Good Morning Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me here today to present the Administration’s views on several bills that would affect the Department of Veterans Affairs’ programs of benefits and services.  With me today is Walter A. Hall, Assistant General Counsel.  Unfortunately, we do not yet have views and estimates for H.R. 6123, H.R. 6127, or the draft bills on homeless programs, homeless prevention, and requirements for providing Veterans with information regarding compensation claims and service-connected disabilities.  We will forward these as soon as they are available.

H.R. 3843—“Transparency for America’s Heroes Act”

Public Law 96-385, enacted on October 7, 1980, established the confidentiality of medical quality-assurance records now codified at 38 U.S.C. 5705.  H.R. 3843 would amend section 5705 to dramatically limit the scope of this confidentiality.  Specifically, the bill would limit confidentiality to records containing the name or other identifying information of a patient, employee, or other individual associated with VA for purposes of a medical-quality assurance program if disclosure would clearly constitute an invasion of personal privacy.  However, this provision would permit the wholesale release of information if the name or other identifying information is redacted.  Moreover, H.R. 3843 would require VA to make quality-assurance records available on the Department’s website within 30 days of their creation.  The bill would also require VA to make available on the internet all quality-assurance records created in the two-year period preceding enactment of this Act. 

VA strongly opposes this legislation.  Confidentiality is a fundamental and critical element of quality-assurance programs.  It improves patient safety outcomes by creating an environment in which providers may report and examine patient safety events without fear of recrimination or an increased risk of liability.  As with VA, the Department of Defense, all 50 states and the District of Columbia have statutory restrictions on disclosure of quality-assurance information.  The public reporting requirements in H.R. 3843 would require a dramatic departure from this widely held standard and would create an abrupt and highly disruptive reversal of longstanding and successful VA policy.  VA policy currently provides confidentiality for certain records that contain discussions of quality of health care, even if they do not identify an individual.  If this information were released, employees may be less willing to be forthcoming about quality issues that arise at their facilities.  In addition, implementing the legislation would be both costly and logistically challenging. 

While opposed to H.R. 3843, VA is committed to transparency regarding the quality and safety of the care it provides.  Since 2008, VA has published a Hospital Report Card containing extensive quality and safety performance data for each of our 153 medical centers.  In addition, select quality data from VA medical centers is posted on the Centers for Medicare and Medicaid Services’ Hospital Compare website.  This transparency allows Veterans and other stakeholders to compare the quality of VA medical centers with other hospitals in their communities. Due to both logistical and legal reasons, not all VHA quality data is available on Hospital Compare.  VA has created its own Hospital Compare site to address this gap, although VA’s site provides comparisons among VA medical centers rather than other hospitals in a Veteran’s community.  VA also hosts an additional website which publishes industry-standard quality scores developed by The Joint Commission and the National Committee on Quality Assurance.  While targeting a more technical audience, this site allows readers to compare VA to other facilities, both locally and nationally.  An enhanced version of this website is expected to launch in October 2010. 

We understand that some of the interest in transparency is to promote accountability.  VA strongly believes that our employees must be held to the highest standard when delivering care; however, it is also imperative that employees know that they can report information fully and completely so that changes can be made and care can be improved.  The agency is concerned that the release of quality-assurance documents may create a chilling effect, deterring our employees from providing accurate information and resulting in poorer quality care.  VA welcomes the opportunity to meet with the Committee to discuss employee accountability as well as additional approaches to increasing the transparency in VA’s quality-assurance programs. 

VA estimates the cost of this provision to be $22 million in FY 2011, $47.9 million over 5 years, and $88.5 million over 10 years. 

H.R. 4041—“Improvements in the Federal Recovery Coordinator Program” 

H.R. 4041 would require VA to train recovery coordinators at a qualified nursing or medical school.  This school would also lead a literature review and a consensus conference and develop training modules for care coordination as well as software that is compatible with VA systems.  H.R. 4041 would authorize appropriations of $1.2M to carry out these elements of the bill and direct the Secretary to subcontract for the development of care-coordination software.  It would also require VA to convene a conference for care coordinator tool validation and to conduct a software pilot program.  $1.2M would be authorized to carry out these provisions.  Section 2(d) would authorize the qualified nursing or medical school to train 45 recovery coordinators, and authorize $500,000 for this training for each of fiscal years 2010, 2011, and 2012. 

VA does not support H.R. 4041.  VA has established measures in place that address the goals of this legislation.  The Federal Recovery Coordination Program (FRCP) was created in 2007 in response to a recommendation from the President’s Commission on Care for America’s Returning Wounded Warriors.  The program has been successfully implemented in 13 sites around the country and there are currently 20 Federal Recovery Coordinators (FRCs)   Newly hired FRCs come to VA’s Central Office for intense training and orientation.  During this training, subject-matter experts provide in-depth reviews of topics frequently encountered by FRCs in the course of assisting their clients.  Topics range from Social Security Disability Insurance to the Department of Defense (DOD) disability evaluation system.  After completion of orientation, the new FRCs return to their station where they complete all necessary training and paperwork unique to their host facility.  They also engage in a mentor/mentee relationship with another more experienced FRC, which helps with process questions and resource identification.  Weekly supervisor calls also provide a structured review of cases and one-on-one problem solving is available during the week if needed.  In addition to the initial orientation, FRCs also receive quarterly training (4 weeks total) and have standard educational requirements for the program and to meet their state license standards.  Training topics are identified by the FRCs for these events to maximize their learning around specific information needed to assist clients. 

The language of section 2(b) of H.R. 4041 would require recovery coordinators to be trained at a nursing or medical school; however, it is unclear what that training would add to the current content-focused training provided by subject matter experts.  Moreover, this section would also require the school to lead a literature review and develop evidence-based guidelines for recovery coordination.  A structured evidence-based review is unlikely to produce much insight or definition as there is a lack of supporting data.  The cost of implementing this section is estimated to be $1.2 million. 

Section 2(c) of the bill would require the development of a care coordination software tool and a program piloting the software.  It is unclear whether this tool is intended to be used for training or for functional data management.  FRCP already has a functional data management tool that is sufficiently flexible to meet the growing needs of the program. It is contained within the Veterans Tracking Application (VTA) and iterative enhancements to the system over the past 2 years have provided increasingly easier data entry and report-writing capabilities.  Through a related effort, FRCP is also part of an information sharing initiative which will improve efficiency and accuracy by enabling information transfer among facilities. It is estimated that the software and pilot required by this section would cost $1.2 million.  We note that the word “subcontractor” in section 2(c)(1) should be “contractor.”

Section 2(d) of H.R. 4041 would authorize training for 45 coordinators.  We do not understand the rationale for this specific number.  Current staffing is based on the need for additional personnel through monitoring of referrals to the FRCP program.  As discussed above, there are currently 20 coordinators in the system and we are in the process of hiring an additional five FTE’s to serve in facilities in CA, TX, VA, and Washington D.C.  The cost of section 2(d) is estimated to be $500,000 in FY 2010, 2011, and 2012. 

VA estimates the total cost of H.R. 4041 to be $3.9 million over three years. 

H.R. 5428—“Injured and Amputee Bill of Rights”

H.R. 5428 would require the Secretary to establish a Bill of Rights for injured and amputee Veterans that would be displayed prominently in prosthetic and orthotics clinics throughout VA.  H.R. 5428 would also require the Veteran liaison at each medical center to collect information relating to the alleged mistreatment of injured and amputee Veterans.  Each quarter this information would have to be reported to the Department’s Chief Consultant, Prosthetic and Sensory Aids who would be required to investigate and address the alleged mistreatment. 

We recognize the unique needs of injured and amputee veterans.  Across the country, VA clinics and Prosthetic and Orthotic Services provide specialized care and treatment to these brave men and women.  We understand that injured and amputee veterans have clinical and medical needs that set them apart from other patients at VA facilities – but they are not set apart in their rights.  The basic tenets of patient care should not vary based either on the condition or injury experienced by a Veteran or the type of medical services a Veteran receives.  VA does not support H.R. 5428, because this legislation would confer unique rights upon a limited group of Veterans.  Giving special rights to amputee patients that are not available to other enrolled Veterans would result in inconsistent and inequitable treatment among our Veteran-patients. 

VA adheres to strict standards of patient treatment.  VA regulations require that a comprehensive list of patient’s rights be posted prominently in all VA facilities.  Patients who are concerned about the quality of their care have a number of options already available for addressing these issues.  Every VA medical center has a patient advocate dedicated to addressing the clinical and non-clinical complaints and concerns of our Veterans and their families.  Many facilities also include a “Letter to the Director” drop box where Veterans can communicate directly with the Director and raise issues and concerns.  In addition, VA’s Prosthetic and Sensory Aid Service maintains a web site that offers Veterans and family members an opportunity to ask questions or raise concerns directly with VA Central Office Staff.  The Department also works closely with Veterans Service Organizations to identify and respond to any concerns with quality and access to care.

If extended to the entire patient population, the Department would support the majority of “rights” that are included in this ‘Bill of Rights,’ e.g., the right to receive appropriate treatment, the right to participate meaningfully in treatment decisions, etc.  However, a few of the “rights” raise serious concerns.  Specifically, the Veteran’s “right to select the practitioner that best meets his or her orthotic and prosthetic needs, including a private practitioner with specialized expertise,” is not sound from a medical perspective.  VA’s practitioners are highly qualified, and VA is able to continually monitor their performance through its rigorous quality management programs.  As part of those programs, VA has an extensive credentialing and privileging program, which surpasses those found in the private sector.  VA, generally, does not have ready and efficient access to Veterans’ non-VA medical records, as few private providers, if any, employ an electronic medical record.  Were these Veterans permitted to choose their own private providers, VA could not oversee the quality of their care, ensure their private providers possesses adequate qualifications, and ensure they receive a continuum of services.  One must also bear in mind that VA’s legal privacy and confidentiality requirements exceed those applicable to the private sector.

In short, VA has the needed expertise in managing Veterans’ unique issues, including unparalleled expertise in managing and caring for amputee patients, particularly those wounded in combat.  What we cannot provide through our own clinics and Prosthetic and Orthotic Services, we readily purchase through contractual arrangements with more than 600 vendors and providers who are approved by the Department.  Although our Prosthetics and Orthotics Service labs are top-notch and very successful in timely meeting Veterans’ needs, we actively evaluate our programs to identify any areas in need of improvement.  With respect to our contractor-prosthetists, we conduct quality-management programs to oversee their performance, thereby protecting our Veterans and assuring they receive quality services.   These efforts would be significantly hindered were Veterans permitted to self-refer to private prosthetists and practitioners.  Veterans could become a vulnerable marketing target by those holding themselves out as having special expertise in this field.

Moreover, including that “right” in a “bill of rights” would be misleading.  Congress has very carefully limited our authority to pay for non-VA care and services.  Stating that a Veteran has the “right” to choose one’s own provider would still not make the Veteran eligible for private care at VA-expense if he or she does not otherwise meet the eligibility terms of 38 U.S.C. 1703.  This “right” could mislead Veterans into believing they are entitled to seek prosthetic or orthotic care or services from a non-VA provider at VA-expense. As a result, some could incur private medical expenses for which they would be personally liable.

There would be no additional costs associated with enactment of H.R. 5428.

H.R. 5516—“Access to Appropriate Immunizations for Veterans Act of 2010”

H.R. 5516 would amend the definition of “preventive health services” in 38 U.S.C. 1701 to specifically include immunizations.  This bill would further amend section 1701 to include the term “recommended adult immunization schedule” and define it to mean the schedule established by the Advisory Committee on Immunization Practices (ACIP).  H.R. 5516 would also amend section 1706 of title 38, to require the Secretary to develop quality measures and metrics to ensure that Veterans receive immunizations on schedule.  These metrics would be required to include targets for compliance and, to the extent possible, should be consistent and implemented concurrently with the metrics for influenza and pneumococcal vaccinations.  Moreover, the bill would require that these quality standards be established via notice and comment rulemaking.  H.R. 5516 would also require that details regarding immunization schedules and quality metrics be included in the annual preventative services report required by 38 U.S.C. 1704 beginning in January of 2011. 

VA does not support H.R. 5516.  VA currently conducts ongoing initiatives that address the goals of this legislation.  The current definition of “preventive health services” at 38 U.S.C. 1701 includes immunization against infectious disease.  Moreover, these immunizations are specifically included in VA’s medical benefits package.  VA is an ex-officio member of the ACIP and develops its clinical guidance on immunizations in accordance with ACIP recommendations.  All ACIP-recommended vaccines, which include hepatitis A, hepatitis B, human papillomavirus, influenza, measles/mumps/rubella, meningococcal, pneumococcal, tetanus/diphtheria/pertussis, tetanus/diphtheria, varicella, and zoster, are currently available to Veterans (as clinically appropriate) at VA medical facilities. 

The delivery of preventive care, which includes vaccinations, has been well-established in the VA Performance Measurement system for more than ten years with targets that are appropriate for the type of preventive service or vaccine.  VA updates these performance measures to reflect changes in medical practice over time.  Requiring that the quality metric, including targets for compliance, be established via notice and comment rulemaking would limit VA’s ability to respond quickly to new research or medical findings regarding a vaccine. Moreover, because the clinical indications and population size for vaccines vary by vaccine, blanket monitoring of performance of all vaccines could be cost prohibitive and may not have a substantial positive clinical impact at the patient level.

Accurately costing this bill is difficult as it will depend on the current use of individual vaccines and the specific performance measures that would be established by VA for those vaccines.  If HR 5516 results in a 10% increase in the use of vaccines by VA than we estimate the cost of H.R. 5516 would be $5 million in 2012, $32.3 million over 5 years, and $90.7 million over 10 years. 

H.R. 5543—“Collective Bargaining Regarding Compensation Other Than Rates of Basic Pay”

H.R. 5543 would amend 38 U.S.C. 7422 by replacing the word “compensation” in sections (b) and (d) with the words “rates of basic pay.” 

VA has serious concerns with this bill as it would repeal the prohibition on collective bargaining with respect to compensation of title 38 employees. 

VA would like to stress to the Committee that we deeply value the contributions of our employees, and enjoy a collaborative, positive working relationship with unions across the country.  We hold retention of employees as a critically important goal, and encourage the management teams of VA facilities to offer professional development opportunities and encourage personal growth.

Currently, 38 U.S.C. 7422(b) and (d) exempt “any matter or question concerning or arising out of . . . the establishment, determination, and adjustment of [title 38] employee compensation” from collective bargaining.  This bill would replace the word “compensation” with the phrase “rates of basic pay.”  This change would apparently make all matters relating to the compensation of title 38 employees (physicians, dentists, nurses, et al.) over which the Secretary has been granted any discretion subject to collective bargaining.  In order to provide the Secretary with the flexibility necessary to administer the title 38 system, Congress has granted the Secretary significant discretion in determining the compensation of VA’s health care professionals.  When Congress first authorized title 38 employees to engage in collective bargaining with respect to conditions of employment, it expressly exempted bargaining over “compensation” in recognition of the U.S. Supreme Court’s ruling in Ft. Stewart Schools v. FLRA, 495 U.S. 641 (1990).  In that case the Court held that the term “conditions of employment,” as used in the Federal Service Labor-Management Relations Statute (5 U.S.C. 7101), included salary, to the extent that the agency has discretion in establishing, implementing, or adjusting employee compensation.  Id. at 646-47.  Thus, Congress sought to make clear in 38 U.S.C. 7422(b) that title 38 employees’ right to bargain with respect to “conditions of employment” did not include the right to bargain over compensation.  Over the years, Congress has authorized VA to exercise considerable discretion and flexibility with respect to title 38 compensation to enable VA to recruit and retain the highest quality health care providers.

The term “rates of basic pay” is not defined in title 38.  However, the Agency has defined “basic pay” as the “rate of pay fixed by law or administrative action for the position held by an employee before any deductions and exclusive of additional pay of any kind.”  VA Handbook 5007, Part IX, par. 5.  Such additional pay includes market pay, performance pay, and any other recruitment or retention incentives.  Id.  Accordingly, H.R. 5543 would subject many discretionary aspects of title 38 compensation to collective bargaining.  For example, there are two discretionary components of compensation for VA physicians and dentists under the title 38 pay system—market pay and performance pay.  Market pay, when combined with basic pay, is meant to reflect the recruitment and retention needs for the specialty or assignment of the particular physician or dentist in a VA facility.  Basic pay for physicians and dentists is set by law and would remain non-negotiable under this bill, but the Secretary has discretion to set market pay on a case-by-case basis.  Market pay is determined through a peer-review process based on factors such as experience, qualifications, complexity of the position, and difficulty recruiting for the position.  In many cases, market pay exceeds basic pay.  In those situations, this bill would render a large portion or even the majority of most physicians’ pay subject to collective bargaining.  The Secretary also has discretion over the amount of performance pay, which is a statutorily authorized element of annual pay paid to physicians and dentists for meeting goals and performance objectives.  Under this bill, performance pay would also be negotiable.  Likewise, pay for nurses entails discretion because it is set by locality pay surveys.  Further, Congress has granted VA other pay flexibilities involving discretion, including premium pay, on-call pay, alternate work schedules, Baylor Plan, special salary rates, and recruitment and retention bonuses.  The ability to exercise these pay flexibilities is a vital recruitment and retention tool.  It is necessary to allow VA to compete with the private sector and to attract and retain clinical staff who deliver health care to Veterans.  As described below, this flexibility would be greatly hindered by the collective bargaining ramifications of H.R. 5543.

This bill would obligate VA to negotiate with unions over all discretionary matters relating to compensation, and to permit employees to file grievances and receive relief from arbitrators when they are unsatisfied with VA decisions about discretionary pay.  If VA were obligated to negotiate over such matters, it could be barred from implementing decisions about discretionary pay until it either reaches agreements with its unions or until it receives a binding decision from the Federal Service Impasses Panel.  This potential barrier could significantly hinder our ability and flexibility to hire clinical staff as needed to meet patient care needs both qualitatively and in a timely manner.  Additionally, VA may be required to pay more than is necessary to recruit and retain title 38 employees.  

Moreover, any time an employee was unsatisfied with VA’s determination of his or her discretionary pay, he or she could grieve and ultimately take the matter to binding arbitration.  This step would allow an arbitrator to substitute his or her judgment for that of VA and, with regard to physician market pay, to override peer review recommendations.  This bill would allow independent third-party arbitrators and other non-VA, non-clinical labor third parties who lack clinical training and expertise to make compensation determinations.  VA would have limited, if any, recourse to appeal such decisions.   

Importantly, H.R. 5543 would result in unprecedented changes in how the Federal Government operates.  It would permit unions to bargain over, grieve, and arbitrate a subject—employee compensation—that is generally exempted from collective bargaining even under title 5.  Although Congress has built much more Agency discretion into the title 38 compensation system both to achieve the desired flexibility and because the system is unique to VA, permitting title 38 employees to negotiate the discretionary aspects of their compensation would simply be at odds with how other Federal employees are generally treated.  Further, collective bargaining over discretionary aspects of pay is unnecessary.  VA’s retention rates for physicians and dentists are comparable to private sector retention rates, while retention rates for VA registered nurses significantly exceed those of the private sector, strongly suggesting that the lack of bargaining ability over discretionary aspects of pay has minimal impact on VA’s ability to retain title 38 employees.  

We are not able to estimate the cost of H.R. 5543 for two reasons.  First, if VA is required to negotiate over compensation matters, and if the Agency is unable to reach agreements with the unions, the final decisions on pay will ultimately rest with the Federal Service Impasses Panel.  The Panel has discretion to order VA to comply with the unions’ proposals.  Second, if pay issues become grievable and arbitrable, the final decisions on pay will rest in the hands of arbitrators.

On the whole, our efforts to recruit and retain health care professionals have been widely successful, notwithstanding the exclusion of matters concerning or arising out of compensation from collective bargaining.  We would be glad to share applicable data with the Committee and brief the members on our continuing efforts in this area. 

H.R. 5996—“Prevention, Diagnosis, Treatment and Management of Chronic Obstructive Pulmonary Disease”

Subject to the availability of appropriations, H.R. 5996 would require the Secretary to develop treatment protocols and related tools for the prevention, diagnosis, treatment, and management of Chronic Obstructive Pulmonary Disease (COPD) as well as to improve biomedical and prosthetic research programs on this disease.  Moreover, in conjunction with the Centers for Disease Control and Prevention (CDC), the Indian Health Service, and the Health Resources and Service Agency, VA would be required to develop a pilot program to demonstrate best practices for the diagnosis and management of COPD.  The bill also specifies that the Secretary and the CDC shall develop improved techniques and best practices for assisting individuals with COPD in quitting smoking. 

VA supports the intent of H.R. 5996 as it has significant potential to improve the health care outcomes of Veterans, but it already has the authority to develop the treatment protocols and related tools and to improve the research programs on this disease.  COPD is currently the 4th leading cause of death in the United States, and it currently impacts more than 500,000 Veterans. The primary cause of COPD, smoking, also remains prevalent among Veterans.  More than 30 percent of Veterans are active smokers, and among those diagnosed with COPD, the rate of active smoking is approximately 50 percent. 

VA has long maintained smoking cessation as a major focus for health promotion and disease prevention.  VA’s national performance measure on tobacco use requires that all Veterans seen in outpatient settings be screened once a year for smoking; if they are currently using tobacco, they are provided with brief counseling, offered prescriptions for nicotine replacement therapy and other smoking-cessation medications, and provided with referrals to VA smoking cessation programs.  VA has also been working with DOD to identify areas for collaboration to establish tobacco use cessation programs that would provide a seamless transition in care and reduce the impact of smoking-related illnesses among both Service members and Veteran populations.

VA supports the bill’s focus on the special needs of COPD patients who struggle with their smoking addictions.  The knowledge gained would benefit the population at large.  VA believes this focus would particularly improve care and outcomes for Veterans with COPD, improve rates of smoking cessation among patients with COPD, and reduce the risk and incidence of other smoking-related illnesses (e.g., lung cancer, heart disease). 

The cost of this bill is estimated to be $25.9 million over 5 years. 

Draft Bill 1—Improvements in Programs for Homeless Veterans

Section 2 of the draft bill would amend 38 U.S.C. 2061 to grant VA permanent authority to offer capital grants for homeless Veterans with special needs on the same basis as the grants currently made to homeless Veteran providers under the VA Homeless Grant and Per Diem (GPD) Program pursuant to 38 U.S.C. 2011.  Veterans with special needs are: those who are women, including women who have care of minor dependents; frail elderly; terminally ill; or chronically mentally ill homeless Veterans.  Section 2 would further amend section 2061 by removing the requirement that VA make grants to VA health care facilities. 

Section 3 of the draft bill would amend 38 U.S.C. 2012 to change grant payments for furnishing services to homeless Veterans from a per diem basis to the annual cost basis.  It would also remove the prohibition on VA providing a rate in excess of the rate authorized for State domiciliaries and grant the Secretary the discretion to set a maximum amount payable to grant recipients.  Section 3 would also direct the Secretary to adjust the rate of payment to reflect anticipated changes in the cost of furnishing services and take into account the cost of services in different geographic areas.  It would also make the requirement that the Secretary consider other available sources of funding discretionary.  Section 3, paragraph E would require the Secretary to make quarterly payments based on the estimated annual basis and would further require recipients to declare the actual amount paid by quarter for services provided and repay any outstanding balances if the amount spent by the recipient is less than the estimated quarterly disbursement.  Similarly, if recipients spend more than the estimated amount, determined on a quarterly basis, the Secretary would be required to make an additional payment equal to that sum.  Payment to recipients would be limited to the amount of the annual grant payment as determined by the Secretary.  Finally, section 3 would allow grant recipients to use VA grants to match other payments or grants from other providers. 

While there are some similarities between this draft bill and a recent VA legislative proposal, VA needs additional time to evaluate this bill in conjunction with the Administration’s focus on permanent housing models for the homeless.  We will provide views and costs as soon as they are available. 

Draft Bill 2—“Miscellaneous Health Care Provisions”

Annual Meeting of the Association of Military Surgeons in the United States

Section 3 would permit the Under Secretary for Health to assist the Association of Military Surgeons of the United States in organizing and hosting the annual meeting of the Association.  The military services are able to assist the Association with its annual meeting due to Public Law 39 (enacted January 30, 1903), which incorporated the Association of Military Surgeons of the United States.  That law made the Secretaries of Treasury, War, and Navy and the Surgeon-Generals of the Army, Navy, and Marine–Hospital Service ex officio members of the Association.  VA would like an authorization to also assist with the annual meetings.  These meetings are valuable to VA because they permit sharing with other Federal health-care entities and provide learning opportunities for VA employees through lectures, panel discussions, and poster discussions. 

The cost associated with enactment of this section will be insignificant.

Hospital Care and Medical services in Non-Department Facilities

Section 4 would grant VA increased flexibility in entering into fee-basis arrangements to obtain hospital care and medical services for eligible Veterans.  These arrangements would be authorized when VA is unable to furnish economical hospital care or medical services due to geographical inaccessibility, or when VA facilities are unavailable to furnish needed care or services.  The statute as currently written  states that these arrangements be accomplished by “contracts” with non-VA “facilities.”  This bill would  expressly provide that VA, notwithstanding any other law, may  “purchase, enter into a contract, provide individual authorization or act in such other manner as the Secretary determines appropriate” with non-VA facilities in order to furnish hospital and outpatient care to eligible Veterans.

VA supports section 4.  There are no costs associated with this section as it would be consistent with VA’s current practice under current law. 

Extension of the Advisory Committee on Homeless Veterans

Section 5 would amend 38 U.S.C. 2066 to extend Congressional authority to continue the Advisory Committee for Homeless Veterans for an additional three years until December 30, 2014. 

This committee was congressionally mandated by Public Law 107-95.  The mission of the committee is to provide advice and make recommendations to the Secretary on issues affecting homeless Veterans and determine if the Department of Veterans Affairs (VA) and other programs and services are meeting those needs.  It has proven valuable, and VA has implemented many of the committee’s recommendations through policy and regulatory changes to enhance access and services for homeless Veterans.

The cost of the Advisory Committee on Homeless Veterans was $141,000 in FY 2009 and VA estimates that this cost will increase by three to five percent for the additional three years of operation and is estimated to be $.5 million. 

Authority to Recover Medical Care Costs from Third Party Providers

Section 6 would amend section 1729(f) of title 38, United States Code, to make clear that the absence of a participating provider agreement or other contractual arrangement with a third party may not operate to prevent, or reduce the amount of, any recovery or collection by the United States under this section.  Subsection (b) would amend section 1729(i)(1)(A) of title 38, United States Code, to clarify the definition of a “health-plan contract” by specifying health maintenance organizations, competitive medical plans, health care prepayment plans, preferred or participating provider organizations, individual practice associations, and other medical benefit plans are included.  These amendments would apply only to care and services furnished under chapter 17 of title 38, United States Code, on and after the date of the enactment.

There are no direct costs associated with this section, other than administrative costs associated with collecting revenue.  VA supports this provision and estimates the adoption of this section would increase collections beginning in fiscal year 2012 by $87.7 million and $1.04 billion over a ten-year period.

Health Professionals Educational Assistance Programs

Section 7 would amend 38 U.S.C. 7675 to impose on full-time student participants in the Employee Incentive Scholarship Program (EISP) who leave VA employment prior to completion of their education program the same liability as is currently imposed on part-time students.  The current statute clearly limits part-time student participants’ liability for breach of the EISP agreement.  This proposal would make both full- and part-time students liable for breach of the EISP agreement.  Currently, all other employee recruitment/retention incentive programs have a service obligation and liability component. 

VA supports this provision and estimates enactment would result in savings of approximately $36,000 in fiscal year 2010 and a total approximate savings of $189,000 over a four-year period.

On-Call Pay for VHA IT Specialists

Section 8 would amend 38 U.S.C. 7457 and authorize the Secretary to pay on-call pay to Information Technology (“IT”) Specialists whose primary responsibilities are to perform services incident to direct patient-care services at VHA health care facilities.  Prior to 2006, title 5 IT staff working in VA health care facilities were employed by the Veterans Health Administration (“VHA”) and were authorized to receive on-call pay under title 38.  In 2006, the Department’s Office of Information and Technology (“OI&T”) was reorganized as a separate staff office and, as a result, title 5 IT staff were transferred out of VHA, and lost their authorization for on-call pay.  On-call coverage is needed because the Department is unable, given staffing availability and cost, to staff OI&T on a 24-hour basis.  This proposal would allow the Department to properly support patient care operations on a 24-hour basis.  This is crucial, as VHA’s delivery of health care is dependent upon the electronic health record.  

VA estimates the cost of this section to be $6.3 million for FY 2011, $37.3 million over five years, and $93.9 million over ten years.

Pay for Physicians and Dentists Employed by the Office of Information and Technology

Section 9 would amend 38 U.S.C. 7431 to authorize the Secretary to pay physicians and dentists employed by the Department’s Office of Information and Technology (“OI&T”) in accordance with title 38 pay authorities.  Prior to 2006, physicians and dentists who served in information technology (“IT”) positions providing support to the Veterans Health Administration (“VHA”) worked in VHA units and were covered by title 38 pay authorities.  In 2006, OI&T was reorganized as a separate Department staff office and, as a result, IT personnel were transferred out of VHA, and lost their authorization for title 38 pay.  This provision would allow VA to recruit and retain physicians and dentists in OI&T leadership positions by inserting a new subsection into section 7431.  Title 38 pay authorities are specifically designed to allow VA to recruit and retain highly qualified health care personnel for Veterans.  The ability to offer title 38 pay to physicians and dentists within OI&T is crucial in maintaining the Department’s position as a world leader in health care information technology because it would allow the Department to recruit and retain senior IT executives who, because of their experience as physicians and dentists, possess intimate knowledge and expertise in both health care processes and information technology. 

While VA believes that 25 positions would be sufficient, this draft bill would permit 100 positions at any time.  To be eligible, a physician or dentist must be board-certified.  The Secretary would ensure that the authority is used only for physicians and dentists serving in key executive positions in which experience as a physician or dentist is critical to accomplishment of the Department’s mission.  Covered physicians and dentists must be paid using the pay schedules established for executives in the Veterans Health Administration whose primary duties are to manage personnel and programs rather than perform clinical duties as a physician or dentist—currently, Pay Table 6 for Executive Assignments, which has three tiers:  Tier 1:  $145,000 - $265,000, Tier 2:  $145,000 - $245,000, and Tier 3:  $130,000 - $235,000. 

Section 9 includes conforming amendments to title 5 that make clear that physicians and dentists receiving rates of basic pay under title 38, including those covered by proposed section 7431(i), are not covered by the provisions governing the General Schedule and the Senior Executive Service.  Section 9 also amends 5 U.S.C. 5371 (OPM’s statutory authority to provide title 38 pay authority to other agencies) so that OPM may authorize other agencies to apply title 38 pay provisions to employees who would otherwise be in the Senior Executive Service. 

The Department estimates the cost of the 100 employees allowed for in the bill to be $13.7 million in FY 2011, $71.9 million over five years, and $153.23 million over ten years.  If VA employed 25 of these employees, the costs are estimated to be $3.4 million in FY 2011, $17.96 million over five years, and $38.3 million over ten years. 

Extension of the Joint Incentives Program

Section 10 would change the termination date for the DOD-VA Joint Incentives Program from September 30, 2015 to September 30, 2020, enabling both agencies to contribute to the Joint Incentive Fund, which fund funds creative coordination and sharing initiatives at the facility, intraregional, and nationwide levels.  VA supports this extension.  There are no costs associated with this provision. 

Use of the Franchise Fund to Expedite Collection of Erroneous Payments

Section 11 would amend the paragraph under the heading ‘‘Franchise Fund’’ in title I of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (Public Law 104-204), which was amended by section 208 of title II of the Military Quality of Life and Veterans Affairs Appropriations Act, 1996 (Public Law 109-114), to authorize the VA Franchise Fund to use amounts available to cover its operating expenses to correct erroneous or improper payments made by Franchise Fund employees.

The Government Management Reform Act (GMRA) of 1994 (Public Law 103-356) and the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (Public Law 104-204) authorize VA to provide certain common administrative services to VA and other government agencies on a fee-for-service basis.  One such service is payment processing.  As a service provider, the VA Franchise Fund acts as an agent for its customers by processing payments on their behalf.  The Franchise Fund has service level agreements (SLAs) with VA customers to pay vendor invoices using the customer’s appropriated funds.  Occasionally, the Franchise Fund makes a payment error, e.g., payment issued to an incorrect vendor.  Currently, customers provide additional funds to the Franchise Fund to make the correct payment, pending recovery of the improper payment.

This section would authorize the customer involved with the improper payment to establish a refund receivable from the Franchise Fund and immediately recover the related budget authority.  The Fund would in turn establish a refund receivable from the vendor and record it in its accounting records. The budget authority would not accrue to the VA Franchise Fund until funds are recovered from the vendor.

Under this approach, the customer’s appropriation would remain whole.  The Franchise Fund, acting as the agent, would set up a refund receivable and use resources from the Fund to immediately refund the corrected payment to its customers.  This would occur while the Fund is pursuing recovery of the improper payment from the vendor.  VA supports this provision.  The VA Franchise Fund has established effective processes to recover funds through bills of collection, payment offsets, the Treasury Offset Program, or civil court collection.  The Franchise Fund’s collection experience demonstrates a high percentage of collections and a low risk for loss of improper payments.

There are no costs associated with this provision.  

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