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

                  THE VETERANS HEALTH ADMINISTRATION'S
                        FISCAL YEAR 2011 BUDGET

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

                                HEARING

                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

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

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 23, 2010

                               __________

                           Serial No. 111-61

                               __________

       Printed for the use of the Committee on Veterans' Affairs

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55-229                    WASHINGTON : 2010
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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

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

                   Malcom A. Shorter, Staff Director

                                 ______

                         Subcommittee on Health

                  MICHAEL H. MICHAUD, Maine, Chairman

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

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                           February 23, 2010

                                                                   Page
The Veterans Health Administration's Fiscal Year 2011 Budget.....     1

                           OPENING STATEMENTS

Chairman Michael Michaud.........................................     1
    Prepared statement of Chairman Michaud.......................    27
Hon. Henry E. Brown, Jr., Ranking Republican Member, prepared 
  statement of...................................................    27

                               WITNESSES

U.S. Department of Veterans Affairs, Hon. Robert A. Petzel, M.D., 
  Under Secretary for Health, Veterans Health Administration.....     2
    Prepared statement of Dr. Petzel.............................    28

                                 ______

American Legion, Joseph L. Wilson, Deputy Director, Veterans 
  Affairs and Rehabilitation Commission..........................    20
    Prepared statement of Mr. Wilson.............................    46
The Independent Budget:
    Blake C. Ortner, Senior Associate Legislative Director, 
      Paralyzed Veterans of America..............................    17
        Prepared statement of Mr. Ortner.........................    32
    Eric A. Hilleman, Director, National Legislative Service, 
      Veterans of Foreign Wars of the United States..............    19
        Prepared statement of Mr. Hilleman.......................    37

                       SUBMISSION FOR THE RECORD

National Association for Veterans' Research and Education 
  Foundations, Barbara F. West, Executive Director...............    48

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:
    Hon. Michael Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs, to Hon. Eric K. Shinseki, 
      Secretary, U.S. Depart- 
      ment of Veterans Affairs, letter dated March 9, 2010, and VA
       responses.................................................    53
    Hon. Michael Michaud, Chairman, Subcommittee on Health, 
      Committee on Veterans' Affairs, to Blake C. Ortner, Senior 
      Associate Legislative Director, Paralyzed Veterans of 
      America, letter dated March 9, 2010, and response letter 
      and attachment, dated April 1, 2010........................    65

 
                  THE VETERANS HEALTH ADMINISTRATION'S
                        FISCAL YEAR 2011 BUDGET

                              ----------                              

                       TUESDAY, FEBRUARY 23, 2010

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

    The Subcommittee met, pursuant to notice, at 1:05 p.m., in 
Room 334, Cannon House Office Building, Hon. Michael H. Michaud 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Michaud, Snyder, Teague, Donnelly, 
Halvorson, Brown of South Carolina, Boozman, and Buchanan.

             OPENING STATEMENT OF CHAIRMAN MICHAUD

    Mr. Michaud. We may as well get started. Mr. Brown is on 
the floor giving a 1 minute speech, and I know Mr. Teague is on 
his way over here, so we may as well get started now.
    I would like to thank everyone for coming out this 
afternoon. The purpose of today's hearing is to examine the 
fiscal year 2011 President's budget request for the Veterans 
Health Administration (VHA) of the U.S. Department of Veterans 
Affairs (VA). The ``Veterans Health Care Budget Reform and 
Transparency Act of 2009'' provides for advanced appropriation 
for the VA medical care accounts and was enacted into law on 
October 22nd, 2009. In accordance with this Act, the 
President's budget requests fiscal year 2011 and 2012 funding 
for the VA medical care accounts.
    The Administration requests $48.2 billion for VA medical 
care for fiscal year 2011, which includes the medical services, 
medical support, and compliance, and medical facility accounts 
of the VA. When medical care collections are included, the 
Administration's request is $51.5 billion for VA medical care, 
which is $4 billion or 8.6 percent above the 2010 enacted 
level.
    In fiscal year 2012, the Administration requests $54.3 
billion for VA medical care, which is about $3 billion or 5.3 
percent above the 2011 request.
    The fiscal year 2011 budget request addresses many of the 
shared priorities of this Subcommittee such as rural health, 
mental health, and homeless veterans.
    The President's budget request for VA is a robust budget in 
the tradition of the significant funding increase that the VA 
will receive or has received in the past several years.
    Through today's hearing we will examine the President's 
2011 budget request for VHA, which includes a funding 
recommendation, as well as policy and legislative proposals for 
the medical care accounts of VHA.
    In addition, we will examine the information technology 
(IT) and the construction resources for VHA, and we will 
explore whether the budget request for the VA health care 
system provides significant resources to meet the needs of our 
returning servicemembers, including those who deployed as part 
of the troop surge in Afghanistan.
    Today we will hear from the VA's Under Secretary for 
Health, as well as Paralyzed Veterans of America (PVA), and the 
Veterans of Foreign Wars (VFW), who are co-authors of The 
Independent Budget (IB). We will also hear from the American 
Legion. I look forward to hearing testimonies.
    [The prepared statement of Chairman Michaud appears on p. 27
.]
    Mr. Michaud. I would like to recognize Mr. Boozman for any 
opening statement he might have? Mr. Teague or Mr. Donnelly, do 
either of you have an opening statement?
    Mr. Teague. No, and for the sake of time I will defer to 
the questions.
    Mr. Michaud. Thank you very much. Without any further ado, 
I would like to recognize our first panel, Dr. Robert Petzel 
who is the Under Secretary for Health. He is accompanied by 
Paul Kearns, Robert Neary, and Brandi Fate. I want to thank all 
of you for coming today. I want to congratulate you, Doctor, 
for your appointment as Under Secretary of Health. I will look 
forward to working with you as we try to take care of the needs 
of the brave men and women who serve this Nation of ours. I 
have heard a lot about you, and look forward to your testimony 
today.
    So without any further ado, Doctor.

 STATEMENT OF HON. ROBERT A. PETZEL, M.D., UNDER SECRETARY FOR 
  HEALTH, VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF 
VETERANS AFFAIRS; ACCOMPANIED BY PAUL KEARNS III, FACHE, FHFMA, 
 CPA, CHIEF FINANCIAL OFFICER, VETERANS HEALTH ADMINISTRATION, 
 U.S. DEPARTMENT OF VETERANS AFFAIRS; ROBERT L. NEARY, ACTING 
  DIRECTOR, OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT, 
U.S. DEPARTMENT OF VETERANS AFFAIRS; AND BRANDI FATE, DIRECTOR, 
CAPITAL ASSET MANAGEMENT AND PLANNING SERVICE, VETERANS HEALTH 
      ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Dr. Petzel. Chairman Michaud, Ranking Member Brown, and 
distinguished Members of the Subcommittee, thank you for this 
opportunity to present the President's fiscal year 2011 budget 
and fiscal year 2012 advanced appropriation requests for the 
Veterans Health Administration.
    Our budget provides resources necessary to continue our 
aggressive pursuit of the President's two overarching goals, to 
transform VA into a 21st century organization and to ensure 
that we provide the highest quality of health care to our 
deserving veterans.
    Before I begin, I would like to thank all of you and your 
colleagues in the Senate for your support as I take on the 
responsibility of managing the Nation's largest and best 
integrated health care system as the new Under Secretary for 
Health. There are many challenges and opportunities ahead, and 
I look forward to working closely with you to improve the 
health and well-being of America's veterans. I also look 
forward to developing strong relationships with the veterans 
service organizations (VSOs), including those who appear today 
in support of The Independent Budget, and I thank them for 
their efforts on behalf to improve the lives of veterans.
    During my confirmation, I pledged to the Senate that I 
would focus on three areas. Articulating a vision of our health 
care system and what it needs to become, more patient centered, 
providing more team care, and continuously improving itself. 
Number two, aligning the organization to achieve that vision. 
And number three, reducing the variation in our organizations, 
structures, business practices, and medical care.
    I believe our budget supports these three strategic goals 
as well as the six high priority performance goals mentioned in 
my written statement.
    VA's budget provides $51.5 billion for medical care in 
2011, an increase of $4 billion over the previous year, or 
about an 8.5-percent increase. This level will allow us to 
continue providing timely, high-quality care to all enrolled 
veterans.
    During 2011, we expect to treat 6.1 million unique 
patients, a 2.9-percent increase over the previous year. Among 
this total will be 439,000 veterans who have served in Iraq or 
Iran, an increase--in Afghanistan rather--an increase of nearly 
15 percent from 2010. Our budget request provides $2.6 billion 
to meet the health care needs of this population, a 20-percent 
increase from the previous year, 2010. This estimate reflects 
also the surge of troops that we expect in Afghanistan.
    The treatment of this newest generation of veterans has 
provided stimulation to us to improve the treatment for 
conditions such as post traumatic stress disorder and traumatic 
brain injury. We are increasing resources for an aging veteran 
population with chronic illness by increasing the funding for 
long-term care by 14 percent, and providing an almost 23-
percent increase in money for non-institutional long-term care.
    We will also strengthen access to health care for rural 
veterans through our new outreach and delivery initiatives, as 
well as expanding home-based primary care, telemental health, 
and telehealth services.
    We will further expand health care eligibility for Priority 
8 veterans in 2011. We estimate that approximately 100,000 new 
veterans will enroll because of this effort.
    The 2011 budget provides $217.6 million to meet the gender 
specific health care needs of women veterans, an increase of 
more than 9 percent over the 2010 level. We will be delivering 
better primary care for women veterans, and this remains one of 
the Department's highest priorities.
    This budget provides the resources required to enhance 
access in our health care system by activating new and improved 
facilities, expanding health care eligibility, and making 
greater investments in telehealth.
    We are requesting a substantial investment for our homeless 
program as part of our plan to ultimately eliminate veteran 
homelessness through an aggressive approach that includes 
housing, education, jobs, and health care.
    VA will be successful in resolving these concerns by 
maintaining a clear focus on developing innovative business 
practices and delivery systems that will not only serve 
veterans and their families for many years to come, but will 
also dramatically improve the efficiency of our operations. By 
making appropriate investments today, we can ensure that higher 
value and better outcomes will endure for our veterans.
    VA must provide timely, high-quality health care in a 
medical infrastructure, which is on average 60 years old. In 
2011, we are requesting $1.6 billion to invest in our major and 
minor construction programs to accomplish projects that are 
crucial to right sizing and modernizing VA's health care 
infrastructure, providing greater access to benefits and 
services for more veterans closer to where they live, and 
adequately addressing patient safety and other critical 
facility deficiencies.
    The 2011 budget request for VA major construction is $1.15 
billion. The $467 million request for 2011 for minor 
construction is an integral component of our overall capital 
program.
    Minor construction permits VA to realign critical services, 
make seismic corrections, improve patient safety, enhance 
access to health care, increase capacity for dental care, 
enhance patient privacy, improve treatment of special emphasis 
programs, and expand our research capability.
    Further, minor construction resources will be used to 
comply with energy efficiency and sustainability design 
requirements.
    VA's 298,000 employees are committed to providing the 
quality of service needed to serve our veterans and their 
families. They are our most valuable resource. VA is fortunate 
to have public servants that are not only creative thinkers, 
but also able to put good ideas into practice.
    With such a workforce and the continuing support of 
Congress, I am confident we can achieve our shared goal of 
accessible, high-quality, timely care and benefits for our 
Nation's veterans.
    Thank you again for this opportunity to appear, and my 
colleagues and I are prepared to answer your questions.
    [The prepared statement of Dr. Petzel appears on p. 28.]
    Mr. Michaud. Thank you very much Doctor, we really 
appreciate your testimony. As I stated in my opening remarks, I 
am looking forward to working with you.
    I now recognize Mr. Teague for any questions he may have.
    Mr. Teague. Good afternoon, thanks for coming to all of you 
and thanks for participating in this hearing. And Mr. Chairman, 
Ranking Member, thank you for allowing me to ask a couple of 
questions here.
    A couple a weeks ago when the Secretary said that after the 
26.4 percent medical care budget increase since 2009 we are 
going to be working on reducing the rate of increase in the 
cost of the provision of health care by focusing on areas 
better leveraging acquisitions and contracting. Could you 
expand on that a little bit more?
    Dr. Petzel. Yes, thank you Congressman Teague.
    Just to give you an example, I come from Minneapolis 
Network 23 where I was the network director, and in that 
network we consolidated our imaging or radiology services and 
consolidated our purchasing for the radiology services, to wit, 
we saved in the purchasing of seven new CAT scanners, about $3 
million. This sort of consolidated purchasing across the entire 
system I think is going to provide us with substantial, 
substantial cost reductions. I also think that by standardizing 
our services, in again many of our networks, we are going to be 
able to realize substantial savings.
    Just one more example, the Prosthetics Service several 
years ago began a process of standardizing some of their 
prosthetic equipment, and one of the things that they 
standardized was hips. We had about 35 different brands and 
varieties of artificial hips that we used when we did a hip 
replacement in patients. And we have consolidated that down to 
I believe about five different prosthetics that meet 
everybody's needs at a substantial savings. I think that doing 
this across the system is going to entail substantial savings.
    Mr. Teague. Coming from a rural district, and I mean a 
really rural district where we have a lot of people that have 
to travel 300 miles to get to a hospital, and knowing that 
there was an additional $30 million in the medical facilities 
account so that we could have more community based outpatient 
clinics (CBOCs) and everything open up, I was just wondering 
how many of those have we added, and how many do we intend to 
continue adding in the 2011 budget? And if so, how many?
    Dr. Petzel. By the end of 2010, and it is actually going to 
be spilling into 2011, because we are not going to be able to 
activate all of the CBOCs that we had planned for 2010, but by 
the end of that period we expect to have 862, I believe, 
community based outpatient clinics, and that is an increase, I 
think, of almost 100 over what we had in 2009. Fifty-one of 
these, Mr. Kearns is pointing out, are in rural areas. So there 
is going to be a substantial investment in 2010 extending into 
2011 in rural CBOCs.
    Mr. Teague. Okay. Is there a list somewhere where we can 
see where they are projected to be? I mean, because as I say, 
with people traveling the distances that they do, it is pretty 
relevant in our district.
    Dr. Petzel. Post hearing we can provide you with a list I 
am quite certain, yes.
    [The VA provided the answer in response to Question #2 of 
the Post-Hearing Questions and Responses for the Record, which 
appears on p. 55.]
    Mr. Teague. Very good, thank you, and thank you for 
attending today and for your answers. I yield back.
    Mr. Michaud. Thank you. Mr. Donnelly.
    Mr. Donnelly. Thank you, Mr. Chairman.
    Dr. Petzel, in regard to the major construction funding, 
additional locations were put on the list to a total of 61 now 
and two were funded. What is your long-term plan?
    Dr. Petzel. The $1.1 billion in 2011, Congressman, is for 
five projects. Two of them--three of them rather--were ongoing.
    Mr. Donnelly. I am sorry, I should say two new places were 
funded.
    Dr. Petzel. And there were two new places, that is correct. 
Alameda and Omaha.
    I will ask Mr. Neary in a minute to comment on the list and 
how we deal with that list, but there is a substantial list of 
major projects, and this makes I think a substantial dent in 
the monetary amount at least, but there still are, as you point 
out, a large number of projects on the list, and I would ask 
Mr. Neary if he could comment on the size of that list and how 
we move through it.
    Mr. Neary. Thank you, Doctor. Congressman Donnelly, as Dr. 
Petzel indicated, I think the major construction proposal for 
fiscal year 2011 is a very robust proposal, but we do have----
    Mr. Donnelly. But it only includes two, two new places.
    Mr. Neary. It only includes two new starts. We have been 
fortunate with the support of the Congress to receive funding 
levels in the approximately $1 billion range for the last 3 
years, substantially higher than the past, so we are headed in 
the right direction, I think. We evaluate all the projects that 
are proposed and prioritize them to the extent that we believe 
the most important projects rise to the top of the list. We are 
working down that list, but it will take some time to go 
through the list that is displayed in the 5-year plan.
    Mr. Donnelly. So those 61 are included in a 5-year plan?
    Mr. Neary. In the volume that submits the construction 
budget and the last half of that volume is the VA's 5-year 
capital plan, and it identifies the projects that we have 
prioritized, yes.
    Mr. Donnelly. So is it your expectation that those 61 will 
all be started within a 5-year period?
    Mr. Neary. It is unlikely that they will all be started 
within 5 years. I believe that the value of that list is 
approximately $13 billion, and obviously the budgets that we 
are seeing are while good will take a little longer than 5 
years to work through them.
    Mr. Donnelly. Thank you very much.
    Mr. Michaud. Mrs. Halvorson.
    Mrs. Halvorson. Thank you, Mr. Chairman, and 
congratulations, Dr. Petzel, on your confirmation, and I know I 
just wanted to let you know that I worked very closely with Dr. 
Cross on a medical facility in my district that I am hoping to 
bring to Joliet, Silver Cross Hospital, I am sure your 
wonderful staff has kept you up to date, or if not, I am sure 
they will, and I just didn't know if there was any light that 
you would like to shed--shed any light on this for me maybe or 
any updates that maybe you want to know, or if there is any 
questions that you have for me.
    Dr. Petzel. Well, Congresswoman Halvorson, that is 
incredibly timely. I was just told not 5 minutes ago that we 
just finished a site visit.
    Mrs. Halvorson. Yes.
    Dr. Petzel. And the word that came back is that this is an 
excellent facility.
    Mrs. Halvorson. It is.
    Dr. Petzel. So we are very optimistic that the Silver Cross 
Medical Facility is going to meet our needs and it is going to 
work very well into our system.
    Mrs. Halvorson. Great, because it is something that is so 
very important to any district. And I know we had the district 
work period last week, and everywhere I went people wanted an 
update, and this is something that we are expecting to come to 
fruition, and I just wanted to make sure that it was always on 
the forefront of your memory and on your radar screen. So very, 
very important to us.
    Dr. Petzel. And it is very important to us.
    Mrs. Halvorson. Because I think the more that--and I know 
Chairman Filner has been out there and I know Secretary 
Shinseki is coming out, and we haven't quite found the date 
yet, but--and you had another site visit, so I just wanted to 
reiterate our concern and how important it is to us.
    We have also seen substantial increases in the past few 
years in my district in terms of the veterans that rely on the 
VA care, so I certainly have concerns. I think that the minor 
construction budget doesn't really reflect the increases in the 
need for veterans care, so I am really concerned about that. 
And maybe you can shed a little more light on why these budget 
slashes and why for the funds for the minor construction 
projects, especially in Illinois and in my area.
    Dr. Petzel. Thank you, Congresswoman. Again, I will let Mr. 
Neary comment in a minute.
    Just to make a statement. The minor construction budget, as 
I understand it, is the second highest request that has been 
made for minor construction in the history of the VA. It is a 
large amount of money relative to what we have been seeing 
before, but as you point out, and I think as Mr. Neary will 
point out, it is not going to completely address our list of 
minor projects.
    Mr. Neary. Certainly correct. Similar to the major 
construction appropriation, in the last few years minor 
construction has been at an all time high in terms of funding 
levels. And as Dr. Petzel said, this is the second largest 
request that has been made for minor construction. The first 
largest being in fiscal year 2010, but it is less than fiscal 
year 2010, and we will be looking to ensure that those funds 
are used most judiciously to bring the most value to our 
facilities programs.
    Mrs. Halvorson. So just so you know we are just really 
concerned that it doesn't meet the needs. As the needs are 
going up, the last thing we need to do is cut those projects 
that we want to keep on track.
    So you know, I appreciate you all being here, but my staff 
and I will be constantly letting you know what is going on in 
my district. So thank you all for being here. It is good to see 
you.
    Mr. Michaud. Thank you. Mr. Brown.
    Mr. Brown of South Carolina. Thank you, Mr. Chairman, and 
thank you to the witnesses who came, and particularly Dr. 
Petzel, glad to have you on board, congratulations for this new 
level of service that you and all the other support folks in 
the VA.
    I think we have a good health care budget in this cycle, 
and I am certainly pleased to support it.
    I am a little disappointed in one project that we have been 
trying to move forward since 2006, what we always refer to as 
the Charleston model. This was a combination of services 
between the VA and the Medical University of South Charleston, 
and we actually put I think it was like $36.8 million in the 
Reauthorization Bill, I guess Benefits and Health Care 
Information Technology Act of 2006, but nothing has actually 
moved on it since then. And I noticed in this particular budget 
there is no funding available and it hasn't been addressed.
    And since we have all of you here in one room, if you all 
could kind of help me go through this and kind of give me an 
idea, you know, of exactly what might be going to take place, 
and if there is a timeline that you are working with that you 
might share it with me.
    Dr. Petzel. Thank you Congressman Brown. I am in a general 
sense familiar with the history of the project in Charleston, 
but not with the specifics, and I think I would ask Mr. Neary 
if he could--or Ms. Fate if she could comment on that, please.
    Ms. Fate. Thank you, sir. Based on the assessment of the 
workload increases as well as the space deficiencies as well as 
the facility condition assessments of the Charleston VA, it was 
assessed that a new hospital wasn't the most advantageous for 
the Charleston VA Medical Center, but instead an expansion to 
decompress the facility, more in an outpatient setting.
    So the request that has come forward is to acquire the 
Naval Hospital, and through their Base Realignment and Closure 
(BRAC) process--through the Navy's BRAC process. And so that 
project was submitted for consideration in the fiscal year 2011 
process and was ranked 51 out of 61 priorities, and so it 
wasn't--and at the same time we are also waiting on the Navy to 
decide which facility is going to get the facility based on 
their BRAC process.
    Mr. Brown of South Carolina. I know I talked about that 
with the Secretary and I know that he was concerned about 
funding, and I know that if it is going to be part of the BRAC 
process, it looks like it could be some kind of lateral 
transfer without any dollars involved. That is generally the 
way that the BRAC process works. I know that when they closed 
Joel's shipyard, most of that property actually deeded over to 
the City of North Charleston, and so I mean certainly if you 
are going to move it into a government entity, you certainly 
ought to be able to do that within the confines of the Federal 
Government.
    But what concerns me about the Charleston model, and if you 
are familiar with the area--in fact we tried to get some money 
and we did get a few dollars in the stimulus where the flooding 
is such a major problem. The roads adjoining to the VA hospital 
are under water if the right rains come and the tide is at the 
right place, so we got $10 million in this last stimulus payout 
back in--last Wednesday, so that--what concerns me is right 
after Katrina hit New Orleans, we actually went down and saw 
some of the facilities, and we recognize that the VA hospital 
there in New Orleans was not damaged, but because of the 
flooding and because of the lack of power we assumed that 
building was not going to be used. Are you all tearing that 
down is what the--what are you--are you reusing the old VA 
hospital in New Orleans, or are you going to relocate it?
    Dr. Petzel. I will let Mr. Neary comment on that, 
Congressman.
    Mr. Brown of South Carolina. Okay.
    Mr. Neary. Certainly. Presently the bulk of the former 
hospital is closed. We are operating an outpatient clinic in 
the facility, but we are in design for a new VA hospital that 
will be located a mile or two away, and we have funding. We 
have partially funded in previous budgets. We have the final 
incriminate of funding in the fiscal year 2011 budget. We 
expect to beginning the first, all be it a small phase of 
construction in the next 2, 3 months, and then in fiscal year--
later in this fiscal year and through 2011 we will be awarding 
further contracts to construct a new facility.
    Mr. Brown of South Carolina. And I might bobtail a little 
bit on that. That is exactly my idea of the Charleston model, 
is we are basically in that same zone. The VA hospital is 
actually in a lower location than say some parts of Medical 
University.
    We were hoping that by being more proactive we could be 
able to address the issue before another Hugo would come in, 
and we had Hugo back in 1989, which was I guess the same 
intensity as the storm that hit New Orleans back in I guess 
2006, or 2005, when it was. But so we were hoping by putting 
that money in that Reauthorization Bill, it would give some 
initiative to actually jump start that project, and I was 
hoping that somehow or another we would be able to be moving.
    The Medical University is actually in a rebuilding mode 
now. They are going to probably replace most of their 
facilities, and by doing so, we thought it would give us a good 
opportunity to be able to bring the VA and the Medical 
University closer together. Some 95 percent of the doctors that 
actually treat those patients at the VA hospital have 
affiliation with the Medical University, so it would seem like 
it would just be a proper thing to be able to bring them in a 
more closer proximity.
    I know the VA hospital itself is in pretty good shape, but 
I am telling you the location we have is going to be at risk if 
we have another major storm that hits.
    So, Dr. Petzel, I hate to just give it to you on the first 
day that you testify before us, but it is a major concern of 
ours. Like I said, we have been working with it since 2006. It 
seems like we are the only one that has the vision, and I am 
just trying to share that with other people, maybe somebody 
else might be able to sense the same problem that we find. But 
I am telling you it was pretty obvious to me when I went to 
that fine facility in New Orleans and recognized that it is not 
going to be able to--although it withstood the winds, the mold 
is going to actually take it down.
    Dr. Petzel. Well, Congressman Brown, I will review the 
circumstances in Charleston with our construction facilities 
management people, see where that stands right now, and become 
acquainted with the details.
    Mr. Brown of South Carolina. I appreciate it. Thank you 
very much.
    I apologize, my southern hospitality just slipped me for a 
minute. We would be happy to accommodate you any time you want 
to come.
    Dr. Petzel. Congressman, thank you very much.
    Mr. Brown of South Carolina. Thank you.
    Mr. Michaud. Thank you, Mr. Brown.
    Medical IT, as you know, is an integral part of the VHA 
health care delivery system. My concern is whether VHA and the 
IT system are working collaboratively in a way that will help 
expedite the process of getting a facility online. If the 
fiscal year 2011 budget request includes about $930 million in 
medical IT support, which is a decrease of about $150 million 
from the 2010 levels, what is the rationale for that decrease?
    [The VA subsequently provided the following information:]

       Facility activations are a top priority for Office of 
Information and Technology (OI&T). All field Information Technology 
(IT) managers are empowered to meet IT activation requirements in 
concert with the activation timelines established by VA facility 
leadership. OI&T Field Operations staff are members of the facility 
project planning teams that develop, schedule and activate new 
facilities, services and programs.
       In response to the question regarding the rationale for budget 
decrease of medical IT, we offer the following:
       There are numerous one time or unique fiscal year activities 
that occur in FY 2010 that are not occurring in FY 2011 or are 
recurring at a different funding level.
       For example:

        Life Cycle Management decreased by $28.939 million;
        Wireless decreased by $47.967 million;
        Engineering Support Contractor Service was reduced by $15 
million to $0;
        Enterprise backup solution was reduced by $16.5 million to $0; 
and
        The National Archive Project was reduced by $12 million to $0.

       Activations costs in FY 2010 are a one-time investment that will 
change in FY 2011 based on the nature, scope, and completion of ongoing 
construction work across the VA system. This includes major 
construction, minor construction, nonrecurring maintenance (NRM), and 
bringing online new Community Based Outpatient Clinics (CBOCs). The 
drop in funding from the FY 2010 Current Estimate to the FY 2011 
President's Submission is the result of the a thorough review of the FY 
2010 Medical IT Support needs (licensing and maintenance agreements), 
having taken place during the execution review for FY 2010. No such 
review has yet taken place for FY 2011. During the summer of 2010, 
OI&T, working with its VA business partners, will conduct a similar 
review of FY 2011 execution needs and necessary adjustments will be 
made to this and other programs prior to the start of FY 2011.

    Mr. Michaud. My second question is, some folks within the 
VA system nationwide have been concerned that there has been a 
lag between VHA and IT that seems to be delaying some of the 
projects that are needed out there. So those are my two 
questions relating to IT.
    Dr. Petzel. Thank you, Mr. Chairman. I want to make just a 
general statement about VHA and IT. I have been working in the 
Central Office as the Acting Principal Deputy Under Secretary 
for the last 9 months, and I have been impressed with the 
change in tenor, if you will, that has occurred with the 
ascendance of Roger Baker as the Assistant Secretary for IT.
    There is really a very, very new wind blowing through that 
organization, and the level of cooperation is probably much 
better than it had been before. And I am encouraged that we are 
going to be able to eventually be on the same path and get our 
needs met in an expeditious manner, but I think it is going to 
take some time.
    Having said that, I don't know what the change in the IT 
medical budget is. We would have to get back to you after I 
talk with Mr. Baker.
    [The VA subsequently provided the following information:]

       Veterans Health Administration (VHA) and VA's OI&T are working 
very closely together throughout the entire lifecycle of project and 
program development. Staff, managers and leadership in both VHA and 
OI&T are demonstrating a strong and consistent commitment to completing 
projects on-time and on-cost.
       VA, however, has experienced IT project delays. A review of 
these projects led to the development of the Program Management and 
Accountability System (PMAS), an IT project management framework that 
uses the best practices from various management and accountability 
methods.
       All programs and projects are now developed and managed under 
PMAS. This level of standardization in project management and 
development is a fundamental change in the way VA develops programs and 
conducts oversight and accountability. Key attributes of PMAS include: 
building in 6-month increments, frequent customer involvement, 
adherence to milestones with frequent milestone reviews, customer 
acceptance of functionality, and a practice of allowing only three 
strikes (missed milestones) before the project is halted or terminated. 
In the event of a halted or terminated project, the entire project, 
along with its managers, will come under intense scrutiny, which 
facilitates a culture of personal accountability. PMAS is already 
demonstrating its value in improving adherence to scheduled milestones 
and project delivery dates.
       VA senior leadership continues its efforts to improve 
communication and coordination between VHA and OI&T, which is evidenced 
by the Deputy Secretary's personal involvement in monthly Operational 
Management Reviews of VHA/OI&T programs and projects. This commitment 
when combined with the recent implementation of PMAS accountability and 
reporting standards, has significantly enhanced VA's ability to quickly 
and efficiently produce and deploy systems to support the services that 
VA provides to our Nation's veterans.

    Mr. Michaud. Thank you. I also know the VA has been working 
collaboratively with the U.S. Department of Defense (DoD) on 
the Virtual Lifetime Electronic Records (VLER). How is that 
project moving forward? Has it been fully developed? Are there 
any delays or any changes that need to be made?
    Dr. Petzel. Well thank you, Congressman. This is an 
incredibly interesting project. Virtual Lifetime Electronic 
Record is the beginning of the attempt to create a completely 
inter-operative medical record across the Nation. The first 
pilot was set up in San Diego between the VA, Kaiser Permanente 
and the DoD. It began modestly with just a very few elements 
being shared using the national health information network. The 
pilot tested very successfully. There are approximately 1,500 
patients from both sides that are enrolled in this and for 
which we are sharing information.
    As we speak, the amount of information that is available is 
being expanded, and we are also beginning to develop the second 
pilot site, which I believe is going to be in Hampton, 
Virginia. In our view, it has been a very successful pilot. It 
is going to require several years of development until it is 
fully implemented, but we believe that this is going to be the 
demonstration of how the Nation can be sharing its medical 
records not only within the government but across the private 
sector, and I am very encouraged.
    Mr. Michaud. Thank you. Moving on to a different topic; 
grants to States for extended care facilities. There has been a 
reduction of about $15 million in that count. What is the 
rationale for this reduction? What I have heard from a lot of 
the State veterans nursing homes is that there is actually a 
backlog of about $405 million where the States have already 
committed dollars for construction.
    Dr. Petzel. I will ask Mr. Kearns to comment on that in a 
minute, but my understanding is that a significant amount of 
American Recovery Reinvestment Act (ARRA) money was used in the 
State homes grant program, and I think if you compare 2011 to 
2010 and take out that stimulus money that went in, we see a 
rather substantial increase.
    But Mr. Kearns, could you comment more specifically?
    Mr. Kearns. Yes, sir. Basically in stimulus funding we had 
$150 million for the grants, and that is progressing very 
nicely. And then it has to be matched with the States. We have 
another $85 million in this budget for fiscal year 2011. So we 
feel that we are going to be able to continue very good 
progress in that area.
    Mr. Michaud. But where the States are already ready to go, 
why wouldn't you want to increase that amount so they can get 
those projects up and running?
    Mr. Kearns. I think we would need to get back with you on 
the specifics, sir. I do know that in a couple of the instances 
when we had the high priority items in the stimulus money, some 
of the States could not match with their funding--the timing 
didn't fit and they couldn't match so we had to slip that and 
put them into the next year.
    So I think it varies State by State as to what their 
specific condition is as to whether they are ready to match at 
any given time, largely because of the current economic 
conditions. But we can get you the specifics back.
    [The VA subsequently provided the following information:]

       The backlog of approximately $405 million has been reduced to 
two projects with an estimated cost to the Department of Veterans 
Affairs of approximately $43 million. This was accomplished as a result 
of the FY 2010 regular appropriation of $175 million for the State Home 
Construction Grant Program, the additional American Recovery and 
Reconstruction Act appropriation of $150 million, and the withdrawal or 
deferral of certain projects at the request of the States. Currently, 
there is no Priority Group 1 backlog of renovation projects (including 
renovations to protect the lives and safety of veterans) or of new 
construction projects in States with a great need for new nursing home 
beds. Priority Group 1 projects are those for which the States have 
committed matching funds. VA is confident that the budget request of 
$85 million for FY 2011 will be sufficient to fund all new Priority 
Group 1 Life Safety and other renovation projects and all new 
construction projects in States with a great need for new beds.

    Mr. Michaud. Thank you. And there has been actually an 
increase in mental health, about $410 million from fiscal year 
2010 to fiscal year 2011. Are there any new mental health 
programs that you plan on implementing with the additional 
funding, or does that just reflect an ongoing need?
    Dr. Petzel. Excellent question, Chairman, and that 
basically is the ongoing needs. We do not have any specific new 
programs in mental health. We want to consolidate and make as 
vibrant the things that we have.
    As you know through both our own actions and Congress's 
actions over the last 3 or 4 years there is been a huge 
increase in our mental health. We have added since 2005, 5,000 
mental health workers, and just in this last year we added 
almost 2,000 new mental health workers. So we think we have the 
programs that we need, we think we have the people that we 
need, and it is a matter of making sure these programs work 
during this year.
    Mr. Michaud. Also, in the previous budget we increased 
funding so we can start reenrolling Priority 8 veterans. What 
have you done specifically to increase reenrollment of Priority 
8 veterans? Have you met your initial goal?
    Dr. Petzel. Thank you, Congressman. The goal was 
approximately 200,000 new enrollees in 2010. As you know we 
increased the threshold in the means test by approximately 10 
percent, and made eligible I think over 300,000 new enrollees 
theoretically, and we expected to see about 200,000 of those 
come.
    There has been an extensive outreach program with the 
county veteran service officers. We have mailed letters to 
everybody that had been denied enrollment previously, but we 
have not met our goal. We have enrolled a substantial number of 
new Priority 8's and we have enrolled a larger number of 
Priorities 5 and 7 than previously. We think that some of these 
Priority 8's, because of the economic conditions, have moved 
into categories 5 and 7. And we look at those people as being 
people who would have otherwise been in our new Priority 8.
    But I would ask Mr. Kearns if you can add anymore specifics 
to that.
    Mr. Kearns. No, sir, that is all. We are in the fiscal year 
2011 budget raising that threshold from 10 percent to 15 
percent, and we are aggressively marketing through different 
media sources to get to those potentially eligible veterans.
    Mr. Michaud. Thank you. My last question relates to some of 
the earlier questions from Mr. Donnelly and others dealing with 
access to health care in rural areas. The Capital Asset 
Realignment for Enhanced Services (CARES) process identified 
several different access points. If you look at some of those 
access points it would probably be fair to say that a lot of 
them are probably at places where we also have a federally 
qualified health care facility.
    Have you looked at the CARES process and determined whether 
or not the access points that were recommended under CARES are 
still valid? And if so, are you looking at working with the 
U.S. Department of Health and Human Services (HHS) to see 
whether or not there might be a qualified health care clinic in 
that area that might overlap? Can you collaborate with HHS to 
try to get more of these access points up and running sooner 
rather than later so we can start taking care of veterans in 
the really rural areas?
    Dr. Petzel. Thank you, Mr. Chairman. Each year, starting at 
the facility level, moving up through the network level, and 
finally coming to Washington we ask for an evaluation of access 
that includes a review of pending access points as well as new.
    I think, as you realize, not only have we almost completed 
activation of all of the CBOCs that were identified in the 
CARES process, there have been many, many other CBOCs that have 
been added. I think since CARES began it would be numbered in 
the hundreds that we have added in terms of community based 
outpatient clinics.
    So I think the process of making sure that the CARES, CBOCs 
are taken care of is well in hand.
    The question whether we are maximizing the possibilities 
with the community health centers remains open, and I think 
that we need to have a renewed effort at looking at how we can 
interact with the community health centers. I am not familiar 
with what kind of efforts have been made in the past, but it is 
something I am interested in pursuing. They are another Federal 
agency and we should be in the process of cooperating with 
another Federal agency to see if we can maximize the benefit of 
the Federal dollars we had. So we will be examining that.
    Mr. Michaud. Thank you, thank you, Doctor.
    Mr. Boozman.
    Mr. Boozman. Thank you, Mr. Chairman. I guess I would like 
to follow up a little bit. I know that you have touched on this 
a little bit.
    In regard to the mileage reimbursement, my question is 
where is the money coming from? Does that come from the 
Veterans Integrated Services Network (VISN) or does that come 
from the Central Office? Are we accounting for the fact of our 
rural districts, our rural hospitals? I would like to know all 
of the different factors that go to work in regard to the 
payment of that. I know that it has been discussed and we have 
a tremendous increase. Where is the money coming from that pays 
for that?
    Dr. Petzel. Thank you, Congressman. We have had extensive 
discussions about this. There is a 23-percent increase in the 
money in our budget for patient travel. I think the figure now 
is $798 million. That is part of our budget. It is distributed 
as part of, and correct me if I am wrong, Mr. Kearns, it is 
part of the veterans equitable resource allocation (VERA) 
distribution. So based on the workload that each one of the 
networks has they would be getting a portion of that money. 
Then it is the responsibility of the networks to ensure that 
money gets distributed to the place where it is needed.
    Mr. Boozman. But would there be some allocation based on 
the fact that maybe if you had a rural hospital that didn't 
have as much tertiary care and things, is it distributed that 
way also if there is more travel involved?
    Dr. Petzel. Congressman, I will ask Mr. Kearns in a minute 
to comment on that more specifically.
    Let me give you my experience from the network that I used 
to direct in Minneapolis, which is quite rural. We would 
distribute the money for patient travel based upon previous 
years' experience. So we know that the Fargo VA medical center 
as an example----
    Mr. Boozman. Right.
    Dr. Petzel [continuing]. Has a disproportionately high need 
for money because they bring people from as far as 400 miles to 
the Fargo hospital from far western North Dakota. So our 
distribution would have been based upon previous use and 
current need. Whereas the Minneapolis VA medical center, which 
serves primarily an urban area, would not need proportionately 
as much travel money.
    So the travel money wouldn't go out just based on the 
workload, it would go out with some cognizance of the ruralness 
or urbanness of the facility and its need.
    Now, Mr. Kearns, you want to make a comment?
    Mr. Kearns. No, sir, that is correct. We do not separately 
allocate the travel money, it is part of the basic allocation 
to the networks, and the networks make that decision.
    However, we do have a large increase in the budgeted fiscal 
year 2010 because the rate of 41.5 cents went up last year. We 
feel we will have the largest experience this year and that 
money is out in the system not specifically targeted to travel, 
so at specific locations if they experience more than they had, 
we would expect them to fund that, if they experience less they 
wouldn't have as much requirement in that area.
    In this current budget, we are funding in fiscal year 2011 
and 2012 average increases above that, but we are not planning 
in the budget to increase that rate of 41.5 cents.
    Mr. Boozman. Okay, very good. In regard to the extra cost 
for the fee-based services in New Orleans, where does that come 
from? Does that come from Central Office or is that coming from 
VISN 16? Is that a nationwide sacrifice or is that a sacrifice 
of that particular VISN?
    Dr. Petzel. Congressman, that money would be expected to 
come out of the budget from VISN 16. And that has been taken 
into account in terms of the total amount of money that VISN 16 
would get, and then they would again distribute that money 
based upon the need.
    So there is nobody else that is not getting care because we 
have an excessive fee basis need in New Orleans right now.
    Mr. Boozman. Okay. And the hospitals that are growing, in 
other words, that have the significant percentage of increase, 
9, 10 percent increases, whatever it may be, do you account for 
that in your budgeting also?
    Dr. Petzel. Yes, Congressman, we do, and I will again let 
Mr. Kearns explain in a minute, I will just make a general 
statement.
    The VERA model puts the money where the work is. That is 
the real salient feature of VERA. So if there is a facility 
that is growing more rapidly than another facility or a network 
that is growing, they are going to get more money than that 
facility that isn't growing as rapidly. Would you like to make 
a comment?
    Mr. Kearns. That is correct, sir. And then in addition to 
that, many times in those facilities that are growing some of 
those veterans also have health insurance so the collections 
will also grow, and those collections stay with the facility 
where the veterans are treated.
    Mr. Boozman. Okay. Thank you, Mr. Chairman. Again we 
appreciate your hard work. I know this is difficult, but like I 
said, we appreciate your service for veterans. Thank you.
    Mr. Michaud. Mr. Snyder.
    Mr. Snyder. I am sorry I wasn't here for the earlier part 
of the meeting.
    Dr. Petzel, what is status of funding for physicians? Do 
you have all physician slots filled that you want with adequate 
funding, or do you have slots that you would like to have 
filled and don't have adequate funding for?
    Dr. Petzel. Congressman, thank you for the question. I am 
going to have a little soliloquy about physician reimbursement 
for just a second if you don't mind.
    First of all, we have enough money to purchase the services 
of all the physicians that we need. And fortunately with the 
relatively new physician pay bill that Congress is responsible 
for, we are able to pay in a general sense salaries that 
attract the physicians that we need. We do have occasions in 
some remote areas, some difficult-to-recruit areas even for the 
private sector, where we sometimes have difficulties 
recruiting. But, we have been able to meet the needs of our 
system for physician services.
    Mr. Snyder. So if somebody tells me that there is some 
empty physician slots some place and they are told the reason 
they are not being filled is there is not adequate funding that 
is inaccurate?
    Dr. Petzel. It would be inaccurate in my experience. I am 
not aware, and I have not been told about, any place that is 
not able to recruit its physicians because it doesn't have 
adequate budget.
    Mr. Snyder. Great, thank you.
    Dr. Petzel. And I would like to know about that. 
Specifically, if there is a place, let's talk to you about 
that. Please talk to us.
    Mr. Snyder. All right. Thank you.
    Mr. Michaud. That is something we actually talked about 
beforehand, and that is a concern that I have, because I have 
heard the same thing about hiring freezes due to a lack of 
funding.
    This Subcommittee will be looking in more detail at the 
VERA model. Getting back to Mr. Boozman's question about 
mileage reimbursement, I will use Togus as an example.
    Dr. Petzel, you mentioned the VERA model puts the money 
where the work is, and that might be the cause of some of the 
problems that we are seeing in really rural areas. For 
instance, in Boston a lot of the medical care involves tertiary 
care and you have veterans who have to travel 9, 10, 12 hours 
to travel to Boston whereas they could actually get that care 
locally. But it is to the advantage of the VISN 1 office to 
have them come to Boston because that is where the money goes, 
rather than to really rural areas.
    We will follow up with additional questions on a more 
detailed break out on how the VERA funding is distributed. We 
have also asked for specific detail on this information for 
VISN 1. I only want one VISN to really focus on, but we haven't 
received that information yet and we have followed up with 
further questions to try to get that break out so that we can 
really try to follow the money and assess what is happening out 
there and determine whether or not the VERA model is a good 
model. It could be a good model, but we are hearing concerns 
back in our respective States about how resources are being 
distributed and whether it might hamper the ability of some 
areas to put forward a new CBOC or access point, because that 
comes out of the operating money, and if you have the Central--
VISN office--trying to control their budget then they might not 
be willing to move forward as aggressively as if they had money 
allocated for the creation of a new CBOC.
    So these are some of the issues that we definitely would 
want to work with you on, Dr. Petzel. And hopefully, can try to 
take care of some of the concerns that we are hearing out there 
as well.
    If there are no further questions I want to thank you, Dr. 
Petzel, and the panel for coming forward today, and I look 
forward to working with you. We will have some followup 
questions in writing as well. So thank you.
    Dr. Petzel. Thank you, Mr. Chairman, and thank you to the 
Subcommittee.
    Mr. Michaud. I would like to now invite panel two to come 
forward. We have Mr. Blake Ortner from the Paralyzed Veterans 
of America, Mr. Eric Hilleman from the Veterans of Foreign 
Wars, and Mr. Joe Wilson from the American Legion.
    I want to thank all three of you for coming forward today. 
I look forward to your testimony, and I also look forward to 
working with you as we move forward in dealing with issues 
important to veterans that serve this great Nation of ours.
    So without any further ado, we will start out with Mr. 
Ortner.

  STATEMENTS OF BLAKE C. ORTNER, SENIOR ASSOCIATE LEGISLATIVE 
   DIRECTOR, PARALYZED VETERANS OF AMERICA, ON BEHALF OF THE 
   INDEPENDENT BUDGET; ERIC A. HILLEMAN, DIRECTOR, NATIONAL 
  LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED 
  STATES, ON BEHALF OF THE INDEPENDENT BUDGET; AND JOSEPH L. 
 WILSON, DEPUTY DIRECTOR, VETERANS AFFAIRS AND REHABILITATION 
                  COMMISSION, AMERICAN LEGION

                  STATEMENT OF BLAKE C. ORTNER

    Mr. Ortner. Thank you, Mr. Chairman, Members of the 
Subcommittee. Paralyzed Veterans of America is pleased to 
present our views on the Veterans Health Administration's 
fiscal year 2011 budget in particular as it relates to 
construction.
    PVA previously testified on the 2011 budget and it is 
addressed in my written testimony, so I would like to focus my 
oral comments on two key issues that PVA is concerned with 
regarding VA construction. That is VA research infrastructure 
funding shortfalls and maintaining critical VA health 
infrastructure.
    In recent years, funding for VA maintenance and 
construction appropriations has failed to provide the resources 
needed to maintain, upgrade, and replace its aging research 
facilities. Consequently, many facilities have run out of 
adequate research space while ventilation, electrical supply, 
roofs, and plumbing deficiencies appear frequently on lists of 
urgently needed upgrades along with significant space 
reconfiguration.
    In the 2003 CARES plan, VA listed over $468 million 
designated for new laboratory construction, renovation of 
existing space, and build-out costs for leased facilities, but 
then omitted these projects from the Secretary's final report.
    In House Report 109-95, accompanying the 2006 VA 
Appropriations Act, the Appropriations Committee expressed 
concern that equipment and facilities to support the research 
program may be lacking and that some mechanism is necessary to 
ensure the Department's research facilities remain competitive, 
directing VA to conduct a comprehensive review of its research 
facilities and report to the Congress.
    Of three sites inspected, all scored poor with the total 
correction cost of over $26 million. By the end of fiscal year 
2009, a total of 53 sites with 47 research programs were 
surveyed. Approximately 20 sites remain to be assessed in 
fiscal year 2010, but to date the combined total estimated cost 
for improvements exceeds $570 million. About 44 percent of the 
estimated correction costs constitute priority one deficiencies 
with an immediate need for correction. Five buildings that 
rated poor were main hospitals housing laboratories.
    A significant cause of the VA research infrastructure's 
neglect is that there is no direct funding line nor any 
budgetary request made for VA research facilities, nor does the 
VA medical and prosthetic research appropriation contain 
funding for construction, renovation, or maintenance of VA 
research facilities. VA researchers must rely on local facility 
management to repair, upgrade, and replace research facilities 
and capital equipment. As a result, VA research competes with 
medical facilities direct patient care infrastructure needs.
    PVA recommends the Administration and Congress establish a 
new appropriations account to independently define and separate 
VA research infrastructure funding and recommends an 
appropriation in fiscal year 2011 of $300 million dedicated 
exclusively to renovating existing research facilities.
    Regarding critical VA health infrastructure, over the past 
year, VA has begun to discuss its desire to address its health 
infrastructure needs in a new way and acknowledged its 
challenges with aging infrastructure, changing health care 
delivery needs, limited funding for construction, and the 
timeliness of construction projects.
    VA has noted, and we concur, that a decade or more is 
required from initial proposal until the doors actually open 
for veterans to receive care in a major medical facility.
    Given these significant challenges, VA has developed a new 
model for health care delivery, the Health Care Center Facility 
Leasing Program, or HCCF. Under this proposal VA would obtain 
by long-term lease a number of large outpatient clinics built 
to VA's specifications. These large clinics would provide a 
broad range of outpatient services, including primary and 
specialty care, as well as outpatient mental health services 
and ambulatory surgery.
    VA noted that in addition to the new HCCF facilities it 
would maintain its VA medical centers, larger independent 
outpatient clinics, community based outpatient and rural 
outreach clinics.
    VA has argued that adopting this model would allow VA to 
quickly establish new facilities that would provide 95 percent 
of the care and services veterans need in their areas.
    We concur that the HCCF model seems to offer a number of 
benefits in addressing capital infrastructure problems, 
including more modern facilities that meet current life safety 
codes. But while it offers some obvious advantages, the model 
could face significant challenges.
    PVA is particularly concerned about the overall impact on 
the future of VA's system of care, including the potential 
unintended consequences on continuity of high-quality care and 
maintenance of its specialized medical programs for spinal cord 
injury, blindness, amputations, and other health challenges of 
seriously disabled veterans.
    In conclusion, PVA agrees with VA's assertion that it needs 
a balanced capital assets program, but VA should not replace 
the majority or even a large fraction of medical centers with 
HCCFs; this would concern us. But we see this challenge as only 
a small part of the overall picture.
    The emerging HCCF plan does not address the fate of 153 
medical centers located throughout the Nation that are on 
average 55 years of age or older. It does not address long-term 
care needs of the aging veterans population, inpatient 
treatment of the chronically and seriously mentally ill, the 
unresolved rural health access issues, or the lingering 
questions on improving VA's research infrastructure.
    The major question is, what will VA's 21st century health 
infrastructure look like and how will it be managed and 
sustained?
    Congress and the Administration must work together to 
secure VA's future to design a VA of the 21st century.
    This concludes my testimony and I would be happy to answer 
any questions.
    [The prepared statement of Mr. Ortner appears on p. 32.]
    Mr. Michaud. Thank you very much. Mr. Hilleman.

                 STATEMENT OF ERIC A. HILLEMAN

    Mr. Hilleman. Thank you, Chairman Michaud, Members of the 
Subcommittee.
    On behalf of the 2.1 million men and women of the Veterans 
of Foreign Wars and our auxiliaries, it is my pleasure to 
testify before you today.
    The VFW works side by side with AMVETS, the Disabled 
Veterans of America, Paralyzed Veterans of America to produce a 
policy budget recommendation document known as The Independent 
Budget. The VFW is responsible for the construction portion of 
the budget, so I will limit my remarks to that portion.
    VA's infrastructure, particularly within its health care 
system, is at a crossroads. The system is facing many 
challenges, including the average age of buildings at 60 years 
or more, significant funding needs for routine maintenance, 
upgrades, modernization and construction.
    VA is beginning a patient-centered information reformation 
in the way it delivers care and manages infrastructure to meet 
the needs of the sick and disabled veterans of the 21st 
century.
    Regardless of what the VA health care system of the future 
looks like, our focus must remain on the lasting and accessible 
VA health care system that is dedicated to the unique needs of 
veterans.
    VA manages a wide portfolio of capital assets throughout 
the Nation. According to its latest asset plan, VA is 
responsible for 5,500 buildings and almost 34,000 acres of 
land. This vast network of facilities requires significant time 
and attention from the capital asset management planners.
    CARES, a VA data-driven assessment of the current future 
construction needs gave VA a long-term roadmap that has helped 
guide its capital asset planning process over the past fiscal 
years. CARES showed a large number of significant construction 
priorities that would be necessary to fill the needs of VA in 
the future. And Congress has made significant end roads into 
these priorities. It has been a huge but necessary undertaking, 
and VA has made slow and steady progress in these critical 
areas.
    The challenge for VA in the post-CARES era is that there 
are still numerous projects that need to be carried out, and 
the current backlog of partially funded projects that CARES has 
identified as large, this means that VA is going to continue to 
require significant appropriations for major and minor 
construction accounts to live up to the promise of CARES.
    VA's most recent asset management plan provides an update 
of the status of CARES projects, including those in the 
planning and acquisition process. The top 10 major construction 
projects in queue require $3.25 billion in appropriations. This 
is just the tip of the iceberg. There are 82 additional ongoing 
or partially funded projects that demonstrate the construction 
need for VA to upgrade and repair its aging infrastructure and 
that continuous funding is necessary to address this backlog of 
projects.
    A November 17th, 2008, letter to the Senate Veterans' 
Affairs Committee by Secretary Peake stated that the Department 
estimates that a total funding requirement for major medical 
facility projects over the next 5 years would be in excess of 
$6.5 billion.
    It is clear that the VA needs a significant infusion of 
cash for its construction priorities. VA's own words and 
studies state this. The total major construction request that 
the IB estimates is $1.295 billion. The minor request is $785 
million.
    The IB recognizes that the money was provided for military 
and veterans construction in the American Recovery Reinvestment 
Act of 2009, and the Administration has requested lower than 
what the IB requested in this fiscal year.
    We ask this Committee to examine VA's construction request 
with the money that was given in the American Recovery and 
Investment Act and weigh that against the growing list of 
construction, both major and minor projects that are 
outstanding.
    We thank you for this opportunity to testify, Mr. Chairman, 
and we look forward to your questions.
    [The prepared statement of Mr. Hilleman appears on p. 37.]
    Mr. Michaud. Thank you. Mr. Wilson.

                 STATEMENT OF JOSEPH L. WILSON

    Mr. Wilson. Mr. Chairman and Members of the Subcommittee, 
thank you for this opportunity to present the American Legion's 
views on VA's Veterans Health Administration's fiscal year 2011 
budget request.
    The following chart reflects the President's 2011 budgetary 
recommendations as well as those of the American Legion. Due to 
time constraint, we ask that you please review that at your 
leisure.
    For the improvement of mental health care, VA's budget 
provides approximately $5.2 billion for mental health, or 8.5 
percent over the 2010 enacted level. VA says this will expand 
inpatient residential and outpatient mental health programs 
with an emphasis on integrating mental health services with 
primary and specialty care. The American Legion supports this 
increase in funding.
    In addition to improving mental health care, VA reported 
that the 2011 budget request will provide $217.6 million to 
meet the gender-specific health care needs of women veterans. 
The number of women veterans, currently 1.8 million, is growing 
rapidly, and women are increasingly relying on VA for their 
health care. The American Legion believes this provision of 
funding for women veterans will minimize many issues facing 
them and their families to include post traumatic stress 
disorder, depression, substance abuse, and other disorders.
    According to VA, the 2011 budget request provides $51.5 
billion for medical care, an increase of $4 billion, or 8.5 
percent over the 2010 level.
    In addition, this level will allow VA to continue to 
provide timely, high-quality care to all enrolled veterans. The 
American Legion agrees with the VA's 2011 budget request on the 
deliverance of medical care to adequately accommodate Operation 
Enduring Freedom/Operation Iraqi Freedom (OEF/OIF) and Vietnam 
veterans, as well as veterans from all other eras.
    The 2011 budget contains $6.8 billion for long-term care. 
VA also reported that $250 million has been allotted to 
continual strengthening access to health care for 3.2 million 
enrolled veterans who reside in rural and highly rural areas.
    The delivery of health care includes a variety of avenues 
to include new rural health outreach and delivery initiatives 
and expanded use of home-based primary care, mental health, and 
telemental health services. The American Legion supports VA's 
actions in providing access to care with the construction of 
new facilities as well as technologies. However, due to the 
vast number of rural venues, we urge that oversight be provided 
to ensure adequate funding is supplied to those areas.
    In 2009, VA opened enrollment to Priority Group 8 veterans 
whose incomes exceed last year's geographic and VA means test 
thresholds by no more than 10 percent. The most recent estimate 
is that 193,000 more veterans will enroll for care by the end 
of 2010 due to this policy change.
    In fiscal year 2011, VA will further expand health care 
eligibility for Priority Group 8 veterans to those whose 
incomes exceed the geographic and VA means thresholds by no 
more than 15 percent compared to the levels in effect to 
expanding enrollment in 2009. The American Legion again 
proposes this proper oversight by Congress to ensure adequate 
funding is in place to meet these enrollees as they arrive to 
receive health care.
    For 2011, VA has allotted $163 million in home telehealth. 
In total, the VA home telehealth program cares for 
approximately 35,000 veteran patients. The American Legion 
concurs with the allotment of funding for the home telehealth 
program because it will serve to provide more access to care 
for veterans residing in rural and highly rural areas and 
reduce travel for health care.
    According to VA more than 150,000 active and reserve 
component servicemembers leave active duty annually. This 
transition relies on the transfer of paper-based administrative 
and medical records from the Department of Defense to the 
veteran, the VA, or other non-VA health providers. VA agrees 
this paper-based transfer carries risk of errors or oversights 
and delays the claim process. The American Legion agrees with 
the establishment of the VLER.
    The capital assessment realignment and enhancement 
services, or CARES initiative, identified approximately 100 
major construction projects throughout the VA medical center 
system. Approximately 5 years have passed since the CARES 
initiative. During that time to present, more women and men 
servicemembers are transitioning from active duty to VA and 
presenting with multiple illnesses such as post traumatic 
stress disorder and mild traumatic brain injury. Meanwhile the 
average age of VA's facilities is approximately 60 years.
    In addition, the American Legion's 2009 ``A System Worth 
Saving'' publication reports space is one of the major overall 
challenges, which is due in part to many VA medical facilities 
being landlocked. The American Legion hereby urges Congress to 
assess the above-mentioned areas being funded in 2011 as well 
as the number of servicemembers and current veterans they 
anticipate will visit a VA medical facility to receive medical 
care. We contend this action may shed light on the actual need 
of each VA facility in their sincere effort to accommodate 
America's veterans.
    Mr. Chairman and Members of the Subcommittee, thank you for 
allowing me the opportunity to present the views of the 
American Legion to you today. Thank you.
    [The prepared statement of Mr. Wilson appears on p. 46.]
    Mr. Michaud. Thank you very much, Mr. Wilson, and I want to 
thank the entire panel.
    Did you mention, Mr. Wilson, the backlog is $785 million 
for minor construction?
    Mr. Wilson. Did I mention the backlog? I didn't mention the 
backlog, no, sir.
    Mr. Michaud. Well, the total cost of the 5-year plan is 
$6.5 billion for major construction.
    And for minor construction, as far as the work that is 
needed? My point is, if you look at the major construction and 
you look at minor construction, clearly the total cost for 
minor construction is less than major construction. Have you 
done an analysis on the total number of veterans that might be 
affected by both major versus minor construction?
    Mr. Wilson. Well, Mr. Chairman, if I can reserve that 
response for a later date to give you the full consensus of the 
American Legion. We are in the midst of conducting site visits 
for 2010, and during our research, as I have said, we are 
gathering numbers and we will have a full assessment--we should 
have a full assessment by the end of our traveling season which 
will be around July.
    Mr. Michaud. After your full assessment and a look at the 
areas where a larger portion of the veteran's population can be 
affected in a positive way, would you encourage the Committee 
to put a real emphasis on minor construction, and on trying to 
get those facilities and CBOCs up and running sooner, rather 
than later, versus spending hundreds of millions of dollars for 
a major hospital when you can actually construct several other 
CBOCs and access points for the same cost?
    Mr. Wilson. Again, that question when you are talking about 
minor construction and CBOCs and then a full VA medical 
facility, I would say that was two different conversations 
there.
    When you are talking about a full facility, for example 
like Orlando, you are talking about approximately 400,000. They 
are going up from maybe under 100,000 to 400,000 veterans. So 
it is a big difference when you are talking about a full VA 
facility as opposed to CBOCs which are located in rural areas. 
And I can't generally say it is hit or miss, because however, 
this will be a hit because there will be an influx of veterans 
coming in from theater, they may also migrate into rural areas, 
which affects CBOCs.
    So that is again, I would reserve that to our giving a full 
assessment; probably by July we will have this full assessment 
so we can respond appropriately.
    Mr. Michaud. Okay, thank you. Mr. Hilleman, I believe I 
read in your testimony that you identified some shortfall of 
the design build construction process. What do you believe is 
the best method to deal with the design build type of 
construction? If that is not a good process what would be a 
good process?
    Mr. Hilleman. Mr. Chairman, if I might answer this for the 
record I would appreciate that. I don't know that the VFW has 
an ideal model for the design build process or an ideal 
solution. We feel that the best solution would be one where the 
VA is collaborating with the Congress and the veterans service 
organizations to try and work something out that addresses all 
of our concerns. But I would be happy to get back to you for 
the record on that question.
    Mr. Michaud. Okay. As you know Congress has appropriated 
additional funding to expand access to health care for Priority 
8 veterans. What do your three organizations feel the VA has 
done to reenroll Priority 8 veterans? Do you think they have 
done a good job? And if not, what do you think that they could 
do differently to encourage the Priority 8 veterans to sign up 
for VA health care?
    Mr. Hilleman. If I could lead off, Mr. Chairman.
    The VFW has seen a number of Priority Group 8 veterans in 
the dark. Something that could be done to improve this is 
marketing. VA has had greater success as of late with its 
mental health marketing and some of its marketing to female 
veterans, and we would urge VA to do marketing, but we 
understand that it is a 5-year plan and VA plans to bring in 
125,000 every year over the next 4 years. But in select 
marketing they may be able to increase Category 8 enrollments.
    Mr. Michaud. What is your organization doing as well? Are 
you doing anything special to help Priority 8 veterans sign up?
    Mr. Hilleman. We have been encouraging veterans to enroll 
that have contacted us about health care. We have made them 
aware of the passage in law authorizing dollars for Priority 
Group 8's. I believe there has been announcements in our 
magazine publicizing the open enrollment for specific Category 
8's.
    Mr. Wilson. Mr. Chairman, since 2003, the demographics have 
changed significantly now that women veterans are coming into 
the system at a high rate. Economics have changed and we 
question whether or not that was considered. I think 
approximately 260,000 were supposed to be enrolled by July of 
this year, and as you heard previously, that hadn't been 
accomplished. In addition, they were supposed to be on track to 
enroll 500,000 by 2013, however they are not on track.
    So we think they are lagging behind. However, I compliment 
VA on inviting VSOs to Central Office to assist in this process 
to include getting the word out to veterans. The American 
Legion has also placed it on our Web site, and after hearing 
that today it encourages me to go back to my office and the 
drawing board and pretty much analyze a few notes and assess/
ascertain what has happened from that point, as far as 
progress.
    Mr. Michaud. What else are you doing other than putting it 
on your Web site? Because you could have some veterans out 
there that are not members of the American Legion and might not 
think to go there. So what are you doing as an organization to 
really encourage veterans to sign up for VA health care?
    I appreciate and have always encouraged the VA to do their 
part, but I think it is also important for the VSOs to be out 
there aggressively educating the public. It is part of your 
responsibility. I think when you consider the importance of 
trying to provide adequate health care benefits, for us to do 
our job to make sure veterans are taken care of, we have to get 
veterans enrolled. That is a concern that I have; yes, we are 
going to increase funding to reenroll Priority 8 veterans, but 
VA hasn't met their goal for the Priority 8 veterans, which I 
know all the VSOs think we need to do. If VA hasn't met the 
goal, then I think we all have a responsibility to do it.
    For example, if you look at what is happening in the 
economy today, I have seen a lot of veterans who have never 
signed up for the VA because they had health care provided 
through their employer. Then they lose their job and they no 
longer have health care provided.
    So has your organization met with other organizations, such 
as labor or other entities to really encourage them to get 
their members who are veterans to sign up? It is going to take 
a collaborative effort.
    Mr. Wilson. Mr. Chairman, I will give you an example. Back 
in November the American Legion collaborated with other VSOs 
and the Washington Redskins to help veterans. The event was 
entitled, ``Time Out for Veterans.'' We collectively informed 
veterans of reopening of priority groups in 2009. We also 
provided them information to contact us, as well as information 
to contact our Web site and the VA's Web site.
    We partner with VA as well as other VSOs to place that 
assessment on our Web site, along with the means test and a 
link that led to VA's Web site.
    To reiterate, we have conducted outreach in events such as 
``Time Out for Veterans'' at FedEx Field.
    Mr. Michaud. Okay, thank you. And PVA?
    Mr. Ortner. Yes, sir, I will hit the last part first there 
about what we are doing.
    Obviously PVA is a smaller organization focusing on the 
catastrophically disabled. However, we use a lot of methods to 
do the outreach. Again, similar to the other organizations, we 
use our magazines. We have both sports magazines as well as our 
paraplegic news, which reaches a larger membership than just 
PVA. So there is outreach in that.
    I think one of the key things that we have as well as some 
of the other organizations like DAV is our service officers. 
Service officers, the contact that they have with not only 
members of the organization, but members of, you know, regular 
veterans as well, getting the word out through that does help a 
lot.
    Then also, of course, we have our chapters throughout the 
Nation that provide information primarily again to those 
individuals that may be members, but the word gets out to 
others as well.
    Going back to what the VA is doing, echoing again my 
colleagues, I think the VA has done a good job of getting 
information out there, but I think it is an issue of who they 
are contacting. As an OEF/OIF veteran myself I have had a whole 
lot of stuff come to me talking to me as an OIF or an OEF 
veteran, but that is everything I have been seeing. I haven't 
seen anything else on, you know, just being a regular veteran 
or a, you know, a Gulf War veteran or anything like that.
    So I think that is probably where VA could improve is just, 
you know, maybe cast a wider net. Now whether they are doing 
that because they are trying to limit the number coming in, 
which is understandable, you know, they have a plan to increase 
the numbers, but again, as was mentioned also, you know, 
information going out to the women veterans.
    So I think it would be possible for the VA to cast a wider 
net, but nowadays there seems to be the greatest interest in 
OIF and OEF veterans, and I think some of those others may be 
left out a bit.
    And your comment about the effects of the economy now I 
think that makes it even more important for the VA to reach out 
to those others to get those individuals that may not be aware 
of it due to the health care losses.
    Mr. Michaud. Thank you. Mr. Boozman.
    Mr. Boozman. Thank you, Mr. Chairman. I really don't have 
any questions. We as always appreciate you guys coming over and 
offering us good advice and commenting about your concerns. We 
really do appreciate your help.
    I want to thank you, Mr. Chairman and Mr. Brown for, in 
such a timely fashion, getting Dr. Petzel over and his team to 
visit with us.
    I want to congratulate you on your appointment. I know that 
you are going to do a great job and we really do look forward 
to working with you, and then all of us together, the 
Committee, or VSOs that do such a tremendous job, to continue 
to push forward for veterans and providing veterans 
opportunities. So thank you very much.
    Mr. Michaud. Thank you, Mr. Boozman.
    Once again I would like to thank this panel for your 
testimony today. I look forward to working with your 
organizations to do what we can to make sure that veterans get 
the health care that they need and deserve. And I think it is 
important for all of us to recognize that it is not just the 
VA's responsibility to try to get veterans into the system. I 
think it is all of our responsibility to do that.
    I am reminded of a round table discussion we had with Judge 
Russell from New York who was instrumental in getting the 
Veterans Court established. He made very clear when he was 
talking to groups that when he asked them how many in the room 
were veterans he had so many put their hands up. Then, when he 
rephrased the question to ask how many served in the services, 
more hands went up. There are veterans out there who do not 
feel that they are veterans because they did not serve in World 
War II or were not on active duty, and I think it is an 
educational process that all of us have to undertake, and 
hopefully we will be able to do what we can to get the word out 
there to those veterans who should be in the system to 
ultimately get them into the system, because it will benefit 
all of us in the long run, and it will definitely help the VA 
as well.
    Once again, I want to thank this panel as well as the 
previous panel. I look forward to working with each of you as 
we move forward. Thank you.
    No other comments. The hearing is adjourned.
    [Whereupon, at 2:28 p.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

             Prepared Statement of Hon. Michael H. Michaud,
                    Chairman, Subcommittee on Health
    The Subcommittee on Health will now come to order. I thank everyone 
for attending this hearing. The purpose of today's hearing is to 
examine the fiscal year 2011 President's budget request for the 
Veterans Health Administration (VHA) of the Department of Veterans 
Affairs (VA).
    The ``Veterans Health Care Budget Reform and Transparency Act of 
2009'' provides for advance appropriations for the VA medical care 
accounts and was enacted into law on October 22, 2009. In accordance 
with this Act, the President's budget requests fiscal year 2011 and 
2012 funding for the VA medical care accounts.
    The Administration requests $48.2 million for VA medical care in FY 
2011, which includes the medical services, medical support and 
compliance, and medical facilities accounts of the VA. When medical 
care collections are included, the Administration requests $51.5 
billion for VA medical care, which is $4 billion or 8.6 percent above 
the 2010 enacted level. In fiscal year 2012, the Administration 
requests $54.3 billion for VA medical care, which is about $3 billion 
or 5.3 percent above the 2011 request.
    The fiscal year 2011 budget request addresses many of the shared 
priorities of this Subcommittee, such as rural health, mental health, 
and homeless veterans. The President's budget request for the VA is a 
robust budget in the tradition of the significant funding increases 
that the VA has received in the past several years.
    Through today's hearing, we will examine the President's 2011 
budget request for VHA, which includes the funding recommendations as 
well as policy and legislative proposals for the medical care accounts 
of VHA. In addition, we will examine the IT and construction resources 
for VHA and will explore whether the budget request for the VA health 
care system provides sufficient resources to meet the needs of our 
returning servicemembers, including those who deployed as part of the 
troop surge to Afghanistan.
    Today, we will hear from the VA's Under Secretary for Health, as 
well as Paralyzed Veterans of America and Veterans of Foreign Wars who 
are the co-authors of The Independent Budget. We will also hear from 
the American Legion. I look forward to hearing their testimonies.

                                 
            Prepared Statement of Hon. Henry E. Brown, Jr.,
           Ranking Republican Member, Subcommittee on Health
    Thank you, Mr. Chairman, for holding this hearing today and I'm 
especially thankful that the weather has finally cooperated enough to 
allow us to meet and discuss the Veterans Health Administration's 
fiscal year 2011 budget. I think one thing we can all agree on is the 
immense pride we feel in the brave men and women who have served our 
Nation so honorably in uniform and our commitment to ensuring that they 
are adequately cared for when they return home from battle. Proper 
funding of VHA is vital to achieving this goal.
    This year, the Administration is requesting funding for health care 
in the amount of $51.5 billion, an increase of $4 billion from last 
year's request. Among the many worthy goals included in this budget are 
initiatives to improve mental health care, to better meet the unique 
needs of female veterans, to expand health care eligibility to Priority 
8 veterans, and to improve access to care for veterans in rural areas. 
I look forward to working with my esteemed colleagues in both parties 
on these important issues in the coming months.
    However, while I support this budget request overall, I do want to 
express my disappointment that funding has still not been appropriated 
for the ``Charleston Model''--a joint venture between the Ralph H. 
Johnson VA Medical Center and the Medical University of South Carolina 
to design, construct, and operate a co-located, joint-use medical 
facility in Charleston, South Carolina. It has been 5 years since 
Congress authorized $36.8 million for this project in the Veterans 
Benefits, Health Care, and Informational Technology Act of 2006. If 
properly funded, this partnership would not only ensure high-quality 
care for veterans in the Charleston area, but could also be used to 
improve access and quality of care in areas across the United States. 
Such an endeavor is too important for this Committee to overlook and I 
strongly encourage we allow this enterprise to go unfunded no longer.
    I'd also like to take a brief moment to congratulate Dr. Petzel, 
who recently took the oath of office to become the new VA Under 
Secretary for Health. Dr. Petzel has been with us as Acting Under 
Secretary since last May and before that served veterans as Director of 
the Midwest Health Care Network and Chief of Staff for the Minneapolis 
VA Medical Center. Dr. Petzel, I'm glad to have you with us officially 
and I look forward to working with you.
    Once again, thank you, Mr. Chairman and all of our witnesses for 
appearing here this afternoon. I look forward to a fruitful discussion 
and I yield back the balance of my time.

                                 
           Prepared Statement of Hon. Robert A. Petzel, M.D.,
      Under Secretary for Health, Veterans Health Administration,
                  U.S. Department of Veterans Affairs
    Chairman Michaud, Ranking Member Brown, and distinguished Members 
of the Subcommittee. Thank you for this opportunity to present the 
President's fiscal year 2011 budget and fiscal year 2012 advance 
appropriations request for the Veterans Health Administration. Our 
budget provides the resources necessary to continue our aggressive 
pursuit of the President's two overarching goals for the Department--to 
transform VA into a 21st century organization and to ensure that we 
provide the highest quality health care to our veterans.
    We will remain focused on producing the outcomes veterans expect 
and have earned through their service to our country. To support VA's 
efforts, the President's budget provides $125 billion in 2011--almost 
$60.3 billion in discretionary resources and nearly $64.7 billion in 
mandatory funding. Our discretionary budget request represents an 
increase of $4.3 billion, or 7.6 percent, over the 2010 enacted level.
                  Delivering World-Class Medical Care
    The budget provides $51.5 billion for medical care in 2011, an 
increase of $4 billion, or 8.5 percent, over the 2010 level. This level 
will allow us to continue providing timely, high-quality care to all 
enrolled veterans. Our total medical care level is comprised of funding 
for medical services ($37.1 billion), medical support and compliance 
($5.3 billion), medical facilities ($5.7 billion), and resources from 
medical care collections ($3.4 billion). In addition to reducing the 
number of homeless veterans and expanding access to mental health care, 
our 2011 budget will also achieve numerous other outcomes that improve 
veterans' quality of life, including:

      Providing extended care and rural health services in 
clinically appropriate settings;
      Expanding the use of home telehealth;
      Enhancing access to health care services by offering 
enrollment to more Priority Group 8 veterans and activating new 
facilities; and
      Meeting the medical needs of women veterans.

    During 2011, we expect to treat nearly 6.1 million unique patients, 
a 2.9-percent increase over 2010. Among this total are over 439,000 
veterans who served in Operation Enduring Freedom and Operation Iraqi 
Freedom, an increase of almost 57,000 (or 14.8 percent) above the 
number of veterans from these two campaigns that we anticipate will 
come to VA for health care in 2010.
    In 2011, the budget provides $2.6 billion to meet the health care 
needs of veterans who served in Iraq and Afghanistan. This is an 
increase of $597 million (or 30.2 percent) over our medical resource 
requirements to care for these veterans in 2010. This increase also 
reflects the impact of the recent decision to increase troop size in 
Afghanistan. The treatment of this newest generation of veterans has 
allowed us to focus on, and improve treatment for, PTSD as well as TBI, 
including new programs to reach veterans at the earliest stages of 
these conditions.
    The FY 2011 budget also includes funding for new patients resulting 
from the recent decision to add Parkinson's disease, ischemic heart 
disease, and B-cell leukemias to the list of presumptive conditions for 
veterans with service in Vietnam.
Extended Care and Rural Health
    VA's budget for 2011 contains $6.8 billion for long-term care, an 
increase of $858.8 million (or 14.4 percent) over the 2010 level. In 
addition, $1.5 billion is included for non-institutional long-term 
care, an increase of $276 million (or 22.9 percent) over 2010. By 
enhancing veterans' access to non-institutional long-term care, VA can 
provide extended care services to veterans in a more clinically 
appropriate setting, closer to where they live, and in the comfort and 
familiar settings of their homes.
    VA's 2011 budget also includes $250 million to continue 
strengthening access to health care for 3.2 million enrolled veterans 
living in rural and highly rural areas through a variety of avenues. 
These include new rural health outreach and delivery initiatives and 
expanded use of home-based primary care, mental health, and telehealth 
services. VA intends to expand use of cutting edge telehealth 
technology to broaden access to care while at the same time improve the 
quality of our health care services.
Home Telehealth
    Our increasing reliance on non-institutional long-term care 
includes an investment in 2011 of $163 million in home telehealth. 
Taking greater advantage of the latest technological advancements in 
health care delivery will allow us to more closely monitor the health 
status of veterans and will greatly improve access to care for veterans 
in rural and highly rural areas. Telehealth will place specialized 
health care professionals in direct contact with patients using modern 
IT tools. VA's home telehealth program cares for 35,000 patients and is 
the largest of its kind in the world. A recent study found patients 
enrolled in home telehealth programs experienced a 25-percent reduction 
in the average number of days hospitalized and a 19-percent reduction 
in hospitalizations. Telehealth and telemedicine improve health care by 
increasing access, eliminating travel, reducing costs, and producing 
better patient outcomes.
Expanding Access to Health Care
    In 2009, VA opened enrollment to Priority 8 veterans whose incomes 
exceed last year's geographic and VA means test thresholds by no more 
than 10 percent. Our most recent estimate is that 193,000 more veterans 
will enroll for care by the end of 2010 due to this policy change.
    In 2011, VA will further expand health care eligibility for 
Priority 8 veterans to those whose incomes exceed the geographic and VA 
means test thresholds by no more than 15 percent compared to the levels 
in effect prior to expanding enrollment in 2009. This additional 
expansion of eligibility for care will result in an estimated 99,000 
more enrollees in 2011 alone, bringing the total number of new 
enrollees from 2009 to the end of 2011 to 292,000.
Meeting the Medical Needs of Women Veterans
    The 2011 budget provides $217.6 million to meet the gender-specific 
health care needs of women veterans, an increase of $18.6 million (or 
9.4 percent) over the 2010 level. The delivery of enhanced primary care 
for women veterans remains one of the Department's top priorities. The 
number of women veterans is growing rapidly and women are increasingly 
reliant upon VA for their health care.
    Our investment in health care for women veterans will lead to 
higher quality of care, increased coordination of care, enhanced 
privacy and dignity, and a greater sense of security among our women 
patients. We will accomplish this through expanding health care 
services provided in our Vet Centers, increasing training for our 
health care providers to advance their knowledge and understanding of 
women's health issues, and implementing a peer call center and social 
networking site for women combat veterans. This call center will be 
open 24 hours a day, 7 days a week.
    VA's 2011 health care budget also focuses on two concerns that are 
of critical importance to our veterans--easier access to benefits and 
services, and ending the downward spiral that results in veterans' 
homelessness.
    This budget provides the resources required to enhance access in 
our health care system. We will expand access to health care through 
the activations of new or improved facilities, by expanding health care 
eligibility to more veterans, and by making greater investments in 
telehealth. We are also requesting a substantial investment for our 
homelessness programs as part of our plan to ultimately eliminate 
veterans' homelessness through an aggressive approach that includes 
housing, education, jobs, and health care.
    VA will be successful in resolving these concerns by maintaining a 
clear focus on developing innovative business processes and delivery 
systems that will not only serve veterans and their families for many 
years to come, but will also dramatically improve the efficiency of our 
operations by better controlling long-term costs. By making appropriate 
investments today, we can ensure higher value and better outcomes for 
our veterans. The 2011 budget also supports many key investments in 
VA's six high-priority performance goals. I will address several of 
these goals related to health care now.
                    Eliminating Veteran Homelessness
    Our Nation's veterans experience higher than average rates of 
homelessness, depression, substance abuse, and suicides; many also 
suffer from joblessness. On any given night, there are about 131,000 
veterans who live on the streets, representing every war and 
generation, including those who served in Iraq and Afghanistan. VA's 
major homeless-specific programs constitute the largest integrated 
network of homeless treatment and assistance services in the country. 
These programs provide a continuum of care for homeless veterans, 
providing treatment, rehabilitation, and supportive services that 
assist homeless veterans in addressing health, mental health and 
psychosocial issues. VA also offers a full range of support necessary 
to end the cycle of homelessness by providing education, jobs, and 
health care, in addition to safe housing. We will increase the number 
and variety of housing options available to homeless veterans and those 
at risk of homelessness with permanent, transitional, contracted, 
community-operated, HUD-VASH provided, and VA-operated housing.
    Homelessness is primarily a health care issue, heavily burdened 
with depression and substance abuse. VA's budget includes $4.2 billion 
in 2011 to prevent and reduce homelessness among veterans--over $3.4 
billion for core medical services and $799 million for specific 
homeless programs and expanded medical programs. Our budget includes an 
additional investment of $294 million in programs and new initiatives 
to reduce the cycle of homelessness, which is almost 55 percent higher 
than the resources provided for homelessness programs in 2010.
    VA's health care costs for homeless veterans can drop in the future 
as the Department emphasizes education, jobs, and prevention and 
treatment programs that can result in greater residential stability, 
gainful employment, and improved health status.
                      Improving Mental Health Care
    The 2011 budget continues the Department's keen focus on improving 
the quality, access, and value of mental health care provided to 
veterans. VA's budget provides over $5.2 billion for mental health, an 
increase of $410 million, or 8.5 percent, over the 2010 enacted level. 
We will expand inpatient, residential, and outpatient mental health 
programs with an emphasis on integrating mental health services with 
primary and specialty care.
    Post traumatic stress disorder (PTSD) is the mental health 
condition most commonly associated with combat, and treating veterans 
who suffer from this debilitating disorder is central to VA's mission. 
Screening for PTSD is the first and most essential step. It is crucial 
that VA be proactive in identifying PTSD and intervening early in order 
to prevent chronic problems that could lead to more complex disorders 
and functional problems.
    VA will also expand its screening program for other mental health 
conditions, most notably traumatic brain injury (TBI), depression, and 
substance use disorders. We will enhance our suicide prevention 
advertising campaign to raise awareness among veterans and their 
families of the services available to them.
    More than one-fifth of the veterans seen last year had a mental 
health diagnosis. In order to address this challenge, VA has 
significantly invested in our mental health workforce, hiring more than 
6,000 new workers since 2005.
    In October 2009, VA and DoD held a mental health summit with mental 
health experts from both Departments, and representatives from Congress 
and more than 57 non-government organizations. We convened the summit 
to discuss an innovative, wide-ranging public health model for 
enhancing mental health for returning servicemembers, veterans, and 
their families. VA will use the results to devise new innovative 
strategies for improving the health and quality of life for veterans 
suffering from mental health problems.
            Advance Appropriations for Medical Care in 2012
    VA is requesting advance appropriations in 2012 of $50.6 billion 
for the three medical care appropriations to support the health care 
needs of 6.2 million patients. The total is comprised of $39.6 billion 
for Medical Services, $5.5 billion for Medical Support and Compliance, 
and $5.4 billion for Medical Facilities. In addition, $3.7 billion is 
estimated in medical care collections, resulting in a total resource 
level of $54.3 billion. It does not include additional resources for 
any new initiatives that would begin in 2012.
    Our 2012 advance appropriations request is based largely on our 
actuarial model using 2008 data as the base year. The request continues 
funding for programs that we will continue in 2012 but which are not 
accounted for in the actuarial model. These initiatives address 
homelessness and expanded access to non-institutional long-term care 
and rural health care services through telehealth. In addition, the 
2012 advance appropriations request includes resources for several 
programs not captured by the actuarial model, including long-term care, 
the Civilian Health and Medical Program of the Department of Veterans 
Affairs, Vet Centers, and the State home per diem program. Overall, the 
2012 requested level, based on the information available at this point 
in time, is sufficient to enable us to provide timely and high-quality 
care for the estimated patient population. We will continue to monitor 
cost and workload data throughout the year and, if needed, we will 
revise our request during the normal 2012 budget cycle.
    After a cumulative increase of 26.4 percent in the medical care 
budget since 2009, we will be working to reduce the rate of increase in 
the cost of the provision of health care by focusing on areas such as 
better leveraging acquisitions and contracting, enhancing use of 
referral agreements, strengthening DoD/VA joint ventures, and expanding 
applications of medical technology (e.g. telehome health).
                    Investments in Medical Research
    VA's budget request for 2011 includes $590 million for medical and 
prosthetic research, an increase of $9 million over the 2010 level. 
These research funds will help VA sustain its long track record of 
success in conducting research projects that lead to clinically useful 
interventions that improve the health and quality of life for veterans 
as well as the general population.
    This budget contains funds to continue our aggressive research 
program aimed at improving the lives of veterans returning from service 
in Iraq and Afghanistan. This focuses on prevention, treatment, and 
rehabilitation research, including TBI and polytrauma, burn injury 
research, pain research, and post-deployment mental health research.
                         Capital Infrastructure
    VA must provide timely, high-quality health care in medical 
infrastructure which is, on average, over 60 years old. In the 2011 
budget, we are requesting $1.6 billion to invest in our major and minor 
construction programs to accomplish projects that are crucial to right 
sizing and modernizing VA's health care infrastructure, providing 
greater access to benefits and services for more veterans, closer to 
where they live, and adequately addressing patient safety and other 
critical facility deficiencies.
Major Construction
    The 2011 budget request for VA major construction is $1.151 
billion. This includes funding for five medical facility projects in 
New Orleans, Louisiana; Denver, Colorado; Palo Alto and Alameda, 
California; and Omaha, Nebraska.
    VA's major construction request also includes $24 million for 
resident engineers that support medical facility projects. This 
represents a new source of funding for the resident engineer program, 
which was previously funded under General Operating Expenses.
Minor Construction
    The $467.7 million request for 2011 for minor construction is an 
integral component of our overall capital program. In support of the 
medical care and medical research programs, minor construction funds 
permit VA to realign critical services; make seismic corrections; 
improve patient safety; enhance access to health care; increase 
capacity for dental care; enhance patient privacy; improve treatment of 
special emphasis programs; and expand our research capability. Further, 
minor construction resources will be used to comply with energy 
efficiency and sustainability design requirements.
                                Summary
    Our job at VA is to serve veterans by increasing their access to VA 
benefits and services, to provide them the highest quality of health 
care available, and to control costs to the best of our ability. Doing 
so will make VA a model of good governance. The resources provided in 
the 2011 President's budget will permit us to fulfill our obligation to 
those who have bravely served our country.
    The 298,000 employees of VA are committed to providing the quality 
of service needed to serve our veterans and their families. They are 
our most valuable resource. VA is fortunate to have public servants 
that are not only creative thinkers, but also able to put good ideas 
into practice. With such a workforce, and the continuing support of 
Congress, I am confident we can achieve our shared goal of accessible, 
high-quality and timely care and benefits for veterans.

                                 
                 Prepared Statement of Blake C. Ortner,
 Senior Associate Legislative Director, Paralyzed Veterans of America,
                  on Behalf of The Independent Budget
    Chairman Michaud, Ranking Member Brown, and Members of the 
Subcommittee, Paralyzed Veterans of America (PVA) is pleased to present 
our views on the Department of Veterans Affairs (VA) Veterans Health 
Administration's (VHA) fiscal year 2011 budget, in particular as it 
relates to construction. As one of the four co-authors of The 
Independent Budget (IB), much of our testimony will directly correspond 
to testimony last week on the views of The Independent Budget regarding 
the funding requirements for the VA health care system for FY 2011.
    When looking back on 2009, it is fair to say that the 111th 
Congress took a historic step toward providing sufficient, timely, and 
predictable funding, and yet it still failed to complete its 
appropriations work prior to the start of the new fiscal year on 
October 1. The actions of Congress last year generally reflected a 
commitment to maintain a viable VA health care system. More important, 
Congress showed real interest in reforming the budget process to ensure 
that the VA knows exactly how much funding it will receive in advance 
of the start of the new fiscal year. This is particularly critical to 
VHA. With the President's signature on P.L. 111-81, the ``Veterans 
Health Care Budget Reform and Transparency Act,'' and the enactment of 
advance appropriations, the VA can properly plan to meet the health 
care needs of the men and women who have served this Nation in uniform.
    In February 2009, the President released a preliminary budget 
submission for the Department of Veterans Affairs for FY 2010. This 
submission only projected funding levels for the overall VA budget. The 
Administration recommended an overall funding authority of $55.9 
billion for the VA, approximately $5.8 billion above the FY 2009 
appropriated level and nearly $1.3 billion more than The Independent 
Budget had recommended.
    In May, the Administration released its detailed budget blueprint 
that included approximately $47.4 billion for medical care programs, an 
increase of $4.4 billion over the FY 2009 appropriated level and 
approximately $800 million more than the recommendations of The 
Independent Budget. The budget also included $580 million in funding 
for Medical and Prosthetic Research, an increase of $70 million over 
the FY 2009 appropriated level. By the end of the year, Congress 
enacted P.L. 111-117, the ``Consolidated Appropriations Act for FY 
2010,'' that provided funding for the VA to virtually match the 
recommendations of the Administration. While the importance of these 
historic funding levels coupled with the enactment of advance 
appropriations legislation cannot be overstated, it is important for 
Congress and the Administration to continue this commitment to the men 
and women who have served and sacrificed for this country.
Funding for FY 2011
    Included in P.L. 111-117 was advance appropriations for FY 2011. 
Congress provided approximately $48.2 billion in discretionary funding 
for VA medical care. When combined with the $3.3 billion Administration 
projection for medical care collections in 2010, the total available 
operating budget provided by the appropriations bill is approximately 
$51.5 billion. Accordingly for FY 2011, The Independent Budget 
recommends approximately $52.0 billion for total medical care, an 
increase of $4.5 billion over the FY 2010 operating budget level 
established by P.L. 111-117. We believe that this estimation validates 
the advance projections that the Administration developed last year and 
has carried forward into this year. Furthermore, we remain confident 
that the Administration is headed in a positive direction that will 
ultimately benefit veterans who rely on the VA health care system to 
receive their care.
    However, PVA continues to be seriously concerned about reports of 
VA's continued inappropriate billing of service connected veterans for 
service connected injuries as well as non-service connected veterans 
being billed multiple times for the same treatment. Inappropriate 
charges for VA medical services places unnecessary financial stress on 
individual veterans and their families. These inaccurate charges are 
not easily remedied and their occurrence places the burden for 
correction directly on the veteran, their families or caregivers. PVA 
believes that many veterans are not aware of these mistakes and simply 
submit full payment to VA when a billing statement arrives at their 
home. If Congress and the Administration are going to continue to rely 
on massive collections estimates and dollars actually collected to 
support the VA health care budget, then serious examination of how the 
VA is achieving these numbers is necessary.
    The medical care appropriation includes three separate accounts--
Medical Services, Medical Support and Compliance, and Medical 
Facilities--that comprise the total VA health care funding level. For 
FY 2011, The Independent Budget recommends approximately $40.9 billion 
for Medical Services. Our Medical Services recommendation includes the 
following recommendations:

------------------------------------------------------------------------
             Current Services Estimate                 $38,988,080,000
------------------------------------------------------------------------
Increase in Patient Workload                            $ 1,302,874,000
------------------------------------------------------------------------
Policy Initiatives                                     $    650,000,000
------------------------------------------------------------------------
Total FY 2011 Medical Services                          $40,940,954,000
------------------------------------------------------------------------

    Our growth in patient workload is based on a projected increase of 
approximately 117,000 new unique patients--Priority Group 1-8 veterans 
and covered non-veterans. We estimate the cost of these new unique 
patients to be approximately $926 million. The increase in patient 
workload also includes a projected increase of 75,000 new Operation 
Enduring Freedom and Operation Iraqi Freedom (OEF/OIF) veterans at a 
cost of approximately $252 million.
    Finally, our increase in workload includes the projected enrollment 
of new Priority Group 8 veterans who will use the VA health care system 
as a result of the Administration's plan to incrementally increase the 
enrollment of Priority Group 8 veterans by 500,000 enrollments by FY 
2013. We estimate that as a result of this policy decision, the number 
of new Priority Group 8 veterans who will enroll in the VA will 
increase by 125,000 in each of the next 4 years. Based on the Priority 
Group 8 empirical utilization rate of 25 percent, we estimate that 
approximately 31,250 of these new enrollees will become users of the 
system. This translates to a cost of approximately $125 million.
    As we have emphasized in the past, the VA must have a clear plan 
for incrementally increasing this enrollment. Otherwise, the VA risks 
being overwhelmed by significant new workload. The Independent Budget 
is committed to working with the VA and Congress to implement a 
workable solution to allow all eligible Priority Group 8 veterans who 
desire to do so to begin enrolling in the system.
    Our policy initiatives have been streamlined to include immediately 
actionable items with direct funding needs. Specifically, we have 
limited our policy initiatives recommendations to restoring long-term 
care capacity (for which a reasonable cost estimate can be determined 
based on the actual capacity shortfall of the VA) and centralized 
prosthetics funding (based on actual expenditures and projections from 
the VA's prosthetics service). In order to restore the VA's long-term 
care average daily census (ADC) to the level mandated by P.L. 106-117, 
the ``Veterans Millennium Health Care Act,'' we recommend $375 million. 
Finally, to meet the increase in demand for prosthetics, the IB 
recommends an additional $275 million. This increase in prosthetics 
funding reflects the significant increase in expenditures from FY 2009 
to FY 2010 and the expected continued growth in expenditures for FY 
2011. The funding for prosthetics is particularly important because it 
reflects current services and represents a demonstrated need now; 
whereas, our funding recommendations for long-term care reflect our 
desire to see this capacity expanded beyond the current services level.
    For Medical Support and Compliance, The Independent Budget 
recommends approximately $5.3 billion. Finally, for Medical Facilities, 
The Independent Budget recommends approximately $5.7 billion. Our 
recommendation once again includes an additional $250 million for 
nonrecurring maintenance (NRM) provided under the Medical Facilities 
account. This would bring our overall NRM recommendation to 
approximately $1.26 billion for FY 2011. While we appreciate the 
significant increases in the NRM baseline over the last couple of 
years, total NRM funding still lags behind the recommended 2 to 4 
percent of plant replacement value. Based on that logic, the VA should 
actually be receiving at least $1.7 billion annually for NRM.
    For Medical and Prosthetic Research, The Independent Budget 
recommends $700 million. This represents a $119 million increase over 
the FY 2010 appropriated level, and approximately $110 million above 
the Administration's request. We are particularly pleased that Congress 
has recognized the critical need for funding in the Medical and 
Prosthetic Research account in the last couple of years. Research is a 
vital part of veterans' health care, and an essential mission for our 
national health care system. We are extremely disappointed in the 
Administration's decision to virtually flat line the research budget. 
VA research has been grossly underfunded in contrast to the growth rate 
of other Federal research initiatives. At a time of war, the government 
should be investing more, not less, in veterans' biomedical research 
programs.
    As explained in The Independent Budget, there is a significant 
backlog of major and minor construction projects awaiting action by the 
VA and funding from Congress. We have been disappointed that there has 
been inadequate followthrough on issues identified by the Capital Asset 
Realignment for Enhanced Services (CARES) process. In fact, we believe 
it may be time to revisit the CARES process altogether. For FY 2011, 
The Independent Budget recommends approximately $1.295 billion for 
Major Construction and $785 million for Minor Construction. The Major 
Construction recommendation includes approximately $100 million for 
research infrastructure and the Minor Construction recommendation 
includes approximately $200 million for research facility construction 
needs.
    We note that the budget request reduces funding for Major 
Construction and slashes funding for Minor Construction. Despite 
additional funding that has been provided in recent years to address 
the construction backlog and maintenance needs facing VA, a great deal 
remains to be done. We cannot comprehend what policy decisions could 
justify such a steep decrease in funding for Minor Construction. 
Specifically, there are two areas where PVA is significantly concerned.
VA Research Infrastructure Funding Shortfalls
    In recent years, funding for the VA maintenance and construction 
appropriations has failed to provide the resources needed by VA to 
maintain, upgrade, and replace its aging research facilities. 
Consequently many VA facilities have run out of adequate research 
space. Also, ventilation, electrical supply, roofs and plumbing 
deficiencies appear frequently on lists of urgently needed upgrades 
along with significant space reconfiguration. In the 2003 Draft 
National Capital Asset Realignment for Enhanced Services (CARES) Plan, 
VA listed $468.6 million designated for new laboratory construction, 
renovation of existing research space, and build-out costs for leased 
research facilities. However, these capital improvement projects were 
omitted from the Secretary's final report on capital planning 
consequential to the CARES effort.
    In House Report 109-95 accompanying the ``FY 2006 VA Appropriations 
Act,'' the House Appropriations Committee expressed concern that 
``equipment and facilities to support the research program may be 
lacking and that some mechanism is necessary to ensure the Department's 
research facilities remain competitive.'' In the same report, the 
Committee directed VA to conduct ``a comprehensive review of its 
research facilities and report to the Congress on the deficiencies 
found and suggestions for correction of the identified deficiencies.'' 
VA piloted the evaluation instrument and methodology in FY 2006 at 
three sites--Central Arkansas Veterans Health System, Little Rock; VAMC 
Salt Lake City; and VA New York Harbor Health Care System (Manhattan 
and Brooklyn campuses). All three sites scored within the ``poor'' 
range (D on an A to F scale) with a total correction cost of over $26 
million.
    In FY 2008, the VA Office of Research and Development (ORD) 
followed up with an as yet incomplete examination of all VA research 
infrastructure, for physical condition, capacity for current research, 
as well as needed program growth and sustainability of VA space to 
conduct research. According to an October 26, 2009, ORD report to the 
VA National Research Advisory Committee, surveys to date support the 
pilot findings: ``There is a clear need for research infrastructure 
improvements throughout the system, including many that impact on life 
safety.''
    By the end of FY 2009, a total of 53 sites within 47 research 
programs will have been surveyed. Approximately 20 sites remain to be 
assessed in FY 2010. To date, the combined total estimated cost for 
improvements exceeds $570 million. About 44 percent of the estimated 
correction costs constitute ``priority 1'' deficiencies--those with an 
immediate need for correction to return components to normal service or 
operation; stop accelerated deterioration; replace items that are at or 
beyond their useful life; and correct life-safety hazards. Furthermore, 
only six buildings (of 38 buildings surveyed) at five sites were rated 
above the ``poor'' range. Three of the seven buildings rated above 
``poor'' were structures housing the main hospital. Five buildings that 
rated ``poor'' were main hospitals housing laboratories.
    A significant cause of the VA research infrastructure's neglect is 
that there is no direct funding line, nor any budgetary request made, 
for VA research facilities. Nor does the VA Medical and Prosthetic 
Research appropriation contain funding for construction, renovation, or 
maintenance of VA research facilities. VA researchers must rely on 
local facility management to repair, upgrade, and replace research 
facilities and capital equipment associated with VA's research 
laboratories. As a result, VA research competes with medical 
facilities' direct patient care infrastructure needs (such as elevator 
replacement, heating and air conditioning upgrades, operating room 
equipment and space upgrades, outpatient clinic space construction or 
renovations, and capital equipment upgrades and replacements such as X-
ray machines and MRIs) for funds provided under either the VA Medical 
Facility appropriation account or the VA Major and Minor Construction 
appropriations accounts. VA investigators' success in obtaining funding 
from non-VA sources exacerbates VA's research infrastructure problems 
because non-VA grantors typically provide no funding to cover the costs 
to VA medical centers of housing extramurally funded projects.
    We anticipate VA's ongoing research facilities assessment will 
identify a need for research infrastructure funding significantly 
greater than the 2003 Draft National CARES report. As VA moves forward 
with its research facilities assessment, we urge Congress to require VA 
to submit the resulting report to the House and Senate Committees on 
Appropriations and Veterans' Affairs by June 1, 2010. Surfacing this 
key report will ensure that the Administration and Congress are well 
informed of the deteriorating condition of VA's research infrastructure 
and of its funding needs so these may be fully considered in the budget 
formulation process.
    In accordance with the recommendations of The Independent Budget, 
to address the VA research infrastructure's defective funding 
mechanism, PVA recommends the Administration and Congress establish a 
new appropriations account to independently define and separate VA 
research infrastructure funding needs from capital and maintenance 
funding for direct VA medical care. The account should be sub-divided 
for major and minor construction, and for maintenance and repair needs. 
This revision in appropriations accounts will empower VA to address 
research facility needs without interfering with direct health care 
infrastructure. We believe correction of the known infrastructure 
deficiencies should not be further delayed and consistent with the 
recommendations of The Independent Budget, we recommend an 
appropriation in FY 2011 of $300 million dedicated exclusively to 
renovating existing research facilities to address the current and 
well-documented shortfalls in research infrastructure.
Maintain Critical VA Health Infrastructure
    Over the past year, VA has begun to discuss its desire to address 
its health infrastructure needs in a new way. VA has acknowledged its 
challenges with aging infrastructure; changing health care delivery 
needs, including reduced demand for inpatient beds and increasing 
demand for outpatient care and medical specialty services; limited 
funding available for construction of new facilities, that are growing 
prohibitively expensive; frequent delays in constructing and renovating 
space needed to increase access, and particularly the timeliness of 
construction projects. VA has noted, and we concur, that a decade or 
more is required from the time VA initially proposes a major medical 
facility construction project, until the doors actually open for 
veterans to receive care in that facility.
    Given these significant challenges, VA has developed a new model 
for health care delivery, the Health Care Center Facility (HCCF) 
leasing program. Under the HCCF proposal, in lieu of the traditional 
approach to major medical facility construction, VA would obtain by 
long-term lease, a number of large outpatient clinics built to VA 
specifications. These large clinics would provide a broad range of 
outpatient services, including primary and specialty care as well as 
outpatient mental health services and ambulatory surgery. Inpatient 
needs at such sites would probably be managed through contracts with 
affiliates or local private medical centers, although today we are 
unclear on how such arrangements would be managed.
    VA noted that, in addition to its new HCCF facilities, it would 
maintain its VA medical centers (VAMCs), larger independent outpatient 
clinics, community based outpatient clinics (CBOCs) and rural outreach 
clinics. VA has argued that adopting the HCCF model would allow VA to 
quickly establish new facilities that would provide 95 percent of the 
care and services veterans need in their catchment areas, specifically 
primary care, and a variety of specialty services, mental health, 
diagnostic testing and same-day ambulatory surgery.
    We concur with VA that the HCCF model seems to offer a number of 
benefits in addressing its capital infrastructure problems including 
more modern facilities that meet current life-safety codes; better 
geographic placements; increased patient safety; reductions in 
veterans' travel costs and increased convenience; flexibility to 
respond to changes in patient loads and technologies; potential savings 
in operating costs and in facility maintenance; and, reduced overhead 
in maintaining outdated medical centers.
    While it offers some obvious advantages, the HCCF model could face 
significant challenges. PVA is particularly concerned about the overall 
impact on the future of VA's system of care, including the potential 
unintended consequences on continuity of high-quality care; maintenance 
of its specialized medical programs for spinal cord injury, blindness, 
amputations and other health challenges of seriously disabled veterans; 
delivery of comprehensive services; its recognized biomedical research 
and development programs; and the impact on VA's renowned graduate 
medical education and health professions training programs, in 
conjunction with longstanding affiliations with nearly every health 
professions university in the Nation.
    Moreover, we believe the HCCF model could well challenge VA's 
ability to provide alternatives to maintaining directly its existing 
130 nursing home care units, homelessness programs, domiciliaries, 
compensated work therapy programs, hospice and respite, adult day 
health care units, the Health Services Research and Development 
Program. Additionally, the unique nature of highly specialized services 
could be compromised including 24 spinal cord injury centers, 10 blind 
rehabilitation centers, a variety of unique ``centers of excellence'' 
(in geriatrics, gerontology, mental illness, Parkinson's, and multiple 
sclerosis), and critical care programs for veterans with serious and 
chronic mental illnesses.
    In general, the HCCF proposal could be a positive development, with 
good potential. Leasing has the advantage of avoiding long and costly 
in-house construction delays and can be adaptable, especially when 
compared to costs for renovating existing VA major medical facilities. 
Leasing options have been particularly valuable for VA as evidenced by 
the success of the leased space arrangements for many VA community 
based outpatient clinics and Vet Centers. However, VA says it will 
contract for these essential inpatient services with VA affiliates or 
community hospitals if needed. First and foremost, VA must provide 
assurances that this approach will not negatively impact safety, 
quality and continuity of care, and permanently privatize many services 
we believe VA should continue to provide. We have testified on this 
topic and have expressed objections in the Contract Care Coordination 
and Community Based Outpatient Clinics sections of The Independent 
Budget.
    We agree with VA's assertion that it needs a balanced capital 
assets program, of both owned and leased buildings, to ensure demands 
are met under current projections. Likewise, we agree with VA that the 
HCCF concept could provide modern health care facilities relatively 
quickly that might not otherwise be available due to the predictable 
constraints of VA's major construction program. On the other hand, if 
VA plans to replace the majority or even a large fraction of all VAMCs 
with HCCFs, such a radical shift would pose a number of concerns for 
us. But we see this challenge as only a small part of the overall 
picture related to VA health infrastructure needs in the 21st century. 
The emerging HCCF plan does not address the fate of VA's 153 medical 
centers located throughout the Nation that are on average 55 years of 
age or older. It does not address long-term care needs of the aging 
veteran population, inpatient treatment of the chronically and 
seriously mentally ill, the unresolved rural health access issues, or 
the lingering questions on improving VA's research infrastructure. The 
major question is what will VA's 21st century health infrastructure 
look like and how it will be managed and sustained? Fully addressing 
these and related questions is extremely important and will impact 
generations of sick and disabled veterans.
    Congress and the Administration must work together to secure VA's 
future to design a VA of the 21st century. It will take the joint 
cooperation of Congress, veterans' advocates, and the Administration to 
support this reform, while setting aside resistance to change, even 
dramatic change, when change is demanded and supported by valid data. 
Accordingly, we urge the Administration and Congress to live up to the 
President's words by making a steady, stable investment in VA's capital 
infrastructure to bring the system up to match the 21st century needs 
of veterans.
    Finally, one of our community's frustrations with respect to VA's 
infrastructure plans is lack of consistent and periodic updates, 
specific information about project plans, and even elementary 
communications. We ask VA to improve the quality and quantity of 
communication with the VSOs, enrolled veterans, concerned labor 
organizations and VA's own employees, affiliates and other 
stakeholders, as the VA capital and strategic planning process moves 
forward. We believe that all of these groups must be made to understand 
VA's strategic plan and how it may affect them, positively and 
negatively. Talking openly and discussing potential changes will help 
resolve the understandable angst about these complex and important 
questions of VA health care infrastructure. While we agree that VA is 
not the sum of its buildings, and that a veteran patient's welfare must 
remain at the center of VA's concern, VA must be able to maintain an 
adequate infrastructure around which to build and sustain ``the best 
care anywhere.'' If VA keeps faith with these principles, we are 
prepared to aid VA in accomplishing this important goal.
    This concludes my testimony. I will be happy to answer any 
questions you may have.
                                 
           Prepared Statement of Eric A. Hilleman, Director,
 National Legislative Service, Veterans of Foreign Wars of the United 
                                States,
                  on Behalf of The Independent Budget
    MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE:
    On behalf of the 2.1 million men and women of the Veterans of 
Foreign Wars of the U.S. (VFW) and our Auxiliaries, I would like to 
thank you for the opportunity to testify today. The VFW works alongside 
the other members of The Independent Budget (IB)--AMVETS, Disabled 
American Veterans and Paralyzed Veterans of America--to produce a set 
of policy and budget recommendations that reflect what we believe would 
meet the needs of America's veterans. The VFW is responsible for the 
construction portion of the IB, so I will limit my remarks to that 
portion of the budget.
    VA's infrastructure--particularly within its health care system--is 
at a crossroads. The system is facing many challenges, including the 
average age of buildings (60 years) and significant funding needs for 
routine maintenance, upgrades, modernization and construction. VA is 
beginning a patient-centered reformation and transformation of the way 
it delivers care and new ways of managing its infrastructure plan based 
on needs of sick and disabled veterans in the 21st century. Regardless 
of what the VA health care system of the future looks like, our focus 
must remain on a lasting and accessible VA health care system that is 
dedicated to their unique needs and one that can provide high-quality, 
timely care when and where they need it.
    VA manages a wide portfolio of capital assets throughout the 
Nation. According to its latest Capital Asset Plan, VA is responsible 
for 5,500 buildings and almost 34,000 acres of land. It is a vast 
network of facilities that requires significant time and attention from 
VA's capital asset managers.
    CARES--VA's data-driven assessment of their current and future 
construction needs--gave VA a long-term roadmap and has helped guide 
its capital planning process over the past few fiscal years. CARES 
showed a large number of significant construction priorities that would 
be necessary for VA to fulfill its obligation to this Nation's veterans 
and over the last several fiscal years, the Administration and Congress 
have made significant inroads in funding these priorities. Since FY 
2004, $4.9 billion has been allocated for these projects. Of these 
CARES-identified projects, VA has completed 5 and another 27 are 
currently under construction. It has been a huge, but necessary 
undertaking and VA has made slow, but steady progress on these critical 
projects.
    The challenge for VA in the post-CARES era is that there are still 
numerous projects that need to be carried out, and the current backlog 
of partially funded projects that CARES has identified is large, too. 
This means that VA is going to continue to require significant 
appropriations for the major and minor construction accounts to live up 
to the promise of CARES. VA's most recent Asset Management Plan 
provides an update of the state of CARES projects--including those only 
in the planning or acquisition process. Table 4-5: (page 7.4-49) shows 
a need of future appropriations to complete these projects of $3.25 
billion.

------------------------------------------------------------------------
                                             Future Funding Needed ($ in
                    Project                           Thousands)
------------------------------------------------------------------------
  Denver                                                    $   492,700
------------------------------------------------------------------------
  San Juan                                                  $   122,920
------------------------------------------------------------------------
  New Orleans                                               $   370,000
------------------------------------------------------------------------
  St. Louis                                                 $   364,700
------------------------------------------------------------------------
  Palo Alto                                                 $   478,023
------------------------------------------------------------------------
  Bay Pines                                                 $    80,170
------------------------------------------------------------------------
  Seattle                                                   $    38,700
------------------------------------------------------------------------
  Seattle                                                   $   193,830
------------------------------------------------------------------------
  Dallas                                                     $   80,100
------------------------------------------------------------------------
* Louisville                                                 $1,100,000
------------------------------------------------------------------------
      TOTAL                                                  $3,246,143
------------------------------------------------------------------------
This amount represents just the backlog of current construction
  projects. It does reflect the Administration's FY 2011 proposed
  appropriation toward Denver, New Orleans, and Palo Alto.
* Louisville's cost estimate is found in table 5-6, on page 7.5-93.

    Meanwhile, VA continues to identify and re-prioritize potential 
major construction projects. These priorities, which are assessed using 
the rigorous methodology that guided the CARES decisions, are released 
in the Department's annual Five Year Capital Asset Plan, which is 
included in the Department's budget submission. The most recent one was 
included in Volume IV and is available on VA's Web site: http://
www4.va.gov / budget / docs / summary / Fy2011 _ Volume _ 4-
Construction _ and _ 5_ Year_Cap_Plan.pdf.
    Table 4-5 shows a long list of partially funded major construction 
projects. These 82 ongoing projects demonstrate the continued need for 
VA to upgrade and repair its aging infrastructure, and that continuous 
funding is necessary for not just the backlog of projects, but to keep 
VA viable for today's and future veterans.
    In a November 17, 2008 letter to the Senate Veterans Affairs 
Committee, Secretary Peake said that ``the Department estimates that 
the total funding requirement for major medical facility projects over 
the next 5 years would be in excess of $6.5 billion.''
    It is clear that VA needs a significant infusion of cash for its 
construction priorities. VA's own words and studies show this.

------------------------------------------------------------------------
               Major Construction Account Recommendations
-------------------------------------------------------------------------
                                                    Recommendation ($ in
                      Category                           Thousands)
------------------------------------------------------------------------
VHA Facility Construction                                    $1,000,000
------------------------------------------------------------------------
NCA Construction                                            $    60,000
------------------------------------------------------------------------
Advance Planning                                            $    40,000
------------------------------------------------------------------------
Master Planning                                             $    15,000
------------------------------------------------------------------------
Historic Preservation                                       $    20,000
------------------------------------------------------------------------
Medical Research Infrastructure                             $   100,000
------------------------------------------------------------------------
Miscellaneous Accounts                                      $    58,000
------------------------------------------------------------------------
    TOTAL                                                    $1,295,000
------------------------------------------------------------------------

      VHA Facility Construction--this amount would allow VA to 
continue digging into the $3.25 billion backlog of partially funded 
construction projects. Depending on the stages and ability to complete 
portions of the projects, any additional money could be used to fund 
new projects identified by VA as part of its prioritization methodology 
in the Five-Year Capital Plan.
      NCA Construction's Five-Year Capital Plan details 
numerous potential major construction projects for the National 
Cemetery Association throughout the country. This level of funding 
would allow VA to begin construction on at least three of its scored 
priority projects.
      Advance Planning--helps develop the scope of the major 
construction projects as well as identifying proper requirements for 
their construction. It allows VA to conduct necessary studies and 
research similar to planning processes in the private sector.
      Master Planning--a description of our request follows 
later in the text.
      Historic Preservation--a description of our request 
follows later in the text.
      Miscellaneous Accounts--these include the individual line 
items for accounts such as asbestos abatement, the judgment fund, and 
hazardous waste disposal. Our recommendation is based upon the historic 
level for each of these accounts.

------------------------------------------------------------------------
               Minor Construction Account Recommendations
-------------------------------------------------------------------------
                                                        Funding ($ in
                      Category                           Thousands)
------------------------------------------------------------------------
Veterans Health Administration                                 $450,000
------------------------------------------------------------------------
Medical Research Infrastructure                                $200,000
------------------------------------------------------------------------
National Cemetery Administration                               $100,000
------------------------------------------------------------------------
Veterans Benefits Administration                               $ 20,000
------------------------------------------------------------------------
Staff Offices                                                  $ 15,000
------------------------------------------------------------------------
    TOTAL                                                      $785,000
------------------------------------------------------------------------

      Veterans Health Administration--Page 7.8-138 of VA's 
Capital Plan reveals hundreds of already identified minor construction 
projects. These projects update and modernize VA's aging physical 
plant, ensuring the health and safety of veterans and VA employees. 
Additionally, a great number of minor construction projects address 
FCA-identified maintenance deficiencies; the backlog of 216 projects in 
FY 2010 with over $1 billion that has yet to be funded.
      Medical Research Infrastructure--a description of our 
request follows later in the text.
      National Cemetery Administration of the Capital Plan 
identifies numerous minor construction projects throughout the country 
including the construction of several columbaria, installation of 
crypts and landscaping and maintenance improvements. Some of these 
projects could be combined with VA's new NCA nonrecurring maintenance 
efforts.
      Veterans Benefits Administration--Page 7.6-106 of the 
Capital Plan lists several minor construction projects in addition to 
the leasing requirements VBA needs.
      Staff Offices--Page 7.8-134 lists numerous potential 
minor construction projects related to staff offices.
             Increase Spending on Nonrecurring Maintenance
The deterioration of many VA properties requires increased spending on 
                        nonrecurring maintenance
    For years, the Independent Budget Veteran Service Organizations 
(IBVSOs) have highlighted the need for increased funding for the 
nonrecurring maintenance (NRM) account. NRM consists of small projects 
that are essential to the proper maintenance and preservation of the 
lifespan of VA's facilities. NRM projects are one-time repairs such as 
maintenance to roofs, repair and replacement of windows, and flooring 
or minor upgrades to the mechanical or electrical systems. They are a 
necessary component of the care and stewardship of a facility.
    These projects are so essential because if left unrepaired, they 
can really take their toll on a facility, leading to more costly 
repairs in the future, and the potential of a need for a minor 
construction project. Beyond the fiscal aspects, facilities that fall 
into disrepair can create access difficulties and impair patient and 
staff health and safety. If things do develop into a larger 
construction projection because early repairs were not done, it creates 
an even larger inconvenience for veterans and staff.
    The industry standard for medical facilities is for managers to 
spend from 2 percent-4 percent of plant replacement value (PRV) on 
upkeep and maintenance. The 1998 PriceWaterhouseCoopers study of VA's 
facilities management practices argued for this level of funding and 
previous versions of VA's own Asset Management Plan have agreed that 
this level of funding would be adequate.
    The most recent estimate of VA's PRV is from the FY 08 Asset 
Management Plan. Using the standards of the Federal Government's 
Federal Real Property Council (FRPC), VA's PRV is just over $85 billion 
(page 26).
    Accordingly, to fully maintain its facilities, VA needs a NRM 
budget of at least $1.7 billion. This number would represent a doubling 
of VA's budget request from FY 2009, but is in line with the total NRM 
budget when factoring in the increases Congress gave in the 
appropriations bill and the targeted funding included in the 
supplemental appropriations bills.
    Increased funding is required not just to fill current maintenance 
needs and levels, but also to dip into the extensive backlog of 
maintenance requirements VA has. VA monitors the condition of its 
structures and systems through the Facility Condition Assessment (FCA) 
reports. VA surveys each medical center periodically, giving each 
building a thorough assessment of all essential systems. Systems are 
assigned a letter grade based upon the age and condition of various 
systems, and VA gives each component a cost for repair or replacement.
    The bulk of these repairs and replacements are conducted through 
the NRM program, although the large increases in minor construction 
over the last few years have helped VA to address some of these 
deficiencies.
    VA's 5-Year Capital Plan discusses FCAs and acknowledges the 
significant backlog of the number of high-priority deficiencies--those 
with ratings of D or F--that had replacement and repair costs of over 
$9.4 billion, found on page 7.1-18. VA estimates that 52 percent of NRM 
dollars are obligated toward this cost.
    VA uses the FCA reports as part of its Federal Real Property 
Council (FRPC) metrics. The Department calculates a Facility Condition 
Index, which is the ratio of the cost of FCA repairs to the cost of 
replacement. According to the FY 08 Asset Management Plan, this metric 
has gone backward from 82 percent in 2006 to just 68 percent in 2008. 
VA's strategic goal is 87 percent, and for it to meet that, it would 
require a sizeable investment in NRM and minor construction.
    Given the low level of funding the NRM account has historically 
received, the IBVSOs are not surprised at the metrics or the dollar 
cost of the FCA deficiencies. The 2007 ``National Roll Up of 
Environment of Care Report,'' which was conducted in light of the 
shameful maintenance deficiencies at Walter Reed, further prove the 
need for increased spending on this account. Maintenance has been 
neglected for far too long, and for VA to provide safe, high-quality 
health care in its aging facilities, it is essential that more money be 
allocated for this account.
    We also have concerns with how NRM funding is actually apportioned. 
Since it falls under the Medical Care account, NRM funding has 
traditionally been apportioned using the Veterans Equitable Resource 
Allocation (VERA) formula. This model works when divvying up health 
care dollars, targeting money to those areas with the greatest demand 
for health care. When dealing with maintenance needs, though, this same 
formula may actually intensify the problem by moving money away from 
older hospitals, such as in the northeast, to newer facilities where 
patient demand is greater, even if the maintenance needs are not as 
high. We were happy to see that the conference reports to the VA 
appropriations bills required NRM funding to be apportioned outside the 
VERA formula, and we would hope that this continues into the future.
    Another issue related to apportionment of funding came to light in 
a May 2007 Government Accountability Office (GAO) report. They found 
that the bulk of NRM funding is not actually apportioned until 
September, the final month of the fiscal year. In September 2006, GAO 
found that VA allocated 60 percent of that year's NRM funding. This is 
a shortsighted policy that impairs VA's ability to properly address its 
maintenance needs, and since NRM funding is year-to-year, it means that 
it could lead to wasteful or unnecessary spending as hospital managers 
rushed in a flurry to spend their apportionment before forfeiting it 
back. We cannot expect VA to perform a year's worth of maintenance in a 
month. It is clearly poor policy and not in the best interest of 
veterans. The IBVSOs believe that Congress should consider allowing 
some NRM money to be carried over from one fiscal year to another. 
While we would hope that this would not resort to hospital managers 
hoarding money, it could result in more efficient spending and better 
planning, rather than the current situation where hospital managers 
sometimes have to spend through a large portion of maintenance funding 
before losing it at the end of the fiscal year.
Recommendations
    VA must dramatically increase funding for nonrecurring maintenance 
in line with the 2 percent-4 percent total that is the industry 
standard so as to maintain clean, safe and efficient facilities. VA 
also requires additional maintenance funding to allow the Department to 
begin addressing the substantial maintenance backlog of FCA-identified 
projects.
    Portions of the NRM account should be continued to be funded 
outside of the VERA formula so that funding is allocated to the 
facilities that actually have the greatest maintenance needs.
    Congress should consider the strengths of allowing VA to carry over 
some maintenance funding from one fiscal year to another so as to 
reduce the temptation some VA hospital managers have of inefficiently 
spending their NRM money at the end of a fiscal year for fear of losing 
it.
          Inadequate Funding and Declining Capital Asset Value
   VA must protect against deterioration of its infrastructure and a 
                     declining capital asset value
    The last decade of underfunded construction budgets has meant that 
VA has not adequately recapitalized its facilities. Recapitalization is 
necessary to protect the value of VA's capital assets through the 
renewal of the physical infrastructure. This ensures safe and fully 
functional facilities long into the future. VA's facilities have an 
average age approaching 60 years, and it is essential that funding be 
increased to renovate, repair, and replace these aging structures and 
physical systems.
    As in past years, the IBVSOs cite the Final Report of the 
President's Task Force to Improve Health Care Delivery for Our Nation's 
Veterans (PTF). It found that from 1996-2001, VA's recapitalization 
rate was just 0.64 percent. At this rate, VA's structures would have an 
assumed life of 155 years.
    The PTF cited a PriceWaterhouseCoopers study of VA's facilities 
management programs that found that to keep up with industry standards 
in the private sector and to maintain patient and employee safety and 
optimal health care delivery, VA should spend a minimum of 5 to 8 
percent of plant replacement value (PRV) on its total capital budget.
    The FY08 VA Asset Management Plan provides the most recent estimate 
of VA's PRV. Using the guidance of the Federal Government's Federal 
Real Property Council (FRPC), VA's PRV is just over $85 billion (page 
26).
    Accordingly, using that 5 to 8 percent standard, VA's capital 
budget should be between $4.25 and $6.8 billion per year in order to 
maintain its infrastructure.
    VA's capital budget request for FY 2009--which includes major and 
minor construction, maintenance, leases and equipment--was just $3.6 
billion. We greatly appreciate that Congress increased funding above 
that level with an increase over the Administration request of $750 
million in major and minor construction alone. That increased amount 
brought the total capital budget in line with industry standards, and 
we strongly urge that these targets continue to be met and we would 
hope that future VA requests use these guidelines as a starting point 
without requiring Congress to push them past the target.
Recommendation
    Congress and the Administration must ensure that there are adequate 
funds for VA's capital budget so that VA can properly invest in its 
physical assets to protect their value and to ensure that the 
Department can continue to provide health care in safe and functional 
facilities long into the future.
                 Maintain VA's Critical Infrastructure
    The IBVSOs are concerned with VA's recent attempts to back away 
from the capital infrastructure blueprint laid out by CARES and we are 
worried that its plan to begin widespread leasing and contracting for 
inpatient services might not meet the needs of veterans.
    VA acknowledges three main challenges with its capital 
infrastructure projects. First, they are costly. According to a March 
2008 briefing given to the VSO community, over the next 5 years, VA 
would need $2 billion per year for its capital budget. Second, there is 
a large backlog of partially funded construction projects. That same 
briefing claimed that the difference in major construction requests 
given to OMB was $8.6 billion from FY 03 through FY 09, and that they 
have received slightly less than half that total. Additionally, there 
is a $2 billion funding backlog for projects that are partially but not 
completely funded. Third, VA is concerned about the timeliness of 
construction projects, noting that it can take the better part of a 
decade from the time VA initially proposes a project until the doors 
actually open for veterans.
    Given these challenges, VA has floated the idea of a new model for 
health care delivery, the Health Care Center Facility (HCCF) leasing 
program. Under the HCCF, VA would begin leasing large outpatient 
clinics in lieu of major construction. These large clinics would 
provide a broad range of outpatient services including primary and 
specialty care as well as outpatient mental health services and 
ambulatory surgery.
    On the face of it, this sounds like a good initiative. Leasing has 
the advantage of being able to be completed quickly, as well as being 
adaptable, especially when compared to the major construction process. 
Leasing has been particularly valuable for VA as evidenced by the 
success of the Community Based Outpatient Clinics (CBOCs) and Vet 
Centers.
    Our concern rests, however, with VA's plan for inpatient services. 
VA aims to contract for these essential services with affiliates or 
community hospitals. This program would privatize many services that 
the IBVSOs believe VA should continue to provide. We lay out our 
objections to privatization and widespread contracting for care 
elsewhere in The Independent Budget.
    Beyond those objections, though, is the example of Grand Island, 
Nebraska. In 1997, the Grand Island VA Medical Center closed its 
inpatient facilities, contracting out with a local hospital for those 
services. Recently, the contract between the local facility and VA was 
canceled, meaning veterans in that area can no longer receive inpatient 
services locally. They must travel great distances to other VA 
facilities such as the Omaha VA Medical Center. In some cases, when 
Omaha is unable to provide specialized care, VA is flying patients at 
its expense to faraway VA medical centers, including those in St. Louis 
and Minneapolis.
    Further, with the canceling of that contract, St. Francis no longer 
provides the same level of emergency services that a full VA Medical 
Center would provide. With VA's restrictions on paying for emergency 
services in non-VA facilities, especially for those who may have some 
form of private insurance, this amounts to a cut in essential services 
to veterans. Given the expenses of air travel and medevac services, the 
current arrangement in Grand Island has likely not resulted in any cost 
savings for VA. Ferrying sick and disabled veterans great distances for 
inpatient care also raises patient safety and quality concerns.
    The HCCF program raises many concerns for the IBVSOs that VA must 
address before we can support the program. Among these questions, we 
wonder how VA would handle governance, especially with respect to the 
large numbers of non-VA employees who would be treating veterans. How 
would the non-VA facility deal with VA directives and rule changes that 
govern health care delivery and that ensure safety and uniformity of 
the quality of care? Will VA apply its space planning criteria and 
design guides to non-VA facilities? How will VA's critical research 
activities, most of which improve the lives of all Americans and not 
only veterans, be affected if they are being conducted in shared 
facilities, and not a traditional part of VA's first-class research 
programs? What would this change mean for VA's electronic health 
record, which many have rightly lauded as the standard that other 
health care systems should aim to achieve? Without the electronic 
health record, how would VA maintain continuity of care for a veteran 
who moves to another area?
    But most importantly, CARES required years to complete and consumed 
thousands of hours of effort and millions of dollars of study. We 
believe it to be a comprehensive and fully justified roadmap for VA's 
infrastructure as well as a model that VA can apply periodically to 
assess and adjust those priorities. Given the strengths of the CARES 
process and the lessons VA learned and has applied from it, why is the 
HCCF model, which to our knowledge has not been based on any sort of 
model or study of the long-term needs of veterans, the superior one? We 
have yet to see evidence that it is and until we see more convincing 
evidence that it will truly serve the best needs of veterans, the 
IBVSOs will have a difficult time supporting it.
Recommendation
    VA must resist implementing the HCCF model without fully addressing 
the many questions the IBVSOs have and VA must explain how the program 
would meet the needs of veterans, particularly as compared to the 
roadmap CARES has laid out.
                    Research Infrastructure Funding
   The Department of Veterans Affairs must have increased funding for
 its research infrastructure to provide a state-of-the-art research and
 laboratory environment for its excellent programs, but also to ensure
      that VA hires and retains the top scientists and researchers
VA Research Is a National Asset
    Research conducted in the Department of Veterans Affairs has led to 
such innovations and advances as the cardiac pacemaker, nuclear 
scanning technologies, radioisotope diagnostic techniques, liver and 
other organ transplantation, the nicotine patch, and vast improvements 
in a variety of prosthetic and sensory aids. A state-of-the-art 
physical environment for conducting VA research promotes excellence in 
health professions education and VA patient care as well as the 
advancement of biomedical science. Adequate and up-to-date research 
facilities also help VA recruit and retain the best and brightest 
clinician scientists to care for enrolled veterans.
VA Research Infrastructure Funding Shortfalls
    In recent years, funding for the VA Medical and Prosthetics 
Research Program has failed to provide the resources needed to 
maintain, upgrade, and replace VA's aging research facilities. Many VA 
facilities have exhausted their available research space. Along with 
space reconfiguration, ventilation, electrical supply, and plumbing 
appear frequently on lists of needed upgrades in VA's academic health 
centers. In the 2003 Draft National Capital Asset Realignment for 
Enhanced Services (CARES) plan, VA included $142 million designated for 
renovation of existing research space and build-out costs for leased 
researched facilities. However, these capital improvement costs were 
omitted from the Secretary's final report. Over the past decade, only 
$50 million has been spent on VA research construction or renovation 
nationwide, and only 24 of the 97 major VA research sites across the 
Nation have benefited.
    In House Report 109-95 accompanying the FY 2006 VA appropriations, 
the House Appropriations Committee directed VA to conduct ``a 
comprehensive review of its research facilities and report to the 
Congress on the deficiencies found and suggestions for correction of 
the identified deficiencies.'' In FY 2008, the VA Office of Research 
and Development initiated a multi-year examination of all VA research 
infrastructures for physical condition and capacity for current 
research, as well as program growth and sustainability of the space 
needed to conduct research.
Lack of a Mechanism to Ensure VA's Research Facilities Remain Competitiv
        e
    In House Report 109-95 accompanying the FY 2006 VA appropriations, 
the House Appropriations Committee expressed concern that ``equipment 
and facilities to support the research program may be lacking and that 
some mechanism is necessary to ensure the Department's research 
facilities remain competitive.'' A significant cause of research 
infrastructure's neglect is that there is no direct funding line for 
research facilities.
    The VA Medical and Prosthetic Research appropriation does not 
include funding for construction, renovation, or maintenance of 
research facilities. VA researchers must rely on their local facility 
managements to repair, upgrade, and replace research facilities and 
capital equipment associated with VA's research laboratories. As a 
result, VA research competes with other medical facilities' direct 
patient care needs--such as medical services infrastructure, capital 
equipment upgrades and replacements, and other maintenance needs--for 
funds provided under either the VA Medical Facilities appropriation 
account or the VA Major or Minor Medical Construction appropriations 
accounts.
Recommendations
    The Independent Budget veteran's service organizations anticipate 
VA's analysis will find a need for funding significantly greater than 
VA had identified in the 2004 Capital Asset Realignment for Enhanced 
Services report. As VA moves forward with its research facilities 
assessment, the IBVSOs urge Congress to require the VA to submit the 
resulting report to the House and Senate Committees on Veterans' 
Affairs no later than October 1, 2010. This report will ensure that the 
Administration and Congress are well informed of VA's funding needs for 
research infrastructure so they may be fully considered at each stage 
of the FY 2011 budget process.
    To address the current shortfalls, the IBVSOs recommend an 
appropriation in FY 2010 of $142 million, dedicated to renovating 
existing VA research facilities in line with the 2004 CARES findings.
    To address the VA research infrastructure's defective funding 
mechanism, the IBVSOs encourage the Administration and Congress to 
support a new appropriations account in FY 2010 and thereafter to 
independently define and separate VA research infrastructure funding 
needs from those related to direct VA medical care. This division of 
appropriations accounts will empower VA to address research facility 
needs without interfering with the renovation and construction of VA 
direct health care infrastructure.
                 Program for Architectural Master Plans
    Each VA medical facility must develop a detailed master plan.
    The delivery models for quality health care are in a constant state 
of change. This is due to many factors including advances in research, 
changing patient demographics, and new technology.
    The VA must design their facilities with a high level of 
flexibility in order to accommodate these new methods of patient care. 
The Department must be able to plan for change to accommodate new 
patient care strategies in a logical manner with as little effect as 
possible on other existing patient care programs. VA must also provide 
for growth in already existing programs.
    A facility master plan is a comprehensive tool to look at potential 
new patient care programs and how they might affect the existing health 
care facility. It also provides insight with respect to possible 
growth, current space deficiencies, and other facility needs for 
existing programs and how VA might accommodate these in the future.
    In some cases in the past, VA has planned construction in a 
reactive manner. After funding, VA would place projects in the facility 
in the most expedient manner--often not considering other projects and 
facility needs. This would result in shortsighted construction that 
restricts, rather than expands, options for the future.
    The IBVSOs believe that each VA Medical Center should develop a 
comprehensive facility master plan to serve as a blueprint for 
development, construction, and future growth of the facility. Short- 
and long-term CARES objectives should be the basis of the master plan.
    Four critical programs were not included in the CARES initiative. 
They are long-term care, severe mental illness, domiciliary care, and 
polytrauma. VA must develop a comprehensive plan addressing these needs 
and its facility master plans must account for these services.
    VA has undertaken master planning for several VA facilities; most 
recently Tampa, Florida. This is a good start, but VA must ensure that 
all facilities develop a master plan strategy to validate strategic 
planning decisions, prepare accurate budgets, and implement efficient 
construction that minimizes wasted expenses and disruption to patient 
care.
Recommendation
    Congress must appropriate $20 million to provide funding for each 
medical facility to develop a master plan.
    Each facility master plan should include the areas left out of 
CARES; long-term care, severe mental illness, domiciliary care, and 
polytrauma programs as it relates to the particular facility.
    VACO must develop a standard format for these master plans to 
ensure consistency throughout the VA health care system.
                      Empty or Underutilized Space
    VA must not use empty space inappropriately and must continue 
disposing of unnecessary property where appropriate. Studies have 
suggested that the VA medical system has extensive amounts of empty 
space that the Department can reuse for medical services. Others have 
suggested that unused space at one medical center may help address a 
deficiency that exists at another location. Although the space 
inventories are accurate, the assumption regarding the feasibility of 
using this space is not.
    Medical facility planning is complex. It requires intricate design 
relationships for function, but also because of the demanding 
requirements of certain types of medical equipment. Because of this, 
medical facility space is rarely interchangeable, and if it is, it is 
usually at a prohibitive cost. For example, VA cannot use unoccupied 
rooms on the eighth floor to offset a deficiency of space in the second 
floor surgery ward. Medical space has a very critical need for inter- 
and intra-departmental adjacencies that must be maintained for 
efficient and hygienic patient care.
    When a department expands or moves, these demands create a domino 
effect of everything around it. These secondary impacts greatly 
increase construction expense, and they can disrupt patient care.
    Some features of a medical facility are permanent. Floor-to-floor 
heights, column spacing, light, and structural floor loading cannot be 
altered. Different aspects of medical care have different requirements 
based upon these permanent characteristics. Laboratory or clinical 
spacing cannot be interchanged with ward space because of the needs of 
different column spacing and perimeter configuration. Patient wards 
require access to natural light and column grids that are compatible 
with room-style layouts. Labs should have long structural bays and 
function best without windows. When renovating empty space, if the area 
is not suited to its planned purpose, it will create unnecessary 
expenses and be much less efficient.
    Renovating old space rather than constructing new space creates 
only a marginal cost savings. Renovations of a specific space typically 
cost 85 percent of what a similar, new space would. When you factor in 
the aforementioned domino or secondary costs, the renovation can end up 
costing more and produce a less satisfactory result. Renovations are 
sometimes appropriate to achieve those critical functional adjacencies, 
but it is rarely economical.
    Many older VA Medical Centers that were rapidly built in the 1940s 
and 1950s to treat a growing veteran population are simply unable to be 
renovated for modern needs. Most of these Bradley-style buildings were 
designed before the widespread use of air conditioning and the floor-
to-floor heights are very low. Accordingly, it is impossible to 
retrofit them for modern mechanical systems. They also have long, 
narrow wings radiating from a small central core, which is an 
inefficient way of laying out rooms for modern use. This central core, 
too, has only a few small elevator shafts, complicating the vertical 
distribution of modern services.
    Another important problem with this unused space is its location. 
Much of it is not located in a prime location; otherwise, VA would have 
previously renovated or demolished this space for new construction. 
This space is typically located in outlying buildings or on upper floor 
levels, and is unsuitable for modern use.
                VA Space Planning Criteria/Design Guides
    VA must continue to maintain and update the Space Planning Criteria 
and Design Guides to reflect state-of-the-art methods of health care 
delivery.
    VA has developed space-planning criteria it uses to allocate space 
for all VA health care projects. These criteria are organized into 60 
chapters; one for each health care service provided by VA as well as 
their associated support services. VA updates these criteria to reflect 
current methods of health care delivery.
    In addition to updating these criteria, VA has utilized a computer 
program called VA SEPS (Space and Equipment Planning System) it uses as 
a tool to develop space and equipment allocation for all VA health care 
projects. This tool is operational and VA currently uses it on all VA 
health care projects.
    The third component used in the design of VA health care projects 
is the design guides. Each of the 60 space-planning criteria chapters 
has an associated design guide. These design guides go beyond the 
allocation of physical space and outline how this space is organized 
within each individual department, as well as how the department 
relates to the entire medical facility.
    VA has updated several of the design guides to reflect current 
patient delivery models. These include those guides that cover Spinal 
Cord Injury/Disorders Center, Imaging, Polytrauma Centers, as well as 
several other services.
Recommendation
    The VA must continue to maintain and update the Space Planning 
Criteria and the VA SEPS space-planning tool. It also must continue the 
process of updating the Design Guides to reflect current delivery 
models for patient care. VA must regularly review and update all of 
these space-planning tools as needed, to reflect the highest level of 
patient care delivery.
               Design-build Construction Delivery System
    The VA must evaluate use of the design-build construction delivery 
system.
    For the past 10 years, VA has embraced the design-build 
construction delivery system as a method of project delivery for many 
health care projects. Design-build attempts to combine the design and 
construction schedules in order to streamline the traditional design-
bid-build method of project delivery. The goal is to minimize the risk 
to the owner and reduce the project delivery schedule. Design-build, as 
used by VA, places the contractor as the design builder.
    Under the contractor-led design-build process, VA gives the 
contractor a great deal of control over how he or she designs and 
completes the project. In this method, the contractor hires the 
architect and design professionals. With the architect as a 
subordinate, a contractor may sacrifice the quality of material and 
systems in order to add to his own profits at the expense of the owner.
    Use of design-build has several inherent problems. A short-cut 
design process reduces the time available to provide a complete design. 
This provides those responsible for project oversight inadequate time 
to review completed plans and specifications. In addition, the 
construction documents may not provide adequate scope for the project, 
leaving out important details regarding the workmanship and/or other 
desired attributes of the project. This makes it difficult to hold the 
builder accountable for the desired level of quality. As a result, a 
project is often designed as it is being built, which often compromises 
VA's design standards.
    Design-build forces the owner to rely on the contractor to properly 
design a facility that meets the owner's needs. In the event that the 
finished project is not satisfactory to the owner, the owner may have 
no means to insist on correction of work done improperly unless the 
contractor agrees with the owner's assessment. This may force the owner 
to go to some form of formal dispute resolution such as litigation or 
arbitration.
Recommendation
    VA must evaluate the use of design-build as a method of 
construction delivery to determine if design-build is an appropriate 
method of project delivery for VA health care projects.
    The VA must institute a program of ``lessons learned.'' This would 
involve revisiting past projects and determining what worked, what 
could be improved, and what did not work. VA should compile and use 
this information as a guide to future projects. VA must regularly 
update this document to include projects as they are completed.
                Preservation of VA's Historic Structures
    The VA must further develop a comprehensive program to preserve and 
protect its inventory of historic properties.
    The VA has an extensive inventory of historic structures that 
highlight America's long tradition of providing care to veterans. These 
buildings and facilities enhance our understanding of the lives of 
those who have worn the uniform, and who helped to develop this great 
Nation. Of the approximately 2,000 historic structures, many are 
neglected and deteriorate year after year because of a lack of funding. 
These structures should be stabilized, protected and preserved because 
they are an integral part our Nation's history.
    Most of these historic facilities are not suitable for modern 
patient care. As a result, a preservation strategy was not included in 
the CARES process. For the past 6 years, the IBVSOs have recommended 
that VA conduct an inventory of these properties; classifying their 
physical condition and their potential for adaptive reuse. VA has been 
moving in that direction and historic properties are identified on 
their Web site. VA has placed many of these buildings in an ``Oldest 
and Most Historic'' list and these buildings require immediate 
attention.
    At least one project has received funding. The VA has invested over 
$100,000 in the last year to address structural issues at a unique 
round structure in Hampton, VA. Built in 1860, it was originally a 
latrine and the funding is allowing VA to convert it into office space.
    The cost for saving some of these buildings is not very high 
considering that they represent a part of history that enriches the 
texture of our landscape that once gone cannot be recaptured. For 
example, VA can restore the Greek Revival Mansion in Perry Point, MD, 
which was built in the 1750's, to use as a training space for about 
$1.2 million. VA could restore the 1881 Milwaukee Ward Memorial Theater 
for use as a multi-purpose facility at a cost of $6 million. This is 
much less than the cost of a new facility.
    As part of its adaptive reuse program, VA must ensure that the 
facilities that it leases or sells are maintained properly. VA's legal 
responsibilities could, for example, be addressed through easements on 
property elements, such as building exteriors or grounds.
    We encourage the use of P.L. 108-422, the Veterans Health Programs 
Improvement Act, which authorized historic preservation as one of the 
uses of a new capital assets fund that receives funding from the sale 
or lease of VA property.
Recommendation
    VA must further develop a comprehensive program to preserve and 
protect its inventory of historic properties.
    Mr. Chairman, this concludes my statement. I would be happy to 
answer any questions that you or the Members of the Committee may have.

                                 
        Prepared Statement of Joseph L. Wilson, Deputy Director,
    Veterans Affairs and Rehabilitation Commission, American Legion
    Mr. Chairman and Members of the Subcommittee:
    Thank you for this opportunity to present The American Legion's 
views on the Department of Veterans Affairs (VA) Veterans Health 
Administration's (VHA) fiscal year (FY) 2011 budget request. To date, 
the VHA provides integrated health care services to eligible veterans 
through 153 medical centers, 755 Outpatient Clinics, and 232 Vet 
Centers in all 50 States, including the District of Columbia, Guam, 
Puerto Rico, and the U.S. Virgin Islands. In 2009, Congress enacted 
Public Law 111-81, the ``Veterans Health Care Budget Reform and 
Transparency Act'' which requires VA to submit this request for advance 
appropriations with its President's budget submission each year.
    The American Legion proposes the following budgetary 
recommendations for selected programs within the VA Veterans Health 
Administration for FY 2011:

----------------------------------------------------------------------------------------------------------------
                                                                                President's
                          Program                            FY 10 Funding        Request       Legion's Request
----------------------------------------------------------------------------------------------------------------
Medical Services                                             $37.7 billion      $40.5 billion         
----------------------------------------------------------------------------------------------------------------
Medical Support and Compliance                                $4.9 billion       $5.3 billion         
----------------------------------------------------------------------------------------------------------------
Medical Facilities                                            $4.9 billion       $5.7 billion         
----------------------------------------------------------------------------------------------------------------
Medical Care Total                                           $48.1 billion      $51.5 billion       $48 billion
                                                                                                      (includes
                                                                                                    medical and
                                                                                                    prosthetics
                                                                                                      research)
----------------------------------------------------------------------------------------------------------------
Major Construction                                            $1.2 billion       $1.2 billion        $2 billion
----------------------------------------------------------------------------------------------------------------
Minor Construction                                            $703 million     $467.7 million      $1.5 billion
----------------------------------------------------------------------------------------------------------------
Medical and Prosthetics Research                              $581 million       $590 million      $700 million
----------------------------------------------------------------------------------------------------------------
Medical Care Recovery Fund                                    ($3 billion)     ($3.4 billion)                 *
----------------------------------------------------------------------------------------------------------------
* Third-party reimbursements should supplement rather than offset discretionary funding.

Improving Mental Health Care
    VA recently stated that the 2011 budget request will continue to 
improve the quality, access, and value of mental health care provided 
to veterans. VA's budget provides approximately $5.2 billion for mental 
health, an increase of $410 million, or 8.5 percent, over the 2010 
enacted level. In addition, VA says this will expand inpatient, 
residential, and outpatient mental health programs with an emphasis on 
integrating mental health services with primary and specialty care.
    The American Legion supports this increase in funding and contends 
that appropriate increases in mental health should be frequently 
evaluated due to the influx of men and women servicemembers diagnosed 
with Post Traumatic Stress Disorder (PTSD) and traumatic brain injury 
(TBI), depression, and substance use disorders.
Meeting the Medical Needs of Women Veterans
    VA reported that the 2011 budget request will provide $217.6 
million to meet the gender-specific health care needs of women 
veterans. The delivery of enhanced primary care for women veterans 
remains one of the Department's top priorities. The number of women 
veterans is growing rapidly and women are increasingly reliant upon VA 
for their health care.
    The American Legion believes the provision of funding to ensure 
women veterans receive complete, comprehensive care will minimize many 
issues facing them and their families, to include PTSD, depression, 
substance abuse, and other disorders.
Delivery of Medical Care
    According to VA, the 2011 budget request provides $51.5 billion for 
medical care, an increase of $4 billion, or 8.5 percent, over the 2010 
level. VA says this level will allow them to continue providing timely, 
high-quality care to all enrolled veterans.
    VA states their total medical care level is comprised of funding 
for medical services ($40.5 billion), medical support and compliance 
($5.3 billion), medical facilities ($5.7 billion), and resources from 
medical care collections ($3.4 billion). VA also stated that the 2011 
budget will reduce the number of homeless veterans and expand access to 
mental health care, as well as accomplish other outcomes that improve 
veterans' quality of life, including:

      Providing extended care and rural health services in 
clinically appropriate settings;
      Expanding the use of home telehealth;
      Enhancing access to health care services by offering 
enrollment to more Priority Group 8 veterans and activating new 
facilities; and
      Meeting the medical needs of women veterans.

    During FY 2011, VA anticipates treating nearly 6.1 million unique 
patients, a 2.9-percent increase over 2010. Among the total to be 
treated are over 439,000 veterans who served in Operation Enduring 
Freedom and Operation Iraqi Freedom.
    The American Legion agrees with the VA's 2011 budget request on the 
deliverance of medical care. We also applaud Congress on the approval 
of funding to adequately accommodate OEF/OIF and Vietnam veterans as 
well as veterans from other areas.
Extended Care and Rural Health
    VA's budget request for FY 2011 contains $6.8 billion for long-term 
care. VA also reported that $250 million has been allotted to continue 
strengthening access to health care for 3.2 million enrolled veterans 
living in rural and highly rural areas through a variety of avenues, 
including new rural health outreach and delivery initiatives and 
expanded use of home-based primary care, mental health, and telehealth 
services. VA intends to expand use of cutting edge telehealth 
technology to broaden access to care while at the same time improve the 
quality of our health care services.
    The American Legion supports VA's actions in providing access to 
care with new facilities as well as technologies. However, due to the 
vast number of rural venues, we urge that oversight be provided to 
ensure funding reaches these areas.
Expanding Access to Health Care
    In 2009, VA opened enrollment to Priority Group 8 veterans whose 
incomes exceed last year's geographic and VA means test thresholds by 
no more than 10 percent. Our most recent estimate is that 193,000 more 
veterans will enroll for care by the end of 2010 due to this policy 
change.
    In FY 2011, VA will further expand health care eligibility for 
Priority Group 8 veterans to those whose incomes exceed the geographic 
and VA means test thresholds by no more than 15 percent compared to the 
levels in effect prior to expanding enrollment in 2009. This additional 
expansion of eligibility for care will result in an estimated 99,000 
more enrollees in 2011 alone, bringing the total number of new 
enrollees from 2009 to the end of 2011, to 292,000.
Home Telehealth
    For FY 2011, VA has also allotted $163 million in home telehealth. 
The Secretary says they are taking greater advantage of the latest 
technological advancements in health care delivery which will allow VA 
to closely monitor the health status of veterans and improve access to 
care for veterans in rural and highly rural areas. In total, the VA 
home telehealth program cares for approximately 35,000 veteran 
patients.
    The American Legion concurs with the allotment of funding for the 
Home Telehealth program because it will serve to provide more access to 
care for veterans residing in rural and highly rural areas and reduce 
travel for health care.
Establishing a Virtual Lifetime Electronic Record
    According to VA more than 150,000 active and Reserve component 
servicemembers leave active duty annually. This transition relies on 
the transfer of paper-based administrative and medical records from the 
Department of Defense (DoD) to the veteran, the VA or other non-VA 
health care providers. VA agrees this paper-based transfer carries 
risks of errors or oversights and delays the claim process.
    The VA is currently building a fully interoperable electronic 
records system that will provide every member of our armed forces a 
Virtual Lifetime Electronic Record (VLER), which will enhance the 
timely delivery of high-quality benefits and services by capturing key 
information from the day they put on the uniform, through their time as 
veterans, until the day they are laid to rest. The Secretary of VA also 
stated VA has $52 million in IT funds in 2011 to continue the 
development and implementation of this Presidential priority.
    The American Legion agrees with the establishment of the VLER. As 
with many programs, we remain adamant that proper oversight be placed 
on the implementation of this record. The storing of such records is 
extremely vital to the health and welfare of each and every veteran.
    The Capital Asset Realignment for Enhanced Services (CARES) 
initiative identified approximately 100 major construction projects 
throughout the VAMC system, DC, and Puerto Rico. Approximately 5 years 
have passed since the CARES initiative. In addition, more women and men 
servicemembers are transitioning from active duty to VA and presenting 
with multiple illnesses, such as PTSD and mild TBI. Meanwhile, the 
average age of VA's facilities is approximately 45 years. The American 
Legion's 2009 ``A System Worth Saving'' publication reports ``space 
availability'' as one of the major overall challenges.
    The American Legion hereby urges Congress to assess the 
abovementioned areas they funded for FY 2011, as well as the number of 
servicemembers and current veterans they anticipate to visit a VA 
medical facility to receive medical care. We contend this action will 
shed light on the actual need of each VA facility in their sincere 
effort to accommodate America's veterans.
Conclusion
    Mr. Chairman and Members of the Subcommittee, The American Legion 
appreciates the commitment of this Subcommittee, and remains fully 
committed to working with you to ensure all of this Nation's veterans 
are provided with timely access to the quality health care they 
deserve, are entitled to receive. It is imperative we remain vigilant 
in our efforts to adequately accommodate them as they continue to 
adjust to the civilian community.
    Thank you for allowing me the opportunity to present the views of 
The American Legion to you today.

                                 
           Statement of Barbara F. West, Executive Director,
 National Association for Veterans' Research and Education Foundations
    The National Association of Veterans' Research and Education 
Foundations (NAVREF) appreciates the opportunity to submit a statement 
for the record of the February 23, 2010, hearing of the Health 
Subcommittee of the House Committee on Veterans Affairs.
    NAVREF is proud to be the voluntary membership association of the 
more than 80 nonprofit research and education corporations (NPCs) 
established by Department of Veterans Affairs (VA) medical centers and 
operated in accordance with 38 USC Sec. Sec. 7361-7366. Last year, NPCs 
administered over $250 million in private sector and non-VA Federal 
funding on behalf of VA investigators and educators conducting 
approximately 4,000 research studies and education activities at VA 
facilities across the Nation.
    The purpose of this statement is to convey NAVREF's views on VA's 
request for legislative authority to establish a ``Central Nonprofit 
Corporation for VA Research.'' VA's proposal is described in Volume II, 
Medical Programs and Information Technology Programs of the 
Department's FY 2011 Funding and FY 2012 Advance Appropriations 
Request, pages 1I-20 and 1I-21.
    Despite careful consideration, NAVREF is unable to support VA's 
proposal for a central nonprofit because:

      VA fails to make a compelling case for what a central VA 
nonprofit could accomplish that the existing NPCs cannot;
      The proposal contains so little detail about how VA and a 
central VA nonprofit would interact that NAVREF is forced to consider 
potentially problematic possibilities; and
      Absent from VA's justification is how a central VA 
nonprofit would further VA's research mission which is to ``discover 
knowledge, develop VA researchers and health care leaders, and create 
innovations that advance health care for our veterans and the Nation.''

    NAVREF and its member NPCs fully appreciate the advantages of 
public/private nonprofit partnerships. As ``flexible funding 
mechanism[s] for the conduct of VA research'' [38 USC Sec. 7361(a)], 
NPCs confer substantial advantages on VA medical centers. Through 
careful stewardship of funds entrusted to them by private sector 
grants, cooperative research and development agreements (CRADAs) for 
industry-sponsored studies and non-VA Federal awards, NPCs have 
provided innumerable benefits to the VA facility research programs and 
VA investigators. Over the 22 years since they were first authorized by 
Congress, NPCs have helped to foster vibrant VA research enterprises at 
VA medical centers across the country through contributions of research 
personnel; equipment; supplies; facility improvements; compliance 
training; grant writing, submission and management services; travel 
support and much more. Because VA already has more than 80 nonprofits, 
we feel that it is incumbent on VA to make a more convincing case for 
authority to establish a new and untested form of VA nonprofit. Toward 
that end, we recommend that in order for a central VA nonprofit to 
warrant consideration:

    1.  VA should provide compelling justification for a central VA 
nonprofit that clearly articulates what the proposed central VA 
nonprofit could accomplish that the existing NPCs cannot.

    In our view, some NPCs are already accomplishing the stated 
objectives of the central VA nonprofit, and more could do so if given 
the opportunity, particularly under the updated NPC authority that is 
presently close to final enactment in H.R. 2770 and title VIII of S. 
1963.
    VA's justification for a central VA nonprofit hinges in part on its 
desire to ``carry out national medical research and education 
projects.'' However, VA has a long history of successfully managing 
complex, multi-site studies involving thousands of subjects through its 
Cooperative Studies Program (CSP) and its Health Services Research and 
Development (HSR&D) program. As a result, we are uncertain of the need 
for a central VA nonprofit to accomplish what has long been a major 
strength of the VA research program.
    Also, while the updated NPC authority awaiting enactment will 
clarify that NPCs may administer multi-site studies, they have been 
doing so for years [see Multi-Center Studies, OGC Opinion 023 (11/4/
99)]. Further, NPCs have increasingly partnered with VA to administer 
non-VA funds for CSP studies since the longstanding relationship 
between the Office of Research and Development (ORD) and the Friends 
Research Institute (FRI) had to be terminated in 2004 when misuse of 
non-VA funds directed to FRI for CSP studies came to light. [See OIG 
administrative investigation Report No. 03-03053-115; March 22, 2004]. 
(Please note that FRI is not one of the more than 80 VA NPCs. ORD's 
relationship with FRI pre-dated authorization of the NPCs in 1988 but 
continued until 2004.)
    Since termination of the FRI relationship, NPCs associated with 
medical centers where VA has CSP Coordinating Centers (CSPCCs)--Hines, 
Illinois; Palo Alto, California; West Haven, Connecticut; and Perry 
Point near Baltimore, Maryland--have worked closely with CSPCC 
personnel to set up efficient systems and MOUs that allow accountable 
management of non-VA Federal funding, and private sector funds 
contributed by industry partners, for CSP and other centrally directed 
VA studies. Recent examples include NPC facilitation of the ACCORD 
(diabetes) and ALLHAT (hypertension) studies and the shingles vaccine 
trials. Additionally, an NPC not associated with a CSPCC currently 
administers over $15 million annually in NIH funding for multi-site 
studies led by a single VA principal investigator.
    Another justification that VA uses in support of a central VA 
nonprofit is found in the statement, ``While current NPCs work well 
with their current authority to manage studies in their specific 
jurisdictions, few of the individual NPCs have all the skill sets 
needed to coordinate more complex efforts.'' Although some NPCs may 
lack all the ``skill sets'' needed to coordinate more complex efforts, 
we believe that more could readily acquire those skills--or hire new 
personnel with the necessary skills--if given greater opportunity for 
responsibility for multi-site studies. It should be noted that many 
NPCs--even some of those associated with relatively large VA research 
programs--have not reached their full potential because so much non-VA 
funding for research performed in VA facilities is administered by 
entities other than VA or NPCs, primarily universities and university-
affiliated nonprofits.

    2.  VA should establish that centralized administration of research 
is an appropriate model for VA.

    First, it should be noted that the purposes of the central VA 
nonprofit stated in the proposal are strikingly similar to the 
statutory authority given to the Department of Defense (DoD) to 
establish the Henry M. Jackson Foundation (HJF) for the Advancement of 
Military Medicine (10 USC Sec. 178) in 1985. HJF has one primary 
university affiliation (Uniformed Services University of the Health 
Sciences), has relationships with more than 160 military medical and 
other organizations worldwide, and employs 1,800 personnel providing a 
broad array of research and clinical services.
    We are uncertain how well the HJF model would suit VA even though 
we understand that VA does not intend for the central VA nonprofit to 
supplant medical center-based NPCs, except possibly where the research 
programs are very small. The centralized HJF model was considered when 
legislation proposing the NPCs was the subject of congressional 
hearings (H. Rept. 100-373). It is our understanding that after review, 
the centralized model was rejected in favor of a decentralized approach 
more suitable for VA which has affiliations with 107 medical schools 
and more than 5,000 affiliation agreements with some 1,200 other health 
professional colleges and universities.
    For over 20 years, VA's decentralized approach using local NPCs has 
demonstrated effective support of the VA research and education 
missions through on-site (most NPC offices are located in VA facilities 
or very nearby) research support services for VA investigators while 
working closely with the medical center personnel responsible for the 
conduct and oversight of research at each facility. Indeed, for a short 
time VA had centralized research support offices--the Eastern and 
Western Research and Development Offices (ERDO and WRDO). These offices 
administered VA-appropriated funds for sites with just a few projects, 
but they were closed after a few years.
    We agree that it makes little sense for facilities with very few 
research projects to incur the effort, expense and responsibility of 
maintaining their own NPC. However, legislation already passed by the 
House and Senate in H.R. 2770 and title VIII of S. 1963 respectively, 
and presently awaiting final resolution of their minor differences, 
offers a means for these facilities to access the benefits of NPCs 
through voluntarily sharing one NPC among two or more VAMCs. By pooling 
funds, consolidating management and avoiding duplication, such as 
having one audit instead of three, or one executive director instead of 
three, ``multi-medical center research corporations'' (MMRCs) will 
preserve the advantages of the close relationship NPCs have with the 
facilities and investigators they serve while reducing overhead. These 
MMRCs will offer smaller research programs a locally accountable option 
which is likely to be nearby, if not onsite, for management of their 
research projects and education activities. We see no need for the 
option of remote, possibly Washington-based, services a central VA 
nonprofit would offer.

    3.  To preserve the integrity of the intramural nature of the VA 
research program, VA should clarify that the central VA nonprofit would 
accept only non-VA Federal and private sector funds.

    We further question the suitability of an HJF-like authority for VA 
because, unlike DoD and NIH, which have authority to conduct research 
both intra- and extramurally, a core tenet of the VA Research and 
Development program is that it is solely an intramural research 
program. If--and that is a big ``if'' because the proposal contains so 
few details--authority for the central VA nonprofit would encompass 
reciprocal contracting or the ability to pass VA-appropriated funds 
through to VA or non-VA entities (as HJF does for some DoD funds), we 
believe that would compromise the long held intramural nature of the VA 
research program. Ultimately, this would reduce its effectiveness as a 
recruitment and retention tool for high-quality clinician-investigators 
who in turn focus their research on conditions prevalent among veterans 
and who provide optimum care for veterans. We may be reading too much 
into the proposal, but we feel it is important to state that NAVREF 
would be opposed to any measures that could have the unintended 
consequence of altering the intramural nature of VA research.

    4.  VA should describe what legal mechanisms available to VA would 
be used to engage with a central VA nonprofit.

    Although we are unable to discern from the proposal how VA and the 
central VA nonprofit would interact to each other (what are 
``cooperative arrangements''?), it appears that justification for the 
central VA nonprofit may entail plans for VA to use VA-appropriated 
funds to contract with the central VA nonprofit for services. We 
regularly hear that VA hiring mechanisms are ill-suited for research 
projects because these require prompt hiring to meet time-limited 
funder deadlines and the ability to terminate employees when their 
services are no longer needed. These problems may be an underlying 
reason for seeking a central VA nonprofit authority which perhaps would 
function as a private sector contractor to meet VA's fluctuating 
research staffing needs. However, in our view contracting with a 
central VA nonprofit may be problematic from the perspective of 
compliance with Federal hiring and contracting statutes and 
regulations. As a result, we encourage the Subcommittee to determine 
how VA and the central VA nonprofit would engage with each other.
    It should be noted that to the extent allowed by law, NPCs already 
routinely help VA research facilities meet their temporary staffing 
needs using the Intergovernmental Personnel Act (IPA) authority (5 USC 
Sec. Sec. 3371-3375 and 5 CFR part 334). This allows VAMCs to work with 
NPCs to acquire the services of skilled research personnel, who are 
considered to be VA employees for most purposes except pay and 
benefits, quickly and only for the time their services are needed.

    5.  Compliance with Federal ethics statutes applicable to Federal 
employees regarding conflicts of interest as well as membership on the 
board of directors and staffing by VA or non-VA personnel should be 
addressed satisfactorily before congressional approval is given.

    It has taken over 20 years of regular consultation with VA 
policymakers, attorneys, and overseers; two modifications of the 
original NPC authority; and most recently, a thorough updating and 
clarification of the NPC authority, to resolve the many ambiguities 
inherent in the public/private partnership embodied in the NPCs. To 
avoid similar protracted uncertainty, a number of matters not addressed 
in the proposal should be resolved before the Subcommittee considers 
approving an authority for a central VA nonprofit.
    For example, would VA personnel serve on the board of the central 
VA nonprofit? How much influence would VA personnel have over funding, 
management and expenditures of the central VA nonprofit? Also, how 
would potential conflicts of interest be addressed? It took VA and 
NAVREF many years to grasp the implications of the Federal ethics 
statutes, particularly those found at 18 USC Sec. 208 and Sec. 209, 
when applied to VA personnel associated with NPCs, and to manage 
potential conflicts. In our view, these questions should be fully 
answered in advance to avoid putting VA employees who may interact with 
the central VA nonprofit at risk of unwittingly violating Federal 
ethics statutes.

    6.  Congress should ensure that funds that could be appropriately 
managed by local mechanisms may not be directed to the central VA 
nonprofit.

    As noted above, we firmly believe in the advantages of local 
administration and local accountability for VA research. Also, it is 
important to note that ultimately, every research project requires a PI 
and a site where the research is actually conducted. As a result, and 
assuming the central VA nonprofit would not have its own laboratories 
or patients, we are concerned that the central VA nonprofit may add an 
unnecessary layer of bureaucracy and administrative expense to VA 
research. Consequently, we feel there must be a compelling reason for a 
central VA nonprofit to administer a project as opposed to longstanding 
local mechanisms such as NPCs.
    Additionally, we are having difficulty envisioning what ``national 
medical research and education projects'' VA would engage in that NPCs 
could not administer. VA's genomic research initiative has been cited 
as an example, but we have not yet fully grasped why a designated NPC 
could not accept non-VA Federal or private sector funds made available 
for this initiative. Nor have we been able to discern how a central 
nonprofit would fulfill the regulatory requirements for local oversight 
of human subjects research.
    Further, we encourage the Subcommittee to ask VA how the central VA 
nonprofit would allow VA to ``compete for non-VA funding at a national 
level.'' NPCs and VA-affiliated universities have historically 
supported VA PIs in their applications for non-VA funding whatever the 
source, scope or amount. We are uncertain what funding ``at a national 
level'' means or what types of non-VA funding a central VA nonprofit 
could apply for that excludes applications submitted by VA PIs through 
NPCs or VA-affiliated universities. That said, if a central VA 
nonprofit were to compete for the same non-VA Federal and private 
sector research funding opportunities as PIs supported by NPCs, the 
result may be a reduction in NPCs' ability to provide much needed 
research infrastructure support at the facility level.

    7.  There must be sufficient justification for the substantial 
investment of funds and effort establishing a central VA nonprofit 
would require.

    While we assume that statutory approval to establish a central VA 
nonprofit would also authorize startup funding from the R&D 
appropriation, we are concerned about the use of R&D appropriated funds 
for two reasons. First, allocating $200,000 for startup of a central VA 
nonprofit would take funds away from ongoing VA research. Second, the 
proposed budget of $200,000 for each of the first 2 years appears far 
too low, particularly if this nonprofit would be incorporated and 
managed in the Washington, DC area. Even if VA relied on VA attorneys 
and accountants to assist with incorporation and filing for exemption 
from Federal taxes, and VA provided office space, utilities and other 
government resources, a central VA nonprofit would require an executive 
director experienced in nonprofit establishment and management as well 
as skilled in research administration. Additionally, it is likely that 
a central VA nonprofit would require a bookkeeper experienced in 
nonprofit accounting and administrative staff. Annual salaries alone 
are likely to add up to far more than $200,000 during the first few 
years.
    Also, 2 years seems to be a very short timeframe for the central VA 
nonprofit to become self-sustaining. It would have to charge funders 
for its administrative services as well as those of any organizations 
to which it passes through funds. VA should anticipate that some 
funders would pay little or no indirect costs and as a nonprofit 
affiliated with a Federal agency, its Federal indirect cost rate is 
likely to be relatively low because Federal agencies will not fund 
facility costs of another Federal agency. These factors clearly portend 
a much higher cost to the Federal budget than the unrealistic startup 
estimate noted in the proposed budget and continuing for a longer time 
period. In our view $400,000 for each of the first 3 years would be a 
more realistic estimate.
Conclusion
    Strikingly missing from the central VA nonprofit's purposes is any 
discussion of how a central VA nonprofit would benefit veterans or 
further VA's research mission. We do not view serving as a ``focus for 
interdisciplinary interchange and dialogue'' among VA personnel and 
researchers from other Federal and non-Federal entities as appropriate 
justification for a central VA nonprofit. Rather, the ultimate test 
should be whether it would foster advances in treatments for conditions 
prevalent among veterans and high-quality care for the veteran 
population VA serves.
    Again, NAVREF is unable to take a position in support of VA's 
proposal for a central nonprofit. If VA pursues such an authority, we 
hope that the above discussion offers the Subcommittee a framework for 
determining why such an authority is needed when there are already so 
many VA-affiliated nonprofits providing a wide variety of services in 
support of VA research and education.
    Thank you for considering our views. Questions or comment may be 
directed to Barbara West, Executive Director, NAVREF, at 
[email protected] or 301-656-5005.
          POST-HEARING QUESTIONS AND RESPONSES FOR THE RECORD
                                     Committee on Veterans' Affairs
                                             Subcommittee on Health
                                                    Washington, DC.
                                                      March 9, 2010

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

Dear Secretary Shinseki:

    Thank you for the testimony of Dr. Robert A. Petzel, Under 
Secretary for Health, at the U.S. House of Representatives Committee on 
Veterans' Affairs Subcommittee on Health oversight hearing on ``The 
Veterans Health Administration's Fiscal Year 2011 Budget'' that took 
place on February 23, 2010.
    Please provide answers to the following questions by April 20, 
2010, to Jeff Burdette, Legislative Assistant to the Subcommittee on 
Health.

    1.  VA requests $250 million in fiscal year 2011 for the Office of 
Rural Health. In 2009, there was $190 million in carryover funds which 
are available to be spent in 2010. Why is VA having difficulty spending 
this money? What steps has VA taken to ensure that resources are spent 
in a timely manner in the fiscal year that the funds were appropriated?

    2.  As you know, for fiscal year 2010, Congress provided an 
additional $30 million for the Medical Facilities account so that VA 
can open new CBOCs in rural areas. Does the fiscal year 2011 budget 
continue and expand on this effort? Also, please identify the total 
number of new CBOCs, be they new constructions or leases, that are 
supported by the fiscal year 2011 budget request.

    3.  It is my understanding that VA has implemented a systemwide 
screening for returning OEF/OIF veterans for depression, PTSD, TBI, and 
problem drinking. How much funding is requested in the fiscal year 2011 
budget to continue this screening? To date, what are some key findings 
of this screening? For example, how many are screened positive and 
receive treatment?

    4.  How much funding is requested in the fiscal year 2011 budget to 
continue VA's suicide prevention hotline? How does this compare to what 
VA spent in 2009 and will spend in 2010? Also, what are the latest 
program data on the hotline?

    5.  In a June 2009 press release, VA committed to expanding the 
enrollment of Priority Group 8 veterans into the VA system by more than 
500,000 by fiscal year 2013. How much additional funding is needed to 
fulfill this commitment in the outyears? Finally, what steps is VA 
taking to ensure that the expanded enrollment is implemented in a 
responsible manner so that it does not overwhelm the current VA health 
care system?

    6.  The President has committed to deploying an additional 30,000 
U.S. troops to Afghanistan. Does VA have a clear sense of the numbers 
of deploying and returning servicemembers so that VA can plan properly 
for the VA health care system to meet the increasing health care needs? 
Please describe the nature and the extent of the coordination and 
communication between VA and DoD.

    7.  VA expects to provide over $4 billion to help homeless veterans 
in fiscal year 2011. Of this, $3.4 billion is for medical services and 
nearly $800 million is for specific homeless programs. Of the $800 
million, a relatively small portion of funds is dedicated to prevention 
efforts. Please explain how prevention fits into VA's overall strategy 
to end homelessness among our veterans.

    8.  VA informs that investments in homeless initiatives in fiscal 
year 2011 will emphasize education, jobs, prevention and treatment 
programs. Please explain the details of the education and jobs 
investments.

    9.  The fiscal year 2011 budget includes several legislative 
proposals to help caregivers of veterans. This includes health coverage 
through CHAMPVA, travel expenses, and education and training. As you 
know, both the House and Senate passed caregiver bills. What specific 
population of eligible veterans and caregivers do the fiscal year 2011 
legislative proposals intend to target?

    10.  With the funds requested in the fiscal year 2011 budget, VA 
expects to spend about $218 million for women veterans. This includes a 
new peer call center and social networking site. Please expand on the 
details of the call center and social networking site proposals.

    11.  What is VA's long-term strategy to improve the care provided 
to women veterans and how does the fiscal year 2011 budget request for 
women veterans fit into this long-term strategy?

    12.  During the past year, the Committee has become concerned over 
reports that there are problems in the implementation of the NDAA 
fiscal year 2008 and NDAA fiscal year 2009 sections regarding the joint 
establishment of the Defense and VA Centers of Excellence for Vision, 
Hearing, and Limb Extremity `orthopedic injury.' We would like to know 
what VA staff has been appointed to these three centers, the budget for 
this year as well as fiscal year 2011-2012, and locations of these 
joint centers.

    13.  The Committee has been told that strong concerns over the 
organizational structure of these three Centers of Excellence have 
resulted in numerous meetings and delays in implementation. Where do 
the Directors and Deputy Directors report to, in both DoD and within 
VHA?

    14.  The 2011 budget provided $590 million for medical and 
prosthetic research, which is $9 million above the 2010 enacted level. 
However, this increase does not keep pace with the estimated inflation 
for biomedical research and development. Does this mean that VA will 
have to decrease staff and/or award fewer grants?

    15.  The 2011 budget includes a legislative proposal to create a 
central nonprofit corporation for VA research. It is my understanding 
that the VA already has more than 80 research and education nonprofit 
corporations, or NPCs. What could a central VA nonprofit do that the 
existing NPCs cannot? Please be specific in your response.

    16.  In an effort to better understand the need for the legislative 
proposal to create a central nonprofit corporation, I would like to 
know if there are opportunities for non-VA support for research that VA 
is unable to accommodate through its own authorities, through the NPCs 
or through VA-affiliated universities. If yes, please give specific 
examples.

    17.  Also related to the legislative proposal to create a central 
nonprofit corporation, I would like to know whether under the current 
law, regulations, or policies, there are specific impediments to VA 
research that central nonprofit is intended to overcome.

    18.  Of the $48.2 billion requested in fiscal year 2011 for the 
medical care accounts, about 80 percent of the funds are distributed to 
the 21 VISNs using the VERA General Purpose Fund and 20 percent is 
distributed to select VISNs for special programs and initiative using 
the VERA Specific Purpose Fund. In the fiscal year 2012 budget request, 
the projected funding distribution using the VERA Specific Purpose Fund 
decreases to about $290 million compared to the fiscal year 2011 
request. It is my understanding that the VERA Specific Purpose Fund 
provides resources for special programs such as mental health and 
homeless grants. As these are priority initiatives, what is the 
rationale for decreasing the funding set-aside for the VERA Specific 
Purpose Fund?

    19.  After years of no major hospital construction, there are now a 
few projects in the pipeline scheduled for completion. I believe the 
first one is scheduled to open in 2012. At what point are budgetary 
arrangements going to be made to ensure activation or to bring them 
online? For example, if a facility is opening in 2012, would activation 
funds be included in the fiscal year 2011 budget?

    20.  Of the budget request for medical facilities, how much is for 
facility activation? How does VA develop the budget request for 
facility activation and how do you disseminate the facility activation 
funding? In other words, must localities apply for this funding or are 
the funds set aside for a defined list of facilities?

    21.  In 2010, resident engineers were funded from the GOE account. 
The 2011 budget requests $24 million to fund 140 resident engineers in 
the major constructions account, but these funds would be used to 
reimburse the GOE account. What is the rationale for requesting funding 
for resident engineers under the major construction account only to 
reimburse the GOE account? Why not keep the funding for the resident 
engineers in the GOE account? Also, how many resident engineers were 
funded in 2010 and please justify whether 140 resident engineers in 
2011 is sufficient to oversee the major construction projects of VA.

    22.  The budget proposes $468 million for minor construction 
programs in 2011, of which $387 million is for VHA. This represents a 
decrease of $235 million from 2010. Please explain the proposed 
decrease in funding when VA facilities are aging and minor construction 
demands continue to grow.

    23.  VA requests about $1.3 billion for medical IT investments to 
develop the next generation health care system known as HealtheVet to 
enhance and supplement the current legacy system, VistA. This is a 
decrease of about $150 million from the 2010 level. In light of this 
focus on HealtheVet, what is the rationale for the decrease in funding 
in 2011?

    24.  Please provide an update on VA's collaboration with DoD to 
create Virtual Lifetime Electronic Records (VLER). How much is 
requested in the fiscal year 2011 budget for the VLER initiative and 
what is the full project cost in the out-years in fiscal year 2012 and 
beyond to fully develop and implement VLER?

    Thank you again for taking the time to answer these questions. The 
Committee looks forward to receiving your answers by April 20, 2010.

            Sincerely,

                                                 MICHAEL H. MICHAUD
                                                           Chairman
                               __________
                        Questions for the Record
                     Submitted by Chairman Michaud
      U.S. House of Representatives Committee on Veterans' Affairs
                         Subcommittee on Health
                           February 23, 2010
   The Veterans Health Administration's (VHA) Fiscal Year 2011 Budget
    Question 1: VA requests $250 million in fiscal year 2011 for the 
Office of Rural Health. In 2009, there was $190 million in carryover 
funds which are available to be spent in 2010. Why is VA having 
difficulty spending this money? What steps has VA taken to ensure that 
resources are spent in a timely manner in the fiscal year that the 
funds were appropriated?

    Response: Congress provided the Veterans Health Administration 
(VHA) Office of Rural Health (ORH) with $250 million in 2 year funds 
(fiscal year 2009/2010) for rural health care initiatives. Since 
December 2008, $213 million have been distributed to the Veterans 
Integrated Service Networks (VISNs) and VHA program offices. Of the 
$213 million allocated, $212 million has either already been obligated 
or is specifically identified for obligation before the end of Fiscal 
Year (FY) 2010.
    There are several reasons why rural health care dollars have been 
delayed in obligation, which fall into three broad categories. First, 
the pool of qualified bidders willing to contract with Department of 
Veterans Affairs (VA) to provide health care in rural communities is 
limited. Second, identifying qualified employees in highly rural areas 
has proven difficult, and finding health care workers willing to move 
to isolated areas has also been a challenge. Third, identifying 
appropriate physical space for clinical activities in rural areas that 
meet privacy standards has been a challenge, as well. Frequently, the 
space has required significant alteration, thus causing delays in 
construction and obligating dollars for completion of these projects.
    Please be assured, however, that additional project enhancements 
and/or new projects are currently under consideration, which will 
result in obligating the remaining $38 million before the end of FY 
2010.

    Question 2: As you know, for fiscal year 2010, Congress provided an 
additional $30 million for the Medical Facilities account so that VA 
can open new CBOCs in rural areas. Does the fiscal year 2011 budget 
continue and expand on this effort? Also, please identify the total 
number of new CBOCs, be they new constructions or leases that are 
supported by the fiscal year 2011 budget request.

    Response: VA is committed to enhancing access to health care for 
veterans residing in rural and highly rural areas. On March 30, 2010, a 
Report to Congress was provided to the Committee on Appropriations of 
both Houses of Congress to detail an expenditure plan for the $30 
million funding for community based outpatient clinics (CBOCs) in rural 
areas. VA has invested a total of $62.1 million ($30 million as 
directed and $32.1 million from rural health funding) in FY 2010 and is 
planning to invest $87.8 million in FY 2011 rural health funding for 51 
of the FY 2010 activated CBOCs located in rural counties (see attached 
list of CBOCs and funding plan) for a total 2-year investment of $149.9 
million. This investment will sustain the 51 CBOCs in 11 VISNs for the 
first 2 years of operation. The FY 2011 budget will continue the 
operation of the rural CBOCs, which were opened in FY 2010 and funded 
with the $30M. At this time, plans for any additional CBOCs in FY 2011 
are part of an ongoing evaluation and assessment process to address the 
health care needs of our veterans.

    Question 3: It is my understanding that VA has implemented a 
systemwide screening for returning OEF/OIF veterans for depression, 
PTSD, TBI, and problem drinking. How much funding is requested in the 
fiscal year 2011 budget to continue this screening? To date, what are 
some key findings of this screening? For example, how many are screened 
positive and receive treatment?

    Response: No additional funding will be required as the screening 
activity is built into the existing budget. Cumulatively from the first 
quarter of FY 2002 through the fourth quarter of FY 2009 (the most 
recent complete data available) among Operation Enduring Freedom/
Operation Iraqi Freedom (OEF/OIF) veterans who have been treated at VA 
medical centers and clinics, 129,654 have been seen for at least a 
provisional diagnosis of post traumatic stress disorder (PTSD), 90,936 
for depression, and 24,454 for alcohol dependence. These numbers 
represent veterans who have received a diagnosis from at least one 
provider during at least one clinical encounter. They should be 
considered to be provisional diagnoses that may have changed during 
subsequent encounters when more information became available.
    An FY 2008 records review of a small representative sample of 
veterans from all service eras has data to address the question of 
veterans screened and referred for treatment. Of that sample, 7,231 
veterans screened positive for the possibility of PTSD, and of that 
population 1,724 (23.8 percent) were documented as being positive for 
PTSD and referred for further intervention/treatment. The number of 
OEF/OIF veterans in the study sample was too small to be effectively 
broken out. The question of OEF/OIF veterans screened and followed up 
for treatment will continue to be explored using VA databases.
    From April 2007 through December 2009, VA has screened 383,054 OEF/
OIF veterans for possible mild traumatic brain injury (TBI). Of these, 
71,158 screened positive for potential mild TBI and were referred for 
comprehensive followup evaluations. To date, 27,287 have received a 
confirmed diagnosis of having suffered a mild TBI; all are referred for 
ongoing treatment as necessary for their medical condition. Over 90 
percent of all veterans who screen positive have been determined not to 
have suffered a TBI, but all who are screened and report current 
symptoms are evaluated and treated as appropriate for their condition 
and symptoms.
    In FY 09, VA screened over 96 percent of eligible veterans for 
alcohol misuse with a validated screening measure and screening remains 
at 97 percent in FY 10 to date. Data on alcohol misuse screening 
prevalence and followup are available for 737 OEF/OIF veterans included 
in a FY 2007 national sample of VA outpatients randomly selected for 
standardized medical record review for quality monitoring. Age adjusted 
prevalence of alcohol misuse was higher in OEF/OIF men than non-OEF/OIF 
men (21.8 percent vs. 10.5 percent), but did not differ reliably within 
the smaller sample of OEF/OIF and non-OEF/OIF women (4.7 percent vs. 
2.9 percent). Age adjusted rates of documented advice or feedback (31.6 
percent vs. 34.6 percent) and referral (24.1 percent vs. 28.9 percent) 
were not significantly different between OEF/OIF and non-OEF/OIF men 
who screened positive for alcohol misuse. Overall, OEF/OIF men were 
more likely to screen positive for alcohol misuse than non-OEF/OIF men 
and approximately half of all those with alcohol misuse had documented 
counseling and/or referral to alcohol treatment.

    Question 4: How much funding is requested in the fiscal year 2011 
budget to continue VA's suicide prevention hotline? How does this 
compare to what VA spent in 2009 and will spend in 2010? Also, what are 
the latest program data on the hotline?

    Response: Suicide Hotline budget for FY 2009 and FY 2010 are as 
follows:

    FY 2009: $11,177,433
    FY 2010: $15,068,350 (projected)

    The increase from 2010 reflects both increased utilization of the 
program and enhancements to its activities, including growth of the 
online Internet chat service, and increases in services for active duty 
personnel. In general, staffing and costs for the hotline are based on 
projections of the demand for its services.

    Question 5: In a June 2009 press release, VA committed to expanding 
the enrollment of Priority Group 8 veterans into the VA system by more 
than 500,000 by fiscal year 2013. How much additional funding is needed 
to fulfill this commitment in the outyears? Finally, what steps is VA 
taking to ensure that the expanded enrollment is implemented in a 
responsible manner so that it does not overwhelm the current VA health 
care system?

    Response: VA's base budget request already includes funding for the 
expanded enrollment commitment. VA is closely monitoring observed 
demand for enrollment and patient access, and proposes expansion of 
enrollment based on the availability of resources to meet current and 
projected demand through subsequent relaxations of enrollment 
restrictions.

    Question 6: The President has committed to deploying an additional 
30,000 U.S. troops to Afghanistan. Does VA have a clear sense of the 
numbers of deploying and returning servicemembers so that VA can plan 
properly for the VA health care system to meet the increasing health 
care needs? Please describe the nature and the extent of the 
coordination and communication between VA and DoD.

    Response: Due to operational readiness issues and sensitivity 
surrounding actual plans for military deployments, VA utilizes data 
from the Congressional Budget Office (CBO) to project the overall 
number of servicemembers that may seek care at VA in any given year. 
The VA enrollee health care projection model projects separate OEF/OIF 
veteran enrollment and utilization. The model is updated annually to 
reflect VA's most recent experience among the OEF/OIF veteran 
population. The overall FY 2011 and FY 2012 funding levels for medical 
care takes into account the impact of publically announced increases in 
troop deployment levels.

    Question 7: VA expects to provide over $4 billion to help homeless 
veterans in fiscal year 2011. Of this, $3.4 billion is for medical 
services and nearly $800 million is for specific homeless programs. Of 
the $800 million, a relatively small portion of the funds is dedicated 
to prevention efforts. Please explain how prevention fits into VA's 
overall strategy to end homelessness among our veterans.

    Response: Prevention is one of VA's six strategic pillars of 
intervention and services to end homelessness among veterans. VA will 
enhance prevention by offering grants to assist vulnerable veterans and 
their families; enhance health care and benefits to veterans involved 
with the criminal justice system; enhance street outreach and provide 
additional contracts with community providers who will help get 
veterans off the streets and engage them with appropriate services to 
end their homelessness. Below are four of VA's initiatives to prevent 
homelessness:

  Supportive Services for Low-Income Veteran Families
     Under the 2011 proposed budget VA will enhance prevention by 
offering more than $50 million for Supportive Service Grants for Low-
Income Veterans and Families at 50 percent or less of area median 
income. This initiative will establish and provide grants and technical 
assistance to community nonprofit organizations to provide case 
management and supportive services for eligible veterans and their 
families to maintain their current housing and in cases where the 
veteran lacks financial capability to secure deposits, get them into 
permanent housing. This will include financial assistance to prevent 
veterans falling into homelessness. We expect to award funding in 2011 
that will provide services for 22,500 veterans and families.

  HUD-VA Homeless Prevention Pilot
     Housing and Urban Development (HUD) and VA are initiating a 
prevention initiative which is a multi-site 3-year pilot project 
designed to provide early intervention to recently discharged veterans 
and their families to prevent homelessness. This collaborative effort 
will provide comprehensive community services for veterans and families 
and intensive case management by VA to provide needed health care and 
benefit assistance to eligible veterans. VA expects to spend $5 million 
to provide services to 200-300 veterans and families in 2011.

  Programs for Justice-Involved Veterans
     The prevention of homelessness requires a wide variety of efforts, 
including working with veterans who are being seen in the criminal 
justice system. The Health Care to Re-Entry (HCR) program aims to 
prevent homelessness by engaging veterans discharging from prisons and 
by providing linkage to VA services. VA also has a Veterans Justice 
Outreach program that provides direct linkage to veterans in drug, 
mental health, and veterans courts to offer appropriate health care 
services designed to get the veteran needed treatment that will prevent 
them from becoming homeless. VA expects to spend $12.6 million to 
provide direct services to more than 7,500 veterans in 2011.

  Health Care for Homeless Veterans Contract Residential Care
     VA's Health Care for Homeless Veterans (HCHV) program provides 
outreach services to more than 40,000 homeless veterans each year. HCHV 
is increasing resources and capacity at each VA medical center to 
realize the commitment to ``no wrong door'' by contracting with 
community partners who will provide comprehensive residential care for 
veterans who seek safe places to stay where immediate admission to a VA 
operated program is not available. VA expects to spend nearly $116 
million and provide services to 12,000 veterans in 2011.

    Question 8: VA informs that investments in homeless initiatives in 
fiscal year 2011 will emphasize education, jobs, prevention and 
treatment programs. Please explain the details of the education and 
jobs investments.

    Response: Education and employment is another of VA's six strategic 
pillars in the continuum of interventions and services to end 
homelessness among veterans. VA is constantly striving to provide more 
supportive services through partnerships to prevent homelessness, 
improve employability, and increase independent living for veterans. We 
will do this by enhancing Compensated Work Therapy/Supported Employment 
(CWT/SE), Homeless Veterans Reintegration (HVRP) and the Vocational 
Rehabilitation and Employment (VR&E) Vet Success programs. Below are 
descriptions of these programs:

  Compensated Work Therapy/Supported Employment (CWT/SE) 
Program
     One of the key needs for many veterans is to return to gainful 
employment. Many veterans who have been homeless have years without 
productive employment. Many suffer with physical and mental issues that 
require them to participate in a therapeutic rehabilitative effort in 
order to once again be able to return to a position where they can 
become employment ready. The CWT/SE program is a therapeutic employment 
program targeted at veterans with significant health problems.
     VA currently offers CWT services at VA Medical Centers. Under our 
2011 budget VA plans to expand CWT/SE services into the community by 
offering community-based staff that will target supportive employment 
opportunities for veterans with significant health problems. The 
availability of these services in community settings will increase 
employment opportunities available for veterans. VA plans to spend more 
than $29 million and provide community based CWT/SE services for 8,150 
veterans in 2011.

  Homeless Veteran Reintegration Program (HVRP)
     The Department of Labor's (DoL) HVRP program is a key partnership 
with VA at the Federal level. DoL's Veterans Employment and Training 
Service (VETS) offers funding to community groups to get veterans back 
into gainful employment. VA aids this effort and works closely with DoL 
and its grantees to coordinate that needed health care and benefits 
assistance is provided. This close working relationship is beneficial 
to the veterans we mutually serve since employment opportunities, 
without addressing underlying health care and benefits, may produce 
gains that are not maintained over time.
     VA continues to partner with DoL and looks forward to working with 
them as they fund women-only HVRP programs and offer funding for 
Incarcerated Veteran Transition programs.

    VBA Benefits

  The Vocational Rehabilitation and Employment (VR&E) 
VetSuccess Program
     This program is authorized by Congress under Title 38, Code of 
Federal Regulations, Chapter 31. The VetSuccess program assists 
veterans with service connected disabilities: to prepare for, find, and 
keep suitable jobs. For veterans with disabilities so severe that they 
cannot immediately consider work; VetSuccess offers services to improve 
their ability to live as independently as possible. Homeless veteran 
and those at risk of becoming homeless apply for benefits through VBA's 
Vocational Rehabilitation and Employment program.

    Question 9: The fiscal year 2011 budget includes several 
legislative proposals to help caregivers of veterans. This includes 
health coverage through CHAMPVA, travel expenses, and education and 
training. As you know, both the House and Senate passed caregiver 
bills. What specific population of eligible veterans and caregivers do 
the fiscal year 2011 legislative proposals intend to target?

    Response: With the passage of P.L. 111-163 ``Caregivers and 
Veterans Omnibus Health Services Act of 2010'' on May 5, 2010, VA is 
currently analyzing the legislation and determining the population of 
eligible veterans.
    Those proposals include:

     One proposal provides the Civilian Health and Medical Program of 
the Department of Veterans Affairs (CHAMPVA) benefits to caregivers 
without entitlement to other health insurance or coverage. This benefit 
would apply to one caregiver for each eligible veteran, provided that 
the caregiver meets all other CHAMPVA criteria.
     The second proposal would provide travel benefits to the 
caregivers of veterans in a manner similar to that currently available 
to family caregivers of active duty servicemembers when the 
servicemember or veteran is receiving care for service related 
conditions. This proposal would only apply to the caregivers of 
eligible veterans with service after September 11, 2001.

  The third proposal would provide caregiver education 
materials for caregivers and individuals who support caregivers. The 
proposal assumes one caregiver per veteran would qualify.

     The final proposal would provide that VA conduct a caregiver 
survey every 3 years to determine the number of caregivers, the types 
of services they provide and information about the caregiver.

    Question 10: With the funds requested in the fiscal year 2011 
budget, VA expects to spend about $218 million for women veterans. This 
includes a new peer call center and social networking site. Please 
expand on the details of the call center and social networking site 
proposals.

    Response: The $218 million listed in the budget on page 1K-32, 
Volume 2 of 4, is for Gender Specific Health Care Services for 
approximately 186,000 unique patients. These services would include 
mammography and breast care, reproductive health care, including 
maternity services, and treatment for all female-specific diagnostic 
conditions and disorders. However, it does not include a proposal for a 
specific women veteran call center or social networking site. This will 
be addressed through a VA transformation initiative. Every VA medical 
center has a women veterans program manager designated to assist women 
veterans. In addition, VA currently uses Facebook, Twitter, Flicker, 
and YouTube to improve communication with all veterans, including women 
veterans, to help them access health care and benefits.

    Question 11: What is VA's long-term strategy to improve the care 
provided to women veterans and how does the fiscal year 2011 budget 
request for women veterans fit into this long-term strategy?

    Response: VA has continued long term strategic plans to enhance the 
provision of health care services to women veterans. The following 
elements from the plan are outlined as they relate to the FY 2011 
budget request:

  Fully Implement Comprehensive Primary Care for Women Veterans
    Staffing: Providers proficient in women's health.
    Staffing: Support staff for care coordination within 
medical home care in women's health.
    Facility Resources: Construction enhancements focusing on 
dignity, privacy and safety.
    Equipment and Supplies: Necessary clinical enhancements to 
deliver primary care.
    Training: Retrain providers to care for women veterans.
    Communication: Effective internal and external 
communication about the care needs of women veterans.
    Beginning with FY 2010, the VHA's New Model of Care 
Initiative supports the addition of primary care support staff, 
training, and some space configuration for women's health. In the FY 
2011 budget request, general medical services dollars will continue to 
support the overall medical care provision for women veterans. In 
addition, the FY 2011 budget line item request for women veterans 
specifically increases the amount needed for gender-specific care, such 
as cervical and breast cancer screenings.

  Develop a High-Quality Continuum of Health Care for Women 
Veterans
     The strategic goal is to fully integrate specialty care services 
for women veterans at the facility level. In FY 2011, the requested 
budget will support Comprehensive Care Services for women veterans that 
includes:

    Mental Health
    Specialty Care
    Emergency Care
    Diagnostic Services
    Tele-Health
    Geriatric and extended care services
    Women's health and wellness screening and prevention 
programs
    Rehabilitation health (catastrophically injured women)

    Question 12: During the past year, the Committee has become 
concerned over reports that there are problems in the implementation of 
the NDAA fiscal year 2008 and NDAA fiscal year 2009 sections regarding 
the joint establishment of the Defense and VA Centers of Excellence for 
Vision, Hearing, and Limb Extremity `orthopedic injury.' We would like 
to know what VA staff has been appointed to these three centers, the 
budget for this year as well as fiscal year 2011-2012, and locations of 
these joint centers.

    Response: National Defense Authorization Act (NDAA) of 2008 and 
2009 establishes each of these as Department of Defense (DoD) Centers 
of Excellence. The legislation mandates collaboration from DoD ``to the 
maximum extent practicable with the Secretary of Veterans Affairs'' for 
the Hearing Loss and Auditory Injuries Center, and Vision Center. The 
legislation mandates that DoD and VA ``jointly'' establish the Center 
for Extremity Injuries and Amputation. VA has been steadily involved 
and working with DoD representatives to develop plans for these 
centers, and the registries associated with them.
    The Vision Center of Excellence currently occupies temporary DoD 
space within the Washington, DC area. A congressional supplemental 
appropriation for DoD ($4.052 million) was approved for a permanent 
location at the Walter Reed National Military Medical Center in 
Bethesda, Maryland, with expected occupancy in fourth quarter FY 2011. 
VA has committed a total of six staff members for the Vision Center. 
The positions are currently supported for Deputy Director (detailed 
effective April 12, 2010), Chief of Staff (position filled), and a 
Blind Rehabilitation Specialist (detailed). A permanently hired Deputy 
Director and a Blind Rehabilitation Specialist have been selected, and 
are expected to begin third quarter FY 2010. VA is recruiting for the 
low vision research specialist (optometrist), administrative assistant, 
and biostatistician. Originally, the biostatistician position was going 
to be filled via DoD under a contract; however, VA just recently agreed 
to take responsibility for this recruitment and is in the process of 
developing a position description. Of the funding provided by Congress 
in FY 2009, VA allocated $6.9 million in the Medical Services 
appropriation for FY 2010 through 2014 and the funding for FY 2010 
through 2012 is presented below. Cost for support of the Registry for 
FY 2010 is $1.7 million.

------------------------------------------------------------------------
              Budget                   FY10         FY11         FY12
------------------------------------------------------------------------
O&M                                     $1.1M        $1.1M        $1.5M
------------------------------------------------------------------------
IT (Registry)                           $1.7M
------------------------------------------------------------------------

    Plans for the Hearing Loss and Auditory Injuries Center, and the 
Center for Extremity Injuries and Amputation, are still under 
development by DoD and have not yet been submitted to VA for review. 
Consequently, the level of support from VA will be determined when the 
plans are finalized.

    Question 13: The Committee has been told that strong concerns over 
the organizational structure of these three Centers of Excellence have 
resulted in numerous meetings and delays in implementation. Where do 
the Directors and Deputy Directors report to, in both DoD and within 
VHA?

    Response: For the Vision Center, VA staff report organizationally 
to the VHA Chief Patient Care Services Officer, through the VA National 
Program Directors for their respective disciplines; i.e., the VA 
National Program Directors for Ophthalmology, for Optometry, and for 
Blind Rehabilitation Service. VA staff functionally report to the DoD 
Executive Director for the Center. The DoD Executive Director currently 
reports to the Director of the TRICARE Management Activity, Under 
Assistant Secretary of Defense for Health Affairs.
    Plans for the Hearing Loss and Auditory Injuries Center and the 
Center for Extremity Injuries and Amputation are still under 
development by DoD. VA continues to be involved in working groups with 
DoD representatives to assist in developing concepts of operations and 
plans for these centers and the level of support from VA with regard to 
budget and staff will be determined when the plans are finalized.

    Question 14: The 2011 budget provided $590 million for medical and 
prosthetic research, which is $9 million above the 2010 enacted level. 
This increase does not keep pace with the estimated inflation for 
biomedical research and development. Does this mean that VA will have 
to decrease staff and/or award fewer grants?

    Response: The increase in appropriations from FY 2009 ($510 
million) to FY 2011 ($590 million) is 16 percent. The Office of 
Research and Development will be able to execute their mission without 
any adverse impacts.

    Question 15: The 2011 budget includes a legislative proposal to 
create a central nonprofit corporation for VA research. It is my 
understanding that the VA already has more than 80 research and 
education nonprofit corporations, or NPCs. What could a central VA 
nonprofit do that the existing NPCs cannot? Please be specific in your 
response.

    Response: This legislative proposal remedies several deficiencies 
associated with the use of local nonprofit corporations (NPC) in 
support of national research initiatives. It does so by minor 
modifications of the current law that strengthen accountability for 
national program operation by making the Chief Research and Development 
Officer and Chief Academic Affiliations Officer statutory members of 
the Board of the National Nonprofit, and assures that other members of 
the board serve under the same ethical and financial restrictions that 
govern board members for local NPCs. The Central NPC will not 
``compete'' with local NPC's, nor operate in a manner similar to that 
of the Henry M. Jackson Foundation. Had that been the intent of the 
legislative initiative, a plan for disestablishing the local NPCs would 
have been proposed. It is expected that the Central NPC will often work 
cooperatively with the local NPCs, administering national research 
while each of them administers the particular part of the national 
study that is accomplished at its VAMC.
    The nature of research has changed since 1988, with an increasing 
emphasis on interdisciplinary, large multi-site research. The VA is 
uniquely able to conduct this type of research because clinical care 
and research are under the same roof. Current NPCs work well with its 
current authority to manage studies in its specific jurisdictions, but 
the decentralized system does not allow VA to efficiently and 
effectively coordinate non-VA funded large multi-site research at a 
systemwide level, or to compete for non-VA funding at a national level.
    A central NPC will be integral to the future of VA's Genomic 
Medicine initiative to develop a genomic database that links patient 
genetic information with longitudinal health outcomes using VA's 
electronic health record. Few areas hold as much promise for changing 
everyday practice of health care delivery. This initiative includes the 
Million Veteran Program to collect samples and health information, with 
longitudinal followup, on a million veterans--an effort that will be 
unparalleled anywhere in the world. It also includes nationwide studies 
to examine the genetic bases of mental health issues such as 
schizophrenia and bipolar disease. This initiative requires 
partnerships with other Federal and non-Federal research entities, for 
which a central NPC will be an essential enabler. VA's Genomic Medicine 
initiative is a national program whose activities will not be managed 
in a specific VAMC, so a central NPC without ties to a specific VAMC, 
as is required by current statutory authority, is crucial to the future 
of this program. Likewise, when VA Cooperative Studies leverage funding 
by partnering with industry partners, a central NPC would facilitate 
the dissemination of funding to the multiple coordinating centers and 
sites. While it is true that the Cooperative Studies Program has been 
able to operate within the current framework of local NPCs, its concern 
has been overwhelmingly with only intramural research funded fully 
through VA's research appropriation. Such funds are wholly managed 
within VA without assistance from the NPCs. When outside funds are 
needed or appropriated for national or multi-site research, the Central 
NPC will provide VA with a mechanism for obtaining, administering and 
overseeing such funds. Indeed, since the Chief Research and Development 
Officer and Chief Academic Affiliations Officer of VA will serve on the 
Board of the proposed Central NPC, the new arrangement will give VA, at 
the national level, the same level of oversight and accountability for 
NPC operations in support of national programs that local facility 
Directors now have for local NPCs.
    The purpose of the Central NPC will be to: (1) act as a flexible 
funding mechanism for the conduct of national medical research and 
education projects under cooperative arrangements with VA, (2) serve as 
a focus for interdisciplinary interchange and dialogue between VA 
medical research personnel and researchers from other Federal and non-
Federal entities and (3) encourage the participation of the medical, 
dental, nursing, veterinary and other biomedical scientists at VA in 
research at the national level that will be facilitated by the Central 
NPC for the mutual benefit of VA and non-VA medicine, veterans and the 
public.
    The establishment of a central NPC also creates synergies with 
other efforts currently underway in VA to improve the health and well-
being of veterans. This includes VA's development of a central 
Institutional Review Board (IRB) to streamline the IRB review process 
for large multi-site studies. This type of study, especially when 
supported by outside funding, is the type that a central NPC will 
better enable VA to conduct. The existence and authorities of the local 
NPCs would be unaffected.

    Question 16: In an effort to better understand the need for the 
legislative proposal to create a central nonprofit corporation, I would 
like to know if there are opportunities for non-VA support for research 
that VA is unable to accommodate through its own authorities, through 
the NPCs or through VA-affiliated universities. If yes, please give 
specific examples.

    Response: A central NPC can leverage VA funding by negotiating with 
non-VA funding agencies, such as National Institutes of Health (NIH), 
to support studies associated with large VA projects such as the 
Genomic Medicine initiative. It would be neither feasible, nor 
appropriate for a local NPC to take on this role on behalf of the 
entire VA research enterprise. A central NPC will increase VA's ability 
to compete nationally for funding from other Federal, industry and 
nonprofit research sponsors, by making VA's research program a more 
attractive collaborator. The central NPC will provide VA a more 
straightforward mechanism to work with other Federal and non-Federal 
research sponsors. It will further give VA more flexibility and 
leverage to execute interagency agreements with other Federal research 
sponsors, and to assure that VA's responsibilities under these 
agreements are appropriately executed with high-level program 
accountability. A central NPC will also provide VA with more 
flexibility and weight for collaborations with industry and nonprofit 
research sponsors. This is particularly relevant for large multi-site 
clinical trials where industry and nonprofit research sponsors must 
currently negotiate with several separate local VA-affiliated NPCs, 
which may result in the sponsors turning to other organizations to 
conduct the research.
    The Central NPC should be in a more robust financial position than 
smaller local NPCs and would be able to enter into research agreements 
under the Federal Acquisition Regulation (FAR). Currently, smaller 
local NPCs are unable to afford to meet some of the requirements for 
subcontractors under the FAR, making research with the DoD through the 
Henry M. Jackson Foundation that now requires use of FAR contracts 
instead of grants, problematic for the smaller NPCs. Through economies 
of scale the Central NPC, after meeting the FAR requirements, would 
enter into one larger agreement on behalf of the affected VA sites and 
would fully administer the funds for any site where the local NPC was 
not able to meet the FAR requirements.
    Additionally, the Central NPC will be VA's facilitator for 
collaborative research between VA and outside public and/or private 
entities which contain centers for excellence or leaders in various 
fields. Through the Central NPC, needed funds can be sought and raised 
for projects such as this which are of national scope and importance, 
in which VA might otherwise be unable to participate.

    Question 17: Also related to the legislative proposal to create a 
central nonprofit corporation, I would like to know whether under the 
current law, regulations, or policies, there are specific impediments 
to VA research that central nonprofit is intended to overcome.

    Response: By statute, local VA-affiliated NPCs cannot administer 
funds for large studies involving a number of VA sites and multiple 
VAMCs. They are limited to facilitating research and education at the 
one VA medical center (VAMC) at which they were created. The proposal 
will, first and foremost, permit the establishment of an NPC that is 
not affiliated with a particular VAMC, but which may operate in any or 
all VAMCs, including those in which there is a local NPC. This is the 
major change accomplished by the proposed legislation. It will allow VA 
research that is of national scale to be conceived of, facilitated, 
funded and administered on that scale and could usher in a new age for 
VA research. The proposed legislation will, in addition, grant VA 
limited new authorities not available under the current NPC statute and 
clarify others, by allowing: (1) VA to enter into Intergovernmental 
Personnel Act agreements with the proposed central NPC; (2) VA and the 
Central NPC to enter into Cooperative Agreements with one another to 
conduct cooperative enterprises with non-appropriated funds; and (3) VA 
to provide appropriated funds and resources to establish the NPC. 
Although the Board of Directors of the Central NPC will include VA 
Central Office staff, the majority of Directors will not be government 
employees. Finally, the Central NPC will be explicitly defined as not 
an entity of the U.S. Government.
    A central NPC will increase VA's flexibility in using non-VA 
funding. It will allow VA to adapt more quickly to changes in science 
by shifting the focus on non-VA funding and changing the scope of 
agreements with non-VA sponsors more easily. It will also increase VA's 
ability to carry over non-VA funds between fiscal years.
    A central NPC will increase ability and flexibility to hire 
personnel. A central NPC will provide VA a quick and flexible hiring 
mechanism for professional, technical and/or clerical personnel as part 
of the cooperative agreements with the Central NPC. This will allow VA 
to quickly fill gaps in personnel that may be necessary to address 
rapidly emerging needs.

    Question 18: Of the $48.2 billion requested in fiscal year 2011 for 
the medical care accounts, about 80 percent of the funds are 
distributed to the 21 VISNs using the VERA General Purpose Fund and 20 
percent is distributed to select VISNs for special programs and 
initiative using the VERA Specific Purpose Fund. In the fiscal year 
2012 budget request, the projected funding distribution using the VERA 
Specific Purpose Fund decreases to about $290 million compared to the 
fiscal year 2011 request. It is my understanding that the VERA Specific 
Purpose Fund provides resources for special programs such as mental 
health and homeless grants. As these are priority initiatives, what is 
the rationale for decreasing the funding set-aside for the VERA 
Specific Purpose Fund?

    Response: When comparing FY 2009 and FY 2010 Specific Purpose 
funding one needs to consider the one-time congressional funding of 
nearly $1.5 billion. Specific Purpose funds actually increased over $1 
billion when accounting for the one-time congressional add-ons in FY 
2009 (see table below). From FY 2011 to FY 2012, Specific Purpose 
funding increases nearly $288 million.

------------------------------------------------------------------------
         Description               2009           2010        Inc./Dec.
------------------------------------------------------------------------
VERA Specific Purpose          $9,380,011     $9,092,279     ($287,732)
 Allocation to VISNs &
  Prgs
------------------------------------------------------------------------
Less: Congressional Add-Ons    ($1,497,400)    ($186,000)   $1,311,400
 (Non-Recurring)
------------------------------------------------------------------------
    Total                      $7,884,620     $8,908,289    $1,023,669
------------------------------------------------------------------------
                                   2011          2012        Inc./Dec.
------------------------------------------------------------------------
VERA Specific Purpose          $9,592,354     $9,880,125     $287,771
 Allocation to VISNs &
  Prgs
------------------------------------------------------------------------

    Question 19: After years of no major hospital construction, there 
are now a few projects in the pipeline scheduled for completion. I 
believe the first one is scheduled to open in 2012. At what point are 
budgetary arrangements going to be made to ensure activation or to 
bring them online? For example, if a facility is opening in 2012, would 
activation funds be included in the fiscal year 2011 budget?

    Response: Funds for estimated activation requirements are included 
in each year's budget request. VA budgets an amount estimated to be 
sufficient to meet the needs of the VISNs that will be activating 
facilities and will have funding requirements in that year. This amount 
is based on projected major construction and major leases with 
occupancy dates for the current and following years.

    Question 20: Of the budget request for medical facilities, how much 
is for facility activation? How does VA develop the budget request for 
facility activation and how do you disseminate the facility activation 
funding? In other words, must localities apply for this funding or are 
the funds set aside for a defined list of facilities?

    Response: The budget request estimates $268 million for 
activations. The activation request is based on anticipated facility 
activations. While the funds are set aside for a defined list of 
activations, VISNs request these funds to ensure budget execution is 
synchronized with actual beneficial occupancy dates of the specific 
facilities.

    Question 21: In 2010, resident engineers were funded from the GOE 
account. The 2011 budget requests $24 million to fund 140 resident 
engineers in the major constructions account, but these funds would be 
used to reimburse the GOE account. What is the rationale for requesting 
funding for resident engineers under the major construction account 
only to reimburse the GOE account? Why not keep the funding for the 
resident engineers in the GOE account? Also, how many resident 
engineers were funded in 2010 and please justify whether 140 resident 
engineers in 2011 is sufficient to oversee the major construction 
projects of VA.

    What is the rationale for requesting funding for resident engineers 
under the major construction account? Why not keep the funding for the 
resident engineers in the GOE account?

    Response: In 2011, resident engineer costs will be moved from the 
General Administration (GOE) appropriation to the Major Construction 
appropriation in order to directly link the funding for staffing 
requirements for major construction to the funding for the projects 
themselves.
    The Major Construction appropriation will provide funding for on-
site supervision, including resident engineers and other project 
administrative staff for VHA and National Cemetery Administration (NCA) 
major construction projects located throughout the country.
    The Office of Acquisition, Logistics, and Construction (OALC) will 
use its GOE appropriation to transform itself into a 21st century 
enterprise facilities management system. Under this transformation 
initiative, OALC will provide increased local and regional on-site 
supervision and support for construction and leasing projects. Because 
the costs of resident engineers will be reimbursed from the Major 
Construction and Medical Facilities appropriations, OALC will use GOE 
funding to hire additional planning staff, project managers, 
contracting officers, real property officers and sustainment personnel.
    This transformation effort will allow OALC to:

      Integrate facilities management functions to maximize 
life-cycle performance.
      Implement corporate-level management with a decentralized 
system of project execution.
      Assess and meet facility needs while reducing overall 
costs.
      Leverage core mission expertise for minor design, 
construction and leasing.
      Increase technical support for local facilities 
engineers.
      Increase return on facility investment.

    How many resident engineers were funded in 2010?

    The GOE appropriation provides funding for 129 full-time 
equivalents (FTE) in 2010, including on-site supervision and support. 
The Medical Facilities appropriation provides funding for 36 FTE in 
2010.
    In 2011, funding from the Major Construction appropriation is 
requested for 140 FTE, including on-site supervision and support. 
Funding from the Medical Facilities appropriation is requested for 62 
FTE, an increase of 26 from the 2010 level.

    Justify whether 140 resident engineers in 2011 is sufficient to 
oversee the major construction projects of VA.

    The 2011 Major Construction budget request identifies 5 major 
construction projects with funding for construction. There will also be 
39 projects under construction in 2011 using prior year funding. An 
analysis of the size and scope of the major projects requested and 
ongoing major projects indicate that 140 FTE are required to provide 
sufficient oversight. This is an average of only 3 to 4 people per site 
and includes administrative support necessary to effectively manage 
these projects. The number of staff required to adequately provide 
oversight varies based on the complexity and scope of the project. More 
staff are needed with increased complexity of the work, multiple shifts 
and multiple contractors. VA currently has several projects costing 
over $100 million, which require at least 5 resident engineers to 
oversee various aspects of construction--foundations, electrical, 
mechanical, plumbing, dry wall, etc. Insufficient staff can lead to 
poor quality work, untimely responses to requests for information from 
the contractor, which cause delays in completion and beneficial 
occupancy for veterans and increased claims. Inadequate staff can also 
slow the close out of contracts since staff must move to a new job 
before being able to fully finish the prior job.

    Question 22: The budget proposes $468 million for minor 
construction programs in 2011, of which $387 million is for VHA. This 
represents a decrease of $235 million from 2010. Please explain the 
proposed decrease in funding when VA facilities are aging and minor 
construction demands continue to grow.

    Response: The 2011 minor construction request is the second largest 
amount the Department has requested for the minor construction program. 
(The largest minor construction budget requested was the President's 
2010 budget at $600 million.) Historically, VA has requested $390 
million for minor construction (2008-2010). This request is 
approximately 20 percent above this historical request level. In 
addition, the 2011 request includes $1.1 billion in the medical 
facilities account for nonrecurring maintenance (NRM). This is the 
largest request VA has ever made for the VHA NRM account. A significant 
portion of the VHA NRM account is used to address the repair and 
maintenance needs at VA medical facilities.

    Question 23: VA requests about $1.3 billion for medical IT 
investments to develop the next generation health care system known as 
HealtheVet to enhance and supplement the current legacy system, VistA. 
This is a decrease of about $150 million from the 2010 level. In light 
of this focus on HealtheVet, what is the rationale for the decrease in 
funding in 2011?

    Response: The $1.3 billion for medical IT investments includes not 
only development of HealtheVet; it also includes the sustainment of 
VistA Legacy and operational sustainment of medical center IT systems. 
The 2011 budget request provides development funding that is comparable 
to 2010; the estimated $150 million decrease is represented in the 
Operations and Maintenance portion of the budget request and should not 
affect the development efforts underway.

    Question 24: Please provide an update on VA's collaboration with 
DoD to create Virtual Lifetime Electronic Records (VLER). How much is 
requested in the fiscal year 2011 budget for the VLER initiative and 
what is the full project cost in the out-years in fiscal year 2012 and 
beyond to fully develop and implement VLER?

    Response: VA is collaborating daily with DoD on various aspects of 
the Virtual Lifetime Electronic Record (VLER). A number of lessons 
learned from the go-live January 31st date for the VLER Health 
Communities exchange of health information between DoD, VA, and Kaiser 
Permanente in San Diego, CA are being applied toward the planning of 
the next pilot deployment site in the Tidewater, Virginia, area. VA is 
working with DoD to determine the next several sites yet to be 
announced. Determining the next health data sets, collaborating on 
similar functionalities, and establishing a joint integrated master 
schedule through the Interagency Program Office are all activities 
underway.
    There is $52 million in the FY 2011 President's Budget for VLER. 
This money will continue deployment and productization of the software 
solution created for the VLER Health Communities throughout the VA. It 
will also begin to address the overall enterprise architecture and 
systems integration required for the long-term strategy for VLER. Work 
is commencing in the VLER Enterprise Program Management Office (EPMO) 
to develop a multi-year funding profile for VLER that will identify and 
incorporate the initiatives required to meet the President's vision of 
VLER. It should be noted that the two Departments are not creating a 
new system, but leveraging existing initiatives that create the 
seamless integration of the information required for all service 
providers.

                                 

                                     Committee on Veterans' Affairs
                                             Subcommittee on Health
                                                    Washington, DC.
                                                      March 9, 2010

Mr. Blake C. Ortner
Senior Associate Legislative Director
Paralyzed Veterans of America
801 18th Street, NW
Washington, D.C. 20006

Dear Mr. Ortner:

    Thank you for your testimony at the U.S. House of Representatives 
Committee on Veterans' Affairs Subcommittee on Health oversight hearing 
on ``The Veterans Health Administration's Fiscal Year 2011 Budget'' 
that took place on February 23, 2010.
    Please provide answers to the following questions by April 20, 
2010, to Jeff Burdette, Legislative Assistant to the Subcommittee on 
Health.

    1.  The Independent Budget estimates that it will cost about $252 
million to care for an additional 75,000 new OEF/OIF veterans in fiscal 
year 2011. However, VA's 2011 budget submission projects spending about 
$600 million to care for an additional 57,000 OEF/OIF veterans. This 
means that the IB projects a faster growth in OEF/OIF veterans but 
estimates that it will cost less to treat these additional individuals. 
Please provide an explanation of the basis for The Independent Budget's 
projections.

    2.  The Independent Budget highlights two key policy initiatives 
for long-term care and prosthetics. There appears to be a disconnect 
between the critical issues that The Independent Budget identified for 
fiscal year 2011 in that neither long-term care nor prosthetics were 
mentioned in The Independent Budget's critical issues document. Please 
explain this disconnect.

    3.  The Independent Budget recommends $700 million for medical and 
prosthetic research in 2011. This is $119 million above the fiscal year 
2010 enacted level and $100 million above the Administration's request. 
We recognize the importance of research and would like to better 
understand the basis for The Independent Budget's funding 
recommendation for medical and prosthetic research. In addition, are 
there particular research areas that you believe VA should target with 
your recommended increase in funding?

    4.  You recommend $300 million to address the research 
infrastructure deficiencies in fiscal year 2011. To clarify, is this 
request reflected in the $52 billion that The Independent Budget 
requests for the medical care accounts in 2011? Do you have alternate 
recommendations for addressing the research infrastructure deficiencies 
without creating a new appropriations account?

    Thank you again for taking the time to answer these questions. The 
Committee looks forward to receiving your answers by April 20, 2010.

            Sincerely,

                                                 MICHAEL H. MICHAUD
                                                           Chairman
                               __________
                                      Paralyzed Veterans of America
                                                    Washington, DC.
                                                      April 1, 2010

Honorable Michael Michaud
Chairman
House Committee on Veterans' Affairs
Subcommittee on Health
338 Cannon House Office Building
Washington, D.C. 20515

Dear Chairman Michaud:

    On behalf of Paralyzed Veterans of America, I would like to thank 
you for the opportunity to present our views on the FY 2011 budget for 
the Veterans Health Administration (VHA). We appreciate the Committee 
recommending a substantial budget for the VA in its recently submitted 
Views and Estimates. We also look forward to working with the Committee 
to ensure that the Government Accountability Office (GAO) follows 
through on its responsibility as a part of the advance appropriations 
process. Only through cooperation between the veterans' service 
organizations and the Members of the Committee can we hope to attain a 
sufficient, timely, and predictable budget for the VA.
    We have included with our letter a response to each of the 
questions that you presented following the hearing on February 23, 
2010. Thank you very much.

            Sincerely,

                                                    Blake C. Ortner
                              Senior Associate Legislative Director
                               __________
    Question 1: The Independent Budget estimates that it will cost 
about $252 million to care for an additional 75,000 new OEF/OIF 
veterans in fiscal year 2011. However, VA's 2011 budget submission 
projects spending about $600 million to care for an additional 57,000 
OEF/OIF veterans. This means that the IB projects a faster growth in 
OEF/OIF veterans but estimates that it will cost less to treat these 
additional individuals. Please provide an explanation of the basis for 
The Independent Budget's projections.

    Answer: Before providing an explanation of The Independent Budget's 
projections, we believe that it is first necessary to analyze the 
Administration's proposal. While the Administration recommends 
approximately $600 million to provide for 56,784 new OEF/OIF uniques, 
we do not fully understand how they came up with this recommendation.
    Examining the Administration budget submission in more detail, we 
note that the Administration projects $2.575 billion in total 
expenditures for FY 2011 to address the needs of 439,271 total 
cumulative OEF/OIF unique users. This computes to approximately $5,862 
per individual unique OEF/OIF user. However, taking the 
Administration's $600 million estimation and applying it to the 56,784 
new OEF/OIF uniques suggests a cost per individual unique OEF/OIF user 
of $10,566. This seems to suggest a real discrepancy in their budget 
recommendations. Calculating a cost for new OEF/OIF unique users based 
on the actual cost per unique ($5,862) yields a real cost of 
approximately $333 million.
    However, it is fair to conclude that they may have additional 
factors built into the budget recommendation. For instance, the cost 
per unique OEF/OIF user may also factor in things like prosthetics 
utilization, access to new mental health programs, or similar programs. 
Unfortunately, the Administration budget submission does not really 
provide detailed justification for its budget recommendations, and it 
certainly does not explain the difference between the apparent cost per 
unique ($5,862) and the cost for new unique users in FY 2011 ($10,566).
    As for The Independent Budget, part of the reason our budget 
estimate is less than the Administration's recommendation is because we 
project an even lower cost per unique OEF/OIF user. That value is 
approximately $3,360. Our projection of 75,000 new uniques is based on 
the historical trend that year-to-year increases in new users have gone 
up over time, not leveled out or declined. In recent years, we believe 
the Administration has actually underestimated the year-to-year 
increases in new users. Our cost estimate of $252 million is based on 
this projection of new OEF/OIF unique users multiplied by our projected 
cost per user. Were we to use the apparent actual cost of unique OEF/
OIF users ($5,862) according to the VA, the recommendation would 
actually be approximately $440 million.

    Question 2: The Independent Budget highlights two key policy 
initiatives for long-term care and prosthetics. There appears to be a 
disconnect between the critical issues that The Independent Budget 
identified for fiscal year 2011 in that neither long-term care nor 
prosthetics were mentioned in The Independent Budget's critical issues 
document. Please explain this disconnect.

    Answer: First, we believe there is no particular disconnect between 
the Critical Issues Report published last fall and the recently 
released Independent Budget. It is important to realize that the 
Critical Issues Report is meant to address broad, sweeping policy 
issues facing the VA. While overall funding for the VA, and the VA 
health care system in particular, is of critical importance, the 
individual components of the funding recommendations do not generally 
receive that level of attention in the Critical Issues Report.
    Additionally, as explained in the introduction of the Critical 
Issues Report, that document is designed to alert the Administration, 
Members of Congress, VA, and the public to the issues concerning VA 
health care, benefits, and benefit delivery that we believe deserve 
special scrutiny and attention. The Report does not offer specific 
funding recommendations, but instead serves as a guide to policymakers 
so they can prepare for the coming budget debate in February and 
beyond. Through these efforts we believe VA is better positioned to 
successfully meet the challenges of the future. The Critical Issues 
Report also provides direction and guidance for the Administration and 
Members of Congress.

    Question 3: The Independent Budget recommends $700 million for 
medical and prosthetic research in 2011. This is $119 million above the 
fiscal year 2010 enacted level and $100 million above the 
Administration's request. We recognize the importance of research and 
would like to better understand the basis for The Independent Budget's 
funding recommendation for medical and prosthetic research. In 
addition, are there particular research areas that you believe VA 
should target with your recommended increase in funding?

    Answer: For over 60 years, the VA research program has been 
improving veterans' lives through innovation and discovery that has led 
to advances in health care for veterans and all Americans. VA 
researchers conducted the first large scale clinical trial that led to 
effective tuberculosis therapies and played key roles in developing the 
cardiac pacemaker, the CT scan, and radioimmunoassay. The first liver 
transplant in the world was performed by a VA surgeon-researcher. VA 
clinical trials established the effectiveness of new treatments for 
schizophrenia, high blood pressure, and other heart diseases. The 
``Seattle Foot'' and subsequent improvements in prosthetics developed 
in VA have allowed people with amputations to run and jump. The ``DEKA 
Arm,'' a collaborative invention involving VA and Department of Defense 
(DoD) scientists and private entrepreneurs, holds major promise for 
upper extremity amputees to regain normative activity.
    To keep VA research funding at current-services levels, the program 
needs at least $20 million (a 3.3-percent increase over FY 2010) to 
account for inflation. Beyond anticipated inflation, additional VA 
research funding is needed to: (1) take advantage of burgeoning 
opportunities to improve the quality of life for our Nation's veterans 
through ``personalized medicine;'' (2) address the critical needs of 
returning Operations Enduring Freedom and Iraqi Freedom (OEF/OIF) 
veterans and others who were deployed to combat zones in the past; and 
(3) maximize use of VA's expertise in research conducted to evaluate 
the clinical effectiveness, risks and benefits of medical treatments. 
Thus, the IBVSOs believe an additional $100 million in FY 2011, beyond 
inflationary coverage, is necessary for sustained support of new VA 
research initiatives.
    In fiscal year (FY) 2009, VA awarded more than 2,200 new grants to 
VA-based investigators designed to enhance the health care VA provides 
to veterans. Among other initiatives, VA researchers are currently:

      Developing new assistive devices for the visually 
impaired, including an artificial retina to restore vision.
      Working on ways to ease the physical and psychological 
pain of veterans now returning from two current overseas wars.
      Gaining new knowledge of the biological and behavioral 
roots of post traumatic stress disorder (PTSD) and developing and 
evaluating effective PTSD treatments.
      Developing powerful new approaches to assess, manage, and 
treat chronic pain to help veterans with burns and other injuries.
      Learning how to deliver low-level, computer-controlled 
electrical currents to weakened or paralyzed muscles to allow people 
with incomplete spinal cord injury to once again walk and perform other 
everyday activities.
      Studying new drug therapies and ways to enhance primary 
care models of mental health care.
      Identifying genes associated with Alzheimer's disease, 
diabetes, and other conditions.
      Studying ways to prevent, diagnose, and treat hearing 
loss.
      Pioneering new home dialysis techniques.
      Developing a system that decodes brain waves and 
translates them into computer commands to allow quadriplegics to 
perform routine daily tasks such as using e-mail.
      Exploring organization of care, delivery methods, patient 
outcomes, and treatment effectiveness to further improve access to 
health care for veterans.

    As for specific areas to direct funding, the IBVSOs would like to 
see added focus in two research areas. First, additional funding is 
needed to expand research on strategies for overcoming the devastating 
injuries suffered by veterans of OEF/OIF. Urgent needs are apparent for 
improvements in prosthetics technologies and rehabilitation methods, as 
well as more effective treatments for polytrauma, traumatic brain 
injury, injury to the eye (highly significant in this population, with 
thousands of potential injuries), significant body burns, PTSD and 
other mental health consequences of war, including depression and 
suicide risk.
    Second, through genomic medicine VA is uniquely positioned to 
revamp modern health care and to provide progressive and cutting-edge 
care for veterans. VA is the obvious choice to lead advances in genomic 
medicine. It is the largest integrated health system in the world, 
employs an industry-leading electronic health record, and has an 
enrolled treatment population of millions of veterans to sustain 
important research. Innovations in genomic medicine will allow the VA 
to:

      reduce drug trial failure by identifying genetic 
disqualifiers and allowable treatment of eligible populations;
      track genetic susceptibility for disease and develop 
preventative measures;
      predict responses to medications; and
      modify drugs and treatments to match an individual's 
unique genetic structure.

    In 2006, VA launched the Genomic Medicine Program to examine the 
potential of emerging genomic technologies, optimize medical care for 
veterans, and enhance the development of tests and treatments for 
relevant diseases. One of the main objectives of the Genomic Medicine 
Program is to create an expanded DNA sample bio-bank of veteran donors, 
which will be made available for carefully designed research that leads 
to improved treatment while protecting veteran privacy and safety. The 
Independent Budget believes that at least $25 million should be 
directed toward this initiative in FY 2011 to move this program 
forward.

    Question 4: You recommend $300 million to address the research 
infrastructure deficiencies in fiscal year 2011. To clarify, is this 
request reflected in the $52 billion that The Independent Budget 
requests for the medical care accounts in 2011? Do you have alternate 
recommendations for addressing the research infrastructure deficiencies 
without creating a new appropriations account?

    Answer: The research infrastructure recommendation is not included 
in the funding recommendations for the medical care accounts for FY 
2011. The Major Construction account includes a $100 million 
recommendation to address the backlog of research infrastructure needs. 
Additionally, the Minor Construction account includes $200 million for 
research infrastructure needs. As explained in The Independent Budget 
for FY 2011, in recent years, funding for the VA maintenance and 
construction appropriations has failed to provide the resources needed 
by VA to maintain, upgrade, and replace its aging research facilities. 
Consequently many VA facilities have run out of adequate research 
space.
    In the 2003 Draft National Capital Asset Realignment for Enhanced 
Services (CARES) Plan, VA listed $468.6 million designated for new 
laboratory construction, renovation of existing research space, and 
build-out costs for leased research facilities. However, these capital 
improvement projects were omitted from the Secretary's final report on 
capital planning consequential to the CARES effort.
    In FY 2008, the VA Office of Research and Development (ORD) began 
an as yet incomplete examination of all VA research infrastructure, for 
physical condition, capacity for current research, as well as needed 
program growth and sustainability of VA space to conduct research. 
According to an October 26, 2009, VA ORD report to the VA National 
Research Advisory Committee, surveys to date support the pilot 
findings: ``There is a clear need for research infrastructure 
improvements throughout the system, including many that impact on life 
safety.''
    By the end of FY 2009, a total of 53 sites within 47 research 
programs will have been surveyed. Approximately 20 sites remain to be 
assessed in FY 2010. To date, the combined total estimated cost for 
improvements exceeds $570 million. About 44 percent of the estimated 
correction costs constitute ``priority 1'' deficiencies--those with an 
immediate need for correction to return components to normal service or 
operation; stop accelerated deterioration; replace items that are at or 
beyond their useful life; and correct life-safety hazards. Furthermore, 
only six buildings (of 38 buildings surveyed) at five sites were rated 
above the ``poor'' range. Three of the seven buildings rated above 
``poor'' were structures housing the main hospital. Five buildings that 
rated ``poor'' were main hospitals housing laboratories. It is time 
that dedicated resources are provided for research infrastructure 
upgrades to overcome these challenges.
    A significant cause of the VA research infrastructure's neglect is 
that there is no direct funding line, nor any budgetary request made, 
for VA research facilities. The VA Medical and Prosthetic Research 
appropriation also does not contain funding for construction, 
renovation, or maintenance of VA research facilities. If the VA and 
Congress are unwilling to provide dedicated funding in a separate 
account for VA research infrastructure needs, then the Congress must 
ensure that adequate funding is appropriated through the current 
account structure, with particular emphasis on directing that funding 
to research needs.

                                 
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