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The Honorable Eric K. Shinseki

The Honorable Eric K. Shinseki, Secretary, U.S. Department of Veterans Affairs

Chairman Miller, Ranking Member Michaud, Distinguished Members of the House Committee on Veterans’ Affairs:
Thank you for the opportunity to present the President’s 2014 Budget and 2015 advance appropriations requests for the Department of Veterans Affairs (VA).  This budget continues the President’s historic initiatives and strong budgetary support and will have a positive impact on the lives of Veterans, their families, and survivors.  We value the unwavering support of the Congress in providing the resources and legislative authorities needed to care for our Veterans and recognize the sacrifices they have made for our Nation.

The current generation of Veterans will help to grow our middle class and provide a return on the country’s investments in them.  The President believes in Veterans and their families, believes in providing them the care and benefits they’ve earned, and knows that by their service, they and their families add strength to our Nation.

Twenty-two million living Americans today have distinguished themselves by their service in uniform.  After a decade of war, many Servicemembers are returning and making the transition to Veterans status. The President’s 2014 Budget for VA requests $152.7 billion – comprised of $66.5 billion in discretionary funds, including medical care collections, and $86.1 billion in mandatory funds.  The discretionary request reflects an increase of $2.7 billion, 4.3 percent above the 2013 level.  Our 2014 budget will allow VA to operate the largest integrated healthcare system in the country, with more than 9.0 million Veterans enrolled to receive healthcare; the ninth largest life insurance provider, covering both active duty members as well as enrolled Veterans; an education assistance program serving over 1 million students; a home mortgage service that guarantees over 1.5 million Veterans’ home loans with the lowest foreclosure rate in the Nation; and the largest national cemetery system that leads the Nation as a high-performing organization, with projections to inter about 121,000 Veterans and family members in 2014.
Priority Goals

Over the next few years, more than one million Veterans will leave military service and transition to civilian life.  VA must be ready to care for them and their families.  Our data shows that the newest of our country’s Veterans are relying on VA at unprecedented levels.  Through January 31, 2012, of the approximately 1.58 million Veterans who returned from Operations Enduring Freedom, Iraqi Freedom, and New Dawn, at least 62 percent have used some VA benefit or service.

VA’s top three priorities – increase access to VA benefits and services; eliminate the disability compensation claims backlog in in 2015; and end Veterans homelessness, also in 2015 – anticipate these changes and identify the performance levels required to meet emerging needs.  These ambitious goals will take steady focus and determination to see them through.  As we enter the critical funding year for VA’s priority goals, this 2014 budget builds upon our multi-year effort to position the Department through effective, efficient, and accountable programming and budget execution for delivering claims and homeless priority goals.

Stewardship of Resources

Safeguarding the resources – people, money, time – entrusted to us by the Congress, managing them effectively, and deploying them judiciously, is a fundamental duty.  Effective stewardship requires an unflagging commitment to use resources efficiently with clear accounting rules and procedures, to safeguard, train, motivate, and hold our workforce accountable, and to assure the effective use of time in serving Veterans on behalf of the American people.  Striving for excellence in stewardship of resources is a daily priority.  At VA, we are ever attentive to areas in which we need to improve our operations, and are committed to taking swift corrective action to eliminate any financial management practice that does not deliver value for Veterans.    

    VA’s stewardship of resources begins at headquarters.  Recognizing the very difficult fiscal constraints facing our country, the 2014 request includes a 5.0 percent reduction in the Departmental Administration budget from the 2013 enacted level.  This reduction follows a headquarters freeze in the 2013 President’s Budget — a two-year commitment.

Recent audits of the Department’s financial statements have certified VA’s success in remediating all three of our remaining material weaknesses in financial management, which had been carried forward for over a decade.  In terms of internal controls and fiscal integrity, this was a major accomplishment.  In the past four years, we have also dramatically reduced the number of significant financial deficiencies from 16 to 1.
    At VA, we believe that part of being responsible stewards is shutting down information technology (IT) projects that are no longer performing.  Developed by our Office of Information and Technology, the Project Management Accountability System (PMAS) requires IT projects to establish milestones to deliver new functionality to its customers every 6 months.  Now entering its third year, PMAS continues to instill accountability and discipline in our IT organization.  Through PMAS, the cumulative, on-time delivery of IT functionality since its inception is 82 percent, a rate unheard of in the industry where, by contrast, the average is 42 percent.   By implementing PMAS, we have achieved at least $200 million in cost avoidance by shutting down or improving the management of 15 projects.

    Through the effective management of our acquisition resources, VA has achieved savings of over $200 million by participating in Federal strategic sourcing programs and establishing innovative IT acquisition contracts.  In 2012, VA led the civilian agencies in contracting with Service-Disabled Veteran-Owned Small Businesses, which, at $3.4 billion, accounted for 19.3 percent of all VA procurement awards.  In addition, we have reduced interest penalties for late payments by 19 percent (from $47 to $38 per million) over the past four years.

Finally, VA’s stewardship achieved savings in several other areas across the Department.  The National Cemetery Administration (NCA) assumed responsibility in 2009 for processing First Notices of Death to terminate compensation benefits to deceased Veterans. Since taking on this responsibility, NCA has advised families of the burial benefits available to them, assisted in averting overpayments of some $142 million in benefit payments and, thereby, helped survivors avoid possible collections.  In addition, we implemented the use of Medicare pricing methodologies at the Veterans Health Administration (VHA) to pay for fee-basis services, resulting in savings of over $528 million since 2012 without negatively impacting Veteran care and with improved consistency in billing and payment.  

    To serve Veterans as well as they have served us, we are working on delivering a 21st century VA that provides medical care, benefits, and services through a digital infrastructure.  Technology is integrated with everything we do for Veterans.  Our hospitals use information technology to properly and accurately distribute and deliver prescriptions/medications to patients, track lab tests, process MRI and X-ray imaging, coordinate consults, and store medical records.  VA IT systems supported over 1,300 VA points of healthcare in 2012: 152 medical centers, 107 domiciliary rehabilitation treatment programs, 821 community-based outpatient clinics, 300 Vet Centers, 6 independent outpatient clinics, 11 mobile outpatient clinics, and 70 mobile Vet Centers.  Technology supports Veterans’ education and disability claims processing, claims payments, home loans, insurance, and memorial services.  Our IT infrastructure consists of telephone lines, data networks, servers, workstations, printers, cell phones, and mobile applications.  

    No Veteran should have to wait months or years for the benefits that they have earned.  We will eliminate the disability claims backlog in 2015; technology is the critical component for achieving our goal.  VA is deploying technology solutions to improve access, drive automation, reduce variance, and enable faster and more efficient operations.  Building on the resources Congress has provided in recent years to expand our claims processing capacity, the 2014 budget requests $291 million for technology to eliminate the claims backlog― $155 million in Veterans Benefits management System (VBMS) for our new paperless processing system, and $136 million in the Veterans Benefits Administration (VBA) to support a Veterans Claims Intake Program, our new online application system that will allow for the conversion of paper to digital images for our new paperless processing system, the Veterans Benefits Management System (VBMS).  Without these resources, VA will be unable to meet its goal to eliminate the disability claims backlog in 2015.   

Information Technology

      At VA, advances in technology -- and the adoption of and reliance on IT in our daily commercial life -- have been dramatic.  Technology is integral to providing high quality healthcare and benefits.  The 2014 budget requests $3.683 billion for IT, an increase of $359 million from the President’s 2013 Budget, reflecting  the critical role technology plays in VA’s daily work in serving and caring for Veterans and their families.  Of the total request, $2.2 billion will support the operation and maintenance of our digital infrastructure and $495 million is for IT development modernization and enhancement projects.  

    The 2014 budget includes $32.8 million for development of VBMS, our new paperless processing system that enables VA to move from its current paper-based process to a digital operating environment that improves access, drives automation, reduces variance, and enables faster, more efficient operations.  As we increase claims examiners’ use of VBMS version 4.2 to process rating disability claims, our major focus is on system performance, as we tune the system to be responsive and effective.  VA will complete the rollout of VBMS in June 2013.  

In addition, the 2014 budget includes $120 million for development of the Veterans Relationship Management (VRM) initiative, which enhances Veterans’ access to comprehensive VA services and benefits, especially in the delivery of compensation and pension claims processing.  The program gives Veterans secure, personalized access to benefits and information and allows a timely response to their inquiries.  Recently, VRM released Veterans Online Application Direct Connect (VDC), which enables Veterans to apply for VBA benefits by answering guided interview questions through the security of the eBenefits portal.  Claims filed through eBenefits use VDC to load information and data directly into VBMS.

The Virtual Lifetime Electronic Record (VLER) is an overarching program which aims to share health, benefits, and administrative information, including personnel records and military history records, among DoD, VA, SSA, private healthcare providers, and other Federal, State and local government partners.  eBenefits is already reaching 2 million Veterans and Servicemembers and 1 million active users with BlueButton.  The 2014 budget requests $15.4 million for VLER  to develop and support these functions as well as the Warrior Support Veterans Tracking Application; the Disability Benefits Questionnaires; a VA/DoD joint health information sharing project known as Bidirectional Health Information Exchange; and a storage interface known as Clinical Data Repository/Health Data Repository.  All of these efforts are designed to enable the sharing of health, military personnel and personal information among VA, other Federal agencies, Veteran Service Organizations and private health care providers to expedite the award and processing of disability claims and other services such as education, training and job placement.

 Eliminating the Claims Backlog

    Too many Veterans wait too long to receive benefits they have earned.  This is unacceptable.  Today’s claims backlog is the result of several factors, including: increased demand; over a decade of war with many Veterans returning with more severe, complex injuries; decisions on Agent Orange, Gulf War, and combat PTSD presumptions; and, successful outreach to Veterans informing them of their benefits.  These facts, in no way, diminish the urgency that we all feel at VA to fix this problem which has been decades in the making.  VA remains focused on eliminating the disability claims backlog in 2015 and processing all claims within 125 days at a 98-percent accuracy level.

To deliver this goal, the Veterans Benefits Administration (VBA) is implementing a comprehensive transformation plan based on more than 40 targeted initiatives to boost productivity by over the next several years  However, as VBA transforms its people, processes, and technologies, its claims demand is expected to exceed on million annually.  From 2010 through 2012, for the first time in its history, VBA processed more than one million claims in three consecutive years.  In 2013, VBA expects to receive another million claims and similar levels of demand are anticipated in 2014.  This is driven by successful outreach, claims growth not previously captured in VBA’s baseline, and new requirements.  Included are mandatory Servicemember participation in VOW/VEI benefits briefings and an expected increase upon successful completion of a transition assistance program, revamped by the President as Transition: Goals, Plan, Success (GPS).  As more than one million troops leave service over the next 5 years, we expect our claims workload to continue to rise.  In addition, VBA is experiencing an unprecedented workload growth arising from the number and complexity of medical conditions in Veterans’ compensation claims.  The average number of claimed conditions for our recently separated Servicemembers is now in the 12 to 16 range – roughly 5 times the number of disabilities claimed by Veterans of earlier eras.  While the increase in compensation applications presents challenges, it is also an indication that we are being successful in our efforts to expand access to VA benefits.

Investments in transformation of our people, processes, and technologies are already paying off in terms of improved performance.  For example:

•    People:  More than 2,100 claims processors have completed Challenge Training, which improves the quality and productivity of VBA compensation claims decision makers.  As a result of Challenge Training, VBA’s new employees complete more claims per day than their predecessors – with a 30 percent increase in accuracy.
VBA’s new standardized organizational model incorporates a case-management approach to claims processing that organizes its workforce into cross-functional teams that work together on one of three segmented lanes: express, special operations, or core.  Claims that predictably can take less time will flow through an express lane (30 percent); those taking more time or requiring special handling will flow through a special operations lane (10 percent); and the rest of the claims flow through the core lane (60 percent).  Initially planned for deployment throughout 2013, VBA accelerated the implementation of the new organizational model by nine months due to early indications of its positive impact on performance.  

VBA instituted Quality Review Teams (QRTs) in 2012 to improve employee training and accuracy while decreasing rework time.  QRTs focus on improving performance on the most common sources of error in the claims processing cycle.  Today, for example, QRTs are focused on the process by which proper physical examinations are ordered; incorrect or insufficient exams previously accounted for 30 percent of VBA’s error rate.  As a result of this focus, VBA has seen a 23 percent improvement in this area.  

•    Process:  Disability Benefits Questionnaires (DBQs) are online forms used by non-VA physicians to submit medical evidence.  Use of DBQs has improved timeliness and accuracy of VHA-provided exams – average processing time improved by 6 days from June 2011 to October 2012 (from 32 to 26 days).

Fully developed claims (FDCs) are critical to reducing “wait time” and “rework.”  FDCs include all DoD service medical and personnel records, including entrance and exit exams, applicable DBQs, any private medical records, and a fully completed claim form.  Today, VBA receives 4.5 percent of claims in fully developed form and completes them in 117 days, while a regular claim takes 262 days to process.  Fulfilling the Veterans Claims Assistance Act, to search for potential evidence, is the greatest portion of the current 262-day process.  The Veterans Benefit Act of 2003 allows Veterans up to 365 days, from the date of VA notice for additional information or evidence, to provide documentation.  Of the 262 days to complete a regular claim, approximately145 days are spent waiting for potential evidence to qualify the application as a fully developed claim.

VBA built new decision-support tools to make our employees more efficient and their decisions more consistent and accurate.  Rules-based calculators provide suggested evaluations for certain conditions using objective data and rules-based functionality.  The Evaluation Builder uses a series of check boxes that are associated with the Veteran’s symptoms to help determine the proper diagnostic code of over 800 codes, as well as the appropriate level of compensation based on the Veteran’s symptoms.  

•    Technology:  The centerpiece of VBA’s transformation plan is VBMS – a new paperless electronic claims processing system that employs rules-based technology to improve decision speed and accuracy.  For our Veterans, VBMS will mean faster, higher-quality, and more consistent decisions on claims.  Our strategy includes active stakeholder participation (Veterans Service Officers, State Departments of Veterans Affairs, County Veterans Service Officers, and Department of Defense) to provide digital electronic files and claims pre-scanned through online claims submission via the eBenefits Web portal.  

•    VBA recently established the Veterans Claims Intake Program (VCIP).  This program will streamline processes for receiving records and data into VBMS and other VBA systems.  Scanning operations and the transfer of Veteran data into VBMS are primary intake capabilities that are managed by VCIP.  As VBMS is deployed to additional regional offices, document scanning becomes increasingly important as the main mechanism for transitioning from paper-based claim folders to the new electronic environment.  

There are other ways that VA is working to eliminate the claims backlog.  VHA has implemented multiple initiatives to expedite timely and efficient delivery of medical evidence needed to process a disability claim by VBA.  As a result, timeliness improved by nearly one-third, from an average of 38 days in January 2011 to 26 days in October 2012.  Recently, VA launched Acceptable Clinical Evidence (ACE), an initiative that allows clinicians to review existing medical evidence and determine whether they can use that evidence to complete a DBQ without requiring the Veteran to report for an in-person examination.  This initiative was developed by both VHA and VBA in a joint effort to provide a Veteran-centric approach for disability examinations.  Use of the ACE process opens the possibility of doing assessments without an in-person examination when there is sufficient information in the record.  

Another way to eliminate the claims backlog is by working closely with the DoD.  The Integrated Disability Evaluation System (IDES) is a collaborative system to make disability evaluations seamless, simple, fast and fair.  If the Service member is found medically unfit for duty, the IDES gives them a proposed VA disability rating before they leave the service.  These ratings are normally based on VA examinations that are conducted using required IDES examination templates.  In FY 2012, IDES participants were notified of VA benefit entitlement in an average of 54 days after discharge.  This reflects an improvement from 67 days in May 2012 to 49 days in September 2012.

    The Benefits Delivery at Discharge (BDD) and Quick Start programs are two other collaborations for Servicemembers to file claims for service-connected disabilities.  This can be done from 180 to 60 days prior to separation or retirement.  BDD claims are accepted at every VA Regional Office and at intake sites on military installations in the U.S., and at two intake site locations overseas.  In 2012, BDD received more than 30,300 claims and completed 24,944 -- a 14% increase over 2011’s productivity (21,657).  During this same period of time Quick Start decreased their rating inventory by over 44 percent.
Expanding Access to Benefits and Services
    VA remains committed to ensuring that Veterans are not only aware of the benefits and services that they are entitled to, but that they are able to access them.  We are improving access to VA services by opening new or improved facilities closer to where Veterans live.  Since 2009, we have added 57 community-based outpatient clinics (CBOCs), for a total of 840 CBOCs through 2013, and increased the number of mobile outpatient clinics and mobile Vet Centers, serving rural Veterans, to 81.  Last August, we opened a state-of-the-art medical center in Las Vegas, the first new VAMC in 17 years. The 2014 medical care budget request includes $799 million to open new and renovated healthcare facilities and includes the authorization request for 28 new and replacement medical leases to increase Veteran access to services.
    Today, access is much more than the ability to walk into a VA medical facility; it also includes technology, and programs, as well as, facilities.  Expanding access includes taking the facility to the Veteran -- be it virtually through telehealth, by sending Mobile Vet Centers to rural areas where services are scarce, or by using social media sites like Facebook, Twitter, and YouTube to connect Veterans to VA benefits and facilities.  Telehealth is a major breakthrough in healthcare delivery in 21st century medicine, and is particularly important for Veterans who live in rural and remote areas.  The 2014 budget requests $460 million for telehealth, an increase of $388 million, or 542 percent, since 2009.  
As more Veterans access our healthcare services, we recognize their unique needs and the needs of their families—many have been affected by multiple, lengthy deployments.  VA provides a comprehensive system of high-quality mental health treatment and services to Veterans.  We are using many tools to recruit and retain our large mental healthcare workforce to better serve Veterans by providing enhanced services, expanded access, longer clinic hours, and increased telemental health capabilities.  In response to increased demand over the last four years, VA has enhanced its capacity to deliver needed mental health services and to improve the system of care so that Veterans can more readily access them.  Since 2006, the number of Veterans receiving specialized mental health treatment has risen each year, from over 927,000 to more than 1.3 million in 2012, partly due to proactive screening.  Outpatient visits have increased from 14 million in 2009 to over 17 million in 2012.  VA believes that mental healthcare must constantly evolve and improve as new knowledge becomes available through research.  

The 2014 budget includes $168.5 million for the Veterans Relationship Management (VRM) initiative, which is fundamentally transforming Veterans’ access to VA benefits and services by empowering VA clients with new self-service tools.  VA has already made major strides under this initiative.  Most recently, in November 2012, VRM added new features to eBenefits, a Web application that allows Veterans to access their VA benefits and submit some claims online.  Veterans can now enroll in and manage their insurance policies, select reserve retirement benefits, and browse the Veterans Benefits Handbook from the eBenefits Website.  With the help of Google mapping services, the update also enables Veterans to find VA representatives in their area and where they are located.  Since its inception in 2009, eBenefits has added more than 45 features allowing Veterans easier, quicker, and more convenient access to their VA benefits and personal information.  

VBA has aggressively promoted eBenefits and the ease of enrolling into the system. We currently have over 2.5 million registered eBenefits users.  Users can check the status of claims or appeals, review VA payment history, obtain military documents, and perform numerous other benefit actions through eBenefits.  The Stakeholder Enterprise Portal (SEP) is a secure Web-based access point for VA’s business partners. This electronic portal provides the ability for VSOs and other external VA business partners to represent Veterans quickly and efficiently.  

VA also continues to increase access to burial services for Veterans and their families through the largest expansion of its national cemetery system since the Civil War.  At present, approximately 90 percent of the Veteran population—about 20 million Veterans—has access to a burial option in a national, state, or tribal Veterans cemetery within 75 miles of their homes.  In 2004, only 75 percent of Veterans had such access.  This dramatic increase is the result of a comprehensive strategic planning process that results in the most efficient use of resources to reach the greatest number of Veterans.

Ending Veteran Homelessness

    The last of our three priority goals is to end homelessness among Veterans in 2015.  Since 2009, we have reduced the estimated number of homeless Veterans by more than 17 percent.  The January 2012 Point-In-Time estimate, the latest available, is 62,619.  We have also created a National Homeless Veterans Registry to track our known homeless and at-risk populations closely to ensure resources end up where they are needed.  In 2012, over 240,000 homeless or at-risk Veterans accessed benefits or services through VA and 96,681 homeless or at –risk Veterans were assessed by VHA’s homeless programs.  Over 31,000 homeless and at-risk Veterans and their families obtained permanent housing through VA specialized homeless programs.

In the 2014 budget, VA is requesting $1.393 billion for programs to assist homeless Veterans, through programs such as Department of Housing and Urban Development-VASupportive Housing (HUD-VASH), Grant and Per Diem, Homeless Registry, and Health Care for Homeless Veterans.  This represents an increase of $41 million, or 3 percent over the 2013 enacted level.  This budget will support our long-range plan to end Veteran homelessness by emphasizing rescue and prevention -- rescue for those who are homeless today, and prevention for those at risk of homelessness.

Our prevention strategy includes close partnerships with some 150 community non-profits through the Supportive Services for Veteran Families (SSVF) program; SSVF grants promote housing stability among homeless and at-risk Veterans and their families. The grants can have an immediate impact, helping lift Veterans out of homelessness or providing aid in emergency situations that put Veterans and their families at risk of homelessness.  In 2012, we awarded $100 million in Supportive Service grants to help Veterans and families avoid life on the streets.  We are currently reviewing proposals for the $300 million in grants we will distribute later this year.  In 2012, SSVF resources directly helped approximately 21,000 Veterans and over 35,000 household members, including nearly 9,000 children.  This year’s grants will help up to 70,000 Veterans and family members avoid homelessness.  The 2014 budget includes $300 million for SSVF.

To increase homeless Veterans’ access to benefits, care, and services, VA established the National Call Center for Homeless Veterans (NCCHV).  The NCCHV provides homeless Veterans and Veterans at-risk for homelessness free, 24/7 access to trained counselors.  The call center is intended to assist homeless Veterans and their families, VA medical centers, federal, state and local partners, community agencies, service providers, and others in the community.  Family members and non-VA providers who call on behalf of homeless Veterans are provided with information on VA homeless programs and services.  In 2012, the National Call Center for Homeless Veterans received 80,558 calls (123 percent increase) and the center made 50,608 referrals to VA medical centers (133 percent increase).

    VA’s Homeless Patient Aligned Care Teams (H-PACTs) program provides a coordinated "medical home" specifically tailored to the needs of homeless Veterans.  The program integrates clinical care with delivery of social services and enhanced access and community coordination.  Implementation of this model is expected to address health disparity and equity issues facing the homeless population.  Expected program outcomes include reduced emergency department use and hospitalizations, improved chronic disease management, and improved "housing readiness" with fewer Veterans returning to homelessness once housed.  

During 2012, 119,878 unique homeless Veterans were served by the Health Care for Homeless Veterans Program (HCHV), an increase of more than 21 percent from 2011.  At more than 135 sites, HCHV offers outreach, exams, treatment, referrals, and case management to Veterans who are homeless and dealing with mental health issues, including substance use.  Initially serving as a mechanism to contract with providers for community-based residential treatment for homeless Veterans, many HCHV programs now serve as the hub for myriad housing and other services that provide VA with a way to outreach and assist homeless Veterans by offering them entry to VA medical care.

VA’s Homeless Veterans Apprenticeship Program was established in 2012--a 1-year paid employment training program for Veterans who are homeless or at risk of homelessness.  This program created paid employment positions as Cemetery Caretakers at five of our 131 national cemeteries.  The initial class of 21 homeless Veterans is simultaneously enrolled in VHA’s Homeless Veterans Supported Employment program.  Apprentices who successfully complete 12 months of competency-based training will be offered permanent full-time employment at a national cemetery.  Successful participants will receive a Certificate of Competency which can also be used to support employment applications in the private sector.  

Another avenue of assistance is through Veterans Treatment Courts, which were developed to avoid unnecessary incarceration of Veterans who have developed mental health problems.  The goal of Veterans Treatment Courts is to divert those with mental health issues and homelessness from the traditional justice system and to give them treatment and tools for rehabilitation and readjustment.  While each Veterans Treatment Court is part of the local community’s justice system, they form close working partnerships with VA and Veterans’ organizations.   As of early 2012 there are 88 Courts.

The Veterans Justice Outreach (VJO) program exists to connect these justice-involved Veterans with the treatment and other services that can help prevent homelessness and facilitate recovery, whether or not they live in a community that has a Veterans Treatment Court.  Each VA Medical Center has at least one designated justice outreach specialist who functions as a link between VA, Veterans, and the local justice system. Although VA cannot treat Veterans while they are incarcerated, these specialists provide outreach, assessment and linkage to VA and community treatment, and other services to both incarcerated Veterans and justice-involved Veterans who have not been incarcerated.

Multi-Year Plan for Medical Care Budget

Under the Veterans Health Care Budget Reform and Transparency Act of 2009, which we are grateful to Congress for passing; VA submits its medical care budget that includes an advance appropriations request in each budget submission.  The legislation requires VA to plan its medical care budget using a multi-year approach.  This policy ensures that VA requirements are reviewed and updated based on the most recent data available and actual program experience.  

The 2014 budget request for VA medical care appropriations is $54.6 billion, an increase of 3.7 percent over the 2013 enacted level of $52.7 billion.  The request is an increase of $157.5 million above the enacted 2014 advance appropriations level.  Based on updated 2014 estimates largely derived from the Enrollee Health Care Projection Model, the requested amount would allow VA to increase funding in programs to eliminate Veteran homelessness; continue implementation of the Caregivers and Veterans Omnibus Health Services Act; fulfill multiple responsibilities under the Affordable Care Act; provide for activation requirements for new or replacement medical facilities; and invest in strategic initiatives to improve the quality and accessibility of VA healthcare programs.  Our multi-year budget plan assumes that VHA will carry over negligible unobligated balances from 2013 into 2014 – consistent with the 2013 budget submitted to Congress.   

The 2015 request for medical care advance appropriations is $55.6 billion, an increase of $1.1 billion, or 1.9 percent, over the 2014 budget request.  Medical care  funding levels for 2015, including funding for activations, non-recurring maintenance, and initiatives, will be revisited during the 2015 budget process, and could be revised to reflect updated information on known funding requirements and unobligated balances.

Medical Care Program

The 2014 budget of $57.7 billion, including collections, provides for healthcare services to treat over 6.5 million unique patients, an increase of 1.3 percent over the 2013 estimate.  Of those unique patients, 4.5 million Veterans are in Priority Groups 1-6, an increase of more than 71,000 or 1.6 percent.  Additionally, VA anticipates treating over 674,000 Veterans from the conflicts in Iraq and Afghanistan, an increase of over 67,000 patients, or 11.1 percent, over the 2013 level.  VA also provides medical care to non-Veterans through programs such the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) and the Spina Bifida Health Care Program; this population is expected to increase by over 17,000 patients, 2.6 percent, during the same time period.  

The 2014 budget proposes to extend the Administration’s current policy to freeze Veterans’ pharmacy co-payments at the 2012 rates, until January 2015.  Under this policy, which will be implemented in a future rulemaking, co-payments will continue at $8 for Veterans in Priority Groups 2 through 6 and at $9 for Priority Groups 7 through 8.  

    The 2014 budget requests $47 million to provide healthcare for Veterans who were potentially exposed to contaminated drinking water at Camp Lejeune as required by the Honoring America’s Veterans and Caring for Camp Lejeune Families Act of 2012, enacted last August.  Since VA began implementation of the law and in January 2013, 1,400 Veterans have contacted us concerning Camp Lejeune. Of these, roughly 1,100 were already enrolled in VA healthcare.  Veterans who are eligible for care under the Camp Lejeune authority, regardless of current enrollment status with VA, will not be charged a co-payment for healthcare related to the 15 illnesses or conditions recognized, nor will a third-party insurance company be billed for these services.  In 2015, VA expects to start treating family members as authorized under the law and has included $25 million for this purpose within the 2015 advance appropriations request.  VA continues a robust outreach campaign to these Veterans and family members while we press forward with implementing this complex new law.

Mental Healthcare and Suicide Prevention

At VA, we have the opportunity and the responsibility to anticipate the needs of returning Veterans.  Mental healthcare at VA is a system of comprehensive treatments and services to meet the individual mental health needs of Veterans.  VA is expanding mental health programs and is integrating mental health services with primary and specialty care to provide better coordinated care for our Veteran patients.  Our 2014 budget provides nearly $7.0 billion for mental healthcare, an increase of $469 million, or 7.2 percent, over 2013.  Since 2009, VA has increased funding for mental health services by 56.9 percent. VA provided mental health services to 1,391,523 patients in 2012, 58,000 more than in 2011.

To serve the growing number of Veterans seeking mental healthcare, VA has deployed significant resources and is increasing the number of staff in support of mental health services.  Consistent with the President’s August 31, 2012 Executive Order, VHA is on target to complete the goal of hiring 1,600 additional mental health clinical providers and 300 administrative support staff by June 30, 2013 to meet the growing demand for mental health services.  In addition, as part of VA’s efforts to implement the Caregivers and Veterans Omnibus Health Services Act of 2010, VA has hired over 100 Peer Specialists in recent months, and is hiring and training nearly 700 more.  Additionally, VA has awarded a contract to the Depression and Bipolar Support Alliance to provide certification training for Peer Specialists.  This peer staff is expected to be hired by December 31, 2013, and will work as members of mental health teams.

In addition to hiring more mental health workers, VA is developing electronic tools to help VA clinicians manage the mental health needs of their patients.  Clinical Reminders give clinicians timely information about patient health maintenance schedules, and the High-Risk Mental Health National Reminder and Flag system allows VA clinicians to flag patients who are at-risk for suicide.  When an at-risk patient does not keep an appointment, Clinical Reminders prompt the clinician to follow-up with the Veteran.

     Since its inception in 2007, the Veterans Crisis Line in Canandaigua, New York, has answered over 725,000 calls and responded to more than 80,000 chats and 5,000 texts from Veterans in need.  In the most serious calls, approximately 26,000 men and women have been rescued from a suicide in progress because of our intervention—the equivalent of two Army divisions.  

    We recently completed a 2012 VA suicide data report, a result of the most comprehensive review of Veteran suicide rates ever undertaken by VA. We are working hard to understand this issue — and VA and DoD have jointly funded a $100 million suicide research project.  We will be better informed about suicides, but while research is ongoing, we are taking immediate action and are not waiting 10 years for final study outcomes.  These actions include Veterans Chat on the Veterans Crisis Line, local Suicide Prevention Coordinators’ for counseling and services, and availability of VA/DoD Suicide Outreach resources.

The Affordable Care Act

    The Affordable Care Act  (ACA)  expands access to coverage, reins in health care costs, and improves the Nation’s health care delivery system.  The Act has important implications for VA.  Beginning in 2014, many uninsured Americans, including Veterans, will have access to quality, affordable health insurance choices through Health Insurance Marketplaces, also known as Exchanges, and may be eligible for premium tax credits and cost-sharing reductions to make coverage more affordable.  The 2014 budget requests $85 million within the Medical Care request and $3.4 million within the Information Technology request to fulfill multiple responsibilities as a provider of Minimum Essential Coverage under the Affordable Care Act, including: (1) providing outreach and communication on ACA to Veterans related to VA health care; (2) reporting to Treasury on individuals who are enrolled in the VA healthcare system; and (3) providing a written statement to each enrolled Veteran about their coverage by January 2015.

Medical Care in Rural Areas

VA remains committed to the delivery of medical care in rural areas of our country.  For that reason, in 2012, we obligated $248 million to support the efforts of the Office of Rural Health to improve access and quality of care for enrolled Veterans who live in rural areas.  Some 3.4 million Veterans enrolled in the VA healthcare system live in rural or highly rural areas of the country; this represents about 41 percent of all enrolled Veterans.  For that reason, VA will continue to emphasize rural health in our budget planning, including addressing the needs of American Indian and Alaska Native (AI/AN) Veterans.  

VA is committed to expanding access to the full range of VA programs to eligible AI/AN Veterans.  Last year, VA signed a Memorandum of Agreement with the Indian Health Service (IHS), through which VA will reimburse IHS for direct care services provided to eligible American Indian and Alaska Native Veterans.  While the national agreement applies only to VA and IHS, it will inform agreements negotiated between the VA and tribal health programs.  

This follows the agreement already in place between VA and IHS whereby nearly 250,000 patients served by IHS have utilized a prescription program that allows IHS pharmacies to use VA’s Consolidated Mail Outpatient Pharmacy (CMOP) to process and mail prescription refills for IHS patients.  By accessing the service, IHS patients can now have their prescriptions mailed to them, in many cases eliminating the need to pick them up at an IHS pharmacy.    

Women Veterans Medical Care

Changing demographics are also driving change at VA.  Today, we have over 2.2 million women Veterans in our country; they are the fastest growing segment of our Veterans’ population.  Since 2009, the number of women Veterans enrolled in VA healthcare increased by almost 22 percent, to 591,500.  However, by 2022 -- less than a decade from now -- their number is projected to spike to almost 2.5 million, and an estimated 900,000 will be enrolled in VA healthcare.  

The 2014 budget requests $422 million, an increase of 134 percent since 2009, for gender-specific medical care for women Veterans. Since 2009, we have invested $25.5 million in improvements to women Veterans’ clinics and opened 19 new ones.  Today, nearly 50 percent of our facilities have comprehensive women’s clinics, and every VA healthcare system has designated women’s health primary care providers, and has a women Veteran’s program manager on staff.

In 2012, VA awarded 32 grants totaling $2 million to VA facilities for projects that will improve emergency healthcare services for women Veterans, expand women’s health education programs for VA staff, and offer telehealth programs to female Veterans in rural areas.  These new projects will improve access and quality of critical healthcare services for women.  This is the largest number of one-year grants VA has ever awarded for enhancing women’s health services.

Medical Research

Medical Research is being supported with $586 million in direct appropriations in 2014, with an additional $1.3 billion in funding support from VA’s medical care program and through Federal and non-Federal grants.  VA Research and Development will support 2,224 projects during 2014.  

Projects funded in 2014 will be focused on supporting development of New Models of Care, identifying or developing new treatments for Gulf War Veterans, improving social reintegration following traumatic brain injury, reducing suicide, evaluating the effectiveness of complementary and alternative medicine, developing blood tests to assist in the diagnosis of post-traumatic stress disorder and mild traumatic brain injury, and advancing genomic medicine.  

The 2014 budget continues support for the Million Veteran Program (MVP), an unprecedented research program that advances the promises of genomic science.  The MVP will establish a database, used only by authorized researchers in a secure manner, to conduct health and wellness studies to determine which genetic variations are associated with particular health issues – potentially helping the health of America’s Veterans and the general public.  MVP recently enrolled its 100,000th volunteer research participant, and by the end of 2013, the goal is to enroll at least 150,000 participants in the program.  
Veterans Benefits Administration

The 2014 budget request of $2.455 billion for VBA, an increase of $294 million in discretionary funds from the 2013 enacted level, is vital to the transformation strategy that drives our performance improvements focused most squarely on the backlog.  

Virtually all 860,000 claims in the VBA inventory, including the 600,000 claims that have been at VA for over 125 days and are considered backlogged, exist only in paper.  Our transition to VBMS and electronic claims processing is a massive and crucial phase in VBA transformation.  VA awarded two VCIP contracts in 2012 to provide document conversion services that will populate the electronic claims folder, or eFolder, in VBMS with images and data extracted from paper and other source material.  Without VCIP, we cannot populate the eFolder on which the VBMS system relies.  The 2014 request for $136 million for our scanning services contracts will ensure that we remain on track to reach this key goal.  In addition, the budget request includes $4.9 million for help desk support for Veterans using the Veterans On-Line Application/eBenefits system.  

VBA projects a beneficiary caseload of 4.6 million in 2014, with more than $70 billion in compensation and pension benefits obligations.  We expect to process 1.2 million compensation claims in 2014, and we are pursuing improvements that will enable us to meet the emerging needs of Veterans and their families.  

Veterans Employment

Under the leadership of President Obama, VA, DoD, the Department of Labor, and the entire Federal government have made Veterans employment one of their highest priorities.  In August 2011, the President announced his comprehensive plan to address this issue and to ensure that all of America’s Veterans have the support they need and deserve when they leave the military, look for a job, and enter the civilian workforce.  He created a new DoD-VA Employment Initiative Task Force that would develop a new training and services delivery model to help strengthen the transition of our Veteran Servicemembers from military to civilian life.  VA has worked closely with other partners in the Task Force to identify its responsibilities and ensure delivery of the President’s vision.  On November 21, 2012, the effective date of the VOW Act, VA began deployment of the enhanced VA benefits briefings under the revised Transition Assistance Program (TAP), called Transition GPS (Goals, Plans, Success).  VA will also provide training for the optional Technical Training Track Curriculum and participate in the Capstone event, which will ensure that separating Servicemembers have the opportunity to verify that they have met Career Readiness Standards and are steered to the resources and benefits available to them as Veterans.  Accordingly, the 2014 budget requests $104 million to support the implementation of Transition GPS and meet VA’s responsibilities under the VOW Act and the President’s Veterans Employment Initiative.  

Veterans Job Corps

In his State of the Union address in 2012, President Obama called for a new Veterans Job Corps initiative to help our returning Veterans find pathways to civilian employment.  The 2014 budget includes $1 billion in mandatory funding to develop a Veterans Job Corps conservation program that will put up to 20,000 Veterans back to work over the next five years protecting and rebuilding America.  Jobs will include park maintenance projects, patrolling public lands, rehabilitating natural and recreational areas, and administrative, technical, and law enforcement-related activities.  Additionally, Veterans will help make a significant dent in the deferred maintenance of our Federal, State, local, and tribal lands including jobs that will repair and rehabilitate trails, roads, levees, recreation facilities and other assets.  The program will serve all Veterans, but will have a particular focus on post-9/11 Veterans.

Post 9-11 and other Education Programs

    Since 2009, VA has provided over $25 billion in Post-9/11 GI Bill benefits to cover the education and training of more than 893,000 Servicemembers, Veterans, family members, and survivors.  We are now working with Student Veterans of America to track graduation and training completion rates.    

    The Post-9/11 GI Bill continues to be a focus of VBA transformation as it implements the Long-Term Solution (LTS).  At the end of February we had approximately 60,000 education claims pending, 70 percent lower than the total claims pending the same time last year.  The average days to process Post-9/11 GI Bill supplemental claims has decreased by 17 days, from 23 days in September 2012 to 6 days in February 2013.  The average time to process initial Post-9/11 GI Bill original education benefit claims in February was 24 days.  

National Cemetery Administration

The 2014 budget includes $250 million in operations and maintenance funding for the National Cemetery Administration (NCA).  As we move forward into the next fiscal year, NCA projects our workload numbers will continue to increase.  For 2014, we anticipate conducting approximately 121,000 interments of Veterans or their family members, maintaining and providing perpetual care for approximately 3.4 million gravesites.  NCA will also maintain 9,000 developed acres and process approximately 345,000 headstone and marker applications.  

Review of National Cemeteries  

For the first time in the 150-year history of national cemeteries, NCA has completed a self-initiated, comprehensive review of the entire inventory of 3.2 million headstones and markers within the 131 national cemeteries and 33 Soldiers’ Lots it maintains.  The information gained was invaluable in validating current operations and ensuring a sustainment plan is in place to enhance our management practices.  The review was part of NCA’s ongoing effort to ensure the full and accurate accounting of remains interred in VA national cemeteries.  Families of those buried in our national shrines can be assured their loved ones will continue to be cared for into perpetuity.

Veterans Employment

NCA continues to maintain its commitment to hiring Veterans. Currently, Veterans comprise over 74 percent of its workforce.  Since 2009, NCA has hired over 400 returning Iraq and Afghanistan Veterans.  In addition, 82 percent of contracts in 2012 were awarded to Veteran-owned and service-disabled Veteran-owned small businesses.  NCA’s committed, Veteran-centric workforce is the main reason it is able to provide a world-class level of customer service.  NCA received the highest score—94 out of 100 possible—in the 2010 American Customer Satisfaction Index (ACSI) sponsored by the University of Michigan.  This was the fourth time NCA participated and the fourth time it received the top rating in the Nation.


NCA continues to leverage its partnerships to increase service for Veterans and their families.  As a complement to the national cemetery system, NCA administers the Veterans Cemetery Grant Service (VCGS).  There are currently 88 operational state and tribal cemeteries in 43 states, Guam, and Saipan, with 6 more under construction.  Since 1978, VCGS has awarded grants totaling more than $500 million to establish, expand, or improve Veterans’ cemeteries.  In 2012, these cemeteries conducted over 31,000 burials for Veterans and family members.
NCA works closely with funeral directors and private cemeteries, two significant stakeholder groups, who assist with the coordination of committal services and interments.  Funeral directors may also help families in applying for headstones, markers, and other memorial benefits.  NCA partners with private cemeteries by furnishing headstones and markers for Veterans’ gravesites in these private cemeteries. In January of this year, NCA announced the availability of a new online funeral directors resource kit that may be used by funeral directors nationwide when helping Veterans and their families make burial arrangements in VA national cemeteries.

Capital Infrastructure

A total of $1.1 billion is requested in 2014 for VA’s major and minor construction programs.  The capital asset budget reflects VA’s commitment to provide safe, secure, sustainable, and accessible facilities for Veterans.  The request also reflects the current fiscal climate and the great challenges VA faces in order to close the gap between our current status and the needs identified in our Strategic Capital Investment Planning (SCIP) process.

Major Construction

The major construction request in 2014 is $342 million for one medical facility project and three National Cemeteries.  The request will fund the completion of a mental health building in Seattle, Washington, to replace the existing, seismically deficient building.  It will also increase access to Veteran burial services by providing a National Cemetery in Central East Florida; Omaha, Nebraska; and Tallahassee, Florida.  

The 2014 budget includes $5 million for NCA for advance planning activities.  VA is in the process of establishing two additional national cemeteries in Western New York and Southern Colorado, according to the burial access policies included in the 2011 budget.  These two new cemeteries, along with the three requested in 2014, will increase access to 550,000 Veterans.  NCA has obligated approximately $16 million to acquire land in 2012 and 2013 for the planned new national cemeteries in Central East Florida; Tallahassee, Florida; and Omaha, Nebraska.  

Minor Construction

In 2014, the minor construction request is $715 million, an increase of 17.8 percent from the 2013 enacted level.  It would provide for constructing, renovating, expanding and improving VA facilities, including planning, assessment of needs, gravesite expansions, site acquisition, and disposition.  VA is placing a funding priority on minor construction projects in 2014 for two reasons.  First, our aging infrastructure requires a focus on maintenance and repair of existing facilities.  Second, the minor construction program can be implemented more quickly than the long-term major construction program to enhance Veterans’ services.

In light of the difficult fiscal outlook for our Nation, it’s time to carefully consider VA’s footprint and our real property portfolio.  In 2012, VA spent approximately $23 million to maintain unneeded buildings.  Achieving significant reduction in unneeded space is a priority for the Administration and VA.  To support this priority, the President has proposed a Civilian Property Realignment Act (CPRA), which would allow agencies like VA to address the competing stakeholder interests, funding issues, and red tape that slows down or prevents the Federal Government from disposing of real estate.  If enacted by Congress, this process would give VA more flexibility to dispose of property and improve the management of its inventory.

Besides presenting VA’s resource requirements to meet our commitment to the Nation’s Veterans, the President’s Budget also requests legislative action that we believe will benefit Veterans.  There are many worthwhile proposals for your consideration, but let me highlight a few.  For improvements to Veterans healthcare, our budget includes a measure to allow VA to provide Veterans with alternatives to long-stay nursing homes, and enhance VA’s ability to provide transportation services to assist Veterans with accessing VA healthcare services.  Our legislative proposasl also request that Congress make numerous improvements to VA’s critical homelessness programs, including allowing an increased focus on homeless Veterans with special needs, including women, those with minor dependents, the chronically mentally ill, and the terminally ill.  

We also are putting forward proposals aimed squarely at the disability claims backlog – such as establishing standard claims application forms—that are reasonable and thoughtful changes that go hand-in-hand with the ongoing transformation and modernization of our disability claims system.  We are offering reforms to our Specially Adaptive Housing program that will remove rules that in some circumstances can arbitrarily limit the benefit.  The budget’s legislative proposals also include ideas for expanding and improving services in our national cemeteries.

Finally, this budget includes provisions that will benefit Veterans and taxpayers by allowing for efficiencies and cost savings in VA’s operations – for example, we are forwarding a proposal that would require that private health plans treat VA as a ‘participating provider’ – preventing those plans from limiting payments or excluding coverage for Veterans’ non-service-connected conditions.  VA merits having this status, and the additional revenue will fund medical care for Veterans.  We are also requesting spending flexibility so that we can more effectively partner with other federal agencies, including DoD, in pursuit of collaborations that will benefit Veterans and Servicemembers and deliver healthcare more efficiently.  


Veterans stand ready to help rebuild the American middle class and return every dollar invested in them by strengthening our Nation.  And we, at VA, will continue to implement the President’s vision of a 21st century VA, worthy of those who, by their service and sacrifice, have kept our Nation free.  Thanks to the President’s leadership and the solid support of Congress, we have made huge strides in our journey to provide all generations of Veterans the best possible care and benefits through improved technology that they earned through their selfless service.  We are committed to continue that journey, even as the numbers of Veterans using VA services increase in the coming years, through the responsible use of the resources provided in the 2014 budget and 2015 advance appropriations requests.  Again, thank you for the opportunity to appear before you today and for your steadfast support of our Nation’s Veterans.