to schools (for tuition and fees) per 
student in FY 2015.

 
------------------------------------------------------------------------
                                                  Tuition    Average per
                Type of School                   and Fees   Student in a
                                                   Paid         Year
------------------------------------------------------------------------
For-profit schools............................     $2.0B      $8,254
Public schools................................     $1.7B      $4,362
------------------------------------------------------------------------
Data Source: 2015 CBS Report

                                 ______
                                 
Response to Posthearing Questions Submitted by Hon. Mazie K. Hirono to 
                  U.S. Department of Veterans Affairs
                          veteran homelessness
    Question 45.  Current estimates from the Department of Housing and 
Urban Development indicate that approximately 48,000 veterans are 
homeless on any given night. Meanwhile, the National Coalition for 
Homeless Veterans indicates that approximately 1.4 million other 
veterans are at risk of homelessness. Could you elaborate on how you 
envision the VA's transformation strategy will work to better 
collaborate with DOD to prevent further instances of homelessness among 
transitioning veterans?
    Response. In collaboration with DOD and the United States 
Interagency Council on Homelessness, VA VHA Homeless Programs Office 
and Care Management and Social Work Services has developed a new 
initiative to prevent and end homelessness among Transitioning 
Servicemembers. This new holistic approach to transition preparation 
includes Servicemembers planning for post-separation finances, housing, 
transportation, employment, and family and social support. For those 
Servicemembers who are determined to be at risk of homelessness, a 
referral will be made to a VA medical facility for the coordination of 
health care and housing services facilitated by the Transition and Care 
Management (TCM) team.
    Key to this initiative are the VA Liaisons for Health Care, 
licensed social workers or registered nurses, who are strategically 
placed in Military Treatment Facilities (MTF) with high concentrations 
of ill and/or injured Servicemembers and those returning from combat. 
VA has 43 VA Liaisons for Healthcare stationed at 21 MTFs to facilitate 
the transfer of Servicemembers from the MTF to a VA health care 
facility closest to their home or most appropriate location for the 
specialized services their medical condition requires. VA Liaisons are 
co-located with DOD Case Managers at MTFs and provide onsite 
consultation and collaboration regarding VA resources and treatment 
options. VA Liaisons meet with Servicemembers directly to discuss the 
VA system of care and the individual's health care needs. VA Liaisons 
provide direct access to care for transitioning Servicemembers and 
ensure that VA care is personalized, proactive, and patient-driven to 
meet the unique needs of each new Veteran. If housing needs are 
identified at the time of transition, VA Liaisons communicate this 
information to the receiving VAMC so ongoing services can be 
coordinated. The goal with each referral is for the Servicemember to 
leave the MTF registered for VA health care with a scheduled VA 
appointment.
    At sites without a VA Liaison for Healthcare, a VA Benefits Advisor 
will make a warm handoff to a Homeless Prevention point of contact at 
the VAMC who is an expert at identifying and accessing VA and community 
homeless resources.

    Question 46.  It is encouraging to see that the President's FY 2017 
budget includes $1.6 billion for programs that will continue VA's 
efforts to end veterans' homelessness. I also appreciate the work that 
VA has done to reduce veterans' homelessness in the last several years, 
whereas Veteran homelessness has declined by 36% between 2010 and 2015. 
What kind of impact does VA project toward lowering the rate of 
homeless veterans throughout the Nation with the requested funding 
level?
    Response. The kind of progress reflected in the declining Point-in-
Time estimates affirms that the strategies and systems that VA, 
together with the Department of Housing and Urban Development and 
community partners, has implemented are working. The requested increase 
in the FY 2017 VA homeless-services budget request is needed to sustain 
its continuum of care for not only homeless and at-risk Veterans but 
for those Veterans who have obtained permanent housing yet still 
require supportive services in order to maintain housing stability. VA 
has made unprecedented efforts to promote the services available to 
Veterans who are homeless or might become homeless. As a result of the 
success of the effort and targeted resources, more Veterans than ever 
before are seeking out VA. Since 2010, demand for VA homeless-related 
services has increased by 136 percent (FY 2010: 127,070--FY 2015: 
300,108 Unique Veterans accessing VHA homeless services). There has 
been a 7.8 percent increase in demand for homeless services since this 
time last year (January 2015: 164,224 to January 2016: 178,139).
    Communities that have reached the goal or are close to effectively 
ending homelessness rely heavily on VA targeted homeless resources. 
Communities that have developed a sustainment plan are dependent on 
those resources to remain available as they continue to tackle 
homelessness. The systems we have in place will make sure that the 
experience is measured not in months or years, but in days if 
sustained. Therefore, VA remains focused on ensuring adequate resources 
that address the needs of Veterans who may become or are at-risk of 
homelessness and sustain the supports for Veterans who have moved into 
permanent housing so that they maintain housing stability and do not 
fall back into homelessness.
                 dod/va health record interoperability
    Question 47.  Secretary McDonald, in your testimony you indicate 
that one of VA's breakthrough outcomes for 2016 is to finalize 
congressionally mandated DOD/VA interoperability requirements at the 
Office of Information and Technology. Could you comment on the specific 
metrics that VA is using to measure interoperability? What is the 2016 
timeline for when these requirements will be fulfilled?
    Response. Our key measure of interoperability between VA and DOD is 
a clinician's ability to access all health information required to 
provide optimal care for Veterans and Servicemembers. To ensure we are 
exchanging this information effectively, the DOD/VA Joint 
Interoperability Plan (JIP) includes details regarding the Departments' 
efforts to standardize terminology, content, exchange methods, and 
access to shared health information. The JIP also addresses the 
Departments' efforts to exchange health information securely, flexibly, 
and in compliance with national standards and relevant privacy laws. 
Currently, JLV is used by both VA and DOD for a complete view of a 
Veteran or Servicemember's longitudinal record. Later this year, JLV 
will also provide direct access to radiographs and other images. 
Imaging study reports are already included in JLV today. As VA 
continues improving our point-of-care health record interface with the 
enterprise Health Management Platform, all current capabilities of JLV 
will be included in the new system.
    The Departments certified that we have achieved the interoperable 
capability required in Section 713 (b)(1) of the 2014 National Defense 
Authorization Act on April 8, 2016,--approximately 8 months ahead of 
the deadline.
    The summary of Interoperability Metrics and Milestones, extracted 
from the JIP, is embedded below for additional detail.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                         automation of benefits
    Question 48.  In your testimony, you highlight the need to simplify 
the VA appeals process. As a result of automating burial benefits, you 
state that the Department was able to reduce the time spent processing 
these benefits from 190 days to 6. This Congress, in collaboration with 
VA, I introduced the Veteran Survivors' Claims Processing Automation 
Act which passed out of this Committee last month. The bill would 
provide the Department with the authority to automate the claims 
process for dependency and indemnity compensation, survivors' pensions, 
and payments of accrued benefits. In the context of your 2016 
Breakthrough Outcomes for Appeals, would you be able to comment on the 
impact that automating these benefits would have on decreasing 
processing time, and assisting the VA in meeting its goal of completing 
90 percent of appeals within one year of filing by 2021? Can you 
comment on the budgetary impact you anticipate that streamlining 
programs in this manner would have on the VA, and the positive impacts 
that it would have on veterans' services by improving the timeliness 
and quality of benefits delivery?
    Response. The overall intent of automating survivors' benefits is 
to grant the benefit without the need for the survivor to submit an 
application. Because of the unique adjudication process of appeals, VBA 
cannot implement automation at the time a survivor files an appeal. 
Many of these appeals require a detailed analysis of multiple types of 
evidence before a decision is reached. Automation does not lend itself 
well to this type of review. Additionally, since nearly 98 percent of 
all pending VA appeals involve disability compensation benefits, the 
impact from automating survivor appeals would be minimal.
             board of veterans' appeals chairman nomination
    Question 49.  Making significant progress on the veteran claims 
backlog is a key part of your 2016 breakthrough outcomes however the 
Board of Veterans' Appeals has not had a Senate-confirmed Chairman 
since the departure of the late James Terry in 2011. Laura Eskenazi was 
designated by Secretary Eric Shinseki as Executive in Charge and Vice 
Chairman of the Board of Veterans' Appeals (BVA), on June 30, 2013. 
Since the beginning of the 114th Congress, the Senate has not received 
a nomination for BVA Chairman. Are there plans to submit to the Senate 
a nominee for BVA Chairman in 2016?
    Response. VA acknowledges that leadership for the Board of 
Veterans' Appeals is important as we move critical initiatives forward. 
Nomination of the Chair, Board of Veterans' Appeals is a process 
executed by the White House, and we therefore defer to the White House 
on this matter.
                    telehealth/hepatitis c treatment
    Question 50.  Secretary McDonald, you note in your testimony that 
with its $1.5 billion request in FY 2017, VA expects to treat 35,000 
patients with Hepatitis C and that VA will focus resources on the 
sickest patients and most complex cases and continue to build capacity 
for treatment through clinician training and use of telehealth 
platforms. Could you elaborate on how telehealth will be expanded and 
how it will impact treatment?
    Response. VHA currently operates multiple Hepatitis C and liver 
Telehealth programs, both within and across VISNs. These include 
traditional provider-patient Telehealth visits, in which the patient is 
seen through a video link at one VAMC by a Hepatitis C provider at 
another VAMC. They also include Tele-consultation models using VHA's 
highly successful SCAN-ECHO program, in which primary care physicians 
at a VAMC or CBOC present Hepatitis C cases to an expert team at 
another VAMC and receive didactic training, enabling them to become 
experienced Hepatitis C treaters. Preliminary data from VHA's Hepatitis 
C SCAN-ECHO program show significant increases in patient access, 
decreases in travel time, and most importantly, cure rates similar to 
those achieved by experienced VHA Hepatitis C providers.
    VHA is planning and executing expansion of these programs as 
rapidly as possible. Expansion will use geomapping to target sites that 
report patient access difficulties due to geographic constraints or 
limitations in provider resources as well as relatively low proportions 
of Veterans treated. Expansion will involve meetings between the VHA 
National Viral Hepatitis Program Office and National Telehealth Program 
Office with clinical staff at such sites to guide deployment and 
implementation of Telehealth resources, recruitment of experienced 
Hepatitis C providers to deliver Hepatitis C Telehealth care, use of 
peer support groups for remote treatment of Veterans, and updating the 
existing national liver/Hepatitis C Telehealth guide. VHA will also 
leverage its existing provider to provider training programs, including 
its Hepatitis C SCAN-ECHO program, to buildupon existing provider 
capacity to treat Hepatitis C; the National Viral Hepatitis and Primary 
Care Programs are collaborating to refine a Hepatitis C curriculum for 
VHA primary care providers. Based on the data from existing programs, 
we anticipate that this expansion will improve access to Hepatitis C 
and liver care, particularly among Veterans residing in rural and 
highly rural areas.
    Chairman Isakson. We have a second panel that will come 
forward. If the second panel will move forward?
    I appreciate your time this morning. [Pause.]
    I would like to welcome our second panel, and, again, I 
appreciate the Secretary staying for the second panel. We have 
our veterans service organizations, which are critically 
important to us on the VA Committee. We have The American 
Legion in town today. I was with them earlier this morning, and 
I appreciate their support for the Veterans Administration and 
for this Committee.
    We have: Mr. Carl Blake, the Associate Executive Director 
of Government Relations, Paralyzed Veterans of America; Paul 
Varela, Assistant National Legislative Director, Disabled 
American Veterans; Ray Kelley, the Director of the National 
Legislative Service, Veterans of Foreign Wars; and Mr. Louis 
Celli, Jr., National Director of Veterans Affairs and 
Rehabilitation, The American Legion.
    Mr. Blake, we will begin with you.

    STATEMENT OF CARL BLAKE, ASSOCIATE EXECUTIVE DIRECTOR, 
      GOVERNMENT RELATIONS, PARALYZED VETERANS OF AMERICA

    Mr. Blake. Thank you, Mr. Chairman. On behalf of the co-
authors of The Independent Budget--DAV, PVA, and VFW--I would 
like to thank you for the opportunity to testify today. You 
have a copy of our joint statement that we submitted for the 
record, so I will limit my comments primarily to the medical 
care section of the VA's budget and to the recommendations of 
the IB.
    Let me say first and foremost that overall we believe that 
the VA's budget is a good one. I think in many ways it mirrors 
the recommendations of the independent budget for this year, 
particularly when you take into account the amount of money 
that the VA projects to spend from Section 801 and Section 802 
of the Choice Act as well. It brings the numbers up pretty 
close. The one exception to that would certainly be the 
infrastructure portion. I will leave the comments on that to my 
colleague with the VFW.
    Let me say, though, that we do have some real concerns 
about this continued escalated growth in funding in community 
care. This year, the VA introduced its new medical community 
care account. When coupled with the Choice Act, they project to 
spend nearly $12.2 billion on care in the community this year.
    It is fair to say that we understand the need to leverage 
community care as best as possible to expand access. The 
independent budget framework that we have already discussed 
with the Committee staff outlines some of our ideas in that 
same way, much as the VA's new Veterans Choice Plan also 
addresses the issue.
    However, we are concerned about what is the potential for 
uncontrolled growth in this area. While the Congress and the 
Administration seem to be keenly focused on expanding access in 
the community, I do not think we can emphasize enough the need 
to devote critical resources and focus also on expanding the 
existing capacity of the VA and the staffing levels of the VA 
health care system, particularly in the areas of specialized 
services like spinal cord injury or disease. Just outsourcing 
the care into the community, while it might seemingly improve 
access, runs the risk of undermining the larger health care 
system, which many veterans, particularly those with 
catastrophic disabilities, rely upon.
    One interesting note that I'd like to point out is in the 
VA's budget this year, they project for fiscal year 2016 to 
spend about $1.7 billion in Section 802 Choice funding. That is 
the community care portion of Choice. When we asked them about 
it during their budget briefing, they admitted that they 
actually project to spend $2.3 billion or more in Choice Act 
funding for community care this year. But, their budget does 
not seemingly square those two facts, which begs the question: 
where will the additional money come from? The obvious easy 
answer would be the remaining balance of the Choice Act. Then, 
that would call into question, how does that impact the $4.8 
billion in Choice funding that they are projected to spend in 
fiscal year 2017 for community care?
    We have real concerns about how the Choice Act funding is 
going to be broken up. Certainly last year, with the massive 
budget shortfall, that caused some significant difficulties 
when figuring out how to manage the Choice Act funding line. We 
will be keeping a close eye on how that impacts care going 
forward.
    With these thoughts in mind, we also have some real 
concerns about the funding level for fiscal year 2017 that was 
approved in the advance appropriation in December of last year. 
While the IB recommends approximately $72.8 billion for medical 
care for 2017, that advance appropriation only included about 
$66.6 billion. That is a lot of money no matter how you look at 
it. But, the fact is the VA revised its estimate for 2017, 
necessarily so, we believe, to a much higher and much more 
significant level, we believe reflective of the actual need 
that they project to have for 2017. Unfortunately, we believe 
that we are setting up the scenario where the very same 
shortfall problems that we experienced last summer may rear 
their head again in this fiscal year, 2016, and potentially 
again in 2017 this advance appropriation level is not 
appropriately addressed. We hope this Committee will take a 
serious look at that and consider that as you put together your 
views and estimates.
    Last, we are concerned about the 2018 advance appropriation 
level. When we questioned the VA on what we felt like was 
clearly an insufficient level for 2018 for all of medical care, 
they sort of half-heartedly admitted that they do not believe 
it is going to be sufficient either, which is kind of 
befuddling to us. If you took the historical perspective that 
that is OK because it will be corrected, that is not a fair way 
to look at this. While the last 2 years Congress has adjusted 
the advance appropriation in many appropriate ways, the four 
previous years to that Congress did not adjust by a single 
dollar the advance appropriation for health care, particularly 
in medical services. The track record does not lend itself to 
underestimating now to get it corrected later. So, I certainly 
hope that the Committee will take a real look at the 2018 
advance appropriation and address it so that funding is not 
left short when we get to that point 2 years from now.
    Mr. Chairman, I would like to thank you again for the 
opportunity to testify. I would be happy to answer any 
questions that you may have.
    Chairman Isakson. Thank you, Mr. Blake.
    Mr. Varela?

   STATEMENT OF PAUL VARELA, ASSISTANT NATIONAL LEGISLATIVE 
              DIRECTOR, DISABLED AMERICAN VETERANS

    Mr. Varela. Good morning, Chairman Isakson and Members of 
this Committee. On behalf of the IBVSOs, we thank you for 
providing us with the opportunity to discuss our fiscal year 
2017 budget recommendations and those proposed within VA's 
budget request. Today I will focus my oral remarks on four 
elements: compensation (comp service); vocational 
rehabilitation and employment service (voc rehab); the Board of 
Veterans Appeals (the Board); and the simplified appeals 
process recommendations.
    For comp service, we recommended an increase of 1,700 full-
time employee equivalents (FTEEs). The administration requests 
authorization for just 400. Given the significant backlog and 
workload affecting appeals, we believe that 1,000 of the 1,700 
FTEE requested by the IBVSOs should be dedicated solely to 
appeals processing. Without adequate resources, appellants 
seeking redress of their VA determinations will continue to 
endure significant delays in the adjudication of their appeals. 
We have also recommended 100 additional FTEE for the fiduciary 
program, 300 FTEE for non-disability rating activities, and 300 
FTEE for call centers. VBA must be resourced properly to meet 
the needs and expectations of veterans, survivors, and 
dependents seeking VA benefits and services.
    Second, voc rehab. The IBVSOs have again recommended a 
staffing increase for fiscal year 2017; 158 new FTEEs are 
required, but for a second consecutive year, the administration 
has not requested a staffing level increase. Mr. Chairman, voc 
rehab program participation has increased steadily over the 
past few fiscal years to include receipt of new applications 
for entitlement determinations, which has also increased at 
roughly the same rate. Vocational rehabilitation counselors 
(VRCs), perform myriad tasks ranging from their daily caseload 
responsibilities to integrated disability evaluation system and 
veteran success on campus activities. VRCs have one of the most 
critical roles within VA. They ensure that ill and injured 
veterans have all the help, guidance, and resources they need 
to overcome their employment obstacles to lead to more 
independent and economically fulfilling lives. The IBVSOs 
recommended a staffing increase that would support a more 
appropriate client-to-counselor ratio throughout voc rehab so 
VRCs can devote the appropriate amount of time to each veteran 
in the program to ensure they are on a path to success.
    Third, the Board. We are pleased to see the 
administration's request for 242 FTEEs. The IBVSOs fully 
support this request. The additional personnel are certainly 
needed given the exceedingly large inventory of appeals now 
estimated at roughly 440,000 appeals pending review at various 
stages in the appeals process. It is important to note that 
even if the Board is provided with this staffing increase and 
VA's budget is appropriated on time, the impact of these new 
employees would not be fully realized until some time in 2018. 
Regardless of the time it will take to hire, train, and orient 
these new hires to the Board, they are desperately needed now. 
In fiscal year 2015, the Board was able to produce over 57,000 
decisions with 646 FTEEs. This averages out to be 88 decisions 
per FTEE. If the Board were to receive their staffing increase, 
thus increasing their staff size to 922, they could conceivably 
complete 81,000 appeals each year. However, to end the backlog 
and keep up with incoming appeals, future staffing increases 
will likely be needed.
    Last, Mr. Chairman, the proposal regarding a simplified 
appeals process. The IBVSOs strongly object to closing the 
evidentiary record at the point of initial decision, 
transferring jurisdiction of an appeal to the Board upon 
receipt of a notice of disagreement, and eliminating an 
appellant's option for a personal hearing before the Board. 
However, the IBVSOs are pleased that VA has engaged with us 
regarding their proposals, and we hope to find reasonable and 
tangible solutions to address the appeals process.
    I would like to highlight that we have put forth several 
recommendations to address the appeals issues, such as 
eliminating or amending the new and material evidence standard, 
fencing off decision review officers, and enacting fully-
developed appeals legislation that passed in the House and was 
introduced here in the Senate. We would like to thank Senators 
Sullivan, Casey, Heller, and Tester for their support on this 
legislation.
    We cannot emphasize enough how important it is to move FDA 
legislation forward. FDA has the potential to provide tangible 
relief to both appellants and VA. FDA differs from VA's 
proposed simplified appeals process because while it has sped 
up appeals processing, it is a voluntary option, tempered with 
critical due process protections currently afforded to 
veterans.
    Chairman Isakson and Members of this Committee, thank you 
for allowing us the opportunity to testify today, and I look 
forward to your questions.
    Chairman Isakson. Thank you, Mr. Varela.
    Mr. Kelley?

    STATEMENT OF RAY KELLEY, DIRECTOR, NATIONAL LEGISLATIVE 
               SERVICE, VETERANS OF FOREIGN WARS

    Mr. Kelley. Mr. Chairman, on behalf of the 1.7 million 
members of the Veterans of Foreign Wars and our Auxiliary, 
thank you for the opportunity to testify today. As a partner of 
the IB, the VFW is responsible primarily for capital 
infrastructure and the National Cemetery Administration (NCA), 
so I will limit my remarks to those two areas.
    For more than 100 years, the Government solution to provide 
health care to our military veterans has been to build, manage, 
and maintain a network of Federal hospitals around the country. 
Many of these facilities need to be replaced, others need to be 
expanded, and all of them need to be maintained. VA uses what 
is known as the ``Strategic Capital Infrastructure Plan,'' or 
SCIP, to manage and identify VA's current and projected gaps in 
building access, utilization, condition, and safety.
    Major and minor construction, leasing, and non-recurring 
maintenance make up the four cornerstones of VA's capital 
infrastructure, and each work together to ensure veterans have 
access to their earned health care.
    While Congress and VA need to realign the SCIP process to 
allow VA to enter into public-private partnerships, both 
publicly and federally, to right-size VA's footprint, it must 
continue to fund the projects that are partially funded today 
and begin advance planning and design on those projects that we 
know VA needs to fund in the near future.
    Currently, there are 30 major construction projects that 
are partially funded. To completely fund these 30 projects, VA 
is going to have to invest more than $3 billion to complete 
them. These projects need to be put on a clear path to 
completion.
    Out of the next five major projects on the VA's priority 
list, two of them are seismic in nature, two of them are 
specialty clinics--one is a mental health care clinic, the 
other is a spinal cord injury center--and one is in addition to 
an existing facility to eliminate access barriers. The IB 
recommends that Congress appropriate $1.5 billion for fiscal 
year 2017 to help close these gaps.
    Approximately 600 minor construction projects need funding. 
Congress provided additional funding through the Choice Act, 
and VA developed a spending plan that will obligate over $500 
million to 64 minor construction projects over the next 2 
years. It is important to remember these funds are supplemental 
to and not a replacement for the annual appropriations for 
minor construction. With that in mind, the IB is requesting 
$749 million for VA's minor construction accounts for fiscal 
year 2017.
    This year, VA is requesting $52 million for fiscal year 
2017 leasing needs. While VA's request is adequate, Congress 
needs to authorize these leases and the leases that were 
brought forward last year in their appropriation cycle. Even 
though non-recurring maintenance (NRM) is not found in the 
construction account, NRM is very critical to VA's capital 
infrastructure. VA is investing more than $800 million in NRM 
projects that was funded from the Choice Act. But, to maintain 
the status quo, VA's NRM account needs to be funded at $1.35 
billion a year.
    The administration request is just over $1 billion for 
fiscal year 2017. The IB requests that the full $135 billion 
baseline for appropriations for this line item be appropriated 
so NRM backlog does not grow any larger.
    NCA historically asks for and properly spends what it 
needs, and the IB recommends that NCA be funded at the 
requested level of $286 million.
    VA also provides construction grants for State extended 
care facilities and State veterans' cemeteries. The IB requests 
$200 million for extended care facility grants and $51 million 
for cemetery grants.
    Thank you again for allowing the VFW to testify before you 
today, and I look forward to any questions you or the Committee 
may have.
    Chairman Isakson. Thank you, Mr. Kelley.
    [The prepared joint statement of PVA, DAV, and VFW for the 
Independent Budget follows:]
   Prepared Joint Statement of The Independent Budget Representatives

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Mr. Celli?

 STATEMENT OF LOUIS J. CELLI, JR., DIRECTOR, NATIONAL VETERANS 
        AFFAIRS AND REHABILITATION, THE AMERICAN LEGION

    Mr. Celli. $103 billion in mandatory spending, money that 
goes directly to veterans based on laws passed by Congress for 
the sole purpose of attempting to make them whole again. $79 
billion in discretionary spending for things like doctors, 
claims processors, administrative staff, IT infrastructure, 
hospital maintenance, and out of that, $65 billion will be 
spent for health care alone.
    Chairman Isakson, Ranking Member Blumenthal, Members of 
this Committee, on behalf of National Commander Dale Barnett 
and the 10 percent of all U.S. American veterans that make up 
The American Legion, we welcome this opportunity to comment on 
the Department of Veterans Affairs' budget.
    In 2014, Kaiser Permanente had an operating revenue of 
$56.4 billion and a staff of 177,000 employees. Meanwhile, for 
about the same amount of money, VA ran 150 hospitals, 819 
CBOCs, 300 Vet Centers, 131 national cemeteries, and 56 
regional offices, and they do it with a staff of 350,000. That 
is double Kaiser's staff. And unlike private-sector physicians, 
VA providers are not eligible for overtime pay, so this 
weekend, when VA is conducting its second access stand-down in 
an attempt to zero out backlogged appointments, VA will incur 
very little additional expense while serving veterans. I am not 
sure we can expect the same level of dedication from private-
level doctors ever.
    By law, VA facilitates the largest teaching hospital in the 
country, conducts statutorily mandated medical research, 
maintains emergency backup infrastructure in support of our 
national defense and national emergencies, processes millions 
of compensation claims, the appeals that result from those 
claims, cemeteries, processes GI bill payments, VA home loan 
applications, and insurance programs, all the while providing 
health care to millions of veterans in 50 States and the 
Caribbean. This is a massive budget that is broken down into 
hundreds of accounts and thousands of line items. Does VA have 
enough money? They have too much money. Is it wisely spent? Are 
there areas where VA can save money? All valid questions, but 
the bottom line is someone has got to do it, and to date, no 
one has come up with a cheaper solution.
    In the meantime, The American Legion recognizes that VA 
will need sufficient budget authority and flexibility in order 
to serve our members and the veterans of the United States of 
America, and there are certainly areas where VA can save money. 
As highlighted in the written portion of my testimony, The 
American Legion would like to draw this Committee's attention 
to three areas: consolidation of outside care; ensuring 
adequate VA staffing; and the growing number of pending 
appeals.
    With the enactment of the Choice Act, Congress added yet 
one more layer to an already complicated system of eligibility 
and payment structures. The time is now to fix it by organizing 
all of these programs under one umbrella, with a single point 
of entry and a logical physician reimbursement system that is 
streamlined and easy for primary care teams to use. This would 
not only save VA money, but it would provide better and faster 
health care for veteran patients.
    VA is a service-based industry. As in all service-based 
industries, the most expensive line item is employee burden. 
The fastest way to start saving money today is to reduce 
employee turnover. VA has a terrible problem filling vacancies 
in their mid- and upper-level leadership positions and an even 
worse record of succession planning. If VA is to successfully 
keep their positions filled, they must do a better job with 
succession planning. It is rare, if it happens at all, that a 
deputy is promoted to the position of a departing director. 
This practice leaves little incentive for the deputy to remain 
loyal to the organization and breeds resentment once the new 
director is instilled. VA has 50 percent of leadership 
positions filled by temporary fill-ins or vacant. Fifty 
percent. Employee turnover is expensive and a waste of money 
when it can be avoided.
    Finally, claims. Every time a claim goes into the appeals 
process, it costs money. Adjudicate the claim correctly the 
first time, and the rate of appeals will be reduced to a 
trickle. We address the appeals today because VA has included a 
request to revamp the appeals process in their budget 
submission. As submitted, The American Legion does not support 
this plan. That said, VA has been working closely with The 
American Legion and our VSO partners to look at ways VA can 
improve the timeliness and quality of the appeals process, and 
we are excited and encouraged by the progress that we have made 
early on in this discussion and with the openness VA has shown 
in seeking detailed input from VSOs by treating them as valued 
partners.
    Senators, my time before you is short today, so I will be 
happy to try to address any questions you may have following my 
opening statement. But, more importantly, we look forward to 
our continued work with you and your very dedicated 
professional staff.
    [The prepared statement of Mr. Celli follows:]
Prepared Statement of Louis J. Celli, Jr., Director, National Veterans 
        Affairs and Rehabilitation Division, The American Legion
``What we have done historically is that we have managed to a budget 
        number as opposed to managing to requirements . . . as a result 
        we've muddled along and not met the needs veterans deserve.''
                                  VA Acting Secretary Sloan Gibson 
                                before the House Committee on Veterans 
                                Affairs July 24, 2014 \1\
---------------------------------------------------------------------------
    \1\ HVAC Hearing ``Restoring Trust: The View of the Acting 
Secretary and the Veterans Community''--July 24, 2014

    When now Deputy Secretary of the Department of Veterans Affairs 
(VA) Sloan Gibson addressed this Committee nearly two years ago, he was 
not advocating the budgetary planning approach he described, but 
speaking to the problems that long standing approach could cause. 
Drawing contrasts with the planning models he was familiar with in the 
private sector, Deputy Secretary Gibson noted the historical approach 
was about managing to requirements. For VA to succeed and be great, 
they need to be able to move beyond managing requirements and move 
---------------------------------------------------------------------------
toward building planning based on need.

    Chairman Isakson, Ranking Member Blumenthal, and Members of the 
Committee: On behalf of National Commander Dale Barnett and the over 
two million members of The American Legion, we welcome this opportunity 
to comment on the Federal budget, and programs of the Department of 
Veterans Affairs (VA).
    The American Legion is a resolution based organization; we are 
directed and driven by the millions of active legionnaires who have 
dedicated their money, time, and resources to the continued service of 
veterans and their families. Our positions are guided by nearly 100 
years of consistent advocacy and resolutions that originate at the 
grassroots level of the organization--the local American Legion posts 
and veterans in every congressional district of America. The 
Headquarters staff of the Legion works daily on behalf of veterans, 
military personnel and our communities through roughly 20 national 
programs, and hundreds of outreach programs led by our posts across the 
country.
    What we present here is an attempt to focus on a few particular 
issues and projected needs, rather than what has been the historical 
and problematic approach of presenting a budget based on a number. 
While the budget numbers have gone up for VA, indicative of the 
commitment that Congress has shown even in tight fiscal times, there 
has still been the tendency to set a number and manage to that limit, 
rather than projecting the need and divining numbers from that need.
    In terms of future planning, and ensuring that VA's budget meets 
needs in critical areas, The American Legion directs the Committee's 
focus to three critical areas: the consolidation of outside care, 
ensuring VA's medical hiring needs are met, and addressing the rising 
backlog of appeals.
                     consolidation of outside care
    When the Choice Card program was added as a temporary emergency 
measure as part of the Veterans Access, Choice and Accountability Act 
(VACAA) of 2014 \2\, The American Legion supported the program because 
we had seen firsthand the need across the country. During 2014 The 
American Legion set up a dozen Veterans Crisis Command Centers (VCCCs) 
in affected areas from Phoenix to Fayetteville and spoke to hundreds of 
veterans personally affected by the scheduling problems within VA. The 
Choice Card program provided an immediate short term option, but also 
provided an opportunity to learn how veterans utilized the program. At 
the time, The American Legion advised gathering as much data as 
possible from veterans' use of the program to make all of VA's other 
existing authorities for care in the community \3\ better in their 
ability to serve veterans.
---------------------------------------------------------------------------
    \2\ Public Law Public Law 113-146
    \3\ Such as Project Access Received Closer to Home (ARCH), the 
Patient Centered Community Care (PCs) program and others
---------------------------------------------------------------------------
    Ultimately that has led to the current transformation in VA's 
community care programs. As directed by the Surface Transportation and 
Veterans Health Care Choice Improvement Act of 2015 (VA Budget and 
Choice Improvement Act) in July 2015, VA has developed a plan to 
consolidate all existing programs into a single community care program, 
the New Veterans Choice Program (New VCP). Generally, The American 
Legion supports the plan to consolidate VA's multiple and disparate 
purchased care programs into one New VCP. We believe it has the 
potential to improve and expand veterans' access to health care. Much 
depends, however, on the department's success in working with its 
employees, Congress, VSOs, private providers, academic affiliates, and 
other stakeholders as the agency moves forward in developing and 
implementing the plan.
    With an eye toward budgetary matters, there are two important 
considerations revolving around this new transformation that must be 
implemented in future budgets: (1) VA must have the ability to spend 
all community care monies under the new framework; and (2) the 
additional funding required to provide for the Choice Card program 
needs to be factored into future budgets.
    During 2015, VA ran into problems with budgetary shortfalls because 
of the separation in funding between Choice Card care and other 
community care authorities. Because of the strong push to ensure 
veterans were seen as quickly as possible, VA quickly exhausted care in 
the community funding, while emergency funding for the Choice Card 
program was still available. VA was forced to seek, and was granted, 
authority to move some of the $10 billion allocated to fund the Choice 
Card program over the three year pilot to cover care in the community 
costs.
    By now, as the transformation of care in the community moves 
forward to a plan with a single, overarching authority for this care 
(New VCP) the distinctions between the VACAA Choice funds and community 
care funding should be academic. While The American Legion understands 
there are reasons certain funding and accounts have limitations, and is 
not advocating for a wholesale removal of barriers for VA to move 
funding, in this instance is makes sense. Care in the community is care 
in the community, and VA must have a single stream of funding for this.
    It is important to recognize that the need for the extra funding 
was and is real. The VACAA provided $10 billion for treating veterans 
in the community through Choice because the need to fund that care was 
real. Those needs are not going away. As of last month, VA had over 6.1 
million appointments scheduled nationwide, and more than 8.5% of those 
appointments are still waiting over 30 days for treatment.\4\ VA has 
seen their number of completed appointments jump by over 2.6 million 
last year, and throughout this they still need to authorize millions of 
appointments for outside care.
---------------------------------------------------------------------------
    \4\ VA Pending Appointments--January 15, 2016
---------------------------------------------------------------------------
    The $10 billion from VACAA was provided as emergency funding, but 
in the future, we must plan for the tremendous demand on the VA system. 
This is a direct illustration of the managing to numbers versus 
managing to need contrast mentioned above. For future budgets, we must 
ensure that VA is receiving funding for care that adequately reflects 
how they must deliver that care. A robust budget for VA medical care is 
necessary, but as the past few years have shown, VA has been dependent 
on care in the community as well to provide timely care to veterans 
where they are overburdened by scheduling, staffing, or lack of 
adequate resources. This needs to be reflected in the community care 
budgets, not as an emergency measure when the problem boils over and 
out of control.
                      ensuring proper va staffing
    One reason VA may sometimes struggle to provide care within the 
Veterans Health Administration (VHA) is directly related to staffing. 
The staffing figures can be ugly. One in six positions nationally for 
some critical jobs remain vacant, and critical needs like psychiatric 
workers can see vacancy rates of 40-64%.\5\
---------------------------------------------------------------------------
    \5\ USA Today--September 2015
---------------------------------------------------------------------------
    To be fair, the VACAA already provided funding for 10,000 new 
healthcare positions, however funding new positions alone may not be 
the solution and there may be budgetary means to address some of the 
vacancies. Even when VA is hiring an additional 9% of their workforce 
they are losing a similar amount to attrition.\6\ Some of this could be 
improved with better hiring incentives and more competitive wages, 
particularly in key fields of need such as psychiatric care, 
physician's assistants, nurses and physical therapists.
---------------------------------------------------------------------------
    \6\ VA Office of the Inspector General (VAOIG) Report No. 15-03063-
511 ``OIG Determination of Veterans Health Administration's 
Occupational Staffing Shortages''--September 2015
---------------------------------------------------------------------------
    As the Office of the Inspector General recommended, VA also bears 
additional responsibility in the form of the development of better 
staffing models and examining the red tape and bureaucratic burdens 
that stretch hiring out into a process that can take nine months or 
longer.\7\ Additional examination of where VA can better incentivize 
prospective applicants to decide on a career serving veterans would be 
helpful. We need to ensure VA has proper funding to get the best and 
brightest team members on their medical and psychological staffs 
serving veterans.
---------------------------------------------------------------------------
    \7\ Ibid
---------------------------------------------------------------------------
    The VA can further help improve their staffing, especially in 
leadership positions, with better succession planning for VA employees 
to rise to leadership levels within the organization. As an 
organization of advocates that has worked hand in hand with VA for 
decades, The American Legion notes the training programs VA had in 
place during the 1990's were better suited to creating the next 
generation of leadership than the current programs in place. The VHA 
training programs of the 1990's were specifically built to prepare 
administrative employees to assume mid-level management programs at the 
department level. This could include personnel, fiscal, medical 
administration, associate director training and other leadership 
training. The programs were replaced, over time, with VA's current 
Leadership Development Programs, but feedback The American Legion has 
garnered from interacting with VHA personnel during visits from our 
System Worth Saving Task Force has indicated these programs are not 
providing the tools the employees need to be the next generation 
leaders of VA and to lead from within. Additional consideration to 
revamping this portion of training, and ensuring this training is 
properly funded, could be a key component to reducing VA's reliance on 
the complicated process of hiring from outside VA and ultimately reduce 
the number of unfilled leadership positions.
                       the looming appeals crisis
    Last year, 2015, was the year VA was supposed to ``break the back 
of the backlog'' of veterans' claims for disability benefits. While VA 
has made substantial progress according to their public figures in 
reducing the number of initial claims--the ``claims backlog'' sits at 
around 77,000 claims today \8\ down from a peak of over 600,000 claims 
in early 2013--those numbers do not reflect the waiting period for many 
veterans who have been waiting for three or more years for their 
appeals to be decided. Over that same period the number of appeals has 
soared to over 325,000 from their level of 250,000 in 2013.\9\ VA 
defines ``backlog'' as any case pending over 125 days. Every single 
appeal represents a veteran who has been waiting for much, much longer 
than 125 days, but those 325,000 appeals are not counted as part of the 
``backlog.''
---------------------------------------------------------------------------
    \8\ VA Claims Backlog Dashboard--January 30, 2016
    \9\ VA Monday Morning Workload Report--February 1, 2016
---------------------------------------------------------------------------
    Often the fastest way to resolve an appeal is with a Decision 
Review Officer (DRO) in a Regional Office (VARO). The DROs are among 
the most experienced employees, and can discern aspects of a claim that 
a newer employee might miss, furthermore after an initial denial the 
veteran can be better equipped to provide information the VA noted was 
lacking in the initial denial. Because everything stays within the 
VARO, correspondence with the veteran and with a service officer 
helping that veteran is direct and many claims can be resolved more 
quickly through this process. The DRO review can be one of the best 
tools for speedy adjudication of an appeal and to reduce the appeals 
backlog. However, the unfortunate case recently is that DROs have not 
always been free to handle their appeals workload.
    The Veterans Benefits Administration (VBA) has been under a 
singular mission to reduce the backlog. To this end they have forced 
over four years of mandatory overtime, and key veteran staffers 
including DROs have seen their workloads adjusted to focus on the 
initial claims, the claims that are counted in the VA statistics for 
``backlog.'' This can have the effect of keeping DROs from devoting 
full attention to their appeals workload, and the growing appeals 
backlog cannot be seen as an accident.
    Last year, The American Legion noted that occasional mandatory 
overtime in a short term crisis is prudent management, but four 
straight years is indicative of an organization that's clearly 
understaffed. The American Legion reiterates our call for better study 
of VBA staffing models, but also notes that last year VA had proposed 
making the DRO process more robust, something we wholeheartedly 
support.

          ``DROs can often resolve appeals more rapidly than the appeal 
        process at the Board of Veterans Appeals (BVA) and with greater 
        accuracy and clarity than the average VA rater. Reports have 
        indicated in some offices the DROs have been reassigned to 
        other tasks as the pressure mounts to work on initial claims. 
        It would be the hope of The American Legion that renewed 
        interest in hiring and increasing the DRO force would allow 
        DROs to return to their appeals duties, and help prevent a 
        rising backlog in the appeals area.'' \10\
---------------------------------------------------------------------------
    \10\ Testimony of The American Legion--HVAC Hearing February 11, 
2015

    There have been many recent proposals for measures to transform 
appeals as the initial claims process was transformed by the Veterans 
Benefits Management System (VBMS) and the Fully Developed Claims (FDC) 
process. The American Legion is supportive of transformative thinking, 
clearly the system as it has existed in the past has many flaws and has 
not always served veterans with the ability to develop prompt and 
accurate decisions on disability claims. However, it is also critical 
to understand that there is important due process in the system to 
protect veterans, and we cannot abandon these things in the interest of 
simply faster decisions or more convenience for VA.
    Due process is important to protect veterans, especially veterans 
who may be uniquely vulnerable due to their disabilities incurred in 
the service of this Nation. It is one of the reasons the veterans' 
disability claims system has been specifically cited as ``uniquely pro-
claimant'' in the manner it serves veterans filing for benefits.\11\ 
Veterans need to depend on the ability to get a DRO review in a timely 
fashion, or to submit evidence in response to the VA when they are 
informed their claim is lacking proof of a key point, such as 
documentation of an event that happened in service.
---------------------------------------------------------------------------
    \11\ See Jaquay v. Principi, 304 F.3d 1276, 1280 (Fed. Cir. 2002); 
Nolen v. Gober, 222 F.3d 1356, 1361 (Fed. Cir. 2000); Hensley v. West, 
212 F.3d 1255, 1262 (Fed. Cir. 2000).
---------------------------------------------------------------------------
    One of the best things to help address the growing appeals backlog 
would be to increase funding for DROs to fully staff all offices and to 
add additional full time employees elsewhere within the offices to get 
the DROs back to doing what they do best, reviewing appeals in a timely 
manner. The budget should also reflect additional funding to study 
proper staffing levels within the VBA, because four years of mandatory 
overtime is a warning flag that has been waving to tell us we're not 
supplying enough staff to deal with the backlog of veterans' claims.
    Whether it is appeals or initial claims, a backlog is a backlog, 
and the budget must reflect sufficient resources to address these 
claims, otherwise veterans will be forced to do what we have become all 
too familiar with--wait.
                               conclusion
    The VA cannot afford to be run as an entity reactive to one crisis 
after another. Effectiveness stems from long term planning, and to be 
truly effective that long term planning needs to include all 
stakeholders. While there are other areas that can benefit from 
predicting crises before they occur and providing resources to 
perceived needs, these three areas represent a key start in the sort of 
thinking that must be adopted to make VA successful in the long run.
    In order to assimilate all outside care under one cohesive 
management authority VA needs the budget flexibility to utilize the 
Choice Card funds for community care as well as to see a boost to 
community care funding commensurate with the increased demand. The 
VACAA infused $10 billion in care funding because there was an 
emergency, but the demand has not gone away and future funding levels 
must reflect this as part of the plan, not a reaction to a crisis.
    There must be attention paid to VA's hiring and incentives, and if 
additional resources are needed to secure key providers like 
psychologists and physician's assistants, then VHA must be provided 
with the funding needed to secure those key performers. That is the 
long term key to ensuring veterans get the care they need in a timely 
fashion in the system that is designed to treat their unique wounds of 
war.
    Four years of mandatory overtime and reassignment of DROs needs to 
stop if VA is going to prevent the growing appeals backlog from 
reaching disaster levels. Funding must be given to better assess the 
workforce within VBA and to provide the full time employees needed to 
accomplish the mission while keeping top assets like DROs working on 
the work they do best.

    Chairman Isakson. Thank you, Mr. Celli. Thanks to all of 
you for testifying, and thanks to your organizations for your 
advocacy.
    Mr. Varela and Mr. Celli, let me just get right to the 
point. Both of you commented directly on objections or concerns 
about reforming the appeals process and the VA's plans on how 
they might do that. We cannot continue to do what we are doing 
now, which is have a backlog of claims at almost half a 
million, some 25 years old that continue to build up. We need 
your help to come up with a solution that you support and the 
VA can implement. Will you all commit to us to work with the 
Secretary to try and make such a recommendation?
    Mr. Celli. We already have, and we continue to commit to 
working with the Secretary. We have already had several 
meetings now with Deputy Sloan Gibson. We have worked with our 
VSO partners, and I would like to associate myself with the 
comments of Mr. Varela and DAV as well.
    Chairman Isakson. Well, your comments were very timely and 
very appropriate, but being timely means we need to move 
forward. The Secretary needs some tools in his toolbox he does 
not have, and one of them is getting this whole backlog 
straightened out. So, let us work toward a date at the end of 
March trying to come together on some kind of consolidated 
agreement. Would you all work with us on that?
    Mr. Celli. We agree.
    Chairman Isakson. Mr. Varela, you commented on the fact 
that your testimony recommends 158 full-time employees in voc 
rehab and employment services, and once again this year, the VA 
has asked for none. Is that correct?
    Mr. Varela. That is correct, Mr. Chairman.
    Chairman Isakson. Are you familiar with the Workforce 
Innovation and Opportunity Act, WIOA?
    Mr. Varela. Yes, I am, Mr. Chairman.
    Chairman Isakson. Are those funds available to the VA 
commissioners in the various States to utilize for training for 
vocational rehabilitation?
    Mr. Varela. I will have to take that for the record. I do 
not know that offhand.
    Chairman Isakson. I would suggest you check that out. When 
we did the WIOA act, we made sure to give the States the 
flexibility to do veterans training and rehabilitation as a 
part of that. That is a source of funding and personnel that 
could be dedicated--it would not add personnel to the VA, but 
it would add the service to the VA's whole quiver. So, I would 
appreciate your checking on that and being sure.
    Mr. Varela. I will.
    [The information referred to follows:]
 Response to Request Arising During the Hearing by Hon. Johnny Isakson 
   to Paul Varela, Assistant National Legislative Director, Disabled 
                           American Veterans
    Yes, WIOA funds can be used to supply vocational rehabilitation.
    However, those funds are ``not'' dedicated solely for injured and 
ill veterans, they are available to non-veterans alike, so these two 
groups would have to compete for those resources.
    The Vocational Rehabilitation and Employment (VR&E) services within 
the Department of Veterans Affairs are dedicated solely for the use of 
injured and ill veterans.

    Chairman Isakson. Mr. Blake, your testimony recommends $75 
million in directed funding for the Million Veteran Program 
(MVP) independent of or supplemental to the funds proposed for 
the medical and prosthetic research account. Could you further 
explain the recommendation for dedicated funding for the MVP 
genetic research program?
    Mr. Blake. Well, Mr. Chairman, that is a special program, a 
genomic study that the VA is doing as sort of a longitudinal 
study of all veterans for research purposes that can evaluate 
the wide variety of issues unique to veterans.
    I think our concern is it is a heavy lift to fund that 
program to function the way it is intended, and the VA does a 
good job of expending much to all of its resources already 
dedicated for the existing medical and prosthetic research 
account. Unfortunately, this year I think the VA is projecting 
to draw about $60 or $65 million out of its appropriations 
request just for MVP. That would actually bring the medical and 
prosthetic research account number back below what was just 
approved in the appropriations bill back in December. We think 
it would be better served to actually direct funding for that 
program independent of the medical and prosthetic research line 
item.
    Chairman Isakson. Well, thank you for your testimony and 
for your organization, and I want to repeat what I said at the 
beginning to Mr. Varela and Mr. Celli and Mr. Kelley. Mr. 
Blake, this applies to you as well. If we can form a goal to 
get this appeals process worked out in terms of VA claims and 
VA's appeals, that would be a major move forward, and your 
organizations' support of doing that would be critical. We are 
at a point now where the Committee I think is prepared to move 
forward on some major legislation to resolve some of our 
problems. Let us not let another year go past by kicking the 
can down the road. Let us make the reforms necessary to get the 
VA straightened out. I appreciate your help in doing so.
    Senator Blumenthal?
    Senator Blumenthal. Thanks to all of you for being here 
today. Thank you for your service. I apologize that I was not 
here earlier, but this is my fourth Committee meeting today, 
and one of them was the Armed Services Committee where we are 
assessing the capability of our military force in the South 
Pacific, an issue I know you feel is important as well. So, 
thank you to the men and women who serve with you, and thank 
you for your advocacy here.
    I want to come back to a topic that I asked the Secretary 
about, which is the capacity of our VA to deal with women's 
health care, and although we have an all-male panel here, or 
maybe because we have an all-male panel, I want to ask how you 
feel the VA is doing judging by what you are hearing from 
members of your organizations.
    Mr. Celli. If you do not mind, I will start. The American 
Legion has a program that we call ``A System Worth Saving.'' We 
visit VA hospitals around the country. One of the things that 
we specifically look at is women's health care. Female 
veterans, as we all know, are the fastest-growing population of 
veterans, and while VA has had a very difficult time standing 
up women's health care programs, lately they have come a long 
way. There are several new women's health care clinics spread 
out across the country. Does every CBOC and every hospital have 
a women's clinic? They do not. Do they have women's sections? 
They do. Could they be improved? Yes, they can. They are moving 
in that direction. They need to make sure that they maintain 
the flexibility in spending and the funding to create that.
    Also on that, we also need to make sure we continue to keep 
an eye on child care. There are a lot of women veterans who 
will forgo their medical appointments because they do not have 
sufficient child care. VA has a program by which they can stand 
up some child care clinics within the women's health care 
clinic center. We need to make sure those remain funded.
    Senator Blumenthal. That point about women's child care is 
very, very important. I have heard this repeatedly in 
Connecticut. We have a new facility, a new clinic in 
Connecticut. It is a tremendous improvement. But, the issue of 
child care, the issue of transportation, the issue of taking 
off from work, which may affect men as well as women, but 
particularly so for women. I would welcome any other comments.
    Mr. Blake. Mr. Blumenthal, one of the things I would 
mention is while I obviously cannot speak from the perspective 
of how women are experiencing the VA, we appreciate that the VA 
has dedicated new additional resources, I think to the tune of 
about $40 million, for their programs. I would believe that 
more could even be done. The IB actually recommends about $90 
million in 2017 and an additional $100 million in 2018.
    I would also offer that while I think it would be unfair to 
say that there are not still some challenges in delivering 
health care to women veterans, one of the areas where we 
clearly see some difficulty still is in meeting the needs of 
women veterans who have catastrophic disabilities, particularly 
women with spinal cord injuries like our membership.
    If it is a challenge to deliver care just to women 
veterans, when you add on the aspect of complicated services 
and the specialized services program, that adds a whole new 
element that I do not think they have thought completely out of 
the box on yet.
    Mr. Kelley. As quick as I can, we just commissioned a 
survey and got the results back, and we are going to be sharing 
those on Capitol Hill when our folks are here next week doing 
``Storm the Hill.'' As a recap, women veterans who access VA 
are, by and large, pleased with it. They want better access to 
women health care providers. Only 40 percent of them are being 
provided access to a female provider if they ask for it.
    Also, it goes much further than just access to health care. 
You mentioned child care. One of the leading causes of lack of 
ability to get to health care services and also employment 
services that VA has is the lack of child care. It is a 
hindrance. It is leading to homelessness and people sleeping on 
other people's couches with no way out. So, we need to tackle 
that as a larger issue.
    Also, women veterans who are over the age of 55 use VA at a 
much lower rate than the current generation of veterans, so we 
need to figure out how to do outreach to that generation of 
veterans to let them know that the services at VA are there for 
them as well.
    Senator Blumenthal. Before we go to Mr. Varela--and I 
welcome your comments, too--Mr. Kelley, the survey that was 
done, is that of the VFW members or of women veterans 
generally?
    Mr. Kelley. We sent it through our membership data pool, 
and we also shared it within the community for them to send out 
to their membership as well. We have active duty, Guard, 
Reserve, veterans from multiple organizations and walks of 
life.
    Senator Blumenthal. The number that you mentioned, 40 
percent, that is the number of women veterans who want to see a 
woman health care provider? Maybe you could just explain that.
    Mr. Kelley. It is 40 percent of those who are seeking 
health care through the women's health care clinics, 40 percent 
of them are being seen by a female provider. But, by and large, 
all of them want to be seen by a female provider.
    Senator Blumenthal. But, only 40 percent are now.
    Mr. Kelley. Yes.
    Senator Blumenthal. In addition to the other challenges 
that the VA has in recruiting more professionals, female 
professionals to deal with women's health care issues----
    Mr. Kelley. Right. In VA's defense, they are doing a great 
job of training the doctors that they have for the particular 
needs of women veterans. But, when asked, ``Would you prefer to 
have a female doctor?'' by and large, they want to have that as 
well.
    Senator Blumenthal. That may be a key to involving more 
women in seeking health care through the VA system, the 
availability of women physicians.
    Mr. Kelley. Absolutely.
    Senator Blumenthal. Thank you.
    Mr. Varela?
    Mr. Varela. Thank you, Senator Blumenthal. I would align 
our comments and sentiments with those of the VSO panel up 
here. I would also add that the women veterans that we hear 
from routinely say they do not want better care; they want 
comparable care. We do believe that the VA is moving in the 
right direction, but more can be done.
    Senator Blumenthal. I would just like to finish, with the 
Chairman's indulgence. I know, Mr. Blake, you said that the 
VA's dollar amount for health care for fiscal year 2018 is 
lower than you would like to see. Is that correct?
    Mr. Blake. That is correct. One----
    Senator Blumenthal. But--sorry, go ahead.
    Mr. Blake. No, sir. You.
    Senator Blumenthal. What is the number that you think it 
should be?
    Mr. Blake. The IB recommends for 2018, overall for medical 
care, our recommendation is about $77 billion for medical 
services alone. It is about $64 billion. One of the things I 
would point out, though--and this is a touchy subject even for 
our membership, but looking at the community care account 
alone--the VA projects to spend $12.2 billion in 2017 on all 
community care, that is through Choice and through its 
community care account. Yet their projection for 2018 reduces 
that projection by almost $3 billion. Now, I am not here 
advocating for expanding community care, but I am not sure how 
they can even square that fact.
    Senator Blumenthal. Thank you very much. I think that is a 
very, very important insight.
    I want the record to show that Secretary McDonald and his 
team are here. They are listening to you. I want to thank them 
for remaining here. It is not always the case, as you know, 
that the head of an agency stays to hear panels afterward, but 
I think it is a mark of the expertise and experience and 
insight that this panel brings to this process that he and his 
team have stayed, so I want to thank all of them for being 
here, and thank you particularly for, again, your service to 
our Nation in uniform and afterward in the organizations that 
you serve now. Thank you.
    Chairman Isakson. Thank you, Senator Blumenthal.
    Senator Boozman?
    Senator Boozman. Thank you, Mr. Chairman. I would echo the 
Ranking Member. We do appreciate your service in so many 
different ways to your country and your fellow veterans.
    We have your written testimony and we have heard your 
spoken testimony. There are lots of issues today, lots of 
concerns. If you would just take a second to go through and 
have you tell me, if you had to summarize the top one or two 
things that you are really concerned about with this budget. 
That is really what we are talking about today. What is at the 
top of the list? What are your real concerns regarding the 
numbers that we are seeing on the budget as to where they are 
going?
    Yes, sir, Mr. Blake?
    Mr. Blake. Senator Boozman, I would say from PVA's 
perspective, our concern is clearly what is a projected 
escalated growth in community care spending. I recognize it is 
a need to address access, but that does not improve access for 
PVA's members. The fact is, by and large, our members do not 
use the existing Choice Program. They do not use PC3. They do 
not avail themselves of the community care programs because 
they are best served by the SCI system of care in VA.
    For all of this work toward expanding community care 
access, PVA's members feel like they are maybe being left out 
in the cold in that discussion. VA is certainly committed to 
making sure there is access for our members in the SCI system 
of care, but there is certainly more than can be done.
    Senator Boozman. Very good.
    Mr. Kelley. I would like to include capital infrastructure. 
If you just look at the way the SCIP has ben put together, in 
between, it is around $60 billion in construction and 
infrastructure needs that VA would need to do under the current 
model to close that out over the next decade. That is a 
tremendous amount. We need to look at ways to afford VA the 
opportunity to enter into public-private partnerships, do 
sharing agreements with other Federal agencies, to ensure that 
we can reduce some of that backlog on new construction, but 
also get us out from underneath some of these older buildings 
that have non-recurring maintenance costs that are outrageous 
because they are so old. I mean, as mentioned in the first 
panel, if you are trying to maintain a building that is 90 
years old, the non-recurring maintenance value of that is much, 
much higher than a building that is 10 years old.
    So, we need to give them the ability to do those things, so 
we need to really clearly look at where are we going with 
construction in the future and then try to align that $60 
billion. What can we carve off of that if we have these other 
opportunities afforded to VA in the future?
    Senator Boozman. Very good.
    Mr. Celli. I think by far recruiting and retention. The 
independent assessment clearly highlighted some leadership 
deficiencies within the Department of Veterans Affairs that 
everybody recognizes needs to be fixed immediately. If you have 
got a skeleton crew working, you are not going to be able to 
serve veterans. If you have got people filling in for jobs that 
they are not going to be keeping, you have got a leadership 
that is unwilling to make decisions, which then goes ahead and 
contributes to whistleblower retaliation, people being 
dissatisfied with their jobs. We have got to get these 
positions filled.
    I heard the Secretary and Dr. Shulkin talk a little bit 
about reviewing the infrastructure to find out how many of 
these positions are actually needed. We cannot make that 
decision. They will have to do that assessment. But, if they do 
eliminate those positions, the people that are filling those 
positions that have been pulled from other positions will go 
back. It is a ripple effect.
    We have, like I said, roughly 50 percent over the VHA 
landscape of leadership that is either in a temporary position 
or vacant. If those individuals that are filling in those 
leadership positions are just plugging the gaps so that the 
operation can move forward, their positions are now vacant. So, 
it is a very difficult situation that needs to be fixed, and it 
needs to be fixed immediately.
    Senator Boozman. Yes, sir?
    Mr. Varela. Thank you, Senator. If I could just comment on 
the VBA portion, which is my area of oversight within the IB, 
our serious concerns lie within the amount of personnel that 
they have requested for VBA particularly to process appeals. As 
we said, we think about 1,000 FTEEs should be dedicated to 
processing appeals only.
    I would say that we have tempered that request also not 
simply saying that we need to hire 1,700 new FTEEs for that 
program specifically, but to temper that with hiring on a 
temporary basis maybe a portion of that so that once we get the 
backlog managed and once we get the inventory managed, we may 
not need all of those people.
    Also, within VR&E, one of the most important programs with 
the VA, you take wounded, injured, and ill veterans, help them 
overcome their obstacles, and put them right back into the 
workforce. I mean, how does the program continue to increase 
each fiscal year, yet their staffing levels do not? That is a 
major concern for us.
    Senator Boozman. OK. Very good. Thank you, Mr. Chairman. 
Thank you, gentlemen.
    Chairman Isakson. Thank you, Senator Boozman.
    Senator Blumenthal, thank you, and I want to thank the 
Secretary for staying. Dr. Shulkin, thank you very much for 
your testimony. To the VSOs: we depend very heavily on what you 
have to say and your active participation as we all work 
together for the best benefit of our veterans. Thank you for 
your testimony, and thank you for what you do.
    Remember what I said about our goal. We really want to try 
to take action by the end of March and have a consolidation of 
bills put together that give flexibility of direction and the 
flexibility the Secretary needs to have accountability within 
the VA; make sure we make a move forward on reducing the 
backlog of claims, not by cutting people's ability to make them 
out, but by streamlining the process to make sure it is faster 
and more accountable to the veteran.
    Thank you all for your testimony. We stand adjourned.
    [Whereupon, at 12:03 p.m., the Committee was adjourned.]
      

                                  [all]