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[Senate Hearing 114-558]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-558

                     HEARING ON PENDING LEGISLATION

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 15, 2016

                               __________

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                     COMMITTEE ON VETERANS' AFFAIRS

                   Johnny Isakson, Georgia, Chairman
Jerry Moran, Kansas                  Richard Blumenthal, Connecticut, 
John Boozman, Arkansas                   Ranking Member
Dean Heller, Nevada                  Patty Murray, Washington
Bill Cassidy, Louisiana              Bernard Sanders, (I) Vermont
Mike Rounds, South Dakota            Sherrod Brown, Ohio
Thom Tillis, North Carolina          Jon Tester, Montana
Dan Sullivan, Alaska                 Mazie K. Hirono, Hawaii
                                     Joe Manchin III, West Virginia
                       Tom Bowman, Staff Director
                 John Kruse, Democratic Staff Director
                            
                            
                            C O N T E N T S

                              ----------                              

                             March 15, 2016
                                SENATORS

                                                                   Page
Isakson, Hon. Johnny, Chairman, U.S. Senator from Georgia........   1,7
Tester, Hon. Jon, U.S. Senator from Montana......................     6
Tillis, Hon. Thom, U.S. Senator from North Carolina..............     6
Blumenthal, Hon. Richard, Ranking Member, U.S. Senator from 
  Connecticut....................................................     9
Sullivan, Hon. Dan, U.S. Senator from Alaska.....................     9
Cassidy, Hon. Bill, U.S. Senator from Louisiana..................    23
Rounds, Hon. Mike, U.S. Senator from South Dakota................    31
Boozman, Hon. John, U.S. Senator from Arkansas...................    33

                               WITNESSES

Burr, Hon. Richard, U.S. Senator from North Carolina.............     1
    Prepared statement...........................................     4
McDonald, Hon. Robert A., Secretary, U.S. Department of Veterans 
  Affairs, accompanied by: Laura Eskenazi, Executive in Charge 
  and Vice Chairman, Board of Veterans' Appeals; Baligh Yehia, 
  MD, MPP, MSHP, Assistant Deputy Under Secretary for Community 
  Care, Veterans Health Administration; and Meghan Flanz, Deputy 
  General Counsel, Legal Operations and Accountability, Office of 
  General Counsel................................................    10
    Prepared statement...........................................    14
    Response to posthearing questions submitted by:
      Hon. Bill Cassidy..........................................    35
      Hon. Sherrod Brown.........................................    36
      Hon. Mazie K. Hirono.......................................    37
Celli, Louis, Director of Veterans Affairs and Rehabilitation, 
  The American Legion............................................    39
    Prepared statement...........................................    40
Fuentes, Carlos, Senior Legislative Associate, Veterans of 
  Foreign Wars...................................................    44
    Prepared statement...........................................    45
Atizado, Adrian, Assistant National Legislative Director, 
  Disabled American Veterans.....................................    50
    Prepared statement...........................................    51

                                APPENDIX

Daines, Sen. Steve, U.S. Senator from Montana; prepared statement    59
American Federation of Government Employees, AFL-CIO; prepared 
  statement......................................................    59
Porter, Clifton J., II, Senior Vice President of Government 
  Relations, American Health Care Association; letter............    62
American Medical Association; prepared statement.................    65
National Association of State Directors of Veterans Affairs; 
  letter.........................................................    68
Nurses Organization of Veterans Affairs; letter..................    69
Metoxen, Kerry, Manager, Oneida Nation Veterans Department; 
  prepared statement.............................................    69
Stier, Max, President and CEO, Partnership for Public Service; 
  prepared statement.............................................    70
Paralyzed Veterans of America; prepared statement................    75
Senior Executives Association; prepared statement................    80
Weidman, Richard, Executive Director for Policy and Government 
  Affairs, Vietnam Veterans of America; prepared statement.......   104

 
                     HEARING ON PENDING LEGISLATION

                              ----------                              

                        TUESDAY, MARCH 15, 2016

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:16 p.m., in 
room 418, Russell Senate Office Building, Hon. Johnny Isakson 
presiding.
    Present: Senators Isakson, Boozman, Heller, Cassidy, 
Rounds, Tillis, Sullivan, Blumenthal, Brown, Tester, Hirono, 
and Manchin.
    Also present: Senator Burr.

                HON. JOHNNY ISAKSON, CHAIRMAN, 
                   U.S. SENATOR FROM GEORGIA

    Chairman Isakson. I will call this meeting of the Senate 
Veterans' Affairs Committee to order, and at the outset I want 
to thank all the members who are here and the ones that are 
coming for their participation. This is a very important 
hearing, and I want everybody to be here for as much of it as 
they possibly can be. I want to thank the Secretary for 
rearranging his schedule so he can be here for the complete 
hearing and for his testimony as well.
    We are going to go a little bit out of order. I am going to 
recognize Senator Burr in just a second because he is our 
Chairman of the Intelligence Committee. He is doing some 
important intelligence work, and he needs to get back. I am 
going to let him make a few comments on his legislation that he 
has worked on with Senator Tester.
    Afterward, I will make an opening statement, then Senator 
Blumenthal will make an opening statement, then we will go to 
Senator Sullivan and Senator Tester to make brief opening 
statements before Secretary McDonald. That way, everybody who 
has legislation that is to be discussed today will have their 
say and we will all have had a chance to hear it.
    Without further ado, I introduce Senator Burr from North 
Carolina. Welcome.

                STATEMENT OF HON. RICHARD BURR, 
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Burr. Thank you, Mr. Chairman, Ranking Member 
Blumenthal, and to my colleagues on the Committee. I thank you 
for holding this hearing and for providing me the opportunity 
to testify about the Veterans Choice Improvement Act.
    I introduced this legislation with Senator Ayotte, Boozman, 
Crapo, Daines, Hoeven, Moran, and Tillis. It is my 
understanding, Mr. Chairman, as of right now, we have a 
bipartisan agreement, and that means hopefully there is an 
opportunity for this to be marked-up in the context of your 
next markup legislation. It would be helpful if those who 
really are not focused on veterans health care would stand down 
and let us focus on substance in this bill that really does 
focus on the quality of care delivered and the efforts that the 
VA continues to make to provide that care for our veterans.
    In 2014, when I was the Ranking Member of this Committee, 
Congress passed the Veterans Access, Choice, and Accountability 
Act, which created the Veterans Choice Program, to make sure 
our veterans get the health care they need and that they get it 
expeditiously. This legislation was in response to a systemic 
problem throughout the VA health care system that had been 
uncovered in early 2014. We recognized at the time that the 
only way to make certain that veterans got the care they needed 
was to enable them to go to the doctor outside the VA if, in 
fact, they were on a wait list or lived a certain distance from 
a VA facility. I was proud to help author the Veterans Choice 
Program, and I know that program has helped many veterans get 
health care without having to wait or to drive far.
    However, nearly 2 years later, veterans are still 
experiencing serious frustrations and delays in getting health 
care. Just this October a CNN reporter found that appointment 
wait times at the VA were not getting better even after 
billions of dollars flowed into the agency.
    I know every Senator here today is hearing about these 
problems from veterans living in their own States. I certainly 
do, and let me give you an example.
    As recently as last month, Charlotte WBTV reported that a 
veteran named Jim Bancroft had waited more than a year to 
receive a referral from the VA to see a spine specialist. Mr. 
Bancroft was finally given a referral and allowed to see an 
outside specialist. When Mr. Bancroft called to make the second 
appointment, he was told he could not see the doctor because 
the doctor was no longer accepting veterans under the Choice 
Act. Why? Because the VA had continually failed to pay the 
doctor for seeing veterans.
    This is just one example of thousands and why I introduced 
the Veterans Choice Improvement Act. We must fix this, and we 
must get it right for our veterans.
    The first problem that the Veterans Choice Improvement Act 
seeks to fix is the confusing nature of receiving care outside 
of the VA. Currently, the VA offers care to veterans outside of 
the VA through a number of different programs and contracts. 
The laws and regulations that govern these programs differ in 
substantial ways, and this is confusing to the veteran, 
confusing to the doctor, the hospitals, and oftentimes it is 
confusing to the VA itself.
    That is why the Veterans Choice Improvement Act 
consolidates all of these programs into one permanent program, 
the Veterans Choice Program. This program will be the one 
program for veterans to receive care in their community. It is 
designed to be easily understandable by the veterans so that 
they will know when they are eligible to go outside of the VA 
for care.
    The Veterans Choice Improvement Act will also make 
significant reforms to the VA medical claims and reimbursement 
process to make sure that medical providers get paid for the 
services they provide to our Nation's veterans. This, in turn, 
will ensure veterans will be able to get the timely, quality 
health care they have earned.
    In North Carolina, we have already seen hospitals stop 
seeing veterans under the current Veterans Choice Program 
because the VA consistently failed to pay reimbursements for 
hospital services. I know this is a problem in other States as 
well, and that is why we reformed the claims process in this 
bill.
    We have set a standard for how long the VA has to reimburse 
a claim, and if they fail to meet the standard, interest begins 
to accrue on the claim. We require the Secretary to notify 
medical providers of what information a claim must contain for 
a quick reimbursement and also notify providers if that 
information requires changes. We also mandate that the VA 
establish an electronic system to receive medical claims from 
outside providers, but we give the VA until 2019 to put that in 
place. That is more than sufficient time to get it right, even 
for the Federal Government.
    As the Members of this Committee know, the VA has had a 
significant accounting problem as more and more veterans have 
been allowed to receive care outside the VA. In May 2015, the 
VA came to Congress and told us that they may have a funding 
problem but that they were not really sure, so they hired 
outside accounting firms to help them understand what was 
happening.
    Then in late July 2015, the VA came back and informed us 
that they were nearly $3 billion short in their medical 
services account for the fiscal year. The VA also told us that 
unless Congress allowed a reprogramming of funds out of the 
Veterans Choice Act the VA would be forced to close hospitals. 
Congress, of course, allowed for the reprogramming in order to 
keep the VA medical facilities open, but to say that such 
incidences are unacceptable is a gross understatement.
    In the Veterans Choice Improvement Act, we make an effort 
to fix these accounting issues so that the incidences like the 
one I just described do not happen again. The Veterans Choice 
Program will be funded through a single appropriation account, 
and that funding will be provided a year in advance. This 
should help clear up some of the accounting issues and provide 
more transparency for congressional, and for public, oversight.
    Last, Mr. Chairman, I would like to thank Senators Hoeven 
and Manchin for their legislation on provider agreements, which 
is part of this bill. I believe that this will make a real 
difference for veterans who live in rural America. These 
provider agreements will allow the VA to have a standing 
agreement with local doctors and hospitals to provide certain 
medical services to our Nation's veterans. This will alleviate 
the burden on veterans who currently have to travel distances 
for minor medical issues that can easily be addressed closer to 
home.
    There is simply no reason that veterans are driving four 
and 5 hours each way to get a new pair of eyeglasses. I give a 
great deal of credit to Senator Crapo for passionately 
advocating for veterans in Idaho and telling me the story of 
how veterans there were driving three and 4 hours to Salt Lake 
City to get fitted for hearing aids when there is a private 
hospital just down the road that could easily do the same 
thing.
    We can do better for our veterans, and that is why I also 
give the VA credit for requesting this ability and 
acknowledging that this is necessary and will help our Nation's 
veterans.
    I will close by saying this, that the Veterans Choice 
Improvement Act will help veterans across America get the best 
health care we have to offer, and they get it without having to 
wait long or to drive far, regardless of whether they live in 
an urban area or a rural town. This bill will help all.
    Mr. Chairman, I also want to thank Senator Tester. We have 
worked aggressively over the last week to put together a 
bipartisan bill, and I was told before I walked in the door 
that we are there. I am sure he will have an opportunity to 
speak, and he can reconfirm that.
    Our effort is simply this: through the VA and through this 
wonderful medical infrastructure that we have in this country, 
to make sure that veterans receive the highest quality of care. 
This is not an attempt to eliminate or to bypass, it is to put 
together the best health care system that we can provide for 
those who have given of themselves for this country.
    I thank the Chair. I thank the Ranking Member. I thank my 
colleagues.
    [The prepared statement of Senator Burr follows:]
           Prepared Statement of Senator Richard Burr (R-NC)
    Chairman Isakson and Ranking Member Blumenthal, thank you for 
holding this hearing and for providing me with the opportunity to 
testify about the Veterans Choice Improvement Act, which I introduced 
with Senators Ayotte, Boozman, Crapo, Daines, Hoeven, Moran, and 
Tillis. I'd also like to thank Senator Tester for his work on this 
issue as well.
    In 2014, when I was the Ranking Member of this Committee, Congress 
passed the Veterans Access, Choice and Accountability Act, which 
created the Veterans Choice Program to make sure our veterans could get 
the health care they need when they needed it. This legislation was in 
response to the systemic problems throughout the VA health care system 
that had been uncovered in early 2014. We recognized at the time that 
the only way to make certain that veterans got the care they needed was 
to enable them to go to a doctor outside the VA if they were on a 
waitlist or lived far from a VA facility. I was proud to help author 
the Veterans Choice Program, and I know that program has helped many 
veterans get health care without having to wait long or drive far.
    However, nearly two years later, veterans are still experiencing 
serious frustrations and delays in getting health care. Just this 
October, a CNN reporter found that appointment wait times at the VA 
were not getting better, even after billions of dollars flowed into the 
agency. I know every Senator here today is hearing about these problems 
from veterans living in their state. I certainly do. Let me give you an 
example:

          As recently as last month, Charlotte's WBTV reported that a 
        veteran named Jim Bancroft had waited more than a year to 
        receive a referral from the VA to see a spine specialist. Mr. 
        Bancroft was finally given a referral and allowed to see an 
        outside specialist, but when Mr. Bancroft called to make a 
        second appointment, he was told he could not see the doctor 
        because the doctor was no longer accepting veterans under the 
        Choice Act. Why? Because the VA had continually failed to pay 
        the doctor for seeing veterans.

This is just one example of thousands and why I introduced the Veterans 
Choice Improvement Act. We must fix this and get it right for our 
veterans.
    The first problem that the Veterans Choice Improvement Act seeks to 
fix is the confusing nature of receiving care outside of the VA. 
Currently, the VA offers care to veterans outside of the VA through a 
number of different programs and contracts. The laws and regulations 
that govern these programs differ in substantial ways, and this is 
confusing to the veteran, confusing to doctors and hospitals, and 
oftentimes, confusing to the VA itself. That is why the Veterans Choice 
Improvement Act consolidates all of these programs into one permanent 
program, the Veterans Choice Program. This program will be the one 
program for veterans to receive care in their community. It is designed 
to be easily understandable by the veteran so that they will know when 
they are eligible to go outside the VA for care.
    The Veterans Choice Improvement Act will also make significant 
reforms to the VA's medical claims and reimbursement process to make 
sure medical providers get paid for the services they provide to our 
veterans. This, in turn, will ensure veterans will be able to get the 
timely, quality health care they've earned.
    In North Carolina, we have already seen hospitals stop seeing 
veterans under the current Veterans Choice program because the VA has 
consistently failed to reimburse the hospitals for services rendered. I 
know this is a problem in other states as well, and that is why we 
reform the claims reimbursement process in this bill. We have set a 
standard for how long the VA has to reimburse a claim, and if they fail 
to meet that standard, interest begins to accrue on the claim. We 
require the Secretary to notify medical providers of what information a 
claim must contain for quick reimbursement and also notify providers if 
that information requires changes. We also mandate that the VA 
establish an electronic system to receive medical claims from outside 
providers, but we give the VA until 2019 to put it into place. That is 
more than sufficient time to get it right, even for the Federal 
Government.
    As the Members of this Committee know, the VA has had significant 
accounting problems as more and more veterans have been allowed to 
receive care outside the VA. In May 2015, VA came to Congress and told 
us that they may have a funding problem, but that they were not really 
sure, and so they had hired outside accounting firms to help them 
understand what was happening. Then, in late July 2015, the VA came 
back to Congress and informed us that they were nearly $3 billion short 
in their medical services account for that fiscal year. The VA also 
told us that unless Congress allowed for a reprogramming of funds out 
of the Veterans Choice Fund, the VA would be forced to close hospitals. 
Congress, of course, allowed for the reprogramming in order to keep VA 
medical facilities open, but to say that such incidents are 
unacceptable is a gross understatement.
    In the Veterans Choice Improvement Act, we make an effort to fix 
these accounting issues so that incidents like the one I just described 
do not happen again. The Veterans Choice Program will be funded through 
a single appropriations account, and that funding will be provided a 
year in advance. This should help clear up some of the accounting 
issues and provide more transparency for Congressional and public 
oversight.
    Last, I would like to thank Senators Hoeven and Manchin for their 
legislation on provider agreements, which is part of this bill. I 
believe this will make a real difference for veterans who live in rural 
America.
    These provider agreements will allow the VA to have a standing 
agreement with local doctors and hospitals to provide certain medical 
services to veterans. This will alleviate the burden on veterans who 
currently have to travel long distances for minor medical issues that 
can easily be addressed closer to home. There is simply no reason that 
veterans are driving four and five hours each way just to get a new 
pair of eyeglasses. I give a great deal of credit to Senator Crapo for 
passionately advocating for veterans in Idaho and telling me the story 
of how veterans there are driving three and four hours to Salt Lake 
City to get fitted for hearing aids when there is a private hospital 
just down the road that could easily do the same thing. We can do 
better for our veterans, and that is why I also give the VA credit for 
requesting this ability and acknowledging that this is necessary and 
will help veterans.
    I will close by saying that the Veterans Choice Improvement Act 
will help veterans across America get the best health care we have to 
offer, and get it without having to wait long or drive far. Regardless 
of whether they live in an urban center or a rural town, this bill will 
help them. Thank you again for allowing me to testify today.

    Chairman Isakson. Senator Burr, I know you have to go back 
to the Intelligence Committee, but could you let me amend my 
introduction a little bit? I want to go to Senator Tester.
    Before you got here, Senator Tester, I was going to give 
you and Senator Sullivan a chance to make opening statements as 
well, though following me and Senator Blumenthal. But, since 
you are now here, Senator Blumenthal can wait 5 minutes I 
believe, especially since you all worked so hard on this 
agreement.
    I want to tell everybody this is exemplary of the best in 
the U.S. Senate. Ten days ago we had an impasse. I sat down 
with Senator Tester, personally and I sat down with Senator 
Burr. I said, will you all do me a favor? Will you put your 
heads together and see if you can find common ground and make 
this happen? For the record, I want to compliment both of you 
today on doing exactly that.
    With the Ranking Member's indulgence, we will go ahead and 
let Senator Tester make his remarks now.
    Senator Tester.

                 STATEMENT OF HON. JON TESTER, 
                   U.S. SENATOR FROM MONTANA

    Senator Tester. I will be very brief, Mr. Chairman.
    First of all, I want to thank you and I want thank the 
Ranking Member, but particularly you, Mr. Chairman. That is 
leadership, and I appreciate it. You allowed Senator Burr and 
myself the space to be able to get something done. You just did 
not say no. You said, go talk, get it done.
    I think Senator Burr's staff and my staff have worked hard.
    I think you know the problem here and we all know it, 
sitting around this dais; Senator Burr knows this. Choice is 
broken. We have to figure out how to make it work. Our veterans 
are suffering because of it, which is unacceptable. We need to 
make sure that things are done right with the VA not only 
because our veterans deserve it but because we should be 
talking about something else. That program should be done and 
working; we should be talking about the next challenge.
    I want to thank Senator Burr, in particular, for his good 
work and look forward to finding a path to get this across the 
finish line and on to the President's desk, so we can really 
make some things happen.

       HON. THOM TILLIS, U.S. SENATOR FROM NORTH CAROLINA

    Senator Tillis. Mr. Chairman?
    Chairman Isakson. Yes.
    Senator Tillis. May I just thank the senior Senator from 
North Carolina for coming up here and fighting for veterans? He 
is actually in a contested primary today. Votes are going on, 
and he is up here, which I appreciate.
    Chairman Isakson. We all appreciate the job both you and 
Senator Tester have done. Thank you for your commitment. Now, 
go back to the Committee on Intelligence and keep us safe.
    Senator Burr. Thank you, Mr. Chairman.
    Chairman Isakson. Now, I am going to make my opening 
remarks. Then I am going to turn it over to Senator Blumenthal. 
Then, Senator Sullivan, you will be recognized to make yours. I 
think you knew that was coming.
    Senator Sullivan. Yes, sir, Mr. Chairman. Thank you.

      OPENING STATEMENT OF HON. JOHNNY ISAKSON, CHAIRMAN, 
                   U.S. SENATOR FROM GEORGIA

    Chairman Isakson. Secretary McDonald, thank you again for 
being here and changing your schedule so you could go through 
this.
    I want to thank the Ranking Member. Over the last month we 
have had three conversations by phone as things have progressed 
in our effort to try to find a way to do accountability in the 
Veterans Administration, to do caregivers in the Veterans 
Administration, to fix the Choice Program in the Veterans 
Administration, and to speed up the consideration of claims and 
appeals in the Veterans Administration.
    We have all had lots of different ideas, and we have had 
places where we could find an impasse. But, we have tried 
through communication to find ways to find common ground, and 
we are on the cusp--we are not there yet, but we are on the 
cusp--of being able to bring to the floor of the U.S. Senate a 
major comprehensive omnibus veterans bill, get it passed 
through the Senate, get it to the House, find out where, if any 
place, we are going to have disagreements, and then get it to 
the President's desk for signature.
    I have had the privilege of knowing Denis McDonough since 
he became Chief of Staff, and I have taken the liberty of 
including him in discussions over the past 3 or 4 weeks and 
talked to him as late as this morning about where we were.
    Our goal is to have an omnibus bill that this Committee, 
Democrat and Republican alike, agrees to, and to get it to the 
leaders so they can get a Rule 14 to the floor of the Senate. 
Then, we can have action on the floor of the Senate before we 
get too far in the year, certainly so we can, by Memorial Day, 
have a signing ceremony somewhere to let our veterans know we 
do want accountability in the VA. Do want Choice to work, we 
want caregivers providing care to those injured prior to 9/11/
2001 to have the same benefits as those afterwards, and all 
other things that we have worked upon. We are close to getting 
there.
    I want to thank every Member of the Committee for their 
help and their input.
    Now we will not get everything in the omnibus bill, but we 
will get a lot of things we never thought we could have. We 
will include a lot of the things Secretary McDonald has asked 
for, which he knows because we have been meeting on a private 
basis--Senator Blumenthal, myself, the Ranking Member in the 
House, and the Chairman in the House--to see to it we come up 
with a good bill.
    We have our differences still, but patently we want to make 
sure that we send the signal to the American people and the 
American media that accountability at the VA is now something 
that is meaningful.
    Every morning when I wake up and I turn on my television in 
my condominium or at home, and the first story is about a 
veteran who did not get an appointment or a veteran who passed 
away or a mental health patient who got an answering machine 
rather than a person on the hotline. It grieves my heart 
because I know every day of the 314,000 employees in veterans 
health care 99.9 percent of them are doing a terrific job and 
those stories are not representative. Because they are 
sensational, because they can make the news, they continue to 
perpetuate an image that is not true of the VA.
    I think if we have an accountability provision which we are 
going to talk about today and I know the Secretary is going to 
talk about it in his remarks, we can send the signal to the 
American people that we are giving the Secretary the ability to 
hire and the ability to terminate and the ability to appeal but 
in the way you would want to have an accountable organization.
    I believe that all the SES employees should be under Title 
38 and should have the right to be hired by the Secretary, and 
the Secretary should have the right to discipline them, and if 
he disciplines them or fires them they should have the right of 
an appeal, but it ought to be to the Secretary.
    The Merit Systems Protection Board has its place, and there 
are lots of places I think it works well, but I think one of 
the things we have tried to do is see to it when it comes to 
SES employees and Title 38 that we have the Secretary have the 
ability to hire and the Secretary the ability to fire.
    Now I am not one that likes to fire people. I want to go on 
the record as saying, I ran a company for 30 years; the hardest 
thing I ever did was terminate people, but from time to time 
you have to.
    But, oftentimes, the fact that termination is a possibility 
if you do not perform, you set an atmosphere in an organization 
where everybody works hard and pulls together. I know that is 
what Bob McDonald wants in the VA, and I know that is what he 
is going to deliver.
    I am proud that Senator Patty Murray has worked so hard 
with me. I am sorry she is not here for me to brag about her to 
her face, but she has brought this caregivers bill to the point 
where we now can incorporate it.
    We have a lot of things on veterans appeals that we want to 
incorporate. Senator Blumenthal, Senator Moran, and other 
Senators on the Committee have done lots of things that will be 
included in the omnibus bill.
    With the good Lord willing and the creek don't rise, by the 
time we return in the first of April, we will have an omnibus 
bill ready for everybody to sign off on; we will begin to move 
it forward to the Senate floor in process. Then, we will be 
able to go home to our communities on Memorial Day and say that 
we brought about accountability in the Veterans Administration. 
Employees that should shine are shining and those that need 
more inspiration will have that inspiration, and Bob McDonald 
will have the authority to run the agency as the Secretary 
should have.
    That is our goal today. I am very proud of what we have 
today, and I hope I do not--knock on wood--spoil our progress 
so far.
    I thank the Ranking Member again for his cooperation, his 
leadership, and his advice on how we get from where we were to 
where we want to be.
    Now I will introduce Senator Blumenthal.

  STATEMENT OF HON. RICHARD BLUMENTHAL, RANKING MEMBER, U.S. 
                    SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thank you, Mr. Chairman, and thank you 
for your kind words but, most importantly, for your leadership, 
your vision, and your determination to reach this breakthrough 
moment. It really is a breakthrough moment for the Veterans 
Choice Program and for health care provided by the VA.
    It is a moment. It is a good step, a very positive way 
forward, a path that ought to be pursued. There will be a lot 
more after today to be done, and we are near the finish line. I 
hope that we can cross it.
    In the meantime I want to thank you for your very 
collaborative and bipartisan leadership, which has emphasized 
the importance of good ideas regardless of who has them.
    It is the same spirit that our military men and women have 
when they go into serve and sacrifice for our country. It is 
the same attitude that they have when they seek health care. 
They do not care about party labels or partisanship.
    It is the same attitude that the dedicated doctors and 
other health care providers in the VA have when they meet those 
health care needs. What we need to do is partly enable and 
empower them, and partly get out of their way, but at the same 
time hold them accountable. We are absolutely unified in the 
view that accountability has to be improved, and we are simply 
seeking the best way to do it consistently with fairness and 
due process.
    I am indebted to everyone on this Committee for their role. 
Every Member of this Committee has played a role in reaching 
this point. Everyone seated here today has been a participant 
in the efforts to consolidate all of the community programs 
that include the Veterans Choice Program, in seeking to speed 
and improve the appeals of disability claims, in enforcing 
accountability, and raising the standards and performance of 
the caregivers' aid to families and others who provide care to 
our veterans.
    I am hopeful that we will meet that timetable. I believe we 
can.
    I continue to look forward to working together. I know we 
will. Again, I want to thank you for your leadership.
    Chairman Isakson. Thank you very much, Senator Blumenthal.
    Senator Sullivan, you are recognized for up to 5 minutes, 
but not more.

            OPENING STATEMENT OF HON. DAN SULLIVAN, 
                    U.S. SENATOR FROM ALASKA

    Senator Sullivan. Thank you, Mr. Chairman. I will try and 
keep it within that timeframe.
    I want to thank you and Ranking Member Blumenthal and 
fellow Members of the Committee for the opportunity to discuss 
my bill, Senate Bill 2473, the Express Appeals Act of 2016.
    Mr. Chairman, Secretary McDonald, we have all heard the 
statistics. The Veterans Benefits Administration will have 11 
to 12 percent of the claims decisions that they make will be 
generally appealed, and that is not surprising.
    What is surprising I believe to many of us, and also 
unacceptable, is the wait time that we have seen for the VA to 
resolve an appeal. On average, nearly 1,000 days, almost 3 
years. I think creating a less bureaucratic system is something 
that we all agree on.
    What Senate Bill 2473 does is it directs the VA to carry 
out a 5-year pilot program that will provide an option for 
veterans to use an express appeal procedure referred to as the 
Fully Developed Appeal Process. It is completely voluntary. It 
empowers veterans to make their own case to obtain an expedited 
result to their appeal. Importantly, what we think we should be 
looking for is that it should be a fast lane not to know but a 
fast lane to fix our appeals process.
    I want to thank my colleagues, in particular those on the 
Committee--Senators Tester, Heller, Moran, plus Senator Casey, 
and Co-Chairs of the Senate VA Backlog Working Group--and some 
of the service organizations that are supportive of my bill 
like Disabled American Veterans, for their staunch support and 
advocacy.
    Mr. Secretary, we do want to work together. As you know, I 
have raised this issue a number of times. We are getting a 
little bit of mixed signals. I think there was support from the 
VBA on the House version of this bill. My understanding your 
testimony now is there might not be support because it does not 
go far enough.
    Well, trust me, I am all ears on suggestions from the VA to 
go further so we can get your support, but I think all of us 
agree that having the option of a Fully Developed Express 
Appeals is something that we should be working on together.
    I am very interested in working with you and working with 
the Committee to make sure that this is something the VA does 
support. I am a little confused on whether you do or do not 
support it at this juncture and if there are suggestions from 
the VA experts to make this go further in terms of express 
appeals. I believe the Committee and my staff are all ears.
    Thank you again, Mr. Chairman.
    Chairman Isakson. Thank you very much.
    It is now my privilege to introduce Secretary McDonald, who 
is accompanied by Ms. Meghan Flanz; Dr. Baligh Yehia, we are 
glad to have you back again; and Ms. Laura Eskenazi?
    Secretary McDonald. It is Eskenazi.
    Chairman Isakson. I did pretty well.
    Secretary McDonald. You did very well.
    Ms. Eskenazi. Not bad.
    Chairman Isakson. Mr. Secretary, the microphone is yours, 
and you can take as much time as you want to consume.

     STATEMENT OF HON. ROBERT A. MCDONALD, SECRETARY, U.S. 
DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY LAURA ESKENAZI, 
   EXECUTIVE IN CHARGE AND VICE CHAIRMAN, BOARD OF VETERANS' 
   APPEALS; DR. BALIGH YEHIA, ASSISTANT DEPUTY SECRETARY FOR 
  COMMUNITY CARE, VETERANS HEALTH ADMINISTRATION; AND MEGHAN 
      FLANZ, DEPUTY GENERAL COUNSEL, LEGAL OPERATIONS AND 
           ACCOUNTABILITY, OFFICE OF GENERAL COUNSEL

    Secretary McDonald. Thank you, Chairman Isakson, Ranking 
Member Blumenthal, and Members of the Committee. Thanks for 
this time to discuss VA's legislative priorities for veterans.
    I ask that my written statement be submitted for the 
record.
    Chairman Isakson. Without objection.
    Secretary McDonald. Thank you, sir.
    Over these three decades in the private sector, I learned 
firsthand what it takes to make a high performance 
organization. Our team of talented business and health care 
professionals are well equipped with the advanced business 
skills necessary to build the high performance organization 
veterans deserve and taxpayers also expect.
    That is what our five MyVA transformation strategies are 
about: modernizing the VA; improving the veteran experience; 
improving the employee experience; improving internal support 
services; establishing a culture of continuous improvement, and 
expanding strategic partnerships. That is also what our 12 
Breakthrough Priorities for 2016 are about.
    We appreciate your time in January, helping us shape these 
priorities. That goal is within our reach, we believe, and we 
are as committed to giving veterans a high performing 
organization as we are convinced that we can get there with 
your help.
    But, as I have testified, important priorities for 
transformational changes require congressional action, and our 
window of opportunity will not be open indefinitely. More than 
100 legislative proposals in the President's 2017 budget and 
2018 advance appropriations request for VA require 
congressional action. Over 40 of these are new this year, and 
some are absolutely critical to maintaining our ability to 
purchase non-VA care.
    I would like to focus on seven priorities for veterans.
    One, modernizing VA's purchase care authorities. We need 
your help to modernize and clarify VA's purchase care 
authorities, and we appreciate the legislation introduced to 
address this issue. Above all else I address today, this needs 
to get done; and it can be done in this Congress, to ensure a 
strong foundation for veterans access to Community Care.
    We need to be able to contract with providers on an 
individual basis in communities where veterans are served 
without forcing those who want to serve veterans to meet 
excessive and unnecessary bureaucratic standards. This proposal 
is about maintaining veterans access to timely Community Care 
everywhere in the country. We provided detailed legislation 
addressing this change 10 months ago, and I have been 
consistent and vocal in identifying it as a top priority.
    Number 2, streamlining Care in the Community. To best serve 
veterans, we need your help streamlining VA's Care in the 
Community systems and programs. Last October we submitted our 
plan to consolidate and simplify the overwhelming number of 
varying programs and improve access to Care in the Community.
    My written statement sets out a number of ways to improve 
those programs right now. I will highlight three:

    First, make VA the primary payer to give providers faster 
and more accurate payments.
    Second, allow VA to obligate funding at the time of 
payment. This small change can make a huge difference in 
efficiently using the resources Congress provides.
    Third, provide funding flexibility so all Care in the 
Community comes from one single account.

    Now we do have some significant concerns with the Veterans 
Choice Improvement Act of 2016 as currently written. I address 
these concerns in detail in my written submission, but four are 
particular troublesome. I think we may have already worked 
through those four. I have to catch up with Senator Tester and 
Senator Burr because these are fast-breaking changes.
    Here were our four concerns of the original act:

    First, the proposed limitations on networks compromised the 
great potential for veterans that the network model represents. 
We have discussed this with Senator Tester and Senator Burr. We 
think they understand this. We think the changes are being 
made, but we have not seen their next round of work.
    Second, the proposed extension to Project ARCH until August 
2019 is both unnecessary and financially unsound.
    Third, the legislation does not afford the rate flexibility 
necessary to respond to local market conditions.
    Fourth, the proposed 90-day timeline between establishing 
presumptions and providing compensation is an unrealistic 
expectation that will not serve veterans well.

    These discussions are ongoing, as I said. I am sure we are 
making progress as we go forward and coming to a consensus 
point of view. We look forward to helping ensure the 
legislation is exactly right for veterans.
    Number 3, the appeals reform. The statutory appeals process 
is archaic. It is not serving veterans well. Last year the 
board was still adjudicating an appeal that originated 25 years 
ago and had been decided more than 27 times. It is simply 
inappropriate that only 2 percent of veteran claimants are 
creating 45 percent of the appeals.
    Let me say that again. Only 2 percent of veteran claimants 
are creating 45 percent of the appeals.
    What we all learned in the military was you put the needs 
of the organization above yourself. This is not happening.
    Nearly 74 percent of appeals are from veterans who are 
already receiving VA disability. In fact, 12 percent of 
veterans with a pending appeal are already receiving benefits 
at the 100 percent disability rate.
    The proposed express appeals act is a good start. It is a 
good start, but as written it does not achieve the fundamental 
reform we need to achieve in order to fix this broken process 
that is over 80 years old and to improve the veteran 
experience.
    The fiscal year 2017 budget proposes a simplified, 
streamlined, and fair appeals process. In 5 years, veterans 
could have appeals resolved within 1 year of filing.
    Last week we spent three solid days working hard with 
Veterans Service Organizations, members of the VA, members of 
your staffs, shaping a genuine reform. I want to thank our 
Veterans Service Organizations, the National Association of 
State Directors of Veterans Affairs, the National Association 
of County Veteran Service Officers, for rolling up their 
sleeves with us. We have another meeting beginning later this 
week on Thursday, and we are going to continue to drive toward 
a consensus point of view.
    We welcome the Committee staff also who have come to hear 
about this and participate with us firsthand.
    It is a work in process. We are keeping at it. Why do we 
need to keep at it? Because failure to take full advantage of 
this rare opportunity for sweeping change in the appeals 
process fails veterans.
    Number 4, VHA personnel authorities. We compete with the 
private sector for talent, especially in health care. We are 
proposing flexibility on the 80-hour pay period maximum for 
certain medical professionals and compensation reforms for 
network and hospital directors. The 80-hour restriction does 
not give VA the industry standard 12-hour shifts that can 
improve hospital operations and attract the best staff who 
prefer flexible schedules. That is one reason that when Sloan 
Gibson came on board, then I came on board, we found VA had so 
many outsourced emergency room departments.
    Likewise, we need to treat health care career executives 
more like their private sector counterparts. We would like to 
expand the Title 38 hiring authority to VHA senior executive-
level medical center directors, VISN directors, and other 
health care executive leadership positions. These employees 
could be hired more quickly with flexible salary ranges 
competitive with the private sector, and they would operate 
under accountability policies comparable to those of the 
physicians and dentists that they lead.
    Number 5, budget flexibility. We have to be more responsive 
to veterans emerging needs. We are asking for measured 
flexibility to overcome artificial funding restrictions on 
veterans care and benefits. The budget proposes a general 
transfer authority for up to 2 percent of discretionary funding 
across accounts, including medical care.
    Number 6, West Los Angeles legislation. To get positive 
results for homeless veterans in great need, we are asking 
Congress to pass special legislation for our West Los Angeles 
Campus where years of debate and court action have been 
unproductive. We now have a community-agreed master plan for 
the campus to build housing for about 1,200 homeless and 
vulnerable veterans. Developers are ready to put spades in the 
ground and begin construction. We are waiting on the 
legislation.
    Number 7, construction and leasing. Finally, I will 
reiterate priorities for leases and construction. We need 
congressional authorization for 18 leases submitted in VA's 
2015 and 2016 budget requests. These will make a big difference 
in expanding access to care for veterans in Florida, Alabama, 
Georgia, South Carolina, North Carolina, Virginia, 
Massachusetts, Maine, Michigan, Colorado, Montana, and 
California. We need authorization for eight major construction 
projects included in VA's 2016 request and the six additional 
replacement major medical facility leases in the 2017 budget.
    These are only a few of the many opportunities for 
transformational change. This Congress, with today's VA 
leadership team, can make these changes and more for veterans. 
Then we can all look back on this year and look at this year as 
a turnaround for the Department of Veterans Affairs.
    On behalf of veterans and VA employees serving them every 
single day, I would like to thank this Committee and the 
Chairman and Ranking Member for their bipartisan leadership in 
getting this done.
    I look forward to your questions, sir.
    [The prepared statement of Secretary McDonald follows:]
       Prepared Statement of Hon. Robert A. McDonald, Secretary, 
                  U.S. Department of Veterans Affairs
    Good afternoon, Chairman Isakson, Ranking Member Blumenthal, and 
Distinguished Members of the Senate Veterans' Affairs Committee. 
Accompanying me today are Dr. Baligh Yehia, Assistant Deputy Under 
Secretary for Community Care, Veterans Health Administration, Ms. Laura 
Eskenazi, Executive-in-Charge and Vice Chairman, Board of Veterans 
Appeals, and Ms. Meghan Flanz, Deputy General Counsel, Legal Operations 
and Accountability, Office of General Counsel.
    Thank you for the opportunity to come before you today to discuss 
the Department's legislative priorities. I know the Committee is 
working to move an ``omnibus'' measure which will address many of the 
immediate needs of the Department of Veterans Affairs in serving 
Veterans.
    Our pressing needs are items that we have outlined in letters to 
the Committee, in previous testimony, and in countless meetings with 
the Committee and Members staffs, which support the MyVA Breakthrough 
Priorities. Some of these critical needs are addressed in bills you are 
considering in today's hearing, but we'd like to work with you on the 
particular language to ensure that, as enacted, the language will have 
the desired effect of helping the Department best serve Veterans.
    I believe it is critical for Veterans that we all work together and 
gain consensus on a way forward for these legislative proposals that 
will provide VA with the tools necessary to deliver care and benefits 
at the level expected by Congress, the American public, and deserved by 
Veterans.
                     improve care in the community
    We need your help, as discussed on many occasions, to overhaul our 
Care in the Community programs. Our Plan to Consolidate Programs of 
Department of Veterans Affairs to Improve Access to Care (the Plan) as 
required by Title IV of Public Law 114-41, the VA Budget and Choice 
Improvement Act, was delivered on October 30, 2015.
    Determining the details of a program that could replace the current 
and temporary Veterans Choice program enacted in August 2014 will 
require close study and collaboration with Veterans, Veterans Service 
Organizations (VSO), the Congress and other stakeholders and experts.
    That is why VA staff and subject matter experts have communicated 
regularly with Committee and Member staffs to further discuss concepts 
and specific concerns. While we know further discussions are required 
to get us to a fully streamlined program, we have identified components 
of the plan that could be enacted now and would improve Veterans 
experiences' with, and VA's performance under, the existing Veterans 
Choice Program.
    We believe that together we can accomplish the necessary 
legislative changes to streamline the overwhelming number of varying 
Care in the Community programs before the end of this session of 
Congress. Many of the concepts are addressed in some way by two of the 
bills on your agenda today--S. 2646, the Veterans Choice Improvement 
Act of 2016, and S. 2633, the Improving Veterans Access to Care in the 
Community Act.
                          provider agreements
    Both bills encompass aspects of VA's most urgent legislative 
priority, addressing deficiencies in VA's general non-VA care 
authorities outside of the Veterans Choice program. VA's May 1, 2015, 
proposed Department of Veterans Affairs Purchased Health Care 
Streamlining and Modernization Act, would most ideally clarify VA's 
ability to form agreements with providers in the community on an 
individual basis that are not subject to certain provisions of law 
governing Federal contracts, so that providers are treated similarly to 
providers in the Medicare program. Put simply, this would allow VA to 
contract with providers on an individual basis in the community, 
without pulling in all of the requirements usually attached to Federal 
procurement.
    VA's proposal accomplishes this through ``Veterans Care 
Agreements,'' or VCAs. VCAs would be used only when care directly from 
VA or from a non-VA provider with a FAR-based agreement in place is not 
feasibly available. Already, we have seen certain nursing homes not 
renew their contracts with VA because of the excessive compliance 
burdens, and as a result, Veterans are forced to find new nursing home 
facilities for residence. VA sent proposed legislation to Congress to 
address this issue more than 10 months ago, and the problems, I assure 
you, are not getting better with time. We again urge Congress to come 
together on legislation to address deficiencies in VA's basic 
purchasing authorities outside of the Veterans Choice Program.
    VA believes the omnibus legislation the Committee moves forward 
with should reflect the approach to Veterans Care Agreements in 
S. 2633, due to its application of employment nondiscrimination and 
equal employment laws to VCAs and its inclusion of corresponding 
reforms for State Veterans Homes, which were requested in VA's May 1, 
2015 legislative proposal. We have concerns about whether Veterans Care 
Agreements would be subject to the more restrictive criteria and rates 
that would be applicable to care furnished under the Choice program in 
S. 2646.
    VA also supports and strongly recommends inclusion in any omnibus 
bill, the following other elements of S. 2633:

     Allowing use of the Veterans Choice Fund for all non-VA 
care programs, allowing VA to use the funding as was intended without 
strict limitations;
     Increasing the accuracy of funding by recording Community 
Care obligations at payment;
     Streamlining Community Care funding by adapting the 
current model used for funding VA's Consolidated Mail Outpatient 
Pharmacies and applying it to payment for community care;
     Aligning with best practices on the collection of health 
insurance information;
     Promoting timely payments to non-VA providers by 
formalizing alignment with current industry guidelines established by 
States;
     Allowing VA to serve as primary payer for care, subject to 
resourcing concerns, under the current Veterans Choice program, which 
will result in a less cumbersome billing process which has been a 
source of frustration for Veterans and a barrier to effective 
implementation of Veterans Choice;
     Making Veterans currently enrolled in ARCH eligible for 
Choice, ensuring that these Veterans have minimum disruption in care 
during the necessary process to streamline overlapping and duplicative 
programs; and,
     Requiring VA to be treated as a ``participating provider'' 
for reimbursement for non-service-connected outpatient care.

    VA has significant concerns on the following provisions within 
S. 2646, and urges the Committee to exclude them from any omnibus 
legislation designed to help VA serve Veterans:

     Imposing severe limitations on tiered networks are a 
serious concern, as that concept is a central element in the Plan. 
Tiered networks are essential to enhance VA's coordination of care, 
allow better oversight of providers, help ensure Veteran satisfaction, 
as well as ensure VA's teaching and training mission that is a key part 
of training for the Nation's health care system as a whole is 
maintained;
     Extension of the pilot program known as Project ARCH for 
three years, until August 7, 2019, is inconsistent with the fundamental 
aim of the Plan, especially when the bill also deems Veterans enrolled 
in project ARCH as eligible for Veterans Choice. While providers prefer 
ARCH due to a higher reimbursement rate than other care in the 
Community programs, VA has an obligation to be responsible with 
taxpayer dollars. This can be done by enrolling ARCH eligible Veterans 
in the Choice program;
     Limiting flexibility on rates, restricting VA's ability to 
pay rate differentials when necessary in certain markets; and,
     Imposing a 90-day timeframe between the date VA 
establishes a presumption and then provides compensation for certain 
illnesses and conditions is an unachievable timeline. VA would not be 
able to identify all entitled individuals within the first 90 days 
following establishment of the presumptive. Even with the establishment 
of a presumptive condition, many claims still require additional 
development, including verification of the requisite conditions of 
service and medical examinations to determine the level of disability.
                  overhaul the claims appeals process
    In any omnibus legislation that may move forward, Veterans need 
legislation that sets out structural reforms at VA that will allow the 
Veterans Benefits Administration (VBA) and the Board of Veterans 
Appeals to provide Veterans with the timely, fair, and quality appeals 
decisions they deserve, thereby addressing the growing inventory of 
appeals. In the Committee's hearing on VA's Fiscal Year 2017 Budget, I 
noted we had already begun preliminary informal discussions on VA 
proposals with the Committee and Members and their staffs, as well as 
VSOs. Those conversations have continued, and we invited the 
Committee's staff to join us and the VSOs for a working meeting last 
week. Those collaborations need to continue until we can identify what 
is best for Veterans and taxpayers.
    The 2017 Budget proposes a Simplified Appeals Process--legislation 
and resources (i.e., people, process, and technology) that would 
provide Veterans with a simple, fair, and streamlined appeals process 
in which the vast majority would receive a final decision on their 
appeal within one year from filing the appeal by FY 2021.
    For this hearing, the Committee has identified a bill, S. 2473, the 
Express Appeals Act, which would establish a pilot program for what are 
called Fully Developed Appeals (FDA), which would limit new evidence 
filed after the point of appeal through a voluntary program. VA has 
supported the FDA pilot in the past, but at this point, we believe the 
growing appeals challenge requires much more widespread reform that 
will address all future appeals, not just the voluntary participants 
that may elect the FDA pilot.
    S. 2473 will not reduce the pending appeals inventory and will not 
significantly address the future appeals inventory. As a pilot for 
voluntary participants, we believe it does too little to streamline the 
VA appeals process for all veterans, or to provide an improved 
experience for all Veterans. The current VA appeals process is lengthy, 
complex, confusing, and frustrating for Veterans. All Veterans, not 
just those who elect to participate in an optional FDA pilot program, 
deserve an efficient, transparent, and streamlined appeals experience. 
The FDA pilot program in its current form is not enough to change the 
current broken VA appeals system. True comprehensive legislative reform 
that is as ambitious as that presented in the President's 2017 Budget 
is required.
    Without legislative change, VA will face a soaring appeals 
inventory, and Veterans will wait even longer for a decision on their 
appeal. Last week VA led an encouraging and intensive three-day appeals 
summit with VSOs and veterans advocacy groups on the topic of appeals 
reform, looking at the entire system, including the period prior to 
filing an appeal. The group is committed to continuing the momentum 
from those intensive discussions to further refine a new appeals 
framework. We were very pleased that Committee staff joined the group 
near the end of the session to gain first-hand observations from 
Veteran advocates and VA representatives as to the progress made in 
those three days. We would like to collaborate with the Committee as 
those discussions progress. We do know if the status quo remains, 
Congress would need to provide resources for VA to more than double its 
appeals FTE. The prospect of such a dramatic increase, while ignoring 
the need for structural reform, is not a good result for Veterans or 
taxpayers.
             accountability for va senior executive leaders
    VA understands the desire for an omnibus bill to contain language 
enhancing provisions to hold senior executives accountable. We remain 
supportive of continued dialog with the Committee on how best to 
accomplish this, but believe that the discussions should include the 
full description of accountability, rather than just its use in 
shorthand as ``firing people.''
    If we define ``accountability'' only in the narrower way--in terms 
of the number of employees we remove from their jobs serving Veterans--
then success on the accountability front means failure in our core 
mission, service to Veterans. Overemphasis on punitive measures 
prevents us from recruiting and retaining the best and brightest 
employees to serve Veterans. I am not interested in a definition of 
success that requires us to decimate our workforce, rob the VA of the 
senior executive talent it needs to serve Veterans, and, ultimately, to 
close our doors.
    We continue to approach employee discipline with a commitment to do 
what is right and necessary to rebuild Veterans' trust in VA programs 
and services. Through the MyVA initiative, we are transforming the 
Department, and in turn, we need to be able to treat VA career 
executives more like their private-sector counterparts. We need to have 
the ability to compete for top talent--through flexibility in hiring 
authorities, compensation, and other tools--and not drive them away 
through a focus on firing people.
    The draft language submitted to you was not the Department's, nor 
the Administration's, proposal. It was an idea brought up due to 
internal collaborative discussions, which are fostered as part of the 
MyVA culture, and was sent to the Committee for discussion purposes.
    However, it is important to consider the second and third order 
effects of this and other proposals, and how they could impact the 
long-term health of the Department. In considering these consequences, 
and our overall goal of providing the tools needed for VA to transform 
the Department into a Veteran-centric organization, we have identified 
a series of new provisions that we recommend. These new provisions were 
the subject of a joint briefing to your committee staffs at the end of 
last week.
    Under the revised construct, we would expand the Title 38 hiring 
authority that currently exists for physicians and dentists to VHA 
Senior Executive level Medical Center Directors, VISN Directors, and 
other health care executive leadership positions. Under this system, 
employees in these senior healthcare positions would be hired more 
quickly, have flexible salary ranges to compete with the private 
sector, and be subject to disciplinary processes comparable to those 
now applicable to VA physicians and dentists, where appeals on 
disciplinary actions are adjudicated by the VA Secretary as opposed to 
the Merit Systems Protection Board (MSPB).
    For those remaining Senior Executives elsewhere in the VA who are 
not hired under Title 38, we would propose changes which we believe 
will better align the MSPB appeal process with VA's ongoing 
transformational efforts. These changes include requiring MSPB to apply 
an evidentiary standard that affords greater deference to the VA 
Secretary's decisions to remove or demote VA Senior Executives based on 
misconduct or poor performance. Changes discussed would also authorize 
the Presidentially-appointed MSPB board members, rather than lower-
level administrative judges, to decide VA executives' appeals. In 
addition, VA would take a number of actions under its existing 
authorities to drive strong performance management and accountability 
practices.
    To be clear--accountability alone will not solve all VA's problems, 
nor will it enhance our ability to serve Veterans. Reforms to VA's 
personnel system must come alongside similar legislative reforms, 
discussed here, which provide VA with the necessary authority to 
operate in a way that best serves Veterans.
                                leasing
    Another priority that needs to be included in any legislation 
moving forward is authorization of 18 major medical leases: in Florida 
(actually three leases), Michigan, Alabama, Colorado, Virginia, 
Massachusetts, Montana, California, Georgia, Maine, South Carolina and 
North Carolina. We ask Congress to act soon on construction and leasing 
authorization legislation, which will make a big difference in 
expanding access to care for Veterans in those States.
          special legislation for va's west los angeles campus
    Any omnibus package moving forward needs to incorporate requested 
legislation to provide the enhanced use leasing authority necessary to 
implement the Master Plan for our West Los Angeles Campus. That plan 
represents a significant and positive step for Veterans in the Greater 
West Los Angeles area, especially those who are most in need. We 
appreciate the Committee's hearing in December 2015, on legislation to 
implement that Master Plan, and urge your support for expedited 
consideration of this bill to secure enactment of it in this session of 
Congress. Enactment of the legislation will allow us to move forward 
and get positive results for the area's Veterans after years of debate 
in the community and court action. The bill proposed would reflect the 
settlement of that litigation, and truly be a win-win for Veterans and 
the community. The Master Plan increases the campus utilization by 
1,200 beds, but we can't start work until the EUL legislation is 
passed. I believe this is a game-changing piece of legislation as it 
highlights the opportunities that are possible when VA works in 
partnership with the community.
                improvement of vha personnel authorities
    VA has also presented its own proposals that can help make VA more 
competitive in attracting top-tier clinical and health care management 
professionals. As I continue to get letters from Members of this 
Committee and your colleagues urging us to hire a facility or VISN 
director overseeing their district more quickly, you are aware that 
recruitment continues to be a challenge. Given that ongoing challenge, 
we have requested special pay authority for VA Medical Center and 
Veterans Integrated Service Network (VISN) Directors to help VA recruit 
and retain the best talent possible in hospital system management. We 
appreciate the Committee's inclusion of this provision in S. 425, the 
Veterans Homeless Programs, Caregiver Services, and Other Improvements 
Act of 2015, and urge its inclusion in any omnibus proposal. As one 
technical note, VA would request the language in section 412 of S. 425 
include ``is not less than'' in place of ``does not exceed.''
    The 2016 Budget included a proposal to end an 80-hour biweekly work 
period requirement that is simply not appropriate nor efficient for 
many medical professionals, and out of step with health care in the 
private sector. Enactment will both improve the efficiency of hospital 
operations and improve VA's ability to recruit and retain critical 
professionals. We appreciate SVAC's inclusion of this provision in 
S. 425. Again, we urge you to include this provision in any legislative 
vehicle moving forward.
    Mr. Chairman, I appreciate your dedication to serving our Nation's 
Veterans, as well as that of the Ranking Member, and all the Members of 
the Committee. I believe with continued collaboration and partnership 
we can deliver the improvements that Veterans deserve.
    And as I have said before, there are things Congress can include 
now in legislation that will significantly impact the way VA serves 
Veterans:

     Provider Agreement Authority as written in VA drafted 
legislation or S 2633,
     Elimination of 80-hour work period requirement
     Flexibility around compensation for Medical Center and 
VISN directors
     Enhanced Use Authority for West LA Campus
     Fundamental reform of the Appeals process as set in 
statute
     Streamlining of care in the community, including 
provisions outlined above from S. 2633, which will help us achieve the 
goal of streamlining various overlapping programs to make things 
clearer for employees, for Veterans, and for their families.

    Thank you for the opportunity to appear before you today and for 
your continued steadfast support of Veterans. We look forward to your 
questions.

    Chairman Isakson. Thank you very much, Mr. Secretary.
    I want to start, if I can, on the accountability issue, 
which is the linchpin of everything we want to try to do and a 
lot of the things you just mentioned in your seven priorities 
are, in part or in whole, being dealt with if I am not 
mistaken. In fact, I think after you meet with Senator Burr and 
Senator Tester, most of the things that you mentioned you 
wanted to be sure were included are, in fact, included that you 
wanted.
    Secretary McDonald. Yes, sir, and we stand ready to work 
with your staff to go over and make sure everything is 
included.
    Chairman Isakson. West Los Angeles, I think without 
exception, is supported by the Committee in terms of getting 
that done.
    Secretary McDonald. Yes, sir.
    Chairman Isakson. Senator Feinstein has been a trooper on 
that, and I appreciate the effort that you have made.
    The accountability piece is kind of the linchpin for me, 
and I have harped on it the most, and you know that from the 
meetings that we talked about. I had some prepared remarks in 
my opening statements, where I was going to quote you and you 
could quote me, about some of the things we have said leading 
up to this hearing about accountability, but I did not do that 
because we are at a point where I really think we can move 
forward.
    I know Ms. Flanz is here, and you were in the meeting we 
had last time with the Secretary at his office, if I am not 
mistaken.
    Ms. Flanz. Yes, sir.
    Chairman Isakson. Legal counsel has been involved as well.
    I believe the American people expect, and I believe that 
the veterans of America expect, there to be an accountability 
mechanization that they understand. What happened in 
Philadelphia and what happened with the Merit Systems 
Protection Board overturning your action in those two 
situations sent a terrible signal across the country and 
misrepresented, in my judgment, what really goes on at the VA. 
Nonetheless, it was the story that was undeniable, that they 
had been overturned and that you did not have the ability to 
really discipline as you should and hold them accountable.
    On the same token, you need and deserve the flexibility 
that you asked for in terms of VHA personnel flexibility, the 
80-hour rule, the emergency room problems, finding the right 
help that you need to give our veterans health care, and that 
goes hand in hand with accountability. We need to be 
accountable to you to give you the tools you need to bring in 
the right people.
    You need to be accountable to us and, more importantly, to 
the veterans of the United States of America. If we have a bad 
egg in the senior executive leadership of the Veterans 
Administration, we are going to correct that egg and get a good 
egg in that place. They are going to get a fair hearing; they 
are going to get a right to appeal. It is going to fall back to 
you, and they are going to know that the buck stops at your 
desk, which is where it should, and any future Secretary as it 
should.
    That was not a question; that was a statement. But, that is 
my hope, that you will work with us in trying to make the 
language work in terms of accountability so that all the other 
things we want to do can come along and follow along behind it.
    Secretary McDonald. I think we are very close, Mr. 
Chairman, and if you like, I can describe where I think we are.
    Chairman Isakson. I would like to hear from you.
    Secretary McDonald. Sure. I think we are very close. I 
think we have achieved alignment that all of the individuals in 
the medical professional in the VA should be under Title 38. 
That was the intent of the Title 38 law. Today, we have medical 
center directors that you know are not Title 38, and as a 
result they are paid less than half what they would be in the 
private sector.
    Title 38 gives us the ability to hire directly, which will 
speed up the hiring process and make us competitive with the 
private sector. We have had a number of instances where we have 
tried to hire someone, but because of the length of time it 
took us to clear all of the red tape necessary they were 
scarfed away by some other for-profit medical system.
    Also, Title 38 will allow us to pay more competitively and 
recruit more competitively.
    Then, separately, what we have talked about is taking the 
Title 5 individuals who are not part of the health care system 
and changing the methodology of the process for disciplinary 
action and appeals, recognizing that in our opinion the Merit 
Systems Protection Board did not understand or did not get to 
execute the intention of Congress in the Choice Act. The way I 
look at this is, how do we improve the Choice Act?
    I will ask Meghan, if I may, to comment on that.
    Ms. Flanz. Thank you.
    What we are contemplating is amending the Choice Act 
Expedited SES Appeal Process to give the Merit Systems 
Protection Board the clarity in terms of what its obligations 
are to carry out the Secretary's accountability actions under 
that Act. We believe that there was perhaps greater adherence 
to Merit Systems Protection Board (MSPB) precedent less 
appropriate deference to the Secretary's actions in the cases 
that we have had so far. What we are contemplating is greater 
clarity around the rules that apply to the non-health care 
executives at the Department.
    Chairman Isakson. There was no deference in the 
Philadelphia case to the Secretary's authority in terms of what 
I saw, and that is what really magnified this particular issue. 
I know your proposal is to kind of bifurcate the SES employees 
from the medical employees to the other, I think you called 
them, Title 5. Is that right?
    Secretary McDonald. Yes, sir.
    Chairman Isakson. We will talk about that, but in the 
meantime that bone of contention we have got to work out 
because I want you to have the ability to hire and bring in the 
people that you need and also hold them accountable in a 
fashion that is fair but not so deliberate that you end up 
being neutered in your ability to lead and discipline the 
Department.
    Secretary McDonald. I want that as well, Mr. Chairman. The 
issue that we face is because of the restrictions in the Choice 
Act. The judges in the MSPB, I think if they were here to 
defend themselves, they would say the 21-day limit and the fact 
that they could not provide any remediated punishment. As a 
result, we think the changes that we will make will add greater 
clarity and give more weight to the Secretary's interest in the 
process.
    Chairman Isakson. I am not going to take any more time 
because I have talked already too much today except to say I 
think ultimate accountability to you as the best authority, as 
the leader. Those SES employees, I think there are 434 of them 
in the Agency if I am not mistaken.
    Secretary McDonald. Yes, sir.
    Chairman Isakson. That is the heart and soul of the 
discipline and the attitude and the MyVA program that you put 
together, which I do not want compromised in any way 
whatsoever.
    Senator Blumenthal.
    Senator Blumenthal. Thank you, Mr. Chairman.
    I want to focus on the appeals process. Assuming there is 
the reform that we are contemplating and the budget envisions, 
how quickly would it be implemented?
    Secretary McDonald. I will maybe ask Laura to comment on 
the details, but because of the difficulty and the changes 
required, we have put forward a plan where we would actually 
use extra people right now to brute-force some action on the 
appeals while putting in place the structure of the new plan, 
which would take a number of years to put in place.
    Ms. Eskenazi. Certainly. Thank you.
    Yes. Whether it is the Express Appeal Act or another form 
such as we have been discussing with the VSOs recently, what we 
are talking about is kind of a twofold process. We have the 
current inventory in the Department of approximately 445,000 
appeals, and we do not intend on changing the laws in which 
they were filed. That will require resources.
    For new appeals, though, we are hoping to not have them be 
prisoners of that current dense process and to put something in 
place that will, over time, lead to a sustainable, efficient 
process for all veterans.
    Senator Blumenthal. In Connecticut, as you know, just to 
take one example, appeals are currently on hold because of the 
shift of resources to the initial filings of disability claims. 
Now what I hear you saying is that you would move resources 
back to consider those appeals immediately. Is that correct?
    Ms. Eskenazi. In the local field offices I know that VBA 
this year is putting a great deal of effort on appeals, and 
they are working on some reallocations in the 2016 budget to 
really address those pending appeals. That is ongoing now.
    What we know is that to really address the large inventory 
across the Department we do have a need for increased 
resources, as reflected in the President's budget. We are also 
looking for a system of laws, a legal framework that is not so 
costly but yet provides something that is efficient, timely, 
and fair and transparent for veterans.
    Senator Blumenthal. My question goes not only to the 
reforms that have to be achieved. We are all in agreement that 
there needs to be streamlining and resources over the long 
term. But, what will be done right now and immediately, 
considering that those appeals are pending?
    The Secretary may be correct that some of them are 
receiving disability benefits right now, but they do not 
receive, potentially, all they deserve. So, what can we do 
immediately?
    Secretary McDonald. In our 2017 budget proposal and in the 
2016 budget proposal, we had put in place some requests for 
more headcount, for more people. We need those people. 
Unfortunately, given the system the way it is, the law the way 
it is, we need people. It is people, and if we can get those 
people, we can start to drive it down.
    We would be irresponsible if we did not tell you that 
adding more people is not the answer. With this law, we are 
going to have over two million appeals in a very short period 
of time, and that is just unacceptable. We have got to change 
the law.
    Senator Blumenthal. What you are saying is that in the 
short term more resources and more people will help stem the 
rising tide, but over the long haul there have to be changes in 
the law and the process.
    Secretary McDonald. Yes, sir, and the sooner the better. 
That is why we are trying to drive this working group to a 
consensus or at least a majority within the next couple of 
weeks so we can meet your and the Chairman's deadline.
    Senator Blumenthal. Are you satisfied, and can you commit 
to us that this plan will not just shift back to the initial 
claims process that huge backlog because of lack of resources 
there?
    Secretary McDonald. Yes, I am happy to commit to that.
    Laura?
    Ms. Eskenazi. What I can tell is one of the features of the 
current inventory and the inability to work it down in a timely 
fashion is we have a situation where the claims process is very 
entangled with the appeals process. We are looking at new ideas 
where we can segment claims from appeals, allow those appeals 
to move forward to a timely decision that preserves fairness, 
and also get those claims' new material handled in the claims 
stream.
    Senator Blumenthal. I appreciate those commitments. I think 
they are tremendously important because I think the credibility 
and faith in the VA really hinge on addressing this issue 
effectively. Even as health care is addressed through 
legislation, through accountability, and consolidating 
Community Care programs, this disability claims process is a--I 
am tempted to say--festering wound that really needs to be not 
just Band-aided but solved.
    Secretary McDonald. We could not agree with you more. This 
has been the elephant in the room for a long time. We have 
joined arms, and we have said, no longer. It cannot go on like 
this. It is not fair. It is not fair to veterans.
    Senator Blumenthal. It is not fair to veterans, and it is 
not fair to a lot of the dedicated men and women who work at 
the VA because their reputations are tarnished by a system that 
simply is not working.
    It has been, I agree, the elephant in the room, more like 
the tiger in the room that is dangerous to not only veterans, 
who cannot get the justice--it really is a matter of simple 
justice that they deserve and need--but also to the VA itself.
    Thank you.
    Chairman Isakson. I want to thank Senator Blumenthal for 
raising that question, and I am going to fudge a little bit and 
just ask an amplification if I can.
    Senator Sullivan, your proposal on appeals is a pilot 
program. Is that not correct?
    Senator Sullivan. That is correct, Mr. Chairman.
    Chairman Isakson. It is predicated on concessions the 
veteran makes in order to expedite the appeal. Is that correct?
    Senator Sullivan. That is correct and eliminates a number 
of standard elements that are normally in the appeal to bring 
down the timeline of the appeal.
    Chairman Isakson. Mr. Secretary, the Agency's adversity to 
that recommendation is that it is not a total fix. Is that 
correct?
    Secretary McDonald. Mr. Chairman, I would not even use the 
word that we are against it because we worked very hard with 
the Disabled American Veterans and others on that program when 
we thought that that was all we could get. I now think we can 
get more if we are willing to take a more aggressive stance 
than the pilot program would allow.
    The pilot program, in and of itself, is a good idea. I 
thought it was a good idea at the time. But, we are talking 
about an effect that is a relatively small effect relative to 
the 440,000 appeals that we have.
    What we would like to come up with is a law which would 
have a greater impact on those 440,000, but I am not opposed to 
that bill. I just think we can get more, and I think the time 
is right for us to get more.
    Chairman Isakson. I want to enforce the Tester-Burr Rule, 
and that is where there are differences there can be common 
ground. If you work with Senator Sullivan as we expedite the 
consideration of what we can do, maybe you can come up with 
that before we have the legislation done.
    Secretary McDonald. No question, we can do that.
    Chairman Isakson. If not, I see no problem at all in 
putting in what Senator Sullivan has talked about and you 
replacing it somewhere else down the line. I think we have got 
such a good template, what Senator Tester and Senator Burr have 
done, and this is such a big, big problem that it is important 
for us to do that.
    This is a humorous interlude, and I apologize for the time. 
My staff has been participating in some of those meetings you 
all have had over at the Agency, discussing appeals. I know you 
have had some of these charts on the wall, where you have been 
discussing different ways to solve the problem. On each one of 
these charts, there was an elephant being shot by somebody. 
[Laughter.]
    I was so afraid that was a partisan statement, but it is 
not. It is the elephant in----
    Secretary McDonald. Sir, I am sorry. We have to learn to 
strike that from our vocabulary, but in business we often say 
``the elephant in the room'' or ``the elephant on the table,'' 
and it is a business term. It has nothing to do with political 
parties.
    Senator Blumenthal. I think it is unfair to the elephants. 
[Laughter.]
    Chairman Isakson. I am sure we can work with Senator 
Sullivan on this.
    Senator Blumenthal. I would join, or offer to join, Senator 
Sullivan in working on this issue because I understand your 
position that a more streamlined, fair, efficient process is 
necessary for all veterans as soon as possible. Senator 
Sullivan's approach may make sense for a large body of those 
veterans, and maybe we can combine the two approaches.
    Chairman Isakson. My apologies for the interlude, but I 
think that was an important exchange.
    Secretary McDonald. You were just demonstrating how we in 
the VA now are applying tried and true business processes to 
the business of government.
    Chairman Isakson. Absolutely.
    Secretary McDonald. That is what you showed. That is 
process-mapping. That is what we are teaching. Lean Six Sigma, 
human-centered design is what we are teaching people in the VA.
    Chairman Isakson. It is the road to a solution; there is no 
question about it.
    Senator Cassidy.

         HON. BILL CASSIDY, U.S. SENATOR FROM LOUISIANA

    Senator Cassidy. Apropos of that what you just said, 
Secretary, there are going to be some amendments being advanced 
further about accountability. On page five of your testimony 
you speak about, implicitly, that you do not want to fire 
people, if we define accountability only in the narrow way, in 
terms of the number of employees removed from their jobs, et 
cetera.
    I am just curious. How many employees does the VA have?
    Secretary McDonald. If you include part-time employees, we 
have over 350,000.
    Senator Cassidy. How many have been fired in the last year?
    Secretary McDonald. Since I have been Secretary, we have 
had over 2,600 terminations.
    Senator Cassidy. That percent would be?
    Secretary McDonald. I did not include in that retirements, 
which would be another over 700.
    Senator Cassidy. One of the things that concerns us is, for 
example, I think the woman who headed the scandal at the 
Phoenix VA was allowed to retire with her bonus and two of the 
others who were collaborators have been still on the payroll, 
still working. We have seen the people who, frankly, acted out 
of venality in Philadelphia--I do not remember quite the 
details except it is just reprehensible what they did, and they 
are still on the payroll.
    I cannot believe in the private sector there would be such 
a reluctance to hold those who were venal and incompetent 
accountable to the degree that they would be let go.
    I have to dispute a little bit. You say decimate. By 
definition, that means 1 out of 10 is killed. It is hard for me 
to think that of those 300,000 employees, 30,000 would be venal 
and incompetent. I have to think it is a very small minority.
    Please explain to me. If it is really a small minority--we 
are frustrated. We have people who clearly are venal, who are 
allowed to stay employed, who are rude to veterans when they 
show up, who are allowed to stay employed.
    We are interested in accountability, and I am not sure I 
would characterize the ability to let go some as going to 
intimidate the rest. That implies that the rest are similarly 
ill-suited for employment. It has been my experience that it is 
about 1 percent that are bad and the 99 percent that are good 
and are tainted by those who are bad.
    Just kind of elaborate on that, please.
    Secretary McDonald. As I said, since I have been Secretary, 
we have terminated over 2,600 people. That does not include 
roughly 700-plus that have retired or done something else. As 
you know, in several instances where we have proposed 
disciplinary action, the individual has chosen to retire.
    You can try to pass a law to claw back a retirement benefit 
from someone, but my experience in the private sector is that 
will be unconstitutional and that will be decided, and that is 
what the case law says.
    I think the important point here is that the changes we are 
talking about in the new Title 38/Title 5 changes approach 
would end up with a different result, in my opinion, for Sharon 
Helman, the lady at Phoenix that you are describing. What 
happened in that case was the MSPB thought our evidence and our 
case for her mismanagement was not strong enough, and as a 
result she was terminated for accepting money from someone 
else. Let's use that as a test and see.
    Let me ask our attorney. Under the changes that we are 
proposing for Title 5, wouldn't the evidentiary standard be 
different and wouldn't the MSPB arrive at a different decision?
    Ms. Flanz. The evidentiary standard that we are proposing 
would, in fact, be more deferential to the Secretary's action, 
and it would be our hope that in that case we would have been 
able to sustain all of the charges. I will point out that with 
the case itself we did prevail and she was, in fact, terminated 
based on other misconduct.
    Senator Cassidy. And her two collaborators?
    Secretary McDonald. They are still employed, but we are 
very close to taking action with respect to them.
    Senator Cassidy. What about the folks in Philly who 
manipulated things so they were getting moving expenses and 
others--you know the details better than I.
    Ms. Flanz. Sure. That individual was returned to her 
position as a result of the judge finding that the charges were 
sustained, the action taken was based on sufficient evidence, 
but that under the circumstances, according to the judge, the 
penalty was unreasonable.
    Another part of our proposal is to provide greater clarity 
to judges around their authority to impose their own judgment 
with respect to a penalty. What we would propose is that the 
judge is to defer to the agency action unless the penalty 
imposed is beyond the tolerable bounds of reasonableness. That 
is a term of art that judges understand means that they are to 
defer to the agency penalty unless there is something simply 
untenable about it, it was imposed for improper reasons, or 
what have you.
    Senator Cassidy. Bottom line, would she have been able to 
be terminated?
    Ms. Flanz. We are talking about the Philadelphia 
individual?
    Senator Cassidy. Philly.
    Ms. Flanz. Well, the Secretary's proposal in that respect 
was actually not to terminate her. Based on the facts of the 
case and the evidence of that case, the proposal or the action 
taken was to demote rather than remove, and we did sustain the 
charges. To answer your question directly, the penalty, we 
would hope, would have been deferred to in that case.
    Senator Cassidy. OK.
    Secretary McDonald. What we are trying to do is take the 
Choice Act that had these provisions that the judges have found 
constraining and modify it just like we are in the Community 
Care discussion. Modify it so we can deal with what has 
happened, what we have learned from this MSPB action.
    Senator Cassidy. It may only be tangentially related, and I 
do not know the details well enough to pursue it further. But, 
as I recall, the person in Philadelphia actually lied and 
manipulated circumstances so that she could be reimbursed to 
her own advantage but to the disadvantage of the system.
    I guess my other question is: Why wouldn't she be 
terminated if that is how I remember?
    Secretary McDonald. What you remember is some of the 
reporting in the media. Sloan Gibson, the Deputy Secretary, who 
was the deciding authority on the punishment, he went through 
all the case file, and it was his opinion--and I obviously 
trust his opinion--that she should be demoted rather than 
terminated, that he did not find where she actually broke the 
law. But, what he did find is poor judgment, poor management 
judgment, and he thought demotion was more appropriate, and 
that is what the judge sustained.
    Senator Cassidy. I yield back. Thank you.
    Chairman Isakson. Senator Tester.
    Senator Tester. Thank you, Mr. Chairman.
    Thank you for being here, Mr. Secretary, and your team.
    When I spoke previously, there were a lot of people to 
thank, and there is somebody that I forgot to thank, and I 
think it is important that I do, and that is the Ranking 
Member. Senator Blumenthal has been great in the negotiations. 
His staff has been incredibly helpful, especially on the 
provider agreement stuff.
    We want to give you the due you deserve and thank you for 
that.
    Mr. Secretary, I want to talk about provider agreements and 
spending flexibility because I think a failure to act on those 
things in a timely manner would ensure that the changes you 
need to make to the Choice program would not be implemented. I 
want you to either confirm or deny that.
    Secretary McDonald. That is true, sir.
    Senator Tester. For those who believe that we are simply 
working to make the Choice Act permanently, could you explain 
how the ``Jon-Richard'' Bill would actually allow us to move 
well beyond Choice and to put in a framework that actually will 
work for our veterans?
    Secretary McDonald. I think as I understand the bill--and, 
of course, we have not caught up with the most recent version--
--
    Senator Tester. Yes, right.
    Secretary McDonald [continuing]. That you and Senator Burr 
have been working. We know from the work that you have done on 
your bill that this idea of setting up this optimal network of 
medical providers for veterans will ensure our veterans get the 
very best care possible.
    Having one set of standards for payment will allow us to 
compete equally across the thing versus what we have today. 
Whereas, you and I know some of our programs are richer for 
providers and some are actually less fulfilling for providers, 
and cause the provider to propose one program versus another.
    Third, being able to be the primary payer allows us the 
ability to pay our bills more on time, allows us the ability to 
account for those payments more on time. It means the bills 
will be paid within 30 days as we have committed to do by the 
end of the year.
    Baligh, is there anything else you want to add to my 
explanation?
    Dr. Yehia. No. I think that is great.
    Senator, you had it right; there are some things that we 
need today to make the Choice program work today, this year, 
and then build the foundation for the future. I think the way 
that we are having this discussion of what has to occur this 
session and then how do we lay the foundation is the right 
framework.
    Senator Tester. OK. Thank you.
    Mr. Secretary, you were in front of Appropriations last 
week. You heard Senator Murkowski and others talk about 
consolidation of Community Care. Their skepticism was the same 
as mine initially, by the way, because frontier States like 
Alaska, like Montana, and others need flexibility to deliver 
that care.
    Just explain to me how consolidating Community Care would 
actually give States, frontier States like mine and Alaska, the 
flexibility that we need and that we had before Choice to 
ensure that veterans receive the care that they need?
    Secretary McDonald. We would work hard to make sure that we 
got into the network that I talked about the Alaska Native 
Health System, for example, where there are very outstanding 
providers. In fact, the Southern Foundation we are working on 
and trying to get more residencies in Alaska.
    In Montana, we would make sure we had the very best 
providers in the network so it would be very easy and very 
quick for a veteran to go to them.
    Dr. Yehia. I think there are two provisions in there 
specifically: The provider agreements which will allow us to 
work with individual providers that may not be part of a large 
national contracted network, that is critical. And, the ability 
to, as best as possible, try to link to Medicare but 
understanding in the frontier States that we might have to pay 
a different rate in order to get providers to work with us or 
for some specialties. So, building in the consistency as best 
as possible while allowing for flexibility in those locales.
    Senator Tester. OK. Thank you.
    Montana is one of the few States, I think Maine is another 
one, that serves veterans under Project ARCH. Project ARCH, for 
the most part, has been pretty well accepted. Can you tell me 
why we should not indefinitely just extend the life of that 
program and why it makes more sense to incorporate that program 
into consolidated Community Care?
    Secretary McDonald. We have also learned a lot about ARCH. 
If we were to simply extend ARCH, none of us would like the 
cost or the scoring because ARCH, while it was a good program, 
does not necessarily differentiate between the urban and the 
rural areas in the way the reimbursement costs go, and as a 
result the cost could be astronomical.
    I think what you have done in your legislation and what we 
have tried to advise is to put the best components of ARCH in 
the legislation but leave those that would raise the cost to an 
astronomical figure out.
    Senator Tester. OK. One last thing and then I will shut it 
down, Mr. Chairman, and that is every once in a while you get 
to feel good about stuff we do in this body. This is one of 
those moments where my staff, Burr's staff, the Secretary's 
staff, both of your staffs have helped us, get to a point where 
we have got something that we think is acceptable.
    To be honest with you, we have not accomplished one thing 
yet. Hopefully, with the leadership of the two people to my 
left we can get this thing done and over. Then, hopefully, get 
the House's concurrence or some manner --if they do some work 
over there, if they are ever in--and get it to the President's 
desk.
    I say that because, you know, we have got a lot of veterans 
who are sitting in the audience today that represent a ton of 
veterans across this country, and we all know that Choice is 
not doing it. We are all getting the letters. We are all 
getting the e-mails. We are all getting the phone calls. We are 
all getting stopped on the street. The quicker we can get this 
fixed the better it is going to be for the country.
    Thank you, Mr. Chairman.
    Chairman Isakson. Let me just say--and Richard can answer 
too--the Ranking Member and I are committed to seeing that we 
bring this home, and we would like to bring it home heavy, not 
light. We are not going to let a difference of opinion on one 
issue thwart us from the overall goal, which is to include the 
big things that we have talked about. I appreciate your 
comments, and I remain committed to doing exactly that. Our 
veterans, on Memorial Day, deserve a new VA set of standards 
and the hope of accountability that is meaningful and real.
    Senator Blumenthal. I agree with the Chairman completely. 
Compromise is not a four-letter word, and we ought to be ready 
to move forward with your incredibly important leadership.
    Thank you, Senator Tester.
    We will strike from the record the words ``if they are ever 
in,'' referring to the House of Representatives. [Laughter.]
    Secretary McDonald. Ranking Member Blumenthal, in defense 
of Chairman Miller, I have spoken with him. I called him the 
day he announced his retirement, and we all agreed that this is 
the moment in time that we need to get something big done. So, 
I can tell you that Chairman Miller and Ranking Member Brown 
are on board as well.
    Senator Blumenthal. Thank you.
    Chairman Isakson. We have one example already, the Denver 
hospital. I mean, they said we could not get that done a year 
ago. We brought it home and got it done, and the House came 
along, too. We can do it twice in one Congress, I am convinced.
    Senator Sullivan.
    Senator Sullivan. Thank you, Mr. Chairman.
    I appreciate your comments, Mr. Secretary, Ranking Member 
Blumenthal, on the whole idea of getting together soon and 
really hashing out some of the issues that relate to appeals. I 
think there is widespread agreement that this is a big issue, 
an important issue. We do not want it to be the next 
problematic issue. We want to be able to preempt it.
    Mr. Secretary, I will take you up on your offer. Senator 
Blumenthal, I will certainly take you up on that offer and look 
forward to working with all of you.
    In terms of kind of trying to look at the parameters that 
we are talking about, you mentioned the bill that I and a 
number of Members on the Committee have introduced, that it is 
a good start; it does not go far enough. I am fine with that, 
especially if you guys want to be more ambitious, and more 
creative and effective in terms of the problem we are trying to 
solve.
    Let me ask a basic threshold question. Is your concern that 
because it is a pilot program, it is going to only impact a 
certain number of veterans; therefore, it is not really 
covering the broader category of all veterans? Or, is it the 
substance itself, that it is not creating enough efficiencies, 
enough reforms in the process?
    Those are two different things, right? It is either not 
covering enough. Because it is a pilot program, by definition, 
it is not covering. Sometimes we do that here, though, because 
we want to see if something works. Or, is it that the reforms 
are not ambitious enough? Or, a combination of both.
    Secretary McDonald. Again, I do not want to disparage the 
bill or the work that you have done with the Disabled American 
Veterans and others because I do think it is outstanding work 
and it has led to this new approach, which may be considered 
more aggressive.
    I would add one more thing to it. It is voluntary.
    Senator Sullivan. Right.
    Secretary McDonald. Which, the two things you mentioned add 
to it: it is voluntary; and it will take some time to do.
    I think there is an opportunity to do even more, faster, 
but again, I think that program is the basis of what we have 
done.
    Laura, do you want to make any more specific comments?
    Ms. Eskenazi. Certainly. Thank you.
    We started working with the VSOs on this concept 2 years 
ago.
    Senator Sullivan. Yeah.
    Ms. Eskenazi. Certainly one of the limitations is that it 
is voluntary, and we always knew that. We always knew that it 
was not going to be the silver bullet, but it would sort of 
show--it would sort of model out perhaps other changes that 
could be taken.
    One of the things that has happened in the past year, 
working under our Secretary and our Deputy Secretary, is we 
were charged this year when we were putting together our budget 
request to kind of come up with a requirement for appeals. One 
of the things that appeals has never had is any sort of 
timeframe.
    Senator Sullivan. Yeah.
    Ms. Eskenazi. Not that it is all about time. Fairness is 
certainly paramount. But in doing so, that is when we saw the 
stark picture that the Secretary has presented in other 
hearings, that if we continue on this path we are not going to 
be sitting on 450,000 appeals.
    Senator Sullivan. Right.
    Ms. Eskenazi. We will be sitting on over two million.
    Senator Sullivan. No. It is the bulge, right? I mean, it is 
a real----
    Ms. Eskenazi. That was sort of the shock factor.
    Senator Sullivan. Yeah.
    Ms. Eskenazi. Which caused us to take a different look not 
just at amending what we currently have but sort of putting it 
aside, focusing on the attributes that veterans are looking 
for--timeliness, fairness, transparency--and looking to design 
a new type of an appeals process.
    Senator Sullivan. Good. Well, again, we look forward to 
working with you and the service organizations because I know 
they have been very, very involved in this as well.
    You know, Mr. Chairman, we are talking about 
accountability.
    Mr. Secretary, I want to go back to a topic that I know you 
are very focused on, we have all been very focused on, and you 
see it manifest itself in different ways. The issue I have 
raised a number of times is with payments to the providers. 
That is a problem.
    That has been a problem, as we have talked about, where the 
veteran himself or herself gets stuck with the bill because the 
VA goes after them--or the provider goes after them because 
they are not getting paid. It is also a huge issue for the 
providers.
    I was just informed of an Alaska group, outstanding health 
care group. Actually, it is a consortium with some of the 
groups you were just talking about, South Central and others, 
where they are now experiencing up to 180 days of nonpayment. I 
was just informed of this a couple days ago--half a million 
dollars of nonpayment. I would like to actually provide you and 
others specifically with their case so you can address that.
    More broadly, you are saying 30 days. I think that is music 
to everybody's ears. Making sure that the veteran does not get 
caught in the middle, as we have talked about, and get, 
perhaps, his credit ruined and things like that.
    How do we get there when I already have constituents 
informing me that it sounds like it is getting worse on 
provider payment, not better?
    If this is going to be an accountability bill, do we need 
to take legislative action in conjunction with you so you can 
make that commitment about 30-day payments to our providers?
    I think we start addressing a lot of the problems out there 
if we can really strongly not only commit to that but make it 
happen. How do we do that?
    Secretary McDonald. There are a number of things that we 
have done in the short term. Number 1, we no longer require the 
paperwork before we make the payment. We have gone to the best 
practice of the private sector, where we now will pay when the 
service is done, at least a good portion of it. We did that 
about a week ago. I think it was about a week ago we made that 
change. Already you are going to start seeing the backlog of 
bills dropping as the payments are made.
    Senator Sullivan. OK.
    Secretary McDonald. Second, we instituted a crisis credit 
hotline for veterans----
    Senator Sullivan. Right.
    Secretary McDonald [continuing]. So that no veteran's 
credit could be affected by this.
    Again, these steps are steps we can take. We are taking 
them quickly to try to get this alleviated.
    The important thing is we built this bill so that we 
eliminate this issue altogether. We become the primary 
provider, the primary payer.
    Why don't you go ahead and describe the details?
    Dr. Yehia. Sure. Thank you, Senator. We would love to get 
those names.
    We actually have a team that goes out and works with those. 
When we sit down with providers we hear all of them want to 
serve veterans. That is without question. I mean, we always 
hear that.
    One of the things that we learn is that they have a lot of 
things on their books that we will never pay because we are not 
allowed to pay by law, and that is the whole idea of getting to 
one way of paying care. For example, in emergency room care, in 
some circumstances we are the primary payer; in other 
circumstances we are the payer of last resort, and we only pay 
a certain portion, but they think we are going to pay 100 
percent of the bill. Getting to one system that makes sense 
will make sure that folks know exactly what they get to pay.
    Then the next piece is: How do we pay timely and 
accurately? There are, in both versions of the Choice 
consolidation bill, good things in there that I think will help 
us get to a system where we can pay timely and accurately.
    I would divide them into two things. One is, we have to 
make the system less complex, become the primary payer, and the 
other one is to get the technology and the system in place so 
we can pay timely and accurately.
    Senator Sullivan. OK. Thank you, Mr. Chairman.
    Chairman Isakson. Thank you, Senator Sullivan.
    Senator Rounds.

        HON. MIKE ROUNDS, U.S. SENATOR FROM SOUTH DAKOTA

    Senator Rounds. Thank you, Mr. Chairman. Let me just begin 
by saying thank you to you and the Ranking Member for the work 
that you are doing. I think it always makes all of us feel good 
when we are working on a bill which is not partisan in nature, 
and I think we have a lot better chance of getting something 
done when it is done on a bipartisan fashion.
    Secretary McDonald, there seems to me to be a lot of 
confusion about the differences between the terms ``co-pay'' 
and ``deductibles'' when referencing out-of-pocket payments 
made by veterans under the Choice program. The way I read the 
current law private providers are only allowed to charge 
veterans co-pays equal to what the VA would charge at one of 
your facilities, which is a good thing.
    This is not true for deductibles, however, and as a result 
veterans under the Choice are being charged deductibles by 
providers in accordance with their private insurance policies 
when seeking care for nonservice-connected disabilities. These 
deductibles could be in terms of thousands of dollars.
    Section 1729 of Title 38, meanwhile, forbids the VA from 
collecting deductibles for nonservice-connected disability care 
at VA facilities.
    Last week, I introduced a bill to eliminate this 
discrepancy. It makes the VA the primary payer under the 
Choice, as you suggested, and I am very pleased to hear that, 
and it directs the VA to pay for deductibles just like it would 
if the veteran received the care at a VA facility.
    Can you comment on how the VA would treat deductibles for 
veterans with private insurance under these bills currently 
before us today?
    Dr. Yehia. Thank you for that question, Senator.
    The way that the Choice law currently is, is that we are 
the secondary payer for nonservice-connected care and if they 
have another form of health insurance they have to first bill 
outside health insurance, then bill VA. As a result, some 
veterans will have to pay two co-payments--one to the VA and 
one to their outside health insurance. We do not want that, and 
we agree with you of helping us become the primary payer.
    I think our goal, too, is to make sure that there is parity 
between internal VA care and external VA care. When it comes to 
hospital care or medical services, if a veteran has to pay a 
co-payment in the VA, it should be the same outside. If they do 
not have to pay a co-payment in the VA, it should be the same 
outside. What we are hoping to do is to create an even playing 
field so if this is how they behave when they see a VA doctor 
it should be the same way in the community.
    Senator Rounds. OK. Let me just clarify this because there 
are two parts. There is co-pay, and there are deductibles. Are 
you excluding co-pay from your discussion, or are you including 
co-pay as being something which the VA should pick up?
    Dr. Yehia. First of all, only a small segment of the 
population has a co-payment. Usually, it is a set----
    Senator Rounds. Co-pay or deductible?
    Dr. Yehia. Co-payment. Co-pay. Category seven and eight. 
So, if you are getting seen for an----
    Secretary McDonald. Category 7.
    Dr. Yehia. Category 7 and 8.
    Senator Rounds. OK.
    Dr. Yehia. Thank you.
    Secretary McDonald. Category 7s and 8s.
    Dr. Yehia. If you are getting seen for an outpatient visit, 
you might have--I do not know what the exact number is, but you 
will have a certain amount that you have to pay. If you go in 
the community, we want it to be exactly the same, not higher, 
not lower, not different.
    If you do not have a co-payment at all, in the community it 
should be the same. You should not be required to pay anything.
    This is actually how traditional VA care worked before 
Choice.
    Senator Rounds. Now I want you to use the term 
``deductible'' if you mean deductible because there is a 
difference between deductible and co-pay. Someone outside of 
the VA receiving services outside of the VA will have a 
deductible, and then they will have a co-pay under their 
insurance company. OK?
    What we are finding right now is that even if you go in as 
the primary provider, and if they are at a VA facility today, 
there is no deductible for the services being provided. But, if 
they are outside of a VA facility, before a co-pay starts, 
there is a deductible under an insurance policy plan. First 
dollar, or it could be thousands of dollars.
    Dr. Yehia. Yeah.
    Senator Rounds. If you want it equal to the services being 
provided inside of a VA facility versus outside of a VA 
facility, what I am proposing under our proposed legislation is 
that the deductible will also become the responsibility of the 
primary provider, which is the VA.
    Are you in agreement that the deductible should be paid by 
the VA rather than the veteran?
    Dr. Yehia. When we become the primary payer, the whole idea 
of a deductible, I think, is less of an issue. I do not think 
it really becomes more of an issue.
    It is an issue in the secondary payer situation, where you 
have to pay. If you do have a deductible, you have to pay it 
and the co-payment.
    But, when we become the primary payer as it is in fee care, 
that is less of a concern. There is not a deductible.
    Senator Rounds. There is not a deductible.
    Dr. Yehia. Right.
    Senator Rounds. Very good.
    Secretary McDonald. There is no deductible.
    Senator Rounds. That is what I wanted to get at--under the 
proposals, if we make you the primary payer, the deductible is 
eliminated for these veterans that right now are in some cases 
paying thousands of dollars.
    Dr. Yehia. Yeah, the deductible to the outside health 
insurance will be eliminated.
    Senator Rounds. There we go. Thank you.
    Thank you, Mr. Chairman.
    Chairman Isakson. Thank you, Senator Rounds.
    Senator Boozman.

         HON. JOHN BOOZMAN, U.S. SENATOR FROM ARKANSAS

    Senator Boozman. Thank you, Mr. Chairman. I apologize to 
you and the Ranking Member for being late, and I have to sneak 
out again. I have got another hearing that is going on.
    I want to thank you, Secretary McDonald, for your 
willingness to come and testify before Congress. I think I have 
probably been with you five or six times in the last 2 or 3 
weeks between the appropriations, this process, and others, and 
that really is very important.
    The comment and question that I would like to make is that 
it seems like in the last few weeks, as the Choice Program is 
starting to kick in, that the comments I hear from--I am an 
optometrist by training. My brother was an ophthalmologist.
    As I talk to my friends, their concern is that they feel 
like, as providers--and these are folks that realize that we 
are at war now--they want to do the right thing, and they want 
to participate. You know, I can shame them into doing the right 
thing.
    The problem is that they almost feel like you want them to 
go to work for the VA. They deal with Medicare. They deal with 
Medicaid, programs for the elderly, programs for the poor. They 
deal with all kinds of private insurance.
    But there is something going on right now with the 
structure that we have that makes it more difficult, and I do 
not know exactly what that is.
    I would really encourage you to--and we are talking about 
small and medium practices. These are not the clinics that are 
large, you know, that do a great job. We are talking about 
small clinics and medium clinics because these are in the 
communities where veterans do not have access.
    So, I would really encourage you to get out and send some 
of your folks to literally camp out there for a week or so and 
see what is going on because it is just hard.
    We have growing pains and all of that. I realize that. That 
is just the way it is. I am afraid we are in a situation now 
where we are having, in some cases, really bad experiences.
    The payment issue we have talked a lot about. I think you 
are doing a better job of that. I know you are working hard on 
that, but there are other things.
    It is the key staffer that spends a lot of time on the 
phone dealing with problems that they feel like are fairly 
insignificant compared to these other insurance programs. It 
really is a problem.
    Secretary McDonald. Senator Boozman, we agree entirely. We 
think that the changes we have proposed to the law, which I 
know Senator Burr and Senator Tester have been working on, will 
address a lot of this and, I hope, will solve it.
    We, frankly, have been disappointed with the performance of 
one of our third-party providers, Health Net. I have met with 
their CEO, but we are still disappointed. Regarding the law, 
the way the Choice Act is structured today, does not permit us 
to take back the responsibility from the third-party provider 
because it is written into law.
    This new bill would allow us to take that back and would 
allow us to own the customer service. We are in a customer 
service business. Our vision is to be the best customer service 
organization in the government. We cannot outsource our 
customer service, so I am hoping we will see lots of changes.
    I notice--I think you meant it euphemistically--that we are 
trying to make them VA employees. I am out there recruiting. I, 
unashamedly, am out there recruiting. As you know, I have been 
to over two dozen medical schools. So, if there are people who 
would like to join the VA, we would love to hire them.
    Senator Boozman. I understand. No, these are people that, 
like you say, they want to provide service, but they do not 
want the same restrictions.
    Secretary McDonald. Yes, sir.
    Senator Boozman. The same, you know, all that goes through 
with the people that are working very hard at the VA as 
providers.
    Again, it does seem to be unique, and it is enough--there 
is enough smoke that there is some fire there.
    Dr. Yehia. Senator, if I may.
    Senator Boozman. Sure.
    Dr. Yehia. That is exactly what we are doing. I was in 
Orlando, FL, a couple weeks ago, where we hosted a roundtable 
with those small- and medium-size practices just to hear 
directly from them what is going on.
    Our intention with the plan and where we hope to go is we 
do not want VA to be so different than everyone else. So, we 
are trying to figure out what the best practices in industry 
and as best as possible conform to those because if you are a 
small practitioner and you have to deal with multiple different 
insurance plans, each operating in a different way or a similar 
way except for the VA----
    Senator Boozman. Right.
    Dr. Yehia [continuing]. Why do you want to work with us? I 
think we want to figure out how we can be good partners to 
community providers.
    Senator Boozman. Right. Well, thank you very much. I 
appreciate it.
    Thank you, sir.
    Chairman Isakson. Mr. Secretary, I hope that the next time 
that we meet we will be discussing our mutual joy and success 
at coming up with significant legislation for the Veterans 
Administration that addresses the needs of our veterans, 
assures the American public there is accountability within the 
VA administration, deals with the caregivers, deals with all 
the things that Senator Burr and Senator Tester have done and, 
in particular, Choice.
    I appreciate your changing your schedule to be with us for 
the entire hearing this afternoon. We are very grateful to you 
and appreciate all your staff for being here as well.
    Senator Blumenthal. Could I please ask one last question, 
Mr. Chairman?
    Chairman Isakson. Certainly.
    Senator Blumenthal. Thank you.
    Looking at the budget for this year and the question of how 
to pay for additional Care in the Community after the emergency 
Choice Act funding expires, could you explain how you will 
cover that expense? Because the budget submission that you have 
made seems to have a shortfall of $9 billion in the fiscal year 
2018. Am I correct?
    Secretary McDonald. In 2017, I think it was, we put in $12 
million. In 2018, we do have a shortfall there, and the 
shortfall is because we were not sure what legislation would 
come out of the Committee and we did not want to put a number 
in there that would be wrong. As soon as we work together and 
figure out this legislation and get it done, we will put a 
number in that hole and talk about that because we will have a 
better idea what it will be. There are several options in the 
legislation, and those options each have a different cost with 
them.
    Senator Blumenthal. But, you can assure us that you will 
cover that cost without cannibalizing other VA services.
    Secretary McDonald. We will deal with it when we get back 
to the second bite, so to speak, because it will be part of the 
budget.
    Senator Blumenthal. Thank you.
    Secretary McDonald. Yes, sir.
    Chairman Isakson. Secretary, I thank you and your staff 
very much.
    Secretary McDonald. Thank you, Mr. Chairman.
  Response to Posthearing Questions Submitted by Hon. Bill Cassidy to 
  Hon. Robert McDonald, Secretary, U.S. Department of Veterans Affairs
    Secretary McDonald, during the March 15th hearing you testified 
that 2,600 VA employees have been terminated since your appointment. 
This statistic seemed to represent the total number of adverse actions 
taken, not the total number of terminations. The September 1, 2015, 
Assessment L, which was part of the Independent Assessment of the 
Health Care Delivery Systems and Management Processes of the Department 
of Veteran Affairs, specifically criticizes the VA on the topic of 
terminating Senior Executive Service (SES) employees. The March 3, 2016 
weekly report on adverse actions initiated since June 3, 2014 shows 
that only 96 employees were subject to removal. This is in stark 
contrast to the 2,600 you referred to during your testimony, and still 
significantly different from the ``Removal'' totals on the FY 2015 
Adverse Actions Totals that were provided to Congress.

    Question 1. What is the accurate number of terminations since your 
appointment on July 30, 2014 (including and excluding resigned and 
retired in lieu of)?
    Response. VA's Office of Accountability Review maintains a database 
to track disciplinary actions, including but not limited to removals, 
throughout the Department. The data is input by human resources 
officers at VA medical centers, regional offices, and other facilities 
and program offices across the VA system. That database reflects that, 
as of April 11, 2016, a total of 3,144 VA employees have been removed 
or terminated during their probationary period since July 30, 2014. An 
additional 874 employees have resigned or retired in lieu of 
involuntary separation.

    Question 2. Since that time, how many of those terminations have 
been SES employees?
    Response. Within the population described in the response to 
question 1, nine Senior Executive Service (SES) employees have been 
removed or retired or resigned in lieu of involuntary separation.

    Question 3. Why is there such variation in the statistics provided 
during testimony, those provided in writing to Congress and the 
Department's weekly report?
    Response. The numbers are different because they are responding to 
very different questions.
    As stated on the cover sheet VA provides with each weekly report, 
the information provided in that report responds to a June 3, 2014, 
oversight request from the House Veterans' Affairs Committee (HVAC) 
requesting information about disciplinary actions proposed or taken on 
the basis of specified types of misconduct: patient scheduling, record 
manipulation, appointment delays, and/or patient deaths. That report 
does not reflect disciplinary actions based on other types of 
misconduct because the June 3, 2014, HVAC oversight request did not ask 
for information about actions proposed or taken on other bases.
    The Secretary's count of all employee removals includes actions 
taken on any basis, not just the specific types of misconduct covered 
by the June 3, 2014, HVAC request or the responsive weekly report.

    Question 4. Why does the VA, the agency with the most scandals, 
have on average a termination rate for SES employees that is 10 times 
lower than other agencies?
    Response. It is not clear from the Question for the Record where 
the figures supporting the underlying assertion arose. You can review 
the Office of Personnel Management's Fiscal Year (FY) 2015 data 
reporting online at www.fedscope.opm.gov. This website shows provides 
information for all agencies (as defined in FedScope).
                                 ______
                                 
 Response to Posthearing Questions Submitted by Hon. Sherrod Brown to 
  Hon. Robert McDonald, Secretary, U.S. Department of Veterans Affairs
    On December 15, 2015, President Obama issued an Executive Order, 
``Strengthening The Senior Executive Service,'' to ``periodically 
explore and promote new selection methods that effectively and 
efficiently identify the most capable and talented candidate for 
executive leadership.''

    Question 5. What steps has the VA taken, in conjunction with OPM, 
to respond to the following requirements delineated in the Executive 
Order?

          (ii) The heads of agencies with SES positions that supervise 
        General Schedule (GS) employees shall implement policies, as 
        permitted by and consistent with applicable law and regulation, 
        for initial pay setting and pay adjustments, as appropriate, 
        for career SES appointees to result in compensation exceeding 
        the rates of pay, including locality pay, of their subordinate 
        GS employees. Similar policies shall be implemented by heads of 
        agencies for Senior Professional (i.e., SL or ST) employees 
        that supervise GS employees. Such policies and practices 
        support, recognize, and reward agency executives, especially 
        top performers, in a manner commensurate with their roles, 
        responsibilities, and contributions, and may increase the 
        competitiveness of SES positions with comparable positions 
        outside of Government.
          (iv) Within 120 days of OPM issuing the guidance described in 
        section 3(a)(iii) of this order, the heads of agencies with SES 
        positions shall examine the agency's career SES hiring process 
        and make changes to the process to make it more efficient, 
        effective, and less burdensome for all participants. Agencies 
        shall simplify the initial application requirements for SES 
        positions consistent with the guidance issued in section 
        3(a)(iii) of this order, and should only request critically 
        necessary technical qualifications, with the goal of minimizing 
        requirements that may deter qualified applicants from applying. 
        Agencies shall also monitor time to hire of SES positions, and 
        identify appropriate process improvements or other changes that 
        can help reduce time to hire while ensuring high quality of 
        hires.

    Response. With respect to section (ii), VA drafted a pay setting 
and pay adjustment policy based on an overarching compensation 
philosophy for its SES and equivalent positions.
    The philosophy is based largely on the use of tiers for VA 
executive positions, which align to criteria by which VA differentiates 
among and categorizes SES positions. The tiers represent different 
levels of responsibility and complexity/scope of work yet are based on 
established criteria, which allows for transparency and consistency 
when setting pay. It also recognizes there are additional flexibilities 
through pay-for-performance, which the VA will begin to consider more 
broadly. This includes opportunities for larger percentages used for 
performance-based increases and awards. We note that these VA policies 
must be consistent with performance-basis mandated by law and pay 
differentiation based upon performance required for certification of 
appraisal systems
    When setting pay, many factors are considered to include the tier 
of the position; the candidate's experience, pay history and 
qualifications; rate of pay, which is fair and equitable amongst 
similarly situated employees; the pay of subordinate GS employees; and 
the potential room for growth for the candidate for performance-based 
increases within the pay band.
    With respect to section (iv), VA has initiated several Rapid 
Process Improvement Working groups to consider the agency's career SES 
hiring process and ways to make it less burdensome for applicants, 
especially for those applying to our Medical Center Director positions, 
as these positions have a high vacancy rate, are crucial to carrying 
out the VA's mission, and historically have been difficult to fill. The 
VA also continues to monitor and now reports monthly the time-to-hire 
of SES positions to the Deputy Secretary.

    Question 6. Please describe how things would change if the 
executives are moved from Title 5 to Title 38?
    Response. The Administration supports legislation to appoint, pay, 
appraise, and discipline, under Title 38, senior executives holding 
positions as Medical Center Director, Veterans Integrated Service 
Network Director, and any other critical senior health care executive 
position within VA's Veterans Health Administration (VHA).
    VHA Medical Center and VISN Directors are in a unique position to 
help lead and shape the way VA provides world-class health care to our 
Nation's Veterans. Typically, these individuals are compensated at a 
much higher rate in the private sector. For example, most VA Medical 
Center Directors have their salary capped at $185,100. Whereas, 
according to the 2015 Hay Group Integrated Health Systems Report 
survey, the average annual base salary of a similar position in the 
private sector is $345,100. Likewise, most VA Medical Center Director 
positions take an average of 230 days to fill. Whereas, a similar 
position the private sector takes around 60 to 120 days to fill.
    Under the Administration's proposal, VA Medical Center Director, 
VISN Director, and any other critical senior health care executive 
would be treated in a similar fashion as their private sector 
counterparts and Title 38 health care provider peers. Indeed, the 
Administration's proposal is based on the appointment, compensation, 
and disciplinary statutory authorities that exist for Title 38 health 
care providers, including doctors and dentists. Under the 
Administration's proposal, VHA Medical Center and VISN Directors would 
be appointed based on the qualifications that VA sets; be evaluated 
according to the agency's priorities and goals; have their pay set 
based on relevant market factors and on their achievement of identified 
performance goals; and be disciplined in a fashion that respects the 
employee's rights while also being reasonable given the importance of 
the individual's work to the agency's mission.
    As the Secretary has stated, organizational change cannot only be 
accomplished through employee terminations and discipline. Instead, 
success requires the use of a broad spectrum of resources to drive 
organizational performance and improvement through hiring, training, 
compensating, evaluating, and rewarding exceptional employees. The 
Administration's proposal would give VA similar tools and incentives as 
the private sector, which would allow VA to better perform its mission.
                                 ______
                                 
Response to Posthearing Questions Submitted by Hon. Mazie K. Hirono to 
  Hon. Robert McDonald, Secretary, U.S. Department of Veterans Affairs
    Question 7. Secretary McDonald, last September I raised the issue 
of a catch-22 of sorts in one of our committee hearings. Current law 
imposes a requirement that veterans must have received VA care within 
the preceding 24 months in order to be eligible for emergency treatment 
reimbursement from the VA. This means that recently enrolled veterans 
who would otherwise be eligible for emergency treatment, but have not 
received VA care or services due to wait times associated with their 
initial appointment are not eligible for non-VA emergency treatment. 
Furthermore I have introduced the VA's proposal (S. 1693) to exempt 
newly enrolled veterans from this requirement. Would VA support 
including S. 1693 in comprehensive legislation related to non-VA care?
    Response. Please see the excerpt below from VA's testimony before 
the Senate Veterans' Affairs Committee on September 16, 2015. In that 
testimony, we expressed support for S. 1693 but asked the Committee to 
forbear consideration of the bill to allow for further discussion in 
the context of VA's comprehensive review of its Care in the Community 
programs. The Plan to Consolidate Community Care Programs was provided 
to the Committee on October 30, 2015, and we appreciate the 
opportunities to discuss the Plan with the Committee, including a 
December 2, 2015, hearing on Consolidating Non-VA Care programs. That 
testimony included discussion of expanded access to emergency treatment 
and care. VA supports measures to improve access to emergency care for 
Veterans, contingent on the provision of the additional resources, and 
would be happy to further discuss emergency care reforms, including in 
discussion of the Committee's pending omnibus bill. VA supports 
S. 1693, as expressed in our September 16, 2015, testimony.
Excerpt from VA testimony before the Senate Veterans' Affairs Committee 
        on September 16, 2015:

          VA supports S. 1693 but, as discussed below, requests that no 
        further action be taken at this time. We recognize that some 
        Veterans have been enrolled in VA's health care system but 
        unable to become actual users of the system because they have 
        not been able to receive their ``new patient examination'' due 
        to waiting periods (in appointment scheduling) for care in VA. 
        As a result, although enrolled, they fail to meet the full 
        statutory definition of an ``active Department health-care 
        participant'' for purposes of being able to receive 
        reimbursement under section 1725. The bill would provide a fair 
        remedy for those whose section 1725 claims are denied solely 
        because VA scheduling procedures and wait times prevented them 
        from receiving VA care within the 24-month period preceding 
        their receipt of non-VA emergency treatment.
          While the goal of this bill is well-intentioned, we believe 
        it premature for Congress to take any action on this measure 
        until VA has completed its comprehensive review of the 
        Department's Care in the Community programs, which includes a 
        review of the monetary benefits available under section 1725. 
        For that reason, we respectfully request that the Committee 
        forbear consideration of S. 1693 (and any similar measure) 
        until VA has an opportunity to complete its review and share 
        the results, including recommendations, with the Committee.

    Question 8. Secretary McDonald, would you be able to comment on how 
the VA would implement the reforms outlined in S. 2633 related to 
access to emergency care, and do you have any indication as to what 
extent this would reduce out-of-pocket costs for enrolled Veterans?
    Response. The implementation of this bill, S. 2633, Section 102: 
Expansion of reimbursement of veterans for emergency treatment and 
urgent care would remove certain eligibility requirements, expand 
benefits, and establish VA as the primary payer for Veterans to access 
emergency treatment, urgent care, and emergency transportation in the 
community. The impact of this provision would reduce enrolled Veterans' 
out-of-pocket costs by not holding them personally liable for the 
payment of emergent treatment, urgent care, and emergency 
transportation. S. 2633 should work to reduce administrative barriers 
for obtaining such health care in the community. In order to implement 
this legislation, VA would need to develop supporting regulations, 
processes, and procedures. VA would also require system redesign and 
solution enhancements to care coordination, customer service, claims 
processing, and payment systems. Finally, a comprehensive 
communications strategy would be required for conducting appropriate 
outreach to affected Veterans, providers, and stakeholders, and VA 
would need significant additional resources, estimated at $2.4 billion 
in FY 2017 and $14 billion over five years for this expanded benefit, 
including urgent care, emergency care, and treatment.

    Question 9. S. 2633 contains provisions seeking to address the 
problem of the Department of Veterans Affairs not being reimbursed by 
insurance companies in instances in which the VA treats enrolled 
veterans for non-service-connected treatments, as they were not 
classified by these particular companies as ``in network'' or as a 
participant provider. Secretary McDonald, could you comment on the 
importance of addressing this issue, the approximate amount of 
recovered revenue and the benefit that it would bring to VA and 
veterans that seek these kinds of treatments through the VA?
    Response. Currently, if an agreement is not in place with a third 
party payer, VA is seen as an out-of-network provider and therefore, 
benefits are either limited or non-existent. This proposal would 
prevent a health insurer or third party payer from denying or reducing 
payment, absent an existing agreement between VA and any health 
maintenance organization, competitive medical plan, health care 
prepayment plan, preferred provider organization, or other similar 
plan, based on the grounds that VA is not a participating provider. 
Providing this authority would increase collections from third party 
payers. The increased revenue to individual VA medical centers could 
then be used to continue improving the Veteran experience.

                                ------                                

    Chairman Isakson. Our second panel is welcome to come 
forward. [Pause.]
    Chairman Isakson. I would like to welcome our VSOs for our 
second panel today. First, we will hear from Louis Celli, the 
Director of Veterans Affairs and Rehabilitation at The American 
Legion.
    Carlos Fuentes, Senior Legislative Associate at Veterans of 
Foreign Wars.
    And, Adrian Atizado, Assistant National Legislative 
Director for Disabled American Veterans.
    We are so glad to have you here today. Welcome to all of 
you.
    We would ask you to try to hold your testimony to 5 
minutes. All preprinted statements will be put in the record 
automatically.
    Mr. Celli, you are recognized.

  STATEMENT OF LOUIS CELLI, DIRECTOR OF VETERANS AFFAIRS AND 
              REHABILITATION, THE AMERICAN LEGION

    Mr. Celli. It is an exciting time right now as we work 
toward bettering the resources and services that veterans in 
this country have earned.
    Chairman Isakson, Ranking Member Blumenthal, and Members of 
the Committee, on behalf of National Commander Dale Barnett and 
the over two million veterans that make up The American Legion, 
we welcome this opportunity to comment on bills and discuss VA 
oversight, access to health care, and the structure of claims 
and appeals management.
    Lately, this has been a fast-moving train. In the last 2 
weeks alone, we have furthered efforts to make improvements and 
advancements for veterans that seek access to high quality 
health care as well as help define necessary improvements that 
need to be made in the area of veterans disability claims and 
appeals.
    The bills presented today underscore a commitment and 
dedication that this Committee has shown to ensure that 
veterans receive care and attention that they have earned, and 
The American Legion is proud to be working closely with our 
Congress as well as the Department of Veterans Affairs in order 
to streamline many of the services that have not been updated 
in close to 50 years.
    In our written testimony, we look at Senate Bill 2633 and 
2646, and we highlight the portions of each The American Legion 
believes will make the greatest impact on veterans who use and 
enjoy VA health care. In our testimony, you will see that we 
reviewed eligibility, network structure, prompt payment 
requirements, and emergency and urgent care reimbursement. We 
also acknowledge that both bills provide the necessary funding 
in order to support the programs.
    One major point of discussion has been the concept of the 
tiered network. Some are concerned that VA lacks the 
infrastructure or expertise to support building a provider 
network organically while others criticize the existing TPA 
model as dysfunctional.
    This is a complicated proposal, and The American Legion 
cannot attest to VA's capabilities one way or the other that 
would support or deny success, but we can say that if VA is 
capable of building such a network as they propose it will be 
more cost effective and support VA's mission to be in a better 
position to provide better and more seamless health care 
experiences for veterans. Based on our experience with ARCH and 
PC3 and community-contracted care, in many ways, they are 
already doing it.
    Last week, The American Legion agreed to be sequestered 
away in a room with no windows over at the Board of Veterans' 
Appeals for three solid days to help propose streamlining the 
appeals process. It was painful. A good portion of the initial 
time was spent developing trust, not only from the VSOs' and 
advocates' standpoint, but also from the VA.
    While we did not cure the ills of the world in 3 days, what 
we were able to accomplish was everyone's ability to just get 
it all out onto the table and deal with what was there. By the 
end of the 3-day session, the group was able to agree on a path 
to move forward, a basic framework for what an improved program 
might look like, and a fundamental understanding that there is 
no better opportunity for positive change to take place than 
for the betterment of veterans in the claims appeals process 
than now.
    Some of the participants have continued to work together to 
this end and are meeting to discuss this framework tomorrow, 
and the group as a whole has agreed to meet again on Thursday.
    Again, it is an exciting time right now as we all work 
together to improve the programs that serve and support our 
veterans. This Committee has shown that we have your support. 
The House Veterans' Affairs Committee has pledged their support 
for change. The Veterans Service Organizations have committed 
to working with Congress and VA to improve our programs. And, 
VA has committed to Congress and the VSOs to work 
comprehensively together to design and support change. And, the 
President of the United States has charged us all with making 
it happen.
    Senators, The American Legion is actively supported by 10 
percent of all living American veterans, and that does not take 
into account our family members, the Auxiliary, and the Sons of 
The American Legion. As clearly stated by National Commander 
Dale Barnett just last month during our congressional 
presentation, the word of the day is ``accountability.''
    Finally, on the proposal that would allow VA to convert 
certain senior executive positions to another hiring authority 
within the U.S. Code, specifically Title 38, The American 
Legion supports any measure that will allow greater hiring 
flexibility, greater oversight and authority, and 
simultaneously empower VA to be more competitive in the areas 
of the country that are difficult to recruit in.
    We caution that any program changes of this magnitude need 
to be clear on issues of oversight, authority, and 
accountability, and specifically review and tailor things like 
the appellate authority and timeliness to take into 
consideration VA's unique mission and honored customer base 
before making any final decisions.
    That is all I have, and thank you.
    [The prepared statement of Mr. Celli follows:]
Prepared Statement of Louis J. Celli, Jr., Director, National Veterans 
        Affairs and Rehabilitation Division, The American Legion
    Chairman Isakson, Ranking Member Blumenthal, and distinguished 
Members of the Committee; On behalf of our National Commander, Dale 
Barnett, and the over 2 million members of The American Legion, we 
thank you for this opportunity to testify regarding The American 
Legion's positions on pending legislation before this Committee. We 
appreciate the Committee focusing on these critical issues that will 
affect veterans and their families.
         burr--s. 2646: veterans choice improvement act of 2016
To amend title 38, United States Code, to establish the Veterans Choice 
        Program of the Department of Veterans Affairs to improve health 
        care provided to veterans by the Department, and for other 
        purposes.
tester--s. 2633: improving veterans access to care in the community act
To improve the ability of the Secretary of Veterans Affairs to provide 
        health care to veterans through non-Department health care 
        providers.
                               background
    The American Legion believes in a strong, robust veterans' 
healthcare system that is designed to treat the unique needs of those 
men and women who have served their country. However, even in the best 
of circumstances there are situations where the system cannot keep up 
with the health care needs of the growing veteran population requiring 
VA services, and the veteran must seek care in the community. Rather 
than treating this situation as an afterthought, an add-on to the 
existing system, The American Legion has called for the Department of 
Veterans Affairs (VA) to ``develop a well-defined and consistent non-VA 
care coordination program, policy and procedure that includes a patient 
centered care strategy which takes veterans' unique medical injuries 
and illnesses as well as their travel and distance into account.'' \1\
---------------------------------------------------------------------------
    \1\ Resolution No. 46 (2012): Department of Veterans Affairs (VA) 
Non-VA Care Programs
---------------------------------------------------------------------------
    Over the years, VA has implemented a number of non-VA care programs 
to manage veterans' health care when such care is not available at a VA 
facility, could not be provided in a timely manner, or is more cost 
effective through contracting vehicles. Programs such as Fee-Basis, 
Project Access Received Closer to Home (ARCH), Patient-Centered 
Community Care (PC3), and the Veterans Choice Program (VCP) were 
enacted by Congress to ensure eligible veterans could be referred 
outside the VA for needed, and timely, health care services.
    Congress created the VCP after learning in 2014 that VA facilities 
were falsifying appointment logs to disguise delays in patient care. 
However, it quickly became apparent that layering yet another program 
on top of the numerous existing non-VA care programs, each with their 
own unique set of requirements, resulted in a complex and confusing 
landscape for veterans and community providers, as well as the VA 
employees that serve and support them.
    Therefore, Congress passed the Surface Transportation and Veterans 
Health Care Choice Improvement Act of 2015 (VA Budget and Choice 
Improvement Act) in July 2015 after VA sought the opportunity to 
consolidate its multiple care in the community authorities and 
programs. This legislation required VA to develop a plan to consolidate 
existing community care programs.
    On October 30, 2015, VA delivered to Congress the department's Plan 
to Consolidate Community Care Programs, its vision for the future 
outlining improvements for how VA will deliver health care to veterans. 
The plan seeks to consolidate and streamline existing community care 
programs into an integrated care delivery system and enhance the way VA 
partners with other Federal health care providers, academic affiliates 
and community providers. It promises to simplify community care and 
gives more veterans access to the best care anywhere through a high 
performing network that keeps veterans at the center of care.
    Generally, The American Legion supports the plan to consolidate 
VA's multiple and disparate purchased care programs into one New 
Veterans Choice Program (New VCP). We believe it has the potential to 
improve and expand veterans' access to health care.
                           burr/tester bills
    The American Legion commends Senators' Burr and Tester for 
sponsoring legislation to fix the Choice program and codify the New VCP 
and we commend the Committee for expeditiously considering these bills. 
Both bills address deficiencies in current law, as well as provide a 
comprehensive framework and foundation for consolidating the purchase 
of care in the community in those circumstances where it is not readily 
available from VA through contracts or existing sharing agreements.
    There is a great degree of overlap and a lot to like in these 
bills. We look forward to a final compromise bill which incorporates 
the best of both. Where there are differences, The American Legion will 
highlight below what we would like to see in the final legislative 
package.
Veteran Eligibility
    Eligibility requirements are almost the same in both bills. 
However, the Tester bill has an additional requirement that should be 
kept, i.e., The veteran has a primary care provider under section 1705A 
that is not a health care provider of VA.
Network Structure
    The American Legion supports Tester's language allowing VA to set 
up tiered networks. As we understand it, this structure is meant to 
empower veterans to make informed choices, provide access to the 
highest possible quality care by identifying the best performing 
providers in the community, and enabling better coordination of care 
for better outcomes. However, it does not dictate how veterans will use 
the network.
    The American Legion wants to make clear, though, that we do not 
support a wholesale option to circumvent the VA infrastructure or 
healthcare system entirely.
Prompt Pay
    From the Burr bill, we support the provision mandating that all 
claims be made electronically by January 1, 2019. From the Tester bill, 
an eligible provider should submit claims to Secretary within 180 days 
of furnishing care or services.
Episode of Care
    We support the Burr provision ensuring that an eligible veteran 
receives such care and services through the completion of the episode 
of care, including all specialty and ancillary services deemed 
necessary as part of the treatment recommended in the course of such 
care and services.
Funding for Program
    The American Legion is pleased to see that both bills call for 
advanced appropriations for VA's Care in the Community beginning in 
Fiscal Year 17.\2\
---------------------------------------------------------------------------
    \2\ Resolution No. 16: Assured Funding for VA Medical Care
---------------------------------------------------------------------------
Emergency/Urgent Treatment
    The American Legion supports the inclusion of the Tester provision 
requiring VA to reimburse veterans for the reasonable value of 
emergency treatment or urgent care furnished in a non-Department 
facility in a final bill.\3\
---------------------------------------------------------------------------
    \3\ Resolution No. 100: Non-Department of Veterans Affairs 
Emergency Care
---------------------------------------------------------------------------
Conclusion
    Ensuring veterans have access to appropriate, timely, high-quality 
care is critical. VA needs to overhaul its outside care reimbursement 
programs, consolidating them into a more efficient bureaucracy able to 
dynamically interact with the network of Federal, public, and private 
providers that are to supplement VA direct provided care.
    The American Legion believes that together we can accomplish 
legislative changes to streamline Care in the Community programs before 
the end of this session of Congress. We can't let another year slip 
away. Our veterans deserve the same sense of urgency now that Congress 
has shown numerous times since the VA scandal first erupted in 2014.
                  s. 2473: express appeals act of 2016
To direct the Secretary of Veterans Affairs to carry out a pilot 
        program to provide veterans the option of using an alternative 
        appeals process to more quickly determine claims for disability 
        compensation.
    This act, while well-intentioned, may ultimately have a negative 
impact upon veterans. Under the current proposal, veterans will have 
the option to elect to pursue a claim in a ``fully developed appeal 
(FDA)'' format. Through electing to have a claim adjudicated via FDA, a 
veteran opts to not submit any additional evidence for the record 
following the submission of the Notice of Disagreement (NOD).
    The Express Appeals Act is designed to expedite the appellate 
process within VA. With a growing inventory of claims, VA and veterans 
service organizations (VSOs) have been working to discover a program 
that reduces the amount of time that veterans wait to have an appealed 
claim adjudicated.
    In order for a veteran to receive benefits for a service connection 
condition, the following criteria must be met:

     A current diagnosis (exception: Gulf War Illness)
     An incident in service
     A nexus statement linking the current condition to either 
service or a previously service-connected condition

    Unfortunately, VA adjudication letters are often incomplete and 
unclear to veterans. They are uncertain why they were denied benefits; 
more importantly, they often do not know what information is needed to 
successfully overturn the previous decision by the VA regional office. 
Through passage of H.R. 732, VA will be compelled to find the most 
expeditious means to adjudicate an appealed claim. The American Legion 
strongly supports increased transparency in the adjudication of 
claims.\4\
---------------------------------------------------------------------------
    \4\ Resolution No. 128: Increase the Transparency of the Veterans 
Benefits Administration's Claims Processing
---------------------------------------------------------------------------
    The current bill could allow the following to occur:

     Veteran receives decision denying the benefit with little 
explanation regarding how VA arrived at its denial
     Veteran elects to appeal via FDA
     Veteran is denied the benefit sought at the BVA due to not 
knowing what information to submit

    While decisions at the VA regional offices are lacking regarding 
how a claim is decided, Board of Veterans Appeal (BVA) decisions are 
lengthy and filled with language common in the legal profession, 
however, it is confusing to veterans who have no legal background. 
Ultimately, a veteran could file a claim, have it denied at a VA 
regional office, utilize the appellate process and have a claim 
adjudicated at BVA meanwhile having little or no understanding of why 
the claim was denied.
    The American Legion believes the FDA program is a program that with 
some adjustments could hold value. Discussions between The American 
Legion and VA have occurred regarding the adequacy of the adjudication 
notification letters. VA Secretary Robert McDonald has agreed to 
formulate a group of concerned veteran's service organizations to draft 
a letter to create an adjudication notification that properly advises 
veterans of the information needed to gain service connection for the 
condition.
    The American Legion is working closely with VA and other VSOs to 
develop an appeals process that is expeditious meanwhile not 
shortcutting veterans' due process rights. The American Legion could 
support this legislation provided the working group makes helpful and 
productive changes to the notification letter process.
    The American Legion could support this legislation, provided it 
follows the caveats mentioned above.
                            discussion draft
On title 38, United States Code, appointment, compensation, performance 
        management, and accountability system for senior executive 
        leaders in the Department of Veterans Affairs.
    The American Legion supports any mechanism that ensures added 
accountability while providing VA the freedom to hire the best 
qualified medical and administrative staff. While we are excited and 
intrigued about VA's recommendation to convert the Senior Executive 
Service positions to an alternate hiring authority contained within the 
United States Code, we remain apprehensive until we are able to fully 
evaluate how the new program would be implemented in this special 
circumstance. The ability to convert positions, promote, demote, 
expedited hiring, as well as removal from government service 
capabilities need to be clearly outlined, to include an appellate 
process that is fair and equitable to the government employee, the 
veteran seeking quality services, and the American taxpayer. The 
American Legion looks forward to working closely with this Committee 
and VA to review this proposed plan.
                               conclusion
    As always, The American Legion thanks this Committee for the 
opportunity to explain the position of the over 2 million veteran 
members of this organization. For additional information regarding this 
testimony, please contact Mr. Warren J. Goldstein at The American 
Legion's Legislative Division at (202) 861-2700 or 
wgoldstein@legion.org.

    Chairman Isakson. Thank you very much, Mr. Celli, and 
thanks for all the input. I held up the poster that you all did 
when you were referring to the meetings at the VA before. They 
were graphically very pretty, but they also obviously showed a 
road map we need to follow to get to a solution on disability 
claims. I appreciate The Legion's willingness and ability to do 
that.
    Mr. Fuentes.

  STATEMENT OF CARLOS FUENTES, SENIOR LEGISLATIVE ASSOCIATE, 
                    VETERANS OF FOREIGN WARS

    Mr. Fuentes. Mr. Chairman, on behalf of the men and women 
of the VFW and our auxiliaries, I would like to thank you for 
the opportunity to present our views on today's legislation. I 
would also like to thank you for considering legislation that 
would supplement, not supplant, the excellent health care 
veterans receive from the VA.
    We are pleased to see that the Improving Veterans Access to 
Care in the Community Act consolidates the best aspects of the 
Choice Program and other Community Care programs. This would 
ensure VA employees, private sector providers, and veterans are 
able to understand and easily navigate VA Community Care.
    The VFW has also heard from too many veterans who live more 
than 40 miles from a VA primary care provider but are required 
to travel further for Choice Program care than they would for 
VA care. That is why the VFW supports Section 302, which would 
improve how the 40-mile rule is applied.
    Instead of measuring 40 miles from a VA medical facility, 
this legislation would make veterans the center of the 40-mile 
rule. Doing so would require VA to properly size its networks 
to ensure veterans have primary care providers within 40 miles 
of their home.
    The VFW continues to hear from veterans that VA refuses to 
pay the cost of their emergency room visits. This is why the 
VFW strongly supports expansion of emergency and urgent care. 
However, this legislation would require veterans to be active 
users of VA care. This barrier to access could cause an undue 
hardship for veterans who are enrolled in VA health care but 
have been denied access due to wait times.
    VA is aware of this problem and has requested authority to 
make an exemption to the 24-month rule for veterans who find 
themselves in this situation. The VFW agrees with the VA, and 
this barrier must be eliminated for veterans who are not able 
to receive VA health care because of long appointment wait 
times.
    The VFW supports many of the modifications that the 
Veterans Choice Improvement Act of 2016 would make to VA 
Community Care, such as ensuring a veteran is able to receive 
follow-up care to complete an episode of care without having to 
cut through bureaucratic red tape. However, this legislation 
would retain the Choice Program's 40-mile standard for 
determining when veterans access Community Care. The VFW 
recommends this Committee adopt Section 302 of Senator Tester's 
bill in lieu of the current 40-mile standard to ensure the 40-
mile rule is veteran-centric rather than VA-centric.
    Another lesson learned from the Choice Program is that VA 
provides health care specialties that do not have Medicare 
rates, such as gynecological care. That is why we recommend the 
Committee authorize VA to establish a fee schedule for services 
it provides that are not covered under Medicare.
    Section 301 would expedite the process for adjudicating 
disability claims for veterans exposed to contaminated water at 
Camp Lejeune. VA recently announced that it will classify eight 
medical afflictions as presumptive disabilities for these 
veterans.
    However, it is unacceptable that VA would require Camp 
Lejeune veterans to wait an entire year before being able to 
submit claims. The VFW recommends this Committee require VA to 
issue interim final regulations within 90 days of establishing 
a presumptive for service connection and start accepting claims 
the day the interim final regulations are published.
    The VFW is pleased to see the Express Appeals Act includes 
reporting requirements on the efforts of the Secretary to 
provide more clear rating decisions and improve disability 
rating notification letters. However, the VFW cannot fully 
support the fully developed appeals initiative until veterans 
have sufficient information to understand why VA denied their 
claims. Simply put, without adequate notice, there can be no 
knowledgeable waiver.
    The VFW strongly supports the hiring retention provisions 
of the discussion draft proposal regarding VA SES employees. 
The VFW strongly believes that employee accountability is 
critical to correct the past problems at VA and restoring 
veterans' trust and confidence.
    However, the VFW does not believe that a panel of SES 
employees would effectively determine the veracity of adverse 
actions being considered against their peers, especially if the 
Secretary is the final arbiter of that decision. While the VFW 
has full faith and confidence that Secretary McDonald will 
strengthen rather than erode VA's SES Core, the VFW does not 
want future political appointees to politicize VA's career 
civil servants.
    Mr. Chairman, this concludes my testimony. I am happy to 
answer any questions you or the Members of the Committee may 
have.
    [The prepared statement of Mr. Fuentes follows:]
  Prepared Statement of Carlos Fuentes, Senior Legislative Associate, 
 National Legislative Service, Veterans of Foreign Wars of The United 
                                 States
    Chairman Isakson, Ranking Member Blumenthal and Members of the 
Committee, on behalf of the men and women of the Veterans of Foreign 
Wars of the United States (VFW) and our Auxiliaries, I would like to 
thank you for the opportunity to testify on today's pending 
legislation.
    The VFW strongly believes that veterans have earned and deserve 
timely access to high quality, comprehensive, and veteran-centric 
health care. In most instances VA care is the best and preferred 
option, but we acknowledge that VA cannot provide timely access to all 
services to all veterans in all locations at all times; that is why VA 
must leverage private sector providers and other public health care 
systems to expand viable health care options for veterans.
    Before discussing the individual bills being considered by the 
Committee, I would like to first thank the Members of this Committee, 
specifically Senators Tester, Moran, Blumenthal, Boozman, Brown, and 
Tillis for sponsoring or cosponsoring legislation being considered 
today that would improve how veterans access community care options and 
ensure the private sector supplements, not supplants, the excellent 
health care veterans receive from VA health care professionals. The VFW 
truly believes these proposals would lead to better health care 
outcomes and would build on VA's holistic approach to medicine. The VFW 
is also pleased both community care bills being considered today are 
closely aligned with recommendations the VFW has made to improve VA 
community care.
      s. 2633, improving veterans access to care in community act
    This legislation would, among other things, consolidate VA's 
community care authorities, expand VA's authority to provide emergency 
room and urgent care, and improve VA community care. The VFW supports 
this legislation and would like to offer suggestions to strengthen it.
    The Veterans Choice Program has faced a number of challenges since 
it was implemented in November 2014. The VFW has made a concerted 
effort to evaluate what aspects of the Veterans Choice Program have 
worked and identify common sense solutions to aspects of the program 
that have not worked as intended. That is why we are pleased to see 
that this legislation would incorporate many of the lessons learned 
from the Veterans Choice Program and other community care programs, 
such as consolidating all of VA's community care authorities to ensure 
veterans, VA employees and private sector providers understand how to 
navigate VA's community care program.
    Similar to the consolidation plan VA was required to submit to 
Congress, this legislation would move away from federally mandated 
standards to determine how long a veteran must wait for care before 
being offered community care options. This legislation would ensure 
veterans receive community care options when clinically necessary, 
regardless of whether the care is delivered by VA or community care 
providers.
    The VFW has heard from too many veterans who live more than 40 
miles from a VA primary care provider, but are required to travel 
farther for community care than they would for VA care, because the 
Choice network does not have viable options within 40 miles. That is 
why the VFW supports section 302 of this legislation, which would 
improve how the 40-mile rule is applied.
    Instead of placing a 40-mile bubble around VA medical facilities, 
this legislation would make veterans the center of the 40-mile rule. 
Doing so would require VA to ensure a veteran who lives more than 40 
miles from a VA primary care provider is assigned to a community 
primary care provider that is within 40 miles of his or her home. To 
avoid confusion on how the 40-mile rule is applied and when veterans 
are eligible for the Veterans Choice Program, the VFW recommends that 
the Committee amend this legislation by striking the original 40-mile 
rule in favor of section 301. The VFW does not believe that this change 
would impact how many veterans are eligible for the Veterans Choice 
Program. However, VA would be required to ensure a veteran who is 
eligible for community care is offered viable community primary care 
options within 40-miles of the veteran's home.
    In 2010, VA implemented its Patient Aligned Care Team initiative to 
improve VA primary care. This holistic, patient-centered and integrated 
approach to delivering health care ensures that a veteran's primary 
care team is able to track the progress and evaluate the outcomes of 
all the care the veteran receives. As a result, the quality of care 
veterans receive from VA has improved. To ensure the benefits of VA's 
patient-centered medical home model are not eroded, the VFW strongly 
believes that VA must remain the coordinator and guarantor of care 
veterans receive through VA, regardless of where that care is 
delivered. That is why the VFW supports the establishment of procedures 
for VA to coordinate the care veterans receive from community care 
providers and ensure VA receives the health records from these episodes 
of care.
    The VFW continues to hear from veterans that VA refuses to pay the 
cost of their emergency room visits which may have saved their lives or 
was their only option for receiving the urgent care they needed. That 
is why the VFW supports this legislation's expansion of emergency and 
urgent community care. Specifically, the VFW is pleased to see that 
this legislation would ensure copayments associated with emergency and 
urgent community care would be equal to the copayments paid by veterans 
at VA medical facilities. This would ensure veterans are not punished 
for using community care.
    However, this legislation would require veterans to have received 
VA care with the past 24-months in order to be eligible to receive 
reimbursement for the cost of community emergency and urgent care, 
which is similar to the eligibly requirements under VA's current 
emergency care reimbursement program. This barrier to access has caused 
undue hardship on veterans who enroll in VA health care, but have been 
denied access due to wait times, and subsequently require emergency 
services. VA is aware of this problem and has requested the authority 
to make an exemption to the 24-month requirement for veterans who find 
themselves in this situation. The VFW recommends that the Committee 
amend this legislation to ensure veterans who face long appointment 
wait times are not precluded from seeking the emergent and urgent care 
they need.
    The VFW is also glad to see that this legislation would expand VA's 
authority to quickly provide community care options by establishing 
veterans care agreements. These agreements are a necessary tool to 
allow VA to meet the wide-ranging and unique health care needs of 
veterans. However, it is important that these contracts be used as last 
resort. Doing so would ensure veteran care agreements do not impede the 
success of this legislation's consolidated community care program. That 
is why the VFW supports this legislation's requirement that VA exhaust 
all other avenues of furnishing community care before using veteran 
care agreements.
            s. 2646, veterans choice improvement act of 2016
    This legislation would, among other things, expand the Veterans 
Choice Program, improve how VA reimburses emergency medical 
transportation costs and expedite Camp Lejeune disability compensation 
claims. The VFW supports sections 102 through 205. The VFW supports the 
intent of sections 101 and 301 and would like to offer suggestions to 
improve them.
    Section 101 would make a number of improvements to the Veterans 
Choice program, to include ensuring a veteran's continuation of care is 
not interrupted by bureaucratic rules. This legislation would allow 
veterans who receive authorized care from a community care provider to 
continue to see their community care provider or another community care 
provider to complete an episode of care, or enter into follow-up 
treatment without the need to request additional authorization.
    The VFW has heard from too many veterans that the community care 
provider they choose to use through the Veterans Choice Program has 
billed them for the cost of their care. The most common billing 
complaint occurs when a veteran is authorized to use the Veterans 
Choice Program for an episode of care that requires follow-up care that 
is outside of the scope of the original authorization. In these cases, 
the veteran's doctor is required to submit a request for additional 
services, and the program's contractors must work with VA to get the 
additional services authorized before the care can be delivered. This 
is where the program often fails veterans.
    When the care is not authorized before a veteran arrives at his or 
her follow-up appointment, the veteran is required to either 
reschedule, assume liability for the care, or all too often, the 
provider and the veteran are unaware of this requirement, so the 
veteran is left with the bill. This legislation would remove this 
barrier by authorizing veterans to complete their episode of care or 
follow-on care without specific authorization.
    This legislation would also require veterans to provide VA with 
their health insurance information when receiving VA health care. The 
VFW thanks Senator Burr for ensuring VA does not withhold care from 
veterans who may not know their insurance status has changed or are 
unable to disclose health insurance information. To ensure VA medical 
collections are maximized, the VFW urges VA to improve its medical 
billing process. The VFW also recommends that the Committee consider 
authorizing VA to verify whether a veteran has health insurance 
coverage by entering into a data sharing agreement with the Internal 
Revenue Service (IRS), who receives veterans' health insurance 
information through annual IRS health coverage exemptions.
    As discussed above, the VFW has made a concerted effort to evaluate 
the Veterans Choice Program and determine whether eligibility 
requirements are aligned with veterans' options, perceptions and 
expectations when receiving VA health care. In conducting site visits 
to VA medical facilities around the country, the VFW found that VA 
community care staff were unable to authorize veterans to use the 
Veterans Choice Program when their VA medical facility was unable to 
provide the service veterans need. Thus, veterans who were not eligible 
for the Veterans Choice Program under the 40-mile rule were unable to 
receive Choice care because the facility was unable to schedule an 
appointment that would trigger wait-time eligibility. To correct this, 
VA has requested the authority to offer veterans the opportunity to use 
the program when a VA medical facility is unable to provide the service 
they need. The VFW recommends the Committee amend this legislation to 
include this change.
    The VFW is glad to see that this legislation includes improvements 
to the eligibility criteria for the Veterans Choice Program, such as 
the Secretary's authority to determine that there is a compelling 
reason for a veteran to use community care in lieu of VA care. However, 
the VFW does not agree with the legislation's 40-mile standard to 
determine when veterans are afforded the opportunity to access 
community care. The VFW believes that the distance a veteran is 
required to travel for health care should be determined by the veteran 
in consultation with his or her health care provider. However, if the 
Committee intends to continue to use 40 miles as a standard to measure 
geographic accessibility, the VFW recommends the Committee adopt 
section 302 of S. 2633 to ensure the 40-mile rule is veteran-centric 
rather than VA centric. Doing so would ensure VA affords veterans the 
opportunity to receive veteran-centric and coordinated community care 
within 40-mile of their home.
    Another lesson learned from the Veterans Choice Program is that VA 
provides health specialties that do not have a Medicare rate, including 
obstetrics and gynecological care. While the VFW understands the need 
to set limits on the amount VA is authorized to reimburse community 
care providers, the VFW believes that a consolidated community care 
program should authorize VA to provide community care options for every 
health care specialty it delivers. That is why we recommend the 
Committee amend this legislation authorizing VA to establish a fee 
schedule for services it provides that do not have a Medicare rate.
    Section 301 would require VA to begin processing disability claims 
within 90 days of establishing a condition as being presumptive to Camp 
Lejeune toxic water exposure. VA recently announced that it will 
classify eight medical afflictions as presumptive disabilities for 
purposes of adjudicating compensation benefits for veterans who were 
exposed to contaminated water at Camp Lejeune between 1953 and 1987.
    However, VA estimates that veterans will have to wait a year from 
when VA announced its decision before VA regional offices can begin 
adjudicating these claims. While the VFW agrees that a year is too 
long, we do not believe 90 days gives VA enough time to process 
regulations and start compensating veterans for such conditions. The 
VFW recommends that the Committee amend this bill to require VA to 
issue interim final regulations within 90 days of establishing a 
presumption of service connection and start accepting presumptive 
claims the day the interim final regulations are published.
                  s. 2473, express appeals act of 2016
    This legislation would direct VA to carry out a five-year pilot 
program to provide veterans with the option to appeal claims for 
disability compensation through an expedited process. Appeals filed 
under this program would be known as Fully Developed Appeals (FDA). 
While the VFW supports the concept of the FDA initiative, we remain 
concerned that notification letters currently issued by the Veterans 
Benefits Administration (VBA) contain insufficient information to allow 
veterans to make educated decisions on whether to participate in the 
pilot or file through the traditional appeals process.
    Under the Express Appeals Act, the FDA initiative would give the 
claimant the choice to waive receipt of a Statement of the Case, 
Decision Review Officer review, a hearing before a Board of Veterans 
Appeals (BVA) panel and other developmental and review opportunities 
currently existing in the VA appeals process. The claimant, at the 
Notice of Disagreement stage, would have a one-time opportunity to 
submit additional evidence and argument. In exchange for this waiver, 
the appeal would bypass all regional office activity and move directly 
to the BVA, where it would be placed on a separate docket to be 
considered in the order it was received. This approach has the 
advantage of bypassing nearly three years of delay at the regional 
office.
    However, it must be recognized that a speedy decision by the BVA 
may not be advantageous to all claimants. During that three-year wait 
at the regional office, claimants have an unlimited opportunity to 
submit additional evidence, undergo new treatment and examinations, 
produce fresh argument and in other ways help perfect the record prior 
to BVA review. Under law favorable to veterans, the record remains open 
and subject to amendment almost up to the point of decision by the BVA. 
In addition, the BVA has unrestricted authority to remand appeals to 
correct deficiencies in development by VA and to acquire new evidence.
    To be successful, the FDA initiative must be an avenue for veterans 
who truly do not need to submit additional evidence, and not simply an 
expedited path to denial for those who do. The VFW strongly believes 
that improving the current notification letter is the lynchpin to 
ensure this happens. Veterans and other claimants must have sufficient 
information to understand what VA decided, what specific evidence was 
used, how it was weighed and the reasons (not just conclusions) for the 
decision. Simply put, without adequate notice, there can be no 
knowledgeable waiver.
    While the VFW is pleased to see that S. 2473 includes reporting 
requirements on ``the efforts of the Secretary to provide clear rating 
decisions and improve disability rating notification letters * * *'' we 
are still concerned that VA has not done enough to improve the 
notification letters.
    In recent years, VBA has significantly restricted the amount of 
information it provides in decision letters to claimants. Starting with 
the Simplified Notification Letter initiative by VBA in 2012, VA worked 
to reduce most notice letters to pattern words and phrases instead of 
original claims specific content. In testimony before the House 
Veterans' Affairs Committee at the time, the VFW protested this move in 
strong terms. While VA made cosmetic changes, the Simplified 
Notification Letter and its progeny remain largely in place.
    The VFW continues to believe that most current notice letters are 
deficient and certainly inadequate for the purposes of the FDA 
initiative. In a Simplified Notification Letter, the ``summary of 
evidence'' is simply a list of documents, such as treatment records. 
The ``reasons for decision'' in the notice letters are almost always 
simple conclusions that lack an adequate explanation of the evidence 
considered, how it was weighed and reasons for the decision. VA must 
improve them in order to provide information which allows claimants and 
their representatives to understand the evidence used in making the 
decision, an explanation of the analysis, and reasons and bases for the 
decision. Without this information, a claimant does not have the tools 
necessary to decide what evidence was used, how it was analyzed and why 
VA made its decision, and therefore cannot knowledgeably waive his or 
her rights.
    With an improved disability rating notification letter, the VFW 
believes that the FDA initiative would be an effective tool to help 
reduce the backlog of 444,500 pending appeals in a timely and accurate 
manner, while protecting the due process rights of veterans and other 
claimants.
    discussion draft on title 38, united states code, appointment, 
  compensation, performance management, and accountability system for 
     senior executive leaders in the department of veterans affairs
    This discussion draft would move VA's Senior Executive Service 
(SES) corps from title 5, United States Code (U.S.C.) to title 38, 
U.S.C., and expand VA hiring, compensation and accountability 
authorities. The VFW supports the discussion draft's intent and has a 
suggestion to improve it.
    The VFW agrees that the current hiring and compensation structure 
for SES employees puts VA at a disadvantage when recruiting and 
retaining the best and brightest executives. That is why the VFW 
strongly supports expanding VA's authorities to hire SES employees and 
pay them salaries that are more competitive to their private-sector 
counterparts.
    The VFW strongly believes that employee accountability is critical 
to correcting past problems at VA and restoring the trust of the 
veterans they serve. This includes authorizing the Secretary of 
Veterans Affairs to properly discipline VA executives who deliberately 
delay or withhold care from a veteran. While the overwhelming majority 
of VA executives are excellent leaders who deserve to be praised for 
their tireless work to improve the lives of our Nation's veterans, 
those who commit malfeasance should be held accountable for their 
actions.
    This discussion draft proposes establishing disciplinary appeals 
boards, made up of SES employees, to review disciplinary actions 
against VA SES employees. While these types of boards are relatively 
effective in determining the professional conduct or competence of VA 
health care professionals, which this proposal is modeled after, the 
VFW does not believe a panel of SES employees would effectively 
determine whether adverse actions being considered against their peers 
would effectively determine the veracity of such adverse actions----
especially if the Secretary is the final arbiter of the decision.
    According to a Congressional Research Service report entitled ``The 
Senior Executive Service: Background and Options for Reform'' the SES 
corps was established to serve as ``a link between political appointees 
who run agencies and the career government workers in the agencies.'' 
To the VFW, this means that SES employees were not intended to be 
politicized. The VFW believes that the establishment of peer-review 
boards for SES employees without having an independent third party 
entity serve as the final arbitrator of adverse actions would result in 
SES employees serving at the whims of political appointees. While the 
VFW has full faith and confidence that Secretary McDonald would 
strengthen rather than erode VA's SES corps, the VFW would not want 
future political appointees to be able to politicize VA's career civil 
servants.
    However, the VFW acknowledges that the Merit System Protection 
Board may not be the best arbiter of adverse actions under title 38 
authority. That is why the VFW urges the Committee to consider 
establishing a new independent agency to review appeals of major 
adverse actions against title 38 employees.

    Mr. Chairman, this concludes my testimony and I will be happy to 
answer any questions you or the Committee members may have.

    Chairman Isakson. Thank you, Mr. Fuentes.
    Mr. Atizado.

  STATEMENT OF ADRIAN ATIZADO, ASSISTANT NATIONAL LEGISLATIVE 
              DIRECTOR, DISABLED AMERICAN VETERANS

    Mr. Atizado. Thank you, Mr. Chairman. First of all, I would 
like to thank you for inviting DAV to testify at this 
legislative hearing.
    As you know, DAV believes that by putting their lives on 
the line in defense of this country and our freedom that 
veterans have earned and deserve timely access to effective 
benefits and services, which these bills under consideration 
today do intend to facilitate.
    DAV thanks the sponsors and cosponsors of the three bills 
under consideration, particularly Senator Burr, Senators Tester 
and Sullivan, and their staff, and of course, your leadership, 
Mr. Chairman, and your dedicated committee staff, to working 
with us on these measures.
    It is well documented in numerous studies of the VA health 
care system and the quality of care it delivers to millions of 
veterans. While VA has many challenges, some of them quite 
serious, it somehow continues to outperform the U.S. health 
care sector on nearly every metric of quality. This unique 
accomplishment in the face of the access crisis, we believe, 
must not be compromised.
    We are pleased to support both S. 2646 and provisions of 
S. 2633 which both contain some of our recommendations to 
reform the VA health care system while preserving and 
strengthening the VA for the future. For the sake of brevity, I 
will only speak to a few key items out of several that DAV 
believes the Committee should include in the omnibus measure it 
is working to move.
    We believe the health care network contemplated in S. 2633 
would most likely yield a tailored network that optimizes the 
strength of all health care resources, seamlessly integrate 
Community Care into the VA health care system, and allow VA to 
best meet the expectations of veteran patients at the most 
local level.
    However, we also believe that 2646 offers an important 
provision that prohibits VA from requiring veterans to receive 
care from a specific entity in a specific tier. This, we 
believe, is necessary because we are strongly urging this 
Committee to ensure that the current arrangement under the 
Choice program, which has effectively dismantled care 
coordination in many places, does not become a permanent 
fixture in the future.
    See, this disconnect to getting Care in the Community is 
the single greatest source of complaints and frustration among 
veterans. VA must be made the coordinator and principal 
provider of care, and that responsibility must not be given to 
VA lightly.
    Now in addition to the authority to reform how veterans 
access Care in the Community, DAV urges the Committee to ensure 
any omnibus measure includes the authority for VA to use 
provider agreements. There is no doubt that as we discuss the 
future of VA health care today veterans are being denied the 
care they have chosen in the community and are being displaced. 
We must act, and we urge the Committee to consider our 
recommendations in this provision and move it without further 
delay.
    DAV also applauds the sponsors and cosponsors of 2633 for 
including our recommendations to make urgent care part of VA's 
medical benefits package and to better integrate emergency and 
urgent care within the health care delivery system.
    We are pleased that legislation would limit the imposition 
of co-payments for this care because our organization, frankly, 
is opposed to co-payments. We believe it should be reduced or 
altogether eliminated. But, nonetheless, we strongly oppose the 
provision that would force veterans to pay co-payments while 
allowing VA to collect on their health insurance.
    Finally, Mr. Chairman, because of the year-long 
collaborative effort put into this proposal by Veterans Service 
Organizations and VA, I would like to spend a few precious 
moments on S. 2473, the Express Appeals Act of 2016.
    Now it is worthy to note this Committee's House counterpart 
and, indeed, the full House believe in the merits of this 
measure by approving identical provisions in H.R. 677. This 
bill would establish a fully developed appeal program modeled 
after the successful fully developed claim program in which 
veterans voluntarily agree to develop private evidence to 
substantiate their claim in exchange for expedited processing. 
With broad bipartisan support, we urge this Committee to 
approve this important legislation.
    Mr. Chairman, I have to note, though, I understand that 
this is a pilot program. I understand it is small right now. 
But, just like the fully developed claims process, which also 
is voluntary, the initial host for the program was maybe 10 
percent of the total claims being submitted. It has now grown 
to over 50 percent and has done tremendous impact on the claims 
backlog. We hope that great things come in small packages and 
this is going to be one of those things.
    Mr. Chairman, this concludes my statement. I would be happy 
to answer any questions you have.
    [The prepared statement of Mr. Atizado follows:]
   Prepared Statement of Adrian Atizado, Deputy National Legislative 
                  Director, Disabled American Veterans
    Mr. Chairman and Members of the Committee: Thank you for inviting 
DAV (Disabled American Veterans) to testify at this legislative 
hearing, and to present our views on the bills under consideration. DAV 
is a congressionally chartered national veteran's service organization 
of 1.3 million wartime veterans, all of whom were injured or made ill 
while serving on behalf of this Nation, and dedicated to a single 
purpose: empowering veterans to lead high-quality lives with respect 
and dignity.
    We believe ill and injured veterans earned and deserve timely 
access to high-quality, comprehensive and veteran-centric health care 
designed to meet their unique circumstances and needs. Because numerous 
studies on the quality of care the VA health care system delivers as 
well as the studies mandated by Public Law 113-146, ``the Veterans 
Access, Choice, and Accountability Act of 2014,'' show that while the 
VA has a numerous challenges and problems, it continues to outperform 
the rest of the U.S. health care sector on nearly every metric of 
quality. This unique accomplishment in the face of the access crisis 
must not be compromised.
       s. 2646, the veterans choice improvement act of 2016, and 
  s. 2633, the improving veterans access to care in the community act
    DAV deeply appreciates the commitment and work of the members and 
staff of this Committee and the Senators for sponsoring the two bills 
being considered in today's hearing. Both bills seek to improve 
veterans access to community care by, among other things, consolidating 
some of VA's purchased care authorities, ensure coordination of care 
and health information sharing, and improving emergency care. DAV is 
pleased both bills contain some of our recommendations to reform the VA 
health care system while preserving and strengthening it so that DAV 
members and all eligible veterans may continue to enjoy the unique 
benefits and vital services VA provides well into the future.
    Over the past year, DAV and our Independent Budget (IB) partners 
developed a comprehensive framework to reform VA health care based on 
the principle that it is the responsibility of the Federal Government 
to ensure that disabled veterans have proper access to the full array 
of benefits, services and supports promised to them by a grateful 
Nation. In order to achieve this goal, our comprehensive framework has 
four pillars--Restructure, Redesign, Realign, and Reform. We offer our 
views on specific provisions of S. 2633 and S. 2646 that we believe fit 
within this framework and recommend it be part of the final legislation 
this Committee passes to reform VA health care.
I. Restructure our Nation's system for delivering health care to 
        veterans, relying not just on a Federal VA and a separate 
        private sector, but instead creating local Veterans-Centered 
        Integrated Health Care Networks that optimize the strengths of 
        all health care resources to seamlessly integrate community 
        care into the VA system to provide a full continuum of care for 
        veterans.
            Veterans-Centered Integrated Health Care Networks
    To this end, we believe the health care network contemplated in 
S. 2633 would most likely yield the local Veterans-Centered Integrated 
Health Care Networks. Like private sector health care plans and larger 
provider systems that offer health coverage, the proposed Subsection 
1730A(c)(3) of this measure will allow VA to create a tiered network 
that would best meet the expectations of veteran patients at that local 
level.
    This kind of integrated network should provide veterans information 
they would need to make an informed decision. For example, information 
about the quality of the community providers in this network will give 
veterans the ability to discern between those community providers that 
are more knowledgeable about the veteran experience and unique needs, 
information about the satisfaction rating from other veterans who have 
seen that provider, and whether there is a good working relationship 
with the VA that facilitates care coordination.
    This integrated network would create and preserve the kind of 
community-VA provider partnership that mirrors the care our members 
value most in the VA health care system. However, we believe S. 2646 
offers an important provision that would prohibit VA from requiring 
veterans to receive care or services from an entity in a specific 
tier.\1\
---------------------------------------------------------------------------
    \1\ Sec. 1703A(n)(2) as proposed in S. 2646.
---------------------------------------------------------------------------
    To ensure formation of the local Veterans-Centered Integrated 
Health Care Networks allows for the function of a high performing 
network, our framework places VA as the coordinator and principal 
provider of care, which we discuss immediately below. VA's primary care 
(medical home) model with integrated mental health care, is more likely 
to prevent and treat conditions unique to or more prevalent among 
veterans, particularly those with disabilities or chronic conditions.
II. Redesign the systems and procedures by which veterans access their 
        health care with the goal of expanding actual, high-quality, 
        timely options; rather than just giving them hollow choices:

            Care Coordination
    We strongly urge the Committee to preserve the organizational model 
required in Section 106 of the Veterans Access, Choice, and 
Accountability Act of 2014 (Public Law 113-146; 38 U.S.C. 1701 note) in 
any future consolidation of VA's purchased care authorities. Section 
106 effectively created a ``wall'' that separated the financial and 
clinical operations of the current Choice program, which better 
insulated front-line clinicians, such as VA Community Health Nurse 
Coordinators, social workers, or other VA health care professionals 
against the fiscal pressures that have been known to sway clinical 
decisions and delay or deny community care to veterans.
    DAV also strongly urges the Committee to discontinue the current 
arrangement under the Choice program that has effectively removed a 
critical part of the care coordination responsibility away from VA 
front-line clinicians. VA Community Health Nurse Coordinators are the 
veteran's case manager and coordinators of care who work with the 
veteran's health care team to provide for the veteran patient's 
medical, nursing, emotional, social and rehabilitative needs as close 
to and/or in the veterans home.
    While VA Community Health Nurse Coordinators are now better able to 
exercise their clinical authority due to the Section 106 
reorganization, they are frustrated having lost their ability under the 
current Choice program to act as a liaison between community providers 
and VA and as an advocate for their veteran patients--who themselves 
have unsuccessfully tried to exercise their Choice option and asked for 
assistance from their VA nurse coordinator--to get the care they need 
in the community.
    We strongly recommend the Committee ensure VA remains the 
coordinator of veterans care especially if that care is provided in the 
community and paid for by the Department.
            Community Care Eligibility
    For veteran patients, waiting for a health service begins when the 
veteran and the appropriate clinician agree to a service, and when the 
veteran is ready and available to receive it. We believe it is time to 
move toward a health care delivery system that keeps clinical decisions 
about when and where to receive care between a veteran and his or her 
doctor--without bureaucrats, regulations or legislation getting in the 
way.
    As both S. 2633 and S. 2646 proposes an additional hurdle for 
veterans to receive clinically necessary in the community, we stand 
ready to work with the Committee to ensure veterans, and especially 
service-connected veterans are not any more encumbered in receiving 
care in a reformed VA health care system. We applaud the veteran-
centric approach in using a geographic distance around the veteran as 
described in Section 302 of S. 2633. Moreover, if clinical access to a 
primary care provider is to be used, we recommend language employed in 
S. 2633 of a full-time primary care ``provider'' rather than 
``physician.'' This would ensure uniformity with the private sector 
practice of using non-physician providers in primary care settings.
    We also support the provisions in both S. 2633 and S. 2645 to make 
eligible to receive care in the community those veterans enrolled in 
Project ARCH so they do not experience a disruption in the care they 
have been receiving when the authority for the program is consolidated.
            Veterans Care Agreements
    Section 201 of both S. 2633 and S. 2644 would authorize the 
establishment of ``Veterans Care Agreements,'' and would prescribe the 
types of providers eligible for participation. We support the 
establishment of such agreements, but we are concerned that VA would be 
required to first exhaust other acquisition strategies before being 
allowed to pursue such agreements under S. 2646. In addition, different 
terms are used for paragraph (4) in both bills. We recommend the term 
``provider'' be used rather than ``health care provider'' for 
consistency and ease of implementation of this section by the 
Department.
    We agree with VA's assessment regarding the need for this authority 
to be enacted into law without delay and applaud this Committee's work 
to include similar language in S. 425; however, there are limitations 
in that measure that we believe will work against the consolidation of 
VA's purchased care authorities as contemplated in the two bills under 
consideration today.
    Mr. Chairman, there is one other note of concern as you consider 
legislation restructuring VA's relationship with non-VA community 
providers. Both S. 2633 and S. 2646 have provisions authorizing 
provider agreements with community providers, but there is a provision 
in S. 2633 (Sec. 202) addressing State Veteran Home provider agreements 
which does not have a corresponding provision in S. 2646. When this 
Committee approved S. 425 on December 9, 2015, in addition to 
authorizing new provider agreement authority for VA, it also included a 
conforming amendment to protect existing provider agreements that VA 
has with all State Veterans Homes for the provision of skilled nursing 
care to severely disabled veterans rated 70 percent or higher. As you 
know, it took several years, two public laws (P.L. 109-461 & Public Law 
112-154) and an Interim Final Rule (RIN 2900-AO57) to achieve Congress' 
original intent of offering the most severely disabled veterans the 
option to receive extended care at State Veterans Homes. As the 
Committee and the Senate move forward, it is important to ensure that 
any legislation that addresses VA's provider agreement authority with 
community providers does not modify, diminish, endanger or eliminate 
State Veterans Homes existing provider agreements authorizing them to 
provide these critical long term care services to thousands of severely 
injured and ill veterans.
            Emergency and Urgent Care
    DAV applauds the sponsors and cosponsors of S. 2633 for including 
our recommendations to make urgent care part of VA's medical benefits 
package and to better integrate emergency and urgent care with the 
overall health care delivery system. DAV believes a health care benefit 
package is incomplete without provision for both urgent and emergency 
care.
    We support the proposal in both bills to address the eligibility 
and payment issues that veterans and community providers face. This 
Committee is aware of our organization's long standing position 
opposing any and all copayments imposed on veterans and support 
legislation reducing the copay amount. In light of the latter, we are 
pleased the legislation would limit the imposition of emergency and 
urgent care copayments had veterans sought this type of care at VA 
medical facilities.
    However, DAV opposes the provision that would force veterans to pay 
copayments while their health insurance reimburses VA for emergency or 
urgent care. VA should be applauded and allowed to continue its current 
practice of offsetting a veteran's copayment debt with monies VA 
receives from billing the veteran's health insurance plan.
    We also oppose the provision in S. 2633 that would require veterans 
to have received VA care within the last 24-months prior to receiving 
emergency care to be eligible for the emergency and urgent care 
benefit. This requirement unduly discriminates against otherwise 
healthy veterans who need not seek care at least once every 24 months, 
yet is required to make an otherwise unnecessary medical appointment in 
order to be eligible for payment or reimbursement for non-VA emergency 
treatment. We urge the Committee provide greater flexibility by 
including an exemption authority to the 24-month requirement for this 
and other unforeseen circumstances.
            Emergency Care Defined
    Carrying out the multiple and complex authorities \2\ for VA to pay 
or reimburse emergency care under title 38 are a source of continuous 
complaints and can drive ill and injured veterans and their families to 
financial ruin.
---------------------------------------------------------------------------
    \2\ 38 U.S.C. Sec. Sec. 1703, 1725 and 1728
---------------------------------------------------------------------------
    According to VA, ``In FY 2014, approximately 30 percent of the 2.9 
million emergency treatment claims filed with VA were denied, amounting 
to $2.6 billion in billed charges that reverted to Veterans and their 
[Other Health Insurance]. Many of these denials are the result of 
inconsistent application of the ``prudent layperson'' standard from 
claim to claim and confusion among Veterans about when they are 
eligible to receive emergency treatment through community care.''
    One of the by-products of Emergency Medical Treatment and Labor Act 
(EMTALA) was the prudent layperson standard in response to a critical 
payer issue of the day--payment denials for the lack of prior 
authorization. To address the inconsistent application of the prudent 
layperson standard, DAV recommended the ``emergency condition'' be 
defined using EMTALA, with a minor amendment to include behavioral 
conditions, so that the definition of an emergency condition for VA 
purposes would be:

        ``A medical [or behavioral] condition manifesting itself by 
        acute symptoms of sufficient severity (including severe pain) 
        such that the absence of immediate medical attention could 
        reasonably be expected to result in placing the individual's 
        health [or the health of an unborn child] in serious jeopardy, 
        serious impairment to bodily functions, or serious dysfunction 
        of bodily organs. With respect to a pregnant woman who is 
        having contractions that there is inadequate time to effect a 
        safe transfer to another hospital before delivery, or that 
        transfer may pose a threat to the health or safety of the woman 
        or the unborn child.''
            Claims Processing and VA as Primary Payer
    In addition, VA's processing of claims has been a significant 
weakness to the Department's community care programs resulting in 
costlier care, inappropriate billing of veterans and strained 
partnerships with community providers. Government Accountability Office 
reports throughout the years have consistently highlighted disturbing 
limitations in the Department's claims processing system as having 
unnecessary manual operations rather than automatically applying 
relevant information and criteria to determine whether claims are 
eligible for payment and notifying veterans and community providers 
about the results of the determination, payment, and appeal procedures.
    Many veterans worry about claims that are not paid promptly or are 
left unpaid, and they are left in a difficult position of trying to get 
claims paid or be put into collections. These delays or denials create 
an environment where community providers are hesitant to partner with 
VA for fear they will not be paid for services provided. Hospitals and 
community providers have also expressed concern that prompt payment 
laws do not apply to care that is provided to veterans if they do not 
have a contract with VA. We have also heard complaints from veterans 
regarding section 101(e) of the current Choice program, which places on 
them greater financial burden and emotional stress while trying to 
recover from injuries and illnesses. We believe the responsibility of 
the government as first-payer and prompt payer for care and services 
should be reaffirmed.
    Thus, DAV supports the required claims processing system in Section 
103 of S. 2646, which would apply the prompt payment act to all 
services under the new Veterans Choice Program, govern claims 
management and payments to providers under the Choice Program, and 
would set a firm date after which VA would not accept claims in other 
than electronic form. This section would mandate the establishment of 
an electronic interface to enable private providers to submit 
electronic claims as required by the section. To further strengthen 
this proposal, we recommend adding certain provisions in S. 2633 
requiring VA be primarily responsible for payment of services, an 
eligible provider to submit claims to VA within 180 days of furnishing 
care or services and how paper claims will be treated in the interim. 
These factors are critical elements in high performing Veterans-
Centered Integrated Health Care Networks.
III. Realign the provision and allocation of VA's resources so that 
        they fully meet our national and sacred obligation to make 
        whole those who have served.
    We support the provisions in both S. 2633 and S. 2646 which would 
require the Administration to submit in its annual budget requests for 
advance appropriations for the Veterans Health Administration, Care in 
the Community program to begin in fiscal year 2017.
IV. Reform VA's culture to ensure that there is sufficient transparency 
        and accountability to the veterans this system is intended to 
        serve.
    In line with our recommendation to maintain the financial and 
clinical reorganization under Section 106 of the Veterans Access, 
Choice, and Accountability Act of 2014 (Public Law 113-146; 38 U.S.C. 
1701 note), we believe it is beneficial to require, rather than make 
discretionary, the transfer of funds and payment of services to the 
Chief Business Office of the Veterans Health Administration. This would 
help ensure transparency and accountability to a single entity when 
conducting oversight.
                  s. 2473, express appeals act of 2016
    S. 2473, the Express Appeals Act of 2016, introduced by Senators 
Dan Sullivan (AK), Robert Casey (PA), Dean Heller (NV) and Jon Tester 
(MT) would establish a new pilot program to allow veterans to file 
``fully developed appeals'' (FDA) which would receive expedited 
processing by the Veterans Benefits Administration (VBA) and the Board 
of Veterans Appeals (Board). An identical House bill (H.R. 800) was 
incorporated into an omnibus bill (H.R. 677) approved by the full House 
on February 9, 2016.
    The FDA program was developed through a year-long collaborative 
effort among stakeholders that included DAV, VFW, The American Legion 
and other major veterans organizations, as well as leaders of both VBA 
and the Board. The FDA is modeled on the successful Fully Developed 
Claims (FDC) program in which veterans agree to undertake the 
development of private evidence necessary to substantiate their claims 
in exchange for expedited processing. Similarly, to participate in the 
FDA program, appellants would agree to develop and submit any private 
evidence necessary for the Board to make its decision, thus relieving 
both VBA and the Board of that development workload. The appellant 
would be required to submit all such new evidence, as well as any 
argument and other required certifications, at the time they submit 
their FDA.
    In addition, the appellant would agree to an expedited process at 
VBA that eliminates the Statement of the Case (SOC), Form 9, any 
hearing before the VBA or the Board and the Form 8 certification 
process. The elimination of these processing steps alone could save 
some veterans up to 1,000 days or more waiting for their appeals to be 
transferred from VBA to the Board.
    During stakeholder negotiations over the FDA it was agreed that the 
Board would retain its ``duty to assist'' in the development of any 
necessary Federal records. If new Federal records are obtained, or new 
exams or independent medical opinions ordered, the appellant would not 
only be given copies of all such evidence, but would have 90 days to 
review it and submit additional argument and evidence in response, 
including private evidence.
    A key attribute of the FDA program is that it is a voluntary 
program with the appellant retaining the absolute right to withdraw 
from the FDA program and revert their appeal back to the standard 
appeal processing model at any time prior to disposition by the Board. 
Such a reversion would then allow the appellant to submit any 
additional evidence, have their appeal heard by a Decision Review 
Officer (DRO) or request a hearing by the Board.
    In accordance with DAV Resolution No. 091 to improve the claims and 
appeals process, DAV strongly supports the creation of a ``fully 
developed appeals'' pilot program through enactment of H.R. 2473. This 
innovative and pragmatic legislation would alleviate workload at the 
Board and VBA, provide some veterans with a new option to expedite 
their appeals by up to 1,000 days, while fully protecting the due 
process rights of veterans so that they can receive all the benefits 
they have earned through their service. H.R. 2473 has broad and 
bipartisan support and we urge the Committee to approve important 
legislation to improve the appeals process.
    discussion draft on title 38, united states code, appointment, 
  compensation, performance management, and accountability system for 
    senior executive leaders in the department of veterans affairs.
    Delegates to our most recent national convention passed two 
resolutions that may be relevant to this informal ``discussion'' 
proposal. DAV Resolution No. 126 calls for modernization of VA human 
resources management system to enable VA to compete for, recruit and 
retain the types and quality of VA employees needed to provide 
comprehensive health care services to sick and disabled veterans. DAV 
Resolution No. 214 calls for meaningful accountability measures, but 
with due process, for employees of the Department of Veterans Affairs--
by requiring that any legislation changing the existing employment 
protections in VA must strike a balance between holding civil servants 
accountable for their performance, while maintaining VA as an employer 
of choice for the best and brightest.
    The discussion draft would apply personnel laws for Senior 
Executive Service (SES) members now working under title 5, United 
States Code, which covers most civil servants, to title 38, which 
allows greater pay flexibility to provide more competitive wages. 
Hiring under title 38 would also give the Secretary more authority to 
expedite hiring. These are key issues when competing against other 
Federal agencies and the private sector for top talent. DAV supports 
the intent of these provisions.
    However, there may be some issues when hiring individuals under 
title 38, which is generally reserved for personnel in health related 
fields, and applying those standards to those who would lead the 
Veterans Benefits Administration, National Cemetery Administration, and 
VA staff offices. In addition, while the proposed reform would allow 
expedited SES hiring, DAV asks the Committee to carefully consider 
whether the proposed executive compensation, which would still lag far 
behind that of chief executives in private sector health care, is 
nearly sufficient to offset the new risks being created by other parts 
of this proposal.
    In the final analysis, these individuals would serve at the 
pleasure of the VA Secretary with little protection that is now 
available under current law to guarantee their status under title 5 to 
appropriately protect their due process rights and provide them retreat 
rights to lower-level assignments and to insulate them from politically 
motivated decisions--all hallmarks of the origins of the SES as 
envisioned in the Civil Service Reform Act of 1978. That act 
established the SES, the Merit Systems Protection Board, and created an 
array of procedures and requirements that govern the entirety of the 
SES program and many other aspects of Federal personnel law.
    Mr. Chairman, DAV and our members urge serious reform of the VA 
health care system to address access problems while preserving the 
strengths of the system and its unique model of care. We appreciate 
this Committee's hard work and are pleased that many of our 
recommendations have been incorporated into the measures under 
consideration today so that veterans will have more options to receive 
timely, high-quality care closer to home.

    Thank you for inviting DAV to submit this testimony. We would be 
pleased to further discuss any of the issues raised by this statement, 
to provide the Committee additional views, or to respond to specific 
questions from you or other Members.

    Chairman Isakson. Thanks to all three of you for your 
testimony and for your patience, and we appreciate your being 
here today and your input. Thank you for the input you give us 
on a daily basis as we deliberate.
    Each one of you referred to the inclusion that either the 
Department or the Committee or both have done with your 
organizations as we develop many of these platforms and many of 
these changes in the law for the Veterans Administration. We 
appreciate that acknowledgement, and we could not do it if not 
for your help.
    Mr. Fuentes, let me ask you a question. You made a 
reference to Camp Lejeune and the eight presumptions the 
Secretary approved for coverage about a year ago or about 6 
months ago, but you made a reference to you wanted them to be 
able to allow them to file claims and they were not allowed to 
file claims for another year. Is that correct?
    Mr. Fuentes. That is correct, Mr. Chairman. I may be wrong, 
but I think it was a couple weeks ago that the Secretary 
decided to consider eight conditions as presumptive and being 
caused by the contaminated water in Camp Lejeune. What this 
does is it expedites or reduces the burden of proof that 
veterans have to present when applying for disability claims. 
However, because of the regulatory process, it is estimated to 
take about a year until veterans can actually start applying, 
which we feel is unacceptable.
    Chairman Isakson. Mr. Secretary, I know you are in the 
audience and not testifying. But, can you address that for a 
second?
    Secretary McDonald. I can, Mr. Chairman. There is something 
called an interim----
    Chairman Isakson. I got him on his knees already. That is a 
good sign. [Laughter.]
    Secretary McDonald. Mr. Chairman, I am always on my knees 
for you.
    There is something called an interim final rule, and like 
we did with C-123 for Agent Orange, I would like to do an 
interim final rule so that veterans can apply as quickly as 
possible.
    Mr. Fuentes is right. It does take a period of time to run 
these regulations and rules through the government structure, 
but if we do the interim final rule we can speed up that 
process, and that is what we want to do, obviously.
    Chairman Isakson. Thank you very much.
    Secretary McDonald. Yes, sir.
    Chairman Isakson. Each one of you made a positive 
reference, in particular Mr. Celli and Mr. Fuentes, to the 
accountability portion of what we are trying to do in the 
omnibus bill and made statements making sure that we did not 
have a negative effective on career Civil Service employees 
within the Veterans Administration. There is no intention of 
this Committee to have any negative impact on career civil 
servants of the Veterans Administration.
    It is clearly our goal to see to it that there is a 
mechanism for the Secretary to, first of all, hire the 
professionals he needs to be able to run the Veterans 
Administration and perform the medical services within the 
Veterans Administration under Title 38, and that where in SES 
employees there is a problem the Secretary has the ability for 
discipline and the ability for future employment depending on 
the merits of the case that he determines, not determined by 
some third party.
    There are a lot of people that always feel when you talk 
about firing somebody that it is something that just gives 
somebody a big thrill to say ``I am going to go fire a few 
people today.'' That is not what we are looking for at all.
    But, what we are looking for is an explanation, for which 
there is none to this moment, for some of the egregious things 
that have happened over the last few years--prior to Secretary 
McDonald's service, I might add--because we end up dealing with 
these things 2 and 3 and 4 years after the time they take 
place.
    I appreciate your testimony and your support for the 
accountability piece, which will be the linchpin that will 
allow us to do caregivers, will allow us to do West L.A., will 
allow us to do the fully expedited claims, will allow us to 
improve disability claims and improve the processing of those, 
which is exactly what we want to do.
    I want to thank you for being here today and thank you for 
your testimony. The record will remain open for five days if 
you have any additional testimony you want to add or any 
additional things that need to be said.
    We appreciate your service to the United States of America 
and your testimony today. God bless you and thank you.
    [Whereupon, at approximately 4:02 p.m., the Committee was 
adjourned.]

                            A P P E N D I X

                              ----------                              

   Prepared Statement of Hon. Steve Daines, U.S. Senator from Montana
    Chairman Isakson, Ranking member Blumenthal and Members of the 
Committee; Thank you for allowing me to submit testimony on the 
importance of the Veterans Choice Improvement Act of 2016, S. 2646, 
introduced last week by Senator Burr, myself, and five other Senators. 
Issues with the Choice Act are the top concerns I hear from veterans in 
my home state of Montana and I am extremely pleased to see that our 
legislation designed to fix it has been brought before the Committee 
today.
    Our legislation seeks to improve the Choice Act passed in 2014 by 
creating one easy to understand program that allows veterans to get 
care outside the VA. It was clear that the redundant and bureaucratic 
layers of programs previously provided to our veterans was failing 
them, and failing local medical providers throughout the country.
    In Montana, we started seeing providers pull out of the Choice Act 
because they were not being paid back. This created a chain reaction of 
more problems for veterans, who found themselves traveling past 
multiple qualified doctors to get to one that was accepting the VA's 
horrific track record of reimbursements. Furthermore, veterans started 
seeing their own credit history being impacted due to failed payments. 
By holding the VA accountable for reimbursements and setting strict 
time standards, our bill fixes this. S. 2646 ensures providers outside 
the VA want to enter into these partnerships and blocks them from the 
painful regulations that come with being labeled a Federal contractor.
    Additionally, one of the key parts to the Veterans Choice 
Improvement Act is that it is the best suited for veterans in rural 
areas. Montana is home to one of the original pilot programs for 
veterans' healthcare in rural communities, the Access Received Closer 
to Home (ARCH) program--which is now incorporated and made permanent 
with S. 2646. ARCH works to find healthcare in small local communities 
for veterans, and is a program that could be negatively impacted if the 
VA is allowed to enter into the ``tiered network.'' A tiered network 
would restrict a veteran's ability to choose among providers, and is 
something our legislation strictly prohibits.
    Ensuring veterans can get the best care possible, close to home and 
without delay is of the utmost importance as we see our servicemembers 
return home. In Montana, where we are home to the second most veterans 
per capita, it is a top priority. The Veterans Choice Improvement Act 
takes drastic steps to ensure our veterans are getting the top care 
possible, and I am proud to submit this testimony today in support of 
it.
                                 ______
                                 
Prepared Statement of American Federation of Government Employees, AFL-
                                  CIO
    Chairman Isakson, Ranking Member Blumenthal, and Members of the 
Committee, Thank you for the opportunity to present the views of the 
American Federation of Government Employees, AFL-CIO and its National 
Veterans Affairs Council (AFGE) regarding pending legislation. AFGE 
represents over nearly 700,000 Federal employees, including nearly 
230,000 employees of the Department of Veterans Affairs. AFGE's 
representation of non-management, front line employees working in 
virtually every non-management VA position allows us to share a unique 
perspective with the Committee.
                                s. 2646
    It appears that S. 2646 would immediately repeal the current pilot 
program established by Section 101 of the Veterans Choice, Access and 
Accountability Act of 2014 (Choice Act), and replace it with a 
permanent Veterans Choice Program. AFGE strongly believes that it is 
premature to establish a permanent Choice program at this time. AFGE 
urges the Committee to defer any action that would make what reports 
suggest is a flawed temporary program permanent less than halfway 
through its authorization period. Instead, Congress should conduct 
immediate oversight of the many serious problems that veterans are 
experiencing in trying to access non-VA care under the current pilot 
program.
    Congress established the current Choice program as a temporary fix 
to what was perceived to be severe access problems. The current Choice 
program does not expire until the end of FY 2017. It is too early to 
determine whether the current pilot program has been a success or 
failure or whether its high price tag and adverse impact on VA's own 
capacity justifies its continuation.
    The Choice Act also provided additional funding to address chronic 
staffing shortages. Since enactment of the Choice Act, the Department 
has made significant progress toward its goal of hiring more front-line 
clinicians and support personnel who provide veterans with the 
exemplary health care services that they rate highly and strongly 
prefer. In addition, five months ago, the VA rolled out its 
Congressionally-mandated plan to consolidate non-VA care programs, and 
Chairman Isakson called its implementation a top priority for 2016.
    Veterans deserve great care and strong accountability from VA and 
non-VA providers alike. Therefore, we strongly recommend that the 
Committee take adequate time to address the many troubling reports 
regarding the Choice Act that have been made by veterans and the VA 
health care personnel trying to assist them. These include the pilot 
program's alleged failure to provide community clinics with consults 
containing diagnoses and physician instructions, or alert veterans that 
their evaluations have been scheduled, or notify the VA that a non-VA 
appointment has been made. This last item has resulted in many wasted 
in-house appointment slots.
    Veterans have reported that they are being harassed by bill 
collectors in connection with Choice Act care. In addition, as a 
consequence of the Choice pilot program, veterans are facing longer 
waits for in-house VA care because the VA employees assisting them 
often have to spend hours on the phone trying to deal with HealthNet 
and TriWest. Similarly, short staffing at VA's own primary clinics has 
worsened because staff have to be diverted to the time-consuming Choice 
referral process.
    OFCCP Jurisdiction: Section 201 of this bill would exclude VA-
provider contracts from Office of Federal Contract Compliance Program 
(OFCCP) jurisdiction. AFGE strongly opposes the elimination of anti-
discrimination protections for veterans and other covered employees who 
work for VA health care contractors.
    OFCCP plays a critical role in protecting veterans who work for 
Federal contractors. This office enforces the Vietnam Era Veterans' 
Readjustment Assistance Act of 1974 (VEVRAA) that requires Federal 
contractors to take steps to recruit, hire and promote protected 
veterans. Veterans protected under VEVRAA include: disabled veterans, 
veterans who served on active during a war, recently separated 
veterans, and veterans who received an Armed Forces service medal.
    Many veterans transition from having been medics and corpsmen, 
saving lives on the battlefield, to civilian health care jobs. Those 
veterans who will work for contractors receiving millions and millions 
of VA dollars deserve to be protected against discrimination that may 
occur simply because of their veteran status. OFFCP ensures that 
veterans are protected throughout the employment process, including 
hiring, firing, pay, benefits, job assignments, promotions, layoffs, 
training and other employment related activities. OFFCP also enforces 
laws prohibiting discrimination on the basis of race, sex, disability 
and national origin.
    How ironic it would be to enact a law that is specifically designed 
to protect veterans from job discrimination that would carve out the 
Department of Veterans Affairs' own health care agreements.
                                s. 2633
    It appears that S. 2633 would establish a new Veterans Choice 
program after termination of the current pilot program. While AFGE 
supports bill provisions that would improve veterans' access to care, 
including authorization for tiered, integrated health care networks 
that enable veterans to make informed choices, we believe that 
establishing a new program at this time is premature. As already 
stated, veterans are experiencing serious problems accessing 
appropriate, timely care under the current pilot program. We urge the 
Committee to instead conduct extensive oversight during the remaining 
18 months of the pilot in order to properly evaluate its strengths and 
weaknesses.
  discussion draft on title 38 appointment, compensation, performance 
        management, and accountability for va senior executives
    AFGE strongly opposes the Administration's proposal to move all VA 
senior executives (SES) from the Title 5 personnel system to the Title 
38 personnel system. Title 5 provides adequate flexibility to provide 
market pay to senior executives under Title 5. Section 5377 of Title 5 
authorizes agencies to increases SES pay up to Level I of the SES scale 
if a position ``requires expertise of an extremely high level in a 
scientific, technical, professional, or administrative field'' or ``is 
critical to the Agency's successful accomplishment of an important 
mission.''
    Conversion of VA SES positions to Title 38 would result in the 
elimination of all rights to appeal to the Merit Systems Protection 
Board (MSPB). AFGE strongly opposes the reduction of MSPB rights or 
other due process rights for any VA employees. The Choice Act provided 
the Secretary with an expedited process for removing and disciplining 
SES personnel (that only allows the MSPB administrative judge to accept 
or reject the discipline imposed by the Department). Alternatively, the 
Secretary can still use the process provided by 5 U.S.C. 7543(b) that 
allows the MSPB to lower the penalty as appropriate instead of 
completely reinstating the SES employee if it finds that the penalty 
was too severe.
    AFGE urges the Committee to reject further attempts to eliminate VA 
employee rights, and instead, enact management improvement provisions 
included in H.R. 2999.
                                 ______
                                 
 Letter from Clifton J. Porter II, Senior Vice President of Government 
           Relations, American Health Care Association (AHCA)

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                                 ______
                                 
         Prepared Statement of the American Medical Association
          s. 2646, veterans choice improvement act of 2016 and
    s. 2633, improving veterans access to care in the community act
    The American Medical Association (AMA) appreciates the opportunity 
to submit this statement for the record with regard to the Senate 
Committee on Veterans' Affairs' hearing today on draft legislation, 
S. 2646, the ``Veterans Choice Improvement Act of 2016,'' which was 
introduced by Senators Burr, Tillis, Boozman, and Moran, and S. 2633, 
the ``Improving Veterans Access to Care in the Community Act,'' which 
was introduced by Senators Tester, Blumenthal, and Brown. The AMA is 
strongly committed to helping Congress and the Department of Veterans 
Affairs (VA) ensure the comprehensive delivery of, and timely access 
to, primary and specialty health care for our Nation's veterans. The 
AMA was an early supporter of the Veterans Access, Choice, and 
Accountability Act of 2014 (VA Choice Act), which created the Veterans 
Choice Program (VCP), and we applaud the Committee's ongoing efforts to 
reform and improve our Nation's veterans' access to quality health 
care, as well as enhance the ability of non-VA physicians and other 
providers to deliver such care.
                       consolidation of programs
    We agree with the VA and the Committee that the VCP has not been 
working as intended, and we strongly support provisions in both S. 2646 
and S. 2633 to consolidate the VCP and all existing community care 
programs into one streamlined program. While the VA has the legal 
authority to send veterans outside of the VA for care, there are 
multiple programs, contracts, laws, and regulations. We think that the 
poor response to the existing VCP has in part been due to confusion by 
veterans and physicians between the VCP and the other existing 
community care programs, such as the Patient-Centered Community Care 
(PC3) Program. Streamlining and consolidating the different programs 
would improve care by creating efficiencies and eliminating duplication 
and costs in administering the new VCP, especially with regard to 
billing, the reimbursement process, eligibility criteria, and clinical 
and administrative systems.
                   veterans' access to specialty care
    Veterans have had longstanding issues with access to specialty care 
outside VA facilities. The VA Choice Act, S. 2646, and S. 2633 include 
the same problematic provisions with respect to veterans' eligibility 
for specialty care--the requirement that the veteran must live more 
than 40 miles driving distance from a VA medical facility, including 
``community-based outpatient clinic.'' This has been interpreted by the 
VA in some instances as preventing a veteran from going to a facility 
or physician further away for specialty care, because a VA community-
based outpatient clinic is within 40 miles, even if it does not provide 
the specialty care needed. While S. 2646 includes new language 
acknowledging that such facilities must have a full-time primary care 
physician, we recommend that the language also include a reference to 
necessary specialists.
                  agreements/contracts with providers
    In order to be effective, the VA's partnerships with private 
physicians in the community need to be simple and easy to navigate for 
physicians. We believe that the most straightforward way to authorize 
care and services by non-VA physicians is through provider agreements, 
similar to those used in the Medicare program, as recognized by the 
provisions in the VA Choice Act that created the VCP. Section 101(d)(3) 
authorizes the VA Secretary to enter into an agreement with non-VA 
providers using the procedures, including those procedures related to 
reimbursement, available for entering into provider agreements under 
the Social Security Act.
    It is also extremely important that, under such agreements, 
physicians and other providers are only subject to the same rules and 
regulations as Medicare and Medicaid providers. Generally, Federal 
contractors delivering supplies or services of $10,000 or more to a 
Federal entity have affirmative action obligations as prime contractors 
pursuant to Executive Order 11246, the Vietnam Era Veterans' 
Readjustment Assistance Act of 1974, and section 503 of the 
Rehabilitation Act of 1973. Each government contractor with 50 or more 
employees and $50,000 or more in Federal contracts is required to 
develop a written affirmative action plan, which must be updated 
annually. In addition to complying with multiple layers of affirmative 
action regulations, Federal contractors must comply with and prepare 
for the prospect of audits conducted by the Office of Federal Contract 
Compliance Programs (OFCCP). Medicare and Medicaid providers are not 
considered to be Federal contractors subject to these rules and 
procedures. Moreover, the VA Choice Act waived the OFCCP Federal 
contracting requirements for physicians and other providers entering 
into contracts and agreements to provide care and services, and we 
believe that any legislation to improve the VA Choice Program should do 
so as well. Without such protection, physicians in small private 
practices could be discouraged from entering into agreements to care 
for veterans. Accordingly, we support the provision in S. 2646 
providing that any contract entered into with non-VA providers for the 
care of veterans ``may not be treated as a Federal contract for the 
acquisition of goods or services and is not subject to any provision of 
law governing Federal contracts for the acquisition of goods or 
services'' (Section 101(d)(1)(C)).
                       billing and reimbursement
    With respect to reforming the VCP's billing and reimbursement 
processes, we generally support the provisions in S. 2646, except as 
noted below. According to the VA, ``The current VA claims 
infrastructure and claims process are complex and inefficient due to 
highly manual procedures, and VA lacks a centralized data repository to 
support auto adjudication'' (U.S. Department of Veterans Affairs, Plan 
to Consolidate Programs of Department of Veterans Affairs to Improve 
Access to Care,'' October 30, 2015, at page 49). The VA has more than 
70 centers processing claims across 30 different claims systems, and 
limited automation with paper-based processes that result in late and 
incorrect payments. Improving the VA's reimbursement processes would 
alleviate some of the complaints that physicians and other providers 
have had tied to the VCP, e.g., administrative hassles and delays in 
payment. Some of these problems have arisen with Health Net, one of the 
VCP managers, particularly with respect to billing and reimbursement 
delays in the New England region. Moving toward auto-adjudication and 
away from requiring medical records for reimbursement--a current VA 
requirement--should help to improve claims processing accuracy and 
predictability and allow claims to be paid promptly, thereby providing 
an incentive for physicians to join and remain in the provider network.
    We appreciate that both S. 2646 and S. 2633 include provisions 
requiring prompt processing and payment of claims. While we prefer the 
timeframes for processing and payment of claims in S. 2646, which are 
shorter than in S. 2633, we would note that with respect to clean 
claims submitted electronically, it should not take 30 days to 
reimburse a physician. Accordingly, we urge that this provision be 
changed to 14 days. Further, clean paper claims should be paid within 
30 days.
    In addition, while the AMA encourages the use of electronic claims, 
we do not support mandates on physicians or timetables for submitting 
all claims with no exceptions, and therefore we cannot support section 
103(b) of S. 2646. We note that although most Medicare claims are 
electronically submitted, there are certain exceptions allowed under 
Medicare, such as for claims from small providers (e.g., defined as 
providers with less than 25 full-time equivalent employees (FTEs) that 
are required to bill a Medicare intermediary, or physicians with fewer 
than 10 FTEs that are required to bill a Medicare Administrative 
Contractor), and for claims from providers that submit fewer than 10 
claims per month on average during a calendar year. Accordingly, we 
urge that the mandate provision in S. 2646 be deleted; at the very 
least, exceptions similar to those recognized by Medicare for small 
providers should be considered.
    Both S. 2646 and S. 2633 would standardize provider reimbursement 
rates to Medicare rates. While we think that this is moving in the 
right direction in terms of basing payment to providers on Medicare 
rates, the AMA supports the Medicare rate as a floor, not a ceiling, 
especially in areas where there are significant needs for service and 
limited available specialists. We appreciate that S. 2646 allows some 
regional variation, for veterans in highly rural areas, in Alaska, and 
in a state with an all-payer model agreement, but would urge more 
flexibility be allowed where needed, recognizing the varying expense of 
clinical practice in different geographic regions of the country.
                            tiered networks
    We are very concerned with the language allowing tiered networks in 
S. 2633, and therefore support the language in S. 2646 banning such 
networks for veterans receiving care from non-VA physicians. In its 
proposal for reform of the VCP, the VA indicated that they intended to 
provide veterans access to a tiered, ``high-performing network,'' which 
would reward providers for delivering ``high-quality care'' while 
promoting veteran choice and access. The VA indicated that it would 
apply industry-leading health plan practices for the tiered network 
design and that providers in the Preferred tier, versus the Standard 
tier, must ``demonstrate high-value care'' in order to be considered in 
the Preferred tier and to receive higher payment. It is unclear, 
however, how ``high-value care'' would be determined or demonstrated. 
Given some of the access issues that have arisen with the narrow 
networks offered in the exchanges under the Affordable Care Act and 
outside the exchanges, we believe that both the VA and the Committee 
need to proceed carefully in moving toward tiered networks. We are 
concerned that any tiering or narrowing of the networks in a reformed 
VCP will further exacerbate or create access problems. This is already 
occurring in certain states, in exchange plans and Medicare Advantage 
plans, with patients unable to find physicians in the top tiers in 
their areas or able to receive necessary specialized services because 
the tiering is specialty and not service or subspecialty specific. With 
many veterans requiring specialized services, such as mental and 
behavioral health care and orthopedics, which are already very limited 
in many places throughout the country, further tiering seems 
incompatible and actually in conflict with the direction of a reformed 
VCP program to provide greater and faster access to specialty care 
services in the community. Narrowing or tiering will do little to 
demonstrate confidence in the program and could deter participation by 
physicians in the community. If a prime goal of reforming the VCP is to 
increase participation and encourage ``high-value'' or ``high-quality'' 
physicians to participate in the program, this tiering will likely have 
the opposite effect.
                 using value-based reimbursement models
    We are strongly opposed to any use of a value-based payment model 
(VBM) ``to promote the quality of care,'' as S. 2633 proposes for 
incorporation into agreements to provide care by non-VA providers. The 
VBM is currently incapable of accurately and equitably measuring and 
comparing the cost and quality of services provided by physicians. A 
number of the cost and outcome measures that are being used were 
created for hospitals and are inappropriate for use in physicians' 
offices with smaller and less heterogeneous patient populations. 
Several reports done for the Centers for Medicare & Medicaid Services 
suggest that practices with the sickest patients fare poorly under the 
VBM. There are problems with many aspects of the methodology, including 
risk adjustment attribution and communication of rules and results to 
physicians. We believe that more analysis and evaluation of the VBM and 
its underlying physician feedback reports is needed, and oppose its 
extension to other programs, such as the VCP.
                               conclusion
    The AMA, on behalf of our physician and medical student members, is 
committed to helping ensure that our Nation's veterans receive 
comprehensive, timely, high-quality care. We applaud the Committee for 
its dedication to our Nation's veterans, and look forward to working 
with you to advance proposals to improve the Veterans Care Program and 
the care delivery experience for our veterans.
                                 ______
                                 
Letter from National Association of State Directors of Veterans Affairs

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                                 ______
                                 
  Prepared Statement of Nurses Organization of Veterans Affairs (NOVA)

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                                 ______
                                 
           Prepared Statement of Mr. Kerry Metoxen, Manager, 
                   Oneida Nation Veterans Department
    The Oneida Nation Veterans Dept. fully endorses an initiative to 
simplify the Appeals Process and supports VA's efforts to reform the 
Appeals Process to one that will better serve Veterans and tax payers. 
The current process is more than 80 years old and was implemented after 
WWI. Each appeal takes approximately 3-5 years to complete.
    The current process is failing Veterans, tax payers, and the 
American public.
                                 ______
                                 
          Prepared Statement of Max Stier, President and CEO, 
                     Partnership for Public Service

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                                 ______
                                 
          Prepared Statement of Paralyzed Veterans of America
    Chairman Isakson, Ranking Member Blumenthal, and Members of the 
Committee, Paralyzed Veterans of America (PVA) would like to thank you 
for the opportunity to submit our views on legislation pending before 
the Committee. The magnitude of the impact that veterans health care 
reform will have on present and future generations of veterans cannot 
be overstated, and we are proud to be part of this important 
discussion.
 s. 2633, the improving veterans access to care in the community act, 
                                  and 
          s. 2646, the veterans choice improvement act of 2015
    PVA's historical experience and extensive interaction with veterans 
around the country leads us to confidently conclude that veterans 
prefer to receive their care from the Department of Veterans Affairs 
(VA). We recognize, however, that while for most enrolled veterans VA 
remains the best and preferred option, VA cannot provide all services 
in all locations at all times. Care in the community must remain a 
viable option. As VA seeks to take the next major step in improving 
access to quality care for veterans, we appreciate the Committee's 
significant efforts in this matter and the Senators for sponsoring the 
legislation being considered during today's hearing. Both bills provide 
thoughtful approaches to incorporating community care and other health 
care resources in a consolidated and effective manner.
    As we consider legislation designed to reform VA health care, it is 
important to recognize that VA's specialized services, particularly 
spinal cord injury care, cannot be adequately duplicated in the private 
sector. Many advocates for greater access to care in the community also 
minimize, or ignore altogether, the devastating impact that pushing 
more veterans into the community would have on the larger VA health 
care system, and by extension the specialized health services that rely 
upon the larger system. Broad expansion of community care could lead to 
a significant decline in the critical mass of patients needed to keep 
all services viable. We cannot emphasize enough that all tertiary care 
services are critical to the broader specialized care programs provided 
to veterans. If these services decline, then specialized care is also 
diminished. The bottom line is that the SCI system of care, and the 
other specialized services in VA, do not operate in a vacuum. Veterans 
with catastrophic disabilities rely almost exclusively upon the VA's 
specialized services, as well as the wide array of tertiary care 
services provided at VA medical centers.
    Specialized services, such as spinal cord injury care, are part of 
the core mission and responsibility of the VA. As the VA continues the 
trend toward greater utilization of community care, Congress and the 
Administration must be cognizant of the impact those decisions will 
have on veterans who need the VA the most.
    PVA, along with our Independent Budget (IB) partners, Disabled 
American Veterans (DAV) and Veterans of Foreign Wars (VFW), developed 
and previously presented to this Committee a framework for VA health 
care reform. It includes a comprehensive set of policy ideas that will 
make an immediate impact on the delivery of care, while laying out a 
long-term vision for a sustainable, high-quality, veteran-centered 
health care system. Our framework stands on four pillars: 1) 
restructuring the veterans health care system; 2) redesigning the 
systems and procedures that facilitate access to health care; 3) 
realigning the provision and allocation of VA's resources to reflect 
the mission; and 4) reforming VA's culture with workforce innovations 
and real accountability. With this perspective, we offer our views on 
specific aspects of both S. 2633 and S. 2646, as well as the discussion 
draft legislation that would reform the Senior Executive Service (SES).
I. Restructuring the system in a way that establishes integrated health 
        care networks designed to leverage the capabilities and 
        strengths of existing local resources in order to provide more 
        efficient, higher quality and better coordinated care.
    PVA strongly supports the concept of developing high-performing 
networks that would seamlessly combine the capabilities of the VA 
health care system with both public and private health care providers 
in the community. The network structure proposed in S. 2633 is best 
suited to setting VA up for success in achieving this goal.
    By encouraging VA to develop a tiered network of eligible 
providers, the focus remains on providing not only increased access and 
choice, but the quality of care veterans earned and deserve. High-
quality health care for veterans requires more than expanding options. 
Establishing a tiered network where VA is able to capture and 
synthesize information related to specific providers enables veterans 
to make informed decisions related to their care. This ultimately leads 
to better results. Consistent with this idea, a specific provision in 
S. 2646 alleviates situations where the ``best option,'' as indicated 
in VA's tiered network, might not be the best fit for the veteran due 
to his or her particular circumstances. The proposed language prevents 
VA from requiring a veteran to receive care or services from an entity 
in a higher tier than any other entity or provider network. We 
recommend this provision be incorporated in the final legislation this 
Committee passes.
    A tiered system also permits VA to identify culturally competent 
community providers who understand the unique needs of the veterans 
they serve. VA academic affiliates and the corresponding workforce 
training programs have long provided clinicians their first extensive 
exposure to the unique needs of the veteran patient community. As 
integrated networks are developed, it is important to recognize the 
value of having primary care providers in the community who have passed 
through the VA academic affiliate programs. It also gives VA a baseline 
for identifying community health care providers who have at least some 
level of cultural competency. Despite these long-standing partnerships, 
academic affiliates are conspicuously absent from the explicit list of 
eligible providers in S. 2646.
    Critical to such a restructuring is the ability to bring community 
care providers into the fold. S. 2633 and S. 2646 each address VA's 
request for authority to enter into non-Federal acquisition regulation 
(FAR) provider agreements. The current requirement that providers enter 
into agreements with VA governed by the FAR System have suffocated VA's 
attempts to expand access to care in a timely manner. Smaller health 
care provider organizations otherwise disposed to serve the veteran 
population are especially resistant to engaging in the laborious FAR 
process. And yet they remain a critical piece to filling the gaps in 
health care services in certain areas. PVA is concerned, however, that 
the implied directive in S. 2646 is for VA to exhaust FAR based 
acquisitions before turning to ``Veterans Care Agreements.'' To 
facilitate the efficient development of high-performing networks, we 
support the unambiguous language in S. 2633 which permits VA to utilize 
such agreements as it sees fit.
II. Redesigning the systems and procedures that facilitate access to 
        care in a way that provides informed and meaningful choices.
    PVA firmly believes that eligibility and access to care should be a 
clinically based decision made between a veteran and his or her doctor 
or health care professional. Once the clinical parameters are 
determined, veterans should be able to choose among the options 
developed within the high-performing network and schedule appointments 
that are most convenient for them. Access decisions dictated by 
arbitrary wait times and geographic distances have no comparable 
industry practices in the private sector. While both pieces of 
legislation contain the current 30-day wait time and 40-mile distance 
eligibility standards for care in the community, we highlight a subtle, 
but significant, shift in S. 2633's proposal to use the veteran's 
residence as the center of origin as opposed to the nearest VA 
facility. S. 2646 offers another enhancement by ensuring that any 
follow-up care, including specialty and ancillary services deemed 
necessary as part of the original treatment, is conducted by the same 
provider and considered one episode of care. This ensures that veterans 
are not shuttled back and forth between different providers, including 
VA, for ancillary services based on piece-meal eligibility 
determinations conducted on the basis of separate episodes of care.
    Effective care coordination is essential to producing high-value 
health care outcomes for veterans served by the proposed high-
performing networks. Both bills propose measures aimed at streamlining 
the authorization process, payments to providers and the exchange of 
medical records. Modernizing these processes through automation and 
improved technology features will relieve stress on the current system 
and the veterans who fall victim to the financial distress 
inadvertently caused by lapses in the authorization and/or payment 
processes.
    Rather than employing the current Non-VA Care Coordination Program 
as proposed in S. 2646, VA should be permitted to modernize its care 
coordination efforts. VA's Choice Consolidation Plan spells out levels 
of care coordination administered based on the intensity of 
coordination needed. VA will directly manage care coordination for 
patients receiving care within its facilities and those eligible for 
care in the community based on wait times.
    For those veterans who are distance eligible for care in the 
community, a third-party administrator will be responsible for 
``Basic'' care coordination. As a distance eligible patient's needs 
escalate, VA care coordination is available for ``Care/Disease 
Management'' and a more intensive level of oversight, ``Case 
Management.'' In light of VA's current proposals, we support the 
provision in S. 2633 which permits VA to establish procedures it 
considers appropriate to facilitating care coordination. The method 
proposed by VA offers the functionality and flexibility needed to 
ensure that patients with complex cases receive adequate attention and 
resources. It also allows VA to provide a level of care coordination 
that corresponds to each individual patient's complexity and needs, 
regardless of whether the veteran receives care in VA facilities or in 
the community.
    PVA applauds the sponsors and co-sponsors of S. 2633 for 
incorporating our proposals to expand access to emergency and urgent 
care. We have long opposed co-payments for veterans who are otherwise 
exempt, and we are glad to see this reflected in legislation.
    We do, however, continue our opposition to any requirement that a 
veteran have received VA care within the preceding 24 months in order 
to qualify for emergency and urgent care benefits. The strict 24-month 
requirement is problematic for newly enrolled veterans, many of whom 
have not been afforded the opportunity to receive a VA appointment due 
to appointment wait times, despite their timely, good-faith efforts to 
procure one. This barrier has caused undue hardship on veterans and has 
resulted in some receiving unnecessarily large medical bills through no 
fault of their own. Additionally, this provision discriminates against 
healthier veterans who otherwise do not need as much health care as 
other veterans and may go more than two years without being seen.
III. Realigning the provision and allocation of VA's resources to 
        reflect the mission.
    PVA supports the provisions in both bills which would require 
advance appropriations for the Veterans Health Administration, Care in 
the Community program to begin in fiscal year 2017. Not reflected in 
either piece of legislation is a plan for addressing VA's inability to 
take the long view toward strategic resource allocation and planning. 
Under the framework presented by PVA and our IB partners, we call for 
the implementation of a Quadrennial Veterans Review, similar to the 
Quadrennial Defense Review.
    Additionally, while much of the focus in this legislation is keyed 
to addressing smooth integration of community care, we would reiterate 
that the access issues plaguing VA have been exacerbated by staffing 
shortages within the VA health care system which impacts VA's ability 
to provide direct care. Evaluating VA's capacity to care for veterans 
requires a comprehensive analysis of veterans health care demand and 
utilization measured against VA's staffing, funding, and 
infrastructure. However, VA's capacity metrics are based on deflated 
utilization numbers that fail to properly account for the true demand 
on its system.
    For example, a shortage of nurses within the Spinal Cord Injury and 
Disease (SCI/D) system of care has precluded SCI/D centers from fully 
utilizing available bed space and has forced SCI/D centers to reduce 
the amount of veterans they admit. This has caused a decrease in the 
daily average census at some SCI/D centers and implies that there is a 
lack of demand on the system, when in reality veterans who want to 
access SCI/D care are turned away because those centers lack the staff 
to man available beds.
 discussion draft on title 38, united states code revisions for senior 
                           executive service
IV. Reforming VA's culture with workforce innovations and real 
        accountability.
    PVA believes workforce innovation and accountability are critical 
to evolving the VA health care system into a truly dynamic system best 
suited to meet the demands of veterans. We applaud Secretary McDonald 
for acknowledging that employee experience is vital to its 
transformation efforts as a part of the MyVA initiative. The MyVA 
taskforce has developed a number of programs and initiatives to engage 
and empower VA employees. However, Federal hiring still reflects a 
mismatch between the skills desired and the compensation provided for 
many of the professionals VA recruits. If Congress is focused on 
bolstering VA's ability to fire poor-performing employees, Congress 
must also give VA the leverage to hire employees quickly and offer 
compensation commensurate with their skill level.
    With this in mind, we believe thoughtful consideration should be 
given to the draft proposal before the Committee, as put forward by the 
Secretary, which begins to address the question of workforce innovation 
and accountability, at least at the Senior Executive Service (SES) 
level. We do remain skeptical as to whether or not this draft 
legislation will produce meaningful accountability across the VA 
system, but we are convinced that the current system does not work. 
Additionally, while not contemplated by any of the bills on today's 
hearing agenda, workforce innovation and accountability are critical at 
all levels within the management structure of the VA. As VA is 
generally at a competitive disadvantage to hire and retain the best 
professionals in the health care field, the Committee should consider 
what additional incentives and tools the VA needs in order to enhance 
its ability to attract the best employees at every level, from the SES 
down to the bedside nurse.
    Last, as we have stated in previous testimony, we have consistently 
heard from veterans that their patient advocates are ineffective or 
seek to protect the medical facility's leadership instead of addressing 
their concerns. PVA believes that patient advocates cannot effectively 
meet their obligations to veterans if their chain of command includes 
VA medical facility staff that is responsible for the actions and 
policies they are required to address. If accountability is going to be 
a key tenet of reform, then PVA, along with our IB partners, recommend 
strengthening the Veterans Experience Office by combining its 
capabilities with the patient advocate program. Veterans experience 
officers would advocate for the needs of individual veterans who 
encounter problems obtaining VA benefits and services. They would also 
be responsible for ensuring the health care protections afforded under 
title 38, United States Code (U.S.C.), a veteran's right to seek 
redress through clinical appeals, claims under section 1151 of title 
38, U.S.C., the Federal Tort Claims Act, and the right to free 
representation by accredited veteran service organizations are fully 
applied and complied with by all providers who participate in Veterans-
Centered Integrated Health Care Networks, both in the public and 
private sector.
                s. 2473, the express appeals act of 2016
    PVA is pleased with the introduction of the Express Appeals Act in 
the Senate. This bill mirrors legislation recently passed in the House 
on February 9, 2016 (H.R. 800) as part of an omnibus bill (H.R. 677). 
We are glad to see that many of the recommendations we submitted in 
previous testimony were incorporated into the language prior to House 
approval, and those same recommendations are reflected in the Senate 
version presented here.
    This legislation is a good beginning and a framework for critical 
changes to the appeals process that may help veterans receive benefits 
they have earned more rapidly. While we understand there may be 
concerns about the fairness of allowing only new appeals, we strongly 
believe that limiting the participants to those entering the pilot at 
the initial Notice of Disagreement (NOD) stage will produce a much more 
accurate picture of the effectiveness of the process being tested.
    We also want to emphasize the importance of maintaining substantial 
veteran service organization (VSO) representative involvement 
throughout this process. Notifying VSO representatives who are working 
under a Power of Attorney of any actions or updates on their client's 
appeal is critical to ensuring veterans who opt in to this program do 
not miss out on the expertise VSO representatives bring to bear on 
their behalf.
    One of the strongest ways to impact the appeals process is to 
mandate that VA provide thorough notice of the basis for decisions on 
disability ratings. One cannot make an educated decision on whether to 
appeal a claims decision without knowing why it was denied. We support 
the provision in subsection (e)(2), which contemplates a review 
conducted in conjunction with VSOs as to the efforts of the Secretary 
to improve this aspect of the claims process.
    Finally, we maintain our position that a shift of employees from 
the Appeals Management Center (AMC) to the Board for purposes of 
developing claims should be done with strict oversight from this 
Committee. While it can be expected that reducing resources or manpower 
will have an impact on AMC's processing rate, we fear this may become 
an excuse by the Veterans Benefits Administration for why they are 
unable to complete traditional appeals.
                                 ______
                                 
          Prepared Statement of Senior Executives Association

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                                 ______
                                 
 Prepared Statement of Richard Weidman, Executive Director For Policy 
          and Government Affairs, Vietnam Veterans of America
    Mr. Chairman, Ranking Member Blumenthal and other distinguish 
members of the Senate Veterans' Affairs Committee, thank you for giving 
Vietnam Veterans of America (VVA) the opportunity to present our 
statement for the record regarding pending legislation before this 
Committee.
  s. 2633, the improving veterans access to care in the community act
    Responding to a crisis about access to VA health care, Congress 
enacted what is commonly referred to as the Choice Act in 2014. 
Expectations for this legislation were high, by Members of Congress, 
most VSOs, and veterans disgruntled with their treatment in VA medical 
centers and CBOCs.
    As with any startup, there were startup difficulties, that ought to 
have been anticipated, but weren't, beginning with the unrealistic 
demand that VA send out an initial mailing to all nine million or so 
veterans who use the VA for their health care needs. The essence of the 
new law was admirable: it was designed to fix a situation to provide 
timely and accessible care in communities where care could not be 
provided by a VAMC or CBOC in a timely manner. Ostensibly, a secondary 
benefit was to give the VA a handle on healthcare dollars expended 
outside of Veterans Health Administration facilities.
    However, there was also an unrealistic expectation in Congress of 
the demand for ``choice'' by the veterans this legislation was supposed 
to benefit; after all, the Choice Act responded to complaints of 
veterans in different parts of the country. In addition, at the time, 
there was inflexibility as to how the VA could spend a $10 billion pool 
of funds (which loosened only when VA Secretary Bob McDonald threatened 
to shutter or cut back operations of some VA hospitals because there 
were not enough funds on hand to meet demand for services in last 
quarter of FY15).
    The ``Improving Veterans Access to Care in the Community Act, 
introduced by Senator Jon Tester and colleagues Senators Blumenthal and 
Brown, seeks to further remedy situations when a VA healthcare facility 
is unable to furnish hospital care and medical services to eligible 
veterans for a variety of reasons.
    VVA endorses S. 2633 except for the provision in Title 1, 1703A (2) 
(F) that a veteran may be ``assigned a primary care provider * * * that 
is not a health care provider of the Department.'' Primary care, 
including a determination that a veteran may need mental health care, 
must be a direct function of the VA--to establish a viable electronic 
health record and to coordinate the best possible care for a veteran.
    Nowhere in this legislation is any requirement that the VA must 
refer management of non-VA care to a third party, e.g., HealthNet, 
TriWest. In fact, we see no real need to spend hundreds of millions of 
healthcare dollars to any outside entity to manage Choice. There is no 
reason why, with proper training and assistance of a traveling ``tiger 
team'' from VACO, each VAMC cannot establish arrangements and come to 
agreements with a network of healthcare providers in its area. Going 
through an outside entity to do this work is not an efficient and 
effective expenditure of limited healthcare dollars.
    The ``tweaks'' to Choice in S. 2633 are viable and valuable, and 
VVA endorses enactment of this legislation with the exception noted 
above.
          s. 2646, the veterans choice improvement act of 2016
    This bill is, in essence, competing legislation with S. 2633 as 
this bill has been introduced by Senator Richard Burr and cosponsors 
Senators Tillis, Boozman and Moran. In addition, whereas S. 2633 
sunsets on 31 December 2017, S. 2646 includes no deadline for Choice.
    Obviously, many in Congress--from both sides of the aisle--are less 
than enthusiastic at the present about the management capabilities of 
the VA, particularly the Veterans Health Administration. Still, an 
amalgam of the ``best'' provisions in S. 2646 and S. 2633 can be 
achieved, and will be of benefit to those veterans who will be best 
served by accessing health care in their community or within a more 
reasonable distance than a VA healthcare facility).
    The need for rationalizing purchased care outside of VHA is real. 
Congress, however, must note that the majority of veterans eligible for 
VA health care, are content and, in many cases, enthusiastic, about 
their treatment in a VAMC or CBOC. They appreciate the ``one-stop 
shopping'' at a VAMC. And those with special, or unique, needs--
veterans with spinal cord injury, with amputations from combat or 
necessitated by disease, with blindness--can find superior health care 
at a VA facility, even if it means they have to travel more than an 
arbitrary 40 miles or have to wait more than 30 days for an 
appointment. In fact, Congress should note that making appointments for 
non-VA health care sometimes takes more than 30 days, as many veterans 
are finding out.
    Choice is, and must be, an adjunct to health care provided at a 
VAMC or CBOC. In fact, the VHA was purchasing more than $5 Billion in 
outside care before the Choice Act. Overall, the VA healthcare system, 
despite its well-publicized mis-steps, is the largest, and finest, 
integrated system in the country. Inasmuch as both S. 2646 and 2633 
attempt to improve healthcare delivery to eligible veterans--without 
supplanting the VA as primary healthcare provider--they are worthy of 
enactment into black-letter law. VVA can support this legislation as 
written.
                s. 2473, the express appeals act of 2016
    Understandably, many veterans appealing the decision of a Veterans 
Benefits Administration (VBA) adjudicator are frustrated by how long it 
takes for the Board of Veterans Appeals (BVA) to render its decision. 
S. 2473, introduced by Senator Dan Sullivan, a Republican, with two 
Democrats and one Republican original cosponsors, is an attempt to 
break any logjam before it reaches crisis proportions (which some would 
argue already exists, with more than 450,000 appeals to be 
adjudicated).
    S. 2473, dubbed the ``Express Appeals Act of 2016,'' places the 
burden of filing a substantially developed appeal on the appealing 
veteran--in an attempt to rectify the VA's own folly in robbing 
resources from appeals to adjudicate claims to reduce a backlog that 
had been approaching 1 million. Sure, the VA, in responding to pressure 
from Congress and the VSO community, was able to eliminate this 
backlog. Nevertheless, as the VA gradually got a handle on processing 
claims, which now are down to a reasonable number, appeals have 
exploded. Lesson: the VA cannot continue to rob peter to pay paul.
    The major stakeholders in appeals of veterans' claims met for three 
full days last week to hammer out a framework that will speed veterans' 
appeals without compromising a veterans' right to due process under the 
law. Staff members from both sides of the aisle joined us on Thursday 
afternoon to see what had come of these intensive discussions thus far. 
The same group will re-convene on this coming Thursday to begin the 
effort to more fully develop agreement on the elements that need to be 
incorporated into this structure.
    VVA opposes S. 2473 in its current form, and urges the Committee to 
wait until we see whether all sides can come to agreement on a 
framework that will work from everyone's point of view. When such a 
tentative a document is reached, with input from your staff, we hope 
that the distinguished Senators on the Committee will consider the 
proposal(S), and move forward with any needed statutory changes.
   discussion draft, title 38 appointment, compensation, performance 
 management, and accountability system for senior executive leaders in 
                   the department of veterans affairs
    This potential bill is inspired, obviously, by the recent 
embarrassing mess when two senior VBA employees engineered transfers of 
two VA Regional Office directors so that they could then fill these 
positions themselves. Once this untoward and unethical affair was 
revealed, however, VA leadership stepped all over themselves as the 
current bureaucracy of appeals in effect rewarded rather than punished 
these two executives for their flagrant acts that benefited only 
themselves and not the veterans they are supposed to there to serve.
    This draft bill would, as it states up front, ``establish a 
comprehensive employment system under Title 38 for VA's Senior 
Executive level leadership positions.'' In addition, let us acknowledge 
what is known within the VA and in Congress: that serious flaw in VA 
leadership positions do exist, to the detriment of veterans.
    This goal of this potential bill is ``to ensure that VA can operate 
as a values-based high performance organization rather than a 
compliance-focused underperforming bureaucracy.'' It is obvious that 
this contemplated legislation is the product of business-oriented VA 
leadership starting at the top with a Secretary whose career has been 
primarily in corporate America. It would, in effect, give the VA 
Secretary the authority, as conceived in the Choice Act, to ``move 
quickly and decisively to remove or demote those VA executives whose 
misconduct or poor performance undermine veterans' trust in VA care and 
services.'' However, it also would add a degree of rationality in 
determining the compensation for senior executives based on ``the 
complexity of the position held; an analysis of the local labor market 
for similar positions in private and other Federal sector 
organizations; and the individual executive's experience and 
performance in the position and/or in other VA assignments.'' Ideally, 
enactment of the basic elements of this proposed legislation would 
upgrade leadership in critical positions of authority within the VA.
    If the intent is to attract and retain gifted individuals, 
compensation is, of course, a significant factor. Nevertheless, the 
language herein fails to acknowledge that many individuals join Federal 
service because of generous, and guaranteed, pensions, even if their 
rate of pay is not up to par with colleagues in private employ.
    Now, there are many reasons (see above) that such a significant 
change in how senior executives are recruited and retained is 
attractive. However, there are dangers inherent in any attempt to give 
a Secretary far more discretion in demoting or removing top executives 
from their positions, e.g., if an executive's decision on a particular 
issue are rational, logical, and necessary, a Secretary might cave to 
political opposition to silence such an executive.
    Another danger is inherent in the actual operation of good 
intentions. In the background of this bill is this: ``. . . VA must 
revamp its systems for assessing and rewarding performance to ensure 
executive-level leaders' performance ratings accurately reflect the 
performance of the enterprise. This requires both that we set 
meaningfully outcome-oriented performance goals and that we discipline 
ourselves in assigning ratings so that only the most outstanding and 
transformational leaders receive the highest marks'' (italics added). 
Because if the current system for awarding bonuses to senior executives 
is any indication, it is too easy to give just about everyone a bonus, 
even if they are failing in achieving positive results in the programs 
they oversee.
    This potential bill certainly is worthy of consideration by the 
SVAC and HVAC. On the other hand, a ``roundtable'' hosted by the 
Committee may be useful. Perhaps such discussions will lead to 
improvements in the bill, and strong support by VSOs and other 
stakeholders.
      

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