Good Morning Mr. Chairman and Members of the Subcommittee:

Mr. Chairman, thank you for inviting me here today to present the Administration’s views on several bills that would affect Department of Veterans Affairs (VA) programs that provide veteran health care benefits and services. With me today are Walter Hall, Assistant General Counsel, and Gary Baker, Chief Business Officer, Veterans Health Administration. I am pleased to provide the Department’s views on the 3 draft bills under consideration by the Subcommittee.

Discussion Draft #1. Catastrophically Disabled Veterans’ Exemption from Certain Copayment Requirements.

Discussion Draft #1 would amend current law to exempt a veteran who is catastrophically disabled from having to pay copayments that would otherwise apply to inpatient and outpatient services that the veteran receives through the Department.

Mr. Chairman, we recognize that the draft bill is intended to address any disproportionate financial burden that falls on these seriously ill and disabled veterans because their very complex medical needs compel their high use of the VA health care system. The draft bill is targeted at the approximately 25,000 veterans who because of their conditions rely on VA health care services more than any other veteran-population enrolled in our system. Because their catastrophic disabilities are not service-connected and because their incomes exceed VA‘s means test level for low-income veterans, they are not exempt from the copayment requirements.

We share the Subcommittee’s concern that these severely disabled veterans not be subject to an undue financial burden as a result of the copayment obligations that apply to their receipt of inpatient and outpatient care. However, we are still in the process of ascertaining these veterans’ hospital and outpatient utilization rates and copayments. VA has not previously tracked amounts and ranges of copayments by enrollment category. Without that data, we cannot determine the extent of their copayment liability or project the estimated loss in revenue that would be associated with this bill’s enactment. Once we have had an opportunity to collect and analyze all of the necessary data, we will come back to the Subcommittee with a recommendation as to the need for this legislation or any other approach that the Administration believes, based on the confirmed data, might be an appropriate means of protecting these veterans from undue copayment burden. Until then, we therefore request that the Subcommittee refrain from taking action on this draft bill.

Discussion Draft #2. Counseling, training, and mental health services for immediate family members of veterans receiving treatment for a non-service connected disability.

Discussion Draft #2 would amend VA’s authority to furnish counseling, training, and mental health services to immediate family members of veterans receiving VA treatment for a non-service connected disability. Currently, all enrolled veterans other than those who are receiving outpatient care for non-service connected disabilities are eligible for these family support services to the extent they are necessary to the veterans’ treatment. Veterans being treated for non-service connected disabilities are only eligible for these family support services only to the extent they are necessary in connection with the veteran’s treatment and if they were initiated during the veteran’s hospitalization and their continued provision on an outpatient basis is deemed essential to permit the discharge of the veteran from the hospital. The draft bill would eliminate the requirements that the services be initiated during the veteran’s hospitalization and deemed essential to permit the veteran’s discharge, thus making the eligibility criteria the same for all veterans.

VA supports Discussion Draft #2. Over the last decades, VA has successfully transformed its delivery of health care services from an inpatient-based model to an outpatient-based model. This has significantly increased our efficiencies, increased veterans’ access to care, and aligned our system with the health care industry at large. However, as a result, some families have become ineligible for counseling, training, and other family support services that are essential to the veterans’ treatment simply because their loved ones’ care was for a non-service connected disability that was provided on an outpatient basis. The draft bill would eliminate vestiges of an old system that no longer have any place in today’s VA health care system. An enrolled veteran is eligible for any needed medical treatment, regardless of whether the condition is service-connected. It is incongruent to still base eligibility for needed family support services on the service-connected nature of the veteran’s disability. As long as the family support services are necessary in connection with the veteran’s treatment, it should be irrelevant whether the disability under treatment is service-connected and whether it was provided in hospital. Importantly, these amendments could improve the treatment outcomes for the affected group of veterans.

We are still developing costs for this draft bill and will submit them for the record as soon as possible.

Discussion Draft #3. Veterans Nonprofit Research and Education Corporations Enhancement Act of 2008

Discussion Draft #3 would update the law applicable to VA’s nonprofit research and education corporations (corporations). VA-affiliated nonprofit research corporations are critical to VA’s overall research program because they provide flexible funding mechanisms for the administration of non-VA funds for the conduct of VA-approved research.

A provision of Discussion Draft #3 would authorize a single corporation to facilitate the conduct of research and education at more than one VA medical center. It would also make it clear that corporations may reimburse a VA laboratory for the preliminary costs it incurs before a research project has been officially approval by the Secretary. VA would also be authorized to reimburse corporations for costs incurred for the assignment of corporation employees to VA under the Intergovernmental Personnel Act of 1970 (IPA).

Additionally, this draft bill would clarify that corporations may set fees for certain education and training programs they administer and retain those funds to offset program expenses.

We support the provision of the draft bill that would authorize the establishment of new multi-center non-profit research corporations (NPCs) and the consolidation of existing single facility NPCs into multi-facility NPCs. This offers the prospect of NPC-assistance in funding research projects to VA medical centers (VAMCs) that are unable to support their own dedicated corporation. This provision would also provide the system with the tools needed to consolidate or close NPCs that are too small to institute proper internal controls without the loss of the funding support for VA research and education programs that the NPCs provide. By requiring the Director of all VAMCs supported by an NPC to sit on its board of directors, the provision provides this beneficial increased flexibility without sacrificing VA oversight.

With respect to the draft bill’s remaining provisions, we ask the Subcommittee to defer further action on this draft bill in order to give the Department an opportunity to address underlying structural issues and to formulate policy related to the governance and finance of the VA affiliated non­profit research corporations. A steering committee has been chartered by the Veterans Health Administration Office of Research and Development, to provide recommendations regarding governance, oversight, and finance issues related to the corporations by the end of the fiscal year. We will be happy to provide you with a copy of their final report and recommendations.

Mr. Chairman, this concludes my prepared statement. I would be pleased to answer any questions you or any of the members of the Subcommittee may have.