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[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]

            VA AND ACADEMIC AFFILIATES: WHO'S BENEFITING NOW

=======================================================================

                                HEARING

                               BEFORE THE

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 OF THE

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

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                         THURSDAY, JUNE 8, 2017

                               __________

                           Serial No. 115-17

                               __________

       Printed for the use of the Committee on Veterans' Affairs
       
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         Available via the World Wide Web: http://www.fdsys.gov
         
         
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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                     COMMITTEE ON VETERANS' AFFAIRS

                   DAVID P. ROE, Tennessee, Chairman

GUS M. BILIRAKIS, Florida, Vice-     TIM WALZ, Minnesota, Ranking 
    Chairman                             Member
MIKE COFFMAN, Colorado               MARK TAKANO, California
BRAD R. WENSTRUP, Ohio               JULIA BROWNLEY, California
AMATA COLEMAN RADEWAGEN, American    ANN M. KUSTER, New Hampshire
    Samoa                            BETO O'ROURKE, Texas
MIKE BOST, Illinois                  KATHLEEN RICE, New York
BRUCE POLIQUIN, Maine                J. LUIS CORREA, California
NEAL DUNN, Florida                   KILILI SABLAN, Northern Mariana 
JODEY ARRINGTON, Texas                   Islands
JOHN RUTHERFORD, Florida             ELIZABETH ESTY, Connecticut
CLAY HIGGINS, Louisiana              SCOTT PETERS, California
JACK BERGMAN, Michigan
JIM BANKS, Indiana
JENNIFFER GONZALEZ-COLON, Puerto 
    Rico
                       Jon Towers, Staff Director
                 Ray Kelley, Democratic Staff Director

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                    JACK BERGMAN, Michigan, Chairman

MIKE BOST, Illinois                  ANN MCLANE KUSTER, New Hampshire, 
BRUCE POLIQUIN, Maine                    Ranking Member
NEAL DUNN, Florida                   KATHLEEN RICE, New York
JODEY ARRINGTON, Texas               SCOTT PETERS, California
JENNIFER GONZALEZ-COLON, Puerto      KILILI SABLAN, Northern Mariana 
    Rico                                 Islands

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

                              ----------                              

                         Thursday, June 8, 2017

                                                                   Page

VA And Academic Affiliates: Who's Benefiting Now.................     1

                           OPENING STATEMENTS

Honorable Jack Bergman, Chairman.................................     1
Honorable Ann Kuster, Ranking Member.............................     2

                               WITNESSES

Carolyn Clancy, M.D., Deputy Under Secretary For Health For 
  Organizational Excellence, Veterans Health Administration, 
  Department Of Veterans Affairs.................................     5
    Prepared Statement...........................................    34

        Accompanied by:

    Rachel Ramoni, MD, Chief Research and Development Officer, 
        Veterans Health Administration

    Karen Sanders, MD, Deputy Chief Academic Affairs Officer, 
        Veterans Health Administration

Mr. Rick Starrs, Chief Executive Officer, National Association of 
  Veterans Research and Education Foundation.....................     7
    Prepared Statement...........................................    37

        Accompanied by:

    Nancy Watterson-Diorio, Executive Director, Boston VA 
        Research Institute

Christopher C. Colenda, MD, MPH, President Emeritus, The West 
  Virginia, University Health System, Senior Advisor, Veterans 
  Affairs, Association of American Medical Colleges..............     9
    Prepared Statement...........................................    43

                       STATEMENTS FOR THE RECORD

Christian Kreipke, Ph.D..........................................    53

 
            VA AND ACADEMIC AFFILIATES: WHO'S BENEFITING NOW

                              ----------                              

                         Thursday, June 8, 2017

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                      Subcommittee on Disability Assistance
                                      and Memorial Affairs,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 10:08 a.m., in 
Room 334, Cannon House Office Building, Hon. Jack Bergman, 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Bergman, Roe, Poliquin, Arrington, 
Kuster, Takano, and Sablan.

          OPENING STATEMENT OF JACK BERGMAN, CHAIRMAN

    Mr. Bergman. Good morning. This hearing will come to order. 
I want to welcome everyone here today.
    This hearing is a follow-up to the one held last year 
around this same time on the VA-Academic Affiliate 
relationship. Unfortunately, one year later, the same concerns 
persist and VA appears to have not done anything to improve its 
position with the affiliate and make itself more of an equal 
partner.
    As I prepared for this hearing and reviewed the relevant 
information, the same two words kept popping into my head: 
oversight and accountability. Where are the oversight and the 
accountability? These are the two things constantly lacking 
with the VA and this issue is no different.
    At the budget hearing held just two weeks ago, Secretary 
Shulkin was asked about the VA's research budget. His response 
was that VA research is very important and it needs to find 
ways to continue to invest in its research.
    Well, VA has an avenue that it is not properly utilizing 
and that is the VA Non-Profit Corporations or NPCs. These NPCs 
were set up to facilitate VA and promote VA research. Any money 
they collect by administering grants or awards is put directly 
back into the local VA Medical Center. Last year, they brought 
in over $250 million to VA research, but this number could be 
even greater.
    Also last year, NPCs paid salaries for an institutional 
review board and R&D coordinators, purchased equipment, and 
paid bridge funding so that VA researchers could stay on at VA 
and continue their research while applying for other grants. By 
allowing researchers to stay on, VA could continue to receive 
the benefit of VA physician researchers seeing veteran 
patients.
    Despite this, many Federal grants are being awarded and 
administered by academic affiliates even when all research is 
being conducted in VA. So I am curious why in so many cases the 
affiliate is being allowed to administer awards and collect 
fees instead of the NPC when doing so prevents this money from 
coming back to support VA.
    Think of what VA could be doing with this additional money. 
Wouldn't this be investing in VA research, as the Secretary 
noted? But again, lack of oversight or accountability is 
letting this money slip through VA's fingers.
    VA also spends $731 million annually on the Graduate 
Medical Education or GME program. But again, this is a question 
about the level of oversight and accountability, particularly 
about whether VA is getting what it is paying for.
    Numerous VA medical centers have no process in place for 
ensuring that residents and attendees are actually in the VA 
clinics and seeing patients. There is no mechanism for 
accounting for these doctors' time and attendance. Further, VA 
does not have a policy in place that mandates documentation 
from the affiliate so that each local facility is left to 
handle as it sees fit, but whether or not VA receives proof of 
time and attendance, VA still pays the affiliate. In no other 
business would payment be made without proof of service, yet VA 
seems to think nothing of ensuring this level of 
accountability.
    I am interested to hear from VA today on how it is ensuring 
that it is not losing out on what it is entitled to and how VA 
is being fiscally responsible in these relationships. I am also 
interested in hearing from the NPCs and how they could be 
better utilized. Either way, it is painfully obvious that 
reassessing these relationships is one of the many ways in 
which VA could better fulfill its research needs and help 
ensure research remains a critical component of VA care now and 
in the future.
    I now yield to Ranking Member Kuster for her opening 
remarks.

        OPENING STATEMENT OF ANN KUSTER, RANKING MEMBER

    Ms. Kuster. Thank you, Mr. Chairman, and thank you to our 
panel for being with us.
    This afternoon the Subcommittee will delve into issues 
involving VA and academic affiliates. VA plays a vital role in 
our national health care delivery system. In 70 years of 
partnerships with its academic affiliates, the VA is the 
largest single provider of medical training in the United 
States, the largest single provider of medical training. Today, 
over 70 percent of health care providers throughout our 
civilian health care delivery system have received training 
through the VA.
    In partnership with its academic affiliates and VA non-
profit corporations, VA has also been a pioneer in the field of 
biomedical research.
    These are two very important topics and I hope my 
colleagues, and especially Chairman Bergman, will schedule 
future hearings on the subjects, because there are so many 
important issues that we are trying to cover today, involving 
the training of health care providers, recruitment of 
providers, and VA research, that this hearing alone simply will 
not be enough.
    While our overall health care system reaps the benefits of 
the VA's education/training efforts, VA also benefits by being 
able to rely on additional providers and specialists who are on 
the leading edge of medical knowledge and leaders in their 
field of practice. This is especially important to the VA, 
which is facing a shortage of over 45,000 health care 
providers. In fact, it is estimated that there will be a 
nationwide shortage of between 40,000 and 105,000 physicians 
within the next decade.
    VA's relationship to its academic affiliates is essential 
if VA is to provide the level of health care that we all expect 
for our veterans, and that is why Congress, the VA and the 
academic affiliates must work together to address areas that 
need improvement.
    We must do everything we can to make sure VA is able to 
fill all 1500 graduate medical education slots that Congress 
authorized under the Choice Act. I want to understand what 
barriers exist to filling the slots and recruiting these future 
providers who are completing GME rotations in VA medical 
facilities.
    I look forward to discussing whether scholarship programs, 
debt reduction in student loan forgiveness programs, and even 
incentives to foreign-trained providers completing residencies 
in the U.S. could be leveraged to fill the 45,000 provider 
vacancies at VA.
    Last Congress, I introduced the Grow Our Own Directive, we 
call it the GOOD Act, which would provide scholarships to 
veterans with military health experience to become physician 
assistants at the VA. I believe that programs like this should 
be considered, because they can go a long way towards solving 
provider shortage and recruiting some of our best providers to 
care for veterans, military servicemembers who themselves have 
experience providing health care to their fellow 
servicemembers.
    I plan to introduce it again this Congress and I would love 
to work with my colleagues on both sides of the aisle to find 
the funding to support this pilot program so we can get it 
passed into law.
    I look forward to discussing some ways that the VA can 
improve its recruitment and retention of medical professionals 
completing GME and training at VA facilities. We need to find 
creative ways to incentivize providers to work at VA and 
provide care to veterans, particularly those who live in rural 
areas and medically under-served areas like my home state of 
New Hampshire. VA's GME program and legislation like the GOOD 
Act are types of the creative programming that we need.
    Our medically served rural communities struggle to retain 
quality medical providers, which hurts the quality of care in 
these communities. Of course, many of our Nation's veterans 
call these under-served areas home, and that is particularly 
true in the northern and western parts of my state.
    It is critical that VA's GME program are mobilized to the 
greatest extent possible to help these shortages, and the same 
could be said for under-served urban areas. However, I remain 
concerned that rural and under-served VA facilities that may 
not have the infrastructure to support GME rotations are not 
doing more to build capacity or prioritize training for other 
providers that can be trained at these facilities.
    In New Hampshire, for example, we have a shortage of 
nursing assistants. These are providers who require less 
training than registered nurses, but are still critical for 
effective health care, especially palliative care, hospice and 
nursing care. VA facilities can and should be working with 
their non-profit research corporations and academic affiliates 
to train nursing assistants and other providers to serve rural 
communities.
    I know that the White River Junction VA Medical Center 
worked with its non-profit research corporation to provide 
training to VA volunteers to provide palliative care services 
and I want to highlight this as a success story, but I know 
that in other rural New Hampshire communities and across the 
country VA facilities are struggling to fill provider vacancies 
and need to do more to use training resources and opportunities 
with our academic affiliates and non-profit research 
corporations.
    I also wish to examine how we can better support VA 
research and research conducted by our academic affiliates and 
the VA non-profit research corporations mentioned by Chairman 
Bergman.
    I am concerned about the proposed $33 million cut in the 
Trump budget to the VA research programs and 18-percent cut in 
the National Institute of Health budget. If VA's current 
research budget is not keeping pace with inflation and if NIH 
awards 5,000 to 8,000 fewer research grants, this will have a 
negative effect on VA's ability to develop treatment for our 
veterans. If funding for VA research continues to be cut, I 
want to know if it is possible to leverage private investment 
and nonprofit funding through our non-profit research 
corporations, as suggested by Chairman Bergman, and through our 
academic affiliates.
    Finally, I want to ensure that VA is properly overseeing 
its research program and the administration of NIH-funded 
research through the VA non-profit research corporations and 
academic affiliates. I want to better understand when is it 
appropriate for the VA non-profit corporations and academic 
affiliates to administer the NIH grants and ensure that VA is 
following current policy directives.
    Last week, I participated in a symposium at the Dartmouth 
Geisel School of Medicine on addressing the New Hampshire 
opioid crisis. Clinicians and researchers from Dartmouth, the 
White River Junction VA Medical Center, NIH, and hospital 
systems throughout New Hampshire came together to discuss how 
we as a community can work together to address the opioid 
epidemic and effectively treat chronic pain, which affects so 
many of our veterans in communities across the country.
    I know that we have clinician researchers at VA medical 
centers and medical schools and teaching hospitals interested 
in developing effective treatments for both opioid addiction 
and alternative treatment for pain management. This is one of 
the many areas where VA should be leading the country in 
research to develop cutting-edge treatments to address the 
opioid epidemic and effectively treat and manage chronic pain, 
but these researchers need funding. Whether through Federal 
research grants or private nonprofit sources, we need to come 
together to figure out the best way to ensure this vital 
research is funded, it is administered properly, and so that 
this funding results in treatments that improve and in many 
cases will literally save veterans' lives.
    Educating our Nation's health care providers and developing 
medical breakthroughs to provide treatment to our veterans are 
all part of the VA's core mission and it is vital that we as 
Members of Congress continue to support this mission.
    So thank you, Chairman Bergman, for scheduling this 
hearing. I yield back the balance of my time.
    Mr. Bergman. Thank you, Ranking Member Kuster.
    I ask that all Members waive their opening remarks as per 
this Committee's custom. With that, I welcome the first and 
only panel that is now at the witness table.
    On the panel, we have--and by the way, if I mispronounce 
your name, when you introduce yourself, please give me the 
correct pronunciation, please. We have Dr. Carolyn Clancy, 
Deputy Under Secretary for Health for Organizational 
Excellence. She is accompanied by Dr. Rachel Ramoni, Chief of 
Research and Development Officer for VHA, and Dr. Karen 
Sanders, Deputy Chief of the Office of Academic Affiliations 
for VHA.
    We also have Mr. Rick Starrs, Chief Executive Officer for 
the National Association of Veterans Research and Education 
Foundations. He is accompanied by Ms. Nancy Watterson-Diorio, 
Chief Executive Officer of the Boston VA Research Institute.
    Finally, we have Dr. Christopher Colenda, President 
Emeritus of the West Virginia University Health System, who is 
here representing the Association of American Medical Colleges.
    I ask the witnesses to please stand and raise your right 
hand.
    [Witnesses sworn.]
    Mr. Bergman. Please be seated.
    And let the record reflect that all witnesses have answered 
in the affirmative.
    Dr. Clancy, you are now recognized for five minutes.

               STATEMENT OF CAROLYN CLANCY, M.D.

    Dr. Clancy. Good morning, Mr. Chairman, Ranking Member 
Kuster, and Members of the Committee. Thank you for the 
opportunity to discuss VA's research program and our 
relationship with academic affiliates.
    As you noted, I am accompanied by Drs. Ramoni and Sanders.
    For more than 90 years, VA research has contributed too 
many of the medical treatments and diagnostic tools in use 
today, including the CAT scan, cardiac pacemakers, and state-
of-the-art prosthetic limbs. These achievements have resulted 
in three Nobel Prizes, seven Lasker Awards, and numerous other 
honors. VA research continues to drive advances in veteran care 
in areas as diverse as diabetes, spinal cord injury, mental 
health, and of course our groundbreaking Million Veterans 
Program.
    In establishing the VA research program, Congress 
recognized both the need to study the unique needs of veterans 
and the opportunity for research to support excellent clinical 
care.
    VA research plays a unique role that cannot be filled by 
external funding sources. Sixty percent of our researchers are 
also practicing clinicians at our medical centers. Unlike other 
Federal agencies, VA has no laboratories whose predominant 
function is research; instead, research studies are performed 
in parallel and in close proximity to where patient care is 
provided. This leads to a focus on research that benefits 
veterans conducted by employees who are dedicated to the 
mission of improving care for veterans.
    Our close partnership with universities allows VA 
researchers to be part of a much larger network of scientists 
and to leverage laboratory space, equipment, and expertise that 
may be more readily available at the university affiliate. VA 
research fosters dynamic collaborations with its university 
partners, other Federal agencies, nonprofit organizations, and 
private industry.
    In 2017, VA researchers were able to leverage $673 million 
in VA funding to bring in an additional $595 million in 
external funding from industry and Federal agencies such as the 
National Institutes of Health and Department of Defense. The 
Federal investment in VA research then returns incredible value 
to veterans and the taxpayers, which is reflected in veterans' 
positive attitudes about research and health outcomes in VA.
    VA-affiliated research and education corporations, also 
known as NPCs or not-for-profit corporations, were established 
by the Congress in 1988. Currently, there are 84 NPCs located 
throughout the U.S. and Puerto Rico. After paying their own 
administrative expenses, they have collectively contributed 
$2.2 billion to VA research over the past decade; they employ 
approximately 2800 people, serve 2300 researchers, and 
administer 3500 research projects.
    NPCs are established at VA medical centers and are state-
charted nonprofit corporations governed by boards of directors, 
overseen by the VHA Non-Profit Program Oversight Board. 
Oversight is accomplished through routine triennial on-site 
reviews, follow-up of past reviews, for-cause audits and 
investigations, the NPC annual report to Congress, education 
and training sessions, and ad hoc consultations.
    January 30th of 2016 marked the 70th anniversary of what we 
call VA Policy Memorandum No. 2, a document crafted by General 
Omar Bradley and other VA leaders establishing the visionary 
partnership between VA and America's medical schools. As the 
Ranking Member noted, approximately 70 percent of U.S. 
physicians have had some part of their training in a VA 
facility, which means that VA is really profoundly important to 
medical education in this country. Many of these doctors first 
learned how to use an electronic health record at VA.
    VA is affiliated with well over 90 percent of Doctor of 
Medicine and Doctor of Osteopathy-granting medical schools, and 
our health profession education activities include affiliations 
with over 1800 other schools. So that means that over 127,000 
trainees received supervised clinical education in VA 
facilities in 2016 alone.
    The VA and its academic affiliates are partners striving 
together for excellence in delivering the best health care to 
our veterans. Under the authority of the 2014 Veterans Access 
Choice and Accountability Act graduate medical education 
expansion program, VA is bringing new doctors in training, 
targeting primary care and psychiatry, to the rural and under-
served areas where many of our veterans reside. VA appreciates 
the support of Congress in authorizing this initiative for ten 
years precisely so that some of these facilities can build the 
capacity that the Ranking Member noted.
    We appreciate Congress' support which allows us to train 
future medical researchers and clinicians to care for veterans 
in the Nation as a whole.
    Mr. Chairman, this concludes my testimony, and my 
colleagues and I would be happy to answer your questions.

    [The prepared statement of Carolyn Clancy appears in the 
Appendix]

    Mr. Bergman. Thank you, Dr. Clancy.
    Mr. Starrs, you are now recognized for five minutes.

                    STATEMENT OF RICK STARRS

    Mr. Starrs. Good morning, Chairman Bergman, Congresswoman 
Kuster, esteemed Subcommittee Members, thank you for the 
invitation to be here today to share with you our thoughts 
regarding the VA's medical research program and the role in 
that program of the congressionally-authorized, VA-affiliated 
Non-Profit Research and Education Corporations, NPCs.
    My name is Rick Starrs and I have served as the Chief 
Executive Officer of the National Association of Veterans 
Research and Education Foundations, commonly known as NAVREF, 
since January 2016. I am a proud Army veteran, having served on 
active duty as a Medical Service Corps Officer for 26 years, 
culminating as the Chief of Staff of the U.S. Army Medical 
Research & Materiel Command.
    I was honored to join NAVREF and transition from a career 
supporting the health needs of soldiers to one supporting the 
health needs of all veterans.
    I am accompanied by Ms. Nancy Watterson-Diorio, a member of 
NAVREF's board of directors and the Chief Executive Officer of 
the Boston VA Research Institute, Incorporated, BVARI. Nancy 
has led BVARI for 21 years, building it from a $100,000 startup 
organization in 1996 to a $14 million research enterprise 
today. Her experience, expertise, and leadership have been 
invaluable to NAVREF and I am happy to have her at my side.
    NAVREF is the 501(c) (3) nonprofit membership organization 
of research and education foundations affiliated with VA 
medical centers. These nonprofits were authorized by Congress 
under Title 38 to provide flexible funding mechanisms for the 
conduct of research and education at VA facilities nationwide.
    Basically, our corporations enable VA medical centers and 
their researchers to leverage their programs with funds from 
foundations and companies that the VA could not otherwise 
accept. The VA does not control our nonprofits, but Title 38 
and the VA handbooks give the VA responsibility for oversight 
of their activities.
    NAVREF's mission is simple: we exist to advance the success 
of the nonprofits. I am here today on behalf of the NAVREF 
board and our membership to tell you about the great work of 
these nonprofits, our potential for greater contributions, and 
areas where we face challenges. NAVREF envisions a Nation in 
which veterans receive the finest care based on innovative 
research and education.
    Over the last four years, the NPCs administered over $1 
billion in support of VA research and education activities. Our 
member foundations have recently administered and funded 
research and education projects for veterans in the areas of 
PTSD, mental health, precision medicine, and palliative care, 
among many areas.
    As flexible funding mechanisms, the NPCs offer a multitude 
of services and benefits to VA research and education programs. 
These include renovating and upgrading VA research 
infrastructure; providing funds, staffing, and training support 
to VA research and institutional review boards; paying expenses 
related to recruitment of research investigators to the VA 
system; providing seed grants to new investigators to aid them 
in establishing their VA research careers; underwriting bridge 
funding for VA investigators who are between research grant 
awards, and procuring personnel, equipment, and supplies for 
VA-approved research and education projects.
    NAVREF is encouraged by the approach of the VA's new Chief 
Research and Development Officer, Dr. Rachel Ramoni. In the 
short time that she has been in her position, Dr. Ramoni has 
reached out to NAVREF and the NPC community on multiple 
occasions to share information and seek partnership 
opportunities. She has a strong interest in bringing more 
clinical trials to veterans and understands the key role the 
nonprofits play in fostering these relationships with 
pharmaceutical companies and the clinical trial industry.
    Secretary Shulkin and other leaders at the VA speak often 
about the need to partner with private industry to tap into the 
great ideas and willing contributors in the private sector. 
This is the role that the NPCs were designed to play and where 
we offer so much potential to the VA.
    NAVREF strongly believes the NPCs offer tremendous benefits 
to veterans, but they are not being used to their maximum 
potential. NAVREF offers three recommendations: first, VA 
should establish clear guidelines for the administration of 
extramural research activities that offer the NPC the right of 
first refusal for all research efforts where the majority of 
this work occurs physically within the VA. Included in these 
guidelines should be a common practice for vetting conflicts of 
interest and ensuring those involved in the decision-making 
process are not conflicted.
    Second, VA should review the appropriate level of oversight 
required to ensure the nonprofit corporations are operating 
appropriately and effectively while retaining their 
independence as nonprofit entities legislated to be flexible 
mechanisms outside of the Federal bureaucracy.
    Third, the National Institutes of Health should modify its 
grants policy statement to allow our NPCs to pay VA clinicians 
as principal investigators on the Institute's research grants 
for their off tour of duty effort.
    Ultimately, NAVREF and the NPCs share the same goals as the 
VA: to improve the lives of veterans. We only exist to 
facilitate and support the VA's research and education 
programs. My fellow executive directors and board members, many 
of whom are here today in the audience, are honored to devote 
our personal and professional energies to facilitate scientific 
breakthroughs that can change the lives of veterans, their 
family members, and all Americans.
    With your continued support, the NPCs will make even more 
powerful contributions to the VA research and education 
programs and the veterans they serve.
    Thank you. I look forward to your questions.

    [The prepared statement of Rick Starrs appears in the 
Appendix]

    Mr. Bergman. Thank you, Mr. Starrs.
    Dr. Colenda, you are now recognized for five minutes.

         STATEMENT OF CHRISTOPHER C. COLENDA, M.D., MPH

    Dr. Colenda. Thank you, Mr. Chairman and Ranking Member 
Kuster, and Members of the Subcommittee.
    I am representing today the Association of American Medical 
Colleges, which is a nonprofit organization of the 147 
accredited U.S. medical schools and nearly 400 teaching 
hospitals in this country, many of which are VA medical 
centers.
    I am Dean Emeritus of Texas A&M College of Medicine and 
former Chancellor for Health Sciences at West Virginia 
University, and President Emeritus of the West Virginia 
University Health System. My specialty is geriatric psychiatry 
and public health.
    My testimony today focuses on the specific question posed 
by the VA Subcommittee on Oversight and Investigation, ``VA and 
Academic Affiliates: Who is Benefiting Now?''
    Who benefits from these relationships? Simply put, 
veterans. Since the end of World War II, the VA and academic 
medicine have partnered to improve veterans' health through 
delivery of complex clinical care, medical and health 
professional education, and collaborating on veteran-centric 
research designed to positively impact veterans' health.
    We firmly believe that without the synergistic 70-year 
partnership with academic medicine, the VA's ability to fulfill 
its three statutory missions of patient care, research, and 
education would be limited.
    Residency training, also known as GME, as conducted within 
the VA is high quality and conforms to expectations and 
standards set forth by the Accreditation Council for Graduate 
Medical Education, or the ACGME. ACGME sets general 
institutional standards and residency-specific competencies 
that guide graduate medical education. ACGME insists upon 
multiple training experiences in order to ensure that future 
physicians possess clinical competencies to treat diverse 
patient populations. The VA training sites fall under the 
accreditation sponsorship of medical schools and teaching 
hospitals, and are an important clinical setting to acquire the 
technical and cultural competencies to treat veterans.
    Through a variety of mechanisms, the VA and sponsoring 
institutions ensure accountability for the quality of residency 
training experiences. For example, the VA mandates that 
sponsoring institutions maintain accreditation with the ACGME; 
surveys of both residents and faculty are conducted annually to 
ensure program effectiveness; time and attendance reporting of 
the VA and CMS are well documented, and there are policies and 
procedures in place to remedy resident clinical performance and 
professionalism problems should they arise.
    In response to the nationwide physician workforce 
shortages, the U.S. needs to train more doctors. The AAMC 
appreciates the additional 1500 GME slots that the VA has been 
authorized. However, most residents spend about a third of 
their time in the VA and the remaining two thirds of time 
throughout other rotations with their clinical affiliates. So 
the VA cannot go it alone.
    Unfortunately, GME growth at academic affiliates has been 
stymied by caps on Medicare support by the Balanced Budget Act 
of 1997. To address this issue, the AAMC endorses the Resident 
Physician Shortage Reduction Act of 2017, which would allow 
Medicare to support 15,000 new slots over five years and to 
provide a preference for teaching 15,000 new slots over five 
years, which would allow teaching hospitals that are affiliated 
with VAs.
    Additionally, the VA encourages Congress to establish a 
mechanism to provide VA and Medicare funding for the 1500 
residents while they rotate through teaching hospitals that are 
already above the Medicare cap.
    Beyond increasing GME, the VA can adopt existing Federal 
public service programs tied to medical school and residency 
training to help recruit and retain physicians and future VA 
leaders in their careers. Successful models that the VA could 
emulate include the DoD's Health Professionals Scholarship 
Program, the National Health Service Corps, the Conrad 30 Visa 
Waiver Program for immigrating physicians, and the Uniform 
Services University of Health Sciences partnership with the 
Public Health Service.
    As you know, the history of research within the VA is a 
source of national pride that has focused on the needs of 
successive generations of veterans. We need to have sustainable 
funding for current and future needs for research addressing 
veterans' health care needs. Academic medical centers have been 
and continue to be a high-valued partner for VA research 
enterprise. Among the many benefits include expert peers, 
research libraries, IT support, grants management expertise, 
IRB and other animal oversight care committees, which may not 
be necessarily found within the VA.
    We also support ways to overcome bureaucratic barriers that 
limit the effectiveness of the VA academic medical center 
collaboration. For example, to reduce duplicate of compliance 
training at both VA and AAMC affiliates; for example, human 
subject privacy, data security, and animal care training 
manuals.
    Because NIH-award administration is dependent upon a 
variety of local factors, the AAMC believes that administration 
of NIH awards should be determined at the local level and VA 
should use the same time-and-effort reporting system for 
faculty researchers as NIH, other Federal agencies, and 
university-affiliated schools.
    And last, the AAMC and its members are proud of our 
clinical affiliations and clinical services agreement with 
local and regional VA centers. The AAMC recommends several 
things to preserve and enhance these relationships.
    First, retain academic affiliations as a part of the core 
network of VA care, streamline the processing for direct 
contracting with academic affiliates by eliminating or raising 
the $500,000 review trigger to more aligned with current 
clinical cost; develop pre-approved and national templates, and 
also set standardized overhead rates to eliminate unnecessary 
negotiations and contract delays; and, finally, the Enhanced 
Veterans Health Care Act of 2017 would improve joint ventures 
with academic affiliates for health care resources, including 
space and equipment.
    We believe that the VA is at a crossroad. This is a time of 
great opportunity for the VA and academic medicine to reaffirm 
our commitment to serving those who have served this Nation. 
The AAMC and its member institutions will continue to work with 
Congress and the VA to find effective solutions moving forward.
    Thank you and I look forward to your questions.

    [The prepared statement of Christopher C. Colenda appears 
in the Appendix]

    Mr. Bergman. Thank you, Dr. Colenda.
    The written statements of those who have just provided oral 
testimony will be entered into the hearing record.
    We will now proceed with questioning and I would like to 
open the question.
    Dr. Clancy, what is the role of your office as it relates 
to research and development and academic affiliations, and do 
either of these offices report directly to you?
    Dr. Clancy. So my office has a very important role under 
the heading of Organizational Excellence. That includes a great 
deal of oversight and assessing and improving the integrity of 
our operations throughout the health care system.
    My closest working relationship on a day-to-day basis is 
with the Office of Research and Development, in part because 
our other strong function is actually developing and 
implementing strategies to improve care for veterans as rapidly 
as possible and a big part of the Office of Research has a very 
strong research partner, right? If you implement a program and 
it looks like things got better, you'd like to know that it 
will work every place that people try it and so forth. So that 
has been a very strong relationship.
    In addition to that, I serve by virtue of my background in 
research, I ran a research agency at HHS before coming to VA, 
as the central office official for our institutional IRB, which 
actually reviews grants for multi-site studies, which is an 
increasingly big part of our research program and one we have 
had some very good conversations with NAVREF about.
    Mr. Bergman. Okay. Do they report directly to you or not?
    Dr. Clancy. No, they do not.
    Mr. Bergman. Okay. Dr. Ramoni, I understand you are new to 
your position and have done several site visits. In learning 
about VA research locally, do you think that the relationship 
with the academic affiliates is unbalanced with researchers 
favoring university and not the NPCs for administering 
research?
    Dr. Ramoni. Thank you, Chairman Bergman, for your question.
    I am new to my role. I have been here in this position for 
about five months, drawn to it by the mission to serve veterans 
and our country by serving veterans.
    I have performed so far six site visits in my four and a 
half months and what I have learned is that there is an 
individual relationship at each one of those sites between the 
NPC, the academic affiliate, and the VA medical center. And I 
have heard anecdotes about one being preferred over the other 
and because of that we are going to undertake an independent 
review of all of the different relationships at all of the 
different 84 sites where we have a nonprofit and academic 
affiliate in a VA medical center to better get a handle on what 
is happening at each one of those sites, moving beyond 
anecdotes to data on the whole system.
    Mr. Bergman. Thank you. Again, Dr. Ramoni, what are the 
benefits of having VA NPCs administer Federal funding to 
research studies?
    Dr. Ramoni. So there are several benefits. So grants come 
in different types. Sometimes a grant is a total-cost grant, 
that means the money they give you, if they give you a hundred 
dollars, that has to include your overhead costs plus the money 
you are going to use for research. When you have lower overhead 
costs, it means you have more money for research. Because the 
nonprofits typically have lower operating expenses, that means 
it leaves more money for research when you put it through a 
nonprofit, when you have a total-cost grant.
    Now, not all grants are total-cost grants. Some grants just 
give you a dollar for research and on top of it they give you 
your overhead costs. So that is one of the benefits.
    Another benefit is that there is a really close working 
relationship with a nonprofit. Oftentimes, the nonprofits are 
on site at the VA. When I visited Pittsburgh and I visited 
Chicago, for instance, they are actually on site and have 
clinical research facilities on site.
    In addition, the nonprofits also administer IPAs, which 
allow hiring of personnel that would be difficult at the VA 
very quickly through the nonprofit.
    Mr. Bergman. Thank you.
    Ms. Watterson-Diorio, what advantages do you see in having 
the NPCs administer the research awards conducted at the VA?
    Ms. Watterson-Diorio. Thank you for your question, Chairman 
Bergman.
    I believe that the advantages of VA NPCs administering such 
awards are that the VA NPCs exist solely to support veterans 
research. We are there, as Dr. Ramoni said, most of us on site, 
available to answer and be available for pre-award and post-
award counseling, expertise. The dollars that are available 
through our organizations are exclusively used for research and 
the missions that you were talking about in your opening, as 
well as what Dr. Clancy and Rick also mentioned about being 
able to support back to the VA. All of the dollars are there 
for the VA.
    Mr. Bergman. Thank you. I see my time has expired.
    Ranking Member Kuster is recognized for five minutes.
    Ms. Kuster. Thank you very much.
    This is aimed for Dr. Colenda, but if anyone else has 
anything to add. I have been very involved with my colleagues 
on both sides of the aisle in a task force to combat the heroin 
epidemic and a lot of this, I think we have an opportunity to 
work with the VA and with the medical schools.
    We had research at our task force recently from experts 
that medical education curricula lacks focus on pain 
management, substance use disorder, and complementary or 
alternative medicine, particularly with regard to chronic pain.
    And first, if you know this information, could you describe 
those components of medical education? And then I would like to 
get into if the VA could help us lead the way to better 
research, but also actually changing the education of our 
medical professionals.
    Dr. Colenda. Thank you, ma'am, for asking that question, 
because I think it does get to the heart of the current 
epidemic of opioid addiction in this country and the adaptation 
of medical school and graduate medical education curricula to 
address that issue.
    I would say that because of the increased awareness of 
opioid addiction at the undergraduate medical education level, 
that is in the first four years of the school, there has been a 
rapid adoption of curriculum that addresses both the basic 
science and the clinical science of opiate addiction to help 
improve and give competencies to medical students to be able to 
understand the addiction problem that's found.
    As we move into graduate medical education, there is 
increasing focus on appropriate prescribing practices for pain 
management in a peri-operative or post-operative period, as 
well as training for those of us who are in psychiatry and 
behavioral health, in order to better understand the treatment 
paradigms and the best practices available for reducing opiate 
dependence for those people who are already addicted.
    As you move into continuing medical education, many states 
are now implementing program modules for continuing medical 
education which requires physicians to be able to document in 
their CME profile that they have had additional expertise in 
substance abuse and prescribing practices.
    So it's a curriculum that builds upon itself. It is 
relatively new, because the awareness of the epidemic is new, 
but I believe that medical education across the continuum is 
beginning to address this in a more effective way.
    Ms. Kuster. Yeah, I would very much like to work with you 
going forward, because one of the things we are considering is 
more of a national standard to make sure that everybody gets up 
to speed quickly.
    Dr. Clancy. If I could just add briefly?
    Ms. Kuster. Sure.
    Dr. Clancy. Although Dr. Ramoni reminded us that the plural 
of anecdotes is not data--
    Ms. Kuster. Yes.
    Dr. Clancy [continued]. --I do know of a number of 
instances where some of our experts in VA facilities have been 
hugely helpful to academic counterparts, particularly 
confronting an acute situation. And frankly, thanks to the 
support that we have received from the Congress through the 
Care, Addiction and Recovery Act, I actually think this is a 
potentially very exciting landscape for even more collaboration 
between VA's and academic medical centers.
    Ms. Kuster. Excellent. Thank you, thank you very much.
    Just to get to the meat of the matter, under the Choice Act 
you talked about the VA residency training program was 
increased by 1500 positions, and I think this actually probably 
goes to either Dr. Colenda or Dr. Clancy, my understanding is 
only 547 have been awarded, and I am wondering what is 
impairing VA's ability to get the new positions out the door 
and do you need our help to make this happen?
    Dr. Clancy. Just before I hand this Dr. Sanders, who knows 
all the details very well, I will simply say that in your 
opening statement, Congresswoman, you actually referenced the 
need for the right infrastructure in rural and under-served 
areas, and that have been a very strong focus of the Office of 
Academic Affiliations.
    So we share the excitement that created this opportunity 
and I will turn it to my esteemed colleague.
    Dr. Sanders. Thank you, Dr. Clancy.
    So we agree that we have allocated 547 positions after 
three rounds of the VACAA GME expansion, that third round of 
residents will not start until July 1st of this year. So really 
we are still very early into this process. The legislation was 
only passed less than three years ago and we have had to build 
a process of going to rural and under-served VAs, finding 
academic partners, planning and then building residency 
programs that then get accredited, as Dr. Colenda mentioned; 
and then putting in place the capacity at those small VAs to 
have faculty, to have an education office, to have protected 
time, to have computers and team rooms, and all the things that 
make a program run.
    So I believe actually that the 547 positions is very good 
news, but we do thank you for extending the initiative to ten 
years. Thank you.
    Ms. Kuster. Great. Well, we are happy to work with you 
going forward to make sure you have the resources.
    And I yield back. Thank you, Mr. Chairman.
    Mr. Bergman. Mr. Arrington is recognized for five minutes.
    Mr. Arrington. Thank you, Mr. Chairman.
    Dr. Clancy, help me understand the research operation 
there. How much of the research done is contracted out or 
outsourced to an affiliate like a university versus internal? 
Is it a hundred percent or is it some mix?
    Dr. Clancy. So all of the research that we fund from VA, it 
is an intramural program, which means that it goes to VA 
investigators.
    Now, many of our investigators, I mentioned that 60 percent 
are practicing clinicians in our system, in order to qualify 
for grant funding, physicians have to have a five-eighths 
appointment, that is to say a little over half their time 
dedicated to work at the VA. Many of them also have another 
appointment in a department at the university affiliate, a 
situation they find very, very rewarding, because they have 
great colleagues on both sides, if you will.
    Mr. Arrington. Would you change that construct, would you 
change it for more flexibility, or is there any changes to that 
mix that would help us in pursuit of better research 
opportunities and outcomes?
    Dr. Clancy. The one other thing I should have just 
mentioned was our investigators can and do apply to other 
Federal and private sources for external support, that is the 
$595 million figure that I mentioned in the testimony where our 
investment was $673 million, but that leveraged, if you will, 
an additional $595 million from other sources.
    Mr. Arrington. Like in NIH, NSF, et cetera?
    Dr. Clancy. And Defense, yes.
    Mr. Arrington. The indirect costs versus direct research, 
are the indirect costs the same or similar to the NIH and other 
research programs within the Federal Government?
    Dr. Clancy. VA cannot return--get indirect costs directly, 
that is why the role of the not-for-profit corporations is 
very, very helpful. It is, as the Congress designed it, a very 
flexible funding vehicle and that way we can't actually accept 
the indirect costs for these grants directly to the VA.
    The rate that we get tends to be lower than most university 
affiliates. So I believe that it's about 27 percent, as opposed 
to 50 percent or higher for most academic affiliates.
    And, Dr. Colenda, if that is hyperbole at all, please let 
me know.
    But, in general, the rate is lower for us.
    Mr. Arrington. In terms of research dollars, has it gone 
up, down, or flat over the last three to five years?
    Dr. Clancy. Dr. Ramoni?
    Dr. Ramoni. Thank you, Congressman, for your question.
    So it had been flat and then we had an increase in the 2017 
budget, primarily due to funding given to the Million Veteran 
Program for sequencing, for genetic sequencing of individuals 
in the Million Veterans Program, and you have seen in the 
President's budget a decrease is proposed.
    Mr. Arrington. To whom do you report the outcomes of that 
research?
    Dr. Ramoni. So the outcomes of the research are reported in 
several ways. Because they have different impacts to the 
scientific community, they are reported through scientific 
journals. To the health professions community, also reading the 
scientific journals, we add professional conferences. I was 
just in Chicago where they had the clinical oncology meeting. 
We also have connections to the VA itself, obviously. So--
    Mr. Arrington. Well, let me just, let me make it clear.
    Dr. Ramoni. Please, yes.
    Mr. Arrington. As a fiduciary, do you report your outcomes 
to this Committee or to the VA Committee when you are 
justifying more investment in research because of the efforts, 
the success rates, the discoveries? Who do you justify it to as 
a fiduciary of the dollars that you have in research?
    Dr. Ramoni. That's a very good question. I don't believe we 
currently formally report our outcomes, but I will take that 
for the record to confirm; I want to get you the right answer.
    Mr. Arrington. Thank you.
    And then who sets the agenda, the research agenda?
    Dr. Ramoni. So the agenda, like NIH, some of the agenda is 
set by the investigators. And I want to point out that the 
investigators, the people applying for the grants, 60 percent 
of them are clinicians. So they are people working with 
veterans who know the needs of the veterans firsthand. So they 
apply for awards and we fund them on the basis of their merit.
    In addition, we have targeted grants. So for instance, our 
largest area of funding, some of our largest areas of funding 
are aging, PTSD, traumatic brain injury, suicide prevention, 
areas that you would expect that are of great importance to 
veterans.
    So some of the agenda is set centrally, but we allow the 
investigators to respond to needs that they are seeing on the 
ground, to apply for grants independent of that agenda.
    Mr. Arrington. Mr. Chairman, I know I'm out of time, but 
would you mind circulating the answer to the question about 
outcomes and the fiduciary accountability?
    Mr. Bergman. Absolutely.
    Mr. Arrington. Thank you.
    Dr. Clancy. So if I could just make one friendly amendment? 
The fiduciary accountability in terms of did the money go to 
the researchers and was it actually spent on research, that 
gets reported through the budget process, and we would be happy 
to follow-up with you or anyone else on your staffs for 
briefing.
    The actual outcomes may be some period of time downstream. 
You know, investments in genetics today I am probably not going 
to be able to tell you about in October when the new fiscal 
year starts, but it will have payoffs downstream. Similarly, 
the big successes that you might hear about on the news or 
newspaper, wherever, probably are the results of investments 
made a bit of time ago.
    Mr. Bergman. Thank you.
    Mr. Sablan is recognized next for five minutes.
    Mr. Sablan. Thank you very much, Mr. Chairman.
    Good morning, everyone.
    I am from the Northern Mariana Islands, which is designated 
as a health profession shortage area. Unfortunately, because we 
do not have a teaching university, our hospital, our only 
hospital actually does not even qualify for the J-1 program. We 
have tried looking into that. But what would have to be done to 
create an affiliation between our hospital and the VA and 
establish a GME program? One.
    I also understand that the Veterans Administration offers 
planning grants and infrastructure grants to help with 
establishing affiliations and feeling slots. Could those funds 
be available to help the Northern Mariana set up the program 
there?
    Dr. Sanders. Yes, sir. Thank you for that question.
    In our Veterans Access, Choice and Accountability 
initiative we have three levels and types of funding, as you've 
said. The first level of funding is the planning grant where we 
pay the VA to protect the time of an individual, so they can go 
out and seek academic partners to begin to plan for GME. These 
planning grants usually are awarded three to five years before 
the first resident might ever start.
    The second level of funding, as you have suggested, is the 
infrastructure component. That usually is awarded between zero 
and two years before a resident is supposed to start and that's 
the grant that actually builds capacity at the local VA. They 
already have an academic partner that is willing to send 
trainees and now we have to build up the faculty, protect their 
time, make sure the support staff are in place, and make sure 
the patient population and everything else is ready to go.
    And then the third component of funding is the residency 
funding itself.
    And, yes, we would be happy to work with you, sir.
    Mr. Sablan. And you are saying even if we don't have a 
teaching university, it is possible?
    Dr. Sanders. Right. I would say there are flexible 
mechanisms and we would look to find you a partner, sir.
    Mr. Sablan. Thank you. Thank you very much.
    I yield back.
    Mr. Bergman. Thank you.
    Mr. Poliquin is now recognized for five minutes?
    Mr. Poliquin. Thank you, Mr. Chairman, very much, and thank 
you all very much for being here.
    Dr. Clancy, I would like to start my questioning with you, 
if I may, please. Walk me through an example, if you don't 
mind, of the great research that is done on behalf of our 
veterans both at the VA and at outside affiliates.
    And I believe a type of outside affiliate that you have a 
relationship with or VA does are universities, correct?
    Dr. Clancy. Yes.
    Mr. Poliquin. Okay. My alma mater is Harvard, so I'm not 
picking on Harvard, but we will use them as an example. Okay. 
So let's say there is a $3 million grant that Harvard or 
somebody at Harvard, an employee there or a professor there 
says, we need a grant to do specific research on how to put in 
a pacemaker better than has been done in the past. They apply 
to the VA for a grant, correct?
    Dr. Clancy. If they have an investigator who has a five-
eighths appointment, they can apply to VA, yes.
    Mr. Poliquin. Okay. So there is some mechanism that I don't 
understand, but that's okay, there is some mechanism for 
Harvard to apply to the VA for a grant?
    Dr. Clancy. Yes.
    Mr. Poliquin. Okay. Let's say the grant is $3 million. 
Okay. And does all three million of that dollars, taxpayer 
dollars that are designed specifically to help our veterans, 
does that go to the research, 100 percent of it?
    Dr. Clancy. So our program, Congressman, is an intramural 
program and generally we are funding VA investigators. Many of 
those investigators in your example might have appointments at 
Harvard as well. So where the money flows, a lot of that is 
going to depend on how much it is done at Harvard or sites 
outside of VA.
    Mr. Poliquin. Okay. So let's stop there for a minute, Dr. 
Clancy. I want to make sure I understand this, is that Harvard 
can get a $3 million grant--
    Dr. Clancy. No.
    Mr. Poliquin [continued]. Okay. Harvard can apply for a $3 
million grant?
    Dr. Clancy. No.
    Mr. Poliquin. Keep going.
    Dr. Clancy. An individual investigator who has an 
appointment--
    Mr. Poliquin. Well, does the investigator work for the VA?
    Dr. Clancy [continued]. Yes, has to work for the VA.
    Mr. Poliquin. Okay, is an employee at the VA?
    Dr. Clancy. Yes.
    Mr. Poliquin. And what do they investigate?
    Dr. Clancy. Say they are investigating, I'll use a landmark 
study, whether it makes a difference to treat moderately high--
    Mr. Poliquin. Okay.
    Dr. Clancy [continued]. --blood pressure.
    Mr. Poliquin. So there is someone at the VA that is 
responsible for placing these grants?
    Dr. Clancy. Yes.
    Mr. Poliquin. Okay. So they decide that Harvard is worthy 
to receive a $3 million grant for some reason?
    Dr. Clancy. No.
    Mr. Poliquin. No.
    Dr. Clancy. We are not funding Harvard. All of our money 
goes to research done for veterans.
    Mr. Poliquin. Okay. Okay, I understand that, but if the 
research is done--if Harvard is applying for the grant, then 
Harvard is not doing the research?
    Dr. Clancy. Harvard can't apply for a grant. We would tell 
them, we're sorry, we only fund investigators who work at VA.
    Now, a researcher who has an appointment with us, works a 
little over half of his or her time with the VA and also has an 
appointment, say they are professor at Harvard--
    Mr. Poliquin. Okay.
    Dr. Clancy [continued]. --can apply for a grant. Not only 
that, they may need some of the time of some people who only 
work at Harvard and that would be done through sort of a 
subcontract.
    Mr. Poliquin. Okay. So however the work is dispensed from 
the VA to the people that do the research, how much is spent on 
the research, how much is spent on overhead and administrative 
costs?
    Dr. Clancy. How much overhead? We don't do overhead, do we?
    We actually don't provide overhead costs from the money 
that we invest in research.
    Mr. Poliquin. Is there any of that $3 million, as an 
example, Doctor, that is spent on administrative overhead?
    Dr. Clancy. No.
    Mr. Poliquin. There is not?
    Dr. Clancy. No, no. In fact, our clinician investigators, 
their core salaries are paid by the facility they work for, 
that does not come out of the research grant.
    Mr. Poliquin. Oh. So you're saying, you're saying, if I 
understand this correctly and I can't possibly understand the 
road map that goes from the taxpayer to the VA to getting the 
research done, you're saying right now that there is no 
overhead and the money dispensed from the VA to do this medical 
research is 100 percent spent on medical research; is that 
correct?
    Dr. Clancy. Yes. And in fact it is supplemented, because 
our facilities invest in the core salaries of the people who do 
the work and for many, many research investments, a huge 
investment is the time that people devote to the work.
    Mr. Poliquin. Talk to me a little bit about the internal 
process in these investigators again, how does that work?
    Dr. Clancy. Like any other research institution like the 
National Institutes of Health and so forth, if I am an 
investigator and I have a brilliant idea, whether or not I have 
an appointment at Harvard, I write up a grant application and 
it is submitted through a formal process, and it is reviewed by 
scientific peers. That has been the longstanding standard of 
how we evaluate whether this application is promising and, 
frankly, whether a group of well-established and recognized 
scientists believe that I, the investigator, can actually 
accomplish the work that I have laid out.
    Mr. Poliquin. Thank you, Mr. Chairman. I yield back. Are we 
going to have a second round of questioning?
    Thank you, sir.
    Mr. Bergman. Thank you.
    Mr. Takano, you are recognized for five minutes.
    Mr. Takano. Thank you, Mr. Chairman, and thank you, Ranking 
Member Kuster, for allowing me to be present on a Committee I 
do not formally serve on. And I just could not pass up the 
opportunity to hear more about graduate medical school 
education at the VA.
    I was proud to have a part in championing the 1500 
residencies in the Choice Act during the conference committee 
phase and I am thrilled that a dozen slots have been awarded to 
the Inland Empire region of Southern California and my 
community. In fact, I met last week with psychiatry residents 
and, as we know, psychiatrists are in short supply at the VA 
and also in the general population in many parts of our 
country.
    I want to just reach out to my Republican friends on the 
Committee, especially from rural states. I really believe that 
the GME opportunities we have here are a part of a solution to 
our shortages in rural communities. In fact, I met last week 
with psychiatry residents at UC Riverside School of Medicine 
who will be getting part of their training thanks to the VA.
    I want to continue along Ms. Kuster's line of questioning. 
Dr. Clancy, is the VA on track to filling all 1500 slots by 
2024, or are we going to pass another extension?
    Dr. Sanders. Thank you for that question, sir.
    We believe within the ten-year milestones that we will be 
able to fill the 1500 slots. The first round, if you remember, 
we awarded about 200 positions and we believe that was from 
pent-up demand for residency positions, especially in 
psychiatry and primary care. And in the second round we had a 
dip, about 168 or so--and don't quote those exact numbers--but 
now we are seeing an uptick. And in fact we have just opened 
the fourth round of awards and we are seeing over 250 
applications for new positions.
    So we have worked very hard in my office over the last two 
years to build this capacity out in the rural and under-served 
areas and at the small VAs, and we think it is bearing fruit 
already and we are seeing that in the number of applications.
    Mr. Takano. I did not realize that it took such amount of 
time to--for the rural areas, the underserved areas, to 
actually gear up and ramp up to be able to take advantage of 
those. And in some ways I am glad that the bulk of these 
residencies didn't go to the preexisting strong areas. I mean, 
we really got to--that's my concern is that we make sure the 
opportunities that we have here are spread around.
    Dr. Sanders. Right. So the goal was not to get to 1,500 as 
fast as we could, I totally agree with you. If that was the 
case, we probably could have spread them around very fast 
within five years. But the goal was really to meet the 
legislative intent which was to concentrate on primary care and 
metal health, which is what the country needs, and to also 
distribute GME into rural and underserved areas, and assist the 
VA and their communities around the VAs with the workforce 
pipeline that they need and deserve.
    Mr. Takano. I represent an urbanizing area, but many of 
what we call red states and rural areas, they are in great need 
of these residencies, and many of our veterans move to rural 
areas because they prefer them--it is less stressful, less 
noisy--and we have got to find ways to get these medical 
professionals into these rural areas. And we know that 
residencies--where they do their residencies, you know, give a 
60 percent chance that that resident will become a doctor in 
that community and stay in that community. And I think this is 
an amazing opportunity.
    Apart from increasing the medical GME caps, which is 
outside of the jurisdiction of this Committee, what else can we 
do to fill these slots?
    Dr. Sanders. I think we have focused on the Medicare cap as 
a major barrier to expansion of VACAA; basically because of the 
lack of funding at our academic affiliates due to the Medicare 
cap they are unwilling to either start up or expand new 
residency programs. And I might turn it over to Dr. Colenda to 
comment more about that.
    Dr. Colenda. Thank you for the question because it is an 
important question, it gets to the maldistribution of residency 
spots in the United States as well as the fundamental funding 
challenges that academic health systems and teaching hospitals 
have face since 1997. And most of the expansion of residency 
slots have been out of hospital operating revenues. So resident 
slots have increased since 1997 but it has been funded by the 
health systems. And so when the VA--
    Mr. Takano. When you say ``health system,'' you are talking 
about hospitals themselves--
    Dr. Colenda. Hospitals, right.
    Mr. Takano [continued]. --because there has been a cap on 
the Medicare funding?
    Dr. Colenda. A cap on the Medicare funding. So at West 
Virginia University Health System we were well over 110 or so 
slots above our GME cap that was set in 1997. We pay for those 
positions out our hospital operating revenue.
    So when you have an influx of new resident slots, and 
because of the accreditation requirements for multiple training 
sites to round out our residents training expectations, 
sometimes it is very difficult to incorporate that infusion of 
money from one sector without having an appropriate amount of 
increased funding in the other side of the balance sheet, so to 
speak, for residency funding.
    So it takes time for hospital systems to adjust in terms of 
raising their total number of positions available so that the 
residents who are principally getting their funding from the VA 
may also have the opportunity to experience training in other 
sites that are necessary to meet the ACGME requirements for 
training and the residency review competencies.
    Mr. Takano. I understand we will have a second round of 
questions.
    Mr. Chairman, I am sorry I went over my time.
    Mr. Bergman. Before I recognize Dr. Roe for questions, Mr. 
Takano brought up a good procedural point. Unless I hear an 
objection, I ask unanimous consent that Mr. Takano be allowed 
to continue participating in the hearing should he decide to do 
so.
    Hearing none.
    Welcome.
    Mr. Takano. Thank you, Mr. Chairman. Sorry, I have to 
leave.
    Mr. Bergman. No problem.
    Dr. Roe, you are recognized for five minutes.
    Mr. Roe. I am totally confused now. What just went on?
    Mr. Bergman. We had an interloper.
    Mr. Roe. Okay. Thank you, Mr. Chairman. I would like to 
thank the witnesses for being here today to address this very 
important topic.
    And we have heard from many facilities that there may be 
undo pressure on VA by university affiliates. The leverage, of 
course, is that the affiliate provides personnel that are 
needed by the facility and the facilities are afraid of losing 
the trainees. On the flip side, however, without the VA 
facility, affiliates would lose essential educational 
opportunities. While I realize that VA/university relationship 
is crucial, VA's staff should not have to choose what is best 
for our veterans while being pressured by an affiliate.
    Further, it appears that at many facilities no process 
exists for determining trainee presence or the affiliates are 
not cooperative with the faculty--with facility education 
service chiefs. For instance, during a site visit at one 
facility committee staff was told that the affiliate refused to 
provide documentation of resident attendance and that the 
facility was afraid of actions the affiliate might take if they 
pushed them. At other facilities the affiliate did not get paid 
unless there was proof of attendance.
    So there appears to be a wide disparity in what should be a 
consistent process across all facilities. While I understand 
the educational mission of VA, we are mindful that GME programs 
are supported by tax dollars and these dollars, although they 
support education, should also support veteran care.
    With that in mind, I have a couple of questions. And I also 
worked at our university and we have a very close relationship 
with the VA at our medical school there at East Tennessee State 
[indiscernible] College in Madison. Why, and anyone can take 
this, but why is there such a disparity in the approaches from 
one facility to another? Why isn't there consistency?
    Dr. Sanders. Thank you for that question, sir. There should 
not be inconsistencies. Our policies are very clear when it 
comes to the documentation that is necessary to support an 
invoice from an academic affiliate for resident time and 
attendance. Policies have been in existence for over ten years, 
to my knowledge, that are very detailed and require the VA to 
have independent records before they will pay an invoice.
    Mr. Roe. But that is clearly not happening. We found that 
it wasn't. So what is the penalty when you, for instance, on 
resident--that's a pretty simple thing. I mean, if you are 
getting paid, the resident, you should be able to document that 
resident at the facility working.
    Dr. Sanders. And there is really no problem documenting a 
resident's working because they are usually seeing patients and 
writing notes in the electronic record. In fact, there are 
multiple oversight processes in the resident tracking 
processes. Some of the oversight processes are at the national 
level in my office, some of the oversight processes are at the 
local level. But I think the principal of resident education--
    Mr. Roe. No, wait. Let's just stop.
    Dr. Sanders. Sorry.
    Mr. Roe. I understand all the policies are there, but it is 
not happening. So what happens when it doesn't happen? And 
whose responsibility is it to see that it is happening? And 
what are the consequences when it doesn't? And that's what my 
question is. Not that the policies are there, I know they are 
there.
    Dr. Sanders. Right. So basic fiscal processes require that 
an invoice be matched up with some documentation of what you 
receive even if it is a piece of machinery or a service. So 
these are core fiscal processes that should be working, and I 
am sorry that there is an example that it didn't.
    Mr. Roe. And if they don't, what happens?
    Dr. Sanders. Right. So ultimately these are fiscal 
processes that are enforced and overseen at the local fiscal 
medical center level.
    Mr. Roe. Okay. But what happens?
    Dr. Sanders. So I--if I hear at the national level that 
there is a problem with resident activity tracking, we actually 
go in and do a site visit, and we look at their processes. We 
tell them the bench marks, and the requirements, and the 
standards.
    Mr. Roe. Where has that happened, Dr. Sanders?
    Dr. Sanders. Where has it happened?
    Mr. Roe. Uh-huh.
    Dr. Sanders. Several sites or I can get the names to you. 
Yes.
    Mr. Roe. Okay. Thank you. And, again, the second question 
just dovetail on all that. Can you assure us moving forward 
that there is a consistent accounting of resident time to 
ensure that GME dollars are being spent appropriately?
    Dr. Sanders. Yes. And that gets back to the answer before, 
which is that resident time is highly choreographed. And they 
have requirements that are usually monthly and they have to go 
through a sequence of experiences; outpatient, inpatient, 
procedures, ER, et cetera. When they don't show up we know 
about it.
    And so across 11,000 resident positions and 44,000 people 
it is very obvious when a resident is not doing their duty and 
they run the risk of not successfully completing their 
residency program if they don't show up for these experiences. 
So there is every motivation on the resident's part, the 
program's part, and the VA's part to have them successfully 
complete--
    Mr. Roe. Well, I have taught residents who didn't show up. 
And, so, probably--I mean, most will, but I have been there 
when people didn't show up. And so there needs to be, again--I 
think from the VA's standpoint if we are paying, and they are 
there to take care of veterans, we should be able to document. 
And then the affiliate shouldn't get paid if the resident's not 
there.
    Dr. Sanders. And that is absolutely the policy, sir.
    Mr. Roe. I mean, it is pretty simple. Has it ever happened?
    Dr. Sanders. Yes, sir.
    Mr. Roe. You have not paid the affiliate?
    Dr. Sanders. Yes. Or we have recouped money because--
    Mr. Roe. On the--okay.
    Dr. Sanders [continued]. --we could not document.
    Mr. Roe. I am sorry, I have exceeded my time. I yield back.
    Mr. Bergman. Thank you. Everybody okay with round two?
    I am going to defer my questions until the end. And 
recognize the Ranking Member Kuster for five minutes.
    Ms. Kuster. Thank you, Chairman Bergman. I am going to go 
back to the education of our providers on opioid safety 
initiative, pain management, and clinical practice guidelines 
for chronic pain at the VA. So this is directed at Dr. Clancy. 
Could you just give me an update? Dr. Colenda says that there 
is a new wave in medical education to address these issues 
given the opioid epidemic across this country. Could you tie in 
what the VA has been doing with regard to training on these 
three issues? I am sorry, there is one more. Excuse me, the 
complementary and alternative medicines for opioids.
    Dr. Clancy. So in the last administration the President 
issued a memorandum similar to but not quite the same as an 
executive order about reducing unsafe and inappropriate use of 
opioids. So I can tell you with full confidence that 98.8 
percent of our prescribers have received training consistent 
with our guidelines and those from the Centers for Disease 
Control.
    At that time we were not required to include residents in 
that. In part because many institutions were saying, well, we 
will be stepping forward with this training. I think it is 
actually a great time now for us to follow through on that 
commitment to make sure that it is impossible to finish 
training either at the undergraduate or graduate level without 
having been exposed to this because it is a huge problem. 
Certainly in New Hampshire, but you are not alone.
    Ms. Kuster. No, I think it could make a breakthrough change 
given that 70 percent of our medical providers are--doctors are 
trained through the VA. I think this could be, literally, a 
single step that could make the greatest difference and save 
lives all across this country. So I would like follow-up with 
you, if we could, on that.
    Next, I am going to turn to the issue. Dr. Colenda, you 
mentioned several programs, and I think they were all 
instructive for us. This is with regard to what the VA can do 
to recruit and retain new physicians. You talked about
    J-1 Visa waivers, student loan repayment through the 
National Health Service Corps, and a partnership with Public 
Health Service to place medical officers in VA clinics.
    Could some of these programs or other initiatives be used 
at the VA? And maybe, Dr. Clancy, if you want to weigh in. Are 
there programs currently in place--loan repayment, waivers, 
that type of thing--that we could be using to fill these 45,000 
empty positions?
    Dr. Colenda. Ma'am, let me--I will probably hand this off 
partly to Dr. Clancy. But I think that there is clear evidence 
that with scholarship programs, for example, the Health 
Professional Scholarship Program, the National Health Service 
Corps programs, and the Conrad 30 Visa Waiver programs, they 
have been successfully implemented to recruit and retain folks 
in the specific service areas designed for those programs. For 
example, Army/Navy scholarships, Air Force scholarships for 
physicians who have an obligation to serve after they have 
completed their training.
    Ms. Kuster. So within the VA or in the civilian?
    Dr. Colenda. These are in the military, the VA currently 
does not have that type of program. So if the concern for the 
VA is to look at their workforce in the future, downstream, 
these are programs that can be developed to help assure that 
type of commitment post-training. It is also--
    Ms. Kuster. And that would require legislation to set those 
up? I mean, I would like to work in a bipartisan way--
    Dr. Colenda. Yeah.
    Ms. Kuster [continued]. --to pursue that.
    Dr. Colenda. I would imagine, yes.
    Ms. Kuster. Okay.
    Dr. Colenda. Now in terms of the value proposition for 
that. I think that--medical students, as you probably know, 
incur a tremendous amount of debt, and the loan forgiveness 
programs that are available can also help with incentivizing 
folks to work on a--in public service, let me put it that way, 
in a way that could be better maximized moving forward. So you 
have the undergraduate approach and you have the post-graduate 
approach, and I think combined together you could see a long-
term benefit for innovative ways of helping to--
    Ms. Kuster. I am just going to cut you off because my time 
is very short.
    Dr. Colenda. Sure.
    Ms. Kuster. If Dr. Clancy has anything to add about the VA 
with this recruitment and retention, or I can follow-up off 
line.
    Dr. Clancy. I have good news, and I may want to follow-up 
with you on additional authority for the kind of route that Dr. 
Colenda just mentioned. Where instead of having people who go 
to the uniform services, the military medical school going into 
the services, that there would be a number of slots where 
people could come to VAs. So we will follow-up with you on 
that.
    The really good news is a lot of these other programs that 
have supported the training of people through the National 
Health Service Corps and others, VA facilities are now going to 
be an opening opportunity for that's where people can do their 
payback.
    Ms. Kuster. Excellent.
    Dr. Clancy. So we think--and that's very recent, so we are 
excited about that.
    Ms. Kuster. Excellent. Thank you very much. I yield back.
    Mr. Bergman. Thank you. Mr. Poliquin, you are recognized 
for five minutes.
    Mr. Poliquin. Thank you very much, Mr. Chairman. We are 
going to try this again, Dr. Clancy. Okay. Here we go. All 
right.
    There was research performed for our great veterans to make 
sure we keep them healthy, both at the VA and at organizations 
outside the VA that they use, like Harvard.
    Dr. Clancy. [Inaudible]
    Mr. Poliquin. Okay. Great. Now, we talked about these 
investigators, I think I understand this a little bit better 
now. An investigator is an employee of the VA paid by the VA, 
correct?
    Dr. Clancy. Yes.
    Mr. Poliquin. Might that investigator also have employment, 
or co-employment, at an outside institution?
    Dr. Clancy. Absolutely.
    Mr. Poliquin. So this investigator could be an employee of 
Harvard?
    Dr. Clancy. Yes.
    Mr. Poliquin. And is part of his or her compensation at 
Harvard in part dependent upon how much research grant money 
they get?
    Dr. Clancy. Yes.
    Mr. Poliquin. Oh, okay. Now we are getting somewhere.
    Dr. Clancy. Yes.
    Mr. Poliquin. All right. So let's see if I understand this 
correctly. An investigator who is an employee at the VA and an 
employee at Harvard applies to not the VA but to the National 
Institution of Health or the Department of Defense for $3 
million grant, right? Okay. And someone has to administer, not 
do the research but do the management, administer that grant; 
is that correct?
    Dr. Clancy. Yes.
    Mr. Poliquin. Could that be Harvard?
    Dr. Clancy. It could be Harvard, it could be one of the 
not-for-profit corporate--
    Mr. Poliquin. Okay. It could be Harvard, right?
    Dr. Clancy. Yes.
    Mr. Poliquin. So this gentleman or this lady, who's 
employee of the VA, any employee of Harvard can apply for a 
grant from another taxpayer pot of money, this time coming from 
the NIH or the DoD, his or her employment could be a function 
at Harvard of how much grant money they bring in, and this 
individual's in the position of rewarding that administration 
fee back to Harvard; is that correct?
    Dr. Clancy. Yes.
    Mr. Poliquin. It is? And what, roughly, is the 
administrative cost to do that? What would Harvard charge to 
administer a grant from the NIH?
    Dr. Clancy. Harvard and all other universities have a 
negotiated indirect rate with all Federal funders.
    Mr. Poliquin. Could it be as much as 50 or 60 percent?
    Dr. Clancy. Yes.
    Mr. Poliquin. Oh, it could. Could it--
    Dr. Clancy. Harvard's is--I am sure Harvard's is more like 
70.
    Mr. Poliquin. Oh, 70 percent?
    Dr. Clancy. Yes.
    Mr. Poliquin. Okay. So let's just roughly say it is two-
thirds. So a $3 million grant from the NIH, which is another 
pot of taxpayer money, supposed to be helping our veterans here 
can be redirected back to Harvard who charges about two-thirds 
the cost of the whole grant, so about $2 million of the $3 
million can go for overhead back to Harvard where a million 
bucks is left to do the research?
    Dr. Clancy. No, no, no. The $2 million comes on top of the 
$3.
    Mr. Poliquin. On top of the $3?
    Dr. Clancy. Yes.
    Mr. Poliquin. Oh, okay.
    Dr. Clancy. And that's been the subject of some debate here 
and other Committees.
    Mr. Poliquin. Okay. Do you see this as a conflict of 
interest?
    Dr. Clancy. Well, before we get there, can I just make one 
caveat?
    Mr. Poliquin. Quickly.
    Dr. Clancy. All right. Having not been clear enough before. 
Some part of that money would also have to come back to VA. So 
if this person getting a grant from Harvard, also a VA 
employee, is working with VA people and enrolling veterans who 
are served by our system in their study, then some of those 
indirect funds would come back to the VA.
    Mr. Poliquin. Okay. Let me ask you this, Doctor. Why 
wouldn't the VA, who has a nonprofit, that I believe these 
nonprofits at the VA were specifically set up to administer 
this overhead in 1988; is that right?
    Dr. Clancy. I thought that as well, Congressman. They 
actually had a broader purpose which was to be a flexible 
funding--
    Mr. Poliquin. Okay. Can the VA administer these grants 
coming from the NIH or DoD, yes or no?
    Dr. Clancy. No. No.
    Mr. Poliquin. They can't?
    Dr. Clancy. Some of them just depend on the affiliate to do 
it directly.
    Mr. Poliquin. Okay. So there is no entity--there is no 
nonprofit entity affiliated with the VA that can do this 
administrative work?
    Dr. Clancy. Eighty-three of our facilities that have 
university affiliates--eight-four, excuse me, also have a not-
for-profit corporation.
    Mr. Poliquin. Okay. So there is a VA type entity that can 
do this administration?
    Dr. Clancy. Yes.
    Mr. Poliquin. Don't you do--
    Dr. Clancy. But not all of our VAs--
    Mr. Poliquin [continued]. Let me--
    Dr. Clancy [continued]. --who do research--
    Mr. Poliquin. Don't you do that, ma'am?
    Dr. Clancy [continued]. --do that.
    Mr. Poliquin. Isn't that what your entity does?
    Ms. Watterson-Diorio. I am in Boston, I know full-well, 
and, yes.
    Mr. Poliquin. So you could do this administration?
    Ms. Watterson-Diorio. Uh-huh, I can.
    Mr. Poliquin. Okay. Are you an employee of the VA?
    Ms. Watterson-Diorio. No. I am an employee of the VA 
nonprofit.
    Mr. Poliquin. Okay. But some of this money would recycle 
back to the VA. You are affiliated with the VA, correct?
    Ms. Watterson-Diorio. Hundred percent.
    Mr. Poliquin. Okay. All right. Now, my question is the 
following. Will somebody tell me that this is not a conflict of 
interest? You have an employee of an outside entity and an 
employee of the VA at the same time where this individual is 
given the authority to apply for taxpayer funding from another 
outside entity taxpayer funding, in this case DoD or the NIH, 
they can redirect that money to the entity that they work for 
in addition to the VA? And, excuse me, and their tenure or 
their success at that university is in part dependent upon how 
much money they can direct back to that institution. Somebody 
tell me this is not a conflict of interest.
    Dr. Ramoni. Thank you for your question, Congressman.
    Mr. Poliquin. Yes.
    Dr. Ramoni. Having been at Harvard for 20 years myself, 
this speaks directly to me.
    Mr. Poliquin. Are you an investigator?
    Dr. Ramoni. I was an investigator.
    Mr. Poliquin. Great. Okay. Now I finally got an 
investigator. Okay.
    Dr. Ramoni. So on both sides, there are incentives to put 
the grant through the VA, and there are incentives to put the 
grant through the VA nonprofit, and there are incentives to put 
it through the academic affiliate. At the VA, you get 
additional--so in addition to your grant funding, so let's say 
you bring in a buck of grant funding at the VA, the VA will 
supplement that with what is called VERA dollars; Veterans 
Equitable Resource Allocation dollars. And, in fact, I get more 
VERA dollars if I put it through the VA nonprofit.
    Also, my promotions happen at the VA. I have just signed 
off on promotions. So there are a lot of factors that may, in 
fact, you know, you do get benefits at the VA for putting your 
grants through the VA, the nonprofit may get me somebody to 
work for me.
    Academic affiliates. Academic affiliates also perform some 
of the overlapping functions of the nonprofits. Academic 
affiliates actually employ people who work at the VA as well. 
Academic affiliates also--
    Mr. Poliquin. What does it cost to do this administrative 
work at the VA nonprofit as compared to what it costs at--and 
by the way--
    Dr. Ramoni. Yep.
    Mr. Poliquin [continued]. --I loved my four years at 
Harvard, I am not picking on my alma mater, I am just using it 
because they are the high-priced folks in the room, right.
    Dr. Ramoni. I don't think they will take it personally.
    Mr. Poliquin. Okay. So is it cheaper to have the 
administrative done at the VA nonprofit as compared to an 
unaffiliated nonprofit or a Harvard?
    Dr. Ramoni. Well, so just like it is--
    Mr. Poliquin. Yes or no?
    Dr. Ramoni [continued]. --cheaper to eat at a cheap 
restaurant--
    Mr. Poliquin. Yes--
    Dr. Ramoni [continued]. --and more expensive to at--
    Mr. Poliquin [continued]. Yes or no?
    Dr. Ramoni. It is what you get for it.
    Mr. Poliquin. Okay. So the administration is different, it 
is not the actual work that's going on, it is the overseeing of 
that work?
    Dr. Ramoni. It is what you--at the academic affiliate you 
get access to libraries, additional laboratory space, that's 
what goes into overhead cost calculations. The nonprofits--
    Mr. Poliquin. But isn't this research--
    Dr. Ramoni [continued]. --don't have libraries.
    Mr. Poliquin [continued]. Isn't this research being done at 
the VA in our own labs? Could it be done at the VA in our own 
labs at the VA?
    Dr. Ramoni. So sometimes yes, sometimes no.
    Mr. Poliquin. Right. The investigator might be doing the 
research at the VA even though that individual is still 
employed by Harvard, right?
    Dr. Ramoni. Yes.
    Mr. Poliquin. Okay. So does VA have a library?
    Dr. Ramoni. The VA's library, typically, is not as good, 
for instance, as the Harvard library.
    Mr. Poliquin. Oh, does it cost a lot of money to use 
Harvard's library? How about the library at Congress right here 
in town.
    Dr. Ramoni. You do have to have a Harvard--you do have to 
have a Harvard ID to use the Harvard library.
    Mr. Poliquin. Okay. Well, the investigators do, right?
    Dr. Ramoni. Yes. But--
    Mr. Poliquin. Did you have an ID when you were an 
investigator and you were working at the VA and at Harvard, did 
you have a Harvard ID?
    Dr. Ramoni. I wasn't at the VA as well. But in order to 
sustain those services, Harvard sustains those services through 
indirect costs.
    Mr. Poliquin. How much does it cost overhead at a VA, 
overhead operation, as compared to Harvard, ma'am?
    Ms. Watterson-Diorio. So that figure runs between 25 and 30 
percent.
    Mr. Poliquin. Oh, thank you. And we just found out at 
Harvard it is about 70, right? What am I--
    Dr. Ramoni. That's correct.
    Mr. Poliquin [continued]. --missing here? What am I missing 
here, Mr. Chairman? Is that we are spending two or three times 
as much to send money to an institution like Harvard when it 
could be done at the VA, and we have the folks that are working 
at both entities redirecting money back to the more expensive 
place. What the heck am I missing here?
    The funding of the VA has gone from $120 billion to $180 or 
$190 billion over six years, we are $20 trillion in debt, we 
got our vets coming back from the Middle East that need help, 
and we are spending money like this? What am I missing here?
    Mr. Bergman. Thank you.
    Mr. Poliquin. How much more time could I have? Thank you. I 
yield back.
    Mr. Bergman. Well, days, but the--well, thank you. Thank 
you, Mr. Poliquin.
    Dr. Roe, you are recognized for five minutes.
    Mr. Roe. Thank you, Mr. Chairman. Couple things that I want 
to go in first and then. Dr. Sanders, according to VA 
testimony, the VHA has the second largest funder of GME. And 
during the Committee site visits we learned that many medical 
centers are having difficulty tracking residents' rotations. In 
one location this resulted in overpayment of $1.725 million. Do 
we have a plan to not only track the residents but to also 
collect the money that's owed to the VA?
    Dr. Sanders. Thank you, sir. Yes. When we find out there 
are difficulties at a particular site, as I said before, we do 
do site visits and we train the staff to do the right 
procedures according to our policies. Our policies are very 
specific and some of these are actually some very basic fiscal 
policies. Like when you get a bill, don't pay it until you know 
it is right, and things like that. So those are the standards 
we go by in OAA and those are the standards our fiscal 
colleagues go by as well.
    I think that resident time and attendance is a 
responsibility of the VA ultimately because we are paying the 
invoice. And we disseminate best practices in every way we can. 
We train every education leader out there; we train their 
staff; we have regular conference calls; and we have an annual 
conference to try to teach them the right way to do these 
processes. But we are happy to go in and assist people if they 
are doing it wrong or we find out that--
    Mr. Roe. Well, these are--I mean, these are not our--these 
are our partners in educating people, I mean, we are not an 
adversarial, and that's clearly not what this is intended to 
be. But the question is if the policies were all right, how do 
you explain a $1.7 million overpayment?
    Dr. Sanders. Well, truthfully, $1.7 million in a very large 
budget may be less than one percent.
    Mr. Roe. Well, where I am, and where I live, $1.7 million 
is still a lot of money.
    Dr. Sanders. It is.
    Mr. Roe. And that's just one institution. And who knows 
what it is over a lot. And, again, these are academic 
affiliates at the VA, for the most part, has a great working 
relationship with, not an adversarial relationship--I want to 
be sure I get that on the record--it is not. But it looks to me 
like either the VA or the academic affiliate is dropping the 
ball somewhere if there is those kind of disparities out there. 
And we don't know the magnitude of it because, obviously, we 
have a lot of them, and I want to encourage them.
    I mean, the medical school where I am and taught, was 
started there because of the VA. There were five in the 
country, they were started in the late '70s early '80s, that 
had to be affiliated with the VA, that was the specific bill 
that was passed, that's how it had to happen. So it is a real 
close relationship. As a matter of fact, the medical school is 
on the VA campus. So it is a positive relationship, the 
question is the accounting doesn't seem to be right in some of 
these.
    Dr. Sanders. Right. I actually agree with you, sir. A lot 
of this is the training of what we call--used to call the 
Associate Chief of Staff for Education, now we call this the 
Designated Education Officer. They are the single responsible 
individual at every VA that oversees all clinical training 
education, and is responsible for the time and attendance 
procedures. When we have turnover in that role, procedures may 
suffer. But we are there to train and develop the proper 
procedures at each site.
    Mr. Roe. Well, first of all, Dr. Colenda, thank you for the 
years that you have put in. I don't know whether you were at 
the AAMC meeting when I spoke the other day, but I appreciate 
your training residents at West Virginia University for all 
these years, and young physicians to go out and fill these 
spots. And, certainly, what I would like to work with the VA on 
is these--I think Mr. Takano was talking about it, are these 
1,500 slots in primary care that are not fully implemented yet 
three years into it.
    And that's not easy. I know finding teachers and time to do 
it takes a lot of time, and takes time away from your clinical 
obligations. And it is one of the reasons that I put a bill in, 
we haven't figured out how we are going to fund it yet, but to 
provide scribes for doctors so they will have more time to be 
with patients or even to teach. So I would like to work with 
you all.
    I know I have talked to VA before about doing this. I 
really want to get this implemented because we have a shortage 
coming out there of not only doctors but nurses and other 
health care providers in this country. My local hospital 
system, I was driving in the other day to the office here and I 
heard this advertisement on FOX News, I was listening to it on 
the way in, and this is their national news about Mountain 
States Health Alliance advertising for nurses, and paying--and 
I am thinking, well, there are a lot of mountain states, then I 
realized it was hometown that was advertising nationally for 
nursing personnel. I think you are seeing the same thing in 
medicine.
    And in our state of Tennessee, the last statistic I saw 
were 26 percent of doctors actively practicing in the state are 
over 65 years of age. So we have a manpower shortage that is 
huge coming up. So I think it is critical that the VA get this 
done, and sooner rather than later.
    Dr. Colenda. Thank you for that commentary. I was actually 
one of the deans of one of those five VA medical schools--
    Mr. Roe. Yeah, I know you were.
    Dr. Colenda [continued]. --out in Texas. I think the health 
professional shortage is going to be an increasing problem over 
the next 10 to 15 years because of the changing demographics of 
our country.
    I think that--the other thing is I have said is that, to 
me, health care now is practiced in teams. And to be able to 
ensure that the health care team has physicians, and nurses, 
and other types of health professionals to deliver care to 
patients, whether it is VA patients, veterans, or the civilian 
population is an important concept, and educational concept, to 
have you take away because it is not just dumping money into 
medical education, it really needs to be a broader platform for 
health professions education.
    I would also like to share with you and compliment Dr. 
Sanders for being able to take the specific questions about the 
billing and the transactional nature between the VA and the 
academic institutions for GME.
    On the sponsoring institution side of that equation, that 
is the universities and teaching hospitals where the program is 
accredited, we take accountability equally important because 
failure to do so not only runs problems with the VA but also 
can have problems with CMS in terms of Medicare support for 
graduate medical education. It also has challenges for, as a 
former CEO of a health system, for my board of directors, 
because they ask me--``--``help me understand this GME line 
that is now part of the operating budget for your health 
system.''.''
    And so this whole issue of the transactional nature of 
funding residency training and the accountability of such is 
first and foremost part of the culture of the graduate medical 
education experiences today. Will there be errors? Will there 
be problems in that? And we should expect 100 percent precision 
but when there is not 100 percent precision the key element is 
how can we address those short changes to be able to fix the 
problem because none of us want to lose our accreditation for 
our residency training programs. And this can get tied back to 
accreditation.
    Mr. Roe. Just one last thing. And I appreciate you letting 
me go over, Mr. Chairman. But I will make you a bet that when 
you were a dean or head of the medical school, you wanted the 
GME dollars run by the medical school, and when you were over 
the whole system you wanted it run through the hospital.
    Dr. Colenda. Well, I was more worried about the size of the 
pot.
    Mr. Roe. I bet you were wondering about who controlled the 
pot too. I yield back.
    Mr. Bergman. Thank you. Ms. Watterson-Diorio, what type of 
oversight is there from VA for the NPCs?
    Ms. Watterson-Diorio. The oversight that we are affected by 
is the nonprofit program oversight that happens via a tri-
annual review that is run out of the office of Research and 
Development under Dr. Rachel Ramoni.
    Mr. Bergman. Okay. And what do you understand the actual 
role of the NPPO to be?
    Ms. Watterson-Diorio. The role of the NPPO, as we call it, 
has been established as a formal oversight for developing their 
handbook--sorry, I am--I thought you were going to a different 
level of question. But their role is to look at how the 
nonprofits are effectuated by the handbook and the Title 38.
    Mr. Bergman. Okay. Could we assume possibly not only 
oversight but working liaison as well as oversight?
    Ms. Watterson-Diorio. The liaison piece is probably the 
most prominent of what we would like it to be.
    Mr. Bergman. Okay. Is this office, this NPPO office, and we 
all love acronyms--
    Ms. Watterson-Diorio. I know.
    Mr. Bergman [continued]. --is this helpful? Is the 
existence of that office helpful?
    Ms. Watterson-Diorio. At this time, I don't believe that 
the processes that are happening within NPPO are being 
predominantly helpful. But we have--now I have addressed this 
with Dr. Rachel Ramoni and we are hopeful that we can make 
changes, and we have offered her, basically, some strategic 
plan initiatives for that. I independently did that with her 
directly.
    Mr. Bergman. So you are working with her. What are some of 
the impediments this office places on the NPCs right now?
    Ms. Watterson-Diorio. Well, I think that one of the major 
issues that we are having right now is the fact that the type 
of recommendations that we are getting, especially in these 
tri-annual reviews, are inconsistent with that of our financial 
independent auditors. And we have many audit types of--you talk 
about the alphabet soup; IRS, GAO, OPM, DHHS, ONR. These are 
all people that I have to, as a VA nonprofit, address as an 
audit type of relationship.
    The NPPO recommendations can be inconsistent with those 
that are given by all of these other auditing agencies. When 
that happens, there is not a formal appeal process at this 
point in time. And we find that that is a real impediment for 
us to go forward and be effective as VA nonprofits.
    Mr. Bergman. So, just to repeat what you said, there is no 
formal appeals process in place?
    Ms. Watterson-Diorio. There is no formal appeals process at 
this time, yes.
    Mr. Bergman. Okay. Dr. Ramoni, are you aware of the issues 
that we just talked about here? And if you are, what is being 
done to address them?
    Dr. Ramoni. Chairman Bergman, thank you very much. The 
health of the nonprofit corporation is essential to the health 
of the VA. And so one of the earliest contacts I made was with 
Mr. Rick Starrs when I took this role as chief research and 
development officer. I was very troubled to hear of these 
stories, these complaints, from the nonprofits. I have, of 
course, heard of good reviews, stories where we have been 
supportive, but I have heard comments like those of Ms. 
Watterson-Diorio.
    And so we have decided to pause the reviews of the 
nonprofit corporations for a period of a month so that we can 
conduct an internal review. We will be reaching out to the 
nonprofits and to the VA medical centers accompanying them in 
order to get their feedback on this process. And we look 
forward to establishing a truly collaborative relationship with 
the nonprofit corporations while maintaining our role to ensure 
that they have proper internal controls so that they can be 
healthy nonprofits.
    Mr. Bergman. Okay. Thank you.
    Dr. Clancy. And we would be happy to keep you informed as 
this progresses.
    Mr. Bergman. You were reading my mind. Save me from asking 
the question. Number one, thank you, to all of you serving as 
witnesses today. Your perspectives, your experience are going 
to provide us with insights to better work together with you to 
provide the oversight, if you will, that we are required as a 
Committee to do. And we are all in this together.
    In case anybody hasn't realized it, we are in some very, 
interesting is not the right word, but tough, tough fiscal 
times. And there is going to be tough decisions that have to be 
made, and by partnering together we will be able to do that. 
But we will not sacrifice the quality or the advancement of 
care for our veterans. No excuses will be offered, no excuses 
will be accepted. So you are now excused.
    Budgets are tight in the current fiscal environment which 
is one reason why we conduct a thorough oversight over VA and 
encourage it to be a, not only a good steward, but a forward-
thinking steward of taxpayer money. Yet, time and time again we 
find examples of VA doing just the opposite. We have had some 
interesting questions and responses here today. Not having 
enough, or any oversight, or accountability regarding money 
intended for veterans.
    I hope that the VA has heard our concerns and will work to 
improve its oversight over the GME program. I hope that they 
will put processes in place to ensure that time and attendance 
of residents before paying the affiliates. I hope that VA will 
ensure that when research is being performed in a VA facility, 
that the VA NPCs are administering the funds so that VA does 
not pay excessive overhead costs without getting the benefit of 
reimbursement.
    Today, VA has heard many of the great benefits that NPCs 
can provide, and I strongly encourage them to take full 
advantage of these benefits so that the research can thrive and 
the veteran will receive the benefits.
    I ask unanimous consent that all Members have five 
legislative days to revise and extend their remarks and include 
extraneous material.
    Without objection, so ordered.
    Again, the witnesses are excused. I would like to once 
again thank all of you and the audience members for joining in 
today's conversation.
    With that, this hearing is adjourned.

    [Whereupon, at 11:49 a.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

               Prepared Statement of Carolyn Clancy, M.D.
    Good morning, Mr. Chairman, Ranking Member Kuster, and Members of 
the Committee. Thank you for the opportunity to discuss VA's research 
program and our relationship with academic affiliates. I am accompanied 
today by Dr. Rachel Ramoni, Chief Research and Development Officer and 
Dr. Karen Sanders, Deputy Chief Academic Affiliations Officer.

Office of Research and Development (ORD)

    For more than 90 years, VA has conducted research within its 
hospitals and health care system in accord with Congressional authority 
to advance scientific knowledge about critical issues facing Veterans. 
In establishing VA Research, Congress recognized both the need to study 
the unique problems of Veterans but also the opportunity for research 
to support excellent clinical care.
    Since its inception, VA Research has contributed to groundbreaking 
advances such as the Computerized Axial Tomography scan, the pacemaker, 
and organ transplants; it has sponsored groundbreaking studies on the 
treatment of tuberculosis, high blood pressure, heart disease, and 
Posttraumatic Stress Disorder (PTSD). It has partnered with industry to 
demonstrate the value of vaccination to prevent shingles, and to 
develop state of the art prosthetic limbs. These achievements have 
resulted in three Nobel prizes, seven Lasker Awards, and numerous other 
national and international honors. VA Research continues to drive 
advances in Veteran care in issues as diverse as diabetes, spinal cord 
injury, and mental health. Its groundbreaking Million Veterans Program 
has already enrolled more than half a million Veterans who have donated 
blood samples and completed surveys to help unlock the genomic basis of 
medical disease. Additionally, VA is looking to improve its research to 
focus strategically on the areas where we will have the greatest 
impact.
    VA Research benefits from its position within an integrated health 
care system with more than 150 medical centers and a state-of-the-art 
electronic health record. Our ability to recruit patients throughout 
the country, to draw on detailed clinical data over two decades on 8 
million Veterans, and to implement research findings into clinical care 
makes VA a model for bench-to-bedside research. Partnerships with 
national and regional VA clinical leaders, new outreach to Veterans in 
the community, and a network of research Centers with specific areas of 
focus ensure that research reflects the current and future needs of 
Veterans.
    The VA Research program plays a unique role that cannot be filled 
by external funding sources. First, VA Research prioritizes problems 
that are common or important to Veterans, such as PTSD, traumatic brain 
injury, polytrauma, and military sexual trauma. Second, 60 percent of 
our researchers are also practicing clinicians at VA medical centers 
(VAMCs). As a result, they are familiar with the Veteran experience and 
are able to seek knowledge and pursue research topics to help our 
patients. Unlike other Federal agencies, VA has no laboratories whose 
predominant function is research. Instead, research studies are 
performed in parallel in close proximity to where patient care is 
provided. This leads to a focus on research areas benefiting Veterans. 
Third, research is conducted by VA employees who are dedicated to the 
mission of improving care for Veterans. Finally, a research program 
planned and run within VA can adapt to the changing needs of the 
Veteran population. For example, the Office of Research and Development 
has dramatically increased the number of researchers and studies 
addressing the needs of women Veterans over the past decade to meet the 
growing population of women entering VA care.
    VA's research program relies on principal investigators whose 
primary commitment is to VA Research. All VA Research funding is 
provided to VA-employed researchers. Research in the 21st Century, 
however, is a highly collaborative enterprise, building on the 
collective contribution of different specialized areas of expertise. 
For example, our research on Traumatic Brain Injury requires the 
collaboration of cellular biologists, neurologists, psychologists, 
radiologists, physicists, engineers, and rehabilitation specialists and 
requires accessing state-of-the-art imaging equipment and laboratory 
techniques. VA's close partnership with universities, detailed later, 
allows VA scientists to be part of a larger national network of 
scientists and to leverage laboratory space, equipment, and expertise 
that may be more readily available at the university. VA investigators 
must apply for a waiver if they intend to conduct VA Research outside 
of VA-owned property.
    VA researchers work at more than 100 VAMCs conducting research. The 
majority of VA researchers - whether full-time clinician scientists or 
part-time Ph.D. researchers - have dual appointments at their academic 
affiliate. Their university appointment supports their VA research by 
keeping them up to date on research outside of VA, allowing them to 
train future researchers and clinicians and enabling them to pursue 
additional sources of funding. Dually appointed investigators can 
leverage their VA funding to obtain funding from National Institutes of 
Health (NIH), foundations, Department of Defense (DoD), and industry to 
accelerate their research and its impacts. Many clinicians and 
researchers have laboratory access at both VA and their academic 
affiliate.
    VA Research fosters dynamic collaborations with its university 
partners, other federal agencies, nonprofit organizations, and private 
industry. In 2017, VA researchers were able to leverage $673 million in 
VA funding to bring in an additional $595 million in external funding 
from industry and Federal agencies such as NIH and DoD. The Federal 
investment in VA Research returns incredible value to Veterans and the 
taxpayers, value that is reflected in Veterans positive attitudes about 
research and health care outcomes in VA.

Office of Academic Affiliations (OAA)

    Strong academic relationships have been the foundation of improving 
quality care and patient access in VA health care since 1946. January 
30, 2016, marked the 70th anniversary of VA ``Policy memorandum #2,'' a 
document crafted by General Omar Bradley and other VA leaders which 
established the visionary partnership that VA has with America's 
medical schools. The initial motivation for integrating academic 
relationships into VA's mission is just as relevant today: improving 
the quality of care provided to Veterans and ensuring that they are 
cared for by America's best and brightest from academic institutions. 
Moreover, the partnership with our universities and medical schools 
gives VA access to cutting edge technology, expertise and national 
research networks that would be difficult to replicate in VA. VHA is 
profoundly important to U.S. health care; approximately 70 percent of 
U.S. physicians have had some part of their training in a VA facility.
    VA is affiliated with well over 90 percent of Doctor of Medicine 
(MD) and Doctor of Osteopathy (DO)-granting medical schools; VA's 
health profession education activities also include affiliations with 
over 1,800 schools of nursing, pharmacy, psychology, and other health 
professions. Through these affiliations and VA's own sponsorship of 
selected programs, over 127,000 trainees in health professions received 
supervised clinical education in VA facilities last year. VHA is also 
the second largest funder of Graduate Medical Education (GME), after 
the Centers for Medicare and Medicaid Services (CMS).
    The Office of Academic Affiliations (OAA) is responsible for 
overseeing the statutory education mission of VA, as authorized in 38 
U.S.C. 7302. The Office of Research and Development is responsible for 
the statutory research mission of VA, as authorized in 38 U.S.C. 7303. 
Related to the authority for affiliation relationships, VA is 
authorized to execute sole source contracts with academic affiliates 
under 38 U.S.C. 8153. These contractual relationships are overseen by 
the Medical Sharing Office in VHA. Therefore, all three of these 
offices share oversight responsibilities for conduct of the various 
components of the academic relationships of VA.
    OAA provides oversight and leadership for aligning the health 
professions education programs with VA's health care workforce needs. 
OAA facilitates the conduct of the education mission through extensive 
outreach, communication and dissemination of best practices across the 
enterprise, focusing especially on training programs and trainees. 
Under the authority of the Veterans Access, Choice, and Accountability 
Act of 2014 (VACAA) GME expansion, OAA works with small VAMCs and 
community-based outpatient clinics to initiate new GME programs in 
rural and underserved areas.
    Academic partnerships and the work of dually appointed researchers 
are managed locally by the local VA Research office and by the 
leadership of the local VAMC. With over 3,000 researchers at more than 
100 VAMCs, local leadership is best positioned to ensure that VA 
employees are fulfilling their commitments to VA, whether they be 
clinical, research, teaching or administrative duties. For research, 
the primary focus is on ensuring that the individual projects are 
proceeding on schedule, are completed successfully, and have results 
that are shared with the scientific and clinical communities. VA 
monitors the progress of individual projects through annual reporting 
using the NIH's electronic Research Administration system, through 
annual reports of VA-funded research centers, and through oversight of 
VA multi-site clinical trials through our Data Safety and Monitoring 
Board.
    In general, VAMCs are affiliated with geographically nearby medical 
schools and teaching hospitals. Medical Education is sub-divided into 
Under Graduate Medical Education, the period of time prior to awarding 
of the graduate MD or DO degree, and the GME component, which is also 
called ``residency training.'' GME programs are accredited by two main 
accrediting bodies, which are the Accreditation Council for Graduate 
Medical Education and the American Osteopathic Association. These 
accreditors publish essential standards for the conduct of these 
training programs. With few exceptions, academic affiliates, not VA, 
are the ``sponsors'' of residency training programs, which means they 
bear the primary responsibility for meeting the standards and 
requirements of the accrediting body. VA collaborates with its academic 
affiliates in the execution of the residency training programs in order 
to meet the educational needs of trainees and the care needs of 
Veterans. This collaborative partnership has multiple oversight 
mechanisms to ensure a high quality educational experience for 
physician residents as well as safe and effective care for Veterans. 
While OAA allocates resident positions and provides stipend funding for 
residency education, training program execution resides at the local 
level and is a shared VA-affiliate endeavor.
    It is important to note that OAA's mission is to provide a health 
professions workforce for VA and the nation. In this context, OAA has 
many types of training programs and ensures the alignment of training 
programs with VA's workforce needs. For example, in the last five years 
of OAA's Mental Health Education Expansion, 699 mental health trainee 
positions were allocated across important professions such as 
psychology, social work, and chaplaincy. Funding was also added for 
Licensed Professional Mental Health Counselors and Marriage and Family 
Therapists in the last three years. Mental health training for Nurse 
Practitioners and Physician Assistants also recently began. All states 
now have at least one VA mental health training program. These trainees 
assist in providing direct supervised care for Veterans, and also 
ensure a robust workforce pipeline into VA staff employment.
    Section 301(b) of the VACAA authorized VA to increase the number of 
GME physician residency positions by up to 1,500. An innovative part of 
VACAA was the inclusion of GME expansion targeting primary care and 
psychiatry. While some VA facilities were too remote or small to handle 
GME in other specialties, many had strength in family medicine, 
internal medicine and psychiatry. This statute has allowed many of 
those facilities to start GME programs by forming affiliations with 
residency sponsors in their service areas. New allopathic and 
osteopathic medical schools found clinical rotations for their students 
and residents, such as the University of Texas Rio Grande Valley in 
Harlingen and Burrell College of Osteopathic Medicine in El Paso and 
Las Cruces. This statute has opened VA to family medicine which brings 
along its care for women and crucial procedural skills. In the original 
50 facilities OAA identified as having low or no GME positions only 
four remain with no physician educational activity. This statute has 
influenced the distribution of physician training to underserved areas 
in an effective and positive manner.
    VA appreciates the support of Congress in authorizing this 
initiative for 10 years. This initiative has been extremely successful 
in the 2 years since the first VACAA residents first came to VA in July 
2015. To date, 547 positions have been awarded to VAMCs around the 
country, and over two-thirds of these positions are in primary care and 
psychiatry.

Non-Profit Corporations (NPCs)

    VA-affiliated research and education corporations, also known as 
non-profit corporations (NPCs), were established by Congress in 1988 
under 38 U.S.C. 7361-7366. Currently, there are 84 NPCs located 
throughout the U.S. and in Puerto Rico. After paying their own 
administrative expenses, they have collectively contributed $2.2 
billion to VA Research in the last decade. Annually, they manage $272 
million in assets, comprised principally of cash and cash equivalents. 
NPC revenues are from Federal granting agencies such as NIH and DoD (68 
percent), industry (20 percent), private foundations (10 percent), 
interest earned, and other sources (2 percent). NPCs employ 
approximately 2,800 people, serve 2,300 researchers, and administer 
3,500 research projects. NPCs are established at VAMCs and are state-
chartered nonprofit corporations governed by boards of directors. There 
are four directors required by law (``statutory directors''). They are 
the Medical Center Director, the Chief of Staff, the Associate Chief of 
Staff for Research, and the Associate Chief of Staff for Education. Two 
non-VA community members are also required.
    VA has oversight responsibility and authority for the NPCs. The VHA 
Nonprofit Program Oversight Board meets quarterly and provides 
direction with input from the VHA Chief Financial Officer and the 
Office of Research and Development. The Nonprofit Program Office (NPPO) 
is the principal liaison between VA and the 84 NPCs. On-site audits and 
other oversight measures are employed by the NPPO. This oversight is 
accomplished through routine triennial on-site reviews, follow-up on 
past reviews, for cause audits and investigations, the NPC annual 
report to Congress, education and training sessions, and ad-hoc 
consultations.
    External funding from industry and other Federal agencies may be 
administered by the affiliated NPC. Who administers these funds is 
dependent on a number of factors such as the location of the principal 
investigator and collaborators, conduct of the research, complexity of 
the research, and expertise required for the management of the grant. 
VA encourages the use of the NPCs when possible, but allows the local 
VAMC to manage these relationships.
    VA appreciates Congress's support which allows us to train future 
medical researchers and clinicians to care for Veterans and the nation 
as a whole. Mr. Chairman, this concludes my testimony. My colleagues 
and I are prepared to answer any questions you, Ranking Member Kuster, 
or other Members of the Committee may have.

                                 
                Prepared Statement of Richard P. Starrs
    Chairman Bergman, Congresswoman Kuster, esteemed Committee Members, 
thank you for the invitation to be here today to share with you my 
experiences and insights regarding the Department of Veterans Affairs' 
medical research program and the role of the Congressionally authorized 
VA-affiliated nonprofit research and education corporations.
    My name is Rick Starrs and I have served as the Chief Executive 
Officer of the National Association of Veterans Research and Education 
Foundations, commonly known as NAVREF, since January 2016. I am a proud 
Army Veteran, having served on active duty as a Medical Service Corps 
officer for 26 years, culminating my career as the Chief of Staff of 
the US Army Medical Research & Materiel Command in Frederick, Maryland. 
I was honored to join NAVREF and transition from a career supporting 
the health needs of Soldiers to one supporting the health needs of all 
Veterans.
    I am accompanied by Ms. Nancy Watterson-Diorio, a member of 
NAVREF's Board of Directors and the Chief Executive Officer of the 
Boston VA Research Institute, Inc. (BVARI). Nancy has led BVARI for 21 
years, building it from a $100,000 start-up organization in 1996 to a 
$14 million research enterprise today. Along the way she has invested 
incredible time, energy, and devotion mentoring, advising, and 
assisting others in our community on how to best administer research 
and support Veterans. Her experience, expertise, and leadership have 
been invaluable to NAVREF and I am happy to have her at my side.
    Thank you for inviting us to participate in this important hearing. 
We appreciate this subcommittee's continuing interest in the VA's 
research program and the role of the nonprofit corporations. Your staff 
has visited many of our sites over the last 12-months and is becoming 
well-versed in our operations and our challenges.
    The National Association of Veterans' Research and Education 
Foundations is the 501(c)(3) nonprofit membership organization of 
research and education foundations affiliated with Department of 
Veterans Affairs (VA) medical centers. These nonprofits, also known as 
the VA-affiliated nonprofit research and education corporations (NPCs), 
were authorized by Congress under 38 USC 7361-7366 to 
provide flexible funding mechanisms for the conduct of research and 
education at VA facilities nationwide. Currently, NAVREF has 80 member 
corporations.
    NAVREF's mission is simple-we exist to advance the success of the 
VA-affiliated research and education corporations. The NAVREF Board of 
Directors is comprised of seven NPC executive directors elected by the 
membership, four VA employees elected by the membership consisting of a 
VA Medical Center Director, Chief of Staff, Associate Chief of Staff 
for Research and Development, and Associate Chief of Staff for 
Education, and two community members appointed by the board. I am here 
today on behalf of the NAVREF Board and our membership to tell you 
about the great work of these nonprofits, our potential for greater 
contributions, and areas where we face challenges.
    Ultimately, NAVREF envisions a nation in which Veterans receive the 
finest care based on innovative research and education. We believe that 
by working closely with Congress, the VA leadership, NPC boards and 
leaders, and the great researchers and scientists working in VA medical 
centers across the country that our lofty vision can be achieved. We 
serve not only the Veteran, but a team of VA research and educational 
experts.
    NAVREF has been encouraged by the approach of the VA's new Chief 
Research & Development Officer, Dr. Rachel Ramoni. We look forward to 
continued collaboration with her and her team at the Office of Research 
and Development. In the short time she has been in her position, Dr. 
Ramoni has reached out to NAVREF and the NPC community on multiple 
occasions to share information and seek partnership opportunities. She 
has a strong interest in bringing more clinical trials to Veterans and 
understands the key role the nonprofits play in fostering these 
relationships with pharmaceutical companies and the clinical trial 
industry. We look forward to continued development of this relationship 
and the role of nonprofit corporations as partners invested in the 
success of VA research and education activities. Secretary Shulkin and 
other leaders at the VA speak often about the need to partner with 
private industry and about tapping into the great ideas and willing 
contributors in the private sector. This is the role that the NPCs were 
designed to play and where we offer so much potential to the VA.
    NAVREF strongly believes that the VA-affiliated nonprofit 
corporations legislated by Congress in 1988 offer tremendous benefits 
to Veterans, but are not being used to their maximum potential. NAVREF 
offers three specific recommendations:
    1.VA establish clear guidelines for the administration of 
extramural research activities that offer the NPC right of first 
refusal for all research efforts where the majority of this work occurs 
physically within the VA. Included in these guidelines should be a 
common practice for vetting conflicts of interest and ensuring those 
involved in the decision-making process are not conflicted.
    2.VA review the appropriate level of oversight required to ensure 
the nonprofit corporations are operating appropriately and effectively 
while retaining their independence as non-profit entities legislated to 
be flexible mechanisms outside of the Federal bureaucracy.
    3.The National Institutes of Health (NIH) modifies its Grants 
Policy Statement to allow our NPCs to pay VA clinicians as Principal 
Investigators on the Institutes' research grants for their off tour of 
duty effort.

WHO THE NPCs ARE

    The 1988 legislation authorizing the establishment of VA-affiliated 
nonprofits (US Public Law 111-163 Title 38 - Subchapter IV - Research 
and Education Corporations) laid the foundation for the creation of 
unique partnerships to support VA-approved research and education. It 
allowed for the establishment of private, state-chartered, nonprofit 
entities to provide flexible funding mechanisms for the administration 
of extramural funds (all funds other than those appropriated to VA). 
Today, 29 years later, there are 83 NPCs nationwide; each is an 
independent 501(c)(3). NPCs are physically located at or near VA 
medical centers in 44 states, Puerto Rico, and the District of 
Columbia. As reported in the VA's most recent 2015 annual report to 
Congress, the NPCs managed $271 million, a slight increase from the 
previous year. As a point of comparison, the appropriated budget for VA 
research in 2015 was $589M, so the NPCs' contributions are significant. 
Of the $271 million managed by NPCs in 2015, 70% derived from Federal 
sources such as the National Institutes for Health and the Department 
of Defense, while 30% derived from private industry, other nonprofit 
foundations, and individuals. These financial data points, however, can 
be deceiving. Seven nonprofits in California and one in Seattle combine 
to generate 45% of all NPC revenue and over 56% of all Federal revenue. 
We believe these nonprofits and the relationships they have with their 
academic affiliates are models that should be emulated across the 
country and should not be confined to the West Coast. Federal research 
awards offer greater stability and less risk then industry trials or 
foundation grants. Federal awards allow the research institutes to 
build an appropriate research corporation that grows capability and 
multiplies its ability to support the VA research program.
    More than 10 years ago these eight West Coast nonprofits and their 
academic affiliates worked out simple agreements whereby Federal 
research awards would be administered by the VA-affiliated foundation 
when the majority of effort was performed at the VA medical center and 
by the university when the majority of effort was performed at the 
university. NAVREF believes this practice is consistent with 
congressional intent and is fair to all parties involved. 
Unfortunately, at many VA medical centers across the country, this 
practice is not being followed. At many locations, there are 
understandings or informal agreements that all NIH awards will be 
administered by the university, regardless of where the majority of 
work is performed. At some locations this is broadened to include all 
Federal awards-the VA-affiliated foundations therefore handle only non-
Federal research grants. Admittedly, not all NPCs have the manpower or 
capability to administer Federal awards. But without the prospect of a 
Federal award, these same research corporations have had little 
motivation to build the capability. When Dr. Jeffrey Moore became 
executive director of the Cleveland VA Medical Research & Education 
Foundation (CVAMREF) four years ago, the Cleveland NPC administered 
less than $100,000 in Federal awards and had annual revenues of 
approximately $700,000. He focused attention on Federal awards and 
successfully grew the operation to nearly $2.5 million in 2016 on the 
strength of Federal awards. As a result of this increased 
infrastructure and administrative capacity, he has also been able to 
dramatically increase support for industry-funded clinical trials.

SUCCESS STORIES

    As flexible funding mechanisms, the NPCs offer a multitude of 
services and benefits to VA research and education programs. This 
includes numerous benefits to the VAMC and the Veterans it serves, 
including the following 10 common support services:

      Renovate and upgrade VA research infrastructure
      Provide funds, staffing, and training support to VA 
Research and Institutional Review Boards
      Pay for expenses related to recruitment of research 
investigators to the VA system
      Fund seed grants to new investigators to aid them in 
establishing their VA research careers
      Fund training of VA personnel on a wide variety of topics
      Underwrite bridge funding for VA investigators who are 
between research grant awards
      Support travel and registration fees for VA personnel to 
attend scientific conferences
      Procure personnel, equipment, and supplies for VA-
approved research or education projects
      Host local and national educational conferences for VA 
personnel
      Act as fiscal agent for philanthropic and other available 
research funds

    As seen from this listing, the nonprofit corporations are making 
daily contributions to their VAMC's research and education programs. 
Some of the simplest actions have the most powerful impacts.
    At the White River Junction VA Medical Center in Vermont in 2013, 
the Palliative Care Suite was not being used to its full potential to 
provide end-of-life care for Veterans. Due to staffing restrictions, 
Veterans admitted to the Palliative Care Suite were required to have 
either a family member or a person trained as an end-of-life companion 
to be present 24/7 during their stay in the suite. The VA nonprofit 
(VERANNE) worked with the Director of the Palliative Care Suite to 
obtain a $3,000 grant from the Vermont Veterans Fund to train 
volunteers as end-of-life companions. In their first class, they 
trained over 85 volunteers, many of whom were either VA employees or 
local Veterans. Since then, the Palliative Care Suite has been fully 
utilized, and they've seldom had to turn away anyone from using the 
suite for end-of-life care. The local newspaper ran a major story about 
this education program, which resulted in very positive press for the 
White River Junction VA Medical Center.
    At the Jesse Brown VA Medical Center in Chicago, the Westside 
Institute for Science and Education (WISE) served the VAMC by re-tiling 
the Veterinary Medical Unit prior to the Association for Assessment and 
Accreditation of Laboratory Animal Care (AAALAC) inspection to ensure 
continued certification as a pathogen-free barrier unit. The total 
investment for labor and supplies was only $20,000, but it was 
something the VA was unable to execute in a timely manner, so the NPC 
stepped in.
    Many NPCs also provide financial support for VAMC-hosted 
educational events that can total less than $10,000 annually but can be 
the difference between a successful, well-attended event and a failure. 
At WISE in 2016, four educational events supported in this manner with 
food and refreshments exceeded expectations including the annual Mental 
Health Summit [160 attendees], a Recreation Therapy Open House [80 
attendees], a Military Sexual Trauma Training [60 attendees], and 
Research Week activities [55 Veteran attendees; 80 attendees to 
Research Open House].
    But our NPCs have the capability and potential to have even greater 
impact. Veterans are under-represented in clinical trials, and robust 
NPCs are a primary mechanism for correcting this shortfall.
    As mentioned earlier, the Cleveland NPC has grown and developed 
capability over the last 4 years to have a much greater impact on the 
lives of Veterans. This year, CVAMREF is leading a multisite Phase 3, 
placebo-controlled, randomized, observer-blinded study to evaluate the 
efficacy, safety and tolerability of aluminum hydroxide containing C 
difficile vaccine administered in 3-dose regimen in adults 50 years and 
older. Subjects will be randomly assigned to receive C difficile 
vaccine or placebo. 16,000 people will be enrolled in 25 countries with 
potentially up to 3,000 veterans being enrolled in 18 VAs across the 
country (so far). Three years ago, CVMAREF did not have the capability 
to lead a study of this magnitude, but like several other NPCs, it has 
grown its operations and increased its capability to administer a wide 
variety of research efforts.
    Down the road from Cleveland, the Veterans Research Foundation of 
Pittsburgh established a Clinical Trials Center (CTC) in 2007. Today 
the CTC is the single portal of resources, expertise, and best 
practices for investigators and research staff to facilitate efficient, 
compliant and ethical study conduct and management. The CTC provides a 
location and resources for investigators to participate in multi-
therapeutic clinical drug & device trials in accordance with government 
and industry standards. The mission of the CTC includes increasing 
awareness of clinical trials in the community through education and 
community outreach activities and interfacing with institutional/
industry partners to support clinical research practice. The CTC has 
worked with over 50 commercial study sponsors and 15 Contract Research 
Organizations while running 40-50 trials per year. This capability has 
provided immense benefits to Veterans who now have the opportunity to 
receive the latest, cutting-edge therapies offered throughout the 
country.
    On the other side of the country at the Palo Alto Veterans 
Institute for Research (PAVIR) in Palo Alto, California, PAVIR is 
participating in a complicated study sponsored by a group of 
pharmaceutical companies that will help determine management guidelines 
and inform policies for opioid use. This is a particularly important 
and relevant study for Veterans given the high burden of pain and 
prevalence of opioid use within the Veterans Health Administration 
(VHA). Prescription opioid misuse continues to represent a public 
health crisis for the VHA. Recent evidence indicates high rates of 
mental health disorders (such as anxiety, depression, and post-
traumatic stress disorder) and co-existing high-risk opioid use within 
Veteran patient populations. Higher levels of opioid use generally may 
be related to higher rates of overdose, death, suicide, addiction, and 
other adverse outcomes such as motor vehicle accidents and falls. The 
results of this study will help determine management guidelines and 
inform policies for opioid use for the many hundreds of thousands of 
VHA patients who take opioids daily.
    These are just a handful of current examples demonstrating the 
powerful impact NPCs can have on the lives of Veterans. NPC 
administration of Federal and non-Federal research awards offers 
superior benefits to both the VA and Veterans. NPCs are on site, close 
to the clinicians, researchers and patients. They focus on Veterans 
exclusively and they are cognizant of and compliant with all VA 
policies and regulations.
    We believe that several steps can be taken to further enable the 
NPCs to provide even greater support to Veterans and the VA's research 
and education programs. For the VA to realize the full potential of the 
NPCs, we propose three recommendations.

RECOMMENDATION #1

    Our first recommendation is that VA establish clear guidelines for 
the administration of extramural research activities that offer the NPC 
right of first refusal for all research efforts where the majority of 
effort occurs physically within the VA.
    Currently at many VA medical centers, Federal research grants are 
not being administered by the NPC even when the majority of effort 
research/study is occurring within VA. In many locations, these grants 
are being administered instead by the Academic Affiliate. We believe 
this practice contradicts the intent of Congress when the VA-affiliated 
nonprofits were established to provide such support. This practice also 
contradicts the recently updated VHA Directive 1200.02 ``Research 
Business Operations'' which states in regard to extramural research:
    ``Extramural funds are funds other than those specifically 
appropriated for VA research by Congress. These funds may be provided 
by other Federal agencies, state or local government agencies, non-
profit corporations or foundations, other charitable organizations, 
corporations and other private sector business entities, or an 
individual contributor. Such funds are to be administered through the 
VA Nonprofit Research and Education Corporation (NPC) or through the 
General Post Fund when possible.''
    In order to effectively implement and enforce this clear Directive, 
we recommend VA issue reporting requirements for each VA medical center 
to track what research projects are being administered through the 
local nonprofit corporation, what research projects are being 
administered elsewhere, the associated funding amounts, and the reason 
for any deviation from VHA Directive 1200.02.
    At most VA sites there is no clearly defined process for 
determining how research grant proposals are to be submitted and 
administered. Without a clearly structured process, the decision about 
where to submit the grant proposal is often left to the principal 
investigator. Leaving the decision to a person who has an appointment 
at both the VA and the academic affiliate places them in a conflict of 
interest situation with serious potential ramifications under 18 USC 
208. We believe that due to conflicts of interest associated with being 
a dual-appointee at the academic affiliate, principal investigators 
should not be making these decisions. A PI's relationship to the 
academic affiliate should not enter the decision-making process and the 
only way to remove the conflict is to remove the PI from the decision 
loop.
    Consider the following scenario, which is not uncommon: a VA 
investigator or PI is a 5/8 VA employee and 3/8 an employee of the 
affiliate; the affiliate has an interest in increasing its research 
activity; his/her Dean and department head are given performance 
objectives related to the annual volume of Federal research awards in 
their school or department; the more Federal awards a PI can generate 
for the university, the more stature a PI earns with the university; 
PIs can be compensated above the 40-hour work week if the university 
administers an NIH award, but not if the NPC administers the research 
award; PIs can accrue additional lab space and other benefits at the 
university based on the volume of research funding; and finally, the 
university is an attractive employer to PIs, particularly after earning 
a Federal retirement. In this scenario, a PI given the choice of where 
to administer a Federal research award has numerous personal and 
professional incentives to submit the award through the university, 
regardless where the majority of effort is being expended and despite 
what might be in the best interests of the VA. Under 18 USC 208, the VA 
has indicated that the PI clearly has conflicts of interest that would 
be difficult or impossible to mitigate without removing the PI from the 
decision process.
    Therefore, as a corollary to our ``right of first refusal'' 
recommendation, we further recommend that the local VA medical center 
research & development committee serve as the decision-maker for the 
administration of extramural research awards and provide regular 
reports to VA Central Office and/or the congressional oversight 
committees detailing where awards are being administered and why.

RECOMMENDATION #2

    Our second recommendation is that the VA initiate a review to 
determine the appropriate level of oversight required to ensure the 
nonprofit corporations are operating appropriately and effectively 
while retaining their independence as non-profit entities legislated to 
be flexible mechanisms outside of the Federal bureaucracy.
    The VA-affiliated nonprofits were designed by Congress to be non-
Federal entities so that they could provide flexible solutions to 
support research and education activities. The congressional 
authorizing language highlights the independence of NPCs in Title 38, 
 7361 (d), the enabling legislation for VA NPCs, by explicitly 
stating that ``(2) A corporation under this subchapter is not-(A) owned 
or controlled by the United States; or (B) an agency or instrumentality 
of the United States. Similarly, VHA Handbook 1200.17  2 (b) 
states that: ``NPCs are not owned or controlled by the Federal 
government, nor are they an agency or instrumentality of the Federal 
government.''
    The law further emphasizes this independence:

    ``Except as otherwise provided in this subchapter or under 
regulations prescribed by the Secretary, any corporation established 
under this subchapter, and its officers, directors and employees, shall 
be required to comply only with those Federal laws, regulations, and 
executive orders and directives that apply generally to private 
nonprofit corporations.''

    While Congress made clear its intent to establish independent 
nonprofit corporations to serve as flexible funding mechanisms for the 
conduct of VA research and education programs, other elements of the 
legislation ensured strategic alignment of the nonprofits with their VA 
medical centers. Like all nonprofits, each NPC is governed by a board 
of directors. The original legislation included a requirement that the 
NPC board of directors include the local VA Medical Center Director, 
Chief of Staff, Associate Chief of Staff for Research and Development, 
Associate Chief of Staff for Education, and a minimum of 2 Community 
Members (not federal employees). The requirement for these statutory 
positions ensures that the NPC remains aligned with the VA medical 
center or centers with which it is affiliated.
    In addition to board composition as a method to ensure alignment 
with the VA, the conduct of research administered at each NPC is 
subject to all VA regulations and oversight. Every research grant or 
award administered by an NPC must have a VA principal investigator and 
must be approved by the supported VAMC research and development 
committee. Similarly, the administration of any education activities 
must be approved by the supported VAMC education committee or 
equivalent body.
    Additionally, the VA established VHA Handbook 1200.17 with the 
stated reason to ``provide procedures and instructions governing 
Nonprofit Research and Education Corporations (NPC) created pursuant to 
Title 38 United States Code (U.S.C.) 7361 through 7366.'' VA's 
oversight responsibility of the NPCs is formally performed by the 
Nonprofit Oversight Board (NPOB), the Nonprofit Program Office (NPPO), 
and the VHA Chief Financial Officer (CFO). From paragraph 4 of VHA 
Handbook 1200.17 dated April 26, 2016:

    (1)Nonprofit Program Oversight Board (NPOB). The NPOB is VA's 
senior management oversight body for NPCs, as outlined in the NPOB 
charter. The NPOB is responsible for reviewing NPC activities for 
consistency with VA policy and interests, and for making 
recommendations through the Under Secretary for Health to the Secretary 
of Veterans Affairs regarding VA policy pertaining to NPCs.

    (2)Nonprofit Program Office (NPPO). The NPPO is a VHA program 
office that operates as a liaison between VHA and NPCs. The NPPO is 
responsible for coordinating policy regarding NPCs and provides 
oversight, guidance and education to ensure compliance with applicable 
regulations and VA policies affecting the operation and financial 
management of NPCs..

    (3)Chief Financial Officer (CFO). The VHA CFO exercises financial 
oversight of NPCs by review of NPPO activities and review of any audit 
of an NPC by independent auditors, as necessary. Results of such CFO 
reviews must be made available to the NPPO and NPOB through the Chief 
Research and Development Officer.

    Since their inception, the Nonprofit Oversight Board (NPOB) and the 
Nonprofit Program Office (NPPO) have served important roles and made 
significant contributions to the successes of the NPCs. However, NAVREF 
is concerned that over the years VA, with the best of intentions, has 
slowly exerted increasing levels of oversight (``mission creep'') that 
have led to reduced flexibility and threatens the independence of the 
nonprofits. Some examples of this reduced flexibility include allowing 
medical center directors to exercise individual hire/fire authority 
over nonprofit board members and executive directors; influencing 
compensation and work terms of executive directors; influencing 
staffing levels and office locations; directing how nonprofits file 
paperwork; dictating the frequency of budgetary reporting; directing 
the frequency of board meetings; and encouraging boards dominated by VA 
personnel, in contradiction to the legislative language cited above. 
These restrictive actions redirect attention and effort from the 
flexible roles the NPCs were intended to pursue. Our members believe 
that the VA should review its oversight framework and identify those 
essential aspects that must be continued and those non-essential 
aspects that should be modified or eliminated.
    For example, the NPCs are required to undergo regular independent 
audits based on their annual revenues and state laws. VHA Handbook 
1200.17 also directs, ``Each NPC with revenues in excess of $500,000 
for any year must obtain an independent audit of the financial 
statements of the NPC for that year.'' Furthermore, there is a federal 
requirement to conduct an independent audit if the nonprofit expends 
$750,000 or more in federal funds in a single year. With these various 
requirements in place, is it essential for VA to conduct additional 
financial reviews or is it duplicative?
    As a second example, the current VA triennial review procedure does 
not allow for a formal, well understood process to contest findings or 
resolve conflicts. Organizations like The Joint Commission, the 
Government Accountability Office, and the Internal Revenue Service 
employ well-documented and fair resolution procedures that we would 
like to see applied to VA reviews or audits. There should be a path by 
which the NPCs can safely voice concerns or objections and receive a 
fair and impartial hearing to reach a satisfactory resolution.
    NAVREF leadership would be happy to contribute to this assessment 
to help VA strike the optimal balance between oversight, independence, 
and flexibility that will allow the NPCs to thrive and to make even 
greater contributions to VA research and education activities.

RECOMMENDATION #3

    Our third recommendation is that the NIH modify its Grants Policy 
Statement to allow our NPCs to pay VA clinicians as Principal 
Investigators on the Institutes' research grants. NAVREF agrees that to 
stimulate and incentivize clinician/researchers it is appropriate to 
compensate them for the additional time and effort they invest in 
research beyond their VA clinical duties while off tour of duty. 
However, the NIH Grants Policy Statement specifically prohibits the 
NPCs from compensating PIs for this additional work, while academic 
affiliates are permitted to do so. We have not encountered this 
limitation when dealing with other Federal funding agencies such as the 
Department of Defense, Centers for Disease Control, and Department of 
Transportation. We believe the NIH limitation exacerbates the conflict 
of interest question that we previously addressed. NAVREF will continue 
to engage with policy officials at NIH to bring this situation to a 
favorable resolution.

CLOSING

    In closing, I wish to thank the Committee for its attention to and 
support of the VA's medical research program and for holding this 
hearing. Ultimately, NAVREF and the NPCs share the same goals as the 
VA-to improve the lives of Veterans. We only exist to facilitate and 
support the VA's research and education programs. My fellow executive 
directors and board members are honored to devote our personal and 
professional energies to facilitate scientific breakthroughs that can 
change the lives of Veterans, their family members, and all Americans. 
With your continued support, the VA-affiliated nonprofits will make 
even more powerful contributions to the VA research and education 
programs and the Veterans they serve.

                                 
         Prepared Statement of Christopher C. Colenda, MD, MPH
    Good morning and thank you for this opportunity to testify on 
behalf of the Association of American Medical Colleges (AAMC) regarding 
Department of Veterans Affairs (VA) relationships with U.S. medical 
schools and teaching hospitals for the benefit of our nation's 
Veterans. The AAMC looks forward to working with Congress and the 
Administration to ensure that the long-standing and critical 
partnerships between VA and these academic affiliates are preserved and 
enhanced. We share the VA's commitment to caring for our nation's 
Veterans through our joint missions of patient care, research, and 
education to improve access and quality of care for Veterans, both 
inside and outside the VA system.
    The AAMC is a not-for-profit association dedicated to transforming 
health care through innovative medical education, cutting-edge patient 
care, and groundbreaking medical research. Its members comprise all 147 
accredited U.S. and 17 accredited Canadian medical schools; nearly 400 
major teaching hospitals and health systems, including 51 VA medical 
centers; and more than 80 academic societies. Through these 
institutions and organizations, the AAMC serves the leaders of 
America's medical schools and teaching hospitals and their nearly 
160,000 faculty members, 83,000 medical students, and 115,000 resident 
physicians.
    The unique relationship between the VA and academic medicine dates 
to the end of World War II when the VA faced a severe shortage of 
physicians as nearly 16 million men and women returned from overseas, 
many with injuries and illnesses that would require health care for the 
rest of their lives. At the same time, many physicians were returning 
from the war without having completed residency training.
    The solution was VA-academic affiliations established under VA 
Policy Memorandum No. 2, making the VA an integral part of residency 
training for the nation's physicians. In return, the VA improved access 
and quality of care for our nation's Veterans. What started as a simple 
idea in a time of great need has developed into an unprecedented 
private-public partnership. Today, the VA has over 500 academic 
affiliations, and 127 VA facilities have affiliation agreements for 
physician education training with 135 U.S. medical schools. The AAMC 
encourages Congress and the Administration to build upon this past 
success to improve access and quality of care for the military service 
members who have bravely served our country.

THE ROLE OF ACADEMIC AFFILIATES IN CARING FOR VETERANS

    Many Veterans who use VA services face complex health care 
conditions, ranging from chronic diseases associated with aging, 
treatment and rehabilitation from polytrauma injuries and 
complications, and neuropsychiatric and behavioral disorders associated 
with traumatic brain injuries, post-traumatic stress (PTS), depression 
and the tragic risk of suicide. These conditions not only affect 
individual Veterans but they also impact their families and the 
communities in which they reside. It is heartbreaking to hear the 
stories of Veterans and their families who have suffered; who have not 
received responsive and timely care; and who appear to have been left 
behind as the nation continues to move forward. Our collective 
responsibility and moral obligation as a nation is to address these 
challenges directly and with empathic urgency.
    U.S. medical schools and teaching hospitals are committed to 
mobilizing the resources necessary to partner with the VA to solve the 
21st century problems of Veterans and their families. The AAMC as the 
membership organization for academic medicine would like to offer 
recommendations to ensure that we effectively partner with the VA to 
ensure that our nation's Veterans have access to the highest quality 
care, and to hold forth the promise that the next generation of 
physicians and health professionals will have the necessary 
competencies to care for Veterans, and all patients, across the care 
continuum.

Medical Education and Training

    The VA is an irreplaceable component of the U.S. medical education 
system. Each year, the VA helps train more than 20,000 individual 
medical students and more than 40,000 individual medical residents 
within its walls. As a system, the VA represents the largest training 
site for physicians, and funds approximately 10 percent of national 
graduate medical education (GME) costs annually. The GME relationship 
between the VA and academic affiliates does more than benefit learners 
and training programs. Under the supervision of faculty, many of whom 
have been jointly recruited by the medical school and the VA, residents 
and fellows provide substantial and invaluable direct patient care. The 
VA patient-learner dyad is also a cultural anchor for many young 
physicians who have never served in the nation's armed forces. Thus, 
their VA rotations expand their empathic understanding of what it means 
to ``serve and sacrifice'' for the nation. Without this GME 
partnership, care for Veterans inside and outside the VA system would 
be diminished.

Innovation from Veteran-Centric Research

    The combination of education, research, and patient care that 
occurs because of the close relationship and proximity among VA medical 
centers (VAMCs) and academic medical centers (AMCs) cultivates a 
culture of research curiosity and innovation. Medical faculty must be 
skilled in the latest clinical innovations to train the next generation 
physicians that will care for Veterans. State-of-the-art technology and 
groundbreaking treatments jump quickly from the research bench to the 
bedside to the care delivery system. The VA's intramural research 
program serves as a recruitment tool and sponsors numerous projects in 
areas that specifically benefit Veterans and the unique challenges they 
face - research that might otherwise be neglected in the private 
sector. Ultimately, we all benefit from breakthroughs at the VA, which 
have led to the cardiac pacemaker, CAT scans, kidney and liver 
transplantation, the nicotine patch, and numerous prosthetic 
developments.

Access to Complex Clinical Care

    Veterans require the entire spectrum of clinical care services: 
preventive services, primary care, and highly-specialized clinical 
treatment. The VA's ability to directly contract with academic 
affiliates allows for planning, staffing, and maintaining 
infrastructure for complex clinical care services that are scarcely 
available elsewhere. In this way, the AAMC supports the proposed VA 
Core Network that retains academic affiliates as an immediate extension 
of VA. Further, when well-functioning contractual relationships exist 
between these institutions, there are better outcomes for Veterans and 
more efficient and cost effective use of health care resources.

TRAINING THE NEXT GENERATION OF PHYSICIANS TO CARE FOR VETERANS

Ensuring Quality and Accountability of VA GME

    In the United States there are 792 institutional sponsors of 9,977 
residency training programs. Most programs are sponsored by teaching 
hospitals and medical schools, and predominantly are accredited by the 
Accreditation Council for Medical Education (ACGME). The ACGME is a 
private, 501(c)(3), not-for-profit organization that sets standards for 
U.S. graduate medical education (residency and fellowship) programs and 
the institutions that sponsor them, and renders accreditation decisions 
based on compliance with these standards. ACGME accreditation provides 
assurance that a sponsoring institution or program meets the quality 
standards (institutional and program requirements) of the specialty or 
subspecialty practice(s) for which it prepares its graduates. ACGME 
accreditation uses residency review committees staffed by volunteer 
specialty physician experts from the field to set accreditation 
standards and provide peer evaluation of sponsoring institutions and 
specialty and subspecialty residency and fellowship programs.
    ACGME standards expect diverse clinical training environments in 
order to expose future physicians to a wide variety of patients and 
clinical conditions. No single clinical training environment 
accomplishes that, thus residents rotate through multiple settings to 
gain clinical mastery. The VA is one of those important clinical 
settings to accomplish this core ACGME expectation and standard. With 
the exception of only a few programs, VA residency training is 
sponsored by an affiliated medical school or teaching hospital - an 
efficient arrangement that reduces administrative redundancy. Without 
these partnerships, most VA GME would be unable to meet the ACGME 
requirements as a stand-alone program. While there are considerable 
variability among VA medical centers, programs, and specialties, on 
average medical residents rotating through the VA spend approximately 
three months of a residency year at the VA (i.e., a quarter of their 
training).

VA Residency Training is Accredited by ACGME

    The VA mandates that sponsoring institutions maintain accreditation 
by ACGME for residency programs. As a result, GME that is conducted 
within VAMCs are accredited by ACGME and thereby meet the educational 
and training standards that have been established for each specialty 
program. The sponsoring institution, e.g., the medical school or 
teaching hospital, however, is the accountable party to the ACGME, and 
the ACGME continuously monitors training programs to ensure compliance 
with its standards, including through data collection, evaluation, 
surveys and site visits.

Meeting ACGME Residency Training Standards for VA Rotations

    To further clarify this relationship, when a resident rotates on a 
VAMC clinical rotation, that experience is part of the ACGME accredited 
program of the sponsoring institution and must meet the same ACGME 
standards as any other site. In this way, no matter where a resident 
rotates during training, the quality, the supervision, and all other 
standards will be met while the resident has the advantage of being 
educated in many different types of health care facilities. As one 
clear recognition that the VA will comply with ACGME standards, the VA 
requires that when a VAMC site participates in an ACGME accredited 
training program, it must evaluate the trainee's performance and 
conduct in mutual consultation with the program director and according 
to the guidelines outlined in the approved curriculum and accepted 
standards.

Resident/Faculty Survey Feedback

    ACGME annually surveys residents and faculty members to collect 
critical evaluations of components of their programs to assist in their 
review for the purposes of accreditation. The surveys are only 
accessible by those participating during specific windows during the 
academic year. These participation windows are communicated directly to 
institutions and programs via email. All accredited programs are 
required to meet a minimum level of participation compliance with the 
ACGME surveys. Additionally, VA operates its own Learner's Perception 
Survey to audit training experiences at VAMCs, and these data are used 
by the sponsoring institution for quality control and feedback 
purposes. According to results from the VA's Learners Perception 
Survey, residents that rotate through the VA are nearly twice as likely 
to consider employment at the VA.

GME Funding Accountability to CMS and Time/Attendance Reporting

    Teaching hospitals receive direct graduate medical education (DGME) 
payments from Medicare which are intended to pay Medicare's share of 
costs related to training residents in approved programs (including 
those accredited by ACGME), such as resident stipends and benefits, and 
faculty salaries. Among the requirements for hospitals to receive DGME, 
is that they submit to CMS, with their Medicare cost, report the Intern 
and Resident Information System (IRIS) report which tracks all 
rotations of all residents, whether they are training at the sponsoring 
institution, a VA facility, or elsewhere. These data allow the Medicare 
Administrative Contractors (MACs) to ensure that no resident is counted 
by multiple institutions for training during the same period of time. 
This ensures that when residents are rotating at VAMCs there is a 
record of their clinical rotation.

Physician Workforce Challenges Facing Both VA and Civilian Health Care 
    Institutions: The Need to Increase GME to Address Provider 
    Shortages

    Current VA physician shortages are symptomatic of a broader trend 
for the nation's health system. The AAMC projects a nationwide shortage 
of physicians between 40,800 and 104,900 physicians by 2030. Though 
these shortfalls will affect all Americans, the most vulnerable 
populations in underserved areas will be the first to feel the impact 
(e.g., Veterans heath, Medicare and Medicaid recipients, rural and 
urban community health center patients, and those served by the Indian 
Health Service).
    The AAMC sponsored a study conducted by the Life Science division 
of the global information company IHS Inc. The study estimates a 
shortfall of between 7,300 and 43,100 primary care physicians and 
between 33,500 and 61,800 non-primary care specialties. Similarly, an 
AAMC review of physician vacancies advertised by the VHA found that 
approximately two thirds were for non-primary care specialists, and 
about one-third were for primary care providers.
    At the undergraduate medical education (UGME) level U.S. medical 
schools have expanded enrollment by 30 percent since the mid-2000s. 
However, there has not been a commensurate increase in the number of 
GME residency training positions. The primary barrier to increasing 
residency training at teaching hospitals - and the U.S. physician 
workforce in turn - is the cap on Medicare GME financial support, which 
was established in 1997. To help VA address patient access and 
recruitment issues, the AAMC supports expanding U.S. graduate medical 
education.

Enhanced VA Funding for GME and Potential Funding Gaps for other 
    Resident Training Sites
    Funding graduate medical education in the U.S. healthcare system is 
complicated. Teaching hospitals receive direct graduate medical 
education (DGME) payments from Medicare which is intended to pay 
Medicare's share of costs related to training residents in approved 
programs (including those accredited by ACGME), such as resident 
stipends and benefits, and faculty salaries. The Budget Reconciliation 
Act of 1997, however, capped Medicare funding levels. Expansion of GME 
in U.S. teaching hospitals has occurred since 1997, but the sources of 
funding to support the additional residencies and residency slots have 
often come from hospital income, and these expansion slots have become 
a direct expense for AMCs. The nation's teaching hospitals recognize 
that this is an investment worth making for the future of health care 
in the United States. However, the GME expansion is also a tradeoff 
that these institutions make against other capital, clinical program 
advancement, other health professional educational investment, research 
and human resources. The AAMC endorses the Resident Physician Shortage 
Reduction Act of 2017 (H.R. 2267), which would allow Medicare to 
support 15,000 new slots over 5 years, and provides a preference for 
teaching hospitals that are affiliated with the VA.

VA Financial Support for GME

    Just as Medicare GME funding supports Medicare's share of training 
costs at institutions that care for Medicare beneficiaries, VA GME 
supports residency training based at VA medical centers. The Veterans 
Access, Choice, and Accountability Act of 2014 (VACAA, P.L. 113-146) 
instructs VA to add 1,500 GME residency slots over five years at VA 
facilities that are experiencing shortages. However, VA is the only 
federal agency that has expanded support for residencies to help 
address physician workforce shortages. Without an increase in GME 
support outside the VA, there may not be enough affiliate residency 
positions to accommodate this VA expansion.
    Recall that virtually all VA residency programs are sponsored by an 
affiliate medical school or teaching hospital and not by VAMCs. To 
successfully expand VA GME, VA estimates that affiliated teaching 
hospitals need two to three positions for every VA position to meet all 
ACGME program requirements. As such, increasing VA GME funding alone 
will not address the VA crisis, because many sponsoring institutions 
may not have the funding to accommodate the increased number of 
residents. Further, smaller training sites may have difficulty securing 
ACGME approval to increase the number of slots for a particular 
residency training program, and thereby not have the authority to 
expand the program to accommodate the added VA funding opportunity.
    This illustrates the complexity of GME and the fact that without a 
corresponding increase in GME support for the teaching hospital 
affiliates, VA medical centers will be unable to capitalize fully on 
increases in VA GME funding. As a first step, the AAMC supported 
legislation introduced in the 114th Congress that would have exempted 
medical residents partially funded under VACAA from the Medicare GME 
cap.

Additional Models for Physician Recruitment and Retention

    There are several federal programs that can serve as models for the 
VA to improve recruitment of physicians during residency training at 
the VA, including medical student loan repayment and immigration public 
service programs.

National Health Service Corps

    While medical education remains an excellent investment, the 
average indebtedness of medical school graduates in 2017 was $190,000. 
The National Health Service Corps (NHSC) offers scholarship and student 
loan repayment incentives in exchange for primary care practice in 
federally designated health professional shortage areas (HPSA). In FY 
2012, the NHSC created the Students to Service (S2S) Loan Repayment 
Program, which provides a recruitment incentive as medical students 
choose their specialty and begin their careers in residency training. 
NHSC S2S provides up to $120,000 for student loan repayment during 
medical residency, and in return physicians commit to a 3-year service 
obligation in a HPSA after they complete their training.

Conrad State 30 J-1 Visa Waiver Program

    The U.S. relies on immigrating physicians for a significant portion 
of patient care, especially in medically underserved communities. To 
practice medicine in any state, U.S. residency training is required for 
professional licensure. In the 2017 medical residency Match, more than 
3,800 positions were filled by non-U.S. citizen students. These 
immigrating physicians undergo rigorous screening by the Educational 
Commission for Foreign Medical Graduates as part of the visa process.
    The J-1 ``exchange visitor'' visa is the most common pathway for 
medical students from other countries to attend residency training in 
the United States. To prevent international ``brain drain'' the J-1 
visa requires participating physicians to practice for at least two 
years in their home country after completing their U.S. residency. The 
Conrad State 30 J-1 visa waiver program (``Conrad 30") enables state 
agencies to recruit these physicians to underserved areas for three 
years in exchange for waiving the home country practice requirement. 
Each year, Conrad 30 directs approximately 1,000 new physicians to 
underserved communities in nearly every state.

Uniformed Services University of the Health Sciences and the Public 
    Health Service

    The development, recruitment, and retention of innovative clinical 
leaders is central to the success of the VA's health care system. To 
better address leadership gaps at the VA during current and future 
physician workforce shortages, the VA can partner with the Uniformed 
Services University of the Health Sciences (USUHS) and the U.S. Public 
Health Service (PHS).
    Currently, USUHS medical school graduates each year are assigned to 
shortage areas as PHS officers. With VA financial support, new 
participants in this program could be commissioned into the PHS, attend 
USUHS, and agree to serve seven years with VA post-GME residency. These 
trainees' longitudinal exposure to VA presents a unique opportunity to 
create future physician leaders. As PHS commissioned officers, these 
physicians will be able to be deployed for national emergencies and, in 
turn, bring those skills and experiences back to the VA. It is our 
understanding that VA, USUHS, and PHS are already working on a draft 
memorandum of understanding, pending approval and funding. AAMC fully 
supports this innovative initiative and emphasizes the importance of 
similar leadership development programs.

Health Professions Scholarship Program

    Since 1972, the Health Professions Scholarship Program (HPSP) has 
been a critical source of trained healthcare professionals entering the 
U.S. military. The HPSP offers prospective military physicians a paid 
medical education, from one to four years, in exchange for service as a 
commissioned medical department officer. Programs are available in the 
United States Army, the United States Navy, and the United States Air 
Force.
    The incurred service obligation is generally one-for-one for every 
service-paid year of schooling, with a minimum of two years for 
physicians and three years for other specialties. Fulfillment of the 
obligation begins only after postgraduate training is completed. While 
in medical school, the recipient also earns a stipend in addition to 
paid education.

AAMC Recommendations

    1.Nationwide GME Increases: AAMC encourages Congress and the 
Administration to develop a mechanism that will allow affiliate 
teaching hospitals that are already at or above their 1997 Medicare GME 
cap to receive federal financial support for VACAA residents while they 
are training at a non-VA facility.

    2.Early Recruitment Increases: The AAMC recommends VA create public 
service programs tied to medical school and residency training similar 
to the HPSP, NHSC S2S, the Conrad 30, and the USUHS/PHS program to help 
recruit and retain physicians and future leaders earlier in their 
careers.

BOLSTERING VETERAN-CENTRIC RESEARCH TO IMPROVE CARE

    The history of research within the VA is legion and is a source of 
national pride. VA research has made critical contributions to 
advancing standards of care for Veterans in areas ranging from 
tuberculosis in the 1940s to immunoassay in the 1950s to today's 
ongoing projects dealing with Alzheimer's disease, developing and 
perfecting the DEKA advanced prosthetic arm and other inventions to 
help the recovery of Veterans grievously injured in war, studies in 
genomics and in chronic pain, cardiology, diabetes, and improved 
treatments for PTS and other mental health challenges in Veterans. 
These studies and their findings ultimately aid the health of all 
Americans.
    VA research is a completely intramural program that recruits 
clinicians to care for Veterans while conducting biomedical research. 
More than 70 percent of these clinicians are VA-funded researchers. VA 
also awards more than 500 career development grants each year designed 
to help retain its best and brightest researchers for long and 
productive careers in VA health care.
    VA researchers are well published (between 8,000 and 10,000 
refereed articles annually) and boast three Nobel laureates and seven 
awardees of the Lasker Award (the ``American Nobel Prize''); this level 
of success translates effectively from the bench to the Veteran's 
bedside. And last, through a nationwide array of synergistic 
relationships with other federal agencies, academic affiliates, 
nonprofit organizations, and for-profit industries, the program 
leverages a FY 2017 annual appropriation of $675 million into a $1.8 
billion research enterprise.

Sustaining VA Research Investment and Addressing Emerging Veteran 
    Research Needs

    The AAMC strongly believes funding for VA research must be steady 
and sustainable to meet current commitments while allowing for 
innovative scientific growth to address critical emerging needs. To 
that end, the AAMC endorses the Friends of VA Medical Care and Health 
Research (FOVA) and the Veterans Services Organizations' Independent 
Budget recommendation of $713 million for VA Medical and Prosthetic 
Research in FY 2018, a $38 million (5.6 percent) increase over the FY 
2017 comparable level.
    Despite documented success, since FY 2010 appropriated funding for 
VA research and development has lagged behind biomedical research 
inflation, resulting in a net loss of VA purchasing power. As estimated 
by the Department of Commerce Bureau of Economic Analysis and the 
National Institutes of Health (NIH), to maintain VA research at current 
service levels, the VA Medical and Prosthetic Research appropriation 
would require $19 million more in FY 2018 (a 2.8 percent increase over 
the FY 2017 appropriation). Should the availability of research awards 
decline as a function of budgetary policy, VA risks terminating ongoing 
research projects and losing these clinician researchers who are 
integral to providing direct care for our nation's Veterans. Numerous 
meritorious proposals for new VA research cannot be awarded without a 
significant infusion of additional funding for this vital program.
    Beyond inflation, the AAMC believes another $19 million in FY 2018 
is necessary for expanding research on conditions prevalent among newer 
Veterans as well as continuing inquiries into chronic conditions of 
aging Veterans from previous wartime periods, for example Alzheimer's 
disease, Parkinson's disease and other neurodegenerative illnesses that 
might have connection to wartime service.
    Additional funding will also help VA support emerging areas that 
remain critically underfunded, including:

      Post-deployment mental health concerns such as PTS, 
depression, anxiety, and suicide;
      The gender-specific health care needs of the growing 
population of women Veterans;
      Engineering and technology to improve the lives of 
Veterans with prosthetic systems that replace lost limbs or activate 
paralyzed nerves, muscles, and limbs;
      Studies dedicated to understanding chronic multi-symptom 
illnesses among Gulf War Veterans and the long-term health effects of 
potentially hazardous substances to which they may have been exposed; 
and
      Innovative health services strategies, such as telehealth 
and self-directed care, relatively new concepts that can lead to 
accessible, high-quality, cost-effective care for all Veterans, as VA 
works to address chronic patient backlogs and reduce wait times.

    The VA research program is uniquely positioned to advance genomic 
medicine through the Million Veteran Program (MVP), an effort that 
seeks to collect genetic samples and general health information from 1 
million Veterans over the next five years. To date, more than 500,000 
Veterans have enrolled in MVP. When completed, the MVP will constitute 
one of the largest genetic repositories in existence, offering 
tremendous potential to study the health of Veterans. While AAMC 
supports $65 million to support this transformative and innovative 
program, this program should not impede other critical VA research 
priorities.
    State-of-the-art research also requires state-of-the-art 
technology, equipment, and facilities. For decades, VA construction and 
maintenance appropriations have failed to provide the resources VA 
needs to replace, maintain, or upgrade its aging research facilities. 
The impact of this funding shortage was observed in a congressionally-
mandated report that found a clear need for research infrastructure 
improvements system-wide. Nearly 40 percent of the deficiencies found 
were designated ``Priority 1: Immediate needs, including corrective 
action to return components to normal service or operation; stop 
accelerated deterioration; replace items that are at or beyond their 
useful life; and/or correct life safety hazards.''
    The AAMC believes designating funds to specific VA research 
facilities is the only way to break this stalemate. In 2010, VA 
estimated that approximately $774 million would be needed to correct 
all of the deficiencies found throughout the system; only a fraction of 
that funding has been appropriated since. A follow-up report is already 
underway and will guide VA and Congress in further investment in VA 
research infrastructure to recruit the next generation of clinicians to 
care for the nation's next generation of Veterans. However, Congress 
needs to begin now to correct the most urgent of these known 
infrastructure deficiencies, especially those that concern life safety 
hazards for VA scientists and staff, and Veterans who volunteer as 
research subjects.

Stronger VA-Academic Relationships Through Joint Appointments

    The AAMC strongly supports joint appointments for research faculty 
between medical schools and affiliated VAMCs. It advances both 
institutions as has been detailed throughout this testimony. Simply 
put, faculty are the glue that binds a medical school with its 
affiliated VA to achieve our collective desired research outcomes. 
Unfortunately, confusion and challenges continue to exist, especially 
surrounding effort reporting and dual compensation.
    A 2010 Report by the Council on Government Relations (COGR) 
reviewed the considerable work that the VA and its affiliates have done 
to clarify the appointments and accountability process especially for 
research faculty. COGR's report provides useful background information 
and best practices for affiliated medical schools and VA to follow. The 
COGR report delineates background issues that have caused conflicts 
between university/medical school and VAs over matters such as: how 
faculty work effort is defined differently between university/medical 
schools and the VA; the value of memoranda of understanding (MOUs) 
between the university/medial schools and VA, a faculty member's Total 
Professional Activities; suggested approaches to for salary support 
from Federal grants, and approaches to establish a common language and 
approach to problem solving conflicts that inevitably arise among 
administrators from both the university/medical school and VA.
    The good news is that there has been considerable work accomplished 
over the last several years to better understand the independence of 
faculty appointment from VA appointment, total professional activities, 
develop model template appointment letters and MOU certification 
formats to harmonize the challenges of joint university/medical school 
and VA appointments. We have heard from several of our AAMC medical 
schools officials that relationships are quite good between the school 
and VA. Others note challenges. The AAMC believes that the COGR 
template outlined in their 2010 document can serve as a model for such 
joint appointments of faculty. The document outlines the recommended 
appointment language and how to harmonize percent effort of the 
university/medical school appointment and the eighths appointment 
methods by the VA.

Administering National Institutes of Health (NIH) Grants

    Like all federal agencies, the VA cannot be the recipient of a 
grant from another federal agency (such as the NIH). Likewise, the VA 
cannot receive facilities and administrative costs associated with 
grants from federal agencies. There are two common options for 
investigators with VA and academic affiliate appointments to conduct 
NIH funded research at the VA: administering the NIH grant through VA's 
academic affiliates or through VA Non-Profit Corporations (VA-NPC). 
Because NIH award administration is dependent on a variety of local 
factors, the VA Office of Research and Development allows the local 
VAMC to determine whether to use the academic affiliate or the VA-NPC. 
In many cases, the entity administering the grant is dictated by where 
the majority of the work takes place (i.e., the VA or the academic 
affiliate). Where the work is split between both sites, VAMCs can have 
the academic affiliate administering the grant subcontract with the VA-
NPC, or vice versa.
    In addition to supporting the aforementioned shared education and 
clinical missions, there are several reasons VAMC often choose to 
administer NIH grants through the academic affiliate. Sometimes there 
is no alternative: not all VAMCs have a VA-NPC and not all VA-NPCs are 
large enough to handle NIH grant administration. Academic affiliates 
are also able to offer high value resources, including medical 
libraries, core laboratory facilities at a reduced cost offered only to 
NIH funded investigators, university information technology resources, 
and oversight committees such as Institutional Review Board (IRB) or 
Animal Care and Use Committee (IACUC). These resources can be 
prohibitively expensive for VAMCs and VA-NPCs to support independently, 
and sharing with academic affiliates reduces unnecessary redundancies.
    NIH provides additional funding for facilities and administrative 
costs to the entity that administers the grant. This rate is based on 
the expenses for supporting research and is negotiated at intervals 
with the NIH. For an academic institution, the rate is usually greater 
than 50 percent, whereas the rate for VA-NPCs is usually in the 25 
percent range because they have fewer expenses. Some affiliates also 
set aside a portion the NIH facilities and administrative funding for 
the VAMC to support developmental activities, such as staff in the VAMC 
research office, bridge funding, and start up packages to recruit new 
faculty who will work at the VA.
    Likewise, the VA provides additional Veterans Equitable Resource 
Allocation (VERA) funding to VAMCs to support administration of VA 
research, including salary for dedicated research time, utilities, 
security, and human resources. The VA balances the academic affiliates' 
high value resources and higher NIH facilities and administrative rate 
when calculating VERA-eligible research expenditures; NIH grants 
administered by VA-NPCs are counted at 100 percent whereas NIH grants 
administered by academic affiliates are counted at only 75 percent, 
favoring use of VA-NPC.

AAMC Recommendations

    1.VA Medical and Prosthetic Research Funding Targets: The 
Administration and Congress should provide at least $713 million for 
the VA Medical and Prosthetic Research program for FY 2018 to support 
current research on the chronic conditions of aging Veterans, emerging 
research on conditions prevalent among younger Veterans, and the 
Million Veteran Program.

    2.Research Infrastructure Support: The Administration and Congress 
should provide funding for up to five major construction projects in VA 
research facilities in the amount of at least $50 million and 
appropriate $175 million in nonrecurring maintenance and for minor 
construction projects to address deficiencies identified in the 
independent VA research facilities review provided to Congress in 2012.

    3.Reducing Regulatory Burden: To reduce training redundancy and 
burden, the VA should recognize and not require duplication of 
accredited human subjects research, information privacy and security, 
biosafety and biosecurity, and animal care and use training provided by 
the academic affiliate.

    4.Maintaining Local Flexibility: Because NIH award administration 
is dependent on a variety of local factors (e.g., available research 
administration and support infrastructure) the AAMC believes that 
administration of NIH awards should be determined by the applicable 
VAMC in consultation with the VA-NPC and academic affiliate as 
appropriate.

    5.AAMC encourages the use of COGR model templates for the joint 
appointment of faculty to university/medical schools and VAs in order 
to clarify Total Professional Effort and reporting efforts for Federal 
and non-federal grants applications. Standardizing the approach will 
greatly reduce administrative conflict and improved faculty awareness 
and understanding.

IMPROVING VETERANS' ACCESS TO CARE AT ACADEMIC AFFILIATES

    The nation's major teaching hospitals - frequently with regional 
campuses and co-located near VAMCs - provide around-the-clock, onsite, 
and fully-staffed standby services for critically-ill and injured 
patients, including trauma centers, burn care units, comprehensive 
stroke centers, and surgical transplant services. While on paper there 
may be appeal to increasing Veteran's access to civilian health care 
services through fee-basis mechanisms like the Veterans Choice Program, 
this also has the potential to dilute Veterans' access to the very best 
care available.
    The rational is quite simple. For highly specialized complex 
clinical care, for example cardiac by-pass surgery, we know that heart 
centers that do high volumes of cardiac by-pass procedures have better 
outcomes than those who have less volumes. AMCs around the country make 
tremendous investments in their cardiovascular service lines, including 
capital equipment, human capital investment and protocol management to 
ensure topflight care. Many regional VAMCs neither have the budgetary 
strength, patient volumes or human capital to invest in these types of 
services in order to have comparable outcomes observed in civilian 
programs. Like with commercial and managed care organizations who 
preferentially contract with AMCs to ensure that their beneficiaries 
receive top line care, these same principles should be encouraged and 
embraced by the VA.

The VA's 2015 Plan to Consolidate Community Care Improves the Current 
    System

    The Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-
41) required the VA to ``develop a plan to consolidate all non-
Department provider programs by establishing a new, single program to 
be known as the `Veterans Choice Program' to furnish hospital care and 
medical services to Veterans enrolled in the system of patient 
enrollment established under section 1705(a) of title 38, United States 
Code, at non-Department facilities.''
    As proposed in the VA's 2015 plan, the AAMC supports a tiered 
network of providers in order to improve Veterans access to care at 
academic affiliates. The proposed VA Core Network would include federal 
and academic partners, and would be treated as a direct extension of VA 
care. The External Network would include a Standard Tier as well as a 
Preferred Tier for providers that demonstrate quality and value.
    Under the plan, AMCs would be able to continue contracting directly 
with the local VA Medical Center to provide clinical services. This 
contracting would be streamlined with national templates, but allow for 
local flexibility. Importantly, medical schools and teaching hospitals 
would also be eligible for fee-basis care under the new External 
Network that is reimbursed at Medicare rates with customized fee 
schedules for selected areas and scarce specialty services.
    The VA would be responsible for case management and referrals 
instead of third party administrators. Additionally, VA would accept 
academic affiliates' credentialing, with a new VA oversight committee 
to audit compliance with credentialing standards. The VA also plans to 
streamline referrals and health information sharing by automating these 
processes. The plan also calls for greater monitoring of outcomes and 
quality metrics for non-VA providers. VA is expected to utilize 
existing metrics, such as those under the Centers for Medicare and 
Medicaid (CMS) Hospital Value-Based Purchasing (VBP) program.

Improving VA Sole-Source Contracting with Affiliates

    As was stated earlier, today's AMCs are sites where quaternary and 
complex clinical care can be best delivered to Veterans who are in need 
of those services. Improving the contractual processes between AMCs and 
regional VAs or VISNs would greatly relieve the administrative burdens 
for all parties, and thereby enhance the coordination and continuity of 
care for Veterans who require complex care.
    While it is important to have performance standards and data, they 
will only confirm what we already know: the process for long-term, high 
value sole-source affiliate contracts (SSACs) is arduous, resulting in 
short-term SSACs as a fallback. In other words, the problem is the 
process itself, not the oversight of the process. The most frequently 
identified barrier is the additional review of contracts greater than 
$500,000 by the VA Office of Inspector General (OIG). To apply similar 
review to short-term contracts under $500,000 would only create the 
same problems we've seen with long-term, high-value SSACs.
    Short-term agreements are executed as services are about to expire 
and leave Veterans in a lurch. AAMC members frequently report that 
short-term contracts are used as placeholders for long-term, high-value 
contracts. Both VA medical centers and their affiliates would prefer 
long-term, high-value SSACs, but the process and OIG oversight prevents 
or significantly delays agreements. As such, the focus should be on 
improving the process of long-term, high-value SSACs, rather than 
imposing similar arduous oversight on short-term SSACs.
    In addition to improving turnaround for SSAC development and 
approval, the contracting rules for the VA are not designed with 
clinical services in mind. The size of clinical services contracts 
varies greatly, but AAMC members report that virtually all 5-year 
contracts with the VA are between $2 million and $10 million, far 
exceeding the current $500,000 threshold for additional review. As an 
example, the AAMC estimates that contracts for the following clinical 
services would surpass $500,000 and trigger additional review:

      10 uncomplicated cardiac surgeries
      4 burn cases
      5 intensive care unit cases
      10 outpatient radiation cases
      10 esophageal cancer surgery cases

    The AAMC understands the need for federal oversight, but often the 
administrative bodies designed to review and enforce this oversight 
have a less than full understanding of the value in contracts with 
academic affiliates. This value is why VA Directive 1663 states, 
``Sole-source awards with affiliates must be considered the preferred 
option whenever education and supervision of graduate medical trainees 
is required (in the area of the service contracted). The contract cost 
cannot be the sole consideration in the decision on whether to sole 
source or to compete.''
    However, by VA's own estimation, once the decision to contract out 
care has been made, VA sole-source contracting with trusted academic 
affiliates takes longer than the formal competitive solicitation 
process - officially between 17-28 weeks compared to 14-18 weeks, 
respectively, according to VA Directive 1663. Sole-source contracts 
over $500,000 go through an additional 10-11 weeks of review (23-25 
weeks total) compared to contracts under $500,000. Contracts over $5 
million require an additional 3 weeks (26-28 weeks total). AAMC members 
report additional delays of up to 18 months as a result of the VA OIG 
pre-award audit for sole-source contracts that exceed $500,000.
    As a result of approval delays, it is necessary to execute a series 
of extensions or short-term contracts to continue to be paid for 
services. This requires a great deal of time and effort on the part of 
both the VA and the academic affiliate. In some cases, payment is 
delayed as a result of this process. In the long term, it makes it 
difficult for departments to recruit faculty for the VA because there 
is no commitment for future funding.

Establishing Joint Ventures With Academic Affiliates

    To better align the VA and the nation's medical schools and 
teaching hospitals, the AAMC supports the Enhanced Veterans Healthcare 
Act of 2017 (H.R. 2312). The VA and academic medicine have enjoyed over 
a 70-year history of affiliations to help care for those who have 
served this nation.
    This shared mission can be strengthened through joint ventures in 
research, education, and patient care. Already our institutions and 
medical faculty collaborate in these areas, but often VA lacks the 
administrative mechanisms to cooperatively increase medical personnel, 
services, equipment, infrastructure, and research capacity.
    Current authority for VA to coordinate health care resources with 
affiliates has been narrowly interpreted by VA Office of General 
Counsel and the OIG. VA can occupy and use non-VA space for limited 
purposes, but only under 6-month sharing agreements, 6-month revocable 
licenses, or 5-year leasing agreements - all of which have failed in 
practice.

AAMC Recommendations

    1.VA Core Network with Affiliates: AAMC supports implementation of 
the VA's 2015 plan to consolidate community care and create a tiered 
network that facilitates provider participation, but importantly does 
not dictate how Veterans will use the network. For academic affiliates 
who do not yet participate in the VA Choice Program, the Core Network 
will enable VA to sustain and strengthen relationships with affiliates 
and allow Veterans access to the high quality, timely care these 
affiliates deliver.

    2.Contracting Process Improvements: Sole-source contracting with 
trusted academic affiliates should not take longer than the competitive 
bid process. The AAMC recommends exempting sole-source contracting with 
academic affiliates from additional OIG review triggered by the 
$500,000 threshold, or raising the trigger to at least $2.5 million for 
5-year contracts.

    3.Pre-Approved Templates and Rates: As referenced in the VA's 
consolidation plan, the AAMC appreciates VA's willingness to develop 
pre-approved template contracts that reimburse certain services with at 
least Medicare rates. Additionally, we have discussed the development 
of standardized facilities and administrative rates to eliminate 
unnecessary negotiations and contract delays.

    4. Joint Ventures with Academic Affiliates: The Enhanced Veterans 
Healthcare Act of 2017 (H.R.2312) would direct the VA to enter into 
agreements for health care resources (including space) with schools of 
medicine and dentistry, university health science centers, and teaching 
hospitals to deliver care to our Veterans to meet the growing demand 
for Veteran health care services.

CONCLUSION

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to testify on these important issues. The VA is at a 
crossroads. VA GME, research, joint ventures, and the proposed Core 
Network of the Veterans Choice Program can strengthen the 70-year 
history of VA-academic affiliations and prepare our country for the 
next chapter of VA health care. The AAMC and our member institutions 
will continue to work with the Congress and the VA to address the 
challenges and opportunities to ultimately improve care for Veterans 
and all Americans.

                                 
                       Statements For The Record

                  Letter from Christian Kreipke, Ph.D
    To the Subcommittee on Investigations and Oversight, Department of 
Veteran's Affairs:
    It has been nearly a year since I first provided testimony to you 
regarding my harrowing experience following my disclosure that VA 
facilities are allegedly defrauding the American people via their 
academic partners. Please allow me to update you as to the current 
disposition of this case.
    By way of background, shortly after I made disclosures that Wayne 
State University (WSU) in Detroit, MI and John D. Dingell VAMC 
(JDDVAMC) were allegedly participating in wide-spread grant fraud I was 
terminated-first by WSU and then by JDDVAMC. However, they did not just 
terminate me. In an effort to reduce my credibility they accused me of 
committing scientific misconduct. When I first provided testimony to 
your committee I was in the middle of litigation against JDDVAMC 
through the Merit Systems Review Board brought on by VA's decision to 
terminate me, create a hostile work environment, and levy frivolous 
accusations of misconduct against me. Since this time, I received a 
verdict. The Judge ruled that, in fact, I was a whistleblower and that 
my disclosures were the source of the actions taken against me, 
including the misconduct proceedings. Of note to your committee, the 
Judge ruled that VA retaliated against me for exposing alleged 
corruption at WSU and that WSU coerced the VA to crush me. 
Specifically, the Judge stated in her decision,
    ``The record shows the strong academic relationship between the VA 
& WSU and the interplay among the VA, ORO [Office of Research 
Oversight, which provides oversight of VA research], ORI [Office of 
Research Integrity, which provides oversight over Universities and 
HHS], and WSU. An inference can clearly be made that Dr. Reeves 
[Director of JDDVAMC and Professor of Medicine at WSU] was attempting 
to appease WSU and protect their relationship by acquiescing in WSU's 
continued interference with the VA's employment of the appellant...I 
find the existence and motive to retaliate stemmed from the improper 
influence of WSU over the VA to take action against the appellant.''
    Thus, an independent arbiter of this situation concluded that 
Universities do exert undue influence over VA facilities with little 
scrutiny or accountability.
    It appeared for a brief moment that I would receive relief from 
this situation as the Judge ordered,
    ``.the agency to rescind its decisions to: (1) terminate the 
appellant's active Merit Review Award entitled ``Poly-trauma following 
brain injury: towards a combinatorial therapy''; and (2) to rescind its 
decision to terminate the appellant's term appointment for VA research; 
and (3) to rescind its decisions to debar the appellant from receiving 
VA funds for a period of 10 years.''
    Regrettably the current VA administration refuses to comply with 
the Judge's order, thus leaving me, a whistleblower, still 
uncompensated, unable to continue my work and left with a horrific 
smear on my character-a 10 year ban from receiving government funding. 
Yet again I find the very government that I am trying to protect being 
my worst enemy. As a U.S. citizen I continue to be treated as an enemy 
of the state, despite having been victorious in the Court of Law.
    My story does not end here. In the near future I will continue my 
nearly seven-year, extremely costly fight against corruption. I will be 
involved in yet another lawsuit-this time against the Department of 
Health and Human Services (HHS) which has supported Wayne State 
University in their quest to destroy me. Regrettably, HHS tried to 
engage the VA in supporting Wayne State's claims against me, adding to 
the tangled web of falsities aimed at ruining my integrity. What is the 
connection between these entities? HHS provides millions of dollars to 
Wayne State to support not only grants but also the Institute of 
Perinatology which is located at Wayne State. Further, numerous VA 
grants are joint efforts between VA and HHS. It is patently clear that 
HHS has little oversight of the money that it is handing to WSU (and 
other Universities). My disclosures are surely a horrific embarrassment 
to HHS, exposing their lack of concern over the disbursement of 
billions of dollars nationwide. It appears that the improper influence 
of Universities extends to multiple agencies within our Government.
    When I previously provided testimony to your committee I was also 
involved in a False Claims Act suit against WSU. Despite numerous 
witnesses corroborating my facts, the DOJ decided not to intervene. 
Thus, I was forced to litigate through my lawyer without the aid of the 
very government I was trying to protect. Though the Courts ruled that 
Universities are immune from any accountability, there was hope that 
the Supreme Court would analyze the current laws for whistleblowers in 
order to allow us to hold Universities accountable for defrauding the 
American people. Disappointingly, the Supreme Court decided to deny 
cert, thus allowing inconsistency across our Great Nation as to whether 
or not a University can be held accountable for fraud. Currently WSU 
and many other Universities are deemed to be immune from such 
accountability.
    In summary, under current interpretation of the law, Universities 
can continue to exploit our hard-earned tax dollars at the expense of 
health care and medical discovery. The VA continues to retaliate 
against those that are trying to assist in correcting monumental 
problems that plague the beleaguered Agency. And grant money continues 
to be diverted away from advances to help our Veteran's cope with a 
myriad of health issues. Taken as a whole, the system is horrifically 
broken.
    Is there hope? Despite having had my life ruined over a period of 
nearly seven years and now apparently having a system in which a 
Judge's opinion can be ignored, I still have hope in our Great Country 
and its Government Institutions. I believe in Democracy and I believe 
that it is this Democracy that will prove victorious in the end. It is 
in your hands, Members of Congress, to steer a flailing ship to calmer 
waters. I believe that you can make a difference by listening to us 
Whistleblowers, listening to what we are telling you, and allowing our 
testimonies to guide your decision making. By holding those that would 
defraud our fellow Americans accountable, we can stop this madness and 
allow for proper funding to guide medical discovery and better 
treatment for not only our Veterans but for each and every citizen.
    In conclusion, while I still am battling horrific corruption within 
the VA and WSU, I am confident that we Americans can count on our 
Elected Officials in Congress to fix the problems that have been 
exposed. I am confident that in the near future confidence in the VA 
can be restored. I am confident that in the near future Universities 
can return to their mission of training our future generations. This 
cannot happen spontaneously, however. Careful scrutiny of current law 
is required to hold those that would threaten the veracity of our Great 
Institutions accountable. Either through modifications of current law 
or creation of new laws, accountability must be achieved.
    As I have maintained throughout this horrific experience, I will 
continue to assist in any way that I can as I do believe that my 
sacrifices will not be in vain. I believe that these problems can and 
will be fixed. Thank you, in advance, for your continued efforts to try 
to implement improvements to the current System.

    Respectfully Submitted,

    Dr. Kreipke

                                 [all]
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