[Senate Hearing 115-608]
[From the U.S. Government Publishing Office]


 
     MILITARY CONSTRUCTION, VETERANS AFFAIRS, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2018

                              ----------                              


                        WEDNESDAY, JUNE 21, 2017

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:31 p.m. in room SD-124, Dirksen 
Senate Office Building, Hon. Jerry Moran (chairman) presiding.
    Present: Senators Moran, Murkowski, Hoeven, Collins, 
Boozman, Capito, Rubio, Schatz, Tester, Murray, Udall, Baldwin, 
and Murphy.

                     DEPARTMENT OF VETERANS AFFAIRS

STATEMENT OF HON. DAVID J. SHULKIN, M.D., SECRETARY
ACCOMPANIED BY:
        POONAM L. ALAIGH, M.D., ACTING UNDER SECRETARY FOR HEALTH, 
            VETERANS HEALTH ADMINISTRATION
        THOMAS J. MURPHY, ACTING UNDER SECRETARY FOR BENEFITS, VETERANS 
            BENEFITS ADMINISTRATION
        RONALD E. WALTERS, INTERIM UNDER SECRETARY FOR MEMORIAL 
            AFFAIRS, NATIONAL CEMETERY ADMINISTRATION
        MARK W. YOW, CHIEF FINANCIAL OFFICER, VETERANS HEALTH 
            ADMINISTRATION


                opening statement of senator jerry moran


    Senator Moran. Good afternoon. The subcommittee will come 
to order.
    Mr. Secretary, welcome.
    This is our seventh subcommittee hearing of 2017. Thank you 
all for being here today, and we are going to discuss the 
fiscal year 2018 and 2019 budget requests for the Department of 
Veterans Affairs.
    As far as Federal domestic spending goes, in this year's 
budget cycle, the Department of Veterans Affairs is in a more 
comfortable place. With a $4.4 billion or 6 percent funding 
increase for the Department, the budget request before us 
today, in light of the circumstances of everyone else, could be 
considered generous.
    I have always believed, however, that the Department's 
stewardship of those funds is the real issue at hand, not just 
the dollar amount. And I want to hear today from the VA how it 
plans to improve cost estimating, manage spending more 
prudently and to be more transparent with Congress.
    Most of us are aware there is a question before this 
subcommittee and the Oversight Committee, of which I am also a 
member, the Senate Veterans Affairs Committee, about additional 
needs for this year, fiscal year 2017; and next year, fiscal 
year 2018, in Community Care discretionary spending and the 
Veterans Choice Program, which is mandatory spending.
    I hope progress is being made on the authorizing side on 
this problem as we speak. Efforts are underway, but I want to 
hear from you today, Mr. Secretary, how we can help avoid 
situations where you do not have the funds needed to provide 
the care that veterans expect.
    I hope today's hearing will cover all aspects of the VA and 
urge my colleagues to leave no stone unturned. We will look 
forward to hearing about the very recent decision on the 
electronic health record system, a decision, Mr. Secretary, 
that I commend you for making, your plans to decrease veteran 
suicide and protect veterans from over-prescription of opioids; 
how we can be of help in increasing access to care through 
increasing internal VA care and improving care in the 
community, especially in my world for rural veterans. And we 
are also interested in hearing about your increased efforts in 
regard to telemedicine. In your efforts also, Mr. Secretary, it 
will be good to hear about the appeals backlog and modernizing 
the disability claim appeals process.
    As I have mentioned to you before, at our last hearing, Mr. 
Secretary, and in all of our personal conversations, I hope you 
take the opportunity today to talk about the needs and 
constraints you have financially, as well as all the needs and 
constraints you have statutorily. And your openness today will 
help us best help you and the veterans that we all desire to 
serve.
    Let me introduce the panel. The panel is the Honorable 
David J. Shulkin, M.D., the Secretary of the Department of 
Veterans Affairs. He is accompanied today by Poonam Alaigh, 
M.D., the Acting Under Secretary for Health at the Veterans 
Health Administration; Mr. Thomas J. Murphy, the Acting Under 
Secretary for Benefits at the Veterans Benefits Administration; 
and Ronald E. Walters, the Interim Under Secretary for Memorial 
Affairs at the National Cemetery Administration.
    Welcome to all of you.
    There are a number of other VA experts in the room as well, 
and we are delighted to have them and we look forward to 
whatever expertise they can provide you, Mr. Secretary, and us 
as we discuss these issues.
    [The statement follows:]
               Prepared Statement of Senator Jerry Moran
    Welcome to our seventh subcommittee hearing of 2017. The 
subcommittee will come to order. Good afternoon. Thank you all for 
being here today to discuss the fiscal year 2018 and the fiscal year 
2019 budget request for the Department of Veterans Affairs.
    As far as Federal domestic spending goes, in this year's budget 
cycle, the Department of Veterans Affairs is in a comfortable place. 
With a $4.4 billion or 6 percent funding increase for the department, 
the budget request before us today is generous. I have always believed, 
however, that the department's stewardship of those funds, rather than 
the dollar amount, is the real issue at hand.
    I want to hear from you today about how the VA plans to improve 
cost estimating, manage spending more prudently and be more transparent 
with Congress. Most of us are aware there is a question before this 
subcommittee and the Senate Veterans Affairs Committee--also 
responsible for oversight of the department--about additional needs 
this year and next year in community care discretionary spending and 
the Veterans Choice Program mandatory spending.
    I know progress is being made over on the authorizing side on this 
problem as we speak. I support these efforts, but I want to hear from 
you today how we can help you avoid situations where you don't have the 
funds needed to provide the care veterans expect.
    I hope today's hearing will cover all aspects of VA, and I urge my 
colleagues to leave no stone unturned. We look forward to hearing about 
the very recent decision on the electronic health record system--a 
decision, Mr. Secretary, I commend you for making--your plans to 
decrease veterans suicide and protect veterans from the over 
prescription of opioids; how we can help you increase access to care--
through increasing internal VA care and improving care in the 
community--especially for our rural veterans coupled with your efforts 
to increase telemedicine--issues this subcommittee cares very deeply 
about; and your efforts to address the appeals backlog by modernizing 
the disability claims appeals process.
    As you I've mentioned to you before, at our last hearing with you, 
Mr. Secretary, and in our personal conversations, I hope you take the 
opportunity today to talk about the needs and constraints you have 
financially as well as the needs and constraints you have statutorily. 
Your openness today will help us know how to best help you.

I'd like to introduce our panel:

  --A welcome back to the Secretary--the Honorable David J. Shulkin, 
        MD, is the Secretary of the Department of Veterans Affairs. He 
        is accompanied by:
  --Poonam L. Alaigh, M.D., the Acting Under Secretary for Health at 
        the Veterans Health Administration;
  --Mr. Thomas J. Murphy, the Acting Under Secretary for Benefits at 
        the Veterans Benefits Administration; and
  --Mr. Ronald E. Walters, the Interim Under Secretary for Memorial 
        Affairs at the National Cemetery Administration. Welcome to all 
        of you.

    I note there are quite a few other VA experts seated behind the 
panel who are present today to support this hearing, and I thank you 
for being here.

    Senator Moran. I now recognize my colleague and friend, the 
Senator from Hawaii, for his opening remarks.

               OPENING STATEMENT OF SENATOR BRIAN SCHATZ

    Senator Schatz. Thank you, Mr. Chairman. Thank you for 
holding this hearing to review the VA's fiscal year 2018 budget 
request and the 2019 advanced appropriation request. We have 
had a number of important hearings over the last few months to 
shape our appropriations bill, and I want to thank you for your 
leadership and our great partnership.
    This process, our process, stands in contrast to the way 
our Republican colleagues plan to bring a healthcare bill to 
the Floor next week. There have been no hearings or public 
discussion. Americans are still left in the dark. Members of 
the Senate are still left in the dark. This is not the way to 
make a law impacting one-sixth of the economy.
    We know that the House bill would be a disaster, and we 
also know that the VA will not be spared from this bill, 
including any proposed cuts to Medicaid that will likely affect 
veterans' health care and possibly shift costs to VA. I am 
hoping we can find a few Republican Senators who simply refuse 
to vote for a bill for which there was no hearing. I hope they 
will.
    Secretary Shulkin, thank you for being here to discuss the 
VA's budget request. I am glad to see VA's discretionary 
funding is up $4.3 billion from last year. The administration's 
increased request is driven almost solely by the demand for 
more funding to cover the medical care accounts and a 
recognition of the responsibility to pay for the growing 
healthcare demands of veterans, even while it has proposed cuts 
to almost all other domestic agencies.
    I am worried, however, that the proposed increase may not 
be enough but that it is paid for with cuts to other important 
veteran programs, as well as other domestic accounts. Much of 
the fault lies with Congress, which has refused to lift the 
ridiculous BCA (Budget Control Act) caps. We need to lift them 
so that we can pass an entire 2018 budget.
    But the VA is also responsibility for the situation that we 
find ourselves in today, and I have some concerns about whether 
this budget is enough. The VA has encountered significant 
unplanned costs since it submitted its budget, including an 
unexpected surge in the use of Choice, which is now forecasted 
to run out of money by the end of the fiscal year, resulting in 
the need for an infusion of hopefully mandatory funding relief.
    The VA has also decided not to appeal the judicial ruling 
that holds VA responsible for the payment of veterans' 
emergency care at non-VA facilities. I think that is the right 
decision. And the VA has decided to pursue an electronic health 
record contract that was not budgeted for in the request. And I 
do not disagree with these decisions, but they are not 
inexpensive.
    I have concerns with the proposed funding distribution in 
the budget request. For example, the request proposes an 
increase in funding for about a half-a-billion for Medical 
Services, which, as far as I can tell, does not account for 
annualizing the cost of the medical care providers hired under 
Choice or any other increase in utilization in in-house VA 
services.
    I also have concerns that hit closer to home. Dr. Shulkin, 
top of the list for me is the status of a proposed one-stop-
shop community-based outpatient clinic in Hilo. I will submit a 
question for the record that I would like to pursue with you, 
but the bottom line is I want to know where VA is on getting a 
new CBOC for Hilo because this is the highest priority for Big 
Island veterans. This project has been in the VA's SCIP 
pipeline for years.
    I know there are very many worthy competing projects, but 
you should know that our veterans in Hilo are currently 
visiting a CBOC that has to move because it is in a tsunami 
flood zone. We have unique circumstances. The VA leased a 
temporary space in an industrial part of Hilo that it plans to 
move into next year, but our veterans tell me--and I know--it 
is hard to get to and, quite simply, too many of them will not 
want to use it once the VA moves. This situation is not 
acceptable and we need to fix it. If developing a one-stop-shop 
CBOC in Hilo means that more veterans will feel encouraged to 
utilize care that is the kind of access to care that the SCIP 
process should take into consideration.
    The VA also needs to invest even more in telehealth and 
remote patient monitoring. You have done great work, but let us 
try to find opportunities to do more. And I did appreciate 
hearing from you about how VA is leading on telehealth.
    Thank you, Secretary Shulkin. Thank you, Mr. Chairman. I 
look forward to your testimony.
    Senator Moran. Thank you, Senator Schatz.
    Mr. Secretary, welcome, and I recognize you now for your 
opening statement.

              SUMMARY STATEMENT HON. DR. DAVID J. SHULKIN

    Secretary Shulkin. Thank you. Mr. Chairman, Ranking Member 
Schatz, thank you both for your opening statements. I think you 
raised really important issues, and I think you are encouraging 
us to have a candid conversation today, which I know we can do 
and it will be productive.
    And, Ranking Member Schatz, we will certainly get back to 
you about Hilo. I understand the concern that you have over 
making the right decision there, and I would be glad to talk 
more about the SCIP process and telehealth and any of the other 
issues that you have. If it is just the two of you, you will 
have lots of time for questions and we can have a good 
conversation.
    I think you know my intent as the Secretary is really to 
build an integrated healthcare system that provides veterans 
with high-quality care when they need it and where they need 
it, whether it is at the VA or in the high-performing Community 
Care network. And I think that is what this budget that the 
President has submitted is designed to do. It is not designed 
to privatize VA. It is designed to provide veterans the best 
care available in the most timely fashion.
    The challenge is to balance those resources year to year to 
meet the changing demands of care. More veterans are now coming 
to VA for more of their care and more are also opting for 
Choice. Since January 1, we have authorized over 8.2 million 
Community Care appointments. That is 2.6 million more than last 
year or a 46 percent increase. This past March, April, May were 
the highest months ever for Choice usage. And that is why we 
are asking for more Community Care funding for fiscal year 
2018.
    But, as I said before, that does not mean that we are 
privatizing VA. So, let me be clear on what this budget says.
    Perfect timing, Senator Tester, so we can go over these 
numbers. For fiscal year 2018, we expect to spend over $50 
billion on VA Medical Services and just $12.6 billion on 
Community Care. So, when you count all the sources of funding, 
that is our direct appropriations, carryover, transfers in and 
out, or medical care collections and reimbursements, when you 
count all of those, we are talking about an 8.3 percent 
increase for Community Care versus a 5.7 percent increase in VA 
Medical Services.
    And I think, Senator Tester, one of the reasons why we 
sometimes have different numbers, we are putting in not just 
the appropriations but we are putting in our full budget 
amount, which includes the carryovers and the collections and 
other dollars.
    So, let me just go over that again. The 8.3 percent 
increase in Community Care is $965 million more in this year's 
proposed budget. The 5.7 percent increase in Medical Services, 
what the VA is getting, is $2.7 billion, so that is $965 
million versus $2.7 billion, so in total dollars the Medical 
Services is increasing three times the amount that is going to 
Community Care.
    Let me talk about another issue. Again, we are having to 
shift funds among our many separate Community Care accounts to 
cover our obligations. Two years ago, which I am sure you 
remember well, we had to shift funds from the Choice account to 
cover obligations in the Community Care accounts. Now, we are 
doing this in reverse to cover our increased use of Choice.
    The necessity of those shifts is a product of the 
unpredictability of Community Care charges, charges that 
fluctuate month to month. A single authorization for Community 
Care can cover one, two, three or more appointments. The 
authorization might never be used or the authorization might be 
used 3 months after it was issued. VA might not get the bill 
for many months after that.
    The even bigger part of the problem is the fact that we 
have so many accounts and so little flexibility in how we 
manage them, our proposed veterans CARE program--remember, that 
stands for Coordinated Access Rewarding Experience, the CARE 
program--would solve this recurring problem permanently by 
modernizing and consolidating all of our Community Care 
accounts, Choice included.
    The President's budget would address this problem in 2018 
and 2019 by providing additional funds for Choice and the 
necessary resources for continuing our ongoing modernization of 
VA. The budget reflects the President's strong personal 
commitment to the Nation's veterans. It requests $186.5 billion 
for VA, $104.3 billion in mandatory funding, $82.1 billion in 
discretionary funding for a total increase of $6.4 billion, or 
3.6 percent over 2017. It provides $2.9 billion in mandatory 
funding to continue the Choice program in 2018, plus a 7.1 
percent increase in discretionary funding for VHA to improve 
patient access and timeliness of care.
    It supports the strengthening of our foundational services, 
as well as the modernization and consolidation of VA Community 
Care through the veterans' CARE program announced two weeks 
ago, so veterans can make the right decisions about their care, 
together with their provider, giving them yet another reason to 
choose VA.
    We are already taking many steps to move VA modernization 
forward in accountability, transparency, same-day services, 
online access, suicide prevention, and other areas. And I 
detailed several of these in the State of the VA talk that I 
gave at the White House last month.
    But to keep up our modernization momentum, we need your 
help. We have identified over 1,000 facilities that are vacant 
or underutilized. We are working now to dispose of 142 
facilities, and with your help, we could do many more.
    We need Congress to fund our IT modernization to keep our 
legacy systems from failing and to replace our Vista system 
with the system in use by DOD called MHS GENESIS. This will 
ultimately put all patient data in one shared system, enabling 
seamless care between VA and DOD without the manual and 
electronic exchange and reconciliation of data that we 
currently do in our separate systems.
    We also need Congress to authorize the overhaul of our 
broken and failing claims appeals process. We have worked 
closely with VSOs and other stakeholders to draft a proposal to 
modernize the system, and we are very pleased to see the House 
unite behind the bill passed last month. Now, we just need the 
Senate to act.
    Most of all, we need Congress to ensure the continued 
success of choice for veterans. Veterans are responding to our 
modernization effort by choosing VA more than ever. To keep up 
with their choices, we need you to fully fund Choice and help 
us modernize and consolidate VA community care through the 
Veterans Choice program. The Veterans CARE program will 
coordinate care so veterans get the right care at the right 
time from the right provider whether in a VA facility or a 
high-performing VA community care provider. We just need your 
help to make it happen, including funding to keep up with the 
veterans as they choose VA.
    I would like to close on this note: VA's mission is to care 
for veterans and their families. To me, that is what the VA 
budget process is, a discussion that we make sure that we have 
the right things for veterans, their families, and taxpayers. I 
do not support any policy that will hurt veterans or their 
families, so when it comes to discussions about offsets like 
individual unemployability, we have heard from veterans and we 
will work with Congress to find other solutions.
    Thank you, and we look forward to your questions.
    [The statement follows:]
           Prepared Statement of Hon. David J. Shulkin, M.D.
    Good morning, Chairman Moran, Ranking Member Schatz, and 
Distinguished Members of the Subcommittee. Thank you for the 
opportunity to testify today in support of the President's 2018 Budget 
and 2019 Advance Appropriation (AA) Request and to define my priorities 
to continue the dynamic transformation within the Department of 
Veterans Affairs (VA). I am accompanied today by Dr. Poonam L. Alaigh, 
Acting Under Secretary for Health; Thomas Murphy, Acting Under 
Secretary for Benefits; and Ron Walters, Interim Under Secretary for 
Memorial Affairs. I also want to thank Congress for providing the 
Department its full 2017 budget prior to the start of the fiscal year--
this is significant and has been extremely beneficial to our ability to 
provide services and care to Veterans. The 2018 budget request fulfills 
the President's strong commitment to all of our Nation's Veterans by 
providing the resources necessary for improving the care and support 
our Veterans have earned through sacrifice and service to our country.
                    fiscal year 2018 budget request
    The President's 2018 budget requests $186.5 billion for VA--$82.1 
billion in discretionary funding (including medical care collections), 
of which $66.4 billion was previously provided as the 2018 AA for 
Medical Care. The discretionary request is an increase of $4.3 billion, 
or 5.5 percent, over 2017. It will improve patient access and 
timeliness of medical care services for over 9 million enrolled 
Veterans, while improving benefits delivery for our Veterans and their 
beneficiaries. The President's 2018 budget also requests $104.3 billion 
in mandatory funding, of which $103.9 billion was previously provided, 
such as disability compensation and pensions, and for continuation of 
the Veterans Choice Program (Choice Program).
    For the 2019 AA, the budget requests $70.7 billion in discretionary 
funding for Medical Care and $107.7 billion in 2019 mandatory advance 
appropriations for Compensation and Pensions, Readjustment Benefits, 
and Veterans Insurance and Indemnities benefits programs in the 
Veterans Benefits Administration. The budget also requests $3.5 billion 
in mandatory budget authority in 2019 for the Choice Program.
    This budget request will ensure the Nation's Veterans receive high-
quality healthcare and timely access to benefits and services. I urge 
Congress to support and fully fund our 2018 and 2019 AA budget 
requests--these resources are critical to enabling the Department to 
meet the increasing needs of our Veterans.
                             modernizing va
    As you all know, I was part of the VA team for the last year and a 
half prior to being confirmed as the Secretary of Veterans Affairs. I 
came to VA during a time of crisis, when it was clear Veterans were not 
getting the timely access to high-quality healthcare they deserved. I 
soon discovered that years of ineffective systems and deficiencies in 
workplace culture led to these problems. I know that the organization 
has made significant progress in improving care and services to 
Veterans. But I also know that VA needs more changes to the way we do 
business for Veterans and the country as a whole, in order for all to 
say, ``That is a different organization now.'' VA needs to continue to 
fix numerous areas of the business, including access, claims and 
appeals processing, and many of our core functions, to ensure that the 
basics are done correctly. Beyond that, VA has to deliver to Veterans 
revolutionary leaps in care, benefits, and services. Congress, along 
with our VA employees, Veterans Service Organizations (VSO), and 
private industry, will play a critical role in making those 
revolutionary leaps a reality.
Focus on Execution
    Above all else, VA needs to perform its core functions well. When 
Veterans arrive at a VA facility for care, they must be treated with 
respect, see a clean and modern facility, be seen by their provider on 
time, and understand what the next steps for their care will be. 
Veterans should be able to receive clear and accurate information about 
their claims and understand where they are in the process. We must 
ensure that this is every Veteran's experience every time they interact 
with VA. Where we fall short, we will hold employees accountable, 
ensure we are good stewards of the taxpayer dollar, and ask for 
Congress's support for legislative fixes where needed.
Make Bold Change
    We know it is paramount that we increase our focus and intensify 
the efforts to improve how we execute our mission--Veterans should and 
do expect that from us. We also recognize that incremental change is 
not sufficient to achieve the additional improvements VA and Veterans 
need and demand for restoring the trust of Veterans and the American 
public.
    As I have noted, VA is a unique national resource that is worth 
saving, and I am committed to doing just that. Veterans have unique 
needs, and the services VA provides to Veterans often cannot be found 
in the private sector. The Veterans Health Administration (VHA) 
provides support to Veterans through primary care, specialty care, peer 
support, crisis lines, transportation, the Caregivers program, 
homelessness services, vocational support, behavioral health 
integration, medication support, and a VA-wide electronic medical 
record system. These services and supports are unparalleled. We also 
know that VA hospitals perform well on quality compared to non-VA 
hospitals. In a study published in the Journal of American Medical 
Association (JAMA) Internal Medicine in April, researchers compared 
hospital-level quality data on 129 VA hospitals and 4,010 non-VA 
hospitals obtained through the Centers for Medicare and Medicaid's 
website. They found VA hospitals had better outcomes than non-VA 
hospitals on six of nine patient safety indicators, and there were no 
significant differences on the other three indicators. VA hospitals 
also had better mortality and readmission rates than non-VA hospitals. 
With the continued support of Congress, VA will supplement its services 
through private-sector healthcare, but we realize it is not a 
replacement for the services VA provides to Veterans.
    We are already implementing bold changes in the agency. We are 
working hard to ensure employees are held accountable to the highest of 
standards and working with Congress to provide us with greater 
authority and flexibility to do that. We are also working with Congress 
on appeals reform and on a long-term solution for providing greater 
community care options. I will discuss these efforts in greater detail 
below.
                            five priorities
    As I prepared for my confirmation hearing earlier this year, I 
identified my top priorities to address as Secretary. These areas have 
shaped the first several months of my tenure and provide focus for our 
attention and resources, and the foundation for rebuilding trust with 
our Veterans. We will also use the budgeting process to support our 
strategy by shifting resources toward our ``foundational services'' 
that make VA unique while maintaining support to our strategic 
priorities.
                      greater choice for veterans
    The Choice Program is a critical program that has increased access 
to care for millions of Veterans. Coming into this new administration, 
extending the Choice Program was one of my top priorities for quick 
action, as VA anticipated that based on Veteran program participation, 
there would be an estimated $1.1 billion in unobligated funds left on 
the original expiration date of August 7, 2017. On April 19, 2017, the 
President signed into law the Veterans Choice Program Improvement Act 
(Public Law 115-26), allowing the Choice Program to continue until the 
Veterans Choice Fund is exhausted. Without this legislation, VA would 
have been unable to use funding specifically appropriated for the 
Choice Program by Congress, so we commend Congress for passing this 
legislation swiftly and in a bipartisan manner. This legislation also 
provides VA and Congress more time to develop a long-term solution for 
community care.
    Since the start of the Choice Program, over 1.6 million Veterans 
have received care through the program. In fiscal year 2015, VA issued 
more than 380,000 authorizations to Veterans through the Choice 
Program. In fiscal year 2016, VA issued more than 2,000,000 
authorizations to Veterans to receive care through the Choice Program, 
more than a fivefold increase in the number of authorizations from 2015 
to 2016.
    Looking at early data for 2017, it is expected that Veterans will 
benefit even more this year than last year from the Choice Program. In 
the first quarter of fiscal year 2017, we have seen a more than 30 
percent increase from the same period in fiscal year 2016 in terms of 
the number of Choice authorizations. In addition to increasing the 
number of Veterans accessing care through the Choice Program, VA is 
working to increase the number of community providers available through 
the program. In April 2015, the Choice Program network included 
approximately 200,000 providers and facilities. As of March 2017, the 
Choice Program network has grown to over 430,000 providers and 
facilities, a more than 150 percent increase during this time period.
    As these numbers demonstrate, demand for community care is high. In 
2018, VA plans to spend a total of $13.2 billion to support community 
care for Veterans. Community care will be funded by a discretionary 
appropriation of $9.4 billion for the Medical Community Care account 
($254 million above the enacted advance appropriation), plus $2.9 
billion in new mandatory budget authority for the Choice Program. As 
stated in the budget request, this, combined with an estimated $626 
million in carryover balances in the Veterans Choice Fund, would have 
provided a total of $13.2 billion in 2018 for community care. However, 
as of June 9, 2017, $9.2 billion of the Choice Fund has been obligated 
and $7.1 billion has been expended. These levels represent a 
significant acceleration of funds being expended from the Veterans 
Choice Fund, and consequently, I have updated the estimates VA 
previously put forth regarding when Choice Program funds would be fully 
obligated.
    In March 2017, VA issued the highest number of authorizations in a 
month since the start of the program, followed closely by April and 
May. Over the 3 month period between March and May 2017, VA issued 
nearly 800,000 authorizations for Choice Program care, a 32-percent 
increase over the same time period in 2016. As a result, VA anticipates 
that Choice Program funds will be fully obligated sooner than 
previously expected. Based on VA's latest risk-adjusted cost estimates 
and volume projections, the program will be unable to carry over the 
previously estimated $626 million, resulting in a need for the total 
$3.5 billion in new mandatory budget authority to continue the Choice 
Program in fiscal year 2018.
    VA will continue to partner with Congress to develop a community 
care program that addresses the challenges we face in achieving our 
common goal of providing the best healthcare and benefits we can for 
our Veterans. We have also worked with and received crucial input from 
Veterans, community providers, VSOs, and other stakeholders in the 
past, and we will continue doing so going forward. However, we do need 
your help.
    One such area is in modernizing and consolidating community care. 
Veterans deserve better, and now is the time to get this right. We are 
committed to moving care into the community where it makes sense for 
the Veteran. The ultimate judge of our success will be our Veterans, 
and our only measure of success will be our Veterans' satisfaction. 
With your help, we can continue to improve Veterans' care in both VA 
and the community.
Empower Veterans through Transparency of Information
    We are also increasing transparency and empowering Veterans to make 
more informed decisions about their healthcare through our new Access 
and Quality Tool (available at www.accesstocare.va.gov). This Tool 
allows Veterans to access the most transparent and easy to understand 
wait-time and quality-care measures across the healthcare industry. 
That means Veterans can quickly and easily compare access and quality 
measures across VA facilities and make informed choices about where, 
when, and how they receive their healthcare. Further, they will now be 
able to compare the quality of VA medical centers to local private 
sector hospitals. This Tool will take complex data and make it 
transparent to Veterans. This new Tool will continue to improve as we 
receive feedback from Veterans, employees, VSOs, Congress, and the 
media.
                         modernizing our system
Infrastructure Improvements and Streamlining
    In 2018, VA will focus on fixing VA's infrastructure while we 
transform our healthcare system to an integrated network to serve 
Veterans. This budget requests $512.4 million in Major Construction 
funding as well as $342.6 million in Minor Construction for priority 
infrastructure projects. This funding supports projects including a new 
outpatient clinic in Livermore, CA, as well as gravesite expansions in 
Sacramento, CA; Bushnell, FL; Elwood, IL; Calverton, NY; Phoenix, AZ; 
and Bridgeville, PA. VA is also requesting $953.8 million to fund more 
than 2,000 medical leases in fiscal year 2018, an increase of $141.9 
million over the fiscal year 2018 AA, and $862 million for activation 
of new medical facilities.In 2018, VA is seeking Congressional 
authorization of 27 major medical leases. The majority of these leases 
have been included in previous budget requests, some dating back to the 
fiscal year 2015 budget submission. These major medical leases are 
vital to establish new points of care, expand sites of care, replace 
expiring leases, and expand VA's research capabilities.
    The 2018 budget submission includes proposed legislative requests 
that if enacted, would increase the Department's flexibility to meet 
its capital needs. These proposals include: 1) increasing from $10 
million to $20 million the dollar threshold for minor construction 
projects; 2) modifying title 38 to eliminate statutory impediments to 
acquiring joint facility projects with DoD and other Federal agencies; 
and 3) expanding VA's enhanced use lease (EUL) authority to give VA 
more opportunities to engage the private sector and local governments 
to repurpose underutilized VA property.
    The Department is also a key participant in the White House 
Infrastructure Initiative to explore additional ways to modernize and 
obtain needed upgrades to VA's real property portfolio to support our 
continued delivery of quality care and services to our Nation's 
Veterans. We are excited about the opportunity to transform the way we 
approach our infrastructure.
Electronic Health Record Interoperability and IT Modernization
    The 2018 Budget continues VA's investment in technology to improve 
the lives of Veterans. The planned IT investments prioritize the 
development of replacements for specific mission critical legacy 
systems, as well as operations and maintenance of all VA IT 
infrastructures essential to deliver medical care and benefits to 
Veterans. The request includes $358.5 million for new development to 
replace four specific mission critical legacy systems, including the 
Financial Management System, and establish an Integrated Project Team 
to develop the requirements and acquisition strategy for a new 
enterprise health information platform. It also invests $340 million 
for information security to protect Veterans' information and improve 
VA's information networks' resilience.
    The 2018 budget submission includes a proposed legislative request 
that if enacted, would increase the Departments ability to apply agile 
program management to the dynamics of modern Information Technology 
development requirements. To do this, the Department recommends 
advancing the transfer threshold from $1 million to $3 million between 
development project lines, which equates to less than 1 percent of the 
Development account. Through the Certification process, Congress will 
maintain visibility of proposed changes.
    VA recognizes that a Veteran's complete health history is critical 
to providing seamless, high-quality, integrated care, and benefits. 
Interoperability is the foundation of this capability, by making 
relevant clinical data available at the point of care and enabling 
clinicians to provide Veterans with prompt, effective care. Today, VHA, 
the Veterans Benefits Administration (VBA), and the Department of 
Defense (DoD) share more medical information than any public or private 
healthcare organization in the country. We have developed and deployed, 
in close collaboration with DoD, the Joint Legacy Viewer (JLV). JLV is 
available to all clinicians in every VA facility. It is a web- based 
user interface that provides clinicians with an intuitive display of 
DoD and VA healthcare data on a single screen. VA and DoD clinicians 
can use JLV to access the health records of Veterans, Active Duty, and 
Reserve Servicemembers from all VA, DoD, and any third party community 
providers who participate in Health Information Exchanges where a 
patient has received care. Multiple releases of Community Care 
applications, including JLV-Community Viewer, Community Provider 
Portal, and Virtru Pro Secure Email have enhanced care coordination 
with Community Providers through multiple methods of exchanging health 
records and multiple modes of communication improving the care the 
Veteran receives and allowing Community Providers not in Health 
Information Exchanges the ability to share medical documentation.
    VA will complete the next iteration of the VistA Evolution Program, 
VistA 4, in 2018. VistA 4 will bring improvements in efficiency and 
interoperability, and will continue VistA's award-winning legacy of 
providing a safe, efficient healthcare platform for providers and 
Veterans. VistA Evolution funds have enabled investments in systems and 
infrastructure that support interoperability, networking and 
infrastructure sustainment, continuation of legacy systems, and efforts 
such as clinical terminology standardization. These investments are 
critical to the maintenance and deployment of the existing and future 
modernized VistA and essential to operational capability. That said our 
current VistA system is in need of major modernization to keep pace 
with the improvement in health information technology and 
cybersecurity, and software development.
    I promised a decision on our EHR system by July 1st, and I have 
honored that commitment by announcing that, after much deliberation, VA 
will adopt the same EHR system as DoD, now known as MHS Genesis, which 
at its core consists of Cerner Millennium. VA's adoption of the same 
EHR system as DoD will ultimately result in all patient data residing 
in one common system and enable seamless care between the departments 
without the manual and electronic exchange and reconciliation of data 
between two separate systems. Still, VA has unique needs and many of 
those are different from the DoD. For this reason, VA will not simply 
be adopting the identical EHR that DoD uses, but we intend to be on a 
similar Cerner platform. VA clinicians will be very involved in how 
this process moves forward and in the implementation of the system.
    Another critical system that will touch the delivery of all health 
and benefits is our new financial management system, which is under 
development. The 2018 budget continues modernizing our financial 
management system by transforming the Department from numerous 
stovepipe legacy systems to a proven, flexible, shared service business 
transaction environment. The budget requests $83 million in Information 
Technology funds and $61.6 million for business process re-engineering 
to support Financial Management Business Transformation (FMBT) across 
the Department.
                    focus resources more efficiently
Strengthening of Foundational Services in VA
    VA is committed to providing the best access to care for Veterans. 
To deliver the full care spectrum as defined in VA's medical benefits 
package, VA will focus on its foundational services--those areas in 
which it can excel--and build community partnerships for complementary 
services. VA developed the following guiding principles, centered on 
improving the health, well-being, and experience of Veterans receiving 
care from VA and in the community. These principles include:

  --Enabling VA to provide access to high-quality care for Veterans, by 
        balancing services provided by VA and the community given 
        changing demands for care and resource limitations;
  --Promoting operational efficiency and simplicity, while supporting 
        VA's clinical care, education, and research missions; and
  --Allowing facilities to meet the changing needs of Veterans in a 
        flexible way.

    High-performing organizations cannot excel at every capability and 
thus must make decisions about how best to invest its resources. VA 
will therefore further define and grow its foundational services to 
excel in the provision of clinical care to Veterans.
    Investing in foundational services within the Department is not 
limited to only healthcare. For over a decade, VA's National Cemetery 
Administration (NCA) has achieved the highest customer satisfaction 
rating of any organization--public or private--in the country. They 
achieved this designation through the American Customer Satisfaction 
Index six consecutive times. The President's 2018 Budget recognizes the 
need to nurture and advance this unprecedented success with a request 
for $306.2 million for NCA in 2018, an increase of $20 million (7 
percent) over 2017. This request will support the 1,881 FTE needed to 
meet NCA's increasing workload and expansion of services. In 2018, NCA 
will inter approximately 133,600 Veterans and eligible family members, 
care for over 3.7 million gravesites, and maintain 9,400 acres. NCA 
will continue to memorialize Veterans by providing 366,000 headstones 
and markers, distributing 702,000 Presidential Memorial Certificates 
and expanding the Veterans Legacy program to communities across the 
country. VA is committed to investing in NCA infrastructure, 
particularly to keep existing national cemeteries open and to construct 
new cemeteries consistent with burial policies approved by Congress. In 
addition to NCA's funding, the 2018 request includes $255.9 million in 
major construction funds for six gravesite expansion projects. When all 
new cemeteries are opened, nearly 95 percent of the total Veteran 
population--about 20 million Veterans--will have access to a burial 
option in a Veterans' cemetery within 75 miles of their home.
VA/DoD/Federal Coordination
    VA has proposed legislation to eliminate certain statutory 
impediments to VA more effectively pursuing joint projects with other 
Federal agencies, including DoD. Today, medical facilities that are not 
specifically under the jurisdiction of the Secretary require specific 
statutory authorization for optimal collaboration. I look forward to 
working with Congress to: (1) enhance our ability to coordinate with 
DoD and other Federal agencies; (2) improve the access, quality, and 
cost effectiveness of direct healthcare provided to Veterans, 
Servicemembers, and their beneficiaries; (3) permit joint capital asset 
planning and capital investments to design, construct, and utilize 
shared medical facilities; and (4) provide authority for VA to procure 
the use of joint medical facilities for itself and other Federal 
agencies like DoD, and to transfer funds between VA and other Federal 
agencies for such initiatives.
Deliver on Accountability and Effective Management Practices
    Another critical area in which VA is serious about making 
significant changes relates to employee accountability. The vast 
majority of employees are dedicated to providing Veterans the care they 
have earned and deserve. It is unfortunate that certain employees have 
tarnished the reputation of VA and so many who have dedicated their 
lives to serving our Nation's Veterans. We will not tolerate employees 
who deviate from VA's I-CARE values and underlying responsibility to 
provide the best level of care and services to them. We support 
Congress' ongoing efforts to provide VA with the tools it needs to take 
timely action against employees who perform poorly or engage in 
misconduct. Where employees engage in inappropriate behavior, do not 
perform the duties of their job, are engaged in illegal activities, or 
otherwise do not meet the standards we expect of VA employees, we want 
the ability to ensure they can be promptly removed. Certain laws hamper 
our ability to optimally hold our employees accountable and remove 
those individuals that run afoul of my intent for the Department to 
function as a high-performing organization. We support legislation that 
is consistent with the following principles:

  --Increase flexibility to remove, demote, or suspend VA employees for 
        poor performance or misconduct;
  --Provide authority to recoup bonuses of employees for poor 
        performance or misconduct;
  --Enable recovery of relocation expenses that occur through fraud or 
        malfeasance; and
  --Ensure that VA has the ability to retain high performers by paying 
        them a salary that is competitive with the private sector and 
        performance awards that are commensurate with other Federal 
        agencies.

    We thank the Senate for passing critical accountability 
legislation, S. 1094,--all signs point to new accountability rules for 
VA being the law of the land soon, but while that process continues, we 
are also focused on updating internal hiring practices. VHA is the 
largest healthcare system in the United States, and in an industry 
where there is a national shortage of healthcare providers, VHA faces 
competition with the commercial sector for scarce resources. 
Historically, VA has followed hiring practices that have proven unduly 
burdensome. Over the past year, VHA's business process improvement 
efforts have resulted in a more efficient hiring process. We were able 
to reduce the time it took to hire Medical Center Directors by 40 
percent and obtained approval from the Office of Personnel Management 
(OPM) for critical position pay authority for many of our senior 
healthcare leaders. We recognize there is much work left to do. As we 
strive to find internal solutions, we look forward to working together 
on legislation to reform recruitment and compensation practices to stay 
competitive with the private sector and other employers.
    To ensure that VA's management practices are effective, I have 
announced a major initiative to improve our ability to detect and 
prevent fraud, waste, and abuse within VA. The initiative includes:

  --forming a fraud, waste, and abuse advisory committee comprised of 
        experts from the private sector and other government 
        organizations;
  --identifying cutting edge tools and technologies available in the 
        private sector; and
  --coordinating all fraud, waste, and abuse detection and reporting 
        activities through a single office.

    With these improvements, VA has the potential to save millions of 
taxpayer dollars and more effectively serve America's Veterans. I look 
forward to updating you in the future regarding this initiative.
                     improve timeliness of services
Access to Care and Wait Times
    VA is committed to delivering timely and high quality healthcare to 
our Nation's Veterans. Veterans now have same-day services for primary 
care and mental healthcare at all VA medical centers across our system. 
I am also committed to ensuring that any Veteran who requires urgent 
care will receive timely care.
    In March 2017, 96.82 percent of appointments, 5.15 million 
appointments, were completed within 30 days of the clinically-indicated 
or veteran's-preferred date, and as of April 15, 2017, VHA has reduced 
and the Electronic Wait List from 56,271 entries to 22,383 entries, a 
60.2 percent reduction between June 2014 and April 2017. The Electronic 
Wait List reflects the total number of all patients for whom 
appointments cannot be scheduled in 90 days or less.
    In 2018, VA will expand Veteran access to medical care by 
increasing medical and clinical staff, improving its facilities, and 
expanding care provided in the community. The 2018 Budget requests a 
total of $75.2 billion in funding for Veterans' medical care, which 
includes the following:

  --$69.0 billion in discretionary budget authority ($2.65 billion 
        above the 2018 AA enacted level of $66.4 billion and a $4.6 
        billion (7.1 percent) increase over the 2017 enacted level);
  --$2.9 billion in mandatory budget authority to continue the Veterans 
        Choice Program; and
  --$3.3 billion in medical care collections.

    The 2018 request will support nearly 315,000 medical care staff, an 
increase of over 7,000 above the 2017 level.
    Through the Choice Program, VHA and its contractors created more 
than 3.6 million authorizations for Veterans to receive care in the 
private sector from February 1, 2016 through January 31, 2017. This 
represents a 23 percent increase in authorizations when compared to the 
period February 1, 2015 through January 31, 2016. When looking at 
overall appointment data not specific to the Choice Program, the March 
15, 2017, pending appointment data set shows VA has increased the 
number of overall pending appointments ``in house'' by nearly 1.8 
million over the same data the prior year. According to the same data, 
the number of appointments scheduled greater than 30 days from the 
Veterans clinically indicated data or preferred date has decreased by 
3.9 percent (19,645) since the beginning of fiscal year 2017.
Accelerating Performance on Disability Claims
    Since 2013, VA has made remarkable progress toward reducing the 
backlog of disability compensation claims pending over 125 days and is 
working to use more effectively the resources provided by Congress. 
VBA's 2018 budget request of $2.8 billion allows VBA to maintain the 
improvements made in claims processing over the past several years. 
This budget supports the disability compensation benefits program for 
4.6 million Veterans and 420,000 Survivors. VBA implemented new 
professional standards for Veterans Service Representatives (VSR) on 
March 1, 2017. In May 2016, VBA implemented the National Work Queue 
(NWQ) process. This allows VBA to prioritize and quickly distribute 
disability compensation claims according to processing capacity within 
VBA's regional footprint, regardless of the Veteran's place of 
residence. The NWQ process enables VA to more effectively balance the 
workloads nationally, relative to the productive capacity at each 
regional office. This means that Veterans who live in a location where 
claims decisions take longer, VBA can appropriately adjust capacity to 
match the changes in claims volume. In fiscal year 2017, VBA added non-
rating related claims to the NWQ. VBA has completed nearly 1.7 million 
non-rating claims from October 2016 through the end of April 2017. The 
effort to address non-rating claims has resulted in a 269,000 claim 
reduction in the dependency claims inventory since August 2015, from 
359,000 to less than 90,000.
    To continue improving disability compensation claim processing, VBA 
is currently piloting an initiative called Decision Ready Claims (DRC). 
The DRC initiative offers veterans and survivors faster claims 
decisions in which VSOs and other accredited representatives assist 
Veterans with ensuring all supporting medical evidence is included with 
the claim at the time of submission. The DRC initiative empowers 
Veterans by allowing them to receive medical examinations as early as 
possible in the claims process. This initiative also enhances 
partnerships with VSOs by improving access and capabilities to assist 
with gathering all required evidence and information to accelerate 
claims decisions. Submission of claims submitted through the DRC 
process will result in claim decisions within 30 days of submission to 
VA.
Decisions on Appeals
    The current VA appeals process undoubtedly needs further 
improvements for our Nation's Veterans. As of April 30, 2017, VA had 
470,546 pending appeals. The average processing time for all appeals 
resolved by VA in fiscal year 2016 was approximately 3 years. For those 
appeals that were decided by the Board of Veterans' Appeals (the Board) 
in fiscal year 2016, on average, Veterans waited at least 6 years from 
filing their Notice of Disagreement until the Board's decision was 
issued that year.
    The 2018 request of $155.6 million for the Board continues the 
funding level enacted for 2017, which was a 42 percent increase over 
2016. In combination with carryover resources from 2017, the requested 
funding will support a total of 1,050 FTE, an increase of 164 FTE above 
the 2017 estimate of 886 FTE. This request maintains the increased 
budgetary authority the Board received in 2017. In addition, VBA's 
request of $185 million for appeals processing maintains its current 
level of appeals FTE at 1,495. This funding level in tandem with 
sweeping legislative reform initiates a long-term strategy aimed at 
improving the timeliness of appeals for Veterans and is the best policy 
option for taxpayers.
    Without significant legislative reform to modernize the appeals 
process, Veteran wait times and the cost to taxpayers will only 
increase. Comprehensive legislative reform is necessary to replace the 
current lengthy, complex, confusing VA appeals process with a new 
process that makes sense for Veterans, their advocates, VA, and other 
stakeholders. This reform is crucial to enable VA to provide the best 
service to Veterans and is one of my top priorities.
    VA worked collaboratively with VSOs and other stakeholders to 
design this new process for Veterans who disagree with a VA decision. 
The result of that work was a legislative proposal that was introduced 
in the 114th Congress and has been reintroduced in the 115th Congress. 
The proposed process: (1) establishes multiple options for Veterans 
instead of the single option available today; (2) provides early 
resolution of disagreements and improved notice as to which option 
might be best; (3) eliminates the inefficient churning of appeals that 
is inherent in the current process; (4) features quality feedback loops 
to VBA; and (5) improves transparency by clearly defining VBA as the 
claims agency and the Board as the appeals agency in VA. This clear 
definition between VBA and the Board also provides workload 
transparency for better workload/resource projections, and efficient 
use of resources for long-term savings.
    The new process, described in the legislation currently pending, 
will provide a modernized process going forward. However, VA is also 
committed to concurrently reducing the pending inventory of legacy 
appeals. VA has worked collaboratively with stakeholders to identify 
opt-ins that would make the new process available to Veterans who would 
otherwise have an appeal in the legacy process. After assessing these 
various options, and collaborating with our partners, we have 
identified two opt-ins that we intend to implement to address the issue 
of the legacy appeals inventory.
    The legislation must be enacted now to fix this process. It has 
wide stakeholder support and the longer we wait to enact this 
legislative reform, the more appeals enter the current, broken system. 
The status quo is not acceptable for our Nation's Veterans. The new 
process will provide much needed comprehensive reform to modernize the 
VA appeals process and provide Veterans a decision on their appeal that 
is timely, transparent, and fair.
            suicide prevention--eliminating veteran suicide
    Every suicide is tragic, and regardless of the numbers or rates, 
one Veteran suicide is too many. Suicide prevention is VA's highest 
clinical priority, and we continue to spread the word throughout VA 
that ``Suicide Prevention is Everyone's Business.'' The 2018 Budget 
requests $8.4 billion for Veterans' mental health services, an increase 
of 6 percent above the 2017 level. It also includes $186.1 million for 
suicide prevention outreach. VA recognizes that Veterans are at an 
increased risk for suicide and implemented a national suicide 
prevention strategy to address this crisis. VA is bringing the best 
minds in the public and private sectors together to determine the next 
steps in implementing the Eliminating Veteran Suicide Initiative. VA's 
suicide prevention program is based on a public health approach that is 
ongoing, utilizing universal, selective, indicated strategies while 
recognizing that suicide prevention requires ready access to high 
quality mental health services, supplemented by programs that address 
the risk for suicide directly. VA's strategy for suicide prevention 
requires ready access to high quality mental health (and other 
healthcare) services supplemented by programs designed to help 
individuals and families engage in care and to address suicide 
prevention in high-risk patients.
    As part of VA's commitment to put forth resources, services, and 
technology to reduce Veteran suicide, VA initiated the Recovery 
Engagement and Coordination for Health Veterans Enhanced Treatment 
(REACH VET). This new program was launched by VA in November 2016 and 
was fully implemented in February 2017. REACH VET uses a new predictive 
model in order to analyze existing data from Veterans' health records 
to identify those who are at a statistically elevated risk for suicide, 
hospitalization, illnesses, and other adverse outcomes. Not all 
Veterans who are identified have experienced suicidal ideation or 
behavior. However, REACH VET allows VA to provide support and pre-
emptive enhanced care in order to lessen the likelihood that the 
challenges these Veterans face will become a crisis.
Other than Honorable Expansion
    We know that 14 of the 20 Veterans who on average commit suicide 
each day did not, for various reasons, receive care within VA. Our goal 
is to more effectively promote and provide care and assistance to such 
individuals to the maximum extent authorized by law. In that regard, VA 
intends to expand access to emergent mental healthcare for former 
Servicemembers, who separated from active duty with other than 
honorable (OTH) administrative discharges. This initiative specifically 
focuses on expanding access to former Servicemembers with OTH 
administrative discharges who are in mental health distress and may be 
at risk for suicide or other adverse behaviors. VA estimates there are 
more than 500,000 former Servicemembers with OTH administrative 
discharges. As part of this initiative, former Servicemembers with OTH 
administrative discharges who present to VA seeking mental healthcare 
in emergency circumstances for a condition the former Servicemember 
asserts is related to military service would be eligible for evaluation 
and treatment for their mental health condition. Such individuals may 
access the system for emergency mental health services by visiting a VA 
emergency room, outpatient clinic, Vet Center, or by calling the 
Veterans Crisis Line. Services may include: medication management/
pharmacotherapy, lab work, case management, psycho-education, and 
psychotherapy. We intend to carry this initiative out within our 
existing resources because it is the right thing to do for Veterans.
                                closing
    Thank you for the opportunity to appear before you today to address 
our 2018 budget and 2019 Advance Appropriations budget requests and to 
provide you with the priorities that I am taking to ensure VA is viewed 
with pride from Veterans and beneficiaries for the services provided to 
them. I ask for your steadfast support in funding our full fiscal year 
2018 and fiscal year 2019 AA budget requests and continued partnership 
in making bold changes to improve our ability to serve Veterans. I look 
forward to your questions.

    Senator Moran. Secretary, thank you very much. It seems 
like we have had these conversations in a couple of settings 
numerous times over the last several weeks, and I appreciate 
your testimony today. I appreciate it in the VA Committee, and 
I appreciate the conversations that we have had.
    But the topic I want to initially deal with, as you might 
expect, is the funding shortfall. The shortfall that you 
indicated when we were together last week, you said, ``If there 
is no action by Congress to fund the Choice program, it will 
dry up by mid-August.'' That would be mandatory spending, which 
generally would involve the Authorizing Committee. And we had 
this conversation there. I wanted to make sure that Senator 
Tester was here while you and I had this conversation because 
during our Authorizing Committee hearing, I indicated that 
Senator Tester was wrong, and I enjoyed saying it, and it hurts 
me to say that I now understand that Senator Tester is right.
    Senator Tester. Could you repeat that? I did not hear that.
    [Laughter.]
    Senator Moran. The conversation you and I had, Mr. 
Secretary----
    Secretary Shulkin. Yes.
    Senator Moran [continuing]. Involved a memo that was sent 
out by the Department of Veterans Affairs on June 7 in which 
the crux of what quit referring veterans to Choice because of 
the lack of money available to pay for those Choice visits. You 
then, or the Department rescinded that June 7 directive and 
apparently replaced it by a June 12 memorandum.
    And Senator Tester indicated in our Authorizing Committee 
hearing that those two memos were the same. Where I disagreed 
with Senator Tester was I thought they accomplished something 
different because the second memo says, ``Continue to send 
veterans with eligibility for the Veterans Choice program, as 
identified in Veterans Access Choice and Accountability Act, 
those eligible based on residence, 40 miles from their 
residence to the closes VA facility, wait times of 30 days from 
the clinically indicated date, or other criteria such as 
special criteria for residents of Alaska, Hawaii, and New 
Hampshire.''
    That to me was different. I think you and I agreed that is 
the crux of the difference between the June 7 and the June 12 
memo.
    Secretary Shulkin. Yes.
    Senator Moran. In other words, Choice was reinstated.
    Secretary Shulkin. Yes.
    Senator Moran. My understanding of why it was--in part at 
least why it was reinstated, I assume it is because it is good 
for veterans for Choice to continue.
    Secretary Shulkin. Yes.
    Senator Moran. And you indicated to me and to others that 
you would work with Congress to find a funding solution for 
Choice and that, therefore, let us keep the program going while 
we find that resolution of how to pay. Is that?
    Secretary Shulkin. That is correct.
    Senator Moran. A fair summary of where----
    Secretary Shulkin. That is a good summary.
    Senator Moran. Good. I was fearful that you would disagree 
with me about Senator Tester and I would have to repeat that he 
is correct. The reason I think he is correct is because the 
evidence that I get from the field in the VA is veterans are 
not now being referred to Choice. And so I am worried that, 
while the memo says one thing, the actual practice at the VA is 
another.
    Secretary Shulkin. Yes. Right.
    Senator Moran. And so my impression, based upon 
conversations across the field from veterans and employees 
within the VA is we are not referring individuals to Choice.
    Secretary Shulkin. Yes.
    Senator Moran. So, the reason I am fearful that Senator 
Tester is right, while the words say one thing, the practice is 
something different.
    Secretary Shulkin. Right.
    Senator Moran. You and I agreed in our conversation at the 
Veterans Committee hearing that the outcome of not continuing 
Choice, taking a hiatus from referring veterans to Choice would 
very likely mean that the entities Health Net and TriWest, 
which the VA has hired to manage Choice, our conversation was 
that that network is important. And you agreed with me that if 
we stopped providing patients for Choice, the networks will go 
away and they will not be in a position to be helpful, their 
networks will disappear, and when, if we are successful in 
finding the money to fund Choice, then we have no network to 
associate the program with. Is that a fair assessment of?
    Secretary Shulkin. It is.
    Senator Moran. Our conversation?
    Secretary Shulkin. It is.
    Senator Moran. So, Mr. Secretary, my question is what is 
the status of this? Are veterans being referred to Choice? Is 
this a matter of the VA memo saying one thing to placate me and 
others and the practice to be something different? I do not 
know that I want to go back there----
    Secretary Shulkin. Yes.
    Senator Moran [continuing]. But your predecessor indicated 
that there were people within the VA he should not have relied 
upon, and I do not know whether you are relying upon people who 
are telling you one thing but the outcome is something 
different. So, I take this development very seriously because I 
think the VA is headed on a different path than what you 
assured me they were on.
    Secretary Shulkin. Yes. Okay. So, you wanted this to be a 
candid discussion, and I see you started it out that way, which 
is good. Everything that you have said is absolutely accurate. 
And our intent is exactly the same, which is to keep the Choice 
program going. We think it is very important for veterans, and 
we want to see it fully funded.
    I have described why we are in the situation that we are 
today because more veterans than ever are accessing Choice. And 
let me explain why that is. Our fiscal year 2017 budget was $2 
billion less for Community Care than our 2016 budget. So, from 
2016 to 2017, our budget was reduced in Community Care by $2 
billion. That means that what we did was we created a program 
called Choice First, which encouraged our medical centers, 
instead of using Community Care, to go to the Choice program. 
And that is why you have seen a large increase in the use of 
Choice.
    When the money started to run out quicker than we expected, 
instead of it lasting til the end of the fiscal year--we 
project that it will last to August 7. We wanted to clarify to 
the field two things: Continue to use Choice, keep that network 
alive, continue to use Choice because we believe in it for the 
statutory reasons, the reasons why Choice was established, 40 
miles, 30 days; but now, no longer use Choice first when you 
have Community Care funds. So, the message was to try to 
balance this out while we could work out the types of solutions 
that you and I have talked about, to be able to fund Choice in 
the level that we think that we need it.
    So, our field, this is very confusing because we are 
constantly having to readjust the way that we use these two 
separate accounts, Community Care and Choice. It is not the 
right way to manage. We are seeking to manage this under a 
singular fund. We are trying to balance the need to keep the 
Choice network and the Choice program active but also make sure 
we do not interrupt veterans from getting the care that they 
need.
    I met yesterday with all of our network directors 
personally to make sure that they understood what we were 
trying to accomplish so that there would not be confusion in 
the field, and certainly, we will continue to clarify this 
policy. Our intent is to find a solution working with you so we 
do not have to constantly be balancing these two accounts in 
different ways.
    Senator Moran. Are you agreeing with my assessment based 
upon my conversations with people within the VA and veterans 
across the country that Choice is not being utilized to the 
degree that your memo says it should be?
    Secretary Shulkin. No. We hope that the field is taking our 
guidance on the memo, to continue to use Choice and to continue 
to use Choice appropriately, certainly, as you have written the 
law, the statutory requirements for Choice. What we are saying 
is instead of using Choice for everything.
    Senator Moran. Right.
    Secretary Shulkin. Use Community Care.
    Senator Moran. You know that those referrals are continuing 
or are you just that is occurring?
    Secretary Shulkin. Yes.
    Senator Moran. Yes. Okay.
    Secretary Shulkin. Yes. We see the activity every day.
    Senator Moran. My time is well expired, but let me ask this 
follow-up question. So where are you in the more--Senator 
Schatz indicated that money available the end of the fiscal 
year, we think it is actually mid-August when we extended the 
Choice Act. We thought it was January. Those dates have altered 
over a period of time. But where are you--what does OMB or the 
administration tell you that they would support an increased 
mandatory spending to fill the problem for fiscal year 2017 and 
2018?
    Secretary Shulkin. Well, 2017 and 2018, we have several----
    Senator Moran. Yes, 2017 and 2018.
    Secretary Shulkin [continuing]. Yes, 2017 and 2018. We have 
several options on the table that you and I have discussed. One 
is for us to just fix this problem administratively, stop using 
Choice and use Community Care. We think that is the worst 
option, and you and I agree; that would not be healthy for lots 
of reasons.
    The second option would be to transfer money from our 
Medical Services account over to the Choice program. There are 
concerns, legitimate concerns that Senator Tester, Senator 
Murray and others have expressed about that, but that would be 
an option for us to fill up the coffers in the Choice program.
    And the third option would be for the appropriators, who we 
are talking to right now, to look at an early appropriation for 
2017 and 2018 and do that sooner. I think we should be 
discussing all of those options.
    Senator Moran. What I am being reminded----
    Secretary Shulkin. Yes.
    Senator Moran. And what I think is true, the appropriators 
are responsible for discretionary spending, but you need 
mandatory money
    Secretary Shulkin. Yes.
    Senator Moran. If you are going to keep the Choice program 
alive.
    Secretary Shulkin. I am sorry. In the mandatory fund, a 
reauthorization of the Choice program, 2017, 2018. Thank you 
for that correction. And all of those are options. I think they 
all have advantages and disadvantages. We would like to work 
with Congress to make sure that we are picking the right choice 
between those options.
    Senator Moran. In your conversations with the third-party 
administrators, do they agree that the volume of Choice 
referrals today is sufficient to keep them in business, 
sufficient that they are breaking even?
    Secretary Shulkin. No. No, I think that the Choice 
contractors right now, since we have released that memo, are 
experiencing significantly decreased volume than before. 
Clearly, March, April, May were very good months for them, and 
now, they have experienced decreased volume. And according to 
some of my recent interactions with them, they are running at a 
loss. And that is not our intent. We want to be good partners 
with them. We value what they do. We would like to get this 
situation corrected and fixed. We would like to be able to have 
additional funds in the Choice program to be to continue using 
it.
    Senator Moran. The Right Honorable Senator Tester.
    Senator Tester. Gosh, Mr. Chairman, I thank you very much. 
And no offense taken in any of that stuff, and you know that. 
And I very much appreciate your comments, and I want to thank 
the ranking member for allowing me to go. I appreciate that, 
too.
    But one thing before I go, you know, if you keep treating 
me this nice, I might end up supporting that bioresearch 
facility in the middle of Tornado Alley, which happens to be in 
Kansas.
    But that aside, good to have you here, Secretary.
    Secretary Shulkin. Thank you.
    Senator Tester. Good to have your team here.
    Secretary Shulkin. Thank you.
    Senator Tester. I think it needs to be duly noted that Jake 
is not here and make sure you point that out to him because, 
you know, we will hold him accountable on that, okay?
    Secretary Shulkin. Okay.
    Senator Tester. Okay. So, I want to approach this budget 
from a little different perspective today than I have in the 
past, and I appreciate----
    Secretary Shulkin. Yes.
    Senator Tester [continuing]. Your opening statement and I 
appreciate you talking about the direct care versus the 
Community Care. But let us talk about some other issues----
    Secretary Shulkin. Sure.
    Senator Tester [continuing]. That are impacting the budget 
that may not have been there when this budget was drafted, 
okay?
    Decision not to appeal the Staub decision, which I believe 
was the right decision on your part, could cost the VA up to $2 
billion. The decision to purchase electronic health record 
system could run as high as $16 billion; addressing the holes 
in Choice and Community Care, $4 billion; responding to the 
influx of veterans after the repeal of the Affordable Care Act 
could impact up to 700,000 veterans--I believe those are your 
numbers--which would be extremely costly to the VA, but, quite 
frankly, the cost of war and one that we need to pay for; non-
reoccurring maintenance for VA facilities to address $10 
million in backlog code deficiencies; current inventory of 
pending appeals, getting those down, $800 million.
    All these items are compounded by the reality we have more 
and more medical appointments projected each year, and we do 
not have the doctors, nor the facilities or the professionals 
on the ground to really get this done. And you are also seeing 
aging veterans with more complex needs. We are seeing folks 
that are surviving war that would never have survived before 
that have some real issues that we have to deal with both 
physically and mentally.
    So, you are kind of boxed in. Your request needs to be 
signed off by folks above you. But I do think you need to be 
absolutely straightforward with us, and I think that if you 
are, you know us well enough that if you tell us what the VA 
needs now and into the future and you can justify that, I think 
you are going to have receptive ears around this dais.
    So, I think that if we continue talking about and throwing 
budgets up that do not fully address the problems of our 
veterans in this country--and we have been at war now for 15 
years--and we have got Vietnam vets that are getting older and 
you know the story; we have been through it before--I think we 
just run a cycle of never getting to a point where we can 
honestly sit down and say we are giving to veterans what they 
have earned. Would you want to respond to that?
    And by the way, you are not the only one. Ag, Interior, we 
have to go to Energy in a minute, it is going to be the same 
conversation where everything is cut, cut, cut with the 
expectation that we are going to bring all this up. I do not 
think we can bring it all up. And so would you want to respond 
to that?
    Secretary Shulkin. Sure. You certainly paint quite an 
impressive picture there, and, you know, again, this is what 
the budget process is about, to have these types of 
discussions. And I think we needed to have these discussions in 
years past because I think your history is right that we have 
not requested the right type of budget to meet the demands of 
our veterans, and that is where we have fallen short.
    I do believe that this President's budget allows us to meet 
the mission of the VA. I stand behind the President's budget. I 
think there are a couple things as you went down that list. It 
does not include a request for a new electronic medical record, 
and that is the exception.
    I think that some of the costs that you have talked about 
are reasonable estimates, but they are higher than I would put 
as estimates.
    Senator Tester. You do not think Staub would be $2 billion?
    Secretary Shulkin. I do not think Staub will be $2 billion.
    Senator Tester. What are your projections on that? Not that 
I will hold you to them but what are your projections on that?
    Secretary Shulkin. Less than $2 billion.
    [Laughter.]
    Senator Tester. Oh, great.
    Secretary Shulkin. Okay. You know, the appeals process, I 
do not--although I gave a number of what it would cost if we 
just wanted to hire people, I think we have broken processes. I 
am not suggesting we throw more money at this right now.
    So, I really do appreciate the spirit in which you are 
addressing this because I know you want to meet the needs of 
our veterans.
    Senator Tester. Yes.
    Secretary Shulkin. That is where you are coming from. I 
actually think this budget is a good budget, and I will 
appreciate the support for modernizing our IT systems.
    Senator Tester. Well, I would just say that I think there 
is some--and I am not doubting your word. I think you do 
believe it is a good budget. I think there are some glaring 
holes in it. And I would also tell you that this is about 
veterans and it is not about the--it is about the budget as it 
applies to veterans. And in the end when I go into a restaurant 
in Montana and I am sitting there and I have a veteran that 
comes up to me and says, you know what, your Choice program 
stinks; I used to wait 30 days for an appointment; now I am 
waiting 6 months. Those kind of things do not happen unless we 
are screwing up, okay? And so I just bring that up.
    I am going to put the rest of my questions for the record, 
but they all revolve around the first question I asked.
    Once again, thank you all for being here.
    Secretary Shulkin. Thank you.
    Senator Moran. Senator Boozman.
    Senator Boozman. Thank you, Mr. Chairman.
    First of all, I want to thank you for coming to 
Fayetteville, Arkansas, and seeing the VA. The feedback was 
excellent. I think you got to visit with a number of different 
groups in the sense of visiting with the Administration, 
visiting with providers, and most importantly, visiting with 
veterans. And so, again, that seemed to go very, very well.
    Secretary Shulkin. Yes.
    Senator Boozman. And I know you are a busy guy, but I do 
appreciate the fact that you are somebody that is out in the 
facilities doing--I do not think there is any substitute for 
that, and certainly, that is what we are all about.
    I would like to ask you a couple things about eye care, and 
one of them has to do with the eye care in the status of the 
eye care centers. DOD is a doing a registry, but VA seems to be 
lagging, maybe marginalizing that. Would you look into that for 
me and see what the deal is?
    Secretary Shulkin. Yes, sir.
    Senator Boozman. And again, I think that really is very, 
very important.
    The other thing that I would like to talk to you about is 
the Technology-Based Eye Care Services (TECS) program in 
Atlanta. This is a program, a pilot program. What they do is 
they use a reliance on the autorefractor. This is a machine, 
that you look through and it tells you what your prescription 
is. The problem is that it has got about 23 percent error rate, 
but the manufacturers themselves say that this is not 
appropriate to use in that manner as far as prescribing 
glasses.
    The concern is also that the people actually doing that, 
there is no licensure for them also doing that. And then the 
other problem is after that you have got a situation where many 
of them need an appointment because of inconsistencies that are 
found, so you are kind of double-dipping. They see them, get 
kind of a third-world experience, and that truly is a third-
world--there is no example of this going on in private practice 
in America, okay----
    Secretary Shulkin. Okay.
    Senator Boozman. In the way that it is being done from what 
I understand. I think the better choice, something that we 
really need to look at, we have got a problem. Eye care is 
growing tremendously because people are doing a good job and 
veterans are seeking out, but I really wish that you would look 
at how it is being delivered. I think the idea that we are 
using technology is excellent, and you are coming up--you and 
your teams are coming up with out-of-the-box thinking. But I 
really think you ought to look at the way that eye care is 
being delivered and put the technology in the hands of the 
optometrists, the ophthalmologists that are in place and again 
give them the support staff, and then they will be able to see 
more patients in an effective manner and cut out all this other 
stuff because we really do have some problems in that area, but 
that is the way to go as opposed to this other.
    Secretary Shulkin. Okay.
    Senator Boozman. Can you comment on that at all? I do not 
know if you know anything about it.
    Secretary Shulkin. Yes, not nearly as much as you do.
    Senator Boozman. Well, I did it for 23 years. So I have 
gotten a good and we are very proud of that.
    Secretary Shulkin. Yes. It is really a terrific. First of 
all, I would like to comment on Arkansas. First, what a 
beautiful State. And we were there not only to visit the 
Fayetteville VA, which is a five-star facility and doing 
tremendous things
    Senator Boozman. That is a recent acquisition and yes they 
have made great progress but also to learn from Walmart and to 
learn about their logistics and the challenges of how they are 
having to change their business model as the world evolves. So 
that was extraordinarily helpful to learn from really best 
practices and to learn from industry outside the health care, 
so thank you. Thank you for helping us arrange that trip, and 
certainly, Representative Womack as well.
    The eye care issue I will look into it. I really do not 
know that much about it. We are trying to use technology. I 
have seen where we are using tele-retinal exams and, you know, 
leveraging our professionals using tele-technology, but I will 
look into the TECS programming in the eye care model.
    Senator Boozman. Good. And, you mentioned seeing other 
companies, other people that have done a good job thinking 
outside the box. That is certainly the direction that we need 
to go. And again, I compliment you on getting out and exploring 
all different avenues in the sense of trying to move us in the 
right direction in a very efficient manner.
    So many industries, and it does not matter if it is the eye 
care business or the VA business or whatever it is, many of 
these have changed more in the last 10 or 15 years than since 
the creation of the business to begin with.
    Secretary Shulkin. Yes. Right.
    Senator Boozman. And so it is just a constant battle. And 
certainly, with, you know, an entity the size of the VA, it is 
a real challenge.
    Thank you, Mr. Chairman.
    Senator Moran. Senator Schatz.
    Senator Schatz. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for your service. Thank you to 
your team.
    I want to follow up on the question of unanticipated costs. 
You have said that the budget that we are working with is a 
good budget. I will not get into a dispute about that, but I 
will just offer unanticipated costs. You have decided I think 
appropriately to move forward with a new Electronic Health 
Records (EHR) system. You have decided I think again rightly on 
Staub and Choice is running out of money, so it seems to pretty 
plain to see that we do not have enough money in this budget. 
Is that accurate?
    Secretary Shulkin. Well, I think that what you have 
suggested is that we are going to continue to bring forth 
recommendations as we see the need to modernize this system and 
to do better for veterans. So, the electronic medical record, a 
decision 17 years in the making we are bringing forward, we do 
not know the cost of it yet so we were not able to build it 
into this budget.
    On the Staub case, that is the right thing to do, and I am 
willing to absorb those costs into our budget because it is 
consistent with what we should be doing, consistent with the 
court ruling.
    Financial projections we have to do better on. We have a 
financial management system that is over 20 years old that we 
now decided to start replacing that will help us do a better 
job. And we also have some accountability for that as well.
    So, you know, all that we can do is make our best 
projections. I wish we were perfect. Today, as I sit here right 
now, I feel comfortable with the President's budget, but you 
may be right and I may be wrong.
    Senator Schatz. Well, I think the thing is, you know, let 
us say it is not $2 billion for Staub. It is also not zero 
right?
    Secretary Shulkin. You are right.
    Senator Schatz. And let us say you do not know how much the 
Electronic Medical Records (EMR) system is going to cost. You 
have got to do specs, you have got to work with DOD, and I know 
you want to measure twice, cut once, both on the tech side and 
on the clinical side, so I understand you do not want to just 
pick a number. But it is not zero.
    Secretary Shulkin. It is not zero.
    Senator Schatz. And we are about to mark this bill up, and 
it is difficult to do a markup. When lacking information, we 
are expected to sort of book it at zero. And so how do we work 
with you to get some fidelity to not overfund a priority that 
is not yet well-articulated? But it makes me extremely nervous 
that you say you can absorb these costs because, especially 
with Staub, you are actually not providing more care; you are 
reimbursing people who improperly had to, you know, do their 
own copayments. And so that is a pretty hard cost.
    And then the EMR thing is a brand new hard cost. I mean, 
you are going to have to cannibalize your budget to some extent 
in order to pay for those two things, are you not?
    Secretary Shulkin. Well, on the EMR, we have in this budget 
$200 million to start the process of change management. The 
majority of the cost of the EMR, especially in the first 2 
years, is going to be all internal change management to get 
ready for the installation of a new EMR. So, we will come in 
the 2019 budget with firm numbers so that we can have the 
appropriate discussion about whether this is something that you 
can support. In the 2018 budget I believe we have the dollars 
to start preparing for this process.
    You know, the Staub case and a number of other things that 
will happen over the course of this year are management 
accountabilities that we are going to have to assume the 
responsibility for. And part of what I have said when I took 
over this department is that we cannot continue to always come 
to you and ask for more and more money. We have seen that over 
the past decade that this budget has doubled for VA. And we 
also see what is happening in some of the other domestic 
budgets and that I know you are very aware of. And every dollar 
that we get means that there is a dollar for something else 
that I think is, you know, equally as important.
    So, we are trying to be fiscally responsible while at the 
same time making sure that we are doing better for veterans. A 
6.3 percent increase in our budget we think is a reasonable 
number.
    Senator Schatz. In my limited time left, can you walk me 
through from the veterans' perspective, setting aside budget 
and appropriations, from the veterans' perspective how are they 
going to be informed of their rights under your Staub decision? 
Do they get a letter? Is there any case management? Do you 
track down the copay they--I am not sure that that is even 
possible. If I am an individual veteran and you know, 4 years 
ago I paid through private pay, I paid $250 for an ER visit, 
how do I even know that I am entitled to reimbursement?
    Secretary Shulkin. Right. So right now, a veteran files a 
claim, and now is the worst of all processes. They are just put 
into a pending status. We have 600,000 claims pending. It is my 
intention--and I have been clear on this--I want to start going 
through those claims and paying those claims. So, we have sent 
over to OMB an interim final rule. That was the very fastest 
way that I could go about starting the process for rulemaking 
so I am allowed to pay those bills. So, as soon as we get that 
through OMB--and I do not know exactly how long that is going 
to take--but as soon as we possibly can, we are going to start 
paying those 600,000 claims. And that is when the veterans will 
get notified of exactly what our payment obligation is. I do 
not know any way to do this faster.
    Senator Schatz. But at the mechanical level, you figure out 
who was responsible for the original claim and the private 
payer then.
    Secretary Shulkin. Yes. Remember, this case relates only to 
veterans with other health insurance so there is a primary 
payer, whether it is Medicare or a private insurer, that has 
paid their obligation hopefully, and then there is a leftover 
portion.
    Senator Schatz. Right.
    Secretary Shulkin. We will then apply the law as you wrote 
it and as was upheld in the Staub case to VA's paying its 
portion of that.
    Senator Schatz. Okay. And I will take the rest for the 
record, but I would like you to maybe walk us through how it 
works for the individual veteran so that we can talk about it.
    Secretary Shulkin. Sure.
    Senator Schatz. I am not sure that our constituents who are 
veterans actually would understand whether they just wait or 
they go through a process or they have to file a claim. How 
does this all work? And I would appreciate that for the record.
    Senator Moran. Senator Collins.
    Senator Collins. Thank you, Mr. Chairman.
    Dr. Shulkin, it is good to see you again. I want to follow 
up on my colleague from Arkansas in thanking you again for 
coming to Maine and follow up on the questions raised by the 
chairman about the Choice program.
    As you are probably not surprised to learn, I have 
significant concerns about the recent policy changes regarding 
Choice and access to Community Care. When you last appeared 
before this committee in May, Dr. Yehia noted that the model in 
northern Maine developed during the ARCH program should be used 
as a standard-bearer for how VA coordinates Community Care.
    But now, my understanding that the Maine VA will no longer 
be permitted to use provider agreements to purchase care from 
providers, as they had been doing, which in some cases may 
force our veterans to travel literally hundreds of miles for 
specialty care, 250 miles from Aroostook County to the Togus VA 
in Augusta or even an additional 160 miles beyond that to the 
VA in Boston.
    I am concerned also that the veterans are now having to go 
through Health Net, something they have not had good experience 
with, instead of dealing directly with Cary Memorial Hospital 
and the Caribou CBOC. And these changes really disrupt the 
continuity of care for veterans in a system that was working 
really well.
    So, my question for you--and I realize your financial 
constraints are a terrible problem--but if Congress were to 
authorize additional emergency funding or more flexibility for 
you to transfer funds among accounts, would the VA be able to 
revert back to its earlier practices with regard to Choice and 
Community Care, and would you do so?
    Secretary Shulkin. The easiest question I will get all day. 
Yes. We agree with you, Senator that the system was working 
well, and we want desperately to continue to have a system that 
works that way. And the solutions that you talked about, either 
one of those would work for us.
    Senator Collins. Thank you. The second issue that I want to 
bring up with you concerns a hearing that I chaired just last 
week before the Senate Aging Committee on military and veteran 
caregivers, of which there are some 5.5 million in this 
country. And we had extraordinarily moving testimony from the 
spouses of veterans who were suffering from traumatic brain 
injury, from ALS, from posttraumatic stress disorder and the 
RAND Corporation also released a report that was commissioned 
by the Elizabeth Dole Foundation. And Elizabeth Dole has done 
so much extraordinary work in this area.
    In March, you expressed support for expanding the VA's 
program of comprehensive assistance to family caregivers to 
veterans of all eras. I just do not understand why it only 
applies to post 9/11 veterans rather than veterans from all 
eras and conflicts.
    And Senator Murray and I have introduced legislation again 
this Congress that would authorize this expansion, and we hope 
this is something we can accomplish. And I really wish every 
Member of the Senate could have been at our hearing. It was so 
moving listening. It happened to be three wives who are taking 
care of their husbands, and all I could think of is they are 
allowing them to stay at home. That is so much less expensive 
than institutional care.
    So, I know that there is concern about cost, but I am going 
to ask you a leading question here. But do you not agree that 
increasing the availability of caregiver support for veterans 
can reduce VA expenditures in other areas, especially for 
institutional care?
    Secretary Shulkin. Well, I was wrong. This question is 
easier than the last one.
    [Laughter.]
    Secretary Shulkin. Yes, I do agree.
    Senator Collins. Then, let us do it. Let us get it done. As 
I said, I so wish every Member could have been there. It was 
just so moving to listen to the sacrifices made by these 
spouses for their husbands and all that they were doing to keep 
them home.
    Secretary Shulkin. Yes. First of all, Senator Dole is an 
amazing person, and her foundation is doing amazing work. And 
I, too, have had the experience--I am sorry I was not at your 
hearing, but I have had the experience of spending time with 
our caregivers of our veterans, and they are just incredible 
people and very moving.
    We are very supportive of this. As you know and Senator 
Murray certainly knows, we have suspended our rules and we were 
talking to Senator Murray and her staff about this to get this 
right. The one area of our budget that I remain a little bit 
concerned about is the amount that we have allocated for 2018 
for caregivers. We took the 2017 projections and we just 
increased it a little bit. But I am concerned that it may not 
be enough, so I have instructed our financial officer to begin 
to look for additional funds that we could move towards 
caregiving because I think it is not only the right thing to 
do, but I do think it is cost-effective, particularly among 
veterans whose only alternative is to leave their home into 
institutional care.
    Senator Collins. Thank you very much. And thank you, Mr. 
Chairman.
    Senator Moran. Thank you, Senator Murray.
    Senator Murray. Well, first of all, Senator Collins, thank 
you for raising that, and I am delighted to be working with you 
on that. We do have concerns about a number of caregivers who 
have been told that they are no longer eligible this year. To 
me, as the daughter of a World War II veteran whose mother 
stayed home to care for him when he was in a wheelchair, this 
is absolutely critical and it should go to all eras. So, thank 
you for working, and we have got a lot of work to do
    Secretary Shulkin. Yes.
    Senator Murray. At the VA on this. We will continue to do 
it.
    Secretary Shulkin, let me go back to a discussion we have 
had here and that you and I talked about last week, and that is 
the Choice program shortfall. As a result of the problems in 
the Choice program, VA is no longer going to have $626 million 
in carryover as expected for fiscal year 2018. And according to 
a VA briefing, to cover that shortfall of $260 million, the VA 
is asking our hospitals to delay important equipment purchases 
and facility maintenance projects, and your budget documents 
actually show you have already transferred $600 million from 
Medical Services to Community Care, correct?
    Secretary Shulkin. Those are our collections, which come 
into our Medical Services, and then we transfer into Community 
Care.
    Senator Murray. So, that is another change in the budget 
for those needs. If that is not enough, VA would then take from 
Medical Services and Medical Collections, taking away from 
expected carryover in those budgets.
    Secretary Shulkin. Yes.
    Senator Murray. So that will be something that you have to 
carry over.
    Secretary Shulkin. Yes.
    Senator Murray. But my question is your budget submission 
for next year is based on those hundreds of millions of dollars 
of carryover being available, so exactly how much money will VA 
need above what is in the Choice and Community Care accounts?
    Secretary Shulkin. Yes. Well, first of all, you have done a 
good job on understanding those numbers, so I think you have it 
correct, but to make sure that I am going to add up all your 
numbers, correct, Mark, what--our chief financial officer 
probably is going to do better at this.
    I think the question is what is the total amount of 
carryover dollars that we had expected that we may end up 
using?
    Senator Murray. That you will no longer have.
    Secretary Shulkin. Yes.
    Mr. Yow. We had in the budget $1.652 billion in Medical 
Services carryover from fiscal year 2017 into fiscal year 2018. 
Right now, we believe we can resolve the problem with the 
Choice shortfall in fiscal year 2017 without dipping into 
that----
    Senator Murray. No, my question is you are not going to 
have the carryover money for 2018 that you were expected. So, 
what is now the shortfall for 2018 from your budget request 
that is before this committee today?
    Mr. Yow. Yes, ma'am, but we believe we have other offsets 
internally in 2017 that will provide us----
    Senator Murray. Somebody else is going to lose out.
    Mr. Yow. I am sorry.
    Senator Murray. Somebody else will lose out? You are going 
to take money from somebody to make up this.
    Mr. Yow. Well, we have taken money from the National 
Reserve, about $104 million, and we have taken $220 million 
that has been offered up by our VISN directors as being 
available for this. It is more important than what they had it 
set aside for.
    Senator Murray. Well, my understanding is it is about $4 
billion or a little bit more than that that you will need in 
the Choice and Community Care account.
    Secretary Shulkin. For 2018.
    Senator Murray. For 2018, about $4 billion. So, Mr. 
Secretary, my question for you is why have you not submitted a 
request for additional appropriations for this year?
    Secretary Shulkin. Well, because I think that we will be 
able to cover this year, as Mark was saying, that we have 
identified the $260 million in unobligated spending from our--
asking our VISNs what they are not going to be spending. We 
have taken the $104 million from our National Reserve, and we 
will be able to cover this year rather than make an emergency 
supplemental request for this year.
    Senator Murray. So you have created a huge hole for next 
year. Because you have taken away the carryover that you are 
expecting and put into your budget request for this year?
    Secretary Shulkin. We have. At least by $626 million, yes.
    Mr. Yow. In Choice.
    Secretary Shulkin. What is that?
    Mr. Yow. In Choice.
    Secretary Shulkin. In Choice, yes.
    Senator Murray. In Choice.
    Secretary Shulkin. Yes.
    Senator Murray. So this year's budget request is not 
enough?
    Secretary Shulkin. It is.
    Senator Murray. It seems to me the right thing would be to 
do is to ask for a request for this year for the shortfall
    Secretary Shulkin. One of the options to resolve this 
problem would be to have the authorizers of which you are one, 
consider that as an option for doing it now for 2017, 2018.
    Senator Murray. Have you requested that?
    Secretary Shulkin. We are in discussions with you about how 
you would prefer to do this. I think that is one of the 
options, and the other option, as you are saying, is that we 
could fix this through transfers, but there are consequences to 
that. So, each of the options have advantages and 
disadvantages, and I believe that this needs to be a dialogue 
about where we want to go with this. But we want to see this 
fixed. I know you do, too, and we should come to the best 
conclusion as to the way to fix this.
    Senator Murray. It seems to me if the Administration makes 
the request, it will be better served.
    Secretary Shulkin. Okay.
    Senator Murray. Secretary Shulkin, I am very concerned 
about your budget for Medical Services. You are requesting 
barely a 1 percent increase, and that does not cover the basic 
medical inflation, increasing use of health care by veterans. 
It does not replenish the $600 million VA transferred to 
Community Care, and it does not account for delays in equipment 
purchases and maintenance projects. So how do you meet the 
veterans' needs for health care?
    Secretary Shulkin. Yes. Senator Murray, I have different 
numbers than you have. I have a much larger increase in Medical 
Services. Mark, would you please----
    Senator Murray. For your budget request?
    Secretary Shulkin. Yes.
    Senator Murray. For 2018?
    Secretary Shulkin. Yes.
    Mr. Yow. Yes, ma'am. What you are looking at is only the 
appropriation amount. We have five sources of funds. We have 
the appropriation, which obviously is the largest, but we also 
have the funds from the Choice law both for the Choice program 
and for the section 801 VACA funds that are applicable to 
Medical Services. We have medical care collections, we have 
reimbursements, and we have carryover. So when you look at the 
total obligations that we have got in the budget from 2017 to 
2018, our Medical Services account grows by 5.7 percent, and 
our Community Care account grows by 8.2 percent.
    Senator Murray. Okay. Well, what I am hearing you say is in 
all those accounts that you now are expecting a carryover from 
that you will not have, you are counting those in to this?
    Mr. Yow. Right now, the only one we do not expect to have 
it in is in Choice, which would reduce the amount of growth for 
Community Care. It would not impact----
    Senator Murray. But you are taking money from those other 
accounts for Choice?
    Mr. Yow. In the current year, 2017.
    Secretary Shulkin. Not in 2018.
    Mr. Yow. Not in 2018.
    Senator Murray. Okay. Well, that is Choice, which is 
private sector. Inside VA, it is 1.2, correct?
    Mr. Yow. No, ma'am.
    Secretary Shulkin. Mark, let me just try it because he 
helped me with this.
    If you are looking only at the appropriation amount, it 
would be the amount you are talking about, but when he adds in 
his other five sources, it is 5.7 percent inside VA for Medical 
Services.
    Senator Murray. Okay. Well, I will just conclude. You said 
you will defend this budget?
    Secretary Shulkin. Yes.
    Senator Murray. Your job is to defend veterans----
    Secretary Shulkin. Yes.
    Senator Murray [continuing]. And they are the ones that 
this committee cares about.
    Secretary Shulkin. Yes.
    Senator Murray. So thank you.
    Secretary Shulkin. Thank you.
    Senator Moran. Senator Hoeven.
    Senator Hoeven. I would like to thank all the witnesses for 
being here. Secretary Shulkin, thank you for being here and for 
your work on behalf of veterans.
    One of the subjects you and I have talked about before is 
making sure that veterans can get access to nursing care close 
to home. Also, we want to make sure that they can access home-
based health care, right?
    Secretary Shulkin. Yes.
    Senator Hoeven. So, the whole concept behind the Veterans 
Choice legislation is that veterans can get care in the local 
community when there is not a VA institution nearby that has 
the service they need, right?
    Secretary Shulkin. Yes.
    Senator Hoeven. And so you have been hard at work 
implementing that. We worked with the healthcare providers. You 
have been very good about helping us set up a pilot program in 
our State that has really empowered our local VA healthcare 
center in Fargo, which serves North Dakota and half of 
Minnesota, to cut through the red tape and some of the problems 
we have had with the third-party providers and really cut down 
the wait time for veterans to get appointments and get in to 
get health care, and also, through the Veterans Care 
Coordination Initiative, which is what we call it, to make sure 
that providers get paid so they will provide that service to 
veterans in the local communities. It is working. You have made 
a real difference.
    We need to do that now with long-term care and with home-
based care, and we cannot right now because in some cases you 
are not and in some cases you probably do not have authority to 
enter into provider agreements with nursing homes and home-
based care service providers. Tell me how we are going to--you 
know that this is something I am trying to move in legislation, 
and I would like your thoughts on how we are going to get this 
done because this is a fundamental issue of veterans getting 
long-term care in their homes and in their communities.
    Secretary Shulkin. Yes.
    Senator Hoeven. And I would like you to address that 
because this is something we need folks on both sides of the 
aisle working together to get done, just like we did on 
Veterans Choice.
    Secretary Shulkin. Yes. Mark, I am going to ask again, I 
thought we were making progress on being able to utilize our 
Choice funds for both home health aides and our long-term care 
facilities.
    Mr. Yow. Right now, sir, what I think you are talking 
about, though, is expanding it beyond Choice. We do have that 
authority for the Choice program. What we do not have is the 
authority to do it outside of Choice, and we would really like 
to have that for other normal Community Care accounts.
    Senator Hoeven. Right, for really any of the funds that you 
receive.
    Secretary Shulkin. Yes.
    Senator Hoeven. Right now, we are already--I mean, that is 
another one of my questions, how long until you run out of 
funding under the Choice program, which we need to make sure is 
appropriated for. We need to be able to make sure that--I mean, 
are you entering into those type of provider agreements with 
your Choice funds?
    Mr. Yow. Only with Choice, but again with Choice they have 
done quite a bit so far.
    Secretary Shulkin. Yes.
    Senator Hoeven. How far is that taking you?
    Mr. Yow. There were 600 valid agreements that had been put 
into----
    Senator Hoeven. So you are saying then for any nursing home 
that wants--to be able to take VA reimbursement, they should be 
working with you under the Choice funding, and you will do 
that? And that restricts them how?
    Secretary Shulkin. Right.
    Mr. Yow. We have the authority to use the sharing 
agreements for the community home health care that is not 
institutional. It is not the institutional care.
    Senator Hoeven. So you cannot do it with--the nursing 
homes?
    Mr. Yow. Right. Not for nursing homes.
    Senator Hoeven. So, you are not doing it with nursing 
homes?
    Mr. Yow. It is for non-institutional care.
    Senator Hoeven. Only for home-based care?
    Mr. Yow. Yes, sir.
    Senator Hoeven. Okay. So, for home-based care we are making 
progress?
    Secretary Shulkin. Yes. We have proposed with technical 
assistance a revision to the Choice program that we are hoping 
that you will consider that we call the CARE program that 
actually builds in your concepts of working with the nursing 
homes under a single set of funds for Community Care so there 
is not separate Choice and Community Care funds.
    Senator Hoeven. And that would enable you to enter into 
provider agreements----
    Secretary Shulkin. Provider agreements?
    Senator Hoeven [continuing]. With either nursing homes or 
home care providers?
    Secretary Shulkin. Right. Exactly. Yes.
    Senator Hoeven. Okay. And you are doing that where?
    Secretary Shulkin. Well, now that the Choice program 
legislation is going to expire, we are hoping to work with you 
to replace it with a more effective program.
    Senator Hoeven. And include that provision in the 
legislation?
    Secretary Shulkin. Yes. And we provide the technical 
assistance for that.
    Senator Hoeven. So you will work with us to include that in 
the legislative proposal?
    Secretary Shulkin. Yes. That is correct.
    Senator Hoeven. Thank you. I appreciate it.
    Senator Moran. Senator Baldwin.
    Senator Baldwin. Thank you.
    Secretary Shulkin, I wanted to thank you for fully funding 
the Jason Simcakoski Memorial Opioid Safety Act and PROMISE 
Act. I also want to say that I am closely monitoring the 
implementation of Jason's law and efforts to reduce opioid 
dependency at the VA.
    The VA has been making good progress on this issue, and 
there are still big milestones coming up with regard to 
implementation of the law. I would appreciate it if we could 
set up a meeting with the folks that you have implementing 
these provisions to go over some of the details of 
implementation. If we could work together on that, that would 
be great.
    Secretary Shulkin. Absolutely.
    Senator Baldwin. I also want to acknowledge my partner on 
this legislation also on this committee, Shelley Moore Capito, 
and you would be welcome to join the briefing.
    On June 1, Congresswoman Gwen Moore and myself wrote to you 
regarding a mistake that the VA made that is now affecting 11 
veterans who are all police officers----
    Secretary Shulkin. Yes.
    Senator Baldwin [continuing]. At the Zablocki VA Medical 
Center in Milwaukee. A little bit of background on this, in 
2015 the St. Louis Regional Benefit Office reviewed and 
approved an on-the-job officer apprenticeship program 
certifying that each veteran's eligibility to participate in 
the program and using their post 9/11 GI benefits. In February 
of this year, a VA auditor found that the VA erred in approving 
these veterans because they were past their first 3 years of 
employment.
    These veterans are now receiving letters from the VA 
telling them that they each owe upwards of $20,000. The VA has 
requested financial information from these veterans and their 
spouses in an attempt to collect on what was the VA's mistake. 
These veterans have families; they have mortgages. They do not 
have $20,000 laying around for a mistake that the VA made.
    So, Secretary Shulkin, since I wrote you on June 1, can you 
advise me as to whether the VA has made any progress on fixing 
this?
    Secretary Shulkin. Yes. Well, first of all, thank you for 
bringing this to our attention. I think you have it correct. 
The VA made the mistake, and this was our administrative error, 
and we are not going to seek recoupment of those funds from 
those 11 employees. We apologize for the mistake, and we thank 
you for bringing it to our attention.
    Senator Baldwin. Well, I appreciate hearing that. I know 
particularly these veterans who are police officers are going 
to be particularly relieved to hear that.
    Secretary Shulkin. Yes.
    Senator Baldwin. I take it since you have said it here 
publicly, it is now public and we will certainly work with you 
to relay that good news.
    Secretary Shulkin. Thank you.
    Senator Baldwin. Thank you.
    Now, another issue, numerous Wisconsin veterans have 
brought to my attention the fact that it is nearly impossible 
to speak with a live human being when a veteran calls the Debt 
Management Center. In March, after hearing some of the 
complaints, a member of my staff endeavored to replicate this 
experience. It took him over two weeks and 15 phone calls to 
finally get through to the Debt Management Center phone line. 
And the wait time once the connection was made was 36 minutes. 
This is obviously unacceptable.
    Secretary Shulkin. Right.
    Senator Baldwin. Especially when you think about the fact 
that there are veterans with PTSD or other ailments who really 
do not need to deal with this type of dysfunctional system, 
adding stress and frustration in their lives.
    So, my understanding is that the President's budget request 
calls for an increase of 14 full-time employees at the Debt 
Management Center. I am concerned that this additional staff 
will be sort of a bandaid. It will prop up what is a failing 
technological telecom system. So, I would like to hear from you 
what the VA plan is to identify a commercial callback solution 
to eliminate the veterans needlessly waiting on hold and 
experiencing the anxiety of not being able to get through.
    Secretary Shulkin. Yes. Senator, we have a new system that 
is in the process of being installed. It will be installed in 
August of this year. I do not have the exact date, but that is, 
you know, a few months away. And that includes as part of the 
system something called a virtual hold, which is the veteran 
can essentially hang up and will be called back in the order 
that they have received the call so that in the situation that 
you are talking about, they will receive a call back and not 
have to wait on the phone because we agree; that is an 
unacceptable wait.
    Now, as to whether this will all be solved by technology or 
whether the 14 FTEs are enough, I am going to have Mr. Murphy 
just comment on that.
    Mr. Murphy. Senator, we have got some lessons learned from 
what we do at the National Call Center with VBA, and what we 
found out is a combination of two things: technology in terms 
of how much call volume we were getting, and the second one was 
our staffing was not aligned with--we discovered we had our 
people working Monday through Friday and veterans do not only 
call Monday through Friday, so we realigned our staffing. We 
put the mix--we put a few part-time employees in. The new 
technology we put in place allowed us to identify demand on the 
part of the veteran, and then we lined up our staffing model to 
the demand of when the phone calls came.
    We are using that same process and technology and putting 
it in here, the Debt Management Center, so we expect a very 
quick resolution of this.
    Senator Baldwin. Well, I will be looking forward to a 
report in August. Thank you.
    Senator Moran. Senator Capito.
    Senator Capito. Thank you, Mr. Chairman. And thank you all 
of you, and thank you, Dr. Shulkin, for your service and your 
leadership.
    I wanted to ask a question so I understand your proposed 
CARE Act. You just alluded to it. Because I think we are all 
proud of the Choice program, but I think you have initiated the 
CARE program to sort of supplant this. Am I reading that 
correctly?
    Secretary Shulkin. Yes. Choice 2.0.
    Senator Capito. Choice 2.0, which means you would be 
combining Community Care and Choice?
    Secretary Shulkin. Yes.
    Senator Capito. The aspect of it that I wanted to ask you 
about is under the proposed CARE program it is my understanding 
that the veteran would not be able to access a private provider 
in their community without explicit permission from a VA 
clinician who would first assess their needs and then tell them 
where and when and how they could go. Now, to me, is that 
another step that is in there or--just give me the rationale 
for that and how you think that will work better than the 
system that we have now.
    Secretary Shulkin. Yes. So, first of all, our system that 
we have now makes the veteran go out to a third party, makes it 
go out to a TPA and get----
    Senator Capito. Right. And there are some issues with that.
    Secretary Shulkin. And there are some issues with that. 
This is returning to a system that is used every day in the 
private sector, which is a conversation between a patient and a 
provider. Now, it does not mean that a veteran is going to need 
to always come in and be evaluated and clinically assessed. If 
the service is not provided, of course, they go out to Choice. 
If the service is a convenient service closer to the patient 
and is easy to get, they will be authorized--that is a new 
benefit that we will be adding to do that. Sometimes it is 
simply a phone call or a quick conversation. Other times, it is 
a clinical assessment.
    Senator Capito. And you think this will add more 
efficiencies and get more direct better quality? Obviously, 
that is the goal.
    Secretary Shulkin. I think this changes it from what we 
have today, which is a system choice based on administrative 
rules 40 miles, 30 days.
    Senator Capito. Yes. Right.
    Secretary Shulkin. Back to a clinical system of care, which 
is what healthcare systems should be doing, assessing and 
providing clinical care based on the needs of their patients.
    Senator Capito. Okay. Thank you. I would like to know in 
the budget and also Senator Baldwin mentioned the Jason 
Simcakoski bill built around the VA's reaction to 
overprescribing and other issues. Obviously, the VA is a 
reflection of the general population. There is a huge drug and 
opioid abuse--and I know it is high in the veteran population. 
What kind of resources are you putting into this at the VA to 
try to meet these challenges?
    Secretary Shulkin. Yes. I am going to ask again our CFO 
what our CARA budget was. I think it is like $150 million.
    Mr. Yow. Actually, sir, it is less than that. The CARA 
amount for 2018 is $56 million, and then for the 2019 advanced 
appropriation it is $47 million.
    Senator Capito. So that is coming--the vehicles, the CARA 
bill that we passed here.
    Secretary Shulkin. Yes.
    Mr. Yow. Now, the budget was submitted prior to the $50 
million that came in the omnibus, so that was not included in 
the budget submission.
    Senator Capito. So outside of the CARA bill, does the VA 
have other targeted resources to this?
    Secretary Shulkin. Oh, sure.
    Senator Capito. Yes. I mean, are you seeing that reflected 
in your population? I am sure you are.
    Secretary Shulkin. Sure we are. And the VA has been hard at 
work on this issue since 2010 where we launched our initiatives 
on opioid safety. And we have seen since then over a 35 percent 
reduction in the use of opioids throughout the population.
    Senator Capito. So you have got a concentrated initiative 
to divert from prescribing opioids to other pain therapies?
    Secretary Shulkin. Yes, other modalities absolutely. And in 
cases where patients are on opioids, dose reduction and 
reduction of concomitant use of benzodiazepines.
    Senator Capito. Right. Okay. Another question I have and 
Secretary McDonald brought this to our attention. I do not 
think he was the first one, but I am wondering where you are on 
this issue. He mentioned antiquated facilities that are no 
longer being used but still owned by the VA that is a money 
drag on you and your inability to either sell or repurpose or--
can you give us the status on that? Because in my view--we are 
talking about tight resources--that could be a good way to free 
I think some of the VA resources to a more productive delivery 
of care.
    Secretary Shulkin. Yes. We agree with that. Yesterday, I 
put out a press release saying I am moving forward on exactly 
that issue. We have identified 1,100 facilities that are either 
vacant or underutilized. I announced that in the next 2 years I 
will deal with those 1,100 facilities, starting with 142 
facilities right now that I am proceeding with disposal or 
essentially destruction of those buildings so that we no longer 
are paying for maintaining--you know, vacant buildings.
    Senator Capito. Right. Good. Well, I am certainly 
supportive of that initiative.
    And just last, I would like to thank the VA for the 
relocation of the community-based outpatient clinic in 
Lewisburg, West Virginia, to Ronceverte where there were some 
workplace issues. It is a beautiful facility. We cut the ribbon 
on it just several weeks ago, and I know it will enjoy a lot--I 
mean, the veterans in that area are very, very pleased, and I 
thank you for that.
    Secretary Shulkin. Sure. Good. Thank you.
    Senator Capito. Thank you.
    Senator Moran. Senator Udall.
    Senator Udall. Thank you, Chairman Moran.
    Secretary Shulkin, thank you very much for joining us 
today, and I look forward to continued cooperation, making 
improvements, and addressing ongoing challenges facing the VA.
    In March of this year I sent you a letter expressing my 
concerns regarding staffing shortages across the VA medical 
system, including several facilities in New Mexico. In April, 
you responded and said that the VA had addressed this issue by 
increasing pay for several positions. Can you give me an update 
whether or not you are seeing positive results from these pay 
increases?
    Secretary Shulkin. There is mixed news on this. We have 24 
vacancies still, physician vacancies I am talking about. The 
six in emergency medicine we have made offers and have 
acceptances. We are still looking for a director of emergency 
medicine. In some of the other areas, even though we have done 
market salary surveys and made adjustments, we are still 
challenged to find healthcare professionals, like many parts of 
the country that have shortages. And in New Mexico we still 
continue to see shortages.
    So, we are making some progess, but I think we are still 
concerned that we are going to be able to do this as quickly as 
we all want to do it.
    Senator Udall. Yes. Thank you for that. And thank you for 
your effort there.
    In the same letter, I asked you to address the severe 
shortage of mental health practitioners within the VA and 
specifically in New Mexico. You responded that in New Mexico a 
staffing shortage and broken air-conditioning unit were to 
blame for reduced capacity, substance abuse, trauma, and 
rehabilitation residents. Can you update me whether the full-
time staff positions were filled by the end of May?
    Secretary Shulkin. Yes. I know that we fixed the air-
conditioner. That certainly is done. And the full-time people 
are now on board so that we are able to get that corrected as 
well.
    Senator Udall. And besides pay increases, what measures is 
the VA taking to increase training, scholarships, residences, 
and other options that could help address these chronic 
personnel shortages especially in the rural areas of our State 
and across the Nation?
    Secretary Shulkin. Yes. You know, we continue to be 
challenged with this. We do know that several of our programs 
that we use are effective. Educational debt reduction, which 
you will see in the 2018 budget we have asked for additional 
funds for, that is a very effective tool to attract health care 
professionals. But the truth is that there is a shortage right 
now of trained healthcare professionals, and we are looking for 
ways to attract people to the VA. So, one of the thoughts that 
we have is to work with you to expand our graduate medical 
education program in the VA, and in exchange for expansion have 
a payback service in the VA particularly to underserved areas. 
The Department of Defense does this quite effectively. The 
Public Health Service does this quite effectively. We think it 
is a model we should be looking at.
    Senator Udall. Yes. And basically, your model there is many 
of these new doctors that come out medical school have big 
debts, and so in exchange for helping them with their debt, 
they then go into underserved areas and many of the places you 
have not been able to find doctors to----
    Secretary Shulkin. Yes. I think we do that. That is our 
Educational Debt Reduction Program. And we are talking about 
actually expanding it to a new idea.
    Senator Udall. Okay.
    Secretary Shulkin. What is happening now is there are more 
U.S. medical school graduates than there are spots to train 
them in, so we have a mismatch.
    Senator Udall. Yes.
    Secretary Shulkin. VA under the Choice Act, actually you 
helped expand the number of residency programs.
    Senator Udall. Right.
    Secretary Shulkin. We would like to go further this time 
and expand more and use that potentially so that those who 
train in the residency program would then enter the VA for a 
specified period of time to practice.
    Senator Udall. Great. Senator Tester and I introduced a 
bill to expand the Rural Veterans Coordination Pilot Grant 
Program. Can you just give me an update on the expansion of 
that program and how it is going?
    Secretary Shulkin. Yes. We are just getting the study 
results in now. We are in the process of data analysis. We 
should have that in the next 30 days. We would like to come 
back and share that with you.
    Senator Udall. Great. Thank you very much.
    Secretary Shulkin. Thank you.
    Senator Udall. I have an additional question for the record 
on Master Sergeant Jessey Baca and burn pits but I will submit 
that for the record.
    Secretary Shulkin. Okay. Thank you.
    Senator Udall. And thank you, Mr. Chairman.
    Senator Moran. Thank you, Senator Udall.
    Senator Rubio.
    Senator Rubio. Thank you.
    Thank you, Dr. Shulkin. Thanks for being here.
    My understanding is the President is going to sign the VA 
accountability bill on Friday?
    Secretary Shulkin. Yes.
    Senator Rubio. I wanted him to do it last Friday. But my 
sense is that you are prepared to begin to quickly implement 
the flexibility that it gives you for accountability?
    Secretary Shulkin. Absolutely. And we certainly thank you 
for your leadership in that. This is something that I think all 
of us feel is important for moving forward.
    Senator Rubio. Yes. The one thing I would note is that we 
had tremendous bipartisan support on it.
    Secretary Shulkin. Yes.
    Senator Rubio. The people came together. Senator Tester, 
Senator Moran were part of that as well.
    Secretary Shulkin. Yes.
    Senator Rubio. And it just troubles me--and again, it does 
not matter. I did not have to put my name in it--but how little 
coverage it got. And I bet you if we had fought over it a 
little bit, they might have talked about it. It is important 
when good things happen at the agency or here in Congress that 
people mention it, particularly in this case because there has 
been so much negativity over the last three or four years about 
the VA system and that every opportunity we can to catch people 
doing things right, that we point to that as well.
    And the great thing about accountability is it is not 
really a punitive measure. It is designed in many ways to 
reward the people who are doing things the right way. It is not 
fair to a good employee to be saddled with the consequences of 
someone who is not doing a good job----
    Secretary Shulkin. Yes. We have actually seen a fair amount 
of coverage on it. It may not have come to your attention, 
but----
    Senator Rubio. Maybe it is the stations I watch.
    Secretary Shulkin. Exactly. But it is exactly the points I 
make, Senator. I believe this is going to help us improve 
morale. It is going to help us improve recruitment because 
people want to work alongside people that share their values. 
And the vast majority of people who work in the VA are 
dedicated people who are there for the right reason.
    Senator Rubio. Yes. So one of the things that concerns me, 
and I think these numbers are right; I am pretty sure they are. 
We have a little under 1,000 nursing home beds in Florida for 
long-term.
    Secretary Shulkin. Yes.
    Senator Rubio. And I think if you take the number of 
veterans and extrapolate that out to the general population 
understanding, we would love for people to age in place. We 
want as many as possible to be home with their loved ones, and 
then we know there are instances in which that is no longer 
possible. Either the family can no longer sustain it or the 
patient actually would not benefit from it. How are we planning 
for that, the baby boomer, surge that will ultimately impact 
veterans, particularly of the Vietnam era? How are we planning 
for that moving forward? Obviously, Florida is a place where--I 
mean, this is not very well-known, but we have a lot of 
retirees. Many of them served in the military obviously. And so 
how are we planning for that need in the years to come?
    Secretary Shulkin. Yes.
    Senator Rubio. And by the way, when I say nursing home and 
long-term care facilities, we say in many instances that is 
someone who is a senior, but unfortunately, in some cases with 
concussive brain injuries and the like, it may come much sooner 
than anticipated. So, what is our plan moving forward on that?
    Secretary Shulkin. Yes. Well, first of all, Florida, as you 
know, is one of our fastest-growing States in terms of veterans 
and retired veterans, so we are doing several things. First of 
all, I made the decision about 2 months ago to eliminate the 
Federal requirements on the States for building State nursing 
homes or State facilities with Federal money. So, what we used 
to do is we used to give out grants to the State--and Florida 
was actually the case example for us--where we would tell them 
exactly how they had to build these things. And it was costing 
them 40 percent more than the States could do it if we would 
just get out of the way.
    And so we have now changed that to allow Florida and all 
other States to rely upon their own regulations so they are 
able to build with the same amount of money, 40 percent more 
beds for residents, so I think that is going to start helping. 
And there are two of these facilities under construction in 
Florida right now.
    Secondly, we do believe with the use of technology and home 
health technology that we can keep more people at home than 
ever before because we can provide services that previously had 
to be in institutions in the home.
    And third, we do believe in the extended use of caregivers 
where people want to remain in their homes and not go and seek 
institutional care. But, as you said, we are going to have to 
continue to expand capacity, and that is why we are working 
with States, we are working with nonprofit organizations, and 
the VA itself is also building community living centers.
    Senator Rubio. And then one of the things we have learned 
in the sort of, you know, stay-at-home model is there are needs 
from time to time for someone to be able to go to a daytime 
facility while the caregiver works or what have you. Do these 
centers have the flexibility to provide that service, or is 
it--basically, it is up to the State to design based on State 
regulation?
    Secretary Shulkin. Yes, that is what we have said. It is 
now up to the State.
    Senator Rubio. So you are providing the money, and then 
they are building it as if it were any facility operating in 
the State.
    Secretary Shulkin. Exactly. Yes.
    Senator Rubio. Under their guidelines?
    Secretary Shulkin. Yes, and I was on a call with all the 
State directors yesterday going over this, and States have 
different philosophies about this. I happen to think that 
partial-day programs and the type of adult daycare that you are 
talking about may not be a great----
    Senator Rubio. I am sorry. When you extrapolate the long-
term need with the dollars in the budget, do we have sufficient 
funding in that program to keep pace with what we think will be 
the need in the years to come?
    Secretary Shulkin. Well, the States think that the Federal 
Government should be helping more. I have told them that this 
is important to us, that we will maintain our funding 
commitments to it, that we will certainly look and advocate for 
more dollars but that the Federal budgets are under 
considerable, you know, stress. And we are going to have to 
look for all sorts of sources of funding to meet the needs.
    Senator Rubio. I think the right answer to those questions 
is always yes, is it not? Yes, we need more money. But I 
understand your perspective.
    Secretary Shulkin. Yes.
    Senator Rubio. The States want the Federal share to be 
higher.
    Secretary Shulkin. Sure.
    Senator Rubio. Got it. Thank you.
    Senator Moran. Let me ask Dr. Alaigh a question. This 
subcommittee held a hearing on April the 27th on veteran 
suicide, more specifically, veteran suicide prevention. Dr. 
Clancy and Dr. Kudler were the VHA lead witnesses. We spent a 
lot of time talking about the OIG report, which was in February 
of 2016, and that report was highly critical of the operations 
of the veterans' service line. At our hearing, which was more 
than a year after the report, we learned that none of the seven 
IG recommendations for action were closed.
    And then, can you, Dr. Alaigh, bring us up to date on the 
status of those important recommendations. My understanding is 
that six of the seven now have been completed, have been 
closed. Will you proactively pursue number six, which is not 
closed?
    And then, since then, the IG produced a second report on 
the crisis line, March of this year. It has 16 recommendations 
for the VHA. Are you aggressively pursuing tackling those 
recommendations? And what will you do to keep us informed of 
your progress?
    Dr. Alaigh. Thank you, Mr. Chairman. Nice meeting you and 
talking to you. And thank you for raising this issue because, 
as you know, suicide prevention is our number-one clinical 
priority. Many times, we say that, you know, we take care of 
our veterans, but this is a time that if we do not take care of 
our veterans, we are going to lose them, so there is nothing 
more important for us than to take care of this.
    As far as the initial IG recommendations, the seven, we 
have closed six and a seventh one is being closed by June 30 
because that was related to a new contract award for our 
rollover contract, so we just wanted to make sure, based on the 
IG recommendations, that the performance, the quality measures, 
the operational measures were all consistent with our own 
program. And so for that, we had to go into contractual 
negotiations and modifications so that it will be signed on 
June 30, so we would be in compliance with closure of that 
recommendation by July 1.
    Senator Moran. Doctor, before you answer the second part of 
my question, would you assure me or is it your belief that 
compliance with those recommendations has actually improved the 
responsiveness and the effectiveness of the crisis line?
    Dr. Alaigh. Yes, absolutely, because what we have done is 
transitioned the suicide prevention crisis line to really a 
clinical coordination and a clinical crisis solution. So, what 
we have done is we have added clinical oversight, we have 
embedded clinicians. We are doing warm transfers when we find a 
veteran in crisis to a clinician in the medical facility. We 
have seen rollover rates of 30 percent in the last quarter of 
the last calendar year now moving to less than 2 percent. Our 
response rate has improved to about eight seconds. Ninety 
percent of our calls we respond in less than eight seconds.
    So, we have seen operational efficiency, we have seen 
clinical improvement, and we have been able to tie that whole 
program together to make it more robust and truly serving our 
veterans.
    Senator Moran. So, it is not just a matter of meeting the 
IG recommendations; it is a matter of increasing the 
opportunities for us to prevent suicide?
    Dr. Alaigh. It is about saving lives for our veterans.
    Senator Moran. And the second part of my question, the 
March recommendations?
    Dr. Alaigh. Yes, the March recommendations, there were 16 
recommendations. We have submitted four for closure. We still 
have 12 recommendations. A lot of those recommendations are 
around training and putting standardized processes and policies 
in place, and those recommendations do require data gathering 
and analysis and, again, reinforcing that we are meeting our 
targets. So, it does take time, three to six months to collect 
that data and report it, but we are on track to close all the 
recommendations by the end of this calendar year, by December 
of 2017.
    Senator Moran. The challenge in doing so is not a financial 
one. It is not a budget issue. It is a matter of timing of 
getting the reports completed.
    Dr. Alaigh. Right.
    Senator Moran. Thank you for your commitment to that 
effort. And I would again ask you to keep us informed of your 
progress.
    Dr. Alaigh. Absolutely.
    Senator Moran. Thank you.
    Dr. Alaigh. Thank you.
    Senator Moran. And now, let me turn to Mr. Walters. Mr. 
Walters, I understand that my House colleagues reduced major 
construction account in their mark by $102 million, which lines 
up with cutting funding for 2018 for three out of your six 
major construction cemetery projects. I understand the goal is 
to provide veterans--your goal is to provide veterans with 
burial options within 75 miles of their residence. Would this 
reduction impact your ability to accomplish that goal? And 
without the funds, would you be able to move forward with those 
three expansion projects?
    Mr. Walters. As you mentioned, Mr. Chairman, NCA's goal is 
to provide 95 percent of the veteran population with reasonable 
access to a burial option in either a national or State 
Veterans cemetery within 75 miles of where they live. We 
accomplish that by establishing new national cemeteries and, 
perhaps more importantly, keeping existing cemeteries open. In 
fact, our number-one construction priority is to make sure that 
we have sufficient funds for the timely expansion of existing 
cemeteries.
    The six grave site expansion projects that are included in 
the budget are at locations that will have at least one type of 
burial option that will deplete by the year 2020. We requested 
funds in 2018 to ensure that we had sufficient leeway to 
address any unanticipated problems that we might encounter 
during the construction process to ensure that we delivered the 
grave sites in a timely manner.
    The cut of the three expansion projects would place those 
locations at a much higher risk for a possible interruption of 
burial service. This is not insignificant. The three cemeteries 
that were taken out of the request service approximately 1.2 
million veterans. That is about 6 percent of the veteran 
population, so it is something that is of a concern to us.
    Regarding your second question, without the requested major 
construction funding, we would have to significantly reduce the 
scope of the three projects that were deleted to include the 
removal of necessary infrastructure repairs and reallocate a 
large portion of our minor construction budget for stop-gap 
expansion projects. And this would also require frequent 
follow-up with additional minor projects to make sure that we 
do not deplete in the future.
    We feel that this is not the most cost-effective or 
efficient way to address the expansion needs of these three 
locations at this time.
    Senator Moran. Thank you very much.
    Let me turn to Senator Schatz.
    Senator Schatz. Thank you, Mr. Chairman. Excuse me.
    Secretary Shulkin, the Department's request for 
nonrecurring maintenance is $1.8 billion, $700 million over the 
year 2017. I am happy to see this investment into the program, 
especially given the current deficiencies. Based on the VA's 
latest facility condition assessment estimate, what is the 
total cost of code violations and deficiencies at VA hospitals 
and clinics across the country?
    Secretary Shulkin. A lot more than that. I think that our 
total capital deficit across the country is estimated to be 
somewhere near $50 billion. A lot of that includes our seismic 
deficiencies that are of concern to us. Some do include, you 
know, infrastructure repair. But it is a large capital deficit.
    We do think that this NRM program, along with a request 
that we would make to increase our NRM cap from $10 million up 
to $20 million will make a substantial impact on some of the 
more severe deficiencies.
    Senator Schatz. I am a little concerned about the lack of 
investment into other capital accounts, major and minor 
construction accounts. And I want to be reassured here that, as 
you know, your capital expenditures reflect your long-term 
programmatic priorities where they should. And because you have 
this reduction in the major and minor construction accounts, I 
want to be reassured that this is not reflective or predictive 
of your view as to where services are going to be provided, in 
other words, at VA facilities or not at VA facilities but 
rather, due to fiscal constraints, you just had to make tough 
choices. I want to know that this is not a reflecting sort of 
view of the political winds here in terms of privatizing 
services. I want to know what your thinking was here in 
reducing these accounts.
    Secretary Shulkin. Yes. You know, the way I would say it is 
that our thinking is that we were not doing this very well. And 
so with the fiasco in construction in Denver, we made several 
changes. One was to get the Corps involved, and secondly, to 
cut back on our appetite for having such big construction 
projects and look for alternative ways to continue to have new 
facilities for our veterans and to be able to provide state-of-
the-art facilities for them.
    So, it absolutely is not a philosophy towards 
privatization. This is a philosophy that we have to do business 
differently. We have to do it smarter. I believe the future is 
going to involve several things when it comes to facilities. 
One is we are going to have to build different types of 
facilities. The days of building big bed towers are over. Where 
most care is delivered is in ambulatory settings, and we are 
going to have to construct different types of facilities. So, 
most of our facilities were built more than 50 years ago, and 
we need the newer, modern-type design.
    Secondly, we need to look at private-public partnerships. 
And thanks to your authorization, we have five pilots that we 
can do this on. We have announced one in Omaha which took 10 
percent of taxpayer dollars compared to what we were going to 
build, which was a big bed tower.
    And third I would say is we need to do our leasing 
differently. Now, when we do not construct as much--and maybe 
Hilo is going to be a good example of this--we are looking 
towards leasing and having the private sector build this for 
us. We have 27 leases now or 24 leases?
    Mr. Yow. Twenty-seven.
    Secretary Shulkin. How many?
    Mr. Yow. Twenty-seven.
    Secretary Shulkin. Twenty-seven leases that have not been 
authorized by Congress yet. So, when things are not working--
and it has been difficult for you because of the CBO scoring 
over a 20-year period of time. It is counted as one big piece 
of capital. When things are not working, we have to do things 
differently. So, we are approaching GSA to take over the 
inventory of our leases and get out of the business of being in 
the leasing business and let them do that.
    I hope that that will be productive and allow us to open up 
these leases, and we will look at Hilo of course. But this is 
certainly--we will continue to look at where veterans need new 
facilities and advanced facilities and continue to advocate for 
them.
    Senator Schatz. Thank you. And I will leave this one with 
you for the record. First of all, thank you for what you are 
doing in telehealth and telemedicine. I just want to know if 
there is anything either on the authorizing side--not my side 
of the shop--but either on the authorizing side or in the next 
markup that we can do to help you to expand telehealth and 
telemedicine and specifically to get telemedicine into 
veterans' homes.
    Secretary Shulkin. Yes.
    Senator Schatz. I am very interested in that and where we 
can be of assistance. I am sure we will be likely to help, so--
--
    Secretary Shulkin. Well, we have proposed again in 
technical assistance a legislative fix to allow us to do that, 
and we would appreciate your support for that.
    Senator Schatz. Right. We are working on it.
    Secretary Shulkin. Thank you.
    Senator Schatz. Thank you.
    Senator Moran. Dr. Shulkin, Senator Murkowski is on her way 
back, which gives me the opportunity, which I had intended to 
take, regardless of additional questions. But I certainly do 
not consider these stalling.
    On the topic of construction, I had raised three issues 
with the VA. The Leavenworth VA has, for a long time, had a 
plan to do a public-private partnership. I would encourage you 
to take a look at that project. The Johnson County CBOC, that 
is the suburbs of Kansas City, groundbreaking in March, we do 
not yet know what kind of services that CBOC is going to 
provide, if you could help us answer that question.
    And then finally, for a long time, going back to my days in 
the House, there was a DOD VA joint project between McConnell 
Air Force Base and the Dole VA in Wichita for a new facility 
that apparently has fallen through the cracks.
    It has been a priority on-again, off-again for a long time, 
and I would appreciate being updated on those three items.
    Secretary Shulkin. Yes. I would be glad to do that.
    Senator Moran. I want to come back and talk about Choice, 
but let me first turn to the Senator from Alaska.
    Senator Murkowski. Thank you, Mr. Chairman. And sorry that 
I have been popping in and out.
    Dr. Shulkin, thank you for being here. I am sorry that I 
was not able to hear your comments regarding Choice. I will ask 
you a couple. But before we do that, I want to talk about 
Wasilla and the Wasilla CBOC and the sad state of affairs. I do 
not understand why, for 3 years, we have not been able to find 
a single doctor to permanently support this facility. This is a 
clinic that should be staffed with two permanent doctors, and 
we have not been able to keep a single doctor there, and it has 
been 3 years. And it is not like Wasilla is the end of the 
road. Wasilla is on the road system. Wasilla is a thriving 
community.
    Becker's Hospital Review rates the Mat-Su Regional 
Hospital, which is just down the road, as one of the 150 best 
places to work in health care. The southcentral facility, the 
clinic there gets rave reviews, has extraordinary 
professionals. We cannot figure out why we are not able to get 
a permanent full-time VA physician assigned there.
    So, I have to believe that those who are looking at this 
just think that this is a bad place to be, that the VA is not 
an employer of choice for potential employees who have a 
choice. I mean, we have included language in the appropriations 
bills now for a couple years running. I do not know what to say 
to either the VA senior leader who is frustrated. I do not know 
what to say to our veterans about what the problem is. I just 
do not get it.
    And we have looked at the issues relating to salary and to 
pay and to benefits and everything else. We cannot get anybody.
    Secretary Shulkin. Yes. Listen, I hope we have a big 
viewing audience because you made a compelling reason why this 
is a great place to practice. Of course, you know, I have been 
up there and I think it is a great place to practice. It is 
frustrating. I will say that the VA had its recruitment and 
retention dollars cut in half to pay for the CARA legislation. 
And that was not helpful to us because we need every tool 
available to us and every dollar available to us to be able to 
go out and to recruit physicians.
    The last time I was in Alaska, we had three physicians who 
we brought up there and we lost all three to the private 
sector. And so it is very competitive, and we are competing 
directly against really good private institutions that have 
what seems to be a much greater ability to use recruitment and 
retention dollars than we have, so we would like to work with 
you on this.
    Senator Murkowski. Well, you know that I am willing to work 
with you on it, but I am beyond frustrated. I do not know what 
else we need to do. And again, it makes me think that it is 
just something systemically within the VA that is chasing good 
men and women away from these opportunities. And in the 
meantime, it is our veterans that do not get that level of 
service.
    Secretary Shulkin. Well, we had a net increase last year of 
1,500 physicians. This is one of our priorities. You have given 
us a new challenge. Listen, I sense your frustration, and it is 
way too long. And our veterans deserve much better up there. 
So, let us work on this together. I hope by the next time we 
sit at a hearing like this, we have filled the position.
    Senator Murkowski. I hope we can say that was past tense.
    Secretary Shulkin. Yes.
    Senator Murkowski. But I have been thinking that every year 
now for 3 years.
    So, Choice, over the past several years, we have been 
talking also in these hearings about the Choice program and its 
shortcomings in the State. You have had an opportunity to visit 
the State. I think you are familiar with the challenges that 
the VA faces in delivering health care there. You know we are 
remote. You know that some of our communities define remote.
    I guess, you know, there has been a lot of frustration with 
how Choice has kind of come about, how it was written quietly 
behind closed doors, presented at the last minute. Recognizing 
that there was probably not a--I do not think that there was a 
transparent process there, recognizing now that we are dealing 
with Choice 2.0, this major nationwide reform of existing 
Choice. What do you think? What do you think Alaska's veterans 
and healthcare providers want to see in Choice 2.0 up in the 
State? What is achievable? What can we do?
    Secretary Shulkin. Well, first of all, I think Alaska's 
healthcare system was working well prior to Choice and so----
    Senator Murkowski. I think so, too.
    Secretary Shulkin. Yes.
    Senator Murkowski. And that has been the frustration.
    Secretary Shulkin. And we heard that loud and clear. There 
is no question about it. And so because of the national program 
imposed, I think Alaska took a real hit in its customer service 
in the step backwards. So, we have been working hard thanks to 
you and Senator Sullivan who have been making us clear that 
this has to improve, to change the system back to where it was. 
And I think that we have gotten pretty close to where we are. 
We have also signed, as you know, new agreements with the 
Indian Health Service and the tribal agreements.
    And Alaska is unique. There are other parts of the country 
that are unique. I know Kansas has some challenges in rural 
areas as well, so what we learned is there is not one model of 
health care for this country, and every geography needs to have 
some variation in how they implement this program. And Choice 
2.0 allows us for that type of independent geographic 
customized design for the healthcare system.
    Senator Murkowski. Well, and as you point out, we pioneered 
that. We were doing that in Alaska.
    Secretary Shulkin. Yes.
    Senator Murkowski. That is what got the attention of the 
rest of the country. And you move to that and then you say the 
only way forward is the way that we design it. You took away--
or that flexibility was taken away.
    Secretary Shulkin. Right.
    Senator Murkowski. So, again, you know that there is a lot 
of frustration up north because we have challenges. We are a 
place that is born and bred to meet challenges with great 
ingenuity and some enthusiasm. But when we are told basically 
that this is how it will be done, we know best in Washington, 
D.C., we are not interested in hearing that. We have been told 
we are unique so many times we just do not even listen to it 
anymore. We know we are. We know that we need flexibility. And 
my hope is that there is an understanding to allow within 
Alaska the opportunity to define the solutions, as we did 
pretty well before, and if we can do that, our veterans I think 
will be in a better place.
    Secretary Shulkin. Yes.
    Senator Murkowski. Mr. Chairman, thank you for letting me 
air-drop in at the end. I appreciate it.
    Senator Moran. Well, I was glad you were here. I was 
fearful I was going to run out of the opportunity to ask 
questions.
    Mr. Secretary, let me try to bring this hearing to a 
conclusion with just a bit more conversation about Choice. 
First of all, I would indicate that what Senator Collins talked 
about, her ARCH circumstance in Maine is the same circumstance 
in Kansas.
    Secretary Shulkin. Yes.
    Senator Moran. We are one of those four pilot programs who 
have been utilizing Community Care. No longer is it eligible. 
Secondly, in just a more broad conversation about where I think 
we are, a reason--I guess not the--I suppose this is the reason 
I suggested to you that you withdraw your mandate that Choice 
go away, which was the fear that in the absence of Choice, we 
will have an absence of third-party providers, third-party 
administrators.
    Secretary Shulkin. Administrators, yes.
    Senator Moran. And so you were in my view wise enough to 
withdraw that, but it has been replaced with something that yet 
does not solve the problem of keeping the third-party 
administrators in place. I do not know what the timeframe is 
that they will continue or can continue to operate, but I know, 
based upon what you said, they are losing money.
    Secretary Shulkin. Yes.
    Senator Moran. And there is at least a rumor that they are 
in the process of notifying their employees that their 
employment may come to an end. And so, you know, primarily what 
we are here about is veterans, so I am not here on behalf of 
the third-party administrators, but in their absence, I do not 
know how we have a Choice program that works for veterans.
    Your response to the Senator from North Dakota about 
community-based care was we are going to pursue this in long-
term reauthorization of Choice. I am interested in that. I am 
for that, and I am part of the effort to make sure that Choice 
is reauthorized in the long term, but I am worried that we are 
not going to have anything in place; we will be starting from 
scratch and Choice will disappear.
    Secretary Shulkin. Well, I think we all agree if we act 
quickly--and I want to be part of the solution. I know you do, 
too. I truly thank you for raising this to the type of urgency 
to resolve this as it deserves. And you were the first one to 
reach out and say that this needs to be resolved.
    We need to do this quickly because I do not want to see the 
third-party administrators take their networks down. But more 
importantly, and I know you agree with this, we do not want to 
see veterans at all impacted by our inability to manage 
budgets. This is not the veterans' fault. This is the fact that 
we have financial systems that are very difficult to maneuver 
and to get correct in these last couple months of the budget 
year. I believe we have two ways to approach this, and I am 
willing to work with you on either way, as long as we can work 
on it quickly, because, inevitably, I think we all agree it 
needs to be done, so we might as well do it sooner rather than 
later so that we do not have unintended consequences.
    Senator Moran. Well, is there a way in the interim that you 
can return to providing more guidance to your VISNs to continue 
using Choice beyond
    Secretary Shulkin. Well. Beyond the statutory? I do not 
feel comfortable asking them to return to a Choice-first policy 
because I now have less than $800 million of unobligated funds 
in that account. And I can do the math that that will not make 
it till October 31, so I am trying to be responsible and make 
sure that we do not get to a point where we just have to stop 
the Choice program. That would be even worse than where we are 
now.
    Senator Moran. I think you testified today that the date is 
now August the 7th?
    Secretary Shulkin. Yes.
    Senator Moran. And I think the last time we talked, it was 
August the 15th?
    Secretary Shulkin. August 7, August 15, I wish I could be 
that precise that it mattered. I mean, it is mid-August.
    Senator Moran. So there is not some new factor, some----
    Secretary Shulkin. No. No, no, no.
    Senator Moran. It is still in the same ballpark.
    Secretary Shulkin. In fact, extending it so that I did not 
mean to shorten it on you.
    Senator Moran. Should be going?
    Secretary Shulkin. It probably is actually longer than when 
we had talked about.
    But, you know, it does not reach till October 31-September 
30 and so we do need to do something different.
    Senator Moran. So what is missing in getting this resolved? 
When you and I say I want to work with you and you say you want 
to work with me, what is not happening that moves this process 
to a quick resolution?
    Secretary Shulkin. Yes. I would say to you that if you and 
your colleagues have a preferred path to go down, we would like 
to work with you on that.
    Senator Moran. And you have had that conversation with the 
leadership of the authorizing committee?
    Secretary Shulkin. Yes, I have.
    Senator Moran. Okay. And is there something that we could 
assure ourselves that if we go down that path that the 
administration, OMB, the White House would say we support that 
effort?
    Secretary Shulkin. Yes, we are in discussions with OMB. I 
had breakfast with the chairman of the authorizing committee 
this morning, and he is certainly supportive of resolving this. 
And we are in discussions with OMB and the administration 
making sure that they understand where our discussions are. I 
think all of us, all the way up to the President, want to see 
this resolved.
    Senator Moran. But the administration has not chosen one of 
those options or another one that we have not talked about?
    Secretary Shulkin. No.
    Senator Moran. Okay. Mr. Secretary, it is always my 
practice to give you or any of your team the opportunity to 
tell us anything that we did not ask you or did not talk about 
or you want to modify or correct to improve my understanding.
    Secretary Shulkin. I think we are all ready to go home.
    Senator Moran. You know, you indicated this could be a long 
hearing with the two of us having a conversation.
    Secretary Shulkin. Yes.
    Senator Moran. I think almost every member of the 
subcommittee was here. It demonstrates the importance of the 
Department of Veterans Affairs to our constituents and to our 
country, and it indicates a significant interest in your 
success in leading the Department of Veterans Affairs. We want 
you to succeed and we want to help you accomplish that.
    Secretary Shulkin. The only thing I would like to add 
besides thanking you for those last comments is that one thing 
that I think that veterans across the country appreciate and 
certainly we do at VA is the bipartisan nature in which issues 
with veterans are approached. And we know increasingly how 
difficult that is in the environment, but when it comes to VA, 
we have seen you act in a singular fashion in veterans' 
interests, and we hope and believe that is really important to 
continue.
    Senator Moran. In my time in Congress, those arenas in 
which that bipartisanship still exists and works well has 
diminished. There used to be a larger array of areas.
    Secretary Shulkin. Yes.
    Senator Moran. We certainly would not want to lose that in 
this setting.
    Secretary Shulkin. Thank you.
    Senator Moran. Again, I appreciate you being here, and I 
again look forward to working with you on issues of concern for 
our veterans and our country.

                     ADDITIONAL COMMITTEE QUESTIONS

    I would ask that members of the subcommittee who have any 
questions for the record, they should turn them into 
subcommittee staff no later than June the 28th.
             Questions Submitted by Senator Mitch McConnell
    Question. I welcomed our recent discussion regarding the status of 
the new Louisville VA Medical Center, and I look forward to another 
update in the near future. In the meantime, can you please provide an 
updated timeline for the design, construction, and completion of the 
facility? This project was announced in 2006, and Kentucky's veterans 
have had to wait for too long to begin receiving care at this new 
facility.
    Answer. Design of the replacement Robley Rex VA Medical Center 
(VAMC) in Louisville, Kentucky, is ongoing. As outlined in the final 
Environmental Impact Statement (EIS) for the replacement VAMC project, 
VA identified the Brownsboro Road site as the preferred alternative for 
the project. VA has not changed the preferred alternative site at this 
time. The Record of Decision (ROD), which is the final step of the EIS 
process, is undergoing VA's review. Once the ROD is finalized, VA will 
then move forward with completion of the design, which is projected for 
2018. VA construction of the replacement facility is dependent on 
funding availability, and will be decided in future budget submissions.
    Question. It has been brought to my attention that some VA 
healthcare facilities lack the capability to provide care that meets 
the specific medical needs of female veterans. With this in mind, what 
efforts is the VA taking to ensure that all of its healthcare 
facilities are fully equipped to provide quality care to female 
veterans? What plans are being made to ensure that the new Louisville 
VA Medical Center is able to provide quality medical care to female 
veterans?
    Answer. VA is enhancing facilities, training healthcare staff, and 
improving access to services to meet the current and future healthcare 
needs of women Veterans. More than 400,000 women Veterans are currently 
enrolled in the VA healthcare system.
    We understand that women Veterans have unique health needs. Women 
Veterans can receive primary care, specialty care, and preventive care, 
such as breast and cervical cancer screenings. They can also get 
prenatal and maternity care, prescription coverage, mental healthcare, 
home healthcare, and geriatric and extended care, as well as medical 
equipment and prosthetics coverage.
    Subject to the availability of funding and future budget 
submissions, it is anticipated that the new Louisville VAMC replacement 
hospital will include a Women's Health Clinic with four Patient Aligned 
Care Teams (PACT). The clinic is planned to include a dedicated 
reception and waiting area, gynecology examination rooms with private 
restrooms, general examination rooms, TeleHealth examination rooms, 
PharmD consultation/examination, behavioral health consultation, 
nutritional consultation, a phlebotomy laboratory, a procedure room 
with a private restroom, and an imaging suite. The imaging suite is 
planned to include equipment needed for women's healthcare including 
Ultrasound, Bone Densitometry, and Mammography. In addition, the 
Women's Health Clinic is planned to have dedicated support space for 
all assigned staff. For cases in which a woman Veteran would like to 
see a provider not assigned specifically to the Women's Health Clinic, 
all other PACT modules are expected to include gynecology examination 
rooms with private restrooms.
    Question. To assist the VA as it continues with reform efforts to 
improve and expedite care for our nation's veterans, Congress recently 
passed and the President signed into law the Department of Veterans 
Affairs Accountability and Whistleblower Protection Act of 2017. This 
bill authorizes the creation of a new Office of Accountability and 
Whistleblower Protection and provides new authority for additional 
accountability measures. Will you please provide a timeline of the VA's 
plans to implement these new authorities to ensure that veterans 
receive the quality care they deserve and bad actors are held 
accountable?
    Answer. The Department is working to satisfy the requirements of 
Public Law 115-41, the ``Department of Veterans Affairs Accountability 
and Whistleblower Protection Act of 2017'' signed into law in June 
2017.
      office of accountability and whistleblower protection (oawp)
    On May 25, 2017, following an Executive Order signed by President 
Trump, OAWP was established. By June 12, 2017, employees of the former 
Office of Accountability Review were realigned to OAWP.
    OAWP is headed by a politically-appointed Executive Director, who 
is working on establishing OAWP, commensurate with the law.
    OAWP has also developed a website: https://www.va.gov/
accountability. Whistleblowers may also now make a disclosure to OAWP 
by email at [email protected]; fax at 202-495-5601; and 
toll-free hotline at 866-429-6669.
Other key actions for implementing the authorities are as follows:
    On or around July 6, 2017, the Secretary issued VA policies 
implementing the accountability authorities provided under the Act, 
including 38 United States Code (U.S.C.) Sec. 713, as amended, 38 
U.S.C. Sec. 714, and the revised timelines and procedures for Title 38 
employees provided for under the Act. VA has and continues to provide 
training to managers and senior executives on the accountability 
authorities and the implementing policies.
    The other accountability measures as outlined in Title II of the 
Act are under review and will be implemented.
    Question. Mental health issues remain a significant challenge for 
many veterans. What programs are in place to assist and support 
veterans suffering from mental health issues, particularly as they may 
relate to suicide prevention? Are there any additional authorities that 
the VA needs from Congress in order to provide effective treatment and 
care to veterans suffering from mental health issues?
    Answer. The VA Fact Sheet below provides information regarding many 
of VA's mental health services.
         medication-assisted treatment for opioid use disorders
    Question. As you may be aware, the opioid and heroin epidemics have 
hit Kentucky particularly hard and continue to be a challenge for many 
veterans. What programs have been implemented by the VA to treat 
substance use disorders, and particularly opioid abuse, by veterans? 
What programs have been most effective in providing successful 
treatment to veterans?
    Answer. The Veterans Health Administration (VHA) has responded to 
growing demand for opioid use disorder treatment by increasing access 
to Medication-Assisted Treatment (MAT). MAT includes counseling or 
psychotherapy; close patient monitoring; and medication using 
buprenorphine/naloxone, methadone (administered through an Opioid 
Treatment Program), or extended-release injectable naltrexone. 
Buprenorphine/naloxone and extended-release injectable naltrexone are 
on the VHA National formulary. These are available at VHA facilities 
and through non-VA purchased care options in the community. Methadone 
is administered and dispensed through 32 VHA Opioid Treatment Programs 
across the Nation and through non-VA purchased care options at many 
facilities.
    VHA has been expanding access to MAT for patients with opioid use 
disorders. In the year ending in the second quarter of fiscal year (FY) 
2016, VA treated 23,117 patients with MAT, up from 19,333 patients in 
the year ending in the fourth quarter of fiscal year 2014, a 20-percent 
increase in patients treated in just 1 and a half years. This expansion 
is the result of a comprehensive and integrated approach. The 
Buprenorphine in VA Initiative provides clinician education through 
monthly webinars, newsletters, a SharePoint site with educational 
resources, individual consultations, and a national community of 
practice supported by an e-mail group. The Psychotropic Drug Safety 
Initiative (PDSI) combines use of informatics tools and a national 
quality improvement collaborative to improve the evidence-based use of 
psychotropic medications. One of the PDSI program's many impacts has 
been significantly increased rates of using opioid agonist therapy 
among Veterans with Opioid Use Disorder. In addition, VA Pharmacy's 
Academic Detailing service is developing an Opioid Use Disorder 
campaign using informatics tools and individual provider support to 
increase Veteran access to MAT.
    VHA offers several medication assisted treatments for opioid use 
disorder. Opioid Agonist Treatment includes prescription of methadone 
or buprenorphine delivered either in a licensed clinic or office-based 
setting, as well as injectable depot naltrexone.
                             opioid safety
    VA has implemented a number of programs to address the epidemic of 
opioid related adverse events.

  1. The VA's Opioid Safety Initiative (OSI) was implemented nation-
        wide in August 2013, and is producing the intended results. The 
        basis for OSI is to make the totality of opioid use visible at 
        all levels in the organization. OSI includes key clinical 
        indicators, such as the number of VA pharmacy users who have 
        been dispensed an opioid, the number of VA pharmacy users 
        receiving long-term opioids who also receive a urine drug 
        screen, the number of VA pharmacy users receiving an opioid and 
        a benzodiazepine (which puts them at a higher risk of adverse 
        events) and the average morphine equivalent daily dose of 
        opioids. Overall, VA has seen a 30-percent reduction in the 
        number of Veterans who have received opioids for greater than 
        or equal to 90 days.

  2. VA deployed two state-of-the art tools to help providers manage 
        risk for Veterans receiving opioids. These tools are available 
        now to all staff in VA facilities.

        The Opioid Therapy Risk Report (OTTR) is a national dashboard 
        to help primary care teams manage Veteran patients on long term 
        opioid therapy. It includes information about the dosages of 
        opioids and other sedative medications, significant medical 
        problems that could contribute to an adverse reaction, and 
        monitoring data to aid in the review and management of complex 
        patients.

        The Stratification Tool for Opioid Risk Mitigation (STORM) was 
        designed to identify higher risk patients receiving opioid 
        prescriptions for proactive care management and review. STORM 
        incorporates predictive models to estimate the risk that a 
        patient with an opioid prescription will experience a suicide-
        related event or overdose, respiratory depression event, or an 
        accident or fall. STORM generates a nightly-updated report, 
        including: current risk estimates, a list of clinical and 
        prescription risk factors, a tailored checklist of recommended 
        risk mitigation strategies, and information for care 
        coordination. STORM can also provide risk estimates for any VHA 
        patient considering opioid therapy, estimating their risk of 
        adverse events if they were to initiate a low, medium, or high 
        dose trial of opioid medication. These estimates can help guide 
        risk-benefit discussions and shared decisionmaking regarding 
        pain management plans.

  3. VA has implemented the Opioid Overdose Education and Naloxone 
        Program. As of March, 2016, VA had dispensed over 70,000 
        naloxone kits to Veterans.

  4. VA has implemented the Psychotropic Drug Safety Initiative to 
        foster quality improvement efforts for mental health 
        prescribing. PDSI includes efforts to increase access to 
        pharmacological treatments for substance use disorder, and 
        reduce prescribing of benzodiazepines.

    Question. The Army is in the process of replacing the Ireland Army 
Community Hospital (IACH) at Fort Knox with a new facility. Will you 
please provide an update on the VA's plans to replace the Fort Knox VA 
facility currently located at the IACH, and what are the VA's plans to 
ensure area veterans see no disruption in care currently provided at 
this facility?
    Answer. The VA Community Based Outpatient Clinic located at Fort 
Knox, Kentucky, is responding to the Army's Plan to build a new 
healthcare facility that will replace the existing Ireland Army 
Community Clinic. Currently, VA occupies space, via a sharing 
agreement, within the existing Ireland Army Community Clinic. The new 
project will consist of a site that is 4.1 acres in area adjacent to 
the new Army health facility. The project is planned to be an 18,134 
gross square feet facility, and offer primary care and mental health 
services to Veterans in the Fort Knox area.
    VA's current project schedule anticipates the design build 
``Request for Proposal'' to be solidified by August 2017, with a 
construction contract to be awarded by December 2017.
    The project was awarded to the Army Corps of Engineers in order to 
coordinate both projects and ensure seamless transition from the 
existing site to the new site of care. In collaboration with the 
Department of Defense (DoD)/IACH to support care process 
transformation, the services have 1 year to move the clinics prior to 
DoD's readiness for demolition of the existing IACH. VA foresees no 
disruption in care at Fort Knox VA Clinic.
    Question. Your recent announcement regarding the VA's decision to 
transition to the same Electronic Health Record system used by the 
Department of Defense (DoD)--referred to as MHS GENESIS--was welcome 
news to many veterans. Can you please provide a timeframe for 
proceeding with this transition, and how will you ensure that veterans' 
health records are protected during the process?
    Answer. The Electronic Health Record (EHR) modernization effort is 
anticipated to take several years to be fully complete, and will 
continue to be an evolving process as technology advances are made to 
provide seamless care for Veterans. VA is in the midst of focused 
negotiations to finalize a contract.


    Safeguarding Veterans' personal information will remain of 
paramount importance as VA plans for a multi-year transition effort. 
Once an EHR contract is in place and an implementation approach is 
established, we will have more information to share.
                                 ______
                                 
              Questions Submitted by Senator Brian Schatz
                                medicaid
    Question. The President's budget assumes hundreds of billions of 
cuts to Medicaid. According to a recent study released last month by 
Families USA and Vote Vets, about 1.75 million veterans have Medicaid 
as a source of health coverage, and about 340,000 veterans receive 
coverage through the ACA's Medicaid expansion.
    Has the VA forecasted what a cut of this magnitude to Medicaid 
would do to VA's utilization rates or costs?
    Answer.Although we are closely monitoring policy discussions, the 
impact on utilization and costs is unclear until more information is 
known about the final version of the healthcare reform bill and how the 
states may react to changes in Federal policy.
    Question. Secretary Shulkin, you are a clinician with years of 
experience running healthcare systems. In your view, do you believe 
that significant cuts to Medicaid will have an impact on the number of 
veterans seeking and relying on care through the VA's healthcare 
system?
    Answer. The Department of Veterans Affairs' (VA) primary concern 
for Veterans healthcare is that Veterans retain access to quality 
healthcare throughout the country, along with financial support for 
that care where needed. VA would be concerned about any policy changes 
that negatively affect health insurance coverage for Veterans, 
including those currently reliant upon Medicaid for their healthcare. 
These Veterans, typically those with a relatively lower income, may 
have few if any other means to pay for their care if they lose Medicaid 
coverage.
    Question. Does the fiscal year 18 budget request assume any new 
costs due to an increase in veterans coming to the VA system because of 
cuts to Medicaid?
    Answer. The fiscal year (FY) 2018 budget request was based upon 
current policies. Since changes to Medicaid have not been implemented, 
the fiscal year 2018 budget did not include costs due to pending 
healthcare reform proposals.
                       electronic health records
    Question. You recently announced that VA would move to purchase the 
same electronic health record as DoD. If done right, implementing an 
electronic health record has the potential to be transformational. 
However, your current platform, Vista, is an integral part of almost 
everything VHA does--including telehealth. In short, this is more than 
just an EHR procurement; it's a culture change which will impact 
current work patterns and management.
    Leaving the technical requirements aside, what are you doing to 
engage with clinicians and other healthcare workers now to ensure you 
have buy-in by the end of this process?
    Answer. The current Electronic Health Record (EHR) modernization 
effort is anticipated to take several years to be fully complete, and 
will continue to be an evolving process as technology advances are 
made. The input from multi-disciplinary clinical teams from VA will be 
central to how VA implements the new EHR system. We are standing up an 
inter-agency Governance board to maintain a single common EHR solution 
between VA and the Department of Defense (DoD) to drive VA's 
requirements for implementation and to work jointly with DoD to keep 
the two agencies in sync for seamless care.
    VA's longstanding history in field-based IT innovation will be 
leveraged and clinicians and healthcare workers have already begun 
engaging at various levels with the modernization effort. Development, 
technical, and clinical staff with experience in VistA/CPRS and other 
clinical applications will be central to the EHR modernization effort. 
VA encourages and recognizes the need for employee engagement and 
support as we prepare for this substantial organizational change.
    Question. How are you engaging with DoD to ensure that you can 
leverage their expertise in acquisition and learn from their 
experiences?
    Answer. VA and DoD are committed to partnering in this effort and 
understand that the mutual success of this venture is dependent on the 
close coordination and communication between the two Departments. To 
that end, DoD is making available current and former senior 
acquisition, testing, and project management experts who were 
instrumental in the beginning phases of DoD's own transformation to 
assist VA with contracting and initial implementation. This will allow 
VA to capitalize on the experience and expertise of individuals who 
supported previous modernization and EHR implementation efforts, 
including adopting DoD's best practices and lessons learned through the 
requirements and acquisition phase.
    Moving forward, VA has established a dedicated Program Executive 
Office (PEO), which will be staffed with VA's most knowledgeable 
technical and functional subject matter experts in contracting, health 
IT, and business innovation. The newly established PEO will be led by 
the former DoD EHR Program Manager who successfully led the acquisition 
of the DoD EHR solution and related services. Hence, the lessons 
learned from DoD's past efforts will be applied throughout the various 
stages of the VA acquisition and implementation processes.
    Question. To what extent, if any, will Vista remain in use at the 
VA and how will that impact telehealth platforms that tie information 
back to Vista?
    Answer. The new EHR system will bring needed modern functionality 
and infrastructure integrated into a single experience with fewer 
products. This will help simplify healthcare delivery for both Veterans 
and clinical providers. The EHR will be designed to accommodate the 
aspects of healthcare delivery that are high priority or unique to VA, 
while bringing industry best practices to improve VA care. As VA plans 
for a multi-year transition effort, VA will continue to use existing 
clinical systems and identify which of the existing associated 
applications and which VistA modules, in addition to all the clinical 
ones, will be replaced. The impact of telehealth as it relates to EHR 
modernization is still being determined. Once an EHR contract is in 
place and an implementation approach is established, we will have more 
information to share.
    Question. On the budgetary side, clearly your decision was made 
after the fiscal year 2018 budget was developed. When do you expect to 
know overall costs and schedule?
    Answer. VA is in the midst of focused negotiations to finalize a 
contract. Though the contract negotiations will likely take 3-6 months, 
PEO EHRM should be able to offer an anticipated budget request in 
September to support funding requirements and alignment to support the 
anticipated contract award and related Electronic Health Record 
deployment schedule and implementation functions. Once an EHR contract 
is in place and an implementation approach is established, we will have 
more information to share.
    Question. Are there specific funds in your fiscal year 18 budget 
that are currently identified for modernization projects that are now 
no longer needed--and if so, do you plan to move that funding over to 
your new acquisition plan in fiscal year 2018?
    Answer. As part of the overarching EHR Modernization effort, 
Veterans Health Administration (VHA) and the Office of Information & 
Technology subject experts are evaluating modernization efforts that 
are currently underway with the goal of determining which efforts will 
continue, be paused, or be cancelled. VA will also be examining our 
overall contracts portfolio in the coming months to assess capability 
gaps in support of acquiring and implementing a commercial EHR. Once an 
EHR contract is in place and an implementation approach is established, 
we will have more information to share.
     grants for the construction of state extended care facilities
    Question. One of VA's most popular programs with States is the 
grant program for construction of State extended care facilities. 
Before a project is eligible to receive a grant the State must provide 
35 percent in matching funds. In my home State, we have one project, 
construction of a new 120 bed facility in Honolulu, which has received 
matching funds and is currently on the priority one grant list. While I 
am encouraged that the project made it on the priority one list and is 
now eligible to receive a grant, it is nevertheless concerning that the 
amount being requested by the Department for the program falls severely 
short of what is needed to meet demand. In fact, the VA is only 
requesting $90 million for this program, despite having more than $600 
million in priority one grant applications in fiscal year 2017 alone. 
These are projects that have met the requirements of the program and 
have State matching funds.
    Can you please describe how the budget is developed for this 
program--especially given that demand is so high, yet the request is 
barely enough to make a dent in the priority list?
    Answer. VA's priority for the Grants for Construction of State 
Extended Care Facilities is to protect Veterans from those conditions 
that threaten the lives and safety of residents in existing facilities. 
In addition to funding, VA also needs different types of strategic 
partnerships to be able to bring the type of facilities that we need to 
Veterans, and that means working with local government, with academic 
affiliates, other Federal agencies, and private sector partnerships.
    VA establishes a priority list of applications for State home 
grants each fiscal year. First priority is provided to feasible 
applications where States have provided sufficient State funds so that 
the project may proceed upon award of the grant. The first priority is 
further prioritized as follows: (1) Remedies for life/safety 
deficiencies; (2) States that have not previously applied for a 
construction grant for a nursing home; (3) Great need for beds in a 
State; (4) Renovation other than (1); (5) Significant need for beds in 
a State; and (6) Limited need for beds in a State. After VA receives 
the annual appropriation for the State Home Construction Grant program, 
projects are funded in the order of priority ranking on the list until 
Federal funds are spent.
                               telehealth
    Question. Earlier this year, this Subcommittee held a hearing on 
VA's telehealth program. As I mentioned at that hearing, VA has long 
been a leader in leveraging telehealth technology to provide better 
access to veterans. In fact, this is an area where I believe the 
Department far exceeds what is happening in the private sector.
    Given VA's past successes, how is the Department looking to expand 
telehealth and remote patient monitoring in fiscal year 2018?
    Answer. VA has multiple telehealth expansion plans that will 
enhance VA healthcare accessibility and the Veteran's experience 
including VA Video Connect, which provides secure web-enabled video 
visits, and regional telehealth clinical resource hubs offering 
telehealth providers to fill temporary or longer term service gaps for 
primary care, mental health, and specialty care services.
    With its new Home Telehealth (HT) technology contracts in 2017, 
Veterans have even greater flexibility for innovative HT solutions to 
include tablets, mobile monitoring applications, and video--to add to 
the already established HT solutions like hub devices, interactive 
voice response, and web-enabled browser technologies. With these 
additional solutions for case management, VA plans to expand HT to 
Veterans who are more tech-savvy and looking for more flexible and 
portable options. Additionally, these tools will be used to expand the 
Low Acuity/Low Intensity monitoring program that offers another level 
of case management for Veterans who need less assistance than currently 
provided by HT, but more coaching, guidance, and monitoring than a 
mobile self-management application would provide.
    Question. What, if any, help do you need from Congress to bring 
telehealth into veterans homes?
    Answer. On August 3, 2017, the Secretary announced VA is beginning 
to implement nationally VA Video Connect, a software solution that 
facilitates the delivery of real time video communications on personal 
computers and mobile technologies (phones, tablets). This new 
technology will enable VA to more easily deliver services at locations 
most convenient for Veterans, be it in their homes or any other secure 
location where they have their mobile technology. VA still needs to 
establish the unambiguous authority for providers to deliver VA 
clinical services to Veterans irrespective of the provider or Veteran's 
locations. Considering the critical priority assigned to this need and 
its direct relation to expanding clinical services, VA has pursued all 
known avenues to establish this authority. VA expects to issue a notice 
of proposed rule-making in the fall of 2017. Depending on public 
comments, VA expects to have a final, legally effective rule in early 
fiscal year 2018.
    While VA is using its existing authority to amend its regulations 
in consideration of telehealth, it still believes that a clear 
statement in statute of Federal Supremacy by Congress would be the 
ultimate protection for providers and could expand VA's authority to 
deliver comprehensive Telehealth services to Veterans in any location. 
Currently, VA providers delivering telehealth across State lines have 
no clear protection from the enforcement of State laws that require 
local licensure or limit the practice of telehealth. VA needs 
legislation that explicitly authorizes VA providers to care for 
Veterans using telehealth irrespective of the location of the provider 
or Veteran.
                               hilo cboc
    Question. The VA Pacific Island Health Care System has proposed a 
new one-stop-shop style CBOC for Hilo. As I mentioned at the hearing, 
the project has been in the VA's SCIP pipeline for years despite the 
fact that the existing CBOC in Hilo has to move because it is in a 
tsunami risk area. The VA has leased a temporary space in an industrial 
part of Hilo that it is building out and plans to move into next year, 
but veterans tell me that it is hard to get to, and too many of them 
will not utilize this space once the VA moves there.
    What is the status of the VAPIHCS's proposed one-stop-shop CBOC for 
Hilo and when does the VA expect to fund this project?
    Answer. Fiscal year 2018 was the first year that the Hilo CBOC 
minor construction project was submitted and scored through the 
Strategic Capital Investment Planning (SCIP) process. Prior to this, 
the project was listed as a potential out year project in the 
facility's long-range plan. Out year projects are not considered for 
funding request purposes. While the proposed CBOC is a valid 
requirement, the project was not approved for funding in 2018. Due to 
limited resources, VA had to prioritize projects. This included 
emphasizing VA's non-recurring maintenance program over other 
construction programs, including minor construction. The majority of 
VA's fiscal year 2018 minor request is directed towards completing the 
backlog of previously-started minor construction projects. VA requested 
funding for only six new minor projects in the fiscal year 2018 budget. 
VA plans to consider the Hilo CBOC project in future budget years.
    Question. To what extent does the SCIP process consider the impact 
on access to care for veterans that would utilize a new project as 
compared to the status quo when it is prioritizing proposals?
    Answer. SCIP business cases for new capital investments are 
submitted for prioritization, and must address how a project will meet 
an identified performance gap(s), including deficiencies in access, 
space, utilization, and condition. Potential alternatives to meeting 
needs include leasing, new construction, renovation, contracting out, 
and purchasing an existing facility. If a performance gap exists, 
status quo is not a viable option. If there is no performance gap 
identified, then status quo would be an acceptable course of action. 
Minor gaps may be met by maintaining the status quo, and supplementing 
by other available means.

                          SUBCOMMITTEE RECESS

    Senator Moran. This hearing is now adjourned.
    [Whereupon, at 4:29 p.m., Wednesday, June 21, this hearing 
is concluded and the subcommittee was recessed, the reconvene 
subject to the call of the Chair. ]