The Department of Veterans 

Affairs’ budget request for FY 2007 

for the veterans Health 

administration

Hearing

before the

Committee on 

Veterans’ Affairs

House of Representatives

Subcommittee on Health

one hundred ninth congress

second session

february 14. 2006

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 109-32

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26-105.PDF
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 Shelly Berkley, Nevada

 John campbell, California Tom Udall, New Mexico

James M. Lariviere, Staff Director

Subcommittee on Health

 Henry E. Brown, Jr., South Carolina, Chairman Michael H. Michaud, Maine

 Cliff Stearns, Florida, Vice Chairman Ranking

 Richard H. Baker, Louisiana Bob Filner, California 

 Jerry Moran, Kansas Luis V. Gutierrez, Illinois

 Jeff Miller, Florida Corrine Brown, Florida

 Michael R. Turner, Ohio Vic Snyder, Arkansas

Jeffrey Weekly, Subcommittee Staff Director

(II)
CONTENTS

February 14, 2006

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105

The Department of Veterans Affairs Budget Request for FY

 2007 for the Veterans Health Administration ......................

OPENING STATEMENTS

Hon. Henry E. Brown, Jr., Chairman, Subcommittee on

 Health ...................................................................................... 

Prepared statement of Chairman Brown ..................................

Hon. Michael H. Michaud, Ranking Democratic Member ........

Prepared statement of Mr. Michaud ........................................

Witnesses

Perlin, Jonathan B., MD., PhD, MSHA, FACP, Under Secretary for Health, Department of Veterans Affairs .................

Prepared statement of Dr. Perlin .............................................

Blake, Carl, Senior Associate Legislative Director, Paralyzed

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

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

Wiblemo, Cathleen C., Deputy Director, Veterans Affairs and

 Rehabilitation Commission, The American Legion .............

Prepared statement of Ms. Wiblemo ........................................

STATEMENTS FOR THE RECORD

Hon. Corrine Brown ....................................................................

Weidman, Rick, Director of Government Relations, Vietnam

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

The American Psychiatric Association .....................................

American Federation of Government Employees, AFL-CIO ..

POST-HEARING QUESTIONS FOR THE RECORD

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

INFORMATION FOR THE RECORD

Letter from Friends of VA Medical Care and Health Research . 

(III)
(1)

THE DEPARTMENT OF VETERANS AFFAIRS’ 

BUDGET REQUEST FOR FY 2007 FOR THE

VETERANS HEALTH ADMINISTRATION

TUESDAY, FEBRUARY 14, 2006

U.S. House of Representatives, 

Subcommittee on Health,

Committee on Veterans’ Affairs,

Washington, D.C.

 The Subcommittee met, pursuant to call, at 2:03 p.m., in Room 334, 

Cannon House Office Building, Hon. Henry Brown [Chairman of the 

Subcommittee] Presiding.

 Present: Representatives Brown of South Carolina, Miller of Florida, Michaud, and Snyder. 

 Mr. Brown of South Carolina. The Subcommittee will now come to 

order. I would like to take a moment to welcome everyone to the first 

Subcommittee hearing of the second session of the 109th Congress. 

I look very forward to again working with my good friend, Mr. Michaud, the Ranking Member of this Subcommittee from the beautiful 

State of Maine. I am assuming it must be all white today. It is all 

white down here. I had the good fortune to visit Maine last year.

 I would also like to welcome my Subcommittee colleagues back and 

provide you fair warning that we have considerable amounts of work 

ahead of us this year, and it effectively starts with our hearing today 

focused on assessing, with the help of both the VA and the veterans’ 

service organizations assembled here today, the President’s budget 

request for fiscal year 2007.

 Dr. Perlin, it seems we have come a long way since last year. I

want to publicly applaud you, Secretary Nicholson, and the President 

for assembling a budget request that I feel speaks loudly to the needs 

of our Nation’s veterans, and attempts to keep pace with the emerging health care requirements of those who have faithfully served this 

country.

 I think your 12.2% increase in a time of budgetary belt tightening 

is impressive and characteristic of an Administration that is continu-
2

ing to defending the Nation. Having said that, I share the concerns of 

a number of my colleagues, Republicans and Democrats alike, about 

the Administration’s continued reliance on legislative proposals requiring veterans to pay more out of their pockets for health care.

 I am afraid the political will of the Congress will simply not support such a proposal and I am equally concerned about the signal it 

sends to the country. I am also a bit concerned about a reduction in 

appropriated dollars for medical and prosthetic research. While I understand the research budget predicts an overall increase in research 

funding, the reliance on other Federal grants and private partners 

gives me pause.

 In my mind there are few greater pursuits aside from the provisions of direct medical care that can have a greater impact on meeting veterans’ health care needs in the future than good old-fashioned 

clinical research. I am sure you would agree.

 Even with those few concerns in mind, I am encouraged by the proposed increase of funding levels put forward in fiscal year 2007 that 

would address important ongoing issues like long term care, mental 

health, and major and minor construction projects.

 I look forward to discussion here today on all these issues. I also 

look forward to hearing from the veterans service organizations assembled here today, those who represent the Independent Budget, 

and those who have alternative ideas on what VA’s budget should 

look like. Over the course of the next few weeks I want to work with 

all of you on issues where common ground can be found and to forge 

a solid budget of which all of us can be proud.

 Mr. Under Secretary, I would again like to thank you for your continued service to the Department and this Nation. I would also like 

to remind you of a statement made by the Chairman of the Full Committee during last year’s budget hearings. Chairman Buyer acknowledged that Secretary Nicholson had inherited the budget that you 

and he were forced to defend but he also warned that the Secretary 

would own it from now on. Today you own it and I look forward to 

your assessment of that proposal weighed against the Department’s 

current requirements for health care.

[The statement of Mr. Brown appears on p. 40]

 Mr. Brown of South Carolina. At this time, I now yield to our 

Ranking Member, Mr. Michaud, for an opening statement.

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

to welcome both panels and also wish everyone a happy Valentine’s 

Day.

 I want to thank you, Mr. Chairman, for holding this hearing to examine in more depth the fiscal year 2007 budget for veterans’ medical 

care proposed by the President. I look forward to working with you 

to make sure that the budget reflects our Nation’s full debt of grati-
3

tude to our veterans, the men and women who answered the call to 

service, whether it was combat or whether they wore a uniform as a 

career.

I am pleased that the VA’s proposed budget for fiscal year 2007 

includes increases in an attempt to meet the needs of our veterans. 

However, in the brief time that I had a chance to look at the proposed 

budget, it is clear that the impact of this budget proposal does not 

meet the much needed efforts of our veterans.

 Several proposals are nonstarters, as the Chairman had mentioned. I will oppose any proposed enrollment fees, increased copayments and other efforts to place the burden of payment on the backs 

of our veterans who are seeking treatment from VA. These proposals 

finance VA’s health care out of the pockets of our veterans.

 The Administration calculates that its proposals will also discourage some 200,000 patients from continuing their treatment at the 

VA. Some suggest that fees and increased copayments are reasonable policies given the President’s proposal for military retirees.

 The systems are very different in key respects. The VA proposed 

fees and increased copayments greatly affects priority 7’s and priority 8’s veterans, most of whom are over age 65. TRICARE for Life 

beneficiaries, who are over 65, do not have to pay any enrollment 

fees and TRICARE for Life pays their Medicare deductible and copayments. Most importantly, TRICARE for Life beneficiaries can count 

on mandatory funding to pay for their health care.

 If we are to import anything from the TRICARE system into the 

VA health care system, it should be the mandatory funding of TRICARE for Life.

 I am troubled by the Administration’s claim that the budget has 

a $3.5 billion increase when its budget request claims $1 billion in 

fiscal year 2007 in savings from efficiencies. The recently published 

GAO report, requested by Ranking Member Evans, found that the 

VA was unable to provide any support for the estimates of savings 

through efficiencies in the President’s past budget request. Given the 

GAO found that the VA lacks a methodology for even making the savings assumptions about efficiencies, you can understand my concerns 

when you look at these efficiencies. Veterans health care needs real 

dollars, not smoke and mirrors on accounting methods. It needs the 

actual dollars.

VA also was proposing to continue the temporary ban on allowing 

new priority 8 veterans into the VA system. This policy has shut out 

over a number of years more than 2,403 Maine veterans, who have 

turned to the VA asking for their earned benefits, and they continue 

to do so. Rather than seek needed funding for these veterans, the 

Administration is seeking to keep the door closed to these veterans.

 I disagree with this approach. In fact, Maine has a program and 

hopefully other States will adopt this program called Project I Served. 
4

It encourages all veterans regardless of category to attempt to enroll 

in the VA system so that we can understand what the real need is out 

there. I think that it is an important program and hopefully other 

states will adopt it as well.

 Finally, at the last week’s full committee hearing on the budget, 

the Administration acknowledged that it was violating the law by 

proposing to reduce the VA’s own capacity to provide nursing home 

care. The law requires the VA to have a capacity of 13,391 veterans, 

the same as it had in 1998. The VA wants to cut this capacity by 17 

percent. It is wrong for the VA to ignore the law, especially at a time 

when more veterans are aging and the need for this type of care is 

growing. 

 I am also concerned with a report of VA facilities experiencing budget short falls. We heard that from Congressman Miller and others 

last week.

 We all want to do right by our veterans. Dr. Perlin, I want to applaud you and the VA employees for the high quality care that the VA

does provide to millions of veterans and I also want to commend the 

workers of VA for the courage and dedication during the Hurricane 

Katrina and Rita, and I look forward to working with you.

 Our returning veterans and veterans from previous wars count on 

us to get this budget right, and I look forward to this Subcommittee 

doing its work and look forward to working with you, Dr. Perlin, and 

to make sure that we get the adequate resources that we need to do 

right by our veterans. It is the right thing to do, and I look forward to 

working with you to make sure that we do the right thing.

 Thank you very much, Mr. Chairman.

[The statement of Mr. Michaud appears on p. 45]

 Mr. Brown of South Carolina. Thank you. I note we are joined by 

Dr. Snyder. Dr. Snyder, do you have any opening statements?

 Mr. Snyder. No.

 Mr. Brown of South Carolina. Thanks for joining us.

 Before we introduce the panel, I would like to enter into the record 

a letter from the Friends of VA Medical Care and Health Research 

proposing objection to the research budget cut. Without objection, I

would like to enter this into the record.

[The letter appears on p. 105]

 Mr. Brown of South Carolina. Our first panel is Dr. Perlin. Would 

you please take a moment to introduce the members of your group 

with you.
5

STATEMENT OF HON. JONATHAN B. PERLIN, M.D., PH.D.,

 MSHA, FACP, UNDER SECRETARY FOR HEALTH DEPART-

 MENT OF VETERANS AFFAIRS, ACCOMPANIED BY BRIGA-

 DIER GENERAL MICHAEL J. KUSSMAN, M.D., M.S., MACP

(U.S. ARMY RETIRED), PRINCIPAL DEPUTY UNDER SECRE-

 TARY FOR HEALTH FOR VETERANS HEALTH ADMINISTRA-

 TION, RITA A REED, PRINCIPAL DEPUTY ASSISTANT SEC-

 RETARY FOR MANAGEMENT, DEPARTMENT OF VETERANS

 AFFAIRS, JAMES F. BURRIS, M.D., CHIEF CONSULTANT

 FOR GERIATRICS AND EXTENDED CARE, DEPARTMENT OF

VETERANS AFFAIRS, AND MARK SHELHORSE, M.D., DEPU-

 TY CHIEF PATIENT CARE SERVICES OFFICER FOR MEN-

 TAL HEALTH, DEPARTMENT OF VETERANS AFFAIRS

 Dr. Perlin. Thank you and good afternoon, Mr. Chairman, Ranking Member Michaud and Dr. Snyder. I am pleased to be here today 

to discuss the Veterans Health Administration Budget, and I know 

this is something this committee not only takes seriously, but makes 

sure to get a close view of how VA operates. I want to thank both the 

Chairman and the Ranking Member for coming to the Gulf Coast this 

summer and seeing the heroism of the work, but also the extent of the 

challenge that our employees faced. 

 I am pleased to be joined today, going from my right to left, by Dr. 

Jim Burris, who is the Chief Consultant for Geriatrics and Extended 

Care; by Ms. Rita Reed, Principal Deputy Assistant Secretary for Finance and Budget; Mr. Jimmy Norris, who is our Veterans Health 

Administration Chief Financial Officer; Dr. Michael Kussman, Under 

Secretary for Health, Dr. Mike Shelhorse, who is our Acting Deputy 

Chief of Patient Care Services for Mental Health Care. I would like to 

request your permission to enter the full statement into the record.

 Mr. Brown of South Carolina. Without objection.

 Dr. Perlin. Thank you, sir. Mr. Chairman, the VA’s fiscal 2007 

year budget totals $34.3 billion, an increase of $3.5 billion over fiscal year 2006 request. This represents an 11.3 percent increase, including $2.8 billion we estimate we will collect through the medical 

care collections fund. It is the largest dollar increase for VA medical 

care ever requested by a President. The proposed increase will allow 

VHA to continue to provide the highest quality care of any provider 

of health care in the Nation and in the world.

 I am proud to note that our ability to provide the best care anywhere has been extensively documented in the media, in articles in 

Washington Monthly, The Journal of American Medical Association, 

U.S. News and World Report, New York Times, The Washington Post, 

most recently, The National Journal, among others.

 For the 6th consecutive year, VA has also set the benchmark for 

health care satisfaction in both public and private sectors. These ex-
6

ternal acknowledgements of the superior quality of VA’s health care 

reinforce our Department’s own findings. VA not only leads the Nation in quality care but we are showing the health care professions an 

indeed the world how quality can be measured and improved.

 Fiscal year 2007 we expect to treat nearly 5.3 million patients, including more than 100,000 combat veterans in Operations Enduring Freedom and Iraqi Freedom. To date, over 433,000 veterans of 

the two operations have separated from service and approximately 

119,200 have come to VHA to meet some or all of their health care 

needs. More than 36,700 hundred of these individuals visited vet 

centers at least once. Last year, VA began hiring an additional 50 

Operation Iraqi freedom and Enduring Freedom veterans to enhance 

our ability to reach out to their comrades through our readjustment 

counseling or vet center program, joining the 50 original OIF/OEF

veterans who were previously hired into those roles.

 We continue to take steps to insure that our health care forecasting model projects the needs of OIF and OEF veterans and based on 

these actuarial adjustments we have made additional investments 

in key services such as mental health care, prosthetics and dental 

care to insure that we will be able to continue to successfully meet 

the health care needs of those returning veterans and the needs of 

veterans from other eras.

 Three key factors drive our additional funding requirement for 

fiscal year 2007. These are inflation; the aging of our VA veteran 

population; and, third, the greater intensity, complexity of the services provided when veterans seek care. We anticipate a significant 

increase in the use of our health care services in 2007 for several 

reasons. These include the utilization trends for health care in the 

United States, which are continuing as they have for several years to 

increase, as well as general medical practice patterns throughout the 

Nation that have resulted in an increase in the intensity of health 

care services provided per patient due to the growing use of complex 

diagnostic tests, advanced pharmaceuticals and biologicals and other 

sophisticated medical services.

 This rising intensity of care can be seen in the VA’s health care 

system as well. It has contributed to the higher quality of care and 

improved patient outcomes but requires additional resources to continue to provide the kind of care America’s veterans have earned.

 In long term care VA’s 2007 request includes over $4.3 billion for 

long term care, $229 million dollars more than the 2006 level. We 

plan to expand our extended care services. Percentage increase in 

funding for non-institutional care grows about twice that for institutional care.

VA works to deliver care in the least restrictive environment for 

veterans. Our emphasis is on community-based an in-home care to 

provide extended care services to veterans in a more clinically appro-
7

priate setting and closer to where they live and in the comfort of their 

family and familiar settings.

 In mental health, the Department’s 2007 request includes nearly 

$3.2 billion. This is $339 million over the 2006 level and the provides 

comprehensive mental health services to veterans. These additional 

funds help insure the VA continues to realize the aspirations of the 

President’s New Freedom Commission Report as embodied in VA’s 

mental health strategic plan and will continue working toward restoration of function for mental health patients throughout our system.

VA will continue to place particular emphasis on providing care 

to those suffering from a spectrum of combat stress reactions ranging from normal and expected readjustment issues to post-traumatic 

stress disorder, all of which may occur as a result of service in combat 

in Operations Enduring Freedom and Iraqi Freedom. This includes 

the December, 2005 designation of three new centers of excellence in 

Waco, Texas, San Diego, California, and Canandaguia, New York, 

devoted to advancing the understanding and care of mental illness.

 In research, the President’s 2007 budget also includes $399 million 

to support advances in medical and prosthetic research. Last year 

VA’s partnering with a major pharmaceutical company produced a 

vaccine that decreases the incidence and severity of shingles and will 

become a world wide practice standard for preventive care.

 This investigational study was one of the largest adult vaccines 

studies ever conducted. Through recognized studies such as these, 

VA continues to able to attract, what I believe, is the best team of investigational researchers in the world; scientists who are also physicians and nurses and psychologists and pharmacists and other health 

professionals who also bring state of the art knowledge and skills to 

the care of America’s veterans.

 The 2007 budget also includes $832 million for IT services for our 

medical care program. The most critical IT project or our medical 

care program is the continued operation of our Department’s electronic health record, one of the crown jewels in VA health care. Our 

electronic health care system has been recognize worldwide for its 

ability to increase productivity, safety, quality and to increase efficiency.

 The President has made the implementation of the electronic 

health record throughout all of health care in the United States one 

of his highest priorities and VHA is proud to support the President 

in this vital effort.

 In summary, Mr. Chairman, the $34.3 billion that the President 

is requesting for 2007 will provide the resources necessary for VHA

to provide timely, high quality care to nearly 5.3 million veterans, 

especially those with service connected disabilities, lower incomes or 

special health care needs.

 I look forward to working with the members of this Subcommittee 
8

to continue our Department’s tradition of providing timely, high quality services to those who help defend and preserve freedom around 

the world.

 So I thank you, Mr. Chairman, for the opportunity to be here today 

and for your continued support of VA and the veterans. At this time 

my colleagues and I would be pleased to answer any questions that 

you or other members of the Subcommittee may have. Thank you.

[The statement of Dr. Perlin appears on p. 48]

 Mr. Brown of South Carolina. I thank you, Dr. Perlin, and we do 

have some questions we would like to ask if you would bear with us 

just for a moment.

 Dr. Perlin. Mr. Chairman, one question. We had heard there may 

be some interest in going through a review of the budget. That is the 

reason the projector is here. If you would like to go through with that, 

we would be happy to do that. Alternatively, our chief financial officer would be delighted to go through it with staff at another time.

 Mr. Brown of South Carolina. How long would it take, do you 

think?

 Dr. Perlin. Probably not more than 10 minutes.

 Mr. Brown of South Carolina. Dr. Snyder, do you have a position 

on that?

Mr. Snyder. I will defer to your good judgment, Mr. Chairman.

Mr. Brown of South Carolina. Dr. Perlin, the staff says they have 

the copies and already have been briefed. So if you would go with us 

on the question period, and maybe that would help us get through. 

I appreciate the thoroughness of your presentation, and I think you 

covered a lot of points. This would give us a chance to utilize your 

time more valuably just by responding to these questions.

Dr. Perlin. Thank you, sir.

Mr. Brown of South Carolina. If I may, according to the budget 

submission, the VA anticipates a $13 million reduction in the appropriation request for VA research programs. I know you went through 

a lot of programs where additional money was being spent. While 

research funding overall is expected to increase due to other Federal 

grants and resources, why is veterans research taking a back seat in 

the budget proposal?

 Dr. Perlin. Thank you, Mr. Chairman. I appreciate the concern 

of this Committee. I have a bias; I am trained as a researcher and 

this is an area that is particularly important to us. It is correct that 

there is a $13 million decrease in the 2007 appropriation request over 

the 2006 enacted. I would note that there is an increase of the same 

amount in the medical services budget, and it is anticipated that 

this direct appropriation and additional support can be leveraged to 

obtain additional Federal resources and nonfederal resources in the 

amount of $17 million, for a net increase in the size of the research 
9

program of $17 million.

Mr. Brown of South Carolina. Further, I am hoping that you can 

comment on the process we started down in my district between the 

VA and the Medical University of South Carolina. As we consider 

major and minor construction projects on an ongoing basis, can you 

provide me with some type of assurance that the VA and University 

model and their synergy can be seriously considered when new construction projects are put on the table? Also, can you provide information on any other VA facilities where this type of model may have 

clinical and financial utilities in the near future?

Dr. Perlin. Thank you, Mr. Chairman, for the opportunity to comment on that. I want to thank you and Chairman Buyer and the entire team because looking at the opportunities for potential collaboration at Charleston allowed us essentially not only to look to what we 

might be able to do to improve veteran care in the Charleston, South 

Carolina area and create synergies with the community, but how that 

might apply more broadly.

 One immediate outcome of that collaborative effort with Medical 

University of South Carolina was the ability to determine that it 

would be useful to share some high tech equipment for very advanced 

radiation therapy and angiography in a process in which VA would 

provide the equipment and that the services would be provided at 

free or reduced cost to veterans. So this would advance care not only 

for veterans, but citizens in the State of South Carolina. So we think 

we have a template.

 You asked how this might be applied, and in the spirit of that being 

a template, it is really a tool that we hope to look at other collaborations when we have potential for developments at new sites. Of 

course, as we contemplate how to recover in New Orleans, and you 

saw the extent of the damage yourself, and Congressman Michaud as 

well. We have academic affiliations there. And I think it appropriate 

that we use that sort of analysis to determine what the most efficient, 

most effective, highest quality approach to health care is, and we will 

be using that as a lens to look at that sort of relationship.

Mr. Brown of South Carolina. How is New Orleans coming? Have 

you been able to make any kind of determinations whether you are 

going to be able to have some joint collaboration with any of those 

hospitals there? Are any of them back in operation yet?

Dr. Perlin. Sir, the city hospitals are not up to full level as they 

were before the storm. In terms of the academic affiliates, I understand that parts of Tulane University have resumed activity in town. 

The hospitals of Louisiana State University which operate the Charity System as well as University Hospital have a little bit deeper 

damage.

We affiliate and partner with both, and in fact, in terms of answering your question, we formally owe you a report of our plan on the 
10

28th of this month. We will be actually continuing negotiations, 

which are really very promising in terms of looking at ways that we 

might be most effective and efficient in the delivery of services.

 I am proud to say that we are not only coming back in terms of 

inpatient care but we are back in terms of outpatient care. The week 

before Christmas, I was really privileged to go down and open up 

an outpatient clinic right adjacent to the hospital site, in the building that has eight floors of parking deck and then a nursing home 

above it; that nursing home is now offering primary care, and within 

a couple of weeks specialty care services as well.

 As well, I commend the staff of VISN 16 under the leadership of Dr. 

Lynch for really expediting three clinics from a very temporary status 

into a much more robust form to really serve those veterans who were 

forced to leave the downtown city proper.

Mr. Brown of South Carolina. Do you get a feel for whether many 

of them are coming back or how the patient load compares to, say, the 

same time last year?

Dr. Perlin. That is such an important question because it, of course, 

is key to how we consider getting back in town. It is pretty clear that 

while the city population may not reach the prestorm levels, a lot of 

those veterans only went a short distance to a ring around the city. 

And even with very conservative estimates about the repopulation 

of New Orleans, it is clear over the 20-year period there will still be 

growth in the utilization of services in the metropolitan area and part 

of Louisiana, and even Mississippi.

Mr. Brown of South Carolina. The 2007 budget before us calls for 

an increase of $339 million above last year’s level for mental health 

services. In the absence of a concrete strategic plan is this adequate 

to address the new realities, especially in areas like PTSD?

Dr. Perlin. The increase of $339 million actually brings the mental 

health, in a very restricted statutorily defined definition, to $3.2 billion. It absolutely increases the capacity in our specific areas such as 

PTSD care. In fact, there will be PTSD care teams at every hospital, 

and in fact, PTSD specialists available throughout all of the of medical centers and system.

Mr. Brown of South Carolina. One last question. I am interested 

in the Department’s opinion on Senate bill 716, the Vet Center Enhancement Act of 2005. You know, it calls for 50 additional FTEE’s 

to be used for outreach and counseling at the now 207 Vet Centers 

around the country, while expanding bereavement eligibility to the 

parents of those who are killed in service to this country.

 I know that we have hired roughly 200 new FTEE’s for this role 

over the past few years. Can you tell me whether or not those FTEE’s 

are meeting the current requirements at the Vet Centers?

Dr. Perlin. Thank you for that question. Yes, the FTEE who are 

these global war on terror outreach counselors are themselves veter-
11

ans, and they are, in fact, going out to demobilizing units and meeting 

with separating service members. Sometimes when the unit comes 

back to drill, they meet again with them, and they really are an excellent group of individuals.

 Our Department, and I honestly cannot remember the formal opinion of this prepared legislation, but this would formalize what, in 

fact, we are doing, which is to provide that outreach.

 As to the bereavement counseling aspect, regrettably, there are 

times when it is necessary to provide counseling because there has 

been a loss of a service member, and our vet centers and the counselors do step forward, are ready to provide grief counseling to families 

and all survivors of a deceased service member.

Mr. Brown of South Carolina. Do you think the 50 FTEE’s are 

adequate? Is there enough demand to utilize 50 additional FTEE’s?

Dr. Perlin. As I understand this bill, and I may need to check, is 

that this would formalize not the first 50 FTE’s, but the second FTE’s 

who are already on board. It would change their appointment category from a term limited to a permanent, which is something that I

would have no objection to, particularly as some of the older members 

of the counselor cohort from the Vietnam era retire.

Mr. Brown of South Carolina. Thank you. Thank you very 

much.

 Mr. Michaud. 

Mr. Michaud. Thank you very much, Mr. Chairman.

 Dr. Perlin, you had talked about the increase in budget for VA. 

Having been Chair of the Appropriation Committee for many years in 

the Maine legislature, I look at when we give increases as far as the 

outcomes. And when you look at the need out there, particularly with 

the World War II veterans, as they get up in age, they require more 

services, plus the war in Iraq and Afghanistan, where having men 

and women come back and also the increase in need. Even though 

there has been an increase, my concern is the fact that we are not 

meeting that need because of these components. Although I do agree 

with you as far as the quality of care for those veterans who receive 

care from the VA. I have heard nothing but high remarks for them, 

so I commend you for that.

On fiscal year 2005 and 2006 budget projections and assumptions 

were off the mark. Fortunately, through a bipartisan effort Congress, 

corrected this shortfall and I am very concerned when I am hearing 

from facilities who are struggling to make ends meet and are facing 

shortfalls, and as the Chairman mentioned, this is your budget, you 

own it, you can’t blame it on the previous administration for that of 

the VA.

 Some of the shortfalls that we are hearing and as brought up last 

week as well with the Secretary is that the VA Medical Center at 

West Palm Beach is facing an $18 million shortfall, San Diego facil-
12

ity, an $8 million shortfall, the facility in Seattle, a $4 million shortfall. Iowa City is projecting it will need to convert nearly $2 million 

in equipment dollars. Clarksburg, West Virginia will have a $4.5 

million shortfall. There are many more.

 When the shortfalls were brought up last week, you said you would 

look into it. How many VISN’s out there will be facing a shortfall?

Dr. Perlin. First, I want to thank you for your support of budget 

amendments in 2005 and 2006 in response to the President’s request. 

The 2007 budget is indeed Secretary Nicholson’s and my budget. We 

are able to understand and describe that this is a very robust increase relative to growth.

 To your question of the current status of facilities, networks in 

terms of making sure they have the resources to provide care to veterans this year, I have queried each of the networks and they have 

the resources to provide care throughout the system to veterans.

 Are there facilities that, at any point, which in a very early point 

in the year may project that things will be tighter than they would 

want? I think it is fair to say there are facilities that individually 

may believe that they face a challenge.

 Our network directors, however, have the responsibility of making the allocations within the networks and moving dollars around. 

We feel pretty good about the VERA, Veterans Equitable Resource 

Allocation, model which distributes dollars to the network on the basis of a formula based on the complexity of patients and the historic 

workload.

 On the other hand, within the network there are a lot of judgments 

that are made facility to facility and we will be working with network 

directors to make the adjustments in terms of the micro allocations to 

individual facilities to make sure that they have the resources necessary.

 I think Florida is a very interesting area. If I remember off the top 

of my head, for this year the budget is $2.674 billion. This is over a of 

9 percent increase in the face of a 3.6 percent increase in workload.

 So there is also a question I have to ask which is how do we improve 

efficiency in the use of those dollars, and I think that is a fair question 

as well and will be working to do that and working with the networks 

to move resources if there are particular issues.

Mr. Michaud. I can appreciate that and I think you ought to do 

everything that you can to be efficient, but an $18 million shortfall is 

a significant shortfall, and there are shortfalls out there. I have got, 

which I will not share with you, internal memos from the VA from different VISN’s telling about their shortfall. And if I have those memos, I am sure that central office should be aware of, the shortfalls. 

 Will you be requesting a supplemental budget to help address this 

issue, because it is an issue that when the Secretary first came on 

board I had talked about shortfalls and later in the year proved out 
13

that they were borrowing money from other VISN’s just to meet the 

dramatic shortfall, and ultimately you came in and asked for this.

 What are you doing to monitor this, the shortfall in the VISN’s to 

make sure that they are meeting needs. I just visited Togus before 

I flew down here yesterday. There are about 40 vacancies at Togus. 

They delayed hiring. I am sure that is occurring throughout the Nation as far as hiring delays, as far as purchasing equipment.

Dr. Perlin. You have very important questions. Let me be clear, 

we have the resources to provide high quality care to veterans this 

year. I think it is important in terms of the use of the term shortfall 

to be clear in terms of the way funds may be reprogrammed and that 

is a technical and formal aspect and I would ask our chief financial 

officer Jimmy Norris, Mr. Norris to comment on that.

Mr. Norris. Yes, sir. We do monitor the VISN execution on a 

monthly basis in looking at that, and no one, no network director or 

VISN CFO has told me they are having a global problem or problem 

with their total amount of funding. What we do know they are having a problem with is some out of balance in the accounts. We have 

three appropriations, and we are probably a little short in medical 

administration. We know there are some shortages out there in that 

account. We are analyzing that. We will probably be coming forth 

with a request to reprogram some money and move money around 

among accounts.

 But when we add it up at the bottom line we don’t see any indication at this point, and it is early in the year, but we don’t see any 

indication at this point that overall there is a shortfall.

Dr. Perlin. I would just add if I might that Secretary Nicholson 

made a commitment as well to meet with our oversight committees, 

appropriations committees quarterly and provide that information so 

that you have the information as we do to see if anything is getting 

out of kilter.

 I think it is well known that 2005 was a very tough year. In retrospect, no one has any desire to recapitulate that. This is something 

I can assure you we will monitor closely and look at those micro allocation aspects on the budget line appropriation transfers that Mr. 

Norris discussed as well.

I should note that we also have a parallel set of briefings with the 

Office of Management and Budget so that they are apprised and know 

exactly how we are executing relative to budget.

Mr. Michaud. The VA National Leadership Board has a finance 

committee that I believe is meeting shortly. Will you, Dr. Perlin, 

direct your staff to ask about these shortfalls at the facilities and report to the Subcommittee the information that you receive. Because 

my concern is that VISN folks are told not to ask for any additional 

money and to try to keep the issue about the shortfall quiet. And I

hate to read about it in the paper first before we hear from you.
14

 My second question is I have heard that facilities must pay back 

the amount that they received to cover the last year’s shortfall. What 

process do you deal with VISN’s that had to borrow money, as far as 

paying it back?

Dr. Perlin. If I might answer your first question, which is I believe the finance committee is actually meeting yesterday and today 

in conjunction with the national leadership board. In fact, this is 

something that is discussed there but it is something that I, because 

of my interest, asked our office to query each of the network directors, 

and do this periodically.

 As to the second part, I don’t know whether we have determined 

exactly what the manner of repayment will be, and I might ask Mr. 

Norris to comment on that and whether we are maybe granting any 

leniency.

Mr. Norris. Sir, I am not sure I am familiar with that. We did 

not provide any money to any VISN’s or facilities that I am aware 

of that we have asked for them to return in a subsequent year. I do 

think there was some trading among themselves out there and perhaps they made deals that they would trade and pay back. I would be 

happy to follow up an check that out; I am just not aware of it myself 

at this point.

Mr. Michaud. So you think it is within VISN’s if they borrowed 

money from another VISN.

Mr. Norris. Yes, sir.

Mr. Michaud. I appreciate you checking on that.

Mr. Norris. I think the reason is some of them were better off in 

their capital areas than others were and they were able to forego 

some of those things and so they could delay some things to a subsequent year and help their counterparts out. I will be happy to check 

that.

Mr. Michaud. Thank you.

Last week, the Secretary testified that in the budget they plan on 

opening, I believe it is 43 new CBOC’s. The CARES process identified 

the need for CBOC’s in VISN 1 and we, Mr. Brown and I had a hearing actually in Maine and that was one of the issues that came up, 

Maine being a rural state and actually 16 percent of our population 

veterans, one of the highest percentage in the country.

Presuming that you receive the budget request for fiscal year 2007, 

or hopefully an improved budget for fiscal year 2007, would you envision that one of the 43 CBOC’s actually as predicted under the 

CARES process be in Maine? 

Dr. Perlin. I note that there are a number of CBOC’s that have 

been identified in the CARES process for Maine specifically. I would 

prefer to look into the details and discuss with the network. As you 

know, the CBOC’s process is a consideration where a plan is put together that especially with those that have been approved or identi-
15

fied in the CARES process meet certain criteria in terms of need, 

access, in terms of capacity.

 But subsequently there is a process where an operational plan is 

put together, the network comes forward having to demonstrate that 

they have the resources, and ultimately Secretarial approval is required. And so it is something that has helped us improve health 

care, it is helped us move to a model that helps to promote health and 

prevent disease, so it is something that we very much endorse.

 As I think you know, since 1996 we have increased the number of 

outpatient clinics by over 350 percent. So we obviously believe in this 

model and will open clinics as we can.

Mr. Michaud. Thank you. My last question, Mr. Chairman. I don’t 

know off the top of your head, but if you can provide later on, it is either to Mr. Norris or Dr. Burris. The VA is budgeting to maintain an 

average daily census of 11,100 in VA-operated nursing home units. 

The law requires the VA to maintain a level of 13,391. How does the 

VA project the cost to maintain the 11,100 ADC in fiscal year 2007, 

and how much would it cost to maintain the statutory minimum of 

13,391. If you don’t have those numbers with you, if you can provide 

it in writing to the Committee.

Dr. Perlin. I think we probably should calculate those and then 

provide those back to the Committee. [This information was not provided to the Committee.]

Mr. Michaud. Thank you. Thank you very much, Mr. Chairman.

Mr. Brown of South Carolina. Thank you, Mr. Michaud.

 I will take this opportunity to enter Ms. Corrine Brown’s statement 

in the record, without objection.

[The statement of Ms. Brown appears on p. 47]

Mr. Brown of South Carolina. Dr. Snyder.

Mr. Snyder. Thank you, Mr. Chairman. Dr. Perlin, I would like to 

continue this discussion about the research numbers that I had asked 

about the other day when you were here with the Secretary. In Little 

Rock, we get very good feedback about the patient care there and in 

your written statement you talk about the high quality of care. In 

your section on intensity of care, because of the increase of sophistication, for want of better word, of the care, but a lot of it comes from 

research, and a lot comes from research at the VA, so I am having 

trouble reaching a conclusion about why this number is not more robust in this budget at this time in our history.

 My math may not be right, but I think your research number is 399 

million, which you say is an increase of 17 million from 2006, is that 

correct?

Dr. Perlin. The 399 million; the direct appropriation is $13 million 

less than the direct appropriation in the 2006 budget request. $13 

million is added to medical services and 17 million is what is antici-
16

pated to accrue from other research.

Mr. Snyder. So you are saying that is a net increase in the research 

budget of 4 million?

Dr. Perlin. No, sir. The 13 million that is being requested for the 

direct research appropriation -- the direct research appropriation is 

$13 million less. Medical services support component is $13 million 

more, offsetting any decrement in the direct medical research appropriation. So that is a sort of net of zero.

 Then it is estimated that $13 million can be accrued from Federal 

grants and $4 million from private foundation grants, for a net increase of 17 million.

Mr. Snyder. A net increase of 17 million.

Dr. Perlin. Yes.

Mr. Snyder. Over the budget. I will begin with what I said, your 

number 399 million. So for the last year it must have been we are 

saying 282. I am sorry; 382. 382 plus 17 gets me to 399.

Dr. Perlin. No. I need to sum up the different components of the 

research budget. I will just take a moment.

Mr. Snyder. I know this is important but we have limited time. I

am going by your number and says it is $339 million to support VA

medical and prosthetic program. You stated that that is a $17 million increase, because the 13 is a wash, so why am I going wrong by 

saying last year’s must have been 382?

Dr. Perlin. I am sorry if I made it confusing in terms of the terms. 

The overall research resources are $1.649 billion, $17 million more 

than the $1.632 last year, but you are absolutely correct that the 

direct research support component of that actually is $13 million less 

than the 412 in last year’s budget appropriation.

Mr. Snyder. I want you to help me then. So we are saying the total 

research budget is 1.65 billion, an increase of 17 million. I don’t have 

a calculator here with me, but that must be a .01 increase or somewhere less than -- just a very minimal increase over 1.65 million.

What do you consider is the medical inflation rate amongst VA research. How much increase do you need from year to year to hold 

your own?

Dr. Perlin. I would have to get back on a specific number. I know 

that overall inflation will certainly be higher than the number you 

have suggested.

Mr. Snyder. I know that but it is substantially higher than the 

normal inflation rate on groceries and everything else, is it not?

Dr. Perlin. That would be correct.

Mr. Snyder. I am trying to get a feeling for how you all arrived at a 

number when, you know, you are bragging on the research your doing 

at the VA and the kind of research you have ongoing, bragging on the 

results, and then -- I don’t know if this is right or not, the FOVA letter 

today, they say it is going to result in cutting 286 VA direct research 
17

employees. Because of the inflation, they don’t discuss that in detail, 

if you have a number that is essentially a hold your own number in 

nominal terms, it real terms it doesn’t, and you end up in cuts in the 

VA budget. This is a budget that cuts VA research and you can’t say 

that it is not. It is a substantial cut in VA research because of the 

medical research inflation rate, which is high. Why would we end 

up -- is this an OMB thing? Did you all ask for a higher number and 

OMB said no, we can’t do that?

Dr. Perlin. I am not sure on that specific aspect.

Mr. Snyder. Is the number that is in this budget that you are testifying here today, is this adequate to do the job for maintaining the 

level of research that is going on now at the VA?

Dr. Perlin. The proposed appropriation for direct research support of $399 million will not maintain to the level of activity of direct 

VA employees. It does, however, allow for leveraging for additional 

activity, other Federal grants, but the direct answer to your question 

is no.

Mr. Snyder. Even if you achieve the level of research grants from 

outside entities, it won’t do it with the numbers you are giving me.

Dr. Perlin. In terms of the FTEE, the full-time employee equivalence, you are correct.

Mr. Snyder. So why are we doing that, Dr. Perlin. Are you satisfied with this?

Dr. Perlin. I am a researcher by background so I have to identify 

that I am very biased in that area. I do know that the research that 

is being conducted is increasingly focused on veterans issues, but I

also know research is one of the most important ways of attracting 

topnotch physicians and scientists and, as I mentioned, nurses, psychologists and other health care professionals to both advance the 

science in the interests of the health and well being of veterans and 

serve veterans with patient care.

Mr. Snyder. My time is up, Dr. Perlin. I have great respect for you 

and the work you are doing. I am glad you there. Everything I have 

heard you say in your opening statement and written statement in 

response to questions from the Chairman and Mr. Michaud argue for 

a robust budget for research. The only thing that is inconsistent with 

that is the budget for research.

I don’t know where the problem is. Somebody is trying to find dollars to save in an area we ought to not find dollars to save in. We 

ought to be doing it by increasing efficiencies and then plussing up 

the numbers so more good things can be done.

 All your arguments point, we ought to be going in a different direction because this budget is a cut in medical research in real terms, 

and there is no way, I mean, as you acknowledge, there is no way to 

get around it.

 I assume maybe we will have another round of questions, Mr. 
18

Chairman. 

Mr. Brown of South Carolina. Thank you, Dr. Snyder. I would like 

to ask, on that same line of questioning, Dr. Perlin, is VA partnered 

with any other medical groups in research like we have been asking 

you to do, to partner up with the health care delivery system?

Dr. Perlin. Are there partnerships going on in research; that answer is yes, there are absolutely partnerships going on in research. 

Part of the capacity of the VA to really provide cutting edge research 

are partnerships that exist not only with 107 of the Nation’s medical 

schools, but 1,500 programs in health profession educations, partners 

as well with other Federal agencies, including obviously, Department 

of Health and Human Services and all branches of the National Institutes of Health, but also with State agencies and of course the Department of Defense. So the answer to your question is partnership 

is absolutely critical.

 Partnership also occurs in the private sector. I mentioned in my 

opening statement a vaccine that will fundamentally change preventive health care practice in adults, that was a partnership with private sector bringing this vaccine to the market, probably twice as fast 

as had it been done anywhere else other than in VA.

Mr. Brown of South Carolina. I know we are reducing, the funding 

just we put in the record earlier, but are we getting the same bang 

for the buck by coordinating VA’s research activities with other partners? I guess my concluding question would be, are we effectively 

cutting down research or trying to do it in a different way?

Dr. Perlin. Thank you. I will answer your question now. Yes, we 

are amplifying the investment that the American taxpayer through 

Congress at the request of the administration makes in direct VA research. $399 million in this year’s budget is a direct investment that 

we would ask for you to make and to that budget additional funds are 

added for the conduct of research in VA and those come from the National Institutes of Health and from private sector, including pharmaceutical companies and other entities. In fact, the Federal grants 

on the back of the $399 million in the direct research appropriation, 

and $366 million in the support for that, that are part of medical services budget, provides leverage to bring in an additional $376 million 

in Federal grants and $208 million in private sector grants.

Mr. Brown of South Carolina. Okay. Thank you. Thank you very 

much. We have been joined by Mr. Miller from Florida. Do you have 

any questions?

Mr. Miller. Thank you, Mr. Chairman. I also have a statement I

would like to enter into the record.

[Mr. Miller’s statement was unavailable at press time.]

Mr. Brown of South Carolina. Without objection.

Mr. Miller. I apologize for being late. We are on the floor doing a 
19

resolution for the 65th anniversary of the USO. You probably already 

have covered this but, Dr. Perlin, I would like to hear an answer and 

if you have already done it, you can encapsulate what you said prior 

to my arrival. Given the resistance of any enrollment fees in the past 

and increased copays, why is VA doing that again? In fact, it is the 

exact same policy. Can you shed some light on it?

Dr. Perlin. This budget contains a request that we understand 

emphatically has been rejected by Congress previously, and in the 

earlier comments today we heard emphatic concerns about the request for policies that would require priority 7 and priority 8 veterans 

to pay an enrollment fee of $250, sharing the cost of pharmaceuticals 

at a rate of $15. 

Dr. Perlin. And sharing the cost of pharmaceuticals at the rate 

of $15. And I would note that the value of those policy proposals is 

$795 million including an offset to the first-party collections. And 

so I think, it is fair to say, as was indicated also earlier, that there 

is a belief that it is fair and equitable to ask some veterans to share 

modestly in the cost of their health care. We, nevertheless, hear your 

voice and concerns about this.

Mr. Miller. Another question, if you would, in your testimony, you 

said that all of the resources for capital construction are going to be 

devoted toward achieving the goals of achieving delivering greater 

access for high quality health care for more veterans as was the goal 

of the CARES report, and I think this has been addressed, too. And 

I don’t think the information that I got was correct. So I am hoping 

that maybe I misinterpreted what was sent to me. But given the 

unmistakable shifts in population along the gulf coast after the hurricanes last year, do you feel the current and projected population 

numbers should be revisited and the 5-year capital plan adjusted accordingly?

 What I heard, somebody said was reported to this committee, was 

that VA doesn’t feel that the veterans moved away geographically 

from the New Orleans area but further than nonveterans. And how 

do you know that? And then answer that first question.

Dr. Perlin. Right. Well, thank you. This is an appropriate question in looking at how we best serve veterans in the areas devastated 

by Hurricane Katrina. I appreciate your support for helping us to 

provide that care back to those veterans.

Mr. Miller. Let me make sure you understand. I want veterans’ 

health care for my veterans in northwest Florida, as well. So while 

I am concerned about making sure that those in New Orleans were 

taken care of, there was a declining veteran population prior to Hurricane Katrina in New Orleans, a growing population in northwest 

Florida, and I don’t know if we need to go back as the old CARES report was established or if we need to open it up again and say, things 

have changed.
20

Dr. Perlin. That is absolutely a fair question. And I appreciate 

that. I have done some research. It is obviously a question that is 

weighing heavily on my mind.

 What I understand both from the demographics in the area and 

from the actuaries, even with the most conservative projections, that 

there will be more veterans seeking care between now and 2023 in 

the New Orleans Metropolitan area. It is also true -- I have the data 

as well -- that in your area of the country, there is also growth in veterans care. But it does, even with an actuarial estimate that provides 

for minimal change, extreme change and a moderate change in terms 

of resettling New Orleans proper, it is absolutely clear, unequivocal, 

that there is growth in the use of VA health care services in that region, sir.

Mr. Miller. Can you define for me the difference? You say the use 

of the facility, but is the use of the facility including veterans who 

don’t live in metropolitan New Orleans? It is people who travel from 

out of the area to go to that facility; correct?

Dr. Perlin. I want to be careful how I define this. I am going to 

use the CARES data and define the central southern market, which 

is how it is defined as the cachement of the hospitals they listed previously to include 27 Louisiana parishes. And we know that there are 

a band of people who emigrated slightly to a perimeter around New 

Orleans are now using Hammonds, Slidell and La Place for a new 

CBOCs as well as Baton Rouge. We know that Lake Pontchartrain 

area to the west of Homa, straight west as opposed to the northwest 

and over to the east, Slidell, and in the northeast area, that there is 

growth in those markets. And there was already a population shift 

from one part of town to the suburban surrounding areas. But it is 

not people from a different part of the State or region.

Mr. Miller. Do you anticipate spending $800 million in the New 

Orleans area for a new hospital?

Dr. Perlin. I believe that the numbers will come in well below that. 

But we are looking at any number -- 

Mr. Miller. That was what was asked for in the supplemental 

before we adjourned last year, and $753 million was stripped from 

that supplemental. So my question is, do you anticipate using those 

dollars for that?

Dr. Perlin. We -- I think the Secretary last week was clear--that 

we plan to be back in New Orleans and that we will be as efficient 

as possible in our operation and have a final budget estimate in the 

report due to you, sir, in Congress on the 28th of this month.

Mr. Miller. Thank you, Dr. Perlin.

Dr. Perlin. Thank you.

Mr. Brown of South Carolina. Dr. Perlin, if you would bear with 

us, we would like Counsel to ask a question, particularly about the 

inflation rate on health care delivery.
21

Mr. Weekly. Dr. Perlin, from your testimony here today and from 

the Secretary’s testimony last week, the funding drivers associated 

with this year’s budget request are fairly clear and I think fairly well 

articulated in the testimony. One is inflation. Two is the aging of 

VA’s patient population, and the third is the greater intensity of the 

services provided. While we, I think, can wrestle with the latter two, 

that is aging and the greater intensity of services, I think there are 

still some outstanding questions as it relates to inflation in particular. 

 Your testimony, the President’s budget proposal in particular, suggests that a majority of medical services, not the least of which is the 

procurement of medical supplies and/or pharmaceuticals, is tagged 

to medical CPI.

 We have heard on a number of occasions that VA, both in medical services as well as procurement, does things far more efficiently 

than the private sector. So the question then becomes, and I think 

-- I hope -- a logical one, is there not or would there not logically be 

a delta between the inflation rate that you would normally witness 

at VA having statutory protection as it relates to the procurement of 

pharmaceuticals and medical devices et cetera and the medical procurement in the private sector?

 And why then is the President’s budget and VA budgeting always 

tagged to a higher medical inflation rate? And this may be a more appropriate question for Mr. Norris or Ms. Reed, but if you can address 

it, I would appreciate that.

Dr. Perlin. Let me start and I may turn to Mr. Norris to amplify. 

But first let me acknowledge and agree with the economy of scale 

that exists in VA’s national health system. Our leverage, more efficient purchasing power, is clear cut. As well, you have identified 

some statutory opportunities to procure materiel, such as pharmaceuticals, at essentially “best price,” combined with efficient formulary management. That does lead to certain efficiencies. 

 Our budget, and the model portion of that, in terms of projecting 

what the demand for resources will be to care for the population includes the factors that you have mentioned. There is an inflation 

factor, and that is in part given to us. And that is, in this model, at 

about 4 percent.

 Now, I need to mention that the -- intensity of services, and that approaches 1 percent, and just to be clear in what the intensity is; it is 

the amount of care that is given within a particular type of service.

 And with advancing technologies, new biological products, et cetera, that drives the cost up. It also improves the outcome. The utilization goes up by almost 1.2 percent. And utilization is the number 

of the same services provided. So in addition to getting more care 

per unit intensity, there are also more units of service utilization, not 

unexpected given that the population is one that tends to be older and 
22

typically sicker; with three additional physical and one additional 

mental health diagnosis as compared to age-matched Americans and 

oftentimes poorer, less resources.

 The aging and gender change also contributes to the cost of the 

care. And that approaches one and three quarters percent and then, 

with that, there are oftentimes shifts in income within the population of veterans that use VA. And that is another three quarters of a 

percent right there.

 On top of that, we add certain things that we are intentionally doing to change how we deliver care. In this model, there is nearly half 

a percent of increase in resources based on a very clear intent to improve and enhance the mental health services delivery in areas such 

as those we have discussed before.

 So, this model and our approach actually does exactly what you 

have suggested. It demonstrates that we approach with a lower rate 

of inflation than others might experience. It also, I think, takes into 

account that we have a very complex and aging veteran population 

by and large. And on top of that, there are some areas where we are 

making some very goal-directed enhancements to service.

Mr. Weekly. So if I understand you correctly, while it may be true 

that the annual inflation rate, as it relates to medical services and 

procurement, may be dramatically lower, the other factors that you 

just articulated make up for that and, in fact, overcompensate for a 

lower inflation rate leading to one that is consistent with the rest of 

the nation across the whole panoply of medical services?

Dr. Perlin. I think in short that is a reasonable characterization. 

The inflation rate for the same services for unchanging population 

would be lower when you take into account the demographics of this 

population and the needs. It is a higher number as you see before you 

in this very robust budget. 

Mr. Brown of South Carolina. Thank you, Dr. Perlin. I have one 

further question. Can you tell me what, if any, progress has been 

made on the electronic exchange of medical information between 

DOD the VA at the polytrauma centers?

Dr. Perlin. Thank you, Mr. Chairman, for that question. This is 

an area that we think about daily. In fact -- Dr. Kussman and I were 

discussing that on the way over here today. Where electronic data 

exists within the Department of Defense, they are transmitted to VA. 

Not all data exists electronically. But we are pleased to report that 

there are advances that allow us to take better care of veterans. For 

example at our polytrauma units specifically, as you have identified, 

they now have access to tap into the health records that exist at Walter Reed. So in the large picture, we are working toward interoperability, the Joint Electronic Health Records Interoperability Program, 

and that is moving forward, where there are electronic data in DOD

-- those data are being mapped to the electronic health record in VA, 
23

and where this data doesn’t exist electronically or where it only exists some places electronically in some places like Walter Reed, we 

have increased access to that. This is an area that the Secretary and 

deputy and I personally take an interest in and desire with you to 

push forward.

Mr. Brown of South Carolina. Do you have target when you think 

the exchange will be transparent between DOD and VA, or is there 

anything we can do legislatively to help accelerate that process?

Dr. Perlin. Well, first, thank you for your offer of support. And let 

us consider if there is anything that might accelerate it. But I believe 

there is a good bit of progress in the first stage; the Federal Health 

Information Exchange (FHIE) created a repository of, predominantly 

laboratory and pharmacy data, but electronic data that VA can now 

reach into essentially as its repository and pick out that information. I personally have used that information to look up bits of patients’ records for a veteran who has some electronic data. And that 

is available nationally. This year, we are completing the piloting of 

BHIE, the Bidirectional Health Information Exchange. And this will 

allow realtime transfer of pharmacy and lab services. The end goal 

is the full joint electronic health record interoperability and the time 

course for that is completion of our Health Data Repository, HDR, 

and completion of DOD’s Clinical Data Repository, CDR, and only the 

way we in government can do, putting CDR and HDR together is the 

acronym for CHDR, and the goal for CHDR is, I hope, within the next 

couple to 3 years. And then we should have seamless interoperability 

of our health records.

Mr. Brown of South Carolina. Is there a system in place to be 

absolutely sure that we aren’t leaving any third party payee on the 

table? 

Dr. Perlin. This is a great question. And I think it is an opportunity to really identify that there has been just incredible progress in the 

third-party collections. Even absent any of the policy proposals that 

were discussed earlier today, I think you see on this curve over the 

last 6 years that in 2000, the collections were $573 million, and even 

absent any additional policy proposals, in 2007, we would anticipate 

2.288, really, $2.3 billion of collection, pretty significant growth.

 We use the same sort of actuarial models to estimate who has insurance, and indeed, we try to determine this. I can’t tell you that 

we would never leave money on the table. What I can tell you is that 

we are ambitious and assertive in terms of trying to collect that and 

appreciate the support of this committee in terms of improving the 

efficiency and timeliness of collections.

Mr. Brown of South Carolina. Thank you, Dr. Perlin, and we certainly would like to do what we can to enhance that. And, remove? 

I know it is probably difficult to estimate, but we move from half a 

billion to almost $2.6 million did you say?
24

Dr. Perlin. 2.3, sir.

Mr. Brown of South Carolina. $2.3 million, in what, 5 years?

Dr. Perlin. In the 2007 budget, without any change in policy, it 

will be $2.054 billion we estimate at the end of this year.

Mr. Brown of South Carolina. So based on that scenario, you think 

you maximized it, or do you think we are 50 percent there, 35 percent 

there, or 90 percent there?

Dr. Perlin. I think we are getting -- I think it is substantial progress. And I can’t give you a specific percentage. I think it is probably 

very, very high, and I would be pleased to provide better quantitative 

estimate for the record.

 Mr. Brown of South Carolina. Thank you very much. Mr. Michaud?

Mr. Michaud. Thank you, Mr. Chairman.

 Mr. Norris, did you or do you plain to make a presentation to the 

national leadership board on the VA’s fiscal year 2006 budget? Have 

you already done so, or do you plan on doing it?

Mr. Norris. Yes, sir, I plan to update that body every month with 

the status of where we think we are financially.

Mr. Michaud. Would you please provide the committee with a copy 

of the January and February report?

Mr. Norris. Yes, sir.

Mr. Michaud. Thank you. My next question is about prescription 

drugs. What has as the CBO given the VA as estimates when you 

negotiate for prescription drugs? Have they put a number with that 

as far as the savings, and is that calculated? What is the methodology that they use, and is that calculated when you put your budget 

together?

Dr. Perlin. I think that is a great question. We estimate roughly 

that the savings approach, a billion dollars a year in terms of the 

pharmaceutical savings due to a variety of factors.

Mr. Michaud. What method, does OMB, use to do that? Or do they 

pretty much take whatever number you give them?

Dr. Perlin. OMB has recognized that we are extremely efficient 

in this. You mentioned CBO, and in point of fact, there have been 

estimates of VA’s efficiency, and I believe that has been one of the 

sources, sir.

Mr. Michaud. The VA did a mental health model to project demand 

on returning soldiers. Returning soldiers account for roughly 2 percent of the VA’s overall patient workload but nearly 6 percent of the 

PTSD patient workload.

Has VA revised its mental health demand model to reflect this disproportionate increase in workload, and was that budget based on 

that revised model?

Dr. Perlin. I would ask Dr. Mark Shelhorse to talk about what 

some of the percentages have been. I would be happy to follow that 
25

with some comment on the budget estimates.

Dr. Shelhorse. Yes, sir. We are very sensitive to the issue of PostTraumatic Stress Disorder population In the OIF/OEF returnees, 

last year, the figures were indeed 5 percent of the total. And it is 

modifying a little bit as the overall number of PTSD numbers of cases goes up and fluctuate between 3 to 5 percent right now. We are 

very acutely aware that we need to maintain those programs. And 

in 2005, we put $20 million toward additional programs for PTSD

and OIF programs. That accounted for 44 new programs that focus 

purely on the Operation Enduring Freedom and Iraqi Freedom veterans that are returning. And we called those Veterans Outreach and 

Enhancement Centers. They go out, identify those veterans, try to 

educate them as to what services are available, what kind of symptoms they might expect, et cetera. We also put out 43 new programs 

for Post-Traumatic Stress Disorder.

 In 2006, we will invest another $29 million in PTSD and OIF programs. And that money is yet to be distributed in the field. We are 

in the process of choosing those programs right now.

 The model itself was a model that was generated slightly before the 

conflict, before we knew how many returnees we would get. It predicts PTSD population based on residential treatment beds, which 

are the comparable beds that would be used in the community for the 

types of programs that we have.

 It is not sensitive enough to extract OIF/OEF veterans out of the 

current model. But we are using the model in terms of projection of 

PTSD need for the future. We have asked divisions to look at their 

gaps and address where the programs need to be and, in fact, have 

used that for the 2006 distribution, with the idea of plugging in any 

gaps that might be in place and making sure those veterans have access to care when they need it and where they need it.

Mr. Michaud. If I may ask a follow-up question, Mr. Chairman. 

The Department of Defense has a new program, The Post-Deployment Health Reassessment. And this pilot, nearly 48 percent of the 

service members are referred to the VA. How does the VA support 

that program, number one? But how do you keep track of what they 

are doing?

 Dr. Perlin. Thank you for that question. The PDHRA, Post-Deployment Health Reassessment, is really a very noble effort to follow 

up between 90 and 180 days after deactivation. And this program 

is being conducted in many small groups, 60 service members at a 

time.

 In point of fact, to date, we have actually had both VHA and VBA

personnel there, and so the cognizance of what is going on is really 

very immediate.

 I think you have hit a very salient feature, and one that we were 

also quite attuned to is that the survey is extremely sensitive, and as 
26

a result, a number of, a large proportion of the individuals seek care 

or seek to establish a relationship with VA.

 We are actually currently seeking to better understand the implications from DOD and are having ongoing meetings both with the 

Department of Defense at regional levels where this work in the field 

is actually occurring nationally and hope to have continuing information on the effect of the program in terms of VA utilization.

Mr. Michaud. Thank you.

 Thank you, Mr. Chairman.

Mr. Brown of South Carolina. Mr. Snyder, did you have any further questions?

Mr. Snyder. Yes, Mr. Chairman, thank you.

 Dr. Perlin, just one quick note on this research and then I have two 

other questions I want to ask. If I start with $1.65 billion, and I assume a medical inflation rate of about 5 percent for medical research, 

which is different than research or than medical care -- it is higher, 

I think it is because everything has to be new; you are trying to do 

cutting-edge stuff, not stuff with old equipment.

So if I assume a 5 percent increase, inflationary increase, of my 1.6, 

I am going to say $1.633 billion, that gives me like over $80 million.

 And so you all are saying, well, we have increased it by $17 million.

But in order to just to maintain a 5 percent inflation rate, it has got 

to be a little over $80 million which means actually in real terms a 

cut of over $60 million.

Now, I don’t know what the medical inflation rate is but my guess 

is the VA is not that much different from other institutions because 

most medical research is done by institutions, and you have a lot of 

jointness with medical schools but that is a -- if you came in here 

today and stated -- if your written statement said, well, bad news in 

the research front. In real terms, we are going to cut the research 

number by over $60 million, that is a totally different picture than 

the way it is presented. But I think that is in reality what is going 

on. It is probably worse than that.

 My two questions for the record -- would you respond for the record, 

please, to this letter that was sent to the committee from FOVA? And 

they have specific items in there about things they think are going 

to be cut in research. And second, for the record, would you tell us 

please what you think the medical research inflation rate is nationally and then also for the VA, and what distinguishes the difference 

between them if there are any differences? And the two questions I

want to ask are on page four. You are talking about the initiatives, 

increased copays, you say both of these provisions would apply only to 

priority 7 and 8 veterans who have no compensable service connected 

disabilities who typically have other alternatives for addressing their 

medical care costs, including third-party health insurance and Medi-
27

care. Typically. What is your definition of typically? Do you have 

that number available in terms of -- 

Dr. Perlin. 95 percent. The Chairman hit the nail on the head 

because many of those veterans are older and Medicare eligible.

Mr. Snyder. So, of that number, 5 percent don’t have any insurance?

Dr. Perlin. That is correct.

Mr. Snyder. And then my second question on page five is the provision in which you talked about a provision to eliminate the practice of 

offsetting or reducing VA first-party copayment debts with collection 

recoveries from third-party health plans.

 This provision applies to all categories of veterans; is that correct?

Dr. Perlin. It applies to nonservice connected medical activities 

but across all categories, exempting the highest priorities by definition.

Mr. Snyder. My question is, have you all evaluated this from the 

perspective of the potential unintended consequences? I was trying 

to put myself in the place of veterans who may be at work, or I may 

have a working wife who is a bit younger than me, since I have a 

working wife who is younger than me, and who is paying into this 

insurance. I have some kind of private insurance. I am not Medicare 

age eligible. And then this comes down that I can’t use that insurance any more, so it is costing money to have it. And I like to have 

my care at the VA.

 Do you think there will be some potential impact, people will say 

let’s just not carry the insurance since they are not going to use it any 

way and we get our care at the VA? Is that scenario a possibility?

Dr. Perlin. I think that would have to be within the realm of possibility. It is likely individuals who have insurance or have alternative coverage do so because of other factors, such as being over age 

65. But in a pure sense, yes, that could, potentially do that. I would 

note that this is a very challenging area, the first-party offset -- it is 

one of the complexities in the billing process for VA. There is no other 

entity that offsets a copayment with a bill to an insurance company. 

And that almost singularly is one of the things that makes it impossible for VA to buy an off-the-shelf billing program that would be used 

in any other medical enterprise.

Mr. Snyder. Thank you, Mr. Chairman.

Mr. Brown of South Carolina. Thank you, Mr. Snyder. Dr. Perlin, 

I thank you and your team for coming here today. We certainly didn’t 

mean to drill you so heavily, but thank you. And if there are other 

questions, we can certainly submit them to you for response.

While the first panel is vacating and the second panel comes forward, we are going to take about a 5-minute recess.

[Recess.]
28

 Mr. Brown of South Carolina. Meeting will now come back to order, and let’s welcome our second panel.

STATEMENT OF CARL BLAKE, ASSOCIATE LEGISLATIVE

 DIRECTOR, PARALYZED VETERANS OF AMERICA, REPRE-

 SENTATIVE OF THE INDEPENDENT BUDGET; AND CATHY

 WIBLEMO, DEPUTY DIRECTOR FOR HEALTH CARE, THE

 AMERICAN LEGION.

 Mr. Brown of South Carolina. Mr. Carl Blake, Associate Legislative Director of Paralyzed Veterans of America, representing the 

Independent Budget, and Ms. Cathy Wiblemo -- is that pronunciation 

close?

Ms. Wiblemo. Sir, thank you. Very close. Yes.

Mr. Brown of South Carolina. Thank you very much. Deputy director for health care, representing the American Legion, and we will 

begin with Mr. Blake.

 Welcome both of you.

STATEMENT OF CARL BLAKE

 Mr. Blake. Thank you, Mr. Chairman. I would like to ask that my 

full written statement be submitted for the record.

 Mr. Brown of South Carolina. Without objection.

 Mr. Blake. Chairman Brown, Ranking Member Michaud, PVA

would like to thank you for the opportunity to testify today on behalf 

of the IB regarding the fiscal year 2007 VA health care budget. We 

are proud that this will mark the 20th year that PVA along with AMVETS and Disabled American Veterans and the Veterans of Foreign 

Wars have presented the Independent Budget, which is a comprehensive budget and policy document.

 The Independent Budget uses commonly accepted estimates of inflation, health care costs and health care demand to reach its recommended levels. This year, the document is endorsed by 60 veteran 

service organizations and medical and health care advocacy groups. 

For the first time, a reasonable starting point was offered by the President to fund the VA health care system. For fiscal year 2007, the 

administration has requested $31.5 billion for total veterans’ health 

care, a $2.8 billion increase over the fiscal year 2006 appropriation. 

Although this is a significant step forward, we still have some concerns about proposals contained within its request.

The Independent Budget for fiscal year 2007 recommends approximately $32.4 billion for total veterans’ health care, an increase of $3.7 

billion over the fiscal year 2006 appropriation and about $900 million 

over the administration’s request. We believe that the recommenda-
29

tions of the Independent Budget have been validated once again this 

year, as the administration indicated, that it will actually take $25.5 

billion to fund the medical services account, an amount very close to 

what we recommend.

 However, they only requested $24.7 billion in appropriated dollars. 

The administration hopes to raise an additional $800 million by instituting a new enrollment fee and an increase in prescription drug 

copayments to achieve the necessary funding level. We are deeply 

concerned that, once again, the President’s recommendation proposes 

the $250 enrollment fee for priority 7 and 8 veterans and an increase 

in the prescription drug copayment from $8 to $15.

These proposals will put a serious financial strain on many veterans, including certain catastrophically disabled veterans with non 

service-connected injuries. These veterans, because of their catastrophic disabilities, are enrolled in VA health care as priority 4 veterans. However, due to a glitch in drafting of eligibility reform legislation in 1996, because of their income, they are still required to pay 

all copayments and fees as though they are priority 7 and 8 veterans. 

We urge the committee to correct this unfair situation immediately.

 The VA estimates that these proposals will force nearly 200,000 

veterans to leave the system and approximately 1,000,000 veterans 

to choose not to enroll. Congress has soundly rejected these proposals 

for the past 3 years, and we urge you to do so once again.

 Our health care recommendation does not include additional money to provide for the health care needs of category 8 veterans being 

denied enrollment into the system. However, it is included in our 

bottom line for total discretionary dollars needed by the VA to provide health care to all eligible veterans.

 Despite our clear desire to have the VA health care system open to 

these veterans, Congress and the administration have shown little 

desire to overturn this policy decision. The VA estimates that a total 

of over 1 million category 8 veterans will have been denied enrollment into the VA health care system by the fiscal year 2007.

 We believe it would take approximately $684 million to meet the 

health care needs of these veterans if the system were reopened.

 For medical and prosthetic research, the administration has requested $399 million, a cut of approximately $13 million below the 

fiscal year 2006 appropriation. The Independent Budget recommends 

$460 million. Research is a vital part of veterans’ health care and an 

essential mission for our national health care system. It has been 

responsible for such advancements as the cardiac pacemaker, the CT

scan, and world-class prosthetics.

 Despite a reasonable request this year, the budget and appropriations process over the last number of years demonstrates conclusively 

how the VA labors under the uncertainty of how much money it is 

going to get and when it is going to get that money.
30

 In order to address this problem, the Independent Budget has proposed that funding for veterans’ health care be removed from the discretionary budget process and be made mandatory.

 Mr. Chairman, I would like to thank you again for the opportunity 

to testify today, and I would be happy to answer any questions you 

might have.

[The statement of Carl Blake appears on p. 56]

Mr. Brown of South Carolina. Thank you, Mr. Blake.

 Ms. Wiblemo.

STATEMENT OF CATHY WIBLEMO

Ms. Wiblemo. Thank you, Mr. Chairman, and members of the Subcommittee for inviting the American Legion to offer its views on the 

President’s budget request for the Veterans’ Health Administration 

for fiscal year 2007. It is a pleasure to be here today, and I would 

request that my entire testimony be submitted, entered into the record.

Mr. Brown of South Carolina. Without objection.

Ms. Wiblemo. The American Legion is a member of the Partnership for Veterans’ Health Care Budget Reform, and we strongly encourage the Subcommittee to hold a hearing to discuss the annual 

funding process for veteran’s health care before the end of this session. Just recently the Veterans’ Health Administration was recognized as scoring higher than the private sector industry and other 

Federal programs in patient satisfaction for the sixth year running, a 

true testament to the superb job they continue to do for the Nation’s 

veterans.

 We are all very proud of the Veterans’ Health Administration. Indeed, they have received many such recognitions over the past few 

years, and deservedly so. Yet this fiscal year 2007 budget proposal 

aims to drive away over a million veterans from using the high quality health care system. In January 2003, category 8 veterans were 

suspended from enrolling. We would like to see that suspension lifted 

to allow those veterans to enroll in the health care system that was 

established for them.

 Once again, the American Legion raises objection to the proposal 

that would charge an annual enrollment fee of $250 for priority group 

7 and 8 veterans and the proposal that would raise the prescription 

copayment amount from $8 to $15.

We also question the validity of the management efficiencies in 

light of the recent GAO report that found VA lacked both the methodology for making health care management efficiency savings assumptions and adequate documentation for calculating and reporting 

management efficiency savings.
31

Undocumented management efficiencies result in real budgetary 

shortfalls of finite resources. The American Legion is also concerned 

with the apparent stall on the capital asset realignment for enhanced 

services process. With just half of the local advisory panel meetings 

being accomplished, we are wondering if and when the others are 

going to be held. CARES is an extremely important and needed initiative.

 Mr. Chairman, the American Legion appreciates the administration’s continued focus and increased funding for the implementation 

of the mental health strategic plan that will facilitate equitable access and delivery of mental health and substance abuse care across 

the nation to veterans in need. We would ask that the same intensity and energy poured into the strategic mental health plan be the 

same for the formulation of the long overdue long-term care strategic 

plan.

 I would also like to add that Dr. Shelhorse and the mental health 

strategic committee did a wonderful job with the mental health strategic plan. The American Legion is working hard to ensure a true 

and accurate picture is portrayed of the funding and services needed 

to allow VHA to continue to provide high quality health care to the 

Nation’s veterans.

 In August 2005, we published the third annual system saving report, completing site visits to every VA medical center over the course 

of nearly 3 years. The third report revealed a critical shortage in the 

funding of VA health care with the biggest budgetary challenges being increased patient workload demand, upkeep of equipment and 

maintenance, pharmacy costs and staffing levels.

 In January 2006, the American Legion’s system savings task force 

began another round of visiting the VA medical centers. We thank 

Dr. Perlin for that. By the end of this week, we will have visited 12 

facilities.

 Preliminary reports suggest staff cuts and facilities struggling to 

meet patient workload increases. We plan to visit at least 45 facilities to include the polytrauma centers. Through these site visits, we 

learn what is going on in the trenches, where the rubber meets the 

road.

 Indeed, we are in the gulf coast area this week with plans to publish an interim report on just those specific areas.

 Mr. Chairman, veterans’ health care is the price tag of freedom. 

The American Legion stands ready to assist you in ensuring that VA

health care is adequately funded to meet the needs of all veterans. 

Thank you.

[The statement of Cathy Wiblemo appears on p. 65]

Mr. Brown of South Carolina. Thank you very much, and we will 

entertain some questions at this time.
32

Mr. Blake, I am going to ask you the question first, and either one 

of you can join in with a rebuttal or your feelings on that same question.

 Mr. Blake, what is your assessment of VA’s progress to date in getting veterans appointments within 30 days of request?

Mr. Blake. Mr. Chairman, I have to say, from my professional 

opinion, I couldn’t give an accurate answer to that. I would be happy 

to refer that question to our veterans benefits staff at PVA who have 

service officers in the field and see this happen every day and get 

back to you with a more accurate answer on behalf of PVA.

Ms. Wiblemo. Could you repeat that question, sir?

 Mr. Brown of South Carolina. What is your assessment of VA’s 

progress to date in getting veterans appointments within 30 days of 

request?

Ms. Wiblemo. We, our experience has been that the priority veterans, OIF/OEF, are getting within the 30 days. We do not see, and it 

has not been reported to us, that they are not.

 We do, though, have some documentation on the electronic waiting 

list, and that it is getting longer, that veterans with non service-connected conditions are waiting -- are being put on this waiting list and 

are waiting a significant amount of time and/or referred to the community.

Mr. Brown of South Carolina. What would you recommend as the 

solution?

 Is it because VA is understaffed or the facilities are too small or the 

commute is too long, or not enough nurses, etc.?

Ms. Wiblemo. Well, definitely staffing levels are a problem, but 

that is all a funding issue. So, you know, adequate funding of course, 

you hate to keep throwing money at something, but adequate funding 

is definitely an issue when it comes to staffing levels. Anesthesiologists are just one example of where veterans are having to wait to get 

surgery because they don’t have enough anesthesiologists, which is a 

funding issue because VA can’t pay.

Mr. Blake. Mr. Chairman, I would like to concur with Ms. Wiblemo, 

too. Particularly in the areas of specialized care, we have seen some 

difficulty in hiring nurses. We all know that there is a recognized 

nurse shortage across the country in all fields. This is particularly 

true in specialized areas, and that problem is amplified by VA’s inability to hire, in some cases, physicians as well.

 It is one thing when you don’t have the direct bedside care from 

nurses. It is another one when you don’t have the physicians that 

oversee a lot of this care as well.

Mr. Brown of South Carolina. That leads me to my second question. In Charleston and around some other parts of the country, we 

are trying to do some consolidation or at least cooperating sharing in 

some of the services. And so my question would be, do you agree in 
33

concept with VA working with their medical affiliations to enter into 

sharing agreements that maximize the ability of the VA to provide 

veteran patients with the most advanced technology and treatments? 

How would you respond? I am sure you are involved somewhat with 

the idea of trying to combine some resources.

Mr. Blake. Absolutely, Mr. Chairman. I think coordination is the 

key. Our position has always been, however, in any coordinated setting, veterans should still get the priority for care. If you are bringing 

in outside patients who are nonveterans into whatever coordinated 

system you may have, ultimately we believe that the veterans should 

still get the priority for care.

Ms. Wiblemo. I would just like to echo some of that, absolutely, 

coordination, you know, sharing, and all of that, to get the best care.

 Our position has always been to keep the VA a separate system, 

because they are unique and different. And the face of the VA needs 

to be out there for the veterans to see.

Mr. Brown of South Carolina. I think that has been a major concern, too, that the veterans would feel like they might lose their identity, and I don’t think there is any effort at all to lessen that point. I

think the number one point, exactly what the shortcomings you all 

expressed in the first question is that we want to enhance health care 

for veterans. It is becoming more complicated. Some of the veterans coming home today didn’t come home in prior wars, but are now 

because of the new technology. And this is something that we mentioned with Dr. Perlin earlier about research dollars, combining some 

of those research resources with other like interests to try to stretch 

those dollars. And so this is what we are trying to look forward to in 

the 21st century.

Mr. Blake. Mr. Chairman, I would like to make one other point 

also. We certainly support the idea of coordinated care when it comes 

to basic care. But one thing we have to make sure we understand 

is that when it comes to specialty care, we don’t believe that there 

is another type of health care system or anybody else that the VA

can coordinate with that could provide better services than the VA

itself. So in this effort to require the VA work together with another 

system, we have to make sure that veterans with the most important needs and the specialized services, particularly, get their care 

directly through the VA.

Mr. Brown of South Carolina. I think that is a good point, and 

it is certainly well taken. This is something that we certainly are 

trying to build on, too, because I don’t know of any process where 2 

units come together to try to offer some kind of a shared responsibility where you don’t gain something from both.

 I don’t think either one comes to the table with all the technology. Something we are trying to look at as we look at new construction projects around the country, is to try to pull the best from both 
34

worlds and try to coordinate it so that veterans themselves can get 

a higher level of treatment because we know the technology is going 

to be switching and changing as we move forward. And we have to 

be sure we are on the cutting edge, particularly to address the health 

care needs of our veterans.

 Mr. Michaud.

Mr. Michaud. Thank you very much, Mr. Chairman. Before I ask 

my question, I think it is worth noting, Mr. Chairman, that I am very 

pleased to see Dr. Perlin and his staff decided to stay to hear the 

panel as well, and actually, I noticed last week also, Dr. Perlin, that 

you were here to hear the second panel. I appreciate your taking an 

interest in this. And I do want to thank you both for testifying and 

for your advocacy on behalf of our Nation’s veterans. I also want to 

thank you both for your service in the Army. I appreciate your service to the country.

My first question, ma’am, is the American Legion produces an excellent report each year called, A System Worth Saving. This report 

outlines how the budget works from the ground up, from a provider, 

in a veteran’s perspective. Previous reports have documented frustration of and harm to veterans from waiting lists, appointments and 

what have you. Your site visits have been an early warning sign to 

Congress that the system, that there are flaws in the system, particularly with inadequate budget.

 Do you have an initial impression on your visits, so far, from the 

sites you have visited, that the new shortfalls are rearing their ugly 

head once again?

Ms. Wiblemo. We have, like I said, at the end of this week, we will 

have been to 12 facilities. I am going to Albuquerque, as a matter of 

fact, tomorrow.

 Preliminary reports from just -- we have like 6 reports that we have 

in. The budgetary challenge for all of them has been the increased 

patient workload.

 And the other we have had some reports of running in the red, 

facilities. These are not pictures; these are facilities’ specific information that we are getting.

Mr. Michaud. Thank you.

 This one is to both of you. Could you elaborate on your concerns 

with the VA proposed budget for meeting the long-term care needs of 

our aging veterans?

Mr. Blake. Well, Mr. Michaud, this is something we felt was really starting to rear its ugly head last year when there were some 

recommendations to significantly cut long-term care programs. We 

have always pushed for the VA to continue to maintain the capacity 

requirements as laid out in the mil bill. And clearly, the evidence 

doesn’t bear out that the VA has been able to do so. We could debate 

the reasons for why they haven’t. We firmly believe that, obviously, 
35

not receiving the funding necessary is a large part of that.

 I don’t think it is appropiate for the VA, to move down the road of 

curbing its long-term care abilities, given that the veterans’ population is certainly not getting any younger. Though I might fall into a 

younger veteran status, there are a whole lot more veterans that are 

significantly older than I am. And even a recent GAO report bore 

out the fact that with the aging veterans population, the VA has to 

do much more to be able to meet that demand as that population 

grows.

Ms. Wiblemo. The long-term care issue is huge, much like the mental health issue. During CARES, of course, they tabled all of that. 

And they have struggled to come up with a strategic plan, which I

think is very, very important, so they know where they are going to 

go and what they need to do and where they need to put those beds.

 We have always advocated for maintaining the 1998 law. And we 

are not quite sure where those veterans are going, you know. The 

VA is pushing -- as is the rest of the Nation, in long-term care, which 

is also struggling by the way, meaning the demand -- but the VA is 

pushing them to go out, you know, home, in the home, closer to home, 

which is fine, but that is not always relevant for some veterans, those 

with mental health problems. And the VA, of course, is leading the 

industry in that type of treatment. So, we are very concerned, but I

think really it is an issue of getting that long-term care strategic plan 

out, published and starting to be implemented so the dollars are going where they need to go.

Mr. Blake. I would like to make a couple other points. One, I

would like to point out that one of the recommendations in the Independent Budget is that the VA immediately develop a long-term care 

strategic plan. The issue of long-term care and how to best provide 

it is something that PVA grapples with particularly because of the 

nature of our membership with catastrophic disabilities. On the one 

hand, we recognize the importance of institutional long-term care, 

like nursing home care, because of the ability to provide advanced 

services in that setting. At the same time, one of the biggest things 

we are advocates for is the ability of catastrophically disabled veterans to be out in society and to function and be independent.

 So, while we believe that the capacity requirements for institutional long-term care are necessary, we also support additional long-term 

care through things like the Assisted-Living Pilot Program, which 

the VA conducted in a few VISNs, and we believe that the successes 

from that pilot program bear out that maybe this is something that 

should be implemented across the entire country.

Mr. Michaud. Thank you. In my last question, and you both sat 

through the first panel, and I appreciate that as well, and you heard 

that the response and the opening statements of Dr. Perlin and the 

team. Is there anything that you heard from the first panel in either 
36

any of the testimonies you would like to comment on or add or dispute?

Mr. Blake. I don’t know about dispute, Mr. Michaud. I would just 

like to say, I would like to reiterate our concern as was done so by the 

panel about medical and prosthetic research. Research is something 

that is very, very close to PVA’s heart as well as the Independent 

Budget. Not only do we get support from the four organizations of 

the Independent Budget, but we also work hand-in-hand with friends 

of VA research as we develop our medical and prosthetic research 

recommendations.

 So any time we see a cut, we are certainly concerned about the longterm effects that this may have on veterans now and in the future.

Just as I laid out in my statement, there are so many advancements 

that the VA has been responsible for in the medical field through this 

research. I think we do veterans and even all citizens an injustice by 

reducing the ability of the VA to conduct this much needed research.

Ms. Wiblemo. I would just like to comment on the continual comparing of DOD and VA.

 They are completely different systems. They serve different populations. And so I don’t think it is really a fair comparison. So we 

certainly don’t support VA going the way of DOD. While we support 

the sharing agreements and the joint ventures, as long as VA has a 

handle on that, that is all well and good. But, you know, the copays, 

and DOD treats, you know, dependents, family members. Children. 

So, it is a little bit different.

Mr. Blake. Ms. Wiblemo triggered something in my head. I wanted to comment on the same topic. I think it is important that we understand the difference between the TRICARE system and VA health 

care system. TRICARE is an entitlement for its enrollees. And VA

obviously is veterans who are eligible, and it is subject to the discretionary nature of its funding. Because TRICARE is an entitlement, 

retirees who are enrolled in TRICARE cannot be denied access to 

that. Furthermore, it is really just an insurance program. VA is a 

provider of health care. However because it is discretionary, at any 

time, due to the discretionary nature of its funding process, those 

veterans could be cut out of the system. That is not true of TRICARE

enrollees. 

Mr. Michaud. I see the VA officials shaking -- nodding their heads, 

yes, so I assume that they agree.

 No further questions. Thank you, Mr. Chairman.

Mr. Brown of South Carolina. Thank you, Mr. Michaud.

 The Independent Budget recommended $38 million in minor construction projects for the Veterans’ Benefit Administration and $24 

million more than the President’s request. What areas does the Independent Budget recommend funding for on par with what the President requested?
37

Mr. Blake. Mr. Chairman, my area of expertise is not in construction at all. However, I would be happy to take that question into writing and submit it to our people who work on the construction portion 

of the IB and get back to you.

Mr. Brown of South Carolina. Let me ask you one further question then, and either one of you can answer this. The independent 

Budget expressed concern about a VA nursing shortage. Do you support specific funding to establish magnet status at VA medical centers to recruit and retain nursing personnel and improve the level of 

quality care?

Ms. Wiblemo. Well, I can’t answer for the Independent Budget. 

However, the American Legion is a big supporter of the nurses -- 

the nurses of VA foundation and also maintaining -- and the nursing 

education and the furthering of that education. And since the VA is 

older, we would support the magnet, you know, getting the magnet 

certification, or whatever it is. We would support that.

Mr. Blake. Mr. Chairman, I would say, on behalf of the IB, we 

would certainly support any additional resources poured into the system to support hiring more nurses. Clearly, it is a major problem as 

I already addressed. And I think in previous hearings before this 

committee and the full committee, it has been shown that magnet 

status for a medical center serves as a recruiting tool in bringing 

nurses into the system. So that being the case, we would certainly 

support any efforts to get VA in line with that to -- if we believe that 

it will, or we believe that it will allow the VA to recruit more and better nurses, and ultimately that would be a positive for the VA health 

care system.

 Mr. Brown of South Carolina. Let me just say thank you to both of 

you for coming, and as a member of the American Legion, I appreciate you being part of this. One minute, we are not going to conclude 

right yet. Mr. Michaud wants to ask one more question.

Mr. Michaud. Thank you, Mr. Chairman. Actually, their comments triggered another question. Just a brief one, if you might. You 

had talked about DOD and the VA, and clearly I am not sure whether 

it is mandatory or not, but as far as medical records, be it shared, 

with DOD and the VA, my first question, is that mandatory? My 

second question is, seems to me if it is mandatory, that once a system 

is implemented that there should be some management efficiencies 

there. And I was wondering if you had done an analysis about those 

management efficiencies and whether those can be booked and if they 

are real, if the management efficiencies aren’t there once its implemented, if we reduce the DOD’s budget by that amount, if they can’t 

meet those management efficiencies.

 And it is more a question for the VA, but if you can answer that.

Ms. Wiblemo. I am probably not qualified to answer that question, 

other than to say that the sharing of the records, it would make sense 
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that there would be management efficiencies there and the savings of 

money. But past that, I don’t know if it is mandatory or not that they 

share records. I don’t know. 

Mr. Blake. I would say, too, I don’t know if it is mandatory. It 

seems like to me it would only make sense. Having gone through 

medical boarding process when I was retired from the service due to 

a service-connected disability, I know that all of my medical records 

personally were shared with the VA facility as part of the process of 

filing a claim for disability. They had to request my medical records 

for part of that process.

 So I would just assume maybe it already is mandatory, and if it is 

not, it would only make sense that it would be.

Mr. Michaud. Well, thank you very much, and I also want to thank 

you, Mr. Chairman, for your patience this afternoon. I know the first 

panel went longer than you probably expected, but I really appreciate 

your willingness to allow members the opportunity to ask questions 

because as you well know this is a very important issue and really 

appreciate your patience, thank you.

Mr. Brown of South Carolina. Well, thank you, Mr. Michaud. I appreciate, working with you in a nonpartisan spirit to support health 

care for veterans, as it is a top priority for both of us and its certainly 

meaningful for us to listen as long as we may.

 I would just like to further ask you, Mr. Blake, were those records 

transferred electronically or did you have to manually take them 

with you?

Mr. Blake. I didn’t manually take them. I think they were probably transferred manually, or faxed maybe. They were faxed. I know 

that, in the process, there were time frames built in for requests and 

follow-ups and all that sort of thing, but the VA, as I understood it, 

requested a full copy of my medical records, and they were forwarded 

along to the necessary physician as I went through that process.

Mr. Brown of South Carolina. That is the link we are trying to 

overcome -- to have that transparency between DOD and VA.

Mr. Blake. Not on behalf of the Independent Budget or anybody 

else but just from a personal perspective, it seemed to me that one 

of the biggest challenges in going through the claim for disabilities 

process was time limits that were built in by nature for 30 days, from 

the time they file a request to receive some kind of a notification and 

a follow-up with an additional 30 days from that time of contact. And 

a lot of those time frames, it seems to me, could be shortened or done 

away with through electronic transfer of any kind of that information. And that would, you know, not to say that there is an example 

of how you can shorten the disability claims process, but it just seems 

like to me that could be a possibility.

Mr. Brown of South Carolina. Looks to me it would be a no-brainer. Somebody said, if Walmart could tell you when they sold a box of 
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Tide anywhere in the world, we ought to be able to track our veterans 

and our DOD personnel. Looks like to me the format ought to be 

somewhat compatible so you can do that in an outreach effort.

 Today, we are building a combination clinic on the weapon station 

in Charleston which is going to be a DOD and a VA outpatient clinic, 

and so we are trying to make sure we consolidate as many of our resources as possible. 

Mr. Blake. So what we are trying to do is consolidate as many of 

our resources as possible. We feel like that is going to be a good thing. 

But you don’t think so, Cathy.

Ms. Wiblemo. Oh, no. Again, the other thing I would say about that 

is that the stakeholders, the veterans need to be at the table from the 

beginning. I know, down in Charleston, because I went down there, 

that that wasn’t the case. So I would say that the veterans need to be 

at the table in any of those -- like we were with CARES, like former 

Secretary Principi. I think that is important.

Mr. Brown of South Carolina. Thank you very much for your patience and for the knowledge that you bring to the table, and thank 

you for your service to the veterans’ population.

 Dr. Perlin, thank you so very much for staying. We all want to work 

together that is our goal. Thank you so very much.

[The statement of the Vietnam Veterans of America, submitted by 

Rick Weidman appears on p. 78]

[The statement of the American Psychiatric Association appears 

on p. 90]

[The statement of the American Federation of Government Employees, AFL-CIO appears on p. 95]

[Whereupon, at 4:08 p.m., the Subcommittee was adjourned.]
(40)

APPENDIX
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Statement of Rep. Corrine Brown

House Veterans’ Affairs Subcommittee on Health Affairs

Tuesday, February 14, 2006

334 Cannon HOB

Thank you, Mr. Chairman for calling this hearing for further discussion of the health budget for the Department of Veterans’ Affairs.

I must reiterate my concerns for your legislative gimmicks you 

insist on including in your budget requests. While the chairman of 

the full committee has expressed his support for balancing the VA

budget on the backs of the veterans, a $250 user fee and an increase 

in prescription co-pay is not something that I can support.

The House of Representatives has voted over and over again to not 

allow these provisions to become law.

Yet you insist on including it.

The president is spending $10 billion a month in Iraq, and yet must 

pay for the war on the backs of those same veterans who protect our 

freedoms.

I also have heard stories that VISN 8, which includes Florida, is 

short of funding, and there is an unofficial order to not ask for more.

Explain to me how, after last year’s most recent budget debacle, 

where we has to get you $1.5 billion in emergency funding to turn 

the air conditioning on in the operating rooms, you still cannot ask 

for sufficient funding to treat our nation’s veterans?

How do I know your numbers are right and that this is the money 

you need to treat our veterans? Your credibility is low, and this 

“landmark” budget, in the words of your boss, does not meet the 

standard for full care for the defenders of our freedom.
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