[House Hearing, 109 Congress] [From the U.S. Government Publishing Office] THE DEPARTMENT OF VETERANS AFFAIRS� BUDGET REQUEST FOR FY 2007 FOR THE VETERANS HEALTH ADMINISTRATION TUESDAY, FEBRUARY 14, 2006 U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH, COMMITTEE ON VETERANS� AFFAIRS, Washington, D.C. The Subcommittee met, pursuant to call, at 2:03 p.m., in Room 334, Cannon House Office Building, Hon. Henry Brown [Chairman of the Subcommittee] Presiding. Present: Representatives Brown of South Carolina, Miller of Florida, Michaud, and Snyder. MR. BROWN OF SOUTH CAROLINA. The Subcommittee will now come to order. I would like to take a moment to welcome everyone to the first Subcommittee hearing of the second session of the 109th Congress. I look very forward to again working with my good friend, Mr. Michaud, the Ranking Member of this Subcommittee from the beautiful State of Maine. I am assuming it must be all white today. It is all white down here. I had the good fortune to visit Maine last year. I would also like to welcome my Subcommittee colleagues back and provide you fair warning that we have considerable amounts of work ahead of us this year, and it effectively starts with our hearing today focused on assessing, with the help of both the VA and the veterans� service organizations assembled here today, the President�s budget request for fiscal year 2007. Dr. Perlin, it seems we have come a long way since last year. I want to publicly applaud you, Secretary Nicholson, and the President for assembling a budget request that I feel speaks loudly to the needs of our Nation�s veterans, and attempts to keep pace with the emerging health care requirements of those who have faithfully served this country. I think your 12.2% increase in a time of budgetary belt tightening is impressive and characteristic of an Administration that is continuing to defending the Nation. Having said that, I share the concerns of a number of my colleagues, Republicans and Democrats alike, about the Administration�s continued reliance on legislative proposals requiring veterans to pay more out of their pockets for health care. I am afraid the political will of the Congress will simply not support such a proposal and I am equally concerned about the signal it sends to the country. I am also a bit concerned about a reduction in appropriated dollars for medical and prosthetic research. While I understand the research budget predicts an overall increase in research funding, the reliance on other Federal grants and private partners gives me pause. In my mind there are few greater pursuits aside from the provisions of direct medical care that can have a greater impact on meeting veterans� health care needs in the future than good old-fashioned clinical research. I am sure you would agree. Even with those few concerns in mind, I am encouraged by the proposed increase of funding levels put forward in fiscal year 2007 that would address important ongoing issues like long term care, mental health, and major and minor construction projects. I look forward to discussion here today on all these issues. I also look forward to hearing from the veterans service organizations assembled here today, those who represent the Independent Budget, and those who have alternative ideas on what VA�s budget should look like. Over the course of the next few weeks I want to work with all of you on issues where common ground can be found and to forge a solid budget of which all of us can be proud. Mr. Under Secretary, I would again like to thank you for your continued service to the Department and this Nation. I would also like to remind you of a statement made by the Chairman of the Full Committee during last year�s budget hearings. Chairman Buyer acknowledged that Secretary Nicholson had inherited the budget that you and he were forced to defend but he also warned that the Secretary would own it from now on. Today you own it and I look forward to your assessment of that proposal weighed against the Department�s current requirements for health care. [The statement of Mr. Brown appears on p. 40] MR. BROWN OF SOUTH CAROLINA. At this time, I now yield to our Ranking Member, Mr. Michaud, for an opening statement. MR. MICHAUD. Thank you very much, Mr. Chairman. I would like to welcome both panels and also wish everyone a happy Valentine�s Day. I want to thank you, Mr. Chairman, for holding this hearing to examine in more depth the fiscal year 2007 budget for veterans� medical care proposed by the President. I look forward to working with you to make sure that the budget reflects our Nation�s full debt of gratitude to our veterans, the men and women who answered the call to service, whether it was combat or whether they wore a uniform as a career. I am pleased that the VA�s proposed budget for fiscal year 2007 includes increases in an attempt to meet the needs of our veterans. However, in the brief time that I had a chance to look at the proposed budget, it is clear that the impact of this budget proposal does not meet the much needed efforts of our veterans. Several proposals are nonstarters, as the Chairman had mentioned. I will oppose any proposed enrollment fees, increased copayments and other efforts to place the burden of payment on the backs of our veterans who are seeking treatment from VA. These proposals finance VA�s health care out of the pockets of our veterans. The Administration calculates that its proposals will also discourage some 200,000 patients from continuing their treatment at the VA. Some suggest that fees and increased copayments are reasonable policies given the President�s proposal for military retirees. The systems are very different in key respects. The VA proposed fees and increased copayments greatly affects priority 7�s and priority 8�s veterans, most of whom are over age 65. TRICARE for Life beneficiaries, who are over 65, do not have to pay any enrollment fees and TRICARE for Life pays their Medicare deductible and copayments. Most importantly, TRICARE for Life beneficiaries can count on mandatory funding to pay for their health care. If we are to import anything from the TRICARE system into the VA health care system, it should be the mandatory funding of TRICARE for Life. I am troubled by the Administration�s claim that the budget has a $3.5 billion increase when its budget request claims $1 billion in fiscal year 2007 in savings from efficiencies. The recently published GAO report, requested by Ranking Member Evans, found that the VA was unable to provide any support for the estimates of savings through efficiencies in the President�s past budget request. Given the GAO found that the VA lacks a methodology for even making the savings assumptions about efficiencies, you can understand my concerns when you look at these efficiencies. Veterans health care needs real dollars, not smoke and mirrors on accounting methods. It needs the actual dollars. VA also was proposing to continue the temporary ban on allowing new priority 8 veterans into the VA system. This policy has shut out over a number of years more than 2,403 Maine veterans, who have turned to the VA asking for their earned benefits, and they continue to do so. Rather than seek needed funding for these veterans, the Administration is seeking to keep the door closed to these veterans. I disagree with this approach. In fact, Maine has a program and hopefully other States will adopt this program called Project I Served. It encourages all veterans regardless of category to attempt to enroll in the VA system so that we can understand what the real need is out there. I think that it is an important program and hopefully other states will adopt it as well. Finally, at the last week�s full committee hearing on the budget, the Administration acknowledged that it was violating the law by proposing to reduce the VA�s own capacity to provide nursing home care. The law requires the VA to have a capacity of 13,391 veterans, the same as it had in 1998. The VA wants to cut this capacity by 17 percent. It is wrong for the VA to ignore the law, especially at a time when more veterans are aging and the need for this type of care is growing. I am also concerned with a report of VA facilities experiencing budget short falls. We heard that from Congressman Miller and others last week. We all want to do right by our veterans. Dr. Perlin, I want to applaud you and the VA employees for the high quality care that the VA does provide to millions of veterans and I also want to commend the workers of VA for the courage and dedication during the Hurricane Katrina and Rita, and I look forward to working with you. Our returning veterans and veterans from previous wars count on us to get this budget right, and I look forward to this Subcommittee doing its work and look forward to working with you, Dr. Perlin, and to make sure that we get the adequate resources that we need to do right by our veterans. It is the right thing to do, and I look forward to working with you to make sure that we do the right thing. Thank you very much, Mr. Chairman. [The statement of Mr. Michaud appears on p. 45] MR. BROWN OF SOUTH CAROLINA. Thank you. I note we are joined by Dr. Snyder. Dr. Snyder, do you have any opening statements? MR. SNYDER. No. MR. BROWN OF SOUTH CAROLINA. Thanks for joining us. Before we introduce the panel, I would like to enter into the record a letter from the Friends of VA Medical Care and Health Research proposing objection to the research budget cut. Without objection, I would like to enter this into the record. [The letter appears on p. 105] MR. BROWN OF SOUTH CAROLINA. Our first panel is Dr. Perlin. Would you please take a moment to introduce the members of your group with you. STATEMENT OF HON. JONATHAN B. PERLIN, M.D., PH.D., MSHA, FACP, UNDER SECRETARY FOR HEALTH DEPART- MENT OF VETERANS AFFAIRS, ACCOMPANIED BY BRIGA- DIER GENERAL MICHAEL J. KUSSMAN, M.D., M.S., MACP (U.S. ARMY RETIRED), PRINCIPAL DEPUTY UNDER SECRE- TARY FOR HEALTH FOR VETERANS HEALTH ADMINISTRA- TION, RITA A REED, PRINCIPAL DEPUTY ASSISTANT SEC- RETARY FOR MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS, JAMES F. BURRIS, M.D., CHIEF CONSULTANT FOR GERIATRICS AND EXTENDED CARE, DEPARTMENT OF VETERANS AFFAIRS, AND MARK SHELHORSE, M.D., DEPU- TY CHIEF PATIENT CARE SERVICES OFFICER FOR MEN- TAL HEALTH, DEPARTMENT OF VETERANS AFFAIRS DR. PERLIN. Thank you and good afternoon, Mr. Chairman, Ranking Member Michaud and Dr. Snyder. I am pleased to be here today to discuss the Veterans Health Administration Budget, and I know this is something this committee not only takes seriously, but makes sure to get a close view of how VA operates. I want to thank both the Chairman and the Ranking Member for coming to the Gulf Coast this summer and seeing the heroism of the work, but also the extent of the challenge that our employees faced. I am pleased to be joined today, going from my right to left, by Dr. Jim Burris, who is the Chief Consultant for Geriatrics and Extended Care; by Ms. Rita Reed, Principal Deputy Assistant Secretary for Finance and Budget; Mr. Jimmy Norris, who is our Veterans Health Administration Chief Financial Officer; Dr. Michael Kussman, Under Secretary for Health, Dr. Mike Shelhorse, who is our Acting Deputy Chief of Patient Care Services for Mental Health Care. I would like to request your permission to enter the full statement into the record. MR. BROWN OF SOUTH CAROLINA. Without objection. DR. PERLIN. Thank you, sir. Mr. Chairman, the VA�s fiscal 2007 year budget totals $34.3 billion, an increase of $3.5 billion over fiscal year 2006 request. This represents an 11.3 percent increase, including $2.8 billion we estimate we will collect through the medical care collections fund. It is the largest dollar increase for VA medical care ever requested by a President. The proposed increase will allow VHA to continue to provide the highest quality care of any provider of health care in the Nation and in the world. I am proud to note that our ability to provide the best care anywhere has been extensively documented in the media, in articles in Washington Monthly, The Journal of American Medical Association, U.S. News and World Report, New York Times, The Washington Post, most recently, The National Journal, among others. For the 6th consecutive year, VA has also set the benchmark for health care satisfaction in both public and private sectors. These external acknowledgements of the superior quality of VA�s health care reinforce our Department�s own findings. VA not only leads the Nation in quality care but we are showing the health care professions an indeed the world how quality can be measured and improved. Fiscal year 2007 we expect to treat nearly 5.3 million patients, including more than 100,000 combat veterans in Operations Enduring Freedom and Iraqi Freedom. To date, over 433,000 veterans of the two operations have separated from service and approximately 119,200 have come to VHA to meet some or all of their health care needs. More than 36,700 hundred of these individuals visited vet centers at least once. Last year, VA began hiring an additional 50 Operation Iraqi freedom and Enduring Freedom veterans to enhance our ability to reach out to their comrades through our readjustment counseling or vet center program, joining the 50 original OIF/OEF veterans who were previously hired into those roles. We continue to take steps to insure that our health care forecasting model projects the needs of OIF and OEF veterans and based on these actuarial adjustments we have made additional investments in key services such as mental health care, prosthetics and dental care to insure that we will be able to continue to successfully meet the health care needs of those returning veterans and the needs of veterans from other eras. Three key factors drive our additional funding requirement for fiscal year 2007. These are inflation; the aging of our VA veteran population; and, third, the greater intensity, complexity of the services provided when veterans seek care. We anticipate a significant increase in the use of our health care services in 2007 for several reasons. These include the utilization trends for health care in the United States, which are continuing as they have for several years to increase, as well as general medical practice patterns throughout the Nation that have resulted in an increase in the intensity of health care services provided per patient due to the growing use of complex diagnostic tests, advanced pharmaceuticals and biologicals and other sophisticated medical services. This rising intensity of care can be seen in the VA�s health care system as well. It has contributed to the higher quality of care and improved patient outcomes but requires additional resources to continue to provide the kind of care America�s veterans have earned. In long term care VA�s 2007 request includes over $4.3 billion for long term care, $229 million dollars more than the 2006 level. We plan to expand our extended care services. Percentage increase in funding for non-institutional care grows about twice that for institutional care. VA works to deliver care in the least restrictive environment for veterans. Our emphasis is on community-based an in-home care to provide extended care services to veterans in a more clinically appropriate setting and closer to where they live and in the comfort of their family and familiar settings. In mental health, the Department�s 2007 request includes nearly $3.2 billion. This is $339 million over the 2006 level and the provides comprehensive mental health services to veterans. These additional funds help insure the VA continues to realize the aspirations of the President�s New Freedom Commission Report as embodied in VA�s mental health strategic plan and will continue working toward restoration of function for mental health patients throughout our system. VA will continue to place particular emphasis on providing care to those suffering from a spectrum of combat stress reactions ranging from normal and expected readjustment issues to post-traumatic stress disorder, all of which may occur as a result of service in combat in Operations Enduring Freedom and Iraqi Freedom. This includes the December, 2005 designation of three new centers of excellence in Waco, Texas, San Diego, California, and Canandaguia, New York, devoted to advancing the understanding and care of mental illness. In research, the President�s 2007 budget also includes $399 million to support advances in medical and prosthetic research. Last year VA�s partnering with a major pharmaceutical company produced a vaccine that decreases the incidence and severity of shingles and will become a world wide practice standard for preventive care. This investigational study was one of the largest adult vaccines studies ever conducted. Through recognized studies such as these, VA continues to able to attract, what I believe, is the best team of investigational researchers in the world; scientists who are also physicians and nurses and psychologists and pharmacists and other health professionals who also bring state of the art knowledge and skills to the care of America�s veterans. The 2007 budget also includes $832 million for IT services for our medical care program. The most critical IT project or our medical care program is the continued operation of our Department�s electronic health record, one of the crown jewels in VA health care. Our electronic health care system has been recognize worldwide for its ability to increase productivity, safety, quality and to increase efficiency. The President has made the implementation of the electronic health record throughout all of health care in the United States one of his highest priorities and VHA is proud to support the President in this vital effort. In summary, Mr. Chairman, the $34.3 billion that the President is requesting for 2007 will provide the resources necessary for VHA to provide timely, high quality care to nearly 5.3 million veterans, especially those with service connected disabilities, lower incomes or special health care needs. I look forward to working with the members of this Subcommittee to continue our Department�s tradition of providing timely, high quality services to those who help defend and preserve freedom around the world. So I thank you, Mr. Chairman, for the opportunity to be here today and for your continued support of VA and the veterans. At this time my colleagues and I would be pleased to answer any questions that you or other members of the Subcommittee may have. Thank you. [The statement of Dr. Perlin appears on p. 48] MR. BROWN OF SOUTH CAROLINA. I thank you, Dr. Perlin, and we do have some questions we would like to ask if you would bear with us just for a moment. DR. PERLIN. Mr. Chairman, one question. We had heard there may be some interest in going through a review of the budget. That is the reason the projector is here. If you would like to go through with that, we would be happy to do that. Alternatively, our chief financial officer would be delighted to go through it with staff at another time. MR. BROWN OF SOUTH CAROLINA. How long would it take, do you think? DR. PERLIN. Probably not more than 10 minutes. MR. BROWN OF SOUTH CAROLINA. Dr. Snyder, do you have a position on that? MR. SNYDER. I will defer to your good judgment, Mr. Chairman. MR. BROWN OF SOUTH CAROLINA. Dr. Perlin, the staff says they have the copies and already have been briefed. So if you would go with us on the question period, and maybe that would help us get through. I appreciate the thoroughness of your presentation, and I think you covered a lot of points. This would give us a chance to utilize your time more valuably just by responding to these questions. DR. PERLIN. Thank you, sir. MR. BROWN OF SOUTH CAROLINA. If I may, according to the budget submission, the VA anticipates a $13 million reduction in the appropriation request for VA research programs. I know you went through a lot of programs where additional money was being spent. While research funding overall is expected to increase due to other Federal grants and resources, why is veterans research taking a back seat in the budget proposal? DR. PERLIN. Thank you, Mr. Chairman. I appreciate the concern of this Committee. I have a bias; I am trained as a researcher and this is an area that is particularly important to us. It is correct that there is a $13 million decrease in the 2007 appropriation request over the 2006 enacted. I would note that there is an increase of the same amount in the medical services budget, and it is anticipated that this direct appropriation and additional support can be leveraged to obtain additional Federal resources and nonfederal resources in the amount of $17 million, for a net increase in the size of the research program of $17 million. MR. BROWN OF SOUTH CAROLINA. Further, I am hoping that you can comment on the process we started down in my district between the VA and the Medical University of South Carolina. As we consider major and minor construction projects on an ongoing basis, can you provide me with some type of assurance that the VA and University model and their synergy can be seriously considered when new construction projects are put on the table? Also, can you provide information on any other VA facilities where this type of model may have clinical and financial utilities in the near future? DR. PERLIN. Thank you, Mr. Chairman, for the opportunity to comment on that. I want to thank you and Chairman Buyer and the entire team because looking at the opportunities for potential collaboration at Charleston allowed us essentially not only to look to what we might be able to do to improve veteran care in the Charleston, South Carolina area and create synergies with the community, but how that might apply more broadly. One immediate outcome of that collaborative effort with Medical University of South Carolina was the ability to determine that it would be useful to share some high tech equipment for very advanced radiation therapy and angiography in a process in which VA would provide the equipment and that the services would be provided at free or reduced cost to veterans. So this would advance care not only for veterans, but citizens in the State of South Carolina. So we think we have a template. You asked how this might be applied, and in the spirit of that being a template, it is really a tool that we hope to look at other collaborations when we have potential for developments at new sites. Of course, as we contemplate how to recover in New Orleans, and you saw the extent of the damage yourself, and Congressman Michaud as well. We have academic affiliations there. And I think it appropriate that we use that sort of analysis to determine what the most efficient, most effective, highest quality approach to health care is, and we will be using that as a lens to look at that sort of relationship. MR. BROWN OF SOUTH CAROLINA. How is New Orleans coming? Have you been able to make any kind of determinations whether you are going to be able to have some joint collaboration with any of those hospitals there? Are any of them back in operation yet? DR. PERLIN. Sir, the city hospitals are not up to full level as they were before the storm. In terms of the academic affiliates, I understand that parts of Tulane University have resumed activity in town. The hospitals of Louisiana State University which operate the Charity System as well as University Hospital have a little bit deeper damage. We affiliate and partner with both, and in fact, in terms of answering your question, we formally owe you a report of our plan on the 28th of this month. We will be actually continuing negotiations, which are really very promising in terms of looking at ways that we might be most effective and efficient in the delivery of services. I am proud to say that we are not only coming back in terms of inpatient care but we are back in terms of outpatient care. The week before Christmas, I was really privileged to go down and open up an outpatient clinic right adjacent to the hospital site, in the building that has eight floors of parking deck and then a nursing home above it; that nursing home is now offering primary care, and within a couple of weeks specialty care services as well. As well, I commend the staff of VISN 16 under the leadership of Dr. Lynch for really expediting three clinics from a very temporary status into a much more robust form to really serve those veterans who were forced to leave the downtown city proper. MR. BROWN OF SOUTH CAROLINA. Do you get a feel for whether many of them are coming back or how the patient load compares to, say, the same time last year? DR. PERLIN. That is such an important question because it, of course, is key to how we consider getting back in town. It is pretty clear that while the city population may not reach the prestorm levels, a lot of those veterans only went a short distance to a ring around the city. And even with very conservative estimates about the repopulation of New Orleans, it is clear over the 20-year period there will still be growth in the utilization of services in the metropolitan area and part of Louisiana, and even Mississippi. MR. BROWN OF SOUTH CAROLINA. The 2007 budget before us calls for an increase of $339 million above last year�s level for mental health services. In the absence of a concrete strategic plan is this adequate to address the new realities, especially in areas like PTSD? DR. PERLIN. The increase of $339 million actually brings the mental health, in a very restricted statutorily defined definition, to $3.2 billion. It absolutely increases the capacity in our specific areas such as PTSD care. In fact, there will be PTSD care teams at every hospital, and in fact, PTSD specialists available throughout all of the of medical centers and system. MR. BROWN OF SOUTH CAROLINA. One last question. I am interested in the Department�s opinion on Senate bill 716, the Vet Center Enhancement Act of 2005. You know, it calls for 50 additional FTEE�s to be used for outreach and counseling at the now 207 Vet Centers around the country, while expanding bereavement eligibility to the parents of those who are killed in service to this country. I know that we have hired roughly 200 new FTEE�s for this role over the past few years. Can you tell me whether or not those FTEE�s are meeting the current requirements at the Vet Centers? DR. PERLIN. Thank you for that question. Yes, the FTEE who are these global war on terror outreach counselors are themselves veterans, and they are, in fact, going out to demobilizing units and meeting with separating service members. Sometimes when the unit comes back to drill, they meet again with them, and they really are an excellent group of individuals. Our Department, and I honestly cannot remember the formal opinion of this prepared legislation, but this would formalize what, in fact, we are doing, which is to provide that outreach. As to the bereavement counseling aspect, regrettably, there are times when it is necessary to provide counseling because there has been a loss of a service member, and our vet centers and the counselors do step forward, are ready to provide grief counseling to families and all survivors of a deceased service member. MR. BROWN OF SOUTH CAROLINA. Do you think the 50 FTEE�s are adequate? Is there enough demand to utilize 50 additional FTEE�s? DR. PERLIN. As I understand this bill, and I may need to check, is that this would formalize not the first 50 FTE�s, but the second FTE�s who are already on board. It would change their appointment category from a term limited to a permanent, which is something that I would have no objection to, particularly as some of the older members of the counselor cohort from the Vietnam era retire. MR. BROWN OF SOUTH CAROLINA. Thank you. Thank you very much. Mr. Michaud. MR. MICHAUD. Thank you very much, Mr. Chairman. Dr. Perlin, you had talked about the increase in budget for VA. Having been Chair of the Appropriation Committee for many years in the Maine legislature, I look at when we give increases as far as the outcomes. And when you look at the need out there, particularly with the World War II veterans, as they get up in age, they require more services, plus the war in Iraq and Afghanistan, where having men and women come back and also the increase in need. Even though there has been an increase, my concern is the fact that we are not meeting that need because of these components. Although I do agree with you as far as the quality of care for those veterans who receive care from the VA. I have heard nothing but high remarks for them, so I commend you for that. On fiscal year 2005 and 2006 budget projections and assumptions were off the mark. Fortunately, through a bipartisan effort Congress, corrected this shortfall and I am very concerned when I am hearing from facilities who are struggling to make ends meet and are facing shortfalls, and as the Chairman mentioned, this is your budget, you own it, you can�t blame it on the previous administration for that of the VA. Some of the shortfalls that we are hearing and as brought up last week as well with the Secretary is that the VA Medical Center at West Palm Beach is facing an $18 million shortfall, San Diego facility, an $8 million shortfall, the facility in Seattle, a $4 million shortfall. Iowa City is projecting it will need to convert nearly $2 million in equipment dollars. Clarksburg, West Virginia will have a $4.5 million shortfall. There are many more. When the shortfalls were brought up last week, you said you would look into it. How many VISN�s out there will be facing a shortfall? DR. PERLIN. First, I want to thank you for your support of budget amendments in 2005 and 2006 in response to the President�s request. The 2007 budget is indeed Secretary Nicholson�s and my budget. We are able to understand and describe that this is a very robust increase relative to growth. To your question of the current status of facilities, networks in terms of making sure they have the resources to provide care to veterans this year, I have queried each of the networks and they have the resources to provide care throughout the system to veterans. Are there facilities that, at any point, which in a very early point in the year may project that things will be tighter than they would want? I think it is fair to say there are facilities that individually may believe that they face a challenge. Our network directors, however, have the responsibility of making the allocations within the networks and moving dollars around. We feel pretty good about the VERA, Veterans Equitable Resource Allocation, model which distributes dollars to the network on the basis of a formula based on the complexity of patients and the historic workload. On the other hand, within the network there are a lot of judgments that are made facility to facility and we will be working with network directors to make the adjustments in terms of the micro allocations to individual facilities to make sure that they have the resources necessary. I think Florida is a very interesting area. If I remember off the top of my head, for this year the budget is $2.674 billion. This is over a of 9 percent increase in the face of a 3.6 percent increase in workload. So there is also a question I have to ask which is how do we improve efficiency in the use of those dollars, and I think that is a fair question as well and will be working to do that and working with the networks to move resources if there are particular issues. MR. MICHAUD. I can appreciate that and I think you ought to do everything that you can to be efficient, but an $18 million shortfall is a significant shortfall, and there are shortfalls out there. I have got, which I will not share with you, internal memos from the VA from different VISN�s telling about their shortfall. And if I have those memos, I am sure that central office should be aware of, the shortfalls. Will you be requesting a supplemental budget to help address this issue, because it is an issue that when the Secretary first came on board I had talked about shortfalls and later in the year proved out that they were borrowing money from other VISN�s just to meet the dramatic shortfall, and ultimately you came in and asked for this. What are you doing to monitor this, the shortfall in the VISN�s to make sure that they are meeting needs. I just visited Togus before I flew down here yesterday. There are about 40 vacancies at Togus. They delayed hiring. I am sure that is occurring throughout the Nation as far as hiring delays, as far as purchasing equipment. DR. PERLIN. You have very important questions. Let me be clear, we have the resources to provide high quality care to veterans this year. I think it is important in terms of the use of the term shortfall to be clear in terms of the way funds may be reprogrammed and that is a technical and formal aspect and I would ask our chief financial officer Jimmy Norris, Mr. Norris to comment on that. MR. NORRIS. Yes, sir. We do monitor the VISN execution on a monthly basis in looking at that, and no one, no network director or VISN CFO has told me they are having a global problem or problem with their total amount of funding. What we do know they are having a problem with is some out of balance in the accounts. We have three appropriations, and we are probably a little short in medical administration. We know there are some shortages out there in that account. We are analyzing that. We will probably be coming forth with a request to reprogram some money and move money around among accounts. But when we add it up at the bottom line we don�t see any indication at this point, and it is early in the year, but we don�t see any indication at this point that overall there is a shortfall. DR. PERLIN. I would just add if I might that Secretary Nicholson made a commitment as well to meet with our oversight committees, appropriations committees quarterly and provide that information so that you have the information as we do to see if anything is getting out of kilter. I think it is well known that 2005 was a very tough year. In retrospect, no one has any desire to recapitulate that. This is something I can assure you we will monitor closely and look at those micro allocation aspects on the budget line appropriation transfers that Mr. Norris discussed as well. I should note that we also have a parallel set of briefings with the Office of Management and Budget so that they are apprised and know exactly how we are executing relative to budget. MR. MICHAUD. The VA National Leadership Board has a finance committee that I believe is meeting shortly. Will you, Dr. Perlin, direct your staff to ask about these shortfalls at the facilities and report to the Subcommittee the information that you receive. Because my concern is that VISN folks are told not to ask for any additional money and to try to keep the issue about the shortfall quiet. And I hate to read about it in the paper first before we hear from you. My second question is I have heard that facilities must pay back the amount that they received to cover the last year�s shortfall. What process do you deal with VISN�s that had to borrow money, as far as paying it back? DR. PERLIN. If I might answer your first question, which is I believe the finance committee is actually meeting yesterday and today in conjunction with the national leadership board. In fact, this is something that is discussed there but it is something that I, because of my interest, asked our office to query each of the network directors, and do this periodically. As to the second part, I don�t know whether we have determined exactly what the manner of repayment will be, and I might ask Mr. Norris to comment on that and whether we are maybe granting any leniency. MR. NORRIS. Sir, I am not sure I am familiar with that. We did not provide any money to any VISN�s or facilities that I am aware of that we have asked for them to return in a subsequent year. I do think there was some trading among themselves out there and perhaps they made deals that they would trade and pay back. I would be happy to follow up an check that out; I am just not aware of it myself at this point. MR. MICHAUD. So you think it is within VISN�s if they borrowed money from another VISN. MR. NORRIS. Yes, sir. MR. MICHAUD. I appreciate you checking on that. MR. NORRIS. I think the reason is some of them were better off in their capital areas than others were and they were able to forego some of those things and so they could delay some things to a subsequent year and help their counterparts out. I will be happy to check that. MR. MICHAUD. Thank you. Last week, the Secretary testified that in the budget they plan on opening, I believe it is 43 new CBOC�s. The CARES process identified the need for CBOC�s in VISN 1 and we, Mr. Brown and I had a hearing actually in Maine and that was one of the issues that came up, Maine being a rural state and actually 16 percent of our population veterans, one of the highest percentage in the country. Presuming that you receive the budget request for fiscal year 2007, or hopefully an improved budget for fiscal year 2007, would you envision that one of the 43 CBOC�s actually as predicted under the CARES process be in Maine? DR. PERLIN. I note that there are a number of CBOC�s that have been identified in the CARES process for Maine specifically. I would prefer to look into the details and discuss with the network. As you know, the CBOC�s process is a consideration where a plan is put together that especially with those that have been approved or identified in the CARES process meet certain criteria in terms of need, access, in terms of capacity. But subsequently there is a process where an operational plan is put together, the network comes forward having to demonstrate that they have the resources, and ultimately Secretarial approval is required. And so it is something that has helped us improve health care, it is helped us move to a model that helps to promote health and prevent disease, so it is something that we very much endorse. As I think you know, since 1996 we have increased the number of outpatient clinics by over 350 percent. So we obviously believe in this model and will open clinics as we can. MR. MICHAUD. Thank you. My last question, Mr. Chairman. I don�t know off the top of your head, but if you can provide later on, it is either to Mr. Norris or Dr. Burris. The VA is budgeting to maintain an average daily census of 11,100 in VA-operated nursing home units. The law requires the VA to maintain a level of 13,391. How does the VA project the cost to maintain the 11,100 ADC in fiscal year 2007, and how much would it cost to maintain the statutory minimum of 13,391. If you don�t have those numbers with you, if you can provide it in writing to the Committee. DR. PERLIN. I think we probably should calculate those and then provide those back to the Committee. [This information was not provided to the Committee.] MR. MICHAUD. Thank you. Thank you very much, Mr. Chairman. MR. BROWN OF SOUTH CAROLINA. Thank you, Mr. Michaud. I will take this opportunity to enter Ms. Corrine Brown�s statement in the record, without objection. [The statement of Ms. Brown appears on p. 47] MR. BROWN OF SOUTH CAROLINA. Dr. Snyder. MR. SNYDER. Thank you, Mr. Chairman. Dr. Perlin, I would like to continue this discussion about the research numbers that I had asked about the other day when you were here with the Secretary. In Little Rock, we get very good feedback about the patient care there and in your written statement you talk about the high quality of care. In your section on intensity of care, because of the increase of sophistication, for want of better word, of the care, but a lot of it comes from research, and a lot comes from research at the VA, so I am having trouble reaching a conclusion about why this number is not more robust in this budget at this time in our history. My math may not be right, but I think your research number is 399 million, which you say is an increase of 17 million from 2006, is that correct? DR. PERLIN. The 399 million; the direct appropriation is $13 million less than the direct appropriation in the 2006 budget request. $13 million is added to medical services and 17 million is what is anticipated to accrue from other research. MR. SNYDER. So you are saying that is a net increase in the research budget of 4 million? DR. PERLIN. No, sir. The 13 million that is being requested for the direct research appropriation -- the direct research appropriation is $13 million less. Medical services support component is $13 million more, offsetting any decrement in the direct medical research appropriation. So that is a sort of net of zero. Then it is estimated that $13 million can be accrued from Federal grants and $4 million from private foundation grants, for a net increase of 17 million. MR. SNYDER. A net increase of 17 million. DR. PERLIN. Yes. MR. SNYDER. Over the budget. I will begin with what I said, your number 399 million. So for the last year it must have been we are saying 282. I am sorry; 382. 382 plus 17 gets me to 399. DR. PERLIN. No. I need to sum up the different components of the research budget. I will just take a moment. MR. SNYDER. I know this is important but we have limited time. I am going by your number and says it is $339 million to support VA medical and prosthetic program. You stated that that is a $17 million increase, because the 13 is a wash, so why am I going wrong by saying last year�s must have been 382? DR. PERLIN. I am sorry if I made it confusing in terms of the terms. The overall research resources are $1.649 billion, $17 million more than the $1.632 last year, but you are absolutely correct that the direct research support component of that actually is $13 million less than the 412 in last year�s budget appropriation. MR. SNYDER. I want you to help me then. So we are saying the total research budget is 1.65 billion, an increase of 17 million. I don�t have a calculator here with me, but that must be a .01 increase or somewhere less than -- just a very minimal increase over 1.65 million. What do you consider is the medical inflation rate amongst VA research. How much increase do you need from year to year to hold your own? DR. PERLIN. I would have to get back on a specific number. I know that overall inflation will certainly be higher than the number you have suggested. MR. SNYDER. I know that but it is substantially higher than the normal inflation rate on groceries and everything else, is it not? DR. PERLIN. That would be correct. MR. SNYDER. I am trying to get a feeling for how you all arrived at a number when, you know, you are bragging on the research your doing at the VA and the kind of research you have ongoing, bragging on the results, and then -- I don�t know if this is right or not, the FOVA letter today, they say it is going to result in cutting 286 VA direct research employees. Because of the inflation, they don�t discuss that in detail, if you have a number that is essentially a hold your own number in nominal terms, it real terms it doesn�t, and you end up in cuts in the VA budget. This is a budget that cuts VA research and you can�t say that it is not. It is a substantial cut in VA research because of the medical research inflation rate, which is high. Why would we end up -- is this an OMB thing? Did you all ask for a higher number and OMB said no, we can�t do that? DR. PERLIN. I am not sure on that specific aspect. MR. SNYDER. Is the number that is in this budget that you are testifying here today, is this adequate to do the job for maintaining the level of research that is going on now at the VA? DR. PERLIN. The proposed appropriation for direct research support of $399 million will not maintain to the level of activity of direct VA employees. It does, however, allow for leveraging for additional activity, other Federal grants, but the direct answer to your question is no. MR. SNYDER. Even if you achieve the level of research grants from outside entities, it won�t do it with the numbers you are giving me. DR. PERLIN. In terms of the FTEE, the full-time employee equivalence, you are correct. MR. SNYDER. So why are we doing that, Dr. Perlin. Are you satisfied with this? DR. PERLIN. I am a researcher by background so I have to identify that I am very biased in that area. I do know that the research that is being conducted is increasingly focused on veterans issues, but I also know research is one of the most important ways of attracting topnotch physicians and scientists and, as I mentioned, nurses, psychologists and other health care professionals to both advance the science in the interests of the health and well being of veterans and serve veterans with patient care. MR. SNYDER. My time is up, Dr. Perlin. I have great respect for you and the work you are doing. I am glad you there. Everything I have heard you say in your opening statement and written statement in response to questions from the Chairman and Mr. Michaud argue for a robust budget for research. The only thing that is inconsistent with that is the budget for research. I don�t know where the problem is. Somebody is trying to find dollars to save in an area we ought to not find dollars to save in. We ought to be doing it by increasing efficiencies and then plussing up the numbers so more good things can be done. All your arguments point, we ought to be going in a different direction because this budget is a cut in medical research in real terms, and there is no way, I mean, as you acknowledge, there is no way to get around it. I assume maybe we will have another round of questions, Mr. Chairman. MR. BROWN OF SOUTH CAROLINA. Thank you, Dr. Snyder. I would like to ask, on that same line of questioning, Dr. Perlin, is VA partnered with any other medical groups in research like we have been asking you to do, to partner up with the health care delivery system? DR. PERLIN. Are there partnerships going on in research; that answer is yes, there are absolutely partnerships going on in research. Part of the capacity of the VA to really provide cutting edge research are partnerships that exist not only with 107 of the Nation�s medical schools, but 1,500 programs in health profession educations, partners as well with other Federal agencies, including obviously, Department of Health and Human Services and all branches of the National Institutes of Health, but also with State agencies and of course the Department of Defense. So the answer to your question is partnership is absolutely critical. Partnership also occurs in the private sector. I mentioned in my opening statement a vaccine that will fundamentally change preventive health care practice in adults, that was a partnership with private sector bringing this vaccine to the market, probably twice as fast as had it been done anywhere else other than in VA. MR. BROWN OF SOUTH CAROLINA. I know we are reducing, the funding just we put in the record earlier, but are we getting the same bang for the buck by coordinating VA�s research activities with other partners? I guess my concluding question would be, are we effectively cutting down research or trying to do it in a different way? DR. PERLIN. Thank you. I will answer your question now. Yes, we are amplifying the investment that the American taxpayer through Congress at the request of the administration makes in direct VA research. $399 million in this year�s budget is a direct investment that we would ask for you to make and to that budget additional funds are added for the conduct of research in VA and those come from the National Institutes of Health and from private sector, including pharmaceutical companies and other entities. In fact, the Federal grants on the back of the $399 million in the direct research appropriation, and $366 million in the support for that, that are part of medical services budget, provides leverage to bring in an additional $376 million in Federal grants and $208 million in private sector grants. MR. BROWN OF SOUTH CAROLINA. Okay. Thank you. Thank you very much. We have been joined by Mr. Miller from Florida. Do you have any questions? MR. MILLER. Thank you, Mr. Chairman. I also have a statement I would like to enter into the record. [Mr. Miller�s statement was unavailable at press time.] MR. BROWN OF SOUTH CAROLINA. Without objection. MR. MILLER. I apologize for being late. We are on the floor doing a resolution for the 65th anniversary of the USO. You probably already have covered this but, Dr. Perlin, I would like to hear an answer and if you have already done it, you can encapsulate what you said prior to my arrival. Given the resistance of any enrollment fees in the past and increased copays, why is VA doing that again? In fact, it is the exact same policy. Can you shed some light on it? DR. PERLIN. This budget contains a request that we understand emphatically has been rejected by Congress previously, and in the earlier comments today we heard emphatic concerns about the request for policies that would require priority 7 and priority 8 veterans to pay an enrollment fee of $250, sharing the cost of pharmaceuticals at a rate of $15. DR. PERLIN. And sharing the cost of pharmaceuticals at the rate of $15. And I would note that the value of those policy proposals is $795 million including an offset to the first-party collections. And so I think, it is fair to say, as was indicated also earlier, that there is a belief that it is fair and equitable to ask some veterans to share modestly in the cost of their health care. We, nevertheless, hear your voice and concerns about this. MR. MILLER. Another question, if you would, in your testimony, you said that all of the resources for capital construction are going to be devoted toward achieving the goals of achieving delivering greater access for high quality health care for more veterans as was the goal of the CARES report, and I think this has been addressed, too. And I don�t think the information that I got was correct. So I am hoping that maybe I misinterpreted what was sent to me. But given the unmistakable shifts in population along the gulf coast after the hurricanes last year, do you feel the current and projected population numbers should be revisited and the 5-year capital plan adjusted accordingly? What I heard, somebody said was reported to this committee, was that VA doesn�t feel that the veterans moved away geographically from the New Orleans area but further than nonveterans. And how do you know that? And then answer that first question. DR. PERLIN. Right. Well, thank you. This is an appropriate question in looking at how we best serve veterans in the areas devastated by Hurricane Katrina. I appreciate your support for helping us to provide that care back to those veterans. MR. MILLER. Let me make sure you understand. I want veterans� health care for my veterans in northwest Florida, as well. So while I am concerned about making sure that those in New Orleans were taken care of, there was a declining veteran population prior to Hurricane Katrina in New Orleans, a growing population in northwest Florida, and I don�t know if we need to go back as the old CARES report was established or if we need to open it up again and say, things have changed. DR. PERLIN. That is absolutely a fair question. And I appreciate that. I have done some research. It is obviously a question that is weighing heavily on my mind. What I understand both from the demographics in the area and from the actuaries, even with the most conservative projections, that there will be more veterans seeking care between now and 2023 in the New Orleans Metropolitan area. It is also true -- I have the data as well -- that in your area of the country, there is also growth in veterans care. But it does, even with an actuarial estimate that provides for minimal change, extreme change and a moderate change in terms of resettling New Orleans proper, it is absolutely clear, unequivocal, that there is growth in the use of VA health care services in that region, sir. MR. MILLER. Can you define for me the difference? You say the use of the facility, but is the use of the facility including veterans who don�t live in metropolitan New Orleans? It is people who travel from out of the area to go to that facility; correct? DR. PERLIN. I want to be careful how I define this. I am going to use the CARES data and define the central southern market, which is how it is defined as the cachement of the hospitals they listed previously to include 27 Louisiana parishes. And we know that there are a band of people who emigrated slightly to a perimeter around New Orleans are now using Hammonds, Slidell and La Place for a new CBOCs as well as Baton Rouge. We know that Lake Pontchartrain area to the west of Homa, straight west as opposed to the northwest and over to the east, Slidell, and in the northeast area, that there is growth in those markets. And there was already a population shift from one part of town to the suburban surrounding areas. But it is not people from a different part of the State or region. MR. MILLER. Do you anticipate spending $800 million in the New Orleans area for a new hospital? DR. PERLIN. I believe that the numbers will come in well below that. But we are looking at any number -- MR. MILLER. That was what was asked for in the supplemental before we adjourned last year, and $753 million was stripped from that supplemental. So my question is, do you anticipate using those dollars for that? DR. PERLIN. We -- I think the Secretary last week was clear--that we plan to be back in New Orleans and that we will be as efficient as possible in our operation and have a final budget estimate in the report due to you, sir, in Congress on the 28th of this month. MR. MILLER. Thank you, Dr. Perlin. DR. PERLIN. Thank you. MR. BROWN OF SOUTH CAROLINA. Dr. Perlin, if you would bear with us, we would like Counsel to ask a question, particularly about the inflation rate on health care delivery. MR. WEEKLY. Dr. Perlin, from your testimony here today and from the Secretary�s testimony last week, the funding drivers associated with this year�s budget request are fairly clear and I think fairly well articulated in the testimony. One is inflation. Two is the aging of VA�s patient population, and the third is the greater intensity of the services provided. While we, I think, can wrestle with the latter two, that is aging and the greater intensity of services, I think there are still some outstanding questions as it relates to inflation in particular. Your testimony, the President�s budget proposal in particular, suggests that a majority of medical services, not the least of which is the procurement of medical supplies and/or pharmaceuticals, is tagged to medical CPI. We have heard on a number of occasions that VA, both in medical services as well as procurement, does things far more efficiently than the private sector. So the question then becomes, and I think -- I hope -- a logical one, is there not or would there not logically be a delta between the inflation rate that you would normally witness at VA having statutory protection as it relates to the procurement of pharmaceuticals and medical devices et cetera and the medical procurement in the private sector? And why then is the President�s budget and VA budgeting always tagged to a higher medical inflation rate? And this may be a more appropriate question for Mr. Norris or Ms. Reed, but if you can address it, I would appreciate that. DR. PERLIN. Let me start and I may turn to Mr. Norris to amplify. But first let me acknowledge and agree with the economy of scale that exists in VA�s national health system. Our leverage, more efficient purchasing power, is clear cut. As well, you have identified some statutory opportunities to procure materiel, such as pharmaceuticals, at essentially "best price," combined with efficient formulary management. That does lead to certain efficiencies. Our budget, and the model portion of that, in terms of projecting what the demand for resources will be to care for the population includes the factors that you have mentioned. There is an inflation factor, and that is in part given to us. And that is, in this model, at about 4 percent. Now, I need to mention that the -- intensity of services, and that approaches 1 percent, and just to be clear in what the intensity is; it is the amount of care that is given within a particular type of service. And with advancing technologies, new biological products, et cetera, that drives the cost up. It also improves the outcome. The utilization goes up by almost 1.2 percent. And utilization is the number of the same services provided. So in addition to getting more care per unit intensity, there are also more units of service utilization, not unexpected given that the population is one that tends to be older and typically sicker; with three additional physical and one additional mental health diagnosis as compared to age-matched Americans and oftentimes poorer, less resources. The aging and gender change also contributes to the cost of the care. And that approaches one and three quarters percent and then, with that, there are oftentimes shifts in income within the population of veterans that use VA. And that is another three quarters of a percent right there. On top of that, we add certain things that we are intentionally doing to change how we deliver care. In this model, there is nearly half a percent of increase in resources based on a very clear intent to improve and enhance the mental health services delivery in areas such as those we have discussed before. So, this model and our approach actually does exactly what you have suggested. It demonstrates that we approach with a lower rate of inflation than others might experience. It also, I think, takes into account that we have a very complex and aging veteran population by and large. And on top of that, there are some areas where we are making some very goal-directed enhancements to service. MR. WEEKLY. So if I understand you correctly, while it may be true that the annual inflation rate, as it relates to medical services and procurement, may be dramatically lower, the other factors that you just articulated make up for that and, in fact, overcompensate for a lower inflation rate leading to one that is consistent with the rest of the nation across the whole panoply of medical services? DR. PERLIN. I think in short that is a reasonable characterization. The inflation rate for the same services for unchanging population would be lower when you take into account the demographics of this population and the needs. It is a higher number as you see before you in this very robust budget. MR. BROWN OF SOUTH CAROLINA. Thank you, Dr. Perlin. I have one further question. Can you tell me what, if any, progress has been made on the electronic exchange of medical information between DOD the VA at the polytrauma centers? DR. PERLIN. Thank you, Mr. Chairman, for that question. This is an area that we think about daily. In fact -- Dr. Kussman and I were discussing that on the way over here today. Where electronic data exists within the Department of Defense, they are transmitted to VA. Not all data exists electronically. But we are pleased to report that there are advances that allow us to take better care of veterans. For example at our polytrauma units specifically, as you have identified, they now have access to tap into the health records that exist at Walter Reed. So in the large picture, we are working toward interoperability, the Joint Electronic Health Records Interoperability Program, and that is moving forward, where there are electronic data in DOD -- those data are being mapped to the electronic health record in VA, and where this data doesn�t exist electronically or where it only exists some places electronically in some places like Walter Reed, we have increased access to that. This is an area that the Secretary and deputy and I personally take an interest in and desire with you to push forward. MR. BROWN OF SOUTH CAROLINA. Do you have target when you think the exchange will be transparent between DOD and VA, or is there anything we can do legislatively to help accelerate that process? DR. PERLIN. Well, first, thank you for your offer of support. And let us consider if there is anything that might accelerate it. But I believe there is a good bit of progress in the first stage; the Federal Health Information Exchange (FHIE) created a repository of, predominantly laboratory and pharmacy data, but electronic data that VA can now reach into essentially as its repository and pick out that information. I personally have used that information to look up bits of patients� records for a veteran who has some electronic data. And that is available nationally. This year, we are completing the piloting of BHIE, the Bidirectional Health Information Exchange. And this will allow realtime transfer of pharmacy and lab services. The end goal is the full joint electronic health record interoperability and the time course for that is completion of our Health Data Repository, HDR, and completion of DOD�s Clinical Data Repository, CDR, and only the way we in government can do, putting CDR and HDR together is the acronym for CHDR, and the goal for CHDR is, I hope, within the next couple to 3 years. And then we should have seamless interoperability of our health records. MR. BROWN OF SOUTH CAROLINA. Is there a system in place to be absolutely sure that we aren�t leaving any third party payee on the table? DR. PERLIN. This is a great question. And I think it is an opportunity to really identify that there has been just incredible progress in the third-party collections. Even absent any of the policy proposals that were discussed earlier today, I think you see on this curve over the last 6 years that in 2000, the collections were $573 million, and even absent any additional policy proposals, in 2007, we would anticipate 2.288, really, $2.3 billion of collection, pretty significant growth. We use the same sort of actuarial models to estimate who has insurance, and indeed, we try to determine this. I can�t tell you that we would never leave money on the table. What I can tell you is that we are ambitious and assertive in terms of trying to collect that and appreciate the support of this committee in terms of improving the efficiency and timeliness of collections. MR. BROWN OF SOUTH CAROLINA. Thank you, Dr. Perlin, and we certainly would like to do what we can to enhance that. And, remove? I know it is probably difficult to estimate, but we move from half a billion to almost $2.6 million did you say? DR. PERLIN. 2.3, sir. MR. BROWN OF SOUTH CAROLINA. $2.3 million, in what, 5 years? DR. PERLIN. In the 2007 budget, without any change in policy, it will be $2.054 billion we estimate at the end of this year. MR. BROWN OF SOUTH CAROLINA. So based on that scenario, you think you maximized it, or do you think we are 50 percent there, 35 percent there, or 90 percent there? DR. PERLIN. I think we are getting -- I think it is substantial progress. And I can�t give you a specific percentage. I think it is probably very, very high, and I would be pleased to provide better quantitative estimate for the record. MR. BROWN OF SOUTH CAROLINA. Thank you very much. Mr. Michaud? MR. MICHAUD. Thank you, Mr. Chairman. Mr. Norris, did you or do you plain to make a presentation to the national leadership board on the VA�s fiscal year 2006 budget? Have you already done so, or do you plan on doing it? MR. NORRIS. Yes, sir, I plan to update that body every month with the status of where we think we are financially. MR. MICHAUD. Would you please provide the committee with a copy of the January and February report? MR. NORRIS. Yes, sir. MR. MICHAUD. Thank you. My next question is about prescription drugs. What has as the CBO given the VA as estimates when you negotiate for prescription drugs? Have they put a number with that as far as the savings, and is that calculated? What is the methodology that they use, and is that calculated when you put your budget together? DR. PERLIN. I think that is a great question. We estimate roughly that the savings approach, a billion dollars a year in terms of the pharmaceutical savings due to a variety of factors. MR. MICHAUD. What method, does OMB, use to do that? Or do they pretty much take whatever number you give them? DR. PERLIN. OMB has recognized that we are extremely efficient in this. You mentioned CBO, and in point of fact, there have been estimates of VA�s efficiency, and I believe that has been one of the sources, sir. MR. MICHAUD. The VA did a mental health model to project demand on returning soldiers. Returning soldiers account for roughly 2 percent of the VA�s overall patient workload but nearly 6 percent of the PTSD patient workload. Has VA revised its mental health demand model to reflect this disproportionate increase in workload, and was that budget based on that revised model? DR. PERLIN. I would ask Dr. Mark Shelhorse to talk about what some of the percentages have been. I would be happy to follow that with some comment on the budget estimates. DR. SHELHORSE. Yes, sir. We are very sensitive to the issue of Post-Traumatic Stress Disorder population In the OIF/OEF returnees, last year, the figures were indeed 5 percent of the total. And it is modifying a little bit as the overall number of PTSD numbers of cases goes up and fluctuate between 3 to 5 percent right now. We are very acutely aware that we need to maintain those programs. And in 2005, we put $20 million toward additional programs for PTSD and OIF programs. That accounted for 44 new programs that focus purely on the Operation Enduring Freedom and Iraqi Freedom veterans that are returning. And we called those Veterans Outreach and Enhancement Centers. They go out, identify those veterans, try to educate them as to what services are available, what kind of symptoms they might expect, et cetera. We also put out 43 new programs for Post-Traumatic Stress Disorder. In 2006, we will invest another $29 million in PTSD and OIF programs. And that money is yet to be distributed in the field. We are in the process of choosing those programs right now. The model itself was a model that was generated slightly before the conflict, before we knew how many returnees we would get. It predicts PTSD population based on residential treatment beds, which are the comparable beds that would be used in the community for the types of programs that we have. It is not sensitive enough to extract OIF/OEF veterans out of the current model. But we are using the model in terms of projection of PTSD need for the future. We have asked divisions to look at their gaps and address where the programs need to be and, in fact, have used that for the 2006 distribution, with the idea of plugging in any gaps that might be in place and making sure those veterans have access to care when they need it and where they need it. MR. MICHAUD. If I may ask a follow-up question, Mr. Chairman. The Department of Defense has a new program, The Post-Deployment Health Reassessment. And this pilot, nearly 48 percent of the service members are referred to the VA. How does the VA support that program, number one? But how do you keep track of what they are doing? DR. PERLIN. Thank you for that question. The PDHRA, Post-Deployment Health Reassessment, is really a very noble effort to follow up between 90 and 180 days after deactivation. And this program is being conducted in many small groups, 60 service members at a time. In point of fact, to date, we have actually had both VHA and VBA personnel there, and so the cognizance of what is going on is really very immediate. I think you have hit a very salient feature, and one that we were also quite attuned to is that the survey is extremely sensitive, and as a result, a number of, a large proportion of the individuals seek care or seek to establish a relationship with VA. We are actually currently seeking to better understand the implications from DOD and are having ongoing meetings both with the Department of Defense at regional levels where this work in the field is actually occurring nationally and hope to have continuing information on the effect of the program in terms of VA utilization. MR. MICHAUD. Thank you. Thank you, Mr. Chairman. MR. BROWN OF SOUTH CAROLINA. Mr. Snyder, did you have any further questions? MR. SNYDER. Yes, Mr. Chairman, thank you. Dr. Perlin, just one quick note on this research and then I have two other questions I want to ask. If I start with $1.65 billion, and I assume a medical inflation rate of about 5 percent for medical research, which is different than research or than medical care -- it is higher, I think it is because everything has to be new; you are trying to do cutting-edge stuff, not stuff with old equipment. So if I assume a 5 percent increase, inflationary increase, of my 1.6, I am going to say $1.633 billion, that gives me like over $80 million. And so you all are saying, well, we have increased it by $17 million. But in order to just to maintain a 5 percent inflation rate, it has got to be a little over $80 million which means actually in real terms a cut of over $60 million. Now, I don�t know what the medical inflation rate is but my guess is the VA is not that much different from other institutions because most medical research is done by institutions, and you have a lot of jointness with medical schools but that is a -- if you came in here today and stated -- if your written statement said, well, bad news in the research front. In real terms, we are going to cut the research number by over $60 million, that is a totally different picture than the way it is presented. But I think that is in reality what is going on. It is probably worse than that. My two questions for the record -- would you respond for the record, please, to this letter that was sent to the committee from FOVA? And they have specific items in there about things they think are going to be cut in research. And second, for the record, would you tell us please what you think the medical research inflation rate is nationally and then also for the VA, and what distinguishes the difference between them if there are any differences? And the two questions I want to ask are on page four. You are talking about the initiatives, increased copays, you say both of these provisions would apply only to priority 7 and 8 veterans who have no compensable service connected disabilities who typically have other alternatives for addressing their medical care costs, including third-party health insurance and Medicare. Typically. What is your definition of typically? Do you have that number available in terms of -- DR. PERLIN. 95 percent. The Chairman hit the nail on the head because many of those veterans are older and Medicare eligible. MR. SNYDER. So, of that number, 5 percent don�t have any insurance? DR. PERLIN. That is correct. MR. SNYDER. And then my second question on page five is the provision in which you talked about a provision to eliminate the practice of offsetting or reducing VA first-party copayment debts with collection recoveries from third-party health plans. This provision applies to all categories of veterans; is that correct? DR. PERLIN. It applies to nonservice connected medical activities but across all categories, exempting the highest priorities by definition. MR. SNYDER. My question is, have you all evaluated this from the perspective of the potential unintended consequences? I was trying to put myself in the place of veterans who may be at work, or I may have a working wife who is a bit younger than me, since I have a working wife who is younger than me, and who is paying into this insurance. I have some kind of private insurance. I am not Medicare age eligible. And then this comes down that I can�t use that insurance any more, so it is costing money to have it. And I like to have my care at the VA. Do you think there will be some potential impact, people will say let�s just not carry the insurance since they are not going to use it any way and we get our care at the VA? Is that scenario a possibility? DR. PERLIN. I think that would have to be within the realm of possibility. It is likely individuals who have insurance or have alternative coverage do so because of other factors, such as being over age 65. But in a pure sense, yes, that could, potentially do that. I would note that this is a very challenging area, the first-party offset -- it is one of the complexities in the billing process for VA. There is no other entity that offsets a copayment with a bill to an insurance company. And that almost singularly is one of the things that makes it impossible for VA to buy an off-the-shelf billing program that would be used in any other medical enterprise. MR. SNYDER. Thank you, Mr. Chairman. MR. BROWN OF SOUTH CAROLINA. Thank you, Mr. Snyder. Dr. Perlin, I thank you and your team for coming here today. We certainly didn�t mean to drill you so heavily, but thank you. And if there are other questions, we can certainly submit them to you for response. While the first panel is vacating and the second panel comes forward, we are going to take about a 5-minute recess. [Recess.] MR. BROWN OF SOUTH CAROLINA. Meeting will now come back to order, and let�s welcome our second panel. STATEMENT OF CARL BLAKE, ASSOCIATE LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA, REPRE- SENTATIVE OF THE INDEPENDENT BUDGET; AND CATHY WIBLEMO, DEPUTY DIRECTOR FOR HEALTH CARE, THE AMERICAN LEGION. MR. BROWN OF SOUTH CAROLINA. Mr. Carl Blake, Associate Legislative Director of Paralyzed Veterans of America, representing the Independent Budget, and Ms. Cathy Wiblemo -- is that pronunciation close? MS. WIBLEMO. Sir, thank you. Very close. Yes. MR. BROWN OF SOUTH CAROLINA. Thank you very much. Deputy director for health care, representing the American Legion, and we will begin with Mr. Blake. Welcome both of you. STATEMENT OF CARL BLAKE MR. BLAKE. Thank you, Mr. Chairman. I would like to ask that my full written statement be submitted for the record. MR. BROWN OF SOUTH CAROLINA. Without objection. MR. BLAKE. Chairman Brown, Ranking Member Michaud, PVA would like to thank you for the opportunity to testify today on behalf of the IB regarding the fiscal year 2007 VA health care budget. We are proud that this will mark the 20th year that PVA along with AMVETS and Disabled American Veterans and the Veterans of Foreign Wars have presented the Independent Budget, which is a comprehensive budget and policy document. The Independent Budget uses commonly accepted estimates of inflation, health care costs and health care demand to reach its recommended levels. This year, the document is endorsed by 60 veteran service organizations and medical and health care advocacy groups. For the first time, a reasonable starting point was offered by the President to fund the VA health care system. For fiscal year 2007, the administration has requested $31.5 billion for total veterans� health care, a $2.8 billion increase over the fiscal year 2006 appropriation. Although this is a significant step forward, we still have some concerns about proposals contained within its request. The Independent Budget for fiscal year 2007 recommends approximately $32.4 billion for total veterans� health care, an increase of $3.7 billion over the fiscal year 2006 appropriation and about $900 million over the administration�s request. We believe that the recommendations of the Independent Budget have been validated once again this year, as the administration indicated, that it will actually take $25.5 billion to fund the medical services account, an amount very close to what we recommend. However, they only requested $24.7 billion in appropriated dollars. The administration hopes to raise an additional $800 million by instituting a new enrollment fee and an increase in prescription drug copayments to achieve the necessary funding level. We are deeply concerned that, once again, the President�s recommendation proposes the $250 enrollment fee for priority 7 and 8 veterans and an increase in the prescription drug copayment from $8 to $15. These proposals will put a serious financial strain on many veterans, including certain catastrophically disabled veterans with non service-connected injuries. These veterans, because of their catastrophic disabilities, are enrolled in VA health care as priority 4 veterans. However, due to a glitch in drafting of eligibility reform legislation in 1996, because of their income, they are still required to pay all copayments and fees as though they are priority 7 and 8 veterans. We urge the committee to correct this unfair situation immediately. The VA estimates that these proposals will force nearly 200,000 veterans to leave the system and approximately 1,000,000 veterans to choose not to enroll. Congress has soundly rejected these proposals for the past 3 years, and we urge you to do so once again. Our health care recommendation does not include additional money to provide for the health care needs of category 8 veterans being denied enrollment into the system. However, it is included in our bottom line for total discretionary dollars needed by the VA to provide health care to all eligible veterans. Despite our clear desire to have the VA health care system open to these veterans, Congress and the administration have shown little desire to overturn this policy decision. The VA estimates that a total of over 1 million category 8 veterans will have been denied enrollment into the VA health care system by the fiscal year 2007. We believe it would take approximately $684 million to meet the health care needs of these veterans if the system were reopened. For medical and prosthetic research, the administration has requested $399 million, a cut of approximately $13 million below the fiscal year 2006 appropriation. The Independent Budget recommends $460 million. Research is a vital part of veterans� health care and an essential mission for our national health care system. It has been responsible for such advancements as the cardiac pacemaker, the CT scan, and world- class prosthetics. Despite a reasonable request this year, the budget and appropriations process over the last number of years demonstrates conclusively how the VA labors under the uncertainty of how much money it is going to get and when it is going to get that money. In order to address this problem, the Independent Budget has proposed that funding for veterans� health care be removed from the discretionary budget process and be made mandatory. Mr. Chairman, I would like to thank you again for the opportunity to testify today, and I would be happy to answer any questions you might have. [The statement of Carl Blake appears on p. 56] MR. BROWN OF SOUTH CAROLINA. Thank you, Mr. Blake. Ms. Wiblemo. STATEMENT OF CATHY WIBLEMO MS. WIBLEMO. Thank you, Mr. Chairman, and members of the Subcommittee for inviting the American Legion to offer its views on the President�s budget request for the Veterans� Health Administration for fiscal year 2007. It is a pleasure to be here today, and I would request that my entire testimony be submitted, entered into the record. MR. BROWN OF SOUTH CAROLINA. Without objection. MS. WIBLEMO. The American Legion is a member of the Partnership for Veterans� Health Care Budget Reform, and we strongly encourage the Subcommittee to hold a hearing to discuss the annual funding process for veteran�s health care before the end of this session. Just recently the Veterans� Health Administration was recognized as scoring higher than the private sector industry and other Federal programs in patient satisfaction for the sixth year running, a true testament to the superb job they continue to do for the Nation�s veterans. We are all very proud of the Veterans� Health Administration. Indeed, they have received many such recognitions over the past few years, and deservedly so. Yet this fiscal year 2007 budget proposal aims to drive away over a million veterans from using the high quality health care system. In January 2003, category 8 veterans were suspended from enrolling. We would like to see that suspension lifted to allow those veterans to enroll in the health care system that was established for them. Once again, the American Legion raises objection to the proposal that would charge an annual enrollment fee of $250 for priority group 7 and 8 veterans and the proposal that would raise the prescription copayment amount from $8 to $15. We also question the validity of the management efficiencies in light of the recent GAO report that found VA lacked both the methodology for making health care management efficiency savings assumptions and adequate documentation for calculating and reporting management efficiency savings. Undocumented management efficiencies result in real budgetary shortfalls of finite resources. The American Legion is also concerned with the apparent stall on the capital asset realignment for enhanced services process. With just half of the local advisory panel meetings being accomplished, we are wondering if and when the others are going to be held. CARES is an extremely important and needed initiative. Mr. Chairman, the American Legion appreciates the administration�s continued focus and increased funding for the implementation of the mental health strategic plan that will facilitate equitable access and delivery of mental health and substance abuse care across the nation to veterans in need. We would ask that the same intensity and energy poured into the strategic mental health plan be the same for the formulation of the long overdue long-term care strategic plan. I would also like to add that Dr. Shelhorse and the mental health strategic committee did a wonderful job with the mental health strategic plan. The American Legion is working hard to ensure a true and accurate picture is portrayed of the funding and services needed to allow VHA to continue to provide high quality health care to the Nation�s veterans. In August 2005, we published the third annual system saving report, completing site visits to every VA medical center over the course of nearly 3 years. The third report revealed a critical shortage in the funding of VA health care with the biggest budgetary challenges being increased patient workload demand, upkeep of equipment and maintenance, pharmacy costs and staffing levels. In January 2006, the American Legion�s system savings task force began another round of visiting the VA medical centers. We thank Dr. Perlin for that. By the end of this week, we will have visited 12 facilities. Preliminary reports suggest staff cuts and facilities struggling to meet patient workload increases. We plan to visit at least 45 facilities to include the polytrauma centers. Through these site visits, we learn what is going on in the trenches, where the rubber meets the road. Indeed, we are in the gulf coast area this week with plans to publish an interim report on just those specific areas. Mr. Chairman, veterans� health care is the price tag of freedom. The American Legion stands ready to assist you in ensuring that VA health care is adequately funded to meet the needs of all veterans. Thank you. [The statement of Cathy Wiblemo appears on p. 65] MR. BROWN OF SOUTH CAROLINA. Thank you very much, and we will entertain some questions at this time. Mr. Blake, I am going to ask you the question first, and either one of you can join in with a rebuttal or your feelings on that same question. Mr. Blake, what is your assessment of VA�s progress to date in getting veterans appointments within 30 days of request? MR. BLAKE. Mr. Chairman, I have to say, from my professional opinion, I couldn�t give an accurate answer to that. I would be happy to refer that question to our veterans benefits staff at PVA who have service officers in the field and see this happen every day and get back to you with a more accurate answer on behalf of PVA. MS. WIBLEMO. Could you repeat that question, sir? MR. BROWN OF SOUTH CAROLINA. What is your assessment of VA�s progress to date in getting veterans appointments within 30 days of request? MS. WIBLEMO. We, our experience has been that the priority veterans, OIF/OEF, are getting within the 30 days. We do not see, and it has not been reported to us, that they are not. We do, though, have some documentation on the electronic waiting list, and that it is getting longer, that veterans with non service-connected conditions are waiting -- are being put on this waiting list and are waiting a significant amount of time and/or referred to the community. MR. BROWN OF SOUTH CAROLINA. What would you recommend as the solution? Is it because VA is understaffed or the facilities are too small or the commute is too long, or not enough nurses, etc.? MS. WIBLEMO. Well, definitely staffing levels are a problem, but that is all a funding issue. So, you know, adequate funding of course, you hate to keep throwing money at something, but adequate funding is definitely an issue when it comes to staffing levels. Anesthesiologists are just one example of where veterans are having to wait to get surgery because they don�t have enough anesthesiologists, which is a funding issue because VA can�t pay. MR. BLAKE. Mr. Chairman, I would like to concur with Ms. Wiblemo, too. Particularly in the areas of specialized care, we have seen some difficulty in hiring nurses. We all know that there is a recognized nurse shortage across the country in all fields. This is particularly true in specialized areas, and that problem is amplified by VA�s inability to hire, in some cases, physicians as well. It is one thing when you don�t have the direct bedside care from nurses. It is another one when you don�t have the physicians that oversee a lot of this care as well. MR. BROWN OF SOUTH CAROLINA. That leads me to my second question. In Charleston and around some other parts of the country, we are trying to do some consolidation or at least cooperating sharing in some of the services. And so my question would be, do you agree in concept with VA working with their medical affiliations to enter into sharing agreements that maximize the ability of the VA to provide veteran patients with the most advanced technology and treatments? How would you respond? I am sure you are involved somewhat with the idea of trying to combine some resources. MR. BLAKE. Absolutely, Mr. Chairman. I think coordination is the key. Our position has always been, however, in any coordinated setting, veterans should still get the priority for care. If you are bringing in outside patients who are nonveterans into whatever coordinated system you may have, ultimately we believe that the veterans should still get the priority for care. MS. WIBLEMO. I would just like to echo some of that, absolutely, coordination, you know, sharing, and all of that, to get the best care. Our position has always been to keep the VA a separate system, because they are unique and different. And the face of the VA needs to be out there for the veterans to see. MR. BROWN OF SOUTH CAROLINA. I think that has been a major concern, too, that the veterans would feel like they might lose their identity, and I don�t think there is any effort at all to lessen that point. I think the number one point, exactly what the shortcomings you all expressed in the first question is that we want to enhance health care for veterans. It is becoming more complicated. Some of the veterans coming home today didn�t come home in prior wars, but are now because of the new technology. And this is something that we mentioned with Dr. Perlin earlier about research dollars, combining some of those research resources with other like interests to try to stretch those dollars. And so this is what we are trying to look forward to in the 21st century. MR. BLAKE. Mr. Chairman, I would like to make one other point also. We certainly support the idea of coordinated care when it comes to basic care. But one thing we have to make sure we understand is that when it comes to specialty care, we don�t believe that there is another type of health care system or anybody else that the VA can coordinate with that could provide better services than the VA itself. So in this effort to require the VA work together with another system, we have to make sure that veterans with the most important needs and the specialized services, particularly, get their care directly through the VA. MR. BROWN OF SOUTH CAROLINA. I think that is a good point, and it is certainly well taken. This is something that we certainly are trying to build on, too, because I don�t know of any process where 2 units come together to try to offer some kind of a shared responsibility where you don�t gain something from both. I don�t think either one comes to the table with all the technology. Something we are trying to look at as we look at new construction projects around the country, is to try to pull the best from both worlds and try to coordinate it so that veterans themselves can get a higher level of treatment because we know the technology is going to be switching and changing as we move forward. And we have to be sure we are on the cutting edge, particularly to address the health care needs of our veterans. Mr. Michaud. MR. MICHAUD. Thank you very much, Mr. Chairman. Before I ask my question, I think it is worth noting, Mr. Chairman, that I am very pleased to see Dr. Perlin and his staff decided to stay to hear the panel as well, and actually, I noticed last week also, Dr. Perlin, that you were here to hear the second panel. I appreciate your taking an interest in this. And I do want to thank you both for testifying and for your advocacy on behalf of our Nation�s veterans. I also want to thank you both for your service in the Army. I appreciate your service to the country. My first question, ma�am, is the American Legion produces an excellent report each year called, A System Worth Saving. This report outlines how the budget works from the ground up, from a provider, in a veteran�s perspective. Previous reports have documented frustration of and harm to veterans from waiting lists, appointments and what have you. Your site visits have been an early warning sign to Congress that the system, that there are flaws in the system, particularly with inadequate budget. Do you have an initial impression on your visits, so far, from the sites you have visited, that the new shortfalls are rearing their ugly head once again? MS. WIBLEMO. We have, like I said, at the end of this week, we will have been to 12 facilities. I am going to Albuquerque, as a matter of fact, tomorrow. Preliminary reports from just -- we have like 6 reports that we have in. The budgetary challenge for all of them has been the increased patient workload. And the other we have had some reports of running in the red, facilities. These are not pictures; these are facilities� specific information that we are getting. MR. MICHAUD. Thank you. This one is to both of you. Could you elaborate on your concerns with the VA proposed budget for meeting the long-term care needs of our aging veterans? MR. BLAKE. Well, Mr. Michaud, this is something we felt was really starting to rear its ugly head last year when there were some recommendations to significantly cut long-term care programs. We have always pushed for the VA to continue to maintain the capacity requirements as laid out in the mil bill. And clearly, the evidence doesn�t bear out that the VA has been able to do so. We could debate the reasons for why they haven�t. We firmly believe that, obviously, not receiving the funding necessary is a large part of that. I don�t think it is appropiate for the VA, to move down the road of curbing its long-term care abilities, given that the veterans� population is certainly not getting any younger. Though I might fall into a younger veteran status, there are a whole lot more veterans that are significantly older than I am. And even a recent GAO report bore out the fact that with the aging veterans population, the VA has to do much more to be able to meet that demand as that population grows. MS. WIBLEMO. The long-term care issue is huge, much like the mental health issue. During CARES, of course, they tabled all of that. And they have struggled to come up with a strategic plan, which I think is very, very important, so they know where they are going to go and what they need to do and where they need to put those beds. We have always advocated for maintaining the 1998 law. And we are not quite sure where those veterans are going, you know. The VA is pushing -- as is the rest of the Nation, in long-term care, which is also struggling by the way, meaning the demand -- but the VA is pushing them to go out, you know, home, in the home, closer to home, which is fine, but that is not always relevant for some veterans, those with mental health problems. And the VA, of course, is leading the industry in that type of treatment. So, we are very concerned, but I think really it is an issue of getting that long-term care strategic plan out, published and starting to be implemented so the dollars are going where they need to go. MR. BLAKE. I would like to make a couple other points. One, I would like to point out that one of the recommendations in the Independent Budget is that the VA immediately develop a long-term care strategic plan. The issue of long-term care and how to best provide it is something that PVA grapples with particularly because of the nature of our membership with catastrophic disabilities. On the one hand, we recognize the importance of institutional long-term care, like nursing home care, because of the ability to provide advanced services in that setting. At the same time, one of the biggest things we are advocates for is the ability of catastrophically disabled veterans to be out in society and to function and be independent. So, while we believe that the capacity requirements for institutional long-term care are necessary, we also support additional long-term care through things like the Assisted- Living Pilot Program, which the VA conducted in a few VISNs, and we believe that the successes from that pilot program bear out that maybe this is something that should be implemented across the entire country. MR. MICHAUD. Thank you. In my last question, and you both sat through the first panel, and I appreciate that as well, and you heard that the response and the opening statements of Dr. Perlin and the team. Is there anything that you heard from the first panel in either any of the testimonies you would like to comment on or add or dispute? MR. BLAKE. I don�t know about dispute, Mr. Michaud. I would just like to say, I would like to reiterate our concern as was done so by the panel about medical and prosthetic research. Research is something that is very, very close to PVA�s heart as well as the Independent Budget. Not only do we get support from the four organizations of the Independent Budget, but we also work hand-in-hand with friends of VA research as we develop our medical and prosthetic research recommendations. So any time we see a cut, we are certainly concerned about the long-term effects that this may have on veterans now and in the future. Just as I laid out in my statement, there are so many advancements that the VA has been responsible for in the medical field through this research. I think we do veterans and even all citizens an injustice by reducing the ability of the VA to conduct this much needed research. MS. WIBLEMO. I would just like to comment on the continual comparing of DOD and VA. They are completely different systems. They serve different populations. And so I don�t think it is really a fair comparison. So we certainly don�t support VA going the way of DOD. While we support the sharing agreements and the joint ventures, as long as VA has a handle on that, that is all well and good. But, you know, the copays, and DOD treats, you know, dependents, family members. Children. So, it is a little bit different. MR. BLAKE. Ms. Wiblemo triggered something in my head. I wanted to comment on the same topic. I think it is important that we understand the difference between the TRICARE system and VA health care system. TRICARE is an entitlement for its enrollees. And VA obviously is veterans who are eligible, and it is subject to the discretionary nature of its funding. Because TRICARE is an entitlement, retirees who are enrolled in TRICARE cannot be denied access to that. Furthermore, it is really just an insurance program. VA is a provider of health care. However because it is discretionary, at any time, due to the discretionary nature of its funding process, those veterans could be cut out of the system. That is not true of TRICARE enrollees. MR. MICHAUD. I see the VA officials shaking -- nodding their heads, yes, so I assume that they agree. No further questions. Thank you, Mr. Chairman. MR. BROWN OF SOUTH CAROLINA. Thank you, Mr. Michaud. The Independent Budget recommended $38 million in minor construction projects for the Veterans� Benefit Administration and $24 million more than the President�s request. What areas does the Independent Budget recommend funding for on par with what the President requested? MR. BLAKE. Mr. Chairman, my area of expertise is not in construction at all. However, I would be happy to take that question into writing and submit it to our people who work on the construction portion of the IB and get back to you. MR. BROWN OF SOUTH CAROLINA. Let me ask you one further question then, and either one of you can answer this. The independent Budget expressed concern about a VA nursing shortage. Do you support specific funding to establish magnet status at VA medical centers to recruit and retain nursing personnel and improve the level of quality care? MS. WIBLEMO. Well, I can�t answer for the Independent Budget. However, the American Legion is a big supporter of the nurses -- the nurses of VA foundation and also maintaining -- and the nursing education and the furthering of that education. And since the VA is older, we would support the magnet, you know, getting the magnet certification, or whatever it is. We would support that. MR. BLAKE. Mr. Chairman, I would say, on behalf of the IB, we would certainly support any additional resources poured into the system to support hiring more nurses. Clearly, it is a major problem as I already addressed. And I think in previous hearings before this committee and the full committee, it has been shown that magnet status for a medical center serves as a recruiting tool in bringing nurses into the system. So that being the case, we would certainly support any efforts to get VA in line with that to -- if we believe that it will, or we believe that it will allow the VA to recruit more and better nurses, and ultimately that would be a positive for the VA health care system. MR. BROWN OF SOUTH CAROLINA. Let me just say thank you to both of you for coming, and as a member of the American Legion, I appreciate you being part of this. One minute, we are not going to conclude right yet. Mr. Michaud wants to ask one more question. MR. MICHAUD. Thank you, Mr. Chairman. Actually, their comments triggered another question. Just a brief one, if you might. You had talked about DOD and the VA, and clearly I am not sure whether it is mandatory or not, but as far as medical records, be it shared, with DOD and the VA, my first question, is that mandatory? My second question is, seems to me if it is mandatory, that once a system is implemented that there should be some management efficiencies there. And I was wondering if you had done an analysis about those management efficiencies and whether those can be booked and if they are real, if the management efficiencies aren�t there once its implemented, if we reduce the DOD�s budget by that amount, if they can�t meet those management efficiencies. And it is more a question for the VA, but if you can answer that. MS. WIBLEMO. I am probably not qualified to answer that question, other than to say that the sharing of the records, it would make sense that there would be management efficiencies there and the savings of money. But past that, I don�t know if it is mandatory or not that they share records. I don�t know. MR. BLAKE. I would say, too, I don�t know if it is mandatory. It seems like to me it would only make sense. Having gone through medical boarding process when I was retired from the service due to a service-connected disability, I know that all of my medical records personally were shared with the VA facility as part of the process of filing a claim for disability. They had to request my medical records for part of that process. So I would just assume maybe it already is mandatory, and if it is not, it would only make sense that it would be. MR. MICHAUD. Well, thank you very much, and I also want to thank you, Mr. Chairman, for your patience this afternoon. I know the first panel went longer than you probably expected, but I really appreciate your willingness to allow members the opportunity to ask questions because as you well know this is a very important issue and really appreciate your patience, thank you. MR. BROWN OF SOUTH CAROLINA. Well, thank you, Mr. Michaud. I appreciate, working with you in a nonpartisan spirit to support health care for veterans, as it is a top priority for both of us and its certainly meaningful for us to listen as long as we may. I would just like to further ask you, Mr. Blake, were those records transferred electronically or did you have to manually take them with you? MR. BLAKE. I didn�t manually take them. I think they were probably transferred manually, or faxed maybe. They were faxed. I know that, in the process, there were time frames built in for requests and follow-ups and all that sort of thing, but the VA, as I understood it, requested a full copy of my medical records, and they were forwarded along to the necessary physician as I went through that process. MR. BROWN OF SOUTH CAROLINA. That is the link we are trying to overcome -- to have that transparency between DOD and VA. MR. BLAKE. Not on behalf of the Independent Budget or anybody else but just from a personal perspective, it seemed to me that one of the biggest challenges in going through the claim for disabilities process was time limits that were built in by nature for 30 days, from the time they file a request to receive some kind of a notification and a follow-up with an additional 30 days from that time of contact. And a lot of those time frames, it seems to me, could be shortened or done away with through electronic transfer of any kind of that information. And that would, you know, not to say that there is an example of how you can shorten the disability claims process, but it just seems like to me that could be a possibility. MR. BROWN OF SOUTH CAROLINA. Looks to me it would be a no-brainer. Somebody said, if Walmart could tell you when they sold a box of Tide anywhere in the world, we ought to be able to track our veterans and our DOD personnel. Looks like to me the format ought to be somewhat compatible so you can do that in an outreach effort. Today, we are building a combination clinic on the weapon station in Charleston which is going to be a DOD and a VA outpatient clinic, and so we are trying to make sure we consolidate as many of our resources as possible. MR. BLAKE. So what we are trying to do is consolidate as many of our resources as possible. We feel like that is going to be a good thing. But you don�t think so, Cathy. MS. WIBLEMO. Oh, no. Again, the other thing I would say about that is that the stakeholders, the veterans need to be at the table from the beginning. I know, down in Charleston, because I went down there, that that wasn�t the case. So I would say that the veterans need to be at the table in any of those -- like we were with CARES, like former Secretary Principi. I think that is important. MR. BROWN OF SOUTH CAROLINA. Thank you very much for your patience and for the knowledge that you bring to the table, and thank you for your service to the veterans� population. Dr. Perlin, thank you so very much for staying. We all want to work together that is our goal. Thank you so very much. [The statement of the Vietnam Veterans of America, submitted by Rick Weidman appears on p. 78] [The statement of the American Psychiatric Association appears on p. 90] [The statement of the American Federation of Government Employees, AFL-CIO appears on p. 95] [Whereupon, at 4:08 p.m., the Subcommittee was adjourned.]