    [Senate Hearing 118-419]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-419

                       PROVIDING FOR VETERANS: ADDRESSING
                    CURRENT AND FUTURE VA BUDGET CHALLENGES

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

                                    HEARING

                                   BEFORE THE

                         COMMITTEE ON VETERANS' AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION
                                   __________

                               SEPTEMBER 18, 2024
                                   __________

           Printed for the use of the Committee on Veterans' Affairs

                   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov
                                    ______

                       U.S. GOVERNMENT PUBLISHING OFFICE

    56-889 PDF                 WASHINGTON : 2025

                     SENATE COMMITTEE ON VETERANS' AFFAIRS

                         Jon Tester, Montana, Chairman
    Patty Murray, Washington             Jerry Moran, Kansas, Ranking
    Bernard Sanders, Vermont               Member
    Sherrod Brown, Ohio                  John Boozman, Arkansas
    Richard Blumenthal, Connecticut      Bill Cassidy, Louisiana
    Mazie K. Hirono, Hawaii              Mike Rounds, South Dakota
    Joe Manchin III, West Virginia       Thom Tillis, North Carolina
    Kyrsten Sinema, Arizona              Dan Sullivan, Alaska
    Margaret Wood Hassan, New Hampshire  Marsha Blackburn, Tennessee
    Angus S. King, Jr., Maine            Kevin Cramer, North Dakota
                                         Tommy Tuberville, Alabama

                          Tony McClain, Staff Director
                   David Shearman, Republican Staff Director

                                C O N T E N T S

                                  ----------

                               September 18, 2024

                                    SENATORS

                                                                       Page
    Hon. Jon Tester, Chairman, U.S. Senator from Montana.............     1
    Hon. Jerry Moran, Ranking Member, U.S. Senator from Kansas.......     2
    Hon. Richard Blumenthal, U.S. Senator from Connecticut...........    10
    Hon. Margaret Wood Hassan, U.S. Senator from New Hampshire.......    10
    Hon. Marsha Blackburn, U.S. Senator from Tennessee...............    12
    Hon. Tommy Tuberville, U.S. Senator from Alabama.................    14
    Hon. Mazie K. Hirono, U.S. Senator from Hawaii...................    16
    Hon. John Boozman, U.S. Senator from Arkansas....................    18
    Hon. Bill Cassidy, U.S. Senator from Louisiana...................    20
    Hon. Sherrod Brown, U.S. Senator from Ohio.......................    22
    Hon. Dan Sullivan, U.S. Senator from Alaska......................    24
    Hon. Angus S. King, Jr., U.S. Senator from Maine.................    27
    Hon. Kevin Cramer, U.S. Senator from North Dakota................    28

                                   WITNESSES

    Hon. Shereef M. Elnahal, MD, Under Secretary for Health,
      Department of Veterans Affairs.................................     3

    Hon. Joshua D. Jacobs, Under Secretary for Benefits, Department
      of Veterans Affairs............................................     5

                                    APPENDIX

                               Prepared Statement

    Joint statement of Hon. Shereef M. Elnahal and Hon. Joshua D.
      Jacobs.........................................................    39

                           Submission for the Record

    Statement of Michael J. Missal, Inspector General, Department of
      Veterans Affairs...............................................    49

                            Questions for the Record

    Department of Veterans Affairs responses to questions submitted
      by:

      Hon. Bill Cassidy..............................................    65
      Hon. Angus S. King, Jr.........................................    68
      Hon. Jerry Moran...............................................    69
      Hon. Thom Tillis...............................................72, 74

                            PROVIDING FOR VETERANS:
                         ADDRESSING CURRENT AND FUTURE
                              VA BUDGET CHALLENGES

                                  ----------

                         WEDNESDAY, SEPTEMBER 18, 2024

                                           U.S. Senate,
                                Committee on Veterans' Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 3 p.m., in Room
    SR-418, Russell Senate Office Building, Hon. Jon Tester,
    Chairman of the Committee, presiding.

        Present: Senators Tester, Brown, Blumenthal, Hirono,
    Hassan, King, Moran, Boozman, Cassidy, Sullivan, Blackburn,
    Cramer, and Tuberville.

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

        Chairman Tester. I want to call this hearing to order.
    Today we are going to discuss a matter that is urgent. It is
    providing additional funding to the Veterans Benefits
    Administration so it can deliver benefit payments to its
    veterans and their families on time.
        So the question is how did we get to this point? Simply
    put, VA is providing more disability benefits to more veterans
    than ever before. From my perspective, that is a part of living
    up to the promises of war. It is a good thing. I am aware of
    the letters from my colleagues that are blasting the VA for
    moving too quickly to provide benefits under the PACT Act. But
    the message I have heard from the veterans in my treasured
    State of Montana and across the country has been very clear.
    These folks have approached us at events in our states. They
    have written letters and emails, and they have gone out of
    their way to express gratitude to Congress and the VA, and to
    let us know these benefits are having lifesaving effects.
        Many of them, particularly the Vietnam era veterans, waited
    decades for these benefits. It is shocking to me that some are
    now telling them that they should have to wait longer because
    the price tag was too steep. Look, we knew addressing long-
    ignored issues like toxic exposure is going to cost a few
    bucks, but it is the right thing to do.
        Over the past 2 years, VA has approved nearly 1.2 million
    PACT Act claims and more than 335,000 veterans have enrolled in
    VA health care, thanks to the PACT Act. Like I have always
    said, if people up here have a problem addressing the true cost
    of war they should not send these folks to war to begin with.
        Today I am hopeful the Senate is finally going to act on
    this supplemental funding. It is not the time for partisan
    politics--that typically has not been the case on this
    Committee--or for misleading rhetoric about a manufactured
    crisis. It is time to act, to ensure that 7 million veterans
    and their families are not left wondering whether they will
    receive their benefit checks in 13 days, because it runs out
    September 20th.
        With that said, we need to have a serious conversation
    about how the VA can better account for emerging trends in its
    budget, potential disruptions of care, where benefits are in no
    one's interest. And I have a lot of questions about the fiscal
    year 2025 shortfall within the Veteran Health Administration,
    particularly about what is driving these unexpected costs. And
    as we look toward providing sufficient longer-term funding for
    the Department, I am working in a bipartisan, bicameral way to
    ensure that we are requiring more transparency and reporting
    from the VA on budget projections and execution.
        As we head down the road, I hope the colleagues on this
    Committee will work constructively, as always have, to ensure
    the Department has the resources it needs to take care of those
    have borne the battle. That is, after all, why this Committee
    exists.
        With that, Senator Moran, I will turn it over to you.

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

        Senator Moran. Chairman Tester, thank you. I asked for this
    hearing. Thank you for agreeing to that request. And I would
    expect my colleagues, and probably your colleagues, to join us.
        Chairman Tester. Yes, they will.
        Senator Moran. I do not know that I need to have a
    conversation about providing benefits. We are for that. When
    veterans are entitled to benefits we want them to receive them.
        But here is what troubles me is the lack of budgeting
    accountability, knowing the facts in time to make better
    decisions. And what is really troublesome to me is the lateness
    in which this issue arose. And I will explore, in my questions
    with the two of you, the nature of what transpired that led us,
    in my view, for Congress to be unaware. And the reality is that
    whatever the reason for the need for additional authority, we
    were not told. We were not told until after the Appropriations
    Subcommittee marked up its bill. In fact, we were told the next
    day. And we were not told by OMB that this was coming. And no
    reason to tell us, I suppose, is my theory, when we are trying
    to figure out the allocation between domestic spending and
    defense spending.
        So my complaint today is really with the level of trust and
    respect that I would hope we have from the Department of
    Veterans Affairs. I know the leadership and many people who
    work there. You all do a really good job of communicating with
    me on an ongoing basis. But if you do that on things unlike
    this significant shortfall, I am troubled on why you would not
    call and inform us about the problems that are arising so that
    we can make the decisions at the appropriate time and avoid
    this--I mean, this is important. What happens today and
    tomorrow on this issue in the Senate matters in whether
    veterans and their families receive benefits on time.
        And Congress could have handled this in a different way,
    but it seems to me that the VA and the OMB, they failed to just
    pay the respects to the U.S. Senate, and to Members of the U.S.
    Senate and this Committee that they know.
        And so my complaint is the nature of lack of notice and
    knowledge, and it seems to me--I hate it when newspaper editors
    put motives behind my actions. They do not know what really
    went on, and maybe I will learn. But it seems to me the motives
    were to have Congress make decisions before we had the facts.
    That is wrong, and I expected something different from the
    people I know and work with at the Department of Veterans
    Affairs. Thank you.
        Chairman Tester. Well, hopefully you will be able to
    address some of those questions in your opening statements, and
    not all of them.
        I want to thank the witnesses for being here today. It is
    not the first time that Dr. Elnahal and Josh Jacobs have been
    in front of this Committee. Dr. Elnahal is the Under Secretary
    for Health. Josh Jacobs is the Under Secretary for Benefits at
    the Department of Veterans Affairs.
        You will each get 5 minutes. Know that your entire written
    statement will be a part of the record.
        And with that, Dr. Elnahal, you get to start.

         STATEMENT OF HON. SHEREEF M. ELNAHAL, MD, UNDER SEC-
          RETARY  FOR  HEALTH,  DEPARTMENT  OF  VETERANS  AF-
          FAIRS

        Dr. Elnahal. Thank you, Mr. Chairman, Mr. Ranking Member,
    and Members of the Committee.
        At VA we are on a mission to provide more care to more
    veterans than ever before. And since the historic expansion of
    benefits under the PACT Act, our commitment has been to enroll
    as many veterans as we can into VA care, because we know it is
    the best and most affordable care for veterans.
        On March 5th we made new groups of veterans eligible for VA
    health care years earlier than required by the law, including
    every veteran deployed to a Post-9/11 mission, regardless of
    their condition or service-connection. Any toxic-exposed
    veteran, exposed at home or abroad, now also qualifies for
    direct enrollment. We have held thousands of outreach events
    across the country over 2 years to meet veterans where they
    are.
        At our VetFest event this year in Fayetteville, North
    Carolina, we met Vietnam veteran Danny Cox. Years ago, Danny's
    service did not qualify him for VA health care, and he did not
    have high expectations. So he was, quote, ``over the moon'' to
    learn that thanks to the PACT Act he was now eligible to
    enroll. He told us that not only does he appreciate that his
    health care team knows veterans but that this will help his
    family also financially. He now tells every veteran he knows to
    get care at the VA.
        We have enrolled veterans like Danny at historic levels.
    Since President Biden signed the PACT Act, 740,000 veterans
    have enrolled in VA health care, 33 percent more than the
    equivalent period prior to the PACT Act. Further, 900,000
    veterans saw their priority group increased, reducing their
    out-of-pocket costs and in many cases allowing them more care
    options like long-term care and dental care.
        We are also delivering more appointments to veterans than
    ever before. We are on track to exceed last year's record and
    deliver over 130 million appointments this fiscal year between
    our direct care system and the community. And we are exceeding
    previous records in pharmacy and prosthetics with 5 percent
    more prescriptions and 10 percent more prosthetics delivered
    this year than last.
        To prepare for this record-breaking delivery of much-needed
    care to veterans, we embarked on a historic hiring effort in
    2023. Despite industry-wide headwinds in recruitment and
    retention, last year our workforce grew at rates not seen in 15
    years. That includes increases in critical occupations, most
    notably physicians, nurses, medical support assistants, food
    service workers, housekeeping aides, and more. Hiring more than
    60,000 health care workers was the right decision to ensure
    that we had the capacity to meet the needs of veterans.
        We also placed an emphasis on improving clinical
    productivity, holding a series of what we called access sprints
    earlier this year. Over just a couple of months, our teams
    across the Nation made it easier and faster for veterans to
    access VA care by offering night and weekend clinics, by
    increasing the number of veterans scheduled into daily clinics,
    and more. We continue to see the impact today with wait times
    in the direct care system down for both primary care and mental
    health new patient appointments.
        Further, we are leveraging every modality of care to open
    VA's doors wider for veterans. Since the start of the pandemic
    we have seen telehealth episodes triple, utilization of
    clinical resource hubs, home-based primary care, and e-consults
    all show rapid increases, even just over last year. And I am
    happy to report now that all of our VSNs have access to tele-
    emergency care services for veterans.
        Across all of our efforts we have prioritized veteran
    feedback about their care, and of course care quality and
    outcomes. Earlier this month we were proud to announced that VA
    hospitals outperformed non-VA in CMS's star ratings for quality
    and patient safety for the second year in a row, and for
    patient satisfaction, for the ninth consecutive quarter in a
    row. Most importantly, we continue to see improvements in
    veteran trust, which reached an all-time high of 92 percent of
    veterans telling us that they trust us for their outpatient
    care.
        As we have communicated throughout the year, we continue to
    exceed even the most aggressive expectations for care growth
    delivered this year. That is growth in services to veterans,
    along with factors such as rising costs for pharmaceuticals and
    prosthetics, and continued year-over-year growth in the need
    for community care referrals, which has resulted in the need in
    totality for additional funds.
        We have requested an anomaly of $12 billion for the
    potential medical care shortfall going into FY 2025. Without
    these resources, VA will be forced to make difficult cuts, most
    notably to outreach, care coordination, and more. This funding
    is necessary to continue to deliver more care to veterans than
    ever before and maintain our achievements in quality, access,
    and all-time high veteran trust.
        Chairman Tester, Ranking Member Moran, Members of the
    Committee, thank you again for the opportunity to appear before
    you today.

        [The joint prepared statement of Dr. Elnahal and Mr. Jacobs
    appears on page 39 of the Appendix.]

        Chairman Tester. Thank you, Dr. Elnahal. Josh Jacobs, you
    are up.

         STATEMENT OF HON. JOSHUA D. JACOBS, UNDER SECRETARY
            FOR BENEFITS, DEPARTMENT OF VETERANS AFFAIRS

        Mr. Jacobs. Good afternoon Chairman Tester, Ranking Member
    Moran, and Members of the Committee. Thank you for the
    opportunity to appear before you today.
        As you know, VA is currently delivering more benefits to
    more veterans and survivors than ever before, which is largely
    a result of the historic Sergeant First Class Heath Robinson
    PACT Act, as well as our unprecedented efforts to reach out to
    veterans, family members, and survivors proactively and connect
    them to their earned benefits.
        Veterans like Oscar, a former active duty Army and Colorado
    Air National Guard veteran who served two tours in Iraq. A few
    years ago, Oscar received the devastating news that he had
    advanced cancer. He submitted his claim for what he already
    knew was a terminal condition so he could ensure the family he
    loved was taken care of after he passed away. But since his
    claim was submitted and decided before PACT Act became law,
    Oscar's claim was denied.
        When President Biden signed the PACT Act into law in August
    2022, Oscar's county Veteran Service Officer in Colorado, Chad
    Ferris, immediately gave him a call and walked him through the
    steps to reapply for his claim. Tragically, Oscar passed before
    learning that he had been granted a 100 percent service-
    connection for his cancer. But thanks to Chad's persistence and
    the provisions in the PACT Act, Oscar's surviving spouse and
    four children became entitled to benefits in his name.
        Thanks to the generous resources and authorities provided
    by Congress, we utilized the authority provided by the PACT Act
    to make all presumptives effective the day the bill was signed
    into law rather than spreading implementation over several
    years. We also began processing all PACT claims on January 1,
    2023, instead of waiting 18 to 24 months for the completion of
    the rulemaking process, as is typically standard. We make these
    decisions so that millions of veterans who were subjected to
    toxic exposures while fighting for our country could receive
    the benefits they earned as quickly as possible.
        In the 2 years since the PACT Act was signed into law, VA
    has delivered over 1.2 million PACT Act benefits, equating to
    more than $7 billion, to veterans and survivors. In FY 2023,
    veterans and survivors submitted 39 percent more claims
    applications than 2022, an all-time record.
        Today, more veterans and their families are receiving
    earned benefits than ever before. In this fiscal year alone, VA
    has already granted more than 1.1 million benefits, over half
    of which are PACT Act-related, delivering $154 billion in
    benefits to veterans and survivors, another all-time record.
        And it is not just PACT Act claims that have led to this
    increase. Thanks to the largest, most aggressive outreach
    campaign in VA history, veterans, family members, and survivors
    are applying for a variety of benefits at higher numbers than
    ever before. To give you an idea of our efforts, since January
    1, 2023, we have held almost 18,000 events that included PACT
    Act briefings, with over 1.8 million direct engagements with
    veterans or their family members. This includes processing
    applications for education benefits, insurance, home loans, and
    more.
        When a veteran applies for benefits, our goal is to work
    with them to gather the necessary evidence to get to yes. And
    with this approach, we have granted benefits for 65 percent of
    claims and 75 percent of PACT Act-related claims, a sharp
    increase from previous years.
        Despite setting aggressive projections at the beginning of
    the year, the record-setting benefits delivered to veterans
    have exceeded our expectations and resulted in the need for an
    additional $2.883 billion in FY 2024 funding for mandatory
    benefits payments. This is money that goes straight into the
    pockets of veterans and their survivors.
        These funding estimates are conservative to ensure
    sufficient funding is available to get through the fiscal year
    and deliver on the promise to provide veterans their earned
    benefits on time, especially as VA continues to break records
    in benefits and health care delivery. Any funding shortfall of
    even $1 would prevent VA from processing its September pay
    file, and as a result delay benefit payments to approximately 7
    million veterans and survivors.
        We are committed to being transparent with Congress as well
    as veterans and their families on this issue. We were not
    willing to take the risk of potential delays in payments that
    veterans and their families have earned and deserved, which is
    why we elevated this risk as soon as we validated the potential
    need and why we are making changes to future budget projections
    so we do not find ourselves in this situation again.
        Our commitment remains steadfast. We are focused on
    delivering more benefits to more veterans and survivors more
    quickly than ever before.
        Thank you for your continued support. I appreciate the
    opportunity to appear before you today and look forward to
    continuing to work with you to improve veteran outcomes, and I
    am ready to answer any questions you or other Members of the
    Committee may have.
        Chairman Tester. Yes, thank you, Josh, and there will be
    plenty of questions, and I want to thank you both for your
    testimony.
        Look, in my tenure on this Committee this is not the first
    time VA has asked for additional funding. In this instance, the
    VA has, as you have already pointed out, Josh, and you too, Dr.
    Elnahal, had a very successful outreach around the PACT Act. It
    has prompted greater numbers of veterans, survivors, and
    beneficiaries to apply and to get those benefits.
        So the question is twofold, Mr. Jacobs. Number one, how did
    we end up here, and could you explain the timeline that the
    Ranking Member brought up in his opening statement, and why the
    timeline was what it was.
        Mr. Jacobs. Senator, thanks very much for that question.
    The reason we find ourselves in this situation is frankly our
    workforce has overdelivered on what were already aggressive
    projections. For the last year we have delivered more benefits
    to more veterans than at any other time in our history. Last
    year we delivered nearly 2 million claims decisions. We set
    projections that we would deliver 2.2 million claims
    projections. And in the spring, when the Secretary testified
    before Congress about our budget we were on track, looking at
    our projections and our actuals.
        What happened is, in July, as part of what we call the mid-
    session review, a statutorily mandated process, we updated our
    projections based on the most recent experience, and we
    identified that there was potential for us to actually deliver
    2.5 million claims decisions. So, as we updated those
    projections, we then had to work to verify and validate that
    the assumptions we were making were, in fact, possible. And as
    soon as we did that we communicated the risk and that potential
    need to Congress.
        Chairman Tester. Okay. What percentage of the requested
    mandatory funding is administrative or overhead expenses, and I
    would guess that the remainder would go to straight to the
    veterans. Correct?
        Mr. Jacobs. Mr. Chairman, none of the funding that we have
    requested is administrative. The entirety of the funding is
    going to support the delivery of care and benefits.
        Chairman Tester. Okay. Thank you. You talked about it a
    little bit but I want you to talk about it a little more. Tell
    me what is the impact on veterans and their survivors if
    Congress does not do what we need to do, and get the $2.883
    billion out and then ultimately address the issue in next
    year's budget.
        Mr. Jacobs. The risk of not receiving these funds by the
    20th is that the funds would be delayed in terms of their
    delivery to veterans. Over many years, we have developed----
        Chairman Tester. So talk about that delay. Are we talking a
    delay of week or 2 weeks, or are we talking--how long?
        Mr. Jacobs. Well, the majority of the funds that we provide
    are delivered through direct deposit, so 98 percent of our
    compensation and pension funds are delivered that way. We do
    have the ability to compress that timeline. The challenge is it
    increases the risk that something breaks in the process. But we
    can move that up, and working closely with Treasury find ways
    to compress it.
        The real risk is that 2 percent of veterans and survivors,
    140,000, the most vulnerable of our customers, many living in
    rural areas, more health conditions, older, would have a delay
    of up to 2 weeks.
        Chairman Tester. Okay. And don't think I don't want to pick
    on you too, Dr. Elnahal, but this is another question for Mr.
    Jacobs. What new budgeting processes have you implemented since
    discovering the shortfall to capture the costs related to the
    PACT Act, so that you can more accurately account for what the
    needs are out there, so we are not going to be here next
    September?
        Mr. Jacobs. Yes. We have updated our outyear projections
    for 2025 and 2026. One of the main lessons here is we cannot
    underestimate the ability of our workforce to overdeliver.
        We are also working to increase the average rate at which
    disability, the average disability rating, increases. For the
    last several years we have seen an average increase in the
    disability rating of 1 percent. What we are seeing is it is
    actually increasing at a faster rate, at 2 percent. So we are
    updating those projections to make sure that we account for the
    total cost increase, and then we are going to continue to work
    to refine that.
        We have also worked to more frequently provide reports to
    Congress, to this Committee, to ensure that we are sharing with
    you monthly comparisons of actuals to projections, to make sure
    that we have got transparency and close lines of
    communications.
        Chairman Tester. I think you have already answered this
    one, but I am going to ask it anyway. Do you have all the tools
    you need to be able to address, authorities and resources you
    need to be able to address the issue?
        Mr. Jacobs. Yes, sir.
        Chairman Tester. Okay. Thank you. Ranking Member Moran.
        Senator Moran. Thank you, Mr. Chairman. Mr. Jacobs, I
    understand you are the one who is responsible for briefing OMB
    monthly on mandatory spending for veteran benefits. At what
    monthly briefing did you inform OMB of this issue? And how long
    after did you inform Congress?
        Mr. Jacobs. Senator, our Chief Financial Officer is engaged
    in those briefings, but what happened is in June, as part of
    the midsession review, we identified this need. We then
    elevated it, once we were able to verify the concerns and the
    assumptions here, and then communicate it to Congress.
        Senator Moran. Let me ask it this way. Are you telling me
    that the decision to notify Congress when you did--let me put
    what I think the facts are. You just indicated that OMB was
    notified in June. The MilCon-VA Appropriations Subcommittee did
    not mark up a bill until July. And why did the VA wait until
    the day after that markup to start formally notifying Congress?
        Mr. Jacobs. Senator, we had to work through a process of
    verifying and validating that our assumptions were right. So my
    recollection is this all happened toward the end of June, and
    we had a series of meetings with OMB to verify that the
    assumptions we were making, in terms of the updated
    projections, were sound, so a red team analysis, if you will.
    We had to work through that process and balance the need to
    ensure both timely reporting but also accuracy.
        Senator Moran. No thought within the Department's
    leadership that in the period of time between June and July
    that it might be useful to let Congress know that maybe
    something is happening, before we make our decision about how
    we allocate spending between domestic spending and military
    defense spending?
        Mr. Jacobs. Senator, I want to personally apologize for not
    calling you myself, as you referenced in your opening
    statement. One of my lessons here and one of our lessons is we
    will provide earlier communications. I will also say we did not
    have a high level of confidence that we were working to get
    independent verification that the estimate was, in fact, real
    and the needs were verified.
        Senator Moran. I appreciate the suggestion that there be
    additional communication, but let me also point out that
    Secretary McDonough responded to a letter from Chairman Tester
    and me on this topic in May, and I quote the letter. ``We have
    the nationwide staffing totals we need to deliver the services
    to our Nation's veterans.''
        In addition to that, the Secretary's testimony has always
    been that we seem to be doing fine, and if we need any
    additional help we will let Congress know. And what I have seen
    in the press, that has been the explanation. Well, we told
    Congress that we might need their help, so we do not feel like
    we were not disclosing appropriately.
        But it does seem to me that the lack of certainty with
    you--you claim that you did not know for certain about the
    amount of money, but you knew that something was happening, and
    in both the letter and in testimony the indication would be
    Congress would be informed. And it has a lot of consequences as
    we do our appropriations process. And as I said, we only know
    this after we mark up MilCon-VA.
        Let me move on a bit. Mr. Jacobs, one of the documents that
    the VA shared regarding the shortfall indicates a projected
    additional need next fiscal year of approximately $22 billion.
    Is that accurate?
        Mr. Jacobs. I believe it is in that range, $20 billion or
    so. Correct.
        Senator Moran. And, let me, because we have not had the
    chance to talk about this issue in a hearing, and I do not
    think we have been in this room for months, I want to talk
    about the bonuses. Both of you used the authority, your
    authority, to award bonuses ranging up to $100,000 for 182 VA
    senior executives in the VA Central Office. A total of $10.8
    million in CSI payments were spent this way. Is this
    appropriate? Are you satisfied with the decision that you made?
    Is there any admission that it is a mistake or it is just that
    Congress caused an uproar and it did not look good and you
    tried to alter the circumstances that you created?
        Mr. Jacobs. Senator, we made a mistake, as an organization,
    and I made the mistake personally in the way that we handled
    the CSI payments to senior executives in Central Office. And as
    we identified and reported with the Inspector General, once we
    confirmed the mistake we communicated to you, to this
    Committee. We began the process of recoupment, and we have, to
    date, recouped 93 percent of the bonuses, or the CSI payments,
    and we are in the process of getting the remainder.
        But what I will tell you is I am mindful that trust is a
    key priority for us, and that if we do not have trust we are
    not going to encourage veterans to access their earned
    benefits. So to the extent my actions and the Department's
    actions imperil that trust, I want to apologize and take
    ownership for that and make sure that we never repeat that
    mistake again.
        Senator Moran. Trust is important, and communication is a
    significant component of the capability of having trust. And I
    would encourage you, again, the Secretary and both of you are
    very kind in the number of times in which you call and give me
    information. You just referenced one of them. But it seems to
    me that when the billions of dollars that we had in shortfall
    appeared, that this circumstance was worthy of that same kind
    of notification so that we could make decisions. And not just
    me and not this Committee but the appropriations process and
    the leadership of the House and Senate. Thank you.

                        HON. RICHARD BLUMENTHAL,
                     U.S. SENATOR FROM CONNECTICUT

        Senator Blumenthal [presiding]. I am substituting for
    Chairman Tester.
        Senator Moran. You are doing a very fine job. I like this.
        Senator Blumenthal. Well, don't reach any hasty judgments.
    With your guidance I am sure I will. Senator Hassan.

                       HON. MARGARET WOOD HASSAN,
                    U.S. SENATOR FROM NEW HAMPSHIRE

        Senator Hassan. Thank you, Senator Blumenthal. My thanks to
    the Chairman and Ranking Member Moran for this hearing. Look,
    the VA does essential work to provide care and benefits to our
    veterans including through the PACT Act. But I join my
    colleagues in being very concerned about the budget shortfall
    caused by the VA's miscalculations, and so are the Granite
    Staters who have reached out to my office.
        As I discussed at a recent roundtable with veterans in New
    Hampshire, while I am pleased that the VA has provided services
    and benefits to many PACT Act veterans, it is unacceptable that
    the veterans benefits are now at risk due to the VA's inability
    to properly plan for that very influx of PACT Act veterans. The
    VA has to do better. We have to do better.
        Mr. Jacobs, I wanted to start just by following up on your
    answer to Chairman Tester's question about what are you doing
    to make sure that this kind of budget miscalculation does not
    happen in the future. You said, if I heard your answer
    completely, essentially that you made some mistakes with
    projections, you know, how fast and well the workforce could
    work, but also some other projections. But what, in the
    processing moving forward, are you changing so that this does
    not happen again?
        Mr. Jacobs. I think that the largest driver in the process
    are the inputs and the assumptions. And it is also going to be
    the frequency with which we report out, to make sure that we
    are transparent.
        In the springtime, what we identified is that our spend
    plan was nearly on track with our projections. And so we were
    maybe half a percent off for both the education and the comp
    accounts. And so we will continue to do that and make sure that
    as we update our projections we can communicate transparently
    and with vigor.
        Senator Hassan. And I think from what you are hearing from
    the Ranking Member, and I assume you will hear from others,
    with communication as frequently as you can with us, even when
    you are not quite sure what the actual information is going to
    turn out to be.
        Dr. Elnahal, I want to turn to you and health care. As the
    VA has provided health care to more PACT Act veterans, the
    Department is living up to its mission of caring for those who
    have served. That care, though, is not confined to 1 year or
    one budget cycle. It is a lifelong commitment that our country
    has rightly made to our veterans.
        The veterans now covered through the PACT Act are going to
    receive care through the VA for decades to come. So what is the
    VA doing to ensure that it accurately projects the level of
    resources, including funding, that is necessary to provide
    health care for our veterans in the long term?
        Dr. Elnahal. Thank you for the question, Senator. The main
    driver, as my colleague mentioned, for our need for additional
    funds is greater care delivery than ever before to more
    veterans than we anticipated, both enrolling and having their
    priority groups increased because of the hard work that VBA
    employees have done to grant more service-connection.
        And so our efforts to improve our predictive models for our
    budget needs are going to take better into account three main
    factors. The first is our unprecedented outreach. Historically,
    VA has not necessarily been present in communities where
    veterans are, at nearly the frequency where we are now. And I
    hope to be able to make sure that we project the results of
    that, which is more veterans finding out about their earned
    benefits and health care opportunities and enrolling with us.
        The second is the combined policy effects of the MISSION
    Act, which has allowed more veterans to get care in the
    community to meet their needs across the country, and also the
    PACT Act, because of the dynamic I mentioned around priority
    group increases, which confer new health care opportunities to
    veterans in long-term care, dental care, and other services.
    Now this, I think, was an underappreciated factor in our
    projections, and we will make sure that we take them into
    account into the future.
        But the combination of policy and unprecedented outreach,
    Senator, we have to take those better into account as we
    project future budget needs.
        Senator Hassan. Right. And just to be clear, when I am
    meeting with my veterans, a lot of them still do not feel like
    they get great outreach, and a lot of veterans still tell me
    they were not fully aware of the range of benefits or health
    care available to them. So you guys are really going to need to
    kind of think through the ripple effect here, right, and the
    compounding effect, which is a good thing that we should be
    hoping will happen. But what are really looking for is
    processes that will capture that, right?
        Dr. Elnahal. Yes.
        Senator Hassan. I may follow up a little bit more on that,
    but I just wanted to close with adding my concerns about the
    improper issuing of bonuses. The VA Inspector General's Office
    found that the awarding of almost $11 million to Central Office
    executives within the VA, the VBA, your respective offices,
    were inconsistent with both the PACT Act and the VA policy. So
    this was not just a mistake. You have got the Inspector
    General's Office saying you guys just did not follow the law
    and follow the policy.
        I know that you have worked to recoup the bonuses, but with
    the Chair's permission I would like you both just to talk a
    little bit more about how you can explain your role in and
    responsibility for the improper issuing of these bonuses, and
    how do you plan to ensure that it does not happen again. Mr.
    Jacobs.
        Mr. Jacobs. Senator, we had a number of process
    shortcomings, so we did not have the right level of lawyers to
    review. There were concerns that were raised within our HR
    function that did not get elevated. So we have to improve who
    is involved in the decision-making process. We also have to
    ensure that we have the right level of independence so that
    there are no conflicts of interest. Part of that process is to
    ensure that all CSI payments in the future that go to
    executives are delegated to only be approved by the Secretary.
        Senator Hassan. Dr. Elnahal.
        Dr. Elnahal. Senator, to just add to that, my ownership of
    my personal mistakes, mistakes made within our health care
    system on this, they simply will not happen again because my
    attention will be on implementing all of the IG's
    recommendations.
        And finally, I think one of the biggest gaps was not
    bringing this proposed set of incentives forward to our broader
    governance process so that our General Counsel's Office, our
    Human Resources Office, senior leadership, and other really
    important stakeholders could have weighed in. In my case, we
    issued incentives to many more executives than I had originally
    anticipated. All of this would have been caught if we had put
    the proposal through our governance, and it will not happen
    again, Senator.
        Senator Hassan. Well, that is good to hear. Just be aware
    that other offices at the VA did not take this opportunity to
    give bonuses to senior executives because I think they
    understood that was not the intention of the bonus system.
        Thank you, Mr. Chair.
        Senator Blumenthal. Thanks, Senator Hassan. I would be next
    but I am going to defer to my colleagues who are here. Senator
    Blackburn.

                         HON. MARSHA BLACKBURN,
                      U.S. SENATOR FROM TENNESSEE

        Senator Blackburn. Thank you so much, and thank you all for
    coming back to visit with us. I think you know we are all
    concerned about the shortfall, and hopefully we get legislation
    over here this week from the House that is going to patch that.
        I have listened to your answers, and honestly, I do not
    see--there is a lot that just does not seem to add up. How you
    could not have seen this coming is perplexing. So talk to me
    for just a minute about the added transparency and what you are
    going to do to improve that annual budget process. You were
    saying you were looking at $20 billion more in benefits. I
    think that is right, Mr. Jacobs.
        And Senator Sullivan has proposed a bill, and I am co-
    sponsoring this, that would require you to provide regular in-
    person budget reports to Congress, because your numbers have
    been so far off, and your expectations have been so far off. So
    I would love to hear from each of you on that.
        Mr. Jacobs. Senator, I would be happy to increase
    transparency and communication. We previously provided
    quarterly spend rates. Right now we have increased that to
    monthly, and I would be happy to do that in person. The
    approximately $3 billion that we have requested in mandatory
    funding is a little less than a week's worth of payments that
    we provide to veterans and their families. So in terms of where
    the projections were relative to the total amount, relatively
    small but obviously a large dollar amount.
        In terms of the process improvements, we are making certain
    adjustments to our inputs and the assumptions. I discussed that
    a little bit earlier about the total number of vets served and
    the average rate of increased disability compensation. And then
    as we do that we will continue to communicate with this
    Committee and others in Congress to make sure we are----
        Senator Blackburn. Okay. Let me ask you this. Was the
    communication gap that caused this shortfall, was it between
    the veterans and the case worker, the case worker and your
    offices? Where did your numbers fall--how did you get so far
    off track? And I know you have said, well, we have done more
    outreach, well, we have done this, well, we decided to change
    how the PACT Act was going to be implemented. But there should
    have been some form of communication that said we have got a
    hiccup in the system and we need to fix this. And to have come
    before us and not brought it forward and then immediately,
    after say, hey, we have got a problem, it looks very
    suspicious.
        Our job is to make certain that veterans get what benefits
    they are entitled to.
        Mr. Jacobs. Senator, as we were monitoring our spend plan
    and comparing the actuals versus the projections, what we
    identified in the second and third quarter is that we were
    actually quite close, and in fact our spend rate for
    compensation and pension was actually under the projections.
        What transpired and changed in that June/July timeframe is
    we updated our projections. So based on new analysis we
    identified the potential risk for the need of additional
    mandatory funding. And the challenge----
        Senator Blackburn. So you do not do this on an ongoing,
    rolling basis. You periodically do updates. So do you need
    different technology?
        Mr. Jacobs. No, Senator. I think what we have to do is just
    continue to maintain frequency.
        Senator Blackburn. Okay. All right. Dr. Elnahal?
        Dr. Elnahal. Senator, absolutely. So we made very explicit
    policy decisions, including accelerating eligibility for many
    more categories of veterans as of March 5th of this year. Fifty
    thousand veterans have since enrolled from that authority
    alone, on top of three-quarters of a million veterans since the
    PACT Act was signed.
        We should have been more communicative. I will definitely
    concede that to you, and we will work on that. We have been
    monitoring budget execution, as we normally do, every single
    month. The main driver of this is delivering more care to
    veterans than ever before. And we stand by our decision to open
    the doors into the health care system for more veterans, but I
    pledge to you that we will be as transparent as possible as we
    move forward, and we do think this is a good investment for
    future veteran care into the next fiscal year.
        Senator Blackburn. Okay. Let me ask you one quick thing
    about the CSI bonuses, because I think this was astounding that
    bonuses of up to $100,000 were being given. Were any of these
    individuals that got bonuses working remote, part-time, or were
    all of them in-person 5 days a week?
        Dr. Elnahal. So we have a policy for our headquarters,
    Senator, where folks have to come in 5 days per pay period,
    which is 2 weeks, so about 5 days every 10.
        Senator Blackburn. So they are able to work remote, part-
    time, and they are going to get $100,000 bonus, and we have a
    budget shortfall that we cannot take care of the veterans and
    provide them the benefits they have earned.
        Dr. Elnahal. Senator, listen, I concede that we made
    mistakes on this. As soon as we discovered, especially in my
    case----
        Senator Blackburn. My time has expired. I am going to send
    it back to the Chairman.
        Senator Blumenthal. Thank you, Senator. Senator Tuberville.

                         HON. TOMMY TUBERVILLE,
                       U.S. SENATOR FROM ALABAMA

        Senator Tuberville. Thank you, Mr. Chairman. Thanks for
    being here today, both of you. Very important. You know, our
    VA, especially in my state we have so many veterans that we do
    it the right way. We give the best possible care, biggest
    health care system in the world. I get more complaints about
    this than probably anything that I do, but we have just got to
    make sure taxpayer dollars are spent in the right way, but we
    want to take care of our veterans.
        First of all, bonuses. Mr. Jacobs, are these for doctors or
    administrators, these bonuses?
        Mr. Jacobs. The majority of the CSI payments that have been
    paid out by the Department are going to frontline workers, and
    that ranges from environmental technicians who are keeping the
    hospitals clean to HR staff. The CSI payments that were
    provided inappropriately were done to leadership in Central
    Office.
        Senator Tuberville. Is this merit based or seniority?
        Mr. Jacobs. So the requirements under the law are that they
    are positions that are in high demand and short supply, and the
    jobs that are relative to their specific position and critical
    skill.
        Senator Tuberville. You know, we talked about projections.
    How often are your projections internally verified? I mean, do
    you internally go back, have people checking? How often does
    that happen?
        Mr. Jacobs. It is several times a year. We work to update
    our projections. We have two teams, one in the Office of Field
    Operations, one in our what we call the PA&I, Performance,
    Analysis, and Integrity team. They run different models and
    they work against one another to verify the projections and to
    stress test it. We then do that again, as we did most recently
    in June, where we worked to update the projections versus
    actuals, based on the new real-time data that we have
    identified.
        Senator Tuberville. As much money as we are talking about
    here, do we use any outside accounting or entities to go
    through these projections at all, or is it just all in-house?
        Mr. Jacobs. I believe it is in-house. I would have to
    double-check and make sure that I am not unaware of any
    additional outside review for the VBA process.
        Senator Tuberville. All right. Mr. Elnahal, 2025, I think
    my staff was briefed that we are going to have a $22.6 billion
    shortfall. Is that correct?
        Dr. Elnahal. It is about a $12 billion potential shortfall
    into fiscal year 2025 for medical care.
        Senator Tuberville. Yes, 425, we projected that for the
    year 2025, or is that what you are talking about?
        Dr. Elnahal. For fiscal year 2025, yes, Senator.
        Senator Tuberville. Okay. Mr. Elnahal, since the PACT Act,
    the VA has announced that they have hired more personnel than
    ever before, and at the same time community care referrals,
    especially in my state, have continued to go up. Health care
    providers in the Gulf Coast VA health care system have told me
    and my staff that they are overwhelmed with patients and they
    are having to heavily lean on community care, which the VA
    claims is a leading cause of the VHA's budget problems in the
    first place.
        How can we be confident the VA's long-term hiring strategy,
    given the increase in hiring, should mean less community care?
    I mean, to me that is an oxymoron there.
        Dr. Elnahal. Well, Senator, we need this $12 billion to
    grow both direct care and community care, and we are up 10
    percent in established patient appointments, nearly 7 percent
    in new patient appointments.
        Senator Tuberville. So we are hiring more people, right? We
    are hiring more people.
        Dr. Elnahal. That is right. So we are delivering more care
    in the direct care system, Senator. At the same time, we are
    also at about a 14.5 percent growth rate in the community care
    budget. So the $12 billion will support growth in both
    accounts, direct care and community care, for veterans, and
    also help us pay for increasing costs for pharmaceuticals and
    prosthetics that veterans need.
        Senator Tuberville. Yes. And with this PACT Act we were
    hoping this would happen, people would come and take advantage
    of this.
        Dr. Elnahal. Yes.
        Senator Tuberville. So what is the VA's plan to prioritize
    health care worker hirings, especially in mental health?
        Dr. Elnahal. Well, Senator, even during this fiscal year,
    which has been a tighter picture than recent years, we have
    told our medical centers to strategically hire especially in
    mental health, but where veterans need it, clinical care the
    most. So as a result we have actually grown by just over 2
    percent this fiscal year, even though our original goal, in
    terms of maintaining our all-time high veteran trust, quality
    and patient safety outcomes, we thought we could achieve that
    goal with level staff.
        But our medical centers did the right thing and hired
    anyway because that is what they felt we needed, and they have
    been delivering on it with more productivity and more care to
    veterans. So the additional money will allow us to grow further
    by an additional 5,000 employees, to be able to meet even
    further needs.
        Senator Tuberville. So since the PACT Act the last 2 years
    have we seen more people come for help with mental health?
        Dr. Elnahal. Yes, Senator. The mental health demand is
    significantly up, 15 percent more new patient appointments in
    mental health this year than last year. And we also have
    increases in all categories of mental health, including
    telehealth episodes of care.
        Senator Tuberville. I hope we are looking at the new
    avenues of mental health, helping mental health. There are some
    things that hopefully we get in the next budget that we can
    help doctors with it, or really helping PTSD. I know for a fact
    that they have helped in the VA in Arkansas. A friend of mine
    runs the VA there that has really helped. It is going to cost
    money, which everything does, especially in health care.
        Thank you very much. Thank you, Mr. Chairman.
        Senator Blumenthal. Senator Hirono.

                         HON. MAZIE K. HIRONO,
                        U.S. SENATOR FROM HAWAII

        Senator Hirono. Thank you, Mr. Chairman. So I realized that
    we are going to need, that Congress will need to provide you
    with close to $3 billion just to get us through, what, this
    current fiscal year?
        Dr. Elnahal. Yes, Senator.
        Senator Hirono. And then you are going to need another
    close to $12 billion for fiscal year 2025. So yes, you have
    been asked questions about how your budgeting process and your
    ability to accurately determine what the fiscal needs are. So
    do you have the--this is for both of you--do you have the tools
    that you need to accurately project your funding needs, and
    whether that projection could come to us earlier in the year
    than this kind of--I view a $3 billion request right now, which
    we have to do, I believe, in the Senate tomorrow or today, you
    just cannot keep doing it this way.
        So do you have the tools that you need? Do you have the
    people with the ability to make this assessment? Do you have
    whatever other tools that you need to make better predictions?
        Dr. Elnahal. Senator, from a VBA perspective I believe we
    do have the tools. I think one of the key lessons learned is
    that we should not underestimate our workforce. They
    overdelivered on what we thought were already aggressive
    projections. So we are increasing the total number of veterans
    we anticipate being able to serve.
        Senator Hirono. Excuse me. What do you mean by ``they
    overperformed''?
        Dr. Elnahal. So at the beginning of this fiscal year we
    projected that we would be able to deliver 2.2 million claims
    decisions, which was about 200,000 greater than we were able to
    do in the previous fiscal year. And we have already surpassed
    2.4 million, and we are on track to complete 2.5 million claims
    decisions. So we are delivering more benefits to more veterans
    than at any other time in our history.
        Senator Hirono. So in terms of your claims decisions you
    have gotten a lot better?
        Dr. Elnahal. Yes, Senator.
        Senator Hirono. That is good.
        Dr. Elnahal. And Senator, if I can just add, I recognize I
    am a temporary steward of this role. I am not going to be here
    forever. One of the things I want to impart on this
    organization is to take the right lessons from this experience.
    We could have stopped the outreach. We could have slowed down
    the claims processing or stopped claims processing to meet
    those targets. But we chose not to because we wanted to keep
    our foot on the gas, and as soon as we realized it, to make
    sure we are delivering as many benefits to as many veterans as
    possible.
        Senator Hirono. Yes. I commend you for making your claims
    process, that decision-making process and your review process
    much more expeditious, because that has been one of the
    complaints from veterans, that it takes forever for different
    decisions to be made that would impact them. So you got that
    part going, but now you need to better estimate whatever it is
    that you need so that we are not left with having to provide
    really substantial amounts.
        Now one of the other things that I--and you are improving
    on that. That is what you are telling me.
        So for Dr. Elnahal, I think I heard you say that VA has not
    been present where the veterans are. I heard you say that. So
    do you have a map or some kind of a population data as to where
    all your veterans live? Because that is how I interpret what
    you mean by VA is not where the veterans are. So this system
    such as we need more CBOCs, for example, so that the health
    care can be provided where they live. Is that what you are
    talking about?
        Dr. Elnahal. I was referring to our outreach efforts,
    Senator. The fact that we have done thousands of outreach
    events in communities alongside our colleagues in the Veterans
    Benefits Administration, to help make veterans aware of their
    earned benefits and health care opportunities has led to
    750,000 veterans enrolling since the PACT Act was signed, and
    900,000 veterans being upgraded in their health care coverage
    so that they can qualify for new services like dental care and
    long-term care.
        Senator Hirono. I think that is another aspect of what
    needed to happen is your outreach efforts, because there are a
    lot of veterans, particularly I would say, not necessarily the
    World War II or the Vietnam veterans, although there are issues
    there, you know, for them to understand what the programmatic
    support is. But at the same time, I would say we need to
    distribute a better place where they can go to have their
    health care needs met, which means, in my view, CBOCs.
        I am a big supporter of CBOCs going where the veterans are,
    so do you have a plan for distributing the health care
    capabilities to where the veterans are?
        Dr. Elnahal. Yes, Senator. One of the main drivers that
    compelled us to come to Congress to ask for $12 billion in
    additional funding was our ability to actually activate new
    clinical space in some of the fastest growing areas in the
    country that need a presence closer to them.
        On top of that, we have a lot more programming, Senator,
    that is growing significantly, that brings our VA teams into
    veteran homes and communities. So we have home-based primary
    care, we have a lot more telehealth happening, 15 percent
    growth year over year, and we are really trying to, with
    programs like the Close to Me program for cancer therapy, bring
    our complex cancer infusion teams closer to rural communities
    and veterans who live in more remote areas, to bring that care
    closer to them.
        Senator Hirono. Thank you. I commend you for all of those
    efforts, but obviously you need to better assess what your
    resource needs are so we can be on the same page.
        Thank you, Mr. Chairman.
        Senator Blumenthal. Senator Boozman.

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

        Senator Boozman. Thank you, Mr. Chairman. I want to thank
    both of you for being here today. As elected officials, we
    require consistent and forthright communications to ensure the
    VA receives the resources required to fully serve veterans in
    our communities. Anything short of that risks us in situations
    like we are in today, where Congress must make a significant
    budget shortfall on extremely short notice.
        At the VA's budget request hearing in May, I raised my
    concerns about the decrease in the veterans' health care
    request and asked what risks the VA's budget would open. I
    appreciated the work that the VA has done but remain concerned
    that a shortfall of this size was not anticipated. So we
    unfortunately now find ourselves in a situation where veterans
    benefits are at risk.
        I have had the pleasure of serving on the Appropriations
    Committee Subcommittee for MilCon-VA, being the lead Republican
    on that right now, which funds the VA's yearly budget, along
    with this Committee. Of note, the VA's announcement of the
    shortfall came shortly after that Committee agreed on topline
    funding and marking up that particular spending.
        Now it is interesting. In my comments, as we were passing
    that bill, I explicitly said that I was very concerned about
    the numbers. Senator Collins, in her statement, she said that
    she was very concerned about the numbers.
        I guess my question is why was my staff more aware of this
    than your staff and you? Mr. Jacobs.
        Mr. Jacobs. Senator, in the spring, around the time that
    the Secretary was testifying, we were closely monitoring our
    spend plan and comparing our obligations to our projections.
    And we were pretty much on track. We were quite close. So while
    we were close, we were monitoring it. We did not have reason to
    believe that we would need additional funding.
        What happened is in June we engaged in the midsession
    review, as part of that statutorily mandated process, to
    reconsider and review with OMB our numbers. And while we did
    that we updated the projections to include real-time data and
    our experience to inform how we thought the rest of the fiscal
    year would proceed.
        What we identified in that June timeframe was the potential
    need for additional mandatory dollars in order to ensure that
    we could provide all veterans and survivors----
        Senator Boozman. No, I understand, but again, as we were
    doing the mark up for that bill, as was testified to here, my
    staff and the majority staff were very concerned that the
    numbers just did not add up, okay. They did not need a June
    whatever. They just knew, because they follow those accounts
    very closely, that what you were asking, it did not compute. It
    did not make sense.
        And were not off a billion dollars. You were not off a
    little bit of money. You were off a tremendous amount of money,
    okay. So that is the situation that we find ourselves in. And
    then literally, you know, the day after we did our
    appropriations, you come out rectifying it, and that is not a
    good look.
        How do you believe OMB's understanding of funding needed
    for the VA compares to the VA's understanding of required
    funding? Because OMB has got their ideas. You have got yours.
    What is the delta? Do you all agree?
        Mr. Jacobs. Yes, we agree on the total needs for mandatory
    funding.
        Senator Boozman. Okay. How much do you assess that the
    accuracy of the VA's budget formulas contributed to the
    shortfall?
        Mr. Jacobs. I think we have a number of lessons learned
    from our budget forecasting. One is we need to increase the
    total number of veterans we project we can deliver benefits to,
    because our workforce has been delivering at a very high rate.
        Second is we need to better incorporate the increase in the
    average disability rating. Historically, it has increased about
    1 percent per year. What we are seeing more recently is a 2
    percent increase. So we need to take those factors into
    consideration.
        And three, we need to improve our process, so that includes
    monthly reporting to your Committee, to the authorizing
    Committees, to make sure that we are continuing to communicate
    as we know in real time, even if we have not yet fully verified
    the potential need.
        Senator Boozman. Okay. So if you had done that we would not
    have this problem now, with not being a billion dollars off or
    $2 billion, but many billions of dollars off. That would have
    prevented the situation that we are in now.
        Mr. Jacobs. Senator, I think we would still find ourselves
    in a similar situation, absent the forecasting assumption
    changes. What we are finding right now is that the actual spend
    is below plan. We are maintaining the request as still merited
    because we need to be conservative in the mandatory spend. If
    we are even one dollar short, we will be delayed in our ability
    to deliver timely benefits to veterans and survivors.
        Senator Boozman. So how much more are you asking?
        Mr. Jacobs. We are asking for what we requested originally.
        Senator Boozman. And how much more is that than you really
    think you need----
        Mr. Jacobs. Right now----
        Senator Boozman [continuing]. According to your projection.
        Mr. Jacobs. Right now we anticipate, we are about 0.9
    percent under plan, but we are still going through the end of
    the fiscal year, and our workforce, historically in September,
    really puts on the gas and moves forward very high.
        Senator Boozman. Okay. Thank you all very much. Thank you.
        Senator Blumenthal. Senator Cassidy.

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

        Senator Cassidy. Thank you. Dr. Elnahal, thank you again
    for that phone call yesterday. I appreciate that. I understand
    you spoke to my staff. I appreciate that. Thank you.
        Mr. Jacobs, it is my understanding that the VA has hired
    10,000 employees, additional employees, to implement the PACT
    Act.
        Mr. Jacobs. Senator, we have grown by 35 percent over the
    last 2 years. That is about 10,000 employees, yes, sir. It is
    PACT Act but also other benefits, as well, that are associated.
        Senator Cassidy. That is a lot of employees, a lot of
    employees. Others are doing more with less, using AI and
    computing. It seems like we are doing less with more. And I say
    that not to be pejorative----
        Mr. Jacobs. Yep.
        Senator Cassidy [continuing]. But that is just a trend, and
    it does not seem like it is working here.
        How many of those employees work remotely, what percent?
        Mr. Jacobs. Senator, our workforce in the regional offices
    come into the office 2 days per pay period.
        Senator Cassidy. The pay period is----
        Mr. Jacobs [continuing]. Is 2 weeks.
        Senator Cassidy. So they could come in on a Monday and then
    they could come in two Fridays later.
        Mr. Jacobs. At a minimum.
        Senator Cassidy. Now is there any coordination? Okay, we
    have a team working on this project. You are all going to show
    up on Monday, and we are going to go over as a group exercise
    what we need to do, or do people just pick the day they come
    in?
        Mr. Jacobs. There is coordination across different business
    lines in regional offices to coordinate that. But what I will
    say is the work that is conducted, particularly by the claims
    processors, is very individual. It is heads down, working
    through issues. And what we have found is----
        Senator Cassidy. How does the VA monitor productivity?
        Mr. Jacobs. We have performance standards that we apply to
    all of our employees, that they have to hit those standards
    before in production and quality, so we can determine whether
    our employees are meeting their production. And what we have
    seen over the last few years is they are delivering more
    benefits to more veterans than at any other time in our
    history.
        Senator Cassidy. Now, of course, it is partly the fact that
    they have more benefits to bestow. I am not sure that I will
    accept that that is a measure of productivity.
        Mr. Jacobs. We have measured productivity in terms of
    claims decision per employee. It has increased over the last
    couple of years. This year is a little different because we
    have so many new employees.
        But to your earlier point, I do think, as you think about
    people, process, technology, the majority of our production
    output is people based. It is our existing workforce. It is the
    new employees. And until recently it has been a reliance on
    mandatory overtime. We have not received as much lift from
    process improvements and technology.
        We are in the process of implementing what we call
    automated decision support. We are increasingly leveraging
    technology. And that is the future, where had the most
    potential, so that we can give our employees more tools to
    deliver more benefits, more timely, accurately, and equitably.
    And I think as we look to the future we will have the
    opportunity to do a whole lot more for veterans as a result.
        Senator Cassidy. Who is developing that automated decision
    support system?
        Mr. Jacobs. It is a vendor. I believe it is IBM, but I
    would have to verify that.
        Senator Cassidy. And when is it to be delivered? I mean, is
    this kind of like in some agencies where whenever they finish
    it, it is finished, or is this something where you have a hard
    and fast, this shall be completed by this date?
        Mr. Jacobs. We have very clear project milestones. We have
    automated hundreds of diagnostic codes, and we are working in a
    process to verify, validate, and graduate those. So we have
    certain regional offices that have been in the process of
    testing the implementation, providing direct feedback. That is
    being used to improve it. Then we move it to another regional
    office or a set of regional offices where they then continue to
    refine it and then deploy it nationwide. So I would be happy to
    follow up with your or your staff to walk through that
    milestone schedule.
        Senator Cassidy. That would be good. The EHR effort has
    obviously not gone well, and so the question is where on the
    spectrum will it be in terms of actually being developed.
        This also suggests to me that it is ideal, from what I
    understand, a large language model can do. So is this
    conventional decision to support, or will this be a large
    language model looking at patterns and saying we all need to
    review them but these are the ones which need particular review
    and these are the ones which seem routine, that sort of
    decision support?
        Mr. Jacobs. What we are utilizing right now is optical
    character recognition. So it is enabling our employees to see
    the evidence that they need.
        Senator Cassidy. Now OCR, I think, merely takes a PDF and
    it makes it into a digital format. That is still using the
    human in order to make a decision. It is not using the computer
    to aid that decision.
        Mr. Jacobs. Correct. We are working to optimize and enable
    computers to do what they do best while still preserving the
    human element where it is needed and required.
        Senator Cassidy. So I am still losing it a little bit.
        Mr. Jacobs. Yep.
        Senator Cassidy. Again, AI, large language model, is
    touted, it appears it can look at a pattern and make a decision
    that otherwise perhaps an employee would have to.
        Mr. Jacobs. Yes.
        Senator Cassidy. So that is different than optical
    character recognition.
        Mr. Jacobs. Correct.
        Senator Cassidy. So if all you are doing is OCR, I am very
    discouraged.
        Mr. Jacobs. Well, this is a multiphase process. We are
    utilizing elements of AI to improve the way that we enable our
    employees to look at what we call the manual. This is the
    guidance for how we adjudicate claims. It often changes on a
    regular basis. And it is the basis for the decisions that we
    make.
        We are still relatively early here. There is a significant
    amount of case law that we have to navigate. We also have to
    employ trust, because one of the things that we have realized
    through previous deployments of technology is that if our
    employees do not trust it or if they think it is going to come
    for their jobs, they are going to find workarounds. So we are
    in an incremental process of utilizing technology so that we do
    not disrupt it, we do not have delivery breakages, and that we
    can continue to optimize the ROI for this.
        Senator Cassidy. We have hired 10,000, we have got billions
    of overruns, and we are still way behind? I have got to tell
    you, you need some change, and it is going to be limited by
    people who say, ``Wait a second. They may come for my job?''
        Mr. Jacobs. Yes.
        Senator Cassidy. I mean, the veteran is not being served.
    It is not about the person's job. It is about the damn veteran.
        Mr. Jacobs. Yes.
        Senator Cassidy. I am sorry to be frustrated.
        Mr. Jacobs. Yes. Senator, we are delivering more benefits
    to more veterans than at any other time in our history. So to
    put this in perspective, a decade ago, when the backlog was at
    its peak of 611,000, the backlog was 70 percent of our total
    inventory. Today it is 25 percent of the inventory. The average
    claim 10 years ago took 378 days to process. Today it is taking
    152.
        Senator Cassidy. What I do not know is if that claim is
    being just whisked through or if it is truly being processed.
    If you never actually--oh, just click, click, click, click--it
    can go through without an appropriate process. And I think I
    have kind of made my point.
        But we should be doing what others are doing in terms of
    better serve the veteran. We should not be saying, wait a
    second, people may think we are coming for their jobs so we are
    not going to do it after all. That is discouraging.
        I am sorry to be a downer. I yield back.
        Senator Blumenthal. Senator Brown.

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

        Senator Brown. Thank you. I do not think you are a downer,
    Senator Cassidy. You do good things, so thank you for that.
        And I take a different viewpoint. I take one perhaps a bit
    of celebration about the effectiveness of the PACT Act and what
    you all have done. I understand the oversight we need to do at
    the VA, but I also understand you recognize something when it
    really matters. So Senator Blumenthal, thank you, Senator
    Moran, thank you, Mr. Ranking Member.
        I am proud of the fact that more veterans than ever are
    getting benefits they have earned. The PACT Act is named after
    an Ohio veteran. I know his widow. I know his daughter. I know
    his mother-in-law. And what we have been able to do
    collectively, both parties in this body, this Committee
    especially--Senator Moran, I thank you, I thank Chair Tester,
    and Dick, I thank the work you do--is pretty remarkable.
    Thirty-two thousand veterans. And remember, we passed that bill
    I believe in August, September 2022. Some people said it was
    too expensive. Those same people never seem to think it is too
    expensive to send people to war. It is only too expensive to
    take care of them when they come home. So they lost that
    argument when they said, ``Stop, don't do it.'' But you think
    of the success, and the millions of veterans in the country who
    have gotten coverage and care, 32, 33, 34,000 in my state.
        And in so many ways the PACT Act is a victim of its own
    success, because of this increase in veterans. I do not think
    any of us probably predicted it would take hold that quickly.
    It came on January 2023. This is about 18 months later, give or
    take, and look at its success already.
        Delaying the funding, not passing this bill would have
    terrible consequences. Delaying the funding would postpone
    benefit payments, including disability payments, GI Bill
    payments, benefits. These are payments that veterans and
    caregivers and survivors count on. If those checks do not come
    on time, many of these families who have already sacrificed--
    you know all this. I mean, those families that have sacrificed,
    we will not show our appreciation for their sacrifice, and that
    is why this is so, so important.
        Senators Murray and Collins and Tester and Boozman, and
    Senator Moran and I introduced the Veteran Supplemental
    Appropriations Act. It should have already passed. We pushed
    Congress, starting nearly 2 months ago, so veterans and
    families would not have to worry about how they are going to
    make a house payment, a car payment, or feed their families.
    But better late than never. We know what the House did last
    night. A lot of politics played on the House floor, but in the
    end reason prevailed and they passed it by a voice vote.
        So one question. Ohio, as you may know, each of our 88
    counties has its own Veteran Service Office, some as small as
    two people. Franklin County I think has 50 or 60 people whose
    job it is, funded in large part by the county, whose job it is
    to take care of any veteran issues that they confront. They
    have told me many of the veterans who receive compensation and
    pension benefits, this is their only or their primary source of
    income. So millions of these veterans could be forced to go
    even a month or two without any income, and veterans should not
    have to pay that price.
        If we do not get this done by the 20th, talk through that.
    Is there anything the VA can do to ensure that veterans receive
    those critical payments? Either of you, if you could answer
    that.
        Mr. Jacobs. Senator, it is our hope that Congress will take
    action. We were encouraged by the House action last night and
    confident that the Senate will follow suit. If it turns out
    that we are not able to secure the funding by the 20th, we will
    work to communicate with veterans to ensure that they have
    letters to relay to their financial institutions, to their
    schools, to anyone that they may need to make a payment to, so
    that they understand that the payment could be delayed by up to
    2 weeks, in the case of those veterans who are receiving paper
    checks.
        Senator Brown. Thank you.
        Senator Blumenthal. Thanks, Senator Brown. Senator
    Sullivan.

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

        Senator Sullivan. Thank you, Mr. Chairman. Gentlemen, I am
    concerned about what has happened, you know, the processes in
    which we find ourselves again--this has happened a number of
    times--to have a $3 billion shortfall on 6 weeks' notice, or we
    are going to jeopardize other benefits. I think it is a failure
    on leadership, and to be honest, I am disappointed the
    Secretary was not here. You guys are doing a good job answering
    the questions.
        But when something of this magnitude happens, and it is not
    the first time it happens, and some of the concerns are based
    on a recent OIG Biden administration inspector general report
    over at the House Veterans Affairs Committee, I think it is
    really incumbent upon the Secretary to be here, answering
    questions. But I guess that did not happen today, so I
    appreciate you two being here.
        Let me read a little bit from this OIG report that just
    came out recently. Mr. Chairman, I think it is already in the
    record but I would like to submit it for the record. This is
    the September 10th Inspector General for the Veterans Affairs
    report.
        Senator Blumenthal. Without objection.

        [The OIG report referred to appears on page 49 of the
    Appendix.]

        Senator Sullivan. They said, quote, ``The OIG staff
    routinely finds breakdowns in processes, infrastructure,
    governance, leadership, and other failings that erode the
    foundations of elements of accountability at the VA. These
    breakdowns impede the VA's efforts to make certain that
    patients receive timely, high-quality health care and that
    veterans and other eligible beneficiaries are afforded the
    compensation and services they earned.''
        Have any of you read this?
        Dr. Elnahal. Yes, Senator.
        Senator Sullivan. What do you think of that statement?
        Dr. Elnahal. I think the OIG helps us improve every single
    day, and it is incumbent upon us to implement all of their
    recommendations in the health care system to make our services
    in health care more reliable.
        I will say, Senator, that I am proud of our overall
    outcomes, on average, when it comes to veteran trust, an all-
    time high of 92 percent for outpatient care, beating the
    private sector for the ninth consecutive quarter in a row for
    inpatient care. But there are definitely areas where we need to
    improve, and it is one of the most important parts of my job to
    implement IG recommendations.
        Senator Sullivan. Let me go to the issue of accountability,
    because I think they talk a lot about leadership and
    accountability. They talk about the need for a sustained effort
    to change the culture at the VA, where leadership management
    officials are often not held accountable. And that his, again,
    the OIG.
        I recently introduced legislation called the Pro Vets Act.
    I already have 14 co-sponsors, 5 of which are Members of this
    Committee. One of the things it says is, it goes into the issue
    of accountability, by building on quarterly report requirements
    that were included in the House bill last night, by requiring
    an in-person briefing from the Secretary on these
    accountability requirements. Would the VA be okay with that--
    that is leadership. That is accountability--coming before this
    Committee. That is what I am trying to get done right now, as
    we speak.
        I think just throwing $3 billion right now, ``Hey,
    Congress, you have got 3 days for $3 billion,'' without any
    accountability reforms kind of misses the point. Would you be
    okay with that, quarterly from the Secretary on accountability?
    You are supposed to be doing it anyway.
        Dr. Elnahal. Senator, obviously we will review that bill
    and closely work with you and offer technical assistance.
        Senator Sullivan. Let me do another one, which is if there
    is a VA shortfall outside regular order--this is in my bill--
    then the staff responsible for the budget, in both OMB and VA,
    would not qualify for a bonus. Would you be okay with that one?
        Dr. Elnahal. Pending legislation, Senator, we will look at
    it and make sure we offer technical assistance on it.
        Senator Sullivan. So I am trying to get at this issue, Mr.
    Under Secretary, the VA gave out $11 million in improper
    bonuses in May of this year. Are you familiar with that?
        Dr. Elnahal. Yes, Senator, and there were mistakes across
    the agency. I made personal mistakes in not understanding
    exactly how many awards were ultimately approved.
        Senator Sullivan. Was anyone held accountable or fired or
    relieved of duty? You mentioned the private sector. If a
    private sector company came out with $11 million in improper
    bonuses to employees and then came to their board of director,
    which is what we are, your board of directors, saying, ``Oops,
    we need $3 billion more,'' those people would be fired. Was
    anyone held accountable for $11 million in improper bonuses
    coming out of the VA? Anybody?
        Dr. Elnahal. We concurred with the IG's recommendation to
    evaluate for possible discipline----
        Senator Sullivan. You are not answering my question. Was
    anyone held responsible for the $11 million of improper bonuses
    paid out by the VA?
        Dr. Elnahal. The Office of Accountability and Whistleblower
    Protection will help us with that question, Senator, once they
    complete their analysis.
        Senator Sullivan. So right now the answer is no.
        Dr. Elnahal. Not yet, Senator. We have to wait for that.
        Senator Sullivan. Okay. This is why--look, I have more
    veterans per capita. I work with the VA all the time. But this
    is why some veterans, and even on this, right, were scrambling,
    $3 billion, or veterans are not going to get their benefits.
    Well, we do not want that to happen. We will work through this.
    But there should be accountability. Don't you guys agree? I
    know you are spinning this as, hey, this is a great victory. It
    is not a great victory. Come on. We are scrambling at the end
    of the Congress here to get $3 billion, or my constituents will
    not get their VA benefits. That is not a great victory. So I
    wish you would quit spinning it that way.
        It is a failure in leadership and management, and do you
    not think if we are going to do $3 billion again--I forgot what
    the Denver hospital was, Senator King and we all worked on that
    one, if you remember, last minute we had to fund this hospital,
    $3 billion I think it was--that there should be accountability
    standards when we are doing this. I think we are becoming numb
    to this, and I do not think that is a good thing for this
    Committee in terms of oversight.
        So should there be any additional accountability measures
    as we work to quickly scramble for $3 billion to make sure
    veterans in Connecticut and Maine and Alaska do not get cutoff
    here in the next couple of weeks? Should there be? Would you
    guys entertain them, take a look at my bill?
        Mr. Jacobs. Senator, we would be happy to take a look at
    your bill and follow up with you and your staff to talk about
    it once we have had a chance to review it.
        Senator Sullivan. Okay. I have some questions for the
    record, Mr. Chairman, but I appreciate that. Thank you,
    gentlemen.
        Senator Blumenthal. Thank you. I am going to ask a couple
    of questions and then call on Senator King, or if you want to
    go ahead, Senator.
        I would just like to make the point, about these bonuses.
    Is it not a fact that almost all the improperly paid or
    allegedly improperly paid bonuses have been recovered, clawed
    back?
        Mr. Jacobs. Senator, we are at about 93 percent of the
    bonus amounts being returned back to the VA.
        Senator Blumenthal. And nobody likes shortfalls. We all
    want projections to be accurate. But the PACT Act really is a
    success story, in my view. And part of it is on us. I have been
    going around the State of Connecticut. At every veterans group
    I address, every time I am talking to a veteran, even in
    unrelated groups, ``Any veterans here? Raise your hand. Go sign
    up for the PACT Act, if you have not done it.'' That is what I
    say today. That is what I say to groups. It could be Rotary
    Clubs or anybody else. I have been trying to get the word out.
    Because my fear has been that our veterans would not take
    advantage of this program.
        So I regret there is a shortfall and that we are, to use
    Senator Sullivan's word, scrambling, but hopefully, if we act
    in time, nobody is going to be hurt. Is that correct?
        Mr. Jacobs. That is correct, Senator.
        Senator Blumenthal. Thank you. Let me ask you. I am very
    curious. Do you have percentages, or can you give us kind of a
    factual picture of what kinds of illnesses or conditions have
    been most common among the ones covered by the PACT Act? In
    other words, is it cancer? If so, what types of cancer? I have
    known people who were suffering from cancer who are taking
    advantage of it, but I would be interested to know what are the
    conditions most commonly covered?
        Mr. Jacobs. Senator, it has predominantly been respiratory
    issues and certain cancers. I would be happy to follow up and
    provide the details. We also have had significant number of
    Vietnam veterans with hypertension who have applied for and
    received PACT Act benefits.
        And one of the other great benefits of this law is that it
    has encouraged other veterans who are not eligible for the PACT
    Act to come out and either give VA a shot for the first time or
    try it again. I was in Maine last summer, up in Caribou, and I
    met a Vietnam veteran who had never engaged with the VA. And we
    were at a Claims Clinic out in the local community, having a
    Maine breakfast, and he connected with a DAV officer and filed
    his claim for the first time, because he kept hearing that VA
    wants to serve you. So he came with one of his buddies, and it
    is encouraging more veterans to come out.
        One of the main challenges we experience, as we engage with
    the community, is that there is a lack of understanding about
    what benefits are available. There is a lack of understanding
    about potential eligibility. And for many veterans there is a
    lack of trust that we have to work to overcome.
        Senator Blumenthal. And I think that point is so important.
    I cannot tell you the number of veterans I encounter who say,
    ``I don't think I'm going to go to the VA.'' But then once they
    actually go our West Haven facility and they get some care
    there, they are amazed, and they go back again and again. And I
    think that is really an important feature. It happened during
    COVID, as well, when veterans went for tests or other kinds of
    care. The more we can draw veterans into those VA facilities.
        I can tell you, the quality of care in the VA in West Haven
    and Newington is absolutely excellent. And I am proud of the
    fact that this program has, in part, succeeded in getting more
    involved.
        And I will just make this last point. It is going to the
    respiratory issue. It is not like we had a track record here
    that we could predict, oh, there are going to be X number of
    veterans with respiratory conditions, there will be X number
    with hypertension, there will be X number with pancreatic
    cancer, or whatever. So we were working in uncharted territory.
    Senator Moran's point about timely reporting is in no way
    contradicted by this point, but it is one that I would like to
    emphasize.
        And with that let me turn to Senator King.

                        HON. ANGUS S. KING, JR.,
                        U.S. SENATOR FROM MAINE

        Senator King. Thank you. I would like to point out that Mr.
    Jacobs was in Maine at my invitation to meet with L.L. Bean to
    talk about how to deliver quality service. And we had a long
    meeting with the officials at L.L. Bean, who are sort of the
    gold standard for customer service. And then he gained a lot of
    street cred in Maine by driving to Caribou. Freeport, Maine, is
    about halfway between Caribou and New York City. We are a very
    tall state. So I want to thank him for that visit.
        Senator Blumenthal. When you said driving Caribou I thought
    you meant he was driving a herd of caribou.
        [Laughter.]
        Senator King. Driving the Caribou. I apologize for being
    late. If the VA IT system can figure out how to schedule Senate
    hearings so we do not have three at the same time I would
    appreciate that. And I do not want to replow a lot of ground.
        I gather that this shortfall is a result of greater than
    expected take-up of PACT Act benefits. Is that correct?
        Mr. Jacobs. Yes, sir. In large part both compensation and
    pension as well as higher utilization and growth in the
    education area.
        Senator King. So, in a sense, and I know Senator Sullivan
    would disagree, but this is a result of success, which is good
    outreach and good invitation to veterans to take advantage of a
    new program. Is that correct?
        Mr. Jacobs. I believe so. It has been historic levels of
    outreach and historic levels of benefits delivery by the more
    than 34,000 VBA employees.
        Senator King. Which created a greater demand on the budget
    than was anticipated when the budget was adopted a year ago.
        Mr. Jacobs. Yes, Senator.
        Senator King. Okay. That is the good news. The bad news is
    when did you know when this was coming and when did you let us
    know?
        Mr. Jacobs. We identified the potential need for an
    additional approximately $3 billion in mandatory funds in
    around June, when we went through the midsession review. At
    that time we were comparing our projection versus the actuals,
    and we updated the claims model, which identified the potential
    need for additional funds.
        At the beginning of the year we estimated we were going to
    complete about 2.2 million claims decisions, which was 200,000
    more than the previous year, which is an all-time record. What
    we found out in June was we anticipated, based on those new
    projections, to complete about 2.5 million, and we are on track
    to do that by the end of the month.
        Senator King. So that extra 300,000 claims generated the
    additional demand for the funds.
        Mr. Jacobs. In large part. It is also the growth in the
    total number and complexity of the C&P exams and some of the
    additional growth in the education space.
        Senator King. So you knew in June you had a problem. When
    did we know?
        Mr. Jacobs. I believe it was July. And what happened in the
    intervening days is we had to work to verify that our
    projections were sound, that we were not ringing the bell
    unnecessarily, and that we had confidence that if we were going
    to raise this issue it would be based on sound analysis. So
    once we had done that we communicated the request.
        But as we discussed, looking back I should have picked up
    the phone and said, ``Hey, we're working through this and want
    to give you a heads up.'' So that is one of my lessons that I
    am going to take from this and promise to do better.
        Senator King. Thank you. Thank you, Mr. Chairman.
        Senator Moran [presiding]. Thank you. Senator Cramer.

                           HON. KEVIN CRAMER,
                     U.S. SENATOR FROM NORTH DAKOTA

        Senator Cramer. Thank you. He surprised me with his voice.
    He is not the Chairman, but I am glad to see you sitting there,
    Jerry. Thank you, Senator.
        So following up on Senator King's question, and I gather a
    similar line of questioning, and I appreciate the opportunity
    of Senator Moran and the Chairman for having this hearing, like
    Senator King I do not want to plow old ground so I am just
    going to add on to his, and jump over, Secretary Elnahal, to
    the red team report and the issue of community care. Because it
    seems to be that at a time when demand is higher than you can
    provide for, and that the MISSION Act provided for more
    community care, easier access to community care, it seems like
    a mandate for better access to community care in big,
    rectangular states in the middle of the North American
    continent, like Senator Moran and I represent, where there is a
    lot of distance between veterans, a lot of critical access
    hospitals which provide the excellent service, and, in fact, if
    they had a little larger, you know, patient load might even
    save some critical access hospitals.
        The VHA seems to be very resistant, still, to access to
    community care. In fact, I am going to go to the report and
    just highlight a couple of things in the red team report. On
    page 10 it states that the top three reasons for a veteran
    seeking care in a community are drive time, 50 percent say
    drive time; 30 percent say the services that they need are not
    available; and then 5 percent say wait times. So the top three
    are drive time, availability of services, and wait time. And to
    me that paints a pretty clear picture of evidence that there
    are not enough VA providers at facilities to treat veterans
    where they live or to deliver the type of specialized care that
    they need.
        So to me reports like this highlight more of a commitment
    to the bureaucratic institution than to the access to care by
    the veteran. Can you explain why there has been such a
    resistance by the VA to allowing more community care, easier?
        Dr. Elnahal. Well, Senator, I agree with you that the
    Community Care Network is absolutely essential to provide
    timely access to care, especially for rural veterans and
    especially for specific categories of care like long-term care.
    And over the last several years we have grown at very high
    rates in the community care account. This year so far we are up
    14.5 percent on community care referrals compared to last year.
    Part of our request for supplemental funding is to support what
    the current budget projects, which is only 12 percent growth.
    We think we need to grow by another 16.5 percent.
        And what I have emphasized to all of our medical centers is
    that when a veteran qualifies for community care under the
    MISSION Act it is our obligation to offer that option.
        We also have to offer VA options, in my view, and put the
    veteran in the driver's seat to make the final decision when
    veterans qualify for both.
        Senator Cramer. So you just used the term ``when a veteran
    qualifies.''
        Dr. Elnahal. Yes.
        Senator Cramer. And that is one of the things that concerns
    me a little bit, because the bureaucracy of all types, it is
    one of the ways they can manipulate is by not qualifying them.
    And the benefit of the doubt, in my mind, it has always
    frustrated me that the default or the benefit of the doubt
    never goes to the veteran, say in a challenged situation.
        So I think what I hear you saying is if the Committee and
    if the Congress provides you better resources perhaps the first
    thing we could look for are services that already exist in a
    lot of these communities and make it easier for the veteran to
    get that care there rather than build a bigger VA bureaucracy.
    Because it should be about access to care, period, across the
    board, veterans and non-veterans, and I think that the dynamism
    of that patient load and the capacity of a lot of the community
    access hospitals and other things, you know, it could be
    winners all the way around.
        So my pitch is please let's look first at existing capacity
    and infrastructure before we build out a bigger bureaucracy.
        Dr. Elnahal. We have to make the right decision, Senator,
    for every veteran, and if that right decision means a community
    care provider that is closer, more convenient for them and can
    get them that care quicker, we have to elect to do that. And
    the veteran, in my view, has to be in the driver's seat for
    those decisions.
        Senator Cramer. I totally agree, and I can hardly wait to
    tell all my veterans that is going to be the new world order.
    Thank you.
        Senator Moran. Senator Cramer, thank you, and I smiled at
    Dr. Elnahal because he and I have this conversation on such a
    frequent basis. And I again would remind, based upon what you
    said, and I would remind veterans and the VA that one of the
    categories by which you qualify for community care is when it
    is in the best medical interest of the veteran, determined not
    by the VA but determined by the veteran and his or her health
    care provider.
        So when you talk about the bureaucracy, a determination of
    best medical care, best medical interest, is something that is
    certainly available to a veteran and certainly ought to be
    recognized by the VA.
        That is not the topic of the hearing. And I leaned over to
    Senator Blumenthal because he said something that I was going
    to follow up on. We have, in many instances, used this hearing
    as an opportunity to commend and congratulate the success of
    the PACT Act. And I certainly do not have any reason not to do
    that. In fact, I have every reason to commend and congratulate
    the success by you and the people you call that are within the
    VA who are so qualified and capable of bringing veterans into
    the benefits of the PACT Act.
        But my point is that that is not necessarily the purpose of
    this hearing. It is fine. But I do not want us to get off
    track, because I still believe that process matters, and a
    success is a great thing, but we have our work to do in regard
    to how we fund, so we can continue to have success in the PACT
    Act.
        I want to ask just a couple of more questions and make sure
    that I am not missing something in the answers that you gave
    me. One of the things that, I do not know which one of you
    said, but it was something like we chose not to meet the
    targets--was that you, Mr. Jacobs? When talking about the
    targets within the PACT Act we knew we were going to exceed
    those targets, but we decided to proceed anyway. Am I saying
    something that you said, or Dr. Elnahal?
        Mr. Jacobs. Are you referring to the phased implementation
    of the PACT Act?
        Senator Moran. Yes, I am.
        Mr. Jacobs. Yes, sir.
        Senator Moran. This is not a criticism.
        Mr. Jacobs. Yes, yes.
        Senator Moran. I am not trying to trick you in any way. It
    is not a criticism.
        Mr. Jacobs. Yep.
        Senator Moran. But that is the kind of thing that suggests
    to me that when you are making that decision it is a point in
    time in which it would have been useful to notify Congress,
    ``Hey, we're there. We're doing well.'' And yes, we,
    intentionally--one of my concerns about the PACT Act, when we
    originated this effort, was the ability of the VA to meet the
    needs of veterans when so many veterans were already in line,
    waiting for benefits and services. And we put those provisions
    in there, and I would not be one who spends time saying we
    should slow things down. If a veteran needs care, I want the VA
    to provide that care.
        So not a criticism. Just a suggestion that that is a
    reminder. You knew something was happening, and I do not want
    to keep beating this, but that was a suggestion that you be
    picking up the phone or sending a letter or testifying in a
    hearing that we are moving forward faster than what the PACT
    Act anticipated.
        Mr. Jacobs. Senator, I believe we made that announcement at
    the time of the law's enactment, and it was based on an
    analysis that we concluded. We identified we had the authority
    to accelerate. And, in fact, since the law's implementation we
    have had about 340,000 veterans who now are getting PACT
    benefits that would not have been eligible, 60,000 of whom have
    cancer.
        And as we made that analysis it was not only about
    delivering these earned benefits more quickly, but it was also
    the potential inefficiencies that we would have experienced by
    some of the processing challenges.
        So we thought that this was in the best interest of the
    veteran and also more operationally focused.
        Senator Moran. My only point then, Mr. Jacobs, would be
    that you made that decision at the time of the enactment, the
    signing into law of the PACT Act, and then did not tell us how
    that was proceeding, and yet you waited until you crossed the
    T's and dotted the I's on the estimates before telling us the
    day after the hearing.
        Mr. Jacobs. Yep.
        Senator Moran. I have made my point. I am just trying to
    point out that--I made my point.
        Let me ask this. I want to make certain that I understand.
    While I have been complaining that we did not receive notice,
    and perhaps that sounds personal that I did not receive
    notice--to my knowledge neither did the Chairman or the Ranking
    Member and Chairman in the House or the Appropriations
    Committee. But let me ask that question. Did anybody within the
    Administration, the VA, or OMB notify anyone in Congress, the
    leadership of the Senate or House? Am I missing something? I
    want to make sure that I am complaining about this Committee
    not being notified, or the Appropriations Committee that I
    serve on not being notified, but maybe somebody was. And do you
    know anybody that that would be?
        Dr. Elnahal. On the health care side, Senator, we have been
    tracking budget execution very closely, and just on our side we
    did make the decision, in full disclosure, to accelerate health
    care eligibility on March 5th to many cohorts of veterans that
    would have otherwise qualified every 2 years, leading up to
    2032.
        So we made that decision. Right after that decision, the
    Secretary testified in the budget hearings. He did mention that
    the budget was tight on the health care side, and that we would
    be monitoring it very closely leading into the summer, and if
    we ultimately needed more funding to support all the additional
    vets and the upgraded vets on their priority groups that we
    would come to Congress.
        So what I can tell you is that when we identified that
    need, and we knew in order to maintain the outcomes and not see
    access get worse, veteran trust get worse, as of July we knew
    we needed to actually grow our workforce and we knew we needed
    to support more community care, we came forward. But that is
    always a month-by-month assessment that we make.
        Senator King. We want to know who did you notify, and when.
        Dr. Elnahal. I am talking about the notification to all
    four Committees in July that we made out of the health care----
        Senator Moran. And was anybody in Congress notified before
    the July notice to the Committees that you just mentioned, the
    four?
        Dr. Elnahal. Not to my knowledge, Senator.
        Senator Moran. No one indicated this to Senator Schumer or
    to Chairman Murray?
        Dr. Elnahal. Not to my knowledge.
        Senator Moran. And----
        Dr. Elnahal. Not to my knowledge, but what I would be happy
    to do is go back and confirm, just to make sure. I do not have
    all the dates, and I just want to make sure we give you an
    accurate answer.
        Senator Moran. Thank you very much. And then a similar
    question. Were there conversations within the VA, the
    Administration, or OMB about not notifying Congress? Did
    anybody make that suggestion or request to the VA? And are you
    aware of any conversation that took place that was suggested by
    OMB or other Administration officials to the VA, let's delay
    notifying Congress?
        Dr. Elnahal. Senator, the Secretary was very clear that
    once we had an understanding that this was a real concern that
    we had an imperative to notify as quickly as we could. He made
    that very clear.
        Senator Moran. I suppose perhaps there is an interest in
    why the answers to these questions matter to me. I would assume
    that notifying us the day after we mark up our MilCon-VA bill,
    and perhaps that is evident, it would have been useful
    information for the Committee in appropriations. But I also
    worry about this debate that we have on an ongoing, annual
    basis, about what is considered domestic spending and what is
    considered defense spending. And without that information, or
    if someone had the information and others did not, it was not a
    fair conclusion about how to divide--in broad terms, Democrats
    want to spend more money on domestic issues, and Republicans
    want to spend more money on defense. I further admit that there
    is a lot of confusion now in this kind of definition. There is
    no clear cut to what I am saying.
        But when we make the decision about what is defense and
    what is domestic, veteran spending is always something that can
    be one or the other. And I am trying to find out whether
    someone is playing a game with Congress to make a different
    outcome than the one that we made.
        Dr. Elnahal. I know, Senator, that in the President's
    budget we have requested, for multiple years, having actually a
    third budget category for VA medical care so that it would not
    necessarily be entering the debates on the non-defense
    discretionary side. And so I know that Congress has considered
    that before. We still think it is a good idea, so that veteran
    medical care funding is not taking away from other really
    important agencies that serve the American people. I still
    think that is a good idea so that we do not allow for some of
    these other debates to interfere with what veterans need. So I
    just wanted to make that point.
        Senator Moran. But neither one of you, or anybody that you
    have talked to, is aware of that conversation taking place with
    direction or suggestions as here how we can tip the scales one
    way or the other in regard to what decision the leadership of
    Congress, the leadership of the Senate and the House is going
    to make?
        Dr. Elnahal. No, again, not to my knowledge, Senator. And
    we are requesting VHA supplemental funding in the form of the
    Toxic Exposure Fund because we believe that all of that funding
    will be needed to serve veterans with exposure to toxic
    substances. That is a very important requirement for the TEF
    account, and we believe all of it would be used for veterans
    with toxic exposure.
        Senator Moran. Thank you. Mr. Jacobs, anything?
        Mr. Jacobs. No, sir.
        Senator Moran. You have the same answer?
        Mr. Jacobs. Same. I am not aware of it.
        Senator Moran. Thank you. Senator King, I am told you are
    going to close out the hearing. I do not know whether I am
    supposed to yield to you.
        Senator King. Well, that is always a good thing to do.
        Senator Moran. I yield to you.
        Senator King [presiding]. I appreciate it. I appreciate
    your questions. First, I want to associate myself with the
    question that Senator Cramer was asking, although I want to
    disassociate myself from the word ``bureaucracy.'' The people
    that I know that work in the CBOCs and the veterans hospital at
    Togus I do not consider, if there is any pejorative tone to the
    word ``bureaucracy,'' they are not it. They are dedicated to
    the veterans of Maine. So I just wanted to be sure I mentioned
    that.
        I want to thank you all for being here today. This is an
    important conversation, and I hope that the Senate will join me
    in acting quickly to ensure that we deliver these resources
    hopefully within the next 24 hours to avoid negative impacts as
    well as the anxiety that is out there today on our veterans and
    their beneficiaries.
        We will keep the record open for a week.
        Senator Moran. Mr. Chairman?
        Senator King. Yes.
        Senator Moran. May I add one comment?
        Senator King. Please.
        Senator Moran. It will be in agreement with you?
        Senator King. Always.
        Senator Moran. I too, Senator King, have asked my
    colleagues, Republicans and Democrats, to be supportive of
    reaching a conclusion today or tomorrow in regard to the
    additional funding necessary.
        Senator King. Thank you.
        Senator Moran. And I want to make certain that that
    happens, and my expectation is that it will happen tomorrow.
        Senator King. Thank you. This hearing is adjourned. Thank
    you.
        [Whereupon, at 4:41 p.m., the hearing was adjourned.]

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