SPEAKERS CONTENTS INSERTS Tables
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DEPARTMENTS OF VETERANS AFFAIRS AND HOUSING AND URBAN DEVELOPMENT, AND INDEPENDENT AGENCIES, APPROPRIATIONS FOR 1999
TUESDAY, MARCH 17, 1998.
DEPARTMENT OF VETERANS AFFAIRS
WITNESSES
TOGO D. WEST, JR., ACTING SECRETARY
KENNETH W. KIZER, MD, M.P.H., UNDER SECRETARY FOR HEALTH
JOSEPH THOMPSON, UNDER SECRETARY FOR BENEFITS
JERRY BOWEN, DIRECTOR, NATIONAL CEMETERY SYSTEM
DENNIS DUFFY, ASSISTANT SECRETARY FOR POLICY AND PLANNING
Opening Remarks
Mr. LEWIS. The Committee will come to order.
We are today going to take up the 1999 budget request for the Department of Veterans Affairs. The VA, this year, is requesting total budget authority of $42.8 billion and 203,849 FTEs for fiscal year 1999; a net increase of $1.5 billion and a decrease of 2,082 FTEs below fiscal year 1998.
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It is important to note right at the beginning that the proposed increase is not discretionary appropriations. It is on the mandatory appropriations side. Mr. Secretary, these hearings will cover a wide range of issues.
The accuracy of the estimate for medical collections, the quality of health care being provided, the shifting of medical care funds so as to achieve a more equitable distribution and resources among the hospitals, the proposed legislation to deny compensation for smoking-related disabilities, the timeliness of processing claims, and the year 2000 problems, just to name a few of the difficulties.
For the Members that may not be aware, the Secretary and I spent some time together on more than one occasion. In terms of this specificly, we spent some time discussing the opportunities that we have this year to lay the foundation for in-depth evaluation; and not just the volume of dollars received by veterans programs over the years, but to examine the quality of the delivery of services and the use of those dollars in terms of those people for whom we suggest we hold the highest priority of regard. Men and women who have made the maximum contribution to the country deserve the best that we can give. That is what these hearings are about and what, indeed, the work of the Congress should be about in this connection.
Before I call upon the Secretary, let me call on my friend, Louis Stokes, for any comments he might have.
Mr. STOKES. Thank you very much, Mr. Chairman.
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I do not have any formal opening statement. I would like to take just a moment to welcome Secretary West before our subcommittee. This is his first appearance here. We certainly welcome him.
I had a brief opportunity to have a courtesy visit from him a couple of weeks ago. I enjoyed that very much. He has a very distinguished career.
I think he is going to do an outstanding job in his capacity as Secretary of this very important agency. We look forward to working with you. We look forward to your testimony this morning.
Thank you, Mr. Chairman.
Mr. LEWIS. Mr. Stokes, thank you.
This is the first occasion that we will have Secretary West before us. I wonder if we should not call upon our other Members, if they have any opening comments. Mr. Frelinghuysen.
Mr. FRELINGHUYSEN. I will save my opening comments for my time.
Mr. LEWIS. All right. Mr. Mollohan.
Mr. MOLLOHAN. I want to thank you, Mr. Chairman. That is very gracious of you. I have nothing more than to congratulate the Secretary and welcome him to the hearing.
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Mr. LEWIS. Mr. Secretary, your entire statement will be included in the record. You can present it all to us or summarize it as you will.
Acting Secretary West's Opening Remarks
Mr. WEST. Thank you, Mr. Chairman.
I will accept your invitation to summarize it briefly since I know you want to get on with the questions.
Mr. Chairman, Mr. Stokes, and Members of this subcommittee, it is a pleasure to appear before you. I know you are aware that I appear as the Acting Secretary of Veterans Affairs. I await confirmation in the other house.
I have been Acting Secretary for about nine weeks. I guess this is my tenth week in office. So, I believe I am a fast read. I hope I am. I am accompanied, however, just in case I am not.
On my left, your right, the Under Secretary who heads the Veterans Health Administration, Dr. Ken Kizer, whom I know you already know. On my right, your left, the Under Secretary who heads the Veterans Benefits Administration, Joe Thompson; both a veteran and a newcomer. A veteran in that he had a distinguished career culminating as head of the New York office of the Administration and a newcomer because he is recently confirmed himself.
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Also, present as well is the head of the other operating part of the Department. Seated just to my left, to your right, the Director of the National Cemetery System, Jerry Bowen. I acknowledge, if I might Mr. Chairman, the fact that the Ranking Member, the distinguished Member from Ohio, has announced his intent to retire at the end of this present term.
I must acknowledge that during 30 years in Washington, he has been an ardent supporter of veterans and also, as I well know from my time as Secretary of the Army, an ardent supporter of our men and women in uniform.
He supported them, their budgets, their needs, and their families. So, to the extent that I am able to speak for all of those constituencies, and for a whole host of others, I would like to say for the record, thank you for your service. To that Ranking Member, we will miss him.
Mr. STOKES. Thank you very much.
Mr. WEST. During my years of service to this country, Mr. Chairman, I had a chance to learn first-hand of the extraordinary contributions that America's men and women in uniform have made.
I have four and a half years of traveling, both with active duty service members and with veterans. In every case, my impressions are the same; these men and women have left home and family to give of themselves for their country.
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As the President's nominee for Secretary of Veterans Affairs and the Acting Secretary, I appreciate this opportunity to work with you on behalf of all of those veterans.
Mr. Chairman and Members of this subcommittee, in the past five years, the Department of Veterans Affairs has, we believe, made significant progress in changing the way we provide service to veterans and their families.
More important than even the fact of change, has been that the effort is to change for the better. I believe that our responsibility in this era of change, the delivery of services, and the benefits to veterans is not just to maintain the quality, but to improve that quality.
I know that is the intent of the colleagues that I have identified already. Much has occurred. The fact is the processing is better today than it was five years ago, but much remains to be done.
We have made improvements in timeliness of claims, but we look today, and you will hear about this from our Under Secretary in charge of the Veterans Benefits Administration, to improve across the board in a number of categories.
This is the fourth year of a massive transformation in the VA health care system. It has resulted in more outpatient care and less inpatient care to include the establishment of more outpatient clinics, and the closing of unused and unneeded hospital beds.
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Mr. Chairman, the President's fiscal year 1999 budget request for the Department of Veterans Affairs will permit us to continue to provide health care to even more veterans. It is our determination that we will provide quality health care; quality that will set the standard across the nation.
We continue to integrate organizational elements within VA; becoming more efficient, more cost effective, and more vigilant in expending taxpayer dollars. As we move to the next millennium, I look forward not only to working with this committee, but I am prepared to expect and even demand of the Department of Veterans Affairs several things.
First, that we improve the timeliness, dependability, and quality of the delivered benefits.
Second, that we continue the transformation of our health care system, emphasizing quality, compassion, and effectiveness.
Thirdly, that we master the challenges of information technology, including the looming issues of Y2K which, and I will go out on a limb here since someone has already made a statement to this effect, I think that the VA is doing very well.
That we assure our employees in this Department a work environment that is conducive to their best efforts in order that they can better serve our veterans. The fact is, Mr. Chairman and Members of this subcommittee, we do our work through the one key tool that is available to us, our employees. They are the mechanism by which we deliver our services to our veterans. They need an environment in which they can realize their greatest potential.
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Finally, we must continue the efforts commenced under my predecessor, Jesse Brown, to more fully integrate the Department's organizational elements. That effort is known as One VA.
Mr. Chairman, Members of this subcommittee, the proposed fiscal year 1999 budget will permit VA to continue to keep America's promise to our veterans while building on previous successes and improving where we have not been as successful as we need to be.
As you pointed out, Mr. Chairman, this year's budget request is $42.8 billion for mandatory and discretionary programs. Within that, the budget will call for $17.7 billion in medical care; $21.9 billion for compensation and pension payments, and $92 million for the National Cemetery System.
Within that, we seek a 10-percent increase in funding for medical research; a 9-percent increase for our National Cemeteries, and a 7-percent increase to administer the Veterans Benefits Program.
If this budget is approved, Mr. Chairman and Members of this subcommittee, we will open 71 new outpatient clinics. We will treat 134,000 more veterans in fiscal year 1999, than we did in 1998. That is a 4-percent increase.
The bottom line is that we expect to provide quality health care to more than 3.4 million unique patients; an increase of 134,000, with a level of funding that supports some 695,000 inpatients at the centers, and 37 million outpatient visits.
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Mr. Chairman, this budget reaffirms our commitment to reach our strategic goals by the year 2002. We continue to strive to reduce the per-patient cost of health care by 30-percent, increase the number of veterans served by 20-percent and to fund 10-percent of our health care budget from non-appropriated sources.
Mr. Chairman, last year, at the request of the Administration, Congress passed legislation that would allow VA to retain all third-party collections. Essential to continuing our progress and meeting our strategic goals is to be able to fund 10-percent of our health care budget from non-appropriated sources.
Essential to that is our proposal for Medicare subvention. This will permit VA to receive reimbursement from Medicare for health services provided to higher income, non-service connected veterans who choose VA health care.
Legislation which will permit VA to conduct a demonstration to validate the feasibility of Medicare subvention is proposed. We will strongly support it.
There are some new initiatives in this budget, Mr. Chairman. There is a smoking cessation program in which we request authorization to provide treatment to any honorably discharged veteran who began smoking in the military. The budget request is $87 million to establish the effort.
We propose to increase the Montgomery-GI Bill education benefits by 20-percent. I understand that this is the largest in the history of the bill. It is a long-awaited increase. It is an increase of $191 million in 1999. The effect is to raise the active duty benefit to more than $500 per month in 1999 for full-time enrollment. The five-year cost, Mr. Chairman, is estimated at $1 billion.
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We are also proposing an increase of $100 million for VA's Readjustment Benefits Account to reimburse the Department of Labor for programs that assist veterans to find employment.
There is funding in this budget, Mr. Chairman and Members of this subcommittee, for four new cemeteries during the next two years. The metropolitan areas of Chicago, Illinois, Dallas, Texas, Saratoga, New York, and Cleveland, Ohio will be served by these cemeteries.
In sum then, we believe this budget is sound. It is balanced and it touches all of the elements of needed service for our veterans and their families.
Mr. Chairman, we believe this budget is realistic. It puts our veterans and their families first, even in an environment in which the President has proposed the first balanced budget in a generation. Our job, Mr. Chairman, mine as the acting head of this Department, is to be a part of the Administration's program, yes, but to keep foremost in our minds and in our plans that we in this Department are here to serve veterans.
We are here to stand up for those who have stood up for America. It is true, Mr. Chairman, we are changing the way we do business. I plan to continue that course charted to ensure that we will have future successes in that respect.
When the President announced my nomination some two months ago, he referred to a comment that he said I had made in a speech at the West Point commencement the first year of my presence as Secretary of the Army.
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In fact, those are not my words, Mr. Chairman and Members of this subcommittee. Those are the words of my father, a high school principal. He said, and I said to those cadets, ''You teach the life you live.''
Our veterans have taught us in this country by their lives of service and sacrifice. You, the Members of this subcommittee, have taught us all something about supporting our veterans.
We are grateful for your support. I look forward to the opportunity to work with you. Thank you.
[The statement of Mr. West follows:]
"The Official Committee record contains additional material here."
Mr. LEWIS. Thank you, Mr. Secretary, for your statement. As I indicated, it will be included in its entirety in the record.
In order to expedite the hearing, Members, while they have their questions they wish to ask in priority, I am sure there will be other questions that will be submitted by them. We would appreciate you and your assistants in responding to those.
MEDICAL CARE COLLECTIONS
First, Mr. Secretary, concern has been expressed over the adequacy of the proposed 1999 budget level for medical care. In part, this results from last year's budget agreement between the Executive and the Legislative Branches which changed the way funds are provided for medical care.
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Instead of increasing the amount of appropriations each year, future year increases were to come from collections as well as from Medicare. What is the collection experience to -Date in 1998?
I am sure you did not anticipate this question, but in the meantime please.
Mr. WEST. I think that our experience, Mr. Chairman, is running roughly the same as our experience a year ago which was in the neighborhood of 20-percent to 21-percent.
I am going to ask Dr. Kizer to correct me on this and to support me on this in a second. What I would say, of course, is that we asked this question of ourselves at an awkward point in the fiscal year. This is March. So, I think we have truly at our hands the results of the first quarter. We are just about to have the second quarter. We will know a little bit more I suspect next month. Let me just ask Dr. Kizer.
Mr. LEWIS. Dr. Kizer, if you would, let me elaborate just a bit on the question then for you. Based on the experience to -Date, what are the chances the VA will collect the $604 million in 1998? The collections in 1997 were a little below the revised 1997 estimate which is somewhat below the original estimate.
Dr. KIZER. I think to answer your specific question I would say the chances are good. At the end of the first quarter, if my memory serves me correctly, we were about 7-percent below the projection which is not altogether surprising at this point in the fiscal year.
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Again, if my memory serves me correctly, our target at that point was about $127 million. I believe we were at $118 million or $119 million in collections at that point in time. There are a number of specific efforts underway to increase the collections and to get us back on target.
I do not anticipate that at the end of the second quarter we will be on target. I am hopeful by the end of the third quarter we will either be back on target, or very close to it, and that we should end the year either there, or very close to it, and possibly exceed the target.
COLLECTIONS SHORTFALL
Mr. LEWIS. The 1999 target is $677 million, a little larger than $98 million. You have explained efforts being made in expectancies. I know that you will keep the Committee informed if we have problems as time goes forward.
Last year there was a great deal of concern that the estimated level of collections from third-party insurers' various co-payments would not materialize. Legislation was enacted to permit the Secretary of the Treasury to provide the difference between the amount collected and the current CBO base line minus $25 million.
The CBO base line was $604 million. The assumption was that $579 million would be available. In the event that collections fall short, what is the amount from which the $25 million is taken?
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Dr. KIZER. That is an adjustment that we would have to make as we move forward. I do not have a specific figure that I could give you at this time.
Mr. LEWIS. So, nobody has done any game planning that essentially says that if we fall short and need $25 million, this is where we would take it from? I would think that some people would be a little anxious about that.
Dr. KIZER. The anxiety is, of course, there as is the expectation that we will arrive on target. At this point in time, while there has been discussion about it, there has not been a concreteness to any scenario planning since the expectation is still that we will arrive on target.
Mr. LEWIS. Is it last year's CBO estimate of $604 million or the current CBO base line of $579 million?
Dr. KIZER. I am sorry?
Mr. WEST. That is the trip wire?
Mr. LEWIS. Yes.
Mr. WEST. That we would be comparing ourselves to in terms of triggering the need for the assistance?
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Mr. LEWIS. Yes.
Mr. WEST. It is the current one.
Mr. LEWIS. The $604 million?
Mr. WEST. Yes.
MEETING 1999 COLLECTIONS ESTIMATES
Mr. LEWIS. Okay. The authorizing legislation mentions using the current CBO base line. The legislation permitting the Secretary of the Treasury to make up any shortfall in collections only applies in fiscal year 1998.
It might be described as an insurance policy. It costs us about $15 million in budget authority and $14 million in outlay. What reassurances can you give us that collections in 1999 will not fall short of the estimate of $677 million?
Last fall, a report by the General Accounting Office concluded that the VA would succeed only if it does a dramatically better job of collecting payments. Do you see specific results that should encourage this committee?
Dr. KIZER. Well, there are a couple of things. One, I just want to go back to something that I should have noted that I did not. We have held a $100 million reserve so that answers your question about where the $25 million would come from.
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My comments were predicated on if it exceeded that, which we do not expect to be the case. In addition, I would note that each of the networks is holding a reserve as well.
We are currently in the process of working with them to clarify where their expectation is as far as where they will end the year to see how much of that reserve which was previously set at 2-percent of their operating budget, how much of that we could release at this point in time, and what their expectation would be as far as continuing to hold a reserve.
So, there is at least two layers that would have to get worked through before that trip wire, in your words, would need to be met.
Mr. LEWIS. Thank you, Dr. Kizer. Mr. Stokes.
PUBLIC'S PERCEPTION OF VA
Mr. STOKES. Thank you, Mr. Chairman.
Mr. Secretary, if you see me slipping in and out of the hearings, it is because I am also on another subcommittee that is meeting next door. I have to go over there and put in an appearance also.
There were reports last week on the results of a study conducted by the Pew Research Center for the people in the press dealing with the public's perception of government. You are probably familiar with this article, I am sure.
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The favor of most government agencies has increased during the past years. However, numbers for the Department of Veterans Affairs are slipping. From 1986 to 1997, the percent of people who view the VA favorably declined from 68 to 59.
The percent who view the VA unfavorably increased from 22-percent to 26-percent. Compared with the survey results from 1984, the decrease is even sharper. In 1984, 77-percent viewed the VA favorably while only 15-percent viewed it unfavorably.
Even more troubling is that people's perception of the VA has declined, while it has increased for most other government agencies. The only agencies which have marked bigger declines in favor are the FBI and the Internal Revenue Service.
I have several questions to pose to you relating to this trend. First, do you agree with the thrust of the numbers that I have just recited which were in this particular article?
Mr. WEST. Well, I do not have any basis to disagree. I accept their results I guess is the best thing to say. That does not keep me from being disappointed by them.
VA CUSTOMER SURVEYS
Mr. STOKES. Does the VA conduct any surveys of its own with reference to the public's perception of the agency?
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Mr. WEST. I am not sure.
Dr. KIZER. Yes, sir. We have for the last three years. We have been conducting customer satisfaction or patient satisfaction surveys. We have been able to show statistically significant increases or improvement in how our patients perceive the care.
I cannot comment on the benefits side of the house since I do not know what they are doing. On the health side of the house, our patients view the services that they receive as better than they were three years ago.
Mr. WEST. For fairness in advertising, the benefit could speak to that as well, sir.
Mr. THOMPSON. We also conduct national surveys, particularly in the Disability Compensation Pension Program. We have run one. We are now in the process of running a second. So, we will have some comparisons between the base line and the current performance.
Mr. STOKES. Just so I understand this gentleman's comments. Are you disagreeing with the particular poll that I have referenced here?
Dr. KIZER. I do not know the methodology or the technique by which they conducted their poll. I actually, when I saw that, did jot down a note to see if we could find out how they did it.
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Certainly my experience as an epidemiologist who has some training in how you conduct these things is that often the results one gets depends a lot on how you set-up your survey instrument; what specific questions you ask; how it is conducted; and the number of persons that you sample. There is a whole host of technical and methodological questions that I would want answered before I knew how to interpret the numbers that they cite.
I do not disagree with the numbers that they cite, but how significant they are or what they really mean is something that one needs to understand the methodology better before you can interpret them.
Mr. WEST. Mr. Stokes, I do not think we disagree.
I think Dr. Kizer's survey would have been among customers of the veterans served in the Veterans Health Administration. I think the survey that Under Secretary Thompson has in mind would similarly have been among customers; veterans served and the benefits.
I think that the Pew Research was done of Americans at large by some sampling that exceeds veterans. Although we have a substantial population of veterans, some 27 million alive in the country today, they are not by any circumstance a larger part of that subset that Pew would have been considering.
Mr. LEWIS. Mr. Stokes, would you yield just a minute?
Mr. STOKES. Certainly. I will be glad to yield, Mr. Chairman.
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Mr. LEWIS. I am sorry to interrupt your thought, but Mr. Secretary, I have spent some time massaging this survey information on the medical side. I have not done so on the benefits side. Under Secretary Thompson, I would be interested in doing that.
If you can speak to it now or provide for the record, but do you have a percentage of satisfaction expressed by the veterans?
Mr. THOMPSON. No, I do not have it, but I can provide it.
Mr. LEWIS. Okay.
[The information follows:]
"The Official Committee record contains additional material here."
CUSTOMER SATISFACTION
Mr. STOKES. Is VA doing anything to increase the customer and public satisfaction with the agency?
Mr. WEST. Yes, sir. I think to some extent what you are hearing from our two Under Secretaries suggests some of the steps. First of all, we, too, are interested to learn what they have said and what our customers say and how they react.
Secondly, we are building in, on both sides of our house, a sense that the final measure of our success is indeed customer satisfaction.
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Mr. STOKES. One of the reasons why we have posed this question to you is because we are wondering if the budget cuts of recent years have been too severe, and if their impact has resulted not only in some decreased trust in the VA, or perhaps even worse?
I am particularly referring to the situation at the Castle Point and Montross Medical Centers in New York with serious questions raised last year to the effect that budget reductions made pursuant to the veterans equitable resource allocation system had resulted in degraded medical care and increased mortality rates.
Partly in response to news media reports of the request from the New York Congressional Delegation, the VA conducted an extensive investigation of the hospitals and prepared a 400- page report. First, I guess it should be noted that the report concluded mortality at two facilities were not higher than expected, however problems were certainly discovered. Are you in position to make any comment with reference to that situation?
Mr. WEST. Surely. I suspect Dr. Kizer will want to make even more. Let me just say this, Mr. Stokes, about that. There is no doubt that the reporting of unfavorable conditions, whether that reporting is entirely accurate or not, will have an affect on the perception of our agency.
That gives us two different responsibilities. One, to make sure those things do not happen. Secondly, to make sure that we report the good news.
Specifically, I would point out that, that very same medical inspector's report I think you are referring to that has been characterized in the press account I thought made it clear that whatever failings the medical inspector found there, they did not relate to the VERA allocation to those hospitals. Dr. Kizer.
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Mr. STOKES. Dr. Kizer.
Dr. KIZER. I would add to what the Secretary has said in a couple of ways. One, going outside of the VA, as you may recall a few years ago, the tragedy of the Dana Farber Cancer Institute and then after that a succession of other medical problems were reported in the press at private institutions.
Some polling after that also showed a dip in public perception of the medical profession and health care after that. I used that example to underscore the point that the Secretary made that when things are reported in the press, regardless of their etiology or genesis, that influences public perception.
I would also underscore the point that he made about the medical inspector and their very extensive review of the situation at those two institutions. They did not find that the problems were due to VERA.
Indeed, there were some longstanding problems. It appears that if anything the integration of those two facilities that the VERA has highlighted and helped facilitate the resolution of those problems.
Mr. WEST. Mr. Stokes, may I just make a comment?
Mr. STOKES. Sure.
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Mr. WEST. I do not wish to be misunderstood as somehow blaming the press for the perceptions of us. I think we are responsible for the perceptions out there. So, I emphasize as well that our job is not just to improve our getting out our story, but to make sure our story is a good one.
That we are delivering and doing the things that we need to do and that we are providing the best. I think that is the real effort we are all undertaking at the Department.
VA'S REQUEST TO OMB FOR MEDICAL CARE
Mr. STOKES. Let me ask you this. The 1998 appropriation of the VA Medical Care Account is $17.057 billion. The estimated medical care costs recovery collections bring the total funding available to $17.7 billion.
For a year that reflects numerous budget increases throughout the government, the 1999 medical care request actually declines to about $17.028 billion or about $30 million less than this year. What was the VA's request to OMB for medical care?
Dr. KIZER. The request was a part of, as I think the Chairman mentioned earlier, there was an agreement reached as a part of the balanced budget agreement last year that we would maintain our request at a certain level. So, that was the request that was put in.
Mr. WEST. I think our request was honored.
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Mr. STOKES. I am sorry?
Mr. WEST. I was just saying that I think our request was honored by OMB. I was not here, but that is my impression.
Mr. LEWIS. For the record, what was that number?
Dr. KIZER. It was $17.027 as I recall.
Mr. STOKES. OMB actually granted your request?
Dr. KIZER. Yes, sir.
Mr. STOKES. Okay. Are you satisfied at the amount then that is in the proposed budget that this will adequately take care of your needs in terms of medical care?
Dr. KIZER. I think the budget request and what is requested for the next several years reflects a shift, if we are successful in not only getting the appropriation, but also achieving our receipts on the Medical Care Collection Fund, and importantly Medicare subvention.
This whole balanced budget agreement was predicated on a number of factors that if all of those come to fruition, which we are still hoping that the Congress will pass the Medicare subvention piece of that, then we are optimistic that we will continue on the course that we are going of treating more veterans, and providing higher quality, and more consistently high quality throughout the system.
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Mr. WEST. I think, Mr. Stokes, we are satisfied with the numbers. For the record, our request to OMB was $17.027 billion. We are satisfied with the number. A part of those numbers are an obligation on us to make sure our collections work, and also to get Medicare subvention.
Mr. STOKES. Thank you very much. Thank you, Mr. Chairman.
MEDICAL CARE FUNDING LEVEL
Mr. LEWIS. Thank you, Mr. Stokes. I might just intervene here. Mr. Stokes, the question you are asking is one that is pressing us all and we will have to focus on it over time.
It is important to note that in 1998, there was $17.057 billion. The MCCF presumption was $688 million. That would bring the total to $17.745 billion, sharing and other reimbursements for $104 million. So, a total of $17.849 billion. We go to 1999, the projected year, to get very specific regarding your question, the appropriation would be $17.852 billion. That would remain the same through, by way of the budget agreement, 2002 each year.
The MCCF presumption is $677 million. That gives us a total of $17.705 billion and other reimbursements are $147 million for a total of $17.852 billion. It is essentially the same as 1998. The cumulative increases over the years between now and 2002 are only slight adjustments upwards.
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If you took in any kind of inflation, it might very well be considered to be flat at best or maybe less than flat. That is why the un-ease on the part of some service organizations.
Mr. STOKES. Right. That was one of the reasons why we posed the question.
Mr. LEWIS. Thank you, Mr. Stokes. Mr. Frelinghuysen.
Mr. FRELINGHUYSEN. Good morning, Mr. Secretary.
Mr. WEST. Good morning, sir.
Mr. FRELINGHUYSEN. Congratulations on your new post.
Mr. WEST. Thank you.
VETERANS EQUITABLE RESOURCE ALLOCATION (VERA)
Mr. FRELINGHUYSEN. All of us hold you in high regard and wish you the best. As my Chairman and other committee Members know, I have for the past three years been more than outspoken about the VERA Plan, both in substance and how it has been presented.
Mr. Secretary, allow me to be blunt. The implementation of the VERA Plan in the northeast has been a disaster. There is now a crisis in confidence among the veterans in the northeast, a good number of whom I represented in northern New Jersey. I know what VERA is about. I agree that efficiencies can be found and that the way of doing business at the VA can be brought up to modern standards without sacrificing the quality of care for our veterans.
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In reality, for the past three years, serious questions have been raised about the extent of what are called efficiencies and at what point they compromise the quality of care for our veterans.
When I and others from the northeast have raised these types of questions, we have received the ultimate in bureaucratic run around. Budget numbers conflict. Actual steps taken to realize cost savings are entirely unclear.
Worst of all, reports of individual cases of substandard care are written off as isolated incidents and somehow unrelated to asset or dollar allocation issues. When the Director of Medical Operations in my own backyard, and I have two VA Hospitals in northern New Jersey, tells me he does not even know what the budget is for his facilities, something is wrong.
The increases are cumulative increases. First, we were told that VISN Three is taking a $148 million cut. Then last year we were told that $112 million has already been cut. Now, the GAO was in my office the other day. They tell me the number is really between $63 million or $73 million, depending on how you count. On top of this, I am told that our VISN actually gave back during fiscal years 1996 and 1997 $20 million back to Washington to the VA.
Then we hear through the media that we are facing additional cuts of $80 million over the $146 million to -Date. Which is it, Mr. Secretary? Is there anyone in the VA that can give us some straight answers, when we are told that those cuts are a result of ''accounting errors.'' That is what had appeared in the New York/New Jersey newspapers.
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Something is wrong to those of us who represent New York and New Jersey. When the numbers never match up, something is wrong. When our own medical directors appears to have no input in their budgets, something is wrong.
I have never heard of a budget that does not start with the particular institution. In this case, it appears that Washington decides and the institutions back in my home state find out after the fact.
Mr. Secretary, by any definition you have your work cut out for you. The veterans in my area, I believe, are losing confidence in the VA. That alone is alarming. The statistics, budget statistics, are arguable because they are so unclear.
After repeated attempts to get a clear picture, it is more confusing than ever. I have actually had to call on the GAO to come in and do a study of what is going on in the northeast; not only a study of the budget numbers, but more importantly than the budget numbers is whether veterans are getting the quality of care that they deserve.
Public perception is everything. What I think the reality is that this VERA system has been very damaging to the northeast. So, I appreciate your hearing me out. I am frustrated. I would like your reaction.
I do not think I am an isolated voice in the wilderness. I work with the so-called stakeholders that everybody holds up as the means for communication with the veterans' community.
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Recently those stakeholders in my area have been left out of the loop too and surprised by information coming out of Washington that relates to the President's new budget submission for the VA.
If I am out of the loop and I serve on the Committee, and the stakeholders in our medical facilities are out of the loop because the people who run the institution do not know what is going on, then we are in some deep trouble.
So, I would like to know your view of what is going on in the northeast and whether you have heard from other Members of Congress on these types of issues.
Mr. WEST. Thank you, Congressman, for the opportunity to respond. I have a sense, I assume you expect that. To my left is someone who would like to respond to some of the details. Let me answer your question directly to me with a little of my ten weeks' worth of wisdom.
The easiest of your questions and comments to answer is the last one. Yes, sir, I have heard from some other Members. Yours is not the only voice. I have heard from the New York Delegation as well.
I think that some of you may well be aware of the letters that have been fairly public. I make a couple of observations. In my comments, I said for the last several years that VA has been on a course of rather basic change in its delivery of health services.
Although I am absolutely certain this will not satisfy you and it is not intended to. It is by way of my opening explanation. Change is not easy. Change is not easy because of its impact on people who feel it.
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It is not easy because of the burdens it puts on us to make sure that when we do it, we do it right. We do it so that people are not left out of the loop. We do it so that our stakeholders do not lose confidence.
We do it so that there is no perception, or more importantly, there is no reality that some section, some group, some place, some part is being unfairly treated or unfavorably penalized.
My brief review says to me that we undertook this course because you told us to. The Congress said, you have got to reorganize the way you do it. VERA is a response to that.
The data, I gather, is not all in on how successful VERA is. I must tell you that my initial impression is that it is well-conceived, well-constructed, and well-intended. The question is in our execution.
I would ask you to remember also that the people who are engaged in this who are trying to work their way through budgets, trying to make explanations, trying to get things to happen the way they should, all have the same intention that you and I do.
That is to serve our veterans, every one of them, everywhere they are located; those in your District, those in the northeast, the absolute best way that VA has within its means.
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My understanding of the way that VERA has been put in place is that where we find we are falling short, we will add in the additional resources. We have that fail safe. So, the question for me to work through is, just where are we failing in that VISN, if indeed failing we are.
Let me add a couple of other things. I have looked at some of the projections and the explanations of what is happening in VISN Three. I have looked at the reports of the allocations.
It actually seems to me that the explanations, that the numbers, have been remarkably consistent. The question of an accounting shortfall or whatever it is, has been a question of the buying power in that VISN as it is affected by inflation, which is not initially calculated into the numbers that we do.
Inflation is an added factor. I am going to ask Dr. Kizer to refer to that as well. I have seen charts which, as I understand it, have indicated all along that the Health Administration has attempted to make clear that here are the numbers, but also here is the additional impact that inflation would have.
The bottom line though is something you said. You said that veterans in your District are losing confidence in VA and the health services. We cannot have that. I will not have that.
I will do whatever is necessary to make sure that every veteran in your District understands what is happening and has confidence. I understand that begins with you and the Delegation.
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Mr. FRELINGHUYSEN. I appreciate that assurance. I know your heart is in the right place. I must say, it gauls me being a veteran. I am on your side. I will be willing to advocate until the cows come home to get you more resources, most particularly for medical accounts.
We in the northeast do not see any of those add-ons for medical care. I understand that there are constituencies in the south and west who feel that they ought to get more of these resources.
When we go to the mat to increase those accounts and we do not see any of that reflected in our veterans hospital budgets, just take that issue. One of the hospitals that I have, and I know my time is about up here, is the largely psychiatric-based.
When I said to Jim Farsetta and to Ken Mizerak up in my area, do you actively advocate knowing you have a specialized population which requires more care and therefore more cost? Do you specifically advocate?
Do you speak up for the northeast, for veterans in our area who have mental illness? I got a very fuzzy non-answer. I mean, this is not a time to resign yourselves from the VISN principles and VERA principles. It is a time to be proactive.
I do not want the men who are representing me in the northeast to be quiet if in fact we are getting the short end of the stick and that is affecting the quality of VERA. I get the feeling that they are not speaking up in the power circles that are represented in this room.
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Mr. WEST. I only smile because I do not think I know a single medical professional, whether doctor or director of a center, who is a tongue-biter. That is not in their instincts. I say this. I know that you and I have great confidence in the talent and capability that has been brought to this by Dr. Kizer and his folks. I know that they have great confidence in that VISN Director Jim Farsetta. He does speak up. We will review our undertaking countless times. We will work with you. We will give explanation-after-explanation. We will work through every one of these issues with you. I do believe going in that the efforts with respect to that VISN have been fair and principled.
That does not change the fact that if you have a concern, if your veterans have a concern, if your people have a concern, then we need to take those seriously.
RETURN OF EXCESS FUNDS BY NETWORK THREE
Mr. FRELINGHUYSEN. Just one last question. It is my understanding, and I put it in my statement because I met with the GAO, that between fiscal years 1996 and 1997, VISN Three turned back $20 million to Headquarters.
I further understand that we were the only VISN to return money. Can you explain to me why this was done?
Mr. WEST. You have now asked me a factual question. I get to ask my Under Secretary for help.
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Mr. FRELINGHUYSEN. Thank you.
Dr. KIZER. They did turn back money. I cannot, at this moment, confirm that it was $20 million or if it was a number slightly higher than that.
Mr. FRELINGHUYSEN. Well, any amount. By any definition $20 million is a lot of money. I had the GAO come in trying to make some sort of sense out of all your budgetary charts. Why would we turn money back if we are short?
Dr. KIZER. Actually, if it would facilitate this discussion at all, Mr. Chairman, I have a couple of charts and tables here that might help inform this discussion.
Mr. LEWIS. I intended to be involved pretty heavily in the budget questions tomorrow. If you would try to respond specifically to him or have somebody help you with it, I would appreciate that.
Dr. KIZER. Thank you.
Mr. FRELINGHUYSEN. Mr. Chairman, I do have some additional questions, but thank you.
Mr. LEWIS. If you cannot be specific regarding him, I suppose that will have to wait too.
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Dr. KIZER. I just do not have all of those figures in my head. So, I would have to verify whether it was 20 or some other different number. It sounded about right.
[The information follows:]
NETWORK RETURN OF EXCESS FUNDS
The network initiated several management efficiency measures in FY 1997. These included actions such as consolidation of labs, dietetics, and procurement functions. With the refocus from inpatient to outpatient care, acute beds were reduced in most of the network facilities. All of these actions resulted in staffing and other savings necessary for operating within future resource levels. Most of these FY 1997 savings were reinvested for network needs. These needs included both equipment and infrastructure improvements for all facilities. Approximately $13 million of these savings were given to Montrose/Castle Point VAMCs. After all FY 1997 bona fide needs had been satisfied, the Network returned $20 million.
The returned funds were placed in the National Reserve Fund (NRF), a contingency account maintained in headquarters and at that point lost their unique identity. During the latter part of FY 1997 almost all the funds that were in the NRF were used to enhance ADP and telecommunications infrastructure of VHA.
Mr. LEWIS. To further his question, does it not seem kind of strange to you that they got money and they are sending it back? That is a pretty straightforward question.
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Dr. KIZER. Obviously, there was no mandate to return the money. If they returned money, it was because they felt they were meeting their needs, and had that to return.
Mr. LEWIS. Well then, let me further extend the question of my colleague. He is very dissatisfied, a reflection of his constituents, with the quality and the level of the service, yet his VISN has returned money.
If they thought that the service was great, it seems to me there is a huge gap between that kind of assumption and what the experience of my colleague, who is a Members of this subcommittee, is expressing.
Dr. KIZER. That is, obviously, the sort of thing we want to work through with Mr. Frelinghuysen. I would note that at least the information that has been provided by the network from the customer satisfaction surveys that have been done is that the patients who were being treated there have expressed a higher satisfaction level than before. Also, the VISN is treating more patients than it has ever treated before.
CUSTOMER SURVEYS
Mr. FRELINGHUYSEN. Can I speak to the issue briefly?
Mr. LEWIS. Yes.
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Mr. FRELINGHUYSEN. Customer satisfaction is somewhat like the Secretary said a few minutes ago. It really depends what you ask people. It is like the customer satisfaction of the stakeholders. Many of the stakeholders work for the VA. So, you can be sure that they will not be publicly dissatisfied.
None of us want to hurt the VA system. We want to work with you to increase it. So, I think it is all good, fine and good, to take customer surveys to make sure that we pay tribute to the heart, the volunteers, who make-up the stakeholder group.
In reality, this is a group that is fearful. My job is to relieve that fear and apprehension. The bottom line, the best way to do it is this whole issue of asset allocation. We are getting the short end of the stick. Thank you, Mr. Chairman.
Mr. LEWIS. Thank you, Mr. Frelinghuysen.
As I indicated, Mr. Secretary, I intend to spend a good deal more time on the budget questions tomorrow, beginning with the Veteran Equitable Resource Allocation System.
The reason why I pointed earlier at what appears to be a freezing of VA medical care between now and the year 2002 is that certainly is a reflection of a piece, a significant piece, of what appears to be a growing problem and concern being expressed by Members of the House, not just this committee.
I expect we are going to hear a lot of it from Members, particularly in the northeast, as we go forward with this legislation. Mr. Mollohan.
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30–20–10
Mr. MOLLOHAN. Mr. Secretary, congratulations and welcome again Mr. West and the other members of your panel and your fine staff at the VA. We appreciate your all's good work. At the same time, we share a lot of the concerns that have been raised by Members in their questioning forum.
We want to understand how you can achieve level medical budgets and continue to deliver high quality health care to veterans. I have a couple of questions following up on the general questions of Mr. Frelinghuysen perhaps.
The formula that you set forth has, as I understand it, basically three assumptions. The first is that you are going to reduce average costs for individual veterans by 30-percent; the cost of delivering care to individual veterans by 30-percent. Is that correct?
Mr. WEST. Yes, that is.
Mr. MOLLOHAN. That you are going to raise 10-percent from the MCCR collections.
Mr. WEST. Yes, from third parties. That would include getting Medicare subvention, sir.
Mr. MOLLOHAN. That in the process, you are going to serve 20-percent more veterans. So, that is your 30/20/10 goal for veterans. Is that correct?
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Mr. WEST. I think that is a fair statement. Would you care to comment, Dr. Kizer?
Dr. KIZER. The only thing I would add is that those three elements are three of ten goals that were laid out for 2002. The others do not deal specifically with fiscal matters and have attracted less attention than what is coming to be known as 30/20/10, sir.
Mr. MOLLOHAN. But these drive the budget considerations, these three, do they not?
Dr. KIZER. They are a part of the budget considerations.
Mr. MOLLOHAN. Well, let us just talk about these that are a part of the budget consideration. What is the basis for those assumptions for each and every one of them?
Dr. KIZER. The 30-percent is an amalgamation, if you will, of experience that has been found elsewhere as far as the ability to reduce expenditures by using clinical practice guidelines and a host of other things.
I should say that in many of those cases where that data comes from, that 30-percent, is reported as anywhere from a 25-percent to a 45-percent reduction in expenditure, which has been achieved in one year as opposed to the five-year strategy that we are employing.
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There are a number of references or items in that regard that I will be happy to share with you, if you would like. The 20-percent increase in users is predicated in part on the historical patterns of increasing utilization, as well as what we thought would be a realistic figure, looking five years out or down the road.
I would note that last year the VA treated more patients than it has ever treated in its history in a year. Then the 10-percent, again, was based on some best projections. If we are able to get these three elements of the non-appropriated funding, which includes CHAMPUS and other sharing agreements that we now have in the Medical Care Collection Fund. The third element would be the Medicare subvention which, would provide a reasonable scenario to project out over five years.
Mr. WEST. I want to add one element to that explanation. I think it is based also on what is reasonably achievable. I think those numbers could have been carried further.
Mr. MOLLOHAN. Okay.
Mr. WEST. I think the efforts at reducing costs could have been made even more stringent.
Mr. MOLLOHAN. I hear you say that. What I am trying to get to is what is the basis? What rigor? What studies? What experts, not including yourselves, have looked at this to come up with these numbers?
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You are using these numbers as a basis for projecting level funding for medical care. You obviously have confidence in the numbers. I am just inviting you to give us the confidence in the numbers.
Frankly, looking at them and obviously not being anywhere near as familiar with how they were developed as you are, it almost appears to be a rule of thumb.
Dr. KIZER. They are not. Again, they are based on an amalgamation of data. We will be happy to share that with you. In the latest issue of the Veterans Health System Quarterly one short note explains some of the basis for this and cites a number of specific literature citations from which this was drawn.
We can add to that if that would be helpful to your understanding. I just do not carry all of those references in my head.
Mr. MOLLOHAN. I would very much like for you to submit to the Committee the basis of the formula, how they were developed, and what kind of studies and computations are underlie them.
[The information follows:]
Offset folios 061 to 062 insert here.
Dr. KIZER. Sure.
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EFFICIENCIES IN MEDICAL CARE
Mr. MOLLOHAN. With regard to efficiencies, if you are going to increase about 20-percent the number of patients, what efficiencies are you going to affect? Let me ask it in the context of this question.
I know that you have had a decrease in FTEs from 1998, according to your budget submission of 183,000 FTEs. Is that the efficiency?
I mean, obviously if you are measuring it by number of employees servicing an increasing number of veterans, I guess that is efficiency. The question is, can you do that? What is the affect on the quality of the health care delivered to veterans.
Mr. WEST. I do not know if Dr. Kizer is going to say this, but I think the number you just gave is the total number of FTEs, not the decrease. We have decrease down to that number. I think the actual decrease is not more than about 25,000 or so. We have gone down to that level.
Mr. MOLLOHAN. According to the fiscal year 1999 budget submissions, FTEs for medical care in fiscal year 1999 will be 180,411.
Dr. KIZER. Right.
Mr. MOLLOHAN. A decrease from 1998—you are right. Thank you.
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Dr. KIZER. There are a number of things obviously that contribute to the ability to treat more patients more cheaply, not the least of which is treating more on an outpatient basis where that is appropriate.
As you may know, in the last three years, we have closed or at least at the end of December, had closed about 43-percent of our acute care beds, reflecting the shift to treating more patients in the outpatient setting.
For example, over the last three years, of the last three fiscal years, the number of outpatient visits had increased by about 6.6 million.
There had been about a 26-percent increase in outpatient visits and about a 29-percent decrease in the number of inpatient beds.
Since one can treat more patients much more cheaply on an outpatient basis there are savings to be realized. We have reinvested those in taking care of more patients.
At the same time, if you use the standard or some of the standard indicators that are used in the private sector to measure quality of care, for example, the Health Plan Employee Data and Information Set (HEDIS) Measures that are promoted by the National Commission on Quality Assurance.
If you look at measures that are comparable between the VA patients and non-VA patients, what you see is that over the last two years, not only has there been a dramatic improvement in those indicators among VA patients, but the average among the VA is uniformly and, in most cases, markedly higher than in non-VA patients.
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So, the quality of care has increased, at the same time that efficiency has increased, as well as the number of patients being treated has increased.
Mr. WEST. May I add, if I might, sir, I do not think it is so inconceivable that we can improve health care while delivering it at less cost. I just came from a place where if you take the overhead down, and that is a part of what was just described by Dr. Kizer, then you will be doing something that has no effect on the actual delivery of the health care. If you can improve the health care as well. All over America, that is what Americans are demanding, is that we deliver excellent health care but at less cost. The fact is it is simply not true, that the best health care is the most expensive health care.
VETERANS HEALTHCARE PATIENT SATISFACTION SURVEYS
Mr. MOLLOHAN. Well, of course, we are reflecting a lot of concerns being expressed out there. Hopefully, they are concerns anticipating a diminution in health care and not experiencing it. We will just see. Who conducted your VA surveys, your opinion surveys, on the quality of health care and satisfaction with it?
Dr. KIZER. Those are conducted by the VA's National Customer Feedback Center using an instrument that was developed by the Picker Institute in Boston. It is a standard instrument that is used in health care across the board.
It reflects a decision to use an instrument that was common in the industry, so that one could compare results in the VA with the results found in the private sector and make what are commonly known as apples-to-apples types of comparisons of the results.
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Mr. MOLLOHAN. Can you make those surveys and methodologies available to the Committee?
Dr. KIZER. Of course.
Mr. MOLLOHAN. So, you will do that automatically based upon just my questioning right here?
Dr. KIZER. We will provide that for the record, sir.
[The information follows:]
VETERANS HEALTHCARE PATIENT SATISFACTION SURVEY
The following attachments provide the 1997 patient satisfaction and opinion surveys for recently discharged inpatients and for ambulatory care.
"The Official Committee record contains additional material here."
Mr. MOLLOHAN. Thank you. Thank you, Mr. Chairman.
Mr. LEWIS. Thank you, Mr. Mollohan. Mr. Price.
PROCESSING COMPENSATION CLAIMS
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Mr. PRICE. Thank you, Mr. Chairman. Mr. West, I, too, want to congratulate you and welcome you and your colleagues here today.
Mr. WEST. Thank you.
Mr. PRICE. I would like to begin by asking you about a matter that I am sure you have heard from other Members about as well. It has to do with the time that it is taking to process compensation claims.
In my region, and perhaps around the country, but it is my region that I know most about because we do receive calls every day from veterans wanting to hear some word from the office in Winston Salem and concerned about the time that it is taking to have these claims reviewed.
North Carolina has more than 700,000 veterans and another 112,000 active duty personnel that are potential customers. At the end of 1996, it took 138 days to process original claims; an average of 138 days.
That seems to me to be a long time. Today, we are told the situation is worse. The process today takes an average of 175 days. The information I have indicates that there are only 100 employees available to process the 14,073 pending claims.
Now, are these numbers typical of what we would see across the country or is there some kind of special problem in North Carolina?
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Mr. WEST. I am going to let Under Secretary Thompson respond in detail. Let me just say a word or two about that, if I may, sir.
We have been on a line at the Department certainly that was my experience coming in that would suggest that 138, I think you mentioned, which is actually down from a high of 213 some years prior, was part of a line heading down towards even better timelines.
That is still our purpose and our objective at this Department: to continue to drive down the time that it takes to process a claim. The fact is that benefits late delivered are benefits that our veterans have been penalized by not receiving.
That is very important to us. At the same time, just as important is making sure we get it right the first time. As we have begun to focus on not having veterans go through numerous steps to finally get a result, I believe that the experience that you have just identified, and I am not happy to say this, is reflective across the system. It does not just identify problems in that office in my hometown.
Let me ask Under Secretary Thompson to respond more fully.
Mr. THOMPSON. What you said is true. The system itself has backed up. We have approximately 10.7-percent more claims pending this year at this point in time than we did last year. The goal we had scheduled originally was to hit 106 days by the end of this year. We will not achieve that goal. Today, nationwide we stand at 153 days.
Mr. LEWIS. Excuse me, Mr. Price. Let me just clarify what you are asking here. Are you asking that the number of days to process a claim?
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Mr. PRICE. Yes, sir.
Mr. THOMPSON. Yes, sir.
Mr. LEWIS. Last year, it was somewhere like 140. It is now 153?
Mr. THOMPSON. That is correct.
Mr. PRICE. In North Carolina, the number has gone from 138 to 175. So, the trend is even more pronounced.
Mr. LEWIS. My veterans are kind of old. I am just wondering how many days can we afford to wait? Excuse me, Mr. Price. It is your time.
Mr. WEST. Well, there is no doubt that, that is way too long, Mr. Chairman.
Mr. THOMPSON. There are several things that I think are important. I think the amount of time that we spent on reviewing and re-reviewing Gulf War claims has come at a price.
We have injected these claims several times into the process. It speaks to the processing speeds for all of our disability compensation. We are also involved in the middle of a major redesign within the Veterans Benefits Administration.
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We traditionally have handled claims the way General Motors would have manufactured forty years ago. It was an assembly line. In order to try to change the dynamics of that system and create one that is more responsive to veterans where they can go in and know who they can talk to, and who can help them, and be able to answer their questions, and do things more quickly, we have begun the process of redesigning work processes at regional offices.
That comes at a cost because we pull people out of production to be trained to move operations around. So, that has added time as well. I think there is a third factor. We have demanded more accurate counts from regional offices.
Some of the performance that has been cited in the past, in fact, was not reflective of what actually took place. So, I say those three things are contributing to the increase. But I will say we will not hit the 106-day mark this year.
VETERANS BENEFITS ADMINISTRATION REORGANIZATION
Mr. PRICE. I am not certain how the reorganizing factor plays out. Is the ultimate purpose of the reorganization to achieve greater efficiency?
Mr. THOMPSON. It is both, greater efficiency and better quality. In the past, the people that veterans spoke to worked in one part of the operation. The people that handled claims worked in another part of the operation. The communications and the way we had for moving information between those systems was not good.
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When we brought veterans in and they either ran the surveys, or ran focus groups, they would tell you very clearly they were unhappy with our ability to answer their questions. We also found that the quality of the work we were producing was not acceptable.
We make too many mistakes in the claims in a rush to get them done versus trying to get them done right the first time. So, in an attempt to completely reorient the system, which has been in place for many decades, it does take some time, resources, and energy. Some of that is being devoted as we speak, including in Winston Salem, during the process of changing their organization; coupled with the fact that they do have a heavy work load there.
Mr. PRICE. Well certainly the aim at improved accuracy and improved quality of service is a worthy aim. You seem to be suggesting that the reorganization that is designed to carry that out exacerbates the problem of delay.
My question is when will that be overcome? When will the pay-off come in efficiency as well as these qualitative standards of service?
Mr. THOMPSON. This does get staggered through several fiscal years, on an office-by-office basis. Within a year of completing the conversion, they should see some real efficiencies and improvements in service.
Over the system, we will stretch this out into the year 2000 at least, so that we do not load up all of the regional offices at one time.
Mr. PRICE. Well, apart from these aggravating factors that you have identified, to what extent are we simply looking at too few people, at a lack of resources? Do we have long term problems here that this subcommittee needs to address? What are the underlying factors here that have prevented this progress that you have been wanting to make from occurring?
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Mr. WEST. Mr. Price, let me just say, I do not want to get in the way of the expert here. So, I will say this and then step aside. It may be too early to say. The fact is that this effort to reorganize has just started. It clipped what appeared to be the progress and pushing down on the numbers right then.
The fact is that I think you are right in your suspicions. The things that to a ten-week expert drive down the time it takes to process claims, are the things that would appear to you and me are common sense.
Training; I think that is an organizational problem. As VBA prepares its employees to be responsible for the whole process, that takes training. When people are being trained, they cannot also process claims, temporarily increasing processing time in return for long term benefits.
Secondly, taking advantage of technology. Lord knows we should be able to do that in this enlightened time in our country's life. And finally, resources, numbers of people that you put into it.
I think all of that has to be looked at as we make this effort to re-wicker the way we are doing business in those centers. I suspect that we will know more as he works his way through it.
IMPROVEMENTS IN PROCESSING CLAIMS
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Mr. PRICE. Well now, you do, as I understand it, have in this proposed budget $22.6 million targeted to produce improvements in processing claims. I gather that is qualitative improvements and also improvements in the turn around time.
How is this money going to be used? When can we expect results? Can we have assurance that this request has been carefully considered and will in fact produce the results you want?
Mr. THOMPSON. We believe it will produce the results. The difficulty is that there is no slack in the system. The people that are being retrained, learning new roles and responsibilities, the ones that interact with the veterans are the same ones that produce the work. When we bring them off-line to train, there is that loss of productivity at that point in time. The second issue facing us within VBA right now is the amount of training it takes to get people on-line to do the most difficult decisions.
For a disability rating specialist, it takes two years of training at a minimum, after having mastered claims processing, which usually takes several years itself. So, those are the things that face us.
We will use that $22 million to bring about this change in the regional offices. Some of it is for infrastructure. Some of it is for training. Some of it is for technology. The reality is, is that we are operating at capacity right now.
FAREWELLS TO CONGRESSMAN STOKES
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Mr. PRICE. Thank you. Thank you, Mr. Chairman.
If I might, now that Mr. Stokes has returned, could I just take one further minute?
Mr. LEWIS. Go right ahead.
Mr. PRICE. In Secretary West's presence, I want to thank the Department and to thank the Chairman and Mr. Stokes for the cooperative effort we have had to put this veterans center in Raleigh after many years of struggle to get the center established, to get this center operating, and offering mental health services to veterans so effectively.
We really do appreciate that support. Mr. Stokes, when he was Chairman of this committee, took a trip to Raleigh and saw the need first-hand. He helped us write into an appropriations bill a few years ago a directive that, that center be established. With Mr. Stokes' retirement coming this year, I know the folks in Cleveland are going to miss his presence here, but I also want him and the Committee to know that the veterans in Raleigh, North Carolina owe him a debt of gratitude as well.
So, I am glad you came back in, Mr. Stokes, because I did want to express that, and of course to thank the Department for their continuing efforts in Raleigh and in these veterans counseling centers all over the country. I think it is an important vital arm of the health care that you proved. Thank you, Mr. Chairman.
Mr. STOKES. Thank you very much.
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Mr. LEWIS. Thank you, Mr. Price. Mr. Walsh.
VETERANS EQUITABLE RESOURCE ALLOCATIONS (VERA)
Mr. WALSH. Thank you, Mr. Chairman. Mr. Secretary, welcome and congratulations on your appointment. I expect you will be appointed.
I have two questions. One, I would like to follow on and associate myself with the remarks of Mr. Frelinghuysen. I think he put our concerns about as well as they can be put. New York State in this bureau process has really, we feel, our veterans feel, we Representatives feel, been hurt by the reduction in the support for our hospitals.
The estimates are as high as $266 million. Your predecessor, Secretary Brown, pledged that VERA would not result in any negative care to any veteran in the country. It was a relatively bold statement in light of the reductions that we have talked about; the expanded length of processing applications, and so forth.
Realistically, how can this magnitude of reduction be achieved without negatively impacting veterans' care or without significant reductions to VA services in New York State? What actions are you taking to address specifically the legitimate concerns of New York veterans?
Mr. WEST. I will let Dr. Kizer answer in greater detail, but let me just say again. Secretary Jesse Brown's statement may have been bold, but it is absolutely on point. There is no way that Veterans Affairs, this Department, can ever back away from that. There is no way this country can back away from that.
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We cannot allow the quality or the delivery of our health services to our veterans, or any of our benefits as far as veterans, take a step backwards.
If we find out that what we are doing under VERA is having that affect in an area, I believe the Department is already on record as committing itself to go and look at that and make that adjustment there.
I think that we are still sorting out whether the fact that there is being some negative impact on the delivery of health services in that VISN and in New York is in fact a true fact.
There is no debate over whether if it is true, it is undesirable. We would agree with you. I believe that we all believe that at this point, we are still able to provide insurances that we are delivering quality health care to veterans; I will bet to even more veterans than we had before in that VISN.
We have always retained, and even I know this in my ten weeks, the guarantee that if we find that there is a deleterious effect there, we will go in and deal with that. Now, I may have said too much. Let me let Dr. Kizer speak.
Mr. WALSH. Thank you. I appreciate your comments. I look forward to hearing from Dr. Kizer. My veterans advisory and other veterans organizations I am sure will hear your words. They will hold you and this subcommittee to those words and make sure that we maintain that high level, that high standard of care.
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Mr. WEST. Sir, that VISN is getting a lot of attention from us. I have been here for ten weeks. That is the only VISN I have been to twice already.
Dr. KIZER. I would just underscore what the Secretary has said that if we find methodologically or otherwise the ways to improve VERA, we certainly are committed to do that. I would also note that while a great deal of attention, both this morning and otherwise, has been focused on the reductions that are occurring in Network Three, it is probably worthwhile to also note that as far as full and complete information that when VERA is fully implemented, veterans in New York will still receive 27-percent more per patient than the average elsewhere in the system.
Indeed, I was afraid Mr. Price was going to ask me why the veterans in North Carolina will receive 40-percent less than those in New York when VERA is fully implemented.
Mr. LEWIS. Do you want to revise next time, Mr. Price?
Mr. WALSH. If I could just comment on that statement. There is a feeling that the people who are of retirement age and are veterans, who have the ability to go south from the New York winters. They do it.
North Carolina is one of our favorite places to visit, as is Florida, Georgia, and so forth. The people who are real sick, just cannot leave. That is one of the reasons their costs are so high.
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Mr. WALSH. I think just to probably summarize that when VERA is fully implemented, the amount that is allocated will address all of the things that can be explained, all of what you are talking about.
That is, indeed, why the veteran users in New York will have a 27-percent higher expenditure than veterans elsewhere in the country. Those are things that we can explain. The VERA accounts for that. The things that we cannot explain are really what VERA is targeted at.
Mr. WALSH. Would you explain how you got from 27-percent to 50-percent higher? If you take the veterans in Phoenix in Network 18, when VERA is fully implemented, their averaged expenditure will be about $3,800 per person versus New York where it will be $5,700.
Mr. WALSH. There is anecdotal information that you cannot compare costs between the two. I think that certainly our VA in Syracuse has done a terrific job of getting costs down. I think good management goes a long way. I would suggest the model that Phil Thomas has developed there to any of the hospitals.
Still in all, the cost of living is much higher in New York. As I said, we have older, sicker veterans who just cannot get away. That is where they are going to be. So, there are some problems unique to the northeast that I think mitigate for those higher costs.
Dr. KIZER. I think that is what is reflected in VERA. The fact that New York does get a higher expenditure than any other place in the country and that is a reflection of those costs.
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MEDICARE SUBVENTION DEMONSTRATION PROGRAM
Mr. WALSH. Let me just ask along another vein on Medicare application subvention. Many veterans advocates have suggested that veterans' should be reimbursed for non-service connected care that the Veterans Administration provides to veterans who are also covered by Medicare.
This concept is referred to as Medicare subvention, would transfer funds from Medicare to the VA to cover the cost of the VA services to an existing case load of patients who are also covered by Medicare.
Critics of Medicare subvention have argued that this would lead to an increase in federal spending authority. Proponents feel that savings could be achieved because the Department of Veterans Affairs could provide veterans with that care less expensively than under Medicare, enabling the VA to employ under-utilized capacity in many of their facilities.
I know you support a Medicare subvention demonstration program. Can you comment about the feasibility of implementing a Medicare subvention program and address the cost implications of this and its impact on VA medical care and the VA medical care budget?
Dr. KIZER. Well, what you have said, does indeed reflect our thinking. That one, from a philosophical point of view, it is somewhat ironic that the only people in this country who are discriminated against in their ability to use their Medicare benefit are veterans. It is an irony that is pretty hard to explain.
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Mr. WALSH. I have not be able to explain it too.
Dr. KIZER. We would hope that the Congress would see fit to correct that problem this year. From a pragmatic or a programmatic point of view, again, we agree with your comments and those of your constituents that the VA can provide care that is not only less expensive, but also higher quality throughout the system.
Just to put that in some perspective, under VERA, for about 96-percent of our patients, the average expenditure would be about $2,600 or $2,700 per year. Now, if you compare that basic care cost with the Medicare which is running somewhere between $5,600 and $5,700 under a managed care HMO model, you can see that there is room there to provide not only the Medicare scope of benefits, but an expanded scope of benefits for less cost.
That is why we are agreeable in the statute or in the potentially authorizing statute to accept a lower rate of reimbursement than would be provided to private Medicare providers.
Mr. WALSH. Mr. Chairman, I do not have any questions at this point, but I may submit for the record, if it will be all right.
Mr. LEWIS. Fine, Mr. Walsh.
I just want to interpose this. A statement was made that the only group in this country that might be discriminated against for the Medicare availability are veterans.
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For the record, it should be noted that if a veteran were to choose to use Medicare services, he, like any other citizen, can go to the marketplace and get those services.
There are some people who would suggest that the veteran might be better off going somewhere else and using that other option. So, I do not want it to be suggested that we are suggesting against veterans here.
By way of this, just because the Department of Veterans Affairs provides government medical care does not necessarily mean that a veteran would not have other options under Medicare.
Mr. WEST. Well, I guess the point, Mr. Chairman, is that the veteran does not have complete freedom of choice. A veteran could not go and use that in a VA hospital where the veteran may feel more comfortable, where the hospital bears his name ''Veterans.''
Mr. LEWIS. Be very careful, Mr. Secretary. I may be suggesting a lot more if we want to carry this conversation on further.
Mr. WEST. I accept your caution.
Mr. LEWIS. To the Gentle Lady who is the recipient of all of these veterans' activities from New Jersey and New York, and otherwise the Gentle Lady from Florida.
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VETERANS—SPECIFIC CENSUS DATA
Ms. MEEK. Thank you, Mr. Chairman. I am wearing my set pattern, green today. So, I am in a fairly good mood.
Welcome, Mr. Secretary and members of your group. I have concerns about what your Department is thinking in terms of veterans-specific census data. In that a lot of the problems that we are having now came from inaccurate census data. I am just wondering if the Department is in any mode of predictability in terms of census data. Will you be involved with the Census Bureau in this regard?
Mr. WEST. Your question takes me by surprise. I do not know what our interface is with respect to that data. Someone from my staff is here, Assistant Secretary Duffy. May I offer him to respond?
Ms. MEEK. Thank you, Mr. Secretary.
Mr. WEST. Mr. Chairman, could he answer?
Ms. MEEK. My rationale for that, Mr. Secretary, is that in the past the VA has not been very good in extrapolating these data and using it, in terms of the size of veterans' populations.
In the 1990 census data in Florida, we were about 10-percent low. In 1980, we were about 5-percent low. So, I am just wondering whether or not I would like to urge the Bureau to get a handle on this to be sure that there is more accuracy.
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If you do that, you will be doing better than the government. I hope that you would get a handle on this. Thank you.
Mr. WEST. Dennis Duffy is Assistant Secretary of the Department of Veterans Affairs. Can you add something?
Mr. DUFFY. Congresswoman Meek, we do in fact interface with the Bureau of the Census. Members of my staff and the Office Policy and Planning who are professional demographers work with them in ensuring that indeed veterans are one of the subsets identified in the population and looked at in the decennial census.
Indeed my staff at the present time is in the process of updating the estimates and projections from the 1990 census. Every couple of years we try to refine our estimates of the number of veterans located in various states and counties throughout the nation and include in those projections and estimates such factors as migration, which has a huge impact on Florida.
It is my understanding that our projections are within approximately one-percent, plus or minus, of what the actual numbers are. That is based on the best calculations that we have available to us.
Ms. MEEK. Thank you. That leads me to think that no matter how magnanimous you may be in your budget, if the people are there, if the veterans are there, you should have the facility to do many of the things that we would like to see you do.
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So, it is extremely important that, that count is accurate so that you would not have an under-count in the veterans because that means lack of funding for the resources. Thank you so much. I will go on with my questions.
The main concern is your having the ability to extrapolate those figures and being sure that your contact with the Census is good and an accurate one.
MEDICAL AND PROSTHETIC RESEARCH
My second question has to do with research. I asked about this the last time you came to the hearing. I am so concerned about VA research in that over the years, anyone as old as I am would know that the Department of Veterans Affairs had a propensity for doing excellent research.
We have seen perhaps a diminution of that in recent years. I would like to ask you, just what plans do you have for good medical research? I think it came to my attention more persistently with the Gulf War kind of problem.
I would like to feel a little bit more strongly about the kinds of research you are doing. I notice your budget request asks for an increase in that particular area. Would you comment on that?
Mr. WEST. You are correct. Our budget does ask, I think for a 10-percent increase in research funding. We are glad about that. I am going to ask Dr. Kizer to talk about our research program.
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Ms. MEEK. All right. Thank you.
Dr. KIZER. I think what I would like to do is perhaps provide some information for the record.
[The information follows:]
RESEARCH BEING CONDUCTED BY VA DUE TO INCREASES IN FUNDING
Of the total increase of $28 million, $9 million is for current services. The additional $19 million will allow the start of three major new research initiatives that exploit VA's unique assets in clinical research, including: 1) outcomes research; 2) rehabilitation research; and 3) large scale cooperative studies of new therapies. These areas capitalize on our focus within a large integrated health care system. The first of the three initiatives includes VA's new outcomes research initiative on quality of care—the Quality Enhancement Research Initiative (QUERI) which establishes unprecedented collaboration among research, patient care, policy and performance, and informatics. Presumptive target conditions for this initiative include such prevalent conditions as prostate disease including cancer, coronary heart disease, heart failure, diabetes, mental illness such as depression and schizophrenia, cerebrovascular disease, AIDS and chronic spinal cord injury. This initiative will cost approximately $9 million. Secondly, we propose to invest an additional $2 million on Rehabilitation Research initiatives, especially in the areas of vision and hearing, aging with a disability and prosthetics. Also, we propose to add a new research center of excellence in Acute Brain Injury. Thirdly, in the area of large scale clinical trials we plan to initiate major new cooperative studies, costing $8 million, on Parkinson's Disease—$5 million will be devoted to research focused on the evaluation of surgical treatments (pallidotomy) and $3 million will be focused on diagnostic Single Positron Emission Computed Tomography (SPECT) imaging studies. In all these areas, no other federally supported clinical or research entity can initiate or complete such critical and ambitious research activities on behalf of America's veterans.
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Dr. KIZER. Actually, the last three years provide a very good story as far as our ability to increase the number of projects that are funded and increase the number of investigators that are being funded, increase the number of collaborative studies that are being done to establish some new centers and to partner with non-VA entities.
Since there are numbers in that regard, I would hazard to cite all of those at this point. So, I would like to provide that for the record. I would only note that I think as you have so generously commented that the VA has an excellent and indeed a very stellar history of producing research that not only benefits veterans, but benefits everybody in the nation.
I think in the last three years, we have built on that significantly. I know with the increase in funding that is proposed, we will do even a better job.
VERA ALLOCATION IN FLORIDA
Ms. MEEK. Thank you. The VA is extremely important to my State. I am from Florida. From 1980 to 1990, the census data showed that 47-percent of all veterans relocated to another state during the decade.
In that decade, they moved to Florida. They moved there and they remained there. The net gain of veterans to Florida in the last decade alone, was about 349,000 people, from my own figures, was greater than the overall veterans population in 22 states. Florida is the home of the nation's second largest population, other than my Chairman's state of California.
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We are home to that many veterans. These are veterans that come into Florida's programs and they remain there. The only areas where I have had complaints had to do, number one, with the slowness of claims and, of course, all of the other Members mentioned that.
My second reason for mentioning these data is to say to you that when you begin to manage the funding that this committee will give you in VERA, that is why VERA was initiated in the first place, so you could use these data as a basis for allocating funds.
I am sure you must have some other things that you can fold in. We used to call those things equalizers in certain formulas that you can help the other areas. My main statement is do not forget the basic figures.
The statistics are there. Of course, you certainly want equal treatment, as well as you can, of all the other veterans. So, I would implore you to do the same thing as you have always done and make sure that you follow the regulatory and the statutory effects of VERA.
Mr. WEST. We will. Certainly, we realize the importance of what you say. I think you would agree with us that every single Veteran is important to us.
NATIONAL CEMETERY SYSTEM
Ms. MEEK. Yes. My last question has to do with cemeteries. I said that because that will be the last one that lets you down. I understand that our budget—I am so comical at times.
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You need a little comic relief on this committee, I think. Your budget supports the opening of four new cemeteries during the next two years, more than any time since the end of the Civil War. Can you tell me how these new cemeteries will be financed; both for construction and operations?
Mr. WEST. We have them in the budget.
Ms. MEEK. You put them in the budget. That is right.
Mr. WEST. I am going to let Jerry Bowen who is the Director of the National Cemetery System be more specific on that question.
Ms. MEEK. Thank you.
Mr. LEWIS. Mr. Bowen.
Mr. BOWEN. Yes, most of the increase in our budget of 9-percent will be directed towards bringing on-line four additional cemeteries before the year 2000. So, we are planning for that. We also have under way a $6 million construction project to expand the Florida National Cemetery at Bushnell.
We also have $6 million in the 1999 budget request for the construction of a columbarium for the burial of cremated remains at Ft. Rosecrans National Cemetery in California.
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MEMORIAL PARK IN FLORIDA
Ms. MEEK. All right. I asked that question to lead to my last question. It has to do with the fact that many of the veterans in south Florida say to me that they would certainly like to be buried close to home in south Florida.
Is there any chance that there maybe somewhere between now and, well I do not know, I will just say agamemnon, a national cemetery coming to south Florida?
Mr. BOWEN. Yes. In 1987, Congress directed the VA to do a study to identify the ten areas of the country that were in most need of a new national cemetery. That was strictly based on veteran demographics; the number of veterans that would live within 75 miles of a particular site.
One of those ten areas was Miami. We encountered some problems in finding suitable land in and around Miami. Number one, we like to go for high ground for our cemeteries, and the high water table in that area is a problem.
Second, finding a sufficient number of acres that are available for development is also a problem. The cost would be prohibitive due to the topography of the land and the water table as I mentioned.
So, what we are going to explore now, because the cremation rate in our national cemeteries has been rising consistently and is now approaching 30-percent, is building a memorial park for the burial of cremation remains only. Thus we would not have casket burials available in and around Miami.
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However, we still would have casket burials at Florida National Cemetery in Bushnell. So, this would be an additional burial option that the veterans would have available to them.
Ms. MEEK. Thank you. Would you, for the record, keep me apprised of how that is going in terms of your research that would validate you are looking for the type of crematorium or memorial park that you are interested in?
Mr. BOWEN. We would be glad to do that.
[The information follows:]
NEW NATIONAL CEMETERY INITIATIVES FOR THE MIAMI/FORT LAUDERDALE AREA
Miami/Fort Lauderdale was one of the locations documented in 1987 and 1994 Reports to Congress identifying large veteran population areas not served by a national or state veterans cemetery. In evaluating the feasibility of establishing a national cemetery in the area, a need of at least 200 acres was identified and the region was canvassed for appropriate sites. The five best sites were analyzed for environmental and gravesite development feasibility. In general, it was found that due to the high water table poor soils and poor drainage, construction of a traditional cemetery with casketed gravesites would be very difficult, at best. Those sites which offered the best conditions would be very expensive to develop. With the experience in recent years of a significant increase in the number of cremation burials, the National Cemetery System will evaluate the potential establishment of a cremation only cemetery in the Miami/Fort Lauderdale area as part of its strategic planning process. This would likely involve the construction of columbariums only, therefore requiring much less acreage.
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Ms. MEEK. Thank you, sir. Thank you, Mr. Chairman.
Mr. LEWIS. Thank you, Ms. Meek.
TOBACCO-RELATED LEGISLATIVE PROPOSAL
Mr. Secretary, you may have noted that Ms. Meek has a unique capability to bring us very close to the rough.
The 1999 budget assumes $17 billion saved over five years, if legislation denying compensation for certain smoking related disabilities is enacted. Similar legislation was proposed last year.
For the benefit of those who may not be familiar with this matter, would someone briefly explain how we have come to be in the situation we now find ourselves in regard to the payment of compensation for certain smoking-related disabilities?
Mr. WEST. I will make a brief effort, Mr. Chairman. I certainly have enough experts with me to catch me when I am wrong.
Until quite recently, compensation for a disability which did not manifest itself in service and for which the only service connection was tobacco use while in service, did not exist.
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We did not provide compensation for a smoking-related disability, nor did we provide health care as if it were service connected. Two decisions by the General Counsel; one a few years ago and one much more recently, I think in 1997, have changed that. If you would like to hear more from him on their rationale, I see that he is here.
Essentially, the General Counsel's opinions left us with this position: if a veteran could establish that he or she had smoked while on active duty, and then developed a disability from smoking, that the veteran had demonstrated sufficient service connection to obligate us to pay compensation for that disability.
The legislation to which you refer simply negates that conclusion and says that we will not make that compensation. It also affects an obligation to provide health care that would have flowed from such a presumption, of service connection.
Mr. LEWIS. Mr. Secretary, do you support this legislation?
Mr. WEST. I do. The fact is you referred to the savings over five years. I think that is a savings of over five years.
Mr. LEWIS. I understand the savings, Mr. Secretary.
Mr. WEST. Okay.
Mr. LEWIS. I asked if you support it. Let me ask further, do you think such a legislative proposal is fair to our veterans?
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Mr. WEST. I think so. I was about to say that as best we can determine, there would be a number of veterans affected by this.
Mr. LEWIS. Can you imagine some Philadelphia lawyer arguing that this 17-year-old seeing this delightful Camel pack next to his C rations recalled years later was, by way of imagination, tempted to smoke? I can—anyway.
Mr. WEST. That is at least one of the failings of such a broad brush approach as is forced on the Department by our legal interpretation. We are talking about folks from World War II who may or may not have had the reaction you have described.
Today's young 17 or 18-year-old who goes in with full awareness of all the programs, of all the advertising, of all of the statements from medical professionals that say smoking can kill you, indeed, smoking mostly likely will kill you and it will kill those around you too.
My sense is that, that is more than the American public is prepared to have its government do. It is very important to us to maintain the confidence in our system of compensation that does not flow from such a broad approach as that.
PROCESSING TOBACCO-RELATED CLAIMS
Mr. LEWIS. I must say, Mr. Secretary, and one could dwell on this a lot. I do note in the President's budget which is, of course, his submission of a balanced budget there is a nice non-specified off-set from these savings of somewhere between $15 billion and $17 billion for other veterans programs. I am not a smoker myself, but I scratch my head at that. What is the estimated number of claims that would be filed over a five-year period if the proposed legislation is not enacted?
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Mr. WEST. Well, I think if we are looking at something that assumes that—I think this is all very iffy. We have had a very small 6,000 or 7,000 claims so far. I think those have all been in the environment in which there has been an assumption that we are just not going to be granting them.
Now, with hearings and all of the publicity, I do not know how many claims might fall in. I assume right now that the estimate that assumes that savings of $17 million assumes about half a million, 500,000 claims over a five-year period.
Mr. LEWIS. I have some questions along those lines, but I think I will pass them for the moment. There is an anticipated increase claim in connection with this. How much time would be needed to process original compensation claims increase, to how many days, if the proposed tobacco-related legislation is not enacted?
Mr. WEST. Do you mean how would our average number of days in which the process claims balloon?
Mr. LEWIS. Yes.
Mr. WEST. Like if we assume it is at 150 now, where do we go to?
Mr. LEWIS. Yes.
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Mr. WEST. I do not know. Do you?
Mr. THOMPSON. No. It would be driven strictly by the number that came in the door. We are operating at capacity right now. Tobacco claims would be among the most complex. It will contribute significantly if we receive somewhere on the order of 50,000 to 60,000 claims next year. It would significantly increase, perhaps up to a fourth of the total, the amount of time it takes to do a claim.
Mr. LEWIS. Although this, from my perspective, has to relate to what it will cost and how many people are involved. So, would $30 million or so and 500 FTE be in the ballpark if the processes ceases to handle this expansion?
Mr. WEST. I will bet that is not at all out of the question, sir. Certainly if you use the assumptions that 500,000 claims and what maybe 6 FTE per thousand or something like that, that sounds like that would be very close to a ballpark in an environment in which we really cannot tell what the claims experience will be.
Mr. THOMPSON. Mr. Chairman, if I could add one thing to what the Secretary said. The important consideration is it is not for us. It is not just a staffing issue should the legislation not pass. It is a training issue as well. We need significant lead time.
Mr. LEWIS. Yes. I had asked the question, how much additional administrative money, as well as FTEs, would the benefit program need in 1999 to process this?
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Mr. THOMPSON. I guess what I am saying is even with the additional monies, it would still delay claims processing. We would not be able to hold our own because we would not get the people in the right jobs. We could not add that many people into making disability evaluations because of the lead time it takes to train them for that.
Mr. LEWIS. Okay. I do have some clarification that I need for the record here. I will ask those questions and if you will respond. I will be with you in just a moment, Mr. Stokes. Just one more line here, if that is all right with you.
The way this legislative proposal is handled in the 1999 budget is somewhat out of the ordinary. The traditional method of preparing a budget is to base your request on existing legislation. Is that not correct?
Mr. WEST. I will accept your judgment on that, Mr. Chairman.
Mr. LEWIS. I would think that it would be based upon the laws as we see it and not a guesstimate that maybe we are going to have a law.
Mr. WEST. If we did that, we would be basing it on an existing General Counsel opinion I guess.
Mr. LEWIS. I guess that is right. Everybody has to do their own thing. Why did you not include in your 1999 general operating expense appropriation request the administrative funds, which are discretionary, necessary to process the smoking-related claims which are paying under existing law?
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Mr. WEST. I think all things considered, Mr. Chairman, we probably would not have included a single cent in our budget on the assumption that the legislation was going to pass. The claims amount that you see reflected there is there because our sense is that must be reflected there by law.
This other discretionary amount is not reflected there because the Administration's position is simply fairly straightforward. We simply should not be paying those claims.
Mr. LEWIS. Well, it is very, very close to the edge of a budgetary flem-flam. Earlier, I was going to ask you, what do you think the prospects of this legislation really is?
You are too new on the job to be getting involved in predicting legislative success or a lack of success. It does not take much to say it has got a ways to go. Have you got all of the VSOs on board?
Mr. WEST. I would think not.
Mr. LEWIS. Do they influence this process at all? What is the prospect that this legislation will be passed?
Mr. WEST. Well, we are still very hopeful for it, Mr. Chairman because the alternatives are not good. The alternatives of the Department trying to sort this out are not good ones. The philosophy, and I understand you differ with me.
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Mr. LEWIS. I do not differ with you.
Mr. WEST. The VSOs may differ with me. The philosophy is not good as well. I do not think the American people expect us to pay compensation, disability compensation, for someone for a smoking-related disease when the sole connection to military service is that he or she began smoking on active duty.
Mr. LEWIS. Mr. Stokes, this is not exactly fun, but I could see a circumstance where they really work hard, get legislation passed, you know, it would be pretty far out, but then all of the VSOs would be marching around the White House and the President would veto the bill. I can see that happening.
Mr. Stokes, I will yield to you.
Mr. STOKES. Mr. Chairman, I notice that it is about noon now. If you would like, I can just be first up this afternoon, if you would rather.
Mr. LEWIS. You know, frankly, I think probably that would be smart, because we have some other commitments down the hall.
Mr. STOKES. Sure.
Mr. LEWIS. I appreciate your saying that.
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