NASDVA is an organization with a history dating back to the Second World War.  Our membership is composed of State directors of veterans' affairs and State department of veteran affairs staff.  Our members represent each State as well as the District of Columbia, American Samoa, Northern Mariana Islands, Puerto Rico and the Virgin Islands.

As you may know each State has a designated “Office of Prime Responsibility” for service to veterans that is uniquely situated to be a vital resource which augment Federal programs, improve the identification of needs, coordinate local resources and ultimately enhance the quality of care and services to America’s veterans now and in the future. NASDVA is a rich resource which had not been fully recognized nor utilized in caring for America’s returning military/veterans and their families.  Collectively State governments commit more than $ 4 billion annually, which makes them second only to the Federal VA, in resource allocations to provide programs, benefits and services to the men and women who serve and defend our nation.

Unlike “Veteran Service Organizations” State Departments are government agencies not membership organizations. Our members are tasked by their respective State with the responsibility to address the needs of all veterans irrespective of time in service, branch of military or disability status.  On a daily basis, State Directors are confronted with unique situations which could not possibly be addressed in a timely manner by larger systems like DOD and VA.  State Directors are held accountable by the citizens of their individual State and do effect changes and solve problems because they know who, where and how to orchestrate a successful outcome at the local level.

In many respects, all veterans and their needs are our agenda. Over 28,000 Nursing Home beds come directly under the administrative responsibilities of our members which means the subject of today’s hearing is of major concern to our members because they bear the consequences of the recently implemented Regulations which are the focus of this hearing today. We appreciate this opportunity to provide testimony and comments on today’s issues which are extremely important to our members.

Per Diem Reimbursement in State Veterans Homes

Under the Millennium Health Care Act of 1999, Congress, in the name of the American people, directed the Department of Veteran Affairs (VA) to pay for nursing home care for veterans with a service connected disability rating of 70percent or more and veterans who have sustained service-connected disabilities that require nursing home care. While VA provides full cost of care in either a VA or community contracted nursing home this has not been the case for State Veterans Homes. Not only is this a costly disparity in applying the per diem payments based on the facility in which a veteran receives their care, it penalizes veterans in State Homes. Despite the intent of Congress, over ten years have passed and the uniform application of this benefit has not been implemented.

For years, NASDVA has consistently supported equity in the per diem payment system to veterans regardless of where they receive their care.  We believe that Congress authorized the benefit to the veteran, not the facility in which they receive their care. The leadership and members of NASDVA have come, year after year both in testimony to the Congress and advocacy with VA seeking a fair and equitable solution to the inconsistency and inequality of these policies. This issue has also caught the attention of National Governors Association which has issued statements in support of full cost of care reimbursement for State Homes each year since 2002.

In some jurisdictions, VA case managers routinely send veterans to contract homes because the full cost of care is absorbed by VA which prevents veterans from having to meet the stringent financial requirements of Title 19 Medicaid. Hundreds, probably thousands, of veterans meeting the criteria originally set forth in the 1999 Millennium Act, did not receive this relief, or the benefits Congress intended. During this time lapse, veterans who served this nation honorably and incurred severe disabilities, injuries and illnesses have lost assets, personal savings and pride in order to meet the costs of care levied on them. Additionally State Directors have struggled to meet their fiduciary responsibilities and maintain the quality of care these veterans earned and deserve, 

With the enactment of the 2006 “Veterans Benefits, Health Care, and Information Technology Act of 2006” (Pub. L. No. 109-461, § 211(a), codified at 38 U.S.C. § 1745(a)), Congress approved payments by the VA to State Veterans Homes which meet the rigorous requirements required to qualify for per diem reimbursement and authorized VA to place severely disabled service-connected veterans directly in State homes and stipulated that VA was required to reimburse State homes for the full cost of such care.” NASDVA as well as many veterans and the National Governors Association believed that the situation had been resolved.

The notice of “Regulations” required for the implementation of this legislation languished for years. Despite the need and the urgency for these rules, Congress, providers and veterans had to wait while the cost of care continued to increase. All parties expected the statute to take effect 90 days after its enactment (March 21, 2007); but VA did not issue regulations to implement the program until April 29, 2009 (effective May 29, 2009).  This 2 ½ year delay in issuing regulations to implement the new per diem program has caused enormous difficulties and hardships not only with recordkeeping and administrative problems, veterans and their families did not receive the financial relief they were promised. 

Even as these Regulations finally became public in November of 2008, VA restricted the “comment period” to only 30 days instead of the usual 60 days. On first read of the proposed Regulations, it was clear that the spirit and intent of this process was a casualty of time and bureaucracy.  How ironic that Congressional legislation to update the basic per diem rates for veterans in State Homes was enacted in 2006,  consumed over 2 years of VA time to develop and publish the Regulations and resulted in only 30 days over the Christmas Holiday for comment. Despite the economic realities of the times, VA presented a very convoluted, confusing and disappointing proposal for the implementation of this landmark legislation.

The program did not provide State Veterans Homes with the actual cost of care for disabled veterans, despite the intent of Congress. In fact in many States that had Medicare and/or Medicaid-certified Veterans Homes, the stipulation that any funding from these sources had to be repaid after 2 years was pejorative and naïve on VA’s part. How do you return the lost assets, homes, cars and savings to veterans who did spend down to qualify for Medicaid? How do you “regulate” and disqualify the use of Medicare to veterans who had contributed to that fund throughout their lifetime? How do you square these new policies for veterans who died waiting for these benefits?

NASDVA worked for and expected that the new “per diem” rate for veterans, who meet the mandatory eligibility, would be equal to the same rate paid to VA Contracted Nursing Homes. The Regulations that went into effect in 2009 failed to adequately reimburse State Homes and State governments for the level of care required by VA.  More importantly unintended consequences of the present reimbursement rates threatens the continued financial viability of many State Veterans Homes systems and raises questions about the future viability of the entire State Nursing Home Program, The specifications and the limitations required by the present Regulations are not in keeping with the original intent of Congress.

2009 GAO Report on VA Long-Term Care

Information published in the2009 GAO Report “VA HEALTH CARE Long-Term Care Strategic Planning and Budgeting Need Improvement” identified a considerable difference in estimates of long term care demands and gaps in service with VA budget estimates and strategic planning. GAO found that VA’s estimates were based on cost assumptions and workload projections that appeared to be low and unrealistic for both nursing home and non-institutional care. VA’s model was flawed and underestimated its own nursing home spending because the projected increase in cost was estimated at 2.5percent which is considerably lower than market costs.  GAO reported that VA had plans to increase workload for certain veterans for who they are required to provide care but did not include nursing home workload plans for most veterans already on VA roles.

GAO found that VA used cost assumptions which seriously underestimated the actual cost of care, minimized workload estimates and miscalculated the number of veterans using this system.  Not only did this cast a great deal of doubt on the “Strategic Plan”, these major discrepancies also raised questions about the reliability of VA’s spending estimates  and the extent to which VA was actually closing the gaps in the long-term system of care for America’s veterans. These findings strongly suggest that present problems in VA reimbursement policies may be linked to the faulty budget projections and unrealistic data used in the development of the Strategic Plan reviewed by GAO.

NASDVA has and continues to support changes to the present program that would insure that:

• VA develop a strategic plan for long-term care services that maximizes the role of State veterans homes in providing care and minimizes VA cost of Long Term Care for our Nation’s Veterans.
• VA provides veterans in State Nursing Homes meeting the mandatory eligibility requirements the same “per diem” rates” paid to VA or community contracted nursing homes.
• Congress authorize sufficient funding to keep the existing backlog of projects in the State Extended Care Facilities Construction Grant Program at a manageable level to assure life safety upgrades and new construction are timely.
• A implement measures to assure that States are paid a more equitable per diem rate representing the 50 percent of the States' average costs, as allowed by law, and that the policies governing the program be amended to allow new State veterans homes up to 50 percent of the total cost of care paid retroactively from the date of the first veteran's admission to the new home.

Conclusion

States are the second largest providers of service to veterans in the America and commit over $4 billion dollars annually to provide direct services and support to veterans and their families. We augment and enhance VA programs and initiatives at the local level. We provide vital services and support to veterans and their families through State Benefit Offices, Cemetery and Memorial Affairs, Domiciles, Homeless programs, Substance Abuse and Skilled Nursing care. As of the beginning of this fiscal year 2009, there were nearly 28,000 State Veteran Nursing Home beds, more than 6,000 veterans domiciliary beds in 135 State veterans' facilities throughout the Nation. In fact, States provide the majority of VA Authorized long-term and nursing home care. In essence we are “where the rubber meets the road.” More importantly we are accountable to our Governors and the citizens of our State for the quality and responsiveness of our activities. Partnerships with States Departments of Veterans Affairs and State Veterans Homes are both cost-efficient and effective in utilization of resources and the creation of a quality continuum of care for all of America’s Veterans.  We must all work together in real partnership to assure veterans now and in the future receive the services and programs the need and deserve.