Pharmacy Co-payments (formerly collected in theHealth Services Improvement Fund -- HSIF). In FY2002, Congresscreated a new fund (Health Services Improvement Fund) to collect increases inpharmacy copayments (from $2 to $7 for a 30-day supply of outpatient medication)that went into effect on February 4, 2002. The Consolidated AppropriationsResolution, 2003 ( P.L.108-7 ) granted VA the authority to consolidate the HSIF withMCCF and granted permanent authority to recover copayments for outpatientmedications. Long-Term Care Co-payment Account (formerlythe Veterans' Extended Care Revolving Fund). The MillenniumHealth Care and Benefits Act ( P.L.106-117 ) provided VA authority to collectlong-term care copayments. These out-of- pocket payments include per diemamounts and copayments from certain veteran patients receiving extended careservices. These funds are used to provide extended care services, which accordingto the Administration's budget documents, are defined as geriatric evaluation, nursinghome care, domiciliary services, respite care, adult day health care, and othernoninstitutional alternatives to nursing home care. (29) Compensated Work Therapy Program (formerlythe Special Therapeutic and Rehabilitation Activities Fund). Theprogram was created by the Veterans' Omnibus Health Care Act of 1976 ( P.L.94-581 ) to provide rehabilitative services to certain veteran beneficiaries receivingmedical care and treatment from VA. Funds collected in this program are derivedfrom goods and services produced and sold by patients and members in VA healthcare facilities. Compensation and Pension Living ExpensesProgram (formerly the Medical Facilities Revolving Fund). Theprogram was established by the Veterans' Benefits Act of 1992 ( P.L.102-568 ). Underthis program, veterans who do not have either a spouse or child may have theirmonthly pension reduced to $90 after the third month a veteran is admitted for nursing home care. The difference between the veteran's pension and the $90 is usedfor the operation of the VA medical facility. Parking Program (formerly the Parking RevolvingFund). The program provides funds for construction and acquisitionof parking garages at VA medical facilities. VA collects fees for use of these parkingfacilities. The Consolidated Appropriations Act, 2004 authorized collections fromthe Parking Program to be deposited in MCCF and be used for medical services. Funds for construction or alterations of parking facilities will now be included underthe construction major projects and construction minor projects accounts. (30) Sale of Assets (formerly the Nursing HomeRevolving Fund). This fund provides for construction, alteration,and acquisition (including site acquisition) of nursing home facilities as provided forin appropriation acts. Collections to this revolving fund are realized from the transferon any interest in real property that is owned by VA and has an estimated value inexcess of $50,000. No budget authority is required for this revolving fund, and fundsare available without fiscal year limitation. Medical Services. Provides fundsfor treatment of veterans and eligible beneficiaries in VA medical centers, nursinghomes, outpatient clinic facilities, and contract hospitals. Hospital and outpatientcare is also provided by the private sector for certain dependents and survivors ofveterans under the Civilian Health and Medical Program of VA (CHAMPVA). Funds are also used to train medical residents, interns, and other professional,paramedical and administrative personnel in health science fields to support VA'smedical programs. Overhead costs associated with medical and prosthetic researchis also funded by this account. Medical Administration. Providesfunds for the management and administration of VA's health care system. Funds areused for the costs associated with the operation of VA medical centers, otherfacilities, VHA headquarters, costs of Veterans Integrated Service Network (VISN)offices, billing and coding activities, and procurement. (31) Medical Facilities. Provides fundsfor the operation and maintenance of VHA's infrastructure. Funds are used for costsassociated with utilities, engineering, capital planning, leases, laundry, food services,groundskeeping, garbage disposal, facility repair, and selling and buying of property. Medical and Prosthetic Research. Provides funds for medical, rehabilitative, and health services research. The medicaland prosthetic research program is an intermural program. In addition to funds fromthis appropriation, reimbursements from the Department of Defense (DOD), grantsfrom the National Institutes of Health (NIH), and private sources supports VAresearches. Medical research supports basic and clinical studies that advancesknowledge so that efficient, and rational interventions can be made to prevent, carefor, or alleviate disease. The prosthetic research program is involved in thedevelopment of prosthetic, orthopedic and sensory aids to improve the lives ofdisabled veterans. The health services research program focuses on improving theoutcome effectiveness and cost-efficiency of health care delivery for the populationof veterans. Overhead costs associated with medical and prosthetic research are alsofunded by the medical services account. Medical Administration. Providesfunds for costs associated with operation of medical centers, other facilities and VHAheadquarters as well as VISN offices. It also funds all the medical informationtechnology, including patient records, computer equipment and softwaredevelopment, which are considered capital assets by VA. Medical Facilities. Provides fundsfor the operation and maintenance of VHA's infrastructure. Funds are used for costsassociated with utilities, engineering, capital planning, leases, laundry, food services,groundskeeping, garbage disposal, facility repair, and selling and buying of property. Construction Major. Providesfunds for capital projects costing $7 million or more that are intended to design,build, alter, extend or improve a VHA facility. As part of VA's budget process,Congress reviews, approves, and funds major construction on a project by projectbasis. Typical major construction projects are replacements of hospital buildings,addition of large ambulatory care centers, and new hospitals or nursing homes. Construction Minor Projects. Provides funds for capital projects costing $500,000 or more and less than $7 millionthat are intended to design, build, alter, extend or improve a VHA facility. Minorconstruction projects are approved at the Veterans Integrated Service Network(VISN) level. Grants for Construction of State Extended CareFacilities. Provides grants to states for construction or acquisitionof state home facilities, including funds to remodel, modify or alter existing buildingsused for furnishing domiciliary, nursing home or hospital care to veterans. A grantmay not exceed 65% of the total cost of the project.

Summary: The Department of Veterans Affairs (VA) provides services and benefits such as hospital andmedical care, rehabilitation services, and pensions, among other things, to veterans who meet certaineligibility criteria. VA provides these benefits and services through four administrative units: theVeterans Health Administration (VHA), the Veterans Benefits Administration (VBA), the NationalCemetery Administration (NCA), and the Board of Veterans' Appeals. VHA is primarily a directservice provider of primary care, specialized care, and related medical and social support servicesto veterans through an integrated health care system. Funding for VHA is an issue of perennial interest to Congress, especially with the increasingdemand for VA medical services and with some veterans increasingly having to wait more than sixmonths for a primary care or speciality care appointment. VHA is funded through multipleappropriation accounts, which are supplemented by other sources of revenue. Over the past decade,the composition of VHA's funding has changed. Not only has VA's appropriation account structurebeen modified, but also VA's ability to retain nonappropriated funds has increased. These changespresent challenges in comparing VHA funding over a period of time. Between FY1995 and FY2004, appropriations for VA medical care grew by 63%. For thefirst four years of this time period, from FY1995 through FY1999, appropriations for VA medicalcare grew by 6.7%, from $16.2 billion in FY1995 to $17.3 billion in FY1999. In comparison, duringthe last five years of this time period, from FY1999 through FY2004, VA medical careappropriations grew by 52.7%, from $17.3 billion in FY1999 to $26.4 billion in FY2004. Theseamounts do not include appropriations for medical research, medical administration andmiscellaneous operating expenses (MAMOE), and funds from nonappropriated funding sources. The total number of veteran enrollees has grown by 76.9% from FY1999, the first year VHAinstituted an enrollment system, to FY2004. During this same period the number of veteransreceiving medical care has grown by almost 50%, from 3.2 million veterans in FY1999 to anestimated 4.7 million veterans in FY2004. This report will not be updated.