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Hearing Transcript on Potential Budgetary Savings within the U.S. Department of Veterans Affairs: Recommendations from Veterans Service Organizations

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Committee on Veterans' Affairs, Full Committee,Potential Budgetary
Savings within the VA: Recommendations from VSO, 11-15-11

 

 

POTENTIAL BUDGETARY SAVINGS WITHIN VA: 
RECOMMENDATIONS FROM VETERANS' SERVICE ORGANIZATIONS



 HEARING

BEFORE  THE

COMMITTEE ON VETERANS' AFFAIRS

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION


NOVEMBER 15, 2011


SERIAL No. 112-34


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COMMITTEE ON VETERANS' AFFAIRS


JEFF MILLER, Florida, Chairman

 

CLIFF STEARNS, Florida

DOUG LAMBORN, Colorado

GUS M. BILIRAKIS, Florida

DAVID P. ROE, Tennessee

MARLIN A. STUTZMAN, Indiana

BILL FLORES, Texas

BILL JOHNSON, Ohio

JEFF DENHAM, California

JON RUNYAN, New Jersey

DAN BENISHEK, Michigan

ANN MARIE BUERKLE, New York

TIM HUELSKAMP, Kansas

MARK E. AMODEI, Nevada

ROBERT L. TURNER, New York

BOB FILNER, California, Ranking

CORRINE BROWN, Florida

SILVESTRE REYES, Texas

MICHAEL H. MICHAUD, Maine

LINDA T. SÁNCHEZ, California

BRUCE L. BRALEY, Iowa

JERRY MCNERNEY, California

JOE DONNELLY, Indiana

TIMOTHY J. WALZ, Minnesota

JOHN BARROW, Georgia

RUSS CARNAHAN, Missouri

 

 

 

Helen W. Tolar,
Staff Director and Chief Counsel


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

 

       

C O N T E N T S

November 15, 2011


Potential Savings Within VA:  Recommendations from Veterans' Service
Organizations

OPENING STATEMENTS

Chairman Jeff Miller

    Prepared statement of Chairman Miller

Hon. Michael H. Michaud, Democratic Member

Hon. Corrine Brown, Acting Ranking Democratic Member

    Prepared statement of Congresswoman Brown


 

WITNESSES

Joseph A. Violante, National Legislative Director, Disabled
American Veterans

    Prepared statement of Mr.
Violante

Carl Blake, National Legislative Director, Paralyzed Veterans of America

    Prepared statement of Mr. Blake

Accompanied By:

Ian de Planque, Deputy Director, National Legislative Commission, The American
Legion

Raymond C. Kelley, Director, National Legislative Service, Veterans of Foreign
Wars of the United States

Diane M. Zumatto, National Legislative Director, American Veterans (AMVETS)

Todd Grams, Executive in Charge for the Office of Management and Chief Financial
Officer, U.S. Department of Veterans Affairs

    Prepared statement of Mr. Grams

Accompanied By:

Diana M. Rubens, Associate Deputy Under Secretary for Field Operations, Veterans
Benefits Administration, U.S. Department of Veterans Affairs

William Schoenhard, FACHE, Deputy Under Secretary for Health for Operations and
Management, Veterans Health Administration, U.S. Department of Veterans Affairs

Belinda J. Finn, Assistant Inspector General for Audits and Evaluations, Office
of Inspector General, U.S. Department of Veterans Affairs

    Prepared statement of Ms. Finn

Accompanied By:

Linda Halliday, Deputy Assistant Inspector General for Audits and Evaluations,
Office of Inspector General, U.S. Department of Veterans Affairs

Sondra McCauley, Deputy Assistant Inspector General for Audits and Evaluations,
Office of Inspector General, U.S. Department of Veterans Affairs

 


MATERIAL SUBMITTED FOR THE RECORD

Deliverable from the Department of
Veterans Affairs

Post-Hearing Questions and Responses for the Record:

Hon. Bob Filner, Ranking
Member, Committee on Veterans' Affairs, Letter to Joseph A. Violante,
National Legislative Director, Disabled American Veterans

Hon. Bob Filner, Ranking Member,
Committee on Veterans' Affairs, Letter to Carl Blake, National Legislative
Director, Paralyzed Veterans of America

Responses from Joseph A. Violante,
National Legislative Director, Disabled American Veterans and Carl Blake,
National Legislative Director, Paralyzed Veterans of America

Hon. Jeff Miller, Chairman, Committee on
Veterans' Affairs, Letter to Honorable Eric K. Shinseki, Secretary, U.S.
Department of Veterans Affairs

Response from Honorable Eric K. Shinseki,
Secretary, U.S. Department of Veterans Affairs to Hon. Jeff Miller, Chairman,
Committee on Veterans' Affairs

Follow-Up Questions from Hon. Jeff
Miller, Committee on Veterans' Affairs and Responses from Honorable Eric K.
Shinseki, Secretary, U.S. Department of Veterans Affairs

Hon. Bob Filner, Ranking Democratic
Member, Committee on Veteran's Affairs, Letter to Honorable Eric K. Shinseki,
Secretary, U.S. Department of Veterans Affairs

Response from  Honorable Eric K. Shinseki,
Secretary, U.S. Department of Veterans Affairs to Hon. Bob Filner, Ranking
Democratic Member, Committee on Veterans' Affairs

Question 8 Attachment 1 for Hon. Bob
Filner, Ranking Democratic Member, Committee on Veterans' Affairs

Question 11 Attachment 2, Fee Data
Disbursed Amounts

Question 11 Attachment 3, Wait Times


POTENTIAL BUDGETARY SAVINGS WITH VA:  RECOMMENDATIONS
FROM VETERANS' SERVICE ORGANIZATIONS


Tuesday, November 15, 2011

U. S. House of Representatives,

Committee on Veterans' Affairs,

Washington, DC.

 The Committee met, pursuant to notice, at 10:01 a.m., in Room 334, Cannon
House Office Building, Hon. Jeff Miller [Chairman of the Committee] presiding.

     Present:  Representatives
Miller, Bilirakis, Roe,  Stutzman, Denham, Runyan, Benishek, Buerkle,
Huelskamp,  Turner, Brown, Reyes, Michaud, Sanchez, McNerney, Donnelly, Walz, and
Barrow.

OPENING STATEMENT OF CHAIRMAN MILLER

     The CHAIRMAN.  Good morning, everybody.  Welcome to this morning’s hearing.  Ms.
Brown will be the Ranking Member when she arrives but I want to go ahead, in
view of the witnesses that are here with us today, so thank you for joining
each of us this morning.  We are going to review recommendations from several
veterans’ service organizations for possible savings within the Department of
Veterans Affairs.  And I want to say at the onset, thank you to the VSOs for
answering the call and sending some information in that we could have a hearing
on and talk about ways that money can be saved at VA.

     We
are in an unprecedented time of fiscal restraint in America, one that is long
overdue.  The Budget Control Act is the law of the land.  It has put in place
caps for the next decade.  It is on discretionary spending for every account in
government, including VA.  These caps will permit overall government spending to
grow at roughly 2.5 percent annually.  Needless to say, the next ten years that
we are looking at will look very differently than the last decade. 

     Now
it is my belief that veterans spending and defense spending remain an absolute
top priority to this nation and to this Congress.  Maintaining our defense is a
clear constitutional charge of this Congress and I include the care for those
who have fought for our freedom as an inextricable part of that constitutional
charge. 

     With
that said, no agency should ever be exempt from a constant effort to become
more efficient or root out waste, fraud, and other questionable spending.  It
is with this in mind that I solicited the help of the veterans’ service
organizations, some of which are here today, to help find savings within VA
which then could be redirected to provide better care and benefits to our
veterans.  The VSO response was outstanding.  And again, I say thank you for
that response.

     They
provided nine areas for us to examine.  And I am so pleased that they are here
today to discuss those savings and other areas of potential savings within our
government.  Some of what they recommended, such as VA’s questionable payment
of bonuses that go to already well paid employees, are addressed in legislation
reported from this committee and has already been passed by the House. 

     Other
recommendations require ongoing scrutiny and today’s hearing continues our
committee’s oversight to that end.  I want to also thank the VA for its
participation in today’s hearing.  I believe that there are sincere efforts
underway.  It has been documented in several ways,
the successes that they have already enjoyed which shows that Secretary
Shinseki is in fact serious about VA’s stewardship of taxpayer dollars.

     Nevertheless
there are areas that need improvement and continued oversight.  The VA Office
of Inspector General’s testimony will confirm that this morning what we have
talked about in regards to bonuses being paid, and I want to thank the VA OIG
for its work with the committee with VA and with veterans advocates in all of
our common purpose. 

     Before
I close let me touch on one other issue that is on everyone’s mind, one that
Carl Blake raises in his opening statement for the Paralyzed Veterans of
America.  Namely, the question of whether VA medical care is exempt from
indiscriminate cuts that would occur across government accounts under a
sequester order.  Now it is my firm hope and my expectation that the Joint
Select Committee will rise to its calling and produce a bill which saves a
minimum of $1.2 trillion over the next decade that can clear the Congress and
be signed by the President.  However, should that not happen a week from tomorrow
veterans and their loved ones deserve to know now whether VA will be affected
by a looming sequester order.      It is my belief that VA is absolutely
exempt.  But only the Office of Management and Budget is vested with the
authority to determine the sequester rules.  To date, OMB has not been clear on
this point.  Mr. Grams, I hope that you can shed some light on the
administration’s position when you appear on our second panel this morning

     Again,
I thank all of our witnesses for their attendance this morning.  I now turn to
our Ranking Member for his opening statement.  Mr. Michaud, you are
recognized. 

     [The
statement of Jeff Miller appears in the Appendix.]

OPENING STATEMENT OF HON. MICHAEL H. MICHAUD, DEMOCRATIC MEMBER

     Mr. MICHAUD  Thank you very much, Mr. Chairman, for holding this hearing today. 
I also would like to thank our witnesses for joining us and helping this
committee continue its important work ensuring that veterans get the
resources they need while making sure that the VA is a careful steward of these
resources.  Some of my colleagues here in Congress look at potential budget
savings within the VA as a way to reduce our overall budget deficit.  In my
view, we should be looking at ways to provide services and benefits that are
more cost effective in order to provide resources where we need them the most
down the road, as we continue to ensure that the VA has what it needs, but needs
what it gets.

     This way, the VA’s budget request will be better aligned to meet
the needs we are all hearing about from our veterans and our constituents.  I
applaud our VSOs for being active participants in this conversation and in this
process as well.  It is vital that you continue to point out where improvements
in VA programs are necessary and continue to identify programs that are not
working as well as they should be.  I also want to thank the VA Inspector
General for the fine work your office has done in identifying where
improvements can be made and areas where the VA can improve. 

     One
of my foremost concerns is to make certain that the resources get to the veterans. 
There simply must be oversight and accountability within the VA system.  This
is also important to ensure that all of you get the accurate information you
need in order to formulate realistic budgets that are truly need based.  I am
troubled that in the audits and reports that we get from the Inspector
General’s Office there seems to be a consistent pattern in what they find wrong,
in lack of financial controls, and in lack of policies and procedures to ensure
that staff follow management directives. 

     I
would like to know what the VA is doing to fix these problems.  And even more
importantly, what the VA is doing to proactively identify problems that lead to
wasteful spending and lack of accountability.  This is the key role of
effective management.  And I would like to be assured that these issues are
being identified and addressed routinely and not merely in response to the IG
reports and congressional oversight.

     One
of the areas of concerns identified by the VSOs is the issue of funding
holdbacks at the VA central office and in the VISNs.  We all have heard
anecdotal stories of local hiring freezes or our local facilities not having
the resources that they need.  I look forward to the discussion on this issue.

     I
also look forward to learning how the VA is currently doing with its budget
projections and third party collections estimates, and what in general terms
we should expect in looking forward to the budget submission in February. 

     I
have the utmost faith in Secretary Shinseki and wholeheartedly support his
efforts to transform the VA.  The VA faces many problems and I understand it
takes time to change course.  I just want to be sure that we are heading in the
right direction and moving in the right direction we will need the
input from the VSOs as you go back and talk to your members about where they
think the VA has gone astray and where we can continue trying to get it back on
track.

     So
once again, Mr. Chairman, I want to thank you for having this hearing and I
want to thank our panelists as well for coming.  And I yield back the balance
of my time.

     [The
statement of Michael Michaud appears in the Appendix.]

     The CHAIRMAN.  I thank Mr. Michaud for his fine comments.  I associate myself
with them.  And I thank the first panel for being here.  We have two witnesses
that are here with us.  First, Joe Violante, National Legislative for the
Disabled American Veterans; and Mr. Carl Blake, the National Legislative
Director for the Paralyzed Veterans of America.  They are accompanied by other
folks with them today.  We appreciate all of you appearing.  And I don’t know
if Joe, you are first?  We will recognize you for your opening statement. 

STATEMENTS
OF JOSEPH A. VIOLANTE, NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS;
AND CARL BLAKE, NATIONAL LEGISLATIVE DIRECTOR, PARALYZED VETERANS OF AMERICA;
ACCOMPANIED BY IAN DE PLANQUE, DEPUTY DIRECTOR, VETERANS AFFAIRS AND
REHABILITATION COMMISSION, THE AMERICAN LEGION; RAYMOND C. KELLEY, DIRECTOR,
NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES;
AND DIANE M. ZUMATTO, NATIONAL LEGISLATIVE DIRECTOR, AMVETS

STATEMENT
OF JOSEPH A. VIOLANTE

     Mr. VIOLANTE.  Thank you, Mr. Chairman.  And thank you for holding this hearing
this morning about inefficiencies, duplication, and waste within the VA.  Mr.
Chairman, earlier this year in response to your request our organizations developed and presented to the
Committee a number of recommendations regarding
possible waste and inefficiency within VA and we appreciate the opportunity
today to discuss these further.

     First,
however, it is important to recognize that simply cutting VA’s budget in the
absence of detailed justifications and evidence of savings will more likely
result in a loss of accessibility, quality, and safety of services veterans
depend on rather than lead to true deficit reduction.  For example, a decade
earlier VA proposed and Congress approved several successive budgets that cut
billions based primarily on the presumption of unspecified management
efficiencies.  In the end, no savings were actually realized and Congress was
forced to provide supplemental appropriations.  But not before thousands of
veterans were turned away or forced to wait for VA healthcare services.

     So
in order to ensure that VA actually eliminates duplication, inefficiency, and
waste rather than just cut services we must begin with an accurate and
transparent budget process to measure whether savings are achieved.  Based on
VA’s fiscal year 2012 budget proposal there are a number of questions about the
year ahead, such as:   did VA’s planned carryover funding from fiscal year 2011
to fiscal year 2012 and 2013 actually occur?  And how will VA measure whether
savings from proposed operational improvements materialized? 

     In
addition, as you look for savings in VA keep in mind that there exists
sufficient unfunded and underfunded needs.  For example, VA’s Strategic Capital
Investment Planning Process identified about 5,000 capital projects that should
be completed within ten years at a cost estimated between $50 billion and $60
billion. 

     Looking
ahead as this Committee, the Supercommittee, and Congress look to reduce the
national debt, we hope you will draw the line at taking money away from disabled
veterans.  Both the Senate and the House recently passed legislation to provide
a COLA increase to veterans disability compensation without one dissenting
vote.  It would be disgraceful if the Supercommittee now tried to take this
money back.

     Mr.
Chairman, in the spirit of eliminating duplication of our own my colleague from
PVA will focus on the first five areas discussed in our letter and I will focus
on the last four, beginning with inspection at state veterans homes.

     Currently
most state homes undergo regular inspection by both the VA and the Centers for
Medicare and Medicaid services.  Given that the CMS inspections already cover
150 of the 158 criteria required by VA, why not consider eliminating this
overlap of effort to reduce the administrative burden of both the VA and state
veterans homes? 

     Turning
to VBA, we regularly hear reports that the regional offices spend an inordinate
amount of time and resources shredding nonessential paperwork sometimes right
down to Post-it notes, and even assigning senior GS level employees to oversee
this work.  It is our understanding that VBA has made changes over the past six
months.  However, we recommend the committee examine whether current shredding
practices are appropriate to protect and preserve veterans’ records.

     Another
area that merits scrutiny is the practice of brokering claims between VBA
regional offices, particularly the cost of transporting these brokered claims. 
According to the Inspector General report released in September VA brokered
over 200,000 claims in fiscal year 2010 and it is our understanding that these
claims are usually transported via FedEx.  Why not consider reallocating the
money spent on shipping paper files to digitizing them instead, especially
considering VBA’s ongoing transition to paperless processing?

     We
also have concerns about VBA’s use of mandatory or authorized overtime as a
regular practice to address increased workloads.  Is mandatory overtime the
most effective way to increase employee productivity?  And does heavy reliance
on overtime have negative effects on the quality of the work performed?  We
would recommend that the committee ask VBA for answers to these important
questions.

     Mr.
Chairman, that concludes my testimony.  I will be more than happy to respond to
questions.

     [The
statement of Joseph A. Violante appears in the Appendix.]

     The CHAIRMAN  Thank you.  Mr. Blake?

STATEMENT
OF CARL BLAKE

     Mr. BLAKE.  Chairman Miller, members of the committee, on behalf of Paralyzed
Veterans of America I am pleased to be here today to discuss the ongoing debate
about deficit and debt reduction and how it might affect the Department of
Veterans Affairs.

     As
you know and as Joe mentioned, PVA along with AMVETS, the Disable American
Veterans, the American Legion, and the Veterans of Foreign Wars addressed this
issue in a letter provided to the committee in April of 2011.  Since my
statement fully explains the ideas addressed in our joint letter from earlier
this year I will limit my comments to the issues of immediate concern.  However,
we all here on the panel look forward to questions as it relates to the many
issues that we outline in our letter.

     Once
again this year Congress has failed to fulfill its obligations to complete work
on the appropriations bill funding the Department of Veterans Affairs by the
start of the new fiscal year on October 1, 2011, nearly two months ago. 
Meanwhile, the VA is operating based on the parameters of Public Law 112-36,
the Continuing Appropriations Act for Fiscal Year 2012.  As we understand it
the VA has implemented an across the board reduction in all program spending of
approximately 1.5 percent. 

     For
the advance appropriation for VA healthcare to be superceded or misinterpreted
by short term CRs and result in a reduction of VA healthcare funding that was
already approved is absolutely outrageous.  This concern is further amplified
by the points we raised in our letter concerning the growth in various levels
of administration, the holdbacks that occur at the VA, and the SES bonus
levels.  And yet we are here today to further discuss savings that can be
realized within the VA.  As we outlined in our letter to the committee earlier
this year the veterans’ service organizations are not so naive as to think that
cost savings cannot be found within the VA.  But the question remains, to what
end?

     The
context of this hearing is to identify savings within the VA that can
presumably be returned to the Treasury for deficit and debt reduction. 
However, we believe the VA is already failing to meet the demands being placed
on its healthcare and benefits systems.  And I do not even need to go into
great detail to discuss those concerns.  We would argue that any savings
realized by the VA should be used to fill gaps in services now or be
immediately reinvested into the system to make it function more effectively and
efficiently.

     Ultimately
discretionary spending in the VA accounts for approximately $62 billion.  Of
that amount nearly 90 percent of that funding is directed towards the VA
healthcare programs.  As the Joint Select Committee addresses the possibility
of reductions in discretionary spending across the entire federal government,
including the VA, it is important to emphasize that any cuts to VA spending
will have a direct impact on the delivery of healthcare services and benefits
to veterans and their families.

     Additionally
we are concerned that in the event the Joint Select Committee fails to agree to
a bipartisan solution or the House or Senate fails to approve the committee’s
recommendations, an automatic trigger would occur that would immediately cut an
additional $1.2 trillion in federal spending.  The triggers would target two
principal areas of the federal budget, national security spending and all other
domestic programs.  While we believe all VA programs are excluded from
automatic cuts by Public Law 111-139 the statutory Pay As You Go Act of 2010
questions remain about whether or not VA healthcare spending in particular
could be included broader discretionary spending reductions.  And Mr. Chairman,
we appreciate your comments in your opening about your view on how this should
be handled. 

     However,
we have been informed that the final arbiter that will determine whether or not
spending is cut from VA programs is the Office of Management and Budget.  To
say that this fact is worrisome would be a major understatement.  As you know,
the VA is the best healthcare provider for veterans, providing primary care and
specialized health services is an integral component of VA’s core mission and responsibility
to veterans.  Across the nation VA is a model healthcare provider that has led
the way in various areas of medical research, specialized services, and
healthcare technology.  Any reduction in spending on VA healthcare programs
would only serve to degrade these critical services.       In the end it is
easy to forget that the people who are ultimately affected by the wrangling
over the budget and this ongoing debate about cutting the deficit are the men
and women who have served and sacrificed so much for this nation.  We hope that
you will consider these men and women as you continue to investigate areas for
potential savings within the VA.

     This
concludes my testimony.  I would be happy to answer any questions about my
statement and the letter that we have provided.  Thank you.

     [The
statement of Carl Blake appears in the Appendix.]

     The CHAIRMAN.  Thank you, Mr. Blake.  Mr. Blake, you talked about the VSO
recommendation on fee basis care coordination.  And I am trying to kind of wrap
my head around how we can encourage VA to move on this front.  And I guess the
question that I ask is are you suggesting that VA move towards having a large
network of regional providers?  Where we can be assured that the same prices
are being paid to all of the providers?  And how do we move forward?  I mean, I
am an advocate, as many know, for being able to provide that healthcare as
close to home as we can possibly get it.  And if necessary in the private
sector and outside the VA network.  So could you expound on that?  And Mr.
Violante, if you would add to it as well I would appreciate it.

     Mr. BLAKE.  Well I will do my best to answer that question.  I am not sure that
we are suggesting a large regional network that might look something like TRICARE
in the way it provides its benefits to servicemembers.  However, you know, one
of the complaints that we hear quite often is when particularly PVA members get
fee service out in the community there are complications because more often
than not that VA has no provider agreements with providers in the area.  Which
complicates the pay for the care that’s provided.  And it can ultimately lead
to higher costs because I guess you could argue that with some competition or
with the provision of agreements that you might have a better system. 

     There
has also been some ongoing discussion, and I am not saying that we, or the
Independent Budget, or the American Legion have advocated for it, there has
also been some discussion about more of a nationalized plan for how fee basis
care gets done.  Which we just do not believe actually occurs at this time.  So
I do not know if that really answers the question. 

     Mr. VIOLANTE.  I do not know that I could add any more to that.  I mean, what we
would like to see is a more effective program out there when individuals are
sent out to the private sector to ensure, number one, that the care will be
totally provided for, the payments will be provided for, and that VA continues
to manage that veteran’s care instead of just sending them out to any doctor
that is out there.

     The CHAIRMAN.  And I concur that VA does need to continue to help manage that
veteran’s care.  But I, in listening to both of your answers I think it is
clear that there probably needs to be some type of a network that is
established where you do know where the providers are, that VA knows what the
reimbursement rate is going to be for those providers, and you will actually
have, as you said Mr. Blake, competition where folks will be wanting to get onto
that provider list so that they too can be providing healthcare to our veteran
population.

     I
wanted to talk a little bit, yesterday, I am sure you probably already have
seen it, but the Office of Inspector General has released their report on
retention bonuses.  It was not a very positive result.  I think basically they
said 80 percent of the bonuses that were given either were not, I think the
term not justified or appropriate.  And there is a lot of money out there that
unfortunately does not appear to meet the test that those of us on this
committee would want them to meet, nor the veterans’ service organizations.  So
I would like to ask, and I know this is a softball to you, but what do you, if
you have seen this report, what do you think about what the report says?

     Mr. VIOLANTE.  Mr. Chairman, I have not seen that report yet.  One thing though I
think we do want to make clear is when you are looking at the bonuses that VA
not be singled out.  Because we certainly do not want to put VA at a disadvantage
throughout the government.  But we certainly would like the
structure of who gets what and why they get it looked at.  And we would hope
that Congress would do the same government wide.

     The CHAIRMAN.  Let me just take a moment and read to you the summary portion,
where it says that VA lacked clear guidance, oversight, and training to
effectively support the program.  VHA and VHCO approving officials did not
adequately justify and document retention incentive awards in accordance with VA
policy.  VA officials did not effectively use the personnel and accounting
integrated data system to generate timely review notices.  And VA officials
also did not always stop retention incentives at the end of set payment
periods.  Mr. De Planque?

     Mr. DE PLANQUE  Well, thank you, Mr. Chairman.  And I think, and dovetailing on
what Mr. Violante said, I think this is a problem that is kind of endemic
across the board.  But one of our greatest concerns, and this is exactly what
you were addressing there, is that there is not a clear indication of what the standards are for these things.  I think the VA put out, the
Secretary put out their goal of 125 days, no case pending more than 125 days
and 98 percent accuracy.  And in the year 2010 where both of those figures went
back the number of cases over 125 days almost doubled and the accuracy rate
dropped several percentage points, that all of these bonuses were still going
out.  And so if that was kind of your mission statement, this is what was concerning
I think to the American Legion and to the other groups as well, if that is your
mission statement, 125 days and 98 percent accuracy, and you fail in both of
those categories, why are there still bonuses going out?

     I
understand the importance of retention and that you want to be able to keep
employees in place and that it is a competitive job market and there are things
that are there.  But I think there is also a natural reaction on behalf of
people, and you have seen this in Wall Street companies that took a bail out
and their executives were getting bonuses and a lot of people were very angry
about things like that in other organizations.  When you see that attitude,
that you are not meeting the goals that are apparent and yet people are still getting
bonuses for that, that is what causes the confusion.  And if we could get a
more clear indication of what are these bonuses based on?  Are they not
based on the stated mission statement of 125 days and 98 percent?  That is what
we are looking for as organizations, is more clarity in that range.

     Mr. BLAKE.  And Mr. Chairman I think, you know, there are sort of two levels of
questions here.  Because our letter addresses SES bonuses but that trickles
down even to the lower levels and individuals who receive bonuses.  And it is
sort of a, there are two ways of looking at this.  One is our concern about
whether they should get bonuses if they are failing to presumably meet
performance standards which may or may not exist.  The other is, and we have
had this discussion with the VA, sometimes it just does not seem to pass the
smell test.  And Ian referenced this.  You know, when times are tight and
people are struggling people do not want to be reminded that, you know, some
people are going to get bonuses regardless.  And whether they are justified or
not, because we are not here to suggest that some folks in the VA, and maybe
many folks in the VA, do not deserve a bonus.  But sometimes you have to make
hard choices.  And this falls into that category also.  Notwithstanding the
comments that Mr. DePlanque made about our concerns about performance standards
and whether bonuses are even justified in the first place.

     The CHAIRMAN.  Thank you very much.  Ms. Brown, I understand that you have to
leave us a little early so Mr. Michaud has passed to you for the first
questions.

OPENING STATEMENT OF CORRINE BROWN,
ACTING DEMOCRATIC MEMBER

     Ms. BROWN.  Thank you, and I want to thank you for holding this hearing. We just had Veterans Day and I know
we all were involved in many, many activities around Veterans Day.  I want
to thank all of the veterans for their service.  I ask that my
full statement be submitted for the record.  There are a few things
here I
want to focus in on.  We ran two wars on
the credit card.  And so the idea that we are going to penalize veterans who
have already paid their dues is totally unacceptable to me.  My grandmama
always said when you have your head in the lion’s mouth, you ease it out.  And
so we cannot penalize people that have already paid their dues. 

     I
am very proud of the fact that I was involved in the Congress that gave
veterans advanced appropriations and gave the Department of Veterans Affairs the largest
budget increase in the history
of the United States.  And this Office of Management and Budget, I do not know
exactly who they report to, I mean, they do not, I do not necessarily think
they report to the Congress or the administration.  They make the decisions
independent it seems.  How to find out who is in charge of them is something I
have not found out in nineteen years.  Because when we send certain bills, or
we pass certain bills, they come back and say, “We are not doing it.”  And it
is not implemented.  So, you know, that is a challenge.

     I
want to focus in on the fact that one-third of the veterans on the streets
are homeless.  And I have been working with different agencies.  And I want to
know what we can do as far as getting the VA to work with these different
agencies.  Because I understand that they are the hardest to get refinanced, or
get them from foreclosing.  Not the VA but working with them and that
administration. 

     And another area as far as how we get additional
employees.  One of the problems is how long it takes, let us say a nurse,
to go through the system.  The nurse is already certified by the state,
certified by the organization.  But yet we are losing to other hospitals
because it takes so long for the processing.  So we have many, many
challenges.  The Secretary is working on it.  We have other safety
issues pertaining to how we do certain procedures in the hospitals, in the VA. 
Those are the things that I am interested in.  And any savings that we have
from deficit reduction, and we can all look at how we can cut back, should go
directly into veterans programs, assistance, and you know, when you talk about
rules and regulations, that is where we need to cut down on some.  So with
that, does anyone wish to respond to my comments? 

     [The
statement of Corrine Brown appears in the Appendix.]

     Mr. DE PLANQUE  Thank you, Congresswoman.  I would actually like to address specifically
where you were just mentioning homeless veterans, which is definitely a very
big concern.  And I know Mr. Blake and Mr. Violante also brought up our
concerns about sequestration.  While VA programs may be protected from
sequestration as we believe, Department of Labor and Housing and Urban
Development programs--

     Mr. DE PLANQUE  --many of which help homeless veterans are not necessarily going
to be protected by this.  And so this is a big concern of the American Legion
with the sequestration issue looming.  In that sometimes we fail to see that
the issues of veterans encompass more than just the Department of Veterans
Affairs.

     Ms. BROWN.  And we are just getting HUD to
start working with the VA, which is major.  So that we can work in
conjunction to stop them from becoming homeless vets.  So we are now
getting HUD, Labor, and VA working together.  And when you cut, even though
if you do not cut VA, when you cut these programs some of my colleagues do not
see a correlation between the three.  Does anyone
else have anything to add?  I have 35 seconds.

     Mr. VIOLANTE.  I would just like to say we certainly agree.  And we said in our
letter that any savings that are found should be reinvested in VA because there
are so many unmet needs that need to be addressed.  And personally I agree
that, you know, we are fighting a war off budget.  We should be able to care
for those men and women who we have put in harm’s way when they come back.  And
hopefully Congress will continue to keep VA funded at the proper levels.

     Ms. BROWN.  Well you can rest assured I will continue to do my part.  Thank you,
sir, for your service.

     The CHAIRMAN.  Dr. Roe?

     Mr. ROE  Thank you, Mr. Chairman.  And thank the committee for being here.  I,
too, want to associate myself with the remarks of Ms. Brown.  I feel like
that veterans who carried the war, that we have as
a country placed in harm’s way to do what we have asked them to do to protect
our freedoms, that now we provide the benefits we promised them, period.  Very
simple.  We do need to be more efficient, however, though.  I mean we had an
Oversight and Investigation Subcommittee hearing not long ago where a wounded
warrior had eight different caregivers.  I could not
figure that many of them out and neither could the wounded warrior.  So there are things
that we need, to be streamlined within the balance.

     Secondly,
Ms. Brown is absolutely right.  I happened to be sitting next to a
veteran yesterday who works at the VA and spoke with him.  I will not say what he does, but he is
fairly high up in our local VA, who had taken almost six months to hire a
physician and, actually no, this was a nurse practitioner.  And he had lost
several to the private sector because they could not make a decision.  About
how he had interviewed them, but they could just not get
them through the steps.  And so he is losing quality people.  The VA needs
to look at its own, get in a mirror and look at how it can do its own business
more efficiently.  Because I can tell you in the private sector, if I find
a good employee, I hire them.  Period.  If I find somebody that is good here in
the Congress, I hire them and I put them to work.  And I do not know what the
VA does to take six months to hire a nurse practitioner, but that is
ridiculous.  There are things we can do to improve that.

     I totally agree with everyone who said that savings that we
find in the VA should be reinvested in the program.  Because there are needs
out there that are going to be coming forward in the very near future when
these soldiers matriculate out of the military and into the VA system that we
do not have the resources right now budgeted to take care of them.  And I think
those efficiencies should be placed back in.  I 100 percent agree with you on
that.  Any comments on those things?

     Mr. BLAKE.  Well I would first address the point about the efficiencies.  The one
caution I would have is if we are going to find efficiencies they cannot be
vague, they have to be specific.  We have to know exactly where the VA is
finding those dollars from and how they are going to be reinvested.  To simply
say, “Well, we are going to save $500 million,” that is a little too vague for
our liking.  Because inevitably without some clear understanding of how that is
going to happen that may never actually be realized.  And so it is a false
assumption.

     Your
point about hiring, it is no coincidence that the House is getting ready to take
up the Vow to Hire Heroes Act, which I believe all of us here have supported. 
And you spoke not only to the problem of hiring in the VA, there was a
gentleman who spoke at the press conference last week who was an Iraq veteran
who talked about the problems in getting hired in the private sector.  Who has
all the skills to presumably perform a function in the healthcare field and yet
no job opportunity opened itself up because of the problems with certification,
and licensure, and stuff like that.  So we look forward to all these
opportunities to allow veterans in particular to come back into the workforce. 
And I think the VA is, I think the VA has set a pretty good example already. 
And it could certainly help improve its workforce we believe by bringing a lot
of these newer veterans back into the workforce, its own workforce.

     Mr. ROE  One of the things we worked on while I was home was some
veterans homeless issues.  And where they, the veteran had a case coordinator
in the HUD VASH program.  If they slipped down into the HUD system they
did, but they did not have case coordinator if they had just the voucher
program.  I looked at that and I said, “Well how many people would
it take here locally at our VA medical center to solve that problem?”  Because
without the care coordinator, someone to do that with them, they
just slip right back to where they were.  You do not gain anything.  You
actually go backwards.  And it looks like it is not that many people, where you
could get a case coordinator with that veteran who is just on the voucher
program.  I did  not realize it until I was walked through it exactly how
that worked.  Where HUD VASH has got a clinical case coordinator.  The HUD
system does it, they fall down there, they cannot get the HUD VASH just yet. 
But if you are just out where you are in a voucher program you do not have that
case coordinator.  I think that is something we definitely need to look at that
would help reduce homelessness.  And it would not take that many more people, I
think, to do that.  Are you all aware of that? 

     Mr. VIOLANTE.  I am not.  But we certainly would be willing to take a look at
that and see how we can improve that program.

     Mr. ROE  Thank you.  I yield back.

     The CHAIRMAN.  Mr. Michaud?

     Mr. MICHAUD  Thank you very much, Mr. Chairman. 
If I recall correctly the Appropriations Committee mandated that the VA get a
handle on the fee based services that the VA provides.  And the
underpinning of the program that the
VA undertook was Project HERO, which I understand has not been a big
success.  My question is, do you believe that the VA should get back to the
original intent and actually try to standardize fee-based services? 

     Mr. BLAKE.  I do not think I can give a yes or no specifically, but it is
certainly something we think needs to be addressed further.  Since you
mentioned HERO, I cannot say that I know for certain but I believe we have been
told that they are looking at now rolling out HERO onto a national level, which
is of real concern to us given the questions you just raised.  So while that is
going on we are not convinced that that necessarily fixes any of the problems
as it relates to the fee based problem. 

     Mr. MICHAUD  Do you agree?

     Mr. VIOLANTE.  I agree with Carl.

     Mr. MICHAUD  My second question, you mentioned the survey for state veterans
nursing homes.  Actually, I was at the
Caribou State Veterans Nursing Home in August.  CMS came in one week and did
their survey and rated them 100 percent.  The VA came in the next week, did their survey, and they
also got
100 percent.  So there is a lot of duplication within two sister federal
agencies.  It is my understanding also that there are about 43 state veterans
nursing homes that CMS does not come in to do their survey.  How would you
address that issue with these 43 state veterans nursing homes?  I agree
that they should get rid of that
duplication, but there could be a problem with the 43. 

     Mr. BLAKE.  VA would have to sign a contract.  They already signed a contract
with all the nursing homes.  Just reduce the number of contracts that they do
and still continue to have those 43 under contract.

     Mr. MICHAUD  Okay.  My question relating to nursing home as well, when you look
at cost it is also my understanding that it is a lot cheaper with state
veterans nursing homes than VA nursing homes themselves.  Would you
comment on the fact that we might want to look at utilizing state veterans
nursing homes if the beds are available versus VA since it is more costly?

     Mr. BLAKE.  I think the fact that it is more cost effective is definitely
something worth considering.  The problem is ensuring you have the capacity. 
One of the challenges we have dealt with in recent years is the VA has a
mandate to have a certain number of beds capacity within its own system and it
is woefully under the number that it is mandated to have.  And yet it becomes
an excuse to sort of get out of the long term care business altogether because
you are not backfilling the capacity outside of the VA, which goes back to my
original point about our concern about whether that demand could be met outside
of the VA system or  not.  Even though it is certainly more cost effective.

     Mr. MICHAUD  And my next question, and I know we are focused on the VA, but if
you look at the other sister agency where there is a lot of cost is the
Department of Defense.  When you look at cost efficiencies
within the VA system is there a way that you might be able to utilize the
Department of Defense?  A good example is for instance one of the problems with
troop readiness among the Guard and Reserves is dental care.  However, the VA
in some of their facilities does not offer dental care because they say
the need is not there.  Here might be a situation where they could actually do
a joint project with the Department of Defense on dental care.  And that is
just one example.  Any comments?

     Mr. DE PLANQUE  Well I think we certainly need to look at all sorts of
things.  However, historically the Department of Defense and VA do not have a
very good record of communicating well with each other.  This is something that
has been a point of contention I think for all of our organizations for several
years now.  And so if we were going to move towards a direction towards that I
think we would want to make sure that we had really clear lines of
communication sorted out.  Because as it is  now in terms of virtual lifetime
electronic record and everything, that seems so far behind at this point.  And
so the ability of those two organizations to communicate with each other is
really troubling.  And if you were going to double down on that bet with other
efficiencies you may be creating more problems.  And that would be a concern
that we would want to look at. 

     Mr. MICHAUD  Thank you.  I see I have run out of time, Mr. Chairman.  Thank you
very much.

     The CHAIRMAN.  Mr. Stutzman?

     Mr. STUTZMAN.  Thank you, Mr. Chairman.  And thank you to the panel for being
here today, and thank you for your work, and what you do for our veterans.  And
thank you for your service as well.  I had a really good couple of weeks over
the past couple of weeks meeting with veterans across the district and also in
Iowa with Mr. Braley where we did a subcommittee hearing on economic
opportunity in both Waterloo and in Fort Wayne.  And the challenges that we see
for our veterans right now is they face a tough economy.

     I
want to talk a little bit about some of the notes in your letter, joint
letter.  And as, obviously as the Economic Opportunity Subcommittee focuses on
utilizing the VA for connecting veterans with businesses and those who are
looking to hire, some of the challenges that we heard during these hearings and
also during the open house that I had in Fort Wayne was some of the frustration
with just the delay in the care, from our local hospital, and just the challenges. 
They are trying to figure out what are the challenges that our VA has.  And you
mention in here, while funding was indeed reduced the demand and need for
resources were not.  And, you know, our veterans are obviously the ones that we
want to make sure are receiving these services that they need.  Could you talk
a little bit about that.  Is it just funding?  Is it administrative costs? 
What is taking some of the time for VA to make sure the
services are provided and are prompt and are making sure that it is in a timely
fashion for veterans?  Are there budget challenges?  I mean, I know there is a
lot to go on.  But I would like to comment a little bit about that. 

     Mr. VIOLANTE.  Well certainly there are budget challenges.  And one of the things
that we talk about is transparency in the budget process.  And we are very
grateful for the fact that we were able to get advance appropriations for VA
because that has been helpful.  But one of our concerns was that while VA’s
model is excellent and we believe that if you put the right numbers in you get
the right numbers out, but there is tinkering that goes on.  And I think the
GAO report shows that the numbers that come out are not always what is
presented to Congress for the needs.  And OMB shaves some dollars
off.

     So
we need transparency in the process.  We need to know that the assumptions that
VA are making are accurate.  And that what is coming out, their
needs, the veterans’ needs, are being accurately presented to Congress for VA’s
needs.  We have seen too many gimmicks that have gone on over the years in
efficiencies, where we can save $1 billion here.  But we have never seen any of
those savings put forth to show us that the money was indeed saved.  So
what happens is services are cut back.  So what we need is to see some
transparency in this process.  And we hope that we can see that over the
next year.  Again, with the GAO reporting on VA’s model and the numbers. 
But if you look at last year, the last one that GAO did you can see that we are not
getting an accurate reflection of what is needed. 

     We also have concerns too about some of the
carryover that is going on from the current year, or from 2011, and whether or
not that was actual savings that
were generated or just cut back.  And we are seeing examples down in
Florida, in Arizona, of fee based care that is being denied because they do not
have sufficient funding.

     Mr. BLAKE.  And I think it is, it all can sort of be traced back to a budget
concern.   But it has an impact on staffing and capacity concerns.  And it has
a trickle down effect.  You know, we hear fairly frequently from a lot of local
facilities that say I have run out of money, or I cannot hire the people, or,
you know, have these issues.  And it is impacting their ability to meet
demand.  And yet the Under Secretary for Health testified earlier this year
during the budget hearings that a lot of these complaints that come from the
facilities are a conflict between what they want and what they need.  Well that
makes for a good sound bite but how do you qualify that?  Because if a facility
comes to me and says they are running out of resources and they cannot meet the
demand, where is the disconnect? 

     You
know, it kind of boggles our mind when, you know, when every year in July we
start hearing from facilities who are saying, “I am going to be out of money by
the end of the month and the fiscal year starts two months from now.”  And it
certainly runs a red flag up the pole for us and we start asking questions. 
And there is no clear answer as to how that happens.  We have pointed to some
of this in our letter and in discussions in the past about, you know, it is a
fact that the VA has seen substantial increases in its overall budget in the
last several years.  And yet it seems like on a regular basis when we talk to
people at the local facility what might have been a 10 percent increase at the
national level translates to a one percent at the hospital.  And that is sort
of oversimplifying it because there is obviously more to it than that.  But if
it is simply based on some demonstrated need qualify that a little better for
us so that we understand.  Because we are not convinced that that is happening
the way it should. 

     Mr. STUTZMAN.  Thank you very much.  I appreciate both of your comments.  I yield
back. 

     The CHAIRMAN.  Mr. Reyes? 

     Mr. REYES  Thank you, Mr. Chairman.  And thank you, gentlemen, for being here. 
One of the, in a series of meetings with veterans, and including town halls,
one of the big frustrations expressed to me, and I have a veteran population
basically of about 70,000 in the West Texas, Southern New Mexico area, is the
inconsistency in terms of, through the veterans grapevine, in terms of the
types of services that veterans get in different VA facilities.  That, I was
wondering if you could comment on that?  And I am trying to get hold of whether
or not it is an isolated complaint, or is it something that you hear
collectively through your organizations?

     Mr. BLAKE.  I would say it is a vague complaint because veterans all have their
own view of what their services should be and then there is ultimately a
determination of what services they are eligible for and what benefits they are
eligible for.  And so it is, it is hard to say.  It could be an isolated
situation.  We certainly hear on at least a few occasions from other facilities
around the country where people are concerned about whether they are getting
consistent services.  But I, I am not sure that there is a clear answer to the
problem.  We would almost have to hear directly from them and let them explain
to us exactly what the problem is that they see and sort of dig down deeper than
that.

     Mr. DE PLANQUE  One of the things that we have come across in the System
Worth
Saving Reports, and you know we will talk about if you have seen one VA
facility you have seen one VA facility.  And you know there is a balance in, I have a healthy respect for VA and what they try to do in balancing
a level of standardization so that you are getting the same quality of care
everywhere that you get but also reflecting different regional areas have
different regional challenges.  You know, the challenges you would face running
a healthcare system in the State of Montana are going to be different from the
State of New Jersey, just in terms of access to urban centers and things like
that. 

     So
it is difficult, again, and I think Carl made an excellent point about, without knowing specifics and being able to compare that I think it is a
difficult line that VA walks.  And I have a respect for that they are trying to
do that.  I know we would like to see more standardization and more consistency VISN to VISN in terms of delivery of what they can do.  But also you have to
reflect that there are going to be different challenges in different areas, and
not everything is going to necessarily be feasible in every area.  And so we
also try to recognize that as well.

     Mr. REYES  Anybody else?  The other question most often addressed to
me, deals with the Secretary’s priority for identifying homeless veterans.  We
have made a concerted effort in my district to try to get to as many of the
homeless as possible to identify them.  Is, do you have any recommendation
individually as organizations about what else we might be trying to do that?  I
mean, it is a major priority.  But it is very frustrating because we seem to be
missing many of the, many of the people with the most urgent needs in the
homeless community. 

     Mr. VIOLANTE.  That is a very tough question, Congressman.  I mean it, I know the
Secretary has put a big emphasis on reducing the number of homeless vets and
eliminating them in five years.  How do you find them is another question.  I
do not know the answer to that.  I know that people are trying to do
everything they can, even at the local levels, chapters, going out
and trying to find them.  But as to how we find them all, I just do not know
the answer to that one.

     Mr. DE PLANQUE  One of the things that, and I think Dr. Roe made the point
earlier in terms of coordinators and that is something we want to look into. 
Coordination I think is a big thing.  When you have multiple organizations like
the Department of Veterans Affairs, you also have the Housing and Urban
Development.  But then you also have community organizations, the American
Legion, VFW, all of our veterans’ organizations that are out there in
the community trying to reach out.  You have faith based organizations that are
doing a lot of work that are out there.  So the tricky part is coordination of
so many moving pieces.  I think you hope that if enough people are out there casting
nets, you are going to get everything.  But, it is a
concern that there will always be people who are going to slip through.  And it
is just aggressively being out there and trying to coordinate that.

     Mr. REYES  Good.  Thank you, Mr. Chairman.  Thank you, gentlemen.

     The CHAIRMAN.  Mr. Denham?

     Mr. DENHAM  Thank you, Mr. Chairman.  First of all I also chair the Committee on
Public Buildings.  One of the things we are looking at across the nation is all
of the government owned buildings for each different agency on where we can
consolidate, where we can sell off things that we do not need, and bring
revenue back to the government.  Has VA inventories surplus or underutilized
properties that could either be sold off or rehabilitated to accommodate
increasing needs of our veteran community?

     Mr. KELLEY  Yes, they have.  There are, I do not have the number off the top of
my head, but they have got over 1,000 buildings that are being evaluated for
repurposing or being demolished.  And every time, they have a list of criteria
to try to find some other use for it either internally or externally through a
partnership with either another government organization or a private
organization to use that.  And the majority of those are being used for
homeless veterans. 

     Mr. DENHAM  Thank you.  And I would request that this committee receive a list
of that evaluation.  Secondly, cost of brokering, it seems like that has become
a standard practice and continues to escalate in price as well as overtime is
continuing to be reauthorized.  Every veteran town hall that we have conducted
in the district and throughout the state, the issue always comes up about how
quickly or how long it takes, to process a claim.  And at the same
time, it seems like it continues to come at a great expense.  What efforts are
being done to digitize that and make sure that we are not going back over and
over and over on the same information?

     Mr. DE PLANQUE  Well I know one of the things that was addressed earlier was the
idea of taking some of the money that they are using for brokering, and
hopefully VA can look at this, and moving it towards digitizing the claims.  We
all have a lot of hope that as they move to a fully electronic system, as that
process continues that it is going to make it a lot easier if they do have to
broker or share information between offices.  That you can do it
instantaneously once that system is up.  VA has been very good about meeting
with the veterans’ organizations and keeping us posted on the capabilities of
the electronic system.  And it certainly should have the capability to do
that.  And hopefully there will be some savings there and they can start
turning that towards getting a lot of these cases moved towards that.  VA
can probably answer better exactly what they are doing on that, though. 

     Mr. VIOLANTE.  And there may be legitimate reasons for the brokering, such as the
Agent Orange Nehmer cases.  But the question becomes then in a lot of different
offices what we hear from our national service officers is that their regional
office is brokering 150 cases to some other offices.  And then in turn they are
receiving 200 cases from some other office that they are working on now.  So it
creates quite a problem for the representatives of the veterans and for the
veterans in some cases when their case is being dealt with at another regional
office instead of their local one. 

     Mr. DENHAM  My concern and my frustration continues to be that we have the
Department of Defense not working with the VA, who is not working with the
local veterans’ centers.  And if we had one system that we were able to have
communication you would not only decrease the backlog and create more
efficiency in the case work but you would reduce costs at the same time. 
Congressman Roe and I just went over to a, and Mr. Walz, Congressman Walz, went
over to Afghanistan recently.  And one of the things we saw was the lack of communication
between the various parties.  You know, it started with me going to get shots. 
And, you know, we all do not keep our shot records over the decades.  And yet
there is no reason that information should not be in the system itself.  So
rather than create casework for every single instance that we need information
we ought to have that accessible throughout the process and reduce costs at the
same time. 

     The
same situation came up with disabled veterans that were at Ramstein.  There was
no question that they were disabled.  But yet they were going to have to go
through an exhaustive process to transfer from DOD to VA.  One would think that
this would not only be our number one priority in the case of making sure our
veterans are receiving the proper benefits, but the best opportunity to save
costs at the same time.

     Mr. VIOLANTE.  Well the administration announced a couple of years ago I believe
that one of their lofty, long term goals was to have essentially a seamless
system, from the day you enter the military until the day you died
as a veteran.  And that should be the ultimate goal and fashion--

     Mr. DENHAM  I understand.  And the frustration is that is the long term goal. 
We are going to have more veterans returning home in the next year than we have
since Vietnam.  We cannot afford for the long term.

     Mr. VIOLANTE.  Congressman, I agree wholeheartedly.  And what I was going to say
is it has been my experience since that one of the real
roadblocks in this has been DOD’s reluctance to come to the table and really
work with the VA on getting some of these things done.  I think the VA, the VA
is ultimately in the business of serving the veteran and anything that can make
that process better they are working towards that end.  But you have to have a
willing partner.  And in my time here in Washington, I would argue that DOD has
not been the most willing partner in fixing that problem.

     Mr. DENHAM  And I would agree in my short time that I have been here.  But this
committee is looking at cost savings for the VA.  And you have a Supercommittee
that is meeting, as well as sequestration that is on the horizon that between
the two of them we ought to have many willing partners to reduce costs.  And I
think that there is a way to increase benefits and decrease costs at the same
time.  So what we are looking for is, you know, that best case scenario.  You
know, timing is everything in politics.  And right now we have the timing to be
able to push something through that should not be based on the long term but
should be based on right now.  So we are looking for recommendations in that
area and we would look forward to seeing your recommendations on digitizing the
entire system. 

     Mr. DE PLANQUE  One really quick note, and I just think we would also be remiss
at this point if when we talk about DOD and VA here, we cannot forget
that the states are involved in this.  The National Guards and the
communication of those records, that often gets overlooked.  And that is a big
problem.  And we run into that a lot where you have a veteran coming back who
has records that are in Afghanistan, and Landstuhl, and whatever active
duty post that they mobilized through, and their state has got the records. 
And DOD and VA communication is its own problem, but we also cannot forget the
state National Guards.  That is a big component of that and has especially been
over the last ten years. 

     The CHAIRMAN.  Ms. Sanchez?

     Ms. SANCHEZ. Thank you, Mr. Chairman.  I want
to thank our panelists for being here today.  Over the break that we just
had I had an opportunity to visit the VA facility in Long Beach, which is
undergoing quite a bit of modernization and construction.  And it’s nice to
see the upgrade of that facility.  And just in speaking with veterans
during the past week there seems to be an agreement generally speaking that
services at the VA are improving.  So it looks like there is a path of improvement that VA is undergoing that folks
seem to be happy with.  However, there are still many areas that are ripe for
improvement and there are still many veterans that are underserved in many
capacities.  It strikes me that if we could find efficiencies, or find the
inefficiencies rather, in the VA in terms of how it delivers care and help fix
those then there would not be a need for cuts overall because the savings
that you get from inefficiencies could be put towards trying to do more
outreach, or trying to make sure that the need is being met for returning
veterans.  And it seems to me that that is the better case scenario
than just random overall cuts which are not targeted and could cut some
essential programs where in fact more resources are needed.

     And
while I am heartened to hear about the improvements, and one of the things that
I got a chance to see firsthand were these new patient centered care models,
where patients are not having to run all over the place to different
specialists that they need but the doctors are actually brought to the patients
themselves.  There is still this, the IG has still identified a
consistent pattern regarding the lack of financial controls and the lack of
procedures to ensure that staff are following management directives.  And that
seems to be a persistent theme with the IG.

     I am curious, and I know there are many areas that people have
discussed where there could be cost savings, what you think the single best
approach is to trying to confront that intractable problem would be with respect
to the lack of financial controls and  making sure that staff are
following management directives?  Because it seems to me that if we could fix
that one problem there are a lot more efficiencies that would follow.  Any of
the panelists?

     Mr. VIOLANTE.  I certainly agree with your assessment.  But you probably need to
ask VA what problems they are seeing in getting the word down to all of their employees to follow what has to be done.  I mean, in
this Committee and the Subcommittee on Oversight has a big part to play in
that, too, by getting VA in here and exploring some of these areas. 
And that was basically the hope of our letter was to identify some areas to get
the Committee to start focusing on and getting VA in here to explain.  I mean,
they may have some legitimate reasons for why things are happening the way they
do, or what is going on.  But you know, we would like to see those areas
explored.  And certainly what you are speaking about is one of those areas.

     Ms. SANCHEZ.  So your belief is that through increased congressional oversight
of VA you think that those inefficiencies can be identified and dealt with?

     Mr. VIOLANTE.  Well it would certainly help to identify those inefficiencies.  I
mean, you know, we get information from our members, from our employees who are
out there.  But we do not have, you know, all the answers.  We do not know why
certain things are happening, if there is legitimate reasons for it.  But
certainly to get VA in here to explain those is what we are really looking
for.  Because we do not have all the explanations.  We just have a lot of
questions.

     Ms.
SANCHEZ.  Anybody else?

     Mr. BLAKE.  I do not think congressional oversight is the magic bullet.  You
know, the GAO and the Inspector General do reports quite frequently on the
internal workings of the VA and more often than not there are lists of
recommendations.  And the question becomes, what steps has the VA taken to
address any of those recommendations?  As sort of a side example, PVA has an
agreement with the VA where we do site visits with the spinal cord injuries
around the country.  Long Beach is one of them.  And they we identify problems
and we raise questions.  And the VA takes steps to address the problems that we
raise.  But I am not, but when the GAO or the IG provides a similar report I am
not sure that similar actions take place.  And so--

     Ms.
SANCHEZ.  So it would be, would you say if there were some kind of
enforcement mechanism that would correlate to findings and
recommendations, that that might--

     Mr. BLAKE.  Well I am not sure what enforcement is because it sort of implies
punishment.  And I am not sure that you want to punish the VA for not taking
active steps towards some end.  But I guess something down that road is what we
are looking for.

     Mr. DE PLANQUE  I think if we all look at this as partnership.  I think
all of the groups that are here, we have a partnership with your
committee here, we have a partnership with the VA.  And we can offer advice. 
And when we write a letter and come up with things, we are
meaning to start a dialogue.  And to start that process back and forth.  And
you are right, you do not want to create the
idea of punishment.  But consequences. 

     Ms.
SANCHEZ.  Well that is what I am saying.  I mean--

     Mr. DE PLANQUE  And
there needs to be some sort of follow through.   And I do feel like we may have a lot of these hearings, and we may say a lot of the same
things at a lot of the hearings, and it does not seem like things get done
sometimes.  And so, that can lead to a lot of frustration with people. 
But as long as we maintain the idea that we have a partnership, and that
we have an open dialogue, and that we are all working towards the same end,
trying to deliver the best services we can get for the veterans, I think making
sure that all of the partners at the table maintain that attitude towards
partnership and towards being open with their dialogue discussions, and being
receptive to saying to the critiques and different viewpoints
offered by others.  I think keeping an open mind about that will certainly
help.

     Ms.
SANCHEZ.  Thank you.  Thank you, Mr. Chairman.

     The CHAIRMAN.  Mr. Runyan?

     Mr. RUNYAN  Thank you, Mr. Chairman.  And thank you all for your testimony.  I
raise it all the time when ultimately you are talking about partnerships,
and Secretary Shinseki says it all the time, it is accountability.  I mean, it
is holding each other accountable throughout those partnerships.  But it is
ironic that in your access to care example you used Montana and New Jersey. 
Because, quite frankly, my constituents a lot of time their biggest problem is
access to that care.  Whether in South Jersey you have to go to East Orange,
Philadelphia, or Wilmington.  It is an issue. 

     The
thing that puzzles me about it, because the chairman kind of spoke about it
earlier, you know, do we develop a network?  Obviously, you know, the signature
injuries of this conflict we have been in, and will continue to be, PTSD and TBI.  Are we
prepared to tackle that?  We still have not conquered what veteran came back from
Vietnam with, with Agent Orange.  And we are going to pile this on top of that. 
Are we able to tackle that?  And without the access to the care, are we
pushing these medical decisions, are veterans pushing them off just because they
do not want to make the commitment to travel?  Specifically our young ones coming back
where they are still out, they are trying to battle this, you know, 20 percent,
40 percent unemployment thing.  They cannot take two, three, two days off to go
try to get the treatment and figure out what it is.  Is there an avenue there
that we can possibly, you know, look at something like this to help them?  And
not to prolong these issues?  Because we know when we prolong health decisions
they pile up and become more costly at the end of the day. 

     Mr. BLAKE.  I am not sure if I am going to answer your question but I am going to
try.  I think the problem is framing the question of access.  I am a regular
user of the VA and I talk to a lot of veterans when I go to the VA on a regular
basis.  And you hit the nail on the head.  It is always a question of access. 
And generally the complaint I hear is actually getting into the VA in a timely
fashion, their access.  I rarely if ever hear a complaint about the quality of
the services that are provided.  However, that gets spun into their concern
about access so they want to go to their local provider.  That is not the same
thing.  And I think the question of access differs depending on whether you are
talking about Montana or New Jersey.  Because the access problem in Montana is,
there is no healthcare.  But there may not be a VA facility, but there may not
be any healthcare in some rural areas.  Look at Alaska and the options they
have there. 

     Whereas
in New Jersey the problem is you have a very centralized population and massive
demand into a single facility.  And most of those people still want to go to
that facility.  So it is hard to satisfy their concerns because at the end of
the day they want to get into the VA because they know that is where the best
care is.  And so I am not sure that even if you give them another, a different
opportunity, that addresses their ultimate access concern.  I don’t know I
answered that question.

     Mr. RUNYAN  Well but giving them the opportunity could potentially avoid
critical healthcare decisions that have to be made down the road.

     Mr. DE PLANQUE  Mr. Runyan, I think part of the issue is, for access is the
amount of service.  Right now VA is at 121 percent capacity at their VA
facilities.  In 2002 they were around 90 percent capacity.  So growth of
demand, the facilities have not grown at the same rate.

     VA
has an exceptional capital assessment plan in place.  They have really studied
hard, understand where the gaps are, what needs to be done to fill those gaps. 
Funding is the issue, we continually underfund VA, to make sure that they can
fill those gaps.  To make sure there is enough facilities in New Jersey to
cover everybody that comes in, make sure that there are CBOCs in rural
Montana.  We do not have the funding to do that right now.  And at the end of
the day, that is your access issue. 

     Mr. BLAKE.  And there is another problem.  Because you could also look at it in
terms of if I want to go see my primary care doctor I want to just go see my
local primary care doctor.  But then if a veteran incurs something much more
significant, a serious illness, or a spinal cord injury, or incurs some other,
much more specialized type of service is required, they are not going to have
access to that in the private setting, no matter where they are at.  The fact
is the VA is the best in this country when it comes to providing all the broad
array of specialized services.  And so while we might allow for convenience,
which is going to see your local provider, then you could ultimately have a
negative impact on that veteran’s care if they cannot then get into the VA when
they need real serious healthcare services.

     Mr. DE PLANQUE  One thing to bring up on this, and this is something we used to
deal with on a regular basis in the Army, is that when a problem would come up
you could easily develop a work around that would work for that moment.  Which
is good, and you have got to adapt, and overcome.  The problem was all too
often the work around became the standard at that point.  And so you basically
set up a flawed system.  So rather than saying there is a flaw in the system
right now, we all understand that it is very important to be able to get that
care to those veterans immediately and we want to do that.  But we want to make
sure that we are not overlooking that flaw because we came up with a work
around and we do not have to pay attention to it anymore. 

     And
so as a long term system I think most of us agree that we want to be able to
deliver VA care.  And there is a lot of things when we talked about
making sure VA management is still available, if people were getting outside
care, because there are things with VA’s record keeping that they do that no
other healthcare system in the world does in terms of being able to oversee
total patient management and see potential issues outside of things and identify
things that might slip by hidden as unseen wounds.  There are things VA can
do with that.  And so I think ultimately we want to be able to get VA
access for those people.  However, in the short term we still have to get
the care to the people.  And so we want to look at a system that is going
to be able to get care to the people right now when they need it but not
overlook the error that there is a, say a cadre of people that are not getting
care in the Pine Barrens or wherever it is.  And that is the thing that we want
to remember.  Is not forget the error that caused us to do that work around.

     Mr. RUNYAN  Thank you, Chairman.  I yield back.

     The CHAIRMAN.  Mr. McNerney?

     Mr. MCNERNEY  Thank you, Mr. Chairman.  You know the committee and the Congress
has increased the VA budget significantly over the last four or five years. 
And I really like hearing from your point of view that it is a partnership
between this committee, the VSOs, and the VA, because that is, while we do not
always have the same thing in mind, we want the veterans to get the best
service we can, but we also want to see the best bang for the buck.  My first question is general, have we gotten the
best bang for the
buck over the last five years?  Has that increase in spending
really filtered down to increased benefits?  Mr. De Planque, do you want to
take a shot at that?

     Mr. BLAKE.  Somebody mentioned earlier that the capacity of the VA is at 120
percent.  Well that would suggest to me that we are getting far more bang for
the buck than we might have anticipated.  Is there some unsatisfaction?  Sure. 
But the VA must be doing something right if there is that kind of demand on the
system even with it being apparently seriously overburdened. 

     Mr. DE PLANQUE  People are using it and wanting to use it.  And we are, and this
is something we definitely have to keep track of, because they are talking
about big force scale downs and things like that.  So we are putting a lot more
veterans who are going to be out there into the system and there is going to be
a lot more load on the VA.  I think we have seen the volume even of VBA, and
what VBA is dealing with, the number of claims that they are having to deal
with, their volume is increasing exponentially.  And so we are sympathetic in
some ways to what they are trying to deal with as far as that.  However, we do have concerns.  Carl mentioned earlier and he was picking random
numbers out but the idea that you might increase a budget eight percent but
only one percent is trickling down.  And that is where I think a lot of us have
concerns, that the budgets are going out there. 

     And
you know, my colleague Ray just talked about that we are not meeting the
construction budgets.  And all of us sitting here at this table back in the
budget talks in the spring mentioned that we thought that the construction
budgets, major and minor construction, were underfunded.  And that the proposal
was not going to meet the needs that they need to meet their infrastructure
needs for the future. 

     So
spending is going there but there are probably concerns that not all of it is
getting to the right places.  And we are still raising the flags about those
things.  So that is infrastructure spending that you have to do if you want to
be able to maintain the system to deal with the volume.  The demand for
veterans is there, and there was a time when I think veterans were afraid of or
did not want to go to the VA.  I think that is largely changing.  I think that
you know we have all talked about, when you can get the access to the care, and
when you can get there, I know Carl mentioned it, I use the VA as my healthcare
provider and I could not be happier with the care that I get.  So we are
delivering a good quality product when we can get the veterans to it.  But I
think we are falling short in some places of getting those dollars down to
the street level and making sure that the investment is getting to all the
places it needs to get to.

     Mr. MCNERNEY  Thank you.  Well I appreciated the effort that went into the
letter, the VSO letter.  One of the things you mentioned was the size of the
general administration budget.  Is there some concern there that that could be
an area where trimming could be done?

     Mr. VIOLANTE.  That is a question we hope you are going to ask VA when their
panel gets here.  Our estimation is that there may be too many administrative staff. 
I mean, obviously you need administrative staff.  But are they at a number that far exceeds the
benefit?  Should some of those people doing hands on service, whether it is
claims work for veterans, or healthcare work on the medical side, it is a real
issue.  When you look at the increases over the years in admin I think they are
growing at a very rapid rate.  And the question becomes can we get a better
bang for our buck if those people were in different positions? 

     Mr. BLAKE.  And it is not to say that there might not be a logical reason for
that increase.  The VA sort of tried to explain back in the beginning of the
year, when that was the first question that popped up in a lot of people’s
minds is this does not, I got back to it does not pass the smell test.  I look
under their chart and directly underneath general administration is the
Veterans Benefits Administration, which was recommended at a decrease from the
previous year.  And that may be justified as well but we all know the struggles
that VBA is obviously facing with regards to processing claims.  And those two
things just do not seem to line up with the world view of what is going on
within the VA. 

     Mr. DE PLANQUE  And you know when they are talking about kind of record amounts of overtime for VA employees.  And yet when they are
asked, you know, do you have the number of employees on the ground level to
meet the needs and they say yes, and then they start plussing up the central
office staff, but all the people out in the regional office are working
overtime, and double shifts, and things like that.  That is what raises flags
for us.  And obviously, VA is going to be better able to answer
that.  And there may be very, very good answers for why the expansion is where
it is.  But these are the reasons that these flags come up for groups like us
as we look at this, is because we see that they are struggling out on the
pointy end of things dealing with the situation.  And we want to make sure that
the resources are getting there so they can deal with that.  And so that you
are not overtaxing the employees who are having to deal with that on a daily
basis.  Because if you are working 60, 70 hour weeks, the quality of those
individual hours may be going down a little bit.  And we do not want
that to be happening either.

     The CHAIRMAN.  Mr. Walz?

     Mr. WALZ.  Well thank you, Mr. Chairman, for holding this, and thank you to all
of you.  As a veteran I cannot tell you how happy I am that you are out there. 
This has been very good for me again.  I know you are always there.  Ian, I had
at the top of my sheet, “Great partners with VA and us,” this partnership idea
that we have always been there.  And I think the best partners are those that
are holding us accountable to every dollar.  That we are the strongest
supporters of the VA and the harshest critics, and I think it should run
amongst all of us.  So I think you brought up some great points.

     I
think there are some, and you brought up some great truisms.  My frustration
with the whole, you know, this is such great stuff I wish the Supercommittee
could be here.  But since we are not on the politburo we are here to try and
pass that on, to pass it on. 

     But
it is very frustrating to me that this, these false choices or whatever that
all spending is created equal.  We are here to make sure that no taxpayer
dollar is wasted.  And I said the VA is a sacred responsibility because that is
one less dollar going to the care of veterans.  That is the way you see it,
about making sure the needs are there, making sure they are accountable.  So
this is not harsh criticism about that.  I want to know this too, where they
are going.  But we do these blanket statements, that all spending is bad, we
cut it, we do all this, without asking what are your specifics?  Where would
you say that?  What about the need?  And yes, we need to get processing times
down but we added an awful lot of Agent Orange folks to that.  And did we give
them the resources to address that need?

     So
I guess for me, and I think all of us know this, I just came out of a meeting
before this one started without outgoing Surgeon General Schumacher and the
great work that has been done in Army medicine.  The incredible work that has
been down range identifying mild traumatic brain injuries and percussive blast
with the idea that addressing them early will reduce the long term costs and
the long term danger and loss of productivity to those members. 

     But
my frustration, and all of us have beat our heads against the wall over this
issue, we all know this is a seamless transition, where the heck is Armed
Services?  We sit here and hold these hearings by ourselves, talking about DOD,
and talking about they do not cooperate, they do not get along together, VA and
DOD do not cooperate.  Are we doing it?  Are we making a strong effort here to
hold that joint meeting, to bring those folks in, to make the decision makers
there, get that in.  I know you guys have been there.  You are absolutely right
on, you are spot on on this, you are at the point.  I hear your concerns too on
this, Carl, you are talking about this, the nine to one.  I hear it from folks
out there and I go right to the point of where they are delivering it.  How
many more nurses have been added to this ward?  None since then.  Well we gave
money out there.  How many more patients have been added?  Seventeen percent
more.  That is the issues I am looking at, the numbers we are out trying to
look at. 

     So
I do think VA needs to have some answers on that.  I am one, the teacher in me
always was complaining any time the principals got something, or whatever.  Or
why are they getting it?  Or whatever.  Well I know the research shows the best
schools are the ones that have the best principals.  I also know that
administration means a lot and it does a lot, it allows our people to do their
jobs.  But it has to be appropriate. 

     And somehow we are going to have to crack this
congressional barrier between Armed Services and VA, get serious about this. 
I don’t know, we, and this was last Congress, Mr. Chairman, it was all of us in
this, but the previous one before your chairmanship we had offers from Secretary
Shinseki and Gates to sit together here with this on that.  We never
brought them.  They have never been here.

     So
I apologize for my frustration on this.  I am not telling you anything.  I am
preaching to the choir.  Keep where you are at.  Keep talking about this. 
Force these accountabilities.  Make us more efficient.  Make a realization.  As
Mayo Clinic says, we have two of the most fantastic hospitals in the world 90
minutes from each other, Mayo Clinic and the VA hospital in Minneapolis.  Those
are two, not just the best VA hospital, the best hospital.  And that is what we
owe to these warriors. 

     So
I do not necessarily have a question but you brought up some great
suggestions.  I just want you to know that I think my responsibility, maybe you
could respond to this, would it help if we collaborated here with Armed
Services?  If you want to, I am the one who will get in trouble for complaining
so you can--

     Mr. VIOLANTE.  I think that would help greatly. It is something
we would like to see is this Committee and Armed Services Committee sit down
with VA and DOD and find out where the glitch is.  I think about
what Senator Webb said when he first came into the Senate that when he was
a staffer on the committee 25 years ago, 30 years ago, they were talking about
seamless transition and here we are still talking about it.  And I do not quite
understand why there is a problem.  But I think having both of the parties sit down
in front of the committees and talk about where the problems are may
help to resolve the situation.

     Mr. WALZ.  Well I, this is important, your institutional knowledge is critical on
this.  Because when I came, you know, oh, I’m cutting edge here, I am asking,
because I could see people looking at me, “Really?  You are the first guy who
ever mentioned seamless transition.”  You know?  And now I see new members
getting excited about it.  But they get it, they are there.  But we seem to
keep passing this on to each new members and then members of Congress leave,
and a new one comes in, and say, “I have got this great idea.  DOD and VA
should communicate.”  And at some point it has got to go.  We have got to get
it done.

     So
I yield back, Mr. Chairman.  Thank you for indulging me in that mini-rant,
there.

     The CHAIRMAN.  Thank you, Mr. Walz.  Point well taken.  An invitation is in the
printer as we speak, and we will work on doing that as quickly as possible. 
Mr. Bilirakis has waived his questions and we appreciate you being here to
testify at this hearing.  And with that, you are excused. 

     I
would like to call the second panel forward.  As they are making their way to
their seats I will go ahead and introduce them.  Mr. Todd Grams, Executive in
Charge of the Office of Management and Chief Financial Officer for the U.S.
Department of Veterans Affairs.  He is accompanied by Diana Rubens, the Associate
Deputy Under Secretary for Field Operations of Veterans Benefit
Administration.  Mr. William Schoenhard, the Deputy Under Secretary for Health
Operations and Management of the Veterans Health Administration.  We have
Belinda Finn, the Assistant Inspector General for the Audits and Evaluations
for the VA Office of Inspector General, who is accompanied by Ms. Linda Halliday, the Deputy Assistant Inspector General for Audits and Evaluations,
and Sondra McCauley, the Deputy Assistant Inspector General for Audits and
Evaluations for the VA Office of Inspector General.  Mr. Grams, you are
recognized. 

STATEMENTS
OF TODD GRAMS, EXECUTIVE IN CHARGE FOR THE OFFICE OF MANAGEMENT AND CHIEF
FINANCIAL OFFICER, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY DIANA M.
RUBENS, ASSOCIATE DEPUTY UNDER SECRETARY FOR FIELD OPERATIONS, VETERANS
BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND WILLIAM
SCHOENHARD, FACHE, DEPUTY UNDER SECRETARY FOR HEALTH OPERATIONS AND MANAGEMENT,
VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND
BELINDA J. FINN, ASSISTANT INSPECTOR GENERAL FOR AUDITS AND EVALUATIONS, OFFICE
OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY LINDA
HALLIDAY, DEPUTY ASSISTANT INSPECTOR GENERAL FOR AUDITS AND EVALUATIONS, OFFICE
OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND SONDRA MCCAULEY,
DEPUTY ASSISTANT INSPECTOR GENERAL FOR AUDITS AND EVALUATIONS, OFFICE OF
INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS

STATEMENT
OF TODD GRAMS

     Mr. GRAMS  Good morning, Chairman Miller, Ranking Member Filner, and members of
the committee, and Congressman Michaud.  I am accompanied today by Bill
Shoenhard, VHA’s Deputy Under Secretary for Health for Operations and Management;
and Diana Rubens, VBA’s Deputy Under Secretary for Benefits for Field
Operations.  I am pleased to be here with my colleagues and to be at the table
with Belinda Finn and her colleagues from VA’s Inspector General’s Office.  I
also want to recognize our partners and friends, the Veterans’ Service
Organizations.  They continue to serve as tireless advocates for our nation’s
veterans.

     Mr.
Chairman, today’s letter is centered on a joint VSO letter provided to this
committee earlier this year.  The letter responded to your request for ways
that VA could identify areas where there are opportunities for greater value of VA
resources and in the end provide more and better services to veterans.  I have
two central points in my remarks this morning.  First, VA has taken significant
steps over the past three years to become more effective and efficient.  And
second, there is more we need to do. 

     Any
large organization intent on maximizing value must have strong financial
management operations.  The release today of our auditors’ fiscal year 2011
report on VA’s financial statements marks the second year in a row of strong
improvement.  The most significant problems auditors can find are referred to
as material weaknesses and the second most significant are called significant
deficiencies.  In 2008 VA had three material weaknesses and 16 significant
deficiencies in financial management.  Today we have no material weaknesses in
financial management and two significant deficiencies. 

     These
and other accomplishments have strengthened our financial management and we
must continue to get better.  For example, although we have reduced improper
payments in pension and education programs, the continuing issues in fee basis
care have to be effectively addressed to stop unnecessary expenditures.  And
while we have reduced retention allowances across the VA, an audit released by
the IG yesterday confirms that this is an area for improvement.

     Collections
by VA are a major funding source for our healthcare systems and we are working
to turn the tide in our revenue collections with initiatives such as the
Consolidated Patient Accounting Centers which centralize and standardize
collection activities. 

     The
Veterans Equitable Resource Allocation system, or VERA, is the way we ensure
that healthcare dollars get to where veterans need care.  There is a belief
however that the recent increases in healthcare funding are not reaching
veterans who need it when in fact over 97 percent of our medical care budget
goes either to the field or to national healthcare programs like CHAMPVA.  It
is also worth mentioning that if at any time during the year a VAMC or a VISN
director believes they require more funding we have an open and equitable
process to ensure those needs are analyzed and, if justified, funded. 

     For
performance awards at the Senior Executive Service level we have taken action
to make our executives more accountable and to tie performance to results. 
More specifically the percentage of executives at the VA who receive a top
outstanding rating has been reduced by one-third since 2008.  The VSOs also
raised questions about the growth in staff offices.  A strong headquarters is
required to drive transformation.  It is important to  note that increases in
staff offices have increased proportionately with the VA system over the past
three years and, as such, staff offices continue to consume about one percent of
VA’s total staffing.  The increases we have made in staff offices have allowed
us to establish organizations that are leading efforts to provide outreach to
let veterans know about what benefits they have earned, to address our wounded
warriors’ transition from DOD, to eliminate homelessness, and to provide
greater assistance to survivors.

     On
conference and travel expenditures, VA has tightened its guidelines to demand
examination of teleconference alternatives, use of local venues, and trainer
approaches before approval of each conference event. 

     My
written statement, Mr. Chairman, also highlights changes underway at VBA that
are centered on eliminating the disability claims backlog, changes that focus
on our people, our processes, and our technology, all at the same time.  The
written statement also responds in some detail to the benefits issues raised by
the VSOs in their letter. 

     Mr.
Chairman, in closing, I do believe the VSO letter that is the center of
attention today raises the right question.  How do we do more for veterans
and  how
do we do it better, in a time of fiscal constraint?  Thank you for the
opportunity to appear before your committee this morning.

     [The
statement of Todd Grams appears in the Appendix.]

     The CHAIRMAN.  Thank you, sir.  Ms. Finn?

STATEMENT
OF BELINDA J. FINN

     Ms. FINN   Thank you, Chairman Miller.  Chairman Miller and members of the
committee, thank you for the opportunity to testify this morning.  With me
today are Linda Halliday and Sondra McCauley, the Deputy Assistant Inspectors
General who are directly responsible for the work I will be discussing.  As
auditors we are deeply committed to identifying budgetary savings in the
Department of Veterans Affairs and we have read the recommendations from the
veterans’ service organizations with great interest.

     Of
the many issues raised by the VSO, we believe the improved management and
oversight of medical care provided outside of VA facilities, commonly known as
fee care, offers the greatest  opportunity for savings.  Under the program VA
medical centers authorize veterans to receive treatment from non-VA healthcare
providers when VA cannot provide the care.  Fee care costs increased from $1.6
billion in fiscal year 2005 to $4.4 billion in 2010.  And this amount will
continue to grow as healthcare costs rise and the demand for healthcare
increases. 

     Our
findings in the area of fee basis care have addressed the processes to
authorize and pay fee claims, inefficiencies in VHA’s payment processing
organization, controls to prevent and detect fraud, and opportunities to bill
third party insurers for fee care claims.  We estimated that VA could save $293
million annually from improving authorization and payment procedures and $134
million annually from streamlining its payment model.  Also, VA could be paying
at least $114 million in fraudulent payments and missed revenue opportunities
of about $110 million annually.       Between these four reports we identified
approximately $650 million in annual potential savings.  VHA has agreed with
all of our recommendations and is taking action to streamline its fee care
payment process.

     Our
written statement also outlines the results of our audit work related to other
issues raised by the VSOs, such as claims brokering, employee compensation
issues, and the use of overtime in VBA.  As Chairman Miller just mentioned, we
just released our latest report on employee retention incentives yesterday.  In
this report covering retention incentives at the VA central office and VHA, we
questioned the appropriateness of 126 out of 158 incentives, or approximately
80 percent.  These problems happened because the VA personnel needed guidance,
oversight, and training to effectively administer the program.  Both VHA and VA
have agreed with our recommendations and findings and will be taking corrective
actions.

     In
addition to the issues raised by the VSOs we believe VA can reap substantial
benefits by improving its processes in acquisition, delivery of healthcare and
compensation benefits, information technology management, and workers
compensation for employees injured on the job.  Improving acquisition practices
seems particularly prone to savings since VA purchases goods and services in
excess of $10 billion annually. 

     VA
has also long experienced challenges in managing its information technology
investments.  In response to these problems VA implemented the Program
Management Accountability System, known as PMAS, in 2009.  In September of this
year we reported that VA lacks controls to ensure data reliability of the
information in PMAS, verify project compliance with the PMAS process, and track
the project cost.  Until these issues are addressed VA risks further IT cost
overruns, schedule slippages, and performance problems. 

     Several
of our ongoing audits address other concerns raised by the VSOs, or have the
potential to identify significant savings.  We expect to issue final reports on
these audits in calendar year 2012. 

     Mr.
Chairman and members of the committee, thank you again for the opportunity to
be here.  We will be pleased to answer any questions that you may have.

     [The
statement of Belinda J. Finn appears in the Appendix.]

     The CHAIRMAN.  Thank you very much, Ms. Finn.  I would like to start, Mr. Grams,
with you.  I told you in my opening statement that I was going to ask a
question in regards to sequestering.  We all know that it is OMB that actually is the one that interprets the sequester
rules.  And so our question, the VSOs raised it, this committee has raised it,
are veteran dollars exempt if we go into sequestering?

     Mr. GRAMS  Thank you, Mr. Chairman.  We did note that in the letter that you and
Ranking Member Filner sent to the Supercommittee you indicated your view that
existing law exempted all VA programs from sequestration.  The
administration and the Secretary are committed to ensuring veterans get the
care that they need.  Your letter to the Supercommittee also noted possible
legal ambiguities to the Budget Control Act and how it applies to VA with
regard to sequestration. 

     We
are researching those ambiguities.  We are working with OMB.  As soon as we
have the resolution to that legal question we will inform the committee right
away. 

     The CHAIRMAN.  We have been working on the issue now for three months.  How long
do you think it is going to take to get an answer?  I mean, the Supercommittee
has to make their recommendations next week.  And this Congress has to approve
or disapprove of them right before Christmas.  So I mean, 90 days is not long
enough to get a ruling from OMB?

     Mr. GRAMS  Mr. Chairman, we are hoping to have the issue resolved shortly so
that we can know --

     The CHAIRMAN.  Could you give us an idea of when the request was made to them as
to whether or not veterans were exempt?

     Mr. GRAMS  Mr. Chairman, that request went from our General Counsel’s Office
to OMB General Counsel’s Office.  I will go back and get you that date, sir.

     The CHAIRMAN.  I think all of us would appreciate if that is something that
immediately when the law was signed by the President, if it was something that
VA recognized was important to get an answer to this committee.  I think all
members of this committee certainly expect to know something very quickly.  So
I would like to hear something as quickly as possible. 

     Mr. Grams, in your testimony you highlighted the importance of
conferences, because they enable VA to among other things share best practices
and provide opportunities for your employees to establish and enhance their
professional contacts with relationships within VA.  From a cost standpoint, fiscally
only, how much does VA spend annually on conferences of 50 people or more?  And
what over the last few years has been the trend of conferences?  Are we having
more of them or are we having less of them? 

     Mr. GRAMS  Mr. Chairman, in 2011 we spent a little over $100 million for
conferences at the VA.  Those conferences are used for a variety of goals and
objectives.  They can include symposia.  They can include leadership meetings. 
For example, in VBA when their leadership and teams get together to evaluate
the updating and the reevaluation of the VBA compensation schedules, that falls
under the title of conferences.  When VHA’s leadership gets together to set and
discuss major clinical and healthcare policy and financial policy across VHA,
that also falls under that category. 

     You asked for the trend, sir?  In looking at
this, in 2009 it was about $92 million so it has gone up a bit over the last two
years.  And I think that reflects our efforts to try to integrate the VA,
have better communication, and better coordinate among leaders and managers.

     The CHAIRMAN.  Is that the dollar amount has increased?  Or the number of
conferences have increased?

     Mr. GRAMS  That is the dollar amount that I was giving you.

     The CHAIRMAN.  Do you know whether or not conferences have increased?  Or is that
something you need to take for the record as well?

     Mr. GRAMS  If I could take that for the record, I will get that for you. 

     The CHAIRMAN.  Absolutely.  You have mentioned teleconferencing.  I know that the
Chief of Staff has called, or submitted a directive calling for maximizing the
use of teleconferences.  Can you give the committee an idea of where VA is
now?  Has that risen?  And because of the maximization have we seen fewer
conferences?

     Mr. GRAMS  Mr. Chairman, we are making greater use of  VTC through the efforts
of our Chief Information Officer.  And not only was teleconferencing part of
the August memo that you are referring to from our Chief of Staff tightening up
on conferences, he is requiring a detailed business case for each
conference as well as ensuring that we are selecting economical venues.  We are
looking at holding things, if possible, within a 50-mile radius of the vast
majority of the people who need to be at the conference--having those events
being at VA venues, as opposed to having to buy the venue from the private
sector.

     It
is also worth noting in that same memo that you referred to, Mr. Chairman, that
the Chief has charged us with reducing the costs of travel and conferences by
25 percent below the 2010 level.  That is consistent with the President’s
new executive order that is requiring a 20 percent reduction across a variety
of areas such as multiple IT units, printing, travel, and what they call swag.

     The CHAIRMAN.  No $16 muffins, though?

     Mr. GRAMS  No, sir.

     The CHAIRMAN.  Mr. Michaud?

     Mr. MICHAUD  Thank you very much, Mr. Chairman.  Mr. Grams, I would like to
follow up on the chairman’s question as far as the sequestration issue.  What
is the VA’s position and General Counsel's? 

     Mr. GRAMS  Our General Counsel is, has looked at the history of everything
building up all the way back to I think Gramm-Rudman, up to the act for today. 
They are continuing to discuss this with OMB, sir.  And as soon as they have an
answer to that question we will let the committee know.

     Mr. MICHAUD  When you deal with OMB on this issue but
other issues, do you say this is the way you feel it should be?

     Mr. GRAMS  Our General Counsel will be providing to OMB during that exchange
what they have found as they have looked at the law and the statute.

     Mr. MICHAUD  And what is that?  Do you support the committee’s understanding of
what the law is?

     Mr. GRAMS  I think as the committee pointed out in their letter that, based on
history, it would appear that VA would at least to a large extent be exempt from
sequestration.  But as the committee also noted in your letter, there are
ambiguities to the law and that is what we have asked our lawyers to--

     Mr. MICHAUD  Okay.  I do not know how to make this question clearer.  Do you
agree with the committee’s recommendation?  Because the problem that I see is
if we are saying this is our interpretation of the law.  You are saying you are
waiting for OMB to answer.  But on the sideline you are saying well we really
do not care.  Do you have a position or do you not have a position on this?

     Mr. GRAMS  At this point we do not have an official position, Congressman.  We
are working with OMB to develop the administration’s interpretation of the
law. 

     Mr. MICHAUD  So your General Counsel does not know what the laws say?  They do
not have a position?

     Mr. GRAMS  Have they taken a position?  No, sir.  That is not their role before
they discuss these matters with OMB.  They have researched the law and my
understanding is that they are working with OMB to come up with the right
answer to that question.

     Mr. MICHAUD  So they do not have a position on it?  They are waiting, well I
guess my only concern is what is the use of having your General Counsel if they
cannot take a position and make a recommendation to OMB?

     Mr. GRAMS  Well I think it, if I am misunderstanding you or if it is semantics,
I apologize, sir, I think it is not our General Counsel’s role to take a
position, per se.  This has to be worked out within the administration so the
administration provides Congress with one consistent answer.  The General
Counsel has taken a technical review of the law and provided their information
to OMB as part of those deliberations.

     Mr. MICHAUD  Okay.  So in their technical review of the law, what is that?  What
is their recommendation under their technical review of the law?

     Mr. GRAMS  The General Counsel with the information that they have provided to
OMB will lead to their final conclusion in working this out, sir, so that we
can give Congress one answer. 

     Mr. MICHAUD  So they provided their technical review to OMB already?

     Mr. GRAMS  That is my understanding.

     Mr. MICHAUD  Can you provide the committee with a copy of that?

     Mr. GRAMS  I will go back and make that request of our General
Counsel, sir.

     The CHAIRMAN.  Will the gentleman yield?

     Mr. MICHAUD  Yes.

     The CHAIRMAN.  A 2010 law, it says this specifically, and this is where I do not
understand why there is so much consternation.  Veteran programs, the following
programs shall be exempt from reduction under any order issued under this
subchapter.  The subchapter being emergency powers to eliminate budget
deficits.  All programs administered by the Department of Veterans Affairs. 
And that is why I am trying to, I do not think any of us understands where the
fogginess is coming from in regards to that comment. 

     Mr. GRAMS  Mr. Chairman, as you know when interpreting the law, it is not only
looking at a particular provision at a given time but it is going back and
looking at the history and other provisions that it may or may not reference. 
I would, if I recall right, believe that in the letter going to the Supercommittee, it raised issues about potential ambiguities and that is what we
are trying to work out, sir, so that when we give Congress the answer we give
you, the right answer one time. 

     The CHAIRMAN.  So using that rationale if I went up to subsection A it says
benefits payable under old age, survivors, and disability insurance program
established under Title 2 of social security it also says shall be exempt from
reduction under any order issued under this sub, so social security
beneficiaries better be concerned too, correct?

     Mr. GRAMS  Sir, as the CFO of the VA I am hesitant to comment on the law as it
applies to social security.  But I appreciate your question and concern.

     Mr. MICHAUD  So what you are telling me is the General Counsel does not have a
legal opinion on this matter?

     Mr. GRAMS  Congressman Michaud, if it is okay I would like to go back and relay
your concern to our General Counsel’s Office and request that they respond
appropriately.

     Mr. MICHAUD  I just want to know if they have a legal opinion on the
matter.  I mean, if they do not have a legal opinion then why do we have a
General Counsel?  Probably we could save money there.  I mean that is why you
have a General Counsel, to give you legal opinions.  And this appears to be a
question of whether or not it is, whether or not we will have to comply with
sequestration.  but if you could get back to the committee I would
appreciate it.

     My
other question when you look at cost savings, and it is an issue that was
brought up by the VSOs.  And I know the Under Secretary as well had talked
about saving costs.  It gets back to the nursing home issue.  Is that something that you are looking at?  Is
trying to streamline the process so if there is duplications with CMS and the
VA as far as the surveys for nursing homes, to eliminate duplication?

     Mr. GRAMS  Congressman, I will ask Mr. Schoenhard to respond to that.

     Mr. MICHAUD  Thank you.

     Mr. SCHOENHARD.  Congressman, yes, we are looking at that.  As you pointed out,
sir, in the earlier panel there is a number of facilities that are not CMS
certified.  And we take very seriously the oversight and the review of veterans
for which we have fiduciary responsibility for their care as we are providing
these funds.  So we would need to work through the large number of facilities
that are not certified.  We need to balance how we would do that with access. 
I guess one could take the position they should all be CMS certified.  That
might restrict access.  I am not sure that is the answer.  There are a number
of areas that we look at that CMS does not look at, but we appreciate the
efficiency with which that might be achieved.  And we will continue to study
that.  But we need to do so most mindful of the safety and the quality of care
for our veterans.

     Mr. MICHAUD  I agree.  And if I recollect when I saw the two surveys they are
very similar, number one.  Number two, actually there was a report, and I
believe it was a former admiral, a former member of Congress, talked about a
nursing home facility the VA operated that was not very good.  When you looked
at the safety, as matter of fact, I think the report talked about maggots
coming out of wounds of a veteran that was in a VA facility.  And that was a
couple of years ago.  And it was Admiral Sestak, I believe, that brought that
forward to the committee.  So if you really could look at that.  And I would
like to see a side by side of what the VA asks as well as the CMS.  Because I
think this is an area we might be able to save, you know, some money.  So.

     Mr. SCHOENHARD.  We will certainly do that, sir.

     Mr. MICHAUD  Thank you.  I yield back. 

     Mr. BILIRAKIS. [Presiding] Mr. Grams, I am concerned about the antiquated process
the VA is using to broker claims.  Approximately how much does the VA
spend per year on brokering claims?

     Mr. GRAMS  Thank you, Congressman.  I am going to ask Ms. Rubens from VBA
operations to address your question.

     Mr. BILIRAKIS.  Very good.  You are recognized.

     Ms. RUBENS  Thank you, Mr. Grams.  The prospect of brokering is one that VBA
utilizes currently.  I say currently because we have some longer-term plans in place, allowing us to increase some organization
capacity and ensuring that veterans are being served as effectively as possible. 
The stations that we currently broker to are our more effective and efficient
offices.

     Long-term, though, we also understand and having heard the comments from the first
panel as well, the need to move away from physical shipment.  The issue becomes
one of establishing that paperless approach to allow us to do away with
brokering to ensure that that is a cost that we no longer have to incur.  As we
establish that capacity to manage surges, if you will, in a handful of regional
offices we’ve also had the opportunity to benefit from the IG’s report on
brokering.  Some of its recommendations will allow us to see some
savings by avoiding shipping cases that have been prepared for a rating decision
to another office to be rated.  This has been put in place at the IG's suggestion as well
as the suggestion that we consolidated the Nehmer readjudication claims
during fiscal year 2011.  We felt as though we needed to ensure we had the most
effective utilization of those resources. 

     Mr. BILIRAKIS.  Approximately how much would it cost to implement a paperless
system?

     Ms. RUBENS  Mr. Bilirakis, I apologize.  I do not have the full figures with me
for implementing that full paperless implementation.  It is an overarching
approach that VBA is using to engage in transformation, recognizing that we
cannot continue to do business as we have and expect to meet the needs of
today’s veterans.  The receipt of claims has increased tremendously in the last
three years.  As we change not only the training that we provide people, we are
changing the
process that we are utilizing, and implementing technology; we have components for
each of those.  I will need to get for you the record, the technology portion,
for implementing our Veterans Benefits Management System.

     Mr. BILIRAKIS.  Give me a timeframe.  I know you want to implement this.  When
will it become reality?  Give me an approximate timeframe. 

     Ms. RUBENS  Certainly.  For the efforts that are all encompassing, across
people, process, and technology, we are in the midst of the implementation for
it.  The full component, that will begin in January.  For the technology piece,
the implementation of the Veterans Benefits Management System is actually a
three-phased approach.  We are into the third phase.  We have two offices that
are currently engaged in helping us to establish the appropriate requirements,
provide testing and feedback to ensure that the new paperless system provides us what we need from the
repository where the electrons will be housed and that the
systems themselves will allow us to operate in that paperless environment,
replacing our current processing systems.

     Mr. BILIRAKIS.  How much time do you think we will save as far as for the constituents
regarding processing of claims if we move to a paperless system? 

     Ms. RUBENS  Yes, sir.  Today as we look at the overall transformation we are
targeting to meet the Secretary’s very ambitious goals of completing all claims
within 125 days at 98 percent quality by 2015.

     Mr. BILIRAKIS.  Very good.  Thank you very much.  Anyone else want to ask a
question?  Did you have any?  I think we are basically finished here.  On
behalf of the committee I thank each and every one of you for your testimony
and we look forward to working with you of course in the future.  Based on what I have heard today there is no small amount of work.  It can be
done.  In other words, we have to keep working on it.  I repeat my earlier
desire to work with members on both sides of the aisle to ensure America’s
veterans have access to the benefits and services that they deserve.

     I
ask unanimous consent that all members have five legislative days in which to
revise and extend their remarks.  Hearing no objection, so ordered.  I want to
thank the panel for their testimony.  Thanks again for your attendance at
today’s hearing.  And the committee is adjourned.  Thanks so much. 

     [Whereupon,
at 12:00 p.m., the committee was adjourned.]


APPENDIX


Prepared Statement of Hon. Jeff Miller, Chairman, Full
Committee on Veterans' Affairs

Good morning everyone.  Welcome to this morning's hearing. 

Today we will review recommendations from several veterans service
organizations for possible savings within the Department of Veterans Affairs. 

As everyone knows, we are in an unprecedented time of fiscal restraint in
America, one that is long overdue. The Budget Control Act, now the law of the
land, has put in place for the next decade caps on discretionary spending for
every account in government, including VA. These caps will permit overall
government spending to grow at roughly 2.5 percent annually. 

Needless to say, the next 10 years will look vastly different than the last
10 in terms of spending. Now, it is my belief that veterans' spending
and defense spending remain the absolute top priority going forward. Maintaining
the Nation's defense is a clear constitutional charge of the Congress—and I
include the care of those who have fought for our country's freedom as an
inextricable part of that charge.   

With that said, no agency should ever be exempt from a constant effort to
become more efficient in its operations, or root out waste, fraud, and other
questionable spending.

It is with this in mind that I solicited the help of the leading veterans'
organizations to highlight areas of potential savings within VA, which could be
redirected to provide better care and benefits to veterans. 

The VSO response was outstanding. They provided nine areas for the Committee
to examine, and I am so pleased they are here today to discuss those and other
areas of potential savings.  Some of what they recommended, such as
VA's questionable payment of bonuses to already well-paid employees, were
addressed in legislation reported from the Committee and passed by the house. 

Other recommendations require ongoing scrutiny, and today's hearing continues
the Committee's oversight function to that end. I also want to thank the
participation of VA at this hearing. 

I believe there are sincere efforts underway—and documented success in
several areas already—which show that Secretary Shinseki is serious about
VA’s stewardship of taxpayer dollars. 

Nevertheless, there are many areas that need improvement and continued
oversight.  

The VA Office of Inspector General's testimony will confirm that this morning
and I thank the VA OIG for its work with the Committee, VA, and veterans'
advocates in our common purpose.   

Before I close, let me touch on one other issue that is on everyone's mind,
one that Carl Blake raises in his opening statement for the Paralyzed Veterans
of America.  Namely, the question of whether VA medical care is exempt from
indiscriminate cuts that would occur across government accounts under a
sequester order. 

Now, it's my firm hope and expectation that the Joint Select Committee will
rise to its calling and produce a bill which saves a minimum of $1.2 trillion
over the next decade that can clear the Congress and be signed by the
President.  Should that not happen a week from tomorrow, however, veterans and
their loved ones deserve to know, now, whether VA will be affected by a looming
sequester. 

It's my belief that VA is absolutely exempt. But only the Office of
Management and Budget is vested with the authority to determine the sequester
rules.  To date, OMB has not been clear on this point. 

Mr. Grams, I hope you can shed some light on the Administration's position
when you appear on our second panel.

Again, I thank all of our witnesses for their attendance this morning. 

I now turn to our ranking member for her opening statement.  Ms. Brown,
you are recognized.

Prepared Statement of Hon. Corrine Brown

Chairman Miller, Ranking Member Filner, thank
you for holding this hearing today. 

It is important to make sure that veterans
get the resources they need while making sure the resources are not wasted.

I am pleased to have been a member of this Committee who
worked with leadership to increase the VA budget by its largest amount in its
history.  We need to continue to support
these increases while not wasting the resources that need to help both current
and future veterans.  And at no time have
I ever advocated to balance the budget on the backs of our veterans.  When the VA saves money, it puts those
resources back into the veteran, not the General Fund.

I thank the VSOs for the work they do and their involvement
in this process.  Their Independent

Budget helps keeps this committee honest when allocating
resources for the upcoming fiscal year and makes sure the accounts that need
funding, get it.

One of my foremost concerns is to ensure that the resources
get to the veterans.  It is important
that the Departments of Veterans Affairs, Housing and Urban Development and
Labor work together to help veterans.  Housing and Veterans. 
Homeless veterans are one of the works marks on our policies.  How can these young men and women be cast off
to the side after serving their country? 
The three departments need to work together to solve the problem,
because it is not happening separately.

I fully support the work that Secretary Shinseki has begun
at the VA.  As this committee has said
repeatedly, the culture of working against the veterans needs to change to
where they are the advocate for the veteran. 
The Secretary is moving the VA in that direction.  It takes time.

I look forward to hearing the testimony of the witnesses
today.

Thank you Mr. Chairman.

Prepared Statement of Joseph A. Violante, National
Legislative Director, Disabled American Veterans

Chairman Miller, Ranking Member
Filner, and Members of the Committee:

Thank you for
inviting me to testify about areas within the Department of Veterans Affairs
(VA) that should be scrutinized by Congress to ensure that inefficiency,
duplication and waste are minimized or eliminated.  On behalf of the Disabled
American Veterans (DAV), and in partnership with my colleagues from The
American Legion, Veterans of Foreign Wars (VFW), AMVETS, and Paralyzed Veterans
of America (PVA), I am pleased to appear before you this morning.

Earlier this year,
in response to your request, DAV, VFW, PVA, AMVETS and The American Legion
worked together to develop recommendations for areas within VA where
inefficiency or waste might be uncovered and eliminated.  We have been pleased
to see that since we submitted our recommendations on April 4, both the General
Accountability Office (GAO) and VA’s Office of Inspector General (VAOIG) have
produced reports that touch on several of our recommendations, and we have
incorporated some of their comments into our testimony.  Like you and all members
of this Committee, we believe that the precious resources allotted to VA must
be wisely and efficiently spent, especially when our nation faces fiscal and
economic crises resulting from massive government deficits and debt.  Every
dollar that is misspent is one that cannot be used to help a veteran in need. 

However, it is
also important to recognize that simply cutting VA’s budget in the absence of
detailed justifications or evidence of savings, is more likely to result in a loss
of accessibility, quality and safety of the services veterans depend on, rather
than true deficit reduction.  Furthermore, we believe such an approach will
likely lead in the future to additional, avoidable spending to “fix” problems that
manifest as a direct result of underfunding essential services for veterans.

For example, a
decade ago, the Bush Administration proposed several successive VA budgets,
each of which proposed to make substantial “management efficiencies” and
thereby reduce the need for billions of dollars in direct appropriations.  Although
funding was indeed reduced, no efficiencies were ever documented to have been achieved
while the demand and need for resources continued to rise.  As a consequence, after
several such budget cycles, newly-confirmed Secretary Nicholson in 2005
returned to Capitol Hill just weeks after presenting the FY 2006 budget and
admitted VA was seriously underfunded by more than a billion dollars.  In the
end, Congress provided the requested supplemental appropriations to cover the unmet
demand, but not before thousands of veterans were turned away or forced to wait
for vital VA health care services.

For these reasons,
we urge this Committee to closely examine a number of troubling elements of VA’s
budget and appropriations that seem to echo these same problems from the past. 
For example, the FY 2012 budget presented in February for VA health care by the
Obama Administration relies on several “gimmicks” to reduce the real dollar
appropriations provided by Congress, including a projected $1.2 billion in
savings from “operational improvements,” $500 million in carryover funding from
FY 2011, an unexplained or justified reduction in non-recurring maintenance,
and an approximate $1 billion contingency fund for medical care that may or may
not be released to VA.  All of these assumptions have been built into VA’s FY
2012 budget, thereby lowering the level of appropriations approved by Congress,
yet there are serious questions about whether these “savings” will indeed
reduce VA’s need for direct funding.

Further straining
VA’s medical care budget, receipts from the Medical Care Collections Fund
(MCCF) have been dropping.  In February of this year, VA indicated that
contrary to prior assumptions used to build the FY 2012 advance appropriation
for medical care, MCCF receipts were expected to drop by $600 million.  Later in
July, Secretary Shinseki reported to Congress that “MCCF collections are 8.5%
below plan…,” further reducing funding available to VA for FY 2012 medical care
programs. 

In July, the
Secretary reported that implementation of the new caregiver programs would cost
almost $100 million more in FY 2012 than previously estimated.  He also stated
that VA’s “… ability to achieve operational improvements…remains an element of
risk to the sufficiency of the FY 2012 budget.”  In a report released in June, GAO
raised these same concerns about the “operational improvements,” citing
similarities to “management efficiencies” proposed by VA in prior years that
did not materialize and were never documented as having been achieved.  In
addition, GAO reported that in VA’s FY 2012 medical care budget submission,
funding for non-recurring maintenance had been lowered $900 million below the level
that VA’s own Enrollee Health Care Projection Model (EHCPM) had already projected
was needed to maintain its health care facilities. 

Mr. Chairman, if
we are to ensure that VA actually eliminates duplication, inefficiency and
waste from its budget, rather than just cutting services for veterans, we must
have an accurate and transparent budget process to measure whether savings are achieved. 
First, did the carryover funding from FY 2011 to FY 2012 actually take place? 
What is the current projection for MCCF in FY 2012?  How will VA measure
whether savings from proposed “operational improvements” actually materialize? 
Does VA anticipate requesting the funding designated for contingency purposes? 

Moreover, as we
work to find areas where real savings might actually be achieved, we must keep
in mind that VA has significant underfunded needs that are essential to the
integrity of the system itself, especially its health care infrastructure. 
VA’s Strategic Capital Investment Planning (SCIP) process has estimated that VA
space is over-utilized at 114 percent of its intended capacity.  SCIP has identified
at least 4,808 capital projects that should be completed within ten years, at a
cost estimated to be between $53 and $65 billion.  Yet funding for major and
minor construction has gone down, not up, and funding for non-recurring
maintenance and equipment purchases are being cut below what VA’s own actuarial
model estimates is needed.

Although Congress
has funded a significant number of new facilities in recent years, the vast
majority of existing VA medical centers and other associated buildings are, on
average, more than 60 years old.  Aging facilities create an increased burden
on VA’s overall maintenance requirements.  All facilities must be maintained
aggressively so that their building systems—electrical, plumbing, capital
equipment, etc.—are up to date and that these facilities are able to continue
to deliver health care in a clean and safe environment. 

Unless VA
effectively responds to these needs, we fear that VA’s capital programs and the
significant effects on the system as a whole, as well as the veterans
individually, will go unchanged; ultimately risking a diminution of the care
and services provided by VA to sick and disabled veterans in substandard
facilities.  Older, out dated facilities do not only present patient safety
issues, but from VA’s perspective, older buildings often have inefficient layouts
and inefficient use of space and energy.  This means that even with
modification or renovation, VA’s operational costs will be higher than they
would be in a more modern structure.  For these reasons, we believe that if
Congress is able to find true “savings” the first obligation must be to use
them to help fund the essential long-term maintenance needs of the VA health
care system.

Mr. Chairman, I
would also like to comment on one proposal to make “savings” that may be
considered by the so-called “Super Committee:”  to take back all or part of the
cost-of-living-adjustment (COLA) increase for veterans disability compensation
and survivors’ disability indemnification compensation (DIC) payments that
Congress just approved.  As you know, disabled veterans have not had a COLA
increase since December 2009.

On October 19, it
was announced that there would be a 3.6 percent COLA for Social Security
recipients next year, and the Senate immediately and unanimously passed
legislation (S. 894) to apply this same COLA increase to veterans disability
compensation payments.  On November 2, the House also passed this COLA legislation
unanimously, just as it had done with companion House legislation (H.R. 1407)
earlier this year.  We expect the President will sign this legislation any day
now.  Mr. Chairman, we want to thank you and all members of this Committee for
helping to pass this vital legislation.  As you have stated, for the past “…two
years, our veterans have not received an increase.  This additional income will
help them make ends meet in the coming year.” 

However, we are
distressed to hear that the “Super Committee” may consider a proposal to
freeze, delay or cut this very COLA that Congress just passed without one
dissenting vote.  While we recognize it is difficult to make reductions in
federal spending, we believe it would be irresponsible to target cuts at those
who have already sacrificed so much for their country.  For many of these
veterans, particularly those with severe and catastrophic disabilities, these
payments may be their primary or even their only source of income. 

For the past two
years, disabled veterans have seen no COLA increases, and for many it has
become increasingly harder to make ends meet.  While the official COLA may have
been zero for those years, it is important to understand that the CPI index
upon which the COLA is calculated does not take into account increases in the
cost of food or gasoline.  In addition, as disabled veterans grow older, their
needs may also increase due to declining health and increased morbidity.  We
agree with the sentiment that Mr. Filner expressed on the House floor when he
said, “…[Congress] would be derelict in our duty if we failed to guarantee that
those who sacrificed so much for this country are able to receive benefits and
services that keep pace with their needs and inflation.”

Mr. Chairman, in
this context, our veterans organizations have worked together to identify
specific areas throughout VA where we believe the Committee could focus additional
attention to find inefficiency, duplication and waste.  Many of the ideas we
developed were already on the Committee’s oversight agenda, so in our joint
letter of April 4, we focused on nine additional areas that offered new opportunities
for the Committee to consider.  In the spirit of eliminating duplication and
being efficient, my colleague from PVA will focus on the first five areas from
our letter and I will focus on the last four.

Duplicative Surveys of State
Veterans Homes

Currently, State
Veteran Homes must undergo regular evaluation by VA inspection teams.  Many of
these same veterans’ homes are also inspected by the Centers for Medicare and
Medicaid Services (CMS).  The CMS survey has approximately 185 criteria and is
considered the more stringent survey.  The VA survey has 158 criteria, 150 of
which are already contained in the CMS survey.  VA could quickly review its
eight unique criteria as part of the CMS survey team or on its own, in order to
cease such duplication of efforts. Such overlap in inspection regimes appears
unwarranted and we understand that VA itself has been seeking to engage CMS to
consider ways to eliminate this duplication, however so far they have been
unable to make much progress.  We urge the Committee to examine this overlap of
efforts in order to reduce the administrative burden on both VA and State
Veterans Homes and potentially achieve savings.

VBA Records Management and
Shredding Practices

In response to
alarming instances of security lapses and the discovery of the destruction of
veterans’ claims files by employees, VBA in recent years has instituted a
number of new security protocols, including records management practices.  While
VBA absolutely needed to take corrective action to ensure that essential
veterans’ records were never again destroyed in the future, we have heard
credible reports that some VA Regional Offices (VARO) may have gone too far and
spent too much time and resources on shredding non-essential paperwork.  We
understand each VARO has designated a “Records Management Officer,” often at one
of the higher GS levels, who spends an inordinate amount of time focused on the
shredding of documents.  We have been told that such records management
practices have become overly complicated; in fact, some VAROs even have procedures
for shredding Post-It notes, further burdening VBA employees struggling to
properly adjudicate hundreds of thousands of pending claims.  It is our
understanding that VBA has made some changes over the past six months in this
area, however, we would recommend that the Committee continue to investigate
whether current records management practices are effective and appropriate to
meet the requirements of protecting and preserving veterans’ records, without
wasting precious VA resources.

The Costs of Brokering VBA
Claims Work

Another area of
the VBA claims process that needs scrutiny is the practice of brokering claims
between and amongst VBA regional offices, and particularly the significant costs
of transporting such brokered claims files.  Brokering has become a standard
practice in recent years as some VAROs have been overwhelmed with the sheer
volume of work.  VBA has created more than a dozen specialized Resource Centers
at VAROs to handle brokered claims; four doing development phase work, eight
doing rating, award and authorization work, and one “Tiger Team” that does all
phases of the claims process on the oldest and most complex brokered claims. 
According to a VA Inspector General (VAOIG) report in September, the number of
brokered claims has been rising in recent years, reaching 18% in FY 2010. 
Although that number has dropped over the past 18 months as these resource
centers have been shifted to work on Nehmer claims, but as the Nehmer workload
ends later this year the resource centers will once again start to receive large
numbers of brokered claims.

While VBA is still
awaiting a paperless solution to its claims processing problems, it must
maintain and process virtually all claims using paper files, many of which
contain hundreds of pages.  It is our understanding that claims are transported
using FedEx services in both directions.  Furthermore, some claims are brokered
twice: once from the home VARO to a resource center doing development, then
after being returned to the home VARO, the claims file is sent to another
resource center for the rating, award and authorization work, and then back
again to the home VARO.  The costs of transporting these claims using express
delivery services must be quite substantial.  In addition, the number of
personnel involved in locating, organizing, delivering, receiving and
distributing these paper files must also be quite substantial.  The VAOIG
report also found other areas of concern related to the timeliness and quality
of the work done through this brokering process that the Committee needs to
review.

We would recommend
that the Committee examine the entire brokering system, particularly the
paper-centric logistical demands of the current practices.  We believe that VA
should consider transitioning rapidly to digitizing all claims files that are
to be brokered.  If feasible, such a change could redirect spending from shipping
paper files to digitizing files in anticipation of future paperless processing.

Regular Use of Authorized
Overtime

One additional
area in VBA that merits scrutiny by the Committee is the use of mandatory or “authorized
overtime” as a regular practice to address increased workload.  While VBA
continues its myriad efforts to develop a new paperless, rules-based process
for developing and adjudicating claims, it has relied on increased manpower to
meet the current workload requirements.  As the total number of claims filed
has grown to over 1.2 million per year, VBA has hired several thousand new
employees to try and keep pace.  In addition, we understand that most VAROs
have also increased the regular use of “authorized overtime” by employees in an
attempt to meet production goals.  We have concerns about whether sufficient
and cost-effective productivity gains can be achieved through heavy reliance on
overtime.  More importantly, we have concerns about the effects on quality if employees
are being mandated to work under the pressure and strain from extended hours. 
We recommend that the Committee examine VBA’s use of overtime and further
examine whether VBA’s personnel projections and staffing models are accurately meeting
their workload requirements.

Finally, I do want
to add one comment about the issue of Senior Executive Service (SES) bonuses
that was discussed in our joint VSO letter and in my colleague’s testimony
today.  While it is important for Congress and VA to consider whether it is
appropriate to provide SES bonuses at a time when federal employees are in the
midst of a two-year federal pay freeze, we would not want to see VA put at a
competitive disadvantage to other federal agencies.  If Congress were to
consider reducing or eliminating SES bonuses for any time period, it must do so
across all federal agencies, not just target VA.  We must ensure that those
dedicated men and women who choose work that serves our veterans are equally
valued and compensated as those who work elsewhere in the federal government.

Mr. Chairman, as
we have pledged to you previously, we will continue to work with this Committee
and others in Congress to identify areas within VA where there may be
duplicative, ineffective, inefficient or wasteful use of VA resources.  We
share your desire to ensure that the precious funding dedicated to the care of
America’s veterans, especially disabled veterans, achieve its intended
purposes.

That concludes my
testimony and I would be happy to respond to any questions you may have.

Prepared Statement of Carl Blake, National Legislative Director, Paralyzed
Veterans of America

Chairman Miller, Ranking
Member Filner, and members of the Committee, Paralyzed Veterans of America (PVA) is pleased to be here today to discuss the ongoing debate about deficit and debt reduction
and how that might affect the Department of Veterans Affairs (VA).  This Committee
has expressed an interest in this issue since the beginning of the year.  In
fact, as you know, PVA, along with AMVETS, Disabled American Veterans, The
American Legion, and Veterans of Foreign Wars, addressed this issue in a letter
provided to the Committee in April 2011.  Today, we will address the various
issues that were outlined in our letter to the Committee.  Additionally, we
will address the larger budget and appropriations process and ongoing
activities within the VA related to this process. 

Before
discussing the ideas put forth by the five veterans service organizations
represented here today, I would like to focus my comments on the current status
of the budget and appropriations process.  Once
again, Congress has failed to fulfill its obligations to complete work on
appropriations bills funding all federal departments and agencies, including
the VA, by the start of the new fiscal year on October 1, 2011.  Fortunately, as has become the new normal, last year the
enactment of advance appropriations shielded the VA health-care system from the
political wrangling and legislative deadlock.  However, the larger VA system is
still negatively affected by the incomplete appropriations work.  VA still
faces the daunting task of meeting ever-increasing health-care demand as well
as demand for benefits and other services.

Meanwhile, the VA is
operating based on the parameters of P.L. 112-36, the “Continuing
Appropriations Act for FY 2012.”  As we understand it, the VA has implemented
an across-the-board reduction in all program spending of approximately 1.5
percent.  As you know, one of the main reasons that Congress passed, and the
President signed, legislation creating advance appropriations was precisely to
allow the VA health care system to be able to function efficiently and without
interruptions caused by budget showdowns and stop-gap continuing
resolutions.  That is why Congress included a full year FY 2012 advance
appropriations for VA medical care in P.L. 112-10, the “Full Year Continuing
Appropriations Act for FY 2011,” passed in April 2011.  For this legislation to
be superseded or misinterpreted by short term CRs and result in a reduction of
VA health care funding that was already approved is absolutely outrageous.

Moreover, we are
particularly concerned about steps the VA has taken in recent years to generate
resources to meet ever-growing demand on the VA health care system.  In fact,
the FY 2012 and FY 2013 advance appropriation budget proposal released by the
Administration earlier this year includes “management
improvements,” a popular gimmick used by previous Administrations to generate
savings and offset the growing costs to deliver care.  Unfortunately, these
savings were often never realized leaving the VA short of necessary funding to
address ever-growing demand on the health care system.  We believe that
continued pressure to reduce federal spending will only lead to greater
reliance on gimmicks and false assumptions to generate funding.  In fact, the Government Accountability Office (GAO)
outlined its concerns with this budget accounting technique in a report
released to the House and Senate Committees on Veterans’ Affairs in June 2011. 
In its report, GAO states:

If the estimated savings for fiscal years 2012 and
2013 do not materialize and VA receives appropriations in the amount requested
by the President, VA may have to make difficult tradeoffs to manage within the
resources provided.[1]

This observation reflects the real
possibility that exists should VA health care, as well as other programs funded
through the discretionary process, be subject to spending reductions. 

And
yet, we are here today to further discuss savings that can be realized within
the VA.  As we outlined in our letter to the Committee earlier this year, the
veterans service organizations are not so naïve as to think that cost-savings
cannot be found within the VA, but the question remains:  “To what end?”  The
context of this hearing is to identify savings within the VA that can be
presumably returned to the Treasury for deficit and debt reduction.  However, we
believe the VA is already failing to meet the demands being placed on its
health care and benefits systems.  We would argue that any savings realized by
the VA should be used to fill gaps in services now or be immediately reinvested
into the system to make it function more efficiently and effectively.  This is
especially true when discussing the maintenance and modernization of the
infrastructure necessary to deliver the benefits and services authorized under
current law. 

In response to your budget
hearing questions posed after the release of the Administration’s budget
request in February about “savings” and “waste” within VA, we presented our
shared views on the need for Congress to conduct aggressive oversight of
federal veterans’ programs and services to ensure that they are providing
maximum value to our nation’s veterans.  Like you, we are committed to working
collaboratively to identify areas of inefficiency, duplication or waste so that
the resources provided by Congress to the VA are effectively and efficiently
used to deliver the benefits and services due to our nation’s veterans. 
However, to simply cut spending across-the-board, in the absence of detailed
justifications or evidence of savings, will likely result in the loss of
accessibility, quality and safety of the services veterans depend on, rather
than true deficit reduction.  We believe such an approach will likely lead to
additional, unnecessary and avoidable spending to “fix” problems created by
underfunding essential services for veterans.

Within this context, we have
worked together to identify specific areas throughout VA where we believe the
Committee should focus its attention in efforts to find inefficiency,
duplication and waste.  Many of our ideas are already on the Committee’s
oversight agenda.  My comments will focus on the issues identified in our joint
letter targeted at the administration of the VA and the health care system. 

Growth of General
Administration

In recent years, increased
scrutiny has been placed upon the administrative sections of the VA, most
notably on General Administration.  The VA’s General Administration budget
request includes funding for the Office of the Secretary, the Board of Veterans’
Appeals, the General Counsel, and the Offices of Management, Human Resources,
Policy and Planning, Operations and Security, Public and Intergovernmental
Affairs, Congressional and Legislative Affairs, and Acquisitions, Logistics,
and Construction.  In FY 2012, the Administration recommended an 11.3 percent
increase in funding for its General Administration accounts, the largest
account increase within the VA.  As we expressed, and as the Committee likewise
emphasized, during the hearing held in conjunction with the release of the FY
2012 Budget Request in February, we have serious concerns that rising VA
Central Office (VACO) management budgets and expanding personnel comprise a
significant portion of FY 2012 budget growth.  In fact, it was particularly troubling
to our organizations that the Administration requested a considerable increase
in funding for General Administration while simultaneously requesting a
decrease in funding for the Veterans Benefits Administration

The scale of the increases sought
in General Administration do not appear reasonable  and we have concerns about
whether such bureaucratic growth is necessary during a time when veterans face
delays in accessing medical care and proper claims adjudication.  However, we
would like to impress upon the Committee that some of the changes to
administrative funding in the VA are the result of new requirements and
programs authorized by Congress.  It is not surprising that the VA might choose
to direct more funding to its administrative functions in order to respond to
the actions of Congress.  Ultimately, when budgets are limited, it is essential
that every penny reach the veteran at the ground level.  We urge this Committee
to scrutinize the General Administration account, including travel and meeting
costs, and to limit funding increases only where necessary, and to redirect
these funds to the services and programs that immediately impact veterans. 
Moreover, it is imperative that the Committee consider the ramifications of any
new programs authorized or requirements placed upon the VA.  

Size of VISN Administrations

Similarly, we are concerned
about the size and growth of the VISN (Veterans Integrated Service Networks)
bureaucracies within the Veterans Health Administration (VHA).  When this new
organizational model was developed, the plan called for VISNs to employ a small
number of managers and support staff, perhaps a dozen or so, and any additional
expertise needed would come from existing personnel at medical centers and
other existing facilities.  Today, however, some VISNs employ hundreds of
administrative personnel and have built enormous buildings to serve as their
permanent headquarters. 

We understand that VA
leadership is beginning to take steps that will better align the VISN administrative
structure with the duties and responsibilities placed upon those offices. 
However, we hope that as the VA reorganizes its personnel alignment at the VISN
level that these changes do not translate to simply administrative staff at a
different location.  Any change in VISN organization should have quality,
timely health care delivery as its priority.  Ultimately, while we believe
there is certainly value in the regional network model that VHA employs, we
urge the Committee to carefully examine the growth of VISNs and the increasing
share of the budget that they currently consume. 

Funding “Hold Back” at
VACO and VISNs

Related to concerns about
VACO and VISN growth is the manner in which Congressionally-appropriated funds
for medical care are distributed to the field.  In particular, we have concerns
about the practice of “hold back”, by which VACO or VISNs may withhold medical
care appropriations from being distributed to facilities as directed by the
Veterans Equitable Resource Allocation (VERA) system.  VERA determines the
level of funding each facility should receive annually based upon the quantity
and value of services provided in prior years, relative to the amount of
medical care appropriations in the current budget.  However, it has become a
common practice that VACO “holds back” a significant amount of this funding and
retains it to be distributed as it determines for special programs or projects,
or to meet contingencies that may arise throughout the year.  Similarly, VISNs
“hold back” portions of the VERA funding they receive to fund their operations
and for other programs and projects that they manage. 

In fact, as we have already
explained in this testimony, the VA is currently holding back approximately 1.5
percent of the advance appropriations (as well as other VA funding) for health
care as a result of its interpretation of the current “Continuing Resolution.” 
Preventing funds from being disbursed to the field ultimately diminishes the
care being provided.  As we have already testified, all of our organizations
have received credible reports from VHA facilities across the country in recent
years that despite significant year-to-year increases for VA medical care,
local facilities received only small or no increases. 

This is particularly
troublesome when we continue to hear about funding shortfalls occurring at
medical centers around the country.  Likewise, there continue to be reports
everyday of the VA falling short in provision of various health care services. 
In fact, The New York Times recently reported on a survey of VA mental
health professionals in an article on October 24, 2011: 

Only
29 percent of respondents—272 psychologists, psychiatrists, nurses and social
workers at dozens of hospitals and clinics—said their workplace had enough
staff to meet demand.  Nearly 40 percent said they could not schedule an
appointment for a new patient within the 2-week window the veterans
department requires.  Nearly 70 percent said they lacked enough space.  And
nearly half said some patients were being denied care because no appointments
were available outside regular office hours.

We regularly hear reports of
hiring freezes that seem inconsistent with the growth of VA’s medical care
appropriations.  Several VA medical center (VAMC) directors have reported
budget shortfalls that would preclude them from moving forward with hiring.  In
fact, the American Federation of Government Employees (AFGE) testified earlier
this year that in the VAMC in Delaware, budget shortfalls resulted in
leadership leaving beds empty in emergency rooms and therefore limiting the
ability to provide necessary care to the community’s veterans.  Last fall, the
Director of the Indianapolis VAMC, in a newsletter to his staff, informed them
that the facility expected to be $28 million short of the resources required
for FY 2011; this despite VA having received a significant funding increase
through advance appropriations.  And yet, the VACO response has been that
directors “want” more money than they “need.”  We would beg to differ with this
assertion.  We urge the Committee to examine how VA “holds back” medical care
appropriations from being distributed through VERA, how VISNs do similar “hold
backs,” and whether such practices are properly using medical care funding,
including focusing on the growth of administrative personnel and “special
projects.”

Additionally, we must
reemphasize that often the VA is forced to withhold funding to VISN and local
levels in order to address new program requirements created through
Congressional authorization. 

SES Bonuses

Another area that has drawn
significant scrutiny in recent years is the distribution of bonuses to the
Senior Executive Service (SES) employees at a time when there are serious
questions about management performance, particularly in an environment where
federal funding is constrained.  For example, last year the Veterans Benefits
Administration (VBA) distributed $417,152 in bonuses to 30 SES employees while
veterans wait interminably long periods to receive their proper disability
benefits.  During 2010, the backlog of compensation and pension entitlement
claims pending over 125 days (VBA’s standard) rose from just less than 180,000
to over 290,000 claims.  Furthermore, a March 2010 GAO report found that
accuracy as noted by VBA’s own STAR program had not increased, but fallen from
86 percent accuracy to below 84 percent accuracy.  When every metric of VBA's
performance drops, it appears unreasonable that management should be rewarded.

Given that the VA’s workforce
has dealt with a pay freeze for all federal employees for the last two years,
the payment of bonuses seems completely unjustified.  Overall, focused solely
on bonuses paid to the SES employees, last year VA paid out over $3.4 million
dollars to 238 SES employees with an average SES Performance Bonus exceeding
$14,000.  This is nearly half of the Bureau of Labor Statistics estimate of the
average American salary of $32,708 for 2010. 

We understand that executive
bonuses serve an important purpose.  In order for the VA to be competitive in
the marketplace for senior executive leadership, it must be able to provide
financial incentives to candidates and employees.  However, given the tight
fiscal situation facing the VA, rather than taking $3.4 million dollars to
reward senior executives of VA, we believe this funding might be better
directed to ensure essential programs are funded to assist those who have
fought to defend our nation.  We urge Congress to scrutinize the bonus
practices within VA, particularly while a federal pay freeze is in effect. 
Additionally, we believe Congress should not limit its scrutiny of SES bonuses
to the VA, but to all other federal agencies which you have oversight authority
over in other committees. 

Care Coordination for VA
Fee-Based Care

Another area we urge the
Committee to address is the lack of coordination of non-VA purchased care and
the process of referring veterans to local providers.  A veteran who is
approved for fee-based care is not currently provided a list of providers who
are certified, licensed, or accredited to practice.  Furthermore, VA does not
identify local providers in the veteran patient’s community that accept VA’s
payment rate.  VA’s General Counsel has indicated that this “identification and
referral” process may not adhere to full and open competition requirements as
well as other quality oversight issues.  Failure to adopt such an
identification and referral process can lead to veterans being unable to find
qualified providers.  It can also lead to VA paying higher rates than necessary
because savings could have been achieved if VA would identify and contract with
local networks or providers at lower rates.  We urge Congress to conduct
oversight of non-VA purchased care to ensure coordination of care and to avoid
improper payments. 

Joint Select Committee on
Deficit Reduction

Ultimately, discretionary
spending in the VA accounts for approximately $62.0 billion.  Of that amount,
nearly 90 percent of that funding is directed towards VA medical care
programs.  As the Joint Select Committee addresses the possibility of
reductions in discretionary spending across the entire federal government,
including the VA, it is important to emphasize that any cuts to VA spending
will have a direct impact on the delivery of health care services and benefits
to veterans and their families. 

We are concerned that in the event
that the Joint Select Committee fails to agree to a bipartisan solution or the
House or Senate fails to approve the Committee’s recommendations, an automatic
“trigger” would occur that would immediately cut an additional $1.2 trillion in
federal spending.  The triggers would target two principle areas of the federal
budget—national security spending and all other domestic spending.  For FY 2012
and FY 2013, the VA would be included in the national security category along
with the Department of Defense, Department of Homeland Security, Department of
State, and similar agencies.  While we believe all VA programs are excluded
from automatic cuts by P.L. 111-139, The “Statutory Pay-As-You-Go Act of 2010,”
questions remain about whether or not VA health care spending in particular
could be included in broader discretionary spending reductions.  In fact,
Section 11 (Exempt Programs and Activities) of P.L. 111-139 specifically
states:

(b) VETERANS PROGRAMS—The following programs shall be
exempt from reduction under any order issued under this part:

All programs administered by the Department
of Veterans Affairs.”

We believe this language is crystal
clear in outlining the priority that Congress has placed on funding for VA
programs, even in the face of pressure to reduce the deficit. 

The VA is the best health
care provider for veterans.  Providing primary care and specialized health
services is an integral component of VA’s core mission and responsibility to
veterans.  Across the nation, VA is a model health care provider that has led
the way in various areas of medical research, specialized services, and health
care technology.  The VA’s unique system of care is one of the nation’s only
health care systems that provide developed expertise in a broad continuum of
care.  Currently, VHA serves more than 8 million veterans, and provides
specialized health care services that include program specific centers for care
in the areas of spinal cord injury/disease, blind rehabilitation, traumatic
brain injury, prosthetic services, mental health, and war-related polytraumatic
injuries.  Such quality and expertise on veterans’ health care cannot be
adequately duplicated in the private sector.  Any reduction in spending on VA
health care programs would only serve to degrade these critical services. 

In the end, it is easy to
forget, that the people who are ultimately affected by wrangling over the
budget are the men and women who have served and sacrificed so much for this
nation.  We hope that you will consider these men and women as you continue to
investigate areas for potential savings within the VA budget. 

This concludes my testimony. 
I will be happy to answer any questions you may have. 


 Information Required by
Rule XI 2(g)(4) of the House of Representatives

Pursuant to Rule XI 2(g)(4)
of the House of Representatives, the following information is provided
regarding federal grants and contracts.

Fiscal Year 2011 

Court of Appeals for Veterans
Claims, administered by the Legal Services Corporation — National Veterans
Legal Services Program— $300,000 (estimated).

Fiscal Year 2010 

Court of Appeals for Veterans
Claims, administered by the Legal Services Corporation—National Veterans Legal
Services Program— $287,992.

 Fiscal Year 2009 

Court of Appeals for Veterans
Claims, administered by the Legal Services Corporation — National Veterans
Legal Services Program— $296,687.


[1]
U.S. Government Accountability Office. (2011, June). GAO-11-622. Veterans’
Health Care Budget Estimate: Changes Were Made in Developing the President’s
Budget Request for Fiscal Year 2012 and 2013.

Prepared Statement of W. Todd Grams, Executive in Charge
for the Office of Management and Chief Financial Officer, U.S. Department of
Veterans Affairs

Good morning, Chairman
Miller, Ranking Democratic Member Filner, and Members of the Committee.  I am
accompanied today by Mr. William Schoenhard, FACHE, Deputy Under Secretary for
Health for Operations and Management, Veterans Health Administration and Ms.
Diana Rubens, Deputy Under Secretary for Benefits for Field Operations,
Veterans Benefits Administration. 

I am pleased to be here
with my colleagues and to share this forum with representatives of the
Department of Veterans Affairs (VA) Office of Inspector General (OIG).  I also
want to recognize as our partners and friends, the Veterans Service Organizations
(VSO).  They serve as tireless advocates for Veterans and support, in so many
ways, VA’s mission to serve Veterans across the array of health care,
disability compensation, memorial benefits and other services they have richly
earned.  The VSOs also provide VA with useful observations on VA’s performance,
from their own professional staff as well as their members.

This hearing is
centered on a joint VSO letter sent to you, Mr. Chairman, on April 4, 2011, spurred by your
questions at the budget hearings earlier this year.  Their letter states our
central challenge very well:  how do we provide the maximum value and
excellence of service to Veterans, at the same time we are becoming more efficient,
reducing waste, and respecting every dollar entrusted to us by the taxpayer? 
The letter also explains why this has to be a careful and studied exercise to
avoid taking actions that, while appearing to be fiscally responsible, would
“likely result in the loss of accessibility, quality, and safety of the
services Veterans depend on” and actually could lead to additional avoidable
spending.  It is clear this Committee is - and has been - committed to taking a
careful and deliberate path, as we strive to achieve fiscal discipline while
improving quality and access for those returning Servicemembers and for
Veterans of all eras - as well as their families and survivors.

We set out in this
testimony some of our more significant initiatives that are already delivering
better services to Veterans and cost savings.  While acknowledging our
successes, we must also recognize that in an organization with missions as
large, complex, and varied as VA, there are times when these operations and
systems need improvement or correction.  In those circumstances we must take
action.  The Congress, the VSOs, and our OIG are important contributors in our
efforts to always learn and improve, as they provide an outside view of how we
are living up to the commitments the Nation makes to Veterans. 

The hearing
invitation asked VA to testify on the recommendations made in the VSO letter. 
We would like to do so in the context of speaking to the Department’s broader
transformational efforts that are central to both improving our benefits and
services and using resources wisely.  The Secretary began these efforts after
taking over the helm of VA when he focused the Department to be
“people-centric, results-driven, and forward-looking.”  It is hard to overstate
how important the ‘people-centric’ element is in the work we do.  We live
necessarily in the world of systems, processes, organizations, and policies –
but they all exist – and we all at VA are here - to serve Veterans.  This
personal dedication is exhibited every day in extraordinary ways by our
employees.  Being a People-centric organization means having our leadership,
management, and systems be as good as our individual employees - to empower
that sense of mission, and not frustrate it. 

Being
results-driven means that we do more to measure our performance and hold
ourselves accountable.  We will be measured by our accomplishments, not by our
promises.  VA’s leadership has been developing systems and processes to better
measure the results we are securing for Veterans.  And being forward-looking
means modernizing VA’s business practices and using technology to its fullest
advantage.  We will seek out opportunities to deliver the best services with
available resources, continually challenging ourselves to do things smarter and
more effectively.

VA Efficiencies and Savings
through Transformation–Office of Management

With those
principles in mind, I will first highlight those transformation efforts I am
responsible for as VA’s Chief Financial Officer (CFO).  These are not issues in
the VSO letter, but it is important for the Committee to know that these
significant improvements in financial management systems and integrity serve as
a foundation in securing efficiencies and savings across the Department.

Shortly after
joining VA in November 2009, I led the CFO team in establishing a set of top
priorities for VA financial management.  It has been my pleasure to brief this
Committee’s staff of the status of these initiatives on a quarterly basis.  Our
priorities included fixing long-standing issues in financial management, which
have been concerns for VA and this Committee.  These included material
weaknesses in our financial systems as well as a lack of adequate internal
controls over $14 billion in spending categorized as miscellaneous obligations,
VA’s independent auditor certified at the end of fiscal year (FY) 2010, we had
remediated our three material weaknesses related to financial management.  In
terms of internal controls and financial integrity, this was a major
accomplishment.  It has been over a decade since VA had no financial management
material weaknesses.  We have also dramatically reduced the number of financial
issues the auditors categorize as significant deficiencies.  Since 2008, VA has
reduced those significant deficiencies from sixteen to two.

Internal controls
related to ‘miscellaneous obligations’ have been a long-standing issue of concern
to this Committee, VA’s OIG and the Government Accountability Office (GAO). 
About 18 months ago, I made this a top priority for VA financial management. 
With a comprehensive plan and the dedication of our VA team, we have increased
compliance in this program dramatically from 49 percent in 2009 to nearly 100
percent today.  And we can account and report on how these funds are being spent
across the VA system.

There are many
other improvements we have been able to make in financial management, including
a thorough revision and standardization of VA financial policies, and improved
financial management training.  

Today, our
Financial Services Center processes over 1 million payments annually to
commercial vendors.  Payment timeliness, measured by the amount of interest
penalties paid per million dollars disbursed for late payments in accordance
with the Prompt Payment Act, dramatically improved from $48 per million in FY
2008 to just $18 per million in FY 2011.  At the same time, VA earned $5.1
million in discounts for prompt payment (nearly 97 percent of the discounts
offered by vendors) – savings that we are able to use to provide additional funding
for Veterans programs.  This past fiscal year 23 percent of the vendor payments
VA processed used data obtained from electronic invoices, which improved both
the timeliness and accuracy of our payment process. 

VA continues to aggressively
use the Government-wide purchase card program as a cost effective method of
acquiring goods and services.  We processed nearly 7 million purchase card transactions
valued at $3.6 billion during FY 2011 compared to 4.8 million transactions
worth $3.0 billion during FY 2008.  We pay our credit card provider daily for
credit card purchases, allowing VA to maximize the bank rebate offered for
prompt payment.  As a result, during FY 2011 VA earned $73.8 million in
purchase card rebates, a dramatic increase over the $49.4 million earned in FY
2008.  The benefit of those rebates goes directly to Veterans programs.

VA aims to save
even more by essentially eliminating all paper check payments to vendors by the
end of FY 2012.  We made a significant down payment towards that goal.  Over 97
percent of commercial vendors now receive payment by electronic funds transfer
(EFT).  We are reducing check payments to our medical providers supporting the
fee basis and Civilian Health and Medical Program of the Department of Veterans
Affairs (CHAMPVA) programs.  Our outreach to medical providers helped these
programs improve EFT usage by 20 percent this year and eliminated 1.5 million
checks VA-wide.

We are proud of
these achievements in financial management, but realize there is always more we
can do to be more effective and efficient across the Department.

The VSO letter
raised questions about recent staff increases in some offices.  Many of these
increases in staffing are tied to the very transformation efforts to modernize
VA, and are items that the VSOs have historically supported.  For example,
staff increases enhanced VA’s outreach to Veterans and tribal governments as
well as improved VA’s ability to manage costs and programs that deliver
services to Veterans, their families and survivors.  Other staff office
increases are tied to meeting the needs of Congress for extensive and
significantly expanding information requirements to conduct oversight,
formulate policy, and serve individual constituents.  Especially now, taxpayers
need to be assured that staffing levels are justified as a good return on
investment for Veterans. 

I would also like
to address the issue of travel and conferences, a subject of Congressional
interest that has been in the news for VA as well as other agencies.  For a Department
with many different and complex missions, and with facilities throughout the
country, travel and conferences provide important opportunities to train and
conduct a range of other essential activities to include:  share best
practices, maintain critical clinical skills and readiness, conduct oversight
and compliance inspections, increase professional certification of our
employees, and provide opportunities for our employees to establish and enhance
their professional contacts and relationships within the VA and with other
federal, state and local agencies as well as private sector stakeholders.  
These all are important to activities that enable VA to provide high quality
care and services to Veterans.  The role of conferences is too important for us
to treat casually - that is why VA requires a very strong business case
supporting each conference.  Since FY 2009, the VA has mandated VA Chief of
Staff review and approval for all conferences involving 100 or more VA
employees.  For FY 2012, the VA Chief of Staff issued guidance requiring his
office’s pre-approval of any conference involving 50 or more employees.  His
directive calls for maximizing teleconferencing, and for managers to challenge
the assumption that an event needs to occur, including making a business case
analysis of the benefits of a meeting, and consideration of alternatives that
might serve the same purpose.  We would be glad to share with your staff the
scrutiny that proposed conferences and travel receive and welcome VSO and
Congressional staff analysis of what reductions could be taken without adverse
impact to the programs and proficiency we seek in the delivery of care and
benefits.

For the past 3
years, spending for Senior Executive Service (SES) bonuses has been reduced, as
well as the number of outstanding ratings issued.  VA understands the need for
fiscal restraint, and is following the Secretary’s guidance, as well as Office
of Personnel Management and Office of Management and Budget limitations.  Mr.
Chairman, VA has detailed to you in a letter dated October 14, 2011 what it has
done to ensure the integrity of the performance awards process.  We emphasized
in that letter the importance of VA being able to attract and retain the most
talented leaders and managers from within the Federal workforce and from the
private sector.  We are especially wary of restrictions on performance awards
that would not be undertaken as a government-wide policy – in that case VA
would be specifically disadvantaged with respect to other Federal employers,
weakening our ability to compete for and retain the talent we need to best
manage VA and serve our Nation’s Veterans.       

VA Efficiencies
and Savings Through Transformation – Veterans Health Administration

VHA is undertaking
its most significant transformation since the 1990’s by realigning the
organization to focus and target resources on delivering clinically
appropriate, quality care for eligible Veterans when they want and need it.  These
efforts are supporting our goals of improving access and quality of care.  Systems
Redesign is one of the key tools we are using to achieve these goals—it
involves multiple strategies that address transportation, options for Veterans
to improve access, use of advances in medical technology, and local
partnerships. 

Complementing the
Systems Redesign initiatives, we are instilling a culture throughout our system
that pursues continuous improvement and empowers staff members to solve
problems at the front line or at any point in the health care system.  As a
result of these steps, VHA is improving efficiency and reducing costs by
consolidating data, analytic, and reporting systems, and using the power of our
electronic health record to collect clinical performance measures using fully
automated processes.

VA is using
telephone care, telemedicine, secure messaging, My HealtheVet,
and traditional postal mail to reduce the need for additional clinic visits
concerning relatively simple matters.  Telehealth is a particularly critical
area where VHA is identifying significant potential for cost savings.  Home
Telehealth provides non-institutional care and chronic care management
services.  It is predicated upon proactively intervening when a patient’s
symptoms, behavior, or lack of knowledge about his or her conditions places
them at a high risk for hospital admission or institutional care.  Home
Telehealth helps to reduce unnecessary hospital bed days of care and provides
Veterans with additional support at home.

Clinical video
telehealth (CVT) provides services through clinical video conferencing between
VA medical centers (VAMC) and community-based outpatient clinics (CBOC) or
other VAMCs.  VA has established that use of CVT reduced the total number of
hospital bed days of care for patients needing mental health by more than 20
percent.  Telehealth not only improves the quality of care available to
Veterans but also reduces the cost to VA for providing such care.  For Veterans
living in rural areas, expanded telehealth services improve their access to high
quality specialty care services previously only offered at major medical
centers. 

Moreover, the
infrastructure that supports telehealth also supports the training and
education needs of our staff; for example, specialists can more easily provide
ongoing medical education to primary care staff about the management of
Veterans with complex needs.  We are also gaining additional value from this
allied infrastructure by using it to deliver training to administrators,
analysts, and users of our IT systems through video-conferencing.

Another critical
technology to improve care and reduce costs is an integrated electronic health
record (iEHR) between VA and DoD.  The two Departments are already in the
process of jointly modernizing our respective EHR systems, but an integrated
joint system will allow both Departments to achieve economies of scale.  It
will enable us to acquire needed functionality and reduce future sustainment
costs, increase the amount of patient information shared through the use of
national data standards, and improve the delivery of health care and services
to more than 15 million VA and DoD patients.   

VA operates a world
class pharmacy program that excels in several key areas: clinical pharmacy
practice, pharmacy automation, medication safety, drug formulary management and
the strategic sourcing of pharmaceuticals.  In several of these areas, VA is an
innovator and benchmark within the pharmacy profession.  VA’s pharmacy
activities have yielded many billions of dollars in savings over the past
15-plus years.  While aggressively pursuing savings, VA’s customer service
performance remained excellent, as evidenced by an independent customer survey
conducted by J.D. Powers and Associates.  This survey ranked VA’s Consolidated
Mail Outpatient Pharmacy (CMOP) as “Among the Best” in 2009; for 2010 and 2011.
 VA’s CMOPs scored higher than any other mail order pharmacy in the country. 
Based on customer feedback from 20 industries and 800 brands, in 2011 CMOP was
one of only 40 brands designated as Customer Service Champions by J.D. Powers.

Effective earlier
this year, VHA adopted the Centers for Medicare and Medicaid Services (CMS)
payment methodologies for outpatient services.  This aligned VHA with standard
Federal payment methodologies and ensures all payments
from VA utilize the same structure.  VA estimates that this change will result
in savings of almost $1.5 billion over FYs 2011-2015.  Veteran care will remain
uninterrupted, and existing contracts will not be affected.  We are using the savings
from this change to reinvest into our health care system and provide more
accessible and better quality care to America’s Veterans.

VA’s Consolidated
Patient Account Center (CPAC) business model is designed to enhance VHA billing
and collection activities by consolidating traditional revenue program
functions into seven regionalized centers of excellence.  Four CPACs are
already operational, and the final three CPACs will be activated in FY 2012.  By
standardizing and improving business processes, VA has improved key revenue
metrics from FY 2010 to FY 2011.  The average number of days to bill for
the Nation declined by 3.5 (8.3%), while the percentage of accounts receivable
greater than 90 days was reduced 3.3 percent.  However, VHA has not seen
the same level of collections recently for a variety of reasons - an increase
in the number of hardship waivers and copayment exemptions connected to the
condition of the economy, a reduction in third party “collections to billings”
ratios, and movement of Veterans from lower Priority Group enrollment
categories to higher levels.  An aging Veteran population receiving coverage
from Medicare, which becomes the primary insurance provider when a Veteran
becomes 65 years old, has also significantly reduced the amount of funds VA can
collect.  Even with
these challenges, VHA’s improved business practices are capturing available
collections more efficiently.  Continued improvements are a necessity to maximize
this critical piece of our medical care budget. 

The VSO letter
raised issues relating to VA’s purchase of fee-basis care.  VA provides care to
Veterans directly in a VA medical center, or indirectly, through either
fee-basis care or through contracts with local providers.  This strategic mix
of in-house and external care provides Veterans the full continuum of health
care services covered under our benefits package.  VHA provides Veterans care
within VA’s health care system, whenever feasible.  When VA is unable to
provide care within the system, the VA medical center director first considers
sending patients to another VA medical center.  Contracting for necessary
services is considered only if these options are inappropriate or not viable. 
If contracting for services is required, VA’s first option is to use a
competitive bid.  This step ensures that taxpayer funds are used to the
greatest effect. 

VA appreciates
Congress’ support of the use of fee-basis care as a complement to VA services;
the Department has been able to provide services closer to Veterans’ homes as a
result of a number of congressionally mandated programs and directives intended
to improve the management and oversight of fee-basis and to expand access to
care for Veterans in rural areas.

Earlier this year,
VA conducted a pilot program that used standardized templates for purchasing
care, ensured more consistent assessment of other VA options, and resulted in
better control over and management of the care we purchased.  We have
instituted controls to track timeliness of initial approvals for non-VA care,
appointments, and return of clinical information.  Pilot results have seen
positive improvements in each of these areas.  For example, pilot sites
document initial approvals for use of non-VA care at 4 days, appointments made
within 8 days and return of clinical information within 20 days. 

VA will realize
approximately $200 million in savings for fee basis care in FY 2012 through the use of
electronic re-pricing tools, contract and blanket ordering agreements, reduced
duplicate payments, and other efforts.  We are also consolidating contracting
for multi-facility, Veterans Integrated Service Networks (VISN) or regional
contracts, increasing the use of competitive contracts, bringing back
contracted functions in house, reutilizing existing VA property, and related
measures.

We would also like
to address the role of VISNs in ensuring Veterans receive top quality health
care in the most efficient way possible.  The VISN structure encourages
innovation and has been the basis for many of the significant advances within
VHA over the last 15 years.  The responsibilities of VISNs have grown, which
has necessitated corresponding staffing adjustment.  This increase in the
number of employees is mostly the result of a consolidation of functions previously
performed at the facilities within the Network to achieve economies of scale. 
For example, some VISNs have created service lines dedicated to either
specialty care areas or to administrative functions that provide support to all
VHA facilities within the Network.  This approach more effectively utilizes our
resources and allows us to achieve efficiencies not otherwise possible.  For
example, by consolidating equipment purchasing at the VISN level, some Networks
have saved millions of dollars by negotiating high volume contracts with low
per unit prices and saved money on maintenance costs while improving the
consistency of quality of care through equipment uniformity. 

One of VHA’s most
important tools in ensuring the fair distribution of resources is the Veterans
Equitable Resource Allocation (VERA) model, which helps VA provide equitable
access to care for the Nation’s Veterans.  In short, VERA ensures we put the
money where the work is.  VERA has been assessed positively in independent
reviews by PricewaterhouseCoopers, the RAND Corporation, and the Government
Accountability Office (GAO).

VERA addresses the
many complexities of Veterans’ health care by recognizing differences in
patients (those who use some health care but are less reliant on VA care
exclusively, those who seek routine care from VA, and those with special or
complex health care needs), variations in costs of care across the country,
movement of Veterans across the country, research and education demands, and
the need for investments in non-recurring maintenance.  The system must also
account for differences in the types of funds - including general purpose
funds, which are allocated based on patients treated, and specific purpose
funds, which are allocated to comply with statutory or programmatic
requirements. 

After VISN
Directors receive the Network’s allocation, they are responsible for making the
allocations to their facilities.  In 2011, VA implemented a standard VISN
work-performed allocation model to ensure VISNs provided resources to
facilities in a consistent, timely, and efficient manner.  This enables the
VISN Director to hold a portion of the allocation for such requirements as
central equipment purchases, central management of non-recurring maintenance
(NRM) projects, and for changing workload requirements among facilities.  VISN
Directors have the discretion to make appropriate adjustments to that model to
reflect local realities, such as the activation of new CBOCs and changes in
patient demand. 

To help ensure the
Department achieves its financial and program performance goals, VA conducts
monthly reviews that include metrics that measure financial performance,
workload, and access.  These reviews provide data for risk analysis and serve
as a warning system to highlight potential operational or funding problems. 
VHA facility and VISN directors also maintain frequent oversight of their
budgets and communicate with VHA Central Office to provide timely information
to ensure necessary resources are available.  The Secretary also meets with
each VISN Director at least twice during the year to ensure each VISN has
sufficient resources to provide services consistent with the needs of
Veterans. 

The VSO letter
cites reports of local budget shortfalls or “hiring freezes.”  VA will be glad
to discuss any of these specific reports with the Committee or with our VSO
partners.

VA Efficiencies and Savings
through Transformation – Veterans Benefits Administration (VBA)

VBA is committed
to achieving the Secretary’s 2015 strategic goals of completing all
rating-related compensation and pension claims within 125 days at a 98 percent
accuracy level.  VBA has embarked on a wide-scale Transformation Plan to
achieve new efficiencies, greater effectiveness, improved quality and consistency,
and a workplace that is recognized as an “employer of choice.”  Our
transformation strategy builds on VA’s strategic plan, goals, and integrated
objectives.  Initiatives that help improve our business processes are
encouraged.  Ideas are solicited from employees and other internal and external
stakeholders including VSO’s, state and county service officers, industry
partners, as well as Veterans themselves.

Our plan
incorporates an integrated approach to people, process, and technology
solutions, including a strong focus on a career-ready military transition
program, national training standards, paperless rules-based systems, case
management, and automated capability to process an increased number of claims
and a greater number of complex conditions per claim – all at a high quality
level for our Veterans, their families, and survivors.  Best practices in
claims processing are being tested at regional offices to validate the
potential of the initiatives to help us achieve our 2015 strategic goals.  The
effective implementation of this transformation plan is driving VBA to achieve
standardization among all regional offices and a methodology for governing
implementation.  Our implementation strategy includes effective communications
and change management, detailed implementation planning, and effective and
measurable training, ensuring that new ideas are sustainable for the future.

A primary focus of our
plan is managing our relationships with Veterans throughout their lives – from
the day they join the military service, and well into their transition to
Veteran status and beyond.  Seventy-three percent of our Veterans seek new
“on-line” ways of engaging with VA to facilitate their claims and benefits.  In
September 2011, VA and DoD, in a collaborative partnership, registered its
one-millionth user on eBenefits, the one-stop shop that provides
information about military and Veterans benefits and serves as the
client-services portal for lifelong engagement. 

Today, the eBenefits
portal provides an on-line capability to check the status of a claim, an
appeal, the history of VA payments, request and download personnel records,
secure a certificate of eligibility for a VA home loan, and numerous other
benefit actions.  In the next six months, Veterans will be able to file a claim
online in a “Turbo Claim” like approach, where claims data can be entered by
prompting software that self-checks for data errors, and upload supporting
claims information that feeds our paperless claims process.  Every three
months, VA and DoD release additional eBenefits functionality that provides new
ways for our Veterans, their families, and survivors – with support if they
choose from their representatives – to conduct self-service benefit actions at
a time and place of their choosing.

VBA’s
organizational transformation will be deliberate, sweeping, and multifaceted. 
Specific initiatives incorporated in the transformation plan include:

  • The Veterans Benefits Management System (VBMS), a holistic and
    integrated technology solution delivering paperless processing capability in
    2012 to support our business process transformation.  Combining a paperless
    processing system with improved business processes is key to providing Veterans
    with timely and high-quality decisions. 
  • The Veterans Relationship Management (VRM), an initiative to
    expand eBenefits access and self-service capabilities, improve VBA call center
    technology, increase initial call resolution, and establish life-long
    relationships with our Veterans.
  • Rules-based calculators for automated adjudication of basic
    compensation, pension, and dependency claims.  These calculators will guide
    decision makers through the process with intelligent algorithms similar to
    tax-preparation software. 
  • New evidence-gathering tools, known as Disability Benefits
    Questionnaires, which allows VBA to bring new efficiencies to the collection of
    medical information needed for claims decisions.
  • An eight-week national Challenge training program for recently
    hired claims processors, as well as refresher training for more experienced
    staff, that ensures intense, high-quality and standardized training of the VBA
    workforce.
  • Simplified rating decisions and notification letters to more
    effectively communicate with Veterans and streamline the decision-making
    process.
  • Systemic Technical Accuracy Review STAR-trained local Quality
    Review Teams to conduct “in-progress” quality checks and regular end-of-month
    reviews.
  • Cross-functional teams (case management) of cross-trained raters,
    co-located to increase knowledge transfer, speed, and accuracy.
  • Specialized processing “lanes” based on claims complexity and
    priorities (“Express Lane” for less complex work; “Core Lane” for the majority
    of the workload; and “Special Operations Lane” to case manage special missions,
    such as former prisoners of war and military sexual trauma cases).
  • Intake Processing Centers for quick, accurate triage of claims.

These major transformations will be implemented using multi-year
timelines.  Changes in people, processes, and technology will be rolled out in
a progressive, intentional sequence that enables efficiency gains while
minimizing risks to performance. 

We would like to
address the three VBA management issues mentioned in the VSO letter:  records
management, cost of brokering of claims work, and use of authorized overtime. 

The VSO letter
notes concern that, “too much time and resources are now being devoted to the
protection and/or shredding of non-essential paperwork.”  Based on findings
from VA’s OIG in 2008, VBA took action to ensure that Veterans’ records are
protected, maintained, and disposed in accordance with Federal regulations,
statutes and policies.  While VA’s policy was initially based on
OIG findings, updates have been made to incorporate lessons learned.  In FY
2011, VBA established the Records Management Technician (RMT) position.  The
RMT position has enabled VBA to reduce the supervisory review and approval
process to “claims-related material only,” providing the supervisors more time
to facilitate increased claims productivity.  The RMT assists the Records
Management Officers (RMO) in managing, maintaining, and properly disposing of
Veterans’ records and personally identifiable information.  The duties of RMOs
and RMTs are absolutely vital in protecting Veteran, employee, and other
sensitive information. 

A second
VBA area of concern identified in the VSO letter is the cost of brokering
claims.  For a number of years, VBA has pursued this strategy to allocate
additional resources to regional offices that perform at a higher level.  This
strategy is intended to increase VBA organizational performance and capacity by
assisting regional offices experiencing workload challenges and performance
difficulties.  To do this, claims are brokered for processing to Resource
Centers at 13 high-performing offices throughout the country. 

This past fiscal
year was challenging because VBA utilized our Resource Center brokering capacity
to readjudicate previously denied claims for newly established Agent Orange
presumptive conditions (B-cell leukemia, Parkinson’s disease, and Ischemic
heart disease).  Due to the complexity of readjudicating these claims, they are
all being processed at VBA’s Resource Centers.  Our Resource Centers were
therefore temporarily unavailable for brokering work during FY 2011. 

VA recognizes that
transporting paper claims is neither ideal nor sustainable.  VBMS will
significantly reduce our reliance on the receipt, movement, and storage of
paper.  By eliminating the dependence on paper, VBA will be better positioned
to make use of available resources, regardless of geographic location. 

The third VBA area
of concern noted in the VSO letter is the use of authorized overtime. 
While VA works to transform the delivery of benefits and services, overtime
funding is essential to manage claims workload and put VA on a path to achieve
our ultimate goal of having no Veteran wait longer than 125 days to receive a
quality rating decision.  Although VBA has significantly increased the
numbers of primary decision makers through internal promotions and external
recruitment actions to address the growing workload, the normal training time
for these positions is 18 to 24 months.  While in training status, these
individuals are not fully productive and often require 100 percent review of
their cases by a more experienced employee with greater technical knowledge. 
Overtime is a necessary tool to allow VBA to maintain production as we continue
to work to increase our productive capacity and ensure thorough training. 

VBA’s workload
continues to dramatically increase due to the unprecedented volume of
disability claims being filed.  This growth is driven by a number of
factors, including our successful outreach efforts, improved access to
benefits, the growing number of returning Veterans from ten years at war, the
aging Veteran population, economic conditions prompting Veterans to pursue the
benefits they earned during military service, and presumptive disabilities for
Veterans who were exposed to Agent Orange or other herbicides during military
service.

In FY 2011, VBA
received nearly 230,000 additional claims as a result of the approval of three
new Agent Orange presumptive conditions (B-cell leukemia, Parkinson’s disease,
and Ischemic heart disease) based on the latest evidence of an association
between those illnesses and exposure to herbicides.  Of the over 180,000 Agent
Orange claims processed last year, approximately 93,000 were covered by the
Nehmer court settlement requiring readjudication of previously denied claims.  Pursuant
to a court order from the U.S. District Court for the Northern District of
California in Nehmer v. U.S. Department of Veterans Affairs, C.A. No. C-86-6160 TEH (N.D. Cal.), VA  provides retroactive benefits to certain
Nehmer class
members (Vietnam Veterans and their survivors) who filed claims for the three
new presumptive conditions during the period from September 25, 1985, to the
effective date of the VA regulation establishing a presumption of service
connection for these diseases.  These claims are very complex and take more
than twice the resource levels to complete, which significantly slowed
production in 2011.  As we have nearly completed processing Nehmer claims,
overtime funding related to claims processing will be reduced.

We continue to
devote significant resources, including overtime resources, to processing
claims for our wounded, ill, and injured Servicemembers separating from active
duty through the Integrated Disability Evaluation System (IDES).  Overtime
resources are essential if we are to meet our processing goal of 100 days for
IDES claims.  Additionally, overtime allows our regional offices to increase production
while VBA’s pilot initiatives are tested, enabling us to determine which
concepts are suitable for nationwide deployment.

Overtime funding
is also critical to the delivery of education benefits in all of the education
programs VA administers.  Because of the fluctuations in workload inherent in
the processing cycles associated with school enrollment periods, it is
essential that we continue to make effective use of overtime funds to ensure
our Veteran-students and their schools timely receive their benefit payments. 
With full automation of Post-9/11 GI Bill enrollment processing through the
Long Term Solution, we anticipate that our need for overtime funds in the
education program will be reduced. 

Closing

VA appreciates this opportunity to have this exchange with the Committee,
with the participation of the VA OIG and our VSO partners.  As noted at the
beginning of the testimony, the key question is an important one:  how does
VA provide the maximum value and excellence service to Veterans, at the same
time we are becoming more efficient, reducing waste, and respecting every dollar
entrusted to us by the taxpayer?  VA is committed to keep this question
foremost across every administration and office, in Washington and at medical
facilities, regional offices, and national cemeteries in every area of the
Nation.

Prepared Statement of Belinda J. Finn, Assistant Inspector
General for Audits and Evaluations, Office of Inspector General, U.S. Department
of Veterans' Affairs

Mr. Chairman and Members of the Committee,
thank you for this opportunity to testify on the potential for budgetary
savings within the programs and operations of Department of Veterans Affairs
(VA).  We read the recommendations made by Veterans Service Organizations
(VSOs) for budgetary savings within VA with great interest and can comment on
VA’s performance in several of these areas.  My testimony today will highlight
a broad range of programs and issues where we have identified possible cost
savings, recoveries, better uses of funds, and opportunities for VA to achieve
economies and efficiencies.

VA FEE CARE PROGRAM

Of the many issues raised
by the VSOs, improved management and oversight of medical care provided outside
of VA facilities, commonly known as fee care, offers the greatest opportunity
for savings.  Under the program, VA medical centers authorize veterans to
receive treatment from non-VA health care providers when certain services are
unavailable at VA facilities; cannot be economically provided in the veteran’s
geographic area; or in emergencies when delays may be hazardous to life or
health.  The cost for fee care has increased from $1.6 billion in fiscal year
(FY) 2005 to $4.4 billion in FY 2010.  This amount is expected to increase
further in future years as both the demand and cost of health care rises.  We
have issued four audit reports related to fee care since August 2009.

In August 2009, we
reported that the Veterans Health Administration (VHA) improperly paid 37
percent of outpatient fee claims, resulting in $225 million in overpayments and
$52 million in underpayments in FY 2008 and an estimated $1.1 billion in
overpayments and $260 million in underpayments over a 5-year period.  Also,
serious weaknesses in the processes for authorizing outpatient fee care
resulted in 80 percent of payments lacking proper justification.  Clinicians
typically documented the diagnosis and treatment plan but no rationale for
using fee care.  Fee staff did not conduct required cost analyses to determine
if lower cost alternatives, such as transporting patients to other VA
facilities, were available.  In August 2010, we reported that VHA improperly
paid 28 percent of inpatient fee claims, resulting in net overpayments of $120
million in FY 2009 and an estimated $600 million in improper payments over a
5-year period.  Between these two audits of inpatient and outpatient medical
care, we estimated potential improper payments of $1.5 billion through FY 2015
could be avoided by more effective policies and procedures to oversee and
manage fee care services. (Audit of Veterans Health Administration’s Non-VA
Outpatient Fee Care Program
, August 3, 2009, and Veterans Health
Administration – Audit of Non-VA Inpatient Fee Care Program,
August 18,
2010)

During the audit of
inpatient claims, we found the Fee Program’s inadequate payment processing
system, Veterans Health Information Systems and Technology Architecture (VistA)
Fee, contributed to the high rate of payment errors.  VHA was aware of the
shortcomings of VistA Fee and has fielded an integrated claims processing and
management system.  Further, the average cost per claim for the Fee Care
Program was $9.96 compared to $2.55 for Civilian Health and Medical Program of
the Department of Veterans Affairs (CHAMPVA), a difference of $7.41 per claim. 
In addition, sites that processed fee payments for a single VA medical center
(VAMC) had an average cost per claim of $10.78.  Consolidated sites, which
processed claim payments for multiple VAMCs, had an average cost per claim of
$6.85, or about one-third less.  As a result, we conservatively estimated that
current claims processing inefficiencies cost VHA $134 million through FY 2015
and recommended VA evaluate alternative organizational models and payment
processing options, which they agreed to do.

Consolidation of processing
activities is one solution to lowering the average cost per claim, but not the
only alternative.  Commercial
claims processing organizations already process claims for
Federal government agencies, such as Medicare and TRICARE.  Since our
first audit in 2009, VA has adopted Medicare
payment methodologies for common services such as ambulatory surgery,
anesthesia, dialysis, and the payment of professional services.  With business
changes, VA may be able to leverage competition for the claims processing
services.  In response to our recommendation, VA contracted with the
National Academy of Public Administration to study organizational alternatives,
including consolidation or contracting out for services. 

We also evaluated
VHA’s controls to prevent and detect fraud and reported
VHA had not identified fraud as a significant risk to the Fee Care Program.  Health
care industry experts have estimated that 3 to 10 percent of all claims involve
fraud and we see VA facing similar risks.  We
estimated that VA could be paying between $114 million and $380 million
annually for fraudulent claims and recommended VA establish a fraud
management program with data analysis and high-risk payment reviews, system
flags for suspicious payments, employee fraud awareness training, and fraud reporting.
(Veterans Health Administration – Review of Fraud Management for the Non-VA
Fee Care Program
, June 8, 2010)

In the
2½ years since our 2009 report on the Fee Care Program, VHA has made many
changes to the program.  However, fundamental controls are still problematic,
as illustrated by our recent report, Review of Alleged Mismanagement of Non-VA Fee
Care Funds at the Phoenix VA Health Care System
(November 8, 2011)
We reported the medical facility mismanaged fee care funds and experienced a
budget shortfall of $11.4 million, which was 20 percent of the health care
system’s FY 2010 fee care program funds.  One cause of the shortfall was the
lack of effective pre-authorization procedures, the same problem we reported in
2009.  In fact, the facility processed about $56 million in fee claims without
adequate review to ensure services were medically necessary.

Our most recent national
audit on VA’s fee care program reported VHA missed opportunities to bill
third-party insurers for 46 percent of billable fee care claims, reducing
third-party revenue by $110.4 million annually or by as much as $552 million
through FY 2016.  VA bills third-party health insurers for nonservice-connected
medical services provided by VA or non-VA care as part of the Medical Care
Collection Fund (MCCF) Program, which supplements VA’s medical care
appropriations.  In FY 2010, the MCCF Program collected approximately $1.9
billion in total third-party revenue, which was about 69 percent of the total
$2.8 billion revenue.  The potential for third-party revenue from the Fee Care
Program is expected to increase in future years due to increased demand for
care and increased health care costs.  (Audit of Veterans Health
Administration’s Medical Care Collection Fund Billing of Non-VA Care,

May 25, 2011)

CLAIMS
BROKERING

The VSOs noted the potential inefficiencies
of the Veterans Benefits Administration’s (VBA) claims brokering process.  We
have testified several times on the many challenges that VBA faces to improve
the accuracy and timeliness of disability claims decisions, managing an
ever-increasing inventory of claims, and maintaining efficient VA Regional
Office (VARO) operations.  One of the steps VBA has taken to address these
challenges is to establish 13 resource centers that process compensation claims
brokered from other VAROs.  VBA believes effectively shifting claims from one
VARO to another allows VBA to better align workload with available staffing
resources and reduce claims backlogs by expediting claims processing.

Our nationwide audit of the brokering process
identified opportunities for VAROs to improve brokering effectiveness (Audit
of VBA’s Compensation Claims Brokering
, September 27, 2011).  We evaluated
the overall effectiveness of claims brokering and reviewed available
documentation on the costs of transporting hardcopy claims folders from one
location to another.  VBA and VAROs do not consistently track or report the
costs of transporting brokered claims between VAROs.  In fact, only one of
seven audited VAROs was tracking the costs of transporting brokered claims. 
During one year, this VARO spent about $40,000, or approximately $2.00 per
claim, for the one-way transportation of approximately 18,500 brokered claims
folders.  Based on the one VARO’s cost information, we estimated that VBA could
have spent almost $740,000 to transport brokered claims using express delivery
services during FY 2009.

We also reported VBA can improve brokering
effectiveness by addressing ineffective practices such as untimely brokering of
claims by the original regional office, reducing excess inventories of
unprocessed claims at resource centers, brokering to separate facilities for
development and rating, and brokering claims to resource centers with lower
claim processing accuracy rates than the original office.  For nearly 171,000
brokered claims completed during FY 2009, we projected the average processing
time of 201 days would have been 49 days less, or 152 days, if VBA had avoided
the claims-processing delays identified during the audit.  VBA agreed it can
improve the overall effectiveness of brokering.  We will monitor the
implementation of the recommendations. 

VBA could eliminate transportation costs
associated with brokering claims and improve claims processing timeliness by
digitizing claims folders.  We caution that even digitized claims will require
infrastructure and management controls to ensure VAROs consistently and
accurately maintain documents to allow claims processing personnel complete and
timely access to veterans’ claims folders documents.

VA EMPLOYEE COMPENSATION ISSUES

The VSOs noted concerns with general administrative costs and overly generous
employee bonus programs.  We have issued several reports dealing with
retention incentives that identified consistent themes regarding where VA falls
short in its administration of this program.

Retention
incentives are a valuable tool to retain quality and critical employees.  VA
uses retention incentives to retain employees in hard-to-fill positions and
employees who possess high-level or unique qualifications that VA does not want
to lose.  Our review of retention incentives at the VA Medical Center in
Providence, Rhode Island, concluded that for 17 (85 percent) of 20 cases,
justification for retention incentive awards was not available or was
inadequate, resulting in approximately $179,000 in questioned costs annually
and over $895,000 over the next 5 years (Review of Retention Incentive
Payments at VA Medical Center, Providence, Rhode Island,
January 20,
2011).  In response to our report recommendations, VHA outlined actions to
accomplish a 100 percent review of Providence employees’ retention incentives,
establish controls to ensure incentives meet VA policy, develop standard
operating procedures, and establish a system for maintaining this information.

In
FY 2010, VA paid nearly $111 million in retention incentives to 16,487
employees.  In a nationwide audit of VHA and VA Central Office (VACO)
retention incentives that was recently issued, we questioned the
appropriateness of 96 (80 percent) of 120 VHA incentives, and 30 (79 percent)
of 38 VACO incentives, totaling approximately $1.06 million during FY
2010.  (Audit of Retention Incentives for Veterans Health
Administration and VA Central Office Employees
, November 15, 2011

As with the Providence review, we determined
VHA and VACO approving officials did not adequately justify and document
retention incentive awards.  This occurred because VA lacked clear guidance,
oversight, and training to effectively support the program.  Also, VA did
not effectively use the Personnel and Accounting Integrated Data system to
generate timely incentive re-evaluation notices and did not always stop
retention incentives at the end of set payment periods.  VHA and VA
officials agreed with our report recommendations and outlined corrective actions
to address the issues identified.

VBA OVERTIME

The VSOs’ letter raises concerns about VBA’s
use of overtime to meet claims production goals.  In 2010, the OIG conducted a
review to assess VBA’s efforts to meet its hiring goals and the impact of VBA’s
increased workforce on Compensation and Pension (C&P) claims workload.  We
found that VBA could not assess the impact of overtime on its capacity to
complete claims and recommended that VBA collect data on the number of overtime
hours worked to assess the capacity of its current workforce and project future
workforce needs.  VA agreed and have reported to us that they have implemented
a plan to address this issue. (Review of New Hire Productivity and the
American Recovery and Reinvestment Act Hiring Initiative
, February 18,
2010)  

OTHER
AREAS FOR POTENTIAL SAVINGS

In addition to the potential improvements
identified by the VSOs, VA can reap substantial benefits by improving its
processes in several areas: acquisition, delivery of health care and compensation
benefits, information technology system development, and workers’ compensation
for employees injured on the job.

Acquisition Process

VA purchases goods and services in excess of
$10 billion annually.  In November 2009, the Secretary reported to the Office
of Management and Budget that he had established a 2-year departmental goal of
$958 million in acquisition savings by FY 2011.  We have identified issues with
processes at all levels and all phases of the procurement process—planning,
solicitation, award, and administration. 

Historically, problems in VA procurement have
led to inadequate competition for many contracts and a general lack of
assurance that VA has obtained fair and reasonable prices or the best value for
goods and services.  In the past, only about 50 percent of VA’s contract awards
were competitive.  We strongly believe competition is a proven strategy to
achieve better value for the Government.  For example, VA originally planned to
contract for approximately 940 non-recurring maintenance projects with its $1
billion in American Recovery and Reinvestment Act (ARRA) funds.  VA reported
that as they executed the ARRA program, it competed approximately 98 percent of
these contracts, which resulted in cost savings that allowed VA to fund almost
1,125 projects, a 19 percent increase in projects to improve VA medical
facilities.  We validated the completion rate in our report, ARRA Oversight
Advisory Report Review of VHA’s Efforts to Meet Competition Requirements and
Monitor Recovery Act Awards
, (September 17, 2010).

VA can achieve
savings by fully leveraging its buying power and improving the administration
of contracts.  The following examples highlight opportunities where VA can
strengthen the integrity of its contracts and realize significant
acquisition-related cost savings over 5 years: 

  • Savings
    of about $22 million by procuring aortic valves, coronary stents, and thoracic
    grafts through consolidating requirements using national contracts and blanket
    purchase agreements instead of making open market purchases.  (Audit of the
    Acquisition and Management of Selected Surgical Device Implants,
    September
    28, 2007)
  • Savings
    of about $41 million through improved acquisition planning and oversight
    processes to increase the use of the Federal Supply Schedules for the purchase
    of medical equipment and supplies.  (Audit of Veterans Health Administration
    Open Market Medical Equipment and Supply Purchases,
    July 21, 2009)
  • Savings
    of about $60 million through improved clinical sharing agreement monitoring and
    negotiation practices when using noncompetitive clinical sharing agreements for
    professional medical personnel.  (Audit of Veterans Health Administration
    Noncompetitive Clinical Sharing Agreements
    , September 28, 2008)
  • Savings
    of about $38.5 million in health care staffing costs through increased
    competition, better price evaluations, and improved ordering practices.  (Review
    of Federal Supply Schedule 621I – Professional and Allied Healthcare Staffing
    Services
    , June 7, 2010)
  • Reduce
    unsupported costs and improper payments by about $16.8 million by strengthening
    contract administration practices in VHA’s Home Respiratory Care Program.  (Audit
    of Veterans Health Administration’s Home Respiratory Care Program
    , November
    28, 2007)
  • Preventing
    $85.3 million in overpayments by effectively competing, awarding, and
    administering patient transportation contracts.  (Veterans Health
    Administration – Audit of Oversight of Patient Transportation Contracts,
    May
    17, 2010)

Management of Rural Health Initiatives

In addition to identifying potential savings,
we also evaluate how funds are managed and used to meet a program’s intended
outcomes.  In FYs 2009 and 2010, VA’s Office of Rural Health (ORH) received
$533 million in funds designated for improving access and quality of care for
veterans residing in rural areas.  We reported ORH lacked reasonable assurance
that its use of $273 million of the $533 million improved access and
quality of care for veterans residing in rural areas.  For example, ORH provided
$200 million of rural health funds to VISNs to cover fee expenditures for rural
veterans through a project called the Rural Health Fee Usage Plan.  ORH’s goals
for the use of these funds were to improve the percentage of fee care dollars
spent on rural veterans and the percentage of rural patients utilizing VHA
services.  However, the health care facilities were unable to demonstrate that
the use of these funds improved access to care for rural veterans.  For
example, one VAMC received $3.2 million of Fee Usage Plan funds.  The VAMC
transferred $3 million of these funds to their general account then used the
funds without any restrictions.  By the end of FY 2010, the VAMC’s overall
planned fee care expenditures increased only about $252,000.

We also noted concerns with the project
review and selection process used to select projects for execution in FYs 2010
and 2011.  In addition to improved organizational and management controls, we
recommended that VA reassess ORH’s FY 2012 budget requirements to align planned
use of resources to their greatest rural health needs.  As a result of our
report, the Government Accountability Office recommended to the Appropriations
Committees that ORH’s budget resources for FY 2012 be restricted.  VA has taken
our recommendations seriously and strengthened its controls to provide
increased oversight and transparency to ensure that future funds will be used
as intended. 

Temporary
100 Percent Disability Evaluations

Veterans’ disability compensation
payments are not usually an avenue for cost savings.  We have, however, identified one area
where a systemic problem leads to veterans receiving long-term payments to
which they are not entitled.  VBA grants veterans a temporary 100 percent
disability evaluation for service-connected disabilities requiring surgery,
convalescence, or specific treatment.  At the end of a mandated period of
convalescence or cessation of treatment, VA staff are required to review the
veteran’s medical condition to determine whether to continue the temporary
evaluation.  If a medical exam shows a change in the veteran’s condition, and
VARO staff determines that a reduced benefit is warranted, then VBA staff
initiate action to reduce benefits.  In January 2011, we issued a report detailing our
concerns with VBA’s processing of temporary 100 percent disability
evaluations.  We projected that regional office staff did not correctly process
claims of about 27,500 (15 percent) veterans with temporary 100
percent evaluations and that since January 1993 VBA overpaid these veterans a
net amount of about $943 million.  Without
timely corrective action, we conservatively projected that VBA will
overpay veterans $1.1 billion over the next 5
years. 

The
primary message in our report is that VBA paid veterans a temporary 100 percent
benefit without adequate medical evidence.  Further, VBA rarely attempts to
recover any monies paid to the veteran in error and once a temporary
100 percent rating has been in place for 20 years, VBA cannot reduce the
rating unless the veteran committed fraud in obtaining the benefits.  The then
Acting Under Secretary for Benefits did not agree with the projected
overpayment amounts, but agreed to implement the recommendations we made.  We
stand behind our statistical projection as a reasonable and conservative
estimate of overpayments and potential future overpayments based on our review
of compensation records available at the time of the audit.  We monitor VBA’s
actions to correct this condition during the OIG’s VARO Benefits Inspections program
and we continue to find claims files without suspense dates for
reexaminations.  VBA has just recently started work to identify veterans who
need reexamination, and to establish suspense dates to drive timely
examinations.

Information
Technology Issues

Information
technology (IT) is critical to support VA in accomplishing its mission of
providing benefits and services to veterans.  For FY 2012, VA requested
approximately $655 million for new product development out of a total budget of
$3.2 billion for IT systems and support.  If managed effectively, these IT
capital investments can significantly enhance operations and increase
efficiency in a range of VA programs, from medical care to compensation and
pensions. 

However,
IT management at VA is a longstanding high-risk area.  VA experienced
significant challenges in managing its IT investments, including cost overruns,
schedule slippages, performance problems, and in some cases, complete project
failures.  For example, VA spent over 14 years and $308 million developing the
Veterans Services Network (VETSNET) to consolidate compensation and pension
benefits processing into a single system.  Although VETSNET has now achieved
most of the planned functionality, VA has yet to identify a date for migrating
all claims and decommissioning the legacy system, which costs about $7 million
a year to maintain. 

Also,
VA has tried twice to develop an integrated financial management system.  In
2004, after 6 years and spending more than $249 million, VA halted the Core
Financial and Logistics System (CoreFLS) project due to significant project
management weaknesses.  In 2005, VA began work on the Financial and Logistics
Integrated Technology Enterprise (FLITE) program, comprised of an accounting
system, an asset management system, and a data warehouse component—all
scheduled for deployment by FY 2014 at an estimated cost of approximately $609
million.  In July 2010, VA cancelled two FLITE components, partly because of
the same project management issues that had plagued CoreFLS.  In October 2011,
VA cancelled the remaining component after spending more than $127 million on
the entire FLITE program. 

VA
recently began planning for a new financial system.  Reviewing and applying the
lessons learned from the previous failed attempts will be crucial to any future
success.  In September 2009, we reported VA needed to better manage its major
IT development projects, valued at that time at over $3.4 billion, in a more
disciplined and consistent manner (Audit of VA’s System Development Life
Cycle Process
, September 30, 2009).  In general, we found that VA’s
processes were adequate, but VA’s Office of Information Technology (OI&T)
did not communicate, comply with, or enforce its mandatory requirements. 

In
June 2009, OI&T implemented the Program Management Accountability System
(PMAS) to proactively manage VA’s IT projects to complete system development
efforts on time and within budget.  PMAS was designed as a performance-based
management discipline that provides incremental delivery of IT system
functionality—tested and accepted by customers—within established schedule and
cost criteria.  In September 2011, we reported OI&T had not established key
management controls to ensure PMAS data reliability, verify project compliance,
and track project costs.  Until these issues are addressed, VA will risk cost
overruns, schedule slippages, and poor performance in future efforts to deliver
the systems essential to accomplishing the Department’s missions and programs.

Workers’ Compensation Program Case Management

Ineffective workers’ compensation program
(WCP) case management leads to potential program fraud, as well as increased
costs to VA.  Over the past two decades, VA’s WCP costs have increased 57
percent to approximately $182 million; VHA comprises 93 percent of these total
costs. 

We recently reported that VHA could reduce
WCP costs by an estimated $264 million over the next 5 years through improved
program case management oversight. (Audit of VHA’s Workers’ Compensation
Case Management
, September 30, 2011)  While VHA submitted employee
compensation forms timely, it often lacked the medical evidence necessary to
support the employee’s continued disabilities.  VHA also missed
opportunities to return able employees to work.  Overall, we attributed these
issues to a lack of oversight to ensure compliance with WCP statutory
requirements. 

We recommended that VHA provide oversight and
assign dedicated resources to control costs and reduce the potential for future
waste and abuse.  The Assistant
Secretary for Human Resources and Administration and the Under Secretary for
Health agreed with our findings and recommendations and plan to complete all
corrective actions by December 31, 2011.  We will assess and monitor the
implementation of corrective actions.

We also recommended that VA support
legislation currently pending to convert claimants 65 years of age or older to
more appropriate benefit programs.  VA responded that they will contact the
Department of Labor in support of its proposed change in legislation.  

WORK
IN PROGRESS

The VSOs expressed concerns about the size
and growth of Veterans Integrated Service Networks (VISN) in VHA.  We have
ongoing audit work to examine VISN management structures and fiscal
operations.  Although our work is not yet complete, we believe the VSOs have
raised valid concerns.  When VHA created the VISNs in 1995, VHA specifically
decentralized budgetary, planning, and decision-making functions to the
Networks to promote accountability and improve oversight of the daily
operations of its medical facilities.  VHA estimated the overall size of the
original 22 VISNs would range between 154­–220 FTE with total operating costs
of about $26.7 million annually.  Today, we estimate the existing 21 VISNs
employ at least 1,098 staff at an annual cost of over $165 million.

We also have concerns about the existence of
national and regional fiscal controls and data that would allow VHA to
effectively evaluate and compare the reasonableness of VISN staffing levels and
costs.  Strong financial management and fiscal controls would provide VHA the
opportunity to identify inefficiencies in VISN operations and possibly reallocate
funds back to direct patient care. 

While not referenced in the VSOs’ letter, we
also have ongoing projects in several areas that could potentially result in
cost savings.  We are currently examining the extent to which the MCCF program
effectively bills third-party health insurers for VA provided medical care. 
VHA is currently centralizing MCCF billings and collections processes
nationwide, however medical centers are continuing to perform some MCCF
functions.  Although our work is ongoing, VHA continues to miss opportunities
to increase MCCF revenue by not billing third-party insurers for billable fee
care services provided.  We expect to issue a final report by the spring of
2012.

We are also evaluating the effectiveness of
VHA’s acquisition and management practices used to purchase prosthetic limbs. 
Our preliminary results show that VA is paying more for prosthetic limbs than
the agreed upon prices in the contracts in place. VA can reduce its risks for
paying excessive prices by strengthening its oversight and controls with
actions to ensure the review of vendor quotes, purchase orders, and to verify
the costs of items billed on invoices match agreed upon prices in the
associated contracts.  We expect to issue a final report on this early in 2012.

CONCLUSION

As
an agency whose primary mission is to deliver benefits and services, it is a
challenge to achieve meaningful cost savings but it is not insurmountable.  The
suggestions from the VSOs are a good starting point for the discussion but we
believe the Committee and VA should consider other areas, including those we
have raised.  The VA OIG is committed to continue reviewing VA programs and
operations to ensure that that they function economically, efficiently, and
effectively.  We will continue to put forth recommendations that not only
produce savings but more importantly provide better services to our Nation’s
veterans. 

Mr. Chairman and Members of the Committee, this concludes my statement today. 
I will be pleased to answer any questions you may have.

 


MATERIAL SUBMITTED FOR THE RECORD

Deliverables from
House Committee on Veterans’ Affairs Hearing on Potential Budgetary Savings
within VA: Recommendations from Veteran Service Organizations

November 15, 2011

Below
are VA’s responses
to questions asked during the November 15, 2011 HVAC hearing on potential
budgetary savings within the Department of Veterans Affairs.

Question
1
:Please provide a legal
conclusion from OMB on the application of sequestration to VA.

Response: This question will be addressed in
VA’s responses to the post-hearing questions stemming from this hearing.

Question
2
:  Please provide
the trend in the number of conferences over the past several years.

Response:  Leadership of the Department
has centralized the approval process for all conferences involving more than 50
employees, and applied much greater scrutiny to them, requiring a strong
business case to show a clear purpose and desired outcomes from the proposed
conference, as well as encouraging wider use of teleconferences.  When
there is a case made for an in-person conference, there is a strong push for
more economical venues and ensuring the number of participants is
appropriate.  The future trendline for both conference expenditures and
the number of conferences will be downward.  With regard to the request on
historical information, however, an accurate, reliable figure on the number of
conferences is not available. 

Question 3:Please provide a side-by-side review of CMS and VA survey questions for
State Homes for certification.

Crosswalk-
38 CFR 51 VA’s State Veteran Home (SVH) Survey Areas with Centers for Medicaid
& Medicare Services (CMS) SVH Survey Standards (38 CFR 483) –(8) eight
areas of difference:

11-18-11

Below are
the 8 areas identified by Ascellon which differ between the VA’s SVH Survey
Standards
and those of CMS.   Each of these (8) eight areas are
discussed and provided below.

1)  VA area-
Administration

38 CFR 51.210 Notification of change of administration to Geriatrics and
Extended Care,
Compliance with Section 504 of the Rehabilitation Act 1973,
Annual Certification of Drug Free workplace, Annual Certification r/t lobbying,
Annual certification compliance with Title VI of Civil Rights Acts, percentage
of Veterans, State employee if contract out management of SVHs.

These are VA specific with no correspondence in CMS.

2. VA area-
Credentialing and Privileging (C&P)

38 CFR 51.210 j.
Credentialing and Privileging.

VA Specific area-no
corresponding Credentialing & Privileging process in CMS.

Specific to VA is (38 CFR 51.10); the CMS SVH survey regulation
38 CFR 483 does not identify a C&P process, it simply states: “The
facility must operate and provide services in compliance with applicable
Federal, State, and local laws, regulations, and codes, and with accepted
professional standards and principles that apply to professionals providing
services in such a facility
.

3. VA area- Basic Per
Diem

Basic Per Diem 51.41

VA
Specific area-no corresponding CMS area

4. Per Diem and drugs
and medicines: 38 CFR 51.42 & 43 (all VA specific)

VA-specific-no
corresponding CMS area.

5. Social Worker
qualifications

VA’s qualifications are
more comprehensive than those of CMS as described below:

VA Social Work
Qualifications

38 CFR 51.100 (h)
Social Services
.

(1)
The facility management must provide medically related social services to
attain or maintain the highest practicable mental and psychosocial well-being
of each resident.

(2) A nursing home with 100 or more beds must
employ a qualified social worker on a full-time basis.

(3) Qualifications of
social worker. A qualified social worker is an individual with—

(i) A bachelor's degree in social work from a
school accredited by the Council of Social Work Education (Note: A master's
degree social worker with experience in long-term care is preferred), and

(ii) A social work license from the State in
which the State home is located, if offered by the State, and

(iii) A minimum of one year of supervised
social work experience in a health care setting working directly with
individuals.

(4) The facility management must have
sufficient support staff to meet patients' social services needs.

(5) Facilities for
social services must ensure privacy for interviews.

CMS Social Work
Qualifications:

§ 483.15   Quality
of life.

“(3) Qualifications
of social worker.
A qualified social worker is an individual with—

(i) A bachelor's degree in social work or a
bachelor's degree in a human services field including but not limited to
sociology, special education, rehabilitation counseling, and psychology; and

(ii) One year of supervised social work
experience in a health care setting working directly with individuals.”

6. Registered Nursing Services Coverage- VA more specific than
CMS in required coverage

VA Nursing Service
Standard- 38 CFR 51.130 Nursing services

“(b)
The facility management must provide registered nurses 24 hours per day, 7 days
per week.

(d) The facility
management must provide nursing services to ensure that there is direct care
nurse staffing of no less than 2.5 hours per patient per 24 hours, 7 days per
week in the portion of any building providing nursing home care.

(e) Nurse staffing
must be based on a staffing methodology that applies case mix and is adequate
for meeting the standards of this part. (Authority: 38 U.S.C. 101, 501, 1710,
1741–1743)”

CMS Nursing Service:

38 CFR 493 483.30

States that: “facility must provide services by sufficient
numbers of each of the following types of personnel on a 24-hr basis to provide
nursing care to all residents in accordance with resident care plans”, with
waivers to this requirement by the State
for a variety of reasons-ex.
when the state determines that doing so will not endanger the health of the
residents, when the facility has been unable to recruit appropriate personnel,
etc.

7. Issue: Nursing Services: Issue of designation of a
supervising nurse for each tour of duty-

VA more specific than
CMS

VA Nursing Service
Standards

§ 51.130 Nursing
services.

“Facility
must designate a supervising nurse for each tour of duty”

CMS Nursing Service
Standard

See Item #6 above for CMS Nursing Service-38
CFR 493.30 states a facility must designate a licensed nurse to serve as a
charge nurse on each tour of duty except when waived.

8. Nursing Services Issue: VA’s Hours Per Patient per 24 Hours
(HPPD) of no less than 2.5 hours:

VA more specific than
CMS

VA Nursing Service
Standards

38 CFR § 51.130 Nursing
services.  

“(d) The facility management must provide nursing
services to ensure that there is direct care nurse staffing of no less than 2.5
hours per patient per 24 hours, 7 days per week in the portion of any building
providing nursing home care.”

See Item #6 for CMS Nursing Service standards- does not specify hours
of nursing care per patient

Question
4
:Please provide a complete cost to implement paperless claims.

Response:  The Veterans Benefits
Management System (VBMS) lifecycle cost estimate (as revised in the September
2011 E300A submission) is $934,795,000.  This cost estimate consists of
VBMS development, technology, operation and maintenance (O&M), and
government full time employees from fiscal year 2010 through 2017.  
The top cost and schedule drivers are development, technology, and
O&M. 

Development: The major cost driver is the Workflow
and Business Rules development costs.  Man-hours required to interpret the
vast set of business rules surrounding Workflow and Workload management will be
more extensive than any other functional component of the system.  This is
where the most "custom" code development will most likely be
incurred.  Another major driver is the security required for a HIGH system
accreditation.  The development activities surrounding these controls and
the additional documentation will be a larger cost than most systems incur.

Technology: By far, the largest cost driver is
the Document Repository (FileNET) and associated technology required for the
image-processing.  Scanning and, more to the point, back-scanning of image
data will be a large cost. The physical requirements to store and transmit this
data, operationalize in a performant manner and deliver end capability will be
a major long term cost and initial operationalizing cost.  The network
connectivity required along with the associated hardware and software are all
major drivers for cost.

O&M: Scanning will also be one of the larger cost drivers along
with data storage.  VA 6500 and Legal requirements to store data within
accessible means impact long term storage requirements and transmission needs. 
Licensing and repeated incurring costs to support the document management will
be an operational cost.

Questions and Responses for the Record



Questions
for Joseph A. Violante, National Legislative Director, Disabled American
Veterans and Carl Blake, National Legislative Director, Paralyzed Veterans of
America:

November 30, 2011

Joseph A. Violante

National Legislative Director

Disabled American Veterans

807 Maine Avenue, SW

Washington, DC  20024

Dear Joe:

In reference to our full Committee hearing entitled,
“Potential Budgetary Savings Within the U.S. Department of Veterans Affairs: 
Recommendations from Veterans’ Service Organizations,” that took place on
November 15, 2011, I would appreciate it if you could answer the enclosed
hearing questions by the close of business on January 11, 2012.

In an effort to reduce printing costs, the Committee on
Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is
implementing some formatting changes for materials for all full Committee and
Subcommittee hearings.  Therefore, it would be appreciated if you could provide
your answers consecutively and single-spaced.  In addition, please restate the
question in its entirety before the answer.

Due to the delay in receiving mail, please provide your
response to Carol Murray at Carol.Murray@mail.house.gov,
and fax your responses to Carol at 202-225-2034.  If you have any questions,
please call 202-225-9756.

                                                          Sincerely,

                                                          BOB
FILNER

                                                          Ranking
Democratic Member

Questions for the
Record

November 15, 2011

Questions for Joseph
Violante, National Legislative Director, Disabled American Veterans

Question 1: Out of the nine recommendations discussed
in your testimony, please tell the Committee your top three issues that you believe
the Committee should focus on in order of priority.

Question 2: Does your organization generally support
the VISN structure or do you think it is time to take another look at how the
provision of medical care is organized and managed?  If you are generally
supportive of the current VISN structure, do you believe that the present VISN
boundaries are optimally drawn or do you have suggestions as to how to better
draw these boundaries to reflect local needs and national centralization?

November 30, 2011

Carl Blake

National Legislative Director

Paralyzed Veterans of America

801 18th Street, NW

Washington, DC  20006

Dear Carl:

In reference to our full Committee hearing entitled,
“Potential Budgetary Savings Within the U.S. Department of Veterans Affairs: 
Recommendations from Veterans’ Service Organizations,” that took place on
November 15, 2011, I would appreciate it if you could answer the enclosed
hearing questions by the close of business on January 11, 2012.

In an effort to reduce printing costs, the Committee on
Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is
implementing some formatting changes for materials for all full Committee and
Subcommittee hearings.  Therefore, it would be appreciated if you could provide
your answers consecutively and single-spaced.  In addition, please restate the
question in its entirety before the answer.

Due to the delay in receiving mail, please provide your
response to Carol Murray at Carol.Murray@mail.house.gov,
and fax your responses to Carol at 202-225-2034.  If you have any questions,
please call 202-225-9756.

                                                          Sincerely,

                                                          BOB
FILNER

                                                          Ranking
Democratic Member

Questions for the
Record

November 15, 2011

Questions for Carl
Blake, National Legislative Director, Paralyzed Veterans of America

Question 1: Out of the nine recommendations discussed
in your testimony, please tell the Committee your top three issues that you believe
the Committee should focus on in order of priority.

Question 2: Does your organization generally support
the VISN structure or do you think it is time to take another look at how the
provision of medical care is organized and managed?  If you are generally
supportive of the current VISN structure, do you believe that the present VISN
boundaries are optimally drawn or do you have suggestions as to how to better
draw these boundaries to reflect local needs and national centralization?

Responses from Joseph A. Violante, National Legislative Director, Disabled American
Veterans and Carl Blake, National Legislative Director, Paralyzed Veterans of
America:

Question
1
:
Out of the nine recommendations discussed in your testimony, please tell the
Committee your top three issues that you believe the Committee should focus on
in order of priority.

Answer:
On behalf of The American Legion, AMVETS, Disabled American Veterans, Paralyzed
Veterans of America and Veterans of Foreign Wars:  Ranking Member Filner, our
organizations believe it is imperative that the funding provided to VA must be
efficiently and effectively spent in order to care for our nation’s veterans. 
Every dollar that is misspent or wasted is a dollar that cannot be used to
provide benefits or services to veterans in need.  For this reason, we worked
jointly to identify a number of areas that the Committee might examine as
possible ways to reduce waste and achieve savings within certain VA programs. 
In both our letter to the Committee dated April 4, 2011, and in our subsequent
testimonies offered on November 15, 2011,  we stressed the overriding
importance of maintaining sufficient funding for VA health care and
infrastructure remediation, each of which requires significant focus by the
Committee over the coming year. 

Health
Care Funding

Our
organizations have worked with you and your colleagues for a number of years to
gain sufficient, timely and predictable funding for VA’s many programs.  One
extraordinary success was the passage of the Veterans Health Care Budget Reform
and Transparency Act, Public Law 111-81, an Act that created the advance
appropriations process to govern VA health care funding.  That Act was designed
to allay the Veterans Health Administration’s (VHA) chronic annual anxiety
about the availability of funds on the first day of a fiscal year, and has
begun to change management behaviors in a very positive way for the betterment of
health care for veterans. 

However,
as detailed in our testimony, the Administration and the Office of Management
and Budget continue to introduce budget variables and make individual decisions
irrespective of VA’s internal Enrollee Health Care Projection Model and the
advance appropriations process, actions that undermine our joint efforts to
stabilize VHA funding.  We have grave concerns about a number of budgetary
“gimmicks” that were proposed by the Administration and accepted by the
Congress.  Moreover, the entire benefit of advance appropriations was recently
overridden by Congress itself when a provision in the short-term continuing
resolutions approved at the beginning of FY 2012 forced VA to spend less than
Congress had previously provided to VHA through the advance appropriations
process. 

Thus,
we believe a clear priority for the Committee’s time and resources in the new
Session and the next Congress should be allocated to the Administration’s VA budget
formulation practices, with oversight of any new variables, “management
improvements,” or other budget gimmicks that may threaten the advance
appropriations process—which functions optimally when based on honest and
transparent actuarial forecasting.  Therefore, we believe this must be the Committee’s
top oversight function for the foreseeable future.

Maintaining
and Improving VA’s Physical Plant

VA’s
capital infrastructure is another top concern of our organizations.  Diminution
of VA through neglect and attrition of capital infrastructure, whether in the
health or benefits systems, will over time reduce the quality and quantity of
services for veterans.  Without properly functioning buildings and major
building systems, VA cannot sustain quality programs.  Without these investments,
VA will experience steadily increasing inefficiencies and ever-greater
difficulty attracting talented people to work within the VA system.

Over
the past two decades (with the partial exception of seismic improvements), no
Administration or Congress has adequately funded VA’s infrastructure needs. 
While VA buildings today are still serviceable, they and their component parts
need to be maintained, renovated, replaced and kept contemporary in order for
VA facilities to remain viable institutions for veterans who need services and
for the staffs who work in them.  We believe that it is a major responsibility
of Congress and, more specifically, this Committee, to ensure that VA receives
adequate funding to keep its infrastructure safe and functional.  Congress has
reserved to itself the sole power to approve and authorize appropriations for
major medical facility construction on a per-project basis, and provides
oversight on minor construction and VA’s maintenance and repair accounts.  We
believe this critical area of VA weakness and lack of resources warrants much
closer attention and leadership by the Committee.

While
all the recommendations discussed in our testimony are important, these two
items are a priority.

 Question
2

Does your organization generally support the VISN structure or do you think it
is time to take another look at how the provision of medical care is organized
and managed?  If you are generally supportive of the current VISN
structure, do you believe that the present VISN boundaries are optimally drawn
or do you have suggestions as to how to better draw these boundaries to reflect
local needs and national centralization?

 Answer: 
VA’s adoption of VISNs as a regional health care organization was derived from
the geographic service area concept of the 1991 VA Commission on the Future
Structure of Veterans Health Care, a federal advisory commission chartered by
then-VA Secretary Edward J. Derwinski to make recommendations for
organizational, structural, quality, safety and cultural improvement in VA
health care, among other aims.  VA considered the Commission’s
recommendations for three years before implementing this one as a part of VHA’s
1995 administrative reorganization.  Initially, 22 VISNs were established
but two of them—the smallest in terms of patient workload, staff and
funding—were not independently viable and were consolidated, so that today 21
networks remain, covering the continental US, Hawaii, Puerto Rico and US
possessions.

We
supported the VA’s decision to restructure the VA health care system, the
principle benefit being a regionalization of health care delivery, coordination
of leadership and decentralization of decision-making with a corresponding
reduction of VA Central Office’s involvement in local health care management
matters.  Like Congress, we believed that health care decisions were best
left to local VA facility managers and clinicians, while VA Central Office
should focus on national strategy and policies, program development, practices
and standards-setting.  The idea was simple: policy is set at the top;
implementation occurs at the local level.

Recent
testimony before the Senate Committee on Veterans Affairs suggested VA facility
managers are “gaming the system” to meet goal numbers established by the VISNs,
rather than providing needed care to veterans as provided for by law and is
also one of our concerns.  We receive much anecdotal information from our
members and VA employees that is consistent with such allegations – although
these troubling reports are difficult to prove in any systematic way.  The
Committee’s recent oversight hearing on chronic problems at the Miami VA
Medical Center is illustrative of how such challenges can fester undetected
because of lack of adequate public reporting and the general unavailability of
documentary data.

A
second concern and one about which we wrote you in our April 2011 letter and
testified at your November 15 hearing, is the number of staff now assigned to
the VISNs.  When the networks were formed, VA asserted that they would be
staffed by network directors with small cadres of staff.  Management
functions that exceeded this staff’s ability to perform them were to be
accomplished by working groups composed of VAMC staffs on temporary
assignments.  Over the past 15 years, however, the network offices have
grown dramatically, and have morphed into 21 permanent mini-central offices,
staffed with full-time professional staffs focused on operations, clinical
care, human resources, quality, safety, internal and external review, media,
press, public affairs, budget, academic affairs, and numerous other functions.

Perhaps
the most worrisome concern with the VISN organization is the enormous
administrative overhead that is being incurred by these seemingly bloated
numbers of staff.  We believe thousands of VA permanent, full time staff may
now be assigned to VISN offices (but exact numbers are elusive due to lack of publically
available information).  Within VA these network positions are popular
because they represent opportunity for career mobility, professional
advancement, and promotion of local VA employees.  We believe a large number
are clinicians who in their network assignments no longer provide clinical care
to veterans.  While we believe that clinical leadership is a strength of
VA health care, we believe that the size and complexity of the current VISNs depart
from the recommendations of the Commission’s report, and from the original
vision of those who implemented the geographic service area recommendation. 
Not only are clinical staff members being taken away from frontline positions
but also valuable technical and administrative staff have been drained from medical
centers to VISN offices.

Many
of the additional positions were VACO-mandated to respond to the "crisis
of the day" phenomena. Instead of developing thoughtful solutions for
recognized problems, previous Administrations simply added new mandatory
positions, functions or new offices.

Our
third concern with the networks deals with the geographical boundaries of VISNs.
 With exception of the one major consolidation change mentioned above, no adjustment
of VISN boundaries has occurred in the 15-plus years of the life of this
organizational model.  The original VISN geographic boundaries were drawn
based on VA patient-referral patterns and delivery systems from well over twenty
years ago; these may well have changed.  Also, some historical anomalies
of the VISN map seem to cry out for review, for example, the small state of
West Virginia remains subdivided into parts of four VISNs; the western
Panhandle of Florida is part of the eight-state VISN 16, while the remainder of
the large state of Florida is in VISN 8.  We see other examples in the
current VISN map that raise questions as well.

Another
concern is the allocation of appropriated medical care funds below the level of
the network offices.  VA’s VERA system is a risk-adjusted capitation model
that allocates Congressional appropriations to the networks rather than the
facilities. Theoretically, this model enables regional coordination and funding
of highly specialized, scarce medical resources, while the facilities remain
the major delivery systems and serve as VHA’s basic building blocks to
formulate VHA’s annual budget request.  VHA’s appropriations have grown
dramatically over the past several years – yet VA facilities often indicate to us
that they are significantly underfunded and must ration spending for numerous
categorical needs across the operating year.  We believe the resource
allocation model or the systems being employed by the VISN offices to allocate
resources to the VAMCs might need scrutiny and possibly re-balancing for their
effects on local operations.

With
these thoughts in mind, we would recommend the Committee commission an
independent, outside review of the VA network concept, subsequent
implementation and current status, with recommended changes that may be
warranted by review findings.  We believe the time has come for a critical
review of the organization, functions, operations, and budgeting process at the
VISN and VAMC levels. We recommend the review be conducted by the Institute
of Medicine (IOM) rather than by VA or a private contractor. Involving the IOM
would ensure a thoroughgoing, apolitical and unbiased review. In addition to
examining the current referral patterns, the analysis should account for future
demand, changes in veteran and family expectations, and the changing trends in
health care delivery.

Also,
we would recommend that the IOM’s review and analysis be comprehensive to
include a review of the VHA Central Office organization. This evaluation should
address a value-based analysis of those programs that are optimally managed and
funded at a national, VISN or VAMC service level.

While
the IOM’s report should be made to the Committee, but VA should be permitted to
comment on the report.  We would also recommend the Committee hold
hearings on the results of this review to include testimony from this community
and other interested parties.  The IOM reviewers should be carefully
instructed as to the goals of the study, which we believe should focus on ways
to improve health care quality, safety, satisfaction, consistency and access.
The study should focus on delivery of comprehensive, patient-centered care
to today's veterans that builds on the obvious progress VA has made over the
past 16 years.  The IOM’s work on this project should be closely monitored
by the Committee as the process occurs to ensure your goals are met.

We
thank the Ranking Member for your questions, and we would be happy to furnish
any additional information that might be of use to the Committee as it conducts
its oversight of VA programs.

November 30, 2011

The Honorable Eric K. Shinseki

Secretary

U.S. Department of Veterans Affairs

810 Vermont Avenue, NW

Washington, DC  20420

Dear Mr. Secretary:

In reference to our full Committee hearing entitled, “Potential Budgetary
Savings Within the U.S. Department of Veterans Affairs:  Recommendations from
Veterans’ Service Organizations,” that took place on November 15, 2011, I would
appreciate it if you could answer the enclosed hearing questions by the close of
business on January 11, 2012.

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in
cooperation with the Joint Committee on Printing, is implementing some
formatting changes for materials for all full Committee and Subcommittee
hearings.  Therefore, it would be appreciated if you could provide your answers
consecutively and single-spaced.  In addition, please restate the question in
its entirety before the answer.

Due to the delay in receiving mail, please provide your response to Bernadine
Dotson at bernadine.dotson@mail.house.gov
If you have any questions, please call 202-225-3527.

Sincerely,

JEFF MILLER

Chairman

Post-Hearing Questions for the Record

Submitted by Chairman Jeff Miller

Hearing on Potential Budgetary Savings Within the U.S. Department of Veterans
Affairs:  Recommendations from Veterans’ Service Organizations

November 15, 2011

1.      According to the VA IG testimony, VHA estimated in 1995 that the
original size of all 22 VISNs would range between 154 to 220 with total
operating costs of about $26.7 million annually.  The IG now estimates the
existing 21 VISNs employ at least 1,098 staff at an annual cost of over $165
million. 

    1.      Please detail what is being done to assess this
growth in VISN staffing levels.

    2.      What is the FTE range of VISN headquarter staff
nationwide?

    3.      Is there a correlation between a growing headquarter
staff and VISNs meeting key performance measures? 

2.      Please provide information on newly hired employees in the VHA
positions of Medical Center Director, Associate Network Director, and Network
Director for the years 2008 through 2011, broken down by year and the Pay Grade
and Step at which these individuals were hired.

3.      Please provide information on the number of VA employees, broken down
by Administration, whose work-related business activities permit such employee
to receive reimbursement for travel and other expenses incurred for having a
temporary duty location (basically having two residences) and the cost to the
Department as a result of payments for air fare; per diem; or mortgage,
interest, property taxes and utility costs for purchasing a home at the
temporary duty location.

4.      The IG testimony stated that fundamental controls continue to be
problematic for the fee care program.  Why is that?  What is being done about
it?

5.      How many individual fee-basis care contracts does VHA have?  Would
consolidation of contracts into larger networks of providers (similar to a
Tricare model) be more economical and improve care coordination?  Has there been
any analysis of the feasibility of moving to a Tricare-like model for VA’s
fee-basis program?  What about moving to a larger network model for only certain
kinds of care, e.g., mental health?

6.      In the past year the VA IG has uncovered instances of fraud in VA’s
beneficiary travel program.   In essence, veterans who lived only a few miles
from a medical center claimed residences that were over 100 miles away, then
obtained a travel reimbursement based on the fictitious residence.

    1.      What methods does VA have to guard against this
kind of fraud?  Are veterans’ addresses matched against other government records
to ensure valid residences are reported?

    2.      What oversight is conducted on individual medical
centers’ beneficiary travel offices in terms of correct determinations being
made regarding a veteran’s eligibility for travel reimbursement?

    3.      How much money is spent annually on VA’s beneficiary
travel program?  How much is spent administering the program?  Has any thought
been given to consolidating the beneficiary travel function (similar to a CPAC
model) to improve efficiency and promote consistent decision making?

7.      Do VA employees ever fly business class to conferences or other
VA-sponsored travel destinations? 

8.      Please provide the Administration’s position regarding whether VA
programs are exempt from sequestration.  Please provide the Office of General
Counsel legal opinion/recommendation to the Office of Management and Budget
regarding whether all VA-administered programs, including VA medical care, are
exempt from sequestration.

9.      In the November 14, 2011 IG report regarding VA retention incentives,
Dr. Petzel committed to a 100 percent review of all SES/SES Equivalent retention
incentives by November 30, 2011.  Please provide the Committee with the results
of that review.

Questions for the
Record

Chairman Jeff Miller

House Committee on
Veterans Affairs

Potential Budgetary
Savings within the U.S. Department of Veterans Affairs:

Recommendations from
the Veterans’ Service Organizations

November 15, 2011

 

Question
1:
According
to VA IG testimony, VHA estimated in 1995 that the original size of all 22
VISNs would range between 154 to 220 with total operating costs of about $26.7
million annually. The IG now estimates the existing 21 VISNs employ at least
1,098 staff at an annual cost of over $165 million.

            1.
Please detail what is being done to assess this growth in VISN staffing levels.

2. What is the FTE range of VISN headquarter
staff nationwide?

3. Is there a correlation between a
growing headquarter staff and VISNs meeting key performance measures?

 Response:

1.
Please detail what is being done to assess this growth in VISN staffing levels.

In
1995, VHA began a reorganization that included the establishment of 22 VISNs. 
Staffing began with each VISN having ten core staff.  Over time, staffing has
grown commensurate with increased VISN responsibilities.  In August 2011, VHA
conducted a preliminary review of VISN management variation and staffing data,
and determined that a more detailed analysis was necessary.  VHA established
work teams to examine the following sub-areas:

·        
VISN Role and Function

·        
VISN Core Staff

·        
VISN Regional Variations

·        
VISN Strong Practice Sharing

·        
Structured Business Reviews of
VISNs

Expected
deliverables

VISN
Role and Function.
 Since the
mid-1990s, the VISN’s role has evolved into that of a fundamental operating
unit of VHA.  VISNs have been charged with increased oversight responsibilities
and programmatic implementation, which vary according to complexity of care,
specialized services, staff sizes and other local factors.  A specific and
comprehensive definition of the role and functions of the VISN Network Office
will be developed, to ensure that the VISN Network Office role relative
operation, oversight and implementation of programs within facilities is
adequately covered.

VISN
Core Staff.
  VHA has increasingly
come to rely on VISNs to provide “reach” into the field, for added oversight
and operational direction for the Deputy Under Secretary for Health for
Operations and Management (DUSHOM), program office implementation efforts and
VHA leadership.  A work team will formally match this and other
responsibilities into the broader VHA organizational structure.  As form
follows function, the organizational structure (form) will be mapped to the
explicit roles and functions of the VISN.  The work team will generate a
document that maps the VISN role and function to an organization structure.  The
structure will include a breakdown of types of positions (core/leadership,
mandated, discretionary, etc.).

VISN
Regional Variations. 
Develop a
methodology to identify and monitor positions that provide (direct) support to
facilities through coordinated regional
effort for those positions or services that do not meet the criteria for core
VISN staff.

VISN
Strong Practice Sharing. 
Develop a
process (to include expected outcomes) for VISN identification, validation
(measurement) and sharing of strong practices in the VISN.

Structured
Business Reviews of VISNs. 
Develop a
management agenda that will serve as the DUSHOM (10N) structured business
review of the VISNs.

Work teams comprised of VISN and VHACO
leadership, are expected to report the results of their efforts to the Office
of the DUSHOM during the first quarter of calendar year (CY) 12.

2. What
is the FTE range of VISN headquarter staff nationwide?

VISN
staffing ranges between a high of 104 fulltime-equivalent employees (FTEE) and
a low of 38.  A November 2011 survey of VISNs indicates there is a direct
correlation between the complexity of the VISN (number of campuses) and the
number of Veterans the VISN serves (coverage area).

3. Is
there a correlation between a growing headquarter staff and VISNs meeting key
performance measures?

As
VHA undertakes new and expanded initiatives, the variance in interpretation and
assignment of functions and personnel assigned to the VISN has increased. 
Compounding this situation, the escalating role of the VISN in the oversight
and implementation of programs and policies has led to substantial variation in
VISN structure. 

While geographic and Veteran population
differences provide for valid reasons for some level of variation among VISN
structures, the incremental expansion of VISN mission, coupled with variation
in structures, creates variations in both the functions performed by VISNs and
interpretation about the purpose of the VISN.  While it is desirable that VISN
structure and function are evaluated and standardized to disseminate strong
practices across all VISNs that align in mission, VHA’s current efforts to assess
VISN staffing will accommodate those geographic and population differences that
are found among the Networks. 

A corollary to VHA’s VISN staffing assessment
will be the identification of candidate reporting sources for use in the
development of a balanced view of VISN performance.  VHA anticipates that
structured business reviews will guide the integrated outcome, process and
associated measurement framework to incorporate the following traditional
dimensions of a balanced scorecard:  client, process/quality, financial,
operational efficiencies and employee/learning.  A team was formed to develop
this complementary activity, whose timeline for completion is also first
quarter CY 12.  A significant factor in VHA’s VISN staffing assessment is the
finding that the appropriate VISN-level FTEE to provide leadership and expertise
has contributed to better performance at the VAMC-level in such areas as mental
health, geriatrics, prosthetics and patient safety.

Question
2: 
Please
provide information on newly hired employees in the VHA positions of Medical
Center Director, Associate Network Director, and Network Director for the years
2008 through 2011, broken down by year and the Pay Grade and Step at which
these individuals were hired. 

Response: 
Please
see attached.

Question
3:
Please
provide information on the number of VA employees, broken down by
Administration, whose work-related business activities permit such employee to
receive reimbursement for travel and other expenses incurred for having a
temporary duty location (basically having two residences) and the cost to the
Department as a result of payments for air fare; per diem; or mortgage,
interest, property taxes and utility costs for purchasing a home at the
temporary duty location.

Response: VA does
not have access to records that identify individuals who own a second home at
the TDY location.  Under that scenario, the traveler should not claim
lodging costs for the period of travel.  Also, there would be no lodging
receipt for review/approval by the supervisor as required by travel
regulations.  The travel voucher should reflect no lodging costs. 

However, such travelers could receive a Travel Savings Award.  These
incentives are not exclusively provided to individuals who own a home in a
temporary duty location and could include situations where travelers stayed with
friends or stayed in lower cost accommodations as well.  VA’s Travel Savings
Award policy can be found at:
http://10.222.13.221/scan/jobs/13320/DC-260-80B7761018.pdf

VA records show that in 2011 a
total of $59,795 was paid out to 105 employees as “Travel Savings Awards.”

Question
4:
  The
IG testimony stated that fundamental controls continue to be problematic for
the fee care program.  Why is that?  What is being done about it?

Response:  VHA has been developing and
implementing initiatives to resolve program issues.  Most significant issues
center on the manual nature of the program and variability in business
practices.  VHA’s Chief Business Office for Purchased Care has taken several
steps to improve this program, focusing in several areas.  The program has been
supported by manual processes; key changes described below are underway to
standardize, reduce or eliminate manual processes supporting the program.

Technology Improvements:  Fee Basis Claims
System (FBCS):  
The
VistA Fee package was developed more than 20 years ago and was not designed for
the sophistication and volume of claims that the VA is now processing.  As a
result, VA has implemented an interim automation system, FBCS, to support and
improve the Purchased Care claims management operations.  VA has seen
improvements in payment accuracy and timeliness since this implementation began
in October 2009, with significant reductions in the manual work required to
manage this program.  In addition, enhancements are underway that will address
the top audit findings, reducing the significant manual processes currently
supporting the program.  These are planned to be implemented in late calendar
year  2012.

Program Integrity Tools:  VA has implemented
an aggressive Fraud/Waste/Abuse (FWA) Program with specific awareness and
training efforts accomplished in FY 2011 through the creation of the VHA CBO
Program Integrity Department which combats fraud, waste and abuse using various
system safeguards, detailed auditing and the development of fraud detection and
awareness training classes.  During FY 2011, quarterly Fraud, Waste and Abuse
training sessions were conducted through Live Meeting presentations, which
covered: code gaming, ambulance upcoding, “bundled” billable claims, common
fraud schemes, and detection and prevention of health care fraud.  In addition,
VA has developed routine monthly reporting that provides detailed information
on FWA cases to each facility for review; if payment errors are validated,
these results are included in the quarterly High Dollar Overpayment report to
the Office of Management and Budget (OMB).  Finally, VA has procured industry
standard technology tools that utilize known health care industry algorithms to
identify potential fraudulent or erroneous claims.  VA will implement these
tools by the end of calendar year 2012 which will consist of the following:

·        
Claims
Scoring Tool

·        
Data
Repository

·        
Data
Integration/Extraction, Transform and Load (ETL) tool, and

·        
Reporting
Tool

Business Process
Changes:

Non-VA Care Coordination:  VHA is implementing
the following standardized business processes to reduce variability and
inefficiency across all program areas including:

·        
Consult/Referral
review:  initial decision point for use of Non-VA Care

·        
Appointment
Management:  control and oversight of the Non-VA appointments

·        
Clinical
Documentation Management:  assure appropriate clinical information is received
in a timely manner

·        
Emergency
Care:  assure appropriate oversight and management of emergent care provided at
Non-VA facilities; assure claims associated with emergent care are adjudicated
in a standardized manner

·        
Appeals
Management:  assure timeliness and quality standards are met when Veterans
appeal benefit decisions

These standardized business processes are
scheduled to be fully deployed throughout all 21 VISNs by the end of FY 2012. 
Early results have seen positive progress in the timeliness of approvals and
appointments for non-VA care, and the receipt of clinical documentation for
these non-VA care visits.

Site Assessment Visits:  VA’s Chief Business
Office has expanded its Non-VA Care Field Assistance Program to provide enhanced
assistance visits designed to assist with site specific process improvements
and assessment of key business practices supporting the program.  In FY 2011,
30 site assistance visits were performed, which included providing staff
guidance and training to approximately 180 Fee field facility staff.  The site
assistance visits also included an extensive analysis of the clinical
utilization review aspect of Fee care, proper authorizations, obligations of
funds, staff understanding of payment methodologies and the Fee Basis Claims
System (FBCS) and an overview of management controls within the Fee
office.  Upon conclusion of the visit, a final report and extensive action
plan for process improvement is shared with the facility leadership and
follow-up conducted to ensure that action plan findings are implemented. 

Training and Education:  The Fee Academy is
the primary training program provided to VISN and VAMC Non-VA Care (Fee)
employees nationwide.  The Fee Academy is organized into a four-tiered,
progressive level of curriculums designed to improve performance, enhance
internal controls and be in compliance with program policies – 461 employees
completed this training in FY 2011.  The Fee Academy is augmented by ‘just in
time’ mini-courses delivered via LiveMeeting on myriad topics concerning new or
changed processes – over 13,000 employees attended 60+ mini-courses in FY
2011.  Future efforts will include a link to core competencies and
associated mandatory training requirements  

Non-VA Purchased Care Claims Audit Contract
(CCAC):
 
This external contract conducts post-payment reviews and analysis that identify
errors in payment methodologies and procedures for Non-VA Care (Fee) claims
processing.  In FY 2011, 12 VISNs were audited, addressing findings at 24
VA facilities.  Each VISN prepared an action plan specific for their findings. 
In addition, the findings from audits have been utilized to prioritize
technology and business process changes required to support overarching program
improvement initiatives.

Recovery Audit:  The Purchased Care Business
Line (PCBL) manages the national contract for an external audit of non-VA care
inpatient payments.  These audits have been in place since 2002, with recoveries
exceeding $100 million.  In March 2011, PCBL expanded the recovery audit to
include outpatient services.  To date, this audit has identified approximately
1,800 cases with the potential for $557,000 in collections to the government.  The
results will be used to reinforce training and field communications and develop
additional audit and corrective actions plans.

Question
5:
  How
many individual fee-basis care contracts does VHA have?  Would consolidation of
contracts into larger networks of providers (similar to a Tricare model) be
more economical and improve care coordination?  Has there been any analysis of
the feasibility of moving to a Tricare-like model for VA’s fee-basis program? 
What about moving to a larger network model for only certain kinds of care,
e.g. mental health?

Response:  On a national basis, VA currently has
fee-basis care national contracts for Dialysis/End Stage Renal Disease (ESRD)
services and pilot contracts in select VISNs for Project HERO (medical,
surgical, and dental care), mental health services, and Project ARCH (Access
Received Closer to Home) pilot program.   Also, within VA Medical Centers,
specific contracts do exist on a limited basis and they are developed, awarded
and managed at the local level based on need.  Approximately 30 percent of
Non-VA Care (Fee) payments are covered under a contract or local agreement.  VA
facilities also issue individual authorizations, which serve as contracts once
accepted by  non-VA providers.  The Project HERO pilot, while
different than TRICARE, has some similarities to the broader model of
contracting with larger networks of providers.  

VA will be moving to a larger network model
of contracts for health care services with awards anticipated in late calendar
year 2012 and operations beginning in the mid-year 2013.  These contracts utilize
lessons learned from Project HERO and other pilot efforts and the effort is
referred to as Patient-Centered Community Care (PCCC).  This new effort seeks
to connect VA with networks of providers across the country through centrally
supported health care contracts. The contracts will leverage economies of scale
to provide community-based care that is coordinated, timely and of high
clinical quality. The requirements for the contract are in development and are
based on lessons learned from Project HERO and other Purchased Care pilot
programs, such as:

·        
Standardize
business processes;

·        
Require
medical documentation return;

·        
Include
timeliness and access standards to ensure best possible access to care;

·        
Ensure
provider quality by requiring they meet credentialing, licensure and board
certification standards; and

·        
Establish
performance measures and objectives.

Question
6:
In
the past year the VA IG has uncovered instances of fraud in VA’s beneficiary
travel program.  In essence, Veterans who lived only a few miles from a medical
center claimed residences that were over 100 miles away, then obtained a travel
reimbursement based on the fictitious residence.

1.    What methods does VA
have to guard against this kind of fraud? Are Veterans’ addresses matched
against other government records to ensure valid residences are reported?

2.    What oversight is
conducted on individual medical centers’ beneficiary travel offices in terms of
correct determinations being made regarding a Veteran’s eligibility for travel
reimbursement?

3.    How much money is
spent annually on VA’s beneficiary travel program?  How much is spent
administering the program?  Has any thought been given to consolidating the
beneficiary travel function (similar to a CPAC model) to improve efficiency and
promote consistent decision making?

Response:  

1.    What methods does VA
have to guard against this kind of fraud? Are Veterans’ addresses matched
against other government records to ensure valid residences are reported?

VA acknowledges that
the Beneficiary Travel Program (BT) is a high risk area.  Veterans in
accordance with BT regulations at 38 Code of Federal Regulations (CFR) 70.30
(b) may receive travel benefits for travel from either their residence or other
point travel initiated; however, payment cannot exceed the amount payable from the
Veteran’s residence.  Also, current Health Insurance Portability and
Accountability Act (HIPAA) laws provide for an individual to have a mailing
address that does not reflect their residence.  In addition, some rural
residences do not have an established street address.

VA currently does not
have address-matching capabilities with other Federal agencies.  However, for
reasons noted above, another agency’s address on file may or may not reflect
where the Veteran currently resides or initiated travel.  Therefore, such
matching could be of limited value.  As such, when a questionable address is
identified by the local VA Medical Center, program office guidance has been for
the VA Medical Center, in accordance with 38 CFR 70.20 (e),  to request from
the Veteran a document, generally a utility bill, in his or her name indicating
current residence.  If the Veteran does not have such a document, a notarized
letter from an individual where the Veteran is staying may be requested.  VA is
also exploring the use of web-based services which provide automated real time
verification of residence.  This may include use of HHS or SSA address
verification tools.

In addition, VA released to the field in June
2011, a tool that provides the ability to analyze BT mileage reimbursement data
at the facility or Network (VISN) level to determine: total and average cost
per patient; total and average cost per zip code; different patient populations
according to total number (count) of payments made and total amount paid (sum);
total and average number of claims per clerks; and patient behavior and clinic
usage trends.  As such, stations can identify: clinic and patient population
outliers by sum and count; total amount paid in mileage reimbursement within
pre-determined parameters; how efficiently travel clerks are performing;
geographic travel trends; and possible patient behavior trends.  Feedback
obtained from VHA field staff is that this tool has proven extremely beneficial
in identifying potential BT issues for further evaluation and appropriate
action by the using station.  VA is also currently in the final production test
of a “BT Dashboard” tool that will allow field stations to more effectively and
efficiently process beneficiary travel claims.  The tool will expedite claims
process to reduce waiting time for patients and increase accuracy of mileage
determinations through system-wide use of a standardized mileage calculator and
creation of a detailed clinical inventory for surrounding facilities and VISNs.

2.    What oversight is
conducted on individual medical centers’ beneficiary travel offices in terms of
correct determinations being made regarding a Veteran’s eligibility for travel
reimbursement?

VA is currently in the final stages of
implementing internal controls for the BT program by both descriptive/deductive
and inductive modeling through 6 identified Veteran behaviors relating to BT
reimbursement.  Behaviors describe Veterans who:

1.    “Unbundle”
appointments by scheduling them on multiple days even though they could be
scheduled on the same day; and drop-in for medical services without a scheduled
appointment.

2.    Provide incorrect
income information, which may render them eligible for BT benefits irrespective
of their service connected (SC) rating; have a SC disability rating of less
than 30 or have a non-service connected (NSC) disability; and have an annual
income higher than the VA pension level.

3.    Frequently change
their addresses in order to increase their BT payments.

4.    Choose a VA facility
for care that is further than the closest VA facility providing the same care;
and Veterans receiving care at multiple facilities concurrently or
sequentially; some of these Veterans may have been denied BT benefits at some
of the facilities; moreover, the care sought may be similar at each facility.

5.    Travel together (in
the same vehicle) but file BT claims separately.

6.    File for BT benefits
for multiple visits occurring on the same day.  Improper BT payments may occur
when the time needed to travel roundtrip is longer than the time between the
appointments.

Behaviors are to be run against national VA
data and then distributed to VISNs on a monthly basis for review, action and
reporting back to the program office to track, trend, and provide national
level reports regarding results.  Information will also assist the program office
to identify potential deficiencies for review and take corrective action, if
required.  Development is anticipated to be completed by the end of January 2012
with first reporting expected in March 2012.

3.   How much money
is spent annually on VA’s beneficiary travel program?  How much is spent
administering the program?  Has any thought been given to consolidating the
beneficiary travel function (similar to a CPAC model) to improve efficiency and
promote consistent decision making?

While BT is
generally thought of as mileage reimbursement, Title 38 United States Code
(U.S.C.), § 111, “Payments or allowances for beneficiary travel” as regulated
in 38 CFR Part 70 authorizes VA to pay for special mode (ambulance, wheelchair,
van, etc.) and common carrier (plane, bus, train, ferry, etc.) transportation of
certain eligible Veterans and other beneficiaries.  VA can provide or reimburse
for the actual cost of bridge tolls, road tolls, tunnel tolls, parking, and in
case of air transport luggage costs, when supported by a receipt. The actual
cost for meals, lodging or both, not to exceed 50 percent of the amount allowed
for government employees may also be provided in limited circumstances.  As
such, VA tracks costs via three cost centers which are:

·        
Inter-FacilityTravel
(Budget Object Code (BOC) 2112):  Travel costs associated with
the transfer of a patient from one facility to another when the transfer is
necessary for the continuation of care.  The transfer may occur between VA
facilities, non-VA facilities or any combination as long as the treatment is at
VA expense;

·        
Other than
Mileage (BOC 2119):  All beneficiary travel charges, except
mileage.  This includes special mode transport and certain eligible associated
costs of travel: lodging, meals; and

·         Mileage (BOC
2120):  Mileage reimbursement and associated costs: road, bridge, tunnel tolls,
parking.

Obligations for the past three Fiscal Years (FY) are: 

Type

   FY 2009 (000)

   FY 2010 (000)

  FY 2011 (000)

Inter-Facility

     $69,910

     $71,752

    $63,201

Other Than Mileage

    $244,275

    $242,045

  

$276,803

Mileage

    $314,754

    $431,518

  

$484,829

Total

    $628,939

    $745,315

  

$824,833

VA has
previously given consideration to consolidating certain aspects of the BT
program; however, because of the eligibility requirements of the program,
unique clinic needs, physical layout of medical center and associated community
based outpatient clinics and available resources at each facility (as well as
unique local resources), program operations and functions are better suited for
local implementation. VA, is however, currently
evaluating several options to increase oversight, and this may lead to
centralizing certain aspects of the BT program.  The Chief Business Office has
estimated FY 2012 administrative costs for managing the Beneficiary Travel
program to be $645,263.  In addition, during FY 2012, the Chief Business
Office expects to award an analytics support contract for  BT program , at an
estimated cost of $624,000.  Total FY 2012 administrative costs for the program
office are estimated to be $1,269,263.  These figures do not include the
costs incurred at VA health care facilities for administering the program.

Question
7:  Do VA employees ever fly business class to conferences of other
VA-sponsored travel destinations?

Response:  Yes, but only on a very infrequent
basis.  The Federal Travel Regulations (FTR) and VA travel policy permit
employees, under certain circumstances, to use business or first class
“other-than-coach” (OTC) class travel with proper justification and approval.  OTC
travel is always to be the exception, and approval is strictly limited.  VA
recently tightened the authorization process for obtaining such approval.  VA
employees are required to exercise the same care in incurring expenses that any
person would exercise if traveling on personal business and consider the least
expensive class of travel that meets his or her needs.  Authorization for OTC
travel may be justified as a result of a traveler’s medical condition, properly
documented by a medical authority; a total flight time in excess of 14 hours
(business class, but not first class); or other reason allowed under the FTR.  Approved
use of OTC travel entails authorization by the employee’s direct supervisor, a
senior approving official, the respective Under Secretary or Assistant
Secretary, and VA’s Chief Financial Officer.  Otherwise, if OTC travel does not
fall within one of the exceptions to the FTR, the only way an employee could
fly OTC is using personal funds to pay for the upgrade.

Question 8: Please provide the Administration's position regarding
whether

VA programs are exempt from
sequestration.  Please provide the Office of General Counsel legal
opinion/recommendation to the Office of Management and Budget regarding whether
all VA-administered programs, including VA medical care, are exempt from
sequestration.

Response: This
issue remains under Administration legal review.

Question
9:
In
the November 14, 2011, IG report regarding VA retention incentives, Dr. Petzel
committed to a 100 percent review of all SES/SES Equivalent retention
incentives by November 30, 2011.  Please provide the Committee with the
results of that review.

Response:  In September 2011, the Under Secretary
for Health established a VHA Retention Incentive Technical Review Board (RITRB)
to review all proposals for retention incentives for SES and SES Equivalent
employees.  All VHA entities were directed to review retention incentives
currently in place and determine if all requirements were met for the retention
incentives to be continued.  If all criteria were not met, the retention
incentives were to be terminated.  Requests for continuation of retention
incentives were to be submitted for RITRB review by October 31, 2011.  The
RITRB completed their review by November 30, 2011.

The RITRB reviewed all submissions and made recommendations. 
The Under Secretary for Health has also made his recommendations to the
Department, which are now under consideration.

 

Follow-up to
Questions for the Record

Chairman Jeff Miller

House Committee on
Veterans Affairs

Potential Budgetary
Savings within the U.S. Department of Veterans Affairs:

Recommendations from
the Veterans’ Service Organizations

November 15, 2011

 Question:

A question was asked to Mr. Grams at the Nov. 15
hearing regarding the date VA sent it’s legal review/recommendation to OMB
on the sequestration issue.  We still need VA’s response to that
question.  Further, a request was made for the Committee to receive a copy
of VA’s review/recommendation.  That request was repeated in Chairman
Miller’s post-hearing questions as part of question 8.  That was not
responded to as well. 

Understanding that the broader question on sequestration
is still under legal review (according to the responses to Mr. Miller’s post
hearing questions), we still await responses on the two issues above. 
Since Mr. Grams spoke of a review that had already been completed and
submitted, I suspect letting the Committee know of its contents and date
submitted shouldn’t take any time at all.  

Response:

The Administration continues to believe that balanced
deficit reduction, not across-the-board sequestration, is the way to put the
nation on the path to fiscal stability. 

The President’s Budget includes a comprehensive and
balanced deficit-reduction proposal.  Congress should enact that proposal
and then halt the sequestration scheduled to take place on January 2,
2013. 

If Congress does not Act on the President’s
deficit-reduction proposals, the Administration will provide guidance on the
implementation of the sequestration.  It is committed to doing so well in
advance of January 2, 2013, to facilitate orderly planning.

 

November 30, 2011

The Honorable Eric K. Shinseki

Secretary

U.S. Department of Veterans Affairs

810 Vermont Avenue, NW

Washington, DC  20420

Dear Mr. Secretary:

In reference to our full Committee hearing entitled,
“Potential Budgetary Savings Within the U.S. Department of Veterans Affairs: 
Recommendations from Veterans’ Service Organizations,” that took place on
November 15, 2011, I would appreciate it if you could answer the enclosed
hearing questions by the close of business on January 11, 2012.

In an effort to reduce printing costs, the Committee on
Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is
implementing some formatting changes for materials for all full Committee and
Subcommittee hearings.  Therefore, it would be appreciated if you could provide
your answers consecutively and single-spaced.  In addition, please restate the
question in its entirety before the answer.

Due to the delay in receiving mail, please provide your
response to Carol Murray at Carol.Murray@mail.house.gov,
and fax your responses to Carol at 202-225-2034.  If you have any questions,
please call 202-225-9756.

                                                          Sincerely,

                                                          BOB
FILNER

                                                          Ranking
Democratic Member

Questions for the
Record

November 15, 2011

Questions for W.
Todd Grams, U.S. Department of Veterans Affair

Question 1: Your written testimony states that VA is
“instilling a culture throughout our system that pursues continuous improvement
and empowers staff members to solve problems at the front line or at any point
in the health care system.”  Please provide the Committee with the specific
policies or procedures VA has implemented or issued, Since January 1, 2011, to
achieve this change in culture.  Which specific policies or procedures can you
point to as being of primary importance in instituting this change?  In what
other ways are you “instilling” this culture?

Question 2: In February, Secretary Shinseki testified
regarding the VA’s reliance on “carryover” funding, or funding not obligated in
the previous fiscal year.  For many years, a small portion of VA’s medical care
budget was provided in the form of two-year authority to better enable the VA
to manage its resources.  Arguably, the need for two-year authority for a
portion of the VA’s medical care budget is not as strong in the era of advance
appropriations. The continued reliance of the VA on carryover funding may provide
a perverse incentive at the local level not to obligate funds in order to
provide VA Central Office with carryover funding to plug funding gaps in the
next fiscal year.  What specific steps has VA Central Office taken to negate
this incentive?  What specific steps has VA Central Office taken, and
communicated to the VISN level, to ensure that funds are obligated when needed
and on a timely basis?

Question 3: VAOIG audits and reports have identified
hundreds of millions of dollars in potential savings through better management
of VA programs.  Please explain to the Committee why these savings and
improvements were not identified by VA prior to being identified by VAOIG
audits or reports.  What specific steps has the VA taken to improve day-to-day
internal management in order to proactively identify program deficiencies?  Does
VA feel confident that it is better able today to identify future problems?

Question 4: According to your testimony, earlier this
year VA “conducted a pilot program that used standardized templates for
purchasing care, ensured more consistent assessment of other VA options, and
resulted in better control over management of the care [VA] purchased.”  What
was the impetus behind starting this pilot program, and why wasn’t this degree
of standardization implemented in the past?

Question 5: VAOIG testified that improved management
and oversight of the Fee Basis program offers the greatest opportunity for
savings.  VAOIG also states in testimony that the Fee program, still lacks
fundamental controls.  Please explain what VA is doing to tighten up the
pre-authorization process and management controls?  What has VA done
proactively that will prevent the same mistakes happening in the future? 

Question 6: VAOIG evaluated the Veterans Health
Administration’s controls to prevent and detect fraud.  VHA had not identified
fraud as a significant risk to the Fee Care Program.  Health care industry
experts have estimated that 3 to 10 percent of all claims involve fraud.  What
is your progress on the VAOIG’s recommendations from the Veterans Health Administration
– Review of Fraud Management for the Non-VA Fee Care Program
, June 8, 2010
report that VA should establish a fraud management program with data analysis
and high-risk payment reviews, system flags for suspicious payments, employee
fraud awareness training, and fraud reporting?

Question 7: VSOs have raised concerns with the VA’s
practice of holding back medical care appropriations from being distributed to
the field.  Particularly they mention VA is currently holding back 1.5 percent
of the advance appropriations for health care. Please explain the policy
rationale for this practice.

Question 8:  In testimony, the VAOIG listed several
other areas for potential savings.  One of these areas was the management of
rural health initiatives.  In FYs 2009 and 2010, the VAOIG reported that the
Office of Rural Health (ORH) lacked reasonable assurance that its use of $273
million of the $533 million it received improved access and quality of care for
veterans.  Please provide the Committee with a progress report on the six
recommendations listed by the VAOIG in the report Veterans Health Administration
– Audit of the Office of Rural Health
dated April 29, 2011

Question 9:  According to a New York Times
article dated September 12, 2011, entitled “Government Pays More in Contracts,
Study Finds,” a study, conducted by the Project on Government Oversight “found
that in 33 of 35 occupations, the government actually paid billions of dollars
more to hire contractors than it would have cost government employees to
perform comparable services.”  In what areas is VA currently studying the
differences in contracting costs comparable to providing services in house?   In
those areas where the VA has contracted out services in the past, has the VA
undertaken any follow-up studies to ascertain if projected savings were indeed realized?

Question 10:  It is our understanding that the Veterans
Benefits Administration has recently awarded a contract to ACS, Inc.  It is
also our understanding that VBA is training this company on how to develop
claims and that at some time next year, ACS employees will be charged with
developing 190,000 claims.  Please provide the Committee with details of the
contract, including cost, and the policy rationale for contracting this
function out.

Question 11:  According to the National Academy of
Public Administration’s white paper entitled “Veterans Health Fee Care Program,”
dated September, 2011, “VA’s Fee Care Program expenditures have grown 275%
since [FY] 2005.  There are now approximately 2400 Full Time Employees (FTEs)
working in the program.  Paid claims rose from $3 billion in FY 2008 to $4.4
billion in FY 2010 (46% increase), while the number of unique patients served
increased from 820,000 to 952,000 (16%) in the same period.  NAPA also reported
that in “recent years, Fee Care has been increasingly used to meet patient
wait-time standards.  That is, when a medical service cannot be provided at a
VA facility within wait-time performance standards, VA Medical Centers (VAMCs)
often use the Fee Care Program. 

Please detail why paid claims increased 46 percent while the
number of unique patients served increased only 16 percent.  How much of this
46 percent increase in paid claims is attributable to VA attempts to meet
patient wait-time performance standards?  Please provide the Committee with
wait-time reports from FY 2008 to the present, and a detailed breakdown, by
VISN, of Fee Care Program expenditures since FY 2008 and the amount expended,
by VISN, since FY 2008 of Fee Care Program expenditures utilized to meet
wait-time performance standards. 

Question 12:  The NAPA white paper recommended that
substantial changes be made in the VA Fee Care Program and that a strategic
change management plan be developed as quickly as possible.  Does VA agree that
substantial changes should be made in the Fee Care Program?  Is the VA
developing, or planning on developing, a strategic change management plan? 
What is the specific timetable for changes that have been identified as needed
in the Fee Care Program to be implemented?

Question 13:  The NAPA white paper states that “[g]iven
the significant organizational and productivity challenges within the Fee Care
Program, VHA has a limited understanding of the services it is procuring
through its program and their cost.  The Fee Care Program does not appear to
have been well managed at any level of VA.  VHA provides limited VISN-wide
executive oversight of its purchased care program, and the program lacks
clearly defined operational objectives or goals, and it is not guided by a
coherent strategy for managing program expenditures.”  Does VA believe the Fee
Care Program has been well managed?  Does VA believe that there is sufficient
level of VISN-wide executive oversight?  Does VA believe that the Fee Care
Program has clearly defined operational objectives and goals and a coherent strategy
for managing program expenditures?

Question 14:  The NAPA white paper states that the
“Chief Business Office estimates the error rates (that is, erroneous payments)
at 12 percent per year, which equates to approximately $500 million in FY
2011.  By contrast, TRICARE has a reported error rate of 0.42 percent. 
Productivity varies across operating sites by nearly ten folds between the most
and least efficient sites [footnotes omitted].”  Please provide a detailed
explanation to the Committee as to why the VA experiences such a high error
rate compared to TRICARE and why there is a divergence across the VA system in
the level of error rates.  What policies or procedures are currently in place,
or have been in place previously, that contribute to this high error rate and
divergence, and what specific policy and procedural steps is the VA taking to
address this high error rate and divergence?

Question 15:  During the hearing, VA stated that it
was going to roll-out Project HERO nationwide.  What are the detailed policy
rationales behind implementing this program nationwide?  Please provide the
Committee with a detailed plan on the proposed nationwide roll-out including
detailed time frames, benchmarks, and costs associated with the roll-out.  In
addition, please provide the Committee with any detailed cost studies that have
been prepared estimating any cost-savings, by VISN, that VA will achieve with
Project HERO.  If VA has not prepared detailed cost estimates, please provide
the Committee with estimates regarding these proposed savings.

Questions for the
Record

Ranking Democratic
Member Bob Filner

House Committee on
Veterans Affairs

Potential Budgetary
Savings within the U.S. Department of Veterans Affairs:

Recommendations from
the Veterans’ Service Organizations

November 15, 2011

Question
1:
Your
written testimony states that VA is “instilling a culture throughout our system
that pursues continuous improvement and empowers staff members to solve
problems at the front line or at any point in the health care system.” Please
provide the Committee with the specific policies or procedures VA has
implemented or issued, since January 1, 2011, to achieve this change in
culture. Which specific policies or procedures can you point to as being of
primary importance in instituting this change? In what other ways are you
“instilling” this culture?

Response:  The creation and nurturing of a
culture of continuous improvement and organizational learning is a multifaceted
organizational imperative in health care.  The Veterans Health Administration (VHA)
understands that drivers of sustained change include the organizational impetus
to change over time, leadership commitment and support of the change,
improvement initiatives that actively engage staff in meaningful problem
solving, alignment from the top to bottom to achieve consistency of
organizational-wide goals with resource allocation and actions, and integration
to bridge traditional intra-organizational boundaries between individual
components.

VHA is moving forward with a variety of
organizational initiatives and training efforts to influence culture in a way
to harness its power to speed the capacity for the provision of safe, high
quality care characterized by continuous improvement and learning.  VHA’s
Offices of Quality, Safety, and Value (QSV), Workforce Services, Office of
Patient Centered Care & Cultural Transformation, and Nursing Services are
key partners in these efforts. The functions and activities of all of these
offices are fundamental to the success of efforts to facilitate cultural
transformation as these functions draw upon the belief that culture is related
to organizational performance.

Quality, Safety, and Value

VHA has had a long history of commitment to,
and development of a culture of safety through the establishment of the
National Center for Patient Safety (NCPS) in 1999.  This culture of safety
provides the foundation of improvement and learning.  Over the years since NCPS
was established, and with the support of VHA, the elements of a culture of
safety have been developed and expanded. These include the following:

·        
Just
Culture

– a just culture is the lynchpin of any safety culture and is one in which
human error is recognized as an inevitable product of highly complex processes.
 With the 2011 establishment of the Office of QSV, VHA has clearly re-committed
to the continued support and expansion of the just culture. 

·        
Understand
Complexity

– human error occurs because of the complex environment in which individuals
operate.  To improve the safety of this environment, a deep understanding of
why errors occur must be developed so that improved systems may be created.  Because
people have difficulty discussing the errors they make, it is imperative for a just
culture
to exist so that people may admit to, and discuss, the errors they
have made without fear of retribution.  Only with such a culture may healthcare
professionals and staff completely understand the systems issues that lead to
medical errors.  VHA leadership has fully supported NCPS in developing and
training VA staff and leadership in the concepts of a just culture and
this has helped improve the willingness of front line providers to report
errors when they see them.  NCPS conducts a Safety Culture Survey to track
perceptions of patient safety at the facility and Veterans Integrated Service
Network (VISN) level over time.

·        
High
Functioning Teams

– because of the inherent complexity of medical systems, it is difficult for
even the most intelligent and diligent individual to catch all possible
failures that may occur.  Highly functioning teams are imperative to improve
patient outcomes.  To this end, VHA strongly supported NCPS in the development
of programs to enhance team performance.  Medical Team Training (MTT) focuses
on enhancing the performance of teams in high risk areas such as intensive care
units (ICU), operating rooms, and emergency departments.  The face to face
training sessions have been running since 2005 and help develop the skills that
improve team functioning. In 2011, the program was expanded to other areas of
VHA where well defined teams must interact together such as dental, podiatry,
and orthopedic clinics.  The training results in improved safety attitudes,
higher morale, and reduced staff turnover.  A key outcome of VHA’s training has
been reductions in risk-adjusted surgical mortality rates (VA’s findings were
published in JAMA 2010; 304 (15); 1693).  Another team program, Clinical Crew
Resource Management (CCRM) has recently been added to focus on the more
informal teams that interact at the ward level.  This training focuses on the
empowerment of the multi-disciplinary front line staff that come together to
care for patients at the ward level.  Over 800 people have been trained since
the pilot in 2010 and as of 2011 the program will be introduced in an
additional 5-7 sites. Results pre- and post training note improved average
teamwork scores as well as improvement in the error reporting culture.  This
strongly suggests that people feel more comfortable in discussing errors when a
just culture exists.  This training has also resulted in reductions of
unit acquired pressure ulcers, medication errors per patient day, hyper- and
hypo-glycemic events, and failure to rescue.

·        
Engaged
Leadership

– as part of any team training that a facility undertakes there must be
leadership support and engagement.  NCPS ensures that facility leadership
understands that for a culture of safety to be fully developed leadership must
engage in walk rounds so that they may hear about safety and quality concerns
from front line providers and show them that their concerns have been heard.  VHA
leadership has supported such training and with the 2011 reorganization has
specifically created an arm within VHA that focuses on QSV – concepts of
teamwork and leadership have been reinforced in vision and mission of the new
Office of QSV.

Additional initiatives focusing on a culture
of safety and continuous improvement include:

·        
Select
executive leadership teams have participated in a variety of site visits to
non-Department of Veterans Affairs (VA) healthcare entities.  These medical
organizations (Virginia Mason, ThedaCare, Henry Ford, Baptist Healthcare,
Barnes-Jewish, et. al.) have been nationally recognized for successfully
navigating change management and commitment to knowledge sharing.  Eight
Veterans Integrated Service Networks (VISNs) have participated, and site visits
will continue to all remaining Networks.

·        
In
support of VA’s transformational initiatives, senior leaders from all VISNs are
participating in customized Leading Organizational Improvement
workshops.  These workshops include an organizational assessment of the
existing leadership structure and function, and then combine didactic training
with real-time strategic planning to facilitate cultural transformation towards
a culture of continuous improvement.  To date, 10 of 21 VISNs have
completed the workshop.  More than 90 percent of the FY 2011 workshop
participants rated the materials, instruction, and exercises as “Good to
Excellent.”

·        
In
July 2011, VHA leaders participated in a conference entitled “VHA Culture of
Improvement” to thoughtfully develop action plans to help change the culture.

·        
The
Enhancing a Culture of Continuous Improvement Guidebook will be piloted
in early 2012 with plans for widespread deployment later that same year.  VHA’s
Systems Redesign function within the QSV Office is developing the guidebook
with the assistance of a multidisciplinary committee of field-based and
national experts (Systems Redesign Leadership Committee).  The guidebook
focuses on how to change organizational culture to foster a culture of
continuous improvement.

·        
Approximately
25 hospital teams per year participate in training academies in order to learn
and apply systems redesign and operations management techniques to
leadership-identified strategic priorities.  Academy sessions focus on
outpatient access, inpatient flow, and systems redesign methodologies that
include the application of systems engineering principles.

·        
Veteran
Engineering Resource Centers conduct Rapid Process Improvement Workshops
(RPIWs), which enable facility-based teams to apply improvement principles to
real projects.  More than 300 staff attended RPIWs in FY 2011.

·        
VHA
continues to use Learning Collaboratives to engage and train facility based
teams in achieving patient-centered, continuously improving, team-based care in
a data driven healthcare delivery organization.

o  
Patient
Aligned Care Teams (PACT) improved access, care coordination, and redesigned
practices;

o  
The
Human Resources (HR) Recruitment Community of Practice initiative built upon
the FY 2008 – FY 2009 HR Recruitment Collaborative to continue support,
training, and sharing of information and strong practices in improving
recruitment and hiring of skilled healthcare workers;

o  
The
FIX/Flow Collaborative is transforming inpatient ward care and building
cohesive care teams through innovative improvements in quality, safety, nurse
and physician communication, and work efficiencies;

o  
The
Patient Flow Collaborative focuseson management of hospital flow,
communications, and coordination, and incorporation of the deployment of the
electronic bed management system within VA medical centers.

o  
The
Transitioning Levels of Care Collaborative improved and smoothed the
transitions of patients between levels of care. The main focus was on movement
from acute care to lesser acuity settings such as home, long term care, etc.

·        
Ensuring
Correct Surgery (ECS) continues to be offered to facility teams.  This
training program was developed in 2011 in collaboration with Surgical Service
and resulted in a series of virtual training modules available to all operating
room/procedure area staff.  While this training is still new, VISN leadership
in surgery and anesthesia have all been trained in this high-risk area.

·        
QSV
is aggressively pursuing implementation of the International Standards
Organization (ISO) 9001 quality standards. ISO 9001 is the preeminent
international standard for quality management systems that ensure reliable
delivery of services and products.  These standards are created, updated, and
sustained through the International Organization for Standardization (ISO).  Starting
with the reprocessing of reusable medical equipment, VHA is one of the few
healthcare organizations bringing non-healthcare industry rigor and discipline
to the execution of scope cleaning processes.

·        
VHA
is successfully changing the culture in primary care practices to include
patient-centered, team-based primary care.  PACT aims to improve patient
access to appointments with healthcare providers enhance access to providers
through the telephone, secure messaging, group visits and home telehealth, and
engage patients more aggressively in care for chronic disease to keep more
patients out of the emergency department and hospital.

·        
The
Office of QSV is leading the revision of VHA’s “Framework for Excellence”
overarching policy on quality functions. 

VHA partners with the Office of Inspector
General (OIG) on numerous actions that result in reported change and continual
improvement.  Specifically, OIG has verified organizational improvement
for more effective operations in areas specific to procurement; improvement in
how the Workers Compensation Program is managed and monitored to maximize
savings and efficiencies; implementation of significant controls over the payment
of executive retention incentives; and reduction in the number of improper
payments with new monitoring processes involving VHA Finance.

Workforce Services

VHA’s Office of Workforce Services is another
fundamental component of instilling a culture of continuous improvement and
empowering staff to solve problems in the health care system.  The primary
function of Workforce Services is managing and developing human capital,
supporting organizational health, and transforming VA into a learning organization. 
Achievements in 2011 encompass four core themes: improved recruitment and
appointment processes, transformation and system redesign, ensuring a sense of
workplace psychological safety and engagement, and development of the future
clinical workforce. 

Recruitment and appointment processes:

·        
In
FY 2011, VA implemented a new WebHR system in response to enterprise-wide
assessment and modernization of processes and systems to enhance recruitment,
management, and retention of VA’s 300,000-person workforce and to support VA’s
human capital investment.  The WebHR application has been identified as
foundational in VA’s overall human capital management systems modernization
initiative by providing a singular point of automatic document creation.  WebHR
provides a starting point, via the information contained in the SF-52, for many
key HR functions.  WebHR and the Form SF-52 are common to all VA HR components,
with the result of centralizing and facilitating management of information
across VA for applicants, trainees (including affiliates), and employees.

·        
The
Under Secretary for Health granted authority to VISN Directors to approve
leadership positions prior to review by the Leadership Management &
Succession Board (LMSB).  This new process has accelerated the selection and
placement of Executive Career Field senior leadership positions at Medical
Centers throughout VHA.

·        
Professional
clinical recruiters were hired and placed in each VISN to engage local HR staff
and clinical hiring managers in a concerted effort to resolve long-term
staffing issues.  Over 1,700 qualified candidates were referred, and over 350
selections were made in the past 18 months.

 Transformation and system redesign:

·        
VHA
is transforming to provide health care excellence for the 21st century, and in
doing so, more than 30 percent of the programs, products, and services
delivered in FY 2011 were related to transformational initiatives.

·        
Employee
Education Service (EES) manages the clinical training needs of fifteen major
VHA health care transformational initiatives.  For example, in FY 2011, EES
conducted 132 Center of Excellence trainings resulting in PACT education of
8,087 participants.

·        
A
strategic partnership with VHA’s Office of QSV to implement critical
organizational improvement initiatives was developed.  As detailed above, these
initiatives included improving access to care, improving inpatient flow, and
implementation of PACT.

·        
Significant
training has been provided to VHA leadership on improvement principles and how
to create a culture of improvement throughout the organization.

Psychological safety and engagement in the
workplace:

·        
VHA
offers on-site executive coaching expertise to current and developing leaders
within the organization, including the creation of personal development
plans, and offers on-site consultation and assistance.  In 2010, the
National Center for Organizational Development (NCOD) provided executive
coaching to 630 VA clients.  In 2011, NCOD provided one-time executive
coaching to 223 VA clients and ongoing executive coaching to 116 VA clients.

·        
Civility,
Respect, and Engagement in the Workplace (CREW) was initiated in 2005.  As of 2011,
over 1,000 workgroups at 109 VA Medical Centers have participated in CREW.  Each
cohort of CREW has reported statistically significant improvements in civility
as a result of the CREW intervention. CREW is now available to Veterans
Benefits Administration (VBA), National Cemeteries Administration (NCA), and VA
Central Office (VACO) staff as a Human Capital Investment Plan
initiative. 

·        
The
VA All Employee Survey (AES) has been administered annually to all VHA employees from
2006.  In 2010, the AES was expanded to all VA employees across all VA
administrations (VACO, VHA, VBA, and NCA).

·        
In
FY 2010, NCOD provided 360-Degree Assessment reports to 1,800 VA employees,
including 560 VA executives, and provided 180-Degree Assessment reports to
1,000 VA employees.  In FY 2011, it is projected that NCOD will provide
360-Degree Assessment reports to 1,500 VA employees, the Executive 360-Degree
Assessment reports to 550 VA employees, and the 180-Degree Assessment reports
to 900 VA employees. 

·        
In
2011, NCOD provided ongoing, intensive consultation services to 67 VA
organizations (including VISN offices, Medical Centers, VA program offices,
VBA, and NCA).  Additionally, NCOD experts provided focused, one-time
consultative services to 106 VA organizations (including VISN offices, Medical
Centers, VA program offices, VBA, and NCA).

·        
In
FY 2011, VHA developed an executive team model to support the provision of
services that are Veteran-centric, evidence-based, and delivered by engaged,
effective, collaborative teams in an integrated environment that supports
learning, discovery, and continuous improvement.  To date, a total of 162
executive teams, including 704 executives from medical centers and network
offices in the field, have completed a new Executive Team Assessment.  The
Executive Team Assessment is currently being administered to all executive
teams in VHA Central Office. 

Development of the future clinical workforce:

 ·        
One of the primary missions of VA
is to have the leadership in place today to lead us into the future.  But
it is equally important to educate health care professional trainees for
practice in the 21st century health care workplace. 

·        
In
FY 2011, VHA stood up five Centers of Excellence in primary care education with
the goal of transforming care delivery and the education of VA’s future
clinical workforce.

·        
In
FY 2011, VA also expanded the size of the Chief Residents in Quality and Safety
program, which is designed to introduce the foundational principles of patient
safety and quality improvement to medical residents.

Nursing Services

The Office of Nursing Services (ONS) is
implementing the Clinical Nurse Leader role (CNL), a new master’s prepared
general RN provider at the point of care.  The CNL will coordinate and
deliver complex clinical care; improve clinical and cost outcomes, and provide continuous
quality and safety improvements at the Microsystems level; translate and apply
research findings at the point of care; and enhance staff competence and
empowerment to solve problems at the front line.  Since 2009, VHA has
demonstrated significant positive CNL outcomes related to quality, safety,
value, cost savings, cost avoidance and innovative clinical practice.  CNL
practice aligns with both the Patient Aligned Care Team and Specialty Care
Transformation, thereby creating an efficient, transparent, and collaborative
healthcare environment.  As of December 2011, ONS has made significant progress
implementing the CNL role throughout the entire VA health care system. 

 The Office of Patient Centered Care &
Cultural Transformation

The Office of Patient Centered Care &
Cultural Transformation was created in January 2011.  A vision, strategy, and
implementation plan has been formulated, and many presentations have taken
place at all levels of our system (National Leadership Council, VISN, Medical
Center, program offices) to communicate this plan and engage the organization.  Nine
Centers of Innovation have been identified and established to pilot new models
of care and approaches to enrich the Veteran’s experience.  Since August 2011,
Field Based Implementation Team members have been hired and are undergoing
intensive training.  As a result, the Office has a framework and strategic plan
established to implement this significant cultural transformation.

Health Equity

Following a multidisciplinary work group
meeting in August, 2011, the Under Secretary for Health committed to support
for a new initiative to champion the advancement of health equity and reduction
of health disparities for our Veterans.  This initiative will position VHA as a
national leader in achieving equity in health care and outcomes among
disadvantaged patient populations and lead efforts to address health
disparities by promoting and providing education/training, communications and
information to Veterans and our work force.  VHA will coordinate programs,
projects and other activities to bring synergy within the organization. 
Representatives from the work group will represent VA and VHA to serve as
liaison to other governmental and non-governmental organizations working to achieve
health equity.  They will capitalize on the existing network of Minority
Veteran Coordinators, Operation Enduring Freedom/Operation Iraqi
Freedom/Operation New Dawn (OEF/OIF/OND) Coordinators, Women Veterans Program
Managers, Homeless Veterans Coordinators, Center for Faith-based and Neighborhood
Partnerships, Office of Rural Health, Office of Diversity and Inclusion, Office
of Patient-Centered Care and Cultural Transformation and other key partners to
coordinate efforts to advance health equity.

This initiative will be implemented using the
framework provided in the National Stakeholder Strategy for Achieving Health
Equity, using five VHA goals for a Veteran-centric approach.  These goals
include:

·        
Leadership
-
Strengthen and broaden the ability of VA leadership to address health
inequalities and reduce health disparities through operations, policy oversight
and research.

·        
Awareness
-
Increase awareness of the significance of health inequalities and disparities,
their impact on the Nation and the actions necessary within VHA to improve
health care and health outcomes for disadvantaged populations.

·        
Health
Outcomes

- Improve health and healthcare outcomes for Veteran sub-populations
experiencing health disparities.


·        
Diversity
and Cultural Competency of the Workforce
- Improve cultural and linguistic competency
and the diversity of the VA workforce involved in advancing the health and
well-being of Veterans.

·        
Data,
Research and Evaluation
- Improve the availability, coordination and utilization
of data and the diffusion of research and evaluation outcomes in order to track
progress towards the achievement of health equity. 

Question
2:

In February, Secretary Shinseki testified regarding the VA’s reliance on
“carryover” funding, or funding not obligated in the previous fiscal
year.  For many years, a small portion of VA’s medical care budget was
provided in the form of two-year authority to better enable the VA to manage
its resources.  Arguably, the need for two-year authority for a portion of
the VA’s medical care budget is not as strong in the area of advance
appropriations.  The continued reliance of the VA on carryover funding may
provide a perverse incentive at the local level not to obligate funds in order
to provide VA Central Office with carryover funding to plug funding gaps in the
next fiscal year.  What specific steps has VA Central Office taken to
negate this incentive?  What specific steps has VA Central Office taken,
and communicated to the VISN level, to ensure that funds are obligated when
needed and on a timely basis?

Response:  The Department of
Veterans Affairs (VA) Central Office allocates all available funds, including
funds carried over from the previous fiscal year, at the beginning of each
year.  The exception is a small National Reserve that is used to fund
emerging requirements during the fiscal year.

In previous years, Congress has provided a
small portion of each VA Medical Care appropriation (Medical Services, Medical
Support and Compliance, and Medical Facilities) as being available for two
fiscal years.  This has allowed VA to accommodate unanticipated delays in
implementation of new programs, acquisition delays, activation of new
facilities that have experienced construction delays, and other activities that
have crossed fiscal years.  This has enabled VA to ensure that the funds
appropriated by Congress are used for purposes that best enhance health care
for Veterans, rather than for items that can be obligated by the end of the
current fiscal year.

In Fiscal Year 2011, VA implemented a new
resource allocation process called the VA Medical Center Allocation System that
includes a standardized model for VISNs to use in allocating funding to their
medical facilities.  The model was designed to provide consistency in the
allocation process across VISNs but still allow necessary flexibility to make
adjustments to medical facility allocations.

Question
3: 
VAOIG
audits and reports have identified hundreds of millions of dollars in potential
savings through better management of VA programs.  Please explain to the
Committee why these savings and improvements were not identified by VA prior to
being identified by VAOIG audits or reports.  What specific steps has the
VA taken to improve day-to-day internal management in order to proactively
identify program deficiencies?  Does VA feel confident that it is better
able today to identify future problems?

Response:  VA is committed to mitigating risk,
ensuring compliance, and improving the identification of program deficiencies. 
While an Office of the Inspector General (OIG) review may identify issues that
are not already being addressed by  program offices and leadership, many issues
identified in these reports are those that the Department has already begun to
address prior to the review.[1]

VA action plans to address OIG
recommendations and findings often indicate efforts that VA has proactively
taken to address self-identified concerns.  A good example is the recent
response to the OIG Report “Audit of Veterans Integrated Service Network
Contracts” that noted a number of actions VHA had already taken to address concerns
such as:

·        
creation
and implementation of the Acquisition Quality Compliance Audit Program;

·        
creation
of Quality Assurance (QA) positions at the Network Contracting Activity (NCA),
Service Area Office (SAO) and National levels; and

·        
implementation
of a Responsibility Determination Standard Operation Procedures (SOP).

Also, OIG reviews often help to accelerate
those processes that have already begun.  Throughout this review, VHA was able
to identify how VHA had already identified areas for improvement and solutions
that were underway.  In a collaborative effort, the OIG auditors advised VHA
officials about their views of what VHA was doing or planned to do.  In the
end, the solutions were improved. 

The recent establishment of the Office of QSV
is a proactive way to identify and address concerns sooner, rather than later. 
QSV enhances the quality, safety, reliability, and value of VHA’s clinical and business
systems by enabling innovative, enterprise-wide approaches to compliance, risk
awareness, and continuous improvement.   QSV is currently implementing
educational and consultative resources for the deployment of the ISO 9001
Quality Management System standard.  The deployment provides a framework in
which VHA may implement and sustain consistent quality management systems.

VA must also continue its efforts to identify
efficiencies, seek improvement, and strengthen day-to-day internal management
in order to proactively identify program
deficiencies.  To this end, several steps have been initiated.  VA
recently engaged a system-wide review of existing programs, structures, and
skill sets that support the development of an Enterprise Risk system. 
Building upon the background research provided from this overview, the Under
Secretary for Health asked the Office of QSV to introducethe concept of Enterprise Risk Management (ERM) to VHA
leadership.  Following this introduction, QSV has been further educating
VHA leadership on the ERM concepts.  The education process will be
followed by a roll-out of the operational details that may help guide
implementation of ERM at the VISN and hospital levels.

ERM is broadly understood to be a
practice that helps organizations understand their risks so as to better
identify, analyze, mitigate, monitor, and evaluate those risks. Thus, the
benefits of ERM include more effective strategic planning and understanding of
risk exposures.  ERM represents an opportunity for VHA to begin to better
manage risks across the organizational structure and function, rather than
within an individual office or facility.  While ERM is in the early
roll-out phase in VHA, it has been well received by much of the VISN
leadership, and interest in how such the ERM process will work across the VISNs
has been high.    

As is the case with VHA, VBA officials work
closely with the Office of Inspector General and value its critical role and
diligence in helping to meet that commitment to mitigate risk, ensure
compliance, and improve the identification of program deficiencies. 

VBA partners with OIG through all phases of its
audits.  OIG reports identify specific areas in need of process and/or systemic
improvements, as well as compliance issues.  At the regional office level, the
OIG Benefits Inspection reports identify compliance issues and important areas
where additional training is needed. 

Often, issues identified in OIG reports are
already in the process of being addressed by VBA program offices.  The OIG
reviews also have the benefit of looking at the administration of our programs
retroactively.  For all reports, VBA provides action plans addressing OIG
recommendations and quarterly status updates for OIG validation and ultimate
closure.  Each VBA business line performs regular site visits to regional
offices to review compliance with policy and procedures as well as to provide
assistance and training where necessary. 

VBA’s ongoing transformation efforts also
focus on improving decision quality, mitigating risk, and strengthening
day-to-day internal management.  For example, VBA has developed rules-based
calculators for automated adjudication.  Calculators will guide decision makers
through the process with intelligent algorithms similar to tax-preparation
software.  VBA has also started to use new evidence-gathering tools, known as
Disability Benefits Questionnaires, which allow us to bring new consistency to
the collection of medical information needed for claims decisions. 
Additionally, local Quality Review Teams are being implemented to conduct
“in-process” quality checks as well as regular end-of-month reviews. 
Throughout our change management efforts, we will identify risks up front and
build in necessary controls and procedures to avoid potential deficiencies. 
Proactive risk management, recurring quality reviews, and compliance
inspections will enable VBA to avoid potential program deficiencies. 

VA is committed to building
compliance and risk management into every process, policy, and procedure before
implementation.  We must identify risks and ensure compliance proactively,
not rely on inspections after something is implemented.  Inspections have
a role, and we need to review lessons learned and then retool what we are doing when we
do identify an ongoing concern.   By ensuring enterprise risk
management, building in compliance, and appropriately inspecting and measuring
success, VA can and will be a system of continuous improvement.

Question
4:
 
According to your testimony, earlier this year VA “conducted a pilot program
that used standardized templates for purchasing care, ensured more consistent
assessment of other VA options, and resulted in better control over management
of the care [VA] purchased.”  What was the impetus behind starting this pilot
program, and why wasn’t this degree of standardization implemented in the past?

Response:  The Non-VA Care Coordination (NVCC)
initiative was established in October 2010 in response to findings from the
Managing Variation Workgroup which identified organizational weaknesses and
variations in both business and clinical areas.  Non-VA Care was identified as
one of several focus areas and included in the Health Care Efficiency
Transformational Initiative.  The Non-VA Care Coordination model was
developed to reduce and/or eliminate variations and inefficiencies among Fee
programs nationally.  Prior efforts to standardize the program focused on
back-end claims processing.  This 2010 effort was a natural progression of the
many programmatic changes previously underway for improving this program. 

The pilot resulted in positive improvements
in business processes, including improved controls in the timeliness of initial
approvals for Non-VA Care, appointments for these services, and return of
clinical information.  Examples include improving initial approvals for Non-VA Care
within 4 days, appointments made within 8 days and return of clinical
information within 20 days.

Due to these positive results, VHA has
initiated deployment of these standardized business practices in FY 2012. 
Deployment has been completed at the champion sites in VISNs 11, 18 and 16. 
Deployment will continue at all sites with completion prior to the end of FY
2012.

Question
5:
 VAOIG
testified that improved management and oversight of the Fee Basis program
offers the greatest opportunity for savings.  VAOIG also states in testimony
that the Fee program still lacks fundamental controls.  Please explain what VA
is doing to tighten up the pre-authorization process and management controls? 
What has VA done proactively that will prevent the same mistakes happening in
the future?

Response:  The objective of the national
deployment of the Non-VA Care Coordination initiative is to establish
standardized business processes and tools within all Fee programs across VA,
with a strong focus on the pre-authorization process.  A primary goal is
to reduce or eliminate program variations and inefficiencies, thereby providing
consistent and equitable delivery of Fee services to eligible Veterans. 
These changes will provide much greater management controls over this key
programmatic component.  This will be accomplished by facilitating and
coordinating the Veteran’s Fee care, and following up by ensuring care was
rendered and supporting documentation is returned to VA, and appropriate
follow-up is scheduled that returns the Veteran to VA healthcare.  VA is
currently deploying this initiative across all Veterans Integrated Service
Networks (VISNs), with full implementation expected prior to the end of FY 2012. 
These significant efforts to standardize the program will provide VA with more
stringent controls over the entire program scope.

Question
6:
 
VAOIG evaluated the Veterans Health Administration’s controls to prevent and
detect fraud.  VA had not identified fraud as a significant risk to the Fee
Care Program.  Health care industry experts have estimated that 3 to 10 percent
of all claims involve fraud.  What is your progress on the VAOIG’s recommendation
from the Veterans Health Administration – Review of Fraud Management for the
Non-VA Fee Care Program, June 8, 2010 report that VA should establish a fraud
management program with data analysis and high-risk payment reviews, system
flags for suspicious payments, employee fraud awareness training, and fraud
reporting?

Response: 
VA
has implemented an aggressive Fraud/Waste/Abuse (FWA) Program with specific
awareness and training efforts accomplished in FY 2011. Within VHA’s Chief
Business Office, this new FWA Program works with all stakeholders to identify
and mitigate health care fraud, waste and abuse, provide training, research
fraud cases, and assist in the development of process solutions to prevent and
recover all improper payments.  The program provides detailed fraud, waste, and
abuse training to all Purchased Care personnel, VA Compliance Business
Integrity staff, and other VA stakeholders.  Prevention strategies include
publications, VA and Medicare conferences, numerous training opportunities,
employee orientation, and national conference calls.  In addition, VA has
developed routine monthly reporting that provides detailed information on
potential FWA cases to each facility for review; if payment errors are
validated, these results are included in the quarterly High Dollar Overpayment
report to the Office of Management and Budget (OMB).  Finally, VA has a
contract with IBM to implement a “state-of-the-art” Program Integrity Tool,
which will evaluate medical claims data and provide pre-payment notifications
to aggressively monitor improper payments.  This is a significant
improvement and will eliminate the need for “pay and chase” activities and
identify providers that engage in fraud, waste, and abuse.  VA anticipates
implementing these tools by the end of 2012.

Question
7: 
VSOs
have raised concerns with the VA’s practice of holding back medical care
appropriations from being distributed to the field.  Particularly they mention
VA is currently holding back 1.5 percent of the advance appropriations for
health care.  Please explain the policy rationale for this practice.

Response:  The Veterans Equitable Resource
Allocation (VERA) methodology is used by VA Central Office to fund each of VA’s
21 Veterans Integrated Service Networks (VISNs).  VERA does not allocate funds
to the medical centers.  VERA ensures that the funds are equitably distributed
based on the number of Veterans who use the health care system.  Its objectives
are to provide health care to the greatest number of Veterans having the
highest priority for health care, and provide for special health care needs. 
VERA makes adjustments for VISN variances in the case-mix/complexity of care
provided, labor and contract costs, research support, education support,
equipment, non-recurring maintenance (NRM), and high-cost patients. 

In Fiscal Year 2011, VA implemented a new
resource allocation process called the VA Medical Center Allocation System that
includes a standardized model for VISNs to use in allocating funding to their
medical facilities.  The model was designed to provide consistency in the
allocation process across VISNs but still allow necessary flexibility to make
adjustments to medical facility allocations.

VISNs retain some resources allocated to them
by VERA for centrally managed VISN activities and initiatives and for ensuring
that medical facilities meet their mission requirements.  This includes, but is
not limited to, start-up costs for new VISN initiatives to reduce non-VA care
costs; the funding of consolidation of services shared across the Network; and
up to a maximum of 1.5 percent of the total allocation amount for a contingency
reserve.  The contingency reserve is used for unanticipated medical facility
costs, such as increased patient workload for a non-declared natural disaster
or high-cost non-VA care patients, and is normally all allocated to the medical
facilities during the course of the year to provide health care services to
Veterans.

Question
8:

In testimony, the VAOIG listed several other areas for potential savings. One
of these areas was the management of rural health initiatives.  In FYs 2009 and
2010, the VAOIG reported that the Office of Rural Health (ORH) lacked
reasonable assurance that its use of $273 million of the $533 million it
received improved access and quality of care for Veterans.  Please provide the
Committee with a progress report on the six recommendations listed by the VAOIG
in the report Veterans Health Administration – Audit of the Office of Rural
Health
dated April 29, 2011.

Response:  VA’s Office of Rural Health (ORH) successfully
completed the six recommendations listed by the VAOIG in the report Veterans
Health Administration-Audit of the Office of Rural Health
(ORH) dated April
29, 2011. ORH developed and deployed a robust set of financial and program
controls and measures to monitor continuously and trend ORH performance and
outcomes.  These measures are evaluated proactively to ensure effective and
efficient operations, cost savings and positive healthcare outcomes for Veterans
served in rural and highly rural areas.  Please see Attachment 1—the ORH
report to the Appropriations Committees, dated November 17, 2011, which
provides a status update of all six VAOIG recommendations.

Question
9:
According
to a New York Times article dated September 12, 2011, entitled
“Government Pays More in Contracts, Study Finds,” a study, conducted by the
Project on Government Oversight “found that in 33 of 35 occupations, the
government actually paid billions of dollars more to hire contractors than it
would have cost government employees to perform comparable services.” In what
areas is VA currently studying the differences in contracting costs comparable
to providing services in house? In those areas where the VA has contracted out
services in the past, has the VA undertaken any follow-up studies to ascertain
if projected savings were indeed realized?

Response:

1.   
 In what areas is VA currently studying the differences in
contracting costs comparable to providing services in-house? 

The Consolidated Appropriations Act of 2010 required civilian
Federal agencies to complete an annual inventory of their service contracts for
review and analyze that information to understand how contracted services are
being used and whether contractors are being used in an appropriate manner.  In
compliance with this Act, VA submitted its fiscal year (FY) 2010 annual service
contract inventory to the Office of Management and Budget (OMB) in December
2010.

VA is actively participating in
the government-wide OMB led effort to “buy less” and “buy smarter.” 
Toward this end, VA is actively working on several initiatives to improve
acquisition practices and avoid inefficiency and waste.  These initiatives
are as follows:

·        
Reduction of High Risk Contracts:  OMB
challenged agencies to reduce the use of contracts which, if not managed
appropriately, can result in excessive cost increases to the government. 
Contracts considered high risk are sole source, competitive one bid, cost
reimbursement, and Time and Material/Labor hours.  Since FY 2010, VA has
been able to reduce contracting in each high risk category.

·        
Review of Management Service Contracts: 
OMB noted a government-wide increase in the use of service contracts over the
past decade.  Of particular concern is the use of professional and
management services contracts.  These functions were identified by OMB for
heightened management consideration, based on concerns of increased risk of
losing control of mission and operations.  VA is currently conducting an
extensive review of the need for all management service contracts. 

·        
In July 2009, the VA Office of Human Resources and Administration
in conjunction with the Office of Information and Technology (OI&T)
conducted a pilot study in accordance with OMB memorandum M-09-26, Managing
the Multi-sector Workforce
, which required all agencies to develop a pilot
study on insourcing. OI&T was selected for the pilot due to the high ratio
of contractors to federal employees and their interest in changing the ratio.
This study found that the average salary for contractors was 29% more expensive
than the federal employee.  As a result of the study OI&T was able
transition 9 contracting positions to government FTE.

2.   
In those areas where VA has contracted out services in the past,
has VA undertaken any follow-up studies to ascertain if projected savings were
indeed realized?  Yes.  However, VA has not converted any functions from
in-house to contract via a standard or streamlined A-76 study since 2003 when the
Veterans Benefits Administration converted their property management function
from in-house to contract under an A-76 “standard competition,” due to a legal
prohibition for conducting cost comparisons that can be found in appropriations
law.  VA was required by Section 647(b) of Division F of the Consolidated
Appropriations Act, FY 2004, Public Law 108-188, to report savings from the
conversion to contract for five years after the conversion. 

Question
10:
It
is our understanding that the Veterans Benefits Administration has recently
awarded a contract to ACS, Inc.  It is also our understanding that VBA is
training this company on how to develop claims and that at some time next year,
ACS employees will be charged with developing
190,000 claims.  Please provide the Committee with details of the contract,
including cost, and the policy rationale for contracting this function out.

Response:  VBA identified
a temporary need for claims processing support following the Secretary's
decision to add three new Agent Orange presumptive conditions (Parkinson’s
disease, ischemic heart disease, and chronic B-cell leukemia) for Veterans
who were exposed to herbicides used in the Republic of Vietnam during the
Vietnam era.  The influx of new claims for these conditions significantly
increased VBA's claims workload and backlog.  More than 1.3 million claims
were received in FY 2011, including over 230,000 claims for the new Agent
Orange presumptive conditions.  To assist VBA in addressing the
dramatic growth in the pending inventory and claims backlog, VBA decided to
pursue a one-time professional services contract to assist with
claims development.  This contract was funded in FY 2011. 
ACS was awarded a one-year contract on September 12, 2011.  The total cost
of the contract is $18.6M. 

This services contract includes
expedited development of evidence to support certain types of claims, including
claims for increase, original compensation claims, original pension
claims, and dependency verification. 
The required development also includes providing an evidence summary
and medical index, and return of the claims development
package electronically in OCR readable
format (paperless) for decision by VBA.   The
contractor performs claims development activities only -- all claims decisions
remain the responsibility of VA employees.  Having the contractor gather
the needed evidence will allow VBA claims processors to focus on review
of the claims and increasing decision output.  If
full contract volume is achieved, ACS will develop 300,000
claims. 

Additional components to the contract
include:

·        
Veteran
self-service communications plan/outreach for increased enrollment in eBenefits
(level II) self-service portal--target goal is 805,000 new enrollees.

·        
Process
improvement (Lean Six Sigma based) capture and
presentation to VBA stakeholder/leadership.

·        
Transformational
training – 2,400 hours of process improvement/change management training for field staff. 

o  
These
additional services complement our plan to reduce the backlog. 

Question
11:
 
According to the National Academy of Public Administration’s white paper
entitled “Veterans Health Fee Care Program,” dated September 2011, “VA’s Fee
Care Program expenditures have grown 275% since [FY] 2005.  There are now
approximately 2400 Full Time Employees (FTEs) working in the program.  Paid
claims rose from $3 billion in FY 2008 to $4.4 billion in FY 2010 (46%
increase), while the number of unique patients served increased from 820,000 to
952,000 (16%) in the same period.  NAPA also reported that in “recent years,
Fee Care has been increasingly used to meet patient wait-time standards.  That
is, when a medical service cannot be provided at a VA facility within
performance standards, VA Medical Centers (VAMCs) often use the Fee Care
Program.” Please detail why paid claims increased 46 percent while the number
of unique patients served increased only 16 percent.  How much of this 46
percent increase in paid claims is attributable to VA attempts to meet patient
wait-time performance standards?  Please provide the Committee with wait-time
reports from FY 2008 to the present, and a detailed breakdown, by VISN, of Fee
Care Program expenditures since FY 2008 and the amount expended, by VISN, since
FY 2008 of Fee Care Program expenditures utilized to meet wait-time performance
standards.

Response:  Numerous changes have occurred over
this timeframe to include new clinical treatment/technology tools, our aging
population (requiring complex specialty treatment), additional services for
returning OEF/OIF/OND Veterans, expanded authority for payment of emergency
claims, expanded initiatives within the Women’s Health arena including coverage
for newborn care (up to 7 days), a significant number of initiatives to improve
claims processing timeliness, and other key initiatives to assure key controls
are in place to manage and monitor the program.  Payment files likely include
prior year payments and are not always correlated to patients treated.  VA’s
desire to provide Veteran centric care closer to home (such as our Rural Health
initiatives) and increased use of home health services are focused on providing
the right care in the right location.  These efforts to provide Veteran centric
care result in additional Non-VA costs.  VA is analyzing options to assure the right
care is provided at the right time – standardization of the initial decision
points to utilize non-VA care is a major initiative to improve this area.

In addition, VA saw increases in billed
charges during this timeframe.   In certain areas, VA addressed this issue by
developing contracts to stabilize pricing.  In addition, VA recently published
regulations that permit VA in certain situations to utilize the same payment
methodology as Medicare, resulting in significant cost avoidance in this program.

Please see spreadsheets listed as Attachment
2 for more details on Fee Data and Attachment 3 for more details on Wait Times.

Question
12:
 The
NAPA white paper recommended that substantial changes be made in the VA Fee
Care Program and that a strategic change management plan be developed as
quickly as possible.  Does VA agree that substantial changes should be made in
the Fee Care Program?  Is the VA developing, or planning on developing a
strategic change management plan?  What is the specific timetable for changes
that have been identified as needed in the Fee Care Program to be implemented?

Response:  VA does agree that substantial changes
are needed in the health care claims processing systems as pointed out by
NAPA.  A work group, formed and represented by senior members of VHA, is in
place to study the issues, identify and recommend a solution to health care
claims processing for VA.  The complexities of such a significant
organizational change will likely require approximately three to five years for
full implementation.   VA intends to have a plan in place by mid-year 2012.

This work group is
charged to deliver:

·        
Recommendations 
on deployment of a regional/central approach to the back office claims
processing functions to support the Non-VA Care Program (Fee Care Program);

·        
A
tentative deployment schedule, to include pilot assessment;

·        
An
assessment of capital investment requirements; and

·        
Recommendations
for additional teams for research/analysis, planning, and implementation of
selected solutions.

Question
13:
 
The NAPA white paper states that “[g]iven the significant organizational
productivity challenges with the Fee Care Program, VA has a limited
understanding of the services it is procuring through its program and their
costs.  The Fee Care Program does not appear to have been well managed at any
level of VA.  VA provides limited VISN-wide executive oversight of its
purchased care program, and the program lacks clearly defined operational
objectives or goals, and it is not guided by a coherent strategy for managing
program expenditures.”  Does VA believe the Fee Care Program has been well
managed?  Does VA believe that there is sufficient level of VISN-wide executive
oversight?  Does VA believe that the Fee Care Program has clearly defined operational
objectives and goals and a coherent strategy for managing program expenditures?

Response:  VA acknowledges the management and
oversight of the Fee Care program could be improved and is actively pursuing
program changes, IT solutions, and other initiatives to improve the oversight
of the program.  However VA believes the Fee Care Program does have clearly
defined operational objectives and goals established at the enterprise level
and several of these improvements are included below.

·        
Program
Improvement Initiatives:

    •      Non-VA Care
Coordination;

    •      Use of Contracts to
Stabilize or Reduce Pricing;

    •      Internal
Controls/Audit tools;

    •      Program
Integrity/Fraud, Waste, Abuse training and technology; and

    •      External audits to
assure positive results from programmatic changes.

·        
Technology
Enhancements

    •      Implementing key
technology changes to reduce payment errors and address key audit findings;
expected delivery end of 2012.

Question
14:
 
The NAPA white paper states that the “Chief Business Office estimates the error
rates (that is, erroneous payments) at 12 percent per year, which equates to
approximately $500 million in FY 2011.  By contrast, TRICARE has a reported
error rate of 9.42 percent.  Productivity varies across operating sites by
nearly ten folds between the most and least efficient sites [footnotes
omitted].”  Please provide a detailed explanation to the Committee as to why
the VA experiences such a high error rate compared to TRICARE and why there is
a divergence across the VA system in the level of error rates.  What policies
or procedures are currently in place, or have been in place previously, that
contribute to this high error rate and divergence, and what specific policy and
procedural steps is the VA taking to address this high error rate and
divergence?

Response: 
The
high payment error rate in the Non-VA Care program can be attributed to the
manual nature of the technology within a decentralized claims processing system
that is the root cause for many errors.  The payment program has more than
2,000 claims processors distributed across 153 medical centers.  Given such a
working environment, with multiple decentralized software products in place and
technology that relies on manual payment processing, significant changes are
being implemented to resolve these issues. 

VA is currently pursuing technology changes
that will address the top payment errors identified with our Improper Payments
Elimination and Recovery Act IPERA and other audits conducted in FY 2011. 
These technology changes are expected to be released by the end of 2012.

Question
15:
 
During the hearing, VA stated that it was going to roll-out Project HERO
nationwide.  What are the detailed policy rationales behind implementing this
program nationwide?  Please provide the Committee with a detailed plan on the
proposed nationwide roll-out including detailed time frames, benchmarks, and
costs associated with the roll-out.  In addition, please provide the Committee
with any detailed cost studies that have been prepared estimating any
cost-savings, by VISN, that VA will achieve with Project HERO.  If VA has not
prepared detailed cost estimates, please provide the Committee with estimates
regarding these proposed savings.

The Project HERO contracts with Delta Dental
Federal Government Programs and Humana Veteran Healthcare Services are
scheduled to end September 30, 2012. Once those contracts are closed, Project
HERO will end.

Detailed cost studies/expenditures for health
care services through Project HERO have been completed for fiscal years (FY)
2009-2011.  Project HERO has realized a net cost-avoidance of $24,380,746 in
the three measured fiscal years.  Cost savings, by FY, are noted below:

  FY09 FY10 FY11 Totals
Totals $1,864,834 $16,197,039 $6,318,873 $24,380,746

VHA is leveraging the lessons learned from
Project HERO and other pilot programs to develop requirements for new
competitively awarded contracts.  The effort to create these contracts,
Patient-Centered Community Care, is focused on creating centrally supported,
regional health care contracts available throughout the VHA. The goal is to
provide Veterans coordinated, timely access to high quality care from a
comprehensive network of high quality non-VA providers.  Patient-Centered
Community Care is still in the requirements development stage.  An Independent
Government Cost Estimate (IGCE) will be prepared as requirements are known.  We
are confident that within the cost of the program we will be able to assure
high quality, access, and timely return of medical documentation not always
seen in traditional Non-VA Care (Fee) programs.

The schedule for development of the
contracting vehicles, solicitation, evaluation, award, and implementation are
as follows:

            Requirements development:    August 2011 – January 2012

            RFP Development, review and finalization:    December 2011 – April 2012

            RFP Release:    May 2012

            Evaluations:    June 2012 – July 2012

            Award of new contracts:    September 2012

            Implementation/Start up:    September 2012 – February 2013


[1]For example, the
VHA response to the OIG report “Review of Sole-Source Contracts with Affiliated
Institutions” indicated:

It is important to note that the Veterans
Health Administration has within the last year, after also identifying
significant concerns about healthcare contracting and spending with affiliates
for healthcare services, taken aggressive action to address these issues. 
Steps include:

·        
Bolstering
leadership and employment in the Medical Sharing Office;

·        
Instituting
new processes and procedures for tracking this healthcare contracting and
spending;

·        
Improving
training;

·        
Beginning
to develop updated standard operating procedures for acquisition planning,
establishment of backup plans for alternate sources for services, additional
scrutiny of sole source justifications, and implementation of new checklist
processes.

Honorable Bob Filner,
Question 8 Attachment 1

OIG
Recommendation 5:  
“…that
the Under Secretary for Health establish procedures to monitor performance
measures to determine the impact of rural health care funding on improving
access and quality of care for rural Veterans.”

Actions Taken:  ORH has put in place a robust
system of policies and procedures to monitor projects and their costs and
measure performance for all funded projects and activities.  To ensure
appropriate monitoring, VA staff regularly visits Veterans Integrated Service Networks
(VISN) to validate project activity and formally measure project status
quarterly or as needed.  ORH requires performance and impact data in the
funding request application, and the Office assesses this required data in each
application submission.  As a result of this process, ORH evaluated the
measurement and performance data and information when reviewing and approving rural
health initiatives for FY 2012 project funding, to determine project performance
and impact on rural Veterans.  Based on these data, ORH was able to identify
the greatest rural health needs and support projects with the greatest impact
on Veterans.

In March 2011, ORH
completed implementation of the Microsoft Access database and project
monitoring system.  The monitoring system uses a Microsoft Excel spreadsheet to
collect and track project activity, progress, and performance.  Because both
tools have strengths and weaknesses, ORH continues to improve and develop them
to ensure efficiency and effectiveness of use and response to customer needs. An
electronic database system is needed to improve efficiency of measurement and
performance collection, analysis, and reporting.

ORH has defined
quality measures and applied them to all projects.  The measures are dynamic
and change over time to ensure accurate demonstration of performance and
accountability.  Some measurement data are difficult to access (e.g., the
number of Native American unique patients seen for treatment) because they are
self reported and often unreliable; other data are difficult to collect because
specific tracking systems have not been developed yet in VA.  Also, some
clinical measures are not conducive to data collection and tracking currently at
the CBOC or rural health clinic level.  In response to these challenges, ORH is
working with VA’s Offices of Quality Management and Business Intelligence to
establish and implement this capability.  In addition, at this time, VISN Rural
Consultants (VRC) and local project leaders manually report project-specific
data.  

To ensure
accountability for funded projects, equipment, and programs, ORH Program
Analysts are making site visits to the VISNs to evaluate project and program
performance.

In coordination with
the VHA Support Service Center (VSSC), ORH completed and deployed a Rural
Health Briefing Book in April 2011.  The following month, ORH deployed a Rural
Health Dashboard in May 2011.  These new information resources provide timely
and relevant information on socio-demographics, service use, diagnosis,
clinical quality, outcomes, and cost data about over three million Veterans
living in rural and highly rural areas.

Quality
Measurement is an ongoing process. Further plans for action steps and follow-up
include the following:

1.   
Ensure VISNs and VRHRCs report
quarterly measures and accomplishment of any relevant milestones.

2.   
Develop the ORH Microsoft Access
database output reports by  December 31, 2011.

3.   
Evaluate data quality each quarter.

4.   
Establish a mechanism to over-sample
patient satisfaction data in rural and highly rural areas by December 31, 2011.

5.   
Continue to develop standardized
measures for all VISN projects and align them with national program measures
when possible.

OIG
RECOMMENDATION 3:

OIG
Recommendation 3:  
“…that
the Under Secretary for Health implement an effective communication plan to
effectively coordinate and collaborate with key rural health care stakeholders
in the use of rural health care funds.”

Actions
Taken:  
ORH has fully
complied with the IG recommendation to implement an effective communication
plan.

For internal stakeholders and partners, ORH leadership maintains:  1)
bi-monthly teleconferences with leadership of the Veterans Rural Health
Resource Centers (VRHRC); 2) monthly calls with VRCs; and 3) weekly meetings
with ORH VA Central Office (VACO) staff.  Minutes are taken and distributed.  In
addition, ORH hosts a face-to-face meeting with VRCs, VRHRC Leadership, and
VACO staff twice a year, most recently in Iowa City, Iowa, on September 12-14,
2011.

For both external
and internal stakeholders, ORH staff develops content for and manages both an Internet
and Intranet Web site, publishes a quarterly newsletter featuring ORH-sponsored
initiatives and demonstration projects, publishes a monthly fact sheet
highlighting recently published research studies and policies relevant to rural
Veterans’ health issues, and utilizes Webinars to help educate VA health care
providers.  In addition, ORH staff create videos demonstrating the impact of
ORH-sponsored programs on health care for rural Veterans and develop policy
briefs based on evaluations of ORH-funded programs.

The latest
addition to the ORH Web site is a new section devoted to the ORH Veterans Rural
Health Resource Centers.  These pages include information on each Center’s
focus, initiatives, leadership, and staff.  The most recent newsletter was
published in July 2011 and focuses on ORH-sponsored outreach programs for rural
Veterans.  It can be accessed online at:  http://www.ruralhealth.va.gov/news3/ORH_The_Rural_Connection_Newsletter.asp.

ORH distributes quarterly
newsletters via an e-mail contact list, which resides in the ORH Contacts
Database (see below).  The most recent ORH Fact Sheet features up-to-date
statistics on the number of rural Veterans enrolled in VA’s health care system,
the number of Veterans impacted by ORH projects, and the percentage of rural
Veterans who served in Operation Enduring Freedom/Operation Iraqi Freedom/Operation
New Dawn.  An additional nine Fact Sheets are available on the ORH Web site for
download. Archived ORH newsletters and fact sheets are available on the ORH Web
site for download at:  http://www.ruralhealth.va.gov/publications.asphttp://www.ruralhealth.va.gov/publications.asp.

Finally, ORH has created five videos about ORH and ORH-sponsored
initiatives and how they impact rural Veterans.  These are currently available
on the ORH Web site for viewing at:  http://www.ruralhealth.va.gov/index.asp.  ORH distributed these videos at the National Rural Health Association
(NRHA) annual meeting in Austin, Texas, as well as at the VHA Open House in New
Orleans, Louisiana, this past August 2011.

ORH has used its Contacts Database to send several targeted messages
to key stakeholders, who can in turn forward or print these messages for other interested
parties.  For instance, ORH sends e-mails to staff at rural VA CBOCs and
Outreach Clinics.  We suggest they print out copies of the ORH newsletter for
Veterans to read while in the waiting area.  Stakeholder groups in the database
include:

·        
the general public

·        
Veterans Service Organizations (e.g.,
Disabled American Veterans, Paralyzed Veterans of America, etc.)

·        
Veterans Service Offices (state and local)

·        
Rural Health Program Offices (Federal, state,
and local)

·        
Rural Health Associations (National and
state)

·        
Other Federal agencies (e.g., Health
Resources and Services Administration, U.S. Department of Education, etc.)

·        
Academic institutions

·        
Representatives and Senators

·        
Native American Tribal organizations

·        
VA program offices and facilities,
including:

o  
VISN Offices

o  
VA Medical Centers

o  
VA CBOCs

o  
Vet Centers

o  
Office of Public and Intergovernmental
Affairs

o  
My HealtheVet staff

o  
All ORH staff (VACO, VRHRCs, VRCs)

o  
Veterans Rural Health Advisory
Committee

ORH continually updates and
supplements contact data, and there are currently 1,466 active stakeholder
e-mails sent each quarter, an increase from the initial 1,017.  In late March
2011, we added a subscription function to the ORH Newsletter Web page, which
has resulted in an additional 140 contacts.  We continue to work to identify
key stakeholders who should be informed about ORH initiatives and improvements
to access and quality of care for rural Veterans.

Use of Social Media:  ORH staff are utilizing social media to provide even greater
outreach and communication.  For example, ORH has used the VA blog “VAntage
Point” (http://www.blogs.va.gov/VAntage/) twice this year to discuss VA rural
health initiatives and impacts.  The first blog post was focused on increasing
access to rural Veterans (April 5, 2011), and the second was an update on the
work of ORH (June 28, 2011).

Rural health-related posts have appeared on the VHA Facebook page five
times since February 2011 under the following titles:

·        
VA Reaching Out to Rural Veterans With
Telehealth (August 19, 2011)

·        
VA’s Mobile Clinics – “Grillin’ on the
River” Video (July 3, 2011)

·        
Rural Health:  Exchanging Information -
Health Care (April 23, 2011)

·        
Rural Health:  A Health Frontier (March
28, 2011)

·        
“The Rural Connection” Newsletter
(February 2, 2011)

Rural health-related posts have appeared on the VA Facebook page (www.facebook.com/VeteransAffairs) six times since February
2010 under the following titles:

·        
Rural Veterans and the Tyranny of
Distance (August 6, 2011)

·        
VA Reaches Out to Tribal Governments
(July 5, 2010)

·        
Update: VA’s Office of Rural Health –
Mary Beth Skupien (June 29, 2011) (also on the VA Blog, VAntage Point, http://www.blogs.va.gov/VAntage/)

·        
Salem VAMC Holds Ribbon Cutting Ceremony
for Wytheville, VA. CBOC (June 20, 2011)

·        
VA Secretary Learns What ”Rural” Means
for Alaska Vets (May 31, 2011)

·        
Reaching Out to Tribal Governments
(February 1, 2010)

VA has also begun using Twitter to inform others about ORH.  The
following rural health-related “tweets” have been distributed through VA’s
Twitter account (@DeptVetAffairs) since October 1, 2010:

·        
Rural Veterans and the Tyranny of
Distance:  http://t.co/akpBxM9
(August 8, 2011 - Re-tweeted by 5 others)

·        
VA is taking measures to improve health
care for Vets in rural areas. Learn more: http://t.co/qPZjNu9(July 1, 2011 – Re-tweeted by 22 others)

·        
Guest post on VAntage Point: Increasing
Access: Reaching Out to Rural Veterans http://go.usa.gov/TlM (April 6, 2011 - Re-tweeted by 4 others)

·        
If you live in a rural area & it's
a pain for you to reach the nearest VA facility, Project ARCH will be welcome
news. http://go.usa.gov/agz
(October 9, 2010 - Re-tweeted by 18 others)

ORH Communications – FY 2012

For FY 2012, communications
plans include regular “IN THE SPOTLIGHT: Rural Health Publications” e-mails, as
well as special edition e-mails, such as “Bringing Ethics Consultation Services
to Rural Veterans.”  ORH will continue to use the social media tools
outlined above.

ORH will develop and implement a Project Access
Received Closer to Home (ARCH) Communication Plan by December 2011 and will
have a booth at the National Rural Health Association (NRHA) 2012 Annual Rural
Health Conference in Denver, Colorado, April 17-20, 2012. 

OIG
RECOMMENDATION 6:

OIG Recommendation
6:  
“…that the Under
Secretary for Health reassess the rural health initiatives approved for funding
by Office of Rural Health in their fiscal year 2012 budget to align planned use
of resources to their greatest rural health needs.”

Actions
Taken:
 ORH has reassessed
the rural health initiatives requested in the FY 2012 budget to align planned
use of resources to the greatest rural health needs.

1)    As discussed
previously, ORH has instituted a robust system of measurement and performance
monitoring for the budget and for all projects and activities it funds.

2)   
ORH has completed needs
assessments for health care and geographic areas and evaluated and trended them
for all VA VISNs (see trend reports below).  ORH has used this information to identify
the greatest rural health needs and posted it on the ORH SharePoint site, and
will continue to use it throughout the year for planning and program evaluation
purposes.  During the September 2011 ORH bi-annual meeting, ORH staff and
leaders evaluated the needs assessment process to determine how it might be
improved in the future.

3)   
From the geographic needs
assessment, ORH has developed a detailed national geographic map and used it to
assist ORH and VISNs with aligning their use of resources with identified
health care needs.  The map demonstrates that 96.5 percent of all VA enrollees
are within 60 minutes travel time to VHA primary care services.  It also shows,
by VISN, the percent of enrollee coverage meeting FY 2010 access standards (see
attachment below).

4)    In FY 2011, ORH
has funded projects and activities identified as priorities, including the
Secretary’s initiatives to address women and homeless Veterans, and through
priorities established by the ORH Advisory Committee and the ORH Strategic Plan. 
This Strategic Plan addresses efforts to improve outreach, mental health,
telehealth, and recruitment and retention of providers into rural and highly
rural areas.  ORH has completed the “refresh” of its Strategic Plan and finalized
it at the end of FY 2011.

5)    Finally, ORH
completed several Veteran and community agency focus groups in FY 2011 to help
determine the greatest needs for funding. The Western and Central Region VRHRCs
are continuing outreach activities targeting rural and highly rural Veterans
and have planned further focus groups to assess the needs of Veterans within
the community-at-large for both enrolled and non-enrolled Veterans.

OFFICE OF RURAL HEALTH STRATEGIC PLAN,
FY 2012

Overview: The Senate Appropriations Committee recommended that
VA’s reassessment take into consideration both geographic and specific health
needs and encourages the Department to compile Veterans’ records from multiple
systems to create a single view of Veterans and the geographic area in which
they live.

Actions
Taken:
 ORH has
compiled Veterans’ records from multiple systems to create a single view of Veterans
and the geographic areas in which they live.  This profile of rural Veterans
helped VA target funding to programs for FY 2012.  In FY 2011, ORH implemented
a plan to meet with and collect data and information directly from Veterans in
as many geographic locations, systems, and regions nationally as possible.

ORH leadership and staff have participated in a variety of
events (including town hall meetings, listening sessions, outreach events, and
round table discussions) with Veterans, to increase awareness and understanding
of Veterans’ needs, issues, and perceptions.  To obtain more information, ORH
invited Veterans to participate in the health care needs assessment processes
by contributing ideas at informational meetings, providing data on comment
cards, and answering satisfaction and perception questionnaires.

In 2011, the ORH Director and staff have participated in town
hall events and listening sessions in Montana, Texas, South Dakota, Florida,
and Maine.  The VRHRCs in Eastern and Central regions have provided outreach
events and have held numerous Veterans’ focus groups in Utah, California,
Nevada, Iowa, and Illinois, and more are planned.  ORH has integrated and
evaluated information from the geographic and health care needs assessments by
identifying local, regional, and national trends and connecting these findings
with the Secretary’s initiatives, the ORH Advisory Committee recommendations,
and the ORH strategic priorities.  All of these sources of information help ORH
determine as objectively as possible the areas of greatest need for funding. 
During the FY 2012 proposal review sessions, all reviewers were required to
utilize findings from the sources to help guide them in making funding
decisions in an informed and effective way.

ORH has refreshed
its Strategic Plan with details for all rural health activities in FY 2012.  The
full plan is embedded.  A summary of the Strategic Plan follows.

Prior studies
indicate that Veterans who live in rural settings have greater health care
needs than their urban counterparts.  Specifically, compared to urban Veterans,
rural Veterans have lower health-related quality-of-life scores and experience
a higher prevalence of physical illness.  While prevalence of most psychiatric
disorders is lower for rural Veterans compared to urban Veterans, rural
Veterans with psychiatric disorders are sicker as measured by lower
health-related quality-of-life.  These differences in health-related
quality-of-life scores, which equate to lower self-rated health status among
rural dwelling Veterans, are substantial, clinically meaningful, and associated
with increased demand for health care services.  Despite greater health care
needs, rural Veterans are less likely to access health services for both
physical and mental illness, either through VA or the private sector.  In
particular, rural Veterans have lower access to care for chronic conditions
such as hypertension and post-traumatic stress disorder.

To
ensure that ORH programs and initiatives are meeting the health care needs of
rural Veterans, ORH used several different sources to develop a profile on
rural Veterans.  First, ORH conducted a geographical needs assessment to
determine VA facility gaps in rural areas.  It then conducted a clinical needs
assessment to better understand unmet clinical needs.  ORH leadership has
participated in numerous town hall meetings and listening sessions to better
understand the perspective of rural Veterans on accessing VA health care and
has met with the Veterans Rural Health Advisory Committee (VRHAC) on 10 occasions
to discuss its recommendations on how to improve the ORH program.  This
information, together with the Secretary’s priorities on improving care for
women, Native American, and homeless Veterans, provided the framework for the
refresh of the ORH 2012 Strategic Plan.

In
FY 2011, ORH formed a committee of internal and external stakeholders to
refresh the ORH Strategic Plan for FY 2012 through FY 2014.  Committee members
represented the following groups:  the VRHAC, VRCs, the VRHRCs, ORH Central
Office, VA medical center directors, the Office of Telehealth Services, the
Office of Mental Health Services, the Office of Geriatrics and Extended Care, the
Utah State VA Office, VA’s Office of Health Informatics, VA’s Office of
Academic Affiliations, VA’s Employee Education System, and VA’s Healthcare
Retention and Recruitment Office.  Six workgroups were created from the
committee to refresh the initiatives and action items associated with the
strategic goals of ORH.  ORH disseminated the draft compilation of all
recommendations to a broad spectrum of VA field and program offices including
all VISN directors and VISN planners.

Veterans
Health Administration

November 2011

Honorable Bob
Filner, Question 11 Attachment 2, Fee Data Disbursed Amounts

Filner Question 11 Attachment 2 Fee Data Disbursed
Amounts

 

 

 

FY08

FY09

FY10

FY11

 

All Payment Locations

$3,028,962,367

$3,818,112,936

$4,416,267,157

$4,561,833,762

 

V01

$139,641,704

$168,825,720

$188,174,706

$169,174,226

 

V02

$51,489,344

$69,644,612

$81,036,946

$65,054,534

 

V03

$45,040,208

$51,824,172

$52,159,050

$49,001,434

 

V04

$150,207,208

$194,650,669

$209,107,662

$213,771,370

 

V05

$51,766,320

$69,997,271

$67,925,599

$66,693,619

 

V06

$171,051,337

$227,459,348

$262,310,696

$244,605,261

 

V07

$173,436,112

$216,977,473

$316,154,124

$345,743,207

 

V08

$271,965,844

$299,863,068

$372,462,614

$413,079,860

 

V09

$159,000,541

$203,506,465

$215,568,620

$210,201,823

 

V10

$122,347,224

$167,294,344

$237,650,491

$172,680,508

 

V11

$109,686,203

$153,285,222

$163,211,029

$145,382,413

 

V12

$84,189,137

$108,029,431

$128,735,652

$131,510,900

 

V15

$161,454,995

$200,388,460

$209,312,890

$252,454,316

 

V16

$229,161,049

$289,354,762

$361,412,448

$328,289,259

 

V17

$111,111,520

$167,465,263

$233,663,473

$252,076,371

 

V18

$162,456,908

$205,022,885

$222,857,447

$242,174,849

 

V19

$112,950,006

$137,654,118

$163,636,814

$174,346,824

 

V20

$196,148,762

$219,976,592

$231,026,120

$297,091,637

 

V21

$166,685,471

$194,384,255

$210,417,304

$254,719,719

 

V22

$183,267,837

$214,861,462

$250,646,232

$239,626,188

 

V23

$175,904,636

$257,647,345

$238,797,237

$294,155,442

 

Hon. Bob Filner,
Question 11 Attachment 3, Wait Times

FY 2011

Primary Care

Specialty Care

VISN

Patient Category

# of Pt Appts <=14 Days

Total Patient Appts

% of Pt Appts <=14 Days

# of Pt Appts <=14 Days

Total Patient Appts

% of Pt Appts <=14 Days

1

New Pts Desire Dt

23,234

25,015

92.90%

129,285

143,062

90.40%

1

Estab Pts

470,113

488,974

96.10%

890,986

928,656

95.90%

2

New Pts Desire Dt

12,946

14,810

87.40%

67,054

75,663

88.60%

2

Estab Pts

259,501

277,762

93.40%

490,215

507,014

96.70%

3

New Pts Desire Dt

18,431

22,497

81.90%

120,066

136,261

88.10%

3

Estab Pts

269,128

300,769

89.50%

889,940

943,243

94.30%

4

New Pts Desire Dt

27,999

33,763

82.90%

147,671

159,921

92.30%

4

Estab Pts

549,032

568,447

96.60%

967,192

999,592

96.80%

5

New Pts Desire Dt

15,767

16,715

94.30%

80,652

83,049

97.10%

5

Estab Pts

233,811

243,464

96.00%

483,563

495,184

97.70%

6

New Pts Desire Dt

39,198

42,954

91.30%

192,272

202,929

94.70%

6

Estab Pts

606,879

638,404

95.10%

998,535

1,030,376

96.90%

7

New Pts Desire Dt

47,163

53,223

88.60%

183,792

211,303

87.00%

7

Estab Pts

648,931

693,161

93.60%

1,060,181

1,122,361

94.50%

8

New Pts Desire Dt

58,287

68,146

85.50%

303,660

356,929

85.10%

8

Estab Pts

1,111,542

1,213,968

91.60%

1,923,540

2,055,938

93.60%

9

New Pts Desire Dt

27,390

32,684

83.80%

151,091

169,636

89.10%

9

Estab Pts

544,176

576,678

94.40%

931,626

976,146

95.40%

10

New Pts Desire Dt

27,536

29,691

92.70%

142,814

149,006

95.80%

10

Estab Pts

516,402

533,653

96.80%

848,878

870,001

97.60%

11

New Pts Desire Dt

27,680

35,789

77.30%

137,279

155,688

88.20%

11

Estab Pts

455,037

492,124

92.50%

774,831

812,512

95.40%

12

New Pts Desire Dt

23,320

24,540

95.00%

135,313

143,905

94.00%

12

Estab Pts

447,364

458,969

97.50%

927,229

951,779

97.40%

15

New Pts Desire Dt

25,037

26,990

92.80%

118,168

137,322

86.10%

15

Estab Pts

468,302

486,604

96.20%

714,178

745,270

95.80%

16

New Pts Desire Dt

52,572

55,686

94.40%

240,270

260,906

92.10%

16

Estab Pts

871,964

904,590

96.40%

1,403,157

1,463,219

95.90%

17

New Pts Desire Dt

41,198

44,087

93.40%

150,631

160,046

94.10%

17

Estab Pts

589,057

609,556

96.60%

829,917

852,195

97.40%

18

New Pts Desire Dt

25,981

35,362

73.50%

114,587

135,127

84.80%

18

Estab Pts

450,535

507,013

88.90%

709,936

759,101

93.50%

19

New Pts Desire Dt

21,601

23,735

91.00%

83,828

88,808

94.40%

19

Estab Pts

332,808

347,836

95.70%

525,300

540,463

97.20%

20

New Pts Desire Dt

32,842

39,647

82.80%

116,602

136,966

85.10%

20

Estab Pts

419,833

455,675

92.10%

675,126

723,520

93.30%

21

New Pts Desire Dt

30,502

35,777

85.30%

135,335

154,310

87.70%

21

Estab Pts

419,213

456,712

91.80%

796,658

849,194

93.80%

22

New Pts Desire Dt

40,367

46,893

86.10%

176,835

196,906

89.80%

22

Estab Pts

577,499

606,777

95.20%

1,056,806

1,101,986

95.90%

23

New Pts Desire Dt

29,963

34,723

86.30%

131,454

157,427

83.50%

23

Estab Pts

515,346

547,931

94.10%

852,946

908,992

93.80%