The Department of Veterans Affairs

Proposed Health Care Budget

amendment for fiscal year 2006

Hearing

before the

Committee on 

Veterans’ Affairs

House of Representatives

one hundred ninth congress

first session

July 21, 2005

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 109-18

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Committee on Veterans’ Affairs

Steve Buyer, Indiana, Chairman

Michael Bilirakis, Florida Lane Evans, Illinois, Ranking

Terry Everett, Alabama Bob Filner, California

Cliff Stearns, Florida Luis V. Gutierrez, Illinois

dan burton, Indiana Corrine Brown, Florida

Jerry Moran, Kansas Vic Snyder, Arkansas

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

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

Jeff Miller, Florida Dakota

John Boozman, Arkansas Ted Strickland, Ohio

Jeb Bradley, New Hampshire Darlene Hooley, Oregon

Ginny Brown-Waite, Florida Silvestre Reyes, Texas

Michael R. Turner, Ohio Shelley Berkley, Nevada

 Tom Udall, New Mexico

JAMES M. LARIVIERE, Staff Director

(II)
CONTENTS

July 21, 2005

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Department of Veterans Affairs Proposed Health Care Budget

 Amendment for Fiscal Year 2006 ..........................................

OPENING STATEMENTS

Chairman Buyer ......................................................................... 

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

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

Witnesses

Perlin, Jonathan B., M.D., Under Secretary for Health .........

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

STATEMENTS FOR THE RECORD

Hon. Ginny Brown-Waite ...........................................................

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

INFORMATION FOR THE RECORD

Graph depicting the Trend in VHA’s backlogs in Ambulatory

and specialty care appointments for the past 12 months ....

 

(III)
(1)

The Department of Veterans Affairs Proposed

Health Care budget amendment for 

fiscal year 2006

Wednesday, July 21, 2005

U.S. House of Representatives, 

Committee on Veterans’ Affairs,

Washington, D.C.

 The Committee met, pursuant to notice, at 2:08 p.m., in Room 334, 

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

Committee] presiding.

 Present: Representatives Buyer, Moran, Miller, Boozman, Bradley, Brown-Waite, Turner, Evans, Filner, Snyder, Michaud, Herseth, 

Strickland, Hooley, Berkley, and Udall.

 The Chairman. The full Committee on the House Veterans’ Affairs 

will come to order. It is July 21, 2005.

 The purpose of this hearing is to continue the oversight of the VA

health budget process for fiscal years 2005 and 2006.

 By mutual agreement with the Ranking Member, Mr. Evans, prior 

to the hearing, Mr. Evans and I will make brief opening remarks and 

members will be recognized for their statements and questions under 

the five minute rule.

 We are here this morning to bring accountability to this process. 

This is the very reason I elected to serve in this capacity as Chairman of this Committee, to bring accountability and credibility to this 

process.

We owe our veterans a dignified, predictable, responsive process 

that provides quality care and benefits today and into the future. Accountability and credibility will ensure that we have that process, 

one that veterans and taxpayers can trust.

 On June 30th, as we met here to determine what resources the administration needed to care for America’s veterans, I said “As Chairman, getting the VA budget right is about the most important thing I

can do. Without a good budget, how can we provide good care for our 

nation’s veterans? So, we are going to get the budget right.” That is 

what we are going to do.
2

 I am deeply disappointed at the recent series of events that led up 

to this hearing today. A few weeks ago before this Committee at a 

hearing regarding the budget modeling, we were informed about the 

VA’s shortfall. We subsequently asked the Secretary to let us know 

what he needed. He promptly returned with a number of $975 million, which you provided, Dr. Perlin, from your staff.

 Before the day was out, the House of Representatives voted the 

money that was requested to the penny, requested to us on a written 

transmittal from the President of the United States.

 As it turns out, that number now appears to be incorrect. Later we 

were told in fact that the true number for fiscal year 2005 may in fact 

require an additional $300 million more than what was originally 

stated.

 I am interested in your testimony today about circulation of that 

number and what it means.

 Later the administration delivered a $1.977 billion budget amendment for fiscal year 2006 to correct shortfalls in the VA’s budget for 

next year.

 In order for Congress to exercise its constitutional role to care for 

veterans, we need to rely on you to provide us timely and accurate 

information.

 I hold you, the senior management of the VA’s Health Administration, responsible for providing us that information. To date, I have 

not been pleased with some of the responses.

 I am disappointed by more than just numbers. We have discovered 

the VA’s inability to forecast demand. We have been briefed on the 

in excess of $325 million in the account receivables yet to be collected. 

The appointment backlogs continue to grow.

 Although, I will pause and say it is the doctors, the nurses, the hospital personnel of VHA who are the true heroes, to also include our 

volunteers. They care for our wounded and sick veterans every day 

in our hospitals and clinics throughout the VA system. I cannot help 

but feel as though they also are not being well served.

 I intend to push the bureaucracy at the VA to help change it and 

make it more responsive to the needs of our nation’s veterans. This 

Committee will ensure that veterans will receive their care.

 This Committee will hold you, Dr. Perlin, and members of your 

staff, accountable for this system.

 This Committee will take action to ensure the system works and 

that it serves our nation’s veterans and their families, from our oldest 

survivors of World War I to the most recently returned soldier, sailor, 

airman, Marine, Coast Guardman returning from Iraq, Afghanistan, 

the war on terror, and other places around the world and domestically, to also include our new veterans.

 That is what we are going to talk about this afternoon.

 At this point, I will yield to Mr. Evans for his opening remarks.
3

 Mr. Evans. Mr. Chairman, the last time we talked here, I expressed 

my anger over the inability of this Administration to level with us 

and level with America’s veterans as well. Today, I am still angry, 

but frankly, I am mostly puzzled.

The administration’s revised request for fiscal year 2006 still fails 

to fully address the needs of the VA for the upcoming fiscal year. At 

this late date, the administration still submits a request that relies 

upon policy proposals that have been overwhelmingly and repeatedly 

rejected by Congress. Why is this Administration still not leveling 

with us?

 The philosophy put forth is one to drive veterans out of the system, 

to kick needy veterans out of long term health care because they don’t 

have enough beds to serve the veterans, and to gloss over the real 

mental health care needs of our veterans.

We ask our men and women who serve to be willing to sacrifice all 

that they can give. To honestly tell us what resources you need to 

care for them is the least you can possibly do for them.

 This is an important hearing at this time. Mr. Chairman, I appreciate your setting this time this afternoon to hear these issues. 

Thank you. I yield back the balance of my time.

[The statement of Lane Evans appears on p. 47]

The Chairman. Thank you, Mr. Evans.

 We will hear testimony from Dr. Perlin, the Under Secretary for 

Health, Department of Veterans’ Affairs.

Your written testimony will be submitted for the record, and you 

are now recognized for five minutes.

STATEMENT OF JONATHAN B. PERLIN, M.D., UNDER SECRE-

 TARY FOR HEALTH; ACCOMPANIED BY LAURA J. MILLER,

 DEPUTY UNDER SECRETARY FOR HEALTH FOR OPERA-

 TIONS AND MANAGEMENT; AND JIMMY A. NORRIS, VET-

 ERANS’ HEALTH ADMINISTRATION CHIEF FINANCIAL

 OFFICER, DEPARTMENT OF VETERANS’ AFFAIRS

STATEMENT OF JONATHAN B. PERLIN

Dr. Perlin. Mr. Chairman, Ranking Member Evans, members of 

the Committee, thank you for your continuing support and ongoing 

dialogue regarding the interaction of budget forecasting and finances 

of the Veterans’ Health Administration.

 Accompanying me today are Ms. Laura Miller, Deputy Under Secretary for Operations and Management and Mr. Jimmy Norris, our 

Chief Financial Officer in VHA.

 Mr. Chairman, considering our budget planning and the request for 

fiscal year 2005 supplemental appropriations, as well as continuing 
4

resource needs for health services for 2006, I’d like to discuss what 

facts underlie the need for a fiscal year 2005 supplemental request.

VA requested a supplemental appropriation in the amount of $975 

million for fiscal year 2005 in June of this year. That supplemental 

request was needed because our expected forecasted growth, based 

on the actuarial model, was 2.3 percent, and VA discovered in March 

2005 that the actual growth had accelerated through mid-year 2005 

to 5.2 percent.

 This was a difference of 2.9 percent above the original projection. 

This higher than anticipated demand for VHA services was a major 

factor driving our need for a supplemental appropriation.

 Mr. Chairman, as we discussed during your June 23rd hearing, VA

uses an actuarial model to forecast patient demand and associated 

resource needs. Actuarial modeling is the most rational way to project resource needs of a health care system like VHA.

 As I noted at that hearing, that’s the approach used by the private 

sector. Unlike the private sector, however, with the projections used 

to formulate budgets for the next year or even the next open season, 

the Federal budget cycle requires budget formulation using data two 

and a half to three and a half years ahead of actual budget execution.

For example, the data used to formulate the budget in fiscal year 

2005 was derived from health care utilization data in fiscal year 2002. 

In this case, the last full year of data before the Department’s fiscal 

year 2005 budget formulation process began.

 Our actuarial model forecasted 2.3 percent annual growth in health 

care demand in fiscal year 2005. We discovered that growth had accelerated through mid-year 2005 to 5.2 percent above 2004. This 

constitutes a substantial increase in workload and resource requirements.

 As a result, our increased medical care costs in 2005 are $975 million based on increased patient demand and increased utilization of 

health care services.

 With respect to 2006, I believe that an additional $1.977 billion 

above the President’s budget request is needed to continue to provide 

timely, high quality care to enrolled veterans. This includes for 2006 

$300 million to replenish carry over funds that are being used in fiscal year 2005 to cover the increased average cost per patient.

 It also includes $677 million to cover an estimated two percent increase in the number of patients expected to seek care in 2006; $400 

million to recognize the expected cost of providing more intensive 

treatment, and $600 million to correct for the estimated cost of long 

term care.

 The administration has come forward to Congress with a proposal 

to provide VA with these additional resources. The total need for 

both years is $2.952 
5

billion, comprising a fiscal year 2005 supplemental request of $975 

million and a fiscal year 2006 budget amendment of $1.977 billion.

 These amounts assume enactment of the policies in the President’s 

budget. If Congress does not accept any of the policies in the President’s budget, additional resources to offset the cost of policies not 

enacted will be needed still.

 While the 2.9 percent variance among the number of patients projected is far better than the variances that occurred under the previous system, when VA budgets were projected simply by inflating an 

historical base, it is clear that we need to improve the models and 

methodologies’ performance, and we will work with you to improve 

not only the model and methodology, but the overall process. Indeed, 

we must.

 Planned improvements of the model include obtaining access to 

data on VA enrollees’ use of Medicaid, Tricare, and military treatment facilities, integrating VA’s long term care model into the actuarial model, and modeling additional services, such as dental care.

 In addition, we need to continue the progress already made with 

DOD to better engage them in data sharing and projections regarding 

OIF and OEF returnees.

 To address the average three year time lag in the budget process, 

we need to also better consider trends in the economy and environment that might not yet be incorporated into past data and then into 

the model.

 We can incorporate those and they can be provided to adjust our 

budget formulation process.

 Since VA is a low or no cost provider, we must better anticipate 

the effects on our system as the other health care options to veterans 

become more costly.

 Perhaps more importantly, the Secretary has committed to quarterly reviews with this Committee to address resource needs in light 

of VHA’s most current operational experience.

 Mr. Chairman, members of the Committee, in closing, I believe 

the resources requested in the supplemental appropriation for fiscal 

year 2005 proposed by the administration and the President’s budget 

amendment for fiscal year 2006 reflect the commitment and support 

by the administration to the veterans of this nation in meeting the 

increased demand for VHA health care services.

 Thank you for your support of veterans and VA, and for the opportunity to testify before you on this complex issue.

[The statement of Jonathan B. Perlin appears on p. 48]

 The Chairman. Thank you for your testimony, Dr. Perlin.

Dr. Perlin, have you briefed the Secretary of Veterans’ Affairs on 

VHA’s monthly performance reviews for the past 15 months as Acting Under Secretary for Health and now as the confirmed Under Sec-
6

retary for VHA?

Dr. Perlin. Mr. Chairman, the monthly performance review is held 

with the Deputy Under Secretary presiding, and the Deputy Secretary in turn discusses outcomes of the monthly performance review 

with the Secretary.

 The Chairman. At each of these briefings, how is then the Deputy 

Secretary briefed on the forecast budget requirements and actual 

budget execution?

Dr. Perlin. Mr. Chairman, the monthly performance review has 

virtually for number of veterans using the system, the number of patients as well as the number of enrollees, a column that shows the 

actual performance, the actual numbers.

 There is a lag time of one to two months, depending on how quickly 

we have the monthly performance review, and that is tracked against 

both the previous year, as well as against plan.

 The Chairman. What is the role of the VA’s corporate chief financial 

officer and the chief network officer in formulating and preparing the 

monthly review?

Dr. Perlin. The VHA’s chief financial officer has the role of actually consolidating the data used to put the book together from VHA

to provide to the Deputy Secretary. The execution of the resources, 

the line direction for that is provided by the Deputy Under Secretary 

for Operations and Management, formerly entitled the chief network 

officer.

 The Chairman. When did you inform the Deputy Secretary of a divergence between the 2005 budget and the monthly performances?

Dr. Perlin. That is really the key point. As we testified, with a lag 

of about 30 to 60 days, April and May, it was apparent that not only 

were the numbers of actual veterans tracking above projection, but 

that this was going to begin to have some impact on budget and not 

tracking with budget.

 I believe that would be the April/May monthly performance review 

when that began to diverge.

The Chairman. Have you been able to decipher why there was such 

a spike in May?

Dr. Perlin. Historically, usually there is sort of a seasonable trend 

in the number of veterans that come to us, but this was an unusually 

high number that came at this point in the year.

 What was apparent during the month of May was we were beginning to diverge not only in terms of the numbers of veterans seeking 

care, but in terms of the consumption of resources, such as use of capital dollars, non-recurring maintenance, non-critical equipment, for 

the actual operations, paying for the cost of care for those patients.

 The Chairman. When you sent this letter to Congress talking about 

you are going to have to move $600 million, that was in April when 

you informed the Appropriations Committee?
7

Dr. Perlin. Yes, I believe, Mr. Chairman, there was a letter from 

the Secretary informing the Appropriations Committee Chairman 

and Ranking Member of the desire to reprogram $600 million of capital, and I believe some other administrative dollars for reprogramming as well.

 The Chairman. What we have is this moving target. You inform 

Congress of $600 million to reprogram, and in the latter part of June, 

the testimony is the shortfall is $975 million. Then we come back 

after a July break and we say oops, now there could be another $300 

million that may be necessary.

 Is there another number that’s about to hit us? You know what 

I’m saying? This thing is tracking upward and is going to continue 

to track upward? Then what it does is it leads us to make sense next 

week to say, all right, fine, Senate, you chose this $1.5 million number. Is that where this thing is taking us? Besides, if you don’t use 

the extra monies, they are carried over into 2006, which affects your 

budget amendment that you bring to us.

 Help this Committee understand this.

Dr. Perlin. Mr. Chairman, that is a very valid concern. It’s one 

that I share. I sat with the Secretary and testified to $975 million at 

that hearing.

Clearly, my belief is that $975 million is what we need to go forward with for the 2005 replenishment, but during that week, there 

was a good deal of activity and looking into what the actual consumption was by querying the field, and additional resource consumption 

came to light.

 We could have done a better job. We should have had more timely 

data. I would concur with what I take is if not implicit, an explicit 

recommendation to improve the accountability, improve the timeliness, improve the clarity of the tracking of those funds.

 I know that in that process, we put the Secretary and we put you 

and this Committee in a tough situation.

The Chairman. Before I yield to Mr. Evans, when you make these 

separate requests like this, the Senate takes different action. We act 

on your requests. It becomes a credibility gap. There is an erosion 

here.

 Then there is this corrosive rhetoric that is used out there that has 

a depreciating effect upon the men and women in uniform and the 

families, and none of it is healthy.

 Right now, I yield to Mr. Evans.

 Mr. Evans. Mr. Chairman, at this time, I want to yield to my colleagues. I yield at this time to Mr. Filner.

 The Chairman. Mr. Filner, you are now recognized for five minutes.

Mr. Filner. I thank the Chairman and I thank the Ranking Member. Mr. Chairman, I appreciated the comments on accountability 
8

and some of the questions. I think we are more than a few months 

late and more than a few billion dollars short, however, because many 

of us were raising these exact same issues many, many months ago, 

and credibility was gone then, not just now.

 Dr. Perlin, I have watched this Administration over the last month, 

the VA, the OMB, the White House, basically show enormous disrespect for our veterans. I can see the insult to the veterans. I see it 

continuing today, sir.

 You continue to talk about a mathematical model as if you are 

locked up in a little room with only a computer there, and you get 

figures from three years ago and you plug them in.

 Talk to people outside who are in the hospitals. Talk to the veterans. Talk to the VSOs who put together the Independent Budget. 

Why were they right on the mark? When I go to my VA hospital in La 

Jolla, why do I see almost 1,000 veterans on a waiting list? I see 300 

vacancies in the hospital. I see nurses stations unfilled. I see people 

waiting a year for a dental appointment. Years for adjudication of 

their claims, though not in your bailiwick.

 All you have to do is ask any veteran and you know there is a problem.

 You keep talking about a model as if we are run by a mathematical 

model that didn’t account for a war going on. Don’t keep telling us 

that you are run by a model, which is what you keep doing.

 You know there is a war going on. You know people are coming 

back with PTSD. Talk to them. Get the resources in there. You 

know there are vacancies. You are still talking about a mathematical model.

 I think that is incredibly insulting to the veterans of this nation. 

 This side of the aisle tried, in fact, to add the resources that you 

are asking for now, and we kept being shot down by the other side, 

because it didn’t fit into their budget.

 Then you come to us today with another request, $1.97 billion for 

2006, when you know we have already refused to accept your policy 

recommendations on raising prescription drug fees and enrollment 

fees.

 You are acting as if, “oh, we didn’t know that happened.” What 

about the $1.2 billion to make up for the rejection of fees? Why don’t 

you ask for that now? We have rejected that policy, but you are not 

coming back with a number to cover those costs.

 Mr. Perlin, I don’t understand why you are still talking about a 

model. You are still talking about figures which have no relevancy to 

reality. You have been found out, and you are still talking about it as 

if you have not been found out.

Let me ask you specifically. Mr. Bolten, head of the OMB, has testified to the Budget Committee recently.

 He said each of the last three years, the VA health care system had 
9

half a billion dollars more than it needed. This is what the administration testified to, a half billion dollars more than it needed.

 In the face of waiting lists, in the face of vacancies, in the face of 

year long waits, do you agree with Mr. Bolten that you had half a billion dollars more than you needed, that was appropriated in the last 

three years?

 Sir, are you aware of that statement?

Dr. Perlin. I’m aware of the statement and I’m aware of the fact 

that indeed, there were carry overs.

I would like to answer your first question though.

 Mr. Filner. That was my first question.

Dr. Perlin. In my statement today, sir, if I may, I did note that if 

Congress does not accept any of the policies in the President’s budget, 

additional resources -- 

 Mr. Filner. We already turned them down. You are acting as if 

you don’t know that, just like you didn’t know the war was going 

on. Get out of your computer room. Look at the reality. Talk to the 

veterans who put together this Independent Budget. Talk to us who 

go to our veterans’ hospitals and talk to veterans when we are in our 

districts.

 We hear these stories, and you think we are just politicians who 

don’t know what’s going on. We know what’s going on. You don’t 

know what’s going on.

 You better start learning what’s going on because you keep testifying as if we don’t know what’s going on.

 The Chairman talked about a lack of credibility. You don’t have 

any now. You continue to talk in the same old model.

 Do you know how many people are on waiting lists throughout the 

nation today, waiting for their first appointment, and how many vacancies there are in staff positions throughout the nation? Do you 

have that figure?

Dr. Perlin. Sir, there are approximately 25,000 today who are on 

waiting lists.

 Mr. Filner. 25,000? You are still talking about a model? Why don’t 

you talk about how you are going to serve those 25,000?

Dr. Perlin. That’s why we came forward with a supplemental -- 

 Mr. Filner. How many vacancies are there, staff vacancies, around 

the country?

Dr. Perlin. Sir, that’s why we came forward with the request.

 Mr. Filner. How many staff vacancies?

Dr. Perlin. What I can tell you is we are approximately 7,000 FTEE

above what we had predicted, just so we could provide timely services 

to veterans.

 Mr. Filner. That is not the question. I said how many vacancies to 

serve the veterans do we have now?

 I’m told in my VA hospital in San Diego there are 300 vacancies. 
10

You should have a list of every hospital and what their vacancies are. 

Do you have that?

Dr. Perlin. I could determine what number are available throughout the system. The fact of the matter is, we are approximately 7,000 

personnel higher than were predicted.

 Mr. Filner. I’m not asking what you predicted. You just told us the 

model is ridiculous. I want to know how many personnel we need 

to serve the veterans that we have and who are on the waiting lists. 

How many short are we?

Dr. Perlin. I’d have to come back.

 Mr. Filner. Come on, Dr. Perlin. This is what your job is. How 

many veterans we have to serve, do we have the facilities, do we have 

the personnel to serve them? You don’t even have those figures? How 

are you going to come up with the right number if you don’t even have 

these figures at your disposal?

I can tell you in my hospital what the figures are. That tells me how 

much money I need in the San Diego Medical Center. You should 

know that for every medical center.

 Your statement was completely irrelevant to the needs, and you 

don’t even have the information to answer the basic questions.

 I would yield back.

Dr. Perlin. We have 127 vacancies in your hospital at San Diego.

 Mr. Filner. How many in the whole country?

Dr. Perlin. I don’t know. I do know San Diego because your office 

requested that information.

 Mr. Filner. I know that figure. I want to know what the figure is 

for the whole country. How are you going to serve the veterans if you 

don’t know how many vacancies there are?

 The Chairman. I thank the gentleman for yielding back his time. I

appreciate your being responsive to Mr. Filner’s question, and please 

get that in a timely manner to him.

 Mr. Filner. For the record, he is not responsive.

 The Chairman. I would appreciate it, Dr. Perlin, if you would be 

responsive to the gentleman from California’s request.

Dr. Perlin. Yes, sir.

 The Chairman. I also think it would be very helpful in being responsive to his question when he made reference to the model.

You had already testified previously that the model is also used in 

the private sector, and there were concerns about the data and the 

assumptions.

 We are now getting into this and beginning to understand it a little 

bit better. You are also now having to deal with trying to get it right 

for 2005. We have to get this done before we leave for the August 

break. We have an 2006 budget amendment, and you are preparing 

the 2007 budget as we sit here.

 I think it would be very helpful to this Committee and responsive 
11

to Mr. Filner’s questioning, to know what changes you are making 

with regard to input of new data or changes in the assumptions.

 Obviously, you took something into account by giving us an 2006 

budget amendment and as you are working on 2007.

 I think that would be the best thing to be responsive to Mr. Filner’s 

concern.

Dr. Perlin. Thank you, Mr. Chairman, for the opportunity to be 

very clear on how the model needs to be improved. In fairness, this 

is how we identify what resource needs are for veterans and how we 

work together to identify a budget.

 As I stated, the formulation process to budget execution has an 

inherent lag time. It’s been arbitrary, that end of year data from the 

preceding year has been used. For instance, the 2005 budget was 

predicated on end of year 2002.

 One of the things that we are working with the actuary to do is 

move those data so they are rolling. Perhaps the most recent 18 

months, so it is a little bit closer to reality.

 We also know that veterans receive care in other environments, 

Medicaid, Tricare, military treatment facilities. We also know they 

have dental needs and long term care, and all five of those categories, 

Medicaid, Tricare, MTF direct care, dental care, long term care, have 

previously been excluded from the model. We are working with the 

actuary to include those.

 We are also looking to deconstruct how we failed in terms of getting 

it right this year. We had discussion previously on better sensitivity 

to separating service members as they become veterans.

 We are working with the Department of Defense to get more timely 

information, not just about separation data in general, but about the 

activation and predicted separation rates of Reserve members who 

may be called up and then become eligible for care.

 We believe those will be a number of features that will improve this 

model.

 You may say I’m still skeptical. How can you rely on a set of methodologies given the experience that we have had. The truth of the 

matter is we used to use the historical process. We used to just plus 

up on the historical base.

 Once we were off by ten percent in 2002. Unfortunately, we were 

short. The previous year, we were off by 11 percent. That year, it 

was in VA’s favor. Those degrees of variance or error are substantially more.

 I would tell you that the model is not inherently bad. The challenge is in the lag time and some of the additional data.

 I understand Mr. Filner’s concerns that the model doesn’t operate 

in isolation. These are real people coming to real VA, and we have a 

real time obligation to get it right. That is why Secretary Nicholson 

was absolutely passionate about -- 
12

 Mr. Filner. What is the difference if you get it right if OMB says 

you have too much money anyway? They are the ones making the 

final decisions.

 You didn’t answer my question if you agreed with his assessment 

that you had half a billion dollars more than you needed.

 The Chairman. I need to ask for regular order.

 Thank you for the answer to the question.

 Mr. Miller, Subcommittee Chairman on Disability Assistance and 

Memorial Affairs, is now recognized.

 Mr. Miller. Thank you, Mr. Chairman. I associate myself with 

most of the remarks of my colleague, Mr. Filner.

 Dr. Perlin, are you embarrassed? Are you embarrassed by what’s 

happening?

Dr. Perlin. I am embarrassed with what’s happening.

 Mr. Miller. Here today we celebrate the 75th anniversary of the 

VA, and all the good that the administration has done, and you have 

members of this Committee so angry about what’s going on.

 This is one of those Committees where everybody tries as best they 

can to de-politicize what’s going on because our ultimate goal is serving the veterans.

 Politics will always creep into it, but the decisions and votes that I

make are based on the information that you testify to and you provide 

and the administration does.

I find it hard to believe that if you do these quarterly reviews, that 

the information that you forecast through this model on is so stagnant, that it’s causing the problem.

 I think something that a lot of us probably want to know because it 

has affected every member on this Committee and every member of 

this Congress is when did VHA stop dis-enrolling beneficiaries that 

hadn’t been to the VA within a two year period? We are all hearing 

that from our veterans. If you will answer that first.

Dr. Perlin. Yes, sir. I will need to check because this has been a 

long-standing policy that if someone doesn’t come for a period of two 

years, we open up the slot for the primary care provider to new veterans. I believe that has been a policy. I will find out for you the date 

on which we began that.

 We require a primary care provider on average to have a panel of 

approximately 1,200 patients, and we want to make sure that we 

always open capacity for the newest patients, and that was the rationale behind that decision.

 Mr. Miller. You say it’s a policy. My next question is under what 

authority do you have to make that decision and when that decision 

was made, did you in fact inform Congress that you were going to be 

doing that?

 Real quick, I’ll tell you how we were informed. We got letters from 

veterans that came in and gave them to us. That is the notification 
13

that was made to us.

Dr. Perlin. Sir, I should be very careful in the terms. It’s not enrollment. It’s empaneling with a particular care provider, primary 

care provider. We do open the slot if the veteran does not come to 

that primary care provider after a period of two years.

 Mr. Miller. How was Congress notified that you were taking those 

steps? At what point?

Dr. Perlin. I don’t know. I would have to find that out for you, sir.

 Mr. Miller. On page three of your testimony in the second paragraph, you said “These amounts assume enactment of the policies 

in the President’s budget, and if Congress does not accept any of the 

policies in the President’s budget, additional resources to offset the 

cost of those will still be needed.”

 Explain that a little further.

 Mr. Perlin. Sir, in the budget that the VA put forward, there were 

four policies. One, requesting an enrollment fee. One for an increase 

of prescription co-pay. Both of those policies were Priority 7 and 8 

veterans. As well as two long term care policies, one associated with 

state veterans’ homes and one associated with VI.

 The total monetary effect of those or appropriation effect of those 

was approximately $1 billion, and absent enactment of that, in addition to the $1.977 billion that we have come forward with the presidential budget amendment request for, an additional $1 billion would 

be necessary.

 Mr. Miller. Surely, you are not implying that this Congress is the 

reason for the shortfall.

Dr. Perlin. No, sir.

 Mr. Miller. Because this Committee has said no to several of those 

recommendations. I don’t even understand why the inference is even 

in your testimony, because that has already been brought forward for 

authorization, and the answer was no.

Dr. Perlin. Yes, we understand that.

The Chairman. Mr. Michaud, you are now recognized.

 Mr. Michaud. Thank you, Mr. Chairman.

 Dr. Perlin, I believe part of the reason why you are spending so 

much time here with us is because the VA and the administration has 

failed to level with Congress and with our veterans. If you would tell 

us what you actually really need, then we could work in a bipartisan 

manner to try to address that.

 It goes back to the same questions that we keep asking over and 

over again, and we don’t get answers on, what is the original dollar 

figure that you asked for. We never seem to get the answer.

 You have been around for a while. Secretary Nicholson, when he 

was here, he said he was only there for a few months, he did not 

know, but what was the number that you have asked OMB for?

Dr. Perlin. The challenge now is, of course, that their assumptions 
14

were off. We have had very good dialogue with OMB on exactly what 

are our needs, based on our missed estimation in 2005 and 2006.

 Mr. Michaud. That’s not my question. My question is what was 

that number. I don’t care whether assumptions were off or not. It 

gets back to the very fundamental issue of whether or not you are 

requesting enough but OMB is not providing enough.

 It gets back to a question that Mr. Filner had asked dealing with 

Mr. Bolten’s comments that you requested more money than what 

you actually need. Mr. Filner’s question was “do you agree with Mr. 

Bolten’s assumption?” Have you asked for more money than what 

you need? Yes or no?

Dr. Perlin. In previous years, sir?

 Mr. Michaud. Do you agree with Mr. Bolten’s statement that VA

has asked for more money than they actually need?

Dr. Perlin. I’m not sure that was his statement. I don’t mean to be 

argumentative. I think he represented the fact that we carried over 

money in those years.

 Mr. Michaud. I quote “There has been three consecutive years preceding this one in which there was more money requested by the administration and more money appropriated by Congress for the medical care portion of veterans’ services than was actually needed in that 

year. The appropriations have exceeded the VA’s medical care needs 

in the preceding three years by over half a billion dollars in each of 

the preceding years.”

 My question is do you agree with that, that you have asked for 

more money than you need, and then the other question is do you 

support the provisions that allow you this two year authority for a 

portion of your funding?

Dr. Perlin. I would say that we requested what we felt we needed 

in all years. In terms of your second question, the two year authority, 

I believe you are referring to the supplemental appropriation.

 Mr. Michaud. The authority as far as the two year, using that carry 

over of money. You are allowed two years to use it. Do you agree 

with that language, and if so, why?

Dr. Perlin. Yes, sir. I think it gives us increased flexibility to spend 

responsibly. We want to make sure that given the shortfall that we 

are experiencing that we execute resources as quickly as possible, 

but never make decisions that are simply to execute funds before an 

arbitrary time period. We want to make sure they go in the best interest of veterans.

 Mr. Michaud. My next question, and I mentioned it when Secretary 

Nicholson was here, when he first testified before the Committee, and 

it was a question that I brought up because the Bangor Daily News in 

Maine has reported that VISN 1 had a budgetary shortfall for fiscal 

year 2005. This was in January and February, when they actually 

mentioned there was a shortfall. They clearly knew back then there 
15

was going to be a shortfall.

 My question is -- as a result of my meeting last week with the VA, 

I’ve learned there has been incidents where VISNs have actually 

been borrowing from one another for shortfalls, and VISN 1, which is 

Maine, they have been forced to borrow money.

 My question is how is this borrowing coordinated through the VA

headquarters, and do you track it from year to year?

Dr. Perlin. Congressman, it is not unprecedented to transfer funds 

from one network to another or to think allocations are absolutely 

perfect, I think, would be overly ambitious. It’s good, but it’s not perfect. We do periodically correct it when we need to.

 Let me ask Ms. Miller to comment on how that is managed.

Ms. Miller. Thank you, sir. You are accurate in that Network 1 

had the need for some funds for some non-recurring maintenance 

projects that were urgently needed and had utilized their non-recurring maintenance money for operations.

Working through central office, they did coordinate to utilize funds 

from another network until the 2006 budget, at which time they 

would return those funds.

 Mr. Michaud. The second part of that question, if I might, Mr. 

Chairman, is do you track that from year to year, and what was that 

total dollar amount, and how are you ever going to make that up if 

you are borrowing? Are you going to make it up with the additional 

funding in the upcoming budget cycle?

 Ms. Miller. Sir, this is an unusual situation. I’m not aware of this 

occurring on an ongoing basis. This is the only one that I am aware 

of in the recent past. We will track it. There is an expectation that 

those funds would be returned, and presumably, that would come out 

of the 2006 budget allocation.

 Mr. Michaud. You said you will track it, but have you been tracking 

it all along?

 Ms. Miller. Since there haven’t been any other situations that I’m 

aware of, we have not had the need to really track.

 Mr. Michaud. What effect, if I may, Mr. Chairman -- if the money 

is going to be paid back say from VISN 1, what effect is that going 

to have on that fiscal year’s budget, if they have to pay back from a 

previous year. It must have some effect on the services they are going to be able to provide veterans, particularly since we have seen a 

shortfall in the care and in funding.

 Ms. Miller. You’re correct, Congressman, that there will be an impact on their 2006 budget, but the issue was felt to be a timing issue 

in terms of moving forward with some projects that the network felt 

could not wait until fiscal year 2006.

 Mr. Michaud. Thank you, Mr. Chairman.

 The Chairman. Thank you. Mr. Bradley, you are recognized.

 Mr. Bradley. Thanking you, Mr. Chairman, Mr. Evans, for the 
16

leadership that you are displaying on this issue, trying to get to the 

bottom of the problem, trying to rationally solve the problem.

 We all get in a lather once in a while on this Committee, but I have 

to commend both of your gentlemen for really sticking up for the veterans and trying to resolve the problem.

 It would appear to me just in looking at some of the big budget 

holes that have come up, long term care is something that when you 

look out in the future, a three year model ought to do a much better 

job of estimating the cost of long term care, but that is something that 

a model, I would think, can adjust for.

 What the model evidently can adjust for, which makes sense, is 

the fact that we have had several hundred thousand people on the 

ground in that three year period. It would seem to me that is why, if 

we are going to solve this problem, you need to look a little bit outside 

the box of your model.

 Mr. Filner brought this up. That being the Independent Budget. 

When Secretary Nicholson was here, I asked him whether the VA

was starting to discuss the parameters of the Independent Budget 

with the authors of that budget to try and resolve this, to bring a little 

bit more transparency in, unfortunately, a little bit more credibility 

to this issue.

 This isn’t a question. It’s more of a statement. I would just urge 

you to think outside the box, especially where there is an issue of now 

just moving targets of 975 and 1.5, and now the 2006 budget.

 We are just left scratching our heads. The authors of the Independent Budget have seemingly done a much better job of anticipating 

what these costs are. It would seem appropriate, especially given the 

moving target nature of this, that if our goal here is to solve the problem, and I think it is, and that’s why I commended the Chairman and 

the Ranking Member, and certainly the members on the other side of 

the aisle want to solve the problem, we want to solve the problem.

 There are some experts out there that I think you ought to be talking to, and really talking to at great length and in great detail.

 Thank you, Mr. Chairman.

 The Chairman. Thank you. Ms. Hooley, may I make this statement? 

Dr. Perlin, Congress also has to deal with the military health delivery 

system and that model has been very challenging. They have testified here also with you.

Congress made a decision as we moved into the war that we would 

fund over and above from the supplemental. We have not done that 

as a policy decision with regard to the VA.

 This is in fact your job, to receive. It is rather mind boggling, I

think, to all of us here, that surge in capacity, and how DOD transfers 

these patients to you, whether it’s a soldier, sailor, Marine, airman or 

Coast Guardman coming off active duty to new veteran status, or in 

particular, the ones right down there in Bethesda that go to your VA
17

for rehab and then you seek reimbursement.

 How all that wasn’t taken into account in a model is mind boggling 

to us. We are appreciative that you are going to be very responsive to 

this in your new models.

 Thank you, Mr. Bradley, for bringing it up.

 Ms. Hooley, you are now recognized.

 Ms. Hooley. Thank you, Mr. Chair, and thank you so much, and 

Ranking Member, for having this hearing, and to Mr. Bradley, we do 

get in a lather but it’s because every single person in this room cares 

about what happens to our veterans.

 When I’m out speaking to groups and I’m talking about veterans’ 

health care, let me tell you some of the things I say. I’m not an expert 

in this area, but here’s what I talk about when we talk about costs.

 I say we just haven’t kept up with costs, and the reason we haven’t 

kept up with costs is first of all, health care costs are going up faster 

than the cost of living. Also, because of the war, there are more people 

coming into the system. And as our veterans’ population ages more, 

it becomes more expensive. There is more long term health care.

 We have not lost as many lives in the war, but there have been a lot 

of wounded. Some of those are going to be extraordinarily expensive, 

and they are going to be severely damaged, and that is going to cost 

us more money. The cost of modern prosthesis has gone up.

 Those are all factors that we haven’t taken into account when we 

look at the VA budget. We need to increase funding to give adequate 

care to our veterans.

 My question is of just those things that a lay person talks about, 

those are the things that all of us know happen. How much of those 

are in your model? How much credence do you give all of that?

Dr. Perlin. Thank you for that very insightful question. The previous question from Mr. Bradley and Chairman Buyer’s comments that 

there are returning troops and a large number have come to VA, fortunately, most have not had significant physical injury. Some have 

had particularly egregious trauma.

 Ms. Hooley. Right.

Dr. Perlin. Given what we know now, and I think it’s fair criticism 

to say we should not look at life through a model but through the lens 

of the patients that we are taking care of.

We figure that in, and the numbers that I bring to you today, what 

this Administration put forward in terms of the supplemental and 

the President’s budget amendment, we looked specifically at the new 

prosthesis to make sure that any returning service member who 

needs state-of-the-art new equipment gets the state-of-the-art new 

equipment.

Those things have not historically been figured into the model. In 

fact, they have been called non-model items. I can assure you that 

they will be scrutinized, and at the risk of being repetitive, I think 
18

that’s why Secretary Nicholson is so passionate about meeting with 

this Committee quarterly to be able to discuss with the Chairman 

and Ranking Member the realities of what is going on in real time.

 Ms. Hooley. Do we take into account the fact that health care costs 

are going up faster than cost of living?

Dr. Perlin. Absolutely. The actuarial model figures in any trends 

in health care inflation, figures in new technologies. It doesn’t necessarily figure in those things that are unique to the service we provide, 

like prosthetics.

 Ms. Hooley. The fact that we have an aging veterans’ population as 

well, which is going to cost us more in long term health care and just 

health care in general?

Dr. Perlin. Yes, ma’am. The model looks at 55 different services 

being delivered, and to call it a ``model’’ implies it’s a black box of 

some kind, it’s a computer, you push a button. It’s not.

 It’s a set of very rigorous methodologies. It looks at age of the patient and geography, technologies.

 Ms. Hooley. I have a little bit of a problem with the model, only 

because it didn’t even recognize we were in a war.

 I just have to get this out because I’m very slow to get angry. There 

is not much that really really makes me angry. I am probably as angry as I ever get. That is the waiting lists. We are not talking about 

seven and eight priority veterans. I’m talking about waiting lists 

that are a year and a half/two years to get hip replacements or knee 

replacements or hip surgery.

 I happen to have had knee surgery. Anybody that I know that 

has had that kind of surgery, they wait until the last minute, until 

they really can’t stand it any longer, and then they go in and have 

surgery.

 I can’t imagine what it would be like if I needed hip replacement 

or knee surgery and when I got to the point of needing that surgery, 

I then had to wait another year or year and a half or two years, and 

the pain that one person would go through.

 I think that is so egregious and outrageous. We shouldn’t do that to 

people, I don’t care who they are, but certainly not to our veterans.

 My question is when are we going to shorten those lists for those 

people waiting for that kind of surgery?

Dr. Perlin. Right now, with enactment of that supplemental and 

the additional request for 2006. In each of the two years, a portion 

of those dollars are directed at reducing -- eliminating those waiting 

lists.

 Ms. Hooley. Are they going to reduce the waiting lists or are they 

going to eliminate the waiting lists? What do I tell my veterans that 

are waiting for those kinds of operations that are at the point that 

they can’t stand the pain any longer, and it’s not because of the doctors and the nurses and the VA hospitals. They do a wonderful job. 
19

They can only do with what they have.

Dr. Perlin. They will receive that care with better timeliness than 

in any other health sector.

 Ms. Hooley. No waiting lists, six months, three months, what are 

we talking about?

Dr. Perlin. Let me be clearer. Our goal, despite more veterans, and 

I would agree with you, there should be no veteran who has to wait, 

but despite these cases, the actual number of veterans seen within 

30 days of the desired appointment date, both primary and specialty 

care, is beyond 94 percent for specialty care and 95 percent for primary care.

 That’s the goal, to have all veterans seen within 30 days, and no 

veterans waiting over 90 days.

 I’ve just been benchmarking that with other countries and other 

health plans. If we could get to all those veterans being seen in those 

time parameters, VA would be the number one in the world.

 Ms. Hooley. That’s where I want it to be. Thank you.

Dr. Perlin. Thank you for your support.

 The Chairman. Dr. Boozman?

Dr. Boozman. Thank you, Mr. Chairman.

 I’ve been a pretty active member of the Committee since I’ve been 

here for the last four years and sat through many budget hearings, 

both here and privately and this and that.

 Again, I’ve really been supportive in giving the system what was 

asked for.

 My hospital has been affected in the same way as many have, with 

the longer -- quality of service is excellent if you are fortunate enough 

to get in in a reasonable length of time.

 Also, the lower priority folks, you know, who haven’t been there in 

a while, get the “we will be glad to see you in 18 months” rhetoric.

 I guess my question regards a couple of things. First of all, I know 

there are other hospitals that aren’t in that situation. We are the 

fifth fastest growing regions in the country right now, and yet with 

the growth, they have actually had physicians pulled to meet our 

growth, which doesn’t make a lot of sense.

 How do you determine that? Is that a political decision, where the 

dollars are going? What is the rationale behind what hospitals that 

are getting the dollars and those that aren’t getting funded to meet 

growth in demand?

 The second part of my question, is that you have come to us again. 

You said I need this amount of money. I’m very supportive of that.

 Mr. Filner and I had the opportunity to visit when we were congratulating the VA on its 75th anniversary. On the Floor, I said I’ll 

support whatever it takes to get this thing right.

I guess my second part reflects Ms. Hooley’s concerns. If we approve this amount of money for 2006 and we have the 2005 funding 
20

issues, when am I going to see the quality of the service that we have 

had for many years in the Fayetteville VA?

 When are we going to see that or are we going to see it go back to 

what I consider normal, that we have worked so hard for many years 

to get to that level. Now, all of a sudden, we are much below the standard that I see when I pour through the budget thing that you put out 

as far as your waiting times and quality.

Dr. Perlin. Congressman, let me begin by thanking you for your 

support of VA and veterans. Thank you also for your acknowledge of 

the quality of care.

 I think one of the pieces in context that I would be remiss if I didn’t 

provide is as evidenced this past week in U.S. News and World Report which referred to VA care as the top notch health care delivery 

system.

 There are waiting lists. In Fayetteville, you have indicated it is the 

fifth fastest growing area of the country. Indeed, the numbers that I 

have, over the past five years, the growth has been as high as 28.76 

percent growth in Fayetteville alone, which is significantly higher 

than the numbers we have been citing about the annualized growth 

of the entire system.

 You asked is there a fair distribution mechanism to make sure resources get to hospitals and the dollars should follow the patients. 

They haven’t been following fast enough. My goal with the resources 

that you are generously supporting is to make sure that the waiting 

lists are worked down so that all veterans get care and VA performance, as I mentioned.

 Thirty days for primary care and 30 days for specialty care for 95 

and 94 percent of all veterans, respectively, and no veterans waiting 

over 90 days, and under no circumstances a veteran with an emergency or need of urgent services ever waiting.

 That is our goal, and that’s what I intend to do with the resources.

Dr. Boozman. Again, with a growth of 28.6 at Fayetteville, which 

is significantly higher than other VA hospitals, why would you actually reduce physicians at the Fayetteville VA versus some place else? 

How are those decisions made?

Dr. Perlin. I think any decision to change personnel is made as a 

balance. I don’t know the particular situations or what type of physicians. Sometimes, you know, you hire a doctor in lieu of someone who 

is doing maintenance. Sometimes you consolidate, instead of a doctor, 

you might hire two nurse practitioners or physician assistants.

 I don’t know the particular instances at Fayetteville, but I’d be 

pleased to look into it.

Dr. Boozman. With the money that you are asking me to approve 

now, to support you with, will we go back to the level of service shortly 

that we experienced, or do you need to ask us for some more money? 

That’s my question.
21

 Is this enough. Do you need more. That’s what I want.

 Dr. Perlin. Thank you for your support. Given this process, I think 

you all would fully understand that I have no desire to be back here 

in this chair asking for more.

[Laughter.]

Dr. Perlin. I have scrutinized to the best of my ability the data that 

have come forward looking at the needs for prosthetics, the needs of 

returning service members, and the needs of the veterans who don’t 

fall into one of those unique categories, but go to every VI and clinic 

throughout the country, that do we have the right resources.

We have debated and discussed, and I am confident with funds in 

lieu of policy and with the supplemental, and with the President’s 

budget amendment, that gets us to being able to provide not just the 

highest quality of care, but timely and good service as you have requested and veterans deserve.

Dr. Boozman. Thank you.

 The Chairman. If I may, Mr. Strickland, what I have done is I have 

asked staff to pull recently received from the VA, the estimated waiting list as of July 15, 2005 for new enrollees and established patients. 

They are over 30 days.

 Mr. Strickland, if I may, as a follow up here off Ms. Hooley and Dr. 

Boozman, as I look at this, and I just shared this with Mr. Filner, in 

Charleston, you have estimated 1,638 patients. In Cleveland, 56. In 

Indianapolis, 287. Minneapolis, 807. Palo Alto, 3,789. Richmond, 

1,093. San Diego, 621, of which 527 is dental. In Tampa, 2,650.

 I’m sure we could take this out and put them across your entire 

spectrum, and I think the question that has been asked by two members of this Committee is, you have asked for additional funds, Congress is prepared to give you those funds, of which you are then contracting out to take these lists down, and the question that I think 

the members are trying to get to is, are these the resources that you 

believe are necessary to take this waiting list down?

Dr. Perlin. As I say, I come forward with as much confidence as I 

can possibly have that these are the resources to take down not only 

the waiting lists, but also veterans who are waiting beyond our service time frame of 30 days, the list you have just provided.

 The Chairman. All right. There will be follow up. You know you are 

going to be back here in the Spring.

 Mr. Strickland, you are now recognized.

 Mr. Strickland. Thank you, Mr. Chairman. Dr. Perlin, and Laura 

Miller -- someone I’ve known for a long time, used to be in my great 

state of Ohio -- and Mr. Norris.

 I feel for you. I really do. I think you have a very heavy responsibility. I think you are probably trying to do your best under really 
22

difficult circumstances.

 But I’m looking at your testimony, and I want to go back to this 

statement, after you laid out the financial needs, the budget numbers, you say “These amounts assume enactment of the policies in the 

President’s budget. If Congress does not accept any of these policies 

in the President’s budget, additional resources to offset the cost of 

those will still be needed.”

 That statement causes me to think that you are not dealing with 

us in good faith. How many times does this Congress on a bipartisan basis have to say no to those requests before you assume it is a 

settled matter, and that it is insulting to us that you would bring us 

numbers based upon the possibility of that happening. It’s not going 

to happen.

 The Republicans aren’t going to let it happen. We Democrats aren’t 

going to let it happen. Forget it. Bring us budget numbers that don’t 

make those assumptions.

 Don’t you think that’s a fair thing for us to ask?

Dr. Perlin. It is absolutely fair given the clear voice of the entirety 

of this Committee. The 1.977 does not include the President’s policies 

that were in the budget. That is, as I mentioned earlier, an additional 

$1 billion.

 I apologize for the semantics of that statement, even the tone of the 

expression, but you have asked for clarity on what the numbers are. 

1.977 is additional.

 From the congressional budgeting perspective, $1 billion is in lieu 

of those proposed policies, for a total of $2.977 billion.

 Mr. Strickland. You are asking for a sufficient amount of money 

without assuming there may be these other sources of revenue such 

as an user fee and the like? Is that what you are telling me?

Dr. Perlin. If the policy proposals are not enacted, we need $1 billion additional.

 Mr. Strickland. They are not going to be enacted. Why would that 

continue to be a part of the budget request?

Dr. Perlin. I think we are agreeing with the numbers. In lieu of 

them being enacted, the dollar figure is $1 billion, recognizing the 

sentiment of this, the Senate, and both Appropriations Committees. 

The amount of $1 billion plus $1.977 billion for a total of $2.977 billion.

 Mr. Strickland. Is that what you are asking for?

Dr. Perlin. That is the figure that I believe will be necessary, sir.

 Mr. Strickland. But is that what you are asking for?

Dr. Perlin. Yes, that is what I am here identifying the need for.

 Mr. Strickland. So, we can assume that the next time we get a 

budget request, those requests for user fees and increased costs for 

medicines will not be in it?

Dr. Perlin. I know that the sentiment of this Committee has for a 
23

number of years -- 

 Mr. Strickland. It’s the sentiment of the Congress, this Committee, 

certainly, but the Congress.

 Dr. Perlin, you are probably not responsible for this, but how can 

we believe that you are bringing us numbers and you are doing that 

in good faith when you are doing this?

 That puzzles me.

Dr. Perlin. I’m giving you an exact dollar figure in lieu of what the 

budgetary effect of those policies would be. I think I’m providing that 

very candidly, what the dollar value is.

 Mr. Strickland. Do you support those proposals? In your position, 

do you support those proposals to have an user fee and increase copayments for medicines?

Dr. Perlin. This was part of the President’s budget that the VA

brought forward. We testified to that effect.

 Mr. Strickland. That’s why I say I have sympathy for you, because 

I think you find yourselves in a position where you are having to take 

orders from someone. Maybe it’s OMB. Maybe it’s the President 

himself. I doubt it.

I doubt that a decision of this specificity would go all the way up to 

the President of the United States, but someone is doing the President a disservice if we continue to get a budget from the President 

that has these requests that the Congress has thoroughly and totally 

rejected.

 It just makes me wonder if we can believe or trust or accept in good 

faith anything that we get from the administration or from this department. I feel kind of sad about it, quite frankly.

 Mr. Chairman, I yield back the balance of my time.

 The Chairman. Thank you. Ms. Brown-Waite, you are now recognized.

 Ms. Brown-Waite. Thank you very much, Mr. Chairman.

 First of all, I’d like to request that an opening statement that I

have be admitted into the record.

 The Chairman. It shall be entered, hearing no objection.

[The statement of Ginny Brown-Waite appears on p. 52]

 Ms. Brown-Waite. Thank you. When I saw Secretary Nicholson 

wasn’t here, I figured he was begging for his old job back at the Vatican. It probably was a lot easier than being the VA Secretary.

 I have a few questions about veterans’ health care in general. I

certainly agree that veterans’ health care is top notch.

 Do you all do any comparisons, for example, of number of surgeries 

that your doctors perform versus out there in the other realm of medical care, i.e., the for profit or not for profit entities?

 The reason why I ask this is, and Ms. Hooley, you might want to 

hear this. I had a veteran who had a very aggressive jaw cancer. He 
24

was put on a very long waiting list for surgery. When I inquired, I

was told that the oncologist does one surgery a week. One surgery a 

week. I said I want that in writing, because if he does one surgery a 

week, I know about eight oncologists who want his job.

Could you all provide a comparison of caseload with the private 

sector? It’s amazing because when I did that, he suddenly got the 

surgeries scheduled for three weeks later.

 The other question that I have is does the VA treat non-veterans, 

not spouses, but non-veterans? I will wait for your answer.

Dr. Perlin. Your question on veterans is very complex. There are 

a couple of categories of people who fall into not necessarily veterans. 

CHAMPVA is a program that is for beneficiaries of 100 percent service connected veterans, alive or deceased. That would include many 

non-veteran spouses and children in that program.

VA will also provide humanitarian care. VA also provides care -- 

 Ms. Brown-Waite. Would you define ``humanitarian care?’’ This 

may be where we are going.

Dr. Perlin. Sure. Let me give you a personal example. I may be 

one of the few VA physicians to have delivered two babies, non-veterans. The women were there and I was in the emergency room. They 

were ready to deliver. That was essentially a circumstance that was 

unavoidable. The care was provided.

 An individual who has a medical emergency in the parking lot or 

hallway, we would provide care for.

 Ms. Brown-Waite. I appreciate that. I’m sure the women who were 

about to deliver appreciated that.

 Where I’m going with this is I have several VA facilities in my area. 

I’m not going to name the particular VA facility. I was there on a 

tour, saw a wonderful demonstration of a piece of equipment, kind 

of a contraption that you get hooked up onto for walking purposes, 

for anybody who had spinal cord injury. There was a very young girl 

there using this machine.

 I asked if she was a veteran. I guess when you get to be my age, 

everybody looks young. They said no, she wasn’t a veteran. She was 

in a car accident.

 My question is are we using VA resources that should be used for 

veterans for the civilian population? I’m not making a judgment as to 

whether it’s good, bad, or indifferent. I think we need to know where 

these VA dollars are going.

 Everyone of us goes home and hears stories about veterans not being cared for.

Dr. Perlin. Our first priority -- our system is there for veterans. 

I believe I could surmise what facility you are talking about, and I

believe another program, which happens to be a research program, 

a research program to improve the research, and when grants are 

obtained, NIH, for example, or from industry, they can be open to 
25

non-veterans as well, as part of a research program.

 I would imagine, because that is not a standard therapy, it’s very 

state-of-the-art, evaluative research, that was the circumstances under which you saw that individual. I actually believe it was at the 

same place I saw two veterans who essentially regained their walking because of that research. It’s truly incredible.

 Ms. Brown-Waite. It is an incredible program. My question is are 

veterans getting first dibs at it. Lord only knows, we have enough 

veterans with spinal cord injuries as a result of this war. I want to 

make sure that we are using these dollars for people who have served 

our country.

 That is what your organization is all about. That is what we believe we are funding.

Dr. Perlin. I would fully agree with you. The circumstances, as 

I say, was likely one of a research grant, but the priority has to be 

always to veterans.

 Ms. Brown-Waite. Thank you. Mr. Chairman, I would just like to 

make a request. You had said you expected to see him back here in 

the Spring. It looks as if we are not going to be out of here October 

1st, so we might want to get an update on exactly where the money is 

going and what they are doing and how the service levels are changing before the Spring, so whatever time you deem appropriate.

 I think we really need to follow up and make sure that the veterans 

are being served and that they are being served in a timely manner 

with the additional appropriations that we are providing.

 The Chairman. Before I respond to this, we will continue our oversight here. Some things are going to be very telling for us as we work 

through 2005, as we are into the October time frame, we are going to 

know a lot of things.

 We are going to know about this 2006 budget amendment, is that 

even going to be enough. Dr. Perlin and his staff will be putting together an FY 2007 budget request. We are going to be working with 

VHA on a bipartisan basis to ensure that with regard to the data and 

the assumptions, that they are done in a manner for which we also 

agree. I think that just needs to be done.

 We can work cooperatively with you and we can have these updated briefings, and we can bring you back here and brief the members 

with regard to the data lists and what the changes are going to be. 

Put us in a comfort zone.

 Where you are right now with the Committee is called earning back 

the trust. I think that is probably pretty accurate.

 Ms. Berkley, you are now recognized. Did that satisfy the gentlelady’s request?

 Ms. Brown-Waite. Yes.

 Ms. Berkley. Thank you, Mr. Chairman. First, welcome again. I

don’t envy your position and I don’t hold you responsible for this. I
26

don’t think it is your credibility at stake here.

 I’d like to follow up on Mr. Strickland’s line of questioning because 

I think we need to get this on the record. I don’t mean to put you on 

the hot seat but we are going to be revisiting this again. I just don’t 

relish that idea.

 On July 14th, Joshua Bolten, who is the director of OMB, sent a letter requesting additional monies for the VA to the President. In that 

letter, he explained about the 2005 supplemental and then he talked 

about the 2006 budget amendment.

 When you add up the numbers of the $300 million expected to carry 

over and the $677 million increase, which I think is low balling it, but 

we will go with that number, for $100 million for the increase in the 

cost per patient, and another $600 million to correct for the estimated 

cost of long term care, which I think is probably ball park, we get to 

the 1.977, which is what Mr. Bolten recommends to the President to 

bring forward to the United States Congress.

 Your testimony today talks about the total needed for both years, 

comprising the 2005 supplemental request of 975 and the 2006 budget amendment of 1.977. Then you go onto say, as Mr. Strickland 

pointed out, these amounts assume enactment of the policies in the 

President’s budget.

 Now, I think we are all pretty uniform in our belief and our knowledge that this has already been voted down. It’s not going to be 

brought forward. If it’s brought forward, it’s going to be voted down.

 According to your oral testimony, we are going to need an additional billion in addition to the 1.977. Mr. Bolten, the director of 

OMB, who should know better, has proposed to the President that he 

bring forward a number that is $1 billion short of what reality tells 

us we are going to need to satisfy the cost of providing service to our 

veterans; is that correct? Yes or no?

Dr. Perlin. No.

 Ms. Berkley. Not correct?

Dr. Perlin. No. I think everyone in this room understands the 

likelihood of those provisions being enacted. I think the director also 

appreciates that Congress, both Houses, have really not only understood they are not going to be enacted, but understood the need to 

replace the funds in lieu of those. He fully anticipates that as the one 

piece, and the 1.977 is the second piece.

 Ms. Berkley. In the letter that accompanied, I’m assuming, the documentation to the White House, the OMB recommended to the White 

House that they forward to the United States Congress, “I carefully 

reviewed this proposal and am satisfied that this is necessary at this 

time. I, therefore, join the Secretary of the VA in recommending that 

you transmit this amendment to Congress.”

 The reality is it is going to cost an extra billion dollars to care for 

our vets.
27

Dr. Perlin. I believe that is assumed.

Ms. Berkley. But not in this letter to the President.

 The actual number is $2.977 billion?

Dr. Perlin. Yes, ma’am; it is.

 Mr. Strickland. Will my colleague yield just a second?

 This just gets to the idea of good faith and credibility. Why wasn’t 

that billion a part of the request?

 I yield back to my friend. It’s frustrating.

 The Chairman. Ms. Berkley?

 Ms. Berkley. I’m anxious to hear Mr. Perlin’s response, although 

I would say that this gentleman doesn’t do policy, he does numbers. 

The policy of the VA or the OMB is to continue this myth that they 

are going to be able to generate revenue on the backs of the veterans, 

which Congress has already made very clear isn’t going to happen.

 I don’t think this gentleman is in a position to answer that question 

because he crunches the numbers. He doesn’t do the policy. I don’t 

want to put words in your mouth.

 I do have another question. Could you answer Mr. Strickland very 

quickly?

Dr. Perlin. I’m sorry. I can’t speak for OMB. Your very first words 

were you don’t envy my position. I would like this body to know that 

there is not a day that I don’t realize what an incredible privilege it is. 

and I do hope that I represent that in terms of helping our veterans.

 Ms. Berkley. You do. It’s pretty apparent you are not in this for 

the money. None of us are. I know you truly serve your country, and 

I appreciate that.

 This is what is concerning me. I got word while I’m here in Washington that OMB is all over my VA facilities such as they are, limited 

as they are, in Las Vegas right now, asking the same questions they 

asked five years ago, four years ago, three years ago, two years ago, 

and last year, and before the CARES study was initiated, before it 

was completed, before it was brought to bed or sent to bed, and before we had a VA appropriation that came out of this Congress, that 

provided for the funding for a medical center that we are in desperate 

need of.

 It worries me that with this shortfall, they are going to take money 

out of the capital budget, and to me, if we start robbing Peter to pay 

Paul, the people that I represent, my veterans, are going to be in a 

world of hurt.

 I left this Committee, you may have noticed, for a few minutes. I

had 200 Boy Scouts waiting to have a picture taken with me. I was 

out for 15 minutes. Believe me, this is not enough water to rehydrate. It is hot out there.

 While I am walking back here, I am thinking of my 80 year old 

veterans that are standing -- we are having a heat wave in Vegas 

right now. This is the 21st day of over 118 degrees. I have 80 year 
28

old veterans that are standing in the heat waiting for a shuttle to 

take them from location to location to location to get their health care 

needs met.

 My biggest concern, Dr. Perlin, is that we are going to start taking 

money out of the capital budget to cover the costs of the health care. 

Can you give me assurances that is not going to happen?

Dr. Perlin. I believe strongly in the need of the hospital in Las 

Vegas. It is a very poor way of doing business right now, shuttling between the multiple clinic sites. I could not be more passionate about 

support for that hospital.

 I would be remiss to speculate what I know or don’t know, but the 

budget I’ve brought forward assumes resources for operations and 

preservation of capital, to the best of my knowledge.

 Ms. Berkley. Thank you. Thank you, Mr. Chairman.

 The Chairman. Thank you. I now yield to Mr. Evans.

 Mr. Evans. Thank you, Mr. Chairman.

 Dr. Perlin, would you please break out the $1.97 billion request for 

us?

 The Chairman. Break out the $1.97 billion budget request for 2006 

is Mr. Evans’ question, a detailed break out, if you have it, please.

Dr. Perlin. Thank you, Ranking Member Evans. Let me break 

that out, and I will start at the highest level and then break it down 

to smaller groups.

 Let me start with $677 million. Of the $1.977 billion, $677 million 

is in anticipation of increased workload. It’s clear that the model did 

not predict the level of utilization of VA and more veterans came in. 

That is a piece of the workload.

In actually proportionately smaller dollar figures, there are a group 

of returning service members, and again, it’s been well discussed today that we needed to do better in terms of anticipating the returning service members from OEF and OIF, in that $677 million are 

resources as well to care for returning veterans of OEF and OIF.

 Included in that $677 million, as has also been pointed out today 

with respect to the waiting lists, we need to make sure that we work 

down those waiting lists, that we contract or hire or do what is necessary to get back on being within all the types of targets for timely care 

that veterans deserve and you have the right to expect.

That’s the first part, the $677 million.

 The second group of funds relate to long term care. Let me tell you 

that it falls into two pieces. Part of it was that the 2006 budget was 

constructed with an error built into it.

 At some point, it anticipated that the census would be lower in 

2005 going into 2006, and that required additional resources. As 

well, there was a technical error in the total to provide the long term 

care services necessary, $600 million.

 In addition, one of the things that has been apparent, both in the 
29

recent look at our budget and looking forward, is that the veterans 

coming to VA, in addition to there being more veterans, they are using more services. They are using more services perhaps because 

they are not getting those services in other environments. Perhaps 

they are using newer and more expensive pharmaceuticals.

 The measures, such as relative value units, things that measure 

procedures and time spent with patients, per patient, is actually 

higher.

$400 million of the $1.977 billion is for that increased utilization of 

services per veteran in 2006. That gets us up to $1.677 billion. The 

$300 million is actually attributable to similar increases in utilization, but to replenish the carry over and make whole the 2006 budget, 

getting us to the total of $1.977 billion.

 The Chairman. Mr. Evans yields back. Let’s do the math here real 

quick. Based on Mr. Evans’ question here, $1.677 plus the $300 million, if we approve 975 and then you say you need another 300, if the 

House, over the next few days, say we were to take the Senate’s number of 1.5, you now have $200 million over and above a present mark 

for 2005. We replenish now. We have an 2006 budget amendment.

 When we hear Senator Hutchinson in the Senate say if the House 

will take our 1.5, then the 2006 budget amendment comes down 300. 

That is where she gets that from; right?

Dr. Perlin. Yes, sir.

 The Chairman. I got it. Thank you. Ms. Herseth, you are now recognized.

 Ms. Herseth. Thank you, Mr. Chairman. Before I pose a couple 

of questions about long term care as I did in our last hearing, as 

you break that down for the $1.977 billion Administration budget request, as my colleagues have spun out here, the additional $1 billion, 

if the legislative changes aren’t made on user fees and co-pays, which 

everyone, I think, has acknowledged isn’t going to happen for fiscal 

year 2006 and likely beyond, separate from the concerns that have 

been raised procedurally about how this request came forward and 

how you are calculating it, where does the $1 billion go?

 Where does the additional $1 billion that you have indicated will be 

needed if those legislative changes aren’t made, where is the bulk of 

that billion dollars going?

Dr. Perlin. Thank you, Congresswoman, for that question. I can’t 

attribute that to a particular activity. It would restore the budget 

value of the cost reductions that those policies would have had. It 

would go to the general care of veterans, as would be represented in 

the formulation of the overall 2006 budget.

 Ms. Herseth. Is it my understanding that by law, the VA is required to provide long term care for service connected disabled veterans who are 70 percent or greater service connected disabled, as 

space allows?
30

Dr. Perlin. I believe that’s correct.

 Ms. Herseth. My understanding is space is available, but staff is 

not. Is that true?

Dr. Perlin. I would have to look at particular sites. For 70 percent 

or greater service connected veterans, if we don’t have staff, those 

veterans, I believe, are eligible for contracted community nursing 

home care as well.

 We owe those veterans the care, whether or not we have staff, and 

if there is an issue, I would be pleased to look into it.

 Ms. Herseth. Given some of what has already been stated in terms 

of the VA medical centers and what I would hope would be the quality 

of care in terms of the long term care provided, the preference here 

would be to have adequate resources for adequate staff, so we didn’t 

have to contract out to perhaps community long term care facilities 

that may or may not be at the same quality standards.

Dr. Perlin. Let me thank you and agree with you. I know our quality is exceptional in the nursing homes that we have. As a clinician 

who has practiced in two VA’s, Washington and Richmond, frequently a decision is often made by somebody in the family, if that’s a consideration. As proud as I am of that, I know many veterans’ families 

choose to have the veteran close by.

 Ms. Herseth. When we talked about how we broke down the $975 

million request for fiscal year 2005 a few weeks ago, I asked a little 

bit about the long term care. That was the second largest line item, I

think, in how it was broken down.

 At the time, you informed me there was a partnership or research 

undertaken with the Department of Veterans’ Affairs and Duke University, I believe, because there may have been either a technical error in the model or perhaps not an useful model to project long term 

care needs.

 Has there been any new information you can provide us? If we 

are going to be signing off on the assumptions in a model, it would 

be nice to know the progress of that research so we are ready for the 

long term are where we have seen an increase in health care costs as 

well.

Dr. Perlin. Thank you, Congresswoman, for that question. You 

are absolutely right. Previously, VA did not use an actuarial model 

to project care. That was part of the problem. We now contract with 

Duke University, and that has been running in parallel with the Millman.

 We wanted to make sure that we integrate that in all of our projections, but it is a new tool to use. I believe it will be more accurate.

 Ms. Herseth. It’s a new tool that wasn’t used in the fiscal year 2005 

projections or for fiscal year 2006, but will be for fiscal year 2007?

Dr. Perlin. I will have to check and find out to what degree it may 

apply to 2006. I think there has been some experimental work to 
31

validate on a small scale, a particular state or network, but not the 

entire formulation of the budget to this point.

 Ms. Herseth. You do anticipate that you will be ready to do that 

as you generate a proposal in terms of VA needs for fiscal year 2007?

Dr. Perlin. I believe so. I think I should get you the full details 

for the record so that I don’t misstate. My understanding is it is now 

ready to be used at scale.

 Ms. Herseth. I would appreciate that and think other members of 

the Committee would as well, in light of the Chairman’s objective for 

where we may be as we get more information in the Fall. That is an 

integral part of the additional information that we should have.

 Thank you. Thank you, Mr. Chairman. I yield back.

The Chairman. Thank you for your contribution. Dr. Snyder? You 

are now recognized.

Dr. Snyder. Thank you, Mr. Chairman.

 Dr. Perlin, what is your medical specialty?

Dr. Perlin. Internal medicine. I also have a Ph.D. in pharmacology.

Dr. Snyder. I’m always curious about this. You said it was a privilege for you to have that job. I consider it a privilege that we have you 

working for the VA system. I appreciate you doing it.

 When you prepared for this hearing today, do they still do that silly 

stuff where you have to have your written statement signed off on by 

OMB?

Dr. Perlin. Yes. The statements, all testimony is cleared through 

the Office of Management and Budget.

Dr. Snyder. Isn’t that like the silliest thing you have ever heard of? 

You don’t have to clear that statement with OMB.

[Laughter.]

Dr. Perlin. It is a complex process.

Dr. Snyder. That’s being polite.

 I apologize for being late. It would probably be kind of like the 

movie Groundhog Day for you, that I will ask you questions you have 

already dealt with.

 I am still perplexed from our last hearing, and you and I have not 

sat down and talked about this, on this whole actuarial model and 

why it has to run two and a half and three and a half years behind. I

don’t know anything in business that runs two and a half and three 

and a half years behind.

 Have you all had discussions in these last two or three months 

where you have said, you know, let’s target, six months from now, we 

are going to have a model that will have an 8.37 month turn around 

time. You couldn’t make a living in business with a three and a half 

year modeling time.
32

 What direction are we going in with that?

Dr. Perlin. I think that’s a very good point, and we have had discussions about more frequent runs of the model to make sure we are 

tracking closer to reality.

Dr. Snyder. Is that model something that is contracted out? Is that 

a proprietary formula and process?

Dr. Perlin. Yes. There are parts that are proprietary and it is contracted out to Millman, the actuary, who has extensive background. 

Her organization supports managed care organizations, health plans, 

as well as some other public programs, including Medicaid, and I believe they also do some work for the Department of Defense.

Dr. Snyder. It is possible to say good news/bad news. The bad news 

is we ain’t going to do this any more. The good news is you have a 

chance to bid on a contract to have an 8.5 month model. Isn’t that 

right? You can just throw that out there and see what people come 

up with?

Dr. Perlin. Yes. We could do it cyclically. We do it cyclically for 

each successive budget as well.

Dr. Snyder. What reporting requirements do you have to make to 

Congress, not just budgetary, but reporting requirements you have to 

make to Congress regarding access of care and quality of care?

Dr. Perlin. I consider it our responsibility to Congress reporting on 

anything that is asked of us. In fact, we have not formalized the particular document, but I believe when the Secretary intends to meet 

with this Committee quarterly, that he would put down a selection 

of markers.

 Let me share with you, if I may, what I look at. I look at six measuring baskets. I look at the quality of care. I look at things that are 

every patient specific, access to care, satisfaction with the services, 

measures of restorational function.

 I look at a measure called community health, which is a basket for 

those other areas, effectiveness in research and academic mission, 

and then cost effectiveness.

 I would submit those would be the things that we should be sharing 

with you as well.

Dr. Snyder. When you all sat down and looked at those things in 

whatever your most recent time frame was to look at those prior to 

all these budget shenanigans, did not anything stick out for you there 

that told you, you know, maybe our three and a half year, two and a 

half year actuarial model didn’t reflect things that jumped out.

 Did you notice that -- I’ll make something up -- our patient satisfaction rate went down because of waiting times. Our doctor satisfaction rate went down because they say I’m seeing the same number of 

patients but they are more complex now, and I’m having to work two 

hours overtime, or our waiting times, especially at clinics, our waiting times for new patient appointments.
33

 Is that not done in such a way that something would leap out to 

give you like the canary in the mine, something is happening out 

there, our models may be off?

Dr. Perlin. Yes. The area that is leaping out most prominently, as 

we have been discussing, and people have indicated, are waiting lists. 

That indicator is showing that we have the need for these additional 

resources.

Dr. Snyder. With the Chairman’s indulgence, my question -- I’m 

sorry I missed the discussions earlier.

 The last time that you looked at that, did you not have a discussion 

that said waiting times are way up compared to where they were a 

year ago, or our model must be wrong?

 Did you all have that discussion or just with a world so divorced, 

the budget analysis and the model were so separate from your quality and access control evaluations, that you didn’t put those two together, or somebody didn’t put those two together?

Dr. Perlin. We actually review the tracking to plan at the monthly 

performance review, and that was really the indicator that triggered 

these discussions to begin with.

 The question is how in the future can we avoid getting to this point, 

even better, making sure there is a better match of resources and 

needs. That is our task now.

Dr. Snyder. Thank you.

 The Chairman. Mr. Evans and I were up here talking based on Ms. 

Herseth’s question, so if you could help us here.

 You have the budget you submitted to us, that included the enrollment fees and increase in co-pays. Congress right now lacks any 

political will, it appears, to do anything on these.

 You submit to us an 2006 budget amendment for the 1.97. That 

amendment is added onto your budget, so overall, before Congress, is 

the enrollment fees and the increase in co-pays.

Congress elects not to act on those. What you said to Ms. Herseth 

is that your need then is approximately $3 billion, right, if we back 

those out?

 When the House passed its appropriation $1 billion over and above 

your mark, the House basically bought that out.

Dr. Perlin. Yes.

 The Chairman. Right? Not doing the fees and the co-pays.

Dr. Perlin. Exactly.

 The Chairman. When you come to us and ask for the $1.97 billion, 

that’s what you need now from Congress, over and above the House’s 

mark; correct?

Dr. Perlin. Yes, sir.

 The Chairman. I just wanted to make sure we were right on that. 

Mr. Filner?

 Mr. Filner. Thank you, Mr. Chairman.
34

 I’m glad you are here, Dr. Perlin. You have brought this whole 

Committee together. When the Republicans are associating themselves with my remarks, you have done a remarkable job.

[Laughter.]

 Mr. Filner. I thank you for that. I’m not in the camp that has said 

you’re not responsible. You are responsible for what goes here. You 

are accountable.

 We are still living in an unreal world here. I think all this talk 

about the model is irrelevant, frankly. That’s what technicians do. 

Then you have to live in the real world, and that’s your job.

 You can have someone doing a model. Then you have staff say, 

“oh, we have a war going on, did you take that into account? We have 

Hepatitis C now. We didn’t know about that last year.”

 That’s your job, and you didn’t do it. We all knew there was a 

problem before you found it. We all knew there were freezes on hiring, either verbally or in memos. People in your Administration send 

them to us. There are freezes on enrollment. There are freezes on 

maintenance.

 The Chairman. That’s shocking.

 Mr. Filner. Right. Everybody knew it. I don’t know how you can 

continue to say we just found out about it. We all knew about it. The 

question is again, how we are going to deal with it.

 I’m going to ask you again, directly, because when I say the model is 

irrelevant, not only is it irrelevant because you have to test it against 

the real world, but the OMB seems to have a far greater impact, no 

matter what your model says.

You asked for a figure for fiscal year 2006 from OMB. What was 

that figure relative to what OMB recommended to the Congress? 

That would be a more fair test of your model.

Dr. Perlin. As I said before, there is a good bit of additional knowledge now in terms of where we are with the model.

 Mr. Filner. Either answer the question or say you don’t want to, 

but don’t give us this bureaucratic nonsense.

I want to know what figure you sent up to OMB. Mr. Principi answered that question. He said they gave us $1.2 billion less than we 

asked for. Mr. Nicholson said, oh, I don’t know, I wasn’t there. You 

were there. What figure did you ask for?

Dr. Perlin. Obviously, this Committee has discussed the challenge 

and my desire to answer your question directly.

Mr. Filner. So, you can’t answer it directly? All right. You are 

probably better than you are appearing because you probably asked 

for a higher figure, so you are taking all the blame for something that 

may be not your fault.

 How many people are on the waiting lists for how long, and what 
35

are you going to do about it? How many staff vacancies exist for how 

long, and what are you going to do about it? What is the maintenance 

backlog, and how are they going to be fixed and in what time frame?

 This is what we do in our own house, what we do in our own budget. 

If my son needs dental work, I’m saying I don’t care what the model 

shows my salary is, I have to figure out when he’s going to get his 

dental work. We have an emergency, and I have to put the money 

there. What does that do to the rest of my budget and how are we 

going to make it up?

 We all do that every single day in our household accounts, as well 

as anybody who owns a business. We are just boggled by the fact that 

you can’t do this simple thing.

 Give us that information, and give us a time line for doing it. Nobody questions anybody’s motivation here or your concern for veterans. Everybody in your agency is concerned. I know that.

 You are forced to give us bureaucratic nonsense that is not in accord with the real world, and you become an uncredible spokesman, 

and the Administration becomes uncredible, because you are talking 

in a green eye shade world out there, and somebody is putting this 

model out and human intellect has no role here.

 I would like to see, the next time you testify, some of those measures, not these big baskets you are talking about. Tell us. Why do 

we have to come out and tell you how many people are on the waiting 

lists? You should tell us, and say what you are going to do about it.

Dr. Perlin. Sir, those are our data.

 Mr. Filner. When I asked you, you didn’t know it. I asked you earlier how many vacancies exist in our hospitals and how many people 

are on the waiting lists. You didn’t know. You didn’t tell me.

Dr. Perlin. I couldn’t memorize the exact number of vacancies, but 

I do know the exact number on the waiting lists.

 Mr. Filner. If there were vacancies in my agency, I could tell you 

the exact number. I could tell you. It’s my job to eliminate those 

vacancies. It’s my job to eliminate the waiting lists. It’s my job to 

eliminate the maintenance backlog. That’s your job. Our job is to 

support you in that, and you are not giving us any way that we can 

support you because you are not giving us any data.

 I yield back.

 The Chairman. Thank you. Mr. Michaud?

 Mr. Michaud. Thank you very much, Mr. Chairman. I, too, want to 

thank both you, Mr. Chairman, and Ranking Member Evans, for having this hearing. Mr. Chairman and Ranking Member, I agree with 

both of you that getting the VA budget right is very important to me, 

and I will work with you both to make sure we do that.

 I just want to follow up, Dr. Perlin and Ms. Miller, on a question 

earlier about VISNs borrowing money to make ends meet, and the 

response that they would have to pay that back.
36

 It’s my understanding that in VISN 1, they actually did borrow 

$11 million. My concern is with the capital needs and the increased 

amount of veterans coming back from Iraq and Afghanistan, if they 

had to borrow before and they have to pay that money back without 

additional funding, my concern is what is going to happen to VISN

1.

Have you looked at the specifics on why they borrowed the money 

and if they have to pay it back, are they going to be able to meet the 

needs for our veterans in VISN 1?

 The other part of that question is under the CARES process, because of the access issue, it recommended either four or five clinics, 

since Maine is such a rural state, in Maine, plus a CBOC.

 When you look at the borrowing they have to do, the shortfalls, 

whether or not that’s going to ever come to fruition.

 Ms. Miller. I think the issue of the borrowing money was really a 

timing issue more than anything else because the specific projects, 

which I’ve seen a list of, which did total about $11 million, were felt 

to be needed sooner than could be managed by waiting for the 2006 

budget.

Certainly, with the supplemental and with the discussions that are 

going on now about the 2006 amendment, I think that changes the 

scenario for the network, and more than likely would minimize the 

need for that loan.

 Mr. Michaud. My next question is to Dr. Perlin. The VA keeps referring to the highest priority veterans and the core group veterans. Do 

these definitions apply to the veterans that are on Priority 7 lists?

Dr. Perlin. Congressman, there is a policy or directive that emphasized a priority in terms of access to care for veterans who were 50 

percent or greater service connected. By definition, that would not 

include the Priority 7’s or Priority 8’s in the system.

 All veterans are meant to be served within our performance goals, 

which are 94 percent within 30 days for primary and 93 percent within 30 days for specialty care.

 Our actual performance is even higher, though as your colleagues 

have alluded to, I do know and do track, because those are our data, 

our waiting lists, where that is not the case.

 Mr. Michaud. In response to the funding shortfall, in January 

2003, there was suspended enrollment in Priority 8 veterans. The 

fiscal year 2006 budget request fails to provide any additional funding at all for Priority 8 veterans. Is that going to be the policy from 

here on out of the VA and the Administration, just to leave Priority 8 

veterans out there?

Dr. Perlin. The budget request would serve those Priority 8 veterans who are currently in the system. The budget request does not 

anticipate reopening enrollment to Priority 8 veterans.

 Mr. Michaud. Is that going to be the policy, that as long as the 
37

Administration is in office, we will never open for Priority 8’s new 

enrollment?

Dr. Perlin. I would be remiss to speculate on that.

 Mr. Michaud. No additional funding is anticipated for any new enrollments in Priority 8’s?

Dr. Perlin. Yes, sir. That is correct.

 Mr. Michaud. Thank you. Thank you, Mr. Chairman.

 The Chairman. Dr. Snyder?

Dr. Snyder. Thank you, Mr. Chairman.

 Dr. Perlin, in your exchange with Congressman Filner, the discussion about the waiting lists, did you say you had some numbers 

in mind with regard to waiting lists? I assume that was one of the 

things you and I were talking about, one of the six things you follow 

is waiting lists.

Dr. Perlin. Absolutely.

Dr. Snyder. Do you have numbers in mind?

Dr. Perlin. Yes, sir. There are approximately 25,000 veterans 

waiting for appointments to be scheduled at this moment.

Dr. Snyder. Both primary care and specialty?

Dr. Perlin. For their first new primary care visit.

Dr. Snyder. First new primary care visit.

Dr. Perlin. The numbers that Congressman Filner quoted were actually those veterans who were waiting beyond our target of serving 

those veterans within 30 days. I track those for the entire system, 

for the network, for the facility, and even the community based outpatient clinic.

 It is something that I am very acutely aware of because one of the 

reasons we track those is not because it is a bureaucratic or abstract 

number, it is real service to real veterans.

Dr. Snyder. That should be the kind of thing, as you and I were 

talking earlier, that as you follow on month to month and year to 

year, you start seeing a trend going in the wrong direction, it should 

say to you maybe our modeling is not working, our actuarial model.

Dr. Perlin. Yes, sir. That is the sort of thing that tells us either 

things are working or they aren’t. In fact, between that point, January of 2003, when that enrollment decision was made, and there were 

176,000 veterans without appointments scheduled, and 317,000 veterans waiting over six months for care, that was worked down to a 

low of about 5,000.

 I actually think -- this is not a question of performance, it’s a question of the lag between the time a veteran enrolls and when he gets 

his first appointment. I think the minimum is going to be somewhere 

around 5,000, and that’s just that period of time between enrollment 

and their first visit, so we are beyond that perfect steady state of getting veterans care as soon as they enroll.

Dr. Snyder. When you have looked at reasons, and you listed some 
38

in your written statement, I think, about why the model didn’t work, 

have you all thought some beyond kind of the world of the veterans’ 

health care system as to why it might not be tracking as well as you 

may have thought it did in the past?

 For example, it occurs to me that we have seen an erosion in the 

last few years of employer based health care. There may be veterans 

who no longer have employer based health care, so they had to start 

coming to the VA.

 Or they may have been in an employer based health care system 

or got priced out of the market because of preexisting conditions, had 

to come to the VA, and then you make reference to a more complicated patient, or that certain retirees, their retiree health care system, 

more companies are dropping that.

 Have you all looked at why you think you may be having more complicated patients and that the patients require more visits? Are those 

some of the things that have occurred to you all?

Dr. Perlin. Dr. Snyder, that is something that in fact I did allude 

to in my statement, and one of the things we need to improve, the 

conditions that we are tracking, health insurance coverage, coverage 

for particular services and pharmaceutical coverage.

 Pharmaceutical coverage, in particular, is something that is quite 

excellent about VA’s care, and we need to look at the effect of what’s 

going on in the broader environment even more carefully, and even 

more carefully regionally. It’s not necessarily consistent across the 

country, in terms of how that might attract veterans into VA.

Dr. Snyder. I think one of the problems we have as a country is we 

have not figured out how to do health care, no matter what system 

you are in, whether you are working for a private business or you are 

a retiree, or you are on Medicaid, Medicare, or military health care, 

Tricare.

 When one part of the system is struggling, which I think the private sector is, then the Government programs have to step in and 

make up the slack.

 Thank you, Mr. Chairman.

 The Chairman. Thank you very much. I would like to thank Mr. 

Evans for his indulgence. I have a series of questions to ask.

 Mr. Norris, what do you believe are the critical elements of the 

monthly performance review briefing?

 Mr. Norris. Thank you for the question, sir. I believe that obviously tracking the expenditures against the planned expenditures and 

understanding the reasons for the variances for that is important, as 

well as comparing it to the previous year to see how we are tracking 

in relation to what we expected to do overall.

 I think also looking at the workload, that we want to track against 

our plan and against the previous year’s experience as well. 

 Those, to me, are the two most important things. However, there 
39

are other areas, too, that one might want to look at.

 The Chairman. Let’s drill it down again to another step. How current is the data at the time of the monthly review?

 Mr. Norris. The financial data are the previous month’s end of 

month data.

 The Chairman. When you say February, that data is what?

 Mr. Norris. When we do a performance review in March, we would 

be looking at February data.

 The Chairman. Thirty days old, approximately,

 Mr. Norris. Probably less than 30 days old at that point, because 

we would do it some time during the month of March. Two to three 

weeks old.

 The workload data is somewhat more troublesome in terms of timeliness because we have to draw that from several databases, one, we 

have to wait for patient records to close in the field and those databases to be closed out.

We have to match that with data out of the enrollment files, to 

establish a priority group level, to ascertain where the growth and 

changes are occurring, and then we also have to associate it with 

costs and assign those costs to each of those group levels so that we 

understand better where the costs and workload are being incurred.

 Those data matchings cause us the lag beyond the level of time 

that we would like. More recently, we have been trying to estimate a 

month ahead of time or a month in advance of what we actually have 

solid data on and test that against later when we receive solid data to 

see if those estimates are in fact good enough for decision making.

 The Chairman. When you look at these numbers on a monthly basis, do you also then look at these numbers from the previous year?

 Mr. Norris. Yes, sir.

 The Chairman. When you look at them from the previous year, then 

you are able to chart a percentage up or percentage down?

 Mr. Norris. Correct.

 The Chairman. If I were to ask you to graph over the last year, could 

you tell us what that graph would look like?

 Mr. Norris. We started off fairly normally, and I believe we began 

to show -- we sort of begin to show slow growth through the early 

part of the year, and then we saw a fairly significant growth around 

the January time frame, in the January/February data, which we 

were looking at in the April/May time frame, and that’s when we 

discovered that the problem was more significant than we had earlier 

thought it to be.

 The Chairman. Would you be able to tell me what the surge is in 

February/March that caused you to recommend this letter be sent to 

Congress on the reprogramming of funds?

I guess what I’m trying to figure out is is the surge five percent, six 

percent, over and above 2005 to 2004? If it’s five or six percent but it’s 
40

based on 2002 data, it’s really much greater.

I’m trying to drill right into the numbers to figure out that not only 

is it the model, but maybe it’s our monthly review. I’m trying to understand.

 Mr. Norris. I understand. I think we had projected, using the data 

from 2002, and the model had projected a workload growth that would 

be about 2.3 percent over what we experienced in 2004.

 In the mid-year review time frame, when we did this in the April/

May time frame, we saw the growth was about 5.2 percent at that 

point, which was higher than we had predicted.

 The Chairman. Did you break out categories, as Mr. Michaud and 

Dr. Snyder had asked, regarding categories one through six versus 

seven’s and eight’s?

 Mr. Norris. Yes, sir.

 The Chairman. Can you tell us where that surge was coming from?

 Mr. Norris. Most of the growth was in the priority one through six, 

actually seeing some leveling out. There is still a bit of growth in the 

Priority 7’s and 8’s, but quite naturally because we are not bringing 

in more Priority 8 enrollees, that population number is fixed.

 Really the growth has been in the Priority 1 through 6.

 The Chairman. Out of the one through six’s, were you able to break 

out what is OIF and OEF?

 Mr. Norris. We had projected in our budget calculations about 

23,000 OIF/OEF veterans to use our services in 2005. We are now 

thinking we are going to see probably around 100,000 this year.

 The Chairman. Wow. This goes back to your testimony, Dr. Perlin, 

of almost three weeks ago with regard to this surge, which was not 

anticipated when this budget was put together; correct?

Dr. Perlin. Yes, sir.

 The Chairman. Who at VHA is responsible for tracking and trending the spend rate?

 Mr. Norris. I do that, sir.

 The Chairman. How do you plan to keep track of the budget trends 

in the future so there is not a repeat of this?

 Mr. Norris. I think we will continue to do all the things that we are 

now doing in terms of looking at the monthly spend rates against the 

plan, and obviously, we need to refine our plans somewhat in terms 

of the phasing of those expenditures throughout the year, and ensure 

that what we project for a particular month is a little bit tighter fit 

than we have had in the past.

 The Chairman. Of the original request, 975, how much of the $975 

million can actually be obligated before September 30th?

 Mr. Norris. Sir, that is an excellent question. It obviously depends 

on a lot of things. One, primarily, it depends on -- 

The Chairman. Let’s put it this way. What if, by next Friday, this issue is resolved, and you get your number, it’s $975 million to $1.5 bil-
41

lion. You are going to get a number. The President signs it. Bang.

 What can actually be obligated?

Mr. Norris. We think we can obligate the majority of the $975 million. However, it is dependent on -- some of the repair projects, for 

example, require a competitive bid process and contracts, et cetera.

 To the extent that we are almost now to the point of only having 

two months left in the fiscal year, to the extent that process drags on 

they may or may not be able to be awarded and that money actually 

obligated.

In financial parlay, we could commit that money, commit it to those 

particular projects, and it would be obligated in early fiscal year 

2006.

 We think we can obligate a fairly large portion of the $975 million.

The Chairman. When DOD reimburses the VA, at what rate is that 

calculated?

 Mr. Norris. Well, it depends on what the particular service is. We 

have an agreement with DOD on outpatient rates, that we will exchange services based on the CMAC, that’s the CHAMPUS maximum 

allowable charge rate, less ten percent, which works for us quite well 

in keeping things simple and encouraging sharing between the two 

departments.

 The inpatient rates are a little bit more problematic in that DOD

doesn’t have a good inpatient billing rate system yet, which they are 

working on and we are working with them.

 There are rates negotiated locally between facilities based on services available in either department’s facility, and the cost that they 

incur at those local facilities, so they can at least recover their costs.

The Chairman. When you testified about this increase in OIF/OEF 

workload, how will you forecast or predict future workload?

Mr. Norris. I think one of the things, as Dr. Perlin has stated, we 

need to get improved data from DOD, which we are working on doing, 

and getting more current data. I think that’s forthcoming.

 We will certainly use our most recent experience and looking at 

hopefully some discharge rates and those sorts of things that would 

enable us to get better projections of the impact of OEF/OIF or any 

other deployments around the world.

The Chairman. Based on this, Dr. Perlin, how timely is DOD’s data 

on separating OEF/OIF personnel provided to the VA?

Dr. Perlin. It’s gotten better. Every couple of months, it’s not a defined schedule, we get a computer file that shows separation. I think 

there are two approaches that I plan to take.

 One is to try to get that data even more timely. The other is to be 

very conservative this year and extrapolate from the experience and 

anticipate the same or accelerated levels of service members returning.

The Chairman. Does DOD provide the post-deployment assessments 
42

as an assessment tool for the VA?

Dr. Perlin. That is a complex question. Normally, those data are 

available. However, they are not electronic and they are not something that the service member might bring with them.

 The answer is if you ask is it available, the answer technically is 

yes. Is it available in a very practical and simple way? The answer 

would be no.

The Chairman. Ms. Miller, how often do you conference or teleconference with all your VISN directors?

 Ms. Miller. I have a weekly phone conference with them and a 

monthly meeting. That is with all of them as a group. In addition 

to that, on a quarterly basis, there are individual hour long briefings 

with each network director.

 The Chairman. Are there minutes from these meetings?

 Ms. Miller. No, sir. There are minutes for the monthly National 

Leadership Board, which includes all of the chief officers as well as 

the network directors. There are agenda’s for the weekly teleconferences, but there are no minutes.

 The Chairman. How candid are your VISN directors with you?

 Ms. Miller. I would say they are generally pretty candid.

 The Chairman. What has been the trend in VHA’s backlogs in ambulatory and specialty care appointments for the past 12 months?

Ms. Miller. Actually, the trend on the totals is a good trend. It is 

that we are seeing an increased proportion of the total appointments, 

the 95 percent in primary care, and the 94 percent in specialty care, 

within the 30 day time line, an improvement in those that are above 

30 days to bring them down below the 90 days, where we have seen 

a decremental performance is in those who are waiting for their first 

appointment.

 The Chairman. Would you please provide to the Committee graphics to support the answer that you have just given me?

 Ms. Miller. Yes, sir; I will.

[information requested is found on p. 55]

 The Chairman. Ms. Miller, have there been any documented cases 

where returning OIF/OEF service members have been denied care?

 Ms. Miller. Sir, not that I’m aware of. We have repeatedly reinforced to the field the importance of providing those services in a 

timely, compassionate and seamless manner.

 The Chairman. Do you know of any documented cases where returning OEF/OIF service members have been given an appointment 

that is more than 30 days?

 Ms. Miller. Yes, sir. I do believe there are cases of that type, and I

know specifically in the dental arena, we have a backlog of cases. We 

are working on those with $10 million that has been provided to the 

field to address that specific issue.
43

The Chairman. What has happened here is individuals, who are 

very upset, in particular, your critics, what they do is they latch onto 

the new veteran to say you don’t care about them or you are not funding them. You have heard all the rhetoric that’s out there.

 I’d like for you, Ms. Miller, at your next meeting with all these 

VISN directors, I want you to go back and ask them this question, 

please, on whether or not they know of any cases of OIF/OEF service 

members that have been denied any form of care.

 Ms. Miller. Yes, sir.

 The Chairman. I also would like to know immediate action taken in 

the field to ensure that any of these soldiers, sailors, airmen, Marines 

that are returning are beyond 30 days.

 Ms. Miller. Yes, sir.

 The Chairman. At what point were you informed of funding concerns from facilities and VISN directors, that they were having to 

take actions in the field?

 Ms. Miller. Sir, I think when we got into the first of the calendar 

year, people began to identify that it was going to be a very tight and 

difficult year.

 They began to hold on equipment and NRM purchases until they 

saw where the year was going, and as we moved along, it became 

clear that they were going to have to use the NRM and equipment 

money for operational purposes.

 At the same time, they were focusing on advanced clinic access to 

try and work down the waiting lists and improve productivity, and 

we were monitoring closely with them compliance on national contracts and pharmaceutical procurements, et cetera, to try to ensure 

that they were being the most efficient they could be.

 The Chairman. You said that was in the January time frame?

 Ms. Miller. In January and February, early in the year, people began to say, you know, we are seeing this increase, as Mr. Norris said, 

in the workload, and they began to hold back on moving ahead with 

their equipment and NRM money.

 The Chairman. I’m not so certain how that reconciles with Mr. 

Norris’ testimony with regard to the monthly review assessments. 

Things were tracking fine until they began to see this spike in February/March/April.

If you are hearing from the field that they got crunch problems in 

January and it’s not being reflected in this monthly assessment -- do 

you two talk?

 Ms. Miller. Yes, sir; we do.

 Mr. Norris. Sir, let me clarify. I meant to say, if I didn’t say it 

clearly, there was slight workload increase in the early parts of the 

year, in the early months, but they weren’t alarming at that point. 

However, as we hit the mid-year point and looking at the January/

February data, it was getting to the alarming point.
44

 The Chairman. I don’t know how to define “alarming.” Let me go to 

you, Ms. Miller.

 When was it brought to your attention that facilities were beginning to curtail services?

 Ms. Miller. Sir, I don’t believe that facilities were curtailing services in that period of time. I think they were acknowledging that 

things were tight. They were looking carefully at their budget and 

managing tightly.

 They were refraining from moving forward with planned equipment or NRM, as I mentioned. They acknowledged at that point in 

time that they were not prepared to move forward with some CBOCs, 

but I’m not aware they were curtailing services, per se.

 The Chairman. When did facilities start to send out letters of disenrollment?

 Ms. Miller. I would like to make a distinction between enrollment 

and appointment. We do not dis-enroll any veteran.

 When a facility -- 

 The Chairman. If a veteran had not used a facility over the last two 

years, were letters sent out saying you will be dis-enrolled from the 

system?

 Ms. Miller. Not that I’m aware of, sir.

 The Chairman. What letters were sent out with regard to appointments?

 Ms. Miller. When a facility is unable to provide service in a timely 

way, within our guidelines, our policy requires them to notify a veteran that they are on a waiting list.

Generally, we find it is not an appropriate thing to provide appointments more than four months out, because often times, that appointment will not be at a convenient time, the veteran will not show for 

the appointment. It will be a wasted time slot.

 There is a policy that says when we cannot provide you with an appointment in a timely way, that we want you to utilize the electronic 

wait list at the local site and take people off that wait list as expeditiously as possible, but to notify people that in urgent or emergent 

situations, we would see them immediately.

 The Chairman. If I wanted an appointment and I couldn’t get my 

appointment for four months, am I being denied a service?

 Ms. Miller. You are certainly being delayed in the service and it’s 

not good customer service and it’s something that we are trying to 

overcome, sir.

 The Chairman. All right. You have testified that you were not informed of facilities that took any actions that may have curtailed services; is that correct?

 Ms. Miller. I’m not aware of people, for instance, closing services 

down.

 The Chairman. You testified that your VISN directors are candid 
45

with you in these teleconferences?

Ms. Miller. Yes, sir.

 The Chairman. Of which you don’t take minutes. Do you take 

notes?

Ms. Miller. No, sir.

The Chairman. That’s clever. When was it brought to your attention 

that critical maintenance was being deferred? When did your VISN

directors talk about deferring maintenance, facilities, equipment?

Ms. Miller. As I testified earlier, early in the calendar year, it became clear that people were going to need to defer equipment and 

maintenance procurements for operational purposes.

The Chairman. When did you then speak to Dr. Perlin about what 

you are hearing from your VISN directors?

Ms. Miller. I try to keep Dr. Perlin informed on an ongoing basis.

The Chairman. That is not responsive. You have testified to January. When you started first hearing this from the field, did you go to 

Dr. Perlin and tell him what you were hearing from the field?

 Ms. Miller. My memory of exactly when is not clear.

 The Chairman. Notes and minutes would help, wouldn’t they?

 Ms. Miller. Yes, sir; they would. Early in the year, I would say 

that I shared that information with Dr. Perlin.

 The Chairman. Early in the year. I’m not the prosecutor. I don’t 

mean to be interrogating you like one. I assure you that I’ve prosecuted the greatest wordsmith I ever met in my life, named Bill Clinton.

 I’ve had it. Do you have any follow up questions?

Committee Counsel. Dr. Perlin, just a quick question. Are you in 

violation of the Anti-defficiency Act in fiscal year 2005?

Dr. Perlin. No, we are not.

 The Chairman. Mr. Michaud, any further questions?

 Mr. Michaud. No further questions, Mr. Chairman.

 The Chairman. Thank you very much. This Committee is now adjourned.

 I will ask this of you. I’d like for you to conduct an internal review 

to see if any personnel changes need to be made within the department, and report that to the Secretary.

 I would also ask for the GAO to conduct a thorough and comprehensive review of the VA’s budget process.

 I will ask my colleagues on this Committee to continue to monitor 

closely this budget process, as you build the 2007 budget, to ensure 

that the mistakes that were made in 2005 and 2006 are not repeated.

 Finally, I intend in the August break, to take personal travel, and 

I will go to a specific poly-trauma center to see whether or not this allegation that some are making, that OIFs and OEFs are being denied 

their access to care.
46

 Those are the actions I’m going to take, based on today. The hearing is concluded.

[Whereupon, at 4:27 p.m., the Committee was adjourned.]

 
(47)

APPENDIX
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