[Senate Report 107-80]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 190
107th Congress                                                   Report
                                 SENATE
 1st Session                                                     107-80

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



 
DEPARTMENT OF VETERANS AFFAIRS MEDICAL PROGRAMS ENHANCEMENT ACT OF 2001

                                _______
                                

                October 10, 2001.--Ordered to be printed

                                _______
                                

Mr. Rockefeller, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1188]

    The Committee on Veterans' Affairs, to which was referred 
the bill S. 1188, to amend title 38, United States Code, to 
enhance the authority of the Secretary of Veterans Affairs to 
recruit and retain qualified nurses for the Veterans Health 
Administration, and for other purposes, having considered the 
same, reports favorably thereon with an amendment in the nature 
of a substitute and an amendment to the title, and recommends 
that the bill, as amended, do pass.

                              Introduction

    On June 14, 2001, the Committee held a hearing to develop a 
greater understanding of the factors underlying the imminent 
shortage of professional nurses and its projected impact on 
health care in the Department of Veterans Affairs. Those 
testifying at the hearing included: Senator Max Cleland; Thomas 
L. Garthwaite, M.D., Under Secretary for Health, Department of 
Veterans Affairs (VA); Catherine J. Rick, R.N., M.S.N., Chief 
Nurse Consultant, Nursing Strategic Health Care Group, VA; 
Sarah Myers, R.N., Ph.D., President of the Nurses Organization 
of Veterans Affairs, Atlanta, GA; Sandra McMeans, R.N., 
Representative, American Nurses Association, Martinsburg, WV; 
J. David Cox, R.N., First Vice President, National VA Council, 
American Federation of Government Employees, Washington, DC; 
Sandra K. Janzen, R.N., M.S., Chief Nurse Executive, Tampa 
(James A. Haley) VA Medical Center, Tampa, FL; Robert A. 
Petzel, M.D., Director, VA Upper Midwest Health Care Network, 
Minneapolis, MN; Karen Robinson, Ph.D., R.N., Chairperson, VISN 
13 Nurse Managed Care Initiative, Fargo, ND; and Mary Raymer, 
R.N., M.A., Associate Chief of Staff for Patient Care Services, 
Salem VA Medical Center, Salem, VA.
    Building upon this hearing and other oversight work, 
Committee Chairman John D. Rockefeller IV introduced S. 1188 on 
July 17, 2001, with the cosponsorship of Ranking Republican 
Member Arlen Specter and Senator Max Cleland, to improve nurse 
recruitment and retention within VA.
    Earlier, on July 10, 2001, Chairman Rockefeller introduced 
S. 1160, with Senator Larry Craig joining later as a cosponsor. 
S. 1160 would provide the Secretary of Veterans Affairs 
authority to provide service dogs to certain disabled veterans.
    On July 23, 2001, Ranking Republican Member Specter 
introduced S. 1221, which would provide an additional basis for 
establishing the inability of veterans to defray expenses of 
necessary medical care.
    On July 19, 2001, the Committee held a hearing, chaired by 
Committee Member Paul Wellstone, to receive testimony on S. 
739, S. 1160, S. 1188, and a draft bill prepared by Ranking 
Republican Member Specter to change the means test used by the 
VA in determining whether veterans will be placed in enrollment 
priority group 5 or 7. Written testimony was accepted for all 
pending veterans health-related legislation, including S. 739, 
S. 1160, S. 1188, and the draft bill, although oral testimony 
was limited to S. 739 (reported elsewhere).

                           Committee Meeting

    On August 2, 2001, the Committee met in open session to 
consider, among other matters, S. 1188 with an amendment in the 
nature of a substitute incorporating provisions from S. 1160, 
S. 1188, and S. 1221. Present were Senators Rockefeller, 
Wellstone, Murray, Miller, Nelson, Specter, Thurmond, and 
Hutchison. The Committee voted unanimously to report favorably 
S. 1188, as amended, to the Senate.

                     Summary of S. 1188 as Reported

    S. 1188, as reported (herein referred to as the ``Committee 
Bill'') consists of two titles, summarized below.

   Title 1--The Department of Veterans Affairs Nurse Recruitment and 
                   Retention Enhancement Act of 2001

Subtitle A--Recruitment Authorities

    Section 111 permanently authorizes the Employee Incentive 
Scholarship Program; reduces the minimum period of employment 
for eligibility in the program from 2 years to 1 year; removes 
the award limit for education pursued during a particular 
school year by a participant so long as the participant does 
not exceed the overall limitation for the equivalent of 3 years 
of full-time education; and extends authority to increase the 
award amounts based on general Federal pay increases.
    Section 112 permanently authorizes the Education Debt 
Reduction Program (EDRP); expands the list of eligible 
individuals to include those providing direct patient care 
services or services incident to direct patient care services; 
extends the number of years that an employee may participate in 
the EDRP to 5 years and increases the overall award limit to 
$44,000, with the award payments for the fourth and fifth years 
of an employee's participation in the program limited to 
$10,000 each; provides limited special authority (until 
December 31, 2001) for the Secretary to waive the eligibility 
requirement limiting EDRP participation to recently appointed 
employees on a case-by-case basis for individuals appointed on 
or after January 1, 1999, through September 30, 2000.
    Section 113 requires VA to report on the use of authority 
to request waivers of the pay reduction for re-employed 
annuitants in order to meet the requirements for appointments 
to nurse positions.

Subtitle B--Retention Authorities

    Section 121 mandates that VA provide Saturday premium pay 
to employees specified in Section 7454(b), the so-called 
``title 5/title 38 hybrids.'' Such hybrids include licensed 
practical nurses, pharmacists, certified or registered 
respiratory therapists, physical therapists, and occupational 
therapists.
    Section 122 gives VA nurses enrolled in the Federal 
Employee Retirement System the same ability to use unused sick 
leave as part of the retirement year calculation that VA nurses 
enrolled in the Civilian Retirement System have.
    Section 123 requires VA to carry out an evaluation of 
nurse-managed clinics, including primary care and geriatric 
clinics. Matters to be evaluated include patient satisfaction, 
provider experiences, cost of care, access to care, and 
functional status of patients. This evaluation will be reported 
to the House and Senate Committees on Veterans' Affairs not 
later than 18 months after enactment of this act.
    Section 124 requires VA to develop a nationwide policy on 
staffing standards to ensure that veterans are provided with 
safe and high quality care. Such staffing standards should 
consider the numbers and skill mix required of staff in 
specific medical settings (such as critical care and long-term 
care).
    Section 125 requires VA to submit an annual report on 
exceptions of experienced nurses from VA's nurse qualification 
standards, as set forth by VA directive. The report would 
include information on the number of waivers requested and 
granted to promote nurses who have not received a bachelor's of 
science degree in nursing, as well as information on age, race, 
and years of experience of the individuals subject to such 
waiver requests and waivers, as the case may be.
    Section 126 requires VA to submit a report on the use of 
mandatory overtime by licensed nursing staff and nursing 
assistants in each facility during 2001, not later than 180 
days after passage of this act. The report would include a 
description of the amount of mandatory overtime used by 
facilities, a description of the mechanisms employed by VA to 
monitor overtime, an assessment of the effects of mandatory 
overtime on patient care, and recommendations regarding ways to 
prevent the use of mandatory overtime in other than emergency 
situations.

Subtitle C--Other Matters

    Section 131 elevates the office of the VA Nurse Consultant 
so that individual would report directly to the VA Under 
Secretary for Health.
    Section 132 exempts registered nurses, physician 
assistants, and expanded-function dental auxiliaries from the 
requirement that part-time service performed prior to April 7, 
1986, be prorated when calculating retirement annuities.
    Section 133 makes modifications to the nurse locality pay 
authorities, including allowing VA to use third-party survey 
data.

                         Title 2--Other Matters

    Section 201 authorizes VA to provide certain hearing-
impaired veterans, blind veterans, and veterans with spinal 
cord injury or dysfunction, or other chronic physical or mental 
impairment that substantially limits mobility, hearing, or 
activities of daily living, with service dogs to assist them 
with everyday activities.
    Section 202 modifies the methodology used by the VA in 
determining whether veterans will be placed in enrollment 
priority group 5 or 7 based on income levels. The current 
placement eligibility threshold is set at approximately $24,000 
in the preceding calendar year, regardless of where in the 
country the veteran is living.
    Section 203 requires that the compliance and oversight 
activities carried out by field-based units of the Department 
of Veterans Affairs Office of Research Compliance and Assurance 
shall be charged to the Medical Care appropriation.

                       Background and Discussion


   Title 1--The Department of veterans affairs Nurse Recruitment and 
                   Retention Enhancement Act of 2001

    As the average lifespan lengthens in the United States, the 
elderly make up a growing proportion of the population. 
Researchers project that the proportion of Americans age 65 or 
older will expand from approximately 13 percent to 20 percent 
between 2010 and 2030, an increase of about 30 million people. 
The population age 85 and older is the fastest growing age 
group in the United States; and the likelihood that an 
individual will require skilled nursing care increases with 
age. The demand for skilled nursing care, especially long-term 
care services, is projected to increase as the pool of 
potential caregivers remains constant or shrinks.
    Over the last decade, VA and community health care 
providers have embraced managed care principles, which limit 
inpatient treatment to the sickest of patients. The demands on 
professional nurses have evolved as a growing proportion of 
hospitalized patients require highly technical, complex nursing 
care. Simultaneously, the explosive growth in community-based 
care has increased demand for nursing professionals in 
outpatient settings.
    Registered nurses (RNs) and licensed practical nurses 
(LPNs) represent, respectively, the largest and second-largest 
groups of health care providers in the United States. VA 
employs over 35,000 RNs, and about 10,000 LPNs; together, 
nurses represent about one-third of all VA health care 
professionals. The Health Resources and Services 
Administration's 2000 National Sample Survey of Registered 
Nurses shows that women continue to comprise the vast 
majority--more than 95 percent--of professional nurses. As 
career opportunities for women have broadened, enrollment in 
nursing diploma programs has declined precipitously. In 2000, 
the average age of working RNs was 45 years nationally and 48 
years within VA. The average age of a newly hired nurse within 
VA has climbed to 39 years. Half of VA's nursing workforce will 
be eligible for retirement in the next 15 years, with 35 
percent of RNs and 29 percent of LPNs eligible to retire by 
2005.
    Surveys by the American Nurses Association (hereafter ANA), 
the Department of Health and Human Services (hereafter HHS), 
and academic researchers show that stress, frustration, and low 
morale among working nurses have also contributed to the 
shrinking workforce. Recent years have seen growing job 
dissatisfaction among nurses, including 37 significant nursing 
strikes over issues such as the safety of the working 
environment, inflexible or excessive work hours, inadequate 
wages and benefits, and the lack of a voice in management.
    As the number of experienced nurses willing to work in 
critical and long-term care declines, understaffing has already 
begun to affect medical facilities nationwide. Dr. Thomas L. 
Garthwaite, VA Under Secretary for Health, testified at the 
Committee's June 14, 2001, hearing that VA can currently ``meet 
most of the demands for nursing staff. However, there are 
increasing difficulties in filling positions in some locations, 
and extreme difficulty filling some specialty assignments.''
    This difficulty in filling positions may translate into 
adverse working conditions for nurses and diminished services 
for veterans. Sandra McMeans, a Martinsburg (WV) VA Medical 
Center staff nurse and representative of the ANA, testified at 
the Committee's hearing that:

          I believe personally that you will see . . . a 
        decrease in the patient load in the Martinsburg VA, 
        because I look for the nurses to leave . . . I see a 
        lot of nurses who are eligible for retirement who are 
        tired because of the mandatory overtime, because of 
        having to stay [for] late shifts . . . I see them 
        leaving and going to the private sector.

    A recent report by HHS confirmed earlier studies showing 
that the quality of care declines and the length of inpatient 
stays increases when nursing staff levels dwindle.\1\ Long-term 
strategies are needed to avert a national health care crisis 
already developing due to the looming nursing shortage. While 
this issue is getting attention in Congress, pending 
legislation developed by other congressional committees has not 
addressed the needs of nurses in Federal health care systems. 
In an effort to improve prospects for nursing careers in 
general, and to offer VA strategies to recruit and retain 
skilled nurses within an increasingly competitive market, the 
Committee has developed the legislation described below.
---------------------------------------------------------------------------
    \1\ Nurse Staffing and Patient Outcomes in Hospitals (2001). Health 
Resource and Services Administration. Department of Health and Human 
Services, Washington, DC.
---------------------------------------------------------------------------

                        Recruitment Authorities

    The increased demand for nurses able to provide either 
complex technical care or direct outpatient care has not been 
matched by a growing supply. Despite Bureau of Labor Statistics 
estimates showing that employment opportunities for registered 
nurses will grow more rapidly through 2008 than for all other 
occupations in the United States, a smaller percentage of 
graduating high school students enter nursing degree programs 
each year. Between 1995 and 1998, enrollment in nursing 
baccalaureate programs declined 19 percent. Predictably, the 
number of new nurses has steadily declined over the last 5 
years, resulting in a shrinking labor pool available to VA and 
community health care providers. As medical facilities compete 
for an ever-diminishing number of qualified professionals, 
understaffing has become a constant factor in the health care 
environment.
    Testimony offered by each of the registered nurses at the 
Committee's June 14, 2001, hearing confirmed that inadequate 
staffing creates stressful working conditions for nurses and 
endangers patient safety. Understaffing endangers not only the 
quality of direct patient care, but impedes VA's ability to 
conduct clinical research and to provide nursing and medical 
students with critical supervision and training. However, 
mandating that VA increase staffing levels is simply not an 
option without a pool of qualified nurses willing to enter and 
remain in the field.
    VA faces the same challenges as private sector hospitals in 
recruiting and retaining nurses, exacerbated by budget 
constraints and a nursing workforce more rapidly approaching 
retirement. The passage of the Department of Veterans Affairs 
Health Care Personnel Incentive Act of 1998 as Public Law 105-
368 offered VA means to recruit and retain qualified health 
care professionals in fields where high demand produces 
competition from the private sector. The Employee Incentive 
Scholarship Program (hereafter EISP) authorized VA to award up 
to $10,000 per year of scholarship money toward full-time 
study, for up to 3 years, to eligible VA health care 
professionals in return for a period of obligated service. 
Currently, enrollment in the scholarship program is limited to 
employees with 2 or more years of VA employment and is 
scheduled to terminate on December 31, 2001.
    This legislation also authorized the Education Debt 
Reduction Program (hereafter EDRP), allowing VA to repay 
education-related loans incurred by recently hired 
professionals in high-demand areas. This program, still in the 
final implementation process and also scheduled to terminate on 
December 31, 2001, authorized VA to pay $6,000, $8,000, and 
$10,000 per year, respectively, over 3 years toward principal 
and interest on educational loans for professionals in high-
demand fields.
    As of June 14, 2001, VA had awarded 189 scholarships 
amounting to over $1.7 million, primarily for nursing and 
pharmacist degrees, through the EISP and VA's National Nursing 
Education Initiative. As evidenced by many letters from VA 
employees submitted for the record of the Committee's hearing, 
the EISP provides an excellent incentive for recruiting nurses 
and other health care professionals to VA. Section 111 of the 
Committee bill would permanently authorize the EISP, reduce the 
minimum period of employment for eligibility from 2 years to 1 
year, and remove the award limit for a participant's 
educational expenses during a single school year as long as 
these do not exceed the overall limitation for the equivalent 
of 3 years of full-time education. Section 112 of the Committee 
bill would permanently authorize the EDRP; would expand the 
list of eligible individuals to include those providing either 
direct or incidental patient care services; would extend the 
window of participation to 5 years and the overall award limit 
to $44,000, with the payments for the fourth and fifth years 
limited to $10,000 each; and would provide limited authority 
(until December 31, 2001) for the Secretary to extend EDRP 
participation to recently appointed employees on a case-by-case 
basis. These changes, supported by both the American Federation 
of Government Employees (hereafter AFGE), and the Nurses 
Organization of Veterans Affairs, will allow VA to compete more 
aggressively with similar educational recruitment packages that 
private sector employers can offer to nurses and other highly 
sought health care professionals.
    Attracting a new generation of nursing students into the 
profession is essential to ensuring that VA and other health 
care providers can replace retiring nurses in the next two 
decades. Many working nurses were introduced to nursing careers 
through now defunct youth service organizations, such as the 
American Red Cross ``candystriper'' program. New programs, such 
as the recently developed VA Nurse Cadet program at the Salem 
(Virginia) VA Medical Center, must now fill the need to 
introduce students to nursing and to professional nurse role 
models. Mary Raymer, R.N., and founder of the VA Nurse Cadet 
program, testified at the Committee hearing that:

          With no formal mentoring programs and frequent media 
        attention to the problems and hazards of the nurses' 
        work environment, there are few positive messages to 
        choose nursing. Interventions to correct workplace 
        issues must be made in concert with developing and 
        expanding mentoring programs, such as the VA Cadet, 
        that provide the youth opportunities for positive 
        experiences in the healthcare setting.

    However, until such programs can be expanded successfully, 
immediate measures must be taken to increase the pool of 
working skilled nurses. Within VA, allowing annuitants to work 
without endangering their retirement pay would provide an 
immediate reserve of qualified nurses. The testimony of VA 
Under Secretary for Health Garthwaite at the Committee's 
hearing stated that VA has existing authority to request that 
the Office of Personnel Management waive dual compensation 
restrictions under special conditions. The frequency with which 
these waivers have been applied to rehiring retired nurses is 
unclear. Section 111 of the Committee bill would require VA to 
report on the use of these waivers to assist in filling 
appointments to VA nursing positions.

                         Retention Authorities

    A large survey recently conducted by the University of 
Pennsylvania's Center for Health Outcomes and Policy Research 
showed that more than 40 percent of American nurses surveyed 
reported being dissatisfied with their jobs, and that more than 
20 percent planned to leave those jobs in the next year. Job 
dissatisfaction related to issues of ``burnout,'' with the 
majority of nurses surveyed reporting that too few nurses care 
for too many patients, that nurses are not included in 
management and scheduling decisions, and that inadequate 
support staffing further strains already overextended 
professional nurses by forcing RNs to take on non-nursing 
tasks.
    Although VA enjoys a lower rate of nurse turnover 
systemwide than the national average (8.5% as compared to 15% 
in 1999), the testimony of all three VA field nurses at the 
Committee's hearing indicated that nurses' morale has begun to 
decline as staffing shortages worsen in VA. Although 
competitive salaries and scholarship bonuses offer VA means to 
recruit qualified nurses, new initiatives will be needed to 
retain these nurses. The Committee bill includes provisions 
intended to help VA become a national model for safe working 
conditions and the employer of choice for professional nurses.
    Sufficient pay, with wages equivalent to other local health 
care providers, is an obvious cornerstone of nurse recruitment 
and retention. Premium pay in particular refers to a 
differential rate of pay offered for undesirable tours of duty, 
such as weekends or holidays. Currently, title 38 guarantees 
premium pay (at 25 percent over the basic rate) for VA RNs who 
work regular Saturday and Sunday shifts. However, LPNs and 
other support personnel who straddle both title 5 and title 38 
authorities are eligible only for Sunday premium pay, leaving 
Saturday premium pay at the discretion of the medical facility 
directors. Under this law, LPNs and other ``title 5/title 38 
hybrids'' working side-by-side with RNs may not receive the 
same benefits for serving during unpopular tours.
    Section 121 of the Committee bill establishes Saturday 
premium pay standards for LPNs and other professionals 
(pharmacists, certified or registered respiratory therapists, 
physical therapists, and occupational therapists) classified as 
``title 5/title 38 hybrids.'' Creating equitable premium pay 
rates for these professionals should improve VA's ability to 
recruit and retain these personnel, whose efforts are essential 
both to direct patient care and to supporting RNs.
    Currently, VA RNs enrolled in the Civilian Retirement 
System can receive credit for days of unused sick leave in 
calculating total days of service for annuity benefits. 
However, the same benefit is not available to nurses who 
enrolled in the Federal Employee Retirement System. Section 122 
of the Committee bill would establish parity for nurses 
enrolled in these retirement programs in computing total 
service.
    Although salary levels certainly play a critical role in 
drawing nurses to specific providers, working conditions have a 
far greater impact on nurse recruitment and retention. In 
response to the nursing surveys cited above, RNs consistently 
identified opportunities for career development as a key 
component of professional satisfaction. Several studies have 
also shown that both patient outcomes and nurse recruitment 
improve in health care settings in which nurses have direct 
control over the patient care environment.
    Nurse-managed clinics offer advanced practice nurses 
increased authority as independent primary care providers. Four 
nurse-managed community-based outpatient clinics established in 
VA's Upper Midwest Health Care Network have operated since 
1999, providing primary care to an average of 1,000 veterans. 
Dr. Robert Petzel, director of this network, testified at the 
Committee's hearing that ``nurse practitioners are effective as 
providers of safe, high-quality, cost-effective primary care, 
which results in high patient satisfaction,'' but acknowledged 
that ``we must now demonstrate in terms of outcomes-based 
research the services that nurse practitioners provide and 
their positive impact on client outcomes.''
    Preliminary findings suggest that these nurse-managed 
clinics not only improve veterans' access to care, but may 
promote improved health outcomes through better patient 
education. Nurse-managed clinics might prove especially 
valuable as an avenue to provide preventive and chronic care to 
the aging veterans population. To test this theory, section 123 
of the Committee bill requires VA to evaluate how nurse-managed 
clinics affect patient health care outcomes as well as nurse 
retention.
    Staffing levels also contribute to the nursing work 
environment and nurse retention, with nurses increasingly 
expressing frustration over growing patient-to-nurse ratios. In 
a recent ANA survey, 75 percent of more than 7,000 nurses 
surveyed felt that the quality of nursing care in their work 
settings had declined in the past two years, with inadequate 
staffing cited as a chief cause. Research supports these 
perceptions. This February, HHS released the aforementioned 
study on patient outcomes and nurse staffing, based on data 
from more than 5 million inpatient discharges in 11 states. The 
HHS study confirmed earlier research demonstrating a strong 
relationship between higher nurse staffing levels and lower 
rates of serious adverse events such as urinary tract 
infections, pneumonia, shock, and upper gastrointestinal 
bleeding. High nurse staffing also correlated with shorter 
lengths of inpatient stay, reducing costs to the hospitals as 
well as the burdens for patients and their families.
    Given the clearly established connections between adequate 
nurse staffing levels and improved patient outcomes, a 
nationally recognized safe staffing standard would provide an 
essential tool for maintaining high quality health care and 
improving working conditions for nurses. No such national 
standard currently exists, and older systems for determining 
staffing levels no longer suit the rapidly evolving health care 
environment in the United States. According to the June 14 
testimony submitted by David Cox, RN, representing AFGE:

          Currently, DVA only maintains staffing standards for 
        Intensive Care Units and the operating room. These 
        standards have forced DVA to maintain minimal staffing 
        ratios on these wards. In other wards, like psychiatric 
        and medical, staffing standards are determined by the 
        number of staff on duty, not the needs of the patients. 
        In other words, staffing standards at the DVA are not 
        consistent from facility to facility. Nor are the 
        staffing levels adequately measured or rational. 
        Moreover, there is no accountability for unsafe 
        staffing levels.

    Recent studies by HHS,\2\, \3\ the Institute of 
Medicine,\4\, \5\ and the General Accounting Office 
\6\ have all recognized the link between nurse staffing 
standards and patient safety. In addition, they also found that 
adequate staffing plays a significant role in creating a 
favorable work environment for nurses. Rather than prescribing 
specific staffing ratios, section 124 of the Committee bill 
would require VA to develop a national policy on nurse staffing 
standards that considers intensity of care and other issues of 
patient acuity, addresses patient safety and health outcomes, 
and improves the working environment for professional nurses.
---------------------------------------------------------------------------
    \2\ Ibid.
    \3\ Appropriateness of Minimum Nurse Staffing Ratios in Nursing 
Homes (2001). Report to Congress, Health Care Financing Administration, 
Department of Health and Human Services, Washington, DC.
    \4\ Nursing Staff in Hospitals and Nursing Homes: Is it Adequate? 
(1996). Wunderlich, G.S., Sloan, F.A. and Davis, C.K., Editors. 
Institute of Medicine, National Academy of Sciences. Washington, DC: 
National Academy Press.
    \5\ Improving the Quality of Long-Term Care (2001). Gooloo, S., 
Wunderlich, G.S., and Kohler, P.O., Editors. Committee on Improving 
Quality in Long-Term Care, Division of Health Care Services, Institute 
of Medicine, National Academy of Sciences. Washington, DC: National 
Academy Press.
    \6\ Nursing Workforce: Recruitment and Retention of Nurses and 
Nurse Aides is a Growing Concern (2001). Testimony before the Senate 
Committee on Health, Education, Labor, and Pensions. General Accounting 
Office, Washington, DC.
---------------------------------------------------------------------------
    In an effort to encourage nursing education, VA recently 
implemented a directive on revised Nursing Qualification 
Standards that requires VA's registered nurses to hold a 
bachelor's in nursing (BSN) degree to advance beyond entry 
level by 2005, effective immediately for new hires. While these 
standards promote professional development and a more skilled 
nursing staff, they limit promotions and salary increases for 
nurses without bachelor's degrees, regardless of experience. 
The Nurses Organization of Veterans Affairs estimates that 35 
percent of new hires will not advance beyond entry level under 
the new standards if they do not take advantage of scholarship 
initiatives. This may shrink the pool of nurses willing to work 
for VA at a time when VA facilities are already struggling to 
meet staffing needs.
    Nurse Professional Standards Boards in each network have 
the authority to waive degree requirements for experienced 
nurses who completed nursing diplomas or associate's degrees, 
but nurses have reported encountering varying degrees of 
resistance in obtaining these waivers, leading to the loss of 
experienced nurses to the private sector. In order to temper 
higher educational standards with the need to retain 
experienced nurses, section 125 of the Committee bill would 
require VA to report annually on the use of education 
requirement waivers systemwide to identify the numbers of 
waivers requested and granted, and how these relate to the age, 
race, and experience of the applicants.
    To meet demands for skilled nurses, many health care 
organizations rely heavily upon mandatory overtime to fill 
staffing gaps. Unplanned and significant increases in working 
hours, often in consecutive shifts, lead to dangerous fatigue 
and a high turnover rate. A lack of nursing executives leaves 
nurses with little administrative support for reporting unsafe 
conditions. RNs who refuse overtime can be charged with patient 
abandonment, endangering their licenses.
    Testimony given at the June 14, 2001, hearing suggested 
that some VA medical centers rely on mandatory overtime 
regularly, and that its use makes VA a less attractive employer 
in areas where community hospitals offer solely voluntary 
overtime. The AFGE estimates that VA has nearly doubled its 
costs for overtime in the past few years, from $31.5 million in 
FY 1997 to $57.6 million in FY 2000, supporting estimates that 
VA has increased its dependence on overtime as a tool to meet 
staffing needs. According to testimony submitted by the AFGE:

          The DVA does not have a nationwide policy on 
        mandatory overtime, nor does DVA take disciplinary 
        actions against Medical Directors or nurse managers who 
        rely upon mandatory overtime excessively in lieu of 
        adequate staffing. Only the patient and the RN suffer 
        the consequences when a bleary-eyed RN makes a medical 
        error at the end of two consecutive tours of duty. AFGE 
        regards DVA's failure to hold management accountable 
        for excessive overtime as a disturbing indication of 
        DVA's lack of commitment to patient safety and in 
        becoming the employer of choice.

    Catherine J. Rick, VA's Chief Nurse Consultant, testified 
that VA has experienced a ``slight increase in the use of 
overtime over the past three years,'' but acknowledged that VA 
Headquarters has no systemwide policy on mandatory overtime and 
initiated surveys to determine the extent of mandatory overtime 
use in the field only in immediate anticipation of the 
Committee's hearing. As the Committee is deeply concerned about 
growing dependence on a potentially unsafe working practice, 
section 126 of the Committee bill would require VA to report 
not later than 180 days after the passage of this act on the 
use of mandatory overtime in the VA health care system in 2001, 
to assess its effects on patient care, and to identify 
strategies for eliminating its use.

                         Title 1--Other Matters

    RNs comprise the largest group of health care workers 
within VA, providing the greatest proportion of direct health 
care services to veterans. To improve communication to and from 
this essential workforce, VA has recently transformed the 
Nursing Service office into the Nursing Strategic Healthcare 
Group (NSHG), which serves as a resource for the development of 
policies and research strategies to support the nursing 
workforce. However, despite the realignment of VHA Headquarters 
to create executive level offices that reflect key functions 
within VA's health care system, the office of the nurse 
consultant remains outside of the chief officer structure.
    Section 131 of the Committee bill would elevate the office 
of the VA Nurse Consultant to report directly to the VA Under 
Secretary for Health, which would be analogous to similar 
positions within HHS and the Office of the Surgeon General. 
Creating this position would provide the VA Under Secretary for 
Health with a clearly recognized source of information on the 
roles and needs of nurses, and demonstrate an unmistakable 
commitment to including nurses within health care decision-
making processes.
    Section 132 of the Committee bill addresses an issue of 
fairness in retirement annuity benefits promised to part-time 
VA nurses prior to 1986. Organizations that provide inpatient 
care face the perennial challenge of recruiting highly skilled 
health care providers amenable to working night shifts, 
weekends, and holidays. In the past, VA offered retirement 
incentives for part-time nurses as a mechanism of preventing 
nursing shortages and encouraging part-time nurses to work 
unpopular tours of duty on nights and weekends. Specifically, 
VA recruited title 38 medical staff by offering to credit these 
employees with 40 hours of work per week for retirement 
purposes, regardless of the actual number of hours worked. In 
return, these staff committed to VA as an exclusive employer, 
enabling VA to secure coverage for undesirable shifts at the 
discretion of medical facility directors.
    Prior to 1980, the civil service annuity formula used to 
determine pension levels relied upon the highest salary 
received in the average year of the highest-paid 3 years (high-
3 pay) of Federal employment, with no distinction between the 
pensions of full-time and part-time workers except for salary 
level. Public Law 96-330, requested by VA and passed in 1980, 
amended section 4109 of title 38 to use the full-time 
equivalent of the high-3 pay for part-time VA medical 
personnel, prorated to the portion of time actually worked. VA 
sought this legislation to eliminate disproportionately large 
annuities accruing to staff (particularly physicians) who had 
worked a mixture of full- and part-time hours during their 
careers. Subsequent ``technical amendments'' passed 
sequentially in Public Law 96-385 (section 508) and Public Law 
97-72 (section 402) first repealed and then restored the 
retrospective changes.
    When Congress passed Public Law 99-272, the Consolidated 
Omnibus Budget Reconciliation Act of 1985 (COBRA), all part-
time employees in the federal workforce including those covered 
by titles 5 and 38 became subject to the same retirement 
formula, with annuities based on full-time equivalent high-3 
pay prorated to the portion of time worked. This law 
``grandfathered'' any part-time service completed before its 
enactment on April 6, 1986, and repealed section 4109(b) of 
title 38, which treated VA medical personnel covered under 
title 38 differently than other Federal employees. This 
restored full-time work credit to VA nurses who had been 
recruited under the part-time work agreement prior to the 
enactment date.
    In response, VA requested legislation to exclude all title 
38 employees from the provision giving full-time retirement 
credit for part-time work in Public Law 99-272. VA's request 
was based on the assumption that many part-time VA physicians 
enjoyed lucrative outside salaries, including private medical 
practices. Congress granted the VA's request, incorporating the 
change into Public Law 99-509 (section 7003), the 1986 Omnibus 
Budget Reconciliation. This provision removed all title 38 
employees from Public Law 99-272 and restored all prospective 
and retrospective part-time retirement annuity provisions in 
Public Law 96-330 (section 114). Thus, current law treats 
retirement credit for VA nurses for part-time work performed 
prior to April 6, 1986, differently from any other part-time 
Federal employees.
    Section 132 of the Committee bill would amend section 7426 
of title 38 to exempt registered nurses, physician assistants, 
and expanded-function dental auxiliaries from the requirement 
that part-time service performed prior to April 7, 1986, be 
prorated when calculating retirement annuities. This action 
would restore the commitment made to VA nurses and support 
personnel who forfeited the opportunity to seek other full-time 
or supplemental part-time work in return for retirement annuity 
benefit. This provision would not restore full-time work 
credits toward the annuities for physicians or dentists, 
addressing VA's historical concerns about the costs of such 
benefits.
    Section 133 of the Committee bill would make modifications 
to the nurse locality pay authorities, including allowing VA to 
use third-party survey data to establish consistency in wages 
for nurses at all rates of compensation, rather than only on 
beginning rates. Section 7251 of title 38 allows the directors 
of VA health care facilities to request adjustments to the 
minimum rates of basic pay for nurses based on local variations 
in the labor market. This ability to modify nurse salaries to 
achieve consistency with the local market conditions allows VA 
to recruit nurses competitively in regions with high demand. 
Currently, VA health care facilities must rely on industry-wage 
surveys provided by the Bureau of Labor Statistics (BLS), or 
upon third-party industry wage surveys if no BLS data is 
available, to calculate beginning rates of compensation for 
corresponding health care professionals.

                         Title 2--Other Matters


          SEC. 201. SERVICE DOGS FOR CERTAIN DISABLED VETERANS

    Section 201 of the Committee bill, which would authorize 
the Secretary to provide dog-guides to blind veterans and 
authorize the provision of service dogs to hearing-impaired 
veterans and veterans with spinal cord injuries, is drawn 
directly from S. 1160, introduced by Committee Chairman 
Rockefeller. Service dogs have traditionally been viewed only 
as assisting the visually impaired. However, primarily as a 
result of the Americans with Disabilities Act of 1990, there 
have been efforts in recent years to find alternative methods 
of providing assistance to people with various kinds of 
disabilities. While there have been many technological 
developments in this field, a need still remains for long-term 
assistance that allows for the greatest possible independence 
on the part of the disabled individual. The Paralyzed Veterans 
Association of America strongly endorses this goal, stating 
that:

          For over half a century, PVA has fought for the 
        integration of people with disabilities into the 
        economic and social life of our Nation. Providing 
        service dogs to veterans who need them would be a major 
        step forward in the ultimate realization of this goal.

    There are numerous ways in which service dogs can assist 
their owners. Tasks such as opening and closing doors, turning 
switches on and off, carrying bags, and dragging a person to 
safety in the case of an emergency are just a few of the 
standard duties for service dogs. Their ability to perform 
these types of duties makes them invaluable to those who 
require day-to-day aid. Dr. Ronald D. Fletcher, a veteran from 
Fayetteville, Pennsylvania, wrote to the Committee Chairman, 
stating that he had to pay out of his own pocket to acquire a 
service dog. He expressed that: ``Because of my dog-hearing 
guide, I live a happier and more independent life.'' Having 
this sort of assistance can make a big difference in terms of 
offering not only physical support, but companionship as well.
    Various types of evidence illustrate the value of companion 
pets, not just to the disabled, but to everyone. The Journal of 
the American Medical Association published a trial study a few 
years ago that examined the impact of service dogs on the lives 
of people with disabilities--both in terms of economic and 
social impacts. The study concluded that:

          Substantial positive changes on most dependent 
        measures were associated with the presence of a service 
        dog both between and within groups. Psychologically, 
        all participants showed substantial improvements in 
        self-esteem, internal locus of control, and 
        psychological well-being within 6 months after 
        receiving their service dogs. Socially, all 
        participants showed similar improvements in community 
        integration. Demographically, participants demonstrated 
        substantial increases in terms of school attendance and 
        part-time employment. Economically, all participants 
        showed dramatic decreases in the number of paid 
        assistance hours.

    Overall, the JAMA study concluded that service dogs can 
greatly improve the quality of life for the disabled. Given the 
various ways in which these dogs can assist their owners and 
the relatively low cost of implementing this program, the 
Committee has included section 201 in the Committee bill.

                  SEC. 202. MODIFICATION OF MEANS TEST

    Section 202, which is drawn from S. 1221, as introduced by 
Senator Specter, modifies the means test used by VA in 
determining whether veterans will be placed in enrollment 
priority group 5 or 7. In accordance with section 1722(a) of 
title 38, United States Code, veterans with incomes below 
specified levels currently set at approximately $24,000 for 
veterans with no dependents are placed in enrollment priority 
group 5 and as such, are eligible to receive medical care at VA 
facilities at no charge. Under current law, only one means test 
threshold is set for all non-service-connected veterans seeking 
access to VA health care, with no variation based upon 
locality. Section 202 would establish new geographically based 
income thresholds for VA.
    The purpose of the change proposed in section 202 is to 
eliminate the inequity imposed on those veterans living in 
higher cost-of-living areas. The cost of living in large urban 
areas is generally much greater than in many rural parts of the 
country. This provision restructures the means tests threshold 
to make it locality based, by taking the costs of living in 
each region into account when determining a veteran's 
eligibility for certain VA health care treatment. As the 
Paralyzed Veterans of America (PVA), which supports this 
change, testified, the VA already has experience using locality 
based pricing for its reasonable charges for the recovery of 
third-party health care costs and for VERA calculations.
    The Department of Housing and Urban Development (HUD) has 
an index for determining income levels that is based upon the 
cost of living for an identified locality, as well as the 
number of dependents within the family. PVA provided testimony 
that veterans in high cost-of-living areas would benefit from 
the higher income standard found in the HUD formula, with many 
being qualified for enrollment priority 5 because of their 
increased inability to defray copayments.
    This provision changes section 1722 of title 38, United 
States Code, to also include the HUD income index in 
determining eligibility for treatment as a low-income family 
based upon the veteran's permanent residence. This eligibility 
determinant is in addition to ability to receive state 
assistance under title XIX of the Social Security Act, the 
receipt of pension under section 1521 of title 38, United 
States Code, or meeting VA's annual means test thresholds. An 
important goal in creating this additional eligibility 
determinant is to protect those veterans already enrolled in 
priority 5 from being reevaluated and placed into priority 7, 
thereby triggering various copayment requirements. Thus, the 
current national threshold would remain in place as the base 
figure even if the HUD formula determines the low-income rate 
for a particular area is actually less than that amount.
    The effective date of this change is January 1, 2002, and 
shall apply to all means tests after December 31, 2001, using 
data from the HUD index at the time the means test is given.

        SEC. 203. FUNDING OF COMPLIANCE AND OVERSIGHT ACTIVITIES

    Section 203 of the Committee bill addresses funding of the 
VA office which is responsible for the protection of human 
research subjects and research integrity within VA medical 
centers, the Office of Research Compliance and Assurance 
(hereafter ORCA). The rapid pace of biomedical research in 
recent years has led to substantial medical advancements, and 
concomitantly, to a dramatic increase in research trials 
involving human and animal subjects. VA established ORCA by 
directive in 1999, in the wake of an NIH-mandated shutdown of 
all human studies at the VA Greater Los Angeles Healthcare 
System because of lax procedures for approving and overseeing 
trials involving human research subjects.
    The staff of ORCA advises the VA Under Secretary for Health 
on all matters affecting the integrity of research, the safety 
of human research subjects and research personnel, and the 
welfare of laboratory animals, and investigates any allegations 
of research improprieties or scientific misconduct. ORCA staff 
at VA Headquarters work with other appropriate Federal and VA 
offices to provide guidance and develop policies and procedures 
related to research safety and integrity. Staff from the four 
ORCA regional offices conduct both routine periodic and 
unannounced inspections of research programs at VA medical 
centers within their designated geographical areas to ensure 
compliance with policies concerning research integrity and 
scientific misconduct. The ORCA regional staff investigate 
allegations of non-compliance with research and safety policies 
and procedures, develop appropriate educational materials and 
administer remedial training if necessary, and assist research 
staff in restoring compliance.
    The ORCA Chief Officer reports to the office of the Under 
Secretary for Health, and funding for the headquarters ORCA 
office comes from the Medical Administration and Miscellaneous 
Operating Expenses (MAMOE) account. However, VA currently funds 
ORCA's regional offices from the Medical and Prosthetic 
Research Program account, the account which is intended to 
cover the direct costs of research projects.
    HHS recently recognized an inherent conflict of interest in 
allowing the National Institutes of Health (hereafter NIH) to 
manage and fund the oversight of safety and integrity in human 
studies research. In June 2000, HHS eliminated the NIH Office 
of Protection from Research Risks and transferred all authority 
for human subject protection to the Office of Human Research 
Protections, which reports directly to the HHS Under Secretary 
for Health and receives funding from non-research accounts.
    Funding of the ORCA regional offices from VA's Research 
account creates a similar conflict of interest, and does not 
ensure human research subjects of oversight protection by an 
appropriately independent, objective, and unbiased entity. 
Other oversight mechanisms within VA, such as Institutional 
Review Boards, are not funded from the Research account. VA's 
General Counsel has determined that congressional authority is 
required to allow VA to fund ORCA's regional offices from 
accounts other than the research appropriation. Therefore, 
section 203 of the Committee bill would authorize VA to fund 
ORCA's regional offices out of the Medical Care appropriation, 
as these offices directly protect patient and human subject 
welfare.

                             Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the Congressional Budget Office (CBO), 
estimates that, compared to the CBO baseline, there would be 
costs resulting from enactment of the Committee bill.
    The cost estimate provided by CBO follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 10, 2001.
Hon. John D. Rockefeller IV,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1188, the Department 
of Veterans Affairs Medical Programs Enhancement Act of 2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sam 
Papenfuss.
            Sincerely,
                                          Dan L. Crippen, Director.
    Enclosure.

S. 1188, Department of Veterans Affairs Medical Programs Enhancement 
        Act of 2001 (As ordered reported by the Senate Committee on 
        Veterans' Affairs on August 2, 2001)

    S. 1188 would change how the Department of Veterans Affairs 
(VA) compensates nurses and other employees and would provide 
expanded medical benefits to some veterans. The bill would 
increase retirement benefits for VA nurses by changing how 
retirement annuities are calculated and would make permanent 
the authority to provide scholarships and pay school debts as 
an incentive to attract and keep employees in critical 
occupations. Under the bill, certain VA employees also would be 
eligible for premium pay for working on Saturdays. Finally, S. 
1188 would calculate the income thresholds for determining 
whether a veteran qualifies for free health care on a regional 
basis rather than using a single national level.
    CBO estimates that enacting the bill would increase direct 
spending by $1 million in 2002, $9 million over the 2002-2006 
period, and $26 million over the 2002-2011 period. Because the 
bill would affect direct spending, pay-as-you-go procedures 
would apply. In addition, S. 1188 would authorize funding or 
modify provisions governing discretionary spending for 
veterans' programs, which CBO estimates would result in 
additional outlays of about $390 million in 2002 and about $3 
billion over the 2002-2006 period, assuming appropriation of 
the estimated amounts.
    S. 1188 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of S. 1188 is shown in Table 
1. This estimate assumes the legislation will be enacted near 
the start of fiscal year 2002 and that the necessary funds for 
implementing the bill will be provided for each year. The costs 
of this legislation fall within budget functions 600 (income 
security) and 700 (veterans benefits and services).

             Table 1.--Estimated Budgetary Impact of S. 1188
                [By Fiscal Year, in Millions of Dollars]
------------------------------------------------------------------------
                                   2002    2003    2004    2005    2006
------------------------------------------------------------------------

Changes in Direct Spending

Estimated Budget Authority......       1       1       2       2       2
Estimated Outlays...............       1       1       2       2       2

Changes in Spending Subject to
 Appropriation

Estimated Authorization Level...     428     559     691     714     726
Estimated Outlays...............     388     539     671     704     716
------------------------------------------------------------------------

Direct Spending

    Section 132 would change the way part-time service 
performed by registered nurses, physicians assistants, and 
certain dental technicians at VA prior to April 7, 1986, is 
treated in calculating retirement annuities. Under current law, 
retirement benefits for these workers are calculated according 
to a formula that prorates all part-time service performed in 
these positions. For most other federal workers, part-time 
service performed prior to April 7, 1986, is treated as full-
time service when calculating retirement annuities. Information 
about these employees is limited, but based on information 
supplied by VA, CBO estimates there are about 1,600 of these 
workers still employed by the federal government. Assuming that 
retirement benefits calculated under the new formula would be 
between 4 percent and 13 percent higher than under the current 
formula, depending on how much part-time service was performed 
before April 7, 1986, CBO estimates that enacting this section 
would increase direct spending by $1 million in 2002, $8 
million over the 2002-2006 period, and $23 million over the 
2002-2011 period.
    Section 122 would authorize unused sick leave to be counted 
toward total years of service when calculating retirement 
benefits accrued by registered nurses who are employed by the 
Veterans Health Administration and retire under the Federal 
Employees' Retirement System (FERS). Under current law, unused 
sick leave is counted toward total service under the Civil 
Service Retirement System, but not under FERS. According to 
information from VA, about 1,000 registered nurses retire from 
VA every year, and most employees have between 3 and 6 months 
of accrued sick leave upon retirement. CBO estimates that 
enacting this provision would increase direct spending by less 
than $500,000 every year until 2011 when the increase would 
round to $1 million, with the 10-year costs totaling $3 
million.

Spending Subject to Appropriation

    Table 2 shows the estimated effects of S. 1188 on 
discretionary spending for veterans' programs, assuming that 
appropriations are provided in the amounts of the estimated 
authorizations.

                  Table 2.--Estimated Changes in Spending Subject to Appropriations for S. 1188
                                    [By Fiscal Year, in Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
                                                              2001     2002     2003     2004     2005     2006
----------------------------------------------------------------------------------------------------------------

Spending Under Current Law for Veterans' Medical Care

Estimated Authorization Level a...........................   20,863   21,866   22,110   22,839   23,547   24,285
Estimated Outlays.........................................   20,418   21,501   22,020   22,613   23,298   24,028

Proposed Changes

Compensation:
  Estimated Authorization Level...........................        0        8        9       11       14       16
  Estimated Outlays.......................................        0        8        9       11       14       16
Income Threshold:
  Estimated Authorization Level...........................        0      420      550      680      700      710
  Estimated Outlays.......................................        0      380      530      660      690      700
Total Changes:
  Estimated Authorization Level...........................        0      428      559      691      714      726
  Estimated Outlays.......................................        0      388      539      671      704      716

Spending Under S. 1188

Estimated Authorization Level.............................   20,863   22,294   22,669   23,530   24,261   25,011
Estimated Outlays.........................................   20,418   21,889   22,559   23,284   24,002   24,744
----------------------------------------------------------------------------------------------------------------
a The 2001 level is the estimated net amount appropriated for that year. The current-law amounts for the 2002-
  2006 period assume that appropriations remain at the 2001 level, with adjustments for inflation.

    Compensation. S. 1188 contains several provisions that 
would increase compensation and benefits for health care 
workers employed by VA. CBO estimates that these provisions 
would increase discretionary spending by $8 million in 2002 and 
by $58 million over the 2002-2006 period, assuming 
appropriation of the necessary amounts.
    Employee Incentive Scholarships. VA currently administers a 
program to provide scholarships for employees in the Veterans 
Health Administration as an incentive to help meet staffing 
needs in critical occupations. The authority to provide those 
incentive scholarships expires on December 31, 2001. Section 
111 would permanently extend this authority as well as clarify 
the rules for awarding full-time and part-time scholarships. VA 
expects to spend about $7 million on this program in fiscal 
year 2001. CBO estimates that allowing VA to continue to 
provide those scholarships would cost $7 million in 2002 and 
$58 million over the 2002-2006 period, assuming appropriation 
of the estimated amounts. Because VA is currently funding this 
program, the costs associated with this provision are assumed 
in the baseline levels shown for veterans' medical care.
    Education Debt Reduction. VA currently has the authority to 
reimburse new employees for employee payments of principal and 
interest on debts incurred for education related to the 
position the employee presently holds. The authority to enroll 
employees into this program expires on December 31, 2001. To 
date, VA has not implemented this program nor has it finalized 
the regulations under which the program would operate. Section 
112 would extend this authority permanently, increase the 
maximum amount that could be reimbursed from $24,000 over three 
years to $44,000 over five years, and temporarily expand the 
definition of a new employee through December 31, 2001. CBO 
estimates that about 200 employees would take advantage of this 
program on an annual basis, with about two-thirds receiving the 
full amount allowed under the bill. CBO estimates that 
extending this authority along with the other changes would 
cost $4 million in 2002 and $36 million over the 2002-2006 
period, assuming both appropriation of the estimated amounts 
and that VA actually implements this program by January 1, 
2002. Since this program has not yet begun operation, the 
current law baseline does not reflect the costs of extending 
the program and these costs are included in the 
``Compensation'' section of Table 2.
    Saturday Pay. Currently, pharmacists, licensed practical 
nurses, and many therapists receive premium pay when they work 
on Sundays, but premium pay for work performed on Saturdays is 
managed at a local level and many do not receive such pay for 
Saturday work. Section 121 would require that all these 
employees receive premium pay, equal to 25 percent of their 
hourly wage, for all hours worked on Saturday. Using data from 
VA, CBO estimates that this provision would cost $4 million in 
2002 and $22 million over the 2002-2006 period, assuming 
appropriation of the estimated amounts.
    Income Threshold. Under current law, VA furnishes free 
medical care to veterans who meet certain eligibility 
requirements--one of which is an income threshold. Any veteran 
eligible for Medicaid, or who receives a VA pension, or who has 
an income below a statutory level (currently $23,688 for a 
veteran without a dependent) can receive free health care. 
Under the bill, veterans eligible for low-income housing also 
would qualify for free medical care. In general, the Department 
of Housing and Urban Development sets eligibility for low-
income housing at 80 percent of each county's median income 
with adjustments for cost-of-living.
    This provision would affect both veterans who currently 
receive medical care from VA and those who do not currently use 
VA health care services. CBO estimates that the total cost 
associated with expanding eligibility for free VA medical care 
would be $380 million in 2002 and about $3 billion over the 
2002-2006 period, assuming appropriation of the estimated 
amounts.
    Current VA Health Care Users. Using data from VA and the 
Current Population Survey, CBO estimates that under this 
provision about 1.4 million veterans would become eligible for 
free health care. CBO estimates that this number includes more 
than 250,000 veterans who currently use VA medical facilities 
but are not presently eligible for free health care. Under the 
bill, these veterans would no longer need to make copayments 
when receiving health care benefits. Because individuals use 
more health care services when they do not face any out-of-
pocket costs, the cost of providing medical care would increase 
for those users who become eligible for free health care. Using 
data from VA and from published research, CBO estimates that 
those veterans receiving free health care would cost VA about 
$700 more per person in 2002. Using that information and 
adjusting for inflation, CBO estimates that providing free 
health care to veterans currently using VA would cost about 
$170 million in 2002 and almost $1 billion over the 2002-2006 
period, assuming appropriation of the estimated amounts.
    Because the veterans discussed above would be eligible for 
free health care, VA also would lose the copayments that these 
veterans make when receiving care. CBO estimates that the lost 
copayments would total about $40 million over the 2002-2006 
period. Under current law, those copayments can be spent by VA, 
if authorized by the appropriators. Since CBO's baseline 
assumes both the collection and the spending of those 
copayments, the budgetary effect would be neutral. Although 
there is no net budgetary impact, VA would not be able to 
provide the same level of care as they currently do without 
additional appropriations to replace the lost copayments.
    New VA Health Care Users. CBO also estimates that some 
veterans who do not currently use VA medical facilities because 
of the requirement to make copayments would do so once they 
became eligible for free health care. Currently, only about 20 
percent of veterans eligible for free health care based on 
income actually use VA medical facilities. CBO expects that an 
even lower percentage of those who would become eligible for 
free health care would end up using VA medical facilities, 
because some of those veterans have access to health care from 
other sources. CBO estimates that eventually about 100,000 
newly eligible veterans would begin using VA medical care at a 
cost of more than $4,000 per person. CBO estimates that 
providing free health care to these veterans would cost $210 
million in 2002 and about $2 billion over the 2002-2006 period, 
assuming appropriation of the estimated amounts.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts. The net changes in outlays that are 
subject to pay-as-you-go procedures are shown in Table 3. For 
the purposes of enforcing pay-as-you-go procedures, only the 
effects in the current year, the budget year, and the 
succeeding four years are counted.

                      Table 3.--Estimated Impact of S. 1188 on Direct Spending and Receipts
                                    [By Fiscal Year, in Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
                                                    2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays...............................      0      1      1      2      2      2      3      3      3
Changes in receipts *
----------------------------------------------------------------------------------------------------------------
* Not applicable.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    S. 1188 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would not affect the budgets of 
state, local, or tribal governments.
    Estimate prepared by: Federal Costs: Sam Papenfuss and 
Geoffrey Gerhardt. Impact on State, Local, and Tribal 
Governments: Elyse Goldman. Impact on the Private Sector: 
Allison Percy.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis, Congressional Budget Office.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that the Committee bill would not entail any 
regulation of individuals or businesses or result in any impact 
on the personal privacy of any individuals and that the 
paperwork resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7 of rule XXVI of the Standing 
Rules of the Senate, the following is a tabulation of votes 
cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its August 2, 2001, meeting. On that date, 
the Committee, by unanimous voice vote, ordered S. 1188, as 
amended, reported favorably to the Senate.

                             Agency Report

    On August 31, 2001, the Honorable Anthony J. Principi, 
Secretary of the Department of Veterans Affairs, transmitted 
the Department's views on S. 1811, a bill to enhance the 
authority of the Secretary of Veterans Affairs to recruit and 
retain qualified nurses for the Veterans Health Administration, 
and for other purposes. Excerpts from Secretary Principi's 
correspondence are reprinted below:

           *       *       *       *       *       *       *

    I am pleased to provide the Department's views on S. 1188, 
a bill ``to enhance the authority of the Secretary of Veterans 
Affairs to recruit and retain qualified nurses for the Veterans 
Health Administration, and for other purposes.'' VA's nurses 
are critical front-line components of the VA health-care team. 
Our health-care providers are our most important resource in 
delivering high-quality, compassionate care to our Nation's 
veterans. VA must maintain the ability to recruit and retain 
well-qualified nurses in order to continue that care. 
Compensation, employment benefits and workplace factors affect 
that ability, particularly in highly competitive labor markets 
and for hard-to-fill specialty assignments. While VA is able to 
offer generally competitive pay in most markets, the Department 
must continuously monitor the recruitment and retention of 
health-care providers, particularly nurses, and trends in 
private sector employment and workforce projections. Although 
VA nurse staffing is generally stable overall, VA is 
experiencing increasing difficulties in filling positions in 
some locations, and filling some specialty assignments is 
extremely difficult.
    S. 1188 contains several proposals that VA believes would 
assist us in meeting the challenge of recruiting and retaining 
the nurses required to meet VA's patient care needs. However, 
it also contains provisions that VA does not support, as 
explained below.
    Sections 101 and 102 of S. 1188 would make permanent the 
Department's Employee Incentive Scholarship Program (EISP) and 
Education Debt Reduction Program (EDRP) and make other 
technical changes. Specifically, the bill would make the 
authority for each of these programs permanent. It would also 
require the Secretary to make periodic adjustments to the 
amount of assistance paid under these programs when adjustments 
are made to the Federal General Schedule. Such adjustments are 
now required in the other Educational Assistance Programs 
authorized in chapter 76. The bill would also expand 
eligibility so that more employees could participate in these 
programs. In addition, it would provide that EISP payments are 
to be made on a school year basis instead of a calendar year 
basis. It would extend to five years (from the current three) 
the length of time that an employee may participate in the EDRP 
and increase the overall award limit to $44,000.
    VA supports the intent of sections 101 and 102 of the bill. 
The EISP and EDRP are valuable recruitment and retention tools 
for the Department. Indeed, we consider these programs to be 
vital in assuring VA's continued ability to place health-care 
professionals in hard-to-fill occupations, in ensuring that 
VA's registered nurses have the educational foundation to 
perform their enhanced role in health-care management, and in 
enabling VA to compete with the private sector for highly 
qualified health-care professionals.
    Section 103 of S. 1188 would require a report on VA's use 
of the authority in sections 8344 and 8468 of title 5 to 
request waivers of the pay reduction for reemployed annuitants 
for appointments to VHA nurse positions. VA supports this 
provision.
    Section 201 would mandate Saturday premium pay for hybrid 
employees. VA does not support this provision because it 
appears to be unnecessary. Under the provisions of 38 U.S.C. 
7454(b) and (c), the Secretary may authorize premium pay under 
Title 38, including Saturday premium pay, for hybrid employees 
at any location. This authority has been delegated to facility 
directors. VHA believes that the flexibility to authorize 
premium pay according to local practices and to maintain VA's 
competitive stance is the most equitable and cost-effective 
method of adjusting premium pay. The cost estimate for this 
provision is under development.
    Section 202 would amend section 8415 of title 5, United 
States Code, by adding a new subsection (I) to allow the use of 
unused sick leave in the annuity computations of registered 
nurses with the Veterans Health Administration (VHA). This 
would provide an incentive for VA nurses to accumulate and save 
their sick leave because the unused sick leave would count as 
additional service credit upon retirement and would increase 
the employees' annuities. VA opposes this provision. It is 
inappropriate to extend this incentive to such a narrow class 
of Federal employees. Further, this provision would likely have 
PAYGO costs for the civil service retirement and disability 
fund, although no estimate has been developed yet.
    Section 203 of S. 1188 would require an evaluation of VA 
nurse-managed care clinics, including primary care and 
geriatric clinics located in three different Veterans 
Integrated Service Networks (VISNs). If VHA does not have three 
such clinics, VHA would be required to establish three. The 
evaluation is to address: patient satisfaction; provider 
experiences; access to care, including waiting time; functional 
status of clinic patients; other matters determined by the 
Secretary. VA would be required to provide a report on the 
evaluation. VA supports this provision. VA intends to use 
current nurse-managed care clinics or convert existing clinics 
to nurse-managed care clinics as evaluation sites.
    Section 204 of the bill would require that we establish a 
nationwide policy for assuring adequate staffing to maintain 
VHA capacity mandated by section 8110, taking into account 
staffing levels and skill mix required for the range of patient 
care and services provided in VA facilities. It also would 
require that we have staffing necessary to maintain mandated 
VHA capacity, consistent with our overtime policies, and 
consistent with the new nationwide staffing policy.
    VA opposes section 204. There are currently no universally 
accepted staffing guidelines or staffing ratios in the public 
or private sector. While a mandated standard would seemingly 
make determination of quality a matter of a simple equation, 
staffing is too multi-factorial to be so easily structured. All 
facilities must comply with Joint Commission on Accreditation 
of Healthcare Organizations (JCAHO) staffing standards. JCAHO 
does not look for rigid staffing standards or staff-to-patient 
ratios since these measures have proven to be ineffective 
predictors of quality. JCAHO is currently piloting a staffing 
standard that takes into account clinical/service indicators 
(quality outcomes) in combination with human resource 
indicators (both direct and indirect caregivers). The approach 
calls for multiple indicators to be considered in combination. 
This has been the recommended VHA approach for staffing 
methodology over the past several years. Professional judgment 
is the essence and final guarantor of quality care; VA's system 
is designed to foster such professionalism. Some of the complex 
factors that influence staffing decisions are:
     Patient acuity and mix on a given unit
     Availability of varying personnel types, i.e., 
physician specialties, RNs, LPNs, and nursing assistants
     Experience, education and quality of staff
     Availability of other professional partners (i.e. 
social workers, pharmacists)
     Availability of support services, supplies and 
equipment
     Physical layout of the patient care and treatment 
areas
     Technological and administrative support 
availability
     Academic affiliation, etc.
    Staffing decisions are dependent upon these factors applied 
on a 24-hour and seven-day per week basis. VA believes that 
staffing decisions must be made near the site of care. There is 
no known national methodology that is workable. Additional 
costs can be anticipated to result from an inflexible national 
staffing standard.
    Section 205 of the bill would require an annual report, 
beginning in 2002, concerning VA's use of authorities to 
enhance retention of experienced nurses. Included are 
educational assistance programs, waivers of educational 
requirements (by age, race, and years of experience) in the VA 
nurse qualification standard and other available retention 
authorities. VA supports this provision.
    Section 206 would require a report on the use of mandatory 
overtime by licensed nursing staff and nursing assistants in 
each facility. The report would include a description of 
mechanisms to monitor mandatory overtime, an assessment of the 
effects of mandatory overtime, including its contribution to 
medical errors, recommendations concerning mechanisms for 
preventing mandatory overtime other than for emergency 
situations, and other matters VA considers appropriate. VA 
supports this provision.
    Section 301 of S. 1188 would elevate the position of the 
Chief Consultant for Nursing Programs (Director, Nursing 
Service) so that it would report directly to the Under 
Secretary for Health. Currently, this position reports to the 
Under Secretary through the Chief Patient Care Services Officer 
(Associate Deputy Under Secretary for Health). The effect of 
this provision is to recognize the importance of this position 
as the chief advisor to the Under Secretary for Health on 
nursing issues, as well as its role as the operational head for 
VA nursing programs. VA supports this provision.
    Section 302 would change the treatment, for purposes of 
retirement credit, of part-time service performed by certain 
title 38 employees prior to April 7,1986. Currently, part-time 
service performed by title 5 employees prior to April 7,1986, 
is treated as full-time service; title 38 employees' part-time 
service prior to April 7, 1986, is credited as part-time 
service on a pro rata basis, thus resulting in lower annuities. 
Part-time service after April 6,1986, is prorated for both 
title 5 and title 38 employees. VA believes there should be 
parity in the treatment of part-time service for title 38 and 
title 5 employees for retirement purposes. There are some 
potential unintended effects associated with this provision. 
Therefore, the Administration is seeking to resolve, in a 
comprehensive manner, technical problems associated with 
computations of part-time service. This provision would likely 
have PAYGO costs for the civil service retirement and 
disability fund, although no estimate has been developed yet.
    Section 303 of S. 1188 would make clarifying amendments to 
VA's nurse locality pay statute, 38 U.S.C. Sec. 7451, 
consistent with recent changes made by Public Law 106-419. 
Those changes were intended to improve the survey process used 
to adjust nurse locality pay rates. This provision would amend 
subparagraphs (A) and (B) of section 7451(d)(3) by deleting the 
phrase ``beginning rates of'' throughout. This is consistent 
with the requirement under the recent amendments that third-
party surveys conducted under this authority must now include 
broader compensation data. It also would delete the phrase ``or 
at any other time that an adjustment in rates of pay is 
scheduled to take place'' in section 7451(d)(4). This provision 
provided VA medical center directors with discretion to not 
pass on General Schedule adjustments to nurse salaries. The 
recent amendments provide for an automatic adjustment to nurse 
salaries at the same time and in the same amount as the General 
Schedule increase; facility directors no longer have discretion 
to limit such increases.
    Further, section 303 of S. 1188 would eliminate the 
requirement that facility directors notify the Under Secretary 
for Health within 10 days of a decision not to adjust salary 
rates based on survey data as unnecessary. Public Law 106-419 
reinstated an annual reporting requirement, which includes 
information concerning facility directors' decisions not to 
adjust salary rates based on survey data. Finally, this 
proposal would delete references to ``grades'' of positions in 
the report required under section 7451(e)(4) so as to achieve 
consistency with the way VA collects information for the 
report. These amendments would improve administration of the 
complicated nurse locality pay system, consistent with the 
intent of the amendments in Public Law 106-419.
    Section 304 of S. 1188 would make technical amendments to 
section 38 U.S.C. Sec. 7631.
    Because S. 1188 would affect direct spending, it is subject 
to the pay-as-you-go (PAYGO) requirement of the Omnibus Budget 
Reconciliation Act of 1990. VA's cost estimate of S. 1188 is 
under development and will be provided to you when complete.
    The Office of Management and Budget has advised that there 
is no objection to the submission of this report from the 
standpoint of the Administration's program.

           *       *       *       *       *       *       *

    On July 19, 2001, the Honorable Thomas L. Garthwaite, MD, 
Under Secretary for Health, Department of Veterans Affairs, 
appeared before the Committee and submitted testimony on, among 
other things, S. 1188, S. 1160, and a draft bill to change the 
means test used by the VA in determining whether veterans will 
be placed in enrollment priority group 5 or 7. Excerpts from 
this statement are reprinted below:

  STATEMENT OF THOMAS L. GARTHWAITE, MD, UNDER SECRETARY FOR 
             HEALTH, DEPARTMENT OF VETERANS AFFAIRS

    Mr. Chairman and Members of the Committee, I am pleased to 
be here to present the Department's views on six different 
bills being considered by the Committee. They cover a wide 
range of subjects related to personnel matters and VA's 
provision of health care services to veterans. We support many 
provisions in the bills before the Committee, however there are 
some on which we recommend modifications, and others which we 
cannot support at this time. thank you for the opportunity to 
testify today on several legislative items of great interest to 
veterans.

           *       *       *       *       *       *       *


                                S. 1188

    Mr. Chairman I will next present our views on S. 1188, a 
bill designed to improve the recruitment and retention of VA 
nurses. Our nurses are critical front-line components of the VA 
health care team. Our health care providers are our most 
important resource in delivering high-quality, compassionate 
care to our Nation's veterans. We must maintain the ability to 
recruit and retain well-qualified nurses in order to continue 
that care. Compensation, employment benefits and workplace 
factors affect that ability, particularly in highly competitive 
labor markets and for hard-to-fill specialty assignments. 
Thanks to the efforts of this Committee and the House Veterans' 
Affairs Committee, we have been able to offer generally 
competitive pay in most markets. We continuously monitor the 
recruitment and retention of health care providers, 
particularly nurses, and trends in private sector employment 
and workforce projections. As we noted in testimony before this 
committee last month, VA nurse staffing is generally stable 
overall, but there are increasing difficulties in filling 
positions in some locations, and filling some specialty 
assignments is extremely difficult. However, I am not prepared 
to give the Administration's views on this bill without further 
study. We will provide our views on this measure as soon as 
possible.

           *       *       *       *       *       *       *


                                S. 1160

    Mr. Chairman I now turn to S. 1160, a bill that would 
authorize us to furnish a service dog to any veteran with a 
compensable service-connected disability who is hearing 
impaired or who has a spinal cord injury or dysfunction. 
Service dogs can assist a disabled person in his or her daily 
life and can assist that person during medical emergencies. 
They can be trained in many tasks, including, but not limited 
to, pulling a wheelchair, carrying a back-pack, opening and 
closing doors, helping with dressing and undressing, picking up 
things one drops, picking up the phone, and hitting a distress 
button on the phone. Such dogs can also notice when the 
disabled individual is in distress and can find help. Dogs can 
also assist the hearing impaired by alerting them to doorbells, 
ringing phones, smoke detectors, crying babies, and emergency 
sirens on vehicles. We support this bill, and any new costs 
will be handled under existing resources within the FY 2002 
President's Budget. Having said that, however if it were to 
become law, we would promulgate prescription criteria and 
guidelines for provision of such dogs to insure that we provide 
animals only to those veterans who can most benefit from them.

           *       *       *       *       *       *       *


             Draft Legislation on the Means Test Threshold

    Mr. Chairman, also on the agenda is a draft bill that would 
establish new geographically based income thresholds for VA to 
use in determining a nonservice-connected veteran's priority 
for receiving VA care and whether the veteran must agree to pay 
copayments in order to receive that care. As you know, Mr. 
Chairman, the law now requires that most veterans enroll in our 
health care system in order to receive care. Enrollees are 
placed in an enrollment priority group that is based, in many 
instances, on their level of income and net worth. Although we 
currently provide care to veterans in all enrollment priority 
groups, if there were funding shortages in the future, it might 
be necessary to determine that those with relatively higher 
incomes must be disenrolled, meaning they could no longer 
receive VA care. Current law establishes, on a National basis, 
the specific income thresholds that we must use to determine 
the priority group of any given enrollee with no service-
connected disability or other special status. We place higher 
income veterans in priority group 7 and lower income veterans 
in priority group 5. This draft bill would establish new 
geographically based income thresholds that VA could use for 
placing veterans in those priority groups. The draft bill would 
use a specific statutorily based poverty index used by the 
Department of Housing and Urban Development that is established 
for Metropolitan Statistical Areas (MSA's), Primary 
Metropolitan Statistical Areas (PMSA's) and counties. The index 
defines a family as low income if family income does not exceed 
80% of the median family income for the area in which the 
family resides. If we determined that a veteran's income was 
below the threshold for the specific area where the veteran 
lived, and his net worth was below our threshold, we would 
place that veteran in enrollment priority category 5. In many 
instances, particularly in urban areas, this new income 
threshold is greater then the current statutory income 
threshold that we use for determining whether a veteran should 
be placed in priority group 5. The draft bill would provide 
that if the new geographically based income threshold is lower 
then the current threshold, VA would use the old threshold as 
that would benefit the veteran.
    We in VA are very interested in examining the use of 
geographically based income thresholds for placing nonservice-
connected veterans in different enrollment priority groups. We 
recognize that the cost of living in large urban areas is much 
greater then in many more rural parts of the country. What 
might be considered a reasonably high income in some locations 
may be totally inadequate in other higher cost locations. 
However, at this time we cannot support the methodology 
proposed in the draft bill. There are many poverty indexes that 
are established in various ways. However, there are serious 
issues about what these indexes really measure. We believe 
further study is needed to determine the most appropriate 
method for tackling this problem. I will next present our views 
on S. 1188, a bill designed to improve the recruitment and 
retention of VA nurses. Our nurses are critical front-line 
components of the VA health care team. Our health care 
providers are our most important resource in delivering high-
quality, compassionate care to our Nation's veterans. We must 
maintain the ability to recruit and retain well-qualified 
nurses in order to continue that care. Compensation, employment 
benefits and workplace factors affect that ability, 
particularly in highly competitive labor markets and for hard-
to-fill specialty assignments. Thanks to the efforts of this 
Committee and the House Veterans' Affairs Committee, we have 
been able to offer generally competitive pay in most markets. 
We continuously monitor the recruitment and retention of health 
care providers, particularly nurses, and trends in private 
sector employment and workforce projections. As we noted in 
testimony before this committee last month, VA nurse staffing 
is generally stable overall, but there are increasing 
difficulties in filling positions in some locations, and 
filling some specialty assignments is extremely difficult. 
However, I am not prepared to give the Administration's views 
on this bill without further study. We will provide our views 
on this measure as soon as possible.

    Changes in Existing Law Made by the Committee Bill, As Reported

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (existing law proposed to be omitted is enclosed in 
black brackets, new matter is printed in italic, existing law 
in which no change is proposed is shown in roman):

                     TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *


   CHAPTER 17--HOSPITAL, NURSING HOME, DOMICILIARY, AND MEDICAL CARE


                         subchapter i--general

Sec.

1701.  * * *

           *       *       *       *       *       *       *


 subchapter ii--hospital, nursing home or domiciliary care and medical 
treatment

           *       *       *       *       *       *       *



[1714. FITTING AND TRAINING IN USE OF PROSTHETIC APPLIANCES; SEEING-EYE 
                    DOGS.]

1714. FITTING AND TRAINING IN USE OF PROSTHETIC APPLIANCES; DOG-GUIDES 
                    AND SERVICE DOGS.

           *       *       *       *       *       *       *


[Sec. 1714. Fitting and training in use of prosthetic appliances; 
                    seeing-eye dogs]

Sec. 1714. Fitting and training in use of prosthetic appliances; dog-
                    guides and service dogs

           *       *       *       *       *       *       *


  [(b) The Secretary may provide seeing-eye or guide dogs 
trained for the aid of the blind to veterans who are entitled 
to disability compensation, and may pay travel and incidental 
expenses (under the terms and conditions set forth in section 
111 of this title) to and from their homes and incurred in 
becoming adjusted to such seeing-eye or guide dogs. The 
Secretary may also provide such veterans with mechanical or 
electronic equipment for aiding them in overcoming the handicap 
of blindness.]
  (b)(1) The Secretary may provide any blind veteran who is 
entitled to disability compensation with--
          (A) a dog-guide trained for the aid of the blind; and
          (B) mechanical or electronic equipment for aid in 
        overcoming the disability of blindness.
  (2) The Secretary may provide a service dog to the following:
          (A) Any hearing-impaired veteran who is entitled to 
        disability compensation.
          (B) Any veteran with a spinal cord injury or 
        dysfunction who is entitled to disability compensation.
          (C) Any veteran entitled to disability compensation 
        who has any other chronic physical or mental impairment 
        that substantially limits mobility, hearing, or 
        activities of daily living in order to assist such 
        veteran in overcoming such physical or mental 
        impairment.
  (3) In providing a dog-guide or service dog to a veteran 
under this subsection, the Secretary may pay travel and 
incidental expenses (under the terms and conditions set forth 
in section 111 of this title) of the veteran to and from the 
veteran's home and incurred in becoming adjusted to the dog-
guide or service dog, as the case may be.

           *       *       *       *       *       *       *


Sec. 1722. Determination of inability to defray necessary expenses; 
                    income thresholds

  (a) For the purposes of section 1710(a)(2)(G) of this title, 
a veteran shall be considered to be unable to defray the 
expenses of necessary care if--
          (1) the veteran is eligible to receive medical 
        assistance under a State plan approved under title XIX 
        of the Social Security Act (42 U.S.C. 1396 et seq.);
          (2) the veteran is in receipt of pension under 
        section 1521 of this title; [or]
          (3) the veteran's attributable income is not greater 
        than the amount set forth in subsection (b)[.]; or
          (4) the veteran (including any applicable part of the 
        veteran's family) is eligible for treatment as a low-
        income family under section 3 of the United States 
        Housing Act of 1937 (42 U.S.C. 1437a) for the area in 
        which the veteran resides.

           *       *       *       *       *       *       *


 CHAPTER 73--VETERANS HEALTH ADMINISTRATION--ORGANIZATION AND FUNCTIONS


                       subchapter i--organization

    Sec.

7301.  * * *

           *       *       *       *       *       *       *


7324. ANNUAL REPORT ON USE OF AUTHORITIES TO ENHANCE RETENTION OF 
                    EXPERIENCED NURSES.

Sec. 7306. Office of the Under Secretary for Health

  (a) The Office of the Under Secretary for Health shall 
consist of the following:

           *       *       *       *       *       *       *

          (5) A Director of Nursing Service, who shall be a 
        qualified registered nurse and who shall be responsible 
        to, and report directly to, the Under Secretary for 
        Health for the operation of the Nursing Service.

           *       *       *       *       *       *       *


Sec. 7324. Annual report on use of authorities to enhance retention of 
                    experienced nurses

  (a) Annual Report.--Not later than January 31 each year, the 
Secretary, acting through the Under Secretary for Health, shall 
submit to Congress a report on the use during the preceding 
year of authorities for purposes of retaining experienced 
nurses in the Veterans Health Administration, as follows:
          (1) The authorities under chapter 76 of this title.
          (2) The authority under VA Directive 5102.1, relating 
        to the Department of Veterans Affairs nurse 
        qualification standard, dated November 10, 1999, or any 
        successor directive.
          (3) Any other authorities available to the Secretary 
        for those purposes.
  (b) Report Elements.--Each report under subsection (a) shall 
specify for the period covered by such report, for each 
Department medical facility and for each Veterans Integrated 
Service Network, the following:
          (1) The number of waivers requested under the 
        authority referred to in subsection (a)(2), and the 
        number of waivers granted under that authority, to 
        promote to the Nurse II grade or Nurse III grade under 
        the Nurse Schedule under section 7404(b)(1) of this 
        title any nurse who has not completed a bachelors of 
        science in nursing in a recognized school of nursing, 
        set forth by age, race, and years of experience of the 
        individuals subject to such waiver requests and 
        waivers, as the case may be.
          (2) The programs carried out to facilitate the use of 
        nursing education programs by experienced nurses, 
        including programs for flexible scheduling, 
        scholarships, salary replacement pay, and on-site 
        classes.

           *       *       *       *       *       *       *


Sec. 7426. Retirement rights

           *       *       *       *       *       *       *


  (c) The provisions of subsection (b) shall not apply to the 
part-time service before April 7, 1986, of a registered nurse, 
physician assistant, or expanded-function dental auxiliary. In 
computing the annuity under the applicable provision of law 
specified in that subsection of an individual covered by the 
preceding sentence, the service described in that sentence 
shall be credited as full-time service.

           *       *       *       *       *       *       *


Sec. 7451. Nurses and other health-care personnel: competitive pay

           *       *       *       *       *       *       *


  (d)(1) * * *

           *       *       *       *       *       *       *

  (3)(A) In the case of a Department health-care facility 
located in an area for which there is current information, 
based upon an industry-wage survey by the Bureau of Labor 
Statistics for that labor market, on [beginning rates of] 
compensation for corresponding health-care professionals for 
the BLS labor-market area of that facility, the director of the 
facility concerned shall use that information as the basis for 
making adjustments in rates of pay under this subsection. 
Whenever the Bureau of Labor Statistics releases the results of 
a new industry-wage survey for that labor market that includes 
information on [beginning rates of] compensation for 
corresponding health-care professional, the director of that 
facility shall determine, not later than 30 days after the 
results of the survey are released whether an adjustment in 
rates of pay for employees at that facility for any covered 
position is necessary in order to meet the purposes of this 
section. If the director determines that such an adjustment is 
necessary, the adjustment, based upon the information 
determined in the survey, shall take effect on the first day of 
the first pay period beginning after that determination.
  (B) In the case of a Department health-care facility located 
in an area for which the Bureau of Labor Statistic does not 
have current information on [beginning rates of] compensation 
for corresponding health-care professional for the labor-market 
area of that facility for any covered position, the director of 
that facility shall conduct a survey in accordance with this 
subparagraph and shall adjust the amount of the minimum rate of 
basic pay for grades in that covered position at that facility 
based upon that survey. To the extent practicable, the director 
shall use third-party industry wage surveys to meet the 
requirements of the preceding sentence. Any such survey shall 
be conducted in accordance with regulations prescribed by the 
Secretary. Those regulations shall be developed in consultation 
with the Secretary of Labor in order to ensure that the 
director of a facility collects information that is valid and 
reliable and is consistent with standards of the Bureau. The 
survey should be conducted using methodology comparable to that 
used by the Bureau in making industry-wage surveys except to 
the extent determined infeasible by the Secretary. To the 
extent practicable, all surveys conducted pursuant to this 
subparagraph or subparagraph (A) shall include the collection 
of salary midpoints, actual salaries, lowest and highest 
salaries, average salaries, bonuses, incentive pays, 
differential pays, actual beginning rates of pay, and such 
other information needed to meet the purpose of this section. 
Upon conducting a survey under this subparagraph the director 
concerned shall determine, not later than 30 days after the 
date on which the collection of information through the survey 
is completed or published, whether an adjustment in rates of 
pay for employees at that facility for any covered position is 
necessary in order to meet the purposes of this section. If the 
director determines that such an adjustment is necessary, the 
adjustment, based upon the information determined in the 
survey, shall take effect on the first day of the first pay 
period beginning after that determination.
  (C)(i) A director of a Department health-care facility may 
use data on the [beginning rates of] compensation paid to 
certified registered nurse anesthetists who are employed on a 
salary basis by entities that provide anesthesia services 
through certified registered nurse anesthetists in the labor-
market area only if the director--
          (I) has conducted a survey of [beginning rates of] 
        compensation for certified registered nurse 
        anesthetists in the local labor-market area of the 
        facility under subparagraph (B);

           *       *       *       *       *       *       *

  (4) If the director of a Department health-care facility, or 
the Under Secretary for Health with respect to Regional and 
Central Office employees, determines, after any survey under 
paragraph (3)(B) [or at any other time that an adjustment in 
rates of pay is scheduled to take place under this subsection], 
that it is not necessary to adjust the rates of basic pay for 
employees in a grade of a covered position at that facility in 
order to carry out the purpose of this section, such an 
adjustment for employees at that facility in that grade shall 
not be made. [Whenever a director makes such a determination, 
the director shall within 10 days notify the Under Secretary 
for Health of the decision and the reasons for the decision.]

           *       *       *       *       *       *       *

  (e)(1) * * *

           *       *       *       *       *       *       *

  (4) Each director of a Department health-care facility shall 
provide to the Secretary, not later than July 31 each year, a 
report on staffing for covered positions at that facility. The 
report shall include the following:
          (A) Information on turnover rates and vacancy rates 
        for each [grade in a] covered position, including a 
        comparison of those rates with the rates for the 
        preceding three years.
          (B) The director's findings concerning the review and 
        evaluation of the facility's staffing situation, 
        including whether there is, or is likely to be, in 
        accordance with criteria established by the Secretary, 
        a significant pay-related staffing problem at that 
        facility for any [grade of a] covered position and, if 
        so, whether a wage survey was conducted, or will be 
        conducted with respect to that grade.

           *       *       *       *       *       *       *

          (D) In any case in which the director, after finding 
        that there is, or is likely to be, in accordance with 
        criteria established by the Secretary, a significant 
        pay-related staffing problem at that facility for any 
        [grade of a] covered position, determines not to 
        conduct a wage survey with respect to that position, a 
        statement of the reasons why the director did not 
        conduct such a survey.

           *       *       *       *       *       *       *


Sec. 7454. Physician assistants and other health care professionals: 
                    additional pay

           *       *       *       *       *       *       *


  (b)(1) When the Secretary determines it to be necessary in 
order to obtain or retain the services of certified or 
registered respiratory therapists, licensed physical 
therapists, licensed practical or vocational nurses, 
pharmacists, or occupational therapists, the Secretary may, on 
a nationwide, local, or other geographic basis, pay persons 
employed in such positions additional pay on the same basis as 
provided for nurses in section 7453 of this title.
  (2) Health care professionals employed in positions referred 
to in paragraph (1) shall be entitled to additional pay on the 
same basis as provided for nurses in section 7453(c) of this 
title.

           *       *       *       *       *       *       *


Sec. 7631. Periodic adjustments in amount of assistance

  (a)(1) Whenever there is a general Federal pay increase, the 
Secretary shall increase the maximum monthly stipend amount, 
the maximum tuition reimbursement amount, [and the maximum 
Selected Reserve member stipend amount] the maximum Selected 
Reserve member stipend amount, the maximum employee incentive 
scholarship amount. Any such increase shall take effect with 
respect to any school year that ends in the fiscal year in 
which the pay increase takes effect, and the maximum education 
debt reduction payments amount.
  (2) The amount of any increase under paragraph (1) of this 
subsection is the previous maximum amount under that paragraph 
multiplied by the overall percentage of the adjustment in the 
rates of pay under the General Schedule made under the general 
Federal pay increase. Such amount shall be rounded to the next 
lower multiple of $1.
  (b) For purposes of this section:

           *       *       *       *       *       *       *

          (4) The term ``maximum employee incentive scholarship 
        amount'' means the maximum amount of the scholarship 
        payable to a participant in the Department of Veterans 
        Affairs Employee Incentive Scholarship Program under 
        subchapter VI of this chapter, as specified in section 
        7673(b)(1) of this title and as previously adjusted (if 
        at all) in accordance with this section.
          (5) The term ``maximum education debt reduction 
        payments amount'' means the maximum amount of education 
        debt reduction payments payable to a participant in the 
        Department of Veterans Affairs Education Debt Reduction 
        Program under subchapter VII of this chapter, as 
        specified in section 7683(d)(1) of this title and as 
        previously adjusted (if at all) in accordance with this 
        section.
          [(4)] (6) The term ``general Federal pay increase'' 
        means an adjustment (if an increase) in the rates of 
        pay under the General Schedule under subchapter III of 
        chapter 53 of title 5.

           *       *       *       *       *       *       *


Sec. 7631. Periodic adjustments in amount of assistance

           *       *       *       *       *       *       *


  (b) For purposes of this section:
          (1) The term ``maximum monthly stipend amount'' means 
        the maximum monthly stipend that may be paid to a 
        participant in the Scholarship Program specified in 
        section 7613(b) of this title and as previously 
        adjusted (if at all) in accordance with this 
        [subsection] section.
          (2) The term ``maximum tuition reimbursement amount'' 
        means the maximum amount of tuition reimbursement 
        provided to a participant in the Tuition Reimbursement 
        Program specified in section 7622(e) of this title and 
        as previously adjusted (if at all) in accordance with 
        this [subsection] section.
          (3) The term ``maximum Selected Reserve member 
        stipend amount'' means the maximum amount of assistance 
        provided to a person receiving assistance under 
        subchapter V of this chapter, as specified in section 
        7653 of this title and as previously adjusted (if at 
        all) in accordance with this [subsection] section.

           *       *       *       *       *       *       *


Sec. 7672. Eligibility; agreement

           *       *       *       *       *       *       *


  (b) Eligible Department Employees.--For purposes of 
subsection (a), an eligible Department employee is any employee 
of the Department who, as of the date on which the employee 
submits an application for participation in the Program, has 
been continuously employed by the Department for not less than 
[2 years] one year.

           *       *       *       *       *       *       *


Sec. 7673. Scholarship

           *       *       *       *       *       *       *


  (b) Amounts.--The total amount of the scholarship payable 
under subsection (a)--
          (1) in the case of a participant in the Program who 
        is a full-time student, may not exceed $10,000 [for any 
        1 year]; and
          [(2) in the case of a participant in the Program who 
        is a part-time student, shall be the amount specified 
        in paragraph (1) reduced in accordance with the 
        proportion that the number of credit hours carried by 
        the participant in that school year bears to the number 
        of credit hours required to be carried by a full-time 
        student in the course of education or training being 
        pursued by the participant.
  [(c) Limitation on Years of Payment.--(1) Subject to 
paragraph (2), a participant in the Program may not receive a 
scholarship under subsection (a) for more than three school 
years.
  [(2) The Secretary may extend the number of school years for 
which a scholarship may be awarded to a participant in the 
Program who is a part-time student to a maximum of six school 
years if the Secretary determines that the extension would be 
in the best interest of the United States.]
          (2) in the case of a participant in the Program who 
        is a part-time student, shall bear the same ratio to 
        the amount that would be paid under paragraph (1) if 
        the participant were a full-time student in the course 
        of education or training being pursued by the 
        participant as the coursework carried by the student 
        bears to full-time coursework in that course of 
        education or training.
  (c) Limitations on Period of Payment.--(1) The maximum number 
of school years for which a scholarship may be paid under 
subsection (a) to a participant in the Program shall be six 
school years.
  (2) A participant in the Program may not receive a 
scholarship under subsection (a) for more than the equivalent 
of three years of full-time coursework.

           *       *       *       *       *       *       *

  (e) Full-Time Coursework.--For purposes of this section, 
full-time coursework shall consist of the following:
          (1) In the case of undergraduate coursework, 30 
        semester hours per undergraduate school year.
          (2) In the case of graduate coursework, 18 semester 
        hours per graduate school year.

           *       *       *       *       *       *       *

    [Section 7676 is repealed.]

           *       *       *       *       *       *       *


Sec. 7682. Eligibility

           *       *       *       *       *       *       *


  (a) Eligibility.--An individual is eligible to participate in 
the Education Debt Reduction Program if the individual--
          (1) is a recently appointed employee in the Veterans 
        Health Administration serving [under an appointment 
        under section 7402(b) of this title in a position] in a 
        position (as determined by the Secretary) providing 
        direct-patient care services or services incident to 
        direct-patient care services for which recruitment or 
        retention of qualified health-care personnel [(as 
        determined by the Secretary)] (as so determined) is 
        difficult; and

           *       *       *       *       *       *       *


Sec. 7683. Education debt reduction

           *       *       *       *       *       *       *


  (d) Maximum Annual Amount.--(1) Subject to paragraph (2), the 
amount of education debt reduction payments made to a 
participant [for a year] under the Education Debt Reduction 
Program may not [exceed--
          [(A) $6,000 for the first year of the participant's 
        participation in the Program;
          [(B) $8,000 for the second year of the participant's 
        participation in the Program; and
          [(C) $10,000 for the third year of the participant's 
        participation in the Program.
  [(2) The total amount payable to a participant in such 
Program for any year may not exceed the amount of the principal 
and interest on loans referred to in subsection (a) that is 
paid by the individual during such year.] exceed $44,000 over a 
total of five years of participation in the Program, of which 
not more than $10,000 of such payments may be made in each of 
the fourth and fifth years of participation in the Program.

           *       *       *       *       *       *       *

    [Section 7684 is repealed.]

           *       *       *       *       *       *       *


Sec. 8110. Operation of medical facilities

  (a)(1) The Secretary shall establish the total number of 
hospital beds and nursing home beds in medical facilities over 
which the Secretary has direct jurisdiction for the care and 
treatment of eligible veterans at not more than 125,000 and not 
less than 100,000. The Secretary shall establish the total 
number of such beds so as to maintain a contingency capacity to 
assist the Department of Defense in time of war or national 
emergency to care for the casualties of such war or national 
emergency. Of the number of beds authorized pursuant to the 
preceding sentence, the Secretary shall operate and maintain a 
total of not less than 90,000 hospital beds and nursing home 
beds and shall maintain the availability of such additional 
beds and facilities in addition to the operating bed level as 
the Secretary considers necessary for such contingency 
purposes. The President shall include in the Budget transmitted 
to the Congress for each fiscal year pursuant to section 1105 
of title 31, an amount for medical care and amounts for 
construction sufficient to enable the Department to operate and 
maintain a total of not less than 90,000 hospital and nursing 
home beds in accordance with this paragraph and to maintain the 
availability of the contingency capacity referred to in the 
second sentence of this paragraph. The Secretary shall staff 
and maintain, in such a manner as to ensure the immediate 
acceptance and timely and complete care of patients, and in a 
manner consistent with the policies of the Secretary on 
overtime, sufficient beds and other treatment capacities to 
accommodate, and provide such care to, eligible veterans 
applying for admission and found to be in need of hospital care 
or medical services.
  (2) The Secretary shall maintain the bed and treatment 
capacities of all Department medical facilities, including the 
staffing required to maintain such capacities, so as to ensure 
the accessibility and availability of such beds and treatment 
capacities to eligible veterans in all States [and to minimize] 
to minimize delays in admissions and in the provision of 
hospital, nursing home, and domiciliary care, and of medical 
services furnished pursuant to section 1710(a) of this title, 
and to ensure that eligible veterans are provided such care and 
services in an appropriate manner.
  (3)(A) The Under Secretary for Health shall at the end of 
each fiscal year (i) analyze agencywide admission policies and 
the records of those eligible veterans who apply for hospital 
care, medical services, and nursing home care, but are rejected 
or not immediately admitted or provided such care or services, 
and (ii) review and make recommendations regarding the adequacy 
of staff levels for compliance with the policy established 
under subparagraph (C), the adequacy of the established 
operating bed levels, the geographic distribution of operating 
beds, the demographic characteristics of the veteran population 
and the associated need for medical care and nursing home 
facilities and services in each State, and the proportion of 
the total number of operating beds that are hospital beds and 
that are nursing home beds.

           *       *       *       *       *       *       *

  (C) The Secretary shall, in consultation with the Under 
Secretary for Health, establish a nationwide policy on the 
staffing of Department medical facilities in order to ensure 
that such facilities have adequate staff for the provision to 
veterans of appropriate, high-quality care and services. The 
policy shall take into account the staffing levels and mixture 
of staff skills required for the range of care and services 
provided veterans in Department facilities.

           *       *       *       *       *       *       *


                      TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *


Sec. 8415. Computation of basic annuity

           *       *       *       *       *       *       *


  (i) In computing an annuity under this subchapter, the total 
service of an employee who retires from the position of a 
registered nurse with the Veterans Health Administration on an 
immediate annuity, or dies while employed in that position 
leaving any survivor entitled to an annuity, includes the days 
of unused sick leave to the credit of that employee under a 
formal leave system, except that such days shall not be counted 
in determining average pay or annuity eligibility under this 
subchapter.

           *       *       *       *       *       *       *


Sec. 8422. Deductions from pay; contributions for military service

           *       *       *       *       *       *       *


  (d)(1) Under such regulations as the Office may prescribe, 
amounts deducted under subsection (a) shall be entered on 
individual retirement records.
  (2) Deposit may not be required for days of unused sick leave 
credited under section 8415(i).

                                  
