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98–689 2016

TO RECEIVE THE SECRETARY’S TESTIMONY 

REGARDING THE PENDING VA HEALTHCARE 

BUDGET SHORTFALL AND SYSTEM SHUTDOWN 

HEARING 

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

WEDNESDAY, JULY 22, 2015 

Serial No. 114–34 

Printed for the use of the Committee on Veterans’ Affairs 

( 

Available via the World Wide Web: http://www.fdsys.gov 


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COMMITTEE ON VETERANS’ AFFAIRS 

JEFF MILLER, Florida, Chairman 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida, Vice-Chairman 

DAVID P. ROE, Tennessee 

DAN BENISHEK, Michigan 

TIM HUELSKAMP, Kansas 

MIKE COFFMAN, Colorado 

BRAD R. WENSTRUP, Ohio 

JACKIE WALORSKI, Indiana 

RALPH ABRAHAM, Louisiana 

LEE ZELDIN, New York 

RYAN COSTELLO, Pennsylvania 

AMATA COLEMAN RADEWAGEN, American 

Samoa 

MIKE BOST, Illinois 

CORRINE BROWN, Florida, Ranking 

Minority Member 

MARK TAKANO, California 

JULIA BROWNLEY, California 

DINA TITUS, Nevada 

RAUL RUIZ, California 

ANN M. KUSTER, New Hampshire 

BETO O’ROURKE, Texas 

KATHLEEN RICE, New York 

TIMOTHY J. WALZ, Minnesota 

JERRY MCNERNEY, California 

JON TOWERS, Staff Director 

DON PHILLIPS, Democratic Staff Director 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Veterans’ Affairs are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to prepare 

both printed and electronic versions of the hearing record, the process of converting between 

various electronic formats may introduce unintentional errors or omissions. Such occurrences 

are inherent in the current publication process and should diminish as the process is further 

refined. 


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C O N T E N T S 

Wednesday, July 22, 2015 

Page 

To Receive the Secretary’s Testimony Regarding the Pending VA Healthcare 

Budget Shortfall and System Shutdown ............................................................ 1 

OPENING STATEMENTS 

Jeff Miller, Chairman .............................................................................................. 1 

Prepared Statement ......................................................................................... 51 

Corrine Brown, Ranking Member .......................................................................... 3 

Prepared Statement ......................................................................................... 52 

WITNESS 

Hon. Robert McDonald, Secretary, U.S. Department of Veterans Affairs .......... 5 


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TO RECEIVE THE SECRETARY’S TESTIMONY 

REGARDING THE PENDING VA 

HEALTHCARE BUDGET SHORTFALL AND 

SYSTEM SHUTDOWN 

Wednesday, July 22, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON VETERANS’ AFFAIRS, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:01 a.m., in Room 

334, Cannon House Office Building, Hon. Jeff Miller [chairman of 

the committee] presiding. 

OPENING STATEMENT OF CHAIRMAN JEFF MILLER 

Present: Representatives Miller, Lamborn, Bilirakis, Roe, 

Benishek, Huelskamp, Coffman, Wenstrup, Walorski, Abraham, 

Zeldin, Costello, Radewagen, Bost, Brown, Takano, Brownley, 

Titus, Ruiz, Kuster, O’Rourke, Rice, Walz, and McNerney. 

The CHAIRMAN. Good morning, everybody. Welcome to this hearing. I appreciate your attendance. 

We are again gathered to discuss VA’s budget execution for this 

fiscal year. And if you will remember, less than 3 weeks ago we 

gathered to hear Deputy Secretary Sloan Gibson testify regarding 

a budget shortfall at the Department of Veterans Affairs. I am sure 

everyone may be asking why we are here again on the very same 

topic, and I intend to explain in just a minute. But as we all know, 

the stakes have been raised considerably since the Deputy Secretary’s testimony on June 25. 

At that hearing, Deputy Secretary Gibson was asked the following question by Ms. Brownley, and I quote: ‘‘If Congress doesn’t 

act on the fiscal year 2015 budget shortfall, what is it going to look 

like in the VA in July and August and on October 1,’’ end quote. 

The Deputy Secretary responded that we get into dire circumstances the longer we go, but that, quote: ‘‘Before we get to the 

end of August, we are in a situation where we are going to have 

to start denying care to veterans in the community because we 

don’t have the resources to be able to pay for it,’’ end quote. 

The Deputy Secretary also testified about antiquated financial 

systems contributing to the problem, costs associated with the new 

hepatitis C drug treatments, and an unrealistic assumption of how 

fast VA could set up and effectively utilize Veterans Choice Program. 

Now, imagine my surprise when on July 13 I received a letter 

again from the Deputy Secretary that in the absence of providing 


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the flexibility, that VA is seeking to plug the shortfall with Choice 

Fund money, that VA hospital operations would shut down in the 

month of August, and that non-VA care authorizations would cease 

at the end of July. 

This is unprecedented. A true Budgetgate, if you will, of our 

time. First, never can I recall, or other individuals that I have 

talked to can recall, or any agency for that matter, other than VA, 

completely exhausting its operational funds prior to the end of the 

fiscal year with the consequences for VA being cessation of hospital 

operations. 

Second, never can I recall an issue of such enormous magnitude 

evading the direct attention of the President, and until just recently, you and I speaking about it, Mr. Secretary. This is not a 

flying-under-the-radar issue. Yet I feel that it is exactly how the 

VA and the President have treated it in an effort to avoid responsibility of what is going on. 

So that everybody understands where I am coming from, let me 

start by reviewing how we have arrived at this point. The first real 

hint of serious financial issues came as a result of a briefing for 

our staffs with the VA on June 4 on a very separate topic. At the 

conclusion of the briefing, committee staff noted that there appeared to be a $2 billion to $3 billion difference between VA’s projected $10.1 billion obligation rate for care in the community compared with the funds that VA budgeted for care in the community. 

The VA official that was briefing agreed with the discrepancy but stated cryptically that just because VA was on pace to spend $10.1 

billion, it didn’t mean that the money to address the discrepancy 

was either found or was available. That assertion was repeated 

upon further questioning, leaving it to staff to read between the 

lines what was meant. 

At around the same time, during a June 8 visit to the Cincinnati 

VA Medical Center, I myself began to hear rumors of an impending 

financial issue consistent with the cryptic warning that had been 

provided by VA officials in a staff briefings on the 4th of June. As 

a result, on the 10th of June, I called on either the Secretary or 

the Deputy Secretary to testify on the state of VA’s budget. 

As a consequence of my calling this hearing, staff received a prehearing briefing, again at our request, on June 18. It was at this 

briefing that VA for the first time publicly revealed a possible $2.5 

billion shortfall in funding. Notwithstanding this briefing, there 

was no mention of a hospital shutdown. 

On the 23rd of June we received a letter from the Secretary citing the looming shortfall of $2.5 billion and also requesting of the 

Appropriations Committee a transfer of funds from the medical facilities account to the medical services account. Again, there was 

still no mention of a hospital systemwide shutdown. 

And, finally, at the hearing on June 25 itself there was no mention of a hospital system shutdown coming in August. 

Mr. Secretary, I am disappointed about the slow, painstaking 

revelation of this crisis by the Department that is led by you. I understand there are excuses as to why we are in this position. However, somebody somewhere took their eye off the ball. Just as Congress established a cap on spending for the Denver project that VA 

busted, Congress also provided a budget for VA for fiscal year 2015, 


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which the President signed into law, and it too is now busted. In 

both instances, VA has left Congress with very little time to react 

to a crisis created by VA’s own management decisions. 

While we will not penalize veterans for VA’s management or 

transparency failures, the days when VA can come to Congress and 

just say, ‘‘Cut us a check,’’ are gone. Asking for flexibility without 

supporting information is not enough. Similar to the way a large 

corporation board of directors sets a budget and the corporate management implements that budget, the President and 535 members 

of your current board of directors set a budget and expect you and 

your staff to carry out the Department’s mission; that is, to manage 

the taxpayers’ resources in a fiscally responsible manner. 

Just as emerging circumstances in the private sector might cause 

a CEO to go back to the board armed with information supporting 

a request for additional resources or flexibility, we have the same 

expectation. And despite unsupported hints of a problem by the Department, that supporting information was not provided until extraordinarily late. 

We have already passed legislation to take VA out of managing 

major construction programs. Perhaps we need to bring in an outside entity to manage the Department’s finances. I hope not. 

I recognize Ranking Member Brown for an opening statement. 

[THE PREPARED STATEMENT OF CHAIRMAN JEFF MILLER APPEARS

IN THE APPENDIX] 

OPENING STATEMENT OF RANKING MEMBER CORRINE 

BROWN 

Ms. BROWN. Thank you, Mr. Chairman. And thank you for calling this hearing today to discuss the VA’s current budget shortfall 

and the possibility that VA may have to close hospitals or ration 

healthcare. 

Mr. Chairman, I know everyone in this room agrees that this 

committee is committed to providing the resources that VA needs 

to take care of our veterans. We all need straight answers to our 

questions. How much is needed, and why? 

We are all supportive to make sure our veterans get the care 

that they need. But yet again we are faced with an 11th-hour VA 

budget crisis. We must all work together, VA and Congress, in 

order to properly anticipate the resources needed for VA. The VA 

must do a better job of predicting requirements. It is important 

that VA starts planning and anticipating what our veterans will 

need and where they will need it. 

We have been hearing that this shortfall is due to the increase 

of veterans coming to get medical care, resulting in more veterans 

being treated outside of VA. I also think it takes care of the veterans with hepatitis C, many of whom are Vietnam veterans who 

we recently honored in a celebration in the Capitol, should be one 

of our highest priorities. But I wonder if this shortfall is fundamentally due to lack of planning and forecasting or for a variety of programs which provide services to our veterans. 

So today let’s figure out what we need to do to ensure that our 

veterans are getting the healthcare they had earned and begin to 

fix what steps we need to take, a fix that will prevent any more 

11th-hour budget crisis. 


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In February the Secretary began asking this committee for more 

flexibility to move money between accounts that would enable him 

to run his administration more like a business and better care for 

the veterans. Let me repeat that. In February, and again in March, 

the Secretary came right there and asked us to give him the flexibility to run the VA like a business so he could care for the veterans. 

We have over 60 additional accounts that the VA has to decide 

whether or not to allow flexibility. And as we track the VSO support and providing allowing the Secretary access to choice towards 

funds, I want to present for the record the VA physician productivity is up 8.5 percent. And it gives the account of every category 

that we are service veterans for fiscal year 2015 and the increase. 

I want to submit that to the record. 

The CHAIRMAN. Without objection. 

Ms. BROWN. In addition to that, I want to submit for the record 

a letter from each of the service organizations indicating that they 

support the Secretary having the flexibility to move this money 

around. 

When we did the Choice Act, the purpose of the Choice Act was 

to provide services to the veterans. We didn’t say what services, 

just services to the veterans, and the Secretary needs the flexibility 

and able to provide those services. 

And with that, Mr. Chairman, I yield back the balance of my 

time. And did you take the VA’s without objection—— 

[THE PREPARED STATEMENT OF RANKING MEMBER CORRINE

BROWN APPEARS IN THE APPENDIX] 

The CHAIRMAN. Without objection, I will accept those letters. 

And I do appreciate you submitting those letters of support, and 

remind my colleagues that all the veteran service organizations 

also support my accountability bill as well. So as we meet later on 

this week to talk about it, I hope that we will keep that in mind. 

I would remind the members that this committee and the Senate 

as well rejected on a bipartisan basis an attempt to go into the 

Choice Fund to fix the budget shortfall at the Aurora hospital as 

well. And I think we need to focus, rightly so, as Ms. Brown has 

pointed out this morning, forecasting and getting a better grasp on 

what is going on with the dollars that are appropriated to the Department of Veterans Affairs. And that is why we have asked the 

Secretary to be here. 

And I know you had to change your schedule in order to come, 

and I appreciate that. 

Without question, once we spoke, the Secretary said, ‘‘I will be 

there,’’ along with Dr. Tuchschmidt. 

So, Mr. Secretary, you are recognized for your opening statement. 

I know you also have some charts you brought with you. I don’t 

know if we are going to post them up here or if people have—— 

Secretary MCDONALD. We have given them out, Mr. Chairman. 

The CHAIRMAN. Okay. All right. Thank you, Mr. Secretary. You 

are recognized. 


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STATEMENT OF THE HONORABLE ROBERT MCDONALD, SECRETARY, U.S. DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY JAMES TUCHSCHMIDT, M.D., ACTING PRINCIPAL 

DEPUTY UNDER SECRETARY FOR HEALTH, VETERANS 

HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS 

AFFAIRS 

STATEMENT OF THE HON. ROBERT McDONALD 

Secretary MCDONALD. Mr. Chairman, if I may, I would like to 

start, and I know you would agree with this, by honoring our five 

servicemembers who were senselessly killed in Chattanooga. On 

behalf of all veterans and on behalf of our Department, I extend 

my deepest condolences to their families, their fellow 

servicemembers, and their friends who grieve their loss. We will 

never forget their service to our Nation, nor their supreme sacrifice 

on behalf of all of us, and the freedom that we so cherish. 

Thanks to the chairman and the ranking member for joining 

your Senate counterparts at our most recent Four Corners meeting 

at VA’s central office last Thursday morning. And I appreciate this 

opportunity to continue our dialogue publicly so veterans and all 

Americans can understand these important issues. 

Representing veterans and servicemembers this morning are senior leaders of some of our most important partners, veterans and 

military service organizations, and I want to thank them for being 

here as well. 

A year ago today at my Senate confirmation hearing I was 

charged to ensure that VA is refocused on providing veterans with 

the highest quality service that they have earned. I welcome that 

opportunity. 

For the last year, I have been working with a great and growing 

team of excellent people to fulfill that sacred duty. Over the last 

year, since my swearing in, 9 of the 17 top leaders in VA are all 

new. We have to get the right people on the bus, and we have to 

get them in the right seats on the bus. 

Because of their hard work, VA has increased veterans’ access to 

care and completed 7 million more appointments this year than 

last year; 2.5 million within VA and 4.5 million in the community. 

So 7 million total more than last year, 4.5 million in the community, 2.5 million inside VA. 

We have increased VA Care in the Community authorizations, 

including Choice, by 44 percent since we started accelerating access 

to care a year ago. That is 900,000 more authorizations than the 

previous year. While Choice has been just a small proportion of 

that 4.5 million, it is on the rise, and utilization has doubled in the 

last month. 

Today, because of growth in access, the Department is struggling 

to meet veterans’ needs through the end of the fiscal year. We need 

your help. 

You have already appropriated funds to meet these needs, but 

you haven’t given me the flexibility or the authority to use them. 

Without flexibility, we will have no option at the end of July but 

to defer all remaining non-Choice Care-in-the-Community authorizations until October, provide staff furlough notices, and notify 

vendors that we cannot pay them as we begin an orderly shutdown 


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of hospitals and clinics across the country. These are unfortunate 

conclusions to an otherwise productive year of progress. 

In fact, we have doubled the capacity that we thought was required to meet last year’s demand by focusing on four pillars: staffing, space, productivity, and VA Community Care, or what we 

sometimes call Choice Care. We have more people serving veterans. 

Since April 2014, we have increased net staffing by over 12,000, including over 1,000 new physicians, and we have used Choice Act 

funding to hire over 3,700 medical center staff. 

We have more space for veterans. We have activated over 1.7 

million square feet since last fiscal year and increased the number 

of primary care exam rooms so providers can care for more veterans each and every day. 

We are more productive, identifying unused capacity, optimizing 

scheduling, heading off no-shows, and we are also stopping late appointment cancellations and extending clinic hours at night and on 

the weekends. 

We are aggressively using technology like telehealth, secure messaging, and e-consults to reach more veterans. Clinical output, as 

you can see in this chart, has increased 8.5 percent, where our 

healthcare budget has increased only 2.8 percent. 

We are aggressively using Care in the Community. The Choice 

Program and our Accelerating Access to Care Initiative increased 

veteran options for care in the community. We have provided VA 

Care in the Community authorizations, including Choice, for 36 

percent more people than we did over the same period last year, 

a total of 1.5 million individual VA beneficiaries. 

In short, we are putting the needs and expectations of veterans 

and beneficiaries first, empowering employees to deliver excellent 

customer service, improving or eliminating processes, and shaping 

more productive and veteran-centric internal operations. 

That is MyVA, our top priority to bring VA into the 21st century. 

Our strategy is paying dividends for veterans. We have increased 

VA Care in the Community authorizations, including Choice, by 44 

percent since we started accelerating access to care a year ago. 

That is 900,000 more authorizations than the previous year. 

Between the end of June last year and May, we have completed 

56.2 million appointments, a 4 percent increase over last year. And 

there were 1.5 million encounters during extended hours, a 10 percent increase, and that is particularly important to our women veterans. 

Even with that increase, we completed 97 percent of appointments within 30 days, 93 percent within 14 days, 88 percent within 

7 days, and 22 percent same-day appointments. For specialty care, 

wait times are down to an average of 5 days. For primary care, 

wait times are down to an average of 4 days. And we have an average of about 3 days for mental healthcare. 

So we are making verifiable progress for veterans, and with your 

support, VA can be the best customer service agency in Federal 

Government. But even as we increase access and transform, important challenges remain. And there will be more in the future as 

veterans’ demographics evolve. 

It is now clear that the access crisis in 2014 was predominantly 

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bated by greater numbers of veterans receiving services. That sort 

of imbalance predicts failure in any business, public or private, especially when we promise veterans benefits without the flexibility 

to fulfill the obligations. 

So a fundamental problem is VA working to a budget, not to the 

package of benefits and services veterans have earned and have 

been promised by Congress. Budgets are static, our requirements 

are fluid, and changes in veterans’ needs and preferences for care 

far outpace the Federal budget cycle. 

Here is an example. Last year on average we added 51,000 veterans to our healthcare rolls each month. This year—this year—the 

monthly average of new enrollees has have been 131,000—131,000. 

That is a 147 percent increase. And we welcome them all, and I 

am sure you do too. 

But we can’t miss that today enrolled veterans only rely on VA 

for 34 percent of their care. Just 1 percentage point growth in reliance increases costs by approximately $1.4 billion. 

Let me say that again. Today, enrolled veterans only rely on VA 

for 34 percent of their care. Just a 1 percent increase, a 1 percentage point increase in reliance increases costs by $1.4 billion. 

So we are working hard to best serve more veterans, but without 

flexibility, we can’t provide what they need the way you have directed it. We have reached a decision point. Congress can either 

shape a different benefit profile for veterans or give VA the flexibility and money for legislated entitlements. My worst nightmare 

is a veteran going without care because I have the money in the 

wrong pocket. 

I earlier compared the inflexibility we face to having one checking account for gasoline in your household and one checking account for groceries. The price of gasoline falls in half and you can’t 

move money from the gasoline account to the food or grocery account. 

Well, the inflexibility we are talking about today is even worse 

than that. It is even more puzzling. I can’t move money from the 

food account to another food account, from a Care in the Community account to another Care in the Community account. 

Altogether, we have over 70 line items of budget that are inflexible, yet the veteran has choice. Freed up, they would help us give 

veterans the VA that you envision and that they deserve. We need 

flexibility to move money from line item to line item, just like you 

would a business. We need flexibility to move money from VA Community Care to Choice, and from Choice to VA Community Care. 

Both are Care in the Community. We need flexibility to transfer 

both directions depending upon demand because we will not ever 

be able to predict the demand exactly. 

We owe it to veterans and ourselves to be more agile 15 years 

into the 21st century. It was February when I asked for flexibility 

to move resources. It was May when we again asked for flexibility 

to use some Choice Program funding to provide Care in the Community. I am asking again for the simple flexibility to serve veterans with the money you have already appropriated so we can resource the capacity that we have grown. More flexibility will go far 

toward meeting veteran care and increasing access across the country. 


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Money for the Denver Replacement Medical Center will be depleted by early October, and work on the project will cease unless 

we receive congressional authorization for the full cost of the 

project and flexibility in fiscal year 2016 to transfer $625 million 

of our existing resources to the major construction account. 

We have presented several plans to Congress, the latest being on 

June 5, and we will have an update shortly. We anticipate the 

Corps of Engineers will award a contract to complete the facility 

in October and assume construction management on the project if 

we receive full authorization and that flexibility that we seek. 

To improve community care for veterans, we need to streamline 

antiquated business processes for purchasing care. For years, a variety of authorities and programs have provided community care to 

veterans. And I have trouble holding this up and talking at the 

same time, but you have this at your table. 

Today we have seven different programs for providing community care. Each one has its own exclusions, each one has its own 

payment option. It is incredibly confusing. We have traditional VA 

care. We have Choice. We have Patient-Centered Community Care. 

We have two separate plans for emergency care in the community. 

We have something called ARCH. We have Indian Health Service 

and Tribal Health Program. And these don’t include other programs for veterans’ beneficiaries. 

It is all very difficult to understand. Veterans don’t get it, providers don’t get it, our employees don’t get it, and I can tell you 

from our breakfast earlier last week, Members of Congress don’t 

understand it completely. 

We look forward to continuing to work with you on an integrated 

network of VA and community care and a single integrated reimbursement system to get the providers we need on board. You see, 

what happens is providers cherry pick the program to get the highest reimbursement rates. 

On May 1, we sent you our proposal, the Purchased Healthcare 

Streamlining and Modernization Act, a bill to make critical improvements in provider agreements and give us the flexibility to 

provide timely local care to veterans. Our proposal, modeled on the 

purchased care authority in the Choice Act, includes protections for 

procurement integrity, provider qualifications, and reasonable cost. 

Flexibility with respect to Choice is central to resolving the budget shortfall and ensuring veterans continue receiving timely care as 

we strive to meet the 30-day access goal. 

On top of the $7.5 million of VA Community Care we already 

provide, Congress added new entitlements for veterans in the 

Choice Act. But there are many programs that the Choice Act 

doesn’t cover. Because Choice authorizations and community care 

authorizations are in different buckets, we have a funding shortfall, in spite of the fact that both types of care are community care. 

At the current rate, we expect Care in the Community in 2015 

will cost an additional $2.5 billion. New hepatitis C drugs for veterans will cost an additional $500 million. All we seek is flexibility, 

flexibility through limited authority to use money for community 

care to the extent those exceed our fiscal year 2015 budget. 

To meet these growing requirements next year, VA needs the 

adequate funding the President’s 2016 budget request provides. 


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But the House-proposed $1.4 billion reduction means $688 million 

less for veterans’ medical care, meaning as many as 70,000 veterans may not receive care. Further, it means no funding for four 

major construction projects and six cemetery projects, and 17,000 

veterans and family members may not receive VA burial honors. 

The construction budget was cut 50 percent, and that is at a time 

when over 50 percent of our buildings are over 50 years old. 

The increase in requirements we are seeing anticipates greater 

challenges ahead. Services and benefits peak years after conflicts 

end. Remember, during my budget testimony I talked about the 

fact that we are now seeking the peak years of the Vietnam crisis, 

even though the Vietnam war ended 50 years ago. The healthcare 

requirements and the demand for benefits increase as veterans age 

and exit the workforce. 

So full funding of the 2016 budget request is a critical first step 

in meeting these challenges, but we have to look much further 

ahead for the sake of Afghanistan and Iraq veterans. In 1975, just 

40 years ago, the year I graduated from West Point, only 2.2 million American veterans were 65 years old or older. That is 7.5 percent of the veteran population. By 2017, we expect 9.8 million will 

be 65 years or older. That is 46 percent of the veteran population. 

What does that mean? Well, consider this. VA provides the best 

hearing aid technology anywhere. Medicare doesn’t cover hearing 

aids, and most insurance plans have limited coverage at best. So 

choosing VA for hearing aids saves veterans around $4,200. 

As VA continues to improve access, more veterans are going to 

come to the VA because they want to and because it makes financial sense. So it is a foregone conclusion that the cost of fulfilling 

our commitments will grow for the foreseeable future. 

It bears repeating that the 2014 access crisis was in part a Vietnam debt, not a debt of Afghanistan and Iraq where 

servicemembers will still serve. So we can’t be shortsighted. We 

have to respond today with a long-term view that underlines a 

commitment to VA transformation. 

Veterans who have preserved our freedom are watching us. As 

the military drawdown continues, servicemembers are also watching us. And young men and women who might choose to serve are 

watching us. They rightly expect us to fulfill our obligations with 

the same degree of dignity and fidelity with which they put their 

lives on the line for our Nation. If we choose shutdown, we fail all 

of them. 

Given the commitment we made at breakfast last week to keep 

working together, I know we will honor all of our obligations to veterans and their families of every generation. 

Thank you very much, Mr. Chairman and committee. We look 

forward to your questions. 

The CHAIRMAN. Thank you very much, Mr. Secretary. 

I would like to ask, you talked about additional enrollees this 

year, and I don’t have the numbers right in front of me. Did you 

say that was a net number, so it would include those that died, or 

is this just new enrollees? So you had 100,000 new enrollees. How 

many folks died and came off the system? 

Secretary MCDONALD. I don’t have the number, Mr. Chairman, 

of how many died. But I can tell you that with 7 million more apVerDate Aug 31 2005 08:03 Oct 07, 2016 Jkt 000000 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 Y:\98-689.TXT PAT

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pointments this year versus last, that a lot more are alive than are 

dead. 

The CHAIRMAN. And I understand that. But you made a point of 

talking about how many new people enrolled into the system, and 

I just want, for clarity purposes, I think it is important not just to 

focus only on that number—— 

Secretary MCDONALD. We will get you that number. 

The CHAIRMAN [continuing]. But that we get a net number. 

Secretary MCDONALD. We will get you the number of the number 

of people who died and the number of enrollees. 

The CHAIRMAN. And I think the simple question I think that we 

need to talk about today—and I know you wanted to focus on the 

appropriations process, which is still ongoing. I would hope very 

soon that the Senate will move and move a piece of legislation so 

we can get the MilCon-VA budget passed, I think it is very critical 

that we get that done. 

But if we didn’t have the Choice Program to fall back on today, 

that $10 billion, $9 billion, whatever the number is today, how 

would this problem be solved? 

Secretary MCDONALD. Well, Mr. Chairman, we agree with you. 

As we said last week, and as we have said from the very beginning, 

we very much favor the Choice Program. The Choice Program is 

the shock absorber that has allowed us to care for veterans at a 

time when more veterans are entering the system and when that 

care is necessary. 

You know, the Choice Program allocated $10 billion for care over 

3 years. We are already spending $6 billion for community care 

from the current VA budget. So the idea that has been propagated 

in the media that somehow we are against the Choice Program or 

we are gutting the Choice Program is absolutely, positively wrong, 

proven by the data. We have overspent $6 billion this year in community care. Community care is absolutely essentially. 

The CHAIRMAN. I think that the issue is your hepatitis C drug, 

$1.5 billion or whatever the number is for hepatitis C, is part of 

the issue. And I don’t think any one of us thinks that we should 

not be providing that drug. In no budget submission that I can recall was it discussed about that, although I am hoping that somebody, and Ms. Brown actually talked about the forecasting, that 

somebody was looking at the approval of that drug, and it was coming on, and that if it did come on, that it was going to cause a significant issue as it relates to the non-VA care line item of $6 billion, which is gone now, has never been gone before, but all of a 

sudden this year it has disappeared. 

And my questions was, if we didn’t have the pot of money that 

you are looking at now to solve this crisis, how would we solve the 

crisis? 

Secretary MCDONALD. Well, Mr. Chairman, what we are saying 

is that based on the laws that the Congress has passed, there are 

certain benefits we have to give to veterans, and the budget has 

to match that. Without the Choice Act, the budget clearly would 

not match the laws that we provide to veterans. 

And remember, as I said, only just about over a third of veterans 

are using the system. And with every new 1 percentage point of 


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veterans who enter the system, we are talking about $1.5 billion, 

an incremental $1.5 billion. 

I think the point you make on the hepatitis C drug is a really 

important one. I talked about the length of budget cycles in the 

Federal Government. We started the appropriation for 2015 because it is an advanced appropriation sometime around 2013. 

These drugs were invented between 2013 and 2015. They couldn’t 

have been anticipated. We have had two more new hepatitis C 

drugs come out. We are going to have new drug inventions in the 

future. 

How do we work together to create the flexibility in the budget 

cycle so that we can deal with incremental demand to veterans and 

new special causes like new drugs? And that is what we are proposing to work together with you on. 

The CHAIRMAN. According to your staff, the Veterans Health Administration has taken a number of steps to curtail the shortfall, 

including revised guidance on the use of non-VA care, halting all 

nonessential hires, purchase and travel, and pulling salary dollars 

for medical center accounts. 

One area that I see that hasn’t been looked at, and that is the 

issue of bonuses. What is sacred about the $350 million bonus pot 

that would prevent you from accessing that money? And if you 

need flexibility, we will be glad to give you flexibility to use that 

too. Would you not look at every crevice possible? 

Secretary MCDONALD. Mr. Chairman, you probably recall the 

meeting you and I had in your office where we went through the 

relative ranking and the accountability steps that we have taken 

within VA. One of those steps, as you may recall, is nobody in the 

Veterans Health Administration, nobody, is receiving a bonus for 

2014. And also, the relative ranking that we did of their performance, no one in the Veterans Health Administration received an 

outstanding rating. 

And I would defy you, as I did that day, to compare our relative 

rating, our relative performance rating, versus the relative performance rating of every other department of government and the 

best companies in the private sector, because we were following the 

principles of the best companies in the private sector. 

The CHAIRMAN. And I appreciate the meeting that we had, the 

information you provided. And my time has expired, but I want to 

get for clarity, nobody within the Veterans Health Administration 

is getting a bonus? 

Secretary MCDONALD. No executive, yes, sir. 

The CHAIRMAN. There is a very distinct difference between executive and the line employee, and I just wanted to make that clear. 

Ms. Brown. 

Ms. BROWN. Thank you, Mr. Chairman. 

First of all, let me just say that it was a beautiful service that 

we had here last week in the Capitol for the Vietnam veterans. 

And, you know, that glitter is very nice. I mean, they deserve it. 

But they also deserve the services. 

Now, I participated in every Choice meeting, every conference, 

voted on it, and the purpose of the Choice was to provide veterans 

services to veterans, their care. Can you expound more on the flexibility that you need? Because when I think about it, I think about 


VACREP0180 with DISTILLER
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the GI Bill. Veterans can go to any school that they want to. So 

the money follows the veterans. 

So can you expound on that flexibility that you need, that you 

have come to Congress, both openly and in private, and explain to 

us that you need the flexibility? 

Secretary MCDONALD. Yes, ma’am. Well, thank you, Ms. Ranking 

Member. 

As we have said, there are about 23 million veterans in this 

country. Only 9 million are signed up for our healthcare system, 

and probably only 6 million, 7 million use it on any given day. So 

there is an opportunity for every veteran to use our health system, 

and we would like that. But in order for that to happen, we have 

got to have the flexibility to be able to deal with an influx of veterans as we improve care. 

One of the things that you are probably aware of is if you get your knee replaced with Medicare, it costs you roughly $5,000. If 

you are a veteran and you get your knee replaced using the VA, 

you save $5,000. So to the degree we improve our system and we 

improve access to our system, more and more veterans will enter 

the system. And as we said earlier, every percentage point of veterans who enter the system is going to add another $1.5 billion of 

cost. 

With 70-plus line items of budget where we can’t move money 

from one line item to another, it distorts what we do. It causes situations like we are in today. And the whole purpose of the Choice 

Act was to improve care for veterans. The whole purpose of the 

Choice Act was to get veterans care in the community. What we 

are talking about is a shortfall in care in the community. 

So it really defies my logic to understand why we can’t use 

Choice care money for care in the community since that is the reason it was appropriated. The money has already been appropriated. 

It is sitting there. We would like to use it to care for veterans. And 

as more veterans come into the system, we want to care for them 

too. 

Ms. BROWN. One of the complaints or challenges is, you talked 

about knee replacement, so if someone goes into one of the Choice 

programs for knee and the doctor determined that both knees need 

to be replaced, you can’t do it based on exactly how the Choice is 

working right now because that other knee has had to carry. I 

mean, I know this is getting technical, can the medical person explain to me why? 

Dr. TUCHSCHMIDT. Yes. So I think if the veteran needs both 

knees replaced, under the Choice Program they could get both 

knees replaced. It would require a second authorization for the second procedure that needs to be done. 

I think that the challenge for us is really—you know, the chairman asked what would we do if we weren’t in a situation where 

we have Choice funds. And the fact of the matter is, is we probably 

this year would have done what we always have done. We would 

have managed to a budget. But we didn’t do that this year. We 

managed to a requirement, and that requirement was that no veteran would wait more than 30 days for care. 

And while we have worked very hard to make the Choice Program an option for that patient who needs that knee replacement, 


VACREP0180 with DISTILLER
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the fact of the matter is today a lot of our care is going—we are 

buying it through mechanisms outside the Choice Program, but we 

are doing it so that no veteran waits more than 30 days for care, 

and then accessing the resources to be able to pay for that is, I 

think, our challenge today. 

Ms. BROWN. My concern is those community programs that we 

have been working with for years, universities, other stakeholders, 

what is happening to those programs, because we have cut the uses 

of some of those programs because of the shortfall. 

Dr. TUCHSCHMIDT. We have curtailed the use of those programs 

for elective care today. Our interest is actually making Choice Program the premiere program, to make that program the predominant way that we get care. And we have worked very hard with 

both Health Net and TriWest to get the 87,000 providers that we 

have used in the past—some of those are our academic affiliates— 

to sign up to be providers under the Choice Program. And for our 

academic affiliates, we offer them both indirect and direct medical 

education, overhead expenses in the reimbursement that they have 

negotiated with CMS. 

Ms. BROWN. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Mr. Lamborn, you are recognized. 

Mr. LAMBORN. Thank you, Mr. Chairman. Thank you for having 

this important hearing. 

Secretary McDonald, you have come in here basically demanding 

$3 billion or healthcare in large part shuts down on August 20. 

And I am just amazed that we are in this position. Do you and 

your leadership team at the VA have any accountability or any responsibility at all for this happening? And if so, how much? 

Secretary MCDONALD. Well, of course we do. And as Deputy Secretary Gibson laid out in the last hearing on the same subject just 

a few weeks ago, there are many reasons that we are where we 

are, and I think we all share some of the responsibility, including 

Members of Congress. 

We have a new program called the Choice Program. It is hard 

to predict new programs. We have seven different ways of providing care in the community. And at the time the Choice. 

Mr. LAMBORN. Okay—— 

Secretary MCDONALD. Excuse me, sir. You want to interrupt? 

Mr. LAMBORN. Well, yes. Let me interrupt because my time is 

limited. We have described what the layout of the land is. You have 

gone through—— 

Secretary MCDONALD. I was trying to go through the reasons we 

are where we are, and I was going to show you what accountability 

we have. 

Mr. LAMBORN. Okay. Do you have any role in this, is what I am 

getting at. 

Secretary MCDONALD. We all do. We all do. You know, one of the 

first things you learn your first day at West Point is to say, ‘‘No 

excuse, sir.’’ We all do. And one of the things that baffles me in this 

case is we are dealing with a computer system that is over 30 years 

old. It is called the FMS system. It is written in COBOL, which is 

a language I wrote at West Point in 1973. We have got to change 


VACREP0180 with DISTILLER
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the management system of the financials of this enterprise called 

the VA. 

The problem that we have is when we benchmark private industry, our IT budget is about 50 percent of what a healthcare system 

IT budget is. So we have got to fix that. 

At the same time, we have got to improve our management of 

the financial systems, and we are going to work hard to do that. 

At the same time, it would help us if we had flexibility rather 

than over 70 line items of different budget that we can’t move 

around. 

Mr. LAMBORN. See, my issue is that every time one of these problems comes up, on an almost weekly basis it seems like this year, 

we hear pleas for more money or more flexibility or something like 

that to go forward, but we never really get to the bottom of what 

caused it in the first place. And that is just what I am trying and 

the rest of us here are trying to get to the bottom of. 

Secretary MCDONALD. Do you want me to repeat my opening 

statement? I thought I was pretty clear on what caused it. I mean, 

last year you talked about mismanagement being not giving veterans care. Now mismanagement is giving veterans too much care. 

You know, the Congress passes the law—— 

Mr. LAMBORN. No, no, no, no. Here is my real problem here. You 

say that on August 20 there is no other option except for an emergency supplemental by Congress. You are going to start closing 

down operating rooms, hospitals, clinics all over this country. And 

with a $60 billion healthcare budget out of a $160 billion total 

budget, there is no other way for you to see around this problem 

than to tell veterans they can’t come into the operation room after 

August 20. 

Secretary MCDONALD. Sir, I didn’t say that. I did not talk about a supplemental. What I talked about was using part of the $10 billion that has already been appropriated by Congress for care in the 

community to pay for care in the community. That is the lunacy 

of why we are here talking about this. You appropriated $10 billion 

for care in the community. We are talking about using it to pay for 

care in the community. 

Mr. LAMBORN. Mr. Chairman, I yield back. 

The CHAIRMAN. Ms. Brownley. 

Ms. BROWNLEY. Thank you, Mr. Chairman. 

And thank you, Mr. Secretary, for your continued leadership to 

right the ship here. I appreciate it very much. 

I do think that flexibility is part of the solution. It is not the panacea, but it is part of the solution. And I think, clearly, that we 

need to be more nimble to serve our veterans and to serve them 

appropriately in the way that they deserve it. 

Closing hospitals is not a choice, as far as I am concerned. I 

think we have an IT system that can’t track spending and can’t 

reconcile a budget in a timely way. And I would argue, and I think 

that you have alluded to this in your testimony, but I would argue 

that, yes, there has been an increase in demand from our veterans. 

But I would also argue that the VA is pushing more resources out 

the door than they have in the past, and that is a good thing because pushing more resources means that more veterans are being 

served and being served appropriately. 


VACREP0180 with DISTILLER
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So I guess my question, you have mentioned about areas that we 

need to improve upon, you mentioned IT, that we are spending 50 

percent of what private industry spends on their IT systems, and 

better management checks and balances, but what are we going to 

do? 

I think we need, before we move forward in any way, shape, or 

form, we need assurances that these kinds of things are going to 

get fixed, that we can’t move towards flexibility and hope and pray 

that the next time we are going to be better off. 

We need assurances that these are going to be fixed and that we 

will know in a timely way where we are, if we ask the question 

today, we know exactly where we are in terms of money that has 

been spent and what the balances are. 

So share with us the specifics and when you think these things 

are going to be fixed so that we don’t approach another fiscal year 

with this same kind of calamity that we are facing today. 

Secretary MCDONALD. Thank you. 

I again want to reiterate that we do own these problems. We do 

want to fix these problems. I didn’t want to give any different kind 

of impression with Congressman Lamborn’s question or yours. 

It starts with getting the right people in place. We just, as you 

know, just got confirmed Ms. LaVerne Council, who is our Assistant Secretary for the Office of Information Technology. She was the 

IT leader for Johnson & Johnson. She was the IT leader for Dell. 

I have been working to recruit her for many months, almost since 

the day I was confirmed. 

We have got to get the right leaders in place. I think we now 

have them. What we then need to do is we need to benchmark 

other operations, which we are doing. And in the case of the financial management system we use, FMS, the COBOL system I am 

talking about, we have got to replace it. And until we do replace 

it, we have got to take brute force effort to make sure we do a better job of keeping track of our budgets and keeping you informed 

of them. 

I didn’t mention it earlier, but one of the issues here was, when 

you passed the Choice Act, you demanded in the Choice Act that 

we account for care in the community in a different way than we 

were doing it previously. You asked us to centralize that at our 

business office. And I am sure you did that in order to keep control 

of that money and make sure we weren’t spending it for something 

else. 

Well, that change helped exacerbate this situation. Nevertheless, 

we tried through brute force to try to keep that accounting whole 

so that we could understand what was going on. But there is no 

question we have got to do a better job. 

Ms. BROWNLEY. Well, Mr. Secretary, for me at least, I presume 

that we have the resources to find the right people for the job. So 

that is part of the solution. 

I have to say that I don’t have a lot of confidence, having served 

on this committee now for 21⁄2 years, that the VA—you haven’t 

asked us for additional money for an IT system yet. I presume that 

potentially will come. But I don’t have the confidence that within 

a year we are going to have a new IT system that provides the 


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tools necessary that we would need to be able to have timely data 

and timely information in terms of where we are. 

Is there something that you are working on specifically to give 

us some assurances? 

Secretary MCDONALD. Well, obviously, this is a high priority for 

us. But I think before we design an IT system to deal with seven 

different ways of paying for care in the community, we ought to 

work together, as we talked at our breakfast last week, to go to one 

way of paying for care in the community, and then making the IT 

system will be a lot easier. 

Ms. BROWNLEY. Thank you. I yield back. 

The CHAIRMAN. Dr. Benishek. 

Dr. BENISHEK. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary, for being here this morning. I think 

you did a pretty succinct history of what was going on here. 

I guess my biggest problem, frankly—and I agree with having 

more flexibility in accounts. Nothing irks me more than seeing new 

windows put in at VA that just were replaced 4 years ago when 

we don’t have a nurse anesthetist. I mean, it is stuff like that. I 

mean, I completely agree with that. 

I guess what I am most concerned about is the fact that we 

didn’t know about this whole situation until, what, 2 weeks ago or 

less than that? And we had Mr. Gibson here. And all of a sudden 

it is like a crisis. 

And I think, from my perspective, I was kind of hoping that you 

would have, like, a plan to reform the VA and make it all good, and 

you talked about some of that stuff here. But I haven’t really seen 

you come out and tell me, maybe the chairman knows something 

I don’t, about the reform process going on. And I am really disappointed in this $3 billion shortfall. Why 

weren’t we knowing more about this in advance because—what is 

the story with that? Why don’t we know about it sooner? 

Secretary MCDONALD. Congressman Benishek, I just want to 

draw your attention to this. This I gave you on June 5, we gave 

all members of the committee on June 5. This was about Denver. 

It was about replacing the Denver facility. But I thought it was important at the time we published this to also give you a heads-up 

on the work we are doing to transform VA. 

So if you turn to the back of this book, the last 56 pages are all 

about the transformation of VA. And we have sat down with those 

Members of Congress who are interested and gone through the detail. They happened to be mostly in the Senate. But we would love 

to take you through the detail. 

We have set up an external advisory board, which includes some 

of the most outstanding CEOs in this country that are helping us, 

and the VA is going through the largest transformation in its history. And every member on this committee has 56 pages of what 

is going on. And we are happy to spend more time with you. We 

would like you to be part of it. In fact, we would like to have hearings that talk about what are we doing to transform the future. 

Relative to the shortfall, our first knowledge of it was around the 

middle of May. At the time we had a meeting with the Eight Corners, both the Senate and the House appropriations and authorizing. At that time we mentioned three issues that were emerging. 


VACREP0180 with DISTILLER
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One was hepatitis C, one was Denver—of course Denver was the 

one that was the reason for the meeting—and the third was the 

cost of care in the community. 

At that time we thought we could solve the problem. We thought 

we could solve it by putting more veterans into the Choice Program 

and, therefore, not relying as much on our internal care for the 

community budget. We obviously couldn’t solve the problem. 

We also thought that we could use unspent money from previous 

years to do it, and we got legal opinions and OMB opinions that 

we couldn’t do that. So we couldn’t solve the problem. 

Dr. BENISHEK. Is there unspent money from previous years sitting around? 

Secretary MCDONALD. Yes, sir. I mean, anytime you have budget 

line items that are over 70, where you are inflexible in moving 

money from one budget line item to another, you are going to have 

unspent money. 

In fact, one way to rid the government of unspent money is to 

allow more flexibility between accounts. That is the way businesses 

do it. 

Dr. TUCHSCHMIDT. Yes, if I could just add, so, in prior years, the 

last 5 years sit in the Treasury, and as those obligations are expensed, the obligations, there are funds that get de-obligated, and 

those funds sit in the Treasury for 5—— 

Dr. BENISHEK. How much is there? 

Dr. TUCHSCHMIDT. I think for the last—about last 5 years, there is about $1.3 billion. 

Dr. BENISHEK. I had another question, too, about maybe thirdparty reimbursement for nonservice-connected care, and I have 

heard that is an issue that the collections are not what they should 

be. Can you give me a situation update with that? 

Dr. TUCHSCHMIDT. Yes, I think our—so our collections this year 

are actually up significantly. I don’t have the—I haven’t refreshed 

that figure in my head recently. I want to say it is about 7 percent 

higher than we had anticipated, so we are working very hard to 

improve collections. A lot of our patients who have insurance have 

actually Medigap coverage, and without a Medicare EOB, those insurance firms don’t—— 

Dr. BENISHEK. EOB, what is that? 

Dr. TUCHSCHMIDT. Explanation of benefits. So because we are not 

a Medicare provider, those providers don’t necessarily pay us. But 

we are working very hard to collect every penny that we can. 

Dr. BENISHEK. I am out of time apparently. 

The CHAIRMAN. Ms. Titus. 

Ms. TITUS. Thank you, Mr. Chairman. A lot of that money that 

is left over, though, was kind of used quietly to pay for the continuation of the Denver project, wasn’t it? 

Dr. TUCHSCHMIDT. Are you talking about the money in the Treasury for the last 5 years? 

Ms. TITUS. Wherever you found that money in programs around. 

Dr. TUCHSCHMIDT. Well, that money actually is in the Treasury. 

It is not available to us, so we can’t use that money. We had—we 

thought we could, and it is money that essentially becomes, as I 

said, de-obligated as expenses come in. Also sometimes there are 

new expenses for whatever might have happened in, let’s say in 


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2014 and that money is then used in that year, so you can actually 

become antideficient after the fact, so to speak. 

So that 1.3 billion was not available to us. We had hoped it 

would be. I was actually the staff person that had the cryptic conversation with the House staff back in June, and we had—we 

thought we had a plan. When—I mean, in my opinion, quite frankly, we are a victim of our success. I mean, we have gotten many 

more veterans care. 

Ms. TITUS. Okay. But where did you find that money for Denver? 

That was a little piece—— 

Dr. TUCHSCHMIDT. That 1.3 billion is not for Denver. 

Ms. TITUS [continuing]. That was around, right? 

Secretary MCDONALD. The money for the Denver project that we 

have talked about for this year came from the current year budget, 

not from previous years’ budgets. 

Ms. TITUS. Okay. And, also, in that report that you referenced, 

that is where you also listed as a possible solution for Denver taking a 1-percent across-the-board cut, which in retrospect now seems 

like not a very good idea when we are so in the hole now. We 

couldn’t have afforded a 1-percent cut, but apparently, at that time, 

you thought you could. 

Secretary MCDONALD. That is correct. 

Ms. TITUS. Well, we are going—there is a lot of teeth gnashing 

and hair pulling here today. I agree with many of the things that 

have already been said, but the fact of the matter is we can’t let 

hospitals close. We are going to have to look for some flexibility. 

I think my confusion and maybe a confusion here, too, is over the 

difference between the care in the community programs that have 

now been consolidated and Choice. Seems to me there is very little 

difference in those, aside from some regulation, some contractors, 

and some naming. They are both really about care in the community. Is that accurate, so that would mean that flexibility is really 

not that big a problem? 

Secretary MCDONALD. Yes, your statement is accurate in principle. In execution, though, it is incredibly complex, and I would 

ask you to look at the chart that we gave you, and what you will 

find is we have seven different—seven different programs. 

Ms. TITUS. Right. 

Secretary MCDONALD. All of which have different payment methods and different exclusion amounts. I was traveling with a Senator who brought in providers, and they all complained to me about 

every program we have except one, and obviously, I knew that the 

reimbursement rate for that program was higher. 

So because we have different reimbursement rates, you have different providers distorting the system and encouraging one program over another. What we have proposed—and we provided the 

legislation to the chairman and also to the Senate—is to bring all 

those together under one program, one reimbursement rate, make 

it easier for the veteran, make it easier for the VA employee. There 

is—— 

Ms. TITUS. If you do that, though, doesn’t that mean that the 

flexibility that you need from the Choice program to that consolidated community and the care would make sense? 

Secretary MCDONALD. Yes, ma’am. 


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Ms. TITUS. I am trying to help you here. 

Secretary MCDONALD. Yes, ma’am. That is exactly right. You go 

to one program, you have one budget. 

Dr. TUCHSCHMIDT. There is one really important point here, 

though, and that is that our—you know, our community care programs are what we used to call purchased care, used to call fee. 

There are a lot of things in those programs right now that are not 

covered by Choice and will require statutory change to fix that. So 

long-term care is not covered by Choice right now. Home care is not 

covered by Choice. 

Ms. TITUS. Can you work with us to look for legislative fixes? 

Dr. TUCHSCHMIDT. Absolutely. 

Ms. TITUS. And not just the Senate, but maybe some of us on 

this committee? 

Dr. TUCHSCHMIDT. We absolute have. We are working on 13 

things that we think need to be changed and have—we will have 

made a commitment to sit down with staff from this committee and 

from the Senate to make sure that we can address those issues. 

Ms. TITUS. Great. And one last thing. I have been notified that 

you all are looking at moving southern Nevada from the VISN 22 

to the VISN 21. That means our veterans, instead of being able to 

drive 4 hours to Los Angeles, will drive 8 hours, 9 hours, 10 hours 

to San Francisco. I am going to be speaking this week later with 

somebody, Dr. Shulkin, but I just want to put it on your radar because this is something that we are very concerned about. 

Secretary MCDONALD. Thank you. We are trying to simplify the 

organization structure, but we are not—we want to make sure it 

is better for veterans, not worse. 

Ms. TITUS. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Mr. Secretary, have you provided us with draft 

legislative language that would combine all of this? 

Secretary MCDONALD. I haven’t as yet. I made a mistake when 

I said that. What we have provided is the providers agreement legislative language, which you do have. We have not yet provided the 

consolidation legislation language. 

The CHAIRMAN. Thank you. 

And, Ms. Titus, the biggest difference between the non-VA fee 

care pot of 6 billion that sits in there today and the $10 billion 

Choice is the non-VA fee care money was at the discretion of the 

Department of Veterans Affairs whereas the Choice program is at 

the discretion of the veteran, so that was the biggest thing that 

was done from our standpoint. 

Dr. Huelskamp. 

Dr. HUELSKAMP. Thank you, Mr. Chairman, and I appreciate the 

topic of consideration today. 

And Mr. Secretary, I appreciate you coming. This is a very difficult discussion for me. 

I had great hopes that we would move forward in the last 2 years 

to fix some of these problems, but as I see it, you are coming here 

before us with the most massive shortfall in VA history, nearly $3 

billion. And I am not for certain, when did you personally know 

that we had this shortfall, Mr. Secretary? 


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Secretary MCDONALD. What I said to Dr. Benishek was around 

the middle of May. 

Dr. HUELSKAMP. Middle of May. And if I understand the numbers correctly, in this particular line item, it is approximately 50 

percent over the budget amount. Is there a level at which they 

come to you earlier than halfway through the fiscal year to say, 

hey, we have got a problem? Is that normal manner in which budget shortfalls and problems are not brought to your attention unless 

they are 50 percent over budget? 

Secretary MCDONALD. When there is a budget overage, you obviously try to resolve the issue as quickly as you can. 

Dr. HUELSKAMP. But is there a level? Again, 50 percent over 

budget. They tell you, I guess, in May and well before the fiscal—— 

Secretary MCDONALD. Remember there is a $10 billion source of 

funds called Choice, and what we are talking about is Choice. 

Dr. HUELSKAMP. Without—— 

Secretary MCDONALD. We are talking about care in the community and—— 

Dr. HUELSKAMP. Mr. Secretary, I do know that. 

Secretary MCDONALD [continuing]. The same thing. 

Dr. HUELSKAMP. And what I would like to know is why you 

lowballed—— 

Secretary MCDONALD. I didn’t lowball. 

Mr. HUELSKAMP [continuing]. Non-VA care estimates. The actual, 

you came in and projected they would be 25 percent less of the actual figures for 2014. You came in and projected you would save 

1.5 billion. They would be lower, and they are actually coming in 

at 1.5 billion over your estimates. So on one hand, you 

lowballed—— 

Secretary MCDONALD. When did I say that? 

Dr. HUELSKAMP. In the budget submission to Congress. 

Secretary MCDONALD. In my 2016 budget testimony? 

Dr. HUELSKAMP. Let me give you these figures that you provided 

the committee, and maybe your staff didn’t tell you this, and that 

is why I ask about the 50 percent. 

Fiscal 2014, $6.3 billion of actual spending, and you come in and 

said we only need 4.9 billion. That is a 25-percent cut. And then 

you are surprised to come in and say you are actually going to 

spend more than you were spending in 2014. 

So you come in and lowball the figures by 1.5 billion, then come 

in here later and say not only did we not cut 1.5 billion, we are 

going to add another billion on top of it. That is what I don’t understand, Mr. Secretary. 

Secretary MCDONALD. I am not familiar with the figures you are 

talking about. Maybe Jim is, but as I said, I learned about this—— 

Dr. HUELSKAMP. I don’t need to hear the explanation. I want—— 

Secretary MCDONALD. And as I learned about it, we got the information as quickly forward as we can. 

Dr. HUELSKAMP. Mr. Secretary—— 

Secretary MCDONALD. We had the hearing, as I told you 

about—— 

Dr. HUELSKAMP. Please. 

Secretary MCDONALD. The Deputy Secretary was here, and we 

are here today. 


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Dr. HUELSKAMP. Mr. Secretary, I would like an explanation of 

why you projected a 25-percent reduction in this line item, and now 

you are saying you want a 25-percent increase over last year. 

Dr. TUCHSCHMIDT. I am not familiar, actually, with the information you have, but—and I would be happy to look at it, but what 

I can tell you is that—— 

Dr. HUELSKAMP. If I yield back to the chairman. 

The CHAIRMAN. Very quickly. I believe it was the VHA CFO that 

did provide that information to us. 

Dr. HUELSKAMP. And here is my concern, Mr. Secretary, and I 

know, in our closed-door meeting back in February, you did tell us 

and many on this panel, you do support VA Choice, but then you 

come in and requested to raid those funds and use them elsewhere. 

And then we hear from others in the Department that you have 

many employees that are not very supportive of Choice, and somehow we don’t have a lot of veterans moving to Choice, and it came 

in well under budget. 

But what you wanted in next year’s budget, we decided we are 

not going to do that, but then, somehow, a few months later, you 

come in and request essentially what we wouldn’t do for you earlier. So—but I believe your Department either lowballed purposely 

or severely—created a severe mistake, but how could you claim 

that massive cut, and that is what I don’t understand. 

Dr. TUCHSCHMIDT. So, actually, I don’t know what you have, but I can tell you that this year, we started off with a budget of $8.2 

billion for care in the community, and if—— 

Dr. HUELSKAMP. No, you are wrong on that. That was—— 

Dr. TUCHSCHMIDT. No, I am not wrong on that. 

Mr. HUELSKAMP [continuing]. What you spent last year. 

Dr. TUCHSCHMIDT. No, I am not wrong on that. 

Dr. HUELSKAMP. The budget amount was 7.2 billion. That is 

what you put in your budget. 

Dr. TUCHSCHMIDT. What we budgeted internally this year was $8.2 billion for purchase care, and we had hopes of—that the 

Choice program would offset some of that, and we took 688 million 

out to pay for hepatitis C drug. 

Dr. HUELSKAMP. And out of a $3 billion, that leaves 80 percent, 

but those are not the numbers you provided to the committee, and 

I would like to see those clarified, Mr. Chairman. 

One last thing as well. And for the Secretary, for everybody here, 

I know yesterday you apparently told the VFW that we were cutting the VA budget. That has never happened. That has never happened. You know that is not true. Hopefully that has been 

misreported in the media that you told the VFW that Congress has 

cut your budget. 

But I want to know, just for the record that has come up, beginning in how many employees have actually been fired for the waiting scandal? Is it only two? Is that correct? 

Secretary MCDONALD. I think you have seen over the weeks that 

we have made progress. As you know, we sought disciplinary action 

against six. Four are gone; two retired. We have got over 100 under 

investigation for wait time manipulation, and just last week, I 

think you saw an announcement that the FBI has actually indicted 

someone, and so these investigations do take time, Congressman. 


VACREP0180 with DISTILLER
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And the good news is they are getting to fruition, and as they do, 

we are taking action. 

As you know, since I have been Secretary, I think over 1,300 people have been terminated. We take this very seriously. That is why 

we have 9 of our 17 members and new leadership team in our medical centers; 91 percent of our medical center directors or leadership teams are new. So the leadership is changing. And I hope with 

that change, we have a change in culture and a change in performance, and that is why we have had 7 million more appointments 

this year than last year. 

Dr. HUELSKAMP. I yield back. 

Secretary MCDONALD. Thank you. 

The CHAIRMAN. Thank you. 

Mr. Secretary, we do have an outstanding question in to you in 

regard to the 1,300 people that you say have been terminated, how 

many were probationary? And we are still awaiting the information 

for that. 

Secretary MCDONALD. We will get you the answer as quickly as 

we can. 

The CHAIRMAN. Thank you. 

Secretary MCDONALD. Unfortunately, our HR systems are similar to our financial systems, so we have to count them by hand. 

The CHAIRMAN. Ms. Kuster. 

Ms. KUSTER. Thank you very much, Mr. Secretary, and I appreciate you being here with us today. 

I want to try to focus in on an issue that I think may be causing 

some confusion in the question of community care. The VA has recently redefined what had traditionally been viewed as non-VA 

care to include some other programs, so CHAMPVA, State veterans’ homes, which I am very proud of the one in New Hampshire, 

community nursing homes. I think you have mentioned home 

healthcare, and I just want to be realistic, given the aging demographic of veterans in New Hampshire, we have 65,000 Vietnam 

veterans who we are committed to serving. But just so that we all 

understand going forward, we are referring to this as sort of a crisis situation in the short term, but long term, if we are making the 

commitment, a bipartisan commitment, that we have made to 

shorten timeframes for waiting, to provide greater access, to hire 

more professionals, I want to understand exactly what is in this 

umbrella of community care and how we expect to meet this need 

and pay for this need going forward. 

Dr. TUCHSCHMIDT. So we, under the—in the VACAA legislation, 

we were required actually to centralize all these programs under 

the chief business office and to centralize those fundings. 

Ms. KUSTER. Required by whom? 

Dr. TUCHSCHMIDT. By the Choice legislation. So we did that. And 

when we did, I mean, we have always called them purchased care 

really, and when I came in 23 years ago, it was fee care, but we 

were calling it non-VA care, non-VA community care, right, and we 

said, well, when 20 percent of our care on a cost basis is out in the 

community, it is not non-VA care anymore. It is VA care, so we call 

it now VA community care. We are trying to change how we talk 

about it and the mind-set in the organization about what we are 

trying to accomplish. 


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So you are correct, that that bucket of things includes both outpatient and inpatient care that you normally think of as, you know, 

the purchased care stuff, whether we do. It also includes our nursing home care, our State home care, home care, CHAMPVA, those 

list of things are there, and I am happy to get you the detailed list 

of those and the breakout financially of what is in—being spent in 

each of those buckets. 

Ms. KUSTER. And is it your proposal going forward that we would 

consolidate all of those into one program that we on Capitol Hill 

refer to as Choice, but it could also be referred to as community? 

Dr. TUCHSCHMIDT. So we have all these programs, and then we 

also have, as the Secretary said, seven different ways of acquiring 

those services through sharing agreements, through contracts, PC3, 

ARCH, all these things. I think our proposal—and we really want 

to sit down with the staff and jointly hammer out what a future 

state might look like. I think that the Choice program is a good 

program. I think that if we can figure out how to make that model 

work across all of these community care benefits so that we have 

a more unified and structured way where we have one billing system, one way to authorize the care, one way to get information 

back, the same kinds of providers that can provide those services, 

then I think we would be much better off because we could actually 

explain it, not only to other people but to ourselves. 

Ms. KUSTER. And then let me understand when that was consolidated under the Choice Act to a central—presumably here in 

Washington, or is it located somewhere else? 

Dr. TUCHSCHMIDT. Well, the CBO—it is—the chief business officer is here, but we have pieces of that office in Atlanta and Denver 

and—— 

Secretary MCDONALD. Austin. 

Dr. TUCHSCHMIDT. Austin. 

Ms. KUSTER. So when that was consolidated, it sounds like there 

was an unintended consequence or inadvertent result in that you 

no longer had the information that is very regional. I know in our 

area, these are individual decisions. And as the Secretary mentioned, the reimbursement rate, whether a particular clinic, a particular nursing home, a particular home care program is going to 

accept this rate, enter into a contract, have we—is it fair to say 

that—and it is inadvertent, but Congress wrote it that way—— 

Dr. TUCHSCHMIDT. I think you hit the nail right on the head. 

Ms. KUSTER. Is it fair to say that that has created a problem? 

Dr. TUCHSCHMIDT. I think you hit the nail on the head. So I 

think that these programs typically—well, most of the outpatient 

care, the big bulk of it, the nursing home care, State homes, all 

that stuff was managed locally by a medical center. They had a 

budget for it. They had the clunky information systems that we 

had, but they kind of were able to keep track on it. 

And when we centralized that, maybe we should have anticipated some of the problems, but we didn’t, and I think that we lost 

a lot of intelligence about the obligations that were being made 

and, you know, because you have the authorizations in one system 

and you have the obligations in a different system and at a time, 

quite frankly, when we have unprecedented volume of care that we 

are buying in the community. 


VACREP0180 with DISTILLER
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So maybe we should have anticipated those things, but I think 

it was an unintended consequence, and we did not expect this to 

happen. 

Ms. KUSTER. So—and I appreciate your candor, and this is something that we also have to own on our side of the table, having 

drafted the legislation that way. I think we were probably anticipating a better data system, which, clearly, we have a problem 

with, but this is not unique to the VA that the Federal Government 

make authorizations and obligations and then ends up having to 

pay the piper, so our balance here as members of this committee 

is meeting the needs of the VA and the veterans all across our districts in every corner, from El Paso to Pittsburgh, my northernmost 

town in New Hampshire on the Canadian border. 

But the question becomes, going forward, how do we reintegrate 

that vital local information? And my time is well up. I apologize, 

Mr. Chair. I apologize. I was watching his clock, and I thought I 

was on the way down. I was on the way back up. Excuse me. 

The CHAIRMAN. Did you have—was there a question that needed 

to be answered? 

Ms. KUSTER. I didn’t get it. 

Secretary MCDONALD. Mr. Chairman, I think the answer is we 

are going to work with you to develop that legislation that integrates all the different ways of community care. 

The CHAIRMAN. Ms. Brown has a statement. 

Ms. BROWN. Yes, I just want a followup to that question because 

once we pass the Choice, and we move how we—we had the account on the system, you all caught the problem because when you 

all reviewed it, and you were looking at the requisitions that were 

coming in, it wasn’t adding up, and so that is when you all went 

in and did an individual audit. Can you explain that? 

Dr. TUCHSCHMIDT. Yes. That is exactly correct. So back when the 

first quarter ended, we were—it was clear that we had about a 40- 

something-percent increase in the authorizations, but we were on 

plan with our $7.6 billion expenditures for purchased care in the 

community. 

When we sat down and said somehow this doesn’t make sense, 

I could think of a lot of reasons why it might actually make sense, 

but we didn’t really know, and we felt like we needed to look at 

this. So we did in January and February look at that. It took us 

a while to understand exactly what the problem was going through 

the system, and then once we did that, we had to sit down and reconcile millions of authorizations by hand to understand the magnitude of the problem. And it wasn’t until really late April that we 

understood that, the magnitude of that problem. 

We put a plan together, which we thought was going to resolve 

the situation. And as I said, the pillars of that plan started getting 

pulled out kind of from underneath us, and it wasn’t really until 

May, the middle of May when we said: Look, the plan is not viable, 

and we don’t really know how to fix this problem without driving 

more of the care really through Choice and accessing Choice dollars 

for their intended purpose, which is to buy care in the community. 

Ms. BROWN. Thank you. 

The CHAIRMAN. I do think it is important to note that just prior 

to folks finding out that this was an issue, we swept 150—— 


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Ms. BROWN. Is that you? 

The CHAIRMAN. No, but somebody has got a cell phone on that 

needs to be turned off. 

We got $150 million that we swept out of the VA to give to Denver. Is that correct? 

Secretary MCDONALD. I believe so. I don’t know for sure. 

The CHAIRMAN. So you knew that there was a shortfall coming, 

but you thought it was critical that you go take 150 million and 

give to Denver rather than allocate it to the problem. 

Secretary MCDONALD. Mr. Chairman, I wouldn’t have sequenced 

it that way. I think the action on Denver predated this understanding that was discussed. I mean, please understand that every 

tool was being pulled out of the toolbox to do away with this, even 

to the point where we had medical center directors voluntarily reducing their salary budgets, their compensation budgets. We had 

employees willing to give up their compensation in order to meet 

this need of veterans in the community. 

The CHAIRMAN. Maybe some bonuses, too. 

Ms. Walorski. 

Ms. WALORSKI. Thank you, Mr. Chairman. 

Mr. Secretary, good to see you. Thanks for being here today. You 

know, the problem that I don’t understand with this, this is what 

I don’t get, is that this—it seems like it keeps coming back to this 

issue of perception. You know, you come today, you talk—you have 

all your stats. You have your tables and your graphs and those 

kinds of things. And we, over here, we want solutions just as badly 

as everybody does because we are fighting for veterans in our district, and we are fighting in a bipartisan manner, and we are doing 

everything that we can do legally through a legislative process. 

But what we have been up to since you were here last is multiple 

hearings that go on every other day in this place. We have looked 

at the continued whistleblower retaliation, continued procurement 

failures, systematic failures in management in Philadelphia and 

Oakland, Denver cost overruns, purchase card programs waste, 

fraud, and abuse. And I have been involved, and every time your 

IT chief has been here, and we have talked about this as well as 

earlier, you know, getting answers from the IT department: Do you 

need any money to upgrade what you have? No, ma’am, no, we 

don’t. Do you have what you need and what you have needed to 

keep up with? Yes, we do. Do you have a, you know, domain issue 

that has been encrypted? No, we don’t. 

And so that is what we have been up to, and that is what the 

American people have been up to is we have been sitting here asking questions since the last time we met personally in a body like 

this, and I think the issue of trust and this issue of verify becomes 

dominant in my mind because my fear is that, you know, I love the 

issue of flexibility. You know, I sit with another Member, I have 

a—I am on the Armed Services Committee. We did that with the 

DoD. They need to be able move funds. We understood that. But 

there was also a history that we could track that was very transparent, very open, and the American people saw it as well that 

there was a really verifiable need. My concern is back to some of 

the other points folks made is what is going to be the guarantee 

today when we leave here? And we are going to continue our purVerDate Aug 31 2005 08:03 Oct 07, 2016 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 Y:\98-689.TXT PAT

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suit of all this oversight of everything else that goes on in the VA 

that the American people hear about as well. And I sit here today 

shocked thinking, man, we just heard about this crisis. 

And is there anything other, number one, than the threat of 

shutting down medical facilities to take care of our veterans, is 

there anything else that can be done, number one? But number 

two, if this flexibility of funds is the answer, then where is the 

guarantee? Are we going to be looking for a marker that you can 

say, ‘‘Hey, in 6 months, here is what you are going to see, and I 

guarantee it, I put the power of my office behind it’’? 

Secretary MCDONALD. I think that the only guarantee I can give 

you is, one, that we are putting the right leaders in place and that 

those leaders are leaders who are trustworthy, and we have to earn 

your trust. I think that is the strongest guarantee I can give you. 

Ms. WALORSKI. I understand, and I appreciate that, and with all 

due respect, I accept that as your answer. I guess the problem is 

this, that we have been at this longer than you have been at the 

table, and we are still celebrating the day you came and took 

this—— 

Secretary MCDONALD. And I apologize for everything that happened before me. 

Ms. WALORSKI. And your confirmation was a year ago, and I 

think in some areas you have been incredibly helpful, but I guess 

my concern is this, that when we talk about being flexible and 

moving funds, and we don’t see—and you know, we are the eyes 

and the ears for a quarter of a million people, each of us, that is 

what we hear and see. And when we still get the information back, 

and we still sit here in hearings and don’t have the verification on 

1,300 people, whether they are probationary, whether they are full 

employees, we don’t see the shake, rattle, and rolling of your side, 

and those are the kinds of things that I want to see, you know. 

It wasn’t too long ago that veterans were dying because of intolerable kinds of instances that were exposed here in this place 

through media of what was happening to our veterans. You know, 

I wanted to see people go to prison. There were people that died 

that will never be accounted for again, and the gross abnormalities 

that were happening at the hands of the administrators. And I 

would think that with the 1,300 people terminated, the FBI investigations, and those kinds of things, that maybe we wouldn’t have 

as many hearings as we have had, but we still have instances of 

offenses against whistleblowers. IT issues that the American people 

just shake their head at, the billions of dollars spent, no reforms, 

nothing is working, and we still sit here today, and I feel bad. 

Secretary MCDONALD. I wouldn’t say nothing is working. A year 

ago, more than a year ago, we had virtually 300,000 people on wait 

lists. Today we have 7 million more completed appointments. We 

have wait times, on average, that are—— 

Ms. WALORSKI. And that is fine. I understand. 

Secretary MCDONALD [continuing]. 5 days for specialty, 4 days 

for primary care, 3 days for mental health. I defy you to find another medical system in the country that has that. I mean, we are 

here, and we are all for shining light on what we are doing because 

we think it makes us better, and we appreciate your partnership 

to do that, just like—— 


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Ms. WALORSKI. I understand, but—— 

Secretary MCDONALD [continuing]. You appreciate your—— 

Ms. WALORSKI. I don’t want to make light here today of the fact 

that this is an easy decision, and I don’t want the American people 

to think—in the State of Indiana where I live, $2.5 billion is more 

than real money. It is shocking money, and we toss that figure 

around out of a $168 billion budget like, oh, we are just asking for 

this little amount of money, but I am asking for a guarantee and 

for somebody someplace to be able to stand up and say, you know, 

never again on my watch, never again on the Secretary of Defense 

watch or anybody else’s or this President will we tolerate what has 

happened, and I want a guarantee that says, here is what history 

says, we are still having hearings on massive amount of issues. 

That is what history says. 

I want a guarantee going forward that this will stop, and I—the 

final question I have for you is when did the President know that 

there was a crisis in the VA? 

Secretary MCDONALD. I think the President has been working on 

a crisis in the VA for a long time. 

Ms. WALORSKI. When did the President know about this budget 

crisis? 

Secretary MCDONALD. Well, the first thing I—the first discussion 

I had with the President was the crisis that we have. 

Ms. WALORSKI. When did—— 

Secretary MCDONALD. And that is when he nominated—— 

Ms. WALORSKI. When did our President know about this hearing we are having today that we are $2.5 billion short? 

Secretary MCDONALD. I don’t remember. 

Ms. WALORSKI. Did you tell the President? 

Secretary MCDONALD. Pardon me? 

Ms. WALORSKI. Did you tell the President? 

Secretary MCDONALD. Oh, of course. I told chief of staff, sure. 

Ms. WALORSKI. When did you do that? In June? 

Secretary MCDONALD. I don’t remember. 

Ms. WALORSKI. May, when it started happening? Okay 

Secretary MCDONALD. I knew about the middle of May, so it was 

probably around that time. 

Ms. WALORSKI. I appreciate it. 

Thank you, Mr. Chairman. I yield back my time. 

The CHAIRMAN. I do have information, Mr. Secretary, that your 

office did provide to us regarding terminations, and I have 958 

were probationary terminations out of that number. 

Mr. O’Rourke. 

Mr. O’ROURKE. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary and Dr. Tuchschmidt, for your answers 

today, your testimony, and your service to the country. 

I had a townhall meeting this Saturday, and as with almost 

every townhall that I have, it was dominated by concerns about access to the VA, and primarily mental healthcare access, which 

seems to reflect your own recent rankings as of July 1. Out of 141 

mental healthcare systems within the VA, El Paso ranks 141st. We 

are dead last. 

One of the veterans who came up, wonderful young man, incredibly patient and polite, said that that Friday, the day before, he 


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had had a mental healthcare appointment that had been scheduled 

for some time at 9 a.m. At 7:30 a.m., he was called to inform him 

that his provider would not be available and that somebody would 

call him back to reschedule that appointment. No one called him 

back, so he came to the townhall to let me know. I immediately 

called Gail Graham, the new interim director, and she got him an 

appointment this week, so he is going to be seen. 

But I tell you that anecdote because even though we are ranked 

the worst in the country for access, you show us at about 17 days. 

When I asked the veterans in my community, we did a statistically 

valid survey of veterans in El Paso about access, with a margin of 

error under 4 percent, they tell me that it takes about 64 days, on 

average, to see someone. So I just want to register this note of concern, especially given the wait time scandal that we had last year 

that I don’t think VA statistics and reporting on wait times reflect 

what veterans actually experience. And when I ask veterans, as opposed to the VA, I get a very different number, and so I just—I 

want to register that with you and I want to thank you for your 

commitment to turning the situation around in El Paso. It could 

not be a graver crisis. 

You know, Mr. Secretary, you said you worst nightmare is a veteran not being able to get access to healthcare because we haven’t 

provided flexibility. I think the worst nightmare for veterans, and 

they are currently experiencing that in El Paso, is that despite 

record funding, they are unable to get access to see somebody, and 

fully 34 percent of the veterans we surveyed could not see a provider at all for mental healthcare access, whether it was 16 days, 

60 days, 34 percent could not get in at all. 

So I just want to make sure that we go back and look at those 

numbers and make sure that they reflect the reality as veterans 

are experiencing. 

Secretary MCDONALD. Yes, I would suggest we do that. Let’s get 

your numbers and our numbers together. 

Mr. O’ROURKE. Great. 

Secretary MCDONALD. And understand the basis of your research 

and the basis of our numbers and see if we can sort through it. Obviously, we have work to do in El Paso. You and I and others have 

been working on that. We know that. 

Mr. O’ROURKE. And we have submitted a proposal, a pilot project 

to you, and I thank you for reviewing it so quickly. Would love to 

work with you going forward to actually implement that or a better 

idea if you have got one, but we have been at the bottom of the 

barrel, and that translates into care deferred, care denied, suffering 

on the part of veterans and veteran suicides in my community. And 

I have met with too many families, surviving members of veteran 

suicides now. This cannot go on. 

So I don’t mean to be parochial, but I have got to, on behalf of 

the veterans I represent, tell you that we are in crisis right now, 

and we really need your help. So whether it is our plan that we 

propose to you or your plan, let’s turn this around. 

I would like you to talk about—I don’t disagree with your request 

for flexibility. I think it makes sense, and I don’t know that I would 

have a problem long term if I knew you were going to be the VA 

Secretary, you know, for the next 5 or 10 years to carry this out, 


VACREP0180 with DISTILLER
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but in thinking about a policy and a set of rules that we lay down 

for future Secretaries and the VA to follow, going forward, how do 

we not create a moral hazard in the Aurora funding, in this $3 billion shortfall, in future requests from the VA that whatever happens at the VA and whatever additional resources are needed, Congress will provide them without necessarily getting accountability 

or safeguards going forward that we won’t need to plug additional 

gaps to the tune of billions of dollars? 

Secretary MCDONALD. We want to help with that. As we put together this proposed legislation, we would like to put in the safeguards and restrictions that we think would be necessary, regardless of who is in office. We think that is certainly a part of it, and 

I said that in my prepared remarks. 

The thing also that we have got to work on is we have got to find 

a better way to predict what demand will be. You know, I talked 

earlier about the 34 percent of veterans who are accessing care and 

a 1 percentage point difference being another billion and a half dollars. I mean, it is just—we got to get a handle on that and we have 

got to work together on forecasting what that will be and building 

that system because, remember, as I said 2014, the crisis was because of the Vietnam era veterans. It was not because of Iraq and 

Afghanistan. 

If we don’t get ready for Iraq and Afghanistan veterans today, we 

won’t be ready for them 20, 30, 40 years from now as they age. 

Mr. O’ROURKE. And I would also like to ask you again to consider 

an idea, not my original idea. In fact, it was brought by a Somers 

family at a hearing we had on the survivors of veterans who had 

committed suicide because of lack of access or problems within the 

VA. And that suggestion on their part was as you are referring 

care out, and you said you had a 36-percent increase in community 

care last year, their suggestion, which I think holds a lot of sense, 

is, why not refer that care out that as comparable to what the civilian population would need? I use the example of diabetes, or you 

have the flu or dental care. And then for those signature disabilities and conditions related to service in combat, post-traumatic 

stress, traumatic brain injury, military sexual trauma, the VA 

truly becomes a center of intelligence for access, quality of care and 

outcomes. Any quick thoughts on that suggestion from the Somers 

family? 

Secretary MCDONALD. My only quick thought is that patients 

like to go through the same medical doctor, so if you have a primary care physician, you want that primary care physician connected to the specialty physicians. 

One of the things I am trying to work, given we are doing community care, is I am trying to improve the understanding of the 

military culture amongst private sector doctors. We have been 

working with Secretary Burwell on this and if—somehow we have 

got to do that because the primary care physician in the private 

sector has to ask the person, you know, ‘‘have you served,’’ ‘‘have 

you been in the military,’’ because there is a different culture and 

a different set of questions that need to be asked if they have, so 

we are working on that. 

Dr. TUCHSCHMIDT. And I think we agree with your position, actually. I am not—I think coordination of care issue says we need to 


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provide as much of the services as we can, but there are some 

things, mental health is one of them, that you cannot readily go out 

and buy in a community. 

Mr. O’ROURKE. Right. 

Dr. TUCHSCHMIDT. And we have to be the center of excellence. 

We have to be able to provide the infrastructure to support those 

services for veterans. 

Mr. O’ROURKE. Great. I would like to use this basis of agreement 

to actually prototype this in El Paso, if possible, somewhere in the 

country so we can see if this actually works. 

With that, I yield back to the chair. 

The CHAIRMAN. Why El Paso? 

Mr. O’ROURKE. I don’t know. It just comes the mind. 

The CHAIRMAN. I want to wish a very happy birthday to Dr. Roe 

who is now recognized for his 5 minutes. 

Dr. ROE. Thank you, Mr. Chairman. 

And a couple of things, obviously, Mr. Secretary, you are here for 

the same reasons we are here, that is to provide the highest quality 

care for veterans that we can provide in this country and as they 

have earned. 

I think one of the frustrations that I have had on this committee 

is that where he have—as a committee, I have been here 6 and a 

half years and we keep providing more and more and more and 

more money, and then we have the VA come back for more money. 

And we see things like the building in Aurora, we beat that horse 

to death, moves that cost hundreds of thousands of dollars. 

I mean, I think of a billion dollars that was wasted in Aurora 

that could have provided VA veterans healthcare. It was—I don’t 

know where it went. We had a failed system between DoD and VA 

that spent a billion dollars trying to get—that was way before you 

got here—to try to integrate two healthcare records. Vanished, the 

money is gone. That is the waste that I see, and no way on this 

Earth will you have allowed that to happen at your shop when you 

were—and no way would I have allowed that to happen when I was 

the mayor of a local city, Johnson City, Tennessee, where I was, 

or in my own practice. I couldn’t have survived doing that. 

And what has happened is, is that both sides of the aisle want 

to provide for the care, and we feel like we are caught in this trap. 

And the chairman mentioned bonuses. All these other things that 

we see, when we go back out and go home and talk to our veterans, 

and to Mr. O’Rourke’s point, I have got to tell you, in Johnson City, 

Tennessee, these numbers at the Mountain Home VA hospital— 

and they do a fine job. And as a matter of fact, we get—I get veterans all the time that tell me how much they appreciate the care 

they get there, but there is no way on this Earth that the primary 

care is 4 days and that mental health is 3 days and the specialty 

care is 5 days. I don’t know where that information came from. It 

doesn’t exist at our shop, I can tell you. 

And Mr. O’Rourke, I think just pointed—not to beat a dead 

horse, but I don’t know where that came from, but that is a fairy 

tale where I live. 

Secretary MCDONALD. I would love to get the information from 

you as to the veteran, the name, the date, you know, where that— 


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where you believe that that is not true because we really do need 

to make sure that our data is—has integrity—— 

Dr. ROE. That—— 

Secretary MCDONALD. And the only way that we can solve that 

problem is if we work together to make sure we have the right 

data, but we can’t—you know, anecdotes are helpful, but we really 

needs names and dates and so we can really dig into it. 

Dr. ROE. I can—— 

Secretary MCDONALD. And I would love to do that. 

Dr. ROE. I have got a big long thick stack of names and dates 

of people that can’t get in this—in this number. And that is—I 

think that is amazing that you could—if this is true. I certainly 

couldn’t do this in my own private practice, I can tell you that. I 

couldn’t meet that criteria, an average clinic appointment, 4 days 

or 5 days. Most doctors are booked up for weeks ahead or at least 

a month ahead, so anyway, enough on that. 

The other thing I wanted to bring up, and I think the Choice program, as I understand it, as we envisioned it, was to help get rid 

of the backlog, not the VA care that is going on currently but was 

to eliminate the backlog. If that program is going to continue, and 

it is sunsetted, then I think you are absolutely right. There ought 

to be one system of taking a veteran from the VA to outsource care. 

I don’t think there ought to be three or four ways you have to figure out how to do it. It ought to be easy. 

And I talked to several veterans, and I would be delighted to let 

you talk to one of the Veterans Service Officers in Hawkins County, Tennessee, that cannot make sense of the Choice program to 

this day. His comment was it is a joke. I put that in the record, 

his letter to us, and he certainly doesn’t mind using his name. 

The other issue, I think, that disturbed me was when the Veterans Choice Program came out, the first $500 million that was 

spent—and we had a hearing on that—300 million of it was administration. And I don’t think—I don’t understand that. I don’t understand why 60 percent of the money went to the bureaucracy and 

$200 million of it actually went to get veterans in to see me as a 

doctor. And maybe that was a need. I don’t know, but that just 

seemed a little excessive to me. 

Secretary MCDONALD. Well, that was the amount that was required to set up the network. Nevertheless, you know, we are trying to maximize the use of that network as much as we can to provide more care to veterans. 

Dr. ROE. I think the other thing I would look into, and certainly 

the flexibility has been talked about. You need—any CEO needs 

that to operate their shop. I agree with that. 

The other thing that I have—just want to comment in the last 

few seconds I have is that the morale certainly at VA hospitals, if 

you talk to the staff, is down now. Those folks feel beat down, and 

I think there needs to be an evaluation of the morale of the physicians and so forth. 

The other thing I am going to do is bring a bill up very soon as 

a trial process, and a lot of people have done this. When you go to 

your doctor anymore, not only does the assistant come into the 

room but another person shows up, and that person is a scribe, and 


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because of electronic health records, a lot of doctors now use a 

scribe to enter the data so that they can see more patients. 

I would like to do a pilot program in the VA of four, five, six, you 

pick it, and let scribes come in and see if the physicians that are 

there—or the providers—are not more productive. I guarantee you 

they will be if you do that. I have my friends who work at the VA 

tell me they could see 25, 30 percent more people. 

Mr. Chairman, I am sorry I am over. 

Secretary MCDONALD. This is a big issue that you raise about the 

scribe. We are piloting a program with scribes. It is uneven right 

now, but we are in the process of systematizing. Morale also is a 

big issue. As I have said earlier, we have 91 percent of our medical 

centers with new medical center directors, new leadership teams. 

We had a lot of people leave for various reasons, and morale is a 

big issue. 

And VA people, a third of which who are veterans, don’t want to 

be called out as somehow different and failing to perform. They 

really care about veterans, and they are working hard every single 

day. 

Dr. ROE. I yield back, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Miss Rice, you are recognized. 

Ms RICE. Thank you, Mr. Chairman. 

Mr. Secretary, I just want to make sure I heard you correctly. 

You said you found out about the extent of the—or the shortfall in 

May? 

Secretary MCDONALD. Yes, that is what I said. 

Ms RICE. So I believe that we were given information, this committee was given information that the shortfall was actually discovered as far back as either February or actually, actually, I think 

it goes back to even December. Can you explain that discrepancy? 

Secretary MCDONALD. No, I can’t. I haven’t heard that. 

Dr. TUCHSCHMIDT. Well, I don’t think we knew that there was 

a shortfall. I think that what we knew in February was that there 

was a difference between the increase in authorizations that were 

up substantially and the obligations for that care, which were on 

plan. 

So all the data we had in February actually suggested that financially we were on path to—for our 7.6 billion estimated expenditures for the year. We questioned that, that data, right. I mean, so 

it doesn’t make sense, why would you have 40 percent more authorizations, but the obligation rate isn’t up? So that is what we 

knew in February, and it was at that time that we actually sat 

down and said: We have got to figure this out. Maybe there is a 

good explanation and it all makes sense, but maybe it doesn’t. 

And it wasn’t really until April that we understood the problem 

and the magnitude of that problem. 

Ms RICE. So that just sounds like semantics to me. 

Dr. TUCHSCHMIDT. In what way? 

Ms RICE. You knew about a shortfall. You just didn’t want to say 

those—it sounds like you just don’t want to say that word. 

Secretary MCDONALD. No, I think it gets to, do you have a solution? I think what we said is we thought we had a solution until 


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about the middle of May, and that solution fell apart as we tended 

to work the different options for that solution. 

Ms RICE. Okay. So—— 

Secretary MCDONALD. We said that earlier in the hearing. 

Ms RICE. Mr. Secretary, so if you can put it in 30 words or less, 

the reason for the shortfall, the—tell me, hep C, give me an idea 

concisely. 

Secretary MCDONALD. Well, the easiest description is more veterans are coming for care, 7 million more appointments than a year 

ago. 

Ms RICE. So that is the reason. 

Secretary MCDONALD. That is the reason. 

Ms RICE. So I kind of feel like this is—maybe you agree, Mr. 

Chairman, I don’t know, Groundhog Day. I feel like, once again, 

this committee is sitting here with members of the VA, whether it 

is you or Sloan Gibson or anyone else talking about a crisis in the 

VA, right, that is a recurring theme, another request for yet more 

money and—and the most disturbing point to me is a complete and 

utter lack of accountability. 

Secretary MCDONALD. I don’t agree with you, obviously, and remember, this money is already appropriated. We are not asking 

you to appropriate new money. What we are asking you to do is 

use money that has already been appropriated for the Choice program for care in the community to be spent for care in the community. That is what we are asking. 

Ms RICE. And how are you going to pay—— 

Secretary MCDONALD. It is already appropriated. 

Ms RICE. Then how are you going to pay for care in the community next year? 

Secretary MCDONALD. Well, what we are asking for is a part of 

the Choice budget. What we have talked about is let’s put together 

an integrated way of doing care in the community. One budget, one 

way to do it, not the seven that we have today that members of 

the committee have already said, veterans don’t understand, members of the committee don’t understand, and our employees have 

trouble actually executing. 

Ms RICE. So where is the accountability, I guess, is what I am 

asking for. There is no part of this shortfall that is related to misuse of funds or potential fraud or anything like that? 

Secretary MCDONALD. There has been no misuse of funds or 

fraud in this regard. 

Ms RICE. Have you done an audit? Have you had someone maybe 

externally do an audit? Just yes or no. 

Dr. TUCHSCHMIDT. We have done an internal reconciliation of 

these, but—— 

Ms RICE. No. So is that a yes or a no? 

Dr. TUCHSCHMIDT. We have not had an external audit. 

Ms RICE. Okay. Well, you think that might be a good idea, yes 

or no? 

Dr. TUCHSCHMIDT. No, I am not sure it is necessary, but I think 

that we have 40 percent more authorizations for care in the community. You asked us to make sure that no veteran was waiting 

more than 30 days for care. We have done that. That is exactly 

what we are trying to do. 


VACREP0180 with DISTILLER
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Ms RICE. Okay. What I think is disgraceful, just because I have 

about 20 seconds left. 

Dr. TUCHSCHMIDT. Yes. 

Ms RICE. Is for you to insinuate that by not giving money, no one 

on this committee cares about veterans. 

Dr. TUCHSCHMIDT. I think you—— 

Ms RICE. Hold on a second. I am so sick and tired of that insinuation. 

And I yield back my time. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Secretary MCDONALD. Just to clear, we didn’t insinuate that. We 

think you all care for veterans dramatically. 

What we are faced with is you pass the laws to give veterans 

benefits; you pass the budget to pay for those benefits; and we have 

got to execute that. When there is a mismatch between those laws 

and that budget, it is a very difficult proposition. 

I get letters from all of you every single day trying to give more 

benefits to more veterans, and I am all for it, but we have got to 

have the money to do it. 

The CHAIRMAN. I think the law also says that a Secretary must 

manage within available resources. 

Secretary MCDONALD. That is why we are here. 

The CHAIRMAN. But the Choice Act is not a resource that is 

available to you at this point. 

Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

Mr. Secretary, thank you for your service in the United States 

Army. 

Secretary MCDONALD. Thank you, sir. 

Mr. COFFMAN. Although I think that the President—I like to 

think the President chose you in recognition of your experience in 

Proctor & Gamble, and we had, in this committee, I think, my 

predecessor on the Oversight Subcommittee had requested a GAO 

study of major construction projects. And that study was done and 

published in April of 2013, and it said at that time that there were 

four ongoing projects, one in Las Vegas, one in Orlando, one in 

New Orleans, and one in Aurora Colorado—it listed as Denver— 

that they were—that they averaged $366 million over budget and 

that they were each, on average, was about 3 years behind schedule, so we clearly knew that there was a big problem. 

Now, if you, in Proctor & Gamble, were to step in and you had 

a department that was that dysfunctional, you would have fired the 

management team, straightened it out, and spun it off. And when 

I look at the VA, that your core competency is really benefits to 

veterans is obviously healthcare being a very significant part of 

that, construction management is not a core of the mission. And I 

would love it if you would reexamine extricating the VA from being 

involved in major construction management projects. 

I know we will have legislation today that will reduce the 

amount—I have talked to Sloan Gibson about this on numerous occasions. I think he was at the $250 million figure, projects above 

$250 million would be outsourced to the GSA or Army Corps of Engineers. I think we have legislation today, $100 million. 


VACREP0180 with DISTILLER
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One of the problems we have in the legislation today is that the 

Denver construction administrative investigation board was supposed to be finished with their work in June. It will not be done 

in June, may be done in September, but I just think that it is a 

real concern. And we held a—the subcommittee—Oversight and Investigations Subcommittee—held an investigative hearing in Denver on the Aurora projects at our State capital. I think it was last 

year. The chairman was there. Mr. Lamborn was there, and Mr. 

Hagstrom was in charge of construction at that time, and stuck to 

this $604 million figure, that the project could be built for $604 

million. Lost it in litigation late in 2014 on every single count that 

this was a plan over a billion dollars that could not be built for 

$604 million. 

The Army Corps of Engineers is in the process of taking over the 

project, but we are talking about a shortfall today, and we are also 

talking about a half-finished hospital, hopefully a little over a halffinished hospital right now, that will cost another $625 million, I 

believe, is the figure, which is more than its initial projected 

amount to finish the hospital. 

And so I would just really ask you, I mean, as a veteran, that 

it is just not the core competency of your organization, and to focus 

on healthcare, focus on benefits, and to leave, as many other agencies of the Federal Government do, these major construction 

projects to others, I would love your response. 

Secretary MCDONALD. Well, Congressman Coffman, as you know, 

we agree, in part, with you. I think, as you indicated, the only difference between your point of view and ours is what that right 

level is, if it is 250 or 100. But I do want you to know that we have 

taken a lot of steps to improve our construction process. We are 

doing integrated master planning now. We are requiring that major 

construction has at least 35 percent plans design made prior to cost 

and schedule information, that we are doing the very deliberate requirements control process, that we are instituting a project review 

board, that we are using a project management planning system, 

that we are establishing a VA activation office. 

I could go on, but all of these things are best practices that come 

from the private sector. At the same time, we also have met repeatedly with the Association of General Contractors. They had boycotted VA. We met with them, the Deputy Secretary Gibson and I 

did. We took them through all the changes that we are making to 

our process, and we asked them their point of view if we are missing anything, and they are helping us redesign. 

So wherever we end up with the legislation, what I can assure 

you is, we are now operating against the new and improved process, and what happened in Denver, which is really regrettable, was 

awful, should never have happened, will not happen again. 

Mr. COFFMAN. Mr. Turner, we have gone through these cycles before where VA was going to try and reinvent itself in terms of construction management, wound up in the same position. I think a 

$100 million ceiling will be a $300 million ceiling when cost overruns are done. I just don’t have confidence that the culture is going 

to change. 

And, with that, I yield back. 

The CHAIRMAN. Thank you. 


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Ms. Brown. 

Ms. BROWN. I just want to be quick, but as we move forward 

with this construction discussion, when you say general service or 

even Army Corps of Engineers, I think you have got to have some 

of the input—and I know no one likes the word ‘‘czar,’’ but we have 

got to have someone because even when I look at the Army Corps 

of Engineers, I know what happened with Katrina and that project, 

so we need accountability. I don’t care what agency is handling it. 

I yield back. 

The CHAIRMAN. Mr. Takano. 

Mr. TAKANO. Thank you, Mr. Chairman. 

Mr. Secretary, you are introducing, in my view, a new way of 

talking about contract care with non-VA providers, providers that 

are not salaried within the VA. Is that correct? 

Secretary MCDONALD. Yes, sir. 

Mr. TAKANO. So you are calling this care in the community, and 

I think, on a bipartisan basis, we are encouraging the VA to cooperate more with what you refer to as the community, or non-VA 

providers, and I think you are trying to change the culture of the 

VA so that there is not this enmity toward—that there is not—it 

is not a conspiracy to disappear the VA. That is kind of what I am 

reading. 

Secretary MCDONALD. That is why we changed the name of care 

in the community from non-VA care to care in the community because we in the VA own that care, even though it is in the community. 

Mr. TAKANO. And relative to that, I have seen others within VA 

health testifying before this committee, the concern, since you do 

own the care and you are ultimately responsible for it, there needs 

to be ways in which the contractor, the contract providers are also 

accountable, that that care is accountable. 

And I have raised a number of times this issue with interoperability of health records. Now, you have centralized the billing and 

payment operations from the regional areas, and you are saying in 

your testimony what I have heard is that that centralization was— 

had a lot to do with driving the shortfall, the misunderstanding 

that arose from what you knew from the regional billing to the centralized billing. Is that—is that somewhat accurate? 

Secretary MCDONALD. The requirement in the Choice Act to centralize the accounting and billing and administration of the Choice 

Act helped make it more obscure for us to figure out what was 

going on. 

Mr. TAKANO. So that was—so when you, in February, were—you 

were seeing a discrepancy between the authorizations and the payouts, you weren’t able to figure that out, this centralization obscured—was obscuring a clear understanding of what your cash position was. 

Secretary MCDONALD. Yes, sir. It was a new practice. 

Mr. TAKANO. My concern is, is there any feeling that the centralized authorization has resulted in inappropriate authorizations? 

Because my concern is that the regional offices have problems with 

records that were paper records being passed back and forth, and 

there was complaints that even registered mail wasn’t being acknowledged, and I envisioned, you know, stacks and stacks of 


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records that had to be scanned in, and there were delays in payments to doctors because of that. 

Mr. TAKANO. Has the centralization improved that situation at 

all? 

Secretary MCDONALD. So far, from what we know, the centralization, not just of the Choice Act, but across the payment function 

of VA, has actually accelerated our ability to pay bills and that—— 

Mr. TAKANO. It has accelerated it, but you are not worried about 

the acceleration, the rise in authorizations is authorizations that 

were authorized that shouldn’t have been? I mean, the accountability in the system is still sound? 

Secretary MCDONALD. No. In fact, no, if anything centralization 

usually leads to better security. That is my experience. 

Dr. TUCHSCHMIDT. The care is still determined at a local facility 

level. A clinician seeing a patient decides the patient needs something, puts in that request, and the authorization is entered at a 

local level by the business office people at that facility into the system, and the medical record information is transmitted to the third 

party administrator. 

Mr. TAKANO. So there is a great deal of umbrage about this surprise, what is information that we have to act on rather immediately. But the overall narrative that I am getting, though, is that 

more money is being pushed out the door appropriately, meaning 

more veterans are being served, more veterans are finding out 

about the superior service, meaning that—you used the example of 

the knee replacement. There is no copay, and copays under Medicare are significant. 

So it means it is a rational decision that a lot of veterans who 

qualify for both programs are choosing to come to the VA. That accounts for—can you give me that number again, the increase in the 

number of people coming to the VA that you had before? 

Secretary MCDONALD. It is over 2 million. But what we are talking about is 7 million more appointments in the last year 

versus—— 

Mr. TAKANO. I was looking at the increase. 

Secretary MCDONALD. Yes. Seven million more appointments, 4.5 

million out in community care, 2.5 million in VA care. 

Mr. TAKANO. Well, and this was obscured by the—part of it was 

obscured by the change in the Choice Act and how you did the accounting. Well, I don’t like these short notices, but we have to act 

quickly. And the important thing is we serve the veterans, and the 

good news is that we are serving more and more veterans, and let’s 

keep doing it. 

The CHAIRMAN. Dr. Wenstrup. 

Dr. WENSTRUP. Thank you, Mr. Chairman. 

I want to thank you gentlemen both for being here. 

You spoke today about the increase in productivity, and I think 

that the number you said, every 1 percent of increase is $1.4 billion? Was that the number I got? 

Secretary MCDONALD. I am sorry. I may have confused you. Basically veterans are getting 34 percent of their care from the VA. Any 

increase of 1 percentage point of that leads to a $1.5 billion increase in budget need. That is different than an increase in productivity. 


VACREP0180 with DISTILLER
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Dr. WENSTRUP. Okay. But on that vein also with the increase in 

productivity, the VA is different than a private practice, right, because when you increase your productivity, that is not money coming in, that is money going out in most cases. There may be some 

silos there. Whereas on the flip side, in private practice, you increase your productivity, you got more coming in. And I think that 

is the reality that we all have to face in this situation. We asked 

for more productivity. 

One question I have is that amount of productivity, that increase, within the same amount of hours, if you will, in other 

words, if I increase my productivity because I work Saturdays and 

Sundays, that is a little different than did I increase my productivity during the same amount of time. 

Secretary MCDONALD. Right. And also what we looked at was 

productivity, disregarding how many more physicians we brought 

in. But as we shared, the first chart we shared was on the 8.5 percent increase in productivity. Jim can drill down on this more. 

Dr. TUCHSCHMIDT. Yes. So we have done it, I think increased 

productivity, in a number of ways. And so one of them is what you 

suggested, in that we have evening clinics, we have had weekend 

clinics. And particularly those evening clinics have been very popular with younger female veterans in particular. 

Dr. WENSTRUP. Well, one of the things I think we really need to 

focus, though, and, again, this is the comparison of private practice 

to the VA, is how do we increase the productivity within the same 

amount of time. And we have talked about poor set-ups within a 

clinic, you have one room when you need four, those types of 

things. 

So the increase in productivity has to be looked at realistically 

as well. These are good things to add, but if we are not getting the 

caregivers more productive in the same amount of time, then we 

are hurting ourselves. 

Dr. TUCHSCHMIDT. And we are. So I think it is a little bit of both, 

right? I think it is a little bit of increasing productivity during their 

kind of normal hours, as well as using extended hours. And I think 

that one of our biggest hurdles to improving access to care is the 

physical plant infrastructure that we have. And if we can use that 

physical plant infrastructure more efficiently by having extended 

hours, having weekend hours, then everybody benefits from that. 

Dr. WENSTRUP. Yes. I know I had a little frustration when I first 

came here, and this is before Phoenix broke and everything else, 

where I went to the former Secretary and said: I will go into clinics 

with you, as a doctor, I will go into the OR with you and tell you 

why you are not productive, why you are not getting more out of 

your caregivers. And I think we still need to do that. We have got 

doctors on this committee that I think would be willing to partake 

in that process. 

The other thing is we talked one time before about third party 

payments, when people come to the VA. I would love to see the VA 

be centers of excellence for things that our veterans wouldn’t want 

to go anywhere else and where people outside, that aren’t veterans 

would prefer to go to the VA because we are centers of excellence. 

But in that process, we do have veterans that come in and they 

have other insurance. 


VACREP0180 with DISTILLER
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And I am not sure how this is really taking place, what percentage you are actually capturing that can bring more money into the 

VA, but maybe we should turf that out to people that do claims like 

this all the time and take it out of the VA and let it be done and 

increase the revenue to the VA. 

These are productive things that we can do. And as we see more 

people wanting to go to the VA, and especially if they have other 

insurance, that is what we should do and be good at it. 

Dr. TUCHSCHMIDT. So our collections are up substantially this 

year, but we are sitting down and revaluating a lot of our business 

office practices. And one of the things that we are looking at is 

whether that collections is something that should be outsourced. 

Dr. WENSTRUP. And I would suggest we take bids from some outside sources on what that would look like. 

The other thing, and we have talked about this before, is at some 

point we have got to be able to know what we spend per RVU, relative value unit. And if we don’t know that, then we really don’t 

know what our cost is compared to when we pay somebody per 

RVU outside of the walls of the VA. 

I do agree with you on what you said, care in the community, I 

agree with that, rather than non-VA care, because if I was still in 

practice seeing veterans, I would like to say I am a VA provider, 

even if it is in my private practice. 

Dr. TUCHSCHMIDT. And we have cost data per RVU. We should 

come over and discuss that with you. 

Dr. WENSTRUP. I have been asking about it for several times. 

Dr. TUCHSCHMIDT. I will make sure—— 

Dr. WENSTRUP. Deputy Secretary Gibson said: We can’t do that. 

And I am talking about everything, I am not just talking what you 

are paying the doctor. I am talking about your physical plant, your 

staff, your supplies, everything involved, because that would be 

very important to this entire committee. 

Dr. TUCHSCHMIDT. We will get you the information. 

Dr. WENSTRUP. Yes. I think the Secretary would understand the 

cost of Pampers is not just the paper. 

Thank you both for being here. I appreciate it. 

The CHAIRMAN. Dr. Ruiz. 

Mr. RUIZ. Thank you to the chairman and ranking member for 

holding this hearing. 

When brave young men and women volunteer to serve in our 

Armed Forces, they swear to support and defend the Constitution 

of the United States against all enemies, foreign and domestic. 

These servicemembers make a promise to their country, to all of 

us, to keep us safe and protect our way of life. In recognition of 

that service, we promise to care for them when they return. So veterans have served and sacrificed to hold up their end of the bargain, and we must do whatever it takes to hold up our end. 

Many veterans in my district who are excluded from the strict 

requirements of the Choice Program are unable to receive care in 

the community for which they are statutorily authorized because 

the VA has already begun delaying elective care due to this budget 

shortfall. And as a physician, I can tell you that even if a condition 

arguably does not meet the VA’s urgent and emergent working 


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standard for authorizing non-Choice purchased care, it may feel 

painful and very urgent to the patient. 

Veterans being deprived of healthcare they have earned, whether 

due to unforeseen increases in cost or demand, budgetary mismanagement at the VA, congressional dysfunction, or any other 

problem outside the veteran’s control is completely unacceptable, 

and it is absolutely critical that we stabilize the immediate problem and resume serving veterans who need community care at full 

capacity, prevent any furloughs or facility closures, and reform 

whatever structural systems at the VA have failed. 

You are actively searching for new ways to be able to predict the 

future needs of veterans. This is a problem due to the success of 

having 7 million more appointments. But as a physician and public 

health expert, I understand that you really can’t predict to the tee 

the health needs of a growing population, of a system in transition 

that needs to take risk to identify best practices and understand 

that some of these practices may fail and therefore we may need 

to learn from those lessons in order to improve. 

And you mentioned before the term manage to budget, which is 

what this committee has done in the past. Now you are managing 

to the requirement. But I want to warn you that the one requirement that you are managing to is only one of a larger piece and 

complex, because whether a veteran gets seen within 30 days is not 

the same whether they get the quality care, the respect that they 

need, and the efficiency of care when they are being seen. And, 

thankfully, in a lot of our VAs veterans rate their care very highly. 

So we need to manage to the veteran’s healthcare needs with efficiency and to the point of measuring how much it costs to RVUs, 

that is the efficiency in this. And the percentage rate of cost due 

to—or the amount of cost due to an increase in 1 percent of VA 

care, that reflects on the efficiency of the VA. So I really want to 

stress those points. 

And my concern here is these claims that we are shutting down 

facilities, that it is not being—and the way it is being presented is 

that you are holding these VAs hostage because you are not getting 

your way. And that is absolutely, I know with the sentiment, not 

true. 

So can you, first question, can you explain more what is going 

on in Denver and how this is affecting the care of our veterans in 

receiving that care? 

And two, one of the concerns is that if you take, with this flexibility, which I think it is a great idea, if you take money from one 

pot that you already have for another, there is always going to be 

takeaways. So is this a surplus fund? What is the takeaway that 

is at risk here? 

Secretary MCDONALD. Well, the Choice Care Act itself that Congress approved was to provide care in the community for veterans. 

And there is a $10 billion appropriation that is to expire in 3 years. 

What we are talking about is care in the community largely. 

There is another half a billion dollars for hepatitis C drugs. So we 

would be using the money for what it was set aside for, which is 

care in the community. And in that way we are using the money 

for what it was set aside for, it is not a new appropriation. 


VACREP0180 with DISTILLER
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Secondly, the issue you raised about Denver is, because we have 

inflexibility of moving money between accounts, the accounts that 

the money came from this fiscal year for Denver do not affect the 

healthcare of veterans in other locations. So in that sense Denver 

has no impact. 

Now, as I said in many prepared remarks, we have got to get 

Denver, the Denver medical complex, we have got to put that 

money in the 2016 budget, and I am concerned about that since the 

original House budget cut our construction by 50 percent. 

Mr. RUIZ. Okay. Thank you. 

Yield back. 

The CHAIRMAN. Mr. Costello. 

Mr. COSTELLO. Thank you. 

I would certainly like to associate my comments with those of 

Congresswoman Rice and Congressman Ruiz in terms of some of 

the frustrations, at least what I am hearing in my district. And I 

just want to assure those veterans in Lebanon, Berks, Chester, and 

Montgomery Counties that I will work at 110 percent to make sure 

that there is no uninterrupted care for veterans out there. 

And I very confident in the leadership of this committee, with 

Chairman Miller and Ranking Minority Member Brown, that we 

are going to resolve this so that there is in no way a diminishment 

or any interruption in the care of veterans. 

But I do also want to focus on a couple things that are either in 

your written testimony or that I have learned that are very, very 

frustrating for me. And I want to start with the issue of technology. 

So I want to talk about technology and I want to talk about your 

use of the term ‘‘flexibility.’’ 

So in 2004 the VA received $475 million for their IT system. 

GAO report comes out and says that there is essentially nothing 

to show for it. In 2010, Congress was going to provide another $400 

million for another update, and the VA pulled the plug on that. 

Now, you weren’t around then, I wasn’t around then, but it is 

very clear that in the past the VA has identified the need for updated technological capacity, as well as Congress being willing to 

invest in that. 

Part, I feel, of your explanation in coming here with this request 

relates to the financial systems that are in place as being attributable to why you have a budget shortfall. I think, I don’t want to 

put words into your mouth, but I believe that that is sort of what 

you have said in your testimony thus far. 

But on the issue of flexibility, you indicate, and I will just quote 

you on page 3: ‘‘Altogether, over 70 line items of the VA budget are 

inflexible. Freed up, they would help us give veterans the VA you 

envision and they deserve.’’ 

These 70 line items of the budget, are you talking about the entire $170-plus billion budget? And is that all the line items? 

Secretary MCDONALD. Yes. Basically what we are talking about 

is very simple. With the Choice Act, we have given the veteran the 

choice whether they get their care within the VA or outside the VA. 

Very simplistically, those two budgets cannot be commingled. So I 

have got to predict how that veteran makes that choice. 

Mr. COSTELLO. Right. 


VACREP0180 with DISTILLER
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Secretary MCDONALD. Or come back to you each week and 

say—— 

Mr. COSTELLO. Well, I think Dr. Ruiz—I get where he is going. 

I mean, look, the need—you don’t always know what the medical 

need is going to be. So I understand there has to be flexibility within a budget in order to appropriately address the medical needs of 

a veteran. But I also feel that in a budget of $170-billion-plus, that 

if that is itemized amongst only 70 line items, I mean 70 line items 

for $170 billion really isn’t that many line items. 

And in terms of flexibility, the more money we just say, ‘‘Oh, here is the $700 billion, do what you would like with it,’’ the more 

we are going to, I fear, the more we get into the issue of $475 million disappearing into an IT budget or, ‘‘Oh, well, that didn’t really 

work out over there.’’ 

And so I don’t like the aspect of just shifting things around without there being accountability to Congress. I don’t think taxpayers—— 

Secretary MCDONALD. We agree with you. We agree with you. If 

we are able to do this, we would work together on what are the 

restrictions and what are the budgets that should be potentially 

commingled. In the case where the aim of the budget is exactly the 

same, I would argue they should be commingled. 

Mr. COSTELLO. Let me just, next question, related to that, and 

you are looking to use Choice money. I continue to hear that there 

is just a reluctance by many in the VA to sort of buy in, pardon 

the pun, to the Choice Program. And so Congress last session made 

a legislative determination that from a policy perspective the 

Choice Program was something that not only did we want to offer, 

but we wanted to encourage it through the allocation of dollars. 

Now I feel that because some in the VA either don’t like that program or feel that since there is money left over and it was popular 

at the time to institute that legislation, that we can take it out of 

the popular programs and shift it elsewhere. And, again, it gets 

back to the issue of accountability and transparency. 

And so while you use the term ‘‘flexibility,’’ and I understand 

why you need it in some instances, I also feel we could be painting 

a little bit too much of a broad brush here when we are using the 

term ‘‘flexibility’’ for budgeting purposes. And in doing so, we are 

going to lose the accountability that we need and we haven’t had 

and that, frankly, is the source of some of the problems that cause 

us to be here today. 

Secretary MCDONALD. We are very much in favor of care in the 

community, and as you would expect, then we are in favor of the 

Choice Program. So if you or any of your veterans are encountering 

VA employees who somehow suggest they are not in favor of that, 

we need to know about it, because that would be wrong. I mean, 

we are trying to create a culture where we don’t care where the 

veteran gets their care as long as they are getting great care. 

Mr. COSTELLO. So final point here. As you are talking about a 

new IT system in order to better handle budgeting and planning, 

for my opinion, mismanagement can be very visible—and I am not 

suggesting you have mismanagement here—can be visible, and it 

can also be not visible. And I think on the IT side it is very easy 

to mismanage things through the years and not really have any 


VACREP0180 with DISTILLER
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ability for those doing oversight to really know about it, because it 

is sort of on the planning side, it is behind the scenes. 

I think moving forward, as you are talking about, I presume, 

coming forward with what your needs are going to be, capital needs 

are going to be for a new IT system, it has to be thorough, it has 

to be comprehensive, and the ad hoc ‘‘we need a little bit money 

here and then we will need a little bit money the year after’’ isn’t 

going to work. I mean, I really think it needs to be a comprehensive plan so that we have some confidence that what you are proposing is going to solve problems and over the long term reduce 

costs, because from a management perspective, you are going to 

have more transparency and things are going to work more efficient. 

I will yield back. 

Secretary MCDONALD. Well, we agree with you, and we would 

love to have LaVerne Council, our new head of IT, come over and 

talk to you. The chairman has had the opportunity to meet her, 

and I think she is going to be terrific for us. She has experience 

as the head of IT for Johnson & Johnson and Dell. So we are taking the best out of the private sector. 

The CHAIRMAN. Mr. McNerney. 

Mr. MCNERNEY. Thank you, Mr. Chairman. 

Again, I want to thank you, Mr. Secretary, for your service both 

in the Army and as Secretary in this very complicated transition 

period. And we are hoping that it turns out well, and we are going 

to do our best to make sure that it does. 

My first question has to do with public-private partnerships. 

Under Secretary Gibson mentioned at a June 25 hearing that he 

and you had spoke about this, and that you are in favor. Can I ask 

you that question? Do you feel that the VA could benefit from public-private partnerships? 

Secretary MCDONALD. Yes, sir. One of the five strategies for our 

MyVA transformation of the VA is strategic partnerships. We have 

set up an Office of Strategic Partnerships. We have a leader of that 

office, Matt Collier. 

And yesterday when I was in Pittsburgh working at our medical 

center, there was a wonderful example. I met with the chancellor 

of the University of Pittsburgh, the dean of the medical school. We 

have a great partnership there between UPMC, which is a medical 

provider, with the university, and with the VA. This is a system 

Omar Bradley set up in 1946-1947 to ensure veterans get the very 

best care in the country, and it is a system that works today. 

So those partnerships are absolutely critical to us. 

Mr. MCNERNEY. Thank you. 

Mr. Secretary, I have taken a look at this graph. You are familiar with it, the VA Care in the Community funding shortfall. It is 

kind of a straight line. If you divide 7.6 by 12, you get 0.36 billion 

per month, you are totally over. Even in the very first few months, 

it is clear that you are going to miss the target. Why did it take 

so long, given this kind of information, or was this not available 

until just recently? 

Dr. TUCHSCHMIDT. Yes. So actually we went back and reconstructed. So that represents our actual obligations. So what we 

were projecting early on was lower. The obligation data that we 


VACREP0180 with DISTILLER
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had was understated early in the year. But that reflects our actual 

experience. 

Mr. MCNERNEY. Well, how much of the 3 point billion dollar 

shortfall is due to underforecasting? 

Dr. TUCHSCHMIDT. I don’t think it is underforecasting. I think we 

had anticipated that more of the care in the community would have 

gone through the Choice Program and been paid for out of Choice 

802 dollars that were appropriated for the program. 

That program, I am not going to sit here and tell you that it is 

working perfectly, because it is not. And it is a complex program 

that was—as it was structured it is—we have piggybacked on our 

PC3 contract to get it done because no one else in the industry was 

interested in taking this on. And we have business processes that, 

quite frankly, need improvement, and we are working on those 

things. 

So I think that we had a Choice—we have a Choice Program that 

we, we and you, thought were going to get more care in the community for veterans and make sure that veterans were not waiting 

over 30 days for care. We have not been able to get, and maybe 

some of it is cultural, but we have not been able to get the volume, 

the number of authorizations through that program that we had 

anticipated. That has not stopped us from trying to be faithful to 

the intention of Congress when it passed the Choice Act, which was 

no veteran should be waiting. 

So really what we are asking for is to be able to use funds that 

were appropriated for the purchase of care in the community 

through the Choice Program to pay for care that we purchased in 

the community, not through Choice, but through our normal mechanisms, because we have oversubscribed those programs. 

Mr. MCNERNEY. So how soon do you think that we could provide 

that flexibility? 

Secretary MCDONALD. Well, we are asking you to do it before you 

leave in August. So by the end of this month. 

Mr. MCNERNEY. So it would require a bill to be passed and 

signed into law by the end of August—or by the end of July. 

Secretary MCDONALD. The money has been appropriated. So I 

am not an expert on what Congress does. So I yield to the chairman on that. But, yes, I assume it is some kind of bill. 

The CHAIRMAN. We would have to authorize the transfer of those 

dollars out of a finite amount from the Choice Program. 

Mr. MCNERNEY. Well, a painful question. Can you provide a list 

of the facilities that will be closed if you don’t get that money? Or 

how soon can you provide that list? 

Secretary MCDONALD. We have an entire plan together which we 

can share with you. 

Mr. MCNERNEY. All right. 

Dr. TUCHSCHMIDT. I would just say that when we run out of 

money, so we will move funds around between facilities as best we 

can. Medical services will be the first appropriation that runs out. 

It will affect essentially every facility in the country. 

Mr. MCNERNEY. All right. Thank you, Mr. Chairman. 

The CHAIRMAN. Dr. Abraham. 

Dr. ABRAHAM. Thank you, Mr. Chairman. 


VACREP0180 with DISTILLER
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Let me, I guess, just start by saying the old adage in business: 

You can delegate authority but never responsibility. And, Mr. Secretary, I know you were CEO of a major firm before you came 

aboard, and I would just think that if you had come to the board 

of directors at the 11th hour like Ms. Brown indicated, they too 

would be a little incredulous at the shortfall, the, I guess, lack of 

vision, so to speak. And we don’t want to disparage that. We understand that everybody in this room, certainly on this committee, 

yourself and everybody in this room has the veterans’ best interests 

at heart. And I do believe that. 

Let me hit it just from the hepatitis C, Doc. You and I both know 

it is a very insidious disease. It takes many years to get to a point. 

I was back in my district this weekend. I had three Vietnam veterans come up to me and said that they had yet to receive anything 

from the VA, because I understand that is in the pipeline. And I 

do understand that Harvoni and the other hepatitis C drug was 

only approved in 2013. 

But saying that, that still gives us about a year and three-quarters, 2 years to formulate plans, delegate how this medicine is 

going to be divvied up, so to speak, and it hasn’t been done yet. 

Can you give me some indication as to when our Vietnam veterans, 

our Iraqi, our Afghanistan veterans can expect some hard data as 

to, if they are at this point of the disease, they can get the treatment? 

Dr. TUCHSCHMIDT. Yes. Of course those drugs were not approved 

by the FDA when we submitted our budget for fiscal year 2015. 

Dr. ABRAHAM. I understand that. 

Dr. TUCHSCHMIDT. But so we have a plan, we have had a plan 

all along for the treatment of hepatitis C. 

Dr. ABRAHAM. When will it be implemented, Doc? I mean, when 

will the veteran, he or she, know that, hey, I can get treatment 

now? 

Dr. TUCHSCHMIDT. Well, we have treated over 20,000 veterans 

this year for hepatitis C in the VA. 

Dr. ABRAHAM. And are you basing that on liver biopsy results? 

How are you delegating which veteran gets treated and which veteran does not? 

Dr. TUCHSCHMIDT. So you may be getting a little bit over my 

head in terms of hepatitis C. Our hepatologists are managing that. 

But we have a severity score based upon whether the veteran has 

advanced liver disease and—— 

Dr. ABRAHAM. Well, I guess what I would ask, if you can’t answer, if you would just get me that information as how that determination is made. There are blood tests. There are viral loads. 

There are liver biopsy results. I mean, I have treated hundreds if 

not thousands of hep C and hep B cases. But if you would just 

pledge to do that, I would appreciate it, so I can give it back to my 

people in my district. 

Dr. TUCHSCHMIDT. I would be happy to get you the information. 

So we have treated over 20,000 veterans with hepatitis C today, 

and we continue to treat patients with advanced liver disease. And 

patients who can go out into the community have the Choice Program as an option to do that. 


VACREP0180 with DISTILLER
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Dr. ABRAHAM. And, Secretary, you said that of that $2.5 to $3 billion that you are anticipating shortfall, that $500 million of that 

would be designated for hepatitis C treatment, for the treatment 

itself? 

Secretary MCDONALD. Yes, sir. 

Dr. ABRAHAM. Okay. All right. 

I yield back, Mr. Chairman. 

The CHAIRMAN. Mr. Bilirakis. 

Mr. BILIRAKIS. Thank you, Mr. Chairman. 

And thank you, Mr. Secretary, for testifying today. 

Dr. Roe talked about the medical scribes. Elaborate on that pilot 

program. Because I know in the private sector these are great private sector solutions. And I know that the doctor will have more 

time with the—I mean, it has been proven in the private sector 

that the doctor will have more time with the patient. I had a town 

meeting, lasted 4 hours, a couple weeks ago, people were bringing 

that up. 

So you want the doctor to focus on medicine. Elaborate on that 

program, that pilot program. 

Secretary MCDONALD. Well, I have heard a lot of this. I have 

been to 195 different VA facilities, and every one I go to there is 

a different approach. But we are pretty consistent in the operation 

of a PACT team, which is a patient care team, a team of people 

working with a particular patient. 

On those teams today we don’t yet have a scribe. So I think what 

Jim was describing was let’s pilot the scribe so that everybody on 

that team can be working on the patient and not just entering information into the medical record. 

Dr. TUCHSCHMIDT. Yes. I didn’t come prepared today to really expect this question. So I will have to take it for the record and get 

you information about where we are in terms of standing up a pilot 

program. 

Mr. BILIRAKIS. Okay. Thank you. 

Any other innovative medical solutions coming from the private 

sector that you have implemented in the last year? Do you have an 

advisory council set up of physicians possibly to work in the private 

sector to get these ideas to make it more efficient and productive? 

Secretary MCDONALD. Yes, we do. In fact, we have two—we 

have, believe it or not, we have about 20—we have more than 25 

advisory councils, but we have two that I would like to tell you 

about. 

One is our special medical advisory council, which is the best 

medical minds, I think, some of the best medical minds in the 

country. It is chaired by—the chairman is John Perlin. John is the 

chairman of the American Hospital Association. He is also the chief 

medical officer of HCA. He is also a former under secretary of 

health. And they are providing tremendous leadership. 

On the MyVA work that we are doing, the transform VA, we 

have also set up an external advisory council. We have many doctors that are part of that, including Toby Cosgrove, who is the head 

of the Cleveland Clinic, Rich Carmona, who is a former surgeon 

general and also a veteran. 

But I have to tell you, one of the things they are bringing is they 

are not only bringing their innovations and their ideas, but they 


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are taking away our innovations. A couple of weeks ago we published an article that was picked up in medical journals, not broadly in the newspaper, about a new Monte Carlo simulation technique we can use to predict suicide. 

This is a breakthrough. If we can validate this model of predicting suicide, this will be a breakthrough for the VA, but it will 

also be a breakthrough for the American public. And a lot of what 

we have seen and you and I have talked about in the past has been 

innovations that actually start in the VA, part of our $1.8 billion 

of research spending that you appropriate and we appreciate it, 

that result in positive results for the American people. 

Here is a copy of the article, Mr. Chairman, if you would be willing, I would be happy to put it in the record, about this breakthrough. And we have more of these breakthroughs coming. 

Mr. BILIRAKIS. Very good. Sir, we need to get the word out on 

this Choice Program. A lot of people don’t know. I know you sent 

out a card. What else have you done to get the word out? And then 

I have another question with regard to access. 

Dr. TUCHSCHMIDT. So we have mailed letters to everybody. We 

have mailed now I think three letters totally to everybody, first 

with their card and then follow-up. We have another flier that we 

have just developed. 

We have a Web site that we have just reengineered. So we have 

been doing surveys of veterans who use the Choice Program, asking them what they think about the program. And one of the biggest issues they have had is with the Web site and the availability 

of information. So we now have a redesigned Web site that is about 

to go live. It has a live chat on it so that the veteran, while they 

are looking, if they can’t find the information, they can click the 

chat button and talk to somebody right then and there. 

So we have really done a lot. We had a set of outbound phone 

calls to people initially who were actually waiting for care more 

than 30 days to contact them about the Choice Program. So we 

have tried to do a lot of outreach. 

Mr. BILIRAKIS. Sir, my constituents, sir, are having trouble getting access to the program. Describe for the benefit of the constituents, our veterans, our heroes, describe the scenario. How would it 

work? They would call the VA for an appointment? Could you describe a real-life scenario? 

Dr. TUCHSCHMIDT. Yes. So there are two benefits under the 

Choice Program. One is if you are waiting more than 30 days. If 

you are waiting more than 30 days for an appointment, our staff, 

if you either call in or while you are checking out of clinic and getting a follow-up appointment, our staff will tell you, if you cannot 

get an appointment within 30 days, that the Choice Program is 

available to you. They have information that they can hand out to 

the veteran about the Choice Program. 

At the moment, we are both booking an appointment for the veteran in the VA and offering them a Choice Program and making 

that referral to the third party administrator. The veteran can decide which of those two options they want at any time. 

We are about to change that program so that what will happen 

is at the time the veteran asks for an appointment, if we cannot 

give them an appointment within 30 days, we will ask them if they 


VACREP0180 with DISTILLER
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want an appointment in the VA beyond 30 days or if they would 

like to go to the community, and then our staff will contact the 

TPA and get an appointment for the patient. 

We need to do a contract modification to be able to put that program in place, but it is coming down the pike. And that should improve, I think, the coordination and the level of service.—— 

If you are in the 40-mile group, what happens today is that the 

TPA, TriWest and Health Net, already have your information and 

you can contact them directly. You don’t need to go through the VA 

to get an authorization for care. 

Mr. BILIRAKIS. Sir, we have got to make it easier for the veteran. 

That is what I have been hearing. 

Dr. TUCHSCHMIDT. We totally agree. 

Mr. BILIRAKIS. Okay. Thank you very much. 

I yield back. 

The CHAIRMAN. Thank you very much. 

Members, we are not going to do a second round of questions unless there is one that is just absolutely pressing. 

And with that, Ms. Brown, you are recognized. 

Ms. BROWN. Thank you. Mr. Chairman, I want to thank you for 

holding this hearing. 

As far as I am concerned, failure is not an option. We have heard 

a lot of discussion today, and I find it—well, when I was coming 

up there used to be a program on, Sergeant Joe Friday. Facts, 

ma’am. Just the facts. And I want people to understand the facts 

before they walk out that door, because I have seen a lot of people 

snapping pictures and us making different statements. I want you 

to give us a list of the facts why we are in this emergency situation 

and why, if we don’t act before we go home, we are going have a 

crisis at the VA. Every Member needs to understand where we are. 

And this is not anything new. I mean, you have been saying it 

from day one. You need flexibility. And we need to give you the 

flexibility and then we will hold you accountable. 

But, I mean, to sit up here and act like we don’t have 7 million 

additional veterans coming into the system—or wait a minute—7 

million additional appointments and 4 million veterans, and we 

have a community program that you have taken money from and 

used and you used the Choice where you could, but it had limited 

ramifications how you could use it. 

Give us the facts before any of us walk out the door. 

Secretary MCDONALD. We will. Thank you. 

Ms. BROWN. No, no. I want you to answer it. 

Secretary MCDONALD. Well, I think, what I said, I think—— 

Ms. BROWN. You said it, but I want you to go back and check the 

boxes again. 

Secretary MCDONALD. Okay. What I said was what we would 

like to do is get the authorization to use $2.5 billion from the 

Choice Program for care in the community and half a billion dollars 

for hepatitis C treatment, and we would like to get that before the 

end of the month because we have run out of care in the community money in the VA budget, and we want to keep our care going 

for veterans. 

We think we are in a good place in the sense that more veterans 

are getting more care; 7 million more appointments this year, averVerDate Aug 31 2005 08:03 Oct 07, 2016 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 Y:\98-689.TXT PAT

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age wait times 3 days, mental health 4 days, primary care 5 days. 

Specialty care, admittedly we do have issues we have to work on 

in other parts of the country. But we are making progress in the 

right direction. We want to keep it going. Our veterans deserve it. 

Dr. TUCHSCHMIDT. So I would like to just add that we continue 

to buy care in the community for patients so that they were not 

waiting more than 30 days. When we ran out of money in our 

budget to do that we took money out of operations to continue to 

buy that care. We could probably sit here and debate whether that 

was a wise decision or a bad decision. 

Had we decided not do that and leave it in operations, we would 

not be facing any kind of shutdown or closure. But we would have 

told people back in June, at the beginning of June, end of May, 

there was no more care in the community, you either waited in the 

VA or went someplace else. 

We chose not to have that happen, but rather to continue to buy 

care for patients that could not get care through the Choice Program. And so today, because of that, we find ourselves not having 

money out in the field to be able to make payroll and stuff during 

the month of September. 

And that is really what we are asking today, is to be able to use 

Choice money set aside to buy care in the community to pay for 

care in the community. 

Ms. BROWN. The last thing. I know one of the discussions was 

I know we are having some problems in certain parts of the country. But some of the veterans, particularly those in Florida, they 

like the care that they receive from the VA. And I don’t personally 

want to see VA just going to a specialty. We need comprehensive 

care in certain areas. And I do know around the country it is a real 

problem with getting comprehensive care. 

But when you look at the approval rates, veterans is like—what 

is the percentage from?—80 something to 90 something like the 

care that they get in VA. Can you respond to that also? 

Secretary MCDONALD. Well, that is what the VFW study told us. 

The other thing that we see is veterans have always had choice. 

Remember, 81 percent of veterans have multiple ways of getting 

healthcare, whether it is Medicare, TRICARE, VA. And what we 

are seeing now as we improve care is more and more veterans are 

deciding to come to VA. 

So the thing we have got to be vigilant about, and I take responsibility for sharing the forecast with you, is as we continue to improve care, how many more of those veterans are going to be coming to VA for their care. 

Ms. BROWN. All right. 

Thank you, Mr. Chairman, for this hearing. Thank you for the 

time. And I yield back my time. 

The CHAIRMAN. Thank you. 

Dr. Tuchschmidt, did I hear you just say that in June you were 

at the point that you were going to have to tell veterans you were 

out of money and there was no longer the ability for them to have 

care provided for them in the local community? 

Dr. TUCHSCHMIDT. To the purchased care program, we started 

pulling money, I think it was about $290-something million from 


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VERA to supplement that pool of money in probably early, middle 

of June. 

The CHAIRMAN. But is that an accurate statement to say that 

veterans would not be able to have care provided for them outside 

of the VA? 

Dr. TUCHSCHMIDT. Except through Choice. 

The CHAIRMAN. Except through Choice. And, again, why do 

you—you couched your comment to make it appear that you were 

going to shut the spigot off in June. There is $9-plus billion—— 

Dr. TUCHSCHMIDT. Yes. 

The CHAIRMAN [continuing]. Finite dollars, Mr. Secretary, which 

is why we have been so protective of that money. 

You are the ones that sent out the notice with the card saying 

that it is a temporary program. And as you drained the money out 

of this program, and somebody made a budgeting decision, and you 

have already said rightfully or wrongly, you missed. You thought 

you could weather the storm and just squeak by, but you can’t. You 

got caught. Somebody made a bad decision. Veterans will still get 

healthcare in the community through Choice. 

Dr. Tuchschmidt, is that correct? 

Dr. TUCHSCHMIDT. Some veterans will get some care. 

The CHAIRMAN. I understand. 

Look, I know there are some restrictions on dental issues and 

things like that, but you are making it appear with the statement 

that you just made that as of June you thought you were going to 

have to start telling veterans they couldn’t receive care in the community. 

Dr. TUCHSCHMIDT. I think I said that veterans who did not— 

could not get care through the Choice Program would not—would 

have to wait for care. 

The CHAIRMAN. That is not exactly what you said, but I will go 

back and check the record. 

Dr. TUCHSCHMIDT. I stand corrected, then. 

The CHAIRMAN. And, again, we are at a crisis situation again. 

Many of my colleagues have already brought that—you know, scaring veterans that their hospitals are going to close, that we are not 

going to be able to pay their salaries, I think is just that, trying 

to scare them. We are the ones that will have to make the decision 

whether or not this money gets allocated, and I don’t think there 

is a single person that was up here today that advocates anything 

less than trying to solve the problem that exists out there. 

What we are asking is when these issues arise internally, the 

sooner you can inform us, I think the better off everybody is. We 

are still not satisfied with where we are with the Choice Program. 

I don’t think you are either. I think you have made those comments. But all hands need to be on deck. 

And with that, I would ask that all members have 5 legislative 

days with which to revise and extend their remarks and add any 

extraneous material. 

The CHAIRMAN. With that, this hearing is adjourned. 

[Whereupon, at 12:45 p.m., the committee was adjourned.] 


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APPENDIX 

THE PREPARED STATEMENT OF CHAIRMAN JEFF MILLER

Good morning. Welcome to today’s hearing. We are again gathered to discuss VA’s 

budget execution in this fiscal year. 

Less than three weeks ago we gathered to hear Deputy Secretary Sloan Gibson 

testify regarding a budget shortfall at VA. I’m sure everyone is asking why we’re 

here again on the same topic. I will explain in a moment, but the stakes have been 

raised considerably since the Deputy’s testimony on June 25th. 

At that hearing Sloan Gibson was asked the following question by Ms. Brownley 

(quote): ‘‘[I]f Congress doesn’t act on the fiscal year 2015 budget shortfall, what is 

it going to look like in the VA in July and August and on October 1.’’ 

The Deputy responded that we get into dire circumstances the longer we go, but 

that (quote) ‘‘Before we get to the end of August . . . we are in a situation where 

we are going to have to start denying care to veterans in the community because 

we don’t have the resources to be able to pay for it.’’ 

The Deputy also testified about antiquated financial systems contributing to this 

problem, costs associated with new Hepatitis C treatments, and an unrealistic assumption of how fast VA could set up and effectively utilize the Veterans’ Choice 

Program. 

Imagine my surprise when on July 13th I received a letter, again from the Deputy 

Secretary, that in the absence of providing the flexibility VA was seeking to plug 

the shortfall with Choice Fund money that VA’s hospital operations would shut 

down in August, and that non-VA care authorizations would cease at the end of 

July. 

Mr. Secretary, this is unprecedented. A true VA ‘‘Budget-Gate’’ for our time. First, 

never before can I recall VA—or any agency for that matter—completely exhausting 

its operational funds prior to the end of the fiscal year, with the consequences for 

VA being the cessation of hospital operations. Second, never before can I recall an 

issue of such enormous magnitude evading the direct attention of the President and, 

until recently, you. This is not a ‘‘flying under the radar’’ issue, yet I feel that is 

exactly how VA and the President have treated it in an effort to avoid responsibility. 

So that everyone understands where I’m coming from, let me begin by reviewing 

how we’ve arrived at this point. 

The first real hint of serious financial issues came as a result of a briefing for 

our staffs with VA officials on June 4th on a separate topic. At the conclusion of 

the briefing, committee staff noted that there appeared to be a two to three billion 

dollar difference between VA’s projected $10.1 billion obligation rate for ‘‘Care in the 

Community’’ compared with the funds VA budgeted for Care in the Community. The 

VA official agreed with the discrepancy, but stated cryptically that just because VA 

was on pace to spend $10.1 billion, it did not mean that the money to address the 

discrepancy was either found or available. That assertion was repeated upon further 

questioning, leaving it to staff to ‘‘read between the lines’’ as to what was meant. 

At around the same time, during a June 8 visit to the Cincinnati VA Medical Center, I myself heard rumors of impending financial issues consistent with the cryptic 

warning provided by VA officials at the June 4 staff briefing. 

As a result, on June 10, I called on either the Secretary or Deputy Secretary to 

testify on the state of VA’s budget. As a consequence of my calling this hearing, staff 

received a pre-hearing briefing—again at our request—on June 18th. It was at this 

briefing that VA, for the first time, publicly revealed a possible $2.5 billion shortfall 

in funding. Notwithstanding this briefing, there was no mention of a hospital system shutdown. 

On June 23rd, we received a letter from the Secretary citing the looming shortfall 

of $2.5 billion and also requesting of the Appropriations Committee a transfer of 

funds from the Medical Facilities account to the Medical Services account. Again, 

there was still no mention of a hospital system shut down. 

And finally, at the hearing on June 25th itself, there was no mention of a hospital 

system shutdown in August. 

Mr. Secretary, you are the head of the department. I am very disappointed about 

the slow, painstaking revelation of this crisis by the department you lead. I understand there are excuses as to why we’re in this position. However, someone took 

their eye off the ball here. Just as Congress established a cap on spending for the 

Denver project that VA busted, Congress also provided a budget for VA for fiscal 

year 2015—which the President signed into law—and it, too, is now busted. In both 

instances, VA has left Congress with very little time to react to crises created by 

its own management decisions. 


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While we will not penalize veterans for VA’s management or transparency failures, the days when VA can come to Congress and just say, ‘‘Cut us a check,’’ are 

gone. Asking for ‘‘flexibility’’ without supporting information is not sufficient. 

Similar to the way a large corporation’s board of directors sets a budget and corporate management implements that budget, the President and 535 Members of the 

your current board of directors set a budget and expected you and your staff to carry 

out the department’s mission; that is, to manage the taxpayers’ resources in a fiscally responsible manner. Just as emerging circumstances in the private sector 

might cause a CEO to go back to the board armed with information supporting a 

request for additional resources or flexibility, we have the same expectation. And 

despite unsupported hints of a problem by the department, that supporting information was never provided until extraordinarily late. 

Mr. Secretary, we have already passed legislation to take VA out of managing 

major construction programs. Perhaps we now need to bring in an outside entity to 

manage the department’s finances. 

I now recognize my good friend the Ranking Member for her opening remarks. 

f 

RANKING MEMBER CORRINE BROWN

Thank you, Mr. Chairman, for calling this hearing today to discuss the VA’s current budget shortfall and the possibility that VA may have to close hospitals or ration healthcare. 

Mr. Chairman, I know everyone in this room agrees that this Committee is committed to providing the resources the VA needs to take care of our veterans. 

We all need straight answers to our questions. How much is needed, and why? 

We are all supportive of making sure our veterans get the care they need, but yet 

again we are faced with an 11th hour VA budget crisis. 

We must all work together, VA and Congress, in order to properly anticipate the 

resource needs of the VA. It is simply not acceptable that VA manages to its budget. 

It is important that VA start planning and anticipating what our veterans will need, 

and where they will need it. 

We have been hearing that this shortfall is due to an increase of veterans coming 

to get medical care, resulting in more veterans being treated outside of VA. I also 

think that taking care of veterans with Hepatitis-C, many of whom are our Vietnam 

veterans, who we recently honored in a ceremony in the Capital, should be a high 

priority. 

But I wonder if this shortfall is fundamentally due to a lack of planning and forecasting for a variety of programs which provide services to our veterans. 

Today we need to decide how to solve this immediate challenge and walk away 

with a clear understanding about what steps the VA will be taking to prevent such 

a calamity in the future. 

I believe that my bill, H.R. 216, the VA Budget Planning Reform Act of 2015 

would provide a framework for the VA to begin to get its financial house in order. 

My bill passed the House unanimously, and I look to the Senate taking up this important legislation. 

So today, let’s figure out what we need to do to ensure that our veterans are getting the healthcare they have earned, and begin to figure out what steps we need 

to take to fix this and prevent any more 11th hour budget crises. 

Thank you Mr. Chairman, and I yield back the balance of my time. 

Æ 


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