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[Senate Hearing 114-274]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-274

 EXPLORING THE IMPLEMENTATION AND FUTURE OF THE VETERANS CHOICE PROGRAM

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

                                 HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 12, 2015

                               __________

       Printed for the use of the Committee on Veterans' Affairs
       
       
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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

                              ----------                              

                              May 12, 2015
                                
                                
                                SENATORS

                                                                   Page
Isakson, Hon. Johnny, Chairman, U.S. Senator from Georgia........     1
Blumenthal, Hon. Richard, Ranking Member, U.S. Senator from 
  Connecticut....................................................     3
Moran, Hon. Jerry, U.S. Senator from Kansas......................    33
Sanders, Hon. Bernard, U.S. Senator from Vermont.................    35
Rounds, Hon. Mike, U.S. Senator from South Dakota................    37
Manchin, Hon. Joe, U.S. Senator from West Virginia...............    39
Tillis, Hon. Thom, U.S. Senator from North Carolina..............    45
Hirono, Hon. Mazie, U.S. Senator from Hawaii.....................    47
Boozman, Hon. John, U.S. Senator from Arkansas...................    52
Tester, Hon. Jon, U.S. Senator from Montana......................    53

                               WITNESSES

Gibson, Hon. Sloan, Deputy Secretary, U.S. Department of Veterans 
  Affairs; accompanied by James Tuchschmidt, M.D., Acting 
  Principal Deputy Under Secretary for Health....................     5
    Prepared statement...........................................     7
    Response to requests arising during the hearing by:
      Hon. Joe Manchin........................................... 39,42
      Hon. Mazie Hirono..........................................    49
    Response to posthearing questions submitted by:
      Hon. Patty Murray..........................................    56
      Hon. Bill Cassidy..........................................    57
McIntyre, David J., Jr., President and Chief Executive Officer, 
  TriWest Healthcare Alliance....................................    12
    Prepared statement...........................................    14
    Response to posthearing questions submitted by:
      Hon. Patty Murray..........................................    58
      Hon. Bill Cassidy..........................................    59
Hoffmeier, Donna, Vice President and Program Officer, VA 
  Services, Health Net Federal Services..........................    22
    Prepared statement...........................................    24
    Response to posthearing questions submitted by Hon. Patty 
      Murray.....................................................    60
Butler, Roscoe G., Deputy Director, Health Care, Veterans Affairs 
  and Rehabilitation Division, The American Legion...............    60
    Prepared statement...........................................    62
Selnick, Darin, Senior Veterans Affairs Advisor, Concerned 
  Veterans for America (CVA).....................................    65
    Prepared statement...........................................    67
Violante, Joseph A., National Legislative Director, Disabled 
  American Veterans (DAV)........................................    70
    Prepared statement...........................................    71
Rausch, Bill, Political Director, Iraq and Afghanistan Veterans 
  of America (IAVA)..............................................    77
    Prepared statement...........................................    79
Fuentes, Carlos, Senior Legislative Associate, National 
  Legislative Service, Veterans of Foreign Wars of the United 
  States (VFW)...................................................    80
    Prepared statement...........................................    82

                                APPENDIX

Murray, Hon. Patty, U.S. Senator from Washington; prepared 
  statement......................................................    93
Second Report on Veterans Choice Program Submitted by the 
  Veterans of Foreign Wars of the United States (VFW); report....    94

 
 EXPLORING THE IMPLEMENTATION AND FUTURE OF THE VETERANS CHOICE PROGRAM

                              ----------                              

                         TUESDAY, MAY 12, 2015

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:45 p.m., in 
room 418, Russell Senate Office Building, Hon. Johnny Isakson, 
Chairman of the Committee, presiding.
    Present: Senators Isakson, Moran, Boozman, Cassidy, Rounds, 
Tillis, Blumenthal, Sanders, Tester, Hirono, and Manchin.

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

    Chairman Isakson. I call the Committee to order. We have a 
vote on the floor which should be over in the next 10 minutes. 
I passed Ranking Member Blumenthal going in as I was leaving. 
He supposedly is on the way, so I will talk a little bit and 
tell you what I want you to know by the opening statement. If 
he is not here, I want to start with the testimony from Deputy 
Secretary Sloan Gibson. If he is here, we will hear from the 
Ranking Member. Is that fair enough? Is that OK?
    [Sen. Blumenthal's staff nodding affirmatively.]
    Make a note that his staff said that was OK. [Laughter.]
    I hate to get people in trouble.
    I want to take a little extra time on this, anyway, because 
this is a very important hearing for the VA and it is a very 
important hearing for us.
    Last year, culminating in August with the passage of the 
Veterans Choice bill in the U.S. House and Senate, the VA--
every morning I got up, it was bad news: veterans dying in 
Phoenix, problems in Raleigh, problems in Denver, problems in 
Orlando, and answers that were incomplete at best--for 
understandable reasons, because an awful lot of the personnel 
at the VA were new.
    I am the first person to recognize that Robert McDonald had 
just gotten there. I am the first person to recognize that 
Deputy Secretary Petzel just had left VA. Secretary Shinseki 
was gone as well, so there was a transition.
    But, to my way of thinking, there is no excuse for the 
plethora of problems the VA was having, and the transition 
should have been much better but was not.
    The VA demonstrated to me in the last hearing we had on 
Veterans Choice that they finally were listening. All I was 
hearing on the 40-mile rule in terms of as-the-crow-flies 
versus how far the car drives was nothing but stonewalls until 
finally Sloan walked into that hearing, reached in his pocket, 
and pulled out a new ruling on the 40-mile rule to make the 
number of miles driven be the governing factor. I think 
everybody on this Committee appreciated and agreed with and was 
happy that VA found a way to do it. I believe we are 
satisfactorily working toward ``the care you need'' definition 
being defined statutorily in such a way to make that change, 
which will not happen today but will happen in the very near 
future. I want to commend Deputy Secretary Gibson, Secretary 
McDonald, and the others for the work they have done on that.
    To the VSOs who are in the room, I know some of you do not 
like the Veterans Choice bill because they fear it will be a 
replacement for the Veterans Administration. We are not going 
to replace the Veterans Administration. It will always be 
there. But you can empower the Veterans Administration, you can 
empower the veteran by seeing to it they have access to world-
class care, in close proximity to where they live, in an 
affordable amount and a manageable amount, whether it is from 
the private sector or whether it is from the Government.
    In fact, if anything--and this is going to sound harsh, and 
it should sound harsh--the VA has demonstrated it cannot build 
a hospital by running over 100 percent, 200 percent, 300 
percent, or 400 percent. Every time we can have private sector 
help given to veterans without having to build a hospital to 
put the people in, it is saving the VA money, it is saving the 
United States money, and it is giving the veterans far better 
services.
    What we need is a partnership between the private sector 
and the Veterans Administration to deliver the ultimate goal, 
which is to see to it that our veterans get world-class health 
care and they get it in a timely way. That is my only goal. 
However we do that, the most important way to do it is to get 
it done. I think Veterans Choice is the way to do it.
    Now, we have had some bumps since Veterans Choice was 
rolled out. We have had some bumps. I have met with some of our 
private contractors, and, by the way, I appreciated those 
meetings and their confidence in the job that we can do. I 
appreciate the fact that VA is now cooperating I think in ways 
that it might not have been cooperating before to see to it the 
two are working seamlessly. If they cannot work seamlessly, it 
will never work.
    The private contractors have to understand their contracts 
are not just subject to their performance for the veteran, but 
also their willingness to work cooperatively with the VA. The 
VA needs to understand that the veteran's health care drives 
the decision and nothing else.
    There are some in VA health care who do not like the non-VA 
health care provisions anyway. I understand that. But they are 
going to have to get used to it, because we are going to make 
this thing work. We are not going to put a square peg in a 
round hole. We are going to match the round peg with the round 
hole and make this work for our veterans.
    Today's hearing is important to hear a report from the VA 
and the contractors and then later from the VSOs, understanding 
that as we talk today, remember, the first person we are here 
to serve is our veteran. They risk their lives for each and 
every one of us to be here today. We can expect no less of 
ourselves to see to it they get the best world-class health 
care as accessible and affordable as possible from our country 
and the taxpayer.
    With that said, I will turn to the Ranking Member, Senator 
Blumenthal.

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

    Senator Blumenthal. Thank you, Mr. Chairman, and thank you 
for having this hearing. Thank you to each of you for being 
here today.
    We went through a terrible tragedy and debacle not long ago 
that prompted the Veterans Access, Choice, and Accountability 
Act, which sought to relieve some of the problems and 
underlying issues, including deceit and fraud, that caused 
delays and misreporting within the VA system.
    The discussion today is centered on the remaining flaws and 
failings in the VA health care program, particularly the 
Veterans Choice Program. As much as this program was 
established to deal with the immediate crisis of access to care 
in the short term with an investment of $10 billion to provide 
direct care services in the community and $5 billion to provide 
the Choice Program, there is still a lot to be done.
    The program was just a downpayment, just a first step, and 
I believe that it has to be improved even further. There 
remains, for example, underutilization of the Choice Program. 
The reasons for it have yet to be determined or discovered. The 
underutilization may well be the result of a failure to 
sufficiently publicize or make veterans aware. It may be the 
result of other more fundamental issues within the program, and 
I share the Chairman's view that changing the 40-mile rule was 
certainly a welcome step.
    The most important fact that brings us here today--and we 
cannot lose sight of it--is that we still have not solved the 
crisis that led to this program. Veterans still wait too long 
for health care. Health care delayed, in effect, is health care 
denied for veterans who suffer from health conditions that 
require immediate treatment.
    The VA's most recent data release of May 1 indicates that 
wait list numbers have increased significantly since the same 
time last month. In its an April 2 release, 377,300 veterans 
had appointments scheduled in more than 30 days from the 
preferred date. As of the May 1st release, that number had 
jumped by approximately 56,000 to nearly 434,000.
    Anybody who believes that this crisis has been solved is 
living in an alternate universe. It is not the universe that 
our veterans inhabit.
    These delays have real-life consequences. They cannot be 
tolerated. Too many veterans are still waiting too long for 
appointments, and I am glad that the VA is finally going out to 
the facilities with long wait times trying to determine why 
exactly they are not utilizing non-VA care options. I notice 
that a lot of the testimony today talks about further changes 
to the geographic criteria.
    Every time there is an additional change to the 40-mile 
criteria, more of the $10 billion allocated for the Choice 
Program will be devoted to paying for access. This money is 
owed to our veterans because better health care is due them.
    I will close on this note. We still do not have 
accountability for the delays. The Inspector General still has 
not completed his work. We still have no reports on action, and 
I mean effective disciplinary action for the delays that were 
intolerable and still are unacceptable. Accountability is 
absolutely necessary, and I believe that the Inspector General 
needs more resources to effectively implement accountability. I 
will continue to press for the reports and for action by the 
Inspector General that will send a message to the health care 
apparatus and professionals in the VA that we really mean what 
we say when ``accountability'' is our watch word.
    Thank you, Mr. Chairman.
    Chairman Isakson. Thank you, Senator Blumenthal.
    Our first panel will be made up of the following 
individuals:
    First of all, Hon. Sloan Gibson. We have become new best 
friends over the last 4 or 5 months, and I want to thank him 
publicly in this introduction for his willingness to take on 
some tough situations. He inherited some tough situations, and 
I appreciate the fact that he is approaching them in a very 
positive way. We have got a few more tough ones coming up, so I 
hope you will maintain that attitude all the way through. I am 
very appreciative of the cooperation.
    To reiterate for those who are present, including the 
press, Secretary McDonald and Deputiy Secretary Gibson invited 
the Ranking Member, myself, the House Ranking Member, and the 
House Chairman to the VA for what they call a ``standup,'' 
which was in February. We have been invited to come back in 
June, and I believe the invite is for the entire Committee if 
they want to come. I think I heard that this morning, so, as 
many Members who want to go, I want to make sure they are 
invited to see the way in which the VA is benchmarking itself 
against itself, so to speak, to try and find better ways to do 
things and flush out the problems in advance and get them 
solved earlier. We are looking forward to doing that, and we 
have got some big problems to solve in the next few months, 
which will be a testimony or a test, one way or another, to our 
willingness to work together.
    Dr. Tuchschmidt, we appreciate you being here to assist 
Sloan in any way he needs. I am sure if he gets a tough 
question, he will defer to you, so we appreciate you being here 
very much.
    To our private providers: Mr. McIntyre, I enjoyed our 
meeting earlier this week. I appreciate the insights that you 
gave me. Ms. Hoffmeier, I appreciate your being here today. We 
look forward to hearing first from Sloan Gibson.

    STATEMENT OF HON. SLOAN GIBSON, DEPUTY SECRETARY, U.S. 
     DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY JAMES 
TUCHSCHMIDT, M.D., ACTING PRINCIPAL DEPUTY UNDER SECRETARY FOR 
                             HEALTH

    Mr. Gibson. Thank you, Mr. Chairman. Chairman Isakson, 
Ranking Member Blumenthal, and Members of the Committee, we are 
committed to making the Choice Program work and to providing 
veterans timely and geographically accessible quality care, 
using care in the community whenever necessary. I will talk 
shortly about what we are doing and the help that we need from 
Congress to make all that happen. First I want to talk very 
briefly about access to care.
    Most mornings at 9 a.m. for the last year, senior leaders 
from across the Department gather to focus on improving 
veterans' access to care. We have concentrated on key drivers 
of access, including increasing medical center staffing by 
11,000, adding space, boosting care during extended hours and 
weekends by 10 percent, and increasing staff productivity. The 
result: 2.5 million more completed appointments inside VA this 
year than last. Relative value units, a common measure of care 
delivered across--used to measure care delivered across the 
industry are also up 9 percent.
    Another focus area for us in improving access has been 
increasing the use of care in the community. In 2014, VA issued 
2.1 million authorizations for care in the community, which 
resulted in more than 16 million appointments completed. Year 
to date in 2015, authorizations are up 44 percent, which will 
result in millions of additional appointments for community 
care.
    Veterans are responding to this improved access. More are 
enrolling for care at VA. Among those who are enrolled, more 
are actually using VA for care, and those using VA are 
increasing their reliance on VA care. This is especially the 
case where we have been investing most heavily due to long wait 
times.
    In Phoenix, for example, where we have added hundreds of 
additional staff, we have increased completed appointments 20 
percent this year. I should also note that we have increased 
care in the community 127 percent in Phoenix over the last 
year, largely due to the extraordinary effort of TriWest in 
that particular community.
    However, wait times are not down. Wait times are not down 
in Phoenix because of the surge in additional veterans coming 
to VA for care plus the veterans that are there asking for more 
care from VA.
    In Las Vegas, we have got a 17-percent increase in veterans 
receiving care since we opened the new medical center there 
less than 2 years ago.
    In Denver, we have opened outpatient clinics and added more 
than 500 additional staff. Veterans using VA for care there are 
up 9 percent.
    In Fayetteville, NC, where wait times continue to be a 
problem, we have increased appointments 13 percent, relative 
value units up 19 percent, and veterans using VA for care are 
up 10 percent.
    In all of these locations, we have had dramatic increases 
in care in the community.
    As Secretary McDonald has testified during budget hearings, 
the primary reason for increasing demand are an aging veteran 
population, increases in the number of medical conditions 
veterans claim, and a rise in the degree of disability, and as 
we can see here, improving access to care.
    As I mentioned at the outset, community care is critical 
for improving access. We use it and have for years in programs 
other than Choice. In fiscal year 2013, we spent approximately 
$7.9 billion on community care other than Choice. In 2014, that 
rose to $8.5 billion, and we estimate that at the current rate 
of growth, VA will spend $9.9 billion, including Choice, a 25-
percent increase in care in the community in just 2 years.
    At the same time, we have had a large increase in care in 
the community, but Choice is not working as intended. Here are 
some things we are doing to fix it.
    On April 24, we changed the measure from straight line to 
driving distance using the fastest route. This roughly doubles 
the number of veterans eligible for the 40-mile program under 
Choice.
    There is much more to do. A follow-on mailing to all 
eligible veterans is about to go out. We have just launched a 
major change in internal processes to make Choice the default 
option for care in the community: additional staff training and 
communication, extensive provider communications, improvement 
to the Web site and ramped-up social networking, new mechanisms 
to gather timely feedback directly from both veterans as well 
as from front-line staff. These are all already in place or 
about to launch.
    In the longer term, we must rationalize community care into 
a single channel. The different programs with different rules 
and reimbursement rates, methods of payment, and funding routes 
are too complicated. They are too complicated for veterans, for 
providers, and for VA employees who coordinate care. I am 
confident we will need your help on that.
    Next, let me touch on the other 40-mile issue. We have 
completed in-depth analysis using patient-level data to 
estimate the cost of a legislative change to provide Choice to 
all veterans more than 40 miles from where they can get the 
care they need. We have shared that analysis with some Members 
of the Committee, with staff, and with the CBO. It confirms the 
extraordinary cost that had been estimated previously.
    We have also briefed the staff on a broad range of other 
options and believe there are one or more options worthy of 
discussion and careful consideration.
    While we are working together on an intermediate-term 
solution, we are requesting Congress grant VA greater 
flexibility to expand the hardship criteria in Choice beyond 
just geographic barriers. This authority would allow us to 
mitigate the impact of distance and other hardships for many 
veterans.
    We also request greater flexibility around some 
requirements that preclude us from using Choice for services 
such as obstetrics, dentistry, and long-term care.
    As described above, we accelerated access to care in the 
community this year, anticipating that a substantial portion 
would be funded through Choice. For various reasons, most 
touched on previously, we will be unable to sustain that pace 
without greater program flexibility and flexibility to utilize 
at least some portion of Choice Program funds to cover the cost 
of other care in the community. We are requesting some measure 
of funding flexibility to support this care for veterans.
    On May 1, VA sent to Congress a legislative proposal 
providing major improvements to VA's authority to use provider 
agreements for the purchase of community care. We request your 
support.
    Last, we are requesting flexibility in one other area of 
veteran care: hepatitis C treatment. You are all familiar with 
the miraculous impact of this new generation of drugs. Veterans 
that have been hepatitis C positive for years now have a cure 
within reach, with minimal side effects. Because of the newness 
of these drugs, there was no funding provided in our 2015 
budget request or appropriation. We moved $688 million from 
care in the community, anticipating the shift in cost to 
Choice, to fund treatment for veterans with these new drugs. It 
was the right thing to do, but it was not enough. We are 
requesting flexibility to use a limited amount of Choice 
Program dollars to make this cure available to veterans between 
now and the end of the fiscal year.
    We are improving access to care, notwithstanding the 
reported wait times that you see. That means we have still got 
work to do on wait times, but we are improving access to care.
    We are committed to making Choice work and have very 
specific actions underway to do just that, and we need some 
help, especially additional flexibility to allow us to meet the 
health care needs of our veterans.
    We look forward to your questions.
    [The prepared statement of Mr. Gibson follows:]
      Prepared Statement of Hon. Sloan Gibson, Deputy Secretary, 
                  U.S. Department of Veterans Affairs
    Good afternoon. Chairman Isakson, Ranking Member Blumenthal, and 
Members of the Committee. Thank you for the opportunity to participate 
in this hearing and to discuss the progress of the Department of 
Veterans Affairs' (VA) implementation of the Veterans Access, Choice, 
and Accountability Act of 2014 (Veterans Choice Act). I am accompanied 
today by Doctor James Tuchschmidt, Interim Principal Deputy Under 
Secretary for Health.
                implementing the veterans choice program
    The Veterans Choice Program is helping VA to meet the demand for 
Veterans healthcare in the short-term. VA is focusing on ensuring the 
program is implemented correctly and seamlessly as well as on creating 
the most positive experience for all Veterans.
    VA's goal is always to provide Veterans with timely and high-
quality care with the utmost dignity, respect, and excellence. For the 
Veteran who needs care today, VA's goal will always be to provide 
timely access to clinically appropriate care in every case possible. 
However, as we have shared with staff for the Senate and House 
Committees' on Veterans Affairs, users of the Veterans Choice Program 
have identified aspects of the law that are challenging. We are working 
diligently to address these challenges and to turn them into 
opportunities to improve VA care and services. My testimony addresses 
the progress we have made thus far.
Eligibility for the Veterans Choice Program
    President Obama signed the Veterans Choice Act into law on 
August 7, 2014. Technical revisions to Veterans Choice Act were made on 
September 26, 2014, when the President signed into law the Department 
of Veterans Affairs Expiring Authorities Act of 2014, and on 
December 16, 2014, when the President signed the Consolidated and 
Further Continuing Appropriations Act, 2015. On November 5, 2014, VA 
published an interim final rulemaking that implemented section 101 of 
Veterans Choice Act.
    The Veterans Choice Program, established by section 101 of Veterans 
Choice Act, requires VA to expand the availability of hospital care and 
medical services for eligible Veterans through agreements with eligible 
non-VA entities and providers. Under section 101, some Veterans are 
eligible for the Choice Program based on the distance from their place 
of residence to the nearest VA medical facility. The Choice Act does 
not state how distance should be calculated for purposes of determining 
eligibility based on place of residence. The most common methodologies 
for calculating the distance between two places are by using a 
straight-line and by following the actual driving path between the two 
points. In the initial interim final rulemaking, VA adopted a straight-
line measure of distance to determine eligibility based on residence, 
consistent with certain statements in the legislative history.
    During the public comment process for the rulemaking, VA received 
many comments questioning the use of the straight-line distance instead 
of driving distance. By contrast, VA received no comments in support of 
the use of straight-line distance. After considering extensive 
feedback, VA decided to amend the interim final rule to change the 
method used to determine the distance between a Veteran's residence and 
the nearest VA medical facility from a straight-line distance to 
driving distance. The general intent of the Choice Act is to expand 
access to health care for veterans, and the use of driving distance 
allows more veterans to participate in the program and receive care 
closer to home. Moreover, from the standpoint of a veteran, the most 
relevant question is how far he or she must actually travel to receive 
care, not the length of a straight-line route.
    I am happy to report that on April 24, 2015, VA published a second 
interim final rule adopting this change, effective immediately. VA 
estimates that this change almost doubles the number of Veterans 
eligible for the Veterans Choice Program based on place of residence. 
We understand one frustration for Veterans is that according to the 
Choice Act, the Veteran is eligible for hospital care and medical 
services if the Veteran resides more than 40 miles from the medical 
facility of the Department, including a Community-Based Outpatient 
Clinic (CBOC), that is closest to the residence of the Veteran. This 
criterion bases eligibility on the proximity of the nearest facility, 
regardless of the availability of the needed care at that site. VA is a 
regionalized system; so we recognize that every CBOC does not deliver 
the services needed by every Veteran. We acknowledge this is 
problematic and have carefully studied the issue and potential 
solutions, recognizing the constraints of VA's authorities in the 
program under current law and the significant budgetary impact that 
would accompany the potential solutions, which could range from $4 
billion to $34 billion per year.
    We have presented our analysis of the issue to the Congressional 
Budget Office and staff of the Senate and House Committees' on Veterans 
Affairs, and we are continuing to work with Congress to find an 
economically sound solution.
Revisions to the Beneficiary Travel Program
    Based on Veterans' feedback, we are using the fastest route by time 
calculation to determine eligibility for the Veterans Choice Program. 
This is different from the method that had been previously used by the 
Veterans Health Administration (VHA) Beneficiary Travel Program, which 
determined mileage reimbursement based on the shortest route. This 
route determination method may not have been a ``common'' route 
traveled by our Veterans to their healthcare appointments. However, we 
now believe the Beneficiary Travel Program standard should be altered 
as well to reflect the fastest route by time calculation and ensure 
consistency between both programs.
    To reduce variation in mileage calculation between the two 
programs, VA will now calculate mileage reimbursements under both 
programs based on the fastest route by time. In most cases, the change 
will provide equal or greater mileage reimbursements to Veterans.
Veterans Choice Program Outreach Efforts
    We understand that the Choice Program is not working as well for 
Veterans as it should, in part because Veterans, VA employees, and 
community providers do not understand how the program works. We 
continue our outreach efforts to increase Veterans' awareness of the 
program. With VA now determining eligibility for the Veterans Choice 
Program based on driving distance to the nearest VA medical facility, 
to include CBOCs, more Veterans are now eligible for the Veterans 
Choice Program. Beginning April 25, 2015, these newly eligible Veterans 
were sent a letter informing them that based on their place of 
residence, they are eligible to immediately participate in the Veterans 
Choice Program. The letter also provides guidance to the Veterans on 
how to verify their eligibility and access care.
    When we initially launched the Veterans Choice Program, we mailed 
explanatory letters to over eight million Veterans, with their Choice 
Cards. This month, we are planning to send a mailer regarding the 
Veterans Choice Program to the same group of Veterans. The mailer 
assists Veterans in determining if they are eligible for the Veterans 
Choice Program and provides guidance on how to confirm their 
eligibility and schedule their next appointment.
    We will continue to focus on outreach and communicating with 
Veterans to ensure they understand the Choice Program, to include: 
establishing a reoccurring Veterans survey to measure their knowledge 
of the program; strengthening and expanding our social media strategy 
for Veterans, families, and caregivers; and, conducting program-related 
town halls at VAMCs.
Veteran Choice Program Employee Training and Education
    We acknowledge that there are gaps in understanding the Veterans 
Choice Program and related business processes among VHA staff. We 
continue our outreach to VA facility leadership to improve employees' 
understanding of the Choice Program and to address any reluctance our 
staff may have to send patients into the community to use the Choice 
Program. Our staff are more familiar and comfortable with assisting 
Veterans with existing VA community care programs. We must ensure they 
are adept with the Choice Program, as well.
    It is important that our staff understand and use the program 
properly. To date, VHA has conducted a variety of training including, 
but not limited to, in-person training, webinars, virtual training, 
teleconference, and other means. We, at VA, will continue to reiterate 
the distance standard rule change. On April 24, 2015, Interim 
Undersecretary Clancy sent a message about the Veterans Choice Program 
to all employees and included a reference called the Five Questions 
About the Veterans Choice Program, further explaining recent updates 
and how to assist Veterans in accessing the program. In addition to the 
Interim Under Secretary's message, the Network Directors and Medical 
Center Directors will be sending their own messages to their employees, 
and Service Line Chiefs will be meeting with their employees in person 
to further discuss the program and to ensure that all employees 
understand the program.
    As I mentioned in testimony to the Senate Veterans' Affairs 
Committee on March 24, 2015, we are sending teams of experts, including 
staff from our Third Party Administrators (TPA), Health Net and 
TriWest, as well as VA leadership, to 15 facilities in each of their 
catchment areas. These facilities were selected based on the high 
number of Veterans waiting for care and low utilization of the Veterans 
Choice Program. The experts will hold discussion sessions regarding 
needs of the medical centers, and the Third-Party Administrators (TPA) 
network's capacity to provide care. During this time, we will review 
data regarding needs and utilization, and identify gaps in TPA provider 
networks. An action plan will follow each visit.
Educating Third Party Providers on Veterans Choice Program
    As we work to solve Veterans' issues, we must also ensure non-VA 
providers are informed about the program and how to best serve 
Veterans. We use a variety of means to conduct outreach and to educate 
and inform community healthcare providers about how to participate in 
the Veterans Choice Program. Since the Choice Program started, 
Secretary McDonald has met with national health care organizations, 
such as the American Medical Association and the American Association 
of Medical Colleges to discuss the Choice Program as well as other 
aspects of VHA's transformation.
    In November 2014, VA established the Choice Web site as a 
clearinghouse for public information. Veterans and Veterans Service 
Organizations are the primary audience for the Choice Web site, but 
care providers also utilize the site's resources. VA expanded the 
existing VA Community Care Provider Web site to include new information 
on the Veterans Choice Program, as well as how to become a Veterans 
Choice Program provider. Additionally, community provider training is a 
contractual requirement of VA's TPAs, Health Net, and TriWest, which 
have provider pages that they use to engage in targeted outreach to 
non-VA healthcare providers and to deliver training and information as 
they build their networks.
    Recognizing that the Veterans Choice Program is connecting 
community care providers with Veterans to a greater extent than ever 
before, VHA is providing broad access to Veteran-relevant training and 
information for providers who may not be familiar with military 
culture. Recently, VA established VHA TRAIN (TrainingFinder Real-time 
Affiliate-Integrated Network), an external learning management system 
to provide valuable, Veteran-focused, accredited, continuing medical 
education at no cost to community healthcare providers. Since the 
launch of VHA TRAIN on April 1, 2015, more than 1,520 people have 
created an account or subscribed to VHA content through a previously 
established account. The first course offerings, four modules of 
Military Culture: Core Competencies for Health Care Professionals, have 
already seen over 347 registrations and 179 course completions. VA will 
add dozens of Veteran-care training courses to VHA TRAIN throughout 
2015.
Rationalizing All VA Community Care Programs
    Beyond the Veterans Choice Program, VA has, for years, utilized 
various authorities and programs in order to provide care to Veterans 
more quickly and closer to home. In fact, the Department spent over 
$7.012 billion on VA community care in Fiscal Year 2014 to help deliver 
care to eligible Veterans where and when they want it. In Fiscal Year 
2014, Veterans completed 55.04 million appointments inside VA, and 16.2 
million appointments in the community.
    We recognize though, that the number and different types of VA 
community care programs and authorities may be confusing to Veterans, 
our stakeholders, and our employees. Navigating these programs to 
determine the best fit for a Veteran may be challenging. Therefore, we 
are currently working to streamline channels of care, billing 
practices, mechanisms for authorizations, etc., with the goal of 
creating a more unified approach to community care.
Refining Business Processes
    We are also focused on looking internally at the business rules and 
internal processes that govern the Veterans Choice Program. It is our 
hope that stepping back to revise our own practices and focus on long-
term work plans will create more efficient processes that will engender 
better and timelier care experiences for Veterans as well as better 
business relationships with our VA community care providers. Managing 
the Veterans Choice Program effectively requires us to have broad 
visibility of data. We are refining our data analytics to develop more 
thorough management and oversight of the TPA performance. In order to 
support the VA community care providers that treat our Veterans, we are 
refining the oversight of payments for services provided. We are also 
continually working with the TPAs to help them develop their healthcare 
networks to support Veterans' healthcare needs.
    Pilot programs in VISN's 8 and 17 are beginning to send clinical 
documentation only when a Veteran contacts the TPA for an appointment. 
The TPA then requests information from the VA site and VA provides that 
information within 24 hours. There is very little wasted effort and the 
TPA is assured of getting the proper information. With the current 
practice, VA sends clinical documentation to the TPA on every Veteran 
regardless of whether they intend to use the Veterans Choice Program. 
This creates a tremendous burden on both the facility, who must compile 
and send the material, and the TPA who must store all of this data. 
Currently, the pilot is doing well, and we look forward to rolling this 
process out across the Nation.
    More broadly, VA sent to the Congress on May 1 an Administration 
legislative proposal entitled the ``Department of Veterans Affairs 
Purchased Health Care Streamlining and Modernization Act.'' This bill 
would make critical improvements to the Department's authorities to use 
provider agreements for the purchase of VA community medical care--in 
order to streamline and speed the business process for purchasing care 
for Veterans when necessary care cannot be purchased through existing 
contracts or sharing agreements. We urge your consideration of this 
bill, which will provide VA the right legal foundation on which to 
reform its purchased care program. And, that is critical for Veterans' 
access to health care.
                          choice act: funding
    We are thankful for the Veterans Choice Act's funding to help us 
overcome our access issue. As of April 30, 2015, of Section 801's $5 
billion for enhancements to VA staffing and facilities, we have 
obligated almost $304 million to increase access to care for Veterans 
at our VA medical centers. The $304 million includes an estimated $143 
million obligated for hiring medical staff. In addition, we have 
obligated more than $145 million for infrastructure improvements. These 
improvements include legionella mitigation, non-recurring maintenance, 
minor construction and information technology improvements. Of Section 
802's $10 billion dedicated to the Veterans Choice Program, VHA has 
obligated more than $500 million for healthcare, Beneficiary Travel, 
pharmacy, prosthetics, and implementation costs. As we implement the 
improvements described above, we expect these obligations to grow.
                              vha staffing
    VHA is in the process of hiring more than 10,000 medical 
professionals and support staff, leveraging the funds provided by 
Congress in the Choice Act. These healthcare professionals will augment 
the current baseline of employees already providing care to Veterans--
with the goal of further improving timely access to care. As reported 
in the Veterans Choice Act Section 801 Spending Plan provided to the 
House and Senate Committees on Veterans' Affairs on December 3, 2014, 
VHA expects to complete these hires by the end of Fiscal Year 2016. VHA 
is making good progress, with roughly 25 percent of the more than 
10,000 staff now on-board. Using the resources provided by the Veterans 
Choice Act, VHA will continue to aggressively market, recruit, hire and 
credential medical professionals and support staff to ensure we make 
full use of this opportunity to deliver quality care to Veterans.
    Additionally, the Department appreciates the changes to the 
Education Debt Reduction Program authorized by Section 302 in the 
Choice Act. This Program provides a valuable tool for the Department to 
recruit and retain eligible, high-quality staff to VA.
    sections 105 and 106: paying va community medical care providers
    The Department understands the importance of complying with 
requirements of the ``Prompt Payment Act'' and making timely payments 
to VA community medical care providers. The organizational changes 
implemented in Section 106 that consolidated payment of claims under 
centralized authority serve as the basis for further improvements in 
the prompt payments.
    Section 106 of the Veterans Choice Act required the Department to 
transfer authority to pay for healthcare and the associated budget to 
the Chief Business Office no later than October 1, 2014. In seven 
weeks, we re-aligned more than 2,000 positions and over $5 billion 
dollars in healthcare funding to the Chief Business Office from the 
VISNs and VA medical centers. This realignment established a single, 
unified shared services organization responsible for payment functions 
and implemented centralized management which will allow us to leverage 
business process efficiencies going forward. We are in the process of 
refining and implementing standard processes and performance targets, 
and monitoring to ensure processing activities are performed and 
measured consistently across VA. This will enable us to deliver 
exceptional customer service to Veterans and VA community medical care 
providers. In addition, Choice Program claims processing and payment 
was centralized to ensure efficiency of processing and accuracy of 
payments.
    We acknowledge that claims processing timeliness must improve. To 
date, our efforts include expediting hiring, maximizing the use of 
contract staff, implementation of involuntary overtime, and 
implementing tiger teams to maximize efficiencies with people, 
processes, and technology. Our current standard is to have at least 80 
percent of our inventory under 30 days old.
                  section 201: independent assessments
    Section 201 of the Veterans Choice Act requires VA to enter into 
one or more contracts with a private sector entity or entities to 
conduct an independent assessment of the hospital care, medical 
services, and other healthcare furnished by VA, specifically assessing 
areas such as staffing, training, facilities, business processes, and 
leadership. Our work on Section 201 Independent Assessments resulted in 
completion of the first legislative milestone on November 5, 2014, by 
awarding a contract to the Centers for Medicare and Medicaid Services' 
Alliance to Modernize Healthcare (CAMH) to serve as Program Integrator 
for the independent assessments. The program is now progressing toward 
the second legislative milestone--completing the independent 
assessments by July 3, 2015. CAMH, supported by the Institute of 
Medicine and a diverse team of assessment subcontractors, are currently 
in the Discovery and Analysis phase.
    To date, the teams have interviewed hundreds of VA and VHA staff as 
well as assessed over 80 medical facilities across 30 states, 
Washington D.C., and Puerto Rico. The teams have completed a landmark 
``Organizational Health Index'' Survey to capture the perspectives of 
VHA employees nationwide, and VA has provided access to its data, 
systems, and records by sharing over 1,000 data sets, reports, and 
other critical documentation.
    A Blue Ribbon Panel of 16 healthcare experts, with substantial 
executive-level experience, has held two meetings and will continue to 
do so to regularly advise CAMH on the independent assessment. This 
panel, along with CAMH and their sub-contractors, will ensure that the 
recommendations resulting from Section 201 meet the needs of Veterans 
and establish a foundation for transforming VA into the preeminent 
21st-century model for improving health and well-being.
                    new residency program positions
    The Veterans Choice Act provided VA the opportunity to expand 
physician residency positions by up to 1,500 positions over five years. 
The law gives priority to the disciplines of primary care and mental 
health and to sites new to Graduate Medical Education (GME), in health 
professional shortage areas, or with high concentrations of Veterans.
    VHA has conducted extensive outreach to the academic community to 
ensure we generated interest in these new residency positions. The 
first Request for Proposals (RFP), released in the fall of 2014, 
resulted in 204 positions being awarded to VA sites and their academic 
affiliates. These first residents will start July 1, 2015. The process 
for distribution of the Veterans Choice Act positions continues, with 
the second of five annual RFPs anticipated for release in late spring/
early summer 2015. VA plans to award between 200-325 positions each 
year for the next four years.
    As part of the Veterans Choice Act expansion, facilities new to GME 
(or with extremely small residency programs) were offered funds for 
infrastructure support. These funds will offset specific administrative 
or clinical costs incurred in running a residency program and will 
enable these smaller facilities to become more successful in hosting 
residency programs. Last, in order to encourage small VA facilities to 
engage in residency education, VA will issue planning grants to 
incentivize the formation of new affiliation relationships.
                               conclusion
    We are grateful for the close working relationship with Congress as 
we make progress in implementing the Veterans Choice Program. Mr. 
Chairman, we will continue to work with Veterans, Congress--especially 
this Committee--VA community care providers, VSOs, and our own 
employees to ensure the Choice Program is working well and delivering 
great healthcare outcomes for Veterans.

    I again thank the Committee for your support and assistance, and we 
look forward to working with you in improving the lives of America's 
Veterans.

    Chairman Isakson. Mr. McIntyre.

   STATEMENT OF DAVID J. McINTYRE, JR., PRESIDENT AND CHIEF 
         EXECUTIVE OFFICER, TRIWEST HEALTHCARE ALLIANCE

    Mr. McIntyre. Mr. Chairman, Ranking Member Blumenthal, and 
members of the distinguished Committee, I am grateful for the 
opportunity to appear before you this afternoon on behalf of 
our company's employees and its nonprofit owners to discuss 
TriWest Healthcare Alliance's work which we are privileged to 
do in support of the Department of Veterans Affairs.
    I would like to focus my oral testimony on three topics: 
the realities of this program's implementation, the process of 
identifying and resolving gaps and those which remain to be 
resolved, and what I believe to be the art of the possible path 
going forward.
    Mr. Chairman, before the Veterans Choice Program, there was 
PC3, Patient-Centered Community Care. As you know and as 
Secretary Gibson has said, purchasing care in the community 
from community providers has been a long practice of the VA. In 
fact, in September 2013, after 2 years of planning, VA sought 
to change that with the awarding to the patient-centered 
community care contracts to us and Health Net. That contract 
was designed to have a consolidated, integrated delivery system 
built in the community to undergird the VA facilities across 
the 28 States and the Pacific that we are privileged to serve, 
and make sure at the end of the day that we were not there to 
replace the VA, that we were there to supplement it.
    In fact, it worked as intended. When the furnace lit off in 
our home town of Phoenix, AZ, 6,300 providers under contract 
under PC3 leaned forward at the site of the VA medical center 
to assist them in eliminating the backlog, and by August, 
14,000 veterans had moved through that process.
    Around the same time, we got a modification to add primary 
care to those contracts, and within 90 days we stood up a 
network of primary care providers. We now have over 100,000 
providers across 28 States and the Pacific under contract, 
along with 4,500 facilities, and we are not finished. The 
reason why we are not finished is that we need to make sure 
that the networks are tailored to match the demand that exists 
in a particular market that is not able to be met by the VA 
facilities itself.
    The fact of the matter is that it was a complicated program 
to set up. It was done under very short order. But it was 
training, if you will, for what was to come next, because on 
November 5, after 30 days of work, we were to stand up in 
support of VA the Choice Program. We had to partner with VA to 
receive a list of all eligible veterans. We had to design and 
produce a card and put it out with a personalized letter from 
the Secretary. We had to stand up a contact center to handle 
all of the calls coming in. After 2 weeks of design and 2 weeks 
of hiring and training of 850 people, no one went into 3-hour 
waits; the phones were answered; but the work had only begun. 
We have been on a pathway since to try and mature the 
operations.
    The Secretary talked about the 40-mile issue. There are 
additional refinements that may well be needed and desired in 
that area, and if so, we stand prepared to support what those 
might look like. There are some other changes that may well be 
needed to the program as we go forward.
    Second, we need to aggressively identify and resolve our 
gaps and fix our operational performance, and we are in the 
process of doing that together. We are modernizing our IT 
systems, rolling out after Memorial Day, after a 24/7 build, a 
new portal system that will serve all of the facilities and our 
own staff as we seek to move the veteran information back and 
forth between the two facilities as care is rendered downtown. 
We are in the process of tailoring networks to match the demand 
that exists in each market across our area.
    The Choice Program is up, it is operational, and there are 
refinements still need. I believe that because of the 
collaborative work that has been underway between all of us 
that are engaged in this, we are refining the pieces that need 
to be refined, we are identifying the policy gaps that need to 
work, and those things, as the Secretary said, are getting 
attended to.
    I think there are a couple of policy issues, though, that 
remain the jurisdiction of this particular Committee. One is I 
would encourage a relook at the 60-day authorization limitation 
that has been applied. Second, I would respectfully submit that 
there needs to be harmonization between the two programs and 
between all of the facets of how the VA buys its care 
currently, as well as how the VA operates itself in engagement 
with us in order to make this work right.
    At the end of the day, I believe the art of the possible 
which you sought is truly within our grasp. I would like to 
point to Dallas, Texas, for a second, if you will permit me to 
do so. We are under the engaged leadership of the VISN 17 
Director. A couple of weeks ago, we sat with the VA medical 
center Director and the entire staff there, including 
behavioral health staff, and looked at the full demand that 
exists for veterans in that market. We then took out and looked 
at what is the network that is constructed to stand at its 
side, which is the base on which Choice rides. In other words, 
if there is not a network provider, you can set up an 
engagement with an individual provider to deliver services 
under Choice.
    We then designed a network map that we are now in the 
process of constructing together, and over the next 90 days, 
from behavioral health to primary care to specialty care, we 
will rack and stack the network to meet the demands that 
otherwise cannot be met by the VA medical center in Dallas. 
That is being repeated across our entire 28 State area and the 
Pacific as we seek to do our part to mature the operations of 
Choice.
    It is a privilege to serve in support of those that served 
this country. It is an honor to serve the veterans from the 
States that are represented by half of the Members of this 
Committee, and, Mr. Chairman, I look forward to taking 
questions after my colleague Donna Hoffmeier is finished with 
her remarks.
    Thank you.
    [The prepared statement of Mr. McIntyre follows:]
   Prepared Statement of David J. McIntyre, Jr., President and CEO, 
                      TriWest Healthcare Alliance
    Good afternoon Mr. Chairman, Ranking Member Blumenthal, and members 
of this distinguished Committee. I am grateful for the opportunity to 
appear before you this afternoon on behalf of our company's non-profit 
owners and employees to discuss TriWest Healthcare Alliance's work in 
implementing the Veterans Choice Program (VCP). More importantly, I 
look forward to discussing our ability to achieve our collective 
potential in meeting the needs of those who deserve our very best * * * 
our Nation's Veterans.
                             our background
    TriWest is intentionally in business only to serve those who serve; 
which has been the case for nearly 20 years. And during our entire 
history, the company I was fortunate to help found with a group of non-
profit health plans and University Hospital Systems, and have been 
privileged to lead since, has focused exclusively on providing access 
to needed care when it is not able to be provided by the Federal 
systems on which those in uniform rely. Our first 17 years were spent 
helping the Department of Defense (DOD) stand-up and operate the 
TRICARE program. And while we no longer support the DOD in that line of 
work, I'm proud of the work that we did to assist DOD in making TRICARE 
the most popular health plan in the country and meet the needs of 
millions across 21 states who relied on us for that support. And, as 
those of us who were around at the time can attest, we know it was 
neither an easy nor painless road. Now, working together with VA, I 
believe we can achieve the same results for the Veterans who look to VA 
for their health care needs.
                            pc3 performance
    Mr. Chairman, before VCP, there was PC3.
    In September 2013, TriWest was awarded a contract to stand-up and 
implement the brand new Patient Centered Community Care (PC3) program 
across 28 states and the Pacific. Initial access to specialty care from 
network providers began in January 2014, with the rest of the program 
coming online over the months that followed.
    PC3 was intended to be a nationwide program giving VA medical 
centers (VAMC) an efficient and consistent way to provide access to 
care for Veterans from a network of credentialed providers in the 
community. We are pleased to be sharing this work in support of VA with 
our long-time colleagues in the TRICARE work, Health Net. And, I want 
to assure this Committee that we are working together very 
collaboratively to leverage our collective knowledge so that VA 
benefits from it as they and you seek to fashion strategies that will 
optimize VA's direct delivery system and supplement that care with 
access to care in the private sector when and where it is needed.
    Important to the success of PC3 was that the cost to VA, quality, 
and processes would be consistent all across the country. Community 
providers, VA staff, and Veterans would know how the program works. 
Congress and VA health care executives could more accurately budget for 
non-VA care costs. The facilities could turn to consolidated networks, 
tailored to their needs just like DOD did with TRICARE, versus 
inconsistently buying on their own. And, claims payment challenges for 
providers would be a thing of the past.
    The promise of that vision is still there today.
    However, the implementation of PC3 was not without challenges. And, 
overcoming those challenges has been a huge focus for TriWest and our 
VA partners during the first year of its operations.
    For those of us at TriWest, a big challenge at the outset was the 
absence of data showing the VAMC's needs and historical purchasing 
patterns. As you might expect, it is very difficult to build a network 
of providers when you don't know the volume, configuration or location 
of demand. This led to some initial mismatches in our network and 
significant unexpected cost as we had to recalibrate the network once 
we received the needed information. Put simply, we had more of some 
services than VA would ever need in some places. But, we also had less 
of some services in other places than it turns out VA needs in order to 
ensure that care is both in sufficient supply to meet the need and 
reasonably close to where the Veterans reside. I want to compliment our 
contracting officer, Mara Wild, for tirelessly staying on the pursuit 
of this critical information over the course of nine months * * * 
information that we are putting to good use in our efforts to optimally 
calibrate the networks to meet the need.
    Being able to effectively project volumes based on solid 
information not only assists with making sure that networks are 
tailored properly to support each VAMC and Community-Based Outpatient 
Clinic (CBOC), and the Veterans who rely on them for care, it also 
ensures that we have the staff necessary to administer the program and 
meet the tight performance specifications. The PC3 contract is designed 
to pay us only after care is ordered, appointments are made, the 
medical documentation is returned to VA to be inserted in the Veteran's 
consolidated medical record, and we have paid the provider. That means 
staffing levels are all at risk to us. If we hire too many staff and VA 
does not use the program, we lose money * * * effectively paying the 
government for the privilege of doing the work. But, if we hire too 
few, it can lead to delays in the receipt of care as we struggle to 
meet demand. So obviously, getting this as close to right as possible 
is very important.
    There are few programs structured this way, as even TRICARE, 
Medicare plans, and private insurance have premiums being paid in 
advance to cover both the anticipated administrative costs and the 
projected health care risk.
    Yet another challenge has been voluntary utilization of the PC3 
program by each VA medical facility. As noted above, my colleagues and 
I at TriWest and our owners who call most of the communities in our 
area of operation home, built a network of providers based in part on 
estimates derived from historical fee basis care purchasing. However, 
much to our surprise, we've painfully discovered that many facilities 
have simply continued to use, almost exclusively, their historical non-
VA care program to buy care from community providers * * * even when we 
had network providers. In fact, some of our network providers were the 
same providers from whom they continued to buy directly. While some 
VAMCs have largely abandoned this practice, we have had a very 
difficult time understanding why this practice has been allowed to 
continue such that only about 15% of total purchased care has been 
bought through this mechanism and VCP, in spite of all the money and 
man hours that have been spent in constructing these networks.
    Beyond that, we see provider confusion as we attempt to convince 
them to join a network when they are already seeing Veterans through 
the legacy programs. Even worse, when a provider does join the TriWest 
network but continues to receive referrals for services from both VA 
and TriWest, they quickly notice that the requirements, rates, and 
claims processes are often completely different. And yet, to the 
provider, it is a Veteran being referred for care by VA.
    Voluntary utilization of PC3 at the local level has also 
exacerbated the challenges with staffing because even when utilization 
data is available, we cannot assume such workload will come through the 
contract. We have to consider how much volume each local medical 
facility will move through the networks, and its related processes, as 
we determine how much staff is needed to do the work. And, as you might 
expect, those projections are extremely difficult to make with any 
accuracy * * * even with the talented and experienced staff we have 
attending to that task.
    There is, however, hope. I would like to compliment my fellow panel 
member, Dr. Jim Tuchschmidt, for the direction that he and the rest of 
VA's leadership have given to the team at VA that this practice is to 
come to a halt. Instead, their direction is that the networks that were 
constructed to support them and programs, such as VCP, which extend 
options further for Veterans, are to be used rather than resorting to 
direct purchasing of care.
    Mr. Chairman, fortunately, the first year of PC3 operations has 
also had a lot of successes. In fact, I'd say that in spite of the 
challenges I've just noted, we have made some amazing progress together 
in a very short span of time.
    The most important element of that progress is that more workload 
is coming through this contract than when it started. In January 2014, 
the first month of operations for PC3, TriWest received approximately 
2,500 requests for care. This past April, we received over 21,000. As I 
just noted, whether to use the contract is still seen as voluntary 
throughout the system. So, when more care comes through the contract, 
it is evidence that more VAMCs see the benefits of using consistent 
processes, rates, and network to obtain needed, quality care for 
Veterans. In the long run, when these programs are the vehicle for the 
vast majority of care purchased outside of VA, the consistency will 
benefit the entirety of the non-VA care program.
    Concurrent with, and certainly not unrelated to the growth in 
utilization, the partnership between VA and TriWest has matured 
substantially over the past year. And that maturity has helped us to 
focus on better matching the needs of local Veterans with the providers 
in the network, and ensuring those providers are in the right 
communities served by the VAMC. For example, while it is important to 
know that the Topeka VAMC purchased 500 MRIs from community providers 
in a given month, it is critical to know if they purchased 200 in 
Manhattan, 100 in Hays, and 200 from Salina * * * as they are all 
considered to be in the catchment area of the VAMC. However, as I am 
sure Senator Moran can attest to, the Topeka Kansas VAMC has a big 
catchment area in a huge state. Without that second layer of data, 
TriWest would almost assuredly build network in the wrong places.
    The work we are doing at each other's side, and the appreciation of 
what is needed for us to execute with reasonable effectiveness for VA 
in support of Veterans is allowing us to grow the provider network 
smartly. One year ago, there were just over 50,000 network providers 
serving VAMCs in Regions 3, 5, and 6. Today, we've crossed the 
threshold of 100,000 providers in the network devoted to caring for 
Veterans in need of services from providers in their community. More of 
those providers are in more communities where the needs exist. And we 
aren't done yet, which I will talk about in a few minutes.
    It is also important to make sure when you ask a provider to render 
care that they get paid on time and accurately for their work. Not only 
is it proper, but that is the way to ensure they are likely to agree to 
serve another Veteran when the need arises. As we all know, when you 
have to spend time chasing the bill payer, it adds to expense and makes 
the work less attractive. And, we want this work to be attractive * * * 
just as it was with TRICARE when we worked to help the DOD reengineer 
claims processing at the start of the program which put us on a path to 
becoming the fastest and most accurate payer with which most of our 
provider network dealt.
    Any new program has challenges with aspects of implementation and 
operation. And, unfortunately, at the outset of PC3, we were not paying 
our claims as quickly as we would like. In fact, I think we were 
averaging close to 90 days in June 2014. That simply isn't the case any 
longer. Experience, focus, and refinements have successfully brought us 
to a place where our average clean claim is now being paid in fewer 
than 30 days. Providers who render quality care to our Veterans deserve 
timely payment of their claims. And we are committed to honoring their 
service at our side by doing just that.
    On the way to improving the PC3 experience for Veterans, VA, and 
providers, it turns out that we also were just getting warmed up in 
preparation for the ultimate program implementation run which came in 
October 2014 with the first indication that the new VCP would become a 
modification to the PC3 contract. And, the intensity was about to pick 
up several-fold.
                implementing the veterans choice program
    To be exact, we would ultimately have one month for the 
implementation of this massive new program that would ``go live'' on 
November 5, 2014.
    I recall vividly that during one of the initial discussion sessions 
VA had with potential industry partners in mid-September 2014, it was 
said by some in the room that 12-18 months was the needed timeframe in 
which to stand up a program of this magnitude. And while there 
certainly were imperfections on Day 1, and we continue to refine 
operational processes internally at TriWest and between VA and us, I'm 
very proud of what we all accomplished in such a short timeframe. And I 
would like to focus for a moment on what went right, before I share 
with the Committee what remains a challenge and what I hope we all can 
focus on for the future as we seek to achieve an effective and 
efficient program for those we are all privileged to serve.
    As this Committee is aware, the law mandated that all Veterans 
enrolled for care with the VA Health Care system as of August 1, 2014 
receive a Veterans Choice Card. At its core, this required printing 
those cards and mailing them off to Veterans. But, in reality, it 
involved so much more.
    First, we had to partner with VA to receive a list of all Veterans 
eligible to receive the card. We were informed early on that the list 
would contain nearly nine million names. Of course, in order to ensure 
that a list of that size can be used for its intended purpose, 
formatting is crucial. Working together with VA and our colleagues at 
Health Net, we agreed on a template of the fields that would be 
provided to us. We then made that template available to the card 
printer we selected once the design was available to us because they 
had a week to get the first batch of cards printed, stuffed, and into 
the mail.
    At the same time, we worked with our colleagues at Health Net to 
parse out all of that data and break it up so that each of us would 
have the right list of Veterans for each area served. After completing 
that project, we knew there were just under four million Veterans 
eligible in the area of our responsibility.
    Just knowing who was to receive a card was not enough. We also had 
to load all of that data into our customer relations management (CRM) 
system so that when those cards arrived in the mail and Veterans called 
the number on the back, we knew who those Veterans were when we 
answered the phone. And I'm proud to say that we had that system up and 
operational in advance of ``go live'' day.
    While we are on the topic of phones, at the same time all of the 
data loading and print work were occurring, we were also standing up a 
call center infrastructure big enough to serve the outreach from all of 
those who would receive the cards as well as providers and others in 
the general public who learned about the new benefit and had questions.
    To accomplish this task, we worked directly with Verizon and our 
call center partner to establish a cloud-based system that would 
support a single, public-facing phone number (866-606-8198) where a 
Veteran; a provider; or a VA staff member encountered a message from 
the Secretary about the program and then was routed to the appropriate 
agent representing us based on their zip code to receive supportive 
services. Again, in fewer than 30 days, we designed and stood this up 
and it was staffed with nearly 800 people by November 4, 2014 so that 
we would be ready to serve Veterans in need.
    I would submit that our most important accomplishment is what did 
not happen. No computers crashed. No busy signals occurred. In fact, 
there were no long waits for the phone to be answered by a live person. 
In less than 30 days, working together with VA and other partners, we 
stood-up a contact center that worked.
    In those first 30 days, we also had to work with VA to develop a 
means of learning who was eligible for VCP at any given time. As you 
know, the law created two distinct types of eligible Veterans: those 
waiting longer than 30 days to receive needed care; and those residing 
more than 40 miles from the closest medical facility of the department. 
TriWest would need to know which Veterans qualified under which 
category of eligibility because the range of services available differs 
greatly.
    Those residing more than 40 miles from the closest VA medical 
facility are eligible to receive through VCP any needed medical care 
covered by VA. TriWest is delegated responsibility to make 
determinations of medical necessity. As such, our only issues in 
serving this population are whether the care is medically needed, and 
whether there is a provider close-by who agrees to provide that 
service. As many Members of this Committee know, if you live more than 
40 miles from the closest VA medical facility, it is likely you live in 
a rural or highly rural area. As such, it is often not only VA that is 
far away, but it can be difficult to locate some types of specialty and 
subspecialty providers due to their scarce supply.
    For the 30-day waitlist population, the task proved much more 
difficult because it was not only necessary to know that you were on 
the eligibility list, but we needed to understand what service(s) the 
Veteran needed. For this, we would need clinical information (known as 
a ``clinical consult'') from the referring VA provider.
    In an effort to expedite the provision of that clinical 
information, given the very short time in which to stand this up, an 
initial decision was made by VA leaders to send us all clinical 
consults related to any Veteran on the Veterans Choice List (VCL). The 
initial waitlist alone contained information on over 34,009 Veterans. 
For each of those names, we would also receive via fax information 
documenting their respective clinical need. Then, we had to match that 
clinical information with the registry created by the card-mailing file 
and the updates created by the eligibility file so that we could help 
Veterans in need of service when they called. This process has proven 
to cause the most challenges in operation of VCP.
    Nevertheless, in the six months the program has been operational, 
TriWest has processed over 40,000 authorizations for care. And we have 
seen growth in the use of the program every month with the exception of 
a slight drop between January and February of this year. In 
November 2014, we processed approximately 2,600 authorizations (more 
than the first month of operation under PC3). By April 2015, the number 
was 10,600; growth of nearly 400%.
    As I mentioned earlier, while we certainly had many successes about 
which I am proud, I am by no means suggesting that all went right in 
our implementation. And I think it is very important that we outline 
what went wrong if for no other reason than because Veterans and their 
representatives in Congress deserve to know and understand our 
challenges. After all, at the end of the day, we are ever mindful that 
we are all spending taxpayer money.
    First, and foremost, we suffered from a lack of training time. We 
had less than two weeks to hire and train hundreds of people just to 
answer phone calls from Veterans and describe or explain a complex new 
program. It is no understatement to say that most who worked to get VCP 
up and operational worked 100 hour weeks during that 30-day period * * 
* in order to understand what was envisioned by the law and then design 
the approach and stand-up operations. Given the brief amount of time to 
do all that was required, one of the greatest challenges was to gain a 
solid base of understanding of this valuable new benefit, and get the 
operation design set so that we could sufficiently explain both to 
others. And, we were not alone in that challenge. Among those most 
impacted, beyond the Veterans we were all aiming to serve, were the new 
staff in the call centers, as they only had five to seven days in which 
to grasp the information versus the typical two to three week period 
one ought to provide. I am sure others, including VA, struggled with 
the same.
    Obviously, the lack of training led to less than optimal customer 
experiences. Information provided to Veterans was at times inaccurate 
or confusing. And some Veterans were left frustrated. I want to 
apologize for that. But, in apologizing, I also want to assure this 
Committee that we did everything in our power to train and educate this 
new team in the very short period of time we were allotted. In the end, 
it was simply not enough time. And, we are doing our best to stay on 
top of making sure that our staff has the right knowledge base of the 
program in order to provide solid customer service * * * even as this 
program continues to be refined, creating a need for re-training.
    The training of our staff was not the only challenge that impacted 
the customer service experienced by Veterans who called the Choice 
line. As noted above, there are many areas where cooperation and 
collaboration between VA and TriWest needs to occur every day to ensure 
solid performance of VCP. I think it is fair to say that as hard as it 
was for TriWest to train hundreds of new staff, it is vastly more 
complicated for VA's leadership to train thousands--maybe even tens of 
thousands--of administrative and scheduling staff all across the United 
States so that their engagement with Veterans would be informed. Not 
only that, but this challenge left us in a place where our staff and 
Veterans struggled with the impact of encounters with insufficiently 
trained personnel on whom they had to rely for information in order to 
achieve a positive customer experience.
    Another challenge in early implementation of VCP was the timely 
receipt of the eligibility file. As I mentioned earlier, VA worked with 
us to create a template that would allow their team in the Eligibility 
Office to push regular information to us about which Veterans were 
eligible for VCP. But, the Eligibility Office also needed to obtain 
that information every day from clinics all across the country. It was 
always the goal to provide a new file every night so that when a 
Veteran called us the next day, we knew of their eligibility. In 
reality, even to this day, there is at least a five-day lag in between 
when a Veteran is told there is a wait time in the clinic that provides 
them eligibility for VCP and when that information can be used by 
TriWest to serve the Veteran.
    There are many reasons for this delay. But, none of them are 
related to a lack of hard work. In fact, I would like to publicly 
acknowledge the incredible work done by Laura Prietula and her team in 
the Eligibility Office. She is a dedicated public servant who seeks to 
deliver outstanding work every day and from our experience many nights 
she is there too. And, there are many others like her in VA working 
tirelessly in an attempt to get this benefit to where we all want it to 
be. The hope is that some level of automation is coming to this program 
and to this area in particular. But, it was not available on Day 1 and 
that has led to some challenges and frustration.
    Still another challenge has been the receipt of the clinical 
consultation information from VA which, as noted earlier, is necessary 
to schedule an appointment with a provider. For those eligible for VCP 
by virtue of their inclusion on the 30-day waitlist, TriWest must have 
a clinical consult for use when helping to make an appointment. The 
information in the consult tells the provider in the community why the 
Veteran is being referred to them for services. Providing this 
information is standard practice and good clinical care. And for some 
services, it is even required by Medicare, insurance policies or other 
accrediting organizations. For example, no imaging center will provide 
an MRI, CT, or other sophisticated imaging study without a physician 
order. This order would be in the clinical consult.
    Because this information comes from hundreds of different clinics 
all across the VA system, receipt of that information in a consistent 
fashion has been a challenge. Without it, however, we are left with no 
alternative but to tell a Veteran who calls the Choice line that we are 
waiting on clinical information from VA. Needless to say, when we tell 
a Veteran we know they are eligible, and yet we still cannot help them, 
the frustration is enormous.
    As I noted above, the consult is supposed to come to TriWest 
automatically for every Veteran who is placed on the VCL. 
Unfortunately, we only know what we don't have when a Veteran calls for 
an appointment and can't receive one. I also do not want to lay all of 
the challenges in this area at VA's feet. The fact is, many times when 
we call for consults that we do not believe we have, we are told by VA 
staff that they were already sent. This no doubt frustrates VA staff 
too.
    The good news is that recently we implemented a pilot program in 
VISN 17 in collaboration with the Dallas VAMC which is testing whether 
a process of requesting on our end can be met with a response on VA's 
end within 24 hours. Initial data suggests that it is working well. If 
the evidence continues to show promise, it will mean that Veterans all 
across the country can expect a consistent customer experience under 
which we can all assure them that we will have the information 
necessary to make an appointment within 24 hours of them calling us. 
And no longer will VA be responsible for sending thousands of clinical 
consults every day for Veterans who may not use VCP. I would submit 
that this is a win-win.
    This looming success in addressing one of our collective challenges 
flows from the collaborative work in which we, Health Net and VA have 
been engaged since the beginning of the year. Just a little over 60 
days from the start of VCP, we began to sit down together to map the 
gaps in process and customer service and blueprint how to resolve them. 
The focus of this work is to identify the components of our individual 
and collective work, or the policies and approaches that underlie them, 
that are in need of re-engineering or refinement to ensure that 
Veterans receive the access to care that was envisioned with the 
enactment of VCP.
    This work is highly collaborative and involves leadership at all 
levels of the three organizations. In fact, just last week we all met 
for a day-long summit on Clinical Issues where we identified problems, 
discussed solutions and made the changes that will close gaps. This was 
on the heels of our regular, monthly day-long summit during which we 
focus on needed administrative process changes or refinements. Those 
issues are brought to the table by a myriad of integrated topical 
workgroups that meet in many cases several times a week.
    It is intense and focused, just as should be * * * as we are trying 
to quickly address the processes we all know need attention in order to 
improve this critical program and meet the intended objective of VCP.
    I would submit that this approach is yielding effective change and 
refinement at great speed for a program of this magnitude that was 
stood up very quickly and across a vast geographic expanse. And, I want 
to offer that the focus and intensity on the part of those involved and 
the collaboration present is unlike anything I have ever seen in my 30 
years of engagement in this space.
    For our part, not only are we engaged at a macro level, but we are 
operating in this same fashion within our company * * * which is how we 
have accomplished successful and quick refinement and improvement since 
the early days of TRICARE nearly 20 years ago. We have also engaged our 
long-time partner in such work, the world-renowned Customer Service 
Institute at Arizona State University, to conduct customer service 
gapping and blueprinting with the Phoenix VA and within our own 
organization.
    The very early indications are that this time-tested approach, 
mirroring that of the most highly regarded customer service brands in 
America, is beginning to yield results that matter.
    The customer experience under VCP is getting better with each 
passing day. Information provided by TriWest staff is more consistent 
and more accurate; providers are more familiar with the program; and we 
have recently begun an initiative that allows any provider in our 
region to register online with us to be a VCP provider. Knowing who is 
willing to treat a Veteran under VCP, even if they are not already a 
TriWest network provider, will go a long way toward speeding up the 
appointing process.
    Additionally, we are updating our entire CRM system so that our 
staff and all of the VA staff across our regions who interact with us 
in the IT environment will have more information about each Veteran 
right at their fingertips. Construction of these brand new tools was 
conceived of through the collaborative process of which I just spoke. 
We have condensed design and testing of these new systems to weeks and 
are using a 24/7 build strategy in order to rollout the new tools just 
after Memorial Day rather than waiting until next year, which would be 
the case using normal construction schedules.
    It has been my experience that many customer service failures are 
due to the fact that line staff (those on the phone or on the ground) 
simply do not have access to the information needed to help a customer. 
When information is available, resolution of problems is possible. This 
new effort and these new tools will lead us down that road.
    That said, there are many improvements needed that will require 
longer-term planning, collaboration, and perhaps even legislative 
change to what you passed last Summer. And I would like to take a 
moment to discuss a few of those and how, if they are pursued, VCP and 
PC3 can help bring an entirely better experience to the Veteran in need 
of health care services.
          refining the veterans choice program for the future
    One area I would respectfully suggest is in need of review is the 
60-day authorization limitation in the VACAA statute. While we 
understand there were reasons to include the time duration limitation, 
I would respectfully suggest that it is leading to an increasing number 
of circumstances where quality and continuity of care are not the 
ultimate determining factors in the treatment of a Veteran. As a quick 
example, under the strictures of the statute, a Veteran sent through 
VCP for radiation oncology services because the local VA could not see 
him or her within 30 days, could have that service ``recaptured'' by VA 
after the first 60 days in the community if the local VA now has 
capacity. I am not a clinician. But, my Chief Medical Officer tells me 
that only under extreme circumstances should you change radiation 
oncology services in the middle of treatment. Yet, we understand that 
the statute leaves no alternative to continue that care through VCP.
    The same circumstance would apply to maternity care. If the initial 
appointment was more than 30 days out, a female Veteran could be sent 
through VCP to a community OB/GYN. However, after 60 days, VA would 
have to reassess their capacity and could recapture the care, requiring 
the Veteran to change provider mid-pregnancy. Again, I know there were 
reasons for the requirement. However, I would respectfully suggest a 
revaluation to allow for some flexibility when it is in the best 
interests of the patient.
    Additionally, I would respectfully suggest that there is a need to 
harmonize all of the disparate programs that now exist to provide non-
VA (or community) services to Veterans. I noted earlier that voluntary 
use of the PC3 contract made it difficult to predict with any 
reasonable accuracy how much network would be needed for certain 
services and where that network was needed. It is also true that even 
if I can accurately predict network needs, it is difficult to convince 
providers to join a network when they already receive work directly 
from VA at better rates with fewer requirements. It sounds odd to say, 
but in some instances we're competing against VA to provide services to 
VA. Harmonizing the programs in some manner would help alleviate this 
challenge.
    I also mentioned that without knowing, generally, the overall 
volume of services VA will need from my company, it is difficult to 
staff accurately for workload. But, again, it is difficult to predict 
workload when local facilities simply have options every day on the 
program through which they intend to purchase services.
    I think the net result of both of these challenges that stem in 
some manner from multiple different programs come through loud and 
clear in the recent IG report which found a lack of savings under the 
initial year of the PC3 program. The IG noted that there were instances 
in which timely appointing wasn't available through TriWest or network 
providers were not close by. While I do not know the exact cases the IG 
reviewed, I know it is true that when workload exceeds our imperfect 
projections we find ourselves with inadequate network and a lack of 
staff. And that will lead to delays in appointing and difficulties 
finding providers. As an aside, I might note in response to another 
aspect of the IG report, that measuring first year savings of the PC3 
program against implementation fees designed to cover five years of 
operations is a little bit of apples-to-oranges comparison.
    Nevertheless, I am pleased to say that I understand VA intends to 
take some steps to create a hierarchy of options that local non-VA care 
staff will be expected to follow. This will go a long way toward 
providing everyone: VA staff, Veterans, community clinicians, and my 
team with the information we all need to bring timely care to Veterans 
using a consistent process with predictable rates.
    This new effort on VA's part does lead me to one additional 
observation on what is needed for the long-term health of these 
programs. We must focus on a better collaborative planning process when 
changes are needed.
    I've noted at length the challenges we experienced in implementing 
VCP; partly due to the short implementation schedule. Yet, just in the 
last few weeks, we saw an implementation of VA's new determination on 
eligibility under the 40-mile rule. I want to be clear and say that 
this is a tremendous change for Veterans. It is absolutely true that 
one of the most frequent complaints to our call center was the ``crow 
flies'' determination. However, there were only three weeks between the 
time it was determined that the rule would change and when VA sent out 
letters to just over 128,000 Veterans in our three regions notifying 
them of this change.
    In just the first week following the letter, workload to our call 
center for VCP more than doubled. And, we understand that there are 
likely additional changes coming as well that VA is working on.
    The challenge will be to synchronize them effectively so that we 
have the best chance to make sure that sufficient staff are hired and 
trained to meet the increased demand, or to agree among all effected 
that the change needs to be made quicker and that it is acceptable for 
capacity to catch up to demand.
    Regardless, we are ``All In''!
    One of the areas I know that is being worked diligently within VA 
is how to ensure that the networks we are constructing and the 
providers who want to serve at our side in support of Veterans are 
being utilized. And, that is to be applauded.
                        the art of the possible
    At the ground level, I am thrilled at the strong collaboration that 
is emerging all across our geographic area of responsibility. It is 
being supported by one of the superstars from our area, Joe Dalpiaz, as 
he is taking his time to completely engage at the side of his 
colleagues and me to fashion the ``art of the possible.''
    We started with one of the largest facilities in the VA system, 
which is under his engaged and watchful eye, and sat down with the 
Director and non-VA care team to look at all of the demand they have 
for community services and where the VA's needs are. Then, we produced 
an assessment of whether the network we have built is sufficient to 
meet VA's full demand. Where a bit more service is needed, we are 
discussing the optimal strategy to bring it to a fully tailored state 
so that Veterans in that community will have exactly what they need, 
when they need it * * * whether it is from a VA medical facility or 
with a community provider. Of course, a Veteran will also be free to 
select a provider of their choice to the degree that one does not exist 
within VA or the network.
    This effort includes primary care and specialty care, to include 
behavioral health. And, I am confident of the success that will come 
from this completely engaged and collaborative effort, which will have 
each leader within VA knowing what they have at their disposal inside 
VA and in the community to meet the access needs of Veterans * * *.
    My confidence in this process is bolstered by the fact that this is 
exactly what we did together with DOD in TRICARE that led to phenomenal 
success in our area of responsibility and it is what we have now 
accomplished together with the VA leaders in Phoenix and Hawaii * * * 
where networks are now completely tailored to demand. These early 
successes were the result of the great collaborative effort involving 
not only the local leaders and staff, but the tireless work of several 
in VA: Sheila Cain, Greg Frias and Tommy Driskill.
    We have prioritized the areas in which we will begin this work in 
collaboration with the VA leaders that Joe and I have met with over the 
last five weeks. This ensures that we can quickly move the needle once 
VA communicates its intention to the provider community that VCP is the 
pathway, and ensures its own staff on the ground is lined up behind the 
objective of this being the purchasing tool for care when it is 
unavailable in VA, or from a nearby DOD facility or academic affiliate.
    For the purpose of illustration, I would like to highlight what 
will come from this as it relates to one of the biggest needs at the 
moment * * * timely and convenient access to behavioral health care.
    To be sure, VA is the gold standard in understanding the behavioral 
health needs of our Veterans. But, there are many instances in which we 
may be able to help them free up space in VA for their most acute 
patients by working with providers in the community.
    Next, I am matching that demand (both behavioral health and all 
other services) against the network we have in the catchment area of 
the VAMC. And I am doing that in a fully transparent way right in front 
of the VAMC Director. Where I have what he needs, he will know it. And 
he will also know what I am missing.
    Next, the VAMC Director will begin notifying local providers that 
he will be sending all of his community care through PC3 and VCP and 
there will no longer be (with few exceptions) local, direct contracts. 
Then, my team will set out on an aggressive schedule to build the 
network that can fill in the gaps identified by the ``map-and-gap'' 
analysis. Community providers will know that VA's future purchasing 
will be through the consolidated network. We will provide regular 
updates to the team at the VAMC. And as network growth occurs, so too 
will workload, which means I can plan for the hiring and training of 
staff on a timeline to deliver.
    In the very long run, VAMCs can use this process to analyze ``make/
buy'' decisions. Obviously, there is a tremendous need for many 
services at VA medical facilities. But, there are also many exigent 
circumstances that VA must confront in every community. Internal VA 
expansion may be desirable and justifiable. However, perhaps the 
physical space does not exist; the facility may be landlocked; or, most 
commonly, the community itself has a shortage of the type of providers 
VA requires to meet the needs of Veterans, which makes direct hiring 
difficult.
    In those instances, it is my hope that they will find a robust 
network to be an asset they can use in planning and delivering. Perhaps 
the marginal use of time from a dozen community providers can better 
meet the needs of the Veterans than hiring one internally because of 
some challenges I've just mentioned. And, perhaps hiring directly is 
the right thing to do. That decision should always rest with VA and 
Congress.
    To be clear, I am not suggesting in any way that PC3 or VCP should 
replace the direct care provided by the VA health care system. But, I 
do believe that greater knowledge of what is available locally from a 
network of providers could help VA in the long run plan for and deliver 
quality health care in a more timely fashion.
    I believe that is what you envisioned in the passage of VCP * * * 
and, I believe the successful fulfillment of that vision in support of 
those who have borne a high cost in defense of freedom is very much the 
``art of the possible.'' We look forward to doing our part as you 
refine and modify policies and authorities to give us the final tools 
that will be needed to accomplish the success that we all desire.
                               conclusion
    Mr. Chairman and Members of the Committee, my colleagues and I at 
TriWest truly believe that if we are transparent about the needs and 
the shortcomings, collaborate together with VA to fill the gaps, and 
then implement them as quickly as possible, we will earn the trust of 
Veterans and collectively meet their needs. And believe me, I know we 
must earn this trust.
    Supporting the care needs of America's Veterans is a tremendous 
honor and privilege for me, all of the employees of TriWest, our non-
profit owners, and most importantly the providers in our markets that 
have leaned forward at our side to say we will serve a few of our 
fellow citizens when they have needs that are unable to be met by VA 
directly. We are humbled by the service and sacrifice of America's 
Veterans and their example reminds us constantly of the high cost of 
freedom. We take our responsibility very seriously and VA, Veterans, 
and this Committee can be sure that our entire focus is on ensuring 
that our work in support of VA and the Veterans who rely on them for 
their care is fitting of the sacrifices of our heroes and is worthy of 
their trust.

    This concludes my formal testimony. I'd be happy to answer any 
questions you might have.

    Chairman Isakson. Thank you, Mr. McIntyre.
    Ms. Hoffmeier.

   STATEMENT OF DONNA HOFFMEIER, VICE PRESIDENT AND PROGRAM 
       OFFICER, VA SERVICES, HEALTH NET FEDERAL SERVICES

    Ms. Hoffmeier. Chairman Isakson, Ranking Member Blumenthal, 
and Members of the Committee, I appreciate the opportunity to 
testify on Health Net's administration of the Veterans Choice 
Program.
    Health Net is proud to be one of the longest-serving health 
care administrators of Government programs for the military and 
veterans communities. We are dedicated to ensuring our Nation's 
veterans have prompt access to needed health care services and 
believe there is great potential for the Choice Program to help 
VA deliver timely, coordinated, and convenient care to 
veterans.
    In September 2013, Health Net was awarded a contract for 
three of the six PC3 regions. We implemented PC3 across our 
regions on a 6-month implementation schedule, completing 
implementation at the beginning of April 2014. Then in October, 
after Congress passed and the President signed the Veterans 
Access, Choice, and Accountability Act of 2014, VA amended our 
PC3 contract to include several components of the Choice 
Program. With less than a month to implement Choice, as Dave 
just mentioned, we literally hit the decks running--I am a Navy 
veteran, to use a Navy phrase--and we have not slowed down 
since.
    To meet the required start date of November 5, we worked 
very closely with VA and with TriWest to develop an aggressive 
implementation schedule and timelines. The ambitious schedule 
required us to hire and train staff quickly and to reconfigure 
our systems for the new program.
    Despite this very aggressive implementation schedule, on 
November 5, veterans started to receive their Choice cards, and 
they were able to call in to the toll-free Choice number to 
speak directly with a customer service representative about 
their questions on the Choice program or to request an 
appointment for services.
    Having said that, there certainly have been challenges that 
have resulted in veteran frustration as well as frustration on 
the part of VA and, to be honest, even our own staff, including 
call center and appointing staff. With such an aggressive 
implementation schedule, there was little time to finalize 
process flows and make system changes. We literally had less 
than a week from the date we signed a contract modification 
with VA to the actual go-live date.
    While the cooperation with VA since the start of the Choice 
Program has been good, there still is considerable work that 
needs to be done to reach a state of stability where the 
program is operating smoothly and the veteran experience is 
consistent and gratifying. We appreciate the opportunity to 
offer our thoughts on the future of the Choice Program. The 
Choice Program is a new program that was implemented in record 
time. As a result, there are a number of policy and process 
decisions and issues that are either unresolved or 
undocumented. If Choice is to succeed, these items might be 
addressed quickly.
    As I mentioned earlier, we have been working very closely 
with VA to address these issues. Many of the items simply could 
not have been anticipated before the start of the Choice 
Program. Others, however, should have been addressed before the 
program started, but the implementation timeline did not 
provide adequate time to do so.
    The identification of policy and operational issues and 
concerns has been occurring very quickly. As a result, we have 
struggled to keep up with developments and to adequately train 
our staff with the most up-to-date and accurate information. 
This situation is not ideal. Based on these dynamics, we have 
one overall recommendation for moving Choice forward.
    We recommend VA develop a comprehensive, coordinated 
operational strategy for Choice that clearly defines the 
program requirements, the process flows, and rules of 
engagement. This strategy should provide a clear road map for 
all of us to follow, one that is communicated to all the 
stakeholders: VA leadership, VISN Medical Center leadership and 
staff, both contractors, Congress, and, most importantly, the 
veterans.
    While the strategy needs to identify key initiatives and 
reasonable timelines for implementing those initiatives, it 
also needs to contain the flexibility to address issues as they 
arise and make necessary course corrections. The strategy must 
include resolution of outstanding policy and process issues; 
development of policy and operational guides that are mandated 
across the program; comprehensive training of both VA and 
contractor staff using consistent process flows, operational 
guides, and scripting; and a clear and responsive process for 
resolving legitimate issues and challenges.
    In closing, I would like to thank the Committee for its 
leadership in ensuring our Nation's veterans have prompt access 
to needed health care services. We believe there is great 
potential for the Choice Program to help VA deliver 
appropriate, coordinated, and convenient care to veterans. We 
are committed to collaborating with VA to ensure the Choice 
Program succeeds. Working together with the leadership of this 
Committee, we are confident that Choice will deliver on our 
obligation to this country's veterans.
    Thank you. I look forward to your questions.
    [The prepared statement of Ms. Hoffmeier follows:]
 Prepared Statement of Donna Hoffmeier, Program Officer, VA Services, 
                      Health Net Federal Services
    Chairman Isakson, Ranking Member Blumenthal, and Members of the 
Committee, I appreciate the opportunity to testify on Health Net's 
implementation and administration to date of the Department of Veterans 
Affairs' (VA) Patient-Centered Community Care (PC3) and Veterans Choice 
programs.
                        a history of partnership
    Health Net Federal Services is proud to be one of the largest and 
longest serving health care administrators of government and military 
health care programs for the Department of Defense (DOD) and Department 
of Veterans Affairs (VA). Health Net's health plans and government 
contracts subsidiaries provide health benefits to more than five 
million eligible individuals across the country through group, 
individual, Medicare, Medicaid, TRICARE, and VA programs.
    For over 25 years, in partnership with DOD, Health Net has served 
as a Managed Care Support Contractor in the TRICARE Program. Currently, 
as the TRICARE North Region contractor, we provide health care and 
administrative support services for three million active-duty family 
members, military retirees and their dependents in 23 states. We also 
deliver a broad range of customized behavioral health and wellness 
services to military servicemembers and their families, including 
Guardsmen and reservists. These services include the worldwide Military 
and Family Life Counseling (MFLC) program providing non-medical, short-
term, problem solving counseling, rapid-response counseling to 
deploying units, victim advocacy services, and reintegration 
counseling.
    As an established partner of VA, Health Net has collaborated in 
supporting Veterans' physical and behavioral health care needs through 
Community Based Outpatient Clinics (CBOCs) and the Rural Mental Health 
Program. We also have supported VA by applying sound business practices 
to achieve greater efficiency in claims auditing and recovery, and 
previously through claims re-pricing. It is from this long-standing 
commitment to supporting the military and Veterans community that we 
offer our thoughts on the role of PC3 and Choice in augmenting VA's 
ability to provide eligible Veterans with timely access to needed 
health care services.
                    the evolution of pc3 and choice
    The Department of Veterans Affairs developed Patient-Centered 
Community Care (PC3) to provide eligible Veterans access to health care 
through a comprehensive network of community-based, non-VA medical 
professionals. Care is available through PC3 when local VA medical 
centers cannot readily provide the needed care to Veterans due to 
limited capacity, geographic inaccessibility or other limiting factors. 
Services available through PC3 include primary care, inpatient 
specialty care, outpatient specialty care, mental health care, limited 
emergency care, limited newborn care for enrolled female Veterans 
following delivery, skilled home health care, and home infusion 
therapy.
    In September 2013, Health Net was awarded a contract for three of 
the six PC3 regions. These regions include 13 of 21 VISNs; 90 VA 
medical centers in all or part of 37 states; Washington, DC; Puerto 
Rico; and the Virgin Islands.

Figure 1: Health Net Federal Services' Contracted PC3 Regions 1, 2 and 
                                   4
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Region 1: VISNs 1, 2, 3, and 4
        Region 2: VISNs 5, 6, 7, and 8
        Region 4: VISNs 10, 11, 12, 19, and 23

    Health Net phased in implementation of PC3 across our regions 
during a six month implementation period, with services starting for 
the first VA medical centers on January 6, 2014. We completed 
implementation of all remaining VA medical centers by April 1, 2014. 
Originally covering only specialty care, the PC3 program was expanded 
to include primary care in August 2014.
    In August 2014, with the leadership of this Committee, Congress 
passed and the President signed into law the Veterans Access, Choice, 
and Accountability Act of 2014 (VACAA, Public Law 113-146, ``Choice 
Act''), which directed the establishment of a new program to better 
meet the health care needs of Veterans. The law directs the 
establishment of a Veterans Choice Card benefit that allows eligible 
Veterans who are unable to get a VA appointment within 30 days of their 
preferred date or the date medically determined by their physician; 
reside more than 40 miles from the closest VA healthcare facility 
(there are different mileage rules for some states, such as New 
Hampshire and Hawaii); or face other specific geographic burdens in 
traveling to a VA facility to obtain approved care in their community 
instead.
    In October, VA amended our PC3 contract to include several 
components in support of the Choice Act such as production and 
distribution of Choice Cards; establishment of a Choice call center to 
answer Veteran's questions about the Choice program and to verify 
eligibility for it; appointing services for eligible Veterans with 
Choice-eligible community providers; and claims processing. Since VACAA 
required implementation by November 5, 2014, we worked collaboratively 
with VA and TriWest (the contractor for the other three PC3 regions) to 
develop an implementation strategy with extremely aggressive timelines. 
This ambitious schedule allowed for minimal time to hire and train 
staff and to reconfigure our systems for the new program, which 
contains many requirements that differ from PC3 and therefore have to 
be tracked and recorded separately. Despite the fast-paced 
implementation schedule, on November 5th, Veterans started to receive 
their Choice Cards and were able to call in to the toll-free Choice 
telephone number and speak directly with a customer service 
representative about the Choice program.
                        engaging collaboratively
    From the start of discussions on implementation of VACAA, the VA 
Chief Business Office, Contracting Office, and senior VHA officials 
have worked closely with both contractors to establish priorities, 
provide policy guidance and develop process flows. As Choice 
implementation progressed, more policy and process items were 
identified. We collectively agreed to establish a Steering Committee 
and several Work Groups to address these items and to provide an 
effective forum for VA to provide clear policy decisions and program 
requirements.
    This approach has been valuable in identifying policy and process 
gaps, facilitating decisionmaking designed to resolve any issues, and 
ensuring consistency across all regions. We have committed to making 
the appearance of the programs seamless for Veterans across the 
country, regardless of where they reside or which contractor provides 
service.
    A key component to the success of both PC3 and Choice is acceptance 
by community providers. To accomplish our goal of providing Veterans 
with timely access to care in the communities in which they reside, 
Health Net proactively recruits providers to both PC3 and Choice. This 
is another area of collaboration with VA. In addition to public-facing, 
self-service information found on the Health Net Web site, we have 
attended community conferences to educate and engage providers.
    A specific example of collaboration between VA and the Choice 
contractors to educate and engage providers is the effort to integrate 
federally Qualified Health Centers (FQHCs).We are working very closely 
with VHA's Office of Rural Health on this effort, and participated with 
VA at the National Rural Health Association annual conference and 
National Association of Community Health Centers webinar. In addition, 
we have been very successful in working with the Virginia Primary Care 
Association to contract 26 FQHCs as VA Choice providers; our approach 
to outreach in Virginia has become a model we will pursue in other 
states. This collaborative effort has been invaluable in engaging the 
FQHCs--to date, we have recruited a total of 115 FQHCs to participate 
in Choice (27 FQHCs) or join our PC3 network (88 FQHCs).
                            results to date
    Under PC3, from program inception in January 2014 through April 13, 
2015, VA has provided Health Net with over 150,000 authorizations for 
care in 75 specialty areas and primary care. The top six areas of 
specialty care, comprising about 50 percent of authorizations include: 
optometry, physical therapy, podiatry, primary care, orthopedics, and 
colonoscopy. To meet demand, Health Net's network presently includes 
almost 76,600 providers. Since the beginning of April 2015, Health Net 
has successfully recruited over 4,200 additional providers, including 
27 hospitals.
    Since the inception of the Choice program in November through the 
beginning of May, 2015, we have answered about 550,000 calls, with the 
vast majority of those calls coming from Veterans seeking information 
on Choice or requesting an authorization for care. About 30,000 
Veterans have opted-in to the Choice Program with almost two-thirds 
eligible based on wait time. About 16,500 authorizations have been made 
for wait list eligible Veterans and nearly 10,000 authorizations have 
been issued for mileage-eligible Veterans. With the recent change in 
eligibility criteria based on driving distance, we expect a significant 
increase in demand for care for mileage eligible Veterans.
                             moving forward
    Implementation of any new program is challenging, particularly when 
the change is significant and the implementation period is condensed 
into a very short timeframe. Working collaboratively with VA and our 
colleagues at TriWest, we were able to effectively stand up the Choice 
Program by November 5th, as required by the statute. In achieving this 
milestone, Choice cards were mailed out to all Veterans identified as 
eligible by VA, calls to the Choice 866 number were answered promptly, 
and Veterans have been able to exercise the option of obtaining care 
within their local community when the VA capacity is limited or the VA 
facility is far from the Veteran's home. Having said that, we know 
there have been bumps in the road with the accelerated rollout of 
Choice--delays in eligibility information being available, confusion 
over program details, and incorrect or sometimes conflicting 
information provided to Veterans. These bumps have understandably 
caused a level of Veteran frustration.
    While the collaboration with VA since the start of the Choice 
program has been solid, there still is considerable work that needs to 
be done to resolve outstanding policy and process questions, adequately 
ensure appropriate staff training, conduct provider outreach, and 
enhance Veteran education. To that end, we would like to offer a few 
key recommendations for enhancing Choice we believe will facilitate 
achieving a state where the program effectively optimizes VA capacity 
and enables VA to provide all eligible Veterans with access to the care 
they need in a consistent and gratifying manner.
1. Consolidate non-VA programs
    Currently, there are multiple options for non-VA care, including 
Choice, PC3, local agreements/direct contracts and individual 
authorizations (``Fee''). Each option has different reimbursement 
levels, different requirements for community providers (requirements 
for return of medical documentation, credentialing, etc.), and 
different ``administrators'' (VA Medical Center non-VA care staff, VA 
contracting staff, PC3/Choice contractors). These various options 
create enormous confusion with non-VA (community) providers, Veterans, 
VA Medical Center staff and contractor staff. Reducing the number of 
non-VA care options would help to reduce confusion.
    We understand VA is about to address this issue. We commend VA for 
its efforts to resolve the challenges created by these multiple options 
for delivering care to Veterans when VA lacks the capability or 
capacity to provide it directly. VA has informed us of a number of key 
initiatives being planned to streamline non-VA care and to ensure 
Veterans have access to Choice. We fully support these efforts.
    To ensure success as we move forward in support of Choice, we 
recommend VA develop a coordinated implementation strategy that clearly 
defines each initiative and lays out an execution schedule that is both 
aggressive and achievable. Currently, we receive around 10 percent of 
the non-VA care volume through PC3 and Choice. Moving from 10 percent 
to 100 percent requires a well-defined road map that is communicated to 
all key stakeholders--VISN and VA Medical Center leadership and staff, 
both contractors, Congress and most importantly, Veterans. As this 
effort moves forward, it is critical that certain steps be taken:

           Outstanding policy and process issues must be 
        resolved
           Comprehensive training of VA and contractor staff 
        must be conducted using consistent process flows and scripting
           Policy and operational documents and/or manuals 
        should be developed and provided for use by VA facilities and 
        both contractors
2. Eliminate unnecessary impediments to community provider 
        participation
    Consolidating options into one approach that also minimizes VA-
unique requirements for community providers would have a very positive 
impact on the willingness of community providers to participate in 
Choice. Specific community provider challenges and impediments to 
participation include:

           Medical documentation requirements that are not 
        consistent with commercial/community standards. VA requirements 
        for medical documentation are often more detailed than accepted 
        standard of practice in commercial health care. For example, 
        PC3 and Choice require specific elements, short timelines, and 
        provider signatures. VA asks for more documentation and more 
        specific detail, such as provider social security numbers, than 
        is typically provided in private sector health care. In 
        addition, many of these requirements are not present in other 
        non-VA care options.
           Delays in payment of medical claims due to return of 
        medical documentation. Providers are not paid until medical 
        documentation is returned and accepted by VA. This delays 
        payments to providers who have already legitimately provided 
        the services and complied with the requirements to return 
        medical documentation. Continued delays in payment will result 
        in dwindling community provider participation and access 
        problems could return.
           High level of appointment no-shows in the community. 
        Currently, we are required to schedule appointments for 
        Veterans we are unable to reach by phone, and then notify these 
        Veterans of their appointment by mail. This process increases 
        Veteran no-show rates and causes frustration with community 
        providers. Community providers have no ability to bill VA for 
        these no-shows, nor can providers bill the Veteran a fee. This 
        process also creates frustration for VA Medical Center staff 
        because Veterans show up for VA appointments that may have been 
        canceled due to their scheduled community appointment. More 
        importantly, it means Veterans may not receive needed care in a 
        timely manner. We think a modification to this process would 
        reduce community provider reluctance to participate.
           Confusion on where to send documentation and claims. 
        This issue is largely related to multiple non-VA care options 
        and would be substantially aided by a more coherent (and 
        smaller) set of options in non-VA care programs.
           Lack of timely follow-up for authorizations on 
        needed additional services requested by provider for 
        appropriate clinical care. PC3 and Choice services are 
        authorized for ``episodes of care.'' Once an episode of care is 
        complete, additional authorizations are necessary, even for 
        follow-on care that is normally considered standard of 
        practice. This issue currently is being addressed by VA and 
        much progress has been made already to ensure timely approval 
        of requests for additional services. We appreciate VA working 
        collaboratively with us to address this challenge.
           Primary care in 60 day increments for 30 day wait 
        list eligible Veterans is difficult for primary care providers 
        outside of urgent care settings.
           The 60-day limit on an episode of care under the 
        Choice program creates challenges in certain clinical areas, 
        such as chemotherapy, radiation oncology, and complicated 
        obstetrics. With these types of care, it could be harmful to 
        bring the patient back to VA part way through a course of 
        treatment because the VA has availability at the 60 day point 
        and the patient is no longer wait list eligible. There is 
        similar risk if the patient changes address during a course of 
        treatment but is still close enough to receive care from the 
        Choice provider but is no longer eligible by distance criteria. 
        Some flexibility to support continuity of care when it is 
        important to veteran outcome would be very helpful.
                     committed to veterans' choice
    In closing, I would like to thank the Committee for its leadership 
in ensuring our Nation's Veterans have prompt access to needed health 
care services. We believe there is great potential for the Choice 
program to help VA deliver appropriate, coordinated, and convenient 
care to Veterans. We are committed to continuing our collaboration with 
VA and TriWest to ensure Choice succeeds in providing Veterans with 
timely access to care when VA is unable to provide it. Working 
together, and with the support and leadership of this Committee, we are 
confident that the Choice Program will deliver on our obligation to 
this country's Veterans.

    Chairman Isakson. Well, thank you all very much. I had all 
these preplanned questions, but after listening to your 
testimony, I have canceled all of them. I am going to ask the 
ones you have raised in your testimony, starting with you, Mr. 
McIntyre.
    It was quick, so I want to make sure I got it. You were 
encouraging us to look at the 60-day authorization of what?
    Mr. McIntyre. I would look at the limitation on 60 days for 
authorized care under Choice. It puts people who have cancer in 
a position where we need to move them back and forth between 
the VA medical center. It takes a person who might be with us 
under Choice because of a pregnancy and does the same. I do not 
think that was intended. I think it was intentional that there 
were parameters drafted around it, but the notion that certain 
types of care would have to move back and forth between the VA 
medical center and downtown is neither efficient nor effective 
in the delivery of care.
    Chairman Isakson. All right. I do not want to spend too 
much time on this, but this is very important, I think, from 
listening to your testimony and watching everybody's heads bob. 
You want to expand the 60-day authorization to a longer period 
of time?
    Mr. McIntyre. I think I would leave it to the clinicians in 
the Department of----
    Chairman Isakson. No, you are not getting off with that.
    Mr. McIntyre. OK. I will not get off with that. [Laughter.]
    I got it, sir. What I would do is to evaluate which types 
of care need authorizations that would last more than 60 days. 
And----
    Chairman Isakson. So, what you are saying is the 60-day 
limitation causes things like some cancer treatments, a 
pregnancy, for example, and things like that, for the patient 
to have to go back and forth between private and VA health care 
because of the 60-day limitation?
    Mr. McIntyre. The administrative process requires us to go 
back and forth in support of that veteran when it is probably 
unnecessary, is what I would submit.
    Chairman Isakson. That is like Medicare's two-night rule in 
the hospital.
    Mr. McIntyre. Yes, sir.
    Chairman Isakson. It is one of those unintended 
consequences.
    Mr. McIntyre. Yes, sir.
    Chairman Isakson. Is there any reason we cannot fix that?
    Mr. Gibson. We are going to work on it, and we will come 
back to you with a proposal. We think----
    Chairman Isakson. It seems to me it would be more cost-
effective to the VA to do it, to fix it, rather than go back 
and forth, because there has got to be money involved every 
time you are doing that. Is that right?
    Mr. Gibson. Yes, sir. There is a fee that is paid for each 
authorization, but the bigger concern is the potential 
disruption to the veteran.
    Chairman Isakson. Efficiency is always less expensive, and 
that is more efficient, it seems like to me.
    Mr. McIntyre. Yes.
    Chairman Isakson. I appreciate your raising that in your 
testimony.
    Mr. McIntyre. You are welcome, sir.
    Chairman Isakson. Ms. Hoffmeier, do you have any credit 
cards? [Laughter.]
    I do not want them. I just want to know if you have got----
    Senator Blumenthal. You have the right to remain silent. 
[Laughter.]
    Ms. Hoffmeier. I am trying to think, which ones do I 
acknowledge? Yes, sir, I do.
    Chairman Isakson. OK. Let me ask: do you ever get the 
annual mailing of the required Government notification of 
security? It is about four pages long, and the print is so 
small you cannot read it, and you do not read it anyway.
    Ms. Hoffmeier. I think that goes right in the recycle bin, 
Mr. Chairman.
    Chairman Isakson. OK. In your testimony I heard from you a 
clear statement that we needed to simplify and coordinate the 
instructions, the rules, and the processes under which Veteran 
Choice works. Is that right?
    Ms. Hoffmeier. It is, Mr. Chairman.
    Chairman Isakson. I--go ahead.
    Ms. Hoffmeier. As I said in both my written statement and 
opening remarks, everything has been moving very, very quickly, 
and as a result, there are a number of things that maybe have 
not been addressed as completely, as ideally, as we would all 
like to see, which makes it really difficult. I mean, it is 
hard for us--you know, we talk about this at our level--to keep 
up with everything. You are talking about call center 
representatives and appointing clerks that are trying to keep 
up with all of the developments. Somehow we have to find a way 
to make it easy, not for us to understand, but for the people 
that are working closely with veterans to make this program 
work. They need to understand it.
    Chairman Isakson. That goes a little bit further than just 
to you all. I think the veteran needs to have it simpler to 
understand, too. All the stuff that I did as a businessman, we 
served people with college degrees and master's degrees, but we 
wrote everything to an eighth-grade level, which is what the 
newspapers do as well, because that is the way you can 
communicate to the majority of the American people. Some of 
these things--I have not read any medical instructions, but 
some of these things I read on drug notices when I get my 
drugs, you know, my regular drugs, the real ones----
    [Laughter.]
    Chairman Isakson [continuing]. Prescriptions. You read all 
these things you are not supposed to do or you are supposed to 
watch out for. It is so long and so cumbersome I cannot 
understand it, so I do not do the right thing sometimes. I 
think that could be our veterans as well on the instructions 
they are getting.
    Deputy Gibson, I would hope what all of you would do is 
work together to find some ways to simplify the communication 
mechanism to the beneficiary, which is the veteran, and the 
provider, which is the local provider, in Veterans Choice. I 
know it is complicated and I am not trying to oversimplify, but 
sometimes out of fear of--or out of a desire to make sure we 
have covered everything, we cover so much that we do not 
accomplish the goals. I appreciate both of you raising that in 
testimony.
    My last question is going to be of Mr. Gibson until we come 
back for a second round, if we do. You kept talking about you 
wanted us to give you more flexibility.
    Mr. Gibson. Yes, sir.
    Chairman Isakson. Put some meat on that bone. Flexibility 
on what?
    Mr. Gibson. Well, I would say at the very top of the list 
is flexibility around the determination of hardship for 
veterans to be able to have access to Choice care. The way the 
law is written today, it is restricted to geographic barriers, 
I think is the language that is in the bill. We want to open 
that aperture, which would give us much more flexibility to be 
able to extend care under Choice to veterans.
    Chairman Isakson. Open that aperture, to be a type of 
illness?
    Mr. Gibson. It could be a type of illness; it could be 
distance. There could be an instance where a veteran lives 
within 40 miles of a VA facility that does not deliver the 
case, and we want to be able to refer the care into the 
community while we are working on the intermediate term----
    Chairman Isakson. In other words--my time is up, so I am 
going to interrupt you, and I apologize.
    Mr. Gibson. Yes, sir.
    Chairman Isakson. In other words, you want the ability to 
exercise judgment----
    Mr. Gibson. Yes, sir.
    Chairman Isakson [continuing]. In what you do in terms of 
hardships.
    Mr. Gibson. Yes, sir.
    Chairman Isakson. You want the chance to exercise judgment 
in terms of the 60-day authorization. Is that right?
    Mr. Gibson. Yes, sir.
    Chairman Isakson. OK. There ought to be ways that we can 
accomplish both of those things.
    Mr. Gibson. Yes, sir.
    Chairman Isakson. I think in raising those things, Dr. 
Tuchschmidt is really excited about that answer, or either he 
needs to leave, one or the other. I do not know. [Laughter.]
    Chairman Isakson. Whatever the case is, you can help us 
write that? Because you think those are both determinations we 
ought to be able to do. Your flexibility on the 60-day 
authorization sounds to me more cost-effective and less 
expensive. Yours probably raises some cost questions like are 
raised anytime you do things like that. In the end, again, we 
have got to remember the person we want to serve is the 
veteran.
    Dr. Tuchschmidt. Yes.
    Mr. Gibson. Yes.
    Chairman Isakson. Denying them service because of a 
misapplied hardship is not the right thing to do.
    Mr. Gibson. Yes.
    Chairman Isakson. Ranking Member Blumenthal.
    Senator Blumenthal. Thanks, Mr. Chairman.
    Just at the outset, let me say that you will be asked 
shortly by Senator Sanders, I believe, about the letter that he 
has written to Secretary McDonald urging that he use his 
authority as Secretary of Veterans Affairs to break patents on 
hepatitis C medications for the treatment of veterans suffering 
from that disease. I would strongly urge that you consider 
using your authority under 28 U.S. Code Section 1498 to take 
that action that will make this medication more widely 
available to veterans who need and deserve it, especially since 
the VA was involved through one of its employees in the 
research that undertook this initiative and successfully 
reached the result.
    I want to focus for the moment on the VA's proposal to fund 
construction costs at the Denver facility, specifically the $1 
billion cost overruns out of the Choice Program's provisions 
for long-deferred maintenance and facility capacity issues in 
the VA system. These funds were very specifically designated 
and intended by Congress to improve veterans' health care.
    Veterans in my State who are aware of this proposal are 
absolutely outraged that their health care, specifically the 
primary care upgrade at the West Haven facility, would be 
indefinitely deferred because of $1 billion cost overruns in 
Aurora, CO. I suspect the same reaction will be felt equally 
deeply by veterans at the more than 220 other facilities whose 
health care will be compromised as a result of the proposed 
redesignation of these funds.
    I would like assurance from you, Secretary Gibson, since we 
are talking here about Choice Program funds and we are talking 
about not just a few dollars here or there but actually one-
fifth of all the funds in that $1 billion pot, that you are 
considering alternatives to that action.
    Mr. Gibson. Senator, we have sent a letter earlier today to 
this Committee, to the House Committee, and to the 
Appropriations Committee requesting the increase in the 
authorization to be able to complete that facility as well as 
requesting the use of $730 million of those $5 billion to be 
used to complete the Denver facility. We have identify $100 
million----
    Senator Blumenthal. Well, I just want to interrupt you 
because--and I apologize--for me that alternative is a 
nonstarter. It is just unacceptable, and I have expressed that 
view to appropriate administration officials. I realize that 
you are dealing the hand you were dealt. I am simply urging you 
to consider alternatives. There are alternatives, in my view, 
responsible and available alternatives that do not involve 
deferring health care improvements through construction and 
maintenance at those facilities across the country, whether in 
Connecticut or Georgia or Montana or Louisiana or Vermont, and 
all the other States represented on this Committee, as well as 
many who are not.
    Mr. Gibson. Senator, in years past I would tell you it is 
very likely that if VA had gone looking for that kind of money, 
there is a pretty good chance that we could have found it. But 
because of the work that we have been doing over the past year 
to accelerate access to care, to make hepatitis C care 
available to veterans, under the circumstances, we do not have 
$700 million sitting on the sideline. There are no easy answers 
here.
    Senator Blumenthal. I am not asking you to find $1 billion 
sitting on the sideline. But this Nation is capable of doing 
better for its veterans, and a supplemental appropriation, for 
example, might be an alternative. I am asking you to go back to 
the drawing board and use different pencils, not necessarily 
sharpened pencils but different alternatives to compensate for 
the absolutely unacceptable cost overruns and delays in Aurora. 
The project should be completed, but not at the sacrifice of 
health care for other veterans around the country. What I say 
to you today is not personal to you or to Secretary McDonald, 
and we have talked at great length about this issue. We have 
visited that facility together along with the Chairman. I have 
seen that vast hulking shell of a campus that is a mockery of 
Government contracting.
    We need to address this situation to complete the project, 
but it cannot be done in effect at the sacrifice of other 
veterans.
    My time has expired. I apologize for interrupting you, and 
I thank the witnesses for being here today.
    Chairman Isakson. I would not ordinarily do this, but in 
light of the question that was raised and for the benefit of 
everybody at the Committee just to know--and I do not want this 
to limit anything anybody says, but I think we all have an 
obligation to ourselves to make out-of-the-box suggestions on 
what we do about the cost overruns at Denver, particularly 
those of us that have been there and seen it. I have taken a 
couple of actions which I will share with the Committee leading 
up to a meeting we are going to have tomorrow where I have got 
the Democrats and the Republican leaders coming together to 
say, ``OK, what are we going to do with this?'' Which I hope 
the VA people are back in their offices saying, ``What are we 
going to do with this, too?'' not just saying there is nothing 
we can do.
    I have ordered GAO to do a study of surplus property and 
that which would be liquidatable to try and find a way to raise 
money to go to Veterans Choice to offset what might be borrowed 
from it, which you are dealing with a situation where you have 
got until about May 20, is about as much time as we have got 
right now. We need to get at least to July 15, and we have a 
way to do that. It is going to take an action of this 
Committee, but getting us to July 15 only gets us time to 
determine how close to $700 million it is we need, first of 
all, with the Corps and the Veterans Administration working 
together to do that.
    In that time period, we are going to have to have some 
interim bridges, which I am working on to present to the 
Committee tomorrow. But if everybody on the Committee would 
think outside the box, if it was your problem, if you were in 
Secretary McDonald's place or Deputy Gibson's place and you had 
inherited a $700 million shortfall and ran an agency that is 
the second biggest in the Government, where would you go 
looking?
    I want Sloan to revisit the two places I mentioned to him 
in Denver, because it seems like to me if we are going to take 
you out of the construction business, which we are--and that is 
going to happen, at least to a certain major extent--there are 
going to be savings in that appropriation unit within your 
department, and also look at the 77 FTEs you are asking for an 
increase in the current budget, maybe those FTEs are not as 
necessary as helping to build that hospital in Denver. I think 
if everybody is making a contribution like that--it is like 
that movie, ``Dave,'' when the guy became President, he was a 
fill-in for somebody. He called the Cabinet in, they got a 
yellow pad out, and they started working on solutions. We need 
to get the yellow pad out and start working on solutions and 
find a way to do it, because not building the hospital is 
unacceptable, and just saying we are going to borrow funds from 
the veterans health care benefit, I agree with Mr. Blumenthal, 
is not the right way to do it.
    I apologize for interjecting that, but I wanted everybody 
to----
    Senator Blumenthal. I want to thank the Chairman because he 
and I have worked together. I am not speaking for the Chairman, 
obviously, but I have some alternative suggestions as well. I 
have no pride of authorship--I do not think any of us does--in 
meeting the needs of completing that facility, but doing it 
without sacrificing these other projects. So, I will have some 
specific ideas and proposals tomorrow, as well.
    Chairman Isakson. My apologies to all the Members of the 
Committee for taking a little time, and I will turn now to 
Senator Moran.

           HON. JERRY MORAN, U.S. SENATOR FROM KANSAS

    Senator Moran. Mr. Chairman, thank you, and Senator 
Blumenthal, for your comments and for conducting this hearing. 
Mr. Secretary and others, welcome to the Committee.
    I hope to ask a series of questions, but the time on the 
clock will run quickly. I want to start with a story that I 
have told before about a Vietnam veteran named Larry. Larry 
McIntyre lived in Florida and indicates that he is a Vietnam 
veteran, a swift boat Navy veteran. He indicates while he was 
in Florida he received excellent care from the VA; moved to 
rural Kansas, became my constituent; lives about 25 miles from 
a CBOC and about 3 hours from a hospital. I started this story 
or this story began in July 2014 when Larry, this Vietnam 
veteran, needed a cortisone shot. The VA's instructions were, 
``Come to Wichita,'' so a 3-hour drive each way to get a 
cortisone shot.
    We raised this topic with Secretary McDonald at a hearing 
here on September 9. Larry had contacted us and said, ``I do 
not care how it comes, the Choice Act or any other way that the 
VA can provide this service.'' We raised this topic with the 
Secretary in September of last year. Then shortly thereafter, 
the VISN Director in Kansas City took this issue to heart and 
at least solved the problem but, unfortunately, temporarily.
    In December, Larry was granted an appointment in Hays, the 
place where the CBOC exists--I should say the CBOC that does 
not offer cortisone shots, but he got care in the private 
sector in December of last year.
    The doctor who treated him, who provided the colonoscopy, 
then asked to treat him again and to follow up. The VA denied 
that request and sent him back to Wichita. They denied that 
request because he was not eligible for Choice. The CBOC exists 
within the 40 miles of his home.
    He is back to Wichita. Ultimately he then needed--instead 
of a cortisone shot--a colonoscopy. Same series of events. The 
outpatient clinic does not provide colonoscopies, and he is 
trapped in this system of no one telling him what he can do or 
what he qualifies, except he does not qualify for Choice, go to 
Wichita. He has done that, but then just recently, last week, 
he received a letter from the VA approving him for Choice. He 
then calls TriWest, and TriWest says, ``You are not eligible. 
We do not have you on our list.'' ``But I got this letter.'' He 
indicates that he talked to four different operators at 
TriWest, all who gave him a different answer than anyone else, 
than the three other operators.
    He called the 866 number and was told he was not eligible, 
got the four different answers, and now we are back to the 
question of what happens to Larry. My point here is, one, it 
ought not be Larry's problem to solve what happens to Larry; 
but even from the beginning, if he was not eligible for Choice, 
and even if he is not eligible today because the CBOC is there, 
even though it does not provide the colonoscopy or the 
cortisone shot, why is someone not at TriWest or the VA telling 
him, ``Oh, we have these other authorities; this would work for 
you,'' as compared to just leaving Larry hanging about whether 
he is eligible and what he should do? How do we solve that 
problem? I do not think it is totally unique. I hope it is, but 
I doubt that Larry is the only veteran that experiences this 
circumstance.
    Mr. Gibson. I doubt that the problem is unique. I suspect 
there are other veterans that are having similar experiences.
    As I described in my opening statement, we are asking for 
additional flexibility which would give us some more authority 
to be able to handle that kind of situation inside Choice. We 
actually handle many of those situations through other VA care 
in the community routinely, which is why we have incurred so 
much expense on a year-to-date basis. But we find ourselves 
running out of resources in order to be able to sustain that. 
We wind up making suboptimal decisions.
    I would tell you, you have just given two great examples. 
The Chairman asked earlier about whether or not we would be 
using judgment around the nature of the procedure. The answer 
is yes. I would tell you, for someone that has a routine 
requirement like a cortisone shot, there is no reason to travel 
150 miles to go do that. That is something that ought to be 
getting done--we ought to be getting done locally.
    For the veteran that has to go get a colonoscopy, I got to 
tell you, I am not going to drive 150 miles to go get a 
colonoscopy. That is not going to happen. That is something 
else that needs to be provided for inside the community.
    Now, if a veteran needed a knee replacement, I might say, 
you know, ``OK, under the circumstances make the trip.'' But 
for the therapy that has to follow up after that, no, I do not 
want the veteran traveling 150 miles each time he needs to go 
to physical therapy.
    The challenge that we have is 40 miles from where you can 
get the care. We keep running the numbers, and the tab is 
horrendous. It is huge. What we have got to do is find a way to 
be able to manage this in such a way that we are doing the 
right thing for veterans at the same time we are being the best 
stewards we can of the taxpayer dollar.
    Senator Moran. Mr. Secretary, as you know, you and I have 
had a number of conversations on this topic, and today I am not 
arguing--I would argue, given the chance, but I will not argue 
today about whether or not--or how the 40 miles should be 
interpreted. My point on this episode, one, is the uncertainty 
and the burden lying in the wrong place. It ought to lie with 
the VA or TriWest, not the veteran. My second point is that if 
you have these other authorities, whether or not Larry 
qualifies for the Choice Act ought not matter in the answer he 
gets.
    Mr. Gibson. I agree completely.
    Senator Moran. Thank you.
    Chairman Isakson. Thank you, Senator Moran.
    Senator Sanders?
    Senator Sanders. Senator Manchin has kindly yielded to me 
because I have got to run out the door.
    Chairman Isakson. To the gentleman that has got to run out 
the door, Senator Sanders.

              STATEMENT OF HON. BERNARD SANDERS, 
                   U.S. SENATOR FROM VERMONT

    Senator Sanders. Thank you, Mr. Chairman. Thank you for the 
work that you have been doing and for your maintaining the 
bipartisan spirit of this Committee. Congratulations for all 
you are doing.
    Chairman Isakson. Thank you.
    Senator Sanders. I want to just make two points.
    First of all, I want to thank Deputy Secretary Gibson and 
his boss, Secretary McDonald, for the very impressive work they 
are doing. I understand, as the former chair of this Committee, 
how easy it is to beat up on the VA, running 151 medical 
centers, 900 CBOCs, and there is a problem every single day. 
But, you know what? In a Nation which has a dysfunctional 
health care system, the private sector also has one or two 
problems. I will not go into them, but I think we should 
recognize that when you talk to the major veterans 
organizations--the American Legion, the VFW, the DAV, the 
Paralyzed Veterans of America--you know what they say? You have 
heard this, Mr. Chairman. They say that when people walk into 
the VA, the quality of care they get is pretty good. I want to 
thank you for trying to improve that care. I personally will 
fight vigorously those who want to privatize the VA or 
dismember the VA. I think our goal is to strengthen the VA. I 
think our goal is to be creative in terms of using the new 
program that we have developed so that people can get care in 
their community locally. That is a good mix. I will oppose 
efforts to privatize the VA, which is serving our veterans so 
very well.
    I wanted to get to another issue, and Senator Blumenthal 
touched on it. Today I wrote a letter to Secretary McDonald 
about an issue that has concerned me for a while, and that is 
the high cost of the drug Sovaldi, which is a miracle drug, so 
to speak, which is now treating the veterans of our country who 
have very high rates of hepatitis C.
    Mr. Chairman, to me it is an outrage that you have a 
company whose profits have soared in the last few years. Their 
revenues have doubled, I believe, in the last year. They have 
come up with a drug. They are charging the general public 
$1,000 a pill for that drug. They are charging, I believe, the 
VA--I do not know if this is a great secret, but I will tell it 
anyhow--something like $540 for the drug. Is that right? No 
comment. All right. That is because the VA negotiates drug 
prices. But you are running out of money, and we have several 
hundred thousand veterans today who are suffering with 
hepatitis C, which can be a fatal disease, and you do not have 
any money to treat them. Frankly, I think that it is time to 
talk to Gilead, the manufacturer of Sovaldi, and basically ask 
them if they are currently being very generous in providing 
these drugs, hepatitis C drugs, to countries like India and the 
Republic of Georgia for free. Very generous, for whatever 
reasons they are doing that. Maybe at a time when their profits 
are soaring, maybe they might want to respect the veterans of 
this country who might die or become much sicker because they 
do not have access to this wonderful product. As Senator 
Blumenthal mentioned, if they are not prepared to come to the 
table--and I know you think you have done very well by getting 
their prices down by half. I am not impressed that you are 
paying $540 per pill for people who put their lives on the line 
to defend our country.
    I would suggest to them you sit down again with them and 
tell them that you are prepared to utilize Federal law, 
specifically 28 U.S.C. 1498, to break the patents on these 
drugs unless they are prepared to come down significantly lower 
than they are right now. It is not a question of taking money--
I know you have requested to take money out of the Choice 
Program. Maybe that is a good idea. It is a better idea to have 
them treat the veterans of this country with respect and charge 
the VA a reasonable price rather than ripping off the VA as 
they currently are.
    With that, I would yield.
    Chairman Isakson. Thank you, Senator Sanders.
    Whomever is operating the clock, fell asleep a minute ago, 
so turn that clock on when they start talking, if you would.
    We have Senator Rounds, followed by Senators Manchin, 
Cassidy, Hirono, Tillis, and Tester.
    Senator Rounds?

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

    Senator Rounds. Thank you, Mr. Chairman, and I appreciate 
your work and also the Ranking Member's work with regard to the 
issues on the hospital in Aurora. I agree that it should not 
come out of the Choice Program as the alternative.
    Mr. Gibson, I was looking back at the notes I have taken 
here, and you gave some very encouraging notes with regard to 
some of the stats about some of the areas of the country with 
regard to some additional care being provided, and that is 
encouraging. I am just curious. Do you believe that those stats 
are consistent across the country? Are you finding evidence of 
that across the rest of----
    Mr. Gibson. Actually, that is--I always worry when people 
quote averages to me, and what you find is wide disparity 
across the country in terms of the length of wait times, and, 
therefore, in terms of the specific areas where we are making 
the most intensive investments. What I would tell you is where 
we have been making consequential investments, you pretty 
consistently see a material improvement in access measured by 
completed appointments, measured by growth in relative value 
unit. What we are not seeing pretty consistently is a material 
improvement in wait times.
    When you look behind that you realize that what is 
happening is as we improve access to care, either more veterans 
are coming or veterans that are already there are making 
additional utilization of VA care.
    Senator Rounds. I am just curious. It sounds almost like we 
have--and I think Senator Sanders had suggested this in a way, 
but I really think we have to have the discussion about how we 
deliver care long term for our veterans. I would love to be 
able to allow the veterans to make that decision themselves as 
to how we deliver the care to them. I think the Choice Act 
allows that to begin. I understand that right now we have got a 
significant investment, if we have over 150 health care 
communities--or health care centers and 900 CBOCs right now.
    What do you see as the answer here? One of the comments was 
made that we are looking at providing the Choice opportunity 
there if the care cannot be met by the VA itself. It sounds to 
me like what we are saying is that the VA should be making the 
decision about whether or not they are delivering the care or 
whether or not the veteran should be making that decision. It 
sounds to me like maybe we ought to take the other approach 
here and say if we gave that choice to the veterans, I would 
suspect that a number of them who have very great care being 
delivered to them by VA facilities might very well want to 
continue that on. There are others that I suspect would say, 
``Look, I am not near a facility, and I do not expect you to 
build a new hospital near me.''
    You have looked at asking for the ability to have 
flexibility to make that choice. What would happen if we took 
as an alternative and said--and, once again, I think we are 
talking about dollars and cents now as being the deciding 
factor in this case. What would happen if we allowed the 
veterans to decide for themselves whether they wanted to have 
the care through a VA facility or through utilizing the Choice 
Program more fully and skip all of the extra stuff that you 
have talked about here in terms of the 40-mile rule or whether 
or not they have already had care and now they have got to go 
back in after 60 days and so forth? It is still the VA making 
the decision. Why not--and share with me your thoughts. I am 
sure this is not a new thought. Share with me your reasoning 
and logic and why you are where you are at in terms of not 
allowing the veterans to make that choice themselves.
    Mr. Gibson. Sure, not at all a new thought, and we have 
spent a great deal of time talking about it and alluded to some 
options that we briefed the staff on.
    One of the things first to keep in mind, 81 percent of all 
the veterans that we provide care for have either Medicare, 
Medicaid, TRICARE, or some form of private health insurance. 
Often, what you see today--you mentioned the fact earlier that 
veterans, if given the option for Choice, some would elect to 
stay in. And, in fact, that is precisely what happens today. 
Roughly half, 40 to 50 percent, somewhere in that neighborhood, 
depending on whose survey you are listening to. I would tell 
you my perspective, part of those are deciding to stay because 
they want to stay, because they are getting great care, they 
enjoy the camaraderie with other veterans, they have continuity 
of care there because they have been receiving care for a long 
time. Others come there because they have an economic incentive 
to come there, because if they go out to Medicare, they have a 
20-percent co-pay for a procedure. You look at that colonoscopy 
or whatever it happens to be, or the knee replacement, which is 
an example that we use oftentimes, and the veteran can go get 
it with Medicare, but he is going to wind up with a $7,500 bill 
to foot.
    I think part of the answer comes--and it is one of the 
options that we have talked about here--is that we step back 
and we look at some of the economic distortion that exists 
today and find ways to eliminate that.
    For example, what if Medicare, Medicaid, TRICARE, and other 
providers became the primary payer and VA indemnified the 
veteran against a 20-percent co-pay? Then you really are 
providing the veteran with choice. Then you have really--and 
you wind up--the taxpayer does not wind up paying twice for the 
same care.
    I think therein lies kind of the answer. This is not about 
protecting the turf. All we are about is doing the right thing 
for veterans and being good stewards of taxpayer resources. 
Wherever that leads us, that is where we are ready to go.
    Senator Rounds. Mr. Chairman, my time is up, but I think 
that is something that we should seriously consider on this 
Committee. Thank you, sir.
    Chairman Isakson. Thank you, Senator Rounds.
    Senator Manchin?

       HON. JOE MANCHIN, U.S. SENATOR FROM WEST VIRGINIA

    Senator Manchin. Mr. Chairman, thank you very much, and I 
thank all of you for being here today.
    Let me just say that, needless to say, the VA has a lot of 
problems or has had a lot of problems that you all have been 
dealt. Some of you have been there longer than others. Some of 
you have had careers at it. Some of you have come from the 
private sector.
    I have got problems in West Virginia, like every other 
State. Nobody has problems like Colorado has right now with 
what is happening there, but let me just say I need to get this 
on record. I have a situation in Beckley VA medical center. I 
do not know if it had been brought to your attention or not, if 
it has got that far up the ladder. Last month, the Office of 
Special Counsel released a report with substantial allegations 
of switching anti-psychotic drugs based solely on cost. The 
providers and doctors said this is what our veteran needs. 
Then, they made an executive decision that it was too cost 
prohibitive, cut the medicine, and did not get the right 
application.
    I was told there is a new policy in place that regulates 
dispensing of these drugs, and I have not been able to obtain a 
copy of that. At the same time, I am also told that there is a 
follow-on investigation into the matter. I have not heard much 
about that.
    At the same Beckley VA, the Greenbrier clinic, which 
operates under Beckley, has been closed three times because of 
air quality. I am having a horrendous time, because we have a 
very rural State, trying to get our veterans the care they 
need.
    The only thing I can ask, if it has not gotten to your 
level, if you can get me an answer back as quickly as you can.
    Mr. Gibson. One, we will get you the regulation.
    [The information referred to follows:]
 Response to Request Arising During the Hearing by Hon. Joe Manchin to 
                  U.S. Department of Veterans Affairs
                visn 6 beckley vamc congressional update
                    current as of september 15, 2015
       * Greenbrier County CBOC (Closure of Maxwelton Location)--

June 1, 2015:

    The alternative for long-term options for providing care to 
affected Veterans is continuing to be evaluated. Beckley VAMC's first 
action focused on deactivating the current clinic in our systems to 
enable area Veterans to be eligible to use Veterans' Choice benefits 
that include authorization to receive care by local providers. Other 
current actions include investigating the viability of long-term care 
options to maintain clinical services for the regions' Veterans.
    The primary option being pursued at this time is to contract with 
area providers for services. This option has become more challenging 
with the recent Choice Act guidance, which `prohibits new contracts for 
care except in urgent circumstances as determined by the DUSHOM.' This 
updated guidance is dated May 12, 2015. VISN 6 drafted a request for 
Exception to this Policy and forwarded the request to the DUSHOM's 
office for consideration on May 26, 2015.
    Another option being considered is to find replacement space to 
reestablish the CBOC. A newspaper ad for lease space up to 5,000 usable 
square feet of outpatient space was or is to be published in the 
Mountain Messenger (5/22 and 5/29); Valley Ranger (5/24, 5/27, 5/31, 6/
3); and Daily News (M-F, X 2 weeks starting 5/25). In order to procure 
a new lease to replace the Greenbrier CBOC, VA would need to validate 
the need for the new lease through the Strategic Capital Investment 
Planning process, and obtain a lease delegation from General Services 
Administration.

June 15, 2015:

    Beckley VAMC is continuing to work with the VISN and VA Contracting 
to investigate the viability of long-term care options for providing 
access to care to the Veterans in the Greenbrier Valley. Currently the 
medical center is working with VA Contracting on parallel paths:

    1. The marketing study for lease space ended at 4:30 p.m. on 
June 12, 2015.
    Thirteen interested offerors made contact with the Contract 
Specialist.
    2. The VA is now working on a newspaper ad to seek information on 
the availability of potential sources with board-certified providers of 
Primary Care and basic Mental Health in Lewisburg, Rainelle, and 
Alderson who are interested in a multiyear contractual arrangement. A 
supplemental email with details of the ad will be provided prior to 
publication.

July 1, 2015:

    The newspaper ad seeking information from sources interested in 
providing primary care and mental health outpatient services in the 
Lewisburg, Rainelle, and Alderson (WV) catchment area was or is to be 
published in the Mountain Messenger (7/3 & 7/10); Valley Ranger (6/28, 
7/1, 7/5, & 7/8); and Daily News (M-F, X 2 weeks starting 6/29-7/8). 
Interested sources are asked to contact Marchelle Peyton no later than 
5:00 p.m. on July 10 at Marchelle.peyton@va.gov. The ad information was 
provided to our Congressional partners via email on June 26.
    The medical center is preparing a business plan to be submitted to 
the VISN that will provide an analysis of the need based on access, 
workload, and comparison of the various options for providing care 
noted above.

July 10, 2015 (Interim Email Update):

    A local (Beckley VAMC) Review Committee has been established. On 
July 14, this Committee along with VA Contracting will begin the site 
survey process of assessing the identified 13 potential ``ready to 
occupy'' spaces. VA Contracting is in the process of scheduling these 
site visits.

July 15, 2015:

    DUSHOM approved the waiver for new contracts for care on June 2, 
2105.
    The community care solicitation resulted in three (3) interested 
sources. These sources will now be evaluated as to whether they are 
good community based options in which to provide services to our 
Veterans.
    The marketing analysis and preparation of a business plan is 
ongoing.
    SecVA scheduled to speak with Senator Manchin on July 16.

July 24, 2015 (Interim Email Update):

    A final newspaper ad for lease space up to 5,000 usable square feet 
of outpatient space is to be published in the Mountain Messenger (8/1); 
Valley Ranger (7/26 and 7/29); and Daily News (M-F, 7/27 to 7/31). Any 
new interested parties should submit an official response to VA 
Contracting by 4:30 pm EST on August 3, 2015, no other properties will 
be accepted after this date. This will conclude the market research and 
a solicitation will be sent to those properties that meet the 
Department of Veteran Affairs requirements.

August 1, 2015:

    Follow-up to the Congressional conference call held on July 30:

    The marketing analysis determined that VA contracted community care 
is not a viable option at this time.
    The focus is on the re-location site for a VA staffed CBOC. The 
selection of the site is on-going and thoroughly being pursued. 
Anticipated timeframe for the reopening of the Greenbrier County CBOC 
is up to 12 months.
    Note: The Greenbrier Valley Economic Development Corporation (Mr. 
Steve Weir) was notified of the VA's intent to not renew the lease on 
the CBOC (Maxwelton) in writing by the Lease Contracting Officer on 
April 30, 2015 and May 5, 2015.
    The Director will host a Town Hall for the Veterans in the 
Greenbrier Valley on Thursday, August 6, 2015, at 6:00 p.m. at the West 
Virginia School of Osteopathic Medicine, Roland Sharp Alumni Center, 
400 North Lee Street, Lewisburg. Announcement will be made via media 
outlets.

August 10, 2015 (Interim Email Update):

    The final marketing study for lease space ended at 4:30 p.m. on 
August 3, 2015. An additional nine interested offerors made contact 
with the Contract Specialist. VA Contracting is in the process of 
scheduling site visits for the local (Beckley VAMC) Review Committee to 
assess the additional nine spaces this week. This will conclude the 
market research and a solicitation will be sent to those properties 
that meet the Department of Veteran Affairs requirements.
    Note: Local media coverage of the Town Hall held on Thursday, 
August 6, 2015, seems to be somewhat misleading often with erroneous 
information on the process for relocation of the CBOC.

August 15, 2015:

    The Beckley VAMC Review Committee completed the assessment of the 
additional nine spaces on August 14. The reviews for all 22 sites will 
be collated and a prioritized list provided to VA Contracting by 
Wednesday, August 19. The solicitation process will begin.

September 1, 2015:

    Beckley VAMC provided the list of acceptable properties to VA 
Contracting as planned. The VA Contracting process will be consolidated 
and given priority consideration with an anticipated award date of 
December 2015.
    On August 18, Beckley VAMC received an Interim Letter dated 
August 17, 2015, from the National Institute for Occupational Safety 
and Health (NIOSH) which provides the results from the analyses for 
volatile organic compounds (VOCs) and isocyanates from air sampling 
collected on March 26, 2015 (Attached below) from the Maxwelton 
location. Also attached for continuity is the Interim Letter dated 
April 24, 2015 which provides the air sampling results for formaldehyde 
and carbon monoxide (CO).

September 15, 2015:

    The National Contracting Office 6 is continuing to aggressively 
work on the process for awarding a contract for a relocation site for 
the CBOC.
   * Office of the Medical Inspector Report to the Office of Special 
  Counsel OSC File Number Dl-14-3389, dated November 3, 2014--closed 
              April 22, 2015 (Pending supplemental report)

June 1, 2015:

    On April 28-April 30, the Office Medical Inspector conducted a 
supplemental site visit at Beckley VAMC. Beckley VAMC has not received 
the final report. On May 27-May 28, VA Office of Accountability Review 
conducted an administrative investigation as part of the follow-up 
actions to this pharmacy review conducted by the Office of the Medical 
Inspector. The final report is pending.

June 15, 2015:

    Beckley VAMC has not received the final reports on these visits; 
however, the embedded letter has been sent from the Acting Under 
Secretary of Health to Senator Capito.

July 1, 2015:

    No new information. Beckley VAMC has not received the final reports 
nor are they listed on the Office of Special Counsel's Web site.

July 15, 2015:

    No new information.

August 1, 2015:

    No new information.

August 15, 2015:

    No new information.

September 1, 2015:

    No new information.

September 15, 2015:

    The reports from the Office of the Medical Inspector's supplemental 
review and the VA Office of Accountability Review are pending.
                * Intensive Care Unit (ICU) Relocation--

June 1, 2015:

    On May 27, 2015, the ICU unit was temporarily relocated to Ward 3A 
pending floor repair and replacement. Estimated time for relocation is 
September 2015.

July 15, 2015:

    Nothing new to report.

August 1, 2015:

    Renovations are approximately 75% complete and are on target for 
completion in September 2015.

August 15, 2015:

    This project remains on target for completion in September 2015.

September 1, 2015

    This project remains on target for completion by the end of 
September 2015.

September 15, 2015:

    The flooring project has been completed and the ICU unit is up and 
running in its permanent location as of September 10, 2015. This topic 
is now closed.
                        * Princeton VA Clinic--

September 15, 2015:

    Since the June 8, 2015 opening, there has been a net increase of 
200+ Veterans enrolling to receive care or transferring their care to 
the Princeton VA Clinic in addition to the more than 400 Veterans whose 
care was transferred from the mobile unit that was parked in Bluefield, 
WV. The clinic has the capacity to care for 1,200 Veterans.
                     * Adult Day Health Care Unit--

September 15, 2015:

    The medical center is currently in the process of relocating the 
Adult Day Health Care program into their new site--the new building 
located on the left and attached to the medical center. The program 
will now have the capacity to grow and offer care for more Veterans on 
a daily basis.

    Mr. Gibson. Two, I believe the follow-on investigation that 
is referred to here is oftentimes--well, routinely, when the 
Office of Special Counsel has a finding that substantiates a 
whistleblower allegation, then if it is medical care, it is 
turned over to the Office of the Medical Inspector, and we have 
a team of physicians----
    Senator Manchin. You all----
    Mr. Gibson. We do. They really bore it out; they come and 
determine exactly what happened, where the accountability was, 
and then those oftentimes will come to me.
    Senator Manchin. Sure. I have already heard that it is at 
that level now, it has been there. I have been trying to get an 
answer back.
    Mr. Gibson. We will get you an answer.
    Senator Manchin. If you can help me, I would appreciate it 
very much.
    Mr. Gibson. We will do that, sir.
    [The information referred to follows:]
 Response to Request Arising During the Hearing by Hon. Joe Manchin to 
                  U.S. Department of Veterans Affairs
Date: September 24, 2015
Source: Jon Coen, OCLA
Inquiry from: Sen Manchin

    Context of Inquiry: Please provide an update on whistleblower 
allegations concerning the Pharmacy Service at the Beckley VAMC
    Response (excerpt from June 9, 2015, Sen Capito Letter attached): 
In response to OSC's referral of whistleblower allegations concerning 
the Pharmacy Service at the Beckley VAMC, the Department investigated 
the allegations and submitted its report to OSC on January 5, 2015. As 
reported, VA substantiated that the Beckley VAMC Pharmacy and 
Therapeutics (P&T) Committee encouraged its providers to switch 
established Beckley VAMC Veterans from aripiprazole or ziprasidone 
prescribed by Beckley VAMC providers to medications with similar 
indications. VA also substantiated the allegation that Beckley VAMC 
management did not communicate the opioid performance measure to 
Primary Care physicians within 90 days of the beginning of the FY as 
required by Veterans Health Administration (VHA) policy. The report set 
forth specific recommendations for corrective and follow-up actions to 
be taken by Beckley VAMC. Beckley VAMC has fully implemented all of the 
recommendations.
    Beckley VAMC conducted clinical reviews of the condition and 
medical records of all Veteran patients who were discontinued from 
aripiprazole and ziprasidone to determine whether any adverse patient 
outcomes had resulted. Clinical reviews of 137 patients who had been 
receiving aripiprazole and 45 patients who had been receiving 
ziprasidone up until that time were completed on November 18, 2014, and 
January 21, 2015, respectively. Of these 137 Veteran patients, 66 
Veteran patients previously on aripiprazole and 19 Veteran patients 
previously on ziprasidone were changed to other medications with 
similar indications. There were no patients receiving aripiprazole and 
ziprasidone concurrently before or after the reviews. As previously 
stated, the review, validated by the Chief, Mental Health Service Line, 
found no adverse outcomes as a result of the change in medications.
    It is also important to note that based on current information, 
aside from national guidance (evidence-based prescribing criteria, 
treatment algorithms, clinical practice guidelines, etc.), there are no 
``blanket restrictions'' for any drugs or treatments for acute medical 
conditions in place at Beckley VAMC. As a result of the investigation, 
VA instructed Beckley VAMC to ``stop the practice of automatically 
removing patients from aripiprazole or ziprasidone without a legitimate 
clinical need.'' As stated earlier, Beckley encouraged providers to 
switch Veterans from aripiprazole or ziprasidone to medications with 
similar indications; however, at no time did they ``automatically'' 
remove patients from those therapies as reported. Providers may request 
any medication, even medications not listed on the VA's National 
Formulary, through a Special Drug Request (SOR) process when a 
medication is clinically indicated for an acute or chronic medical 
condition. Additionally, Beckley VAMC management has formally clarified 
to staff, via email and in face-to-face meetings, that aripiprazole and 
ziprasidone are, in fact, available for physicians to prescribe when 
clinically needed.
    With respect to VA's recommendation that Beckley VAMC management 
take steps to improve the education of its leadership and the P&T 
Committee on the policy and procedure requirements outlined in VHA 
Handbook 1108.05, Outpatient Services, and VHA Handbook 1108.08, VHA 
Formulary Management Process, Beckley VAMC management has taken the 
following actions:

     On January 25, 2015, during the Medical Staff meeting, 
providers were educated on the policy and procedure requirements 
outlined in VHA Handbook 1108.05, Outpatient Pharmacy Services, and 
1108.08, VHA Formulary Management Process;
     On March 12, 2015, Medical Center leadership, (including 
the Chief of Staff, the Medical Center Director, and the Chief of 
Pharmacy), and members of the P& T Committee were educated about the 
same information. Additionally, the Veterans Integrated Service Network 
(VISN) 6 Pharmacy Executive participated (via teleconference) in a 
Beckley VAMC P&T Committee meeting and during the meeting covered the 
salient elements of VHA Handbook 1108.08 and 1108.05, especially those 
related to continuation of therapy; and
     On March 17, 2015, the VISN 6 Pharmacist Executive 
reinforced the key points of VHA Handbook 1108.05 and 1108.08 to all 
VISN 6 Chiefs of Pharmacy (or their designee) during a conference call.

    VA also recommended that VHA take action to reinforce to all 
Medical Centers the policy and procedural requirements outlined in VHA 
Handbook 1108.05 and VHA Handbook 1108.08 related to the processing of 
formulary medications. This was accomplished on March 13, 2015, when 
VHA issued such guidance to the field. Notably, this same information 
was provided to all VISN Chief Medical Officers, VISN Pharmacist 
Executives, Chiefs of Staff, and other internal stakeholder groups.
    With respect to the status of VA's recommendation that, if and as 
warranted, appropriate action be taken against VAMC leadership and the 
P&T Committee for approving actions that were inconsistent with 
applicable VHA policy on prescribing drugs, the Beckley VAMC Director 
is currently working with VA's Office of Accountability Review, a 
multidisciplinary body which reports to the Secretary through the 
General Counsel, to determine the need for any such action.
    To ensure staffs are able to report suspected violations of policy 
or law and that such reports are investigated promptly, Beckley VAMC 
has appointed a full-time Compliance Officer who is available (both in-
person and via a telephone hotline number) to receive confidential 
reports by staff of suspected policy violations. When a complaint is 
received, the Compliance Officer will notify the Beckley VAMC Director 
of the complaint and enter the matter into a web-based reporting system 
where it is to be monitored until satisfactorily closed. As part of the 
process, the Compliance Officer conducts a fact-finding exercise and 
presents the findings to the Director, who may take whatever action is 
deemed appropriate. The manner in which complaints are to be handled 
and/or resolved will depend upon the nature and facts of each 
complaint. For instance, the Director may convene an Administrative 
Board of Investigation to investigate the types of matters covered by 
VA Handbook 0700. Please note that with respect to suspected criminal 
activity, VA employees, not only the Compliance Officer, are obligated 
to report suspected criminal activity to the appropriate law 
enforcement officials in accordance with 38 CFR Sec. Sec. 1.200-1.205.
    Beckley VAMC maintains posters for the Office of the Inspector 
General and Joint Commission displayed throughout the facility 
informing staff, Veterans, and visitors about how to make complaints of 
suspected waste, fraud, or abuse. Additionally, suggestion boxes can be 
found throughout the facility making it easy for any person to 
anonymously submit questions or concerns to the Compliance Officer.
    The remaining allegation substantiated by VA was the medical 
center's failure to communicate the opioid performance measure to all 
primary care physicians within 90 days of the beginning of the fiscal 
year. VA recommended the facility take steps to ensure performance 
measures are communicated to physicians in a timely manner, in 
accordance with VHA policy (VA Handbook 5007, Pay Administration). On 
January 21, 2015, Beckley VAMC's Office of Human Resources implemented 
a standard operating procedure (SOP) requiring service lines to 
develop, communicate, and implement physician performance pay goals 
(which are the performance measures plan) based upon the Executive 
Career Field plan and opportunity for improvement identified by Beckley 
VAMC. The SOP includes calendar reminders for this action and requires 
confirmation of completion by each service line before the 90-day 
deadline.
    [June 9, 2015, Senator Capito Letter intentionally omitted.]

    Senator Manchin. Really what it comes down to, this leads 
up to everything that we have talked about here, and I think as 
Senator Sanders says, you know, privatization, this and that. I 
just truly want--I just care about the veterans. There are 
going to be an awful lot of them coming back who will need a 
lot of care. My generation coming out of Vietnam, 40 years 
later still have tremendous need.
    With that being said, do you believe--you come from the 
private sector. You come from the private sector. You are 
public. You are public.
    Dr. Tuchschmidt. She is private sector.
    Senator Manchin. Private? Oh, I read here you had 15 years 
in Government. Those who have more public--more private 
exposure, would understand. Do you believe we can give better 
care to our veterans through the private sector? I mean that in 
the case of the quality of care, the time, and also the cost. I 
am not saying we are going to shut the VA down. But before we 
expand, I do not think we are going to build another hospital. 
I do not think we are going to build anything else. We are 
going to have to maintain what we have and give better care for 
more people.
    Mr. Gibson. Sir, I would tell you, no, I do not believe 
that that is the case. If you look at the typical----
    Senator Manchin. Tell me why.
    Mr. Gibson. If you look at the typical veteran that we 
provide care for, they are older, they are sicker, and they are 
poor. We have a highly fragmented health care system in 
America, and that is precisely the person that I do not think 
fares best when turned loose in that fragmented system. If you 
go talk to veterans, to a large number of veterans, 
consistently what you are going to hear, are there instances 
where they had to wait too long for care? Are there instances 
where we made a mistakes? Yes, there absolutely are. Fifty-five 
million outpatient appointments a year.
    Senator Manchin. Use Alaska as an example. We used Alaska 
for the Choice. Alaska is the basis for with Choice. We used 
Alaska and how they were given so much better quality of care 
and quicker wait times than anywhere else. They do not even 
have a VA hospital. Who wants to take that one?
    Mr. Gibson. You know that market very well.
    Mr. McIntyre. If I might, I know Alaska a fair bit, and 
about a decade of public service experience. I would offer the 
following: I think it takes both.
    Senator Manchin. OK.
    Mr. McIntyre. I think the real question at the end of the 
day is: Which things fundamentally are done best by the VA 
directly? Which things have enough demand where it justifies 
building it? Which things ought to be supplemented by the 
private sector? Because it is either there is not enough demand 
to justify a build or where it makes sense to spread the supply 
simply because of the amount of resourcing that is needed to 
deliver services. I think that has always been true. I think 
that is true in the DOD system. That is why you see TRICARE 
constructed the way it is. Alaska has a joint-use facility in 
Anchorage. But when you get outside of Anchorage, most of the 
footprint tends to either be public in the DOD, public through 
the Indian Health Service, or private. It is those two pieces 
working together that are ultimately going to deliver what 
needs to be done.
    Senator Manchin. Well, I can talk to you all day, but my 
time is running out, but the thing on drugs, the drug 
dispensing to our veterans is almost criminal, what we are 
doing to them. The concoction of drugs we are giving them 
without proper guidance, and when you look at high unemployment 
rates in our veterans and look to it as drug addiction, we have 
got to do something there. Prescription drug abuse is the 
biggest killer I have in my State of West Virginia, and it is 
everywhere. It is horrific. But in the ranks of our military 
and our veterans, it is just absolutely off the charts.
    We are putting a prescription drug abuse caucus together, 
Democrats and Republicans working together. We are going to 
need your help because this is where we can----
    Mr. Gibson. We would love to participate. We agree with 
you. We recognize it as a national problem, and it is a problem 
inside VA.
    Senator Manchin. Thank you.
    Chairman Isakson. It is a problem in general society. Thank 
you, Senator Manchin.
    Senator Tillis, then Senator Hirono, followed by Senator 
Boozman and Senator Tester.

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

    Senator Tillis. Thank you, Mr. Chair. Thank you all for 
being here.
    Just a couple of things. One is based on a comment made 
here earlier about the idea of completely privatizing the VA. I 
honestly have not had a single serious discussion with any 
member that saw that as an end state. If they did, if anyone 
here did, all they need to do is spend some time in the VA to 
understand the unique nature of what the VA has to offer. There 
is no other more welcoming place for a veteran than the VA. Not 
that there are not opportunities for private care. There 
clearly are already. The non-VA care is a very significant part 
of what you all do every day, long before Choice was ever 
implemented. Choice is just another safety valve.
    I realize in these Committee meetings sometimes our words 
carry more weight than perhaps they should. But I do not think 
anybody should leave this Committee meeting thinking that 
anybody here has any serious goal or objective to privatize the 
entire VA.
    I want to go back to the point that Senator Blumenthal 
mentioned. I also have concerns about the overrun in the Denver 
hospital. I completely understand your predicament. You have 
got to figure out a way to get it built out. Can you give me an 
idea of what the thought process was? Because presumably, if 
you were going to shift that money over for the short-term need 
to fund the buildout of the Aurora facility, what would that 
cause in terms of delay or ramping down of what we would be 
doing with Choice over the period of time that that money would 
not be available?
    Mr. Gibson. What we basically did is in identifying the 
non-recurring maintenance and minor construction projects, we 
have a capital planning process that actually builds a 
prioritized list that is years long based upon the pace of 
funding that we normally expect to get. When we looked at the 
$5 billion in Choice funds, we basically reached into that skip 
list and pulled a segment out to put into that priority bucket.
    What happens now is the substantial portion of those, if we 
were permitted to do this, in all likelihood would wind up in 
the 2017 budget because they then would fall back into that 
prioritized queue.
    Senator Tillis. That is why I was asking the question, 
because you could infer from some of the discussion that there 
is a $700 million hit and care not being provided versus taking 
a look at how that money was spent over time to build the ramp-
out of the Choice Program. That is why I was asking. It sounds 
like there is some leveling assumptions you were making about 
having the money when you need it.
    Mr. Gibson. That is exactly right. Our commitment has been 
that we would work this back into the funding stream as quickly 
as we could. There are hundreds of----
    Senator Tillis. I think that that is critical in order for 
what you have requested in the letter that you sent us to have 
any prayer of serious consideration, you need to map out how we 
would have assurances that it does not really materially affect 
it because of the way that you would plan to spend that money 
anyway.
    Mr. Gibson. Thank you. Thank you for raising the issue.
    Senator Tillis. Because, otherwise, I would tend to go back 
to the well-articulated position of the Ranking Member.
    The other question that I had or the thing that I think is 
very important is we need to get a 5-year, 10-year, 20-year 
picture of what Choice non-VA care means, to get some 
parameters set about it, because that is critically important 
for you to go back and review your capital improvement plan to 
figure out how to do it. The answer is going to be different 
depending upon where you are.
    Senator Sullivan will rightly say that his State has a 
higher per capita veterans population of any State in the 
Nation. I have a veterans population that exceeds the 
population of several States. The capital planning requirements 
in North Carolina will be necessarily different than non-VA 
care, and the Choice mix in Alaska will be necessarily 
different. We have to come up with that long-term vision so we 
can relook at the current capital improvement plans based on 
what appears to be the interest of the Senate to continue down 
that multipronged path so that you are taking pressure off of 
capital requirements in some areas and maybe redoubling them in 
other areas. That is a very important thing that I think this 
Committee needs to see, but then we need to be very specific 
about what we want beyond just brick and mortar VA presence in 
the form of non-VA care and Choice are to get this right.
    Mr. Gibson. If I can make two quick observations. I think 
you are absolutely spot on. First of all, we have to force 
ourselves to make certain decisions about what care can be most 
efficiently delivered in the community. We have talked before, 
my example the Chairman remembers, optometry. Why would we send 
a veteran 100 miles to go get his eyes checked and get some 
glasses? You can do that anywhere. Why would we not be 
routinely referring that out into the community unless a 
veteran really wanted to come to VA?
    The other issue that we are trying to get at--and we are 
learning right now, again, working to manage toward 
requirements rather than just a budget number. What we are 
seeing is every time we improve access to care with a new 
facility, with additional staff, demand changes. Part of what 
we are trying to understand is what are the dynamics.
    For example, you look in Phoenix where we know we are 
underpenetrated in the veteran market. We improve access to 
care, and we get a disproportionate response back. We have got 
to understand that market penetration phenomenon because it 
will affect our capital planning.
    I have already talked with the folks in Phoenix about 
getting beyond looking over the horizon as it relates to demand 
for care among veterans in Phoenix. We cannot keep 
incrementally doing this because we are just going to stay 
behind. We have got to get ahead of that demand. Your points 
are excellent.
    Senator Tillis. Thank you.
    Thank you, Mr. Chair.
    Chairman Isakson. Thank you, Senator Tillis.
    Senator Hirono?

          HON. MAZIE HIRONO, U.S. SENATOR FROM HAWAII

    Senator Hirono. Thank you.
    There is a shortage of medical personnel in the VA, and I 
note in your testimony, Secretary Gibson, that you are going to 
be creating some 1,500 new residency positions, and this is a 
matter that I have discussed with our VA person in Hawaii, 
because if we can create residency positions in the State, it 
is more likely that those folks will be able to practice in the 
State.
    How will these residency spots be allocated? By region? By 
capacity? Are there any you are planning to increase for Hawaii 
medical students?
    Dr. Tuchschmidt. I do not have the list with me today 
specifically of where the slots are going.
    Senator Hirono. Have you already determined where the 
residency slots are going?
    Dr. Tuchschmidt. Not all 1,500. That is a multiyear plan to 
deploy the 1,500, and the first round of those started this 
fiscal year. I, quite frankly, did not think our Office of 
Academic Affiliations would be able to do it, but they went out 
and sought applications. There are very specific criteria in 
the law about them going to underresourced communities and 
specialties. They went out and specifically sought those. We 
have awarded several hundred for this first round this year, 
not as many as we had thought maybe, but a lot more than I 
anticipated they would be able to award. I can get you 
specifically where those----
    Senator Hirono. Certainly, because Hawaii has a lot of 
rural areas on the neighbor islands that are underserved in the 
VA. Thank you. You can send me the information, or the 
comparative effectiveness.
    Dr. Tuchschmidt. Yes.
    [The information referred to follows:]
Response to Request Arising During the Hearing by Hon. Mazie K. Hirono 
                 to U.S. Department of Veterans Affairs

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Senator Hirono. As we look at the request of Secretary 
Gibson to pay for the Denver facility and we are looking--I 
think that it is really difficult for us to accept that you 
want to take money from the Choice Program to do that. I would 
like to ask you this: When a veteran goes to the VA to get care 
for a non-service-connected matter and this veteran has private 
insurance, do you have the authority to get reimbursed from the 
private insurance company for the care that the VA provides?
    Dr. Tuchschmidt. If the patient goes out into the community 
in our normal purchased care program and has insurance, we will 
bill that insurance company and collect to offset the cost of 
the care we provided.
    Under Choice, we are actually the secondary payer, so under 
the Choice Program, the way the law was written, if the patient 
has commercial insurance, the commercial insurance is the 
primary payer, and then we will make the provider whole up to 
the Medicare rate.
    Senator Hirono. All right. Under the Choice Program that is 
good because VA becomes the secondary payer. My understanding 
is that in the first instance, where the veteran goes to the VA 
and gets the treatment, then often there is no reimbursement 
from his or her private insurance company. You are telling me 
otherwise.
    Dr. Tuchschmidt. We will bill the private insurance company 
if the patient has insurance.
    Senator Hirono. Yes. And do they reimburse you?
    Dr. Tuchschmidt. Yes, we get paid from them. A lot of the 
patients that have insurance have Medigap insurance, and 
without a Medicare EOB oftentimes those insurance companies 
will not pay for the care because it is not Medicare--the 
insurance is specifically Medicare gap coverage. We will not 
oftentimes get paid by those insurers.
    Senator Hirono. You are reassuring me that the VA goes 
after every dime from the private insurance carriers that you 
can get your hands on.
    Dr. Tuchschmidt. I can assure you we go after every dime we 
can collect.
    Senator Hirono. That is reassuring.
    Dr. Tuchschmidt. About $3 billion a year, yes.
    Senator Hirono. There are some questions about the outreach 
on the Choice Card Program. There is still confusion out there 
and whether you found all of the veterans who would qualify for 
the Choice Card. What are the outreach efforts that you have 
engaged in? Do you think that you are succeeding in explaining 
the Choice Program? And, also, to VA employees and community 
health care providers who need to get training on how to 
explain the program.
    Dr. Tuchschmidt. We originally mailed--we know who the 
people are who are eligible to get a Choice Card, and we mailed 
the letter to every one of those people back when the program 
started in November.
    Senator Hirono. I have talked to veterans, and they found 
that letter to be rather confusing.
    Dr. Tuchschmidt. Yes. We are about to mail a second letter 
to all of them. Hopefully it is a lot simpler to understand. We 
have actually tested that with veterans before we put it in the 
envelope.
    Senator Hirono. Good idea.
    Dr. Tuchschmidt. We have made a lot of phone calls and 
outreach to people. There is no question that I think we can do 
more to reach veterans through our Web site, through mobile 
technology, through mailings, and other forms of communication. 
We need to do a better job of educating them.
    Senator Hirono. Good.
    Mr. Gibson. We do need to do a much better job. One of the 
things we have got to remind ourselves of is there is no 
parallel to this out there. It is not like an insurance card 
where you just walk into your doctor's office and present your 
insurance card. There is no frame of reference for people to 
understand how it works. You know, do I have a benefit or do I 
not have a benefit? That is one of the reasons it is hard for 
us to explain and why we have to keep trying.
    Senator Hirono. If giving you feedback from my veterans, 
for example, could help you all do a better job, I would be 
happy to pass that on.
    Mr. Gibson. We would love it, yes.
    Senator Hirono. Thank you.
    Thank you, Mr. Chairman.
    Chairman Isakson. Thank you, Senator Hirono.
    Senator Boozman, followed by Senator Tester.

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

    Senator Boozman. Thank you, Mr. Chairman.
    Very briefly I would like to ask a question of efficiency. 
I understand that the third-party administrators (TPAs), 
TriWest and Health Net, have raised the issue of how much 
clinical documentation is being sent to them by the VA. 
Apparently VA is sending the clinical documentation of every 
veteran who was approved due to having a wait time in excess of 
30 days, which presumably is overwhelming the TPAs. You now 
have a pilot program in VISNs 8 and 17 to only send the 
clinical information of veterans who choose to participate in 
the Choice Program. I guess the question is: are the pilots 
proving successful? Then, Mr. McIntyre and Ms. Hoffmeier, if 
you would like to comment from your standpoint as to what is 
going on.
    Dr. Tuchschmidt. When we first set up the program, we gave 
every patient in the system an appointment in our system and 
put them on the Choice list so that they could decide at any 
point in time which direction they wanted to go. We have 
learned through experience over the last 6 months that that 
does not work. It does not help the veteran. It does not help 
us. Quite frankly, it is not cost-effective.
    We have the pilots. We have just started these pilots to 
see how this goes and how we can improve those business 
processes. But we are moving, quite frankly, in the direction 
of at the point of service offering the veteran--finding out 
what is the appointment that we can provide in the VA, offering 
the veteran that appointment or offering them the opportunity 
to go outside through the Choice Program. At that time, if the 
veteran chooses to go out, then our staff, much like they do 
outside of Choice for all of our other purchased care 
appointments, will work directly with TriWest and Health Net to 
get that patient an appointment through the Choice Program. At 
that time, we hope we have learned from our pilots in 8 and 17 
how to do this smarter and better so that we will greatly 
reduce the volume of people that we are referring to the TPA 
and are only providing medical record documentation for those 
patients who actually choose to go outside the system.
    Senator Boozman. That sounds excellent. Do you----
    Mr. McIntyre. The pilot is a very good idea. Sitting at the 
table in the initial design, when we were getting ready to 
launch, we had 2 days to make a decision. The question was, how 
do you make sure that all the right information is in the right 
place to be able to serve people on the front end? The back-end 
consequences are now obvious, and making the change makes a lot 
of sense, and we are looking forward to supporting it.
    Senator Boozman. OK. Ms. Hoffmeier?
    Ms. Hoffmeier. The pilot has been going exceptionally well 
in our area, and, in fact, we just approved a schedule with VA 
to move forward with implementing the concept across all of our 
regions here very soon. We are getting the consults in less 
than 24 hours on the veterans we need. It is very effective.
    Senator Boozman. OK. That is excellent. I know that it is 
kind of a rocky road as you are working through these things, 
but it is encouraging that you are working through.
    Thank you, Mr. Chairman.
    Chairman Isakson. Thank you, Senator Boozman.
    The Patience of the Year Award goes to Senator Tester. 
Senator Tester?

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

    Senator Tester. It is just because you have a very, very 
good Committee meeting here, Mr. Chairman.
    Chairman Isakson. We got good testimony.
    Senator Tester. I want to thank you and the Ranking Member 
for having you guys, and thank you for your work.
    I just really do not know where to start, quite frankly. 
First of all, you guys do do a good job. I think the private 
sector does a good job. You have your fallibilities. Do not 
think that the private sector does not have their 
fallibilities, too. They are short on nurses, they are short on 
docs, they are short on mental health professionals, they are 
short on facilities, just like you guys are. In the bookkeeping 
nightmare that may come with this, let me give you an example. 
Just say I was a vet. I live 50 miles from a CBOC. My nearest 
hospital is 12 miles away. But that nearest hospital does not 
have a doctor in it. It is staffed by a nurse practitioner.
    Then the questions become: one, is that somewhere you want 
to have an appointment; and, two, if I do not, guess where the 
nearest hospital is? In the same town where that CBOC is. I 
mean, the bookkeeping here is just amazing. I know we are all 
here trying to do the right thing, and I know you are trying to 
do the right thing. Still, sometimes even if you do the right 
thing, people are mad because they think it is the wrong thing. 
I thank you for that.
    Mr. Gibson, you talked about the 40-mile thing as far as 
not offering the service several times, and you talked about 
how it does not make any sense if a guy is going to have a set 
of glasses, why ship them halfway across the country. When you 
did your analysis, did you also include the savings that would 
accrue to the VA by not shipping them a long ways away? Because 
I think that is really important. If I was a veteran and had to 
do it over again, I probably would have signed up just for this 
benefit. But, the truth is that if you are talking about what 
it costs to ship them to the private sector, it also is a 
savings if just in mileage alone. Did you include that in the 
overall net dollar figure?
    Dr. Tuchschmidt. No. We actually do not in the analysis. We 
have worked through several options from what 40 miles from the 
care you need might look like.
    Senator Tester. Yes.
    Dr. Tuchschmidt. We have not taken into account a lot of 
savings.
    Senator Tester. OK.
    Dr. Tuchschmidt. We were modeling this for the Choice 
Program. In the short run, our cost structure is highly fixed; 
90 percent of our costs are fixed. There are variable costs, 
which is mostly the eyeglasses that you do not prescribe, but 
the rest of the infrastructure, the building, a lot of the 
people, et cetera, do not go away.
    Senator Tester. Yeah, but the mileage is also not a fixed 
cost, and if you have to put them up in a room, that is not a 
fixed cost.
    Dr. Tuchschmidt. We have not specifically looked at the 
bene travel, and then there are two aspects of the bene travel. 
There is the true cost savings and there is the cost avoided 
because you have not made them travel.
    Senator Tester. That is correct.
    Dr. Tuchschmidt. But, that is not a real savings. That is a 
cost that you did not realize.
    Senator Tester. Yes, but really? I mean, come on. That 
sounds like CBO talk here, truthfully. I do not want to debate 
this, but the fact is that if you are doing the actual cost 
analysis and you would have spent the money if they went to a 
facility of yours, you have to include that in the savings. 
Truthfully, if we are going to deal with honest figures, that 
savings has to be included, even if it did not accrue.
    Mr. Gibson. Clearly it does have to be included.
    Senator Tester. OK. Right.
    Mr. Gibson. Even though the level of analysis today is 
orders of magnitude better than what we had initially, all the 
way down to the individual patient level, we have not picked up 
some of those incidental costs.
    Senator Tester. Mr. McIntyre, you talked about 
harmonization, which I have talked with Sloan about regarding 
the ARCH program, PC3, and Choice. I am assuming you are for 
harmonization. I read it in your testimony. Just nod your head 
if that is correct.
    Mr. McIntyre. Yes, sir.
    Senator Tester. Deputy Gibson, you are for harmonization of 
those programs. Could you give us some language on how we can 
harmonize those programs? I do not want to be the micromanager 
here, but if you guys need language to be able to harmonize 
those programs, I think it is a reasonable thing to do.
    Mr. Gibson. We need to do that. I think part of that 
picture is how do we manage the 40-mile issue.
    Senator Tester. Yes.
    Mr. Gibson. I think we need to think through this. Are we 
going to look at VA becoming a secondary provider to those that 
have other insurance alternatives? Because it changes the 
nature of the work.
    Senator Tester. OK. Well----
    Mr. Gibson. It is wrapped up in that. It needs to be a very 
near-term exercise.
    Senator Tester. Yes, let us deal with that, because I think 
it is confusing right now, and I think there is a little 
manipulation going on.
    Mr. McIntyre. Well, and if I might, one of the issues I was 
attempting to address and allude to is the fact that we built a 
network out now I our area that has got 100,000 providers in 
it.
    Senator Tester. Yes.
    Mr. McIntyre. The requirements are more extensive than 
those under Choice if you are a participating provider. Those 
things need to be blended together so that we do not have 
disincentive to participate in one program versus another.
    Senator Tester. Fair enough.
    Mr. Gibson. And the reimbursement rates need to be the 
same.
    Senator Tester. That is exactly right. Hepatitis C, you 
want some additional dollars, I think $700 million transferred? 
$400 million?
    Mr. Gibson. Not transferred. If we are allowed to be 
flexible----
    Senator Tester. Be able to tap it. I do not have a problem 
with that, by the way. The question I have is if this is a 
miracle drug, when do you anticipate those costs or hepatitis C 
to flatten out so you are not going to need those kind of 
dollars?
    Mr. Gibson. I think the conversation that needs to be held 
with this Committee, with the House Committee, and with the 
appropriators has to do with the requirement that we manage 
toward. I would tell you VA's thought is we should be talking 
about a requirement where veterans that are hepatitis C 
positive, we manage that number to functional zero by the end 
of 2018. That is what I think the requirement should be. So, 
what we need to do is step back from that and lay out a plan 
that says this is what would be required----
    Senator Tester. I agree with that.
    Mr. Gibson [continuing]. In order to manage to that 
requirement, so we are not back and forth about--because the 
first time we deny a veteran access to the treatment who is 
hepatitis C positive because he does not have advanced liver 
disease, everybody thinks we are depriving a veteran of care. 
We need to reach agreement on what the requirement is.
    Senator Tester. One last question, if I might, since I get 
the award for being patient. You talked about residency slots, 
which I think is great and I support and will do everything we 
can. I believe residencies are 3 years?
    Dr. Tuchschmidt. It varies depending upon what the 
specialty is.
    Senator Tester. How about for internists? How long is that?
    Dr. Tuchschmidt. That is 3 years.
    Senator Tester. 3 years. That is what we are short on, 
right?
    Dr. Tuchschmidt. Yes.
    Senator Tester. The question I have is this place changes 
every 2 years, and to have 3 years in a residency, you have got 
to have the money for that residency.
    Dr. Tuchschmidt. Yes.
    Senator Tester. Talk to me about how this works, because 
you have got a 2-year--you have got forward funding, but you do 
not have forward funding for 3 years. What do you do if 
Congress does something irresponsible--and that has been known 
to happen a time or two--and does not fund you.
    Dr. Tuchschmidt. I think this is actually one of our 
concerns. These residents all have tales. When we start a new 
residency slot, all of those slots have to be funded for the 
duration of that residency training.
    Senator Tester. In that budget.
    Dr. Tuchschmidt. Yes.
    Senator Tester. OK.
    Dr. Tuchschmidt. Exactly, and that is not the case today.
    Senator Tester. OK. That is important to know as we move 
forward. When are you going to start the residency program? Is 
it going to start in this fiscal year?
    Dr. Tuchschmidt. Well, we actually do not own the residency 
slots. They are owned by the Academic Centers.
    Senator Tester. Yes.
    Dr. Tuchschmidt. We pay for trainees, offset their salary. 
The additional slots that we added started this academic yes.
    Senator Tester. This fiscal year.
    Dr. Tuchschmidt. The academic year that will start this 
coming July.
    Senator Tester. In this budget we are dealing with this?
    Dr. Tuchschmidt. Yes.
    Senator Tester. So, if your budget comes in a little short, 
this may be a program that goes bye-bye.
    Dr. Tuchschmidt. I doubt it, because we have made 
commitments at this point.
    Senator Tester. I appreciate it. Thank you, guys, for your 
work.
    I appreciate your flexibility, Mr. Chairman.
    Chairman Isakson. Thank you, Senator Tester. Thanks to all 
the Members, and thanks to our witnesses. It has been a long 
and I think very productive hearing. We are on the path to 
solving some problems and recognizing a few that we need to 
solve. I appreciate everybody's time and effort very much.
    We will take a 2-minute break while we shift nameplates and 
go to panel two.
    Mr. Gibson. We appreciate the collaborative working 
relationship, Mr. Chairman. Thank you.
    Chairman Isakson. That is the only way to do it.
    Mr. Gibson. Yes.
    [Pause.]
  Response to Posthearing Questions Submitted by Hon. Patty Murray to 
   Hon. Sloan Gibson, Deputy Secretary, U.S. Department of Veterans 
                                Affairs
    Question 1. Non-VA Care Programs
    The Choice Program was created as an emergency fix to help bring 
down serious wait times that were keeping veterans from care they 
needed, but that program is a temporary authority and will expire in a 
few years. VA now has at least 4 different major authorities to get 
veterans into non-VA care and they all have different procedures, 
eligibility requirements, reimbursements, and reimbursement rates. This 
is inefficient and confusing to providers, VA employees, and veterans 
alike. VA should be preparing now to create one non-VA care program 
that is effective and efficient, and complements the care provided by 
the Department. Please describe the key features and requirements 
needed for such a future program.
    Response. VA agrees that the existence of four programs, with 
separate statutory and regulatory authorities to access care in the 
community is confusing for VA employees, providers and ultimately 
Veterans. While each program serves a specific purpose, VA agrees that 
the rationalization of these programs would be a welcomed 
simplification for all. In May, 2015, the Department proposed 
legislation through the Department of Veterans Affairs Streamlining and 
Modernization Act which would allow the development of an established 
network of approved non-VA medical care providers, expanding Veteran 
access to care. In addition to this Act, rationalization of non-VA care 
programs is necessary, and should focus on consistency, simplification 
of processes, and robust technology, to include:

     Consistent eligibility requirements for all care in the 
community (or non-VA medical care).
     Eligibility requirements that are written in easy-to-
understand verbiage that VA employees can quickly and concisely 
articulate to providers and Veterans.
     A dynamic provider network that allows VA medical 
facilities the opportunity to continue to cultivate relationships 
within their community.
     Simple, consistent payment methodology for all non-VA 
care.
     Electronic submission of Vendor claims 100% of the time.
     Automation of payments.
     Clearly defined reporting requirements prior to program 
implementation.
     Robust reporting system that captures national and 
facility-level data.

    Ultimately, the future of care in the community is dependent on 
developing an approach that is driven by Veteran satisfaction and 
industry-leading cost-effective care.

    Question 2.  Denver
    Two construction projects in Washington state were among those that 
were allocated funding from the Choice Act. VA has now asked to 
reprogram $24.7 million dollars away from those projects to pay for the 
outrageous cost overruns at the Denver facility. The $5 billion 
provided in the Choice Act was provided to increase access to care by 
addressing critical problems at facilities around the country, not to 
cover the Department's shocking mismanagement of the Denver hospital. 
These two construction projects in Washington are greatly in need of 
this funding, and any request to take away from those projects is 
deeply concerning. Where else can the Department find the money to 
address the problem in Denver besides taking the funds meant to address 
critical issues at other facilities? In responding please provide a 
detailed accounting of such funds and a plan to mitigate the serious 
deficiencies in the Department's management of major construction.
    Response. On June 5, 2015, VA released a comprehensive proposal to 
the House and Senate Veterans' Affairs Committees. The plan details 
specific reforms VA has instituted to improve our construction program 
outcomes and prevent mistakes moving forward. The funding plan for 
completion of the Denver facility presents options from a Veteran-
centric focus that we believe deploys resources efficiently while 
addressing the emerging needs of VA facilities in a fiscally 
responsible, budget-neutral manner. For your convenience, the full text 
of the plan documents is available for download:

    1. Letter to Congress
    2. Plan for Completion of the Denver Replacement Medical Center
    3. Cost Benefit Analysis--Denver VAMC (April 2015)
    4. Photos of Denver Replacement Facility
    5. VA Accountability Fact Sheet (June 2015)
    6. VA Making Progress to Improve Service for Veterans Fact Sheet 
(June 2015)
    7. MyVA Transformational Plan (June 2015)
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Bill Cassidy to 
   Hon. Sloan Gibson, Deputy Secretary, U.S. Department of Veterans 
                                Affairs
    Question 3.  Mr. Gibson, I would like to take this opportunity to 
address the importance of timely claims processing and outstanding 
medical claims for non-VA facilities. As of Feb 9, 2015 the VA had 
$43.7 million in unpaid medical invoices to non-VA facilities in 
Louisiana alone. One single healthcare system covering Texas, 
Louisiana, and New Mexico is owed almost $5.5 million. This is 
unacceptable, we cannot expect private institutions to render care to 
veterans if they know that VA will either only pay the claims at 33% or 
not pay the claims at all.

    a. When does the VA expect to eliminate the backlog of claims 
(older than 30 days) to non-VA facilities?
    b. My constituents are still reporting claims assistance hold times 
ranging from 1-4 hours, what is being done to address this situation as 
a whole within the VA?
    c. When will the VA stop mishandling veterans' paper medical 
records and allow electronic submission of these claims--in the same 
way Medicare and virtually all other payers do now?
    d. In November and in April, the Chief Business Office said it had 
reopened a large group of claims VISN 16 had inappropriately denied for 
lack of medical records after VA employees failed manually scan these 
records into the system. Chief Business Office leaders have not been 
willing to report how many of these claim denials were overturned. When 
will the VA develop metrics that demonstrate the accurate payment of 
claims in VISN 16 and other poorly performing areas?

    VA Response:

    a. Purchased Care has developed a specific plan to address backlog 
elimination and process improvement. The goal is to eliminate the 
backlog and have only current claims in inventory by December 31, 2015.
    b. Due to higher than normal volumes of calls and claim 
submissions, telephone wait times had increased. However, Purchased 
Care has implemented several strategies to address the increase and 
provide customer service to include providing claim status updates via 
email or paper mail, setting up routine follow-up conference calls with 
providers, taking voice mails and returning calls in order to alleviate 
holding times, and the realignment of the V16 call center to Program 
Administration Directorate to pilot a possible national roll out of 
call center support if successful. Subsequent to the implementation of 
the call center pilot in VISN 16 the average waiting time for VISN 16 
callers is 15 minutes. Please provide the constituents' names and we 
will reach out to them to isolate the date called to determine if there 
were any issues associated with the call center systems.
    VA acknowledges there have been instances where clinical 
documentation was misrouted. Internal controls have been established to 
ensure clinical documents are scanned correctly at the VISN 16 
centralized payment center. A pilot to track clinical documentation has 
proven to be successful at another location. This pilot reduced 
customer service wait times and abandonment rates. We have also 
completed technical site visits to evaluate how well the current 
software design is meeting business needs in order to implement 
corrective actions.
    c. VA will be expanding that project through VISN 16 in the near 
future. Providers may also submit medical documentation via CD or DVD 
and VA staff can upload those digital files. Unfortunately VHA will be 
unable to accept electronic submission of supporting clinical 
documentation until upgrades are completed to the Electronic Data 
Interchange submission systems. That upgrade is anticipated to occur in 
approximately two years.
    d. There were a large number of claims that were reopened and 
processed during November and April 2014 in VISN 16. VA staff are 
unable to distinguish the reason why claims were closed during those 
timeframes. However, VA's Purchased Care office does have a department 
responsible for Audits and Internal Controls and monitors payment 
accuracy and addresses specific claims processing errors. In addition 
VA has established claims processing measures to monitor status of 
claims at all payment locations. Claims timeliness is monitored daily 
with weekly conference calls with all payment locations to monitor the 
status of claims processing and implementation of corrective actions.
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Patty Murray to 
David J. McIntyre, Jr., President and Chief Executive Officer, TriWest 
                          Healthcare Alliance
    Question 1.  Private Providers and Non-VA Care
    TriWest and Health Net both play major roles in both the Choice 
Program and in the Patient Centered Community Care Program. Some very 
important controls were put into the PCCC program, including 
requirements to coordinate health care and more oversight of the 
quality of care. As major contractors administering PCCC regions, each 
company made certain assumptions about workload and other factors in 
setting up business plans and provider networks for the PCCC program. 
How is management of the PCCC contracts affected with large portions of 
the workload going through the Choice Program instead?
    Response. Overall, the biggest challenge we have is explaining some 
of the billing differences between the PC3 and Choice programs to 
providers in our network. For the PC3 program, our contract is explicit 
in its prohibition on providers collecting any funds from the Veteran. 
One hundred percent of the bill is paid by TriWest on behalf of VA. 
When that same Veteran is seeking care under the Choice program, the 
law requires that his or her private insurance provide first dollar 
coverage if the care is for the treatment of a non-service-connected 
condition. That creates provider confusion and it is one of the reasons 
I advocated, what I called ``harmonization'' of the programs in my 
opening statement.
    Additionally, while we received very little from VA in the way of 
anticipated volumes for the PC3 program, we were generally assured that 
referrals for care made to TriWest from VA would result in a patient 
visit. In that sense, we were able to predict with some level of 
certainty the staffing we needed to deliver timely service. With the 
Choice Program, at the outset it was not uncommon that only 15-20% of 
the eligible patients would ever call us to use the program to receive 
services in the community. However, we are never really sure from one 
day to the next what the ``uptake'' rate will be from the Choice-
eligible population. That creates substantial challenges in 
appropriately staffing for needed services on a daily and weekly basis.
    Obviously, it is our hope that as we continue to partner with VA 
and educate Veterans about the benefit of the program, some stability 
in expected utilization will occur. But, for now, it is a constant 
challenge to monitor over or under staffing for needed services.
    The only other issue is the multiple different reporting 
requirements that have us segmenting out workload by program. We 
certainly understand that it is important to track activity in ways 
that assure accurate accounting and program utilization. However, at 
times, the segmentation can present a picture of individual programs in 
isolation of the entirety of the efforts to provide care and service to 
Veterans.
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Bill Cassidy to 
David J. McIntyre, Jr., President and Chief Executive Officer, TriWest 
                          Healthcare Alliance
    Question 2.  Mr. McIntyre, After listing the challenges in your 
testimony that TriWest confronted in implementing a Patient Centered 
Community Care (PC3) across 28 States to give VA medical centers a 
consistent way to provide veterans access to care from a network of 
providers, you described a pilot done in the collaboration with the 
Dallas VAMC. At what point, was it decided to implement a pilot? If you 
are finding the pilot successful, why wasn't that a strategy before 
implementation in 28 states to avoid some of the challenges you listed?
    Response. The pilot program in Dallas was specifically targeted at 
a challenge brought about by implementation of the Choice program; not 
the PC3 program. When the Choice program was first implemented, a major 
issue that was identified was the fact that providers in the community 
would need clinical consults (medical notes that also include the 
recommended or suggested specialty service needed) prior to providing 
services. There were only two ways for VA to provide that information 
to TriWest so that we could, in turn, hand it to community providers: 
provide it all up front or provide it only when needed following 
outreach from a Veteran.
    The second option certainly seemed to be a more efficient and 
effective way to provide the information. However, given the short 
timeframe of 90 days to stand up the program in its entirety and the 
backlog of patients on wait lists when the program went live, we all 
were rightly concerned that VA had no personnel operations or processes 
through which it could receive requests for those records and turn them 
around in a timely fashion. While we all wished it was not the case, we 
were forced to deal with the reality that attempting this at the outset 
could very well lead to more delays, not fewer.
    As such, we started the program with a system whereby VA sent a 
consult for every Veteran deemed eligible for care under the Choice 
program rules outlined by Congress regardless of whether the Veteran 
reached out to TriWest for care. It was our hope that this would ensure 
that TriWest would have all of the necessary information to help the 
Veteran as soon as he or she decided to reach out to the Choice program 
for assistance in obtaining a community care appointment. As the 
program grew, the number of clinical consults sent to TriWest grew 
right along with it. Yet, it was still the case that fewer than half of 
those eligible patients were reaching out to the Choice program for 
appointments.
    At this point, TriWest and VA realized that there were more than 
enough staff processing consults that we could comfortably begin to 
implement the more efficient and effective solution we all wanted to 
attempt initially. And we started to test that operationally in Dallas, 
Texas in the form of a pilot program.
                                 ______
                                 
  Response to Posthearing Questions Submitted by Hon. Patty Murray to 
   Donna Hoffmeier, Vice President and Program Officer, VA Services, 
                      Health Net Federal Services
                   private providers and non-va care
    Question. TriWest and HealthNet both play major roles in both the 
Choice Program and in the Patient Centered Community Care Program. Some 
very important controls were put into the PCCC program, including 
requirements to coordinate health care and more oversight of the 
quality of care. As major contractors administering PCCC regions, each 
company made certain assumptions about workload and other factors in 
setting up business plans and provider networks for the PCCC program. 
How is management of the PCCC contracts affected with large portions of 
the workload going through the Choice Program instead?
    Response. Both PCCC and Choice support providing eligible Veterans 
with access to health care through a comprehensive network of 
community-based, non-VA medical professionals and facilities. The PCCC 
contract, awarded to Health Net in September 2013, was phased in over a 
six month period, with services beginning in January 2014. In 
October 2014, VA amended the PCCC contract to include several 
components of the Choice Act (such as production and distribution of 
Choice Cards, establishment of a call center, and other administrative 
functions) and required very fast implementation in one month.
    PCCC and Choice are designed to achieve the same objective of 
enabling VA to provide all eligible Veterans with access to the care 
they need in the local community. In support of PCCC and Choice 
contract requirements, we have developed policies and processes to meet 
requirements to coordinate Veterans' healthcare and provide oversight 
of quality. For example, in building provider networks, we tailor the 
network to meet the Veteran's health care needs, as identified by the 
VA Medical Center that is submitting authorizations while meeting the 
specific requirements of PCCC and Choice. Choice Program participation 
requirements make it easier for providers to participate, and as a 
result we are able to get Choice providers on-board more quickly, which 
enhances Veterans' access to community care.
    Currently, the range of options (e.g., PCCC, Choice, affiliate 
agreements/direct contracts, individual authorizations) for non-VA fee 
care is confusing for Veterans, providers, and VA staff. As VA 
discusses options to streamline the programs for non-VA care through 
greater use of PCCC and Choice, we would anticipate greater efficiency 
in care delivery.

    Chairman Isakson. All right. Welcome back to the Senate 
Veterans' Affairs Committee. It was a good first panel. I 
apologize to our second panelist that it took so long, but I 
think it was beneficial, and from the participation you all 
were illustrating by the looks on your faces, I am sure you 
enjoyed it, too. Thank you very much.
    For our second panel we have Mr. Roscoe Butler, the Deputy 
Director for Health Care for The American Legion. Roscoe, good 
to have you.
    Darin Selnick, Senior Veterans Affairs Advisor for 
Concerned Veterans for America.
    Joseph Violante, National Legislative Director, Disabled 
American Veterans.
    Mr. Bill Rausch--who is missing in action right now, or 
AWOL--Political Director for Iraq and Afghanistan Veterans of 
America.
    And Carlos Fuentes, Senior Legislative Associate of the 
Veterans of Foreign Wars.
    We welcome all of you for being here today, and we will 
start with you, Mr. Butler.

 STATEMENT OF ROSCOE G. BUTLER, DEPUTY DIRECTOR, HEALTH CARE, 
  VETERANS AFFAIRS AND REHABILITATION DIVISION, THE AMERICAN 
                             LEGION

    Mr. Butler. Chairman Isakson, Ranking Member Blumenthal, 
and distinguished Members of the Committee, on behalf of our 
national commander, Michael Helm, and the 2.3 million members 
of The American Legion, we thank you for this opportunity to 
testify regarding The American Legion's views of the progress 
of the Veterans Choice Program.
    The American Legion supported the Veterans Access, Choice, 
and Accountability Act of 2014 as a means of addressing 
emerging problems within the Department of Veterans Affairs. VA 
wait times for outpatient medical care had reached an 
unacceptable level nationwide as veterans struggled to receive 
access to timely health care within the VA health care system. 
It was clear that swift changes were needed to ensure veterans 
could access health care in a timely manner. As a result, The 
American Legion immediately took charge by setting up veterans 
benefits centers (VBCs) in large and small cities across the 
country to assist veterans in need and their families as a 
result of the systemic scheduling crisis facing the VA.
    The American Legion VBCs' charge is to work firsthand with 
veterans experiencing difficulties in obtaining health care or 
having difficulties in receiving their benefits.
    On November 5, 2014, VA rolled out the Veterans Choice Card 
Program, and after 6 months, it is clear the program fell short 
of the initial projections from the CBO. According to the VA 
latest Daily Choice Metrics dated November 30, 2014, there were 
approximately 51,000 authorizations issued for non-VA care 
since implementation of the Choice Program, with about 49,000 
appointments scheduled. When you compare these numbers to the 
over 8 million Choice Cards issued, one would ask: Why did VA 
issue so many Choice Cards? Nevertheless, The American Legion 
is optimistic that the recent rule change by eliminating the 
straight-line rule and using the actual driving distance will 
allow more veterans access to health care under the Choice 
Program.
    The American Legion also believes that if VA were to move 
forward with the 40-mile rule change to only include a VA 
medical facility that can provide the needed medical care or 
services, everyone would see increases in utilization and 
access to non-VA health care.
    The American Legion applauds the Senate for unanimously 
passing an amendment reminding the Department of Veterans 
Affairs they have the obligation to provide non-VA care when it 
cannot offer the same treatment at one of its own facilities 
that is within the 40-mile driving distance from the veteran's 
home. We now call upon the House to take up H.R. 572, the 
Veterans Access to Community Care Act, and ensure its swift 
passage. Let us get these bills to the President's desk and 
make sure we are taking care of our rural veterans.
    During a recent visit last month to examine the health care 
system in Puerto Rico, The American Legion learned that VA 
staff had been mistakenly telling veterans that no one on the 
island is eligible for health care under the Veterans Choice 
Card Program because there is no medical facility that is 
further than 40 miles from anywhere anyone lives on the island. 
The American Legion is concerned that as a result of inadequate 
training, there could be staff at many health care facilities 
who failed to receive proper training as a result of bad 
communications and providing incorrect information to veterans.
    Recently, The American Legion learned that the VA contract 
with Health Net and TriWest required these third-party 
administrators to report Daily Choice Metrics. However, this 
contractor requirement has now expired, and the TPAs are no 
longer required to report these daily metrics. The last report 
VA provided to VSOs was dated March 31, 2015. The American 
Legion is concerned that since the TPAs are no longer required 
to provide these daily metrics, VA can easily lose track of the 
numbers.
    The American Legion calls on Congress to require VHA to 
continue reporting these daily metrics throughout the duration 
of the contract or explain how they will continue to track this 
information. In fiscal year 2014, VA spent over $7 billion on 
non-VA health care. Many of the non-VA purchased care programs 
are managed by different program officers in VA's central 
office, and some of these services are handled outside of VA's 
fee-basis claim processing system. VA should streamline its 
current purchased care model to incorporate all of VA's non-VA 
care programs into a single integrated purchased care model.
    Congress should also look into streamlining the VA's non-VA 
care statutory authorities. Once Congress gets a better sense 
of how the Choice Program will play out over the next couple of 
years, VA's non-VA care statutory authorities should be 
consolidated and rationalized incorporating lessons learned 
from the VA Choice Program.
    Thank you, and, again, Mr. Chairman, Ranking Member 
Blumenthal, I appreciate the opportunity to present The 
American Legion's views and look forward to answering any 
questions you may have.
    [The prepared statement of Mr. Butler follows:]
 Prepared Statement of Roscoe G. Butler, Deputy Director, Health Care, 
   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, Michael 
Helm, and the 2.3 million members of The American Legion, we thank you 
for this opportunity to testify regarding The American Legion's views 
of the progress of the Department of Veterans Affairs veterans choice 
program.
                               background
    The American Legion supported the passage of H.R. 3320, the 
``Veterans Access, Choice, and Accountability Act (VACAA) of 2014'' 
that was signed into law on August 7, 2014 as Public Law (PL) 113-146; 
as a means of addressing emerging problems within the Department of 
Veterans Affairs (VA). VA's wait time for outpatient medical care had 
reached an unacceptable level nationwide and veterans were struggling 
to receive access to care within the VA healthcare system. It was clear 
that swift changes were needed to ensure veterans could access health 
care in a timely manner. Congress implemented this law to ensure when 
VA could not provide access to timely, high-quality health care inside 
the VA health care system; eligible veterans could elect to receive 
needed health care outside the VA health care system as a temporary 
measure until VA corrected its wait-time problem. The law authorizes 
veterans who were enrolled as of August 1, 2014, current eligible, or 
recently discharged combat veterans, the ability to be seen outside the 
VA by an approved non-VA health care provider if they are unable to 
schedule an appointment within 30 days of their preferred date, 
clinically appropriate date, or live more than 40 miles from a VA 
medical facility.\1\
---------------------------------------------------------------------------
    \1\ Public Law 113-146--August 7, 2014: Veterans Access, Choice, 
and Accountability Act of 2014: http://www.gpo.gov/fdsys/pkg/PLAW-
113publ146/pdf/PLAW-113publ146.pdf
---------------------------------------------------------------------------
                assessment of the choice program to date
    On November 5, 2014, The Department of Veterans Affairs Veterans 
Health Administration (VHA) started the Veterans Choice program in 
three stages of implementation. The initial step VHA took was to mail 
320,000 choice cards to enrolled veterans who reside more than 40 miles 
from any type of VA medical facility. On November 17, 2014, VHA 
initiated the second stage by mailing the choice card to those veterans 
who were currently waiting for an appointment longer than 30 days from 
their preferred date or the date determined to be medically necessary 
by their physician. The third and final stage was to mail choice cards 
and letters to the remainder of all veterans enrolled in the VA health 
care who may be eligible for the Choice Program in the future. The card 
mailings included a letter explaining how to verify eligibility and use 
the choice card. As of February 2, 2015, according to the latest Daily 
Choice Metrics obtained from VA Health Net, one of the third-party 
administrators (TPAs) authorized 16,644 veterans to be seen outside the 
VA healthcare system under the Choice Program, of which 13,733 
appointments were scheduled. Similarly, TriWest, another TPA issued 
34,909 authorizations, and scheduled 34,909 appointments. Based on this 
information, the authorizations totaled 50,936 and appointments 
scheduled totaled 48,642. When you compare the number of authorizations 
and appointments scheduled to the 8,671,993 Veterans Choice Cards 
issued, one can easily arrive at a conclusion that the program is off 
to a slow start. However, The American Legion is optimistic that the 
recent changes used to calculate the distance between a veteran's 
residence and the nearest VA medical facility, moving from a straight-
line distance to actual driving distance, will allow more veterans 
access to care under the Veterans Choice program.
    Recently, The American Legion learned that the portion of VHA's 
Veterans Choice contract with Health Net and TriWest, which requires 
the TPA's to report Daily Choice metrics, has expired and the TPA's 
will no longer be reporting this information to VA. The American Legion 
is concerned that if the TPA's are no longer required to provide this 
type of information the number can be easily manipulated and may become 
an issue in the future. The American Legion calls upon Congress to 
require VHA to continue reporting these daily metrics throughout the 
duration of the contract, or explain how they will continue to track 
this information. One of the critical functions of the original 
legislation was to provide metrics on how and where the program was 
being used as a bellwether to indicate where VA needed to improve 
capacity in their system or efficiency of care delivery. By examining 
where the Choice program is used most heavily, stakeholders should be 
able to determine where improvements are needed in VA's overall care 
network.
    actions needed to eliminate impediments to greater veteran and 
                        physician participation
    On February 25, 2015, American Legion National Commander Michael D. 
Helm stated during his congressional testimony before the Senate and 
House Veterans' Affairs Committees that one of the biggest challenges 
he has seen with the implementation of the Veterans Choice Card Program 
is the confusion over VA's definition of a VA medical facility.
    On November 5, 2014, VA published a regulation which defines a ``VA 
medical facility'' as a VA hospital, a VA community-based outpatient 
clinic (CBOC), or a VA health care center. VA further stated that they 
``* * * included these types of VA facilities because they provide 
medical care or hospital services that may be provided as part of the 
program.'' \2\ However, there is no consideration as to whether the VA 
medical facility can provide veterans the needed medical services. In 
many cases, veterans are being referred from a CBOC to the parent VA 
medical center which can be over 150 miles further away without taking 
into account travel times and road conditions. This can significantly 
impact veterans' ability to maintain their appointments, which directly 
impact VA's appointment cancellation and no-show rates.
---------------------------------------------------------------------------
    \2\ Federal Register, 79 FR 65571: https://www.Federalregister.gov/
articles/2014/11/05/2014-26316/expanded-access-to-non-va-care-through-
the-veterans-choice-program
---------------------------------------------------------------------------
    During The American Legion's Commander's testimony, Senator Moran 
(KS) emphasized the importance of providing non-VA health care to 
veterans. Senator Moran calculated the distance from Helm's home in 
Norcatur, Kansas to the nearest VA medical facilities.

          ``It's 267 miles to Denver, 287 miles to Wichita, 287 miles 
        to Omaha, and 100 miles to the nearest Community Based 
        Outpatient Center (CBOC). I appreciate the perspective that 
        this commander will bring about caring for all veterans 
        regardless of where they live in the United States.'' \3\
---------------------------------------------------------------------------
    \3\ Commander to Congress: We face `historic opportunities'-
February 26, 2015: http://www.legion.org/washingtonconference/226220/
commander-congress-we-face-%E2%80%98historic-opportunities%E2%80%99

    On March 27, 2015, American Legion National Commander Mike D. Helm 
praised the Senate for unanimously passing an amendment to remind the 
Department of Veterans Affairs that they have the obligation to provide 
non-VA care when it cannot offer that same treatment at one of its own 
facilities that is within 40-miles driving distance from a veteran's 
home. According to Commander Helm, the call to VA to clarify its stance 
was embodied in an amendment, offered by Senator Jerry Moran, R-Kansas, 
to Senate's budget Resolution 11.\4\
---------------------------------------------------------------------------
    \4\ Congress.gov: https://www.Congress.gov/bill/114th-congress/
senate-concurrent-resolution/11

          ``This bill simply calls on VA to do what it already had the 
        authority to do,'' National Commander Michael D. Helm said. 
        ``Intent is everything. When Congress passed the Veterans 
        Access, Choice and Accountability Act last year, it once again 
        gave VA this authority. I say `once again' because VA had this 
        authority on a fee-basis long before the Choice act. Despite 
        this authority, VA was trying to find loopholes by denying 
        people who were near VA clinics that did not offer the needed 
        services the right to use an alternative provider.''
          ``We applaud Senator Jerry Moran for writing this amendment, 
        even though it's a shame that such a common sense measure needs 
        to be spelled out repeatedly for VA. We call on the House to 
        pass this measure quickly and send an unmistakable message to 
        VA.''

       efforts to ensure adequate training of va staff regarding 
                           the choice program
    The American Legion is concerned that due to improper training, 
some VA medical centers are not offering Choice access to their 
veterans at all. On a recent visit last month to examine the healthcare 
system in Puerto Rico, The American Legion discovered VHA staff had 
been mistakenly telling veterans that no one on the island is eligible 
because there is no medical facility that is further than 40 miles from 
anywhere on the island. The American Legion also heard scattered 
reports of similarly confusing directives about the program from some 
other medical facilities, in contradiction to what was being expressed 
by VA Central Office directives. This can only occur when employees are 
not adequately trained, which can result in miscommunication. Better 
understanding of programs and communication between VA and the veterans 
they serve is essential to the success of any VA program.
    In a recent Senate Veterans Affairs hearing, Debra Draper Director 
of Health Care Issues Government Accountability Office (GAO) stated:

        ``the veterans health care system was added to the high-risk 
        list due to ambiguous policies and inconsistent processes; 
        inadequate oversight and accountability; information technology 
        challenges (such as outdated systems that lack 
        interoperability); inadequate training for VA staff; and 
        unclear resource needs and allocation priorities.'' \5\
---------------------------------------------------------------------------
    \5\ GAO Testimony: Veterans Affairs Health Care, Addition to GAO's 
High Risk List and Actions Needed for Removal, GAO-15-580T http://
www.gao.gov/assets/670/669927.pdf

    Since the implementation of the Veterans Choice Program, The 
American Legion has seen and heard from veterans Nation-wide, that 
there was a complete lack of training and knowledgeable staff regarding 
the program requirements, rules and regulations. The American Legion is 
concerned when the Veterans Choice program was rolled out, VA did not 
issue an official national policy to its health care facilities 
outlining VA's policy, procedures and program requirements. However, 
---------------------------------------------------------------------------
VHA Directive 6330, ``Directives Management System'' (DMS), states:

          ``It is VHA policy that VHA Central Office, VHA Veterans 
        Integrated Service Networks (VISNs) and their field facilities 
        establish and maintain a DMS, in accordance with this VHA 
        Directive and corresponding Handbooks, regarding ``directive'' 
        and ``non-directive'' media. Directive documents contain 
        mandatory policies, procedures, and, as indicated, oversight 
        monitoring requirements.''

    This directive establishes mandatory VHA policies for VHA 
Programs.\6\ According to VHA Directive 6330, VHA can issue two types 
of policy Directives, a VHA DMS Directive or a VHA Temporary Directive.
---------------------------------------------------------------------------
    \6\ Department of Veterans Affairs VHA Directive 6330- December 15, 
2008: http://www.va.gov/vhapublications/ViewPublication.asp?pub_ID=1814
---------------------------------------------------------------------------
    A VHA DMS directive establishes mandatory VHA policies for VHA 
Programs. These Directives must be recertified every 5 years. A VHA 
Temporary Directive defines policy that has a limited time span or new 
program policies that will be incorporated in DMS Handbooks at a later 
date. A Temporary Directive carries an expiration date and is not 
issued for longer than 5 years. If the policies prescribe short-term 
requests for reports, data collection or implement special short-term 
programs, they are issued as temporary directives with a 5-year (or 
less) expiration date specified.
    The lack of VHA policies and procedures outlining the Veteran 
Choice program requirements and procedural guidance for VHA field 
facilities staff to follow has significantly undermined VA's ability to 
educate and provide appropriate guidance to its employees. These 
policies and procedures when implemented are often used by VA staff to 
properly train employees throughout the health care system.
    The American Legion believes when a new law is passed implementing 
new program requirements or changes, VHA should be required to provide 
Veterans Service Organizations and Congress a detail communication plan 
outlining it plans to implement the changes required by the law to 
include plans for staff training. In additional to this information, 
VHA should include the timeframe for issuing any VHA Directives and 
Handbooks.
  increasing access to care by streamlining va's multiple non-va care 
         programs into a single integrated purchased care model
    VA spent over $5.5 billion on Non-VA care in Fiscal Year 2014. Many 
of VA's non-VA purchase care programs are managed by different program 
offices within VHA, and purchases for Contract Nursing Home, VA's State 
Home, Home Health, Dental and Bowel and Bladder services are handled 
outside of VA's Fee-Basis Claims Processing System. VA needs to 
streamline its current purchase care model to incorporate all of VA's 
non-VA care programs into a single integrated purchase care model.
    Congress should also look into streamlining VA's non-VA care 
statutory authorities. Currently, there are eight statutory 
authorities, including the new Choice Act. Once Congress gets a better 
sense of how the Choice Program will play out over the next couple of 
years, the eight statutory authorities should be consolidated and 
rationalized incorporating lessons learned from the Choice Program.
                               conclusion
    As always, The American Legion thanks this subcommittee for the 
opportunity to explain the position of the 2.3 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. We appreciate the Legion's willingness to 
follow up and come to all our hearings and give us the 
testimony we need. Thank you, Roscoe.
    Darin Selnick, senior veterans affairs advisor for the 
Concerned Veterans of America.

 STATEMENT OF DARIN SELNICK, SENIOR VETERANS AFFAIRS ADVISOR, 
                 CONCERNED VETERANS FOR AMERICA

    Mr. Selnick. Chairman Isakson, Ranking Member Blumenthal, 
and Members of the Committee, I appreciate the opportunity to 
testify at today's hearing on the implementation and future of 
the Veterans Choice Program, and thank you for your leadership 
in ensuring that veterans get the quality health care they 
deserve.
    Today true choice in veterans health care remains out of 
reach for most veterans: like a mirage in the desert, as you 
move closer it recedes into the horizon. Our assessment is that 
the Choice Program has been unsuccessful and is not a long-term 
solution. As such, we have developed recommendations for 
comprehensive reform through the Fixing Veterans Health Care 
Taskforce.
    The current rules pertaining to choice do not represent 
real choice. Instead they require veterans to obtain approval 
from VA before they are able to make a choice. Veterans should 
not have to ask for permission to select their health care 
provider.
    The VA implementation of the Choice Program has been a 
failure. For example, the Associated Press reported, ``GAO says 
Veterans' Health Care Costs a `High Risk' for Taxpayers....The 
number of medical appointments that take longer than 90 days to 
complete has nearly doubled,'' and that only 37,000 medical 
appointments have been made through April 11.
    Last fall, CVA commissioned a national poll of veterans. 
The results showed that 90 percent favored efforts to reform 
veterans health care, 88 percent said eligible veterans should 
be given the choice to receive medical care from any source 
they choose, and 77 percent said they want more choices even if 
it involved higher out-of-pocket costs.
    Choice and competition are the bedrock of today's health 
care system. We choose our health care insurance, provider, and 
primary care physician. Health care organizations provide 
quality and convenient care because they know if they do not, 
they will lose their patients to someone else. In order to fix 
the VA health care system, both choice and competition must be 
injected into the system.
    VA recognized this when they said ``evaluate options for a 
potential reorganization that puts the veteran in control of 
how, when, and where they wish to be served.'' Unfortunately, 
veterans do not have that control and will not under the 
current VA health care system.
    VA needs to have a 2015 health care system. We believe the 
Veterans Independence Act is the road map and solution to do 
just that. This road map was developed by the Fixing Veterans 
Health Care Task Force, co-chaired by Dr. Bill Frist, former 
Senate Majority Leader; Jim Marshall former Congressman from 
Georgia; Avik Roy of the Manhattan Institute; and Dr. Mike 
Kussman, former VHA Under Secretary.
    We developed ten veteran-centric core principles that serve 
as the guiding foundation. These ten principles included: the 
veteran must come first, not the VA; veterans should be able to 
choose where to get their health care; refocus on, and 
prioritize, veterans with service-connected disabilities and 
specialized needs; VA should be improved, and thereby 
preserved; grandfather current enrollees; and VHA needs 
accountability.
    To implement these principles, we laid out three major 
categories of reform and nine policy recommendations.

    First, restructure the VHA as an independent, Government-
chartered nonprofit corporation, empowered to make decisions on 
personnel, IT, facilities, partnerships, and other priorities.
    Second, give veterans the option to seek private health 
care coverage with their VA funds.
    Third, refocus veterans' health care on those with service-
connected injuries--VA's original mission.
    The key policy recommendations included: separate the VA's 
payer and provider functions into separate institutions; 
establish the Veterans Health Insurance Program as a program 
office in VHA; establish the Veterans Accountable Care 
Organization, VACO, as a nonprofit Government corporation fully 
separate from VA; preserve the traditional VA health benefit 
for enrollees who prefer it, while offering an option to seek 
coverage from the private sector through three plan choices:

          VetsCare Federal: Full access to the VACO integrated 
        health care system with no changes to benefits or cost 
        sharing;
          VetsCare Choice: Select any private health care 
        insurance plan legally available in their State, 
        financed through premium support payments; and
          VetsCare Senior: Medicare-eligible veterans can use 
        their VA funds to defray the costs of Medicare premiums 
        and supplemental coverage.

    Last, create a VetsCare Implementation Commission, to 
implement the Veterans Independence Act.

    We retained the services of HSI to conduct a fiscal 
analysis. HSI determined a properly designed version of these 
policy recommendations is likely to be deficit neutral.
    In order to fix veterans health care, we must always keep 
in mind what General Omar Bradley said in 1947: ``We are 
dealing with veterans, not procedures; with their problems, not 
ours.''
    That is why we urge you to use the Veterans Independence 
Act road map to develop the legislative blueprint that will fix 
and be the future of veterans health care. Veterans must be 
assured that they will be able get the access, choice, and 
quality health care they deserve. In this mission, failure is 
not an option.
    We are committed to overcoming all and any obstacles that 
stand in the way of achieving this important mission, and we 
look forward to working with the Chairman, Ranking Member, and 
all Members of this Committee to achieve this shared mission.
    Thank you.
    [The prepared statement of Mr. Selnick follows:]
 Prepared Statement of Darin Selnick, Senior Veterans Affairs Advisor, 
                     Concerned Veterans for America
    Thank you Chairman Isakson, Ranking Member Blumenthal, and Members 
of the Committee. I appreciate the opportunity to testify at today's 
hearing on the implementation and future of the veterans choice program 
and your leadership in ensuring that veterans get timely and convenient 
access to the quality health care they deserve.
    Nearly as we approach the one year anniversary of the passage of 
the Veterans Access, Choice and Accountability Act of 2014, true choice 
in veteran's health care remains out of reach for most veterans: like a 
mirage in the desert, as you move closer it recedes into the horizon. 
Our assessment is that the choice program has been unsuccessful and is 
not a tenable long-term solution. As such, we have developed 
recommendations for comprehensive reform through the Fixing Veterans 
Health Care Taskforce.
    The current rules pertaining to choice do not represent real 
choice. Instead they require veterans to obtain approval from VA before 
they are able to make a choice. Veterans should not have to ask for 
permission to select their health care provider.
    The VA implementation of the choice program has been a failure. For 
example, the Associated Press has reported that ``GAO says Veterans' 
Health Care Costs a ``High Risk'' for Taxpayers'' \1\ and that ``The 
number of medical appointments that take longer than 90 days to 
complete has nearly doubled.'' \2\ They have also noted that ``only 
37,648 medical appointments have been made through April 11.'' \3\
---------------------------------------------------------------------------
    \1\ Associated Press. ``GAO: Veterans' Health Care Cost a 'High 
Risk' for Taxpayers'' New York Times Online. ABC News Online, 11 Feb. 
2015. Web. 11 Feb. 2015.
    \2\ Associated Press. ``VA Makes Little Headway in Fight to Shorten 
Waits for Care'' ABC News Online. ABC News, 09 April 2015. Web. 
09 April 2015.
    \3\ Associated Press. ''$10B Veterans Choice program more underused 
than previously thought'' Stars and Stripes Online. Starr and Stripes, 
23 April 2015. Web. 23 April 2015.
---------------------------------------------------------------------------
    Last fall, Concerned Veterans for America commissioned a national 
poll of veterans. The results of that poll showed that 90% favored 
efforts to reform veteran health care, 88% said eligible veterans 
should be given the choice to receive medical care from any source they 
choose and 77% said give veterans more choices even if it involved 
higher out-of-pocket costs.
    Choice and competition are the bedrock of today's health care 
system. We choose our health care insurance, provider and primary care 
physician. Health care organizations provide quality, timely and 
convenient care, because they know if they don't, they will lose their 
patients to someone else. In order to fix the VA health care system, 
both choice and competition must be injected into system.
    Secretary Bob McDonald's VA has recognized this in a fact sheet 
wherein they promise to ``evaluate options for a potential 
reorganization that puts the Veteran in control of how, when, and where 
they wish to be served.''\4\ Unfortunately veterans do not have that 
control and will not under the current VA health care system.
---------------------------------------------------------------------------
    \4\ ``The Road to Veterans Day 2014 Fact Sheet'' http://
www.blogs.va.gov/VAntage/wp-content/uploads/2014/09/
RoadToVeteransDay_FactSheet_Final.pdf, accessed May 5, 2015.
---------------------------------------------------------------------------
    The outmoded VA health care system that currently exists needs to 
become a 2015 health care system. We believe the Veterans Independence 
Act is the roadmap and solution to do just that. This roadmap is part 
of the Fixing Veterans Health Care report developed by a Bi-Partisan 
Policy Taskforce co-chaired by Dr. Bill Frist, former Senate Majority 
Leader, Jim Marshall former Congressman from Georgia, Avik Roy of the 
Manhattan Institute and Dr. Mike Kussman, former VHA Under Secretary.
    The solutions and actions recommended are designed to provide 
concrete reforms to dramatically improve the delivery of health care to 
the 5.9 million unique veteran patients served by the VA.
    We first developed ten veteran-centric core principles that serve 
as the guiding foundation. These ten principles are:

     1. The veteran must come first, not the VA
     2. Veterans should be able to choose where to get their health 
care
     3. Refocus on, and prioritize, veterans with service-connected 
disabilities and specialized needs
     4. VHA should be improved, and thereby preserved
     5. Grandfather current enrollees
     6. Veterans health care reform should not be driven by the budget
     7. Address veterans' demographic inevitabilities
     8. Break VHA's cycle of ``reform and failure.''
     9. Implementing reform will require bipartisan vision, courage and 
commitment
    10. VHA needs accountability

    In order to implement these principles, we laid out three major 
categories of reform and proposed nine policy recommendations.

          First, restructure the VHA as an independent, government-
        chartered non-profit corporation, fully empowered to make 
        difficult decisions on personnel, I.T., facilities, 
        partnerships, and other priorities.
          Second, give veterans the option to seek private health 
        coverage with their VA funds.
          Third, refocus veterans' health care on those with service-
        connected injuries--which was the VA's original mission.

    These reforms are carried out by nine policy recommendations:

    1. Separate the VA's payor and provider functions into separate 
institutions, the Veterans Health Insurance Program (VHIP) and the 
Veterans Accountable Care Organization (VACO).
    2. Establish the Veterans Health Insurance Program (VHIP) as a 
program office in the Veterans Health Administration.
    3. Establish the Veterans Accountable Care Organization (VACO) as a 
non-profit government corporation fully separate from Department of 
Veterans Affairs.
    4. Institute a VA Medical Center realignment procedure (MRAC) 
modeled after the Defense Base Realignment and Closure Act of 1990 
(BRAC).
    5. Require the VHA to report publicly on all aspects of its 
operation, including quality, safety, patient experience, timeliness, 
and cost-effectiveness.
    6. Preserve the traditional VA health benefit for current enrollees 
who prefer it, while offering an option to seek coverage from the 
private sector through three plan choices.

          VetsCare Federal: Full access to the VACO integrated health 
        system with no changes to benefits or cost-sharing
          VetsCare Choice: Select any private health insurance plan 
        legally available in their state, financed through premium 
        support payments.
          VetsCare Senior: Medicare-eligible veterans can use their VA 
        funds to defray the costs of Medicare premiums and supplemental 
        coverage (``Medigap'').

    7. Reform health insurance coverage for future veterans.
    8. Offer veterans' access to the Federal Long Term Care Insurance 
Program.
    9. Create a VetsCare Implementation Commission, to implement the 
Veterans Independence Act.

    To understand the fiscal impact of these policy recommendations, we 
retained the services of Health Systems Innovation Network to conduct a 
fiscal analysis. HSI determined a properly designed version of these 
policy recommendations is likely to be deficit neutral.
    In order to fix veterans health care we must always keep in mind 
what General Omar Bradley said in 1947: ``We are dealing with veterans, 
not procedures; with their problems, not ours.''
    That is why we urge you to use the Veterans Independence Act road 
map to develop the legislative blueprint that will fix and be the 
future of veterans health care. Veterans must be assured that they will 
be able get the access, choice and quality health care they deserve. In 
this mission, failure is not an option.
    CVA and the co-chairs of the taskforce are committed to overcoming 
any and all obstacles that stand in the way of achieving this important 
mission. We look forward to working with the chairman, ranking member, 
and all Members of this Committee to achieve this shared mission.

    Chairman Isakson. Thank you, Mr. Selnick.
    Let me just interject at this point. I have read--and I am 
sure Sen. Blumenthal has, too--the Fixing Veterans Health Care 
Report that your organization did, which is an outstanding 
report. I think it basically could be called ``Ultimate 
Choice,'' if I am not mistaken. Wouldn't that be a good name 
for it?
    Mr. Selnick. Yeah, that would be a good name.
    Chairman Isakson. Your representation of the changes are 
probably far more broad than some on the panel might look for 
us to do in terms of preserving what VA does without giving 
choice, but I want to commend you on that and let you know we 
are watching what you recommended. We are taking a look at it. 
We are trying to make sure--Senator Blumenthal and I have one 
underlying principle: we are going to make Veterans Choice 
work. It is not an option that it might work; if it does not 
work, we will think of something else. We are going to make it 
work. How it works is going to take the very best ideas and 
input, and your organization's report is one of those that is 
going to help us a lot, as is each stakeholders' input. This is 
going to be a process of evolution as we go, but one thing is 
for sure: we are not just hoping it is going to be over one 
day. We are going to make it happen one way or another.
    Mr. Selnick. Thank you.
    Chairman Isakson. Mr. Violante.

STATEMENT OF JOSEPH A. VIOLANTE, NATIONAL LEGISLATIVE DIRECTOR, 
                   DISABLED AMERICAN VETERANS

    Mr. Violante. Chairman Isakson, Ranking Member Blumenthal, 
and Members of the Committee, on behalf of the DAV and our 1.2 
million members, all of whom were wounded, injured, or made ill 
from their wartime service, thank you for the opportunity to 
testify on the temporary Choice Program. While it is too early 
to reach conclusions about this program, we are beginning to 
see some lessons.
    As of last week, almost 54,000 Choice authorizations have 
been made and 43,000 appointments have been scheduled. By 
comparison, about 6 million appointments are completed monthly 
inside VA and another 1.3 million appointments are completed 
outside VA using non-VA care programs other than Choice.
    A number of reasons likely contributed to this lower than 
expected utilization of the Choice Program. Since last spring, 
VA has used every available resource to increase its capacity 
to provide timely care that may have shifted some of the demand 
away from Choice.
    VA was slow in rolling out Choice cards and in educating 
its staff. We also have high-risk troubling reports of a 
significant lag time between when a VA clinician determines a 
veteran is eligible for Choice and third-party administrators 
can see this authorization in their system.
    Finally, some veterans simply prefer to go to VA. The 
bottom line is we do not have adequate information today and 
need to take steps to gather sufficient data before making any 
permanent changes. We must study private sector wait times and 
access standards, coordination of care, patient satisfaction, 
and health outcomes for those who use the Choice Program.
    Mr. Chairman, recently DAV, VFW, the Legion, IAVA, and 
others wrote to congressional leaders to extend the mandate of 
the Commission on Care to allow at least 12 months for its 
interim report and at least an additional 6 months for the 
final report. We called on Congress to refrain from making any 
permanent, systemic changes until after the Commission 
submitted its recommendations and then allowed sufficient 
opportunity for stakeholders and Congress to engage in a debate 
worthy of the men and women who served.
    For more than 150 years, going back to President Lincoln's 
solemn vow--``to care for him who shall have borne the 
battle''--the VA health care system has been the embodiment of 
our national promise, yet today some are proposing to make it 
just another choice among health care providers, while others 
are calling for the VA to be downsized or eliminated. But for 
millions of veterans wounded, injured, or ill from their 
service, there is only one choice for receiving the specialized 
care they need, and that is a healthy and robust VA.
    Although the VA provides comprehensive medical care to more 
than 6 million veterans, the VA's primary mission is to meet 
the unique, specialized health care needs of the Nation's 3.8 
million service-connected disabled veterans. If VA was 
downsized or eliminated, the private health care system would 
be unable to provide timely access to the specialized care they 
require. Even if all disabled veterans were dispersed into 
private care, they would only be 1.5 percent of the total adult 
population. Does anyone truly believe that a market-based 
civilian health care system would provide the focus and 
resources necessary for this small minority in the way VA does?
    Mr. Chairman, while it is far too soon to settle on how to 
reform the VA health care system and integrate non-VA care, we 
can at least outline a framework for rebuilding, restructuring, 
restructuring, realigning, and reforming the VA health care 
system.
    First, rebuild and sustain VA's capacity by recruiting, 
hiring, and retaining sufficient clinical staff, and by funding 
a long-term strategy to repair and maintain VA facilities.
    Second, restructure the many non-VA care programs into a 
single integrated extended care network which incorporates the 
best features of fee-based, ARCH, PC3, and other purchased care 
programs and provide this program with a separate and 
guaranteed funding source.
    Third, realign and expand VA health care to meet the 
diverse needs of future generations of veterans, including 
women veterans. This should include new urgent-care nationwide 
with extended operating hours.
    Fourth, reform VA management by redesigning its performance 
and accountability report and restructuring its budget process 
by implementing a PPBE system, which stands for planning, 
programming, budgeting, and execution.
    Mr. Chairman, this framework is not intended to be a final 
or detailed plan, nor could it be part of one at this point. 
But it offers a new pathway toward a future that truly fulfills 
Lincoln's promise.
    That concludes my testimony, and I would be happy to answer 
any questions.
    [The prepared statement of Mr. Violante follows:]
    Prepared Statement of Joseph A. Violante, National Legislative 
                  Director, Disabled American Veterans
    Chairman Isakson, Ranking Member Blumenthal, and Members of the 
Committee: On behalf of the DAV and our 1.2 million members, all of 
whom were wounded, injured or made ill from their wartime service, 
thank you for the opportunity to testify before the Committee today to 
discuss the implementation of the temporary ``choice'' program 
authorized by the Veterans Access, Choice and Accountability Act of 
2014 (VACAA), and how it fits into the larger issue of providing high-
quality, timely care to America's veterans.
    It has been just over a year since the waiting list scandal 
exploded in Phoenix; nine months since passage of the VACAA; six months 
since the first ``choice `` cards were mailed out; and just over three 
months since the mailing of nearly 9 million ``choice'' cards was 
substantially completed. While it is still far too early to reach 
significant conclusions about whether this program will achieve its 
intended purpose, we are now beginning to see the outlines of early 
lessons from this grand experiment.
    Today's hearing is an appropriate opportunity to examine the 
challenges VA has faced in implementing this unprecedented, temporary 
program, to explore some of the reasons for the lower-than-expected 
usage, and to consider changes and improvements to the program so that 
it can achieve its short-term goal of providing timely and convenient 
access for veterans seeking health care, and to start the discussion 
about how best to reform the VA health care system so that we never 
face this kind of access crisis again.
              origins of the va health care access crisis
    Mr. Chairman, in order to evaluate the success of the ``choice'' 
program, it is important to understand the underlying causes of the 
access crisis that precipitated enactment of VACAA. While the scandal 
that enveloped VA last year certainly involved mismanagement in Phoenix 
and at other VA sites, we have no doubt that that principle reason 
veterans were put on waiting lists was the mismatch between funding 
available to VA and demand for health care from VA by veterans, a 
phenomenon that is hardly new. In fact, this mismatch has been 
regularly reported to Congress by DAV, our partners in the Independent 
Budget (IB), and others for more than a decade.
    In May 2003, the bipartisan Presidential Task Force to Improve 
Health Care for Our Nation's Veterans examined chronic VA funding 
shortages in the wake of growing waiting lists at VA, which had 
resulted in the suspension of new enrollments for nonservice-connected 
veterans. At that time, 236,000 enrolled veterans were already waiting 
more than six months without any appointments--a much higher number 
than during last year's crisis. However, despite clear evidence of 
inadequate funding, successive Administrations and Congresses failed to 
adequately increase VA funding to address the heart of the mismatch, or 
to end the moratorium on new enrollment. Unfortunately, that mismatch 
continues today.
    Mr. Chairman, over the past decade, the IB has recommended billions 
of dollars to support VA health care that the Administration did not 
request and Congress never appropriated. Over that period, we and our 
partner veterans service organizations have presented testimony to this 
Committee and others detailing shortfalls in VA's medical care and 
infrastructure budgets. In fact, in the prior 10 VA budgets, the amount 
of funding for medical care requested by the Administration and 
ultimately provided to VA by Congress was more than $7.8 billion less 
than the amounts we recommended. Over the past five budgets, the IB 
recommended $4 billion more than VA requested and Congress approved. 
For this fiscal year, FY 2015, the IB had recommended over $2 billion 
more than VA requested or Congress appropriated.
    The other major contributor to VA's access crisis is the lack of 
sufficient physical space to examine and treat all veterans in need of 
care. Over the past decade, the amount of funding requested by VA for 
major and minor construction to sustain its medical centers and 
clinics, compared to the amount appropriated by Congress, has been more 
than $9 billion less than what the IB estimated was needed to provide 
VA sufficient space to deliver timely, high-quality care. Over the past 
five years alone, that shortfall was more than $6.6 billion, and for 
this year the VA budget request is more than $2.5 billion less than the 
IB recommendation.
    Mr. Chairman, we are all aware that funding levels for VA have 
risen every year for more than a decade, and we appreciate that fact. 
However, the demand--as measured not only by enrollees and users, but 
more importantly by the number of appointments--has risen even faster. 
In addition, the cost of care is rising not just due to medical 
inflation, but also because of the increased cost of specialized care 
provided to so many veterans being treated for traumatic physical and 
mental injuries, many from the ongoing wars in Iraq and Afghanistan. 
When VA does not have enough physicians, nurses and other clinical 
staff, and when VA's facilities are not being properly maintained, 
repaired, replaced or constructed, veterans will be required to wait 
for care. It was under these circumstances that DAV and many others 
supported the emergency VACAA legislation last year, but our support 
was predicated on a number of very important conditions and principles.
               background of the temporary choice program
    First, DAV and all major veterans organizations agreed that the 
most important priority was to ensure that any veteran waiting for 
necessary medical care was taken care of, whether that care was 
provided inside VA or in some form of care in the community. Second, in 
setting up the new ``choice'' program, Congress established a separate 
and mandatory funding source to ensure that VA would not need to make a 
choice between providing care to veterans who chose to receive their 
care at VA and paying for those who chose to access care through the 
non-VA ``choice'' program. In fact, one of the primary reasons that 
VA's purchased care program had struggled to meet veterans' needs was 
the fact that it lacked a separate, mandated funding stream. Going 
forward, Congress and VA must ensure that funding for non-VA extended 
health care, however that program might be reformed, remains separate 
from funding for the VA health care system.
    Another principle that was central to our support for the 
``choice'' program was the coordination of care, which is vital to 
quality. Care coordination helps ensure that the veteran's needs and 
preferences for health services and information sharing are met in a 
timely manner. VA's use of third party administrator (TPA) networks 
helps to assure that medical records are returned to VA, that quality 
controls are in place on clinical providers, and that neither VA nor 
veterans are improperly invoiced for these services. VA's use of the 
TPA structure has many similarities with VA's Patient Centered 
Community Care (PC3) program. Through PC3, VA obtains standardized 
health care quality measurements, timely documentation of care, cost-
avoidance with fixed rates for services across the board, guaranteed 
access to care, and enhanced tracking and reporting of VA expenditures. 
While the use of TPAs for non-VA care does not guarantee that 
coordination of care and health outcomes will meet the same standard as 
an integrated VA health care system, it remains an important component 
of how non-VA care should be provided in the future.
    Finally, and most importantly, while the VACAA established a 
temporary ``choice'' program to address an immediate need for expanded 
access, it also included a significant infusion of new resources to 
rebuild VA's capacity to provide timely health care. As we have 
testified to this Committee and others, the underlying reason for VA's 
access crisis last year was a long-term, systemic lack of resources to 
hire enough physicians, nurses and other clinical professionals, along 
with a lack of usable treatment space to meet the demand for care by 
patients. Regardless of how both VA and non-VA care health care 
programs are reformed in the future, unless adequate--and separate--
funding is provided for both, veterans will likely continue to have 
unacceptable access problems.
                  challenges facing the choice program
    According to VA, as of last week, 53,828 Choice authorizations for 
care had been made to date by the TPAs and 43,044 actual appointments 
for care had been scheduled. By comparison, according to VA, about 6.4 
million appointments are completed each month inside the VA health care 
system, and another 1.3 million appointments are completed outside VA 
each month using non-VA care programs other than the ``choice'' 
program, including the fee-basis, contract care, PC3, ARCH and other 
programs.
    A number of reasons likely contributed to this lower than expected 
utilization of the ``choice'' program. On the positive side, since the 
most recent access crisis gained attention last spring, the VA has used 
every available resource to increase its capacity to provide timely 
care at facilities across the Nation. VA health care facilities 
expanded their days and hours of operation; mobile health units were 
deployed to areas with higher-than-average demand; and VA made greater 
use of existing non-VA care authorities. VA's ability to expand its 
capacity on a temporary basis may have shifted some of the demand away 
from ``choice.''
    It is also very clear that VA was slow in rolling out ``choice'' 
cards and in educating its own staff about how and when the ``choice'' 
program could be utilized. In part this was due to the extremely 
aggressive implementation schedule in the law. However, even today we 
are hearing reports of VA personnel who do not understand the 
``choice'' program or its role among non-VA care authorities. As a 
result, some veterans who are eligible for ``choice'' are not being 
properly referred to the program, and some veterans who are eligible 
for non-VA care programs, such as PC3, are inappropriately being 
referred to ``choice.'' Both of these factors may have deterred some 
veterans from exploring their eligibility for the ``choice'' program. 
VA must do a better job of ensuring that all VA employees understand 
the proper role and relationship of all non-VA care programs, including 
``choice.''
    We also continue to hear troubling reports of a significant lag 
time between when a VA clinician determines a veteran is eligible for 
``choice'' and the time that the TPA receives this authorization in its 
system. In some cases, we have been told up to 30 days or more could be 
required. VA must determine the cause of such unacceptable delays, 
whether IT related or not, and ensure that there is a rapid and 
seamless handoff from VA to the appropriate TPA. Such delays certainly 
might dampen veteran interest in using the ``choice'' program.
    Another possible contributing factor for the low utilization is the 
restrictive manner in which the 40-mile distance criterion mandated by 
VACAA was implemented. The bill established two primary access 
standards to determine when and which veterans would be authorized to 
use the new ``choice'' program: those who would have to wait longer 
than 30 days or travel more than 40 miles for VA care. Unfortunately, 
due to cost and scoring implications, the 40-mile standard was crafted, 
interpreted and implemented in a way that was more restrictive than 
logic and common sense would dictate, although VA has now revised that 
criterion in part.
    As was clearly stated in the report accompanying the law, the 
determination of whether a veteran resided more than 40 miles from the 
nearest VA medical facility was based on a geodesic measurement, 
essentially the distance in a straight line from point-to-point, or 
``as the crow flies.'' Fortunately, following further discussions 
between VA and Congress, this distance has been revised so that the 
calculation of 40 miles is now done by the shortest driving distance in 
road miles. This change has expanded the number of veterans eligible 
under the distance standard and could lead to some increase in 
utilization.
    The second inequity in the distance criteria is that the 
measurement is taken from the veteran's residence to the nearest VA 
medical facility regardless if that facility can actually provide the 
service required by the veteran. As has been acknowledged by the law's 
primary sponsors, these restrictive standards for measuring 40 miles 
were due to the high cost estimates received from the Congressional 
Budget Office (CBO) during the bill's consideration, and a need to 
lower that projected cost. As we have testified previously, such a 
measurement makes no logical sense and should be changed in the 
temporary ``choice'' program.
    However, it is important to note that creating a system that will 
allow VA to immediately determine whether a service is or is not 
available at a VA and/or private facility, or will be available within 
a 30-day window, could be very difficult. Furthermore, VA has indicated 
that the number of veterans who may live farther than 40 miles from a 
VA medical center, where most VA specialty care is delivered, could 
rise to as high as 3.9 million, which could significantly expand the 
utilization of the program.
    Finally, another reason so few veterans have used the ``choice'' 
program may be because they simply prefer to go to the VA. Even with 
the ``choice'' card, some veterans with non-urgent medical needs may 
prefer the VA physician, treatment team, or facility they know, rather 
than look for a new, unknown provider in the private sector. The bottom 
line is that we simply do not have sufficient data to determine exactly 
which factors are behind the low utilization rates at this point. 
Therefore, it is absolutely essential to take steps now so that we have 
sufficient data and analysis before it is the appropriate time to 
consider permanent changes to the VA health care system.
                    learning from the choice program
    The ``choice'' program is an unprecedented experiment, launched 
during a crisis in order to address a short-term emergency need. 
Therefore, it is incumbent upon us to ensure that the proper 
measurements and metrics are in place in order to evaluate the success 
of the program and learn the appropriate lessons. Unfortunately, a 
number of important questions and metrics at present are not being 
studied.
    The ``choice'' program was principally intended to address the 
unacceptable waiting times facing veterans to receive care within the 
VA by allowing them to choose private care providers. As such, it is 
imperative that VA measure the time that veterans wait for 
appointments, including follow-up appointments, when authorized to go 
outside the VA. It is also necessary to understand what the waiting 
times, or access standards, are for the private sector, both in general 
and in detail. After all, the waiting time for a routine dermatology 
appointment should not be the same as that for a serious cardiac 
condition.
    One of the key questions, and one of the primary contributing 
factors to the waiting list scandals, was unrealistic access standards 
in place at VA, which were subsequently repealed. It is important for 
VA to develop new and realistic standards, regardless of the future 
structure of non-VA care, not only for waiting times, but also for 
travel distances. As we and others have pointed out in prior hearings, 
the distance that is reasonable to expect a younger veteran in 
relatively good health to travel may be significantly different from 
what a 90-year old World War II veteran with serious physical 
disabilities would be required to travel. Furthermore, these standards 
must be clinically based to ensure the best health outcomes, not 
randomly set for financial or political reasons.
    Mr. Chairman, given the importance of determining appropriate 
access standards, we would recommend that Congress authorize a 
comprehensive and independent study be performed to review the access 
standards used in the private sector, and to make recommendations for 
such standards for the VA health care system.
    In order to properly evaluate the ``choice'' program, VA must also 
collect, study and analyze data on patient satisfaction and health 
outcomes for those who use private providers through the ``choice'' 
program. VA needs to establish baseline data from which it can compare 
satisfaction for those who use ``choice,'' those who use other non-VA 
care programs, and those who use VA care. Measuring health outcomes may 
prove more challenging, given that it takes many years before true 
outcomes are known; however, since this is the ultimate measure of 
success, VA must begin to explore appropriate research, analysis and 
metrics that could be implemented now in order to help with such 
analysis in the future.
    Another key area that must be evaluated is the coordination of care 
for veterans who go outside the VA, both through the ``choice'' program 
and other non-VA care authorities. Over the next couple of years, 
veterans may find themselves receiving care inside VA as well as 
outside, and VA must be able to determine how well that care is 
coordinated through the various programs. It is imperative that VA 
carefully monitor how and what kind of medical information is 
transmitted back and forth between VA and non-VA providers.
          the congressionally-mandated ``commission on care''
    In addition to the temporary three-year ``choice'' program and the 
investment of new resources in the VA health care system, the VACAA 
also requires the creation of a ``Commission on Care'' to study and 
make recommendations for long-term improvements to best deliver timely 
and high quality health care to veterans over the next two decades. 
Specifically, the law requires that members of this Commission be 
appointed not later than one year after the date of enactment of Public 
Law 113-146, which would be no later than August 7, 2015. The 
President, Majority and Minority Leaders of the Senate, Speaker and 
Minority Leader of the House, will each appoint three members of the 
Commission, with the President designating the Chairman.
    Under the law, once a majority of appointments is made, the 
Commission must hold its first meeting within 15 days, and then it is 
provided only 90 days to produce an interim report with both findings 
and recommendations for legislative or administrative actions, and then 
only 90 additional days to submit a final report.
    Mr. Chairman, last month, DAV, PVA, VFW, The American Legion, IAVA 
and a number of other VSOs wrote to Senate and House leaders to call 
for extending the mandate of this Commission to allow at least 12 
months before the interim report is due, and at least six additional 
months before the final report is presented to Congress. In our jointly 
signed letter, we argued that, ``* * * 90 days does not provide nearly 
sufficient time for a newly constituted Commission of 15 individuals--
each with their own unique background, experience and understanding of 
the current VA health care system--to comprehensively examine all of 
the issues involved, to conduct and review sufficient research and 
analysis, and to discuss, debate and reach agreement on specific 
findings and recommendations that could change how health care will be 
delivered to millions of veterans over the next twenty years.''
    In addition, we called on Congress to refrain from taking any, ``* 
* * permanent, systemic changes * * * until after the Commission has 
had sufficient opportunity to consider how best to deliver health care 
to veterans for the next two decades, submitted its recommendations, 
and then allowed sufficient opportunity for other stakeholders and 
Congress to engage in a debate worthy of the men and women who 
served.''
    By gathering essential data and performing crucial research over 
the next year or so, the Commission, Congress and other stakeholders 
would be able to work together to ensure that veterans receive the 
health care they have earned. However, it is also important that before 
we engage in a debate about how to structure both VA and non-VA care 
programs, we gain a consensus about the proper role and responsibility 
of the VA.
                the principle mission of va health care
    One hundred and fifty years ago, only a month before the Civil War 
ended, President Abraham Lincoln stood on the East Front of the U.S. 
Capitol to make his Second Inaugural Address, in which he made a solemn 
promise on behalf of the Nation ``* * * to care for him who shall have 
borne the battle, for his widow, and his orphan * * *'' Those words 
which are engraved on the entrance of the Department's building here in 
Washington, DC, were spoken just one day after Lincoln signed 
legislation to create the very first Federal facility devoted 
exclusively to the care of war veterans, which ultimately evolved into 
today's VA health care system.
    Since that date, leaders of Congress and Presidents of all parties 
have been united in their bipartisan support of a robust Federal health 
system to care for veterans. But after a very difficult year filled 
with a waiting list scandal and a health care access crisis--which 
resulted in the resignation of a sitting VA Secretary--there is now 
discussion about how and whether to keep that promise to the men and 
women who served. While we certainly agree that change and reform are 
needed at the VA, we have a sacred obligation to ensure that America 
never abandons Lincoln's promise.
    While the VA health care system has long been the embodiment of our 
national promise, some are now proposing to make it just another 
``choice'' among all health care providers, while others are calling 
for VA to be downsized or eliminated altogether. For millions of 
veterans wounded, injured or made ill from their service, their only 
``choice'' for receiving the specialized care they need is a robust VA.
    Although the VA today provides comprehensive medical care to more 
than 6.5 million veterans each year, the VA system's primary mission is 
to meet the unique, specialized health care needs of service-connected 
disabled veterans. To accomplish this mission, VA health care is 
integrated with a clinical research program and academic affiliation 
with well over 100 of the world's most prominent schools of health 
professions to ensure veterans have access to the most advanced 
treatments in the world.
    Furthermore, in order to achieve the best health outcomes, it is 
necessary to treat the whole veteran, and that is exactly what the VA 
is organized to do. VA provides comprehensive, holistic and 
preventative care that results in demonstrably improved quality, higher 
patient satisfaction and better health outcomes for the veterans it 
serves. For those veterans who rely on VA for care, those who have 
suffered amputations, paralysis, burns and other injuries and 
illnesses, we believe they deserve the ``choice'' to receive all or 
most of their care from the VA.
    If the VA health care system ends up being downsized as a result of 
allowing all veterans to leave VA through expanded ``choice'' programs, 
and certainly if VA is eliminated outright, some or all of the 3.8 
million service-connected disabled veterans who rely on VA for their 
health care today would no longer have a ``choice.'' Instead, they 
would end up with fractured care, receiving care through a combination 
of VA and non-VA providers.
    And if VA care was no longer an option for seriously disabled 
veterans, would the private health care system be able to provide 
timely access to the specialized care they require? While the private 
sector also treats many of the same conditions that VA specializes in--
including amputations, paralysis, severe burns, blindness, Traumatic 
Brain Injury (TBI) and even Post Traumatic Stress Disorder (PTSD)--
there is simply no comparison with the frequency, severity and 
comorbidities routinely seen by VA physicians. Even if all 3.8 million 
disabled veterans were dispersed into private care, they would still 
make up just 1.5% of the adult patient population. Does anyone truly 
believe that a market-based civilian health system would provide the 
focus and resources necessary to advance the level of care for this 
small minority in the way that a dedicated, Federal VA system would?
          setting a new framework for reforming va health care
    While it is far too soon to settle on how to reform the VA health 
care system and integrate non-VA care, we must begin to establish at 
least a road map to guide us. We propose a new framework to meet the 
needs of the next generation of America's veterans based on rebuilding, 
restructuring, realigning and reforming the VA health care system.
    First, we must rebuild and sustain VA's capacity to provide timely, 
high quality care. That must begin with a long-term strategy to 
recruit, hire and maintain sufficient clinical staff at all VA 
facilities. In addition, VA must gain the commitment and funding to 
implement a long-term strategy to repair, maintain and expand as 
necessary, usable treatment space to maximize access points where 
veterans receive their care. VA must buildupon its temporary access 
initiatives implemented last year by permanently extending hours of 
operations around the country at CBOCs and other VA treatment 
facilities to increase access for veterans outside traditional working 
hours. To provide the highest quality care, we must strengthen VA's 
clinical research programs to prepare for veterans' future health care 
needs. In addition, we must sustain VA's academic affiliations to 
support the teaching and research programs and to help support future 
staffing recruitment efforts.
    Second, VA must restructure its non-VA care program into a single 
integrated extended care network. This will require that VA first 
complete the research and analysis related to the ``choice'' program 
discussed above, and allow the Commission on Care to complete its work. 
Then based on research and data, VA must develop an integrated VA 
Extended Care Network which incorporates the best features of fee-
basis, contract care, ARCH, PC3, ``choice,'' and other purchased care 
programs. Congress must provide a single, separate and guaranteed 
funding mechanism for this VA Extended Care program. To make this 
program effective, VA must complete the research discussed above 
related to private sector access standards in order to establish new 
clinically-based access policy that is informed, objective and based on 
rigorously established objective evidence. In addition, VA must develop 
an appropriate and effective decision mechanism that ensures that 
veterans are able to access VA's Extended Care Network whenever 
necessary. In addition, there must be a new, transparent, and dedicated 
review and appeal process capable of making rapid decisions to ensure 
veterans have timely access based on their medical needs.
    Third, we must realign and expand VA health care services to meet 
the diverse needs of future generations of veterans, beginning with VA 
expanding urgent care clinics with extended operating hours. These 
services would be delivered by dedicated doctors and nurses in existing 
VA facilities, or smaller urgent care clinics strategically located in 
new locations around the country, such as in shopping malls. The VA, 
like any large health care system should provide walk-in capability for 
urgent care needs of eligible veterans. In addition, VA must extend 
access to care further through enhanced web-based and tele-medicine 
options to reach even the most remote and rural veterans. And with 
veteran demographics continuing to change, VA must eliminate barriers 
and expand services to ensure that women veterans have equal access to 
high quality, gender-specific, holistic, preventative health care. VA 
must also rebalance its long-term supports and services to provide 
greater access to home- and community-based services to meet current 
and future needs, including expanding support for caregivers of 
veterans from all generations.
    Fourth, VA must reform its management of the health care system by 
increasing efficiency, transparency and accountability in order to 
become a veteran-centric organization. VA can begin by developing a new 
patient-driven scheduling system, including web and app-based programs 
that allow veterans to self-schedule health care appointments. To 
support responsible organizational behavior, VA should redesign its 
Performance and Accountability Report (PAR) to establish new metrics 
that are focused on veteran-centric outcomes with clear transparency 
and accountability mechanisms. VA's budgeting process would benefit by 
implementing a more transparent and accountable system known as PPBE, 
which stands for planning, programming, budgeting and execution. This 
approach is already working for the Departments of Defense and Homeland 
Security, and there is legislation pending to bring the same to VA. 
Finally, VA must hold all of its employees--from the Secretary to 
receptionists--to the highest standards, while always balancing the 
need to make the VA an employer of choice among Federal agencies and 
the private sector.
    Mr. Chairman, the framework outlined here certainly is not intended 
to be a final or detailed plan for reforming VA, nor could it be at 
this point with so much unknown, but it offers a new pathway that could 
lead toward a future that would truly fulfill Lincoln's promise. DAV is 
convinced that the VA health care system has been, can be and must be 
the centerpiece of how our Nation delivers health care to America's 
wounded, injured and ill veterans.
    While the VA faces serious challenges, the answer is not to abandon 
it, or to destroy it. Instead, we must honor the service and sacrifices 
of our Nation's heroes by creating a modern, high-quality, accessible 
and accountable VA health care system. Anything less breaks Lincoln's 
promise, ignores our sacred national obligation, and leaves our 
veterans to fend for themselves in a private sector health system ill 
prepared to care for them.

    That concludes my testimony and I would be pleased to address 
questions from you or other Members of the Committee.

    Chairman Isakson. Thank you very much.
    Mr. Rausch?

    STATEMENT OF BILL RAUSCH, POLITICAL DIRECTOR, IRAQ AND 
                AFGHANISTAN VETERANS OF AMERICA

    Mr. Rausch. Chairman Isakson, Ranking Member Blumenthal, on 
behalf of Iraq and Afghanistan Veterans of America and our 
nearly 400,000 members and supporters, thank you for the 
opportunity to share our views with you at today's hearing.
    As you know, IAVA was one of the leading veterans 
organizations involved in the early negotiations on the 
Veterans Access to Choice and Accountability Act as it was 
being drafted and the breadth of its final language was being 
debated. It is a highly complex law that the Department is 
working hard to effectively implement in order to ensure 
veterans are not left waiting for unacceptable lengths of time 
to receive health care services.
    My remarks will focus on the experiences of utilizing the 
VA Choice Program IAVA members have recently reported to us by 
way of survey research. Additionally, I will provide 
recommendations Congress and the Secretary must consider in 
order to get this program operating at the height of its 
potential. These recommendations include: legislative 
clarification of the eligibility criteria for accessing the 
Choice Program, strengthening training guidelines for VA 
schedulers charged to explain the eligibility criteria to 
veterans, and continued active engagement with veterans 
organizations to more broadly identify a comprehensive strategy 
and plan for delivering non-VA care in the community moving 
forward.
    In examining the current criteria for determining which 
veterans are eligible to use the Choice Program--those who must 
wait longer than 30 days for an appointment and those who live 
more than 40 miles from a VA medical facility--more statutory 
clarity is required.
    Veterans are all too frequently reporting they are unsure 
if they are eligible for Choice, and VA in some cases has been 
inconsistent in communicating whether or not a veteran can 
access it in individual cases.
    Based on our most recent survey data, over one-third of our 
members have reported they do not know how to access the Choice 
Program. This is compounded by reports that in some cases VA 
schedulers are not explaining eligibility for Choice while 
offering appointments outside the 30-day window. The Secretary 
and VA senior leadership must continue to engage VA front-
facing scheduling personnel with ongoing and evolving training 
standards, so when veterans call the VA they receive consistent 
and clear understanding of their eligibility for the choice 
program. The VA has improved in this area, but with so many 
veterans still confused about eligibility, training criteria 
must be strengthened and maintained.
    Congress should aid in the Department's implementation 
efforts by clarifying in law that the 40-mile criteria must 
relate specifically to the VA facility in which the needed 
medical care will be provided. This frustrating example that 
continues to surface is one of a veteran that requires 
specialized care in a VA facility outside the 40 miles, but 
through strict interpretation of the current VACAA law is 
ineligible because a local CBOC or other facility may be 
geographically near the veteran's address, notwithstanding that 
facility cannot provide the required care.
    One of our members illustrated this recently by stating, 
``Because there is a CBOC in my area, I was denied. The clinic 
does not provide any service or treatment I need for my primary 
service-connected disability. The nearest medical center in my 
network is 153 miles away.''
    Congress must provide needed clarity and work with VA--and 
it sounds like you are--to eliminate cases like those just 
described.
    There have been encouraging developments related to the 
implementation of the Choice Program, specifically VA's action 
to step up and fix the initial ineffectiveness of the 40-mile 
rule calculations, as it related to the geodesic distance 
versus driving distance. That regulatory correction was much 
needed, and as a result there are hundreds of thousands of new 
veterans who are now eligible for the Choice Program. On behalf 
of our members, we applaud Secretary Bob McDonald and Deputy 
Secretary Sloan Gibson for their leadership in listening to 
their customers, our veterans, to make that change happen.
    VHA's statistics on Choice utilization among the veteran 
population as of this month state there have been nearly 59,000 
authorizations for care and nearly 47,000 appointments. This 
data verifies that veterans out there are using the program, 
and the VA has been making progress to implement what is 
clearly a complex yet important program.
    IAVA is committed to remaining actively engaged with the 
veterans making use of the Choice Program so we can keep 
current on the veteran experience. We are mindful that with 
thousands of appointments being concluded, there will 
inevitably be thousands of unique experiences, and we want to 
gauge those levels of satisfaction with our members for this 
program. The satisfaction of veterans utilizing Choice, the 
cost of the care purchased outside of VA facilities, and 
understanding issues that come up along the way will allow us 
to better realize a veteran-focused strategy and plan for non-
VA care in the community moving forward.
    We appreciate the hard work of this Congress, the VA, and 
the veteran community and recognize we have to stay focused on 
improving veteran health care delivery in the short and long 
term. Robust discussion on the scope and cost of maintaining 
health care networks is complicated and multilayered, which is 
why our last recommendation is simple and something we have 
touched on before: We must continue to work together and keep 
communication active between all relevant stakeholders.
    Mr. Chairman, we sincerely appreciate your Committee's hard 
work in this area, your invitation to allow me to testify 
again, and we want you to know we stand ready to assist this 
Congress and our Secretary to achieve the best results for the 
Choice Program now and in the future. We look forward to taking 
your questions.
    Thank you.
    [The prepared statement of Mr. Rausch follows:]
    Prepared Statement of Bill Rausch, Political Director, Iraq and 
                    Afghanistan Veterans of America
    Chairman Isakson, Ranking Member Blumenthal, and Distinguished 
Members of the Committee: On behalf of Iraq and Afghanistan Veterans of 
America (IAVA) and our nearly 400,000 members and supporters, thank you 
for the opportunity to share our views with you at today's hearing 
Assessing the Promise and Progress of the Choice Program.
    IAVA was one of the leading veterans organizations involved in the 
early negotiations on the Veterans Access to Choice and Accountability 
Act (VACAA), as it was being drafted and the breadth of its final 
language was debated. This is a highly complex law that the Department 
is working hard to effectively implement in order to ensure veterans 
are not left waiting for unacceptable lengths of time to receive health 
care services.
    My remarks will focus on the experiences of utilizing the VA Choice 
Program IAVA members have recently reported by way of survey research. 
Additionally, I will provide recommendations Congress and the Secretary 
must consider in order to get this program operating at the height of 
its potential. These recommendations include: legislative clarification 
of the eligibility criteria for accessing the Choice program, 
strengthening training guidelines for VA schedulers charged to explain 
the eligibility criteria to veterans, and continued active engagement 
with veteran organizations to more broadly identify a comprehensive 
strategy and plan for delivering Non-VA care in the community moving 
forward into the future.
    In examining the current criteria for determining which veterans 
are eligible to use the Choice Program, those who must wait longer than 
30 days for an appointment and those who live more than 40 miles from a 
VA medical facility, more statutory clarity is required. Veterans are 
all too frequently reporting they are unsure if they are eligible for 
choice and VA has, in some cases, been inconsistent in communicating 
whether or not a veteran can access it in individual cases.
    Based on our most recent survey, over 1/3rd of IAVA members have 
reported they do not know how to access the Choice program. This is 
compounded by reports that in some cases VA scheduling personnel are 
not explaining eligibility for choice to veterans and are then offering 
appointments ``off the grid'' of the 30 day standard--sometimes much 
later.
    The Secretary and VA Senior Leadership must continue to engage VA 
front-facing scheduling personnel with ongoing and evolving training 
standards, so when veterans call the VA, they receive consistent and 
clear understanding of their eligibility for the Choice program. The VA 
has improved in this area but with so many veterans still confused 
about choice eligibility--nearly 7 months after the program's birth--
training criteria must be strengthened and maintained.
    Congress should aid in the Department's implementation efforts by 
clarifying in law that the 40-mile criteria must relate specifically to 
the VA facility in which the needed medical care will be provided. The 
frustrating example that continues to surface is one of a veteran that 
requires specialized care in a VA facility outside of 40 miles, but 
through strict interpretation of the current VACAA law, is ineligible 
for participation because a local CBOC or other facility may be 
geographically near the veteran's address, notwithstanding that 
facility cannot provide the required care. One of our members 
illustrated one of these cases with the following statement: ``Because 
there is a CBOC in my area I was denied. The clinic doesn't provide any 
service or treatment I need for my primary service-connected 
disability. [The] nearest medical center in my network is 153 miles 
away.'' Congress must provide much-needed clarity and work with VA to 
eliminate cases like those just described.
    There have been encouraging developments related to the 
implementation of the Choice Program, specifically, the VA's action to 
step up and fix the initial ineffectiveness of the 40mile rule 
calculations under regulation, as it related to geodesic distance vs. 
driving distance. That regulatory correction was much needed and as a 
result there are hundreds of thousands of new veterans eligible for the 
Choice program. On behalf of our members we applaud Secretary Bob 
McDonald's leadership for listening to his customers, our veterans, to 
make that change happen.
    VHA's statistics on choice utilization among the veteran population 
as of this month state there have been nearly 58,863 authorizations for 
care and nearly 47,000 appointments. This data verifies that veterans 
out there are using the program and the VA has been making progress to 
implement what is clearly a complex and historic mandate relating to 
the furnishment of veteran health care now and in years to come.
    IAVA is committed to remaining actively engaged with the veterans 
making use of Choice care so we can keep current on the veteran 
experience. We are mindful that with thousands of appointments for care 
being concluded, there will inevitably be thousands of unique 
experiences we want to know about to gauge the satisfaction with this 
program. The satisfaction of the veteran utilizing Choice, the cost of 
the care purchased outside of VA facilities and understanding issues 
that come up along the way, will allow us to better identify the scope 
and role the concept of choice plays in the future.
    We appreciate the hard work of Congress, the VA, and the veteran 
community and recognize we have to stay focused on improving veteran 
healthcare delivery in the short and long-term. Robust discussion on 
the scope and cost of maintaining healthcare networks is complicated 
and multi-layered, which is why our last recommendation is simple: we 
must continue to work together and keep communication active between 
all relevant stakeholders.

    Mr. Chairman, we sincerely appreciate your Committee's hard work in 
this area, your invitation to allow me to testify before you again, and 
we want you to know we stand ready to assist Congress and Secretary Bob 
McDonald to achieve the best results for the Choice program now and in 
the future.
    I am happy to answer any questions you may have.

    Chairman Isakson. Thank you very much.
    Mr. Fuentes?

  STATEMENT OF CARLOS FUENTES, SENIOR LEGISLATIVE ASSOCIATE, 
 NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE 
                         UNITED STATES

    Mr. Fuentes. Chairman Isakson, Ranking Member Blumenthal, 
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 the Veterans Choice Program.
    Before I begin, I just want to say that VFW opposes VA's 
change to the way veterans choose to use the Veterans Choice 
Program. Veterans must have the opportunity to explore their 
private sector options before rejecting their VA appointments. 
This change is a bureaucratic convenience that will negatively 
affect veterans' experiences.
    The VFW continues to play an integral part in identifying 
new issues the Veterans Choice Program faces and recommending 
reasonable solutions. Yesterday, we published our second report 
evaluating this important program, which made 13 
recommendations on how to ensure it accomplished its intended 
goal of expanding access to health care for America's veterans. 
Our initial report identified a gap between the number of 
veterans who were eligible for the program and those who were 
given the opportunity to participate.
    Our second report has found that VA has made progress in 
addressing this gap. Thirty-five percent of second survey 
participants who believed they were eligible were given the 
opportunity to participate. That is a 60-percent increase from 
our initial survey.
    For 30-dayers, participation hinges on VA schedulers 
informing them of their eligibility. The lack of systemwide 
training for front-line staff has resulted in veterans 
receiving dated or misleading information. VA must continue to 
improve its processes and training to ensure that all veterans 
who are eligible for the program are given the opportunity to 
participate.
    Our second report also found a decrease in patient 
satisfaction among veterans who received non-VA care. This has 
been a direct result of veterans not being able to find viable 
options in the private sector.
    The 40-mile standard used to establish geographic-based 
eligibility for the Veterans Choice Program was based on 
eligibility for TRICARE Prime. However, there is a distinct 
difference between the veterans population and the military 
population. Thirty-six percent of veterans enrolled in VA 
health care live in rural areas. Thus, measuring the distance 
servicemembers travel to military treatment facilities and 
using that same standard to measure distance traveled by 
veterans to VA medical facilities does not appropriately 
account for the diversity of the veterans population.
    Our second report found that a commute-time standard based 
on population densities would more appropriately reflect the 
travel burden veterans face when accessing VA health care. 
Regardless, Congress and VA must commission a study to 
determine the most appropriate geographic-based standard for 
health care furnished by VA.
    As the future of the VA health care system and its 
purchased care model are evaluated, it is important to 
recognize that the quality of care veterans receive from VA is 
significantly better than what is available in the private 
sector.
    Moreover, many of VA's capabilities cannot be duplicated or 
properly supplemented by private sector health care--especially 
for combat-related mental health, blast injuries, or service-
related toxic exposures, just to name a few. With this in mind, 
VA must continue to serve as the initial touch point and 
guarantor of care for all enrolled veterans. Although 
enrollment in the VA health care system is not mandatory, and 
despite more than 75 percent of veterans having other forms of 
health care coverage, more than 6.5 million of them choose to 
rely on their earned VA health care benefits and are by and 
large satisfied with the care they receive.
    Moving forward, the lessons learned from the Veterans 
Choice Program should be incorporated into a single systemwide 
non-VA care program with veteran-centric and clinically driven 
access standards, which afford veterans the opportunity to 
receive private sector health care if VA is unable to meet 
those standards. More importantly, non-VA care must supplement 
the care that veterans receive from VA medical facilities, not 
replace it.
    Ideally, VA would have the capacity to provide timely 
access to direct care for all the veterans it serves. We know, 
however, that VA medical facilities continue to operate at 115 
percent capacity and may never be able to build enough capacity 
to provide direct care to all the veterans that they serve.
    VA must continue to expand capacity based on staffing 
models for each health care specialty and patient density 
thresholds. However, VA cannot rely on building new facilities 
alone. When thresholds are exceeded, VA must use leasing and 
sharing agreements with other health care systems and 
affiliated hospitals when possible and purchase care when it 
must.
    Mr. Chairman, this concludes my testimony. I am prepared to 
answer any questions you 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 thank you for 
the opportunity to present the VFW's thoughts on the current state of 
the Veterans Choice Program.
    More than a year ago, whistleblowers in Phoenix, Arizona, exposed 
rampant wrong-doing at their local Department of Veterans Affairs (VA) 
hospital through which veterans were alleged to have died waiting for 
care, while VA employees manipulated waiting lists and hid the truth. 
In the months that followed, similar problems were exposed across the 
country, and the ensuing crisis forced the Secretary of Veterans 
Affairs and many top Veterans Health Administration (VHA) deputies to 
resign.
    As the crisis unfolded, the VFW intervened by offering direct 
assistance to veterans receiving VA health care; publishing a detailed 
report, ``Hurry up and Wait,'' which made 11 recommendations on ways to 
improve VA's health care system; working with Congress to pass 
significant reforms; and working directly with VA to implement reforms.
    In August 2014, Congress passed and the President signed into law 
the Veterans Access, Choice, and Accountability Act of 2014 (VACAA) 
with the support and insight of the VFW. This critical law commissioned 
the Veterans Choice Program, which now offers critical non-VA health 
care options to veterans who are unable to receive VA health care 
appointments in a timely manner (30-dayers) or who live more than 40 
miles from the nearest VA medical facility (40-milers).
    In an effort to gauge veterans' experiences and evaluate how the 
program was performing, the VFW commissioned a series of surveys and 
compiled an initial report on how the program performed during the 
first three months of its implementation. The VFW's initial report 
included six specific recommendations regarding participation, wait 
time standard, geographic eligibility, and non-VA care issues that 
needed to be addressed. Fortunately, the Veterans Choice Program has 
been a top priority for VA and Congress. As a result, several issues 
that accompanied the roll-out have been resolved.
    The VFW continues to play an integral part in identifying new 
issues the Veterans Choice Program faces and recommending reasonable 
solutions to such issues. Yesterday, we published the second report on 
the implementation of the Veterans Choice Program. All our reports can 
be found on our VA Health Care Watch Website, www.vfw.org/VAWatch. Our 
second Veterans Choice Program report found that the implementation of 
the program has improved. However, more works remains. The second 
report includes 12 recommendations regarding several issues that must 
be addressed to ensure the program accomplishes its intended goal of 
improving access to high quality health care for America's veterans.
                           participation gap
    The VFW's initial report identified a gap between the number of 
veterans who were eligible for the Veterans Choice Program and those 
afforded the opportunity to receive non-VA care. Our report found that 
VA has made progress in addressing this gap. However VA must continue 
to improve its processes and training to ensure all veterans who are 
eligible for the Veterans Choice Program are given the opportunity to 
receive timely access to health care in their communities.
    Thirty-eight percent of second survey participants who believed 
they were eligible for the program were offered the opportunity to 
receive non-VA care. This is a 12 percent increase from our initial 
survey. Yet, the VFW continues to hear from veterans who report that 
the schedulers they speak to are unaware of the program or are unsure 
how it works.
    For 30-dayers, participation continues to hinge on VA schedulers 
informing veterans that they are eligible for the program. The lack of 
system wide training for schedulers and frontline staff has led to a 
reliance on local facility driven training, which VA admits has 
resulted in inconsistent training. To mitigate this issue, VA has 
developed system wide training for all VHA staff, which it intends to 
implement later this month. VA will also conduct specialized training 
for scheduling staff to ensure they are familiar with the Veterans 
Choice Program's business processes and know how to properly serve 
eligible veterans.
    The VFW applauds such efforts, but we are concerned that training 
will not have the desired outcome if VA fails to implement proper 
quality assurance processes. For example, the program's contractors, 
Health Net and TriWest, monitor their call center representatives to 
ensure they provide accurate information about the program. Doing so 
allows them to identify call center representatives who need remedial 
training. They also utilize quality assurance mechanisms to improve 
training to ensure veterans receive high quality customer service. VA 
can benefit from adopting similar processes to ensure VA staff provide 
high quality customer service and adhere to training objectives.
    The VFW acknowledges that the participation gap will not be 
eliminated with training alone. Regardless of how well VA trains its 
staff, human error will lead to veterans not being properly informed of 
their opportunity to receive health care in their communities. To 
address this issue, VA implemented the Veterans Choice Program Outreach 
Campaign to contact more than 100,000 veterans who were initially 
eligible for the Veterans Choice Program as 30-dayers. The program 
concluded in February and resulted in VA staff transferring 
approximately 30 percent of the veterans it contacted to the Veterans 
Choice Program call centers. VA would benefit from implementing an 
automated letter or robocall system that would continue the work of the 
Veterans Choice Program Outreach Campaign.
    The VFW's second Veterans Choice Program report also found a 
decrease in patient satisfaction among veterans who received non-VA 
care through the Veterans Choice Program. Feedback from veterans shows 
that the primary reason for the decline in satisfaction has been a 
direct result of their inability to find viable private sector health 
care options. Many veterans have reported that they chose to keep their 
VA appointments because they were unable to find private sector 
providers closer than their VA medical facilities, or their 
appointments at VA were earlier than what they were able to obtain in 
the private sector.
    Health Net and TriWest have candidly acknowledged that scheduling 
veterans within 30 days is unattainable in certain instances. The 
reasons differ case by case, but are generally associated with a lack 
of availability in the private sector or a delay in receiving the VA 
medical documentation needed to schedule an appointment. For example, 
TriWest reports that in many communities wait times for a new 
dermatology patient are often 60 or even 90 days out. This indicates 
that health care in the private sector is not widely available for all 
specialties, especially when veterans seek veteran-specific care that 
does not exist in the private sector, such as spinal cord injury and 
disorder care, polytrauma treatment and services, and specialized 
mental health care. For example, a veteran from Elko, Nevada, who is 
eligible for the Veterans Choice Program as a 40-miler told us she 
wanted to explore mental health care options in her community, but was 
unable to find a mental health care provider able to treat veterans, so 
she decided it was best to continue receiving telemental health care 
from VA.
    The VFW is concerned that local facilities may also contribute to 
the delay or inability to schedule non-VA care appointments through the 
Veterans Choice Program. Our report found that some local VA medical 
facilities were slow to provide the medical documentation needed to 
schedule appointments through the program. We also found that some VA 
medical facilities were slow to process requests for follow-up 
treatment through the program. For example, a veteran in 
Fredericksburg, Virginia, was authorized to receive back surgery 
through the program, but his appointment was delayed because the 
Richmond VA Medical Center had not sent the medical documentation his 
private sector doctor needed to schedule his surgery. After receiving 
surgery, the veteran was prescribed postoperative physical therapy. 
Unfortunately, he was unable to schedule his physical therapy 
appointments until the Richmond VA Medical Center approved the 
treatment. It took nearly a month for his non-VA physical therapy to be 
approved.
    Furthermore, the VFW is concerned with the lack of private sector 
providers opting to participate in the program. Due to reimbursement 
rates and requirements to return medical documentation, some private 
sector providers have been reluctant to participate in the Veterans 
Choice Program network when they have a preexisting agreement with a VA 
medical facility. Such agreements often allow for higher reimbursement 
rates or do not require the non-VA provider to return medical 
documentation. The VFW is concerned that the reliance on local 
agreements has limited Health Net's and TriWest's ability to build 
capacity by expanding their Choice networks. VA must issues clear 
directives on how to properly utilize purchase care programs and 
authorities to ensure local medical facilities do not prevent the 
Veterans Choice Program's contractors from expanding their networks to 
better serve veterans.
                           wait time standard
    The VFW's initial report highlighted several flaws in the way VA 
calculates wait times. Unfortunately, our second report found that this 
flawed metric is still being used. VA's wait time standard still 
requires veterans to wait unreasonably long and remains susceptible to 
data manipulation.
    VA's current wait time standard requires a veteran to wait at least 
30 days beyond the date a veteran's provider deems clinically 
necessary, or clinically indicated date, before being considered 
eligible for the Veterans Choice Program. This means that a veteran who 
is told by his or her VA doctor that he or she needs to be seen within 
60 days is only eligible for the Veterans Choice Program if he or she 
is scheduled for an appointment that is more than 90 days out, or more 
than 30 days after the doctor's recommendation. The VFW remains 
concerned that veterans' health may be at risk if they are not offered 
the ability to receive care within the timeframe their VA providers 
deem necessary, regardless of whether the care is received through a VA 
medical facility or the Veterans Choice Program.
    Furthermore, VA's wait time standard is not aligned with the 
realities of waiting for a VA health care appointment. Forty-five 
percent of the 1,464 survey respondents who have scheduled an 
appointment since November 5, 2014 reported waiting more than 30 days 
for their appointment. Yet, VA data on more than 70.8 million pending 
appointments between November 1, 2014 and April 15, 2015 shows that 
fewer than seven percent of such appointments were scheduled beyond 30 
days of a veteran's preferred date.
    VA's preferred date metric is a figure determined subjectively by 
VA schedulers when veterans call to make an appointment. The VFW has 
long disputed the validity of this figure, which we outlined in detail 
in our initial report. Our second Veterans Choice Program report found 
that veterans who perceive they wait longer than 30 days for care, 
regardless of how long VA says they wait, are more likely to be 
dissatisfied than veterans who perceive that VA has offered them care 
in a timely manner. Patient satisfaction is fundamental to the delivery 
of health care. Ultimately, satisfaction is based on how long veterans 
perceive they wait, not how VA estimates wait times. VA must take 
veterans' perceptions into account when establishing standards to 
measure how long veterans wait for their care.
    The VFW and our Independent Budget (IB) partners have continued to 
call for VA to develop reasonable wait time standards based on acuity 
of care and specialty. Arbitrary system-wide deadlines do not fully 
account for the difference between the types and acuity of care 
veterans receive from VA. Waiting too long for health care can be the 
difference between life and death for veterans with urgent medical 
conditions. For example, a veteran with severe Post Traumatic Stress 
Disorder should not be required to wait 30 days for treatment.
    As part of the 12 independent assessments being conducted by the 
MITRE Corporation, et al., which were mandated by section 201 of VACAA, 
the Institute of Medicine (IOM) is currently evaluating if VA's wait 
time standard is an appropriate system wide access standard. The VFW 
will monitor IOM's work to ensure its recommendations serve the best 
interest of veterans.
                         geographic eligibility
    On March 24, 2015, VA announced the most significant change that 
has occurred since the Veterans Choice Program was created. VA listened 
to the concerns of countless veterans and changed the way it calculated 
distance for the Veterans Choice Program from straight-line distance to 
driving distance. The change went into effect on April 24, 2015 and 
gave nearly 300,000 additional veterans the opportunity to choose 
whether to receive their health care through private sector providers 
or travel to a VA medical facility. The VFW applauds VA for taking the 
initiative and fixing an issue that confused veterans and caused 
frustration.
    However, this change did not address another significant flaw in 
eligibility for the Veterans Choice Program. The VFW continues to hear 
from veterans who report that their local Community-Based Outpatient 
Clinics are unable to provide them the care they need, so VA requires 
them to travel long distances to a VA medical center. In order to 
properly account for the travel burden veterans face when accessing VA 
health care, geographic eligibility for the Veterans Choice Program 
should be based on the calculated distance to facilities that provide 
the care they need, not facilities that are unable to serve them.
    The 40 mile standard was based on eligibility for TRICARE Prime. 
However, there is a distinct difference between the military population 
and the veteran population. According to VA's Office of Rural Health, 
youths from sparsely populated areas are more likely to join the 
military than those from urban areas. During their service, they are 
likely to live near military installations, which often have military 
treatment facilities. However, when they leave military service, 36 
percent of veterans who enroll in the VA health care system return to 
rural areas. Although VA has made an attempt to expand capacity to 
deliver care where veterans live, it has not been able to, nor should 
it in some instances, expand its facilities to cover all veterans. 
Thus, using the same standard to measure distance that servicemembers 
and their families travel to military treatment facilities to measure 
distance traveled by veterans to VA medical facilities, does not 
properly account for the diversity of the veteran population.
    Feedback we have received from veterans indicates that a commute 
time standard based on population density (urban, rural, highly-rural) 
would more appropriately reflect the travel burden veterans face when 
accessing VA health care. However, the VFW recognizes that any 
established standard will be imperfect. Thus, VA must have the 
authority to make clinically based exceptions. Regardless, a study must 
be commissioned to determine the most appropriate geographic 
eligibility standard for health care furnished by the VA health care 
system. IOM is currently evaluating the way VA calculates wait times, 
yet no one has been asked to evaluate whether the 40-mile standard is 
appropriate.
    While changes are made to the Veterans Choice Program, VA must 
fully utilize all of its purchased care programs and authorities, such 
as the Patient-Centered Community Care Program, to ensure veterans have 
timely access to high quality care. The VFW continues to believe that 
veterans should be afforded the opportunity to obtain care closer to 
home if VA care is not readily available, especially when veterans have 
an urgent medical need.
                       va's purchased care model
    The Veterans Choice Program was intended to address the 
inconsistent use of VA's decentralized non-VA care programs and 
evaluate whether national standards for access to non-VA care would 
improve access. The VFW is committed to ensuring such standards serve 
the best interest of veterans who rely on VA for their health care 
needs. Fortunately, the Veterans Choice Program is succeeding in 
improving access to care for thousands of veterans. The problem remains 
that many veterans who are eligible for the program have yet to be 
given the opportunity to receive non-VA care.
    As the future of the Veterans Choice Program and VA's purchased 
care model are evaluated, the VFW believes it is important to recognize 
that the quality of care veterans receive from VA is significantly 
better than what is available in the private sector. In fact, studies 
conducted by the RAND Corporation and other independent entities have 
consistently concluded that the VA health care system delivers higher 
quality health care than private sector hospitals.\1\ Additionally, 
independent studies have also found that delivering VA health care 
services through private sector providers is more costly.\2\
---------------------------------------------------------------------------
    \1\ ``Socialized or Not, We Can Learn from the VA,'' Arthur 
L.Kellermannhttp, RAND Corporation. August 8, 2012, www.rand.org/blog/
2012/08/socialized-or-not-we-can-learn-from-the-va.html.
    \2\ ``Comparing the Costs of the Veterans' Health Care System with 
Private-Sector Costs,'' Congressional Budget Office. December 10, 2014, 
https://www.cbo.gov/publication/49763.
---------------------------------------------------------------------------
    Moreover, many of VA's capabilities cannot be readily duplicated or 
properly supplemented by private sector health care systems--especially 
for issues like combat-related mental health conditions, blast 
injuries, or service-related toxic exposures. With this in mind, the 
VFW believes that VA must continue to serve as the initial touch point 
and guarantor of care for all enrolled veterans. As advocates for the 
creation and continued improvement of the VA health care system, the 
VFW understands that enrollment in the VA health care system is not 
mandatory. Yet, more than 9 million veterans have chosen to enroll and 
6.5 million of them choose to rely on VA for their care, despite 75 
percent of them having other forms of health care coverage. 
Additionally, veterans who have chosen to utilize their earned VA 
health care benefits are by and large satisfied with the care they 
receive.
    The VFW believes that veterans should continue to request a VA 
appointment prior to becoming eligible for non-VA care. This will 
ensure that VA upholds its obligation as the guarantor and coordinator 
of care for enrolled veterans, which includes ensuring the care 
veterans receive from non-VA providers meets department and industry 
safety and quality standards. Doing so allows VA to provide a continuum 
of care that is unmatched by any private sector health care system.
    Moving forward, the lessons learned from this important program 
should be incorporated into a single, system-wide, non-VA care program 
with veteran-centric and clinically driven access standards, which will 
afford veterans the option to receive care from private sector health 
care providers when VA is unable to meet such standards. Such a program 
must also include a reliable case management mechanism to ensure 
veterans receive proper and timely care and a robust quality assurance 
mechanism to ensure system wide directives and standards are met.
    Non-VA care must supplement the care veterans receive at VA medical 
facilities, not replace it. Ideally, VA would have the capacity to 
provide timely access to direct care for all the veterans it serves. We 
know, however, that VA medical facilities continue to operate at 119 
percent capacity, and may never have the resources needed to build 
enough capacity to provide direct care to the growing number of 
veterans who rely on VA for their health care needs.
    VA must continue to expand capacity based on staffing models for 
each health care specialty and patient density thresholds. However, the 
VFW recognizes that in the 21st century, VA cannot rely on building new 
facilities alone. When thresholds are exceeded, VA must use leasing and 
sharing agreements with other health care systems, such as military 
treatment facilities, Indian Health Service facilities, federally-
qualified health centers, and affiliated hospitals when possible and 
purchase care when it cannot.
    To ensure the VA health care system provides veterans the timely 
access to high quality health care they have earned and deserve, VA 
must conduct recurring assessments and future years planning to quickly 
address access, safety, and utilization gaps. The VFW recognizes that 
these improvements will not happen overnight, but veterans cannot be 
allowed to suffer in the meantime. Non-VA care must continue to serve 
as a reliable bridge between full access to direct care and where we 
are now.
    The VFW is committed to working with Congress, VA, our veterans 
service organization partners and other stakeholders to continue 
monitoring changes to the Veterans Choice Program and VA's purchased 
care model; evaluate what is working; identify shortcomings; and work 
toward reasonable solutions.
    A copy of the VFW's second Veterans Choice Program report has been 
sent to the Committee and I kindly request it be included in the 
record.

    Mr. Chairman, this concludes my testimony. I am prepared to take 
any questions you or the Committee Members may have.

    Chairman Isakson. Mr. Fuentes, at the beginning of your 
testimony, you said VA must immediately address--and I could 
not write fast enough to put it down, but I could not find it 
in the printed testimony. What was that very first, right in 
your first two or three sentences?
    Mr. Fuentes. My first statement was regarding the change 
that Dr. Tuchschmidt actually just announced on how veterans 
elect to use the Choice Program. Right now they are scheduled 
an appointment at VA, and if that appointment is beyond 30 
days, then they keep that appointment, and they call TriWest or 
Health Net and explore what their options are in the private 
sector. That means that they are making an informed decision 
when they decide to essentially reject their VA appointment.
    If you change that to having the veteran make the election 
before exploring their private sector options, it is not an 
informed decision and actually leads to veterans, if they go to 
the private sector, having to go to the back of the line and 
restart their VA scheduling process all over again.
    Chairman Isakson. OK. I want to make sure we understand or 
I understand this. I am a veteran that lives more than 40 miles 
from a clinic, so I am eligible for Veterans Choice. You are 
saying I should make the private appointment through TriWest 
and make a VA appointment anyway, and then choose which one I 
want? I should not automatically go to the private provider?
    Mr. Fuentes. For 40-milers, they currently do and I believe 
they should continue to just contact TriWest and Health Net. 
However, for 30-dayers, if VA cannot schedule an appointment 
within 30 days, then they refer me to TriWest. But from talking 
to TriWest for dermatology for example, the average appointment 
is 60 to 90 days. So, now I am choosing between waiting 60 days 
in VA to waiting 90 days in the private sector. I should know 
that the wait time in the private sector is 90 days before 
making that choice.
    Chairman Isakson. OK. Well, Deputy Gibson, will you answer 
this question. If I am a veteran and I am more than 40 miles 
from a clinic and I have got my card, can I automatically call 
TriWest and make an appointment?
    Mr. Gibson. If you are more than 40 miles, yes, sir, you 
can. The example that he is citing is where it is 30 days' wait 
time, and the proposed process would truncate--we were talking 
before, Senator Boozman mentioned about all of the 
administrative material, the clinical information that is being 
sent over. What we are trying to do is to streamline that part 
of the process.
    You know, in this particular case, if the veteran is not 
pleased with the appointment, that process happens within a 
couple of days, and they should be able to come back to VA to 
say, ``I was not able to get a timely appointment,'' or the TPA 
refers the authorization back.
    But it is a consequence of making the change, rather than 
booking the appointment in VA and referring the veteran over to 
the third-party administrator.
    Mr. Fuentes. Mr. Chairman, just to be clear, there are two 
distinct processes--one for 30-dayers and one for 40-milers, 
and I think one of the issues that the proposed change is 
looking to address is no-shows and cancellations. So, when the 
veteran accepts an appointment in the private sector, TriWest 
or Health Net, then tells the local facility this veteran has 
chosen Choice, cancel that appointment; however, currently a VA 
scheduler or a VA staff member has to go and manually cancel 
the appointments. This will prevent that. However, this will 
come at the cost of the veteran's experience.
    Chairman Isakson. That is what I was getting to, because I 
was hearing a potential problem there with two appointments 
being made, one of them not kept, but nobody letting each other 
know which is happening first.
    Mr. Fuentes. There are better ways to address that issue. I 
feel that an automated process could work. Develop a more 
seamless way for TriWest and Health Net to notify VA that the 
veteran has accepted a private sector appointment.
    Chairman Isakson. Now I am going to open a hornet's nest, 
but I am going to go ahead and do it anyway. I had to pay a $30 
penalty for not keeping an appointment back in Atlanta for some 
health care I was getting. I think we cannot put everything on 
the shoulder of TriWest or the VA. If somebody does not do 
their job by letting VA and TRICARE know which appointment they 
are going to keep, I would be the first person to say there 
ought to be a penalty to that person for not keeping the 
appointment, assuming the communication was complete. I know 
there are going to be some people who are not going to like 
that idea, sounding like a co-payment, but practically, it gets 
everybody's attention. If we are going to be more efficient, I 
think everybody has got to be part of the efficiency, including 
the veteran who is getting the benefit. I just wanted to put 
that in there--not to shake a hornet's nest. I thank you for 
raising that issue because that is very helpful.
    Senator Blumenthal?
    Senator Blumenthal. Thanks, Mr. Chairman. You know, we have 
been talking a little bit about how to pay for the Denver cost 
overrun, and----
    Chairman Isakson. We just figured it out. [Laughter.]
    Senator Blumenthal. The Chairman has told me that we just 
figured it out. Now this has been a more productive afternoon 
than you could ever have hoped. [Laughter.]
    I want to thank all of you for thinking through these 
issues in such a constructive and positive way. I was taught as 
a trial lawyer, ``Never ask a question if you do not know what 
the answer is going to be;'' however, I want to ask a kind of 
open-ended question. Given that the Choice Program and the 
Choice and Accountability Act creates this fund of $15 billion, 
my view is that the potential raid on this money and the effort 
to use it as a kind of slush fund to pay for cost overruns in 
Aurora and Orlando and New Orleans and Las Vegas where, in 
fact, in total there have been $2.5 billion in cost overruns is 
a real threat to veterans health care. We can debate how much 
private care should be provided and how much it should be 
through VA facilities, but there is no question, in my mind at 
least, that VA facilities are an essential part of the health 
care mix of opportunities that we provide to our veterans.
    Therefore, to say we are going to defer projects and delay 
construction on those facilities all around the country to pay 
for cost overruns in those medical facilities under new 
construction is a very dangerous threat.
    Let me make that statement and throw it out to you for 
comment.
    Mr. Butler. I would say that our national commander has 
gone on record to state his position that he opposes taking 
money from the Choice Program and using that funding to support 
other means. I have heard a lot of interesting conversations 
today about exploring other options, thinking outside of the 
box. I think that Members of Congress and VA need to do just 
that. They need to put their hats on and to think about what is 
best for veterans. How can we come to a resolution that would 
serve veterans best without taking money from a program that is 
early in its infant stage and then utilizing that funding for 
other means or purposes? If that is an option, that should be 
the last option after you have explored all the other options.
    Mr. Selnick. Let me just chime in. I would agree with him 
in what you are saying in that we do not want that money 
raided. I worked at the VA from 2001 to 2009. I worked in VHA 
for 3 years. Every time there was a management failure, $300 
million IT program, a failure and they scrapped it, there was 
not accountability, and it was just ``Give me more money, give 
me more money.''
    It is like an alcoholic. You cannot give them more alcohol 
if they are failing. You have got to fix it in other ways.
    I always liked, having been in the VA, that you should do 
an audit of the books, because I saw lots of money put off the 
table. Now, maybe that money is not off the table anymore, off 
to the sidelines, but I would sure love to see an audit to see 
what is really there and what is really not.
    Mr. Fuentes. Veterans should not suffer because VA is 
unable to get its house in order. The VA must atone for its 
gross mismanagement. It should find cost savings in this 
program and in other programs in any way it can. Ultimately, 
Congress does have an obligation to ensure VA has the resources 
it needs to complete this project. Additionally, further delay 
and funding uncertainty will only lead to higher cost overruns.
    Mr. Violante. There is no easy answer, and I believe that 
the facilities are necessary and must be completed. Where that 
money comes from is another question, but I think it was said 
it is about veterans, and veterans need to be cared for. 
Congress needs to find the money somewhere to continue these. 
It should never happen again. I think VA should get out of the 
business of building hospitals.
    Mr. Rausch. We would agree in regard to the construction, 
and just more broadly, any and all cost overruns at VA provide 
a high risk of not providing the highest-quality care to 
veterans. That is the bottom lime, whether it is for 
construction or anything else. IAVA supports the Secretary's 
budget request. We also support his request for greater 
flexibility. As I said in front of this Committee in the 
previous hearing, in theory, without greater flexibility to 
move money within those 72-plus line items, in theory, it would 
allow him to move more money back into Choice. We support his 
request for that, but more broadly, we believe Choice is an 
opportunity to better understand how veterans and where 
veterans want to receive the health care that they deserve. 
That, frankly, ties into what I think everyone is talking 
about, which is a strategic plan for coordinated care in the 
community. Care in the community, again, Mr. Chairman, I think 
that was a phrase you used in the previous hearing, and we have 
started to use that because ultimately we believe that whether 
Choice stays in its current form or fashion, we think it is an 
opportunity to better understand the customer, our members, so 
the VA can move forward with a strategic plan to provide the 
best services possible.
    Thank you.
    Senator Blumenthal. Well, I appreciate all of your answers, 
which confirm my views, and the Chairman and I have stated 
those views. The Chairman has stated and I have as well that we 
have alternatives, different options, that we think absolutely 
have to be explored. We look forward to working with you on 
those options and also on this concept of accountability, which 
all of you have mentioned. You heard me talk about it earlier, 
which is includes looking backward, holding people accountable 
who, in effect, are responsible for this nightmarish debacle, 
and also looking forward. I might mention, Mr. Violante, in 
your written testimony you discuss the VA's need to redesign 
its performance and accountability report. You make reference 
to the Department of Homeland Security's similar regiment known 
as planning, programming, budgeting, and execution, PPBE, as a 
possible model. I am sure there are other models as well.
    To your point, Mr. Rausch, I have said that the VA ought to 
be out of the business of construction, that it should be the 
Corps of Engineers or some other agency that takes over this 
function. No disrespect to the VA, but it is not within their 
job description to manage these mammoth, multimillion-dollar, 
in fact, billion-dollar projects on which the future of VA 
health care depends.
    You know, when you and I go to build a house, ordinarily we 
are not our own contractors. Maybe some of you are, but we try 
to get a little professional help to do it. That may be an 
inexact analogy, but for all the Government agencies, not just 
the VA, this should be some professional center of management 
that maximizes resources, reduces costs, makes it energy 
efficient, decides what materials and designs should be 
incorporated.
    I think we have a lot to discuss going forward. I welcome 
your participation, and I thank the Chairman for this hearing. 
Thank you all.
    Chairman Isakson. Thank you, Senator Blumenthal.
    Let me just echo everything that Senator Blumenthal said 
and point out a couple of things.
    Originally, in our first hearings, the VA people who 
testified told us on the 40-mile rule in terms of distance 
driven versus crow flying, that that was going to expand the 
number of people being eligible for VA Choice and was going to 
cost more money.
    Now that we have talked about the care you need and that 
definition, which we are working on, one of the estimates is it 
is going to cost more money than we planned.
    We understand that to go from Point A, which was a disaster 
in Phoenix that led to all the problems that caused Veterans 
Choice, to where we want to go is going to take time, it is 
going to take money, and it is going to take coordination, 
which is where the coordination work comes from. There are 
savings in coordination once you accept a few principles. 
Principle one is that if you use the private sector well and 
the veterans like it and it is an alternative to make the 
veteran system work--it is not a substitute, but in certain 
cases at times it is an alternative--then you are saving the VA 
money in cost; you are getting the private sector investment, 
and you are getting better health care to the veteran.
    I am willing to look at this in a macro sense. We just did 
a budget in the Congress. It is a 10-year budget that balances 
in the tenth year. VA has got some problems. It is going to 
probably take 10 years to financially solve it, but you have 
got to begin that at some point in time.
    Hopefully, as we work through this problem on Denver and 
get the resolution on who builds what and when they build it, 
we also look at it in a macro sense for how we find the savings 
to pay for the changes we need to make. Eventually, we are 
going to have a delivery system that is probably less costly 
than building the bricks and mortar. It is going to take us a 
while to get there.
    With that said, I want to thank all of you for being here. 
Thank you for your service to America, and I appreciate the 
time everybody has given us today.
    [Whereupon, at 5:07 p.m., the Committee was adjourned.]

                            A P P E N D I X

                              ----------                              

               Prepared Statement of Hon. Patty Murray, 
                      U.S. Senator from Washington
    Mr. Chairman, Thank you for holding this hearing. As the daughter 
of a World War II veteran, I believe making sure our country keeps the 
promises we've made to our Nation's heroes should be at the top of our 
list of priorities, all of the time. Taking care of our veterans when 
they come home is a fundamental part of who we are as a nation and we 
must make sure that the Department of Veterans' Affairs (VA) has the 
tools and resources it needs to provide critical care and support. It 
is part of the cost of going to war.
    Ensuring that all veterans receive quality care in a timely manner 
remains a critical issue. The Department must work quickly resolve 
challenges associated with the implementation of the Veterans Access, 
Choice, and Accountability Act. I continue to hear from veterans about 
delays and confusion in getting care through the Choice Program--and 
delays in filling positions created by this legislation. This is very 
concerning to me.
    No doubt, the $5 billion we gave to build and strengthen VA for the 
long-term is making a difference in some areas, but there is much more 
to be done. In my home state of Washington, we are seeing some positive 
effects of this legislation in addressing critical shortages, as 
several VA medical centers have already announced they will hire 
hundreds of new medical care staff. They will also be able to upgrade 
and expand many of the facilities in Washington.
    It is critical that VA uses that $5 billion as it was intended by 
Congress: to hire more providers, create more usable clinical space, 
and improve access to care for veterans. The Department should not be 
diverting this money from those serious needs to make up for the 
failures in constructing the Denver hospital.
    Despite this, low utilization of the Choice Program and increasing 
delays make it clear that it's time to start planning now for what the 
future of non-VA care will look like. The Choice Program was a 
temporary, emergency authority. When it expires, VA needs to have one 
reformed program in place to help veterans access care outside VA in a 
way that complements services provided by VA, provides coordinated care 
with strict quality of care requirements, has consistent processes and 
eligibility rules, and is cost effective. I look forward to working 
with all of you on this important task.
    Finally, I would also like to thank both panels of witnesses for 
testifying at this hearing. Your hard work is very important for us as 
we work to make sure there are adequate resources to provide veterans 
the benefits and care they have earned.
                                 ______
                                 
 Second Report on Veterans Choice Program Submitted by the Veterans of 
                   Foreign Wars of the United States

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