[Congressional Record Volume 141, Number 165 (Tuesday, October 24, 1995)]
[Senate]
[Pages S15575-S15576]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SIMPSON:
  S. 1359. A bill to amend title 38, United States Code, to revise 
certain authorities relating to management and contracting in the 
provision of health care services; to the Committee on Veterans' 
Affairs.


the veterans health care management and contracting flexibility act of 
                                  1995

 Mr. SIMPSON. Mr. President, it is a great pleasure for me, as 
chairman of the Senate Veterans' Affairs Committee, to introduce today 
the Veterans Health Care Management and Contracting Flexibility Act of 
1995. This legislation, Mr. President, would free the Department of 
Veterans Affairs [VA] from a number of statutory restrictions which 
unnecessarily limit its authority to contract for health care-related 
services. It would also ease and clarify current reporting requirements 
which excessively impede VA's ability to manage its own affairs.
  What this bill would accomplish is best understood by considering, 
first, the health care environment within which all health care 
providers--including VA--must operate today, and then the state of the 
law under which VA attempts to so operate. If there is any certainty 
today with respect to health care, it is this: those who pay for health 
care--whether those payers be State or Federal Government agencies, 
insurance carriers or health maintenance organizations, or better 
informed consumers drawing, perhaps some day, from health savings 
accounts or simply from their own bank accounts--will no longer 
tolerate the unrestrained cost inflation that they have been forced to 
put up with in the past. All health care providers, therefore, are 
now--and will continue to be--under unprecedented pressure to rein in 
costs and find operating efficiencies so that they can compete in an 
increasingly cost sensitive environment.
  In light of these realities, all now agree that health care providers 
must restrain the growth of--or affirmatively cut--costs. One sure way 
of doing that is to share certain resources--including, but not 
necessarily limited to, high tech medical resources--lest there be 
wasteful duplications in expenditures and effort within local markets. 
For example, it has become increasingly common for one hospital or 
practice group to sell, for example, Magnetic Resonance Imaging [MRI] 
services to another, while buying other diagnostic services from the 
same purchaser.
  Like any health care provider, VA medical centers ought to be able to 
share, buy and swap all sorts of services with other community 
providers. But they cannot fully capitalize on such opportunities under 
current law.
  Presently, VA can only share or purchase ``medical'' services. It 
cannot share or purchase other critical services, for example, risk 
assessment services, that all health care providers must either buy or 
provide ``in house.'' Even within the narrow authority allowing only 
``medical'' services to be shared or purchased, there is an unnecessary 
restriction. VA cannot purchase or share any medical resource; it can 
only purchase or share ``specialized'' medical resources.
  And that is not all, Mr. President; there is further restriction 
imposed upon VA. VA medical centers are not free to purchase from, or 
share with, any and all health care providers they might find in the 
local community. They can only ``partner up'' with--and, here, I quote 
from statute--``health-care facilities (including organ banks, blood 
banks, or similar institutions), research centers, or medical 
schools.'' 38 U.S.C. Sec. 8153. This restrictive legal rubric does not 
extend to VA authority to enter into sensible sharing arrangements with 
other potential partners such as HMOs, insurance carriers or other 
``health plans,'' or with individual physicians or other individual 
service providers.
  One provision of my bill, Mr. President, would cut through this legal 
thicket by expanding significantly VA's current sharing authority. In 
summary, VA would be authorized to share, purchase or swap any 
resources with any local provider. VA could enter into contracts for 
any and all ``health care resources,'' a term which is considerably 
broader than the ``specialized medical resource'' limitation under 
which VA now operates. That term would include such resources, but 
would also include nonspecialized ``hospital care,'' ``any other 
health-care service,'' and any other ``health-care support or 
administration resource.''
  Further, VA would be authorized to buy from, or share with, any 
``non-Departmental health care provider''--a term which would include 
the ``health-care facilities'' and ``research centers and medical 
schools'' with which VA may not contract, but which would also include 
other ``organizations, institutions, or other entities or individuals 
that furnish health-care resources,'' and also ``health care plans and 
insurers.''

  Thus, Mr. President, my bill seeks to open up to VA an entire new 
world of potential sharing partners and sharing opportunities. While VA 
would not have totally unfettered authority to buy and sell services--
for example, VA would be required to ensure that any such arrangements 
not diminish services made available to its veteran patients--it is my 
intention that VA be freed from restrictions which were applied when VA 
tried to do everything itself ``in-house.'' There was a time, perhaps, 
when VA could afford to try to be everything to everyone, but it cannot 
do so now. No modern provider can afford that mentality today.
  I note for the Record, Mr. President, that VA has requested the 
expanded legal authority that I propose today. But it has done so in 
the context of a much larger bill, S. 1345, that I introduced at VA's 
request on October 19, 1995. The main thrust of S. 1345 is so-called 
``eligibility reform,'' that is, a broad scale revision of current 
statutes defining who shall be eligible for what VA medical services. 
That issue, Mr. President, is an extremely thorny one inasmuch as, 
lying at its very center, are very difficult judgements about who shall 
have priority over whom in securing VA health care in a period of 
limited resources. The Committee on Veterans' Affairs intends to take 
this critical issue up, but it will take time to sort out conflicting 
claims to priority to such limited resources. I think we ought to 
proceed now to streamline the statutes that restrict VA's sharing 
authority--an action which, in my view, can be taken now, and will made 
sense whether or not we are able to accomplish ``eligibility reform.''
  My bill would do more, Mr. President. As I have pointed out, VA now 
has authority--though authority that is, in my view, too narrow--to 
contract for ``specialized medical resources.'' Even so, however, VA 
medical centers are statutorily barred from ``contracting out'' the 
very same services. 38 U.S.C. Sec. 8110(c). In addition, they may not 
contract out activities that are ``incident to direct patient care.'' 
Id. Finally, VA medical centers may contract out other ``activities'' 
at VA 

[[Page S 15576]]
medical centers, for example, grounds' maintenance services--but only 
if VA leaps through a series of substantive and procedural hoops that 
plainly impede the contracting process.
  Under my reading of the law, it is apparently acceptable, under 38 
U.S.C. Sec. 8153, for a VA medical center to contract for supplemental 
``specialized'' medical services--let us say anesthesiology services--
so long as the medical center does not contract out all such services. 
This distinction, Mr. President, makes no sense to me--and, as I will 
discuss in a moment, apparently makes no sense to the Congress any 
longer. Further, it makes no sense to me that VA cannot contract out 
services that are ``incident to direct care''--assuming one can 
identify the legal boundaries of activities that are merely 
``incidental.'' To my way of thinking, if ``direct care'' activities 
ought to be shared and purchased without significant restriction--as VA 
espouses in recommending modifications to 38 U.S.C. Sec. 8153--they 
ought to be subject to purchase wholly by the medical center through 
the ``contracting out'' process. And if ``direct care'' activities 
ought to be subject to contracting, then, clearly, services that are 
``incidental'' to such activities should be too.
  Of course, Mr. President, what is true for direct care services--
services which go to the core of what VA does--is also true for other 
activities at VA medical centers: all such activities ought to be 
subject to contracting if contracting makes economic sense. We can 
afford no other standard. Unnecessary impediments to contracting--such 
as those set up by 38 U.S.C. Sec. 8110(c)--ought to be swept away.
  As I noted a moment ago, the Congress has apparently come to that 
conclusion already. In the 104th Congress, we suspended application of 
restrictive aspects of section 8110(c) through fiscal year 1999. See 38 
U.S.C. Sec. 8110(c)(7). Mr. President, it is clear to us all that VA 
will not be under less budgetary pressure in the year 2000 than it is 
now. We ought not to indulge the fiction that VA will be able to afford 
to hold all activities ``in house'' then, if it cannot afford to do so 
now. In short, we should have repealed section 8110(c) last year--and 
we ought to do so now.

  Finally, Mr. President, I note another restrictive provision of law 
that ought to be swept away--or at least narrowed--now. Under current 
law, VA is precluded from putting into effect certain field facility 
``administrative reorganizations''--essentially, those which will 
result in a force reduction of 15 percent or more at any particular 
site--unless it has first given the Congress 90-days notice computed to 
count only those days when both Chambers of Congress are in session. 38 
U.S.C. Sec. 510.
  Two difficulties arising from this provision of law came into focus 
earlier this year when VA's Under Secretary for Health, Doctor Ken 
Kizer, submitted a proposal to reorganize VA's 172 medical centers into 
22 ``Veterans Integrated Service Networks'' [VISNs]. While Doctor Kizer 
had briefed Congress extensively on his sensible reorganization model 
during its development, he still had to wait more than 3 months after 
the announcement of the reorganization before he could, by law, take 
any ``action to carry out such administrative reorganization.'' 38 
U.S.C. Sec. 510(b). Worse, since the statute specifies that the 90-day 
``notice and wait'' period runs only when both bodies of Congress are 
in session, Id., he--and we--were unable to determine when the 90-day 
notice would expire since no one was able to know when either body of 
the Congress might recess.
  Such obstructionism by the Congress is, in my view, most unfortunate 
and unseemly. I really think that we ought to grant more trust to the 
senior officials we confirm than is reflected in this statute. Yet, I 
remain sensitive to the Members' needs to know if a field office 
reorganization will adversely affect a significant number of their 
constituents. Therefore, I do not propose today that this provision of 
law be totally repealed. I do propose, however, that we reduce the 
``notice and wait'' period to 45 calendar days. That period, I believe, 
is sufficient to allow Senators and House Members an opportunity to 
assess the impact of a given reorganization on their constituents.
  To recap, Mr. President, my bill would expand VA's authority to 
share, purchase and swap resources, as is necessary to meet the 
challenges of 21st century medicine. And it would remove an excessive 
restriction on VA's right to organize and station its employees 
efficiently. These measures are dictated by common sense and are, in 
the main, supported by VA. I request the support of this body.
  I request unanimous consent that the text of my bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1359

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Veterans Health Care 
     Management and Contracting Flexibility Act of 1995''.

     SEC. 2. WAITING PERIOD FOR ADMINISTRATIVE REORGANIZATIONS.

       Section 510(b) of title 38, United States Code, is 
     amended--
       (1) in the second sentence, by striking out ``90-day period 
     of continuous session of Congress following'' and inserting 
     in lieu thereof ``45-day period beginning on''; and
       (2) by striking out the third sentence.

     SEC. 3. REPEAL OF LIMITATIONS ON CONTRACTS FOR CONVERSION OF 
                   PERFORMANCE OF ACTIVITIES OF DEPARTMENT OF 
                   HEALTH-CARE FACILITIES.

       Section 8110 of title 38, United States Code, is amended by 
     striking out subsection (c).

     SEC. 4. REVISION OF AUTHORITY TO SHARE MEDICAL FACILITIES, 
                   EQUIPMENT, AND INFORMATION.

       (a) Statement of Purpose.--The text of section 8151 of 
     title 38, United States Code, is amended by read as follows:
       ``It is the purpose of this subchapter to improve the 
     quality of health care provided veterans under this title by 
     authorizing the Secretary to enter into agreements with 
     health-care providers in order to share health-care resources 
     with, and receive health-care resources from, such providers 
     while ensuring no diminution of services to veterans. Among 
     other things, it is intended by these means to strengthen the 
     medical programs at Department facilities located in small 
     cities or rural areas which facilities are remote from major 
     medical centers.''.
       (b) Definitions.--Section 8152 of such title is amended--
       (1) by striking out paragraphs (1), (2) and (3) and 
     inserting in lieu thereof the following new paragraphs (1) 
     and (2):
       ``(1) The term `health-care resource' includes hospital 
     care (as that term is defined in section 1701(5) of this 
     title), any other health-care service, and any health-care 
     support or administrative resource.
       ``(2) The term `health-care providers' includes health-care 
     plans and insurers and any organizations, institutions, or 
     other entities or individuals that furnish health-care 
     resources.''; and
       (2) by redesignating paragraph (4) as paragraph (3).
       (c) Authority To Secure Health-Care Resources.--(1) Section 
     8153 of such title is amended--
       (A) by striking out paragraph (1) of subsection (a) and 
     inserting in lieu thereof the following new paragraph (1):
       ``(1) The Secretary may, when the Secretary determines it 
     to be necessary in order to secure health-care resources 
     which otherwise might not be feasibly available or to utilize 
     effectively health-care resources, make arrangements, by 
     contract or other form of agreement, for the mutual use, or 
     exchange of use, of health-care resources between Department 
     health-care facilities and non-Department health-care 
     providers. The Secretary may make such arrangements without 
     regard to any law or regulation relating to competitive 
     procedures.''; and
       (B) by striking out subsection (e).
       (2)(A) The section heading of such section is amended to 
     read as follows:

     ``Sec. 8153. Sharing of health-care resources''.

  (B) The table of sections at the beginning of chapter 81 of such 
title is amended by striking out the item relating to section 8153 and 
inserting in lieu thereof the following new item:

``8153. Sharing of health-care resources.''.
                                 ______