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[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]

                THE U.S. DEPARTMENT OF VETERANS AFFAIRS'
                     IMPLEMENTATION OF THE ENHANCED
                      CONTRACT CARE PILOT PROGRAM
=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 29, 2010

                               __________

                           Serial No. 111-17

                               __________

       Printed for the use of the Committee on Veterans' Affairs

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  ______

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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine            JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South     HENRY E. BROWN, Jr., South 
Dakota                               Carolina
HARRY E. MITCHELL, Arizona           JEFF MILLER, Florida
JOHN J. HALL, New York               JOHN BOOZMAN, Arkansas
DEBORAH L. HALVORSON, Illinois       BRIAN P. BILBRAY, California
THOMAS S.P. PERRIELLO, Virginia      DOUG LAMBORN, Colorado
HARRY TEAGUE, New Mexico             GUS M. BILIRAKIS, Florida
CIRO D. RODRIGUEZ, Texas             VERN BUCHANAN, Florida
JOE DONNELLY, Indiana                DAVID P. ROE, Tennessee
JERRY McNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia

                   Malcom A. Shorter, Staff Director

                                 ______

                         Subcommittee on Health

                  MICHAEL H. MICHAUD, Maine, Chairman

CORRINE BROWN, Florida               HENRY E. BROWN, Jr., South 
VIC SNYDER, Arkansas                 Carolina, Ranking
HARRY TEAGUE, New Mexico             CLIFF STEARNS, Florida
CIRO D. RODRIGUEZ, Texas             JERRY MORAN, Kansas
JOE DONNELLY, Indiana                JOHN BOOZMAN, Arkansas
JERRY McNERNEY, California           GUS M. BILIRAKIS, Florida
GLENN C. NYE, Virginia               VERN BUCHANAN, Florida
DEBORAH L. HALVORSON, Illinois
THOMAS S.P. PERRIELLO, Virginia

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.

                            C O N T E N T S

                               __________

                             April 29, 2010

                                                                   Page
The U.S. Department of Veterans Affairs' Implementation of the 
  Enhanced Contract Care Pilot Program...........................     1

                           OPENING STATEMENTS

Chairman Michael Michaud.........................................     1
    Prepared statement of Chairman Michaud.......................    21
Hon. Henry E. Brown, Jr., Ranking Republican Member..............     1
    Prepared statement of Congressman Brown......................    21

                                WITNESS

U.S. Department of Veterans Affairs, Patricia Vandenberg, M.H.A., 
  B.S.N., Assistant Deputy Under Secretary for Health for Policy 
  and Planning, and Acting Director, Office of Rural Health, 
  Veterans Health Administration.................................     3
    Prepared statement of Ms. Vandenberg.........................    22

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:
    Hon. Michael Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs to Hon. Eric K. Shinseki, 
      Secretary, U.S. Department of Veterans Affairs, letter 
      dated May 4, 2010, and VA responses........................    25

 
                THE U.S. DEPARTMENT OF VETERANS AFFAIRS'
                     IMPLEMENTATION OF THE ENHANCED
                      CONTRACT CARE PILOT PROGRAM

                              ----------                              

                        THURSDAY, APRIL 29, 2010

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                                    Subcommittee on Health,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:16 a.m., in 

Room 334, Cannon House Office Building, Hon. Michael Michaud 
[Chairman of the Subcommittee] presiding.

    Present: Representatives Michaud, Rodriguez, Halvorson, 
Perriello, Brown of South Carolina, Moran, Boozman, and 
Buchanan.

             OPENING STATEMENT OF CHAIRMAN MICHAUD

    Mr. Michaud. I would like to ask the Committee to come to 
order. And I want to thank everyone for being here today.
    I would now ask the first panel and only panel to come 
forward. We have Pat Vandenberg from the the U.S. Department of 
Veterans Affairs (VA) who is accompanied by Gita Uppal. I want 
to thank you both for coming today.
    The purpose of today's hearing is to examine the VA's 
implementation of the Enhanced Contract Care Pilot Program for 
rural veterans. This pilot program was authorized in the 110th 
Congress and has an effective date of 120 days after October 
10th of 2008. However, the pilot program remains unavailable to 
eligible veterans.
    I want to thank Congressman Moran for introducing this 
legislation back in the 110th Congress and his continued 
support to make sure that veterans, regardless of where they 
live, have access to the health care that they need.
    About 40 percent, or nearly 3 million veterans who use the 
VA health care system live in rural areas, which includes over 
100,000 veterans who reside in highly rural areas. This trend 
is likely to continue since a large number of the men and women 
serving our country in Iraq and Afghanistan are recruited from 
our rural communities.
    I recognize and appreciate the VA's effort to address the 
health care needs of our rural veterans who are more likely to 
be in poorer health than those in urban areas. However, more 
work remains in this area as our rural veterans face unique 
challenges that are both extensive and complex.
    The Enhanced Contract Care Pilot Program is a potential 
tool for expanding access to health care for our rural 
veterans, veterans in areas where VA is unable to provide care.
    I would like to learn more about the steps that the VA has 
taken to implement an Enhanced Contract Care Pilot Program. I 
also would like to fully understand any potential barriers that 
are hindering the implementation of this important pilot 
program. And I look forward to hearing the testimony of our 
witness today.
    I would now like to recognize Mr. Brown for any opening 
statements that he may have.
    [The prepared statement of Chairman Michaud appears on p. 21
.]

         OPENING STATEMENT OF HON. HENRY E. BROWN, JR.

    Mr. Brown of South Carolina. Thank you, Mr. Chairman.
    As always, I appreciate your leadership and thank you for 
holding this hearing today to review the status of VA's 
implementation of the Enhanced Contract Care Pilot Program 
enacted into law in the 110th Congress as section 403 of Public 
Law 110-387.
    I also want to commend my good friend and colleague from 
Kansas, Jerry Moran, for his work and continued commitment to 
serving rural veterans.
    Jerry was responsible for the Rural Veterans Access to Care 
Act which led to the establishment of this 3-year demonstration 
project to allow highly rural veterans to receive covered 
services through non-VA providers.
    Of the almost 8 million veterans enrolled in the VA health 
care system, approximately 3 million reside in rural areas. 
Often these veterans face incredible difficulties in accessing 
VA health care. Many must find transportation and traverse 
hours across rough terrain to reach the nearest VA hospital. If 
a round trip is not possible in 1 day because of distance, the 
rural veteran and their family may be compelled to stay 
overnight.
    These difficulties can make even routine medical 
appointments an expensive and lengthy chore and discourage 
rural veterans from using the health benefits to which their 
service entitled them.
    Helping to ease that burden and ensure that even those 
veterans who chose to make their homes in the most rural areas 
have access to the high-quality care they deserve is a priority 
of all of us on this Subcommittee. And this pilot is very 
important to determine ways to best serve our veterans residing 
in highly rural areas.
    As more and more veterans return to their rural homes from 
Operation Enduring Freedom and Iraqi Freedom and rural veterans 
from earlier wars continue to require care, we must continually 
evaluate our actions and determine what more can be done to 
provide timely and appropriate access to medical care.
    In that vein, I am eager to hear from the VA this morning 
on what the Department is doing to implement the law and what 
additional steps will be taken to ensure its success.
    I thank you for coming today, and I yield back.
    [The prepared statement of Congressman Brown appears on 
p. 21.]
    Mr. Michaud. Thank you, Mr. Brown.
    Do any other Committee Members have an opening statement?
    [No response.]
    Mr. Michaud. Hearing none, once again, I want to thank Pat 
Vandenberg for coming.
    Pat, as I mentioned earlier, is the Assistant Deputy Under 
Secretary for Health for Policy and Planning and is also Acting 
Director of the Office of Rural Health for the Veterans Health 
Administration (VHA).
    I appreciate your willingness to take on dual 
responsibilities. And it is my understanding that we are closer 
to having a full-time Director of the Office of Rural Health 
and look forward for that individual coming onboard so we can 
have real attention paid to rural health issues.
    So without any further ado, Ms. Vandenberg.

  STATEMENT OF PATRICIA VANDENBERG, M.H.A., B.S.N., ASSISTANT 
DEPUTY UNDER SECRETARY FOR HEALTH FOR POLICY AND PLANNING, AND 
   ACTING DIRECTOR, OFFICE OF RURAL HEALTH, VETERANS HEALTH 
     ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; 
ACCOMPANIED BY GITA UPPAL, DIRECTOR, POLICY ANALYSIS, OFFICE OF 
   POLICY AND PLANNING, VETERANS HEALTH ADMINISTRATION, U.S. 
                 DEPARTMENT OF VETERANS AFFAIRS

    Ms. Vandenberg. Thank you, Mr. Chairman. I thank you for 
the invitation to meet with you today and describe the VA's 
progress in implementing section 403 of Public Law 110-387.
    Joining me today is Gita Uppal, the Director of Policy 
Analysis, who has been the lead on the implementation of this 
pilot project.
    Section 403, as you well know, requires VA to conduct pilot 
programs to provide non-VA health care services through 
contractual arrangements to eligible veterans. The statute 
directs that the pilot programs be conducted in at least five 
Veterans Integrated Service Networks (VISNs). VA has determined 
that VISNs 1, 6, 15, 18, and 19 meet the statute's 
requirements.
    The statute defines a veteran to be highly rural on driving 
distance to the nearest VA health care facility. Veterans are 
also considered highly rural and eligible to participate in 
this pilot if they experience hardship or other difficulties in 
travel. Details of what constitutes hardship are not specified 
in the law, so VA is formulating regulations to define this 
term with sufficient clarity to provide practice standards.
    Immediately after the law was enacted, VA established a 
cross-functional, multidisciplinary work group with a wide 
range of representatives from various VA program offices as 
well as VISN representatives to identify issues and develop an 
implementation plan.
    VA soon recognized that the pilot program could not be 
commenced in the 120 days of the law's enactment as required 
and in March 2009, VA officials briefed Subcommittee staff on 
these implementation issues.
    The first challenge that VA shared with Congress was the 
statute's definition of highly rural. The statute uses driving 
distances to define a highly rural veteran whereas VA uses 
Census Bureau definition and defines a highly rural veteran as 
a veteran who resides in a county with fewer than seven 
civilians per square mile.
    VA has developed our data systems based on the Census 
Bureau definition and uses these systems to identify highly 
rural veterans.
    To implement the law, we knew that we would need to 
reconfigure our data systems to identify travel distances for 
each enrolled veteran for multiple VA facilities, conduct 
analysis to identify eligibility according to the statute's 
definition, and develop enrollment and utilization projections 
for the pilot program using the definitions in the law. VA 
completed this reconfiguration and analysis in October 2009.
    The second challenge involves the term hardship which VA 
needs to define through regulations. This process involves many 
steps, as you well know, including public review and comment 
and can take up to 24 months to complete.
    VA notes that section 308 of S. 1963, which was recently 
enacted by Congress, would amend that requirement regarding 
hardship exception and the mileage standard.
    We believe these changes will facilitate faster 
implementation of the program and we are very grateful to the 
Committee for including these technical amendments in the 
Caregiver and Veterans Omnibus Health Services Act of 2010.
    While progress has been slower than you expected and than 
we would have liked, VA has made notable strides in 
implementing this law. And the goal is to have the pilot 
program operational in the latter part of 2010 or early 2011.
    Specifically VA has taken the following actions. We have 
developed a comprehensive implementation plan, which contains 
the work group's recommendations on implementing the various 
implications of the pilot program.
    We have analyzed the driving distances for each enrollee to 
identify eligible veterans using the drive distance criteria 
and reconfigured our data systems and now we will make whatever 
accommodation is necessary in light of the technical change.
    We have provided eligible enrollee distribution maps to 
each of the participating VISNs to aid them in their planning 
for potential sites.
    We have developed an internal request for proposal and 
disseminated that to the five VISNs for proposals on potential 
pilot sites.
    We have developed the application form, which the veterans 
participating in this program will use.
    We have formulated the definition of hardship, but in light 
of the technical changes, we may not have to use that.
    We have also taken extensive action to leverage the 
insights from Project HERO, the Healthcare Effectiveness 
through Resource Optimization pilot, and adapted those insights 
for this pilot project.
    VA will assemble an evaluation team of subject matter 
experts to review the proposals that are submitted by the five 
VISNs. This team will then recommend specific locations for 
approval by the Under Secretary for Health. We anticipate this 
process will be complete this summer. After sites have been 
selected, VA will begin the acquisition process.
    Since this process depends to some degree on the 
willingness of non-VA providers to participate, we are not able 
to stipulate exactly when the pilot can commence. However, we 
are using all of the resources and insights gained through 
Project HERO and contracting specialists to expedite the 
process. This would allow us to begin the pilot, as I said a 
minute ago, in the latter part of this year or early 2011.
    So we thank you today for the opportunity to come before 
you to discuss progress. We believe that this pilot will give 
us a further opportunity to explore innovative approaches to 
providing health care for veterans in remote areas and we are 
eager to proceed with the implementation.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Vandenberg appears on p. 
22.]
    Mr. Michaud. Thank you very much, Ms. Vandenberg.
    I have several questions. However, I will recognize Ranking 
Member Brown first to begin with his questions.
    Mr. Brown.
    Mr. Brown of South Carolina. Thank you. Madam Secretary, 
have you identified providers to participate in the pilot and 
if not, why not? And are you expecting challenges regarding the 
willingness of non-VA providers to participate in the pilot 
program?
    Ms. Vandenberg. Mr. Brown, we have not identified providers 
at this point. We are focused at this stage on identifying the 
sites that the VISNs believe will be the appropriate sites. And 
then the next step in the process would be to announce the 
opportunity to serve these veterans at which point, the 
provider community will be engaged.
    We do not have any specific understanding at this point 
that we will not have a welcome reception in the provider 
community. However, we do know in other instances in rural 
health service delivery that not every community has an 
adequate number of providers who are interested in working with 
VA.
    So we do not see any absolute impediments at this point in 
time.
    Mr. Brown of South Carolina. In the structure of locating 
providers, how would you classify their reimbursement? Would it 
be based on Medicare or Medicaid reimbursement? How would you 
determine that?
    Ms. Vandenberg. Sir, I will have to take that question for 
the record. And I would just observe that there are a number of 
discussions underway right now regarding reimbursement and 
various contracting activities that we pursue for various 
components of VA health care.
    And so this is an area of interest and concern to some 
stakeholders. So we will provide the technical response to your 
question for the record, but I am sensitive to the fact that 
the provider community does have concerns about the level of 
reimbursement that they are able to achieve in VA contracting 
in some communities.
    [The VA subsequently provided the following:]

          In general, the Department of Veterans Affairs (VA) utilizes 
        Medicare reimbursement rates as a standard in determining 
        appropriate pricing when purchasing health care services. While 
        final agreements may be either higher or lower than Medicare, 
        it is VA's desire to maintain this Federal health care pricing 
        standard whenever possible.

    Mr. Brown of South Carolina. That is the reason I asked 
because I think in order to attract the proper providers, you 
are going to have to have some initiative to encourage them to 
participate.
    I know in South Carolina, we have a lot of rural health 
care centers already established. And I do not know whether 
part of your plan was to try to interact with some of those 
rural health care centers.
    Ms. Vandenberg. Our goal is to secure the services of 
qualified providers that will optimize the performance of this 
pilot. And so at this point, we do not have any parameters set 
that would preclude any willing provider from participating in 
the contracting process.
    Mr. Brown of South Carolina. All right. Thank you, Mr. 
Chairman.
    Mr. Michaud. Mr. Perriello. I should say, Mr. Rodriguez, do 
you have any questions?
    Mr. Rodriguez. Let me ask you. I know I represent probably 
one of the largest districts in the country. It stretches 650 
miles straight and then about 800 miles through the border. And 
in the middle of there, it is cut into two districts.
    I have people from my area in Texas that have to go all the 
way to Albuquerque, New Mexico, for services. I know that there 
are some expansions that are looking at El Paso, which is a lot 
closer, however this is still 200 to 300 miles away.
    In that area, I think there was a little contract in one of 
the communities and it did not go well in terms of the payment 
problems, that were taking 2, 3 months to pay, this kind of 
problem.
    Have we looked at this in terms of what we have done in the 
past and how we can improve on this because I know that we are 
waiting, providers are waiting 3 months before they got 
reimbursed?
    Ms. Vandenberg. Yes, sir, I have. And I would also observe 
that there is a representative on the Veterans Rural Health 
Advisory Committee that the Secretary has established from 
Texas. And she has made us very aware of some of the practical 
implications of contracting and timely payment of contractors.
    In the instance that you are citing, I think we have 
attempted to rectify that situation in terms of timely payment. 
We had a change in the provider group and needed to establish 
that new relationship and smooth out the payment mechanisms.
    But I am familiar with at least one circumstance and I 
would be happy to entertain the particulars of the circumstance 
that you are referencing and follow up on that.
    [The VA subsequently provided the following:]

          VA contacted the Chief Executive Officer of Community Health 
        Development, Inc. in Uvalde, TX and a member of the Veterans 
        Rural Health Advisory Committee to discuss issues regarding VA 
        contract Community-Based Outpatient Clinics (CBOC) operations. 
        VA acknowledges that there have been VA issues with timely 
        payments of the contractor, and is taking steps to resolve the 
        matter.

    Mr. Rodriguez. As we look in terms of providing those kind 
of services to our veterans, have we looked in terms of how 
comprehensive or what would be the type, for example, the first 
four or five types of services that we would provide for 
veterans?
    Ms. Vandenberg. Our initial emphasis in our conversations 
with the VISNs has been around primary care services since that 
is the cornerstone of the VA's model of care.
    And we are also going to be looking out beyond primary 
services to what are the characteristic patterns of need among 
that population for specialty, subspecialty services. So we 
will look at the range of service that the veteran needs.
    Mr. Rodriguez. And if I could follow up with a question. I 
know that, ironically enough, we wanted access, but there are 
some that are willing to travel all the way to, to San Antonio, 
for example, 150 miles or 200 miles.
    And they are indicating in that particular situation that 
they are required to go to that local clinic when they have had 
a relationship, even though it is 150 miles away, that they 
would prefer to do that.
    Are we requiring them to go to that local facility?
    Ms. Vandenberg. I would have to take that question for the 
record in terms of the specifics of what the practice has been 
in that VISN and in that community. But let me just make an 
observation that I think is germane to this discussion.
    [The VA subsequently provided the following:]

          Veterans may choose to receive VA health care services at any 
        VA medical center. However, there are advantages to veterans 
        using the site of care closest to their homes:

            Continuity of care is enhanced by using a local 
        site for all health care instead of just urgent or emergent 
        care;
            Timeliness of access to care is improved by 
        reducing the distance to be travelled;
            Costs of travel are reduced; and
            VA's beneficiary travel regulations limit 
        reimbursement to the veteran to the nearest site that is able 
        to provide the service.

          While all services, particularly specialties, are not 
        provided at each site of care within the El Paso and Big Spring 
        catchment areas, both facilities have a system of referrals to 
        other VA facilities or to community care through fee basis 
        arrangement, depending upon what is most clinically 
        appropriate. El Paso also utilizes arrangements with William 
        Beaumont Army Medical Center (WBAMC) to provide care for 
        veterans.

    Ms. Vandenberg. The major thrust in the Department of 
Veterans Affairs' Veterans Health Administration strategy at 
this time is for us to become more veteran-centric. And in our 
health care delivery, we have launched a major initiative 
referred to as the patient-centered medical home.
    In that model, we are committed to asking the veteran their 
preference and attempting to honor that preference more 
systematically.
    So in an instance where there are options, rather than 
instructing the veteran that they absolutely have to go one 
place or another place, working with that veteran to understand 
what best suits their health care needs and their preferences 
to the best of our ability.
    So there may be two veterans, one preferring to receive 
care in that civic community and a second veteran for whatever 
reason preferring to travel to a VA facility, a VA provider, a 
community-based outpatient clinic (CBOC), or a VA medical 
center.
    So I think our overall effort at this point in time is to 
in every way possible attempt to be more veteran-centric and 
hopefully when it comes to our rural and highly rural veterans, 
this new approach to our basic model of care will go a long way 
to better meeting their needs because we will be more attuned 
to what works for them.
    Mr. Rodriguez. I do want to thank you also because it has 
been really good, at least the last two, and the beauty of it 
is, I have not heard any more complaints except that more 
veterans are actually participating and showing up.
    Ms. Vandenberg. Well, I am aware of one instance where I 
know that my office intervened and basically pointed out to the 
VISN that we would have to do a better job.
    Mr. Rodriguez. Thank you. Thank you very much.
    Mr. Michaud. Mr. Moran.
    Mr. Moran. Mr. Chairman, thank you. Thank you for holding 
this hearing.
    And, Ms. Vandenberg, thank you for being here.
    I generally have a sense that the VA has worked hard and 
pursued this issue, so I am very appreciative of that. You have 
kept me and my staff informed, and so I am grateful for that.
    Your testimony raises a significant concern for me, 
however. This started out as legislation that would affect the 
entire country. And if you lived a certain number of miles from 
a provider, you would then be eligible for VA care provided by 
a local provider.
    It was narrowed to be a certain number of VISNs as a pilot 
or demonstration project. But your testimony suggests to me 
that we are now narrowing it even further and that you are 
going to do only a particular community within that VISN. And 
that is troublesome to me because we have went from a broad 
scope, taking care of a large number of veterans.
    But we analyzed this and as the VA talked about its cost to 
me, it was never suggested that we were not going to provide 
the same opportunity for community-based service for every 
veteran who lived that number of miles--now that number of 
minutes--from a provider, from a VA provider.
    Am I understanding the testimony correctly that now we are 
just going to select certain communities within the VISN and 
make that the pilot program?
    Ms. Vandenberg. We have asked the VISNs to identify 
multiple sites as focal points within their VISN for 
potentially standing up this pilot project. At this point in 
time, that is the direction that we are moving in.
    We understood the wording in the law when it said the 
Secretary will select areas, sites, that that was permissible, 
that that was feasible in the pilot structure. So we are here 
obviously today to gain further insight from the Committee as 
to your expectations.
    Mr. Moran. That certainly would be different than my 
expectations, and Mr. Michaud and others may have an opinion, 
but I would be very critical of the concept that we are going 
to narrow the opportunities for veterans even further.
    So, if you are a veteran that lives the number of minutes 
from a provider, you may or may not qualify depending upon 
whether the VISN Director decided that your community is one 
that now qualifies.
    What I envisioned and what I hoped that the VA would pursue 
is that if you meet the definition of highly rural and you are 
in that pilot demonstration VISN, you qualify, and in effect, 
the VA has the obligation, finding a provider for you to meet 
your health care needs.
    So I welcome additional dialogue. Maybe other Members of 
the Committee have an opinion in regard to the intention. But 
as I recall, the Congressional Budget Office (CBO) budget 
estimation did not narrow it one more step that you suggest may 
occur. So my red flag is up.
    Ms. Vandenberg. Thank you for the clarification, sir.
    Mr. Moran. You are very welcome.
    The legislation that the President is now expected to sign, 
which redefines miles to minutes and the definition of, help 
me, the definition of----
    Ms. Vandenberg. Hardship.
    Mr. Moran. Thank you. Hardship. Will it speed up the 
implementation date? Do you have a sense that now we are moving 
ahead 6 months more quickly or----
    Ms. Vandenberg. It certainly will facilitate us not being 
impeded by the regulatory process. And so we believe that we 
are on a path at this point having issued the guidance to the 
field and asking them to identify sites. We may have to amend 
that per the conversation we are having.
    But we do not see any firm impediment except for the fact 
that I referenced earlier, we have no way of knowing when this 
goes out to the provider community what the level of 
receptivity would be. So I would say that the rate of progress 
going forward will be a function of the contracting mechanism 
and the receptivity in the provider community to work with us.
    Mr. Moran. I think that receptivity will in part depend 
upon the reimbursement rate that you concluded is appropriate. 
And my understanding is that the VA's current fee base is fee 
based and you cover the entire cost of care. You provide health 
care for veterans with local providers today.
    Ms. Vandenberg. Yes, sir.
    Mr. Moran. And I think you cover the entire cost of doing 
so. That, I assume, would be the most desirable role model for 
the veteran and for the health care provider in getting this 
implemented and widespread use. So I am hoping that you take 
and you follow the same practice that you have been following 
in the past of how you reimburse hometown providers today.
    Mr. Chairman, my time has expired, but I would welcome your 
input or the staff input on this issue of a pilot within a 
pilot. I am fearful that we are narrowing the scope and the 
number of veterans that we wanted to take care of across the 
country that was already narrowed to a certain number of VISNs, 
and we need to make sure, in my opinion, that it is not 
narrowed further so that you have to live in a particular 
community within that VISN in order to access this health care.
    And I thank the Chairman.
    Mr. Michaud. Thank you very much, Mr. Moran.
    And you are absolutely correct. The intent was for this 
program to include the VISN, the whole VISN, and not a pilot 
within that VISN. I believe we actually received a CBO score 
predicated on the full VISN, not on pilots within that VISN. 
And you are 100 percent correct that the intent of the 
legislation was for the program to be conducted through the 
full VISN.
    And that is a concern because this is not the first time we 
have seen the same thing happen. We actually saw it back in 
legislation that was passed in 2006 relating to State veterans 
nursing homes, which required the VA to provide the full cost 
of health care for veterans. Through the rule-making process, 
the VA narrowed that down to what full cost meant for the VA. 
And we are trying to correct that issue currently.
    So you are 100 percent correct, Mr. Moran. The program was 
intended to include the full VISN.
    Mr. Moran. Mr. Chairman, excuse me, and I would point that 
to my knowledge, at least this is the first time I have heard, 
as we have had briefings from the VA on this topic, this is the 
first time I have seen the narrowing of the narrowing. And so I 
appreciate the Chairman's comments.
    Ms. Vandenberg. Mr. Chairman, may I make a further comment?
    Mr. Michaud. Yes.
    Ms. Vandenberg. We obviously will respond to the feedback 
that we are receiving today. But just to go back to the 
question of what further challenge or impediment might we 
experience, I would just like to observe that when attempting 
to put a provider in place for highly rural veterans who will 
no doubt be dispersed in a VISN, we will likely experience a 
situation of multiple contracting relationships. And so that 
could potentially extend the timely implementation for coverage 
in an entire VISN.
    So I am just wanting to acknowledge that I hear you. I 
further appreciate the intent. And just practically speaking, 
obviously we are going to honor the intent and just realize 
that we may be dealing--in a number of instances, it would be 
ideal if there were a provider network established that had 
outlets, if you will, in those multiple venues. Having had some 
experience in my prior life in Idaho where the organization I 
was associated with attempted to set up those multiple venues 
in rural communities, it made it very easy if someone wanted to 
serve those communities. They just came to my organization and 
we helped them get that done.
    In our experience thus far in rural contracting, that has 
not always been the case. So I hear what the Committee is 
telling us today. We will proceed to respond to this and just 
work with due diligence to work through the contracting as 
timely as possible.
    Mr. Moran. Mr. Chairman, I think what Ms. Vandenberg is 
telling me is that my two desires of having broad scope and 
quick implementation may be mutually exclusive and putting the 
reminder back to us that this may slow the process down if they 
have to contract in a multiple number of ways.
    But at least from my perspective, I would put the priority 
on doing it right which is to take care of every veteran 
regardless of where they live, not within a particular 
community as compared to the speed of its accomplishment. We 
want both.
    But, again, I think we would make a terrible mistake if we 
go through this pilot program and we only in a sense take the 
easy areas within a rural VISN and which it is easier to find a 
provider or there is a multiple number of providers or there is 
a larger number of veterans. We are still isolating that 
veteran who lives a long distance from a VA hospital. And so my 
priority would again be back to making sure that we implement 
this in a way that we can demonstrate it can be done VISN-wide.
    Thank you.
    Mr. Michaud. Thank you.
    Mrs. Halvorson.
    Mrs. Halvorson. Thank you, Mr. Chairman.
    And while we have been discussing all this, there are 
probably many veterans who have not been able to find a way to 
get taken care of. So while we are trying to figure out how to 
do this, our veterans still need help.
    Ms. Vandenberg. Uh-huh.
    Mrs. Halvorson. So instead of reinventing the wheel or 
trying to figure out what is rural, what is hardship, why 
aren't we just taking care of our veterans and letting them go 
wherever it is that they need to be taken care of?
    Now, I may be naive and I am new. This is my first term. 
But while we are trying to figure out the intent of a law or 
how to do it the right way no matter if it takes long, what are 
we doing right now for our rural veterans? Where are they going 
and how are they getting taken care of?
    Ms. Vandenberg. Thank you for the question. I am glad you 
asked it because I can speak very directly to it.
    We are already providing a significant amount of fee care 
to rural and highly rural veterans. And under the aegis of the 
Office of Rural Health in fiscal year 2010, we have just put 
out $200 million to the VISNs to afford them the extra resource 
to provide fee care to rural and highly rural veterans.
    So I think it is important to note that that is a mechanism 
that is already in place. And what I understood the intent of 
this to do was to give VA additional incentive and capacity to 
further contract out care to extend that access even more.
    But to answer your question, we are already meeting the 
needs of rural and highly rural veterans through the fee-care 
mechanism.
    Mrs. Halvorson. So then, and not to interrupt, so then what 
is the estimate of how many extra veterans are we going to take 
care of and the cost? So we are already spending money. We are 
already taking care of people. So this program, what are we 
assessing the pilot program's cost, the quality, and how many 
veterans are going to be eligible for the pilot program?
    Ms. Vandenberg. Let me take the assessment of cost first.
    Mrs. Halvorson. Okay.
    Ms. Vandenberg. In our initial analysis of the 
implementation of the pilot as we previously understood it, we 
estimated up to $100 million. However, we knew that that was 
putting significant emphasis on primary care service delivery 
and as you add in the multi-specialty dimensions of a patient's 
care that that cost could rise.
    So our current working assumption is that the pilot project 
as we previously conceived it would cost at least $100 million.
    And your second question about quality, that is part of the 
analysis and the process of contracting and we are using all of 
the resources of VHA that we currently employ in the 
contracting process, pulling those in to look at the specifics 
of assessing the quality of the care and the patient's 
satisfaction with the care.
    Mrs. Halvorson. So for $100 million, we are going to help 
more people?
    Ms. Vandenberg. Yes, ma'am.
    Mrs. Halvorson. And better?
    Ms. Vandenberg. I think I would just observe that we 
believe that the standard of care, the quality of care that is 
evident in our current fee relationships is of a high quality 
nature. So when we say better, that could connote that there is 
something lacking in our current approach, but----
    Mrs. Halvorson. Correct. That is not a good word. Better is 
not a good word.
    Ms. Vandenberg. But I just want to be precise. We 
definitely are trying to enhance access and by spreading the 
network of contract relationships further into highly rural 
communities and attempting to structure those relationships 
where in some instances, they do not exist today, that will 
definitely enhance the quality of veterans' care because of the 
elimination----
    Mrs. Halvorson. Okay. I just hope we are not reinventing 
the wheel. It looks like you have taken all this time to 
discuss hardship and rural when we should be taking this time 
to help our veterans with their health care. And now with 1963, 
I believe, we take hardship out altogether. We should have no 
problem now implementing this bill.
    So, you know, I know my time is about up, but I am 
concerned about the care of my veterans, not debating whether 
they are rural or if they have a hardship. We are talking about 
people that we just want to take care of.
    Ms. Vandenberg. I understand that.
    Mrs. Halvorson. So thank you.
    Ms. Vandenberg. And I am committed to that same mission.
    Mrs. Halvorson. Thank you.
    Mr. Michaud. Mr. Boozman.
    Mr. Boozman. Thank you, Mr. Chairman.
    And we appreciate Ms. Vandenberg being here. And I really 
have enjoyed the discussion. It has been very helpful.
    What I would like to do is go ahead and yield my time to 
Mr. Moran in the sense that he is so knowledgeable about the 
issue. And, again, we are getting some good testimony.
    Mr. Moran. Mr. Chairman, thank you.
    I have actually exceeded my time previously, but I 
appreciate Mr. Boozman yielding.
    Just a couple more thoughts. One, we have always had 
contention, it seems to me, in regard to pharmaceuticals, the 
ability for a local pharmacist to prescribe medication to a 
veteran. And we have pursued this issue before. There have been 
a number of bills introduced that would allow or require the VA 
to allow for a local physician to have a prescription honored 
by the VA.
    Is there any discussion, any policy work in place in regard 
to how we are going to handle the prescription drug issue and 
the local pharmacy?
    Ms. Vandenberg. I will ask Ms. Uppal to respond to that in 
terms of the work that the implementation team has done thus 
far.
    Mr. Moran. Thank you.
    Ms. Uppal. Thank you, sir, for the question.
    That is something that the implementation plan working 
group really did spend a lot of time on. In fact, we have 
engaged very closely with our pharmacy colleagues on this 
issue. So we have come up with a number of recommendations on 
how we would address this ranging from potential retail 
pharmacy network access and a number of other things.
    So if it is okay, we would certainly welcome the 
opportunity to keep the Committee apprised of this issue, but 
that is certainly a major issue that we are very cognizant of 
and intend to work very closely on.
    Mr. Moran. Very good. It will be somewhat self-defeating if 
we are able to go to our local doctor and get a prescription, 
but then cannot go----
    Ms. Uppal. Right.
    Mr. Moran [continuing]. To our hometown pharmacist and have 
it filled.
    Ms. Uppal. Yes.
    Mr. Moran. And then on the Project HERO, it is implemented 
VISN-wide. Are there some analogies there that we can draw as 
to how this implementation may or should work?
    Ms. Vandenberg. I think there are and we have spent an 
extensive amount of time with the lead staff. And we actually 
have an agreement with the business office staff that are the 
support to Project HERO. We have struck a service level 
agreement to make it very clear that we want to leverage their 
experience and their expertise so that we do not reinvent the 
wheel.
    Mr. Moran. Mr. Chairman, thank you.
    Again, I would reiterate that I have a strong sense that 
the VA is serious about implementing this program in a way that 
is advantageous to veterans, and I very much appreciate the 
working relationship that we have had on this legislation. And 
the concerns I have raised today are not critical of the VA, 
but just an attempt to make certain that our intentions are 
fulfilled in the VA's efforts to implement this bill.
    So I thank you for the dialogue, and I look forward to our 
continued working relationship.
    I thank the Chairman.
    Ms. Vandenberg. Thank you, sir.
    Mr. Michaud. Mr. Perriello.
    Mr. Perriello. Thank you very much, Mr. Chairman. Thank you 
for your leadership, Mr. Moran's and others on this.
    Rural care is of tremendous interest to the veterans in 
central and southern Virginia. We have great primary care 
providers, to Mr. Brown's point, who are ready and eager to 
participate in the program, many of whom are veterans 
themselves. So there is a lot of interest through various 
clinics and primary care centers there.
    And I really want to thank you for your work on moving 
forward with implementation on this and coming up with the 
criteria. And I do want to reiterate Mr. Moran's concerns and 
Mr. Michaud's concerns about the VISN-wide issue.
    But to disagree a little bit with Mrs. Halvorson, I think 
obviously the goal here is to get care as quickly as possible, 
but I think there is a genuine disagreement here where many of 
us on the Committee feel like this is going to provide better 
care at a cheaper price. There are those who disagree with that 
and believe that getting people through the existing VA 
facilities is going to be better care at a quality price.
    So I think that as we pick the data points here, the 
important thing is that we are picking enough and a varied 
enough set to be able to answer that question which is how are 
we going with this, are we getting higher quality or equivalent 
quality care at a cheaper price.
    So as we choose these facilities, I know there are a lot of 
concerns and you have put a lot of work into the criteria, but, 
you know, part of the point of a pilot project is to be able to 
say at the end with some degree of certainty, yes, this system 
is working and, therefore, not only do we want to go VISN-wide 
but really nationwide with it if it is, as I think many of us 
believe, going to be a better product.
    And, again, that is a place where good people can disagree 
in advance, but hopefully we will produce the evidence through 
this and look at that.
    With that in mind, just very quickly, what is the timeline 
for making some of the decisions moving forward of where you 
see these pilots going forward?
    Ms. Vandenberg. As I indicated earlier, we envisioned being 
able to move to the contracting phase and after the selection 
and potentially have the pilots up by the end of this calendar 
year or early 2011.
    In light of the conversation that we have had here today, 
we are obviously going to go back and apprise the Under 
Secretary for Health of the need for us to think more broadly 
and make whatever adjustments are necessary then in the next 
steps of the process.
    But I would not envision us lagging dramatically. We are 
eager. We are on a marathon at this stage of the game and we 
see that, you know, line where we are going to cross over from 
implementation planning to actually doing. So we are going to 
press on with all due diligence to keep this moving as fast as 
we can.
    Mr. Perriello. And, again, we have throughout VISN 6 a lot 
of interest, Virginia, North Carolina, West Virginia. I happen 
to know central and southern Virginia the best and there are 
doctors and veterans organizations that are very interested in 
this.
    Would it be possible to facilitate a meeting between folks 
in your office and them just to keep them apprised and letting 
them know about this as it develops?
    Ms. Vandenberg. Absolutely, yes. And I am familiar with 
some of that interest by virtue of the roundtable----
    Mr. Perriello. Right.
    Ms. Vandenberg [continuing]. Conversation. So I fully 
appreciate that there are members of the provider community who 
are eager to move on this.
    Mr. Perriello. Well, thanks. And, again, I just want to 
thank the Members of this Subcommittee and yourself for moving 
this forward. I really do believe in this project in a big way 
and if we implement it well, I think we are going to see good 
results. So thank you very much.
    I yield back.
    Mr. Michaud. Thank you, Mr. Perriello.
    I have a few questions and then if others have additional 
questions, we will go around again.
    And I know, Ms. Vandenberg, this issue began before you 
were in this position, but my concern is I think all too often 
sometimes when Congress passes legislation that is very well 
intended, we tend to not be so prescriptive in order to give 
the agencies the flexibility to make adjustments as they see 
fit. But the concern is that sometimes if we are not 
prescriptive, then they tend to implement the law the way that 
they want to implement it.
    And that has been a concern, especially since I have been 
on this Committee since 2003. We have heard a lot from 
colleagues all around the country about issues affecting 
veterans that live in rural areas. We have constantly had bills 
before our Committee that would encourage the VA or mandate the 
VA to contract out.
    I know that the VA has always looked at this issue, as they 
do provide good service and do contract out in some areas, but 
you do not want to have VA become more or less like the 
insurance agency where they contract everything out, and I can 
understand that. But in order to prevent that from happening, 
those of us who live in rural areas want to see results.
    And the concern that I have is--and I know it is from 
before your time--this legislation passed in October of 2008. 
We did not hear back from the VA until March of 2009 on why 
they cannot implement it. When we went through the hearing 
process and the markup process, that was the time that the VA 
should have been before us saying, well, we need these changes.
    They were not. And we did not hear about their concerns 
until after the fact, which is a concern that I have; making 
sure that we are cognizant of the problems that VA has with 
legislation. But we cannot do it unless you are at the table. 
And the time to have been at the table was during the hearing 
process and during the markup process, not after the fact.
    So I can assure you that for Members of this Committee--
whether it is this Congress or the next Congress or 10 
Congresses down the road--rural health care issues for veterans 
will continue to be a problem and a concern.
    Another issue that I want to discuss is, you mentioned that 
you have asked the different VISNs to report back on the areas 
within their VISN that they would like to use as sites for this 
pilot program. And as you heard, the intention was for this 
program to be implemented VISN-wide.
    I do not believe that that is a problem since we have dealt 
with the Project HERO Pilot Program. I think there are a lot of 
similarities between Project HERO and what Mr. Moran was 
suggesting when he originally put forward this legislation.
    So, when this program is implemented VISN-wide, one of the 
concerns I would have is if the Central Office does not intend 
to give VISNs additional resources to implement it. I have 
heard at Mini Mac meetings in Maine that when you VA facilities 
offer fee for service care, with the increase in mileage 
reimbursement, that actually puts a lot more stress on the 
medical facility within that VISN. The Central Office is 
requiring medical facilities to meet their budget requirement 
and, hence, they might have to actually stop providing fee-for-
service care. They might have to not fill a position that needs 
to be filled, to meet the budgetary constraints.
    Do you envision that once this program is fully operating, 
or during that process, that you would need to give the 
different VISNs additional resources to meet the pilot program? 
And if so, how much or how much flexibility do you intend to 
give the different VISNs?
    Ms. Vandenberg. I can answer that. I am responsible as the 
Acting Director of the Office of Rural Health for the $250 
million appropriation. And so in looking out to fiscal 2011, we 
expected, as I mentioned earlier, to spend at least $100 
million on this pilot. So now that we are going to go back and 
reset our parameters, we may need to amend that estimate.
    My understanding with the Under Secretary of Health is that 
this will be in essence the top line in the Office of Rural 
Health. And so looking at a $250 million appropriation, if this 
is the top, then we are committed to providing those resources 
through the conduit of the Office of Rural Health for the 
duration of the pilot project. And then the implications of 
that are that other efforts that we might have considered 
pursuing through the Office of Rural Health might need to be 
reevaluated in light of that.
    So it is my current understanding, given the policy 
discussion that we have had within VHA, that this is our top 
line.
    Mr. Michaud. And how are you going to go about implementing 
this?
    Here is another concern that I have had when receiving 
information from veterans service organizations (VSOs) at the 
Mini Mac meeting in Maine, for instance, and also I have heard 
it elsewhere around the country; I will use Maine as an 
example. In northern Maine, if the veteran has to go to Boston 
to access health care, they travel to Togus, stay overnight at 
Togus, go to Boston, do their operation in Boston, come back, 
stay overnight in Togus, then go back home. It is a 4-day 
affair, which is unfortunate.
    There has been a situation in which a huge medical facility 
in the city of Augusta, not too far from the Togus VAMC, was 
willing to build a whole wing just for veterans if VA would be 
willing to utilize that wing, knowing that VA is not going to 
build a brand new facility at Togus.
    What I have been told by some of the VSOs is the medical 
facility was amenable to looking at that. However, the VISN 
office said no.
    So I can envision, as you move forward in this pilot 
program, you might have a medical facility in a rural area with 
a different idea of how to move forward. However, there are 
constraints at the VISN office preventing the facility from 
doing it that way.
    So how is the Office of Rural Health or the Under Secretary 
going to make sure that this pilot program is a good pilot 
program and that there are not constraints put on the different 
medical facilities who might have a different idea from what 
the VISN office, in my case Boston, might consider doable?
    Ms. Vandenberg. I think your question illustrates a very 
fundamental dynamic in the Veterans Health Administration today 
between the VISNs and the authority that they have to implement 
a plan using the resources that are provided to them for the 
population within the VISN and the role that my Office of 
Policy and Planning plays and in this instance the Office of 
Rural Health in particular.
    So as we from my office look out across the system and look 
at some of the gaps in service delivery, we are in a dialogue 
with the VISNs about how are they addressing those gaps and 
deploying resources. And that balance of influence then between 
the VISNs' authority to proceed along the lines that they lay 
out and the Office of Policy and Planning observing certain 
patterns and potential emerging needs is a constant dynamic 
back and forth.
    And so I can just speak from the vantage point of the 
Office of Rural Health and this pilot in particular that my 
sense is that when you have a pilot and you are gathering this 
data during the course of the pilot, you come to various 
milestones where you can say that it is clear that there is 
higher veteran satisfaction, comparable, at a minimum, 
comparable quality, and this is what the cost looks like.
    And in instances where veterans are having to travel those 
long distances and there might be an alternative provider 
mechanism available, it would be the Office of Rural Health 
talking to that VISN and saying let us talk about this make by, 
let us look at this more carefully because here's a population 
that has this need and we have demonstrated a way to address 
that need.
    So that is from my vantage point the conversation that I 
have had already with some of our VISN Directors and will 
continue to have in terms of striking a balance between the 
authority that they have and the responsibility that I have in 
my office to observe and question.
    Mr. Michaud. Mr. Moran, do you have any further questions?
    Mr. Moran. Chairman, thank you for your indulgence.
    Just one additional inquiry about CBOCs. Has the Department 
taken into account in its CBOC planning the consequences or 
effects of this legislation, or did that follow after we get 
the pilot in place? Would we expect a different alignment of 
CBOCs, less necessity?
    Ms. Vandenberg. If I could explain what our current process 
is with regard to CBOCs, several years ago, in light of some of 
the dynamics that the Chairman just illustrated, my office was 
empowered to be responsible for the analysis of the gaps. And 
so what we do each year now prospectively is work with the 
VISNs to point out areas that appear to be underserved and then 
they have to come in with a submission that responds to that.
    So to answer your question specifically, the further 
placement of CBOCs was not something that we were 
juxtapositioning with vis-a-vis this pilot. However, that 
process of looking for gaps, underserved areas, and the 
population at risk is very integral to the work that is going 
on in the Office of Policy and Planning routinely.
    And so we have the capacity to take this pilot and the 
implications of this pilot into consideration.
    I would also observe that a decision was recently made to 
help to underwrite the cost of 51 CBOCs that had been 
previously approved that will serve rural veterans through the 
Office of Rural Health.
    And so by virtue of us funding those CBOCs, I have a new 
window into the VISNs and how those CBOCs will perform. And so 
that gives the Office of Rural Health a new opportunity for 
dialogue with my VISN colleagues regarding how we are meeting 
the needs of rural and highly rural veterans.
    Does that respond to your question, sir?
    Mr. Moran. Yes, ma'am, it does. Thank you very much.
    And thank you, Mr. Chairman.
    Mr. Michaud. Mr. Rodriguez.
    Mr. Rodriguez. Yes. Let me follow up on this because I know 
as we reach out, at least in my community, I know it was done 
with private providers. Do we have any contracts right now, I 
know in the past we had, with community health centers?
    Ms. Vandenberg. Sir, I would have to take that question for 
the record. I do not have that data at hand.
    Mr. Rodriguez. Okay. Because I would think that based, and 
although I have received indications that the reimbursements 
were not appropriate when they did have it with the VA, but I 
am wondering as to why because I know they get the 
reimbursements on Medicare, Medicaid, and all the others and I 
gather we collect right? Is that correct? Does the VA get 
reimbursed also from or just from the private sector?
    Ms. Vandenberg. I am not sure I understand your question. 
Does the VA get reimbursed by----
    Mr. Rodriguez. From Medicare, Medicaid on the veterans.
    Ms. Vandenberg. No, sir.
    Mr. Rodriguez. No? Okay.
    Ms. Vandenberg. We take----
    Mr. Rodriguez. You just get private sector?
    Ms. Vandenberg [continuing]. Private insurance coverage----
    Mr. Rodriguez. Private insurance.
    Ms. Vandenberg [continuing]. But not Medicare and Medicaid 
coverage.
    Mr. Rodriguez. Can you look to see if you have any 
contracts now with community health centers----
    Ms. Vandenberg. Yes, sir. We----
    Mr. Rodriguez [continuing]. Since they are reimbursed also 
from the Federal side and especially from the community mental 
health centers that might be out there--because I know they do 
have a good number of providers, that in some cases, there is a 
great need for them.
    And as you look at continuing to move in that direction, we 
are optimistic that at some point, we will have 94 to 97 
percent of the people insured in the future. Right now I know 
in my community, one out of three is not insured in terms of 
cost, as this is another factor.
    Ms. Vandenberg. We have begun the analysis within the 
Department to understand the implications of health care reform 
and broader health insurance accessibility to the entire 
population including veterans who are not currently enrolled 
with VA.
    And so that analysis is underway and we are eagerly 
awaiting some further clarification as to the language in the 
law pertaining to the tax credits that an individual would be 
able to access for coverage vis-a-vis a veteran's eligibility 
or current enrollment with VA.
    Mr. Rodriguez. Okay. And if you can get back with me or my 
staff in reference to possible contracts with community health 
centers----
    Ms. Vandenberg. Yes, sir, we will.
    Mr. Rodriguez [continuing]. Through our community and 
seeing what kind of arrangements we might be able to make since 
they also get Federal resources.
    Ms. Vandenberg. Yes, sir.
    [The VA subsequently provided the following information:]

          Neither the El Paso nor Big Spring facility has contracts for 
        care in the community at this time. Big Spring maintained the 
        Ft. Stockton Community-Based Outpatient Clinic through a 
        contract with a private provider for primary care for most of 
        fiscal year 2010, but this was converted to a VA-staffed clinic 
        in August 2010 to improve the quality of care provided to 
        veterans in this area.

    Mr. Rodriguez. Thank you very much.
    Mr. Michaud. The last question I have is, what steps will 
be taken to foster an efficient but secure flow of patient 
medical information between VA and participating providers? And 
I assume there may be some analogies that could be drawn with 
Project HERO in that regard.
    Ms. Vandenberg. Yes, sir. Basically our answer at this 
point is that we are working within the parameters that VA IT 
has given us regarding the transfer of information. There are 
mechanisms available for read-only interface at this point.
    There is not a clear signal that we will be able to 
transmit information and receive information very easily, but 
we are certainly going to take full advantage of the mechanisms 
that have been put in place vis-a-vis Project HERO in this 
pilot.
    Mr. Michaud. And do you have any concerns with the IT? I 
have heard some concerns that when we originally separated IT 
from the medical facility account, that the medical facilities 
and IT might not be on the same page.
    So you said you have to live within the parameters of what 
they have set. Are those parameters too restrictive or should 
they be changed in any way?
    Ms. Vandenberg. Well, what I meant to say by that is that 
there are rules that govern interoperability and those rules 
are determined not only by VA policy but also by broader 
considerations of requirements for privacy, for example. And so 
we are operating within those parameters.
    The large IT question, I will defer to the Under Secretary 
for Health. There is an ongoing dialogue within the Department 
about the balance of the multiple strategic issues facing the 
Department and the IT support that is required to achieve the 
Secretary's vision of a transformed VA.
    Mr. Michaud. Are there any other questions?
    [No response.]
    Mr. Michaud. Well, I want to thank you, Ms. Vandenberg, for 
coming today. This has been really helpful and I look forward 
to working with you as we move forward to implement this 
program in the way that it was intended to be implemented.
    And if there are any problems as we move forward for full 
implementation, I would appreciate if you could let the 
Committee know what those concerns are. I look forward to 
working with you.
    Ms. Vandenberg. Absolutely.
    Mr. Michaud. So, once again, thank you very much----
    Ms. Vandenberg. Thank you.
    Mr. Michaud [continuing]. For all your hard work----
    Ms. Vandenberg. Thank you.
    Mr. Michaud [continuing]. And dedication----
    Ms. Vandenberg. Thank you.
    Mr. Michaud [continuing]. To take care of our veterans.
    Ms. Vandenberg. I am a nurse. I am sure you have all heard 
the adage once a nurse, always a nurse.
    Mr. Michaud. Yes.
    Ms. Vandenberg. And I am very far removed from the bedside, 
but not far removed from the commitment to reaching out every 
day in some way to assure that our veterans receive the 
appropriate care that they have earned and that they deserve.
    So thank you.
    Mr. Michaud. Thank you very much.
    If there are no other questions, this hearing is adjourned.
    [Whereupon, at 11:18 a.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

             Prepared Statement of Hon. Michael H. Michaud,
                    Chairman, Subcommittee on Health
    The Subcommittee on Health will now come to order. I thank everyone 
for attending this hearing.
    The purpose of today's hearing is to examine the VA's 
implementation of the Enhanced Contract Care Pilot Program for rural 
veterans. This pilot program was authorized in the 110th Congress, and 
had an effective date of 120 days after October 10, 2008. However, the 
pilot program remains unavailable to eligible veterans.
    We know that about 40 percent or nearly 3 million veterans who use 
the VA health care system live in rural areas, which includes over 
100,000 veterans who reside in highly rural areas. This trend is likely 
to continue since a large number of our men and women serving our 
country in Iraq and Afghanistan are recruited from our rural 
communities.
    I recognize and appreciate the VA's efforts in addressing the 
health care needs of our rural veterans who are more likely to be in 
poorer health than their urban counterparts. However, more work remains 
in this area as our rural veterans face unique challenges that are both 
extensive and complex. The Enhanced Contract Care Pilot Program is a 
potential tool for expanding access to health care for our rural 
veterans in areas where the VA is unable to provide care.
    I would like to learn more about the steps that the VA has taken to 
implement the Enhanced Contract Care Pilot Program. I also would like 
to fully understand any potential barriers that are hindering the 
implementation of this important pilot program.
    I look forward to hearing the testimonies of our invited witnesses 
today.

                                 
            Prepared Statement of Hon. Henry E. Brown, Jr.,
           Ranking Republican Member, Subcommittee on Health
    Thank you, Mr. Chairman.
    As always, I appreciate your leadership and I thank you for holding 
this hearing today to review the status of VA's implementation of the 
Enhanced Contract Care Pilot Program enacted into law in the 110th 
Congress as section 403 of Public Law 110-387.
    I also want to commend my good friend and colleague from Kansas, 
Jerry Moran, for his work and continued commitment to serving rural 
veterans. Jerry was the sponsor of the Rural Veterans Access to Care 
Act which led to the establishment of this 3-year demonstration project 
to allow highly rural veterans to receive covered services through non-
VA providers.
    Of the almost 8 million veterans enrolled in the VA health care 
system, approximately 3 million reside in rural areas. Often, these 
veterans face incredible difficulties in accessing VA health care. Many 
must find transportation and traverse hours across rough terrain to 
reach the nearest VA hospital. If a round trip is not possible in 1 day 
because of distance, the rural veteran and their family may be 
compelled to stay overnight. These difficulties can make even routine 
medical appointments an expensive and lengthy chore and discourage 
rural veterans from using the health benefits to which their service 
entitled them.
    Helping to ease that burden and ensure that even those veterans who 
choose to make their homes in the most rural of areas have access to 
the high-quality care they deserve is a priority of all of us on this 
Subcommittee. And, this pilot is very important to determine ways to 
best serve our veterans residing in highly rural areas.
    As more and more veterans return to their rural homes from 
Operations Enduring Freedom and Iraqi Freedom and rural veterans from 
earlier wars continue to require care, we must continually evaluate our 
actions and determine what more can be done to provide timely and 
appropriate access to medical care.
    In that vein, I am eager to hear from the VA this morning on what 
the Department is doing to implement the law and what additional steps 
should be taken to ensure its success.
    I thank our witness for being here, look forward to our discussion, 
and yield back the balance of my time.

                                 
       Prepared Statement of Patricia Vandenberg, M.H.A., B.S.N.,
  Assistant Deputy Under Secretary for Health for Policy and Planning,
              and Acting Director, Office of Rural Health,
  Veterans Health Administration, U.S. Department of Veterans Affairs
    Good Morning, Mr. Chairman and Members of the Committee. Thank you 
for inviting me here today to discuss the progress the Department of 
Veterans Affairs (VA) has made in implementing section 403 of Public 
Law (PL) 110-387. Joining me today is a member of my staff, Ms. Gita 
Uppal, Director of Policy Analysis for the Veterans Health 
Administration (VHA).
    Section 403 requires VA to conduct a pilot program to provide non-
VA health care services through contractual arrangements to eligible 
veterans. This is an issue of significance to both Congress and the 
Department, and we look forward to continuing to work together to 
ensure veterans in geographically remote areas receive the care they 
have earned through service to our country. My testimony will provide 
background information on the provision, discuss VA's efforts to 
implement this provision and the challenges it has encountered, 
document the Department's accomplishments to date, and report on its 
continuing plan for full implementation of the program.
Background
    Public Law 110-387, the Veterans' Mental Health and Other Care 
Improvements Act of 2008, was signed by President Bush on October 10, 
2008. Section 403 of this law requires VA to conduct pilot programs 
during a 3-year period to provide non-VA health care services through 
contractual arrangements to eligible veterans. The pilot program must 
be conducted in at least five Veterans Integrated Service Networks 
(VISN), which were to be selected using specific criteria defined in 
the law. In determining which VISNs would meet Congress' requirements, 
VA reviewed the number of highly rural counties (using the VA 
definition of highly rural, which is fewer than seven civilians per 
square mile) in every VISN. Additionally, VA analyzed the number of 
States within each VISN and excluded those participating in the Project 
Healthcare Effectiveness through Resource Optimization (Project HERO) 
pilot program. VA determined the following VISNs met the statute's 
requirements: VISN 1: VA New England Healthcare System; VISN 6: VA Mid-
Atlantic Health Care Network; VISN 15: VA Heartland Network; VISN 18: 
VA Southwest Health Care Network; and VISN 19: Rocky Mountain Network.
    Veterans who are enrolled in VA as of the commencement of the pilot 
or are eligible under section 1710(e)(3)(C) of title 38, United States 
Code, reside in any of the five VISNs meeting the statute's criteria 
(VISNs 1, 6, 15, 18, 19), and meeting the statute's definition of 
``highly rural'' are eligible to participate in the pilot program. 
Veterans eligible to enroll under section 1710(e)(3)(C) of title 38, 
United States Code, essentially includes Operation Enduring Freedom 
(OEF) and Operation Iraqi Freedom (OIF) veterans and veterans who 
served on active duty in a theater of combat operations during a period 
of war after the Persian Gulf War or in combat against a hostile force 
during a period of hostilities after November 11, 1998. Veterans who 
meet the driving distance and hardship criteria for eligibility but are 
not enrolled in VA as of the commencement of the pilot or eligible to 
enroll under 1710(e)(3)(C) of title 38 are not eligible to participate 
in the pilot program.
    The statute defines a veteran to be highly rural based on driving 
distances to the nearest VA health care facility. Under the statute, a 
veteran is considered highly rural if the veteran resides in a location 
that is:

    1.  More than 60 miles driving distance from the nearest VA health 
care facility providing primary care services, if the veteran is 
seeking such services; or
    2.  More than 120 miles driving distance from the nearest VA health 
care facility providing acute hospital care, if the veteran is seeking 
such care; or
    3.  More than 240 miles driving distance from the nearest VA health 
care facility providing tertiary care, if the veteran is seeking such 
care.

    Veterans also are considered highly rural and thus eligible if they 
experience ``hardship or other difficulties in travel to the nearest 
appropriate [VA] health care facility that such travel is not in the 
best interest of the veteran.'' Details of what constitutes 
``hardship'' are not specified in the law. VA is formulating 
regulations to define this term with sufficient clarity to provide 
practical standards, while still maintaining a proper breadth to 
accommodate veterans with special circumstances. As noted below, 
however, the requirement for this regulation may be eliminated, and the 
criteria for highly rural may be changed slightly, by legislation 
passed recently by the House of Representatives and the Senate.
VA's Efforts and Challenges
    Immediately after Public Law 110-387 was enacted, VA focused its 
efforts on plans to implement this pilot program at several sites. 
Since it is an ambitious and complex undertaking, VA established a 
cross-functional workgroup (the Workgroup) with a wide variety of 
representatives from various offices, as well as VISN representatives. 
The Workgroup began identifying issues and developing an implementation 
plan. VA soon realized that the pilot program could not be responsibly 
commenced within 120 days of the law's enactment, as called for in the 
law. In March 2009, VA officials briefed Subcommittee staff on these 
implementation issues.
    The first challenge VA shared with Congress was that the statute's 
definition of ``highly rural'' was one not being used by VA: the 
statute uses driving distances to define a highly rural veteran, 
whereas VA defines a highly rural veteran as a veteran who resides in a 
county with fewer than seven civilians per square mile. VA has well-
developed data systems based on its definition and uses these systems 
to identify highly rural veterans. To implement the law, VA needed to 
re-configure its data systems to determine which veterans would be 
eligible to participate in the pilot program. These changes required VA 
to identify travel distances for each enrollee for multiple VA 
facilities, conduct analyses to identify eligibility according to the 
statute's definition, and develop enrollment and utilization 
projections for the pilot program using the definitions in the law. VA 
completed this reconfiguration in October 2009.
    The second challenge involved the term ``hardship,'' which would 
need to be defined through regulations. The Federal regulations process 
involves many steps, including public review and comment. That may be a 
lengthy process, depending on the number and complexity of regulations. 
VA is now drafting the regulation defining ``hardship,'' which 
represents the lengthiest task necessary prior to implementing the 
pilot.
    Our staff had subsequent discussions with the Health Subcommittee 
staff, continuing to report on the status of the project and also 
identifying possible changes that could speed implementation. Section 
308 of S. 1963, which recently passed the House of Representatives and 
the Senate, would remove the requirement regarding the hardship 
exception as well as slightly modify the definition of ``highly 
rural.'' We believe those changes could speed implementation of the 
pilot program.
Accomplishments
    VA has made notable strides in implementing section 403 of PL 110-
387, with the goal of having the pilot program operating late in 2010 
or early in 2011. Specifically, VA has:

      Developed an Implementation Plan, which contains the 
Workgroup's recommendations on implementing the pilot program;
      Analyzed driving distances for each enrollee to identify 
eligible veterans (using the drive distance criteria) and re-configured 
its data systems;
      Provided eligible enrollee distribution maps to each 
participating VISN to aid in planning for potential pilot sites;
      Developed an internal Request for Proposals that was 
disseminated to the five VISNs asking for proposals on potential pilot 
sites;
      Developed an application form that will be used for 
veterans participating in the pilot program;
      Formulated a definition for ``hardship,'' and began 
drafting regulations; and
      Taken action to leverage lessons learned from Project 
HERO and adapt it for purposes of this pilot program.

Next Steps
    VA continues to address the ongoing issues associated with 
implementing this pilot program. VA will assemble an evaluation team of 
subject matter experts to review the proposals from the five VISNs 
regarding potential pilot sites. This team will then recommend specific 
locations for approval by the Under Secretary for Health. We anticipate 
this process will be complete in summer 2010. After sites have been 
selected, VA will begin the acquisitions process. Because this process 
depends to some degree on the willingness of non-VA providers to 
participate, VA is unable to provide a definitive timeline for 
completion, but it is making every effort to have these contracts in 
place by fall 2010. This would allow VA to begin the pilot program in 
winter 2010 or early 2011. These estimates are also dependent upon the 
approval process for VA's regulations. Delays in final publication of 
the regulations could further postpone the start date for the program.
    VA is developing information materials for veterans participating 
in the pilot program, for non-VA providers, for VA employees, and for 
other affected populations so that, when the pilot is implemented, all 
parties will have the information they need to fully utilize these 
services. VA is committed to implementing in full, the program directed 
by Congress and to maintaining the quality of care veterans receive. 
Other issues, such as securing the exchange of medical information, 
verifying veterans' eligibility for this pilot program, coordinating 
care, and evaluating the success of the pilot program, are also 
important priorities.
Conclusion
    Thank you again for the opportunity to discuss the status of the 
pilot program required by section 403 of PL 110-387. This program will 
explore opportunities for collaboration with non-VA providers to 
examine innovative ways to provide health care for veterans in remote 
areas. VA continues to work diligently to implement the program and 
will continue to keep Congress apprised on the status of these efforts. 
VA is prepared to do whatever it takes to serve the needs of all 
veterans, including those in rural and highly rural areas. My staff and 
I look forward to answering your questions.
          POST-HEARING QUESTIONS AND RESPONSES FOR THE RECORD

                                     Committee on Veterans' Affairs
                                             Subcommittee on Health
                                                    Washington, DC.
                                                        May 4, 2010

Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, D.C. 20240

Dear Secretary Shinseki:

    Thank you for the testimony of Patricia Vandenberg, Assistant 
Deputy Under Secretary for Health for Policy and Planning and Acting 
Director of the Office of Rural Health, at the U.S. House of 
Representatives Committee on Veterans' Affairs Subcommittee on Health 
oversight hearing on ``VA's Implementation of the Enhanced Contract 
Care Pilot Program'' that took place on April 29, 2010.
    Please provide answers to the following questions by June 15, 2010, 
to Jeff Burdette, Legislative Assistant to the Subcommittee on Health.

     1.  VA's testimony noted that the pilot program would be fully 
implemented by the winter of 2010 or early 2011. As you know, section 
308 of S. 1963, which recently passed the House and the Senate, would 
remove the requirement regarding the hardship exception. Without the 
need to issue regulations defining hardship, how will the 
implementation date be impacted?

     2.  During this hearing, VA heard statements from Representative 
Moran, myself, and others, clarifying that the intent of the law is for 
this program to be implemented VISN-wide, rather than at selected sites 
within the VISN.
       a.  What will the new implementation date be for a pilot program 
meeting this scale?
       b.  What key milestones does VA need to meet to make VISN-wide 
implementation a reality?

     3.  Given delays in the implementation of this program, does VA 
require legislation extending the duration of the program?

     4.  What are VA's plans for accessing the pilot program's cost, 
volume, quality, patient satisfaction, and benefits to veterans? Has VA 
developed a way to measure this for the annual report to Congress?

     5.  Based on VA's best estimate, how many veterans will be 
eligible for the pilot program and how many are expected to receive 
health care through the pilot project?

     6.  Please describe how VA will calculate drive times in 
determining eligibility for the program. For example, how will VA 
account for temporary external factors that may cause drive times to 
fluctuate significantly, such as the presence of heavy construction or 
areas that frequently experience heavy inclement weather that may 
drastically alter drive times?

     7.  What top five health care services does VA expect to contract 
out the most using the enhanced contract care authority?

     8.  How will the Enhanced Contract Care Pilot Program differ from 
and be similar to Project HERO and the fee-basis program?

     9.  To implement the Enhanced Contract Care Pilot Program, will VA 
develop new networks with non-VA providers or will VA utilize the 
existing networks that you use for the fee-basis program?

    10.  VA has previously indicated to the Subcommittee the importance 
of leveraging lessons learned from Project HERO and applying them to 
this pilot program, and your testimony cites that VA has ``taken action 
to leverage lessons from Project HERO.'' At the ground level, how will 
VA ensure that the lessons personnel have learned in implementing and 
executing Project HERO will flow to the personnel responsible for 
carrying out this pilot program?

    11.  On March 17, 2009, the Department briefed the Committee on the 
status of implementation of section 403 of Public Law 110-387. Five 
challenges were identified as follows: (1) establishing criteria and 
identifying providers to participate in the pilot; (2) establishing 
contracts for providers participating in the pilot; (3) determining 
method for providing pharmaceuticals; (4) developing requirements for 
the exchange of medical information with providers participating in the 
pilot and determining how to handle ensuring privacy and accuracy; and 
(5) defining and designing an evaluation component to include 
performance measures. Please provide specific details regarding actions 
VA has taken to date to address these challenges and a projected 
timeline to completely address each issue.

    12.  Has VA developed communication, training, and education 
materials for veterans who may wish to participate in the pilot program 
as well as non-VA providers and other interested parties? If so, please 
provide specific details, including when materials will be given out. 
If not, please explain the reason for not doing so.

    13.  Please provide details as to the type and level of 
communication provided to VISN directors who will be responsible for 
implementing the pilot in their respective areas. When can veterans and 
non-VA providers expect to first hear from the VA?

    14.  Under this pilot will the non-VA provider cost reimbursement 
method function in a similar manner to the current VA fee-basis 
program?

    Thank you again for taking the time to answer these questions. The 
Committee looks forward to receiving your answers by June 15, 2010.

            Sincerely,

MICHAEL H. MICHAUD
                                                HENRY E. BROWN, JR.
Chairman
                                                     Ranking Member
                               __________
                        Questions for the Record
                      HVAC Subcommittee on Health
                          Oversight Hearing on
  ``VA's Implementation of the Enhanced Contract Care Pilot Program''
                      Chairman Michael H. Michaud
                             April 29, 2010
    Question 1: VA's testimony noted that the pilot program would be 
fully implemented by the winter of 2010 or early 2011. As you know, 
section 308 of S. 1963, which recently passed the House and the Senate, 
would remove the requirement regarding the hardship exception. Without 
the need to issue regulations defining hardship, how will the 
implementation date be impacted?

    Response: Section 308 of the Caregivers and Veterans Omnibus Health 
Services Act of 2010 (Public Law, or PL, 111-163) amends section 403 of 
PL 110-387, the Enhanced Contract Care Pilot Program, by deleting the 
hardship provision that expanded eligibility for participation in the 
pilot program. Section 403 of PL 110-387 also required that the 
Secretary prescribe regulations to determine veteran's eligibility 
based on ``hardship or other difficulties.'' The Department of Veterans 
Affairs (VA) believes this change will facilitate faster implementation 
of the program as the Department will not need to issue regulations to 
define hardship, though VA does plan to publish an interpretive rule 
through a Federal Register Notice announcing the pilot program and 
explaining how VA will implement the pilot program under the statutory 
criteria.
    VA has been working diligently to implement these pilot programs. 
Our focus is on ensuring that veterans receive the best possible care 
through the pilot programs. Once the pilot sites are selected, VA will 
begin the acquisitions process. Since this process depends to some 
degree on the willingness of non-VA providers to participate, we are 
unable to provide a definitive timeline for completion, but are making 
every effort to have the pilot programs implemented by winter of 2010 
or early 2011.

    Question 2: During this hearing, VA heard statements from 
Representative Moran, myself, and others, clarifying that the intent of 
the law is for this program to be implemented VISN-wide, rather than at 
selected sites within the VISN.

    Question 2(a): What will the new implementation date be for a pilot 
program meeting this scale?

    Response: As VA noted in the hearing, we appreciated the statements 
made by the Chairman and others regarding the scope of the program and 
are carefully considering their comments.
    The legislation provides that the pilot program ``be carried out 
within areas selected by the Secretary for purposes of the pilot 
program in at least five Veterans Integrated Service Networks 
(VISNs).'' VA is moving forward to implement the pilot programs in 
selected sites within the VISNs designated under the statute's 
criteria. VA has been working with Committee staff to meet with them in 
July concerning the scope and timetable for the pilot.

    Question 2(b): What key milestones does VA need to meet to make 
VISN-wide implementation a reality?

    Response: There would be significant operational implications to 
make VISN-wide implementation a reality. There are numerous and complex 
issues involved in operationalizing these pilot programs, including 
first and foremost, quality and coordination of care, as well as the 
exchange of medical information. Those key considerations may limit the 
sites that are appropriate.

    Question 3: Given delays in the implementation of this program, 
does VA require legislation extending the duration of the program?

    Response: VA's understanding of the statute is that the pilot 
program will occur for a 3-year period once the pilot program 
commences. However, VA would not object to legislation amending 
paragraphs (2) and (3) of section 403(a) of PL 110-387, removing the 
due date (120 days after the date of enactment).

    Question 4: What are VA's plans for assessing the pilot program's 
cost, volume, quality, patient satisfaction, and benefits to veterans? 
Has VA developed a way to measure this for the annual report to 
Congress?

    Response: VA has been focused on developing recommendations to 
assess the pilot program's cost, volume, quality, patient satisfaction 
and benefits to veterans. For example, VA intends to conduct a survey 
that will be used to evaluate patient satisfaction of the pilot 
program. VA staff will continue to work with program offices and 
participating VISNs to develop program evaluation and clinical quality 
measures required for the annual report to Congress.

    Question 5: Based on VA's best estimate, how many veterans will be 
eligible for the pilot program and how many are expected to receive 
health care through the pilot project?

    Response: We are unable to provide an estimated number of veterans 
who would receive health care services through this pilot program at 
this time because the number will depend on the level of veteran 
interest, veteran eligibility, pilot sites, types of services provided, 
and the capacity of contracted non-VA providers.

    Question 6: Please describe how VA will calculate drive times in 
determining eligibility for the program. For example, how will VA 
account for temporary external factors that may cause drive times to 
fluctuate significantly, such as the presence of heavy construction or 
areas that frequently experience heavy inclement weather that may 
drastically alter drive times?

    Response: VA uses the best available commercial geographic 
information system software and national road network data to calculate 
drive times to VA facilities to assess enrollees' geographic access to 
health care services. Each address is assigned a latitude and longitude 
through a process called geocoding. VA facilities are similarly 
geocoded. Next, drive time and distance to nearest VA facility is 
estimated using commercial proprietary algorithms. The algorithms take 
into account the most current characteristics available for each road 
traversed such as highway size, number of intersections, etc. The 
outputs of this rigorous analysis are the enrollee's drive times (in 
minutes) and distance (in miles) to VA primary, secondary, and tertiary 
care facilities. The drive time estimates are used to determine 
enrollee's eligibility to participate in the pilot program, under the 
amendments made by section 308 of PL 111-138 (replacing the ``miles 
driving distance'' measure with the ``minutes driving distance'' 
measure).
    VA does not plan to take into account temporary external factors 
that may alter drive times because there are no feasible means to 
account for these factors. To our knowledge, there are no known 
standards or guidelines for scoring the impact of temporary incidents 
and barriers, and no taxonomy for classifying them.

    Question 7: What top five health care services does VA expect to 
contract out the most using the enhanced contract care authority?

    Response: Types of services offered through the pilot programs will 
depend on a number of factors such as veterans' health care needs in 
the pilot sites, types of services and non-VA providers' availability 
and willingness to participate in the pilot programs. VA will have a 
better understanding of the types of services that will be provided to 
eligible veterans through this pilot program once the pilot sites are 
selected.

    Question 8: How will the Enhanced Contract Care Pilot Program 
differ from and be similar to Project HERO and the fee-basis program?

    Response: The Enhanced Contract Care Pilot Program authorized under 
section 403 of PL 110-387, Project Healthcare Effectiveness through 
Resource Optimization (HERO), and the fee-basis program all share at 
least one common purpose--to purchase care from non-VA providers in 
areas where VA has limited capacity to provide necessary care to our 
veterans. As a result of these programs, veterans have increased access 
to the quality care they need and deserve.
    There are many similarities between the Enhanced Contract Care 
Pilot Program and Project HERO. Both programs involve developing 
contractual arrangements to improve veteran access for required medical 
care when the veteran is residing in a remote area. There are also 
similar challenges between the two programs, such as ensuring the 
highest level of clinical and quality of care, guaranteeing the 
exchange of medical information and using contracts to improve access.
    The fee-basis program authorities are set forth in 38 U.S.C. 1703 
and 38 C.F.R. 17.52-17.56. Section 17.52 describes VA's authority, 
under 38 U.S.C. 1703, to contract with non-VA facilities for care, and 
also provides that when demand is only for infrequent use, individual 
authorizations for care may be used. In contrast to care that will be 
provided under the pilot program, fee basis care authorized under 38 
U.S.C. 1703 and 38 C.F.R. 17.52 is available only when VA facilities 
are not capable of furnishing economical hospital care or medical 
services because of geographical inaccessibility, or are not capable of 
furnishing the care or services requires. Further, VA is authorized to 
provide this care only to the veterans described in section 1703. 
Veterans eligible to participate in the pilot program will not be 
subject to the limitations set forth in section 1703.
    Some of the differences among these programs include differences in 
the eligibility criteria for participation, the types of purchased 
services and the type and structure of the contractual agreements. 
Also, the Enhanced Contract Care Pilot Program will be carried out in 
different locations than the Project HERO locations, as required by 
section 403(a)(4)(D) of PL 110-387. Unlike Project HERO or the Enhanced 
Contract Care Pilot Program, the traditional fee-basis program has 
limited contracts and arrangements with non-VA providers.
    The contracted care pilot program staff and Project HERO staff are 
closely collaborating to leverage lessons learned from Project HERO and 
to apply them appropriately to successfully implement the Enhanced 
Contract Care Pilot Program.

    Question 9: To implement the Enhanced Contract Care Pilot Program, 
will VA develop new networks with non-VA providers or will VA utilize 
the existing networks that you use for the fee-basis program?

    Response: To date, we have not disseminated the solicitation 
package to non-VA providers in the pilot site locations or made the 
contract awards. We are unable to provide additional information on the 
types of provider networks that will be selected. However, it is VA's 
intent to disseminate the solicitation opportunity widely to non-VA 
providers in the pilot site locations.

    Question 10: VA has previously indicated to the Subcommittee the 
importance of leveraging lessons learned from Project HERO and applying 
them to this pilot program, and your testimony cites that VA has 
``taken action to leverage lessons from Project HERO.'' At the ground 
level, how will VA ensure that the lessons personnel have learned in 
implementing and executing Project HERO will flow to the personnel 
responsible for carrying out this pilot program?

    Response: The Project HERO staff plays an active role in serving on 
the working group to implement the Enhanced Contract Care Pilot 
Program. As such, knowledge transfer on the lessons learned from 
Project HERO occurs on an ongoing basis to the individuals involved 
with implementing the Enhanced Contract Care Pilot Program.

    Question 11: On March 17, 2009, the Department briefed the 
Committee on the status of implementation of section 403 of Public Law 
110-387. Five challenges were identified as follows: (1) establishing 
criteria and identifying providers to participate in the pilot; (2) 
establishing contracts for providers participating in the pilot; (3) 
determining method for providing pharmaceuticals; (4) developing 
requirements for the exchange of medical information with providers 
participating in the pilot and determining how to handle ensuring 
privacy and accuracy; and (5) defining and designing an evaluation 
component to include performance measures. Please provide specific 
details regarding actions VA has taken to date to address these 
challenges and a projected timeline to completely address each issue.

    1.  VA will follow standard procedures in establishing criteria and 
determining the qualifications of non-VA providers. Identification of 
potential non-VA providers should be completed once pilot sites are 
selected.
    2.  After pilot sites have been selected, VA will begin the 
acquisition process. We are unable to provide a definitive timeline for 
contract finalization, since this process depends to some degree on the 
availability and willingness of non-VA providers.
    3.  The Office of Policy and Planning in the Veterans Health 
Administration (VHA) continues to work closely with VHA's Pharmacy 
Benefits Management service to determine methods for providing 
pharmaceuticals for participating veterans. We will provide a timeline 
for completion once the pilot sites are selected and contracts are 
awarded.
    4.  The transfer of medical information between VA and non-VA 
providers remains a challenge. Key learning from the Project HERO 
effort indicate that timelines for return of medical documentation to 
the VA from a contracted community provider are very effective in 
achieving a high percentage of medical documentation being returned for 
the veterans VA medical record. Project HERO has also established a 
method for receiving all medical documentation in a secure, electronic 
format reducing risks of misrouting mail or those associated with using 
paper fax. However, these solutions are specific to how the Project 
HERO contracts were defined and implemented. Until the pilot sites for 
the contracted care effort are selected and contracts are awarded, we 
are unable to provide a definitive timeline for finalizing a solution.
    5.  We are unable to provide a definitive timeline for defining and 
designing an evaluation component, but continue to work with other 
program offices and participating VISNs to develop program evaluation 
and clinical quality measures. This remains an ongoing area of focus.

    Question 12: Has VA developed communication, training, and 
education materials for veterans who may wish to participate in the 
pilot program as well as non-VA providers and other interested parties? 
If so, please provide specific details, including when materials will 
be given out. If not, please explain the reason for not doing so.

    Response: VA is currently in the process of developing a 
communications plan for the pilot program. VA already has identified 
key stakeholders for the pilot and is exploring various communications 
methods for each stakeholder. For example, one of the key stakeholders 
for the pilot program is the non-VA providers with whom VA will 
contract. We will develop training materials for non-VA providers and 
their administrative staff. The communications plan will include 
tailored communications channels for various stakeholders and 
identified training needs and materials.

    Question 13: Please provide details as to the type and level of 
communication provided to VISN directors who will be responsible for 
implementing the pilot in their respective areas. When can veterans and 
non-VA providers expect to first hear from the VA?

    Response: Since section 403 of PL 110-387 was enacted, VA has been 
engaging with the VISNs to begin developing an implementation plan for 
this pilot program. This communication has been ongoing as the VISNs 
serve on the implementation working group. As we continue to move 
forward in addressing operational issues, the VISNs continue to play an 
active role.
    Once the sites are selected, VA will start the acquisition process. 
We expect to communicate with non-VA providers and veterans about the 
pilot program once we develop the acquisition packages.

    Question 14: Under this pilot will the non-VA provider cost 
reimbursement method function in a similar manner to the current VA 
fee-basis program?

    Response: The enhanced contracted care pilot has not yet been 
awarded, but the expectation is that the reimbursement methodology will 
be driven by the contract terms, conditions and standards that will 
differ from the current VA fee-basis program.

                                 
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