the va’s budget request for fiscal year 2007

Hearing

before the

Committee on 

Veterans’ Affairs

House of Representatives

one hundred ninth congress

second session

February 8, 2006

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 109-30

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Committee on Veterans’ Affairs

Steve Buyer, Indiana, Chairman

Michael Bilirakis, Florida Lane Evans, Illinois, Ranking

Terry Everett, Alabama Bob Filner, California

Cliff Stearns, Florida Luis V. Gutierrez, Illinois

dan burton, Indiana Corrine Brown, Florida

Jerry Moran, Kansas Vic Snyder, Arkansas

richard H. baker, Louisiana Michael H. Michaud, Maine

Henry E. Brown, Jr., South Carolina Stephanie Herseth, South 

Jeff Miller, Florida Dakota

John Boozman, Arkansas Ted Strickland, Ohio

Jeb Bradley, New Hampshire Darlene Hooley, Oregon

Ginny Brown-Waite, Florida Silvestre Reyes, Texas

Michael R. Turner, Ohio Shelley Berkley, Nevada

John Campbell, California Tom Udall, New Mexico

JAMES M. LARIVIERE, Staff Director

(II)
CONTENTS

February 8, 2006

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The Department of Veterans Affairs FY 2007 Budget ............

OPENING STATEMENTS

Hon. Steve Buyer, Chairman ....................................................

Prepared statement of Mr. Buyer .............................................

Hon. Lane Evans, Ranking Member ........................................

Prepared statement of Mr. Evans .............................................

STATEMENTS FOR THE RECORD

Hon. Jeff Miller ..........................................................................

Hon. Corrine Brown of Florida .................................................

Hon. Michael H. Michaud .........................................................

Hon. Tom Udall .........................................................................

Hon. Stephanie Herseth ............................................................

Hon. Henry E. Brown, Jr., of South Carolina ..........................

Hon. Silvestre Reyes .................................................................

Hon. Michael Turner .................................................................

Hon. Kevin Brady, Representing the 8th District of Texas ....

Witnesses

Nicholson, R. James, Secretary, Department of Veterans 

 Affairs ......................................................................................

Prepared statement of Secretary Nicholson ............................

Greineder, David G., Deputy National Legislative Director, 

 AMVETS .................................................................................

Prepared statement of Mr. Greineder ......................................

Surratt, Rick, Deputy National Legislative Director, Disabled

 American Veterans .................................................................

Prepared statement of Mr. Surratt ..........................................

Blake, Carl, Senior Associate Legislative Director, Paralyzed

Veterans of America ...............................................................

Prepared statement of Mr. Blake .............................................

Cullinan, Dennis M., Director, National Legislative Service, 

Veterans of Foreign Wars of the United States ...................

Prepared statement of Mr. Cullinan ........................................

(III)
Robertson, Steve, Director, National Legislative Commission,

 The American Legion .............................................................

Prepared statement of Mr. Robertson ......................................

Weidman, Rick, Director of Government Relations, Vietnam

Veterans of America ...............................................................

Prepared statement of Mr. Weidman .......................................

INFORMATION FOR THE RECORD

Letter dated February 10, 2006 from Secretary Nicholson in

response to concerns raised by Ms. Berkley .........................

Claims to FTE Ratios submitted by Ms. Berkley ....................

Section C5(v1) Enrollment Suspension and Disenrollment

 Policy .......................................................................................

VA Health Care Enrollment Priority Groups ..........................

PRE-HEARING QUESTIONS FOR THE RECORD

Hon. Lane Evans Pre-Hearing Questions ................................

Hon. Michael Michaud Pre-Hearing Questions .......................

POST-HEARING QUESTIONS FOR THE RECORD

Hon. Steve Buyer .......................................................................

Hon. Michael Turner .................................................................

Hon. Lane Evans ........................................................................

Hon. Stephanie Herseth ............................................................

Hon. Silvestre Reyes .................................................................

Hon. Shelley Berkley .................................................................

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(1)

the va’s budget request for fiscal year 2007

WEDNESDAY, February 8, 2006

U.S. House of Representatives, 

Committee on Veterans’ Affairs,

Washington, D.C.

 The Committee met, pursuant to call, at 10:10 a.m., in Room 334, 

Cannon House Office Building, Hon. Steve Buyer [Chairman of the 

Committee] presiding.

 Present: Representatives Buyer, Stearns, Moran, Brown of South 

Carolina, Miller, Boozman, Brown-Waite, Turner, Evans, Filner, 

Snyder, Michaud, Herseth, Strickland, Berkley, and Udall.

The Chairman. Good morning. I would like to welcome everyone to 

our first hearing of the second year of the 109th session of Congress. 

The Committee on Veterans’ Affairs Full Committee will come to order this day February 8, 2006. Today you will hear testimony from 

Secretary Jim Nicholson on the Administration’s fiscal year 2007 

budget request to the Department of Veterans Affairs. You will then 

hear testimony on the Independent Budget, provided by representatives of four veterans’ services organizations which developed that 

document: AMVETS, Disabled American Veterans, the Paralyzed 

Veterans of America, and the Veterans of Foreign Wars of the United 

States. We will also then hear testimony on the budget from the 

American Legion and Vietnam Veterans of America.

 Mr. Secretary, I am glad you can be with us here today to share 

with this Committee the President’s proposed budget for 2007. I commend you for taking both hands onto this challenge, because what 

was presented to you last year wasn’t your budget. You went through 

some difficult moments, and it appears that improving the integrity 

of the process has borne fruit with this budget.

 Mr. Secretary, you just marked your one-year anniversary as the 

chief steward of our nations veterans. It’s been a year of challenge, 

and you are to be thanked for your willingness to squarely meet those 

challenges. A year ago I expressed my confidence that you would join 

Mr. Evans, this Committee and me in making the VA the best it could 

possibly be. You have done so. Veterans’ health care is excellent by 

any standard. Your National Cemetery Administration and the VA’s 
2

insurance program continually rate among the nation’s best-run government programs. Your leadership and that of Dr. Perlin, and many 

within the department, in response to the catastrophe of Hurricane 

Katrina, was magnificent. The VA set the standard in your response. 

It is our job to preserve those areas of excellence and work together 

in a bipartisan fashion to ensure that every service we provide meets 

high standards, which means to right the wrongs.

 It is worth noting that the President has proposed substantial increases in the budgets of four agencies: the Departments of Defense, 

State, Homeland Security, agencies focused on fighting the war on 

terror; and the Department of Veterans Affairs, an agency focused on 

caring for those who are in the battle.

 As Chairman of this Committee, my three top priorities remain: 

number one, caring for veterans who have service-connected disabilities, those with special needs, and the indigent; two, insuring the 

seamless transition from military service to the VA; and three, providing veterans every opportunity to live full and healthy lives.

 Mr. Secretary, these priorities I noted from your statement almost 

mirror your own. As stated in your written testimony, “The cornerstone of VA’s medical care budget is providing for the veterans who 

need VA the most: those with service-connected disabilities, those 

with lower incomes, and veterans with special health care needs.” 

You further emphasize the importance of priority consideration for 

ill and injured veterans returning from combat in the global war on 

terror.

 We have an obligation to those who bear the burdens of war and of 

military service, and their survivors. Our work must move us toward 

fulfillment of that obligation. There are some concerns in the budget 

that you have before us today. Mr. Secretary, last year you brought 

us a similar request for enrollment fees and increased co-pays. While 

I personally agree that it is appropriate to ask for cost sharing of 

these veterans, category sevens and eights, this Committee by a majority did not support them. This is around the 795 million. If the 

Committee does not go along with these, then we must buy that back 

into the budget, and that will be a challenge before us. So, the lobbying effort is going to have to intensify to convince members as to why 

this is the prudent thing to do.

 You will hear great demagoguery in this room today with regard to 

increased fees, or even the creation of an enrollment fee. You have 

got organizations out there that almost want -- they want to create, 

and convince the sevens and eights that they have an entitlement by 

virtue of service. And so you have got a challenge ahead of you.

 Your request also relies on funds generated by management efficiencies recently called into serious question by the GAOs, so I welcome your response to the GAO report. Further, the VA’s projections 

of nearly $3 billion in collections, given the agency’s track record, ap-
3

pear to be overly optimistic. I want to applaud you, though, on your 

focus on improving the revenue cycle management process.

 Nowhere in the statement, Mr. Secretary, did you mention your 

plans to enhance management of the information technology within 

your department. And so I would like for you to address the CIO issue. And with a new generation of veterans looking to us for care, 

this is a management efficiency that we must realize without delay.

 Also, nowhere did you mention enhancements to the education 

benefit for our veterans, especially those now returning from their 

service. As you know, I created the Subcommittee on economic opportunity to emphasize programs that focus on empowering veterans to 

take advantage of this Nation’s opportunities by creating and fostering ability and self-sufficiency. Increasing the skills of veterans is a 

means to get good jobs, own their own homes, and support their families, as an investment in America’s future. History has shown that 

veterans empowered to take the opportunities offered by this great 

country is a repayment many times over in the investment made.

 That is why that I am announcing today that I will support initiatives to modernize the GI Bill. I welcome ideas and proposals such as 

the one made by the Partnership for Veterans’ Education led by Vice 

Admiral Norb Ryan. The Montgomery GI Bill, as good as it is, does 

not reflect the realities facing today’s service members, especially in 

the Guard and Reserve. We must modernize the GI Bill. I’ve directed 

my staff to work with Ranking Member Evans on this endeavor.

 This is a complex effort, given the need to coordinate with numerous House and Senate Committees, as well as various departments 

and agencies within the executive branch. So Mr. Secretary, I would 

also call on your help in this endeavor to modernize the GI Bill, and 

welcome your comments.

 This budget sends the right message to our men and women in uniform, that if you are hurt or wounded, the VA will be there for you. 

After all, budgets, systems, and programs are about service to people. 

I have visited with soldiers wounded in Iraq who are recovering at 

the VA Polytrauma Rehabilitation Center in Minneapolis. This is 

one of the VA’s four such centers dedicated to treating patients with 

multiple complex traumas, which often include brain injuries.

 The Committee’s staff has also visited the three other polytrauma 

centers, and I extend my deep appreciation and tremendous satisfaction for the dedication of the employees who are doing quality work.

 The quality of care these heroes receive, again, it’s impressive, and 

we are grateful to the VA professionals because they zealously provide that care.

 What was perhaps even more impressive to me was the spirit of the 

young warriors. They wanted to rejoin their unit. They are very optimistic about their recovery, they are proud of their service, and they 

have not taken counsel of their fears. We owe these men and women 
4

and their family members, and all America’s veterans, our best.

[The statement of Chairman Buyer appears on p. 69]

 The Chairman. I would now like to thank Mr. Evans for his opening 

statement.

 Mr. Evans. Thank you, Mr. Chairman. I know that I expressed the 

sentiments of many on this Committee when I say that we will do all 

that we can to make sure VA does not experience any more budget 

shortfalls. Yesterday, I stated that I was baffled by the Administration’s remark that this budget was a landmark budget for veterans. 

I am still baffled today. Although the President’s budget requested 

increase looks good at first glance, it does not deliver the resources 

needed to provide veterans with the health care and benefits they 

need. Across the gamut of VA health care I can see actual cuts in 

such areas as in medical research. In other areas I have seen slight 

increases, over what, I believe it is not sufficient.

 I have learned something already, something we learned since last 

year is to treat the VA health care budget with caution. I certainly 

hope I colleagues approach this request with skepticism, which to me 

seems to be warranted.

 Mr. Chairman, I have a prepared statement I’d like to submit for 

the record. Thank you very much.

 The Chairman. Mr. Evans, your written statement will be submitted into the record. Without objection.

[The statement of Mr. Evans appears on p. 74]

 The Chairman. I will now turn to our first witness and I will share 

with my colleagues that we will give great latitude during your time 

period for questioning and statements that you may have.

Our first witness is the Secretary of Veterans Affairs, the Honorable R. James Nicholson. He’s a 1961 graduate of the United States 

Military Academy of West Point, New York. Secretary Nicholson 

served eight years on active duty as a paratrooper and ranger-qualified army officer, and then 22 years in the Army reserve, retiring at 

the rank of colonel. While serving in Vietnam, he earned the Bronze 

Star, Combat Infantry Badge, the Meritorious Service Medal, Republic of Vietnam Cross for Gallantry, and two air medals. He is our 

former ambassador to the Holy See.

 We welcome you, Mr. Secretary. The Committee looks forward to 

hearing your testimony, and you may begin. And please begin, opening with an introduction of the staff that you brought with you.
5

STATEMENT OF THE HON. R. JAMES NICHOLSON, SECRE-

 TARY, DEPARTMENT OF VETERANS AFFAIRS, ACCOMPA-

 NIED BY JONATHAN B. PERLIN, MD, PHD, MSHA, FACP,

 UNDER SECRETARY FOR HEALTH, VETERANS HEALTH

 ADMINISTRATION; DANIEL L. COOPER, UNDER SECRE-

 TARY FOR BENEFITS, VETERANS BENEFITS ADMINISTRA-

 TION; WILLIAM F. TUERK, UNDER SECRETARY FOR

 MEMORIAL AFFAIRS, NATIONAL CEMETERY ADMINISTRA-

 TION, ROBERT J. HENKE, ASSISTANT SECRETARY FOR

 MANAGEMENT, DEPARTMENT OF VETERANS AFFAIRS; 

 TIM S. MCCLAIN, GENERAL COUNSEL, DEPARTMENT OF

VETERANS AFFAIRS; RITA A. REED, PRINCIPAL

 DEPUTY ASSISTANT SECRETARY FOR MANAGEMENT, 

 DEPARTMENT OF VETERANS AFFAIRS; AND ROBERT MC-

 FARLAND, ASSISTANT SECRETARY FOR INFORMATION

 AND TECHNOLOGY, AND CIO OF THE DEPARTMENT OF

VETERANS AFFAIRS

Secretary Nicholson. Thank you, Mr. Chairman, Mr. Ranking 

Member, members of the Committee. I do have a written statement 

that I would like to have entered into the record.

 The Chairman. Your written statement will be entered into the 

record. Hearing no objection, so ordered.

Secretary Nicholson. And I would like to introduce the team that 

I have with me here at the table this morning, a team of dedicated, 

competent experts. And to my immediate left is Dr. John Perlin, the 

Under Secretary for Health. Next is Admiral Dan Cooper, the Under 

Secretary for Benefits. He is a submariner, but seems to operate 

pretty well on the surface, we are finding. And on the far left is Under Secretary Bill Tuerk, the Under Secretary for Memorial Affairs.

 To my immediate right is Bob Henke, Assistant Secretary for Management. To his right is Ms. Rita Reed, the Deputy Assistant Secretary for Management. And to the far right is Tim McClain, the 

General Counsel for the Department of Veterans Affairs.

 Mr. Chairman, as Secretary, it is my great privilege and responsibility to lead the Department of Veterans Affairs. I am pleased to 

announce this morning a landmark Department of Veterans Affairs 

budget proposal of $80.6 billion for 2007 that is truly historic in its 

scope of services to veterans. Behind the budget figures, Mr. Chairman, is a great story. It is one of America’s truly good news stories. 

And so before we get down to the numbers, I would like to brag a 

bit on my department’s people and their successes. And back home, 

where I come from they used to say it ain’t bragging if it is true.

 And one of those truths, Mr. Chairman, is that our VA employees, 

all 225,000 of them, come to the aid of their communities and their 

fellow citizens, veterans and non-veterans alike, in times of disas-
6

ters and other national emergencies. To make my point I need only 

to mention the heroic efforts of VA employees during Hurricane Katrina, and Rita. Not only did our staffs evacuate several hundred patients out of our hospitals in the Gulf area to other hospitals, and not 

only did they do it quickly and efficiently, they did it at great personal 

risk and great personal sacrifice and loss.

 It is also a fact that the VA knows how to protect our veterans’ 

vital health information against these kinds of catastrophic events 

that swept us in the Gulf Coast. Because veterans’ health care records are electronic, no matter where our New Orleans veterans were 

eventually relocated, their complete health records were available for 

uninterrupted care and treatment.

 And I might add that in recognition of our accomplishments during 

the storm, I was recently privileged to present Senate Resolution 263 

to Gulf region VA employees. That was a congressional commendation for their extraordinary efforts as a first responder to a disaster of 

unprecedented proportion.

 Mr. Chairman, following a decade-long health care transformation, 

my department stands as a recognized leader of America’s health 

care industry, and we have the credentials to prove it. The Journal 

of American Medical Association has applauded VA’s dedication to 

patient safety. The Washington Monthly featured VA in an article 

entitled, “The Best Care Anywhere.” U.S. News & World Report described the entire VA as the home of “top-notch health care,” in its 

annual best hospitals issue. And a Rand report ranked VA performance, on 294 measures of quality, as significantly higher than any 

other health care system in America. Even the New York Times, just 

last month, in an article by Paul Krugman, no less, called the VA the 

model for our nation.

 While these enthusiastic stories about the VA from outside are always welcome, truly welcome, the most meaningful measure of our 

success comes from the millions of men and women that we serve, 

that we care for: our patients, our veterans. They are our biggest 

supporters. Our veterans ranked our care a full 10 percentage points 

above their counterpart patients in private hospitals. Yes, for the 

sixth consecutive year the American Customer Satisfaction Index reports that veterans are more satisfied with their health care than any 

other patients in America. This speaks volumes about the competency and the compassion of our caregivers in our health care system. 

For us, the support of our veterans, the people who know us the best, 

is the highest level of praise that we can receive. That is what gives 

us our bragging rights.

Because of our first-rate, high quality health care, veterans are 

coming to us in ever greater numbers. Fully 7.6 million are currently 

enrolled for our care. This year, we expect to see well over 5 million 

of them.
7

 Mr. Chairman, President Bush in his 2007 budget proposal for the 

Department of Veterans Affairs is fulfilling his promise to our veterans with a strong budget that respects their service to our country, 

and takes a significant step toward redeeming America’s debt to our 

heroes. The President’s total request is for $80.6 billion. This is an 

increase of 12.2 percent over last year’s record amount. It is 8.8 billion above the fiscal year 2006 level. This budget contains the largest 

dollar increase in discretionary funding for VA ever requested by a 

president.

 The resources requested for VA in the 2007 budget will strengthen 

even further our position as the nation’s leader in delivering accessible, high-quality health care, that already sets the national benchmark for excellence.

 In addition, this budget will allow the department to maintain 

our focus on benefits, on timely and accurate claims processing. The 

President’s 2007 budget will also enable us to expand veterans’ access 

to national and state veterans cemeteries. As an integral component 

of our fiscal year 2007 goals, we will continue to work closely with the 

Department of Defense to fulfill our priority that service members, 

transition from active duty military status to civilian life, veteran 

life, is smooth and as seamless as possible.

 Mr. Chairman, our written statement presents a detailed description of the President’s proposal for fiscal year 2007, but I would like 

to take a few moments to highlight some of the key component of this 

historic budget.

 During 2007, we expect to treat 5.3 million patients, including 

more than 109,000 combat veterans who served in Operation Enduring Freedom, and/or Operation Iraqi Freedom.

 The 3.8 million veteran patients in priorities one through six will 

comprise 72 percent of our total patient population in 2007. This will 

be an increase of 2.1 percent in the number of patients in this core 

group, and will represent the fourth consecutive year during which 

those veterans who count on us the most will increase as a percent of 

all patients treated.

The President’s 2007 budget request reflects the largest dollar increase for VA medical care ever requested by a president, and includes our funding request for the three medical care appropriations, 

27.5 billion for medical services, including 2.8 billion in collections, 

3.2 billion for medical administration, and 3.6 billion for medical facilities.

 The total proposed budgetary resources of 34.3 billion for the medical care program represent an increase of 11.3 percent, or 3.5 billion 

over the level for fiscal ‘06. And it is 69.1 percent higher than the 

funding available at the beginning of the Bush Administration.

 The VA is also focused on delivering timely, accurate, and consistent benefits to veterans and their families. The volume of claims’ 
8

receipts has grown substantially during the last few years, and is 

now the highest that it’s been in the last 15 years, as we received 

over 788,000 claims in 2005. This trend is expected to continue. We 

are projecting the receipt of over 910,000 compensation and pension 

claims in 2006, and more than 828,000 claims in 2007.

 One of the key drivers of new claims activity is the increase in size 

of the active-duty military force now including reservists and National Guard members who have been called to active duty to support Operation Enduring Freedom and Operation Iraqi Freedom. This has 

led to a sizable growth in the number of new claims, and we expect 

that this pattern of growth will continue.

 A natural outcome of this increasing claims workload is growth 

in our mandatory spending accounts, which are growing even faster than VA’s discretionary accounts. We estimate that mandatory 

spending will increase by 14.5 percent, to over $42 billion, from an 

estimated fiscal year 2006 level of 36.7 billion. This growth is largely 

in the compensation and pension account, and reflects the combined 

impact of adding new veterans and beneficiaries to the rolls, increasing levels of disability ratings for veterans already on the rolls, and 

annual cost-of-living adjustments for all veterans’ beneficiaries.

 In addition, we expect to continue to receive a growing number of 

complex disability claims, resulting from post-traumatic stress disorder, environmental and infectious risks, traumatic brain injuries, 

complex combat-related injuries, and complications resulting from 

diabetes. Each claim now takes more time and more resources to 

adjudicate. We will address our ever-growing workload challenges 

by improving our training and productivity, by moving work among 

regional offices in order to maximize our resources and performance, 

by simplifying and clarifying benefit regulations, and by improving 

the consistency and quality of claims processing across our regional 

office system.

 Mr. Chairman, our veterans are leaving this life at an ever-increasing pace. Every day now 1,800 men and women who dedicated their 

lives to the continuation of our democracy are being laid to rest in 

fields of honor. Of the 16 million World War II veterans who proudly 

served us, fewer than 3 and a half million now remain. And by this 

time next year, that number is projected to be less than 3 million. 

Korean War veterans are all in their seventies and eighties now, and 

Vietnam veterans, most of us, at least, are resisting the notion that 

we are next, but of course we are.

 It has been said that a nation is known by the way it honors its 

dead. I firmly believe that America’s greatness is reflected in the 

final tributes and perpetual care with which we respect the service of 

our departed veteran. Buglers play taps for more than 107,000 veterans in our national cemeteries each year, and in ‘07 that will increase 

by 5.4 percent, and will be 15.1 percent more than the number that 
9

were interred in 2005.

 The President’s 2007 budget request for the VA includes 160.7 million in operations and maintenance funding for the National Cemetery Administration. This represents an increase of 11.1 million, 

or 74.4 percent over the amount for fiscal year 2006. We will expand 

access to our burial program by increasing the percent of veterans 

served by a burial option in a national or state veterans Cemetery 

within 75 miles of their residence, to 83.8 percent in ‘07, which is 6.7 

percent over that of ‘05. Our plan for the biggest expansion of the 

national cemeteries since the Civil War is on track.

 So Mr. Chairman, I started out my testimony by saying that this 

budget is historic, that this is a landmark proposal funding, unmatched by any previous VA budget ever. And I also said that VA’s 

225,000 employees are doing a terrific job of taking care of our veterans. This level of competent and compassionate care was earned by 

the men and the women who, through blood, sweat, and tears, served 

America selflessly, honorably, courageously.

Veterans don’t seek the spotlight of approval, Mr. Chairman. So 

as the Secretary of Veterans Affairs, it is my privilege to lead our 

national applause in grateful thanks for every gift our veterans have 

given us. This proposed budget for the VA is President Bush’s appreciation for our heroes.

 Thank you very much, Mr. Chairman.

[The statement of R. James Nicholson appears on p. 99]

 The Chairman. Thank you, Mr. Secretary. At this time, I would 

like to yield to Mr. Evans. He has a question now and then he’s going 

to have to leave the room. Mr. Evans?

 Mr. Evans. Thank you, Mr. Chairman.

 You once again offer up legislative proposals that have been soundly rejected by Congress. Is this just stubbornness? As a Marine, I

am quite familiar with stubbornness, but do you find it impossible 

to request a budget in leiu of legislative proposals? Thank you Mr. 

Chairman 

The Chairman. I would like to ask minority counsel to repeat the 

question.

 Minority Counsel. Mr. Evans notes that you once again offer up 

legislative proposals that have been soundly rejected by Congress 

and asks, “Is it just stubbornness?” Mr. Evans notes that as a Marine, he’s familiar with stubbornness, and then asks, “Do you find it 

impossible to request the dollars that you actually need, in lieu of the 

legislative proposals?”

Secretary Nicholson. Thank you, Mr. Evans. That is an important question and was not unanticipated. I personally believe in 

these policy proposals. I think they are reasonable in the overall 

context of what we are doing in this giant health care and benefits 
10

system, because what we are asking is for people who want to get the 

best health care in the world, who have no injuries, disabilities, service-connected ailments of any kind, and who are working and have 

work, to pay $21 a month for their health insurance, and to pay a 

reasonable co-payment for their pharmaceuticals. And the composite 

of that to this budget, as you know, is $795 million, which is a significant amount. It’s in the composite of the revenue that would accrue 

as a result of that, and the adjustment in the number of people using 

the service.

 What it will do, in spite of the fact that this is a huge budget, it 

would just help ensure our ability to do our job even better. And 

there are things that in spite of how well we are doing, there’s more 

that we can do, and there are things that we can do better. And I

don’t see it being a hardship. It is just for categories seven and eight, 

and I think it is very reasonable. It is also very equitable, because if 

you spent 30 years in the service and retire, you go on TriCare and 

you have both a copayment and an enrollment fee, and it is substantially higher than this.

The Chairman. Thank you, Mr. Evans.

 I have four questions. First, Mr. Secretary, I would direct this to 

you and then perhaps further comment from Dr. Perlin and Mr. McClain. I am hoping that you can comment on the process that was a 

started down in Charleston with regard to the VA and the Medical 

University of South Carolina, on the issues of collaboration, and how 

that is possibly being leveraged, not only with regard to construction 

at New Orleans; now even possibly in Las Vegas, and Orlando. So I

welcome your comments on that.

 I also welcome your comments on regard the land acquisition issues at Denver. You had made a request to us at the end of last year. 

Minority had made an objection, so I would like you to help explain 

that to the Committee, and what your proposals are.

 With regard to diabetes standardization, I am aware that in 2006, 

the VA Appropriations Act specifically prohibits the VA from replacing the current system by which VISNs select and contract for blood 

glucose testing supplies and monitoring equipment. I would like to 

know what the present status is, and what directives you have given 

to the VISN directors; and it is my understanding there are three 

VISN directors that are not conforming, so I would appreciate your 

comments.

 Mr. Secretary, another question -- perhaps Admiral Cooper can 

help us -- is with regard to a budget reduction. On the direct compensation FTE, it actually decreases by 48 in this ‘07 budget. Given 

the number of claims that are coming in and the expected backlog, 

please explain.

 Also, Mr. Secretary, and perhaps directed to Under Secretary 

Tuerk, the Committee has an interest in the National Shrine Pro-
11

gram, and I welcome your comments with regard to that, because I

also don’t see that in this budget. Mr. Secretary?

Secretary Nicholson. Thank you, Mr. Chairman. I will start, and 

then refer to the experts that we have.

 The question of collaboration is an important one, and I strongly 

support collaboration wherever we can achieve it. That is, with the 

military, with DOD, and/or with academia. Collaboration with academia has redeemed itself. It was, you know, it was General Bradley 

right after the war who had my job, who insisted to President Truman that we locate these new hospitals, wherever possible, next to 

an existing academic medical facility. And he had the vision, and it 

is so valid that we could, cross-pollinate the staffs through the training, the research, the teaching that would go on, and we could further 

stimulate and grow our doctors, and that has worked wonderfully 

well to the advantage of the VA, such that we have three Nobel Prize 

winners out of the VA system, as doctors.

 Sixty percent of the physicians in America today received training 

in a VA hospital. We have good physicians, and so does America. An 

added plus is the economies, as well as the dynamics, that inure to 

that, especially when we can co-locate with DOD facilities, so I am 

very supportive of that proposition.

 And I am quite aware of these areas that you mentioned. I will 

probably let Dr. Perlin address the Charleston issue, having been 

down there. Let me just address New Orleans. We have a major 

study group, task force, really, going on in New Orleans, trying to 

decide what we should do in New Orleans. We are collaborating with 

the local leadership group in New Orleans, Bring New Orleans Back, 

with the local elected officials and the people here in Washington representing the state. We are hoping to have our task force study done 

by the end of February, so that we have a good notion of what we 

should do, based on what we know.

 But the last point is not unimportant, because there are things 

that still are not clear, like what is going to be the population of New 

Orleans. What is going to be the veteran population of New Orleans. 

And what is going to be the status of protecting a facility, of hardening it against a recurrence like we’ve just been through, vis-a-vis the 

levees or hurricane vulnerability?

 These are important questions. We want to collaborate, as we have 

down there for so long, with LSU, Charity, and Tulane. So, where are 

they going to locate? You know, the good news is that everybody’s 

talking and everybody has, good intentions, and we know that we will 

replace that hospital, at some size and in some location. But I could 

not tell you that today.

 You mentioned the land acquisition in Denver. Denver is another 

area that the CARES process has deemed needs a new hospital. And 

the existing hospital will no longer be located with the collaborative 
12

hospital, which is the University of Colorado Health Science Center, 

because it has moved out to the old Fitzsimmons General Hospital 

campus.

And we’ve gone through turmoil trying to find a place to locate our 

new hospital out there so that we cannot only be next to the new 

university hospital, but the new children’s hospital that is under construction. Happily, with the cooperation of some of the local elected 

people who had other notions about a piece of ground that was still 

left there, we have been able to get that under control, so to speak, 

and at a price that is compatible.

 But it’s not going to stay that way forever, because the local municipality there, Aurora, really wanted to use that piece of ground 

for a destination resort hotel. Since they’ve accommodated us, they 

still want to have that destination hotel. They need to acquire that 

ground, and they’ve done an assemblage, and they want our transaction to take place; i.e., buy the ground, so they have the money to go 

buy the other ground, to do what they really wanted to do.

 And that can be done in two stages. The initial ground acquisition 

to tie up the deal would be $25 million. There is another office building involved that will become part of the hospital, but that does not 

have to be appropriated with the expedition that is needed, for us to 

secure the ground, to be in a position to build and collaborate like we 

have in the past.

 I think while we are on that subject, I will hand this to Dr. Perlin 

to talk to you about Charleston, and then we can come back and talk 

about FTE and other things, after that. 

Dr. Perlin. Thank you, Mr. Chairman. And Mr. Secretary, I would 

agree with the way you have laid this out. I particularly appreciate 

the support of you, Mr. Chairman, Chairman of the Health Subcommittee, Chairman Brown, for really helping us discover a template for 

a way of looking at the value of collaborations. Down in Charleston, 

we were presented with an analysis of the economic value of collaboration. It looked not only at media capital costs, but life cycle costs 

for operations, suggesting ways that we might partner.

As a first step in this partnership, the ability to provide not only 

veterans but citizens of the state of South Carolina with new technology for cancer therapy that has a precisely-aimed beam, a technology 

known as TomoTherapy, and angiography suites, present the very 

first starting block of improved sharing. For our providing some capital equipment, the return is free or significantly reduced costs for the 

use of this equipment, enhancing care for veterans and the community and state. So this is really a win-win.

 I make this point because it really provides us nationally with a 

template for looking at opportunities for collaboration, ways to improve operational efficiencies, capital efficiencies, as we think about 

some of the challenges of ensuring the veteran get the care they need 
13

in the out years.

 So certainly, as we look at sites such as New Orleans, we place a 

great deal of attention not only on the long-standing relationship of 

affiliations, but ways in which we go forward that create synergies 

for all involved.

 The Chairman. John, if you can be brief so we can move to the other 

members’ questions: the diabetes question, the FTE, and the national 

shrine. So if you can try to hold your comments to a minute.

Secretary Nicholson. Yes, sir. The question on information technology, again, another very important area. In spite of how well we 

have done in the transformation and use of modern technology for 

our electronic record system, which is nothing less than phenomenal -- and unprecedented; no other major health care system has 

yet achieved it -- we still need a major transformation inside the VA

in information technology. I think all of you members know that, 

and we know that. The question then is, how to do it? How to force 

that cultural change that is going to take an organization that’s big, 

spread out, far-flung, and to achieve the standardization that you really need so that we can have it do much better in reporting inventory 

control, collection processes, and talking to each other. I think we all 

stipulate to the need.

 So then, how should we do this? We’ve had a major consultant 

come in, Gartner, and look at it, and they looked at also the history 

on this, which hasn’t been very good, in trying to do this, and said, 

“You need to do the draconian step, you need to just totally change 

this,” which would be to just move to a total centralized model. The 

impacts of that you have to think through, because again, we have, 

medical applications going on all over this country, the Philippines, 

Guam, and some of them are quite unique, especially in the research 

area.

 So, do you take that prerogative of developing their own model and 

their own software for that application, draw that all back up into the 

central headquarters here in Washington, and then have an IT czar 

decide, or is there some hybrid of that?

 I believe that we need to do the hybrid, which we call the federated 

system, which is that we do consolidate the budgeting. We would 

give far more responsibility and authority to the Assistant Secretary 

for IT, the Chief Information Officer, who is currently Assistant Secretary McFarland, who is brilliant and again, one of those other lucky 

things we have a guy like that that has come into the government, 

and who has the background to help us.

 If you think tactically, we can still have these medical modules 

working on their own unique software that they may need, after getting the budget approval for that, from the centralized authority for 

it. If we can get that done, we will have taken quantum steps toward 

standardizing this organization. And then see what, how it evolves. 
14

That is what I think we should do.

 The Chairman. All right. Now we are going to have to narrow it 

down to 30 seconds. Be really brief on this, I need to get to other 

members. The diabetes standardization, are you following what the 

appropriators have asked?

Dr. Perlin. Yes, we are.

 The Chairman. Thank you. With regard to the direct compensation 

on FTE you have a decrease, Admiral Cooper, in the budget, in the 

face of growing claims.

 Mr. Cooper. Mr. Chairman, we developed the budget 18 months 

ago. At that time we considered certain planning factors. In fact, we 

got a fairly large increase in FTE for 2006. That increase was predicated partially on the fact that we anticipated the legislation that 

called for special outreach in states with the lowest average compensation payments per veteran. We factored that in. We figured there 

will be 98,000 more claims coming in because of that outreach. We 

expected to start that outreach close to the start of fiscal year 2006. 

Therefore, we would have fewer total incoming claims, as we headed 

into 2007. We have not started that project yet, but we are in a hiring 

process now.

 The fact is, for VBA in general, we got an increase. We apportioned 

that out to the several programs. If I need to, I will reapportion within 

those numbers. So across VBA we recieved a slight increase of about 

173. So, in the planning process 18 months ago, it looked logical to 

reduce slightly in 2007. I will reorient as the budget is approved.

 The Chairman. Secretary Tuerk?

 Mr. Tuerk. Thank you, Mr. Chairman. I appreciate your bringing the National Cemetery Administration, and particularly, our National Shrine Commitment into focus. Apart from keeping our cemeteries open, and developing 11 new cemeteries to serve the needs of 

veterans, advancing the National Shrine Commitment is my highest 

priority.

 This budget is good news with respect to the National Shrine Commitment program. This year, the budget for the National Shrine 

Commitment is increased by 40 percent, from approximately $20 

million to $28 million. Perhaps of equal significance, funding for the 

gravesite renovation projects, for the raising, realigning, the cleaning 

of headstones, and for turf maintenance, is scheduled to increase at 

an even higher rate, by 65 percent.

Clearly we are headed in the right direction. We are on a growth 

curve. When we get this funding, it is my belief and my hope, that we 

will be nearly halfway down the list in the National Shrine Commitment projects. So I am quite pleased with this proposal.

 The Chairman. Okay. Thank you very much. Mr. Filner?

 Mr. Filner. Thank you, Mr. Chairman. Let me first say for the 

record something that we Democrats communicated with you, Mr. 
15

Chairman, in writing: that while Congress on the floor of the House 

is moving to greater transparency in our processes, you are taking us 

and this Committee backwards. To stop the joint sessions with the 

Senate, inviting the members of the VSOs really makes the process 

less transparent. Regardless of the timing of those meetings, we had 

thousands of veterans able to see what was going on here, able to 

connect up with their own members of the Committees, and see what 

we do. I, again, would urge you to reconsider that decision to stop a 

long, long tradition of having VSOs and their members come in for 

their own sessions.

 Mr. Secretary, you called this is a, “landmark, historic budget, biggest increase ever by a President.” I am sure the President said to 

you, “You are doing a heck of a job, Jimmy.” And I think that is a 

good comment on this budget.

 I think you could have sent a video from last year’s appearance, 

because the same costs for veterans are being proposed as last year. 

We have proposals that have been soundly rejected by the Congress 

which are in your budget; steep increases in co-payments for the prescription drugs; enrollment fees; another underestimation of returning soldiers from Iraq and Afghanistan; continuing to drive priority 

eights out of VA health care; an unrealistic figure for third-party collections and inflation; management efficiencies which seems to be a 

category so flexible that you add that to whatever perceived shortfall 

is and one, that the GAO recently said was undocumented in the past 

budgets.

 So, your real budget is way below what you are claiming here as 

historic and landmark. Not only are you on the surface $1.7 billion 

below what the Independent Budget will show us in the next panel, including the priority eights, your legislative proposals probably 

won’t get passed. And so that is another $1.3 billion out. Your management efficiencies of close to a billion may not materialize. You 

overestimate collections. So I count you are almost $4 billion short of 

where we ought to be. Heck of a job.

 And to the tired old proposals you have the nerve to say this is not 

a hardship by increasing the fees, and yet your own budget shows we 

are going to drive 235,000 veterans out of VA Healthcare. It must be 

a hardship on them if you are driving them out of such a wonderful 

system that you described. Mr. Secretary, if it is such a wonderful 

system, why are you driving out 235,000 of them, as the only way 

that you are going to meet your budgetary needs?

 In addition to the tired, old proposals, you add another wrinkle. 

You are very creative. You have changed the rules so you put more 

money on the backs of veterans, and that is in regard to third-party 

collections for care of non-service-connected illnesses and disabilities. 

Right now your practice, as I understand it, is to bill the veterans’ 

insurance companies, the third-party, and when the insurance com-
16

pany pays, if they do, the VA takes off the top the co-payment that 

the veteran would owe. This means that the VA reduces what the 

veteran has to pay with the insurance company collections. A reasonable approach.

 Now what you want to do is to bill them simultaneously, as I understand it, and you get $30 million more out of the pockets of veterans 

in fiscal year 2007, and $192 million over the next five years. Once 

again, you are adding a new wrinkle to your enrollment fees and your 

increase in the co-pays for drugs.

 In addition, another thing I couldn’t understand, you seem to double-count moneys in here, in another accounting gimmick that I think 

gives you the “landmark” figure that you claimed. You have in collections an amount of $544 million that seems to be counted twice: once 

to reduce the medical service appropriations, and again as part of 

the collections. You subtract it from one to reduce the appropriation, 

and you add it again. So it seems to me you are double-counting. And 

if that is a mistake that seems to be there, we will look through the 

budget in more detail and see if there are any others.

 I don’t call it a landmark budget. I don’t call it the biggest increase 

ever by a President. I call it more of the same that we saw last year, 

accounting gimmicks, double-counting, legislative proposals that 

won’t come true, management efficiencies that never are there. I 

think you are doing a heck of a job of driving veterans out of this system, and I think we ought to reverse that course, Mr. Chairman and 

Mr. Secretary. Is there anything I said wrong?

Secretary Nicholson. Let me say, number one, Mr. Filner, the increase in direct appropriation is up 9.4 percent. As to the -- 

 Mr. Filner. Only if all those figures I counted are true.

Secretary Nicholson. The “driving out”, as you call it, of the almost 200,000 people that we project that would not -- 

 Mr. Filner. Your number is 234,566 in your budget. You called it 

an adjustment; I call it driving out.

Secretary Nicholson. Well, 95 percent of those people we find have 

other insurance; either public, private, employer-type insurance, or 

Medicare. And they make a conscious decision at that point about 

what works best for them, and do project that there would be this 

reduction.

 And I will say categorically there’s no double counting in that budget. I will ask Dr. Perlin if he wants to expand on that in any way.

Dr. Perlin. Mr. Filner, I am happy to go through the budget with 

you, but the 544 million dollars is the combination of the collections 

from the pharmacy co-pay and the enrollment fee. I would be pleased 

to go over that. It is counted once. I should note that that is after the 

9.4 percent direct appropriation increase. Including the collections, 

the increase in this budget over last year goes to 11.3 percent.

 Mr. Filner. I am sure you’ll be able to tell me more, but if you look 
17

on your budget’s submission page: chapter one, page two, you add to 

the medical service budget the $544,000 that you claim as a savings 

from the legislative proposal. Then, in another figure below it, collections, it is in there also. So it is an addition because of certain proposals to your budget, but then it is also included in another line-item. 

If that is not right, I will be happy to hear from you, but it looks to us 

that is what you are doing.

Dr. Perlin. We are absolutely certain that the resources, that $544 

million, are counted once and only once as collections. Let me explain what seems to be some confusion about the difference between 

235,000 and 199,000, is. Absent any policy proposals whatsoever, we 

estimate that about 35,000 fewer priority seven and eights would be 

in the system as patients next year. The number one reason for attrition for veterans who are with us generally for life is because they 

pass away.

Secretary Nicholson. Let me also, if I may, Mr. Filner, point out 

-- 

 Mr. Filner. So you mean that’s not part of your model, the people 

who die and are taken out? You are double counting again, Now 

we’ve got dead people you are double counting.

Dr. Perlin. Absolutely not. There are estimated to be 35,000 people fewer. The residual is 199,600 -- 

Mr. Filner. So we are talking about 199,000-something that you 

are driving out, not 235. Okay, I stand corrected.

Secretary Nicholson. I would just like also to point out to you your 

comment with respect to collections. We increased collections in the 

just-finished fiscal year of 2005 by 8.6 percent over the prior year. So 

I think we’ve established -- 

 Mr. Filner. How much money is that?

Secretary Nicholson. Sir?

 Mr. Filner. How much money is that?

Secretary Nicholson. In absolute terms? How much is the increase, or the total -- 

 Mr. Filner. Certain times, you use percentage, other times you use 

numbers. You are always trying to spin it in a way that sounds better. But what does the eight percent represent? If it’s of one dollar, 

it’s not a great increase, you know.

Secretary Nicholson. Fair enough. The amount collected was 

$1,897,000,000.

 Mr. Filner. And that’s an increase from?

Secretary Nicholson. The prior year it was $1,747,000,000.

 Mr. Filner. So how much increase? $200 million?

Secretary Nicholson. 8.6 percent.

 Mr. Filner. How many hundred million was what I asked.

Secretary Nicholson. $150 million.

 Mr. Filner. Out of a $70 billion budget? We’ve had these miscal-
18

culations in past budgets so, we don’t have a lot of confidence in those 

figures. How much did you project, by the way, in the previous budget? Was that what you projected?

Secretary Nicholson. I think I stand corrected if I am -- we were 

within two percent of what we projected we would collect.

 Mr. Filner. And so you overestimated your collections.

Secretary Nicholson. By two percent.

 Mr. Filner. It’s that $100 million or something?

Secretary Nicholson. Oh, no, no.

 Mr. Filner. I am saying if you overestimate your collections -- 

Secretary Nicholson. Three million dollars. Three million.

 In fact, I don’t know if you can see this but we should have a chart. 

You see that line?

 Mr. Filner. I can’t see it.

Secretary Nicholson. That’s the progression of collections, starting in 2000.

 Mr. Filner. What page is that on? Is that in here somewhere?

Secretary Nicholson. I don’t know that you have this, but the point 

is that it’s a very good story. In fact, in 2000, the VA collected $573 

million. As I just told you, in ‘05, it’s collected $1,897,000,000, and 

that line is ascending because we are getting better at it.

 Mr. Filner. And how much would that increase if you included 

Medicare?

Secretary Nicholson. I don’t know, we’d have to get you that.

 Mr. Filner. It would be a lot bigger than this.

Secretary Nicholson. Oh, it would be bigger.

 Mr. Filner. If you went for reimbursement from Medicare, that 

would be very good.

 The Chairman. Thank you, Mr. Filner.

 Mr. Filner. Think about that.

Secretary Nicholson. We have. You’ll have to do it, because we’ve 

been told we can’t do it.

 Mr. Filner. You also can’t increase enrollment fees, but you suggested it.

 The Chairman. Thank you, Mr. Filner. Will now recognize Mr. 

Miller, who chairs the Disability and Memorial Affairs Subcommittee.

 Mr. Miller. Is there time still remaining, Mr. Chairman?

 The Chairman. Well, we want to give members latitude. This is 

our opportunity to speak with the Secretary about the budget. We are 

under the five-minute rule, but we want to give latitude.

 Mr. Miller. I see a green light down here. What does a red, blinking light mean?

 The Chairman. It means I am going to give some latitude.

 Mr. Miller. Will you give it to me?

 The Chairman. I will.
19

 Mr. Miller. Why do I always have to follow my good friend, Mr. 

Filner?

 Mr. Miller. Mr. Secretary, thank you for being here today and 

presenting the blueprint. I don’t imagine that any of us totally agree 

with what’s in here, but we have to have a starting point somewhere, 

and I appreciate it. Some of my questions may be a little bit off subject, but because you are here I want to be able to ask you a question, 

in particular about an issue that’s floating around VISN eight in Florida, about a potential shortfall at Bay Pines, of some $20 million.

 That concerns me, that there is a shortfall, potential shortfall, 

there. What concerns me probably even more is that this Committee 

is being told that members and staff down there are not to communicate with members of Congress in regards to the shortfall. And I

wanted to know if you would address that this morning. Or Dr. Perlin, or anybody that’s at the table.

Secretary Nicholson. Thank you, Congressman Miller. There is 

some history at Bay Pines in the last few years. The IG looked into 

that, and I think it was in August of ‘04, issued a report, and corrective action was implemented. A plan was developed. There were 

weekly conference calls were being conducted, I think it went on for 

about six months. And the IG took another look and said, “All these 

recommendations have been implemented, and these problems have 

been satisfactorily resolved.”

 I am aware of the issue that you are bringing up this morning, 

but I was just made aware of it this morning. Someone wrote an 

anonymous letter pointing out that there were some problems and 

that there’s a shortfall at that hospital. I have not yet had a chance 

to look into this substantively. There are serious allegations in that 

anonymous letter. We take those seriously and we will look into it. 

I am going to be down in Florida myself later this month, and will 

personally talk to some people and look into it. To the best of my 

knowledge, these are unsubstantiated allegations.

 Dr. Perlin, do you have anything to add?

Dr. Perlin. I just note that we were made aware of this, as Secretary said, this morning. And I looked back in terms of the allocation 

of resources to all of VISN eight, I note that the VISN was allocated 

$2.647 billion, a 9.1 percent increase over the previous year. Bay 

Pines received $303.46 million as an allocation within the VISN, and 

I just note that these are somewhat protean during the course of in 

a year. And obviously this has grabbed my attention. We want to 

make sure the veterans at every facility, but particularly given the 

history of the challenges at Bay Pines, get the best possible care, and 

in fairness, that we do so efficiently.

 So I am going to be devoting some good deal of attention to making sure that not only the resources are there, but that they are used 

wisely.
20

 Mr. Miller. Thank you. We look forward to hearing what you find, 

and we will provide you the information that we may be able to pick 

up, as well, Mr. Secretary.

Also, Mr. Tuerk, thanks for coming to first Florida district. I am 

sorry I wasn’t able to be with you when you were at Barrancas. I am 

pleased to see the increase in dollars for the National Shrine Commitment, some $14 million additional over last year’s request. A long 

way to go, 300 million is the number that we need to get to, but I do 

want to say thank you.

 And the yellow light is on, so I am going to ask a question of the 

Secretary. You brought it up. I wasn’t going to, but you mentioned 

New Orleans in several parts of your comments. The purpose of a VA

hospital is what? Who is it supposed to serve? Tulane, LSU, Charity, 

or veterans?

Secretary Nicholson. Well, the purpose of a VA hospital is to serve 

veterans. The history has shown that this service is enriched when 

those hospitals can be co-located and collaborate, and get the specialty services of those people in those other hospitals. For example, 

there are some very esoteric kinds of diseases, or surgical procedures 

that are needed by our veterans, where we don’t staff that narrow 

specialty. We are able to get those because we’ve accredited doctors 

that are at those nearby teaching hospitals with that specialty. I

mean, that has just absolutely redeemed itself.

Mr. Miller. The light is blinking, but since the Chairman is giving 

us latitude, since there is a somewhat clean slate today, is New Orleans exactly the place the VA would want to site a medical facility?

Secretary Nicholson. I would say, Mr. Miller, that the answer is 

in the affirmative, at least in greater New Orleans. I can’t tell you 

where that hospital will be sited, but from what we know, there will 

be a justifiable need to replace that hospital in the residual veteran 

population of the New Orleans area that we serve, yes.

Mr. Miller. For the record, New Orleans is in a declining -- was 

prior to Katrina -- declining veteran population. There was a lot of 

use of the facility by facilities other than VA. My statement, for the 

record, is I don’t know if 800 million to $1 billion in the New Orleans 

area is an appropriate expenditure of funds, and I hope that VA is 

looking at the broader picture. And as long as the greater New Orleans area includes the panhandle of Florida and the needs that are 

there, we will continue to broach the subject. Thank you.

[The statement of Mr. Miller appears on p. 76]

 The Chairman. Thank you, Mr. Miller. I have a statement to be 

submitted for the record from Ms. Corrine Brown. Hearing no objections, so ordered.

[The statement of Ms. Brown of Florida appears on p. 77]
21

The Chairman. Mr. Secretary, I would like to recognize the Ranking Member of the Health Subcommittee, Mr. Michaud. He also, to 

let you know, was at the genesis in Charleston for this collaborative 

effort that, as you said, Dr. Perlin, is this template. He was there at 

the beginning of that and has also had a great interest in increasing the revenue cycle management. A very thoughtful member. Mr. 

Michaud.

Mr. Michaud. Thank you very much, Mr. Chairman. I would like 

to thank you and Ranking Member Evans for having this hearing, 

and would like to thank you, Mr. Secretary, for coming over to testify. 

I would ask unanimous consent to submit my opening remarks for 

the record.

 I have basically four types of questions, Mr. Secretary. I will run 

through them and then go back so that way it will give you time, or 

Dr. Perlin, to answer them.

My first one, and it’s similar to Mr. Miller’s question: last February when you were here you were asked if any VISNs had a shortfall. 

You both stated that no VISN had requested additional money, and 

I think part of the reason is they were told not to request any additional funding. Like last February, this year we are hearing that 

facilities are delaying hiring, and deferring purchases to cover differences between operating funds and demand for services. My question 

is, how many VISNs will be forced to tap into reserves or non-recurrent maintenance funds in order to make ends meet? That’s my first 

question.

 The second question is, last year, VA had a shortfall due in part to 

underestimating the demand for services from the veterans who were 

returning from Iraq and Afghanistan. I am glad that you have included estimates in the budget. I have a couple of questions about the 

budget assumptions for returning OIF and OEF veterans, because we 

all agree we need to take care of these veterans.

 As of October 2005, the VA treated over 119,000 OIF-OEF separated veterans. But your budget for fiscal year 2007 projects 109,000 

OIF-OEF patients. So your estimates are 10,000 fewer than what the 

VA has already seen. The recent published Quadrennial Defense Review states repeatedly that we are in a long war, and I think they’re 

probably right; we are in a long war, so it seems to me like you are 

starting at a low number for your budget assumptions, that could 

negatively impact the VA’s ability to care for veterans. Could you 

explain how you arrived at these assumptions? Do you need to revise 

your budget projections to meet the increased demand on OIF-OEF

veterans?

The third question is on the CARES process which identified the 

needs for hundreds of community-based outpatient clinics and other 

expanded access points, including many in rural states, like the state 

of Maine. How many new CBOCs are funded in fiscal year 2007 bud-
22

get?

 And beyond the increased number of access points, what other initiatives are included in the budget that will assist in easing the travel 

burden facing many veterans, particularly in rural states?

 My last question is on the special Committee on PTSD which has 

begun recommending that each vet center have a family therapist on 

staff. Each year the VA concurs in principle, but does not commit the 

funds or staff to make this recommendation a reality. Instead, the 

Administration says it is actively monitoring the vet center program 

workload, to identify potential gaps, and those identified gaps are 

forwarded to the Under Secretary of Health.

 It is our understanding that the vet centers are functioning at capacity. We met with several groups last year, and that came out. My 

question, relating to that are what gaps have been identified and are 

these initiatives to close the gaps in your fiscal year 2007 budget?

 Do you want me to go back and restate the questions?

Secretary Nicholson. I think I have them, sir, if we are not responsive to one, please feel free to ask us again.

 First, on the VISNs, you related back to experiences last year, saying that you are hearing rumblings that there is delayed hiring, and 

we are tapping into nonrecurring funding now in this fiscal year. 

That is news to me. I am not aware of that. That’s something that 

we will look into, that I don’t believe is the case, and should not be. 

We are going to dig into that and we will get back to you.

 The OIF-OEF question is a very important one, and the nuances of 

that I am going to ask Dr. Perlin to address. It 

has to do with cumulative patient load versus new patients. Well, 

maybe we will just take that right now. You can speak to that, John, 

if you would.

Dr. Perlin. Thank you, sir. In brief, exactly right. The difference 

between the numbers, that I understand they lead to some confusion, 

is how many OIF-OEF we have treated cumulatively, are indeed, we 

have treated 119,000, more than 119,000 in VHA. How many do we 

expect in a particular budget year? Using best estimates at the moment, that 109,000 for the fiscal year 2007 is correct. Obviously, we 

are going to keep monitoring any changes in tempo, and information 

from the Department of Defense, that would lead us to change as 

need be. But that’s why the discrepancy between the two numbers 

are -- 

 Mr. Michaud. How did you arrive at your assumptions, particularly when you look at the insurgencies that’s occurring over in Iraq?

Dr. Perlin. Right. Easy enough. About a quarter of those numbers were really projected based on the use patterns of the current 

OIF-OEF veterans in VA. The other three quarters are based on the 

history, or the rates of separation, from Department of Defense. All 
23

components, active as well as reserve components, coming into VA.

Secretary Nicholson. The next question I think you addressed was 

to the CARES process, the Capital Asset Review for Enhanced Services, with respect to CBOCs. At the beginning of this fiscal year we 

had 712 freestanding Community-based Outpatient Clinics. We plan 

to add 15 additional this year, and in this budget that we are here 

discussing, the ‘07 budget, we have 43 planned in that budget.

Mr. Michaud. So, 43 plus the 15?

Secretary Nicholson. Yes, sir.

Mr. Michaud. Great. And the second part of that question was, are 

there any other things that the VA is going to do to help increase the 

access points, particularly in rural states?

Secretary Nicholson. Well, we are very active in rural health care. 

The CBOCs of course are a real tangible extension of that, trying to 

push them out, get them more out into the communities. You know, 

I think the department has a very commendable record in the way 

that these CBOCs have grown. And the way we are planning to grow 

them, we also are burnishing our efforts in telemedicine, rural home 

medical care, and it’s a real growth area of ours, and one that’s getting quite a bit of attention.

I think the final question was on PTSD.

Mr. Michaud. That’s correct.

Secretary Nicholson. And that’s an area getting a considerable 

amount of our attention, because it’s quite prevalent in both the 

medical side and the benefits side of what we are doing, say, sort of 

overarching what we are endeavoring to try to do, is to be a very affirmative in our entire outreach efforts, in our seamless transition, and 

trying to get these young returning folks, particularly returning from 

the combat area, oriented towards coming in and seeking counsel, 

if you will, and I didn’t say, “therapy” yet, but just come in and talk 

about it without some feeling of a stigma, that they are losing their 

mind or something because of an experience that they’ve had, or have 

a recurring feeling from some, sort of nonnatural human occasion 

they’ve had in combat.

 And people have that. And most people can get over that if we can 

get our arms around it quickly enough, and get them the right treatments. So we are really trying to emphasize that, and we are doing 

that in our Vet Centers as well as, of course, in all of our clinics and in 

the -- I think we had over 8000 briefings last fiscal year to units that 

were deploying back, in an endeavor to try to emphasize the health 

part of that, the recovery part of that, before the compensation part 

of it, because our real goal is to make people healthy.

Mr. Michaud. Could you provide for me, Mr. Chairman -- 

Mr. Stearns. The gentleman’s time has expired. You are five minutes over, and it is double the time that was allotted.

Mr. Michaud. If the Secretary could, my specific question was, 
24

what gap has been identified out of the initiatives in the ‘07 budget, 

taking care of that gap? So if the Secretary could provide us with 

the special Committee’s report, talking about the gap, so that we can 

look at it.

Mr. Stearns. Yeah, I think you can do that in writing to the gentleman.

Secretary Nicholson. Yes, we will be happy to.

Mr. Stearns. There is a lot of members here who wish to speak, 

and we all have busy schedules, so we are just trying to stay to the 

time limit.

[The statement of Mr. Michaud appears on p. 78]

Mr. Stearns. [Presiding] Mr. Chairman, I was here slightly ahead 

of the gentleman from Arkansas, so I was going to start my questions.

Let me first of all commend you. I’ve been on the budget now, this 

is my 18th year, and this is the largest increase I’ve ever seen a secretary offer Congress in his budget. And I think this is probably a 

reality, because of the war on terrorism and the war in Afghanistan 

and in Iraq. So I commend you for doing this. But having said that, 

looking at the three areas that you have in your budget proposal: a 

$250 annual enrollment fee for priority seven and eight, increasing 

in pharmacy co-pays from eight to $15, and your third-party offset; 

all three of those together is a little less than one percent, like, .98 

percent. And it is controversial. I submit that you probably, if you 

work this third-party offset you probably could make up a large portion of this.

And let me first of all ask, what is the status of the Cleveland demonstration project that we keep hearing about on third-party offset? 

Is somebody prepared to give us an update of this demonstration 

project that we are hoping will give us information so we can save a 

lot of money in this third-party offset?

Secretary Nicholson. Mr. Chairman, I am going to ask Dr. Perlin 

if he would respond to that, and then ask your leave, if I could run out 

for a minute and come back.

Mr. Stearns. Absolutely, absolutely. Sure, yeah.

Secretary Nicholson. As I said, I am a Vietnam veteran, I am -- 

Mr. Stearns. No, I understand.

Dr. Perlin. Thank you, Mr. Chairman. The PFSS, to spell it out 

is the Patient Financial Services System program, and the idea is to 

improve all of our collections by allowing our great electronic health 

record interface electronically with billings and collections. And that 

is working, and completion of testing is actually scheduled for May 

of 2006.

Mr. Stearns. So this year, the Cleveland project will start?

Dr. Perlin. Yes, sir.
25

Mr. Stearns. Okay. And do you have the resources and in place, 

the people -- are you happy with that?

Dr. Perlin. The project, to be fair, had a challenging start because 

I think people underestimated the complexity of creating programming that was idiosyncratic with hospital or health care billing, or 

anywhere else.

Mr. Stearns. Okay.

Dr. Perlin. The issue you mentioned, the first-party offset, presents that unique challenge.

Mr. Stearns. You know, having been into these discussions before, 

there is two areas -- any way to turn this volume down? I guess not. 

Just a shade, maybe?

The two areas I find have always been a problem is, can you identify the cost it takes to get the third-party collections? Because I hear 

the veterans come up to me and say, “Oh, we got so many millions of 

dollars back.” But no one has ever told me what the cost is per outpatient -- third-party, rather -- to get this money back. Had you done 

an analysis to say, “Okay, Congress, it’s costing us ‘X’ dollars to get 

this money back and maybe we would be better off not to even do it, 

and we should outsource this,” or something like that?

Dr. Perlin. Yes, sir. I do follow what it costs us to collect. We 

want to be efficient about doing that. I think it’s worth stating that 

whomever did the collections would have to do a number of things 

that don’t occur in other sectors. For instance, we have to generate 

a bill to include what Medicare might have reimbursed, even though 

we don’t get the value of that back. So all of the effort that goes into 

a bill that’s, say, $100; actually at the outset, because we don’t collect 

Medicare as an example, only returns $20. But you still have to go to 

the effort on the other 80 percent, the $80.

 And so on average, across all the different sorts of collections we 

have, it’s approximately 10 to 11 percent.

Mr. Stearns. Okay. Before I forget it now, will this Cleveland demonstration, when will it be complete, and you be able to come back to 

us and give us a some quantitative information?

Dr. Perlin. Yes, we are hoping to go live in approximately July, 

and we would be pleased to report on the success with that, after that 

goes live.

Mr. Stearns. Okay. So you intend to get us a report then perhaps 

to one of the Subcommittees, the full Committee, on this, as soon as 

you have got information?

Dr. Perlin. We would be pleased to discuss with the Committee any 

of the performance of that as soon as it is available.

Mr. Stearns. Okay. And the other thing before I conclude is, do 

you keep accurate reimbursement values that are done throughout 

industry? For example, if a veteran comes in and he has to get Blue 

Cross Blue Shield to pay and then you pay them, I mean, how are 
26

you determining these DRGs? Are you doing it with in-house? Are 

you taking information from industrywide, from TriCare? In other 

words, are you tying all these systems together so that you can say 

the DRGs are accurate and you have got enough information to say, 

“We are not overpaying for reimbursements”?

Dr. Perlin. Sir, thank you very much for that question because it’s 

tremendously important. I think Mr. McClain might speak to statute 

that determines how we set the rates that are there. And -- substantially complex that we should respond to them in writing to you, if 

that would be okay, as to how the rates are actually matched. I know 

they do shop markets to try to identify fairly accurately and precisely 

the usual and customary rates.

Mr. Stearns. My time has expired. Ms. Berkley?

Ms. Berkley. Thank you, Mr. Chairman. I appreciate the time. 

And thank you, gentlemen, and Ms. Reed, for being here. I appreciate the opportunity to speak with you.

 During our break I was watching television, and I just caught you 

on TV as you were touting the Las Vegas VA medical complex project, 

and I was very happy to hear your enthusiasm about it. You know, 

this is a great passion of mine that I have worked very hard towards. 

And I attended a week and a half ago a blessing ceremony that the 

Southern Nevada Paiute Tribal Council conducted in order to bless 

the land that the VA complex is going to be located on, and it was 

quite exciting, and a unique opportunity to share this with our Native 

Americans.

 But I need to share with you something that transpired just in the 

last few days. On Monday, we received a call, my office received a call 

from your office explaining that there was a $27 million shortfall for 

the nursing home. Well, we knew that and were anticipating it, and 

were told initially that this additional $27 million would be contained 

in this year’s budget. It was not contained in the budget. My staff 

then reviewed the rest of the budget and found that there is actually 

a $147 million shortfall.

Now, we contacted your office immediately to get an explanation 

of what was going on, what exactly was the shortfall, what’s the 

breakout of the numbers, are we still on schedule, when do we break 

ground, when do we initiate the vertical construction? And imagine 

my chagrin when we didn’t hear from you, but later that afternoon, 

Senator Ensign from Nevada issued a press release that contained 

the information that we had requested.

 Now I am sure that was an accident, but I don’t appreciate having 

my questions that are directed to your office answered in Senator 

Ensign’s press release. And this is, quite candidly, Mr. Secretary, 

the second time this has happened and I, quite frankly, am tired of 

that. If I contact your office and request information, I would appreciate a timely response before Mr. Ensign’s office is notified with the 
27

information.

 Having said that, it is important for me to have on this record: 

where the additional $47 million is, why we need an additional $47 

million? And I understand it, but I would like it for the record. And 

I would like to know when we anticipate breaking ground, where we 

are, and when we start vertical construction? And when will that 

$147 million be appropriated along with the other money that has 

already been appropriated?

 Secretary Nicholson, Thank you, Congresswoman. First, may I ask 

you a question, did you call me?

 Ms. Berkley. Yeah, we called your office. It’s my understanding 

-- 

Secretary Nicholson. I didn’t get your call. I do not have a record 

of your calling me.

 Ms. Berkley. Yeah, ordinarily I wouldn’t be particularly chagrined, 

but this is the second time, and it is beginning to get under my skin.

Secretary Nicholson. I apologize for that, because I wasn’t aware 

that you were calling, or I would have called you back.

 Onto your questions, we are very committed to the new hospital in 

Las Vegas, and we are appreciative of your support and your efforts 

in helping getting the land transferred from BLM, and so we have 

the land. In looking at the hospital and re-scoping it, or making the 

hospital somewhat bigger and adding a long-term care facility to it, 

we have noted, given I think in a lot of measure due to the vitality of 

your market out here, the cost -- 

 Ms. Berkley. Yeah, the construction. Plus labor costs are going 

up.

Secretary Nicholson. -- costs have gone up -- 

 Ms. Berkley. Do you have a breakdown of the $147 million? I

mean, I appreciate the challenges, believe me. There’s not a bigger 

advocate for the VA than I. But I think I need to know where the 

money is.

Secretary Nicholson. We will provide that.

 Ms. Berkley. You will provide that? Great. And do we still know 

when we are breaking ground?

Secretary Nicholson. Yes. We plan to break ground in either August or September of this year.

 Ms. Berkley. Okay, all right. And vertical construction will commence?

Secretary Nicholson. Well, the first thing we will be doing is the 

infrastructure, site preparation. Utility extensions, as you know, we 

have to run utilities for about two miles to get out to that site -- 

Ms. Berkley. I am very familiar with the area, yes.

Secretary Nicholson. -- so it will be site preparation, very important work. Not very visible, but very important. And the additional 

$147 million that it will take to -- over the $259 million already ap-
28

proved for the project, we are requesting in the ‘08 budget.

Ms. Berkley. For sure?

Secretary Nicholson. Yes, ma’am.

Ms. Berkley. All right. Another question is, I appreciate your support of collaboration, but we have been -- the Nevada Cancer Institute, 

and I think we have spoken about this a number of times already, the 

Nevada Cancer Institute called me yet again last week, saying they 

have gotten nothing from the VA, and they are most anxious to collaborate. When I first started talking about this, the Nevada Cancer 

Institute didn’t exist. Now they are up and running. They have a 

building, and they still wish to collaborate with the VA. Is there anybody in your office that you can assign to this to make this happen? 

And who would that person be, so I can give that name to the Nevada 

Cancer Institute, and we can move forward?

Secretary Nicholson. There is certainly someone in our office that 

they can talk to. I can’t tell you -- making it happen, because I don’t 

know what they want to happen. But they certainly -- 

 Ms. Berkley. Well, we know what they want. They have made 

very clear in meetings, they have flown in here, they have met with 

your people, they have commemorated their requests in writing, and 

we are still no further than we were.

Secretary Nicholson. I am going to ask Dr. Perlin if he has some 

history on this, because I do not.

Dr. Perlin. Thank you, Congresswoman. I personally had the 

pleasure of speaking to representatives at your request. In fact, one 

of the things that is lacking in our environment for us to have the full 

collaboration is the hospital. We look forward to having that, and 

there looks like in the future there will be opportunity for them -- 

Ms. Berkley. But there are some things, Dr. Perlin, as you know, 

that we could be doing now. To whom do they speak, so we can get 

this moving?

Dr. Perlin. I would be happy to receive information, and their call, 

and get the right people engaged.

Ms. Berkley. I am going to hold you to that, because we have had 

this conversation before, as well. Or I have had this conversation 

with VA representatives before.

Very quickly, there are a couple of things that I would like to discuss 

in my capacity as Ranking Member of the Benefits Subcommittee. As 

we know, the budget calls for a cost-of-living increase in compensation and other benefits. But I was somewhat dismayed at the small 

$250 additional payment made to surviving spouses with children 

is not included in the proposed COLA. Last year I proposed at this 

Committee, and the House agreed, that those surviving spouses who 

qualify for the additional $250 per month should not should not see 

the value of the payments erode. Unfortunately, when the COLA was 

proposed in this budget, this was not included, and the value of the 
29

benefit, you know, is going to erode. I am concerned about that.

 I also have to lend my concern about a budget that anticipates an 

enrollment fee and doubling the payment for prescription medication. 

You know the likelihood of that happening in Congress is a slim and 

none, and I fear you are going to be back here, just as we were last 

year, asking for additional supplemental money because the numbers 

just aren’t going to match. So if your budget is based on the reality 

that an enrollment fee and a doubling of the co-pay for prescription 

medication is going to happen by this Congress, I can tell you this 

Congresswoman will not be supporting that. And I would hate to see 

you having to come back again as we did last year.

 Two other very quick things, Mr. Chairman, if I may. Secretary 

Nicholson, you indicated that improved productivity would enable 

the VBA to cut the number of employees needed to handle compensation claims by 142 in fiscal year 2007. Now, according to VA’s own 

data, employees at some of the regional offices are expected to decide 

two or three times more claims and appeals than other offices.

 I’ve got a little chart here that I would like to share with you. But 

in our Reno office, the employees in the Reno office are handling twice 

as many claims as the Salt Lake City office, and we have the fourth 

highest remand rate, which indicates to me that they are already 

overstretched. And how we are going to have less personnel, and 

what efficiencies can possibly be initiated that’s going to help this 

Reno office, and as God is my witness, this is my fourth term in Congress and I started talking about this four terms ago, and I am still 

having the exact same conversation. So I have very serious concerns 

about the numbers.

 Also, when it comes to laying our nation’s veterans to rest, they 

don’t have adequate burial benefits. They haven’t increased since 

1978. We need to provide some relief, and I know that this is something Congress could and should be doing, but I would appreciate the 

support. I hope this Committee is going to consider HR 808, which 

I introduced last year. Burial costs have increased substantially 

since 1978, and recently have not kept up with it, and I think it is a 

shame.

 I am going to submit in writing a couple of other questions. The VA

received a report concerning it’s pension programs. The report found 

that veterans’ surviving spouses do not receive income sufficient to 

cover their basic necessities. The pension program was designed to 

fulfill our nations promise to those who honorably served this country. Isn’t it about time that we provide, and the VA help Congress 

to provide enough money for these veterans to live on? I think that 

answer is rather self-evident.

 One other question -- 

 The Chairman. Thank you.

 Ms. Berkley. All right. Thank you very much. If you wouldn’t 
30

mind, I am going to submit the other questions in writing, would appreciate a response. Thank you very much for being here.

[The attachment appears on p. 194]

 The Chairman. Thank you, Ms. Berkley.

 To my colleague on Ms. Berkley’s point, we will work with Mr. Evans. One of the first full Committee hearings we will have out of the 

box, we will deal with the issue about collaboration, further collaboration with regard to facilities. So we will work with Mr. Michaud, 

and Mr. Brown, and Mr. Evans, and myself, to kickoff -- it will be one 

of our first or second hearings. Because we have a very expensive 

construction in front of us, when you think of Denver, New Orleans, 

Orlando, Las Vegas, and Charleston. And when the secretary mentioned re-scoping, you know, I was pleased to come out to your district 

so I can see firsthand what was planned to build for that VA. Now it 

is almost outdated.

 And at the same time, you have the Chancellor of UNLV interested 

in building the medical University, and making sure that it’s done in 

a manner that can be not only just in close proximity, but somehow 

it could be that shared facilities. And so we need to move in a direction for which we have the best understanding, and we educate all 

the members with regard to what knowledge Mr. Michaud and Mr. 

Brown have. So I just wanted to share with the gentleman here -- 

 Ms. Berkley. Mr. Chairman, I meant to say in my opening remarks 

what a pleasure it was having you share that experience with me in 

Las Vegas. I think it was educational for the both of us, but I think 

the operative word in your comments is, “move.” Let’s move on this.

 The Chairman. Now recognize Dr. Boozman, Chairman of economic 

opportunity, and then I will go to Mr. Strickland.

 Mr. Boozman. Thank you, Mr. Chairman. I really just got one kind 

of technical thing that concerns our Committee, and so let me ask 

that, and then I’ve got a comment while you are trying to figure out 

the answer. But the question I’ve got is, the rehabilitation counselors 

that are going to be hired, how many out of the additional 130 FTEs, 

how many direct claim adjudicators will be hired out of the additional 

46 FTEs? Does that make sense?

 While you are pondering that, if you understand the question -- 

Secretary Nicholson. I am not sure I understand the question. 

Could you -- 

 Mr. Boozman. How many rehabilitation counselors will be hired 

out of the additional 130 FTEs? And how many direct claims adjudicators out of the additional 46 education FTEs?

 Let me just say one thing. Over the weekend I was at a veterans 

event. We have a quarterly thing here where we bring in our representatives from our VSOs, and anyone else that wants to come. And 

we held that at our hospital. And just in the course of that, after I
31

was visiting with one of the administrators, and they told me that 

the Inspector General had come in and, you know, done their thing, 

looked at the hospital and stuff, and basically had given them a clean 

bill of health, you know, a kind of a superior thing in every category 

that they had. And they said that might have been, you know, one of 

the few situations, you know, that that’s ever happened.

So again, that’s really indicative. Ten or fifteen years ago if they 

had come in and done that, our scores would not be anywhere near 

that, okay. So I think it’s something that we can all be very, very 

proud of. You can be very, very proud of, because it’s not just true of 

Fayetteville, Arkansas. That’s true across-the-board. So we got our 

problems, we are going to work those out. You got your budget, we 

are going to look at it and get back and forth. The Senate will have 

some ideas, but you all, the people in the room that have pushed so 

hard for so many years to move this thing forward, you really are doing a good job. The senior members on our Committee, Filner, Mr. 

Evans, Mr. Buyer, Bilirakis, Mr. Smith, all of these people, and now 

us, you know, that are coming forward and continuing the banner.

 Like he said, I think we just need to not lose sight, as we hash this 

thing out, that we really have made tremendous gains, and the VA

system in Arkansas, the VA system, despite, you know, we are not 

perfect by any means, but we really have made tremendous gains. 

Yes, sir?

 Mr. Cooper. Let me attempt to answer your question. As I break 

this down and look at the numbers of people that we are bringing on 

in this ‘07 budget, of the 100 and some that we are bringing on in 

Vocational Rehabilitation and Employment, VR&E, a few of those 

will be counselors. Many of them will be employment specialists, 

because the primary purpose of Voc Rehab is to get the individuals 

either into independent living, if they are seriously disabled, or get 

them employed. And one of the new things we’ve done as a result of 

this study completed two years ago is that we’ve looked very carefully 

at a five track program leading to employment.

 So some of those people, will be counselors, a few will be psychologists, but many of them will be employment specialists that will help 

us in that particular endeavor.

As for those that we are hiring going into ‘07 for grade C&P claims 

processing, most of those are hired at a lower grade than a rating 

specialist, because it takes us three to four years to develop a rating 

specialist, and we prefer to bring them in, highly intelligent young 

men and women, and many veterans, in order to train them to be the 

type of people that work up the claims, and get all the material necessary to then go to the rating specialist, who makes the decision.

 So most of those people, possibly all of those people, will come in 

at that level, to eventually move up. It takes them about a year plus 

to become properly trained in order to carry out their function, which 
32

is so important to making the decision. Does that answer your question?

 Mr. Boozman. Yes, sir. Thank you very much.

Secretary Nicholson. If I could, Congressman Boozman, I want 

to thank you for your acknowledgment of things at the Fayetteville, 

Arkansas hospital. And I just want to also tell you that we have a 

letter of commendation on its way to Mike Wynne, the director, for 

the exemplary job that he’s done there. Our IG found that to be just 

a superb hospital, and job being done by its director. Thank you for 

acknowledging that.

 Mr. Boozman. Well again, I appreciate that. And like I said, I mention that in the context that again, you know, a few years ago that 

would not be the case. And yet, that’s not only in that hospital and 

that system, that’s systemwide. And again, that’s just a lot of hard 

work and a lot of peoples, so give yourselves a pat. Thank you.

 The Chairman. Thank you. I will now yield to Mr. Strickland. Mr. 

Secretary, Mr. Strickland is the ranking on the Oversight and Investigation Subcommittee, and also was very helpful in the CIO legislation, and so he has great knowledge on that issue. Mr. Strickland.

 Mr. Strickland. Thank you, Mr. Chairman. Mr. Secretary, I am 

just struck by the fact that you brought us a budget that contains a 

projected savings of I think the Chairman said about $775 million. 

That will not happen. I don’t know how many times this bipartisan 

Committee has to say “no” to these increases in co-payment and user 

fees, but they’re not going to happen. So we start out with a budget 

that is unrealistic, in my judgment.

 Now I know you said that you believe in these actions, but the fact 

is that’s not what counts. What counts is what the Congress says 

they are willing to do. And this Congress is not going to do it. So, it 

just strikes me as an act of bad faith to come forth with a budget listing increased copayments and user fees as income for the VA. That’s 

not going to happen.

 But I would like to just reiterate a brief bit of history. During our 

February 16th, ‘05 hearing on the budget, I asked you about the department’s continuing claims of savings due to management efficiencies for the fiscal year 2006 budget. Those claimed savings amounted 

to almost $1.8 billion. I asked you whether the VA was able to document efficiency-based savings claims, and I was promised in that 

hearing that the VA would get back to me with the details. And as I

recall, our Chairman characterized my questions as appropriate, and 

directed that the VA be responsive.

When our Chairman asked VA about its level of confidence of 

achieving the 1.8 billion savings for ‘06, the response from the VA 

was, “very confident”.

 When Ranking Member Evans sought explanation for the savings, he was provided a scant five item chart to account for almost 
33

1.8 billion in fiscal year 2006 savings. Both sides of the aisle of this 

Committee challenged the efficiency savings claims, and further requested that a portion of those claimed savings not be used to offset 

the budget.

 However, the VA did not provide adequate documentation to prove 

net savings efficiencies. As a result, I supported Ranking Minority 

Member Evans and Senator Akaka’s request that the GAO audit VA’s 

claimed savings efficiencies. The result of that audit, which were 

released on February 1, confirmed the worst of our concerns about 

VA’s claims. According to the GA audit, the VA lacked a methodology for making savings assumptions. The VA was unable to provide 

any support for savings estimates that it used to offset the veterans 

health care. And the VA lacked adequate support for some 1.3 billion 

it reported as actual management efficiency savings achieved for fiscal years 2003 through 2004.

But perhaps the most significant revelation is that VA officials told 

the GAO during three interviews that the management efficiency 

savings assumed in the budget were, and I quote, “Savings goals used 

to reduce requests for a higher level of annual appropriations in order 

to fill the gap between the cost associated with the VA’s projected 

demand for health care services, and the amount the President was 

willing to request,” close quote.

In other words, it seems that the VA had identified veterans’ health 

care budget needs, and the President refused to meet those needs. So 

the VA chose to fill the gap with these phantom savings goals. Unfortunately, in the ‘07 budget request, this Administration continues 

to claim more than one billion in management efficiency offsets. Respectfully, Mr. Secretary, I and I think some others on this Committee feel that this shell game should stop.

Including the ‘07 estimated budget efficiency savings, the total 

funds potentially skimmed from VA health care by unsubstantiated 

claims is over $5 billion in total, for the five years of the Bush Administration.

 Mr. Secretary, I ask you this question: in this budget, the VA claims 

884 million in efficiency savings from fiscal year 2006. The GAO has 

stated that VA was unable to provide support for its fiscal year 2006 

estimate. Now this budget that we have was presented after the 

GAO report. The VA carries this 884 million claim over a two-year 

period, which totals $1.768 billion in offsets originating from the fiscal year 2006 estimate, that GAO found unsupported.

 Mr. Secretary, can I assume that you can present documentation 

to this Committee and the GAO audit team to support the 884 claims 

in efficiency savings the VA relies upon from the fiscal year 2006 to 

delete the 1.7 billion from the veterans health care budget? I think 

that’s a reasonable question to ask, given the GAO report.

Secretary Nicholson. Well, thank you, Mr. Strickland. And your 
34

recitation of those GAO comments for I think starting in fiscal year 

2003, 2004, and so forth, were I think pretty accurate as the GAO

stated them. The VA has disagreed with some of the GAO findings 

-- the composite of those reports.

But fast forwarding to ‘06, the GAO said, and I will quote, “Based 

on the VA’s past experiences, 2006 estimate of 590 million in management savings appears achievable.” And I would tell you that in 

this budget that we are here today to consider, there are no offsets in 

this budget for management efficiencies, and I want to ask Dr. Perlin 

to expound on that.

Dr. Perlin. Thank you, Mr. Secretary. That is exactly correct. I

appreciate the opportunity to explain that The Secretary built this 

budget from scratch. In fact, I want to separate the concept of management efficiencies from efficiencies in the provision of care. $197 

million is in the demand model. It is what is expected of all of the sectors of health care in terms of improving, in terms of pharmaceutical 

use, in terms of better scheduling of patients, better use of inpatient 

hospitalization, standardization of pharmaceuticals, and the like. 

That has always been in the model, and is really well substantiated, 

well-documented.

 What is not in this budget: there is no offset of the demand with 

additional management efficiencies, so this is categorically different 

than the exposition of budget last year. Thank you, I appreciate your 

points.

 Mr. Strickland. Mr. Chairman, can I just make one follow-up comment. So you are telling me that the management efficiencies that 

were evaluated by the GAO -- effort to achieve management efficiencies in prior budgets -- that there are no such management efficiencies built into this budget?

Secretary Nicholson. That is correct, Congressman, yes.

 Mr. Strickland. Mr. Chairman, I have two or three other questions 

which I will not ask. I would like to submit those questions if I could 

do that, and one more thing, Mr. Chairman. If I could ask for unanimous consent that the Web links to the three GAO reports that I’ve 

referred to could be included in the record?

 The Chairman. The Web links? Can you restate that? The addresses?

 Mr. Strickland. Yes.

 The Chairman. I have no objection, just state the addresses.

 Mr. Strickland. So that could be a part of the record in case people 

wanted to find them.

 The Chairman. All right. My only hesitation, I didn’t want the link 

and therefore other’s documents to be -- 

 Mr. Strickland. Got you.

 The Chairman. All right, thank you.

 Mr. Strickland. Thank you, Mr. Chairman.
35

[The information follows:

 GAO-06-124R found at http://www.gao.gov/new-items/d06124r.pdf

 GAO-06-359R found at http://www.gao.gov/new-items/d06359r.pdf

 GAO-06-360R found at http://www.gao.gov/new-items/d06360r.

pdf]

 The Chairman. Mr. Udall, you are now recognized.

 Mr. Udall. Thank you, Mr. Chairman, and I would ask that my 

opening statement be inserted in the record.

 The Chairman. Hearing no objections, so ordered.

 Mr. Udall. Thank you, Secretary Nicholson, for being here, and 

I want to express my gratitude of many veterans in my district who 

suffer from PTSD, for your decision last year to cancel the review. 

Nearly one in five vets returning from OEF or OIF duty are estimated 

to suffer from some form of PTSD. And there is some concern that 

the fiscal year 2007 VA budget is not sufficient to ensure that each of 

these veterans receives the mental health assistance they need. This 

means all efforts of the VA to make veterans aware of the disease, 

to make veterans aware of the assistance offered by the VA, and to 

de-stigmatize, as you mentioned earlier, PTSD, that these would be 

rolled back.

How is your office going to deal with the increase in the number of 

veterans seeking assistance?

Secretary Nicholson. An important question. Thank you for it. 

As I said earlier, this is a very big priority area of ours. You will see 

sharp increases in our budget request for mental health. I think it’s, 

if my memory is right, it’s right at $340 million for that. We are 

emphasizing both the outreach attempts to capture these people who 

come to us, -- in each of our medical centers we have a PTSD expert. 

At our four polytrauma centers we’ve populated them with just really 

the finest PTSD people that there are. We have probably the world’s 

foremost PTSD research facility at White River Junction, Vermont. 

We are ramping, and ramped up for this, and I will let Dr. Perlin 

further expound with more detail.

 Mr. Udall. Please, Dr. Perlin.

Dr. Perlin. Thank you, Mr. Secretary and Congressman. I appreciate your passion for assuring that mental health services are 

always improved. Just as the Secretary stated, the increase in mental health funds in the ‘07 budget is almost $340 million, bringing the 

specialty mental health services to $3.16 billion. This augments all 

sorts of improvements in programmatic activity including, as the secretary indicated, PTSD specialists at each and every medical center, 

160 full-blown PTSD teams throughout the system.

 As well, you made the point about de-stigmatizing, and it is, as the 

Secretary indicated earlier, completely normal for people to have combat stress reactions, reactions to some of the horrific circumstances 
36

they will experience. Our goal with the Vet Centers, and the Global 

War on Terrorism Outreach Coordinators, or at the hospitals, is to 

make sure that we don’t stigmatize, and that we treat so that people 

are able to be as highly functional as possible.

 The numbers are at this point much lower than I believe you suggest. And I am pleased to note that the Vet Centers are doing outreach at the transition assistance briefings that are increasingly coordinated, not only with DOD directly, but the adjutant general and 

state veterans’ directors of each state.

 Mr. Udall. This review, as both of you know, caused a great deal 

of concern in the veterans community. And we have heard other rumors out there about possible other reviews. We have heard that, 

and I have heard this from veterans, that there is a suspicion that 

the Veterans Administration is now being much more aggressive in 

terms of PTSD analysis, and that in the past, if claims were approved, 

they were approved on one standard and one criteria, and that that 

criteria is getting much tougher.

Can you give us any assurances today that we are not going to have 

any other review on the PTSD issue, and that you are applying the 

same standard you have always applied?

Secretary Nicholson. Well, I can assure you that those 72,000 cases that were given 100 percent disability ratings that were reported 

in the IG report, that we are not going to review those, no.

 As to PTSD in chief, we are going to continue to try to understand 

the dynamics of this condition, and so that we get better at understanding it, and being affirmative in our outreach, and in treating it, 

because it’s a very germane matter, given the numbers and what’s 

going on both in our health side and our benefits side.

 Mr. Udall. Thank you very much. I have additional questions, 

and we will submit those for the record. Thank you.

[The statement of Mr. Udall is found on p. 80]

 The Chairman. Ms. Herseth, you are now recognized.

 Ms. Herseth. Thank you, Mr. Chairman. I want to thank all of you 

for your time and your testimony today, and your hard work. And I

hope you know what a great team you have in the Black Hills health 

care system in South Dakota, who recently in a survey ranked top in 

the region, as well is in a number of categories nationally. So I commend you and the folks there in particular for your work on behalf of 

the country’s veterans that are served throughout that region.

 It will come as no surprise to you, Mr. Secretary and Dr. Perlin, 

that I want to talk a little bit about long-term care. It’s an issue I am 

particularly worried about for our nation’s veterans, as well as our 

overall health care system in this country. And I want to begin by 

just making a few observations, and then I will end with a separate 

question on a separate topic.
37

 Thank you for the increase, the 14 percent increase, as it relates to 

the average daily census for veterans in home and community-based 

care. This is particularly important for older veterans in rural areas, 

and throughout the great plains we have a very high percentage of 

World War II and Korean War veterans who are in need of long-term 

care options, and live in very remote areas where perhaps long-term 

care facilities aren’t based, and to have programs designed for the 

home-based care I think are particularly important, and hope that 

you’ll continue to seek increases in that level of funding.

But I’ve got a couple of concerns. The first, and if you could address 

this, is the statutory requirement. The mandatory minimum that 

Congress has imposed for the number of nursing home beds within 

the VA is 13,391, but the budget is only funding 11,100 beds. Now, 

you are moving them into other areas that we do have to address this 

issue of a statutory requirement that is being ignored in the budget, 

and how we address that situation.

 And the other issue that causes great concern, and it is not just an 

issue for the VA, it is an issue for Medicaid in particular, and other 

programs, and that is the fact that your own survey for using the 

VA’s a long-term care model projected the demand for VA-sponsored 

nursing home care for fiscal year 2007 -- and at the outset, this includes all priority groups I know to be 80,511 average daily census. 

But the budget is funding roughly 34,000 beds, whether that be VA, 

state, or community-based care.

 Now, I know by law the VA is only required to provide the longterm care to the 70 percent or greater, and then additional. And I

know that with the 34,000, that’s beyond the 70 percent service-connected disabled. But in your own projections, just as the midpoint 

projections for older veterans who will suffer from dementia, 42,827 

veterans. So you know, we’ve got to look at our priority groups one 

and two, and even beyond that in other priority groups that may suffer from different types of conditions where long-term care is perhaps 

one of the best settings for meeting the health care needs of our older 

veterans.

 So just a couple of observations but perhaps you could address the 

issue of the statutory requirement, and then the last question I would 

have would be for Mr. Cooper. And that is on the seamless transition 

for returning veterans from Iraq. I would like to know what VBA is 

doing to identify recent veterans who are at risk for homelessness, 

who have claims pending but no source of income?

 So, questions primarily concerning our older veterans and longterm care, and then our most recent veterans who have a risk for 

homelessness.

 The Chairman. Ms. Herseth, your question also incorporates veterans of Afghanistan?

 Ms. Herseth. Yes, it would.
38

 The Chairman. Thank you.

Secretary Nicholson. Well, thank you, Congresswoman, for those 

comments. Thank you for your compliments. Our people out there in 

western South Dakota are doing a great job. I’ve been out there.

 And your points are well presented. There is a statutory requirement, an objective number of beds for long-term care, and we are not 

filling those beds. But we are meeting the need at this time. But we 

have that statutory authority to go up, and certainly will, if there is 

that need.

 The other law is that we are really only supposed to put people in 

those beds who are 70 percent disabled. And those two existing legal 

conditions, coupled with the real progress that we are making in noninstitutional long-term care, in the composite I think are resulting in 

us meeting the needs at this time. And this budget reflects what we 

think we will need in resources to continue to do that.

 Dr. Perlin, you have anything you would like to add to that?

Dr. Perlin. Ms. Herseth, I think you have well stated the statute 

that governs -- Congresswoman, we appreciate your acknowledgment 

of the increases in noninstitutional care. In fact, it’s really pretty 

incredible. There has been an eighty-five percent increase in noninstitutional care since 1998. The program of care coordination, particularly in rural areas, supporting individuals with frailties, be it of 

age or otherwise, has actually increased 466 percent from 2005. So 

really, investing in additional technologies, recognizes that there are 

challenges to an aging population of veterans, and for those that were 

authorized. We will look to every possible means to meet that need.

 Ms. Herseth. Before you respond, Mr. Cooper, if I might, Mr. Chairman, just to clarify. And I respect the work that you are doing to meet 

the needs. That’s why I began with acknowledging the increases in 

these different areas. But I do think that for the Committee and 

the ongoing working relationship that we want to have with all of 

you, that while it’s important to meet the needs, it’s also important 

to come to us if you see the need for a statutory change, so that we 

can see more clearly how the needs are being met, what areas were 

increasing, community based or home health care, and to make the 

changes so that you don’t perhaps lose some credibility. Because my 

understanding is that it’s a mandatory minimum. It’s not so much 

discretion to go up to a certain amount. Is my understanding of the 

statute correct?

Secretary Nicholson. No, you are correct, Congresswoman. I

mean, I would stipulate to you, there are two parts to this that we 

are not literally fulfilling. One is that objective number of those beds. 

And the other is that requirement that they be 70 percent disabled. 

We have considerably more people right now in our long-term care 

facilities than there are just of that number.

 Ms. Herseth. And that’s the discretion I think you have under the 
39

statute, that there is the specific number, and then you fill them with 

the 70 percent or greater service-connected disabled, and then fill in 

others who may need up to that point.

 Secretary Nicholson. We’ve done that, and they are still there because we just have not put them out.

 Ms. Herseth. Okay. Well, I hope that you will take my point in the 

manner in which it is intended. It is intended to be helpful in an area 

of long-term care, but yet also looking at what is required by statute, 

and how you have adjusted that over time in a way a I think that is 

positive, but yet at the same time I am interested in meeting even 

more of the needs of our older veterans than what you have already 

done in a very remarkable way, and a laudatory way. And so that is 

just the point I wanted to make, as it relates to the statutory requirements that we have to be cognizant of in the Committee.

[The statement of Ms. Herseth appears on p. 86]

 The Chairman. Thank you. Mr. Secretary, Ms. Herseth is our ranking on the Economic Opportunity, Subcommittee and gives a valuable contribution.

 I would now like to recognize Dr. Snyder. Dr. Snyder is also the 

ranking on the personnel Subcommittee of Armed Services, so he 

gives us a valuable insight, because he gets the total military health 

delivery system, and then as the soldiers transition to the VA. I yield 

now to Dr. Snyder.

 Mr. Snyder. Thank you, Mr. Chairman and Mr. Secretary. I apologize for being late. We simultaneously have the Armed Services 

Committee hearing with Secretary Rumsfeld and General Pace this 

morning, and that started at 10:00, and so they took a lunch break 

and so I ran over here.

 One thing that came out of the discussion this morning in General 

Pace’s assessment of the Quadrennial Defense Review; in his written 

statement, he made a specific reference to educational opportunities 

or people in the military, to help them both professionally but also 

in their personal goals. And I understand, Mr. Chairman, that you 

mentioned the GI Bill earlier on. I think that we have some work 

to do. One of the problems that we have as an institution is that 

this Committee handles the GI Bill for veterans. The armed services 

Committee handles the GI Bill for Reserve component. And they 

don’t run in tandem. And I have been trying for some time to get 

a joint hearing between this Committee and perhaps the personnel 

Subcommittee on the other side, to have a full discussion of all the 

different proposals related to the GI Bill. I had 45 months of GI Bill 

after I came back from Vietnam, both to finish my undergraduate and 

three years of medical school, and it was very, very helpful to have, 

and I think men and women today should have those opportunities.

 I wanted to ask one question. I apologize again for not having 
40

heard the discussion today, so perhaps you have already dealt with 

this. But in your written statement you have a section on medical 

research. We have the Little Rock VA in my district, in Little Rock, 

Arkansas, and they do great, great work there. It’s right next to -- in 

fact it’s connected by a federally-funded little bridge there, because of 

a lot of communication with our medical school there.

 But in your written statement you say the following: “In addition 

to VA appropriations, the department’s researchers compete and receive funds from other federal and nonfederal sources. Funding from 

external sources is expected to continue to increase in 2007 through 

a combination of VA resources and funds from outside sources. The 

total research budget in 2007 will be almost 1.65 billion, or about 17 

million more than the 2006 estimate.” And that’s the end of your 

statement.

 But when you just look at the federal number that’s coming from 

your all’s budget, it’s a decrease; is it not? I mean, you are betting on 

if there’s going to be competition for, you know, pharmaceutical companies or other organizations that you are hoping will give you the 

total increase, but in terms of our federal commitment, it’s actually 

a decrease of $13 million in federal commitment to medical research, 

and this seems like a bad time to be trying to save money on medical research, when we have got so much going on overseas with our 

veterans.

 Would you comment on that, please? First of all, am I accurate in 

that, that there is a decrease in the federal commitment?

Secretary Nicholson. Yes, you would be. I think that based on our 

history, our track record, being able to leverage our dollars with those 

of other federal and private entities, we feel pretty confident that we 

will make that number, and that will result in over 2000 projects. I

think actually 2045 different research projects, which will be one and 

a half percent more than in ‘06.

 So I think your point is well taken. It is not a time to diminish 

research, and that is certainly not our intention, and even that reduction would not very material, given the total amount. But I think we 

are going to do well in partnering, as we have done in the past. I will 

ask Dr. Perlin if he -- 

 Mr. Snyder. I would like to hear your comment, Dr. Perlin, but the 

issue, though, too becomes, you are kind of saying you are holding 

your own. You are estimating maybe 17 million more. But medical 

research inflation is greater, substantially greater than the normal 

inflation. So when you are just holding your own, as you say it’s not 

very much either way in the total budget, but if the nominal numbers stay static, it’s a substantial reduction because of the medical 

research inflation rate.

 And Dr. Perlin, I appreciate your comments.

Dr. Perlin. Thank you, Dr. Snyder. I think you have laid out 
41

exactly how the budget is constructed in this area. 399 is the VA

component. I should note that in medical services, we are actually 

increasing by $13 million to help fund the administrative overhead 

of that research. The proposition is that VA in 2007 will continue 

its trend of attracting, “leveraging” the investment that’s been made 

through this direct appropriation to research, toward attracting predominately federal grants. Mostly, National Institute of Health, as 

well as private foundation grants. So your outlay is correct. I would 

simply note that Secretary has really worked with us to also ensure 

that we do increase the focus, specifically on those areas of research 

that are most germane to the history of the lives of service members: 

everything from occupational exposures to traumatic injury, and I

am pleased to note that this budget supports a $10 million increase 

in those sorts of areas.

 Mr. Snyder. Well, I just hope, if I could, Doctor, I hope you are 

tracking that. Because we have some very exciting stuff going on as 

a result of our research on both shingles and artificial retina replacement, and urinary infections. Really, I think we are on the edge of 

some exciting stuff. No, I agree with that. I think some great work 

is going on. But if your budget doesn’t keep pace with the rate of 

medical research inflation, you have got researchers out there saying, “Hey, the Secretary just bragged on my work and we are going 

to have to fire people.” You know, I don’t think that is the message 

we need to be sending, so I would hope this is an area we will work 

on, Mr. Chairman, because in the President’s State of Union speech 

he made I thought a very impassioned endorsement of research in 

the math science area, and certainly medical research is part of that. 

Thank you for your time. Sorry I was late.

 The Chairman. Dr. Snyder, the Committee wants to work with you 

and Mr. McHugh, because you know, you just heard testimony from 

the SECDEF, and General Pace, and with regard to the increase in 

fees on TriCare for Life, on military retirees. I mean, we are faced 

with that challenge already. TriCare, you have the enrollment fee, 

you have the increased co-pays over what we do on sevens and eights 

and the deductibles on TriCare standard and prime.

 And this Committee has been unwilling to resolve that inequity, 

so we are treating military retirees differently than somebody who 

has been on one tour of duty. And the worst thing that we could ever 

happen is the Armed Services Committee increases fees in TriCare 

for life for the military retiree, and then this Committee takes no action; all we are doing is exasperating this. And it’s just a challenge, 

and I want to work with the gentleman on how we properly proceed 

on this one. I mean, we don’t want that scenario to occur, whereby 

now there is a greater bias or prejudice against the military retiree, 

versus the seven or eight. This is a real challenge we have in front of 

us, Dr. Snyder. Thank you.
42

 Mr. Brown of South Carolina, Chairman of the Health Subcommittee.

 Mr. Brown of South Carolina. Thank you, Mr. Chairman, for holding this hearing today. And thank you, Mr. Secretary, and all the 

associates for being part of this deliberation. And I am particularly 

pleased at the cooperative spirit that you have entered into with the 

other institutions, as far as health care delivery. And I just wanted 

to express my appreciation publicly for that commitment. Mr. Chairman, I don’t have any questions at this time.

 The Chairman. I am sorry, restate?

 Mr. Brown of South Carolina. No questions at this time. I just 

had a statement. Thank you very much.

[The statement of Mr. Brown appears on p. 90]

 The Chairman. He’s so eloquent, the man from Charleston. It’s 

because we can’t understand you anyway, right?

 Mr. Michaud. I concur with that, Mr. Chairman.

 The Chairman. Like you are any better? No, I was just kidding 

you.

 The Chairman. Go ahead, Mr. Michaud.

 Mr. Michaud. Just a clarification, that Mr. Strickland had asked 

about the question about the management efficiencies, and Dr. Perlin 

had mentioned the GAO report said that they agreed that the efficiencies could be achieved. I was just wondering if he can get a copy 

of that report, or what report was he referring to?

 The Chairman. Doctor?

Secretary Nicholson. Yes, it’s in a letter of March 2nd, ‘05, addressed to the Appropriations Committee, and I would be happy to 

provide you with a copy of it.

 Mr. Michaud. Yes, if you could. Because I believe in that letter it 

said that they did not test the reliability and the validity of the data 

used to calculate, if my recollection -- but if you could provide that 

letter to the Committee, I would appreciate it.

Secretary Nicholson. Yes, sir.

 Mr. Michaud. Thank you, Mr. Chairman.

 The Chairman. Thank you. I would ask unanimous consent that 

opening statements of Mr. Brown, Mr. Boozman, and Mr. Reyes be 

submitted for the record. Hearing no objections, so ordered.

[The statement of Mr. Reyes appears on p. 94]

 The Chairman. Also, we have a unanimous consent request for Mr. 

Michaud, and any other members will have three legislative days to 

submit an opening statement for the record.

 I have a quick follow-up, and then we are going to conclude, Mr. 

Secretary. I appreciate your patience. And maybe we can go to Under Secretary Tuerk on this.
43

 The Military Quality of Life and Veterans Affairs Appropriations 

Act conference report asked for a study on the feasibility of developing land at Fort Ord, which was closed during the BRAC process of 

some 10 years ago, for a national cemetery. I have a copy of your 

response on that, but my question is, are you working with DOD, and 

you are looking at BRAC-ed properties, with regard to where there is 

a need and available land?

 Mr. Tuerk. We have looked at BRAC-ed properties, Mr. Chairman, 

as their availability has been made public. It is my understanding, 

that we have not yet identified any properties via the BRAC process 

in areas where we seek to address the most pressing needs for new 

cemeteries.

 There is one opportunity to acquire some DOD land for development of a national cemetery. In Columbia, South Carolina. But that 

Fort Jackson land is not part of the BRAC process, it is outside of the 

BRAC process.

 The Chairman. All right.

Secretary Nicholson. Mr. Chairman, if I may, I would just add -- 

 The Chairman. Yes, sir?

Secretary Nicholson. -- a little more specific to that. We have 

actually made seven different applications to the Army, and three to 

the Air Force, on specific pieces that we would like to have a chance 

to look at.

 The Chairman. If someone could give us an update. And we are going to look at this further in some hearings with regard to the PFSS

revenue cycle management issues. We have Cleveland ongoing, and 

with regard to the second competitive pilot, a Committee initiative, I

believe there is an anticipated request for proposal. If you could give 

us an update, I would appreciate that, now.

Dr. Perlin. Thank you, Mr. Chairman. Just to reiterate: while you 

were out of the room, we are on track on terms of going live at Cleveland early July of this year, and look forward to wiring our electronic 

health record with electronic billing and collections, taking it into 

the future, and we appreciate your support, and the support of this 

Committee.

 The revenue improvement pilot is multifaceted. As you know, we 

are also developing the CPACs, the Consolidated Patient Accounting 

Centers, to regionalize, not re-duplicate what can be more efficient 

when regionalized. That’s been in development since ‘05, and piloting in this year.

The revenue improvement pilot projects specified, actually build on 

the CPAC activity out of Asheville. And the statement for objectives 

I understand are ready for release. We hope to award the contract 

within the next month or so.

And finally, what was originally known as contract care coordination, renamed because of the confusion with our very successful care 
44

coordination program, and Telehealth program, to project HERO, 

Healthcare Effectiveness through Resource Optimization, is slated 

for competitive award by the end of this calendar year, with three objective-oriented demonstrations appropriate industry and academic 

collaboration.

 I spoke at a kickoff for this on industry day, as it was framed just 

last week, February 2nd, so I am pleased to report that all these projects are moving forward.

 The Chairman. So our second competitive pilot on a pending RFP

will most likely occur at Asheville? Is that what I am taking away 

from your statement?

Dr. Perlin. There are two sets. And yes, the revenue improvement 

pilot will leverage the consolidations there, so that we can really go 

to scale -- 

 The Chairman. No, I have no objection to that. I think you are moving smartly.

Dr. Perlin. Thanks.

 The Chairman. Thank you.

 The last is, and I hate to be redundant, but I have to go back to 

the CIO issue. The Committee has taken this issue on, been dealing 

with it for seven years. So Mr. Secretary, we have been in discussions about this before, and the Senate, they are standing over there 

being good listeners, and will react to what actions or inactions the 

VA takes.

 So help me here. In order for your federated approach to work, you 

are going to have to move the infrastructure, which is your personnel, budget and assets, under the CIO, Mr. McFarland, now. Is that 

correct? And then -- 

Secretary Nicholson. Correct.

 The Chairman. The Secretary answered in the affirmative.

 The other, then, would be the development, the software development in particular, that is then left in the hands of your three under 

secretaries. Correct?

Secretary Nicholson. Well, yes and no. I think it depends on the 

scale, and if it’s a local, unique, what I call tactical application, it 

would be left to those that are working that project. But the CIO will 

have, the main responsibility to set -- 

 The Chairman. The architecture?

Secretary Nicholson. -- the central enterprise architecture. That 

these tactical application would have to comport to.

 The Chairman. All right. In order for -- 

Secretary Nicholson. That’s an important step toward standardization, and centralization.

 The Chairman. And in order for us to support you to do that, would 

you not concur that when we submit our budget views and estimates 

to the Budget Committee, to support this endeavor of empowerment 
45

of the CIO so that he can do his job to create the one architecture, 

we are going to need to fund the data center consolidations, you are 

proposing four of them so that’s around $60 million that we are going 

to have to come up with; about $30 million for Telecom, for redundant 

backup, and the continuation of operating plans. And about $12 million for VBA’s code conversion within the benefits delivery network. 

Would that be accurate?

Secretary Nicholson. I don’t have those numbers in front of me, 

Mr. Chairman, but I think that’s pretty close. We have Mr. McFarland here.

The Chairman. Mr. McFarland, could you come forward, please? 

Would you please state your name and your position?

Mr. McFarland. Robert McFarland, Assistant Secretary for Information and Technology, and the CIO of the VA.

The Chairman. With regard to the funding issues that I just specified, would it be accurate that these are three things that are very 

important for you to proceed in the development of the one architecture?

Mr. McFarland. Yes, sir. Those are accurate projects that we need 

to move forward on in both ‘06 and ‘07 in order to get the economies of 

scale that we anticipate out of this reorganization.

The Chairman. Are there any barriers left in front of us, for this 

transfer of personnel, assets, and budget to you?

Mr. McFarland. I don’t anticipate any barriers. We have some 

decisions that have to be made and are scheduled to be made on the 

15th of this month, at a senior management Committee meeting.

The Chairman. The last comment that I have, then, to Dr. Perlin, 

is with regard to our software development. We are going to make 

sure that we have a near-term plan I mean, since we don’t have the 

standardization process, rules, and structures for the developing of 

new software applications, I believe it’s pretty important for you to 

come up with one.

Dr. Perlin. Mr. Chairman, that’s one of the areas where I couldn’t 

agree more emphatically. We need to comport with enterprise architecture. And just as Mr. McFarland is brilliantly leading a reorganization, standardization, it is our goal within VHA, under the aegis 

of Craig Luigart, who has a background as a fighter test pilot, and 

CIO at the Department of Education, to create a standardized, tight, 

responsible, accountable, (and built on a history of effectiveness) system that comports to the organizational architecture, and advances 

our health IT.

The Chairman. Mr. Secretary, I want to thank you for being here 

with your staff. I want to extend some compliments, not only to Mr. 

McFarland but also to Mr. McClain, your general counsel. Your general counsel has been very responsive to the Committee. I’ve been doing this for 14 years, and I can’t remember a Secretary being here this 
46

long. This was your budget, and you took ownership of this budget. 

And given what we went through last year, I wanted all the members 

to be availed of the greatest opportunity to discuss this budget with 

you. And so for that, I appreciate your being here.

Right now the Committee will recess for five minutes, and then we 

will bring the second panel. Thank you, Mr. Secretary.

[RECESS]

The Chairman. The Committee will come back to order.

 I want to thank the Secretary for his indulgence of the Committee 

and all their questions. We look forward to working with him in this 

coming year. And the Committee will also be submitting questions, 

for the record, to the Secretary.

 Our second panel today consists of representatives of the Independent Budget (IB), as well as the American Legion, and the Vietnam 

Veterans of America. Representing the IB, we have David Greineder, who is the National Legislative Director of AMVETS. Before his 

posting with AMVETS, David served as congressional aide to several 

members of Congress advising them on veterans issues.

 We also have Rick Surratt, who is the Legislative Director of DAV. 

Rick is the combat-disabled Vietnam veteran who enlisted in the 

United States Army in 1966. In 1967, he was wounded by shell fragments in the thigh during a Vietnam combat field operation, while 

serving with the 101st Airborne Division, and was honorably discharged in 1969.

Carl Blake is the Senior Associate Legislative Director for PVA. 

He is a West Point graduate, was commissioned as a second lieutenant in the United States Army. He was assigned to the first brigade 

of the 82nd Airborne Division at Fort Bragg, North Carolina. He retired from the military in October of 2000 due to a service-connected 

disability.

 Finally, we have Dennis Cullinan, who is the legislative director of 

the VFW. He was discharged from the United States Navy in 1970. 

Before his discharge he served as an electronic technician aboard the 

USS Intrepid, and completed three tours of duty in Vietnamese waters.

 I would like to thank your organizations for visiting with us last 

month, and giving the full Committee staff an overview of the methods used in developing the IB, as well as a preliminary idea of what 

the IB would recommend this year. I don’t know if such a briefing 

has ever been done before, and it is a good example of how the veterans’ groups and the Committee can work proactively together, for the 

good of our veterans.

 We also have as part of the second panel Mr. Steve Robertson representing the American Legion as the Legion’s Legislative Director. 

Steve served 12 years in the United States Air Force from 1973 to 
47

1985 as a security police officer in Louisiana, Turkey, and North Dakota -- three very remote locations. He was a missile combat crew 

commander for the Minuteman III ICBM in North Dakota, and was 

a flight commander on the ground launch cruise missile silo in Sicily. Steve was also a military policeman in the D.C. Army National 

Guard. When he was activated in January, 1991, for the Persian 

Gulf war, and served from February to June in Saudi Arabia.

 Finally, representing the Vietnam Veterans of America, we have 

Rick Weidman, Director of Government Relations. During the Vietnam War, Rick served as an Army medical corpsman, including service with Company C of the 23rd Medical Battalion of the AMERICAL Division, located in I Corps of Vietnam in 1969.

Who wants to go first? We will turn it over to the IB, and let you 

go first.

 Mr. Greineder. I guess everybody’s looking at me so it’s my turn.

 The Chairman. All right.

STATEMENTS OF DAVID G. GREINEDER, DEPUTY NATIONAL

 LEGISLATIVE DIRECTOR, AMVETS (AMERICAN VETER-

 ANS); RICK SURRATT, DEPUTY LEGISLATIVE DIRECTOR,

 DISABLED AMERICAN VETERANS; CARL BLAKE, SENIOR

 ASSOCIATE LEGISLATIVE DIRECTOR, PARALYZED VETER-

 ANS OF AMERICA; DENNIS CULLINAN, LEGISLATIVE

 DIRECTOR, VETERANS OF FOREIGN WARS OF THE UNITED

 STATES; STEVE ROBERTSON, LEGISLATIVE DIRECTOR,

 THE AMERICAN LEGION; AND RICK WEIDMAN, LEGISLA-

 TIVE DIRECTOR, VIETNAM VETERANS OF AMERICA

STATEMENT OF DAVID G. GREINEDER

 Mr. Greineder. Mr. Chairman, members of the Committee, thank 

you for the opportunity to be here today. As a co-author of the Independent Budget, AMVETS is pleased to give you our best estimates 

on resources necessary to carry out a responsible National Cemetery 

Administration budget for fiscal year 2007. The Administration requests $160.7 million in discretionary funding for NCA operation and 

maintenance of 125 national cemeteries and 33 soldiers and sailors 

lots, 53.4 million for major construction, 25 million for minor construction, as well as 32 million for the State Cemetery grants program.

 The members of the Independent Budget recommend Congress 

provide $214 million for the operational requirements of NCA, the 

National Shrine Initiative, and the backlog of repairs.

 In total, our funding recommendation for NCA represents a $54 

million increase over the Administration’s request, an increase almost entirely aimed at the National Shrine Initiative.
48

 The members of the Independent Budget and the more than 60 

veteran and military groups who endorse our recommendations ask 

Congress to establish a five-year, $250 million National Shrine Initiative, to restore and improve the condition and character of NCA

cemeteries. We recommend $50 million for fiscal year 2007 to begin 

this important program.

 As the veterans’ population ages, and the global war on terrorism 

continues, demand for NCA services unfortunately remain high. In 

recent years, the burial rate has averaged more than 90,000 interments per year, and is expected to exceed 110,000 before too long. To 

meet the demands for services, the Independent Budget recommends 

hiring an additional 30 FTE for fiscal year 2007, an increase of seven 

FTE over the Administration’s request. Additional employees are 

necessary to staff and maintain existing and new national cemeteries 

across the country. For funding the State Cemetery Grants Program, 

the Independent Budget recommends $37 million for fiscal year 2007. 

The State Cemetery Grants Program is an important component of 

NCA. It has greatly assisted states to increase burial service to veterans, especially those living in less densely populated areas not currently served by a national veterans’ cemetery.

 The Independent Budget also strongly recommends Congress review a series of burial benefits that have seriously eroded in value 

over the years. While these benefits were never intended to cover the 

full cost of burials, they now pay for only a fraction of what they covered in 1973. These recommendations are contained in my written 

testimony, but I would like to say our recommendations, which represent a modest increase, would restore the allowance to its original 

proportion of burial expenses, and tell veterans that their sacrifice is 

given the appreciation it so well deserves.

The NCA honors veterans with a final resting place that commemorates their service to this nation. More than 2.6 million soldiers who 

died in every war and conflict are honored by burial in a national 

Cemetery. Each Memorial Day and Veterans’ Day, we honor the last 

full measure of devotion they gave for this country. Our national 

cemeteries are more than a final resting place. They are hollowed 

grounds for those who died in our defense, and a memorial to those 

who survived.

 Mr. Chairman, this concludes my statement. I thank you again for 

the privilege to present our views.

The Chairman. Do you offer a written statement for the record?

 Mr. Greineder. Yes.

The Chairman. It shall be entered.

 Mr. Greineder. Thank you.

[The statement of David G. Greineder appears on p. 142]

The Chairman. Mr. Surratt.
49

STATEMENT OF RICK SURRATT

 Mr. Surratt. Good afternoon, Mr. Chairman -- 

 The Chairman. Hello. No objection, your written statement will be 

entered into the record.

 Mr. Surratt. I will just touch briefly on the budget request for the 

Veterans Benefit Administration. We view adequate staffing levels 

for the VBA business lines as a most important issue for consideration in this particular component of the VA budget. In the five-year 

period from the end of fiscal year 2000 to the end of fiscal year 2005, 

the volume of disability claims increased 36 percent, or an average 

of 7.2 percent annually. VA projects that the number of disability 

claims will increase only three percent during 2006, and two percent 

in 2007. But even with those modest projections for increased work, 

the Administration’s budget requests 149 fewer direct program FTE

to adjudicate compensation claims in 2007 than was authorized for 

2006.

What makes this proposed reduction of staffing all the more questionable is VA’s estimate that above these projected increases in regular claims work, it will receive an additional 98,000 claims from its 

outreach to veterans in the six states with the lowest average compensation payments, as mandated by last year’s legislation. Apparently, VA projects that all this additional work will be completed in 

2006, which we believe is doubtful.

 We have not had time to analyze VA’s workload projections, production assumptions, and staffing requests carefully. But they admittedly contemplate and accept increases in the already unacceptable 

claims backlogs in these two years, despite the fact that VA projects it 

will increase its 2005 production by 75,000 completed claims in 2006, 

and 85,000 completed claims in 2007.

In the IB, we have recommended a substantially higher staffing 

level that we believe reflects a more realistic assessment of what VA 

needs to deliver benefits to entitled disabled veterans in a reasonably 

timely manner. The IB recommends that the fiscal year 2006 staffing 

of 9431 FTE for C&P service be increased to 10,820, and I would invite your attention to the IB and my written statement for the bases 

of that recommendation.

Similarly, we have recommended staffing levels for the educational 

program and the vocational rehabilitation and employment program 

that we think are necessary to get the job done in an acceptable manner. Though the Administration’s budget seeks increases for these 

programs, the IB recommendations are slightly higher. We recommend an increase of 155 FTE for education service, compared with 

the Administration’s requested increase of 46. And we recommended 

an increase of 250 FTE for vocational rehabilitation, compared with 
50

the Administration’s request of 130 FTE.

 Thank you, Mr. Chairman. That completes my statement. I would 

be happy to answer any questions the Committee may have.

[The statement of Rick Surratt appears on p. 151]

 The Chairman. Thank you, sir. Mr. Blake?

STATEMENT OF CARL BLAKE

 Mr. Blake. Mr. Chairman, Mr. Michaud, the PVA would like to 

thank you for the opportunity to testify today on behalf of the Independent Budget regarding the fiscal year 2007 Department of Veterans Affairs health care budget request.

For fiscal year 2007, the Administration has requested -- 

 The Chairman. Do you have a statement?

 Mr. Blake. Yes, sir. I have a statement to be submitted for the 

record.

 The Chairman. It shall be entered, hearing no objections.

 Mr. Blake. For fiscal year 2007, the Administration has requested 

31 and a half billion dollars for veterans’ health care, a $2.8 billion 

increase over the fiscal year 2006 appropriation. Although we recognize this as a significant step forward, we believe that more can 

be done. The Independent Budget for fiscal year 2007 recommends 

approximately $32.4 billion, an increase of 3.7 billion over the fiscal 

year 2006 appropriation, and about 900 million above the Administration’s request.

 Furthermore, the Administration’s request is approximately $1.3 

billion less than what the IB recommends for the medical services 

account.

 We believe the recommendations of the IB have been validated 

once again this year as the Administration indicated that it will actually need real resource requirements of $25.5 billion to fund the 

medical services account. Where we disagree is on their desire to how 

to achieve this level of funding, particularly through the use of a new 

enrollment fee, and an increase in prescription drug co-payments.

 We are deeply concerned that once again the President’s request 

includes a recommendation for a $250 enrollment fee for priority 

seven and eight veterans, and to increase the prescription drug copayments from $8 to $15. These proposals will put a serious financial 

strain on many veterans, including PVA members who are high-end 

users of the VA health care system. The VA estimates that these 

proposals will force nearly 200,000 veterans out of the system, and 

will result in more than one million veterans choosing not to enroll 

in the system.

Congress has soundly rejected these proposals in the past years 

and we urge you to do the same once again. Although our health care 
51

recommendation does not include additional money to provide for the 

health care needs of category eight veterans being denied enrollment 

into the system, we believe that adequate resources should be made 

available to overturn this policy decision. The VA estimates that a 

total of over one million category eight veterans will be denied enrollment into the VA health care system by fiscal year 2007. Assuming 

the utilization rate of approximately 20 percent for this group of veterans, we believe that it will take approximately $684 million to meet 

the health care needs of these veterans if the system were reopened.

 We believe that the system should be reopened to these veterans, 

and that this money should be appropriated on top of our medical 

care recommendation. For medical and prosthetic research the Administration has requested $399 million, a cut of approximately $13 

million below the fiscal year 2006 appropriation. The IB is recommending $460 million. Research is a vital part of veterans’ health 

care, and an essential mission for our national health care system. 

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 IB has proposed that funding for veterans’ 

health care he removed from the discretionary process, and be made 

mandatory.

 Mr. Chairman, I would like to thank you again for the opportunity 

to testify. We look forward to working with you and the Committee 

to ensure that adequate resources are provided for the VA health 

care system, and I would be happy to answer any questions that you 

might have.

[The statement of Carl Blake appears on p. 157]

The Chairman. Thank you, sir. Mr. Cullinan?

STATEMENT OF DENNIS CULLINAN

Mr. Cullinan. Good afternoon, Mr. Chairman, Mr. Michaud. We, 

too, would request that our written statement be made part of the 

record.

 The Chairman. It shall be entered. Hearing no objection, so ordered.

 Mr. Cullinan. Mr. Chairman, you and your staff have seen our 

written statement, and are familiar with our views on the recommended funding levels and some of the problems therein. So for the 

purposes of timeliness and emphasis, there are a couple of points I

would like to make with an eye towards this Committee taking a look 

at some of these things.

The first thing is to do with the recapitalization of the VA’s infra-
52

structure. The industry standard for medical care is that a facility 

be recapitalized at a rate from two to four percent. In recent years, 

the VA has been pursuing a rate of slightly more than six tenths of a 

percent. You know, obviously this will lead to problems in both the 

short-term and long-term, and we think that this is something that 

need be addressed.

 Another area is nonrecurring maintenance. Nonrecurring maintenance of course is funded out of the health care allotment, and it is 

allocated through VERA. VERA may work with respect to allocating 

funds for patient care, but with respect to construction and maintenance, it’s problematic.

 For example, one could have a facility, a relatively underutilized 

facility in the northeast, with very high maintenance cost. Under 

VERA, they would simply get enough money to accommodate its patient workload without really taking into account the actual expense 

of maintaining that facility. That could lead to problems for the veteran patients, and long-term expenses to the system.

 Another thing we would like very much for the Committee to take 

a look at is the issue of reprogramming. Despite the best efforts on 

the part of the VA, on occasion a bid gets busted. In other words, 

an effort is made to build a facility, a CBOC, for example, in a given 

area. Contracts are undertaken or negotiated with various contractors, and then for a variety of reasons, the money is simply not there 

to pay for it. That then means that with the exception of some very 

narrow limitations, that money is frozen up. What we would like to 

see, and we don’t know the exact solution to this, is VA to have increased reprogramming authority in such situations, so that money 

doesn’t simply sit there.

 It’s especially important now, in lieu of the astronomical rate of 

construction inflation. In our written testimony we indicate it is nine 

percent generally, nationwide. In some parts of the Southwest it is 

up to 35 percent. So if a project gets halted in place, and it need be 

started all over again in a following fiscal year, not only does the additional effort of looking at this again have to take place, but the cost 

is going up. So the reprogramming is something we would love for 

you to take a look at.

 Architectural master plan, we address that in our written statement. Architectural master plan would help steer CARES in the 

right direction. It could accommodate some things that CARES isn’t 

handling, such as long-term care, severe mental health, those kinds 

of things.

 I would like to offer a compliment to this Committee and your counterparts in the Senate. For years, VA construction was saddled with 

the lowest good obligation in negotiating its contracts, and now has 

something called, “best value,” that it is our understanding that this 

is working out way, way better than was the case before. We are get-
53

ting better projects for less money. Thank you for that.

Another issue, the Veterans Benefit Administration, they have not 

had anything built since 1992. We well understand that oftentimes it 

is better to rent or lease, to get a modern facility in a timely manner, 

but perhaps there are instances where the system could save money, 

and veterans would be better served through construction.

And finally, with respect to collaboration, we strongly support collaborations in those areas where both the veteran population and the 

active-duty military population are properly served, and their unique 

identities maintained. The one thing that we would point to, in those 

instances where a VA facility is located on, say, a military base. Due 

to increasing security measures, it is getting more and more difficult 

and indeed more and more daunting to get onto such facility.

 And that concludes my statement, Mr. Chairman. Thank you.

[The statement of Mr. Dennis Cullinan appears on p. 167]

 The Chairman. Thank you. Mr. Robertson?

 Mr. Robertson. Thank you, Mr. Chairman. We, too, would like our 

written statement to be added for the record, with a little caveat that 

we would like to be able to add some additional remarks concerning 

the President’s budget specifically. Because we had the budget presented to us at noon on the same day that the written statement was 

due to you, we were not able to put a full analysis into the President’s 

budget. We are working on it -- 

 The Chairman. The statement that you have today will be submitted for the record. Any additional -- if you could have your commander provide that to the Committee next week at that hearing, I

think it would be a good way to cover it.

 Mr. Robertson. We should have it done today or tomorrow, so we 

should be able to get it to you very, very quickly. But we will do it at 

that meeting.

 Thank you for inviting the American Legion -- 

The Chairman. Your statement will be submitted for the record, 

hearing no objections, Mr. Robertson.

STATEMENT OF STEVE ROBERTSON

 Mr. Robertson. Thank you for inviting the American Legion to 

offer views and estimates on the President’s budget request. As a 

member of the Partnership for Veterans Health Care Budget Reform, 

the American Legion strongly recommends this Committee to hold 

a hearing to discuss the annual funding process for the veterans’ 

health care, before the end of this session. We still believe that there 

are better ways to make sure that no veteran is turned away from the 

health care he needs or she needs in a VA medical facility.
54

 In the 1980s, most of the complaints that I received from veterans 

was concerning the complicated rules and regulations which regard 

the care each individual veteran was entitled to. Things were done to 

bend the rules, and thus, proper care and treatment was not always 

provided in an appropriate setting. VA medical facilities were few 

and far between, requiring long trips for care and treatment.

 In 1996, Congress wisely reopened the doors to all veterans with the 

goal of timely access to health care in the most appropriate setting. 

The transformation of VA changed from a hospital-based system into 

the integrated system we have today, and clearly it is a health care 

industry leader on so many fronts.

 Today, there’s a tremendous demand for the care VA provides to 

a very small percentage of America’s veterans. Mr. Chairman, last 

year at this time, the entire veterans’ Committee was deeply troubled 

with the President’s budget request, and nearly every veterans’ organization expressed concerns over the shortfall in the fiscal year 2005 

budget and the fiscal year 2006 budget request.

 The American Legion applauds the President’s budget request for 

its clear increases in certain areas. However, we remain deeply concerned over other aspects. VA’s close collaboration with OMB has 

paid big dividends, and the funding model now reflects a nation at 

war, to some degree. However, VA should not be a system that welcomes new, younger patients in the front door, by shuffling older patients out the back door.

 The President’s legislative initiative to charge an annual enrollment fee of $250 did not make sense the first time it was proposed, 

and it still doesn’t make sense. Likewise, the initiative to double the 

prescription co-payments still does not make sense. Both of these 

initiatives are clearly targeted to priority group seven and eight veterans. VA anticipates that these proposals will drive more than a 

million veterans from the system, just as DOD predicts TriCare’s 

proposals will drive hundreds of thousands of military health care 

beneficiaries away from the DOD health care system.

 Their decision is not going to be based on the best health care options available, but the best financial decision. Mr. Chairman, rather 

than trying to figure out ways to shed veterans, the American Legion 

believes this Committee and Congress should be trying to figure out 

ways to make sure no veteran is ever turned away. This is an issue of fairness. Why should a Medicare-eligible veteran pay an enrollment fee if he or she pays part A and part B to Medicare? Why 

should a veteran with private health insurance that reimburses VA

be required to pay an enrollment fee? Why should a veteran enrolled 

in TriCare be required to pay an enrollment fee? If VA is their best 

health care option, why should we try to penalize them?

 After all, Mr. Chairman, many of these veterans had other options 

than military service. They chose to serve this nation with honor. 
55

The American Legion believes the annual VA budget should reflect 

the thanks of a grateful nation. Much has been said about the increases in VA medical funding since 1996. Most notably, in the last 

five years. Compared to the cost of other public and private health 

care plans, VA stands clearly alone as the most cost-effective and best 

value for the dollar, especially taxpayer dollars. VA is the ongoing 

cost of the price of peace.

 National Commander Tom Brock provided you and your colleagues 

with views and estimates of the American Legion on September 20th 

at the joint hearing. Hopefully, VA and OMB had an opportunity to 

review those recommendations, as well. Mr. Chairman, the American Legion applauds the President’s serious approach to properly 

funding VA. The American Legion is confident that the mandatory 

funding portion of the appropriation is probably right on target. Unfortunately, it is the discretionary funding portion that troubles us 

the most, because miscalculations have a direct impact not only on 

health care, but on other services and benefits VA provides. Undocumented management efficiencies result in real budgetary shortfalls 

of limited resources. While third-party collection goals continue to 

increase, the uncollected dollars result in real budgetary shortfalls.

 Where in the budget does VA receive credit for the billions of dollars in savings to Medicare for the treatment of non-service-connected 

medical conditions? If VA can’t receive third-party reimbursements 

from the nation’s largest health care insurance company, why can’t 

VA take credit for the real savings in mandatory appropriations? 

Delayed claims as well, as we all know, delays earned benefits and 

services for months, sometimes for years, and unfortunately even decades. Mr. Chairman, you have said over and over that the job of this 

Committee and this Congress is to get it right. The American Legion 

is here to assist you. Thank you for allowing us to testify. We are 

prepared to answer any questions you may have.

[The statement of Mr. Steve Robertson appears on p. 171]

 The Chairman. Thank you, Mr. Robertson. Mr. Weidman, you are 

now recognized.

STATEMENT OF RICK WEIDMAN

Mr. Weidman. Mr. Chairman, on behalf of Vietnam Veterans of 

America, I thank you for allowing us to present our views here today. 

We would be grateful if you would take our written submission and 

enter it into the record.

 The Chairman. It shall be entered into the record, without objection.

Mr. Weidman. Much has been heard about the President’s budget 
56

and how it is much better than many of us anticipated in the veterans Committee. Unfortunately, our view of it at Vietnam Veterans 

of America is that the bad news is that the good news is wrong. In 

fact, what we really need is approximately $35.7 billion without collections, I say that again, $35.7 billion for VHA, without collections. 

And then with collections, it would then add up to 37.9.

That would be 5.6 billion more than fiscal year 2006, which includes the 1.2 billion that the President recently signed off on. The 

President requested 31.5 billion for VA medical care, business line, 

which includes medical services. And that from our point of view is 

simply not adequate to meet the needs even of the truncated enrollment, with the freeze on sevens and dates.

 The 35.7, or a total of 37.9, would allow us to reopen to the seven 

and eights who have been frozen out, which would be about 260,000 

people per year. Perhaps as many as a million, over the last couple 

of years.

 Even without reopening at the registration and enrollment at usage to the sevens and eights, we believe that it still would take approximately 3.6 billion above the current level of the 2002 budget, 

added into VHA, in order to meet the need.

We will comment more specifically in the statement for the record 

for the Health Subcommittee, which we will be filing at the end of 

this week for the hearing next week, and when our president, John 

Patrick Rowan, testifies at the hearing next Thursday on the 16th, 

sir.

 In addition to that, the other place where the bad news is the good 

news is wrong: it was testified here earlier today that the 197,650 

VHA, or Veterans Health Administration staff is remaining steady. 

That is not what we are hearing around the country. It is not just in 

VISN eight, as Mr. Miller pointed out. It is currently in VISN five, 

where there is a two percent reduction in staff at every single hospital. And we are hearing that all over the country.

So, in order to increase the staff to 198,302 in the next fiscal year, 

it’s going to take a much larger increase than has been requested by 

the President.

On the other side of the House I would first of all, Mr. Chairman, 

greatly applaud on behalf of Vietnam Veterans of America your comments in regard to the GI Bill this morning, and giving the young 

men and women who are serving today, in active duty, as well as the 

Guard and Reserve, a GI Bill like that which your father and my father had coming out of World War II, which transformed this nation, 

which was a most cost-effective, cost efficient social program perhaps 

ever tried by this nation. And so we would like to associate ourselves 

with your remarks, and stand ready to help you in any way we can.

In regard to the Veterans’ Benefits Administration, we believe that 

300 more C&P than had counselors, Competition and Pension, adju-
57

dicators, and VSOs need to be provided, other than that which -- instead of what the VBA has asked for in the President’s request. How 

to use those most effectively, as to whether they are VSOs or C&P

adjudicators, we would certainly leave up to the under secretary. 

One thing that we would say, however, there is that some portion of 

additional funds there needs to be set aside for much more effective 

training and competency-based testing of everybody concerned. We 

are not going to do well with just additional bodies, if they are not 

trained well, and they do not have the additional -- if there is not 

competency-based training at the end of training completed.

 We also believe that we cannot rely on the VA DVOP/LVER system 

and the state workforce development agencies to deliver the kinds of 

services necessary to disabled veterans who are returning from OIFOEF, so we would strongly encourage many more Voc Rehab counselors across the nation, with a much greater focus on helping people 

return to work.

There are a number of specific items that we would just mention 

very, very briefly, that we would recommend very strongly that the 

Committee try and get report language on. First of all, is $18 million 

set aside specifically for the vet centers, which would allow them to 

have 250 more permanent, permanent slots, of which 206 would be 

family counselors, one for each of the 206 vet centers in the country? 

We have made this recommendation before. VHA, it is clear now 

after all these years, will not do it unless so directed by the Congress, 

and we ask your assistance in that, sir.

 The second is that we would recommend a 10 percent increase over 

the current level of research and development funds, with report language that 25 million of that in no-year money be set aside to complete the national Vietnam veterans longitudinal study, which was 

suspended by means of an IG report issued on the 30th of September 

of 2005, and it was due to the Congress on October 1, 2005. We would 

also hope that the oversight and investigations Committee will look 

into the independence of the IG in that particular effort, as well as 

others.

 Next is that we ask that $3 million be set aside for the Disability 

Compensation Commission, for two reasons: one, at this key juncture 

when they are just getting their research back, they have limited the 

commissioners to 20 hours of billable hours back to the commission, 

from this point forward. This is a time we had believed that there 

is a fine bipartisan group of commissioners, who are people of real 

integrity, but it is becoming increasingly a staff-driven process, and 

it is a staff that only includes two people who are not permanent employees of the VA. So if it is going to be an independent commission, 

and clear that it is an independent commission, then it needs to have 

independent funding, and certainly the latitude for the commissioners to do their jobs.
58

 There are several other points having to do with report language 

that we strongly recommend. I am over time, and I ask your indulgence for that, but we will submit that with the statements for next 

week. I thank you again, Mr. Chairman, be happy to answer any 

questions.

[The statement of Mr. Rick Weidman appears on p. 184]

The Chairman. I appreciate your comments on the National Shrine 

Program. It is an issue that we took up in last year’s, views and 

estimates that I submitted to the Budget Committee. And the appropriators, for whatever reason, didn’t put the money there, and so 

we are going to take on that endeavor again. And you know, as you 

travel differently than I do, and you can go to Normandy, you can go 

to some of these other sites; compare those cemeteries to a national 

cemetery in America. I think they should all be the same. And so I

want to thank you for bringing that up.

 I don’t know if the efforts of Mr. Weidman’s task force are going to 

be done in time for us to be able to get this in our budget views and 

estimates, but I want to work with you. I want to make sure that 

we get an idea of where we are going. I was disappointed that DAV 

pulled out of that task force. I think your insights would have been 

valuable, and so I expressed to you my disappointment that had occurred.

 I am most hopeful that you have got some positive recommendation 

from this task force to us. You don’t have to talk about it today, we 

are going to set that aside, and are going to address that.

 I want all of you also to know that in our hearings coming up, one 

of our full Committee hearings that we are going to do is, have a 10-

year look back over the eligibility reform. And I am not going to beat 

this one again, because all of you know exactly where I stand. And it 

is challenging for me, because I lived through it, and I was obedient 

at the time, and gave great deference to Chairman Stump when that 

went through, and have now seen the reality that we all embrace, 

that it was a revenue enhancement, when in fact it was not.

 And I am also continuing to live with this pain of how the military 

retiree is getting treated differently than someone who may have 

only served one tour of duty. It is the biggest elephant in the room 

that nobody is paying attention to. So I am going to pay attention 

to it. And it is even more highlighted now, guys, because of what 

the Armed Services Committee may do. And you know, turn to the 

American Legion. The American Legion in Indiana had to increase 

their annual fees. I don’t remember anybody saying, calling the Indiana commander, “You are anti-veteran because you had to increase 

your fees annually.” I mean, probably the error that occurred with 

regard to enrollment fees on sevens and was not created when the 

law was. And I created the enrollment fee when we did Tricare for 
59

Life. And enrollment fees, deductibles, and co-pays are utilization 

tools in a health system, and they are important.

 It is unfortunate how language, rhetoric and demagoguery, pound 

this one, and then in an effort, you also are playing to a greater membership at the prejudice of the military retiree.

 And I will appreciate -- no, I welcome your response to it, because 

I have to figure out how I work with my colleagues to take away this 

inequity and make the system right. I will go back to you, Mr. Robertson.

Mr. Robertson. Mr. Chairman, thank you very much for -- because 

this is a bone that I have in my throat as well. First of all, when I

came in in 1973, there was a promise for health care at no cost to military retirees and their beneficiaries. That’s a fact. Somewhere along 

the way in the eighties, the boat got turned around sideways. The 

American Legion actually came up with a plan to address the CHAMPUS problem, that led to the genesis of TriCare. And that plan was 

to incorporate military retirees and their families in the VA health 

care system; that it would be like TriCare is today, but it would be 

managed by the Department of Veterans Affairs and the Department 

of Defense; i.e., taking out contract bidders. We would be doing the 

same thing with the VA that the contractors are doing for TriCare.

 I guess the bone that is in my throat is I don’t know whether the 

increases for TriCare are going to the Pentagon or to the contractors; 

whether the increase in prescriptions is going to pharmaceutical companies, or going to the Pentagon. Everybody and his brother wants 

to get in to the pharmaceutical that the VA has because it is able to 

get such an economy of scale that it is getting the medications and 

prescription at the rock-bottom price.

 So if we are doing so many things right, then why are we being compared to systems that don’t seem to be doing it right? TriCare started 

out with 12 regions. They are down to three bidders now. And it had 

to restructure its entire area, catchment areas. So you know, people 

can hold up private plans, and they can hold up TriCare, and they 

can hold up Medicare, and they can hold up everything they want to. 

But right now, there are more people trying to get into the VA system 

than trying to get into TriCare or any other private health care plan 

that is out there.

 You talked about seventh and eights that, you know, somebody, I

don’t know who you are referring to and I hope it is not the American 

Legion, is trying to convince sevens and eights that they are entitled 

to care. The American Legion has never said sevens and eights were 

entitled to care. They are eligible for care. Title 38 says that they are 

eligible for care, within existing appropriation. So our responsibility 

as I see it is to figure out how to come up with those extra dollars to 

expand the pool. Medicare reimbursements is one area in which, 

when I think that provision was put into law, they had service-con-
60

nected disabilities in mind, that there were so many service-connected, Medicare-eligible veterans in the system at that time, that they 

didn’t think that it was fair to pay VA for taking care of veterans that 

they were already supposed to be taking care of.

 When we brought in non-service-connected veterans in large numbers, that Medicare reimbursements for treatment of non-serviceconnected disabilities seems like a very, very logical thing. To be 

able to let them use a health care pharmaceutical plan that they understand, rather than trying to figure out what Medicare part D does 

for them, and which is better: to be in Medicare part D, or in the VA, 

and “Will I get penalized if I don’t immediately sign up for part” -- it 

is so confusing on the outside that even more veterans that are in the 

system want to stay in the system.

 Dr. Perlin and his people deserve all the credit in the world for doing an outstanding job. Medical research I think it is unprecedented 

at the VA, and I am very concerned about the future of that. But pitting us up against systems that aren’t working as advertised I think 

is a tragic, tragic mistake. And I think that TriCare could probably 

learn a few things from the VA, if they would attend the meetings, 

and communicate with us. 

 I am sorry, the bone is out of my throat now.

The Chairman. Well, as I said, we are going to hold a hearing on 

this one, and we are going to get into the issues a little bit deeper.

 The issue on enrollment fees and co-pays is not going to go away. It 

is a management tool of a health system. It is just a fact.

 We will look closely at the issue, and I will be a good listener to Mr. 

Michaud and Mr. Brown on the medical research. My sense is that 

they have had such an increase in grants and other sourcing is the 

reason it has come down in their budget, but I will yield to Mr. Michaud and Mr. Brown to give the Committee some guidance on that.

 At this time, let me yield to Mr. Michaud for any questions that he 

may have.

Mr. Michaud. Thank you very much, Mr. Chairman. I want to 

thank all the VSOs for coming out today. I really appreciate your input, I appreciate your comments that you just gave, Mr. Robertson, I

appreciate that very much. I have a couple of questions.

 Mr. Blake, you had mentioned that under the Independent Budget, 

that you did not include priority eights, as far as in the overall line. 

Why did you exclude them?

Mr. Blake. Mr. Michaud, if you look at our chart, we do include 

them in the bottom-line total discretionary funding. However, in the 

past couple of years, we have included that in our recommendation 

for developing our medical services line. And we felt that if we continued to do this, we are being a little bit disingenuous, because we 

were asking for money that was going to be going towards care for 

people that aren’t actually going to be getting care in the VA.
61

 So we recognize that that is money that still has to be appropriated 

for those people, but for us to claim, to build our request on that alone 

would not be fair.

Mr. Michaud. Thank you, I appreciate it. Mr. Surratt, the VA

2007 proposed budget calls for a reduction of 142 employees to handle 

compensation claims in 2007. What impact would you expect such a 

reduction to have on the quality and timeliness of claims, including 

those filed by returning veterans?

Mr. Surratt. Well, first of all let me say that it is 149 direct program FTE for the compensation program. Now, there is a requested 

increase for pension, but you would assume that if they requested 

more FTE for pension, they need that there. So VA must have assumed that they can do with 149 fewer for compensation claims.

 It is hard to quantify, but we know already that they are losing 

ground, that they are having difficulty handling the workload that 

they have. So that can’t be good, and it has to be detrimental. To 

what extent, I can’t say, but certainly intuition would tell you that 

it is going to have a further detrimental impact on a system already 

very much strained.

 And again, as I noted in my oral statement, last year VA’s budget 

said that one of their top priorities was reducing the claims backlog. 

Well, this budget this year acknowledges that with the staffing they 

have requested, that the pending caseload, and that is only rating 

caseload, at the end of the year of 2006 and 2007 will be higher than 

it was at the end of 2005. So now they have accepted that the backlog, already unacceptable, will grow with the resources they have 

asked for.

Mr. Michaud. Thank you. Mr. Weidman, you mentioned earlier 

and I only caught part of it, it sounded to me like you needed a -- were 

you recommending in dealing with the IG that you need an oversight 

Committee to look at the oversight Committee? Could you elaborate 

a little more on that?

 Mr. Weidman. The National Vietnam Veterans’ Longitudinal Study 

was mandated by the Congress, and it is a replication of the National 

Vietnam Veterans Readjustment Study, which was done back in the 

1980s, which was a seminal work on post-traumatic stress disorder 

among combat veterans. And the cohorts involved were those who 

served in Vietnam, those who served in the military during Vietnam 

but did not serve in a combat theater of operations, and a non-veteran 

cohort group.

 Having all three cohort groups is key. This is really essential given 

the fact that we are in a war now, and that estimates of PTSD and 

PTSD-like problems among OIF-OEF returnees ranges from 17, and 

that is the official estimate by the army, up to 30 percent, or much 

more. The CARES model that we have currently that is using -- and 

incidentally that is the same thing that they use for projecting need, 
62

is essentially a civilian formula. It is a civilian formula developed for 

middle-class people who can afford HMOs and the PPOs. That is not 

who comes to VA, one. Two, we have had exposures that, from my 

lips to God’s ear, the civilian population in our great nation will never 

be exposed to. But you have to factor that in.

 So, the NVVRS, or the National Vietnam Veterans Readjustment 

Study, is really essential to projections for the future. I noticed last 

week, NPR did a story on a study that came out in the archives at 

General Psychiatry, where they look back at records of civil war veterans, and documented that all of those who had a heavy combat 

exposure, particularly the younger they were, had significant physiological and other problems throughout their lifetime, much greater 

than the general population at the time.

 This is not a new problem, but it has not been documented, and it 

has not been projected for the future.

 The National Vietnam Veterans’ Longitudinal Study was supposed 

to be due October 1 of last year, to this Committee. In October of 

2003, then Under Secretary suspended it, and we tried to talk to him 

about what was going on. There were some questions that we had at 

VVA about what was going on, including Dr. Linda Schwartz, who is 

currently the Commissioner of Veterans Affairs in Connecticut, who 

sat on the Science Advisory Committee, believed that the Chairman 

and some of those folks were expanding the study and the cost of the 

study in a way that was not legitimate, and not called for.

 Instead of adjusting, and looking to the fact that it was lousy contract management on the part of the Veterans Health Administration, 

and tightening that up, then Under Secretary Roswell suspended and 

then cancelled the contract altogether with the Research Triangle 

Institute, turned it over to the Inspector General and said he couldn’t 

talk to anybody about it because it was under IG investigation.

 Repeatedly, we reached back to him and to his successor, Under 

Secretary Dr. Perlin, about “Where are we at with the National 

Vietnam Veterans’ Longitudinal Study?” And there was all kinds of 

questions expressed, “It’s too expensive, it’s too expensive, it can cost 

more than 17 million.” Well, how expensive is it to underestimate the 

needs of VA, repeatedly? Never mind in human terms, just in fiscal 

terms.

 By their own admission in the summary of the IG report that was 

issued September 30th of 2005, they had completed all their work 

between May and September 2004, and sat on that IG report for over 

a year before they released it. And they released it on a Friday afternoon, September 30th. October 1 was on a Saturday. That Monday, 

VA Congressional Affairs was up here asking you to change the law 

requiring that they do that study.

 If that doesn’t seem a little bit suspicious, and coordination between 

a supposedly independent Inspector General’s office and parts of the 
63

agency that didn’t want that study to happen, because we believe 

that many people at VA didn’t want it to happen because of what they 

believed it would show in terms of physiological and psychological 

long-term damage, and morbidity and mortality, of combat veterans, 

and how that could be extrapolated to the coming population.

 So that is the reason why we would ask for your Committee that 

you are ranking minority member on to look at it, number one. And 

number two, we have wasted so much time, and would encourage 

the full Committee to seek report language to require VA to get that 

study underway, no matter who they contract with. We are not wedded to the Research Triangle Institute, it is whoever is going to get 

the study done right in a timely way.

 Thank you very much. Thank you for your indulgence, Mr. Chair, 

in allowing me to tell out that whole story.

 The Chairman. Thank you. Who is responsible for the IT section?

 Mr. Blake. I guess I can take responsibility for it, Mr. Chairman.

 The Chairman. Do you want to take responsibility for this statement?

 Mr. Blake. I will be glad to take responsibility for it. It is an inexact science.

 The Chairman. You didn’t write this, did you? Obviously you didn’t 

write this.

 Mr. Blake. No, sir.

 The Chairman. I know you didn’t write this. A West Point grad 

would never write like this.

 Mr. Blake. I don’t even know where the IT section is in here, sir.

 The Chairman. Let the gentleman’s statement speak for itself.

 Well, I invite you to review that section, and I really am challenged 

to believe that you would embrace it in its entirety. I just want you to 

know that when this Committee voted unanimously, and the House 

voted unanimously to do the centralized approach, there is no one 

here that would want any decrease in the quality of care that Dr. 

Perlin and his staff are providing. So it is sort of disingenuous, and 

a very broad statement.

 There is another statement in here that is really very peculiar. 

Well, I don’t even want to go into it. It just looks like somebody had a 

little bit of information and thought that they really needed to cover 

this because it’s never been covered before, and it is sort of disjointed.

 You know, you do this bottom line, this is really bizarre,”A centralized approach will give you an inevitable overlay of bureaucracy.” 

You know, it doesn’t even fit what Gartner consulting even testified 

to this Committee, and they are the consultant to the top 500 companies in the world. And so what we are trying to do is to cut through 

the bureaucracies and provide some streamlining. So something is 

not right here.
64

 The goal here is to create the one architecture. The CIO needs to 

be the partner in the room with Dr. Perlin’s clinical chiefs. So when 

the clinical chiefs, have an idea, or somebody at the business table 

out of finance has an idea, the CIO’s job is not to say “no.” It is to 

ensure that it fits under the one architecture so that we have this 

standardization.

 I’ve been a very good listener to Dr. Perlin about how he has such 

great minds in the field, and these are the crucibles of innovation, 

and I understand this decision on this, “federated model” that is very 

new to Gartner. Gartner is also going to advise the VA on how to do 

this. But getting To this one architecture, gentlemen, is so important. We have 127,000 PCs out there that can’t even run on the new 

Microsoft program.

 So getting to this one architecture, letting Dr. Perlin get the infrastructure in place, getting these four data processors up and running, 

I think the clinicians are going to be pretty excited. Once they get the 

one architecture, we can then begin to sophisticate the patient medical record for which the rest of this country, has this appetite for.

 So, watch this one as it goes. Don’t stake your guidon in the ground 

like you have done here, and, “Heck, no.” Watch this one as it progresses. I mean, this is very important for all of us to get the IT right, 

because it is so meaningful to increase the quality of care.

 Where we are going to end up on this one by the end of the year, 

I can’t foretell. Listening to Dr. Perlin -- why, he’s still in the room. 

Thanks for staying, Dr. Perlin. And Admiral Cooper. Who else have 

we got? Well, thank you for staying around and listening to the testimony.

 Listening to Dr. Perlin’s testimony along with the Secretary and 

the CIO, they have a decision, a strategic decision, they need to make. 

They need to get on with it. We will fund that. What Chairman 

Craig is going to do in the Senate with regard to this, I don’t know 

yet. We will take up another hearing to examine it.

 This is a strong bipartisan issue of the Committee, and it is one 

of where you shouldn’t be pitting yourselves against us on this one, 

because I think that we are all in a concentrated effort in the same 

direction. So I just invite you to take -- whoever this is -- please, Mr. 

Blake, take another look at that one.

 The last one I had was Mr. Cullinan, I want to make sure I get this 

right. With regard to New Orleans and the Gulf Coast region, that 

they should only be considered for repair and rebuilding if it does not 

upset the existing CARES process? I never interpreted CARES as an 

inflexible model. I mean, it was a snapshot in time, and it is one we 

can rely on, but can you help me explain that one to us?

Mr. Cullinan. Allow me to elaborate on that, Mr. Chairman.

 Our primary concern is that if the -- and let me talk about that -- if 

the decision is made, and to what extent New Orleans is going to be 
65

rebuilt, that it not absorb all the money from the construction budget 

for everything else, that’s the problem.

 Having said that, with respect to New Orleans, I will state the obvious. The VA is in a tough spot. There is a huge debate raging within 

New Orleans, throughout the nation, as to “Is New Orleans going 

to be rebuilt? To what extent? What are we going to do about the 

wetlands?” There is the huge issue about demographics coming into 

play, who is going to live there, who is not. It is our view that VA

should not take the lead in that debate but should at least be given 

some sort of clarity with respect to what they are going to be dealing 

with in VA. With respect to the veteran population, the non-veteran 

population, the degree of protection they are going to get from future 

flooding. And I will stop, thank you.

The Chairman. Okay. Now I understand that a little bit better. 

Sometimes, I can’t get behind a statement on its own.

Mr. Cullinan. I was shocked by that myself, sir.

The Chairman. Who made the comment on collaboration? You did, 

earlier?

Mr. Cullinan. Yes.

The Chairman. Okay. But you excluded this endeavor of taking the 

next logical step of a collaboration of personnel to collaboration with 

facilities with medical universities owned by states. Did you exclude 

that on purpose?

Mr. Cullinan. That is not by design. That is just simply something 

we didn’t mention. Where that would work, we would clearly support.

The Chairman. Okay. That is something that we are examining, 

Dr. Perlin and I, and General Love, Mr. McClain, Mr. Michaud, down 

in Charleston; we went into this not really knowing what this was 

going to look like with the life cycle costs, and we were all pretty 

surprised.

Mr. Cullinan. Yeah, and we have been supportive -- oh, I am sorry.

The Chairman. No, I just wanted to let you know that, we were pretty 

surprised by it. So when Dr. Perlin testified, said this is a”template,” 

there are some other issues that we want to examine further, but 

what we are able to do is break through the no-go’s that were identified. And because sometimes we go, “Oh, we can’t do that,” or “You 

can’t do this, you can do that,” well, let’s examine.

 And we learned a lot. So I welcome some testimony coming up at 

this collaboration hearing that we are going to have. And as the secretary mentioned, with regard to New Orleans, we want to keep not 

only the collaboration with personnel, now we have got to get them 

back in New Orleans, right? Where is a facility going to be built? 

And to do this with Tulane and LSU, will probably be the first one 

out of the box.

 So it wasn’t excluded on purpose?

 Mr. Cullinan. Absolutely no. It was not by design. We didn’t ex-
66

clude it by purpose.

 Mr. Robertson. Mr. Chairman.

 The Chairman. Yes, sir?

 Mr. Robertson. Our veterans in South Carolina have expressed a 

great deal of concern, I am sure you are well aware of the proposals 

that were being kicked around. And their major concern is the loss 

of identity. In the joint efforts we have seen with the military, when 

the military was in charge of the joint effort, it seemed to crash and 

burn for the most part. But where you had the VA was in charge of 

the collaboration -- they were the host and the military was the guest 

-- that it seemed to work a lot smoother.

 What our initial concern was with the Charleston was whether or 

not VA would lose its autonomy in its access for veterans? Would 

they be on the waiting list?

 The Chairman. Well, what we’ve learned is that none of those are 

true. And for all the veterans’ organizations that came to the hearing 

Mr. Michaud was also attended, those concerns were alleviated. We 

want to share with you as you go into this hearing that you can learn 

more about what the VA wants and their options. And we want to 

make sure that the VA has an identity, that veterans are sure that 

they are given preference. I mean, a lot of those concerns that were 

initially laid out I thought were pretty well laid to rest. Would you, 

Mr. Michaud -- did you -- 

 Mr. Michaud. Yes, if I might, Mr. Chairman. Yes, that was an 

interesting hearing. And actually, what I learned going into it was a 

little different then when I was talking to veterans beforehand versus 

some of the veterans that were there afterwards, is the biggest problem is actually a lack of communication between everyone involved. 

And, I think once they heard what was going on, I am not going to 

say that all the concerns they had were all alleviated, but clearly the 

communication effort was needed. 

 Mr. Robertson. Well, you are 100 percent right, that if we are at 

the table expressing our views and concerns so that they are being 

addressed up front, rather than chasing the dog and hoping to catch 

it and check for fleas, you know, that will go a long, long way. And 

we would ask very much to be part of that dialogue, as well as the IT

dialogue. Our testimony -- 

 The Chairman. I think there was some gentleman that testified, I 

can’t remember. He was from one of the veterans organizations, and 

then there was concern by one of the state commanders -- he really 

wasn’t speaking for me, and I think there got to be a little confusion 

from it. But I just want to let you know, a lot of those initial concerns 

got laid to rest. Some of them did, for some people. Thank you, sir. 

Mr. Robertson?

 Mr. Michaud. If I may, Mr. Chairman.

 The Chairman. Yes?

 Mr. Michaud. One of the things that we did request at that hearing was for the VA and those involved in that process, that they do 
67

include, you know, the players into the process, which I felt was extremely important. And we made that clear that it is important to 

have people involved.

 Mr. Robertson. May I just add one more -- 

 The Chairman. Yes.

 Mr. Robertson. You know, from the national perspective, we have 

staff here in D.C. that deal with the entire system. And a lot of times 

when you go to the local Blue Cap Legionnaire, they may understand 

the problems that are unique to that area, but sometimes they are 

not as knowledgeable of the bigger picture than what we have here at 

the national office. So I would hope that we would be engaged here, 

as well.

 The Chairman. Yeah, it seems like whenever you go to a state, 

there are also interstate rivalries, you know, upstate South Carolina 

versus the low country, and not a knowledge of the totality of that 

VISN.

Mr. Robertson. There is no politics inside these organizations.

The Chairman. Okay. Sure.

Mr. Weidman. Mr. Chairman, I certainly wouldn’t be so rash as 

to agree with my colleague from the Legion on that one. But where 

others are in charge of collaboration, it seems that the veterans are 

left out. At Nellis Air Force Base Hospital in Las Vegas, it’s a classic 

example.

The Chairman. I disagree. I was just there.

Mr. Weidman. I can tell you -- 

The Chairman. I was just there.

Mr. Weidman. -- it was the impetus for -- 

The Chairman. You had VA employees working right there alongside DOD. Those VA patients were excited to be around their activeduty counterparts. I just want to let you know, Rick, I was just 

there.

Mr. Weidman. It was complaints from folks in there from veterans 

using their facility that led to the impetus to move forward with doing that new facility.

 The Chairman. The complaint that I have heard is the one that 

somebody mentioned -- I think you did, Mr. Cullinan about it being 

more difficult now to get on that base, and it’s tougher for family 

members to gain access to the base. So those are things that you have 

asked us to be good listeners to, and I appreciate that.

 Well, gentlemen, I think we have come a long way. You know, 

here, for about three or four years the Congress ended up in some 

pretty nasty and ugly fights over the budget, more on political lines, 

unfortunately. And it also then took veterans organizations and pitted them with party lines, and it got pretty ugly.

 And when I took over this Committee, I leveraged the knowledge 

that I brought to this Committee from dealing with the military health 
68

delivery system, and the Surgeons General in health modeling.

 And I took that knowledge, and then how to apply it by understanding the health modeling the VA uses, the methodology, and 

whether the data that is input is correct. We learned about those 

shortfalls. We have a secretary that embraced that he was going to 

own a budget. We worked with him behind the scenes, making sure 

that if there’s nothing wrong with the model, then let’s get the data 

right, and get our most accurate forecast possible. And that’s why he 

delivered the budget we did today.

 And so I think some of you may have been surprised when you 

first heard about the budget number in some areas, and perhaps not 

surprised in others. I mean, I am not surprised that they are continuing to do the co-pays and the enrollment fees, and that type of 

thing. But for them to come up with the number that they did, even 

in mandatory spending, because we have so many of our brothers and 

sisters, comrade in arms, who have been hurt on the job, and have 

been wounded. And so we need to make sure that that the disability 

system and health care system is there to take care of them.

 I want to thank you for your partnership in this endeavor in the 

budget. Next week we will hear from all the commanders and the 

presidents. That is extremely important, next Wednesday and 

Thursday, because then Thursday, this Committee will hold its business meeting on the budget views and estimates. Getting all of your 

testimony on all of your resolutions in a snapshot in time, prior to 

this budget’s views and estimates, is extremely important. It is the 

first time it has ever been done. And we only have, then, less than a 

week after that Thursday to deliver our letters on budget views and 

estimates to the Budget Committee. So it is a very fast train. So I

look forward to your commanders’ testimonies next week.

 This Committee now stands adjourned.

[Whereupon, at 2:26 p.m., the Subcommittee was adjourned.]

 
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