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[Senate Report 107-231]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 536
107th Congress                                                   Report
                                 SENATE
 2nd Session                                                    107-231

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

 
 VETERANS LONG-TERM CARE AND MENTAL HEALTH PROGRAMS ENHANCEMENT ACT OF 
                                  2002

                                _______
                                

                 August 1, 2002.--Ordered to be printed

                                _______
                                

Mr. Rockefeller, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 2043]

    The Committee on Veterans' Affairs, to which was referred 
the bill S. 2043, to amend title 38, United States Code, to 
extend by five years the period for the provision by the 
Secretary of Veterans Affairs of noninstitutional extended care 
services and required nursing home care, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment in the nature of a committee substitute and 
an amendment to the title, and recommends that the bill, as 
amended, do pass.

                              Introduction

    On April 25, 2002, the Committee held a hearing to review 
factors underlying the lack of action by the Department of 
Veterans Affairs (hereinafter, ``VA'') in implementing the 
long-term care provisions of the Veterans Millennium Health 
Care and Benefits Act of 1999 (Public Law 106-117 (hereinafter, 
Millennium Act)). Those testifying at the hearing included: 
Robert Roswell, MD, Under Secretary for Health, VA; Marsha E. 
Goodwin, RN, MSN, Acting Chief Consultant, Geriatrics and 
Extended Care, and Director, Geriatrics Program, VA; Cynthia A. 
Bascetta, Director, Health Care, Veterans' Health and Benefits 
Issues, United States General Accounting Office (hereinafter, 
``GAO''); Jim Musselwhite, Assistant Director, Health Care, 
GAO; Gladys Dickerson, RN, Home Based Primary Care Coordinator, 
Dallas VA Medical Center; Paula Hemmings, RN, Geriatrics and 
Extended Care Line Manager, Veterans Integrated Service Network 
#2, representing the Alzheimer's Association; Thomas McClure, 
LCSW, Coordinator, VA Medical Foster Home Program, Little Rock 
VA Medical Center; and Jennifer Moye, PhD, Director, Geriatric 
Mental Health Clinic/UPBEAT, Brockton VA Medical Center, and 
Associate Professor of Psychology, Department of Psychiatry, 
Harvard Medical School.
    Prior to this hearing, on March 21, 2002, Committee 
Chairman John D. Rockefeller IV introduced S. 2043, which would 
extend by five years the period for the provision by VA of 
noninstitutional extended care services and required nursing 
home care.
    On September 6, 2001, Chairman Rockefeller introduced S. 
1408, with Committee Members Daniel Akaka, Paul Wellstone, Ben 
Nelson, and Zell Miller joining later as cosponsors. S. 1408 
would standardize the income threshold for copayments for 
outpatient medications with the income threshold currently used 
to determine a veteran's inability to defray necessary expenses 
of care.
    On October 25, 2001, Chairman Rockefeller introduced S. 
1576, which would extend for ten years the special eligibility 
for health care provided to veterans who served in Southwest 
Asia during the Persian Gulf War.
    On March 21, 2002, Chairman Rockefeller introduced S. 2044, 
which would expand and improve programs for the provision of 
specialized mental health services to veterans.
    On April 18, 2002, Chairman Rockefeller introduced S. 2205, 
which would provide VA with permanent authority to offer 
veterans counseling and treatment for sexual trauma suffered 
during active duty in service.
    On April 23, 2002, Chairman Rockefeller introduced S. 2227, 
with Senator Max Cleland joining later as a cosponsor. S. 2227 
would clarify the effective date of the modification of 
treatment for retirement annuity purposes of part-time service 
before April 7, 1986, of certain VA health-care professionals.
    On April 30, 2002, Chairman Rockefeller introduced S. 2228, 
which would authorize VA to operate up to 15 centers for mental 
illness research, education, and clinical activities.
    On May 2, 2002, the Committee held a hearing to receive 
testimony on the aforementioned bills, and on other measures. 
Those testifying at the hearing included: Tim McClain, General 
Counsel, VA; Frances M. Murphy, MD, Deputy Under Secretary for 
Health, Veterans Health Administration, VA; Robert Epley, 
Associate Deputy Under Secretary for Policy and Program 
Management, Veterans Benefits Administration, VA; John 
Thompson, Deputy General Counsel, VA; Claude Kicklighter, 
Assistant Secretary for Policy and Planning/Acting Director, 
Office of Operations, Security and Preparedness, VA; Vincent 
Barile, Deputy Under Secretary for Management, National 
Cemetery Administration, VA; James Fischl, Director, National 
Veterans Affairs and Rehabilitation Commission, The American 
Legion; Joseph A. Violante, National Legislative Director, 
Disabled American Veterans; David Tucker, Associate Legislative 
Director, Paralyzed Veterans of America; and Dennis Cullinan, 
Director, National Legislative Service, Veterans of Foreign 
Wars.

                           Committee Meeting

    On June 6, 2002, the Committee met in open session to 
consider, among other matters, S. 2043 with an amendment in the 
nature of a substitute incorporating provisions from Section 2 
of S. 1408, S. 1576, S. 2044, Section 2 of S. 2205, S. 2227, 
and S. 2228, and amendments offered by Senator Frank H. 
Murkowski regarding a State Home grant of $16 million to the 
State of Alaska for the Pioneers' Homes, and by Senator Patty 
Murray requiring VA to establish two medical outreach programs 
in the State of Washington.
    Present were Chairman Rockefeller, Ranking Member Arlen 
Specter, and Senators James M. Jeffords, Wellstone, Murray, 
Miller, Ben Nelson, Strom Thurmond, Murkowski, Tim Hutchinson 
and Kay Bailey Hutchison. The Committee voted unanimously to 
report favorably S. 2043, as amended, to the Senate.

                     Summary of S. 2043 as Reported

    S. 2043, as reported (hereinafter, ``Committee bill'') 
consists of three titles, summarized below.

         TITLE I--LONG-TERM CARE AND MENTAL HEALTH ENHANCEMENTS

Subtitle A--Long-term Care

    Section 101 extends for five years the provision set forth 
in the Millennium Act requiring that VA provide non-
institutional extended care services and nursing home care 
services to certain veterans.

Subtitle B--Mental Health Programs

    Section 111 increases from $15 million (as specified in 
Section 116 of Public Law 107-135) to $25 million per year 
funding set aside for a program designed to expand and improve 
services relating to the treatment of post-traumatic stress 
disorder (PTSD) and substance use disorders; requires VA to 
ensure that this funding is in excess of a baseline amount; 
clarifies that these funds are to be provided on an annual 
basis for a three-year period; and requires the Secretary to 
ensure that not less than $10 million be allocated by direct 
grants to programs identified by the Mental Health Strategic 
Health Care Group and the Committee on Care of Severely 
Chronically Mentally Ill Veterans, not less than $5 million be 
allocated for PTSD programs, and not less than $5 million be 
allocated for substance use disorder programs.
    Section 112 provides permanent authority for counseling and 
treatment of sexual trauma. Authority for this program is 
currently scheduled to expire on December 31, 2004.
    Section 113 authorizes VA to operate up to 15 centers for 
mental illness research, education and clinical activities. The 
current authority provides for up to five such centers.

                  TITLE II--CONSTRUCTION AUTHORIZATION

    Section 201 authorizes the following Administration-
requested construction projects: seismic corrections to 
Building 2 at the Palo Alto VAMC in the amount of $14 million; 
seismic corrections to Building 4 at the Palo Alto VAMC in the 
amount of $22 million; seismic corrections to the West Los 
Angeles VAMC in the amount of $27 million; and seismic 
corrections to the San Francisco VAMC in the amount of $31 
million. In addition, the Committee bill includes a 
modification to a prior authorization for a nursing home 
project at the Beckley, West Virginia VAMC and extends a prior 
authorization for the nursing home project at the Lebanon, 
Pennsylvania VAMC.
    Section 211 changes to $9 million the monetary threshold 
used for determining when a construction project will be 
classified as a major construction project.
    Section 212 allows VA to make a grant of not more than $16 
million to the State of Alaska for the purpose of expanding, 
remodeling or altering space in six separate Pioneers' Homes 
and specifies that following such grant, the space be treated 
as a single State home facility for the purposes of subchapter 
III of chapter 81 of title 38, United States Code.

                 TITLE III--GENERAL HEALTH CARE MATTERS

Subtitle A--Prescription Copayment Adjustment

    Section 311 modifies the income threshold amount for 
prescription drug copayments by specifying that that income 
threshold amount be the same as the income threshold used to 
determine a veteran's qualification for free outpatient and 
inpatient care.

Subtitle B--Extensions of Authorities

    Section 321 provides that the effective date of the 
amendment made by Section 132 of Public Law 107-135 shall be 
January 23, 2002, and requires that the Office of Personnel 
Management recompute the annuities of each covered health care 
professional who retired before January 23, 2002, but after 
April 7, 1986.
    Section 322 extends for ten years the eligibility for 
health care services of veterans who served in Southwest Asia 
during the Persian Gulf War.

Subtitle C--Other Matters

    Section 331 provides hourly-rate employees of the Veterans 
Canteen Service with transfer rights to title 5 positions.
    Section 332 requires that VA establish a two-year pilot 
project on medical care outreach at two locations in the State 
of Washington.

                       Background and Discussion

         TITLE I--LONG-TERM CARE AND MENTAL HEALTH ENHANCEMENTS

Long-Term Care Authorities

    There is clearly an expanding need for long-term care in 
our country, and in VA that demand is even more pressing.
    Approximately 37 percent of the veteran population is 65 
years of age or older; the veteran population exceeding age 65 
will grow dramatically in the next few years. In an effort to 
respond to the burgeoning need for long-term care services, 
Congress enacted comprehensive long-term care legislation for 
veterans in November 1999 as part of the Millennium Act. 
Section 101 of the Millennium Act directed that VA provide 
nursing home care to any veteran who is in need of such care 
for a service-connected condition, or who is more than 70 
percent disabled due to a service-connected condition. In 
addition, VA was directed to provide non-institutional care, 
such as respite and adult day health care, to all enrolled 
veterans requiring such services. Within three years of the 
bill's enactment, VA was required to evaluate and report to the 
House and Senate Committees on Veterans' Affairs on VA's 
experience in providing services under both of these 
provisions, and to make recommendations on extending or making 
permanent these provisions. These programs were given an 
expiration date of four years from the date of enactment so 
that the effects on the VA health care system and its patients 
could be adequately studied and, if need be, the programs 
modified.
    A key element of the Millennium Act is a provision that 
requires VA to furnish non-institutional long-term care as part 
of VA's standard benefits package. While the Millennium Act was 
signed into law at the end of 1999, VA did not issue interim 
guidance on new long term care benefits until October 2001--
nearly two years later. This interim guidance, VHA Directive 
2001-061, required facilities either to have non-institutional 
long-term care services available or to develop a plan for 
providing such services. In order to assess whether facilities 
had made non-institutional services universally available, 
Chairman Rockefeller and House Veterans' Affairs Committee 
Ranking Member Lane Evans requested that the GAO inventory non-
institutional long-term care programs then existing within VA.
    At the Committee's hearing on April 25, 2002, GAO witnesses 
testified that:
          . . . more than two years after enactment, VA has not 
        completed its response to the Millennium Act . . . we 
        have found that several facilities reported offering at 
        least eight of the non-institutional long-term care 
        services, but some offered one non-institutional 
        service or none at all. The results of our survey are 
        similar to the distribution of services noted almost 
        four years ago by the Advisory Committee on the Future 
        of VA Long-Term Care.
    Veterans Service Organizations shared their concerns at the 
Committee's May 2, 2002, hearing on pending legislation. Dennis 
Cullinan testified that, ``[t]he VFW is deeply disappointed 
that these services, as provided for [in the Millennium Act] 
almost three years ago, have yet to be properly implemented by 
VA.''
    Following the hearing, on May 17, 2002, VA issued 
regulations authorizing non-institutional long-term care 
services. In addition to designating non-institutional adult 
day care, non-institutional geriatric evaluation, and non-
institutional respite care as a part of the medical benefits 
package, the regulations also established copayments for 
extended care services.
    Since Millennium Act provisions relating to both non-
institutional and inpatient long term care services are due to 
expire next year, Section 101 of the Committee bill would 
extend the expiration dates of both long-term care authorities 
for an additional five years, until December 31, 2008.

Mental Health Enhancements

    As the Committee has previously sought to improve and 
expand the provision of veterans' long-term care, so too has 
the Committee worked to improve mental health services provided 
by VA. Historically, as many as one-third of veterans seeking 
care at VA have received mental health treatment, and research 
suggests that serious mental illnesses affect at least one-
fifth of veterans who use the VA health care system.\1\ About 
450,000 of the approximately 2.3 million veterans who receive 
compensation from VA have service-connected psychiatric and 
neurological disorders.\2\ These statistics do not reflect 
problems that affect veterans alone; in 1999, the Surgeon 
General of the United States reported that mental disorders 
account for more than 15 percent of the overall burden of 
disease from all causes--slightly more than all forms of 
cancer.\3\ Major depression alone ranked second only to heart 
disease in impact.
---------------------------------------------------------------------------
    \1\ E. P. Fischer, S. R. Mardner, G. R. Smith, R. R. Owen, L. 
Rubenstein, S. C. Hedrick, and G. M. Curran. Quality Enhancement 
Research Initiative in Mental Health. Medical Care, June 2000; 38(6 
Suppl. 1): 170-81.
    \2\ Department of Veterans Affairs, Veteran Data and Information. 
Program Statistics: FY 1999 Annual Accountability Report Statistical 
Appendix, September 30, 1999.
    \3\ U.S. Department of Health and Human Services. Mental Health: A 
Report of the Surgeon General. Rockville, MD: Substance Abuse and 
Mental Health Services Administration, Center for Mental Health 
Services, National Institutes of Health, National Institute of Mental 
Health, 1999.
---------------------------------------------------------------------------

Grants to Improve Specialized Mental Health Programs

    From its inception, the VA health care system has been 
challenged to meet the special needs of veterans, such as 
spinal cord injuries, injuries requiring prosthetic devices, 
blindness, traumatic brain injury, homelessness, and post-
traumatic stress disorders (PTSD), as well as substance use 
disorders that frequently accompany these other afflictions. 
Over the years, VA has developed widely-commended expertise in 
providing specialized services to meet these needs. 
Unfortunately, these programs have been negatively affected by 
budget constraints, a shift in focus from inpatient to 
outpatient care, and the introduction by VA of a new resource 
allocation system. In 1996, Congress recognized that VA efforts 
to serve more veterans with a limited budget made these costly 
specialized services disproportionately vulnerable to 
reductions, and it took steps to protect them. The Veterans' 
Health Care Eligibility Reform Act of 1996, Public Law 104-262, 
required the Secretary of Veterans Affairs to maintain VA's 
capacity to treat specific special needs of disabled veterans 
at then-current levels, and to report to Congress annually on 
the maintenance of those specialized services.
    Subsequently, internal VA advisory committees and the GAO 
reported that these protections did not go far enough.\4\ Many 
specialized programs particularly for substance use disorders 
and PTSD were closed, reduced in size, or understaffed, 
offering little or no care to veterans suffering from these 
seriously debilitating disorders which can result from combat 
experiences. VA's own annual capacity reports evidenced that 
these programs had failed to provide services to veterans at 
the needed levels. They also evidenced that VA had failed to 
preserve equal access to such services throughout the VA 
system.\5\
---------------------------------------------------------------------------
    \4\ U.S. Department of Veterans Affairs. Special Committee on Post-
Traumatic Stress Disorder. Report to the Under Secretary for Health, 
2002, pp. 6, 7, 11, and 13; and U.S. Department of Veterans Affairs. 
Committee on the Care of Veterans with Serious Mental Illness. Report 
to the Under Secretary for Health, 2002, pp. 4, 6, and 16.
    \5\ U.S. Department of Veterans Affairs. Report to the Committees 
on Veterans' Affairs of the Senate and House of Representatives, as 
required by Public Law 104-262, 2002, pp. 11-12.
---------------------------------------------------------------------------
    In December 2001, Congress strengthened protection of 
specialized services through the Department of Veterans Affairs 
Health Care Programs Enhancement Act of 2002, Public Law 107-
135, which described the manner in which VA is to maintain 
capacity. In addition to protecting VA's capacity to treat 
veterans' special needs, Public Law 107-135 contained a 
designated $15 million in VA funding specifically to assist 
medical facility efforts to improve care for veterans with 
substance use disorders and PTSD. The funds for these mental 
health grant programs will soon revert to a general medical 
care fund.
    In order to distribute these designated funds, VA sought 
proposals from facilities interested in expanding and improving 
their substance use disorder and PTSD treatment programs. VA 
began to release these funds at the end of 2001. As of March 
2002, eight of the sixteen PTSD treatment programs awarded 
funding were operational, but only one-third of these had hired 
a full complement of authorized and funded staff.\6\ Of the 
substance use disorder programs funded through this act, 18 of 
31 have not completed staffing.\7\
---------------------------------------------------------------------------
    \6\ U.S. Department of Veterans Affairs. Program Evaluation 
Resources Center, VA Palo Alto, California. Millennium Bill 
Implementation for Substance Abuse Programs as of July 15, 2001.
    \7\ Ibid.
---------------------------------------------------------------------------
    Despite a slow start, funding has resulted in new PTSD and 
substance use disorder treatment programs being made available 
to veterans. More than 100 staff members have been hired in 18 
of VA's 21 service networks to treat substance use disorders. 
Nine new programs in Baltimore, Atlanta, San Francisco, Dayton 
and elsewhere have initiated or intensified opioid substitution 
programs for veterans who have not responded well to drug-free 
treatment regimens. Other new programs, such as those in Tampa, 
Cincinnati, Columbia, Missouri and Loma Linda, California, put 
special emphasis on treating veterans with more complex 
conditions that include PTSD and substance use disorders. 
Additional funding has also enabled VA to develop better 
outpatient substance use disorder and PTSD treatment programs, 
outpatient dual-diagnosis programs, more PTSD community 
clinical teams, and more residential substance use disorder 
rehabilitation programs.
    Due to these grants, VA has made improvements. However, 
many VA medical center directors have been reluctant to hire 
specialized substance use disorder or PTSD treatment staff 
when, in fiscal year 2003, funding for these programs will be 
subject to a population-based resource allocation system that 
would likely cause funding to disappear. Section 111 ensures 
that this funding will remain ``protected'' for three more 
years. In addition, Section 111 would increase the total amount 
of funding identified specifically for treatment of substance 
use disorders and PTSD from $15 million to $25 million.
    Of the $25 million authorized for this program, $15 million 
would be allocated to individual medical facilities responding 
to calls for proposals. The remaining $10 million would be 
provided as direct grants to VA treatment facilities, based on 
veterans' needs as identified by VA's Mental Health Strategic 
Health Care Group and the Committee on Care of the Severely 
Chronically Mentally Ill.
    Veterans Service Organizations have impressed upon the 
Committee the need to set aside funding for specialized 
services, especially for PTSD and substance use disorder 
programs. Joseph Violante, National Legislative Director of the 
Disabled American Veterans, testified at the Committee hearing 
on S. 2044. During his testimony, he noted:
          As part of The Independent Budget,\8\ DAV has urged 
        Congress to improve specialized mental health services, 
        particularly programs for the treatment of post-
        traumatic stress disorder and substance abuse . . . The 
        treatment and rehabilitation of veterans with mental 
        disorders is among the highest priorities for the 
        Veterans Health Administration. This bill will begin to 
        address necessary programmatic expansion and funding 
        needs of these important mental health programs.
---------------------------------------------------------------------------
    \8\ A publication published jointly by AMVETS, Disabled American 
Veterans, Paralyzed Veterans of America and the Veterans of Foreign 
Wars to present policy positions and make budget recommendations on 
programs conducted by the Department of Veterans Affairs.
---------------------------------------------------------------------------

Sexual Trauma Counseling

    Almost a decade ago, the Committee on Veterans' Affairs 
held a hearing on the needs of the Nation's growing numbers of 
women veterans. Subsequent to that hearing, investigations 
revealed that women veterans are eight times more likely to 
report having experienced sexual assault during service than 
women civilians of the same age.
    In 1992, Congress authorized VA to provide counseling to 
women who had experienced sexual trauma during active service. 
Two years later, recognizing that sexual trauma is not limited 
to women, Congress expanded VA's mandate to offer counseling 
and treatment to victims of sexual harassment or sexual assault 
without regard to gender. The Millennium Act broadened VA's 
responsibilities toward victims of sexual trauma further, 
strengthening outreach efforts and extending the programs 
through December 2004.
    VA has worked--internally and with the Department of 
Defense--to educate health care professionals about the 
physical and emotional legacies of sexual trauma. Those who 
have endured such trauma need counseling and appropriate 
treatment, both during and following service. While we must 
hope that sexual violence will be eliminated from our forces, 
the programs that VA has established will likely continue to be 
needed. Section 112 would authorize VA to continue its 
counseling and treatment programs for veterans who have 
experienced military sexual trauma beyond 2004.
    The Committee on Veterans' Affairs continues to await a VA 
report, mandated by the Millennium Act and due in March 2001, 
on rates of sexual trauma among National Guard members and 
Reservists. Upon receipt of that report, the Committee will be 
better equipped to decide whether authority for counseling and 
treatment services to members of the Armed Forces who might 
have experienced sexual trauma while on active duty for 
training will be needed.

Mental Illness Research, Education, and Clinical Centers

    In 1996, Congress authorized VA to establish five centers 
dedicated to mental illness research, education, and clinical 
activities. These Mental Illness Research, Education, and 
Clinical Centers (hereinafter, ``MIRECCs'') integrate basic and 
clinical research with a training mission that allows VA to 
translate new findings into improved patient care. Research 
undertaken within these centers has helped to increase 
fundamental understanding of mental illnesses, and has given VA 
care givers more and better tools to treat patients with mental 
disorders so they can function more easily within their 
communities.
    Because they have proved so effective at fostering 
scientific, clinical, and educational improvements in mental 
health care, Section 113 authorizes VA to expand the number of 
MIRECCs from five to fifteen. VA researchers have already 
started three more centers--expanding the number of existing 
programs to eight--and have demonstrated their willingness to 
open more in the near future.
    While the Committee bill contains no legislative 
initiatives to assist the National Center for PTSD, the 
Committee commends the Center for its work at the forefront of 
research and education on the etiology, diagnosis, and 
treatment of PTSD and other adverse consequences of exposure to 
stress. Its consistent record of accomplishment is one reason 
VA has emerged as a national and world leader in this field. 
National Center programs supporting VA clinicians, benefits 
personnel, researchers and other officials result in improved 
treatment and claims adjudication for veterans. The Committee 
believes that the National Center for PTSD is a unique and 
valuable resource that deserves continued strong support from 
VA.

                     TITLE II--CONSTRUCTION MATTERS

Subtitle A--Construction Authorization

            Sections 201-203. Major Medical Facility Construction
    VA may not obligate or expend funds on any ``major medical 
facility project'' unless that project has been specifically 
authorized by law. A major medical facility project is one that 
would involve the construction, alteration, or acquisition of a 
medical facility involving the total expenditure of more than 
$4 million.
    Section 201 of the Committee bill would authorize the 
following major medical facility projects: seismic corrections 
to Building 2 at the Palo Alto VAMC in the amount of $14 
million; seismic corrections to Building 4 at the Palo Alto 
VAMC in the amount of $22 million; seismic corrections to the 
West Los Angeles VAMC in the amount of $27 million; and seismic 
corrections to the San Francisco VAMC in the amount of $31 
million.
    The Committee bill also increases the amount of the 
authorization for a previously-authorized project at the 
Beckley, West Virginia VAMC. It also extends a previously-
enacted authorization for a long-term care project at the 
Lebanon, Pennsylvania VAMC.
    VA identifies--in accordance with 38 U.S.C. 
Sec. 8107(d)(1), (2), and (3)--the major construction projects 
that have the highest priority within the Department. Utilizing 
guidance contained in the Office of Management and Budget's 
Circular A-11, Planning, Budgeting, and Acquisition of Capital 
Assets, the VA's Strategic Management Council prioritized the 
major medical construction projects for FY 2003. The top 
fifteen projects, in order of priority, are:
    1. Palo Alto, CA, Building 2, Seismic Corrections
    2. Cleveland, OH, Ambulatory Surgery and Clinical 
            Consolidation
    3. San Francisco, CA, Building 203, Seismic Corrections
    4. Anchorage, AK, VA Health Care System and Regional Office 
            Construction
    5. West Los Angeles, CA, Building 500, Seismic Corrections
    6. West Haven, CT, Ward Renovation
    7. Long Beach, CA, Building 7, Seismic Corrections
    8. Palo Alto, CA, Building 4, Seismic Corrections
    9. Tampa, FL, Ambulatory Care Expansion
    10. VISN 4 Outpatient Improvements
    11. Beckley, WV, Nursing Home Construction
    12. Lebanon, PA, Building 2 Renovations
    13. San Diego, CA, Building 1, Seismic Corrections
    14. Hines, IL, Spinal Cord Injury and Blind Rehabilitation 
            Construction
    15. San Juan, PR, Main Building, Seismic Corrections
    While the Committee bill includes authorizations for each 
project requested by the Administration in the President's 
Fiscal Year 2003 Budget, the Committee is concerned about the 
methodology used by VA to rank projects and how that ranking 
relates to the Administration's requests for funding. The four 
seismic correction projects requested by the Administration 
appear on various points along VA's priority list, namely, 
first, third, fifth, and eighth. Funding and authorization for 
other projects which appear, in some cases, as higher priority 
projects is not sought by the Administration. For example, the 
Cleveland, Ohio ambulatory surgery and clinical consolidation 
project appears as the Department's second-highest rated 
project; yet, the project does not appear in the 
Administration's budget request. The Committee intends to 
monitor the process closely during the next budget cycle and 
urges the Department to review its construction request 
methodology.

Subtitle B--Other Matters

            Sec. 211. Increase in Threshold for Major Medical Facility 
                    Projects
    Section 211 of the Committee bill increases the threshold 
for major construction projects from $4 million to $9 million. 
Currently, VA medical center projects with a minor improvement 
component of less than $4 million are funded from the Minor 
Construction appropriation and need not be authorized 
individually by Congress. However, all such projects are 
subjected to internal review and approval by VA's Strategic 
Management Council. The application process includes an 
assessment of needs; a ten-year cost-effectiveness analysis; a 
study of the impact on Capital Asset Realignment for Enhanced 
Services activities; risk analysis; and alternative analysis of 
issues such as quality, access, waiting times and increased 
benefits. Projects are first screened by the Capital Asset 
Board in the Veterans Health Administration. They are then 
prioritized and referred by the Under Secretary for Health to 
the Department's Strategic Management Council, chaired by the 
Department's Deputy Secretary. Minor improvement projects 
include structural changes, space utilization changes, and 
construction of new or additional space.
    Initially, 38 U.S.C. Sec. 8104 made no distinction between 
major and minor construction projects. In 1988, Public Law 100-
322 defined major construction projects as those costing more 
than $2 million and required that those projects be authorized 
and individually appropriated by Congress. In 1993, Public Law 
103-79 changed the threshold for a major project from $2 
million to $3 million, and in 1996, Public Law 104-262 
increased the threshold to $4 million. Over a period of 14 
years, the threshold has only increased an average of less than 
$150,000 per year.
    The Independent Budget for Fiscal Year 2003 addressed the 
issue of minor construction by noting:
          . . . the $4 million limit on minor construction 
        projects imposed by Congress continues to be a major 
        problem. Realignment and consolidation and the CARES 
        initiative will call for extensive construction 
        investments in many facilities in all VISNs. 
        Accordingly, the current ceiling on minor construction 
        projects is too low to finance the scope of many of 
        these projects . . . Network Directors are forced to 
        string together a series of minor construction projects 
        to make the architectural changes that are needed to 
        realign facilities to new missions. Project scheduling 
        is dictated by financing gimmicks rather than by good 
        design and engineering principles. Facility operations 
        are disrupted and veterans are inconvenienced by drawn-
        out construction activities.
    An example of the how VA ``works around'' the current minor 
construction limit is the Augusta VAMC's Spinal Cord Injury 
(hereinafter, ``SCI'') unit. VA needed to replace the unit 
because current privacy and infrastructure (plumbing, 
electrical, AC and ventilation) standards were not met. A 
replacement unit would have cost approximately $14 million--an 
amount well above the minor construction limit. Rather than 
pursuing approval for major construction project funding, 
facility and VISN management decided to remodel the current SCI 
unit in two phases using funding for two minor construction 
projects (totaling around $7 million). The first phase, which 
was a renovation of inpatient areas, was approved and 
construction has begun. Another minor construction project will 
be requested in fiscal year 2003 to complete the remodeling of 
the outpatient areas. By doing the project in two phases, VA 
will take 50 percent longer to complete the project. Additional 
inconvenience to veterans and disruptions during construction 
will result.
            Sec. 212. State Home Facilities for Furnishing Care to 
                    Veterans in the State of Alaska
    Section 212, provides VA the authority to grant to the 
State of Alaska up to $16 million to improve space in six 
existing Pioneer Homes.
    Since 1888, the Federal government has provided funding to 
States to assist in the care of elderly veterans. 38 U.S.C. 
Sec. 8135(a) requires any State desiring assistance with the 
construction of State home facilities to submit an application 
to the Secretary, certifying that the State has funding of not 
less than 35 percent of the costs needed with respect to such 
construction and that such funding will be available by July 1 
of the fiscal year in which the application is made.
    The State of Alaska is one of three States that currently 
does not have a State Veterans Home. However, the State does 
maintain a residential housing program, known as Pioneers' 
Homes, for elderly citizens, including veterans and their 
spouses, in six different locations within the State.
    The grant provided under this section would exempt the 
State from meeting the 35 percent funding requirement and would 
treat the space in the aggregate as a State home facility.

                 TITLE III--GENERAL HEALTH CARE MATTERS

Subtitle A--Prescription Copayment Adjustment

            Sec. 311. Standardization of Income Thresholds for 
                    Copayment for Outpatient Medications and for 
                    Inability to Defray Necessary Expenses of Care
    Under current law, veterans who are eligible for Medicaid, 
or those who meet an income threshold established by law, are 
eligible to receive free health care at VA facilities. 
Additionally, veterans who are--or would be--eligible for a VA 
pension receive free prescription drugs. However, the income 
threshold for pension eligibility is much lower than that set 
for Medicaid eligibility or the means test established by 
statute for free health care.
    The prescription drug copayment was initially established 
by Public Law 101-508, the Omnibus Budget Reconciliation Act of 
1990. The charge was $2 for each 30-day supply of medication 
prescribed by a VA physician. Public Law 101-508 also 
established the means test for determining the ability to pay 
copayments for outpatient medical care. The means test 
considers annual income (setting a threshold at approximately 
$24,300) and net property worth (setting a threshold at 
$80,000). Public Law 101-508 did not, however, include an 
income threshold for prescription drug copayments. As a 
consequence, all veterans, except those with a 50 percent or 
greater service-connected disability, were charged the $2 
medication copayment prescribed for drugs to treat nonservice-
connected conditions. Later, Public Law 102-568, exempted 
veterans whose annual income did not exceed the maximum annual 
rate of VA pension (approximately $9,500 today) from paying the 
prescription drug copayment.
    For veterans with financial hardships, VHA Directive 2002-
005, dated January, 2002, provides authority and guidance to 
field facilities for processing waiver requests for medical 
care and prescription drug copayment debts.
    On February 4, 2002, VA raised the prescription copayment 
from $2 to $7--a 350 percent increase. This increase has been 
particularly burdensome for lower-income veterans. To 
illustrate the new financial burden imposed on those with low 
incomes, the Committee considered the case of a veteran who 
required ten prescriptions and had an income of approximately 
$10,000 a year. Because of VA's increase in the prescription 
drug copayment, such a veteran must now allocate 8.4 percent of 
his or her annual income, rather than 1.2 percent, on 
prescription medications.
    Robert E. Wallace, Executive Director, Veterans of Foreign 
Wars, wrote in a letter to the VA Secretary, Anthony J. 
Principi:
          That scenario will probably result in one of two 
        things for our category 5 veterans: they will either 
        stop seeking needed medical care because the increased 
        costs will soon ``price'' them out of the system or we 
        will be faced with an inordinate increase in the number 
        of waiver requests . . . the substantial increase of 
        unintentional patient noncompliance will, in the long 
        run, invariably result in overall higher medical costs 
        than what would be recovered by the increased 
        prescription copayment.
    On May 2, 2002, the American Legion testified before the 
Committee about the need to modify the income threshold for 
prescription drugs.
          The American Legion has heard--loud and clear--the 
        negative reactions of veterans to the recent medication 
        copayment increase. . . . Clearly, the sizable percent 
        of this increase has presented difficulties for certain 
        veterans, especially those with low fixed incomes and 
        those who are barely above the threshold for 
        exemption--the pension rate of $9,556--as well as those 
        veterans who require multiple or maintenance 
        medications. Veterans also find the complex and arcane 
        rules that govern eligibility difficult to understand. 
        Standardizing the thresholds, as proposed, would help 
        to simplify the copayment criteria, but most 
        importantly, it would assist those least able to afford 
        the increase in their prescription copayments.
    Section 311 of the Committee bill standardizes the income 
threshold limitation for prescription copayments with the 
income threshold for outpatient medical care. The primary 
purpose for this modification is to reduce the financial burden 
of the VA's new $7 copayment imposed upon veterans in the lower 
income levels (between $9,500 and $24,300); however, there are 
administrative benefits associated with this provision as well.
    The number of waivers requested by veterans has increased 
dramatically, as the Veterans of Foreign Wars predicted. For 
the first three months of the increase, $4.7 million more in 
copayment charges have been waived than during the same time 
period last year. One VA medical center reported that waiver 
applications had increased from only 4 in April 2001 to 48 in 
April 2002. Because the Committee expects that the number of 
waivers requested by veterans will be nearly eliminated by this 
provision, there would be a corresponding decrease in the 
manpower associated with filing, processing, and reviewing each 
claim.

Subtitle B--Extensions of Authorities

            Sec. 321. Retirement Annuities for Part-Time VA Nurses
    Section 321 of the Committee bill addresses an issue of 
fairness in retirement annuity benefits promised to part-time 
VA nurses prior to 1986. In December 2001, Congress enacted the 
Department of Veterans Affairs Health Care Programs Enhancement 
Act of 2001, Public Law 107-135. This legislation gave VA 
several tools to respond to the looming nurse crisis. In 
addition, it altered the way part-time service performed by 
certain title 38 employees would be considered when granting 
retirement credit.
    Previously, the law required that title 38 employees' part-
time service prior to April 7, 1986, be prorated when 
calculating retirement annuities, resulting in lower annuities 
for these employees. Section 132 of Public Law 107-135 was 
intended to exempt all previously-retired registered nurses, 
physician assistants, and expanded-function dental auxiliaries 
from this limitation. However, the Office of Personnel 
Management has interpreted this provision to apply only to 
those health care professionals who retire after the measure's 
date of enactment.
    Section 321 of the Committee bill would require OPM to 
recalculate the annuities for these retired health care 
professionals. This clarification would not extend retirement 
benefits retroactively to the date of retirement. It would, 
however, ensure that annuities are calculated fairly from now 
on for eligible employees who retired between April 7, 1986, 
and January 23, 2002.
            Sec. 322. Eligibility for Persian Gulf War Veterans
    Section 322, which is drawn from S. 1576, as introduced by 
Chairman Rockefeller, extends eligibility for health care to 
veterans who served in Southwest Asia during the Persian Gulf 
War.
    Service members returning from the Gulf in 1991 reported a 
range of unexplained illnesses that many believed might have 
resulted from service. Investigations by Congress, the 
Departments of Defense and Veterans Affairs, and the Institute 
of Medicine showed that the men and women who served in 
Operation Desert Storm might have been exposed to many 
battlefield hazards, including smoke from oil-well fires, 
pesticides, organic solvents, the drug pyridostigmine bromide, 
numerous vaccinations, and sarin nerve gas.
    Success in determining whether any or all of these hazards 
might be linked to specific symptoms has been limited by poor 
data, a lack of research into the long-term effects of low-dose 
exposures, and incomplete military record keeping. In response 
to concerns about the health of Gulf War veterans, Congress 
enacted Public Law 102-585, authorizing health examinations, 
tasking the National Academy of Sciences to evaluate scientific 
evidence regarding potential Gulf War exposures, and 
establishing the Gulf War Veterans Health Registry. In 
addition, Congress enacted Public Law 102-310, authorizing VA 
to provide health care services on a priority basis to Gulf War 
veterans through December 31, 2001. Public Law 107-135 extended 
this provision granting access to health care on a priority 
basis through December 31, 2002.
    More than a decade after the war, scientific research still 
has not determined the causes of veterans' symptoms, or the 
long-term health consequences of Gulf War exposures. The 
Department of Defense recently released new estimates of the 
number and locations of service personnel exposed to nerve 
agents. To meet the medical needs of Gulf War veterans, now and 
in the future, Section 322 of the Committee bill would extend 
this period for providing health care services on a priority 
basis for 10 more years.

Subtitle C--Other Matters

            Sec. 331. Transfer Rights for VA Canteen Workers
    Section 331 of the Committee bill would provide transfer 
rights for hourly rate Veterans Canteen Service (hereinafter, 
``VCS'') employees to title 5 VA positions through internal 
competitive procedures. VCS hourly-rate employees are Federal 
employees hired under authority of 38 U.S.C. Sec. 7802. And 
while this authority provides many of the same benefits that 
title 5 federal employees enjoy, (e.g., workers compensation, 
health benefits, retirement, and veterans' preference) there 
are benefits to which they are not entitled. For example, VCS 
hourly employees do not have the same transfer rights to other 
VA positions that VCS managers have.
    VCS hires through a merit system; however, VA may hire 
canteen workers without regard to title 5 competitive civil 
service procedures. As a result, VCS hourly employees applying 
for VA food service positions, VA housekeeping positions, and 
other VA positions are not treated as internal competitive 
service candidates. Their years of service are irrelevant, as 
they cannot easily transfer to another job at VA without first 
going through civil service competitions.
    In 1979, the Office of Personnel Management (hereinafter, 
``OPM'') approved an interchange agreement with VA that 
permitted two-way movement between the two hiring authorities. 
VA attempted to establish an interchange agreement for the 
hourly employees in 1984, 1987 and 1998, but OPM did not 
approve these proposals.
            Sec. 332. Pilot Project on Medical Care Outreach for 
                    Veterans in the State of Washington Through 
                    Outreach Clinics
    Section 332 requires VA to establish a program, during 
fiscal years 2003 and 2004, to provide health care services for 
veterans in the State of Washington through two outreach 
clinics. The clinics would be located in Whatcom County, 
Washington and in north central Washington, in or near 
Leavenworth, Washington.
    Each clinic would provide basic health care services, 
including diagnosis and referral to other VA facilities, at 
least one day per week. VA would be required, by June 1, 2004, 
to provide to the Veterans Committees of the Senate and the 
House a report on the program describing personnel utilized, 
patient workload and costs, and making recommendations 
regarding the modification or expansion of the pilot project.

                             Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by CBO, estimates that, compared to the 
CBO baseline, there would be costs resulting from enactment of 
the Committee bill.
    The cost estimate provided by CBO follows:

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 24, 2002.
Hon. John D. Rockefeller IV,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 2043, the Veterans 
Long-Term Care and Mental Health Programs Enhancement Act of 
2002.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sam 
Papenfuss.
            Sincerely,
                                         Barry B. Anderson,
                                      for Dan L. Crippen, Director.
    Enclosure.

S. 2043 Veterans Long-Term Care and Mental Health Programs Enhancement 
 Act of 2002 (As ordered reported by the Senate Committee on Veterans' 
                        Affairs on June 6, 2002)

                                SUMMARY

    S. 2043 contains several provisions that would affect 
health care provided by the Department of Veterans Affairs 
(VA). CBO estimates that enacting the bill would increase 
direct spending by $6 million in 2003, $30 million over the 
2003-2007 period, and $64 million over the 2003-2012 period. 
Because the bill would affect direct spending, pay-as-you-go 
procedures would apply. In addition, S. 2043 would modify 
provisions governing discretionary spending for veterans' 
health care programs, which CBO estimates would result in 
outlays of $28 million in 2003 and $880 million over the 2003-
2007 period, assuming appropriation of the estimated amounts.
    The bill would extend for five years certain requirements 
that specify how VA is to provide long-term care to veterans. 
S. 2043 also would increase the amount of appropriated funds 
spent on mental health services and would increase the number 
of centers at VA hospitals that focus on mental health research 
and services. In addition, the bill would permanently extend 
the authority to provide counseling and treatment for veterans 
who suffer from sexual trauma and establish a pilot program of 
outreach clinics in the state of Washington. S. 2043 also would 
require retirement annuities to be recalculated for certain 
former VA employees.
    S. 2043 also would allow more veterans to become eligible 
for free prescription drugs by raising the income threshold for 
determining which veterans need to make a prescription drug 
copayment. Because the bill would not extend the authority to 
collect prescription drug copayments, which expires on 
September 30, 2002, enacting this provision would have no 
budgetary effect over the 2003-2007 period. The provision could 
increase direct spending in fiscal year 2002, however, if the 
bill is enacted soon. If the bill is enacted before the end of 
the fiscal year, CBO estimates that raising the income 
thresholds for eligibility for free prescription drugs could 
increase direct spending by no more than $9 million in 2002, 
and that this increase would be offset by savings of $7 million 
in 2003 and $2 million in 2004.
    Finally, the bill would authorize appropriations for 
construction projects and would raise the threshold for 
projects to be financed out of the appropriation for major 
medical facility construction from $4 million to $9 million. 
(Thus, under the bill projects costing up to $9 million would 
be considered minor construction.)
    S. 2043 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of S. 2043 is shown in Table 
1. For this estimate CBO assumes that the bill will be enacted 
near the beginning of fiscal year 2003, and that both the 
authorized and estimated amounts will be appropriated each 
year. The costs of this legislation fall within budget 
functions 600 (income security) and 700 (veterans benefits and 
services).

             Table 1.--Estimated Budgetary Impact of S. 2043
                  [By Fiscal Year, in Millions Dollars]
------------------------------------------------------------------------
                                   2003    2004    2005    2006    2007
------------------------------------------------------------------------

CHANGES IN DIRECT SPENDING

Estimated Budget Authority......       6       6       6       6       6
Estimated Outlays...............       6       6       6       6       6

CHANGES IN SPENDING SUBJECT TO
 APPROPRIATION

Estimated Authorization Level...     150     192     197     179     186
Estimated Outlays...............      28     208     237     213     194
------------------------------------------------------------------------
a Enacting S. 2043 could also increase direct spending in fiscal year
  2002 if the bill is enacted before the end of the fiscal year. In that
  case, CBO estimates raising the income threshold for determining which
  veterans are eligible for free prescription drugs could increase
  direct spending by no more than $9 million in 2002, depending on the
  date of enactment, but that this increase would be offset by savings
  of $7 million in 2003 and $2 million in 2004.

                           BASIS OF ESTIMATE

Direct Spending

    The legislation would affect direct spending in all future 
years for retirement annuities to certain former VA employees. 
The bill could also affect direct spending in 2002 by allowing 
more veterans to become eligible for free prescription drugs, 
but those potential effects are not included in Table 1 because 
we assume the bill will be enacted near the beginning of fiscal 
year 2003 for the purposes of this cost estimate.
    Retirement Annuities for Certain Retirees with Part-time 
Service. S. 2043 would require retirement annuities to be 
recalculated for federal retirees who performed part-time 
service as registered nurses, physician's assistants, and 
certain dental technicians at VA prior to April 7, 1986. The 
Department of Veterans Affairs Health Care Programs Enhancement 
Act of 2001 (Public Law 107-135), enacted on January 23, 2002, 
made changes to the way retirement benefits are determined for 
those workers who retired on or after the date that legislation 
was enacted. That legislation treated pre-April 7, 1986, part-
time service as full-time service for the purpose of 
calculating retirement annuities. S. 2043 would extend these 
changes to the types of workers covered by Public Law 107-135, 
but who retired between April 6, 1986, and January 23, 2002. 
Retirement benefits for these workers currently are set 
according to a formula that prorates all part-time service 
performed in these positions. For most other federal workers, 
including those covered by Public Law 107-135, part-time 
service performed prior to April 7, 1986, is treated as full-
time service when calculating retirement annuities. In most 
cases, the changes result in higher retirement benefits.
    Information about retirees who would be covered by S. 2043 
is limited, but based on data provided by VA and the Office of 
Personnel Management, CBO estimates that about 1,500 current 
retirees would have their benefits increased by the bill. CBO 
estimates that the new formula would increase benefits for 
affected retirees by 13 percent to 22 percent, depending on how 
much part-time service was performed prior to April 7, 1986. As 
a result, enacting S. 2043 would increase direct spending by $6 
million in 2003, $30 million over the 2003-2007 period, and $64 
million over the 2003-2012 period.
    Prescription Copayments. Under current law, veterans who 
are eligible for a VA pension, eligible for Medicaid, or meet a 
certain income threshold are eligible to receive free health 
care at VA hospitals and clinics. That income threshold is 
currently $24,305 for a veteran with no dependents. Some 
veterans also can receive free prescription drugs, but the 
income threshold is much lower, currently $9,556 for a veteran 
with no dependents. (Both thresholds are adjusted annually for 
inflation.) Section 311 would raise the income threshold for 
receiving free prescription drugs to the same level needed to 
receive free health care and would allow all veterans with 
incomes less than the annually adjusted amount to be eligible 
for free prescription drugs.
    Today, veterans who do not meet the income threshold for 
free prescription drugs must make a copayment when they have 
their prescriptions filled. VA currently collects a $7 
copayment for each outpatient prescription it fills and 
deposits the first $2 of this copayment into the Medical Care 
Collections Fund (MCCF). Under current law, amounts deposited 
into the MCCF are considered to be offsets to discretionary 
appropriations and spending from the MCCF is subject to annual 
appropriation. The remaining $5 is deposited into the Health 
Services Improvement Fund (HSIF). Deposits into the HSIF are 
considered offsets to direct spending, and VA may spend amounts 
in the HSIF without appropriation action. That is, both the 
receipts and outlays of the HSIF constitute direct spending.
    Using information from VA, CBO estimates that raising the 
income threshold for determining which veterans make 
prescription drug copayments would reduce copayment collections 
by about 35 percent. Because the authority to collect 
prescription drug copayments expires on September 30, 2002, the 
impact of providing free prescription drugs to a larger number 
of veterans would only affect fiscal year 2002 and have no 
budgetary effect over the 2003-2012 period.
    If S. 2043 were enacted before the end of the fiscal year, 
CBO estimates that collections deposited into the HSIF would 
decline by no more than $23 million. Because VA has the 
authority to spend the money in the HSIF without appropriation, 
any drop in collections would be matched by a drop in spending 
from the fund. Accounting for a lag in spending of HSIF 
deposits, we estimate that there could be a net increase in 
direct spending of up to $9 million in 2002. That increase 
would be offset exactly by savings of $7 million in 2003 and $2 
million in 2004. Thus, enacting S. 2043 would have no net 
direct spending costs or savings over the 2002-2007 period.

Spending Subject to Appropriation

    Table 2 shows the estimated effects of S. 2043 on 
discretionary spending for veterans' health care programs, 
assuming that appropriations are provided in the authorized and 
estimated amounts. Individual provisions that would affect 
discretionary spending are described below.

                       Table 2.--Changes in Spending Subject to Appropriation for S. 2043
                                [By Fiscal Year, Outlays in Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
                                                                       2003     2004     2005     2006     2007
----------------------------------------------------------------------------------------------------------------

VETERANS' MEDICAL CARE

Long-Term Care:
  Estimated Authorization Level....................................        0      166      171      177      184
  Estimated Outlays................................................        0      151      169      176      182
Mental Health Care:
  Estimated Authorization Level....................................       23       24       26        2        2
  Estimated Outlays................................................       21       24       26        4        2
Pilot Project on Medical Care Outreach:
  Estimated Authorization Level....................................        2        2        0        0        0
  Estimated Outlays................................................        2        2        0        0        0
Subtotal for Veterans' Medical Care:
  Estimated Authorization Level....................................       25      192      197      179      186
  Estimated Outlays................................................       23      177      195      180      184

MAJOR CONSTRUCTION OF VETERANS MEDICAL FACILITIES

Authorization Level................................................      109        0        0        0        0
Estimated Outlays..................................................        5       29       35       26       10

GRANTS FOR CONSTRUCTION OF EXTENDED CARE FACILITIES

Authorization Level................................................       16        0        0        0        0
Estimated Outlays..................................................        0        2        7        7        0

TOTAL CHANGES

Estimated Authorization Level......................................      150      192      197      179      186
Estimated Outlays..................................................       28      208      237      213      194
----------------------------------------------------------------------------------------------------------------

    Veterans Medical Care. Federal spending for all veterans 
medical care totals more than $22 billion a year. Several 
sections of the bill would affect medical care for veterans. In 
total, CBO estimates that implementing these provisions would 
cost $23 million in 2003 and $759 million over the 2003-2007 
period.
    Long-Term Care. Section 101 would extend a requirement in 
current law that VA provide nursing home care to veterans that 
have a disability rating of 70 percent or greater. Under 
current law, this requirement expires on December 31, 2003. 
This provision would extend the requirement for five more years 
through December 31, 2008. Section 101 also would extend an 
authorization to treat noninstitutional extended care services 
as regular medical care. According to VA, the department 
currently spends about $3.5 billion a year providing long-term 
care services to veterans. Of that amount, VA spends more than 
$2 billion for nursing home care and less than $0.5 billion for 
noninstitutional extended care.
    According to VA, it currently spends about $150 million a 
year out of the $3.5 billion to conform with the above 
requirements. Accordingly, CBO estimates that requiring VA to 
continue these services would cost $151 million in 2004 and 
$678 million over the 2004-2007 period, assuming appropriation 
of the estimated amounts.
    Mental Health Care. Section 113 would require VA to 
establish not more than 15 centers for mental illness research, 
education, and clinical activities. VA can establish no more 
than five centers under current law. According to VA, there are 
eight such centers operating today, however. Thus, for this 
estimate, CBO assumes that VA would establish seven more 
centers for mental illness research, education, and clinical 
activities to implement this provision. Based on data from VA, 
CBO estimates that each center would cost about $2 million a 
year to operate. Assuming normal delays in organizing new 
centers and appropriation of the estimated amounts, CBO 
estimates that establishing seven new centers would cost $12 
million in 2003 and $70 million over the 2003-2007 period.
    Section 111 would require VA to spend an additional $25 
million a year on mental health care over the 2003-2005 period. 
Under current law, VA is required to spend $15 million more 
each year than what they otherwise would have spent on post-
traumatic stress disorder and substance use disorders; there is 
no expiration date associated with this requirement. Under 
section 111, VA would be required to spend $10 million more 
than specified under current law over the 2003-2005 period, but 
would then not be required to spend any additional amounts 
after 2005. Thus, CBO estimates that implementing this section 
would cost $9 million in 2003, cost $29 million over the 2003-
2005 period, and save $28 million over the 2006-2007 period.
    Section 112 would permanently extend VA's authority to 
provide counseling and treatment for veterans who suffered 
sexual trauma while a member of the armed services. Under 
current law, this provision expires on December 31, 2004. VA 
currently spends about $2 million a year providing this 
counseling and treatment. CBO estimates that extending this 
provision would cost $2 million in 2005 and $6 million over the 
2005-2007 period, assuming appropriation of the estimated 
amounts.
    Prescription Drug Copayments. Section 311 would raise the 
income threshold for receiving free prescription drugs to the 
same level needed to receive free health care and would allow 
all veterans with incomes less than the annually adjusted 
amount to be eligible for free prescription drugs. The 
specifics of this proposal were discussed above under the 
heading of ``Direct Spending.'' As mentioned earlier, CBO 
estimates the impact of providing free prescription drugs to a 
larger number of veterans would have no budgetary effect over 
the 2003-2007 period because the authority to collect 
prescription drug copayments expires on September 30, 2002. (As 
noted below, costs would be triggered if future legislation 
extends that authority.)
    If S. 2043 were enacted before the end of the fiscal year, 
CBO estimates that this provision would decrease spending from 
the MCCF by no more than $10 million. Because spending from the 
MCCF is subject to appropriation, this reduction would 
represent a real cost to VA that would need to be paid for out 
of increased appropriations if the level of medical care were 
not reduced. CBO estimates that implementing S. 2043 could 
increase spending by as much as $10 million, if the bill were 
enacted before October 1, 2002, assuming the availability of 
appropriated funds.
    In addition, if the authority to collect prescription drug 
copayments were extended through September 30, 2007, CBO 
estimates that VA would collect $634 million from prescription 
drug copayments in 2003 and almost $4 billion over the 2003-
2007 period. If the collection authority is extended, CBO 
estimates that those collections would be reduced by about 35 
percent or $222 million in 2003 and about $1.4 billion over the 
2003-2007 period under S. 2043.
    Pilot Project on Medical Care Outreach. Section 322 would 
authorize VA to establish and operate two VA clinics for fiscal 
years 2003 and 2004 as a pilot project in the state of 
Washington to provide outreach on health care and services for 
veterans in that state. These clinics would provide basic 
health care services to veterans in areas that do not currently 
have VA facilities and would be open at least one day a week. 
Based on information from VA, CBO estimates that each clinic 
would cost about $1 million a year to operate. Thus CBO 
estimates that implementing this provision would cost $4 
million over the 2003-2004 period, assuming appropriation of 
the estimated amounts.
    Major Construction of Veterans Medical Facilities. Sections 
201 would authorize specific construction projects for seismic 
corrections along with one construction project for a long-term 
care facility, and would set spending limits for each project. 
Section 202 would authorize the appropriation of $108.5 million 
in 2003 for major construction projects. Finally, section 211 
would raise the threshold for projects to be financed out of 
the appropriation for major medical facility construction from 
$4 million to $9 million. (Thus, under the bill projects 
costing up to $9 million would be considered minor 
construction.) CBO estimates that implementing these provisions 
would cost $5 million in 2003 and $105 million over the 2003-
2007 period, assuming appropriation of the authorized amounts.
    Grants for Construction of Extended Care Facilities. 
Section 212 would authorize up to $16 million to expand, 
remodel, or alter space in six Pioneer Homes in the state of 
Alaska that are dedicated to providing care for veterans. Under 
section 212, these modified Pioneer Homes would be considered a 
state home facility for the state of Alaska for the purpose of 
laws administered by the Secretary of VA. CBO estimates that 
this provision would have no cost in 2003 but would cost $16 
million over the 2004-2007 period, assuming appropriation of 
the authorized amounts.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending. The net changes in outlays that are subject to pay-
as-you-go procedures are shown in Table 3. For the purposes of 
enforcing pay-as-you-go procedures, only the effects through 
fiscal year 2006 are counted.

                      Table 3.--Estimated Impact of S. 2043 on Direct Spending and Receipts
                                    [By Fiscal Year, in Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
                                      2002   2003   2004   2005   2006   2007   2008   2009   2010   2011   2012
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0      6      6      6      6      6      6      7      7      7      7
Changes in receipts *
----------------------------------------------------------------------------------------------------------------
* Not applicable.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    S. 2043 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments.

                         PREVIOUS CBO ESTIMATE

    On October 29, 2001, CBO transmitted a cost estimate for S. 
1408, the Veterans' Copayment Adjustment Act, as introduced on 
September 6, 2001. S. 2043 and S. 1408 would both allow more 
veterans to become eligible for free prescription drugs by 
raising the income threshold for determining which veterans 
need to make a prescription drug copayment. Because neither 
bill would extend the authority to collect prescription drug 
copayments, which expires on September 30, 2002, the estimated 
costs of this provision are limited to fiscal year 2002 for 
both bills. CBO's estimate for S. 2043 does not include any 
costs for fiscal year 2002 because we assume the bill will be 
enacted near the beginning of fiscal year 2003. Differences in 
the cost estimates stem primarily from different assumed 
enactment dates.
    Estimate prepared by: Federal Costs: Sam Papenfuss and 
Geoffrey Gerhardt. Impact on State, Local, and Tribal 
Governments: Elyse Goldman. Impact on the Private Sector: Sally 
S. Maxwell.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that the Committee bill would not entail any 
regulation of individuals or businesses or result in any impact 
on the personal privacy of any individuals and that the 
paperwork resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7 of rule XXVI of the Standing 
Rules of the Senate, the following is a tabulation of votes 
cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its June 6, 2002 meeting. On that date, 
the Committee, by unanimous voice vote, ordered S. 2043, as 
amended, reported favorably to the Senate.

                             Agency Report

    On May 2, 2002, the Honorable Tim McClain, General Counsel, 
Department of Veterans Affairs, appeared before the Committee 
and submitted testimony on, among other things, S. 1408, S. 
1576, S. 2043, S. 2044, S. 2227, and S. 2228. Excerpts from 
this statement are reprinted below:

   STATEMENT OF TIM McCLAIN, GENERAL COUNSEL, DEPARTMENT OF VETERANS 
                                AFFAIRS

    Mr. Chairman and Members of the Committee, Thank you for 
the opportunity to testify on a number of legislative items of 
interest to veterans.

           *       *       *       *       *       *       *

                                S. 1408

    This bill would increase the income threshold used to 
define the group of low-income veterans who are exempted from 
paying the outpatient pharmacy co-payment. The exempted group 
would be expanded to include veterans who, for purposes of 
receiving VA health care, are deemed unable to defray necessary 
expenses of care, i.e., those with incomes below VA's ``means-
test'' threshold. A provision of the bill would also prohibit 
the Secretary from increasing the pharmacy co-payment until VA 
begins collecting co-payments for outpatient care.
    Currently, the low-income exemption applies only to those 
veterans whose incomes do not exceed the maximum annual rate of 
pension payable under 38 U.S.C. Sec. 1521 were they eligible 
for such pension. This is a much smaller group composed of very 
low-income veterans. Although VA appreciates the desire to 
standardize the definition of ``low-income'' veteran for 
purposes of both health care eligibility and the pharmacy co-
payment exemption, VA cannot support S. 1408. The proposal 
would significantly reduce much-needed revenue upon which the 
Department relies to continue providing services. We also 
recommend deletion of the provision deferring increases in the 
amount of the pharmacy co-payment. VA is already implementing 
new regulations pertaining to both the pharmacy co-payment and 
the outpatient co-payment.
    We estimate the PAYGO costs of S. 1408 to be $300 million 
dollars annually.

           *       *       *       *       *       *       *

                                S. 1576

    S. 1576 would extend through December 31, 2011, VA's 
special authority to treat Gulf War veterans for any 
disability, notwithstanding there is insufficient medical 
evidence to conclude that such disability may be associated 
with such service. That authority will expire after December 
31, 2002. VA supports this proposal.

           *       *       *       *       *       *       *

                                S. 2043

    S. 2043 would extend by five years (through December 31, 
2008) VA's authority to provide non-institutional extended care 
services as part of the medical benefits package furnished to 
veterans. The bill would also extend through December 31, 2008, 
mandatory eligibility for nursing home care for veterans with a 
service-connected disability rated 70% or greater. Finally, S. 
2043 would extend by five years the date by which the Secretary 
must report to Congress on the operation of its long-term care 
programs established under the Millennium Act. VA supports S. 
2043 and the continuation of the Millennium Act non-
institutional long-term care provisions.

           *       *       *       *       *       *       *

                                S. 2044

    S. 2044 would amend section 116 of the Millennium Act to 
direct that we increase funding for specialized mental health 
services for veterans. The measure directs that we expend $25 
million for these programs, but it is not clear whether it 
would require $25 million for each of three successive years, 
or over a three-year period. The additional $25 million must 
also be over and above the baseline amount now being expended 
for these programs. However, it is unclear if we must expend an 
additional $25 million over the baseline each year for three 
successive years, or only over a three-year period. Finally, 
the measure directs that we consider these funds to be special-
purpose funds that we must allocate outside the VERA allocation 
system.
    Although VA appreciates the need to ensure adequate funding 
for these highly valuable and essential health-care programs, 
we strongly oppose this bill. We do not believe any individual 
health service should be treated differently from other 
essential treatment programs for allocation of appropriated 
resources. We also believe it is inappropriate to direct that 
we allocate funds for programs like this outside of the VERA 
system.

           *       *       *       *       *       *       *

                                S. 2227

    S. 2227 would clarify the effective date of changes to the 
method of computing retirement annuities for certain VA health-
care personnel. Last January the Department of Veterans Affairs 
Health Care Programs Enhancement Act of 2001 (P.L. 107-135) 
became law. That bill changed the way part-time service 
performed before April 7, 1986, by certain VA health-care 
personnel is credited for annuity purposes. VA had recruitment 
and retention problems based upon the prior methodology of the 
annuity computation for VA nurses. These difficulties were 
addressed by the enactment of section 132 of P.L. 107-135. S. 
2227 would extend the benefits of section 132 of P.L. 107-135 
to individuals who retired before the law's enactment. The 
Administration opposes legislation that modifies the 
retirement-benefit computations for employees who are already 
retired.

           *       *       *       *       *       *       *

                                S. 2228

    This bill would provide that the Secretary may establish 
not more than 15 Centers for Mental Illness Research, 
Education, and Clinical Activities under 38 U.S.C. Sec. 7320. 
VA has no objection to this provision.

          Additional Views of Chairman John D. Rockefeller IV

    Section 212 of the Committee bill sets a precedent which is 
cause for concern. The State Veterans Home program--run by the 
Department of Veterans Affairs--is a partnership between the 
states and VA to meet the needs of veterans through the 
establishment and maintenance of custodial facilities, 
hospitals, and nursing homes. This partnership has existed for 
more than 60 years.
    In order to gain access to VA funds, which total 65 percent 
of the construction or renovation of existing buildings, a 
state must certify the availability of the remaining 35 
percent. This financial commitment allows VA's limited 
resources to benefit more states and ultimately more veterans, 
and it is the cornerstone of the State Veterans Home Program.
    Section 212 of the Committee bill creates an exception for 
the State of Alaska and would allow the Secretary of VA to hand 
over $16 million to Alaska without any corresponding State 
appropriation.
    Every state, save Alaska, Delaware and Hawaii, have 
previously enacted legislation to appropriate their share for 
participation in the program. Many states have done so multiple 
times, so that veterans could have access to more than one 
facility. Currently, both Alaska and Delaware legislatures have 
taken up the issue.
    Most recently, the legislatures in West Virginia, Colorado, 
Texas, Pennsylvania, and Idaho, have each set aside funds 
totaling more than $25 million dollars. Had these States sought 
a route similar to the one taken by section 212 of the 
Committee bill, the cost to the Federal government would be 
more than $46 million. The chart below details the funding for 
each State Veterans Home project.

                             Construction Grants for State Extended Care Facilities
                                             [dollars in thousands]
----------------------------------------------------------------------------------------------------------------
                                                                                             State Appropriated
                  State Home                         Total Cost             VA Share                Share
----------------------------------------------------------------------------------------------------------------
Alexander City, AL............................                 7,629                 4,959                 2,670
Anderson, SC..................................                12,520                 7,516                 5,004
Anna, IL......................................                 4,510                 2,932                 1,578
Armore, OK....................................                 9,501                 6,176                 3,325
Augusta, GA...................................                 1,956                   978                   978
Augusta, ME...................................                 4,472                 2,907                 1,565
Aurora, CO....................................                23,843                15,498                 8,345
Bangor, ME....................................                10,154                 6,600                 3,554
Barstow, CA...................................                30,500                19,825                10,675
Batavia, NY...................................                15,000                 8,633                 6,367
Bay Minette, AL...............................                10,035                 6,523                 3,512
Bennington, VT................................                11,960                 7,006                 4,954
Big Springs, TX...............................                11,770                 7,650                 4,120
Boise, ID.....................................                 6,795                 4,292                 2,503
Bonham, TX....................................                11,770                 7,650                 4,120
Boulder City, NV..............................                20,930                13,604                 7,326
Bristol, RI...................................                 8,377                 5,264                 3,113
Buffalo, NY...................................                 3,633                 2,254                 1,379
Cape Girardeau, MO............................                 8,364                 5,436                 2,928
Cameron, MO...................................                20,356                13,604                 6,752
Caribou, ME...................................                 1,850                 1,187                   663
Charlotte Hall, MD............................                33,885                20,432                13,453
Chelsea, MA...................................                 7,999                 4,593                 3,406
Chula Vista, CA...............................                34,803                22,100                12,703
Claremore, OK.................................                22,769                14,364                 8,405
Clarksburg, WV................................                13,500                 8,775                 4,725
Clinton, OK...................................                10,223                 6,568                 3,655
Collins, MS...................................                 9,451                 6,143                 3,308
Columbia Falls, MT............................                 1,711                 1,040                   671
Columbia, SC..................................                 1,982                   687                 1,295
Daytona Beach, FL.............................                11,646                 7,764                 3,882
Erie, PA......................................                 6,862                 3,550                 3,312
Fayetteville, NC..............................                 8,801                   692                 8,109
Fergus Falls, MN..............................                 8,000                 5,200                 2,800
Florence, CO..................................                 1,410                   894                   516
Floresville, TX...............................                11,746                 7,635                 4,111
Ft. Dodge, KS.................................                   830                   415                   415
Glendive, MT..................................                 5,691                 3,699                 1,992
Grand Island, NB..............................                 3,299                 1,333                 1,966
Grand Rapids, MI..............................                22,005                12,993                 9,012
Hanson, KY....................................                13,635                 8,863                 4,772
Hastings, MN..................................                 4,888                 3,292                 1,596
Hazard, KY....................................                15,457                10,047                 5,410
Hollidaysburg, PA.............................                26,569                16,567                10,002
Holyoke, MA...................................                 4,062                 2,130                 1,932
Homelake, CO..................................                 2,822                 1,864                   958
Hot Springs, SD...............................                 1,330                   829                   501
Humboldt, TN..................................                 7,538                 4,900                 2,638
Huntsville, AL................................                10,308                 6,701                 3,607
Jackson, LA...................................                 8,675                 5,000                 3,675
Jackson, MS...................................                 6,198                 3,931                 2,267
Juana Diaz, PR................................                13,667                 8,884                 4,783
King, WI......................................                34,801                20,385                14,416
Kosciusko, MS.................................                 9,172                 5,962                 3,210
Lafayette, IN.................................                12,532                 6,126                 6,406
Lake City, FL.................................                 6,739                 4,376                 2,363
Land O'Lakes, FL..............................                11,944                 7,764                 4,180
LaSalle, IL...................................                 7,200                 4,643                 2,557
Lawson, OK....................................                38,226                24,847                13,379
Lewiston, ID..................................                 6,012                 3,908                 2,104
Lisbon, ND....................................                 5,381                 3,498                 1,883
Little Rock, AR...............................                 2,182                 1,418                   764
Luverne, MN...................................                 7,457                 4,847                 2,610
Manteno, IL...................................                18,094                11,761                 6,333
Marquette, MI.................................                10,639                 6,915                 3,724
Marshalltown, IA..............................                42,557                27,205                15,352
Menlo Park, NJ................................                47,284                30,058                17,226
Mexico, MO....................................                 8,027                 5,204                 2,823
Milledgeville, GA.............................                12,284                 6,808                 5,476
Minneapolis, MN...............................                43,831                28,358                15,473
Monroe, LA....................................                11,849                 7,279                 4,570
Montrose, NY..................................                43,856                28,506                15,350
Murfreesboro, TN..............................                 5,126                 3,226                 1,900
Norman, OK....................................                29,737                19,255                10,482
Norfolk, NB...................................                16,516                10,527                 5,989
Omaha, NB.....................................                 1,913                 1,243                   670
Orting, WA....................................                 4,382                 2,805                 1,577
Oxford, MS....................................                 9,537                 6,199                 3,338
Paramus, NJ...................................                28,677                18,251                10,426
Pembroke Pines, FL............................                15,344                 9,924                 5,420
Philadelphia, PA..............................                20,930                13,605                 7,325
Phoenix, AZ...................................                14,189                 9,223                 4,966
Pittsburgh, PA................................                27,339                17,770                 9,569
Pocatello, ID.................................                 5,277                 3,430                 1,847
Quincy, IL....................................                 3,976                 2,772                 1,204
Retsil, WA....................................                 5,989                 3,871                 2,118
Rifle, CO.....................................                 3,571                 2,321                 1,250
Roanoke, VA...................................                17,846                 9,161                 8,685
Rocky Hill, CT................................                 4,656                 2,843                 1,813
Salisbury, NC.................................                 3,371                 2,191                 1,180
Salt Lake City, UT............................                 6,792                 4,415                 2,377
St. Albans, NY................................                28,919                18,798                10,121
St. James, MO.................................                27,754                16,829                10,925
Sandusky, OH..................................                47,762                30,008                17,754
Scarborough, ME...............................                11,226                 6,858                 4,368
Scotts Bluff, NB..............................                 4,520                 2,854                 1,666
Scranton, PA..................................                23,143                13,477                 9,666
Silver Bay, MN................................                 2,481                 1,613                   868
South Paris, ME...............................                 7,619                 4,953                 2,666
Spring City, PA...............................                17,936                11,653                 6,283
Stony Brook, NY...............................                25,400                16,510                 8,890
Sulfur, OK....................................                 5,077                 3,300                 1,777
Talihina, OK..................................                 9,438                 5,999                 3,439
Temple, TX....................................                11,770                 7,650                 4,120
The Dllas, OR.................................                14,218                 9,242                 4,976
Tilton, NH....................................                 7,022                 4,414                 2,608
Truth or Consequence, NM......................                 5,662                 3,636                 2,026
Union Grove, WI...............................                 2,857                 1,857                 1,000
Vineland, NJ..................................                16,432                 8,663                 7,769
Walsenburg, CO................................                 7,741                 5,404                 2,337
Warrensburg, CO...............................                20,960                13,624                 7,336
Wilmore, KY...................................                14,923                10,315                 4,609
Winfield, KS..................................                17,171                10,641                 6,530
Yountville, CA................................                94,694                61,384                33,310
----------------------------------------------------------------------------------------------------------------

    On June 6, 2002, John Johnson, President of the National 
Association of State Veterans Homes wrote:
          We feel giving one state preference would be unjust 
        to all other states. We have worked long and hard with 
        the Department of Veterans Affairs and members of both 
        Houses to create a fair and equitable program. If any 
        changes are made, they should not favor one state over 
        another, but should be equally applied to all states 
        and veterans. Forty-seven states have had to use the 
        process that has been in place, and to waive rules and 
        regulations for one state would be an injustice to all 
        other states who have followed the process.
    Joseph A. Violante, National Legislative Director, Disabled 
American Veterans, expressed similar reservations. In his 
letter of June 6, 2002, Mr. Violante argued that section 212 
``bypasses the Department of Veterans Affairs State Home 
authority currently in place.''
    The proponent of this provision, Senator Murkowski, made 
the case that the uniqueness of Alaska mandates a different 
approach, and that may well be true. Alaska has six Pioneers' 
Homes, in which the elderly reside. Of the current 500 
residents, 97 are veterans. Rather than building one new home, 
it was argued that renovation of these existing homes would be 
more practical. Not only does the statute allow for the 
renovation of multiple facilities, but it actually favors these 
types of projects over new construction. Through the normal 
course--appropriation of funds by the Alaskan legislature, 
certification of the funds, and applications made to VA--Alaska 
could have multiple State Veterans Homes. Each stage of the 
process, including submitting a basic application, was 
disregarded.
    Applying this type of change equally to all states would 
unfortunately mean a total erosion of the partnership which has 
made the State Home Program a success. Allowing an exception 
for only one State is unfair to all others.
                                ------                                

    Changes in Existing Law Made by the Committee Bill, As Reported

    In compliance with rule XXVI paragraph 12 of the Standing 
Rules of the Senate, the following provides a print of the 
statute or the part or section thereof to be amended or 
replaced (existing law proposed to be omitted is enclosed in 
black brackets, new matter is printed in italic, existing law 
in which no change is proposed is shown in roman):

                     TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *

Sec. 1701. Definitions

  For the purposes of this chapter--

           *       *       *       *       *       *       *

  (10)(A) During the period beginning on [the date of the 
enactment of the Veterans Millennium Health Care and Benefits 
Act and ending on December 31, 2003,] November 30, 1999, and 
ending on December 31, 2008, the term ``medical services'' 
includes noninstitutional extended care services.

           *       *       *       *       *       *       *

Sec. 1710. Eligibility for hospital, nursing home, and domiciliary care

           *       *       *       *       *       *       *

  (e)(1)(A) `` * *

           *       *       *       *       *       *       *

  (3) * * *

           *       *       *       *       *       *       *

          (B) in the case of care for a veteran described in 
        paragraph (1)(C), after [December 31, 2002] December 
        31, 2012; and

           *       *       *       *       *       *       *

Sec. 1710A. Required nursing home care

           *       *       *       *       *       *       *

  (c) The provisions of subsection (a) shall terminate on 
[December 31, 2003] December 31, 2008.

           *       *       *       *       *       *       *

Sec. 1720D. Counseling and treatment for sexual trauma

  (a)(1) [During the period through December 31, 2004, the 
Secretary] The Secretary shall operate a program under which 
the Secretary provides counseling and appropriate care and 
services to veterans who the Secretary determines require such 
counseling and care and services to overcome psychological 
trauma, which in the judgment of a mental health professional 
employed by the Department, resulted from a physical assault of 
a sexual nature, battery of a sexual nature, or sexual 
harassment which occurred while the veteran was serving on 
active duty.
  (2) In furnishing counseling to a veteran under this 
subsection, the Secretary may[, during the period through 
December 31, 2004,] provide such counseling pursuant to a 
contract with a qualified mental health professional if (A) in 
the judgment of a mental health professional employed by the 
Department, the receipt of counseling by that veteran in 
facilities of the Department would be clinically inadvisable, 
or (B) Department facilities are not capable of furnishing such 
counseling to that veteran economically because of geographical 
inaccessibility.
  (b)(1) The Secretary shall give priority to the 
[establishment and] operation of the program to provide 
counseling and care and services under subsection (a). In the 
case of a veteran eligible for counseling and care and services 
under subsection (a), the Secretary shall ensure that the 
veteran is furnished counseling and care and services under 
this section in a way that is coordinated with the furnishing 
of such care and services under this chapter.
  (2) In [establishing a program] operating a program to 
provide counseling under subsection (a), the Secretary shall--

           *       *       *       *       *       *       *

Sec. 1722A. Copayment for medications

  (a)(1) * * *

           *       *       *       *       *       *       *

  (3) Paragraph (1) does not apply--

           *       *       *       *       *       *       *

          [(B) to a veteran whose annual income (as determined 
        under section 1503 of this title) does not exceed the 
        maximum annual rate of pension which would be payable 
        to such veteran if such veteran were eligible for 
        pension under section 1521 of this title.]
          (B) to a veteran whose attributable income is not 
        greater than the amount provided for in subsection (b) 
        of section 1722 of this title, as adjusted from time to 
        time under subsection (c) of that section.

           *       *       *       *       *       *       *

Sec. 7320. Centers for mental illness research, education, and clinical 
                    activities

           *       *       *       *       *       *       *

  (b)(1) * * *

           *       *       *       *       *       *       *

  (3) Not more than [five centers] 15 centers may be designated 
under this section.

           *       *       *       *       *       *       *

Sec. 7802. Duties of Secretary with respect to Service

  The Secretary shall--

           *       *       *       *       *       *       *

          (5) employ such persons as are necessary for the 
        establishment, maintenance, and operation of the 
        Service, and pay the salaries, wages, and expenses of 
        all such employees from the funds of the Service. 
        Personnel necessary for the transaction of the business 
        of the Service at canteens, warehouses, and storage 
        depots shall be appointed, compensated from funds of 
        the Service, and removed by the Secretary without 
        regard to the provisions of title 5 governing 
        appointments in the competitive service and chapter 51 
        and subchapter III of chapter 53 of title 5. Those 
        employees are subject to the provisions of title 5 
        relating to a preference eligible described in section 
        2108(3) of title 5, subchapter I of chapter 81 of title 
        5, and subchapter III of chapter 83 of title 5. 
        Employees and personnel under this clause may be 
        considered for appointment in Department positions in 
        the competitive service in the same manner that 
        Department employees in the competitive service are 
        considered for transfer to such positions. An employee 
        or individual appointed as personnel under this clause 
        who is appointed to a Department position under the 
        authority of the preceding sentence shall be treated as 
        having a career appointment in such position once such 
        employee or individual meets the three-year requirement 
        for career tenure (with any previous period of 
        employment or appointment in the Service being counted 
        toward satisfaction of such requirement);

           *       *       *       *       *       *       *

Sec. 8104. Congressional approval of certain medical facility 
                    acquisitions

  (a)(1) * * *

           *       *       *       *       *       *       *

  (3) For the purpose of this subsection:
          (A) The term *major medical facility project'' means 
        a project for the construction, alteration, or 
        acquisition of a medical facility involving a total 
        expenditure of more than [$4,000,000] $9,000,000, but 
        such term does not include an acquisition by exchange.

           *       *       *       *       *       *       *

           VETERANS MILLENNIUM HEALTH CARE AND BENEFITS ACT

           *       *       *       *       *       *       *

                        TITLE I--ACCESS TO CARE

                       Subtitle A--Long-Term Care

SEC. 101. REQUIREMENT TO PROVIDE EXTENDED CARE SERVICES.

           *       *       *       *       *       *       *

  (i) Report.--Not later than [January 1, 2003,] January 1, 
2008, the Secretary shall submit to the Committees on Veterans' 
Affairs of the Senate and House of Representatives a report on 
the operation of this section (including the amendments made by 
this section). The Secretary shall include in the report--

           *       *       *       *       *       *       *

SEC. 116. SPECIALIZED MENTAL HEALTH SERVICES.

           *       *       *       *       *       *       *

  (c) Funding.--(1) In carrying out the program described in 
subsection (a), the Secretary shall identify, from funds 
available to the Department for medical care, an amount of not 
less than [$15,000,000] $25,000,000 in each of fiscal years 
2003, 2004, and 2005 to be available to carry out the program 
and to be allocated to facilities of the Department pursuant to 
subsection (d).
  (2) In identifying available amounts pursuant to paragraph 
(1), the Secretary shall ensure that, after the allocation of 
those funds under subsection (d), the total expenditure for 
programs relating to (A) the treatment of post-traumatic stress 
disorder, and (B) substance use disorders is not less than 
[$15,000,000] $25,000,000 in excess of the baseline amount.
  (3)(A) For purposes of paragraph (2), the baseline amount is 
the amount of the total expenditures on such programs for the 
most recent fiscal year for which final expenditure amounts are 
known, adjusted to reflect any subsequent increase in 
applicable costs to deliver such services in the Veterans 
Health Administration, as determined by the Committee on Care 
of Severely Chronically Mentally Ill Veterans.
  (B) For purposes of this paragraph, in fiscal years 2003, 
2004, and 2005, the fiscal year utilized to determine the 
baseline amount shall be fiscal year 2002.

           *       *       *       *       *       *       *

  (d) Allocation of Funds to Department Facilities.--[The 
Secretary] (1) In each of fiscal years 2003, 2004, and 2005, 
the Secretary shall allocate funds identified pursuant to 
subsection (c)(1) to individual medical facilities of the 
Department as the Secretary determines appropriate based upon 
proposals submitted by those facilities for the use of those 
funds for improvements to specialized mental health services.
  (2) In allocating funds to facilities in a fiscal year under 
paragraph (1), the Secretary shall ensure that--
          (A) not less than $10,000,000 is allocated by direct 
        grants to programs that are identified by the Mental 
        Health Strategic Health Care Group and the Committee on 
        Care of Severely Chronically Mentally Ill Veterans;
          (B) not less than $5,000,000 is allocated for 
        programs on post-traumatic stress disorder; and
          (C) not less than $5,000,000 is allocated for 
        programs on substance abuse disorder.
  (3) The Secretary shall provide that the funds to be 
allocated under this section during each of fiscal years 2003, 
2004, and 2005 are funds for a special purpose program for 
which funds are not allocated through the Veterans Equitable 
Resource Allocation system.

           *       *       *       *       *       *       *

       VETERANS BENEFITS AND HEALTH CARE IMPROVEMENT ACT OF 2000

           *       *       *       *       *       *       *

                      TITLE II--HEALTH PROVISIONS

           *       *       *       *       *       *       *

                 Subtitle D--Construction Authorization

SEC. 231. AUTHORIZATION OF MAJOR MEDICAL FACILITY PROJECTS.

  (a) Fiscal Year 2001 Projects.--The Secretary of Veterans 
Affairs may carry out the following major medical facility 
projects, with each project to be carried out in an amount not 
to exceed the amount specified for that project:

           *       *       *       *       *       *       *

          (2) Construction of a nursing home at the Department 
        of Veterans Affairs Medical Center, Beckley, West 
        Virginia, [$9,500,000] $18,200,000.

           *       *       *       *       *       *       *

SEC. 232. AUTHORIZATION OF APPROPRIATIONS.

  (a) In General.--There are authorized to be appropriated to 
the Secretary of Veterans Affairs for the Construction, Major 
Projects, account--
          (1) for fiscal years 2001 and 2002, a total of 
        [$87,800,000] $96,500,000 for the projects authorized 
        in paragraphs (1), (2), and (3) of section 231(a);

           *       *       *       *       *       *       *

                                  
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