mind that comes with the protectio from an affordable care act that is working. i yield the floor mr. president, and note the absence. >> c-span2 brings you the best access to congress live debates from the senate floor, hearings and current policy events and on the weekend it is booktv live coverage of book festivals from around the country and a behind the scenes look at the publishing industry. c-span2, the best access to congress and non-fiction books. the veterans' affairs committee department is facing a $2.6 billion budget shortfall. how the va wants to handle it. and then theitate taititate -- the state released their human right

violation report. and then a talk about fucnuclear deterance. >> the pentagon is banned from buying russian rockets that have been used to launch satellites into space. they passed the an after russia an exed crimea last year. in the morning, a house armed service community is holding a hearing on what is said to be depending on them for rockets. deputy veterans' affairs committee secretary sloan gibson said the va is having problems and wants to tap into the

outside fund to help people get appointments. here is the two hour hearing chaired by jeff miller of florida. >> if i could get everybody to go ahead and take their seats. i want to begin the hearing. we are going to allow a little flexibility for arrival time for members because people are coming back from votes and i certainly appreciate everybody getting back as quickly as we can. it looks like we may have another vote around 12:00 or shortly there after. ms. brown is on her way. but we will go ahead and start the process. the committee will come to order and i want to thank everybody coming together to talk about the state of the 2015 va budget.

i called this two weeks ago following concerning and inconsistent reports from veterans and veterans' employees around the country about the current state of va funding. i don't believe anybody was aware then of the troubling extent of va's current budget crisis except those maybe in the central office. and unfortunately, i suspect that had i not called this hearing, we would still not be aware today of the $2.6 billion funding fort shawl at the veterans health administration is estimating as a result of increase in non-va care and rising cost of hepatitis c that wasn't planned for properly.

given the pent up care exposed during last year's hearing on wait time manipulation the va had ample time adjust their needs to prevent what we're seeing today. february-april, secretary mcdonald appeared at four separate bunnell budget hearings. we have spoken on a number of issues. at no point in these discussions or hearings has a secretary suggested to me a shortfall of magnitude of $2.6 billion. one that threatens va's ability to meet obligations. nor did other va leaders communicate how much in the red

va was even though the committee was informed late last week the department new as early as march there were giant disparities between the amount of money va was spending and the amount of money that was budgeted. the only comments we received in march was the quarterly appropriate submitted for the 1st quarter of fiscal year 2015 which showed va was underplanned in terms of the spinout rate. va proposed a plan that congress authorized to transfer $150 million in fiscal year 2015 funding to support the replacement center in aurora colorado.

and va proposed just under one percent of 2015 fiscal funds to devote to the colorado project. a proposal that will veterans health administration chief financial officer told the department she didn't know about it until after it was transmitted to congress. i think the actions show va leaders feel moving forward with the project is not scheduled to open until 2017 is a higher priority than insuring veterans who need care now are able to access the care. i have come to expect a startling lack of transparency and accountability from va over the last years. but failing to inform congress of a multibillion funding deficit until this late in the fiscal year while continuing to

advance what i believe are lower priority needs that further deplete the department's coughers in support of a construction project that benefits no veteran for two more years is disturbing on an entirely different level. earlier this week va issued a fact sheet that claims va requested limited budget flexibility in february. and in march, and in may of this year and that they plainly articulated va's need for additional resources. buried on page 167 of the second volume of va's budget submission is a statement i read: in the coming months the administration will submit legislation to reallocate choice funding to

support essential investments in va's system priorities closed quote. secretary mcdonald repeated this testimony without providing any additional supporting details or justification and to date there has been no legislative proposal that has been submitted by the legislation to the congress. in may of 2012 a letter was sent to the chairman and ranking member of the house regarding the denver project and va stated the department quote reflex flexibility to make the choice program work better through limited authority to use funds from section 802 of the choice act to fund care in the community to the extent it exceeds our fy 2015 budget end quote. again, no further information or

supporting materials have been provided. if those two statements are absent of any other supporting evidence or details are what va calls formally requesting budget flexibility and plainly speaking of the department's needs, i understand why va has in fact found themselves suffering nothing but string after string of failures since last year. what is more is it proves once more again va's current problems reflect a management issue far more than a money issue. this committee cannot help va solve their problems if they refuse to be honest upfront, and transparent with us about the position they are in. the struggles they are facing and the help it needs. congress has consistently provided va with the funding the department has requested.

as a result va funding has risen 73% since 2009 while the number of veterans getting care has grown by only about 2%. this comes from va's only testimony. i know i speak for every member of the committee when i say we are committed to insuring va has the funding it needs to deliver the world-class health care our veterans deserve. but va has to do its part to con front and correct its poor budget planning and poor management issues and hold poor performing executives accountable and employees accountability and most importantly to prioritize our veterans' needs over the wants of a burrocracy. and this shortfall, if it shows us anything s what our veterans

want and need is to have a say in and where they get their health care. assuming the va numbers are true non-va care now make up 20% of all apointpointments. i will work with my colleagues on the appropriation committee to give the va the flexibility they are seeking to use a limited amount of funds for non-choice care and insure no veteran suffers from the mismanagement of the budget the american taxpayers provided. however, going forward, there has to be a dedicated appropriation account to fund non-va care under a streamline authority with a dedicated team within the budget rather than the seven desperate ill-executed

programs outlined in the testimony. this morning i look forward to discuss discussing the proposal with my friend sloan gibson and the committee members who share the same desires for outcomes. i will yield to ms. brown for her opening statement. >> thank you mr. chairman. today's hearing is on the state of va's fiscal year 2015 budget. i can tell you all that the state of va's budget is not strong. the va is facing a shortfall of $2.6 billion for veterans' health care. this shortfall must be addressed immediately. we cannot put the health and lives of our veterans at risk by

spending our time and attention pointing fingers and assigning blame. va will face an additional shortfall at the start of the next fiscal year in october. a shortfall that will be made worse by the cost-saving steps va taking right now. we must address this upcoming shortfall. i know this committee, as we have done so many times in the past, will work together to solve this crises and fix this mess. we all recognize sometimes it takes money to fix a problem and not just slapping tape on it and calling it a day. so in the words of deputy secretary gibson we will get our checkbooks out but i am concerned that there may be

nothing left in the account aslo as we continue to prevent that we can fund essential requirement of government without arbitrary budget caps. we seem to be hearing, i am sorry let me be clear we are heading toward a government shutdown. let niasia ellisme say that again. i am concerned the affect the shutdown will have on veterans seeking health care. ten years agree we addressed another va shortfall and that was due to lack of sufficient planning and years of not providing the va the resources that it needed. today's shortfall seems to be caused by the like of proper planning regarding the demand of

veterans for va health care. i am also concerned that it is leading to inaccurate resource requests. we need to fix these problems. my bill the department of veterans' affairs committee reform act passed the house in march 420-0. it is a much-needed reform in ow the va plans and budgets for the future. it is time our colleagues in the senate pass the bill and send it to the president. if the va is going to be there for our veterans than we are going to have the fix the problem. this calls for more than us just opening our checkbook and writing blank checks to the va. it requires thoughtful and major reform so we can insure in the years ahead that the va is worthy of our veterans.

but today, right now, we have veterans that need health care and check we need to write to pay for them and we needed to make sure these checks are not returned because we don't have a sufficient funds in the account. then, and only then can we start the reform efforts so that the va is the model of how we care for those who sacrificed for us and honored us with their service. thank you and i yield back the balance of my time mr. chairman. >> i think the ranking member for her comments and associate myself with the vast majority especially where we call on the senate to please move and pass ms. brown's budgeting bill. i think we agree it is the appropriate thing and i hope ms. brown calls on me to pass the

mail con appropriation bill over there that is critical for funding for the veterans so they can get the health care they earned. we have sloan gibson on the panel today and joining him is dr. james tuchschmidt, the interim deputy for health, and rick murray interim chief officer, and gregory giddens the principle director of office of acquisitions, logistics and construction. thank you for being here. mr. gibson you are recognized for your open statement. >> one year ago today 290,000 veterans were waiting more than 30 days for care. that represented the veterans' needs we were unable to meet timely. improving access to care has

been among the top priorities and we made progress. we c seven million more appointments than in the previous year and doubled the capacity required to meet those veterans needs. average wait time for completed points is five days for regular care, three are for special and three for mental health. authorization for care in the community are up 44%. 97% of appointments are completed within 30 days of the clinically indicated date or the date the veteran requests. we know it is far too long to wait. 93% completed with 14 days 88% completed within 7 days, and 22% of appointments completed on the same day. after hours and weekend

appointments are up 12% and expanded virtual care, e-consults up 36%, the near list -- new enrollee appointment request -- is down. to achieve this va has been executing a strategy building staffic, space, productivity and va community care. highlights. we have grown staffing by 12,000 including 1,000 physicians and 2700 nurses. we added 1.3 million square feet and another 400,000 square feet in va properties. the health care budget is up

less than 3%. and 1.5 million veterans have been authorized for care in the community, a 36% increase year over year. clearly we are improving access and providing more care to veterans. what is the challenge? as we improve access even more veterans are coming to va for their care. as a result appointments pending over 30 days are now up 50% from where they were a year ago. consider phoenix. after adding 337 staff completing 100,000 more appointments and a 91% increase in care and the community wait times are up. why? in the same period of time the of veterans in phoenix receiving primary care is up 11%. specialty care up 17% and mental health care up 16%.

we saw it in las vegas as well where we opened a new facility and the number of veterans receiving care jumped 18%. now as we think about what is going on let's not lose sight of the broader context. we are dealing with an aging veterans population and over half of the veterans receiving care at va are over 65. more veterans are filing claims for more issues the average degree of disability is 50%. among veterans receiving disability it is 50% meaning more veterans are eligible for health care at va. we know that many veterans prefer va health care. vfw march survia of veterans reported 47% of veterans who were offered choice elected to wait to get care inside the va. 78% said they were satisfied with their va care experience

and 82% would recommend va care for a fellow veterans. most veterans have a choice. 81% have medicaid medicare, tricare, or some form of private insurance. many come to va because of the out of pocket cost between their insurance and va care. the average reimbursement for a knee replacement is $25,000 with a co-pay of 20%. va saves the patient $5,000. more veterans are coming to the va because they want to come or have a financial incentive to come. as we look inside va what you are seeing is evidence of a change in the way we operate. you have heard niasia ellisme say

this before. would we have managed this transition more effectively? i think we could and should have. but we are returning the largest health care organization in the country on a 20-year-old financial management system. we had a hard time factoring into our analysis, market penetration, changing veteran reliance and improving access and the impact that has on veterans' choices. we didn't appreciate the challenge associated with changing internal process quickly enough to accommodate to the shift of choice. we build provider networks and the existence many providers have to join the networks. many veterans still don't understand how choice works.

the limitations particularly around geographic burden that congress amended and made it possible to earn choice and created demand for va's traditional community care programs. and lastly veterans are demonstrating their decision time line for care far out paces the federal budget cycle timeline. likewise, medical breakthroughs don't follow the time line. hepatitis c is another one that was hard to forecast. the first of the new generations of drugs to cure hepatitis c was approved by the fda a year after beginning the budgeting process. and less than a year before the fiscal year actually began. after adding these drugs to our formula in april of 2014 we

realized we would not have enough to pay for them in '15 and alerted congress of the shortfall. the fda has approved two new hepatitis drugs, greater rate of cure, but expensive. to cure veterans of this disease we moved $296 million from va community care. but it wasn't enough. veterans desire for this treatment has been extroidinarilyextroidbeentroid exdetroited -- extroidinarily clear. we asked for limited funding and secretary mcdonald raised the issue when he asked to use choice funding to meet the needs of the veterans. the choice program is making a positive change in the lives of

veterans. we want to use choice rather than any other community care option. i would point out in february approximately 5% of choice eligible care was being authorized through choice. by the time you get to the first week in may it was 10%. i now receive daily updates as of the 19th of june we were up to 33% of the authorizations that were choice eligible and i expect that number to continue to climb. but we still need flexibility and the use of choice funds for the balance of '15 and '16. we expect to needs congress' help to consolidate channels including fewer program by program restrictions on those channels. existing funding can help meet the needs that were more urgent than when we made the request. our investments have paid off by

providing more care to veterans to keep progressing and creating better access to care. we need the flexibility to use $2.5 billion of funds appropriated for care. we an advertise pail we will rely on choice heavily in fiscal 2016 to meet the growing needs. for our part our strategy will remain the same. leverage staffing space, productivity and care. we will dwi taxpayer resources and continue to work to make choice a success. but to succeed we need the flexibility and the funds to meet the veterans' needs as they arise. we look forward to working with this committee and look forward to your questions.

>> can you tell us when you first became aware of the major shortfall of what is becoming a multibillion shortfall? at what point was that evident to you or the secretary? >> i actually brought with me in my folder a memo i received dateddate 1416th 16 -- 16th of march showing we were still under obligated obligated. from that time forward, a process launched that covered several months during which millions of individual transactions in the fee-base care system were audited and reconciled in order to be able to determine the magnitude of the shortfall. it is only within the last three

or four weeks we began to get clarity around the magnitude of disconnect. three issues. one doing with the push to accelerate care one is an antique system that doesn't have the fee-base care system and others and the third change that affected us is the requirement in the choice act that we pull all of the budgeted funds in the community out of the centers and consolidate it in the chief business office. these three factors created the disconnect and lack of clarity of what was going on in the fee-base area. >> i was looking at a document that i guess incapsulates the 1st quarter that was provided in march of this year and it is

showing everything is on track at that point. >> we were showing everything was under obligated through february. and the questions that i kept asking were how can we be under obligated with the care. that is what launched the review and reconcilement of the millions of transactions sitting out in the fee base care system to determine actually what had been obligated. you can see why the questions that are going to come from this committee today are absolutely right. >> absolutely right. unex unex unex unexcu unexcusible. we have to find workarounds. we did what congress asked us to

do. pulled all of the budget money in. what happened was here in the community, the funds got managed in the medical center. care in the community decisions were being made in the medical center but all of the budget doctors were sitting centrally. you had a fundamental disconnect between those two elements. we should build a workaround. should we have built a workaround? yes, we should have. we see that clearly with the benefit of hindsight. >> have you requested specific legislation or changes at this point? as i stated in my opening statement, we got very limited questions and statements saying we would like to get more we would like to reform the choice program, but i haven't seen any request from va yet. >> we will -- we have done

briefings with staff, we will deliver a very promptly written request asking were flexibility and utilization of choice funds to pay for care in the community for veterans. >> if we go down this path, and it isn't a path that i want to go down, it may be the only solution to a problem coming for a considerable amount of time. reforms have got to be made. they have to be specific and we want to work with you through the process. >> thank you and we appreciate that. >> thank you. i am going to ask a question because i want something cleared up. explain the difference to us between the fee-based and the choice.

>> we use the fee-base to track patients for care and reconcile back to an invoice and insuring we receive the clinical information from the individual's veterans' care. i think the fee-base system captures choice. >> can i go to a dollar before picking a choice in the community? >> there is an authorization you would prefer to schedule and if we cannot do it timely we can transfer you to third party administrator and they will schedule or if you live 40 miles away. >> and choice? >> that is choice. and it is confusing to the staff

and to providers. different payment reimbursement rates and requirements for authorization and different processes. it is thoroughly confusing. >> i understand it is. but are the veterans getting the care in the community? >> we are estimating in fiscal year '14 we'll see in the neighborhood of 21-23 million appointments for care in the community. that is up from about 16 and a half million in 2014. as i mentioned, there are a record number of veterans who are receiving authorizations for

care in the community. 1.5 million over the last 12 months. a 36 increase over the prior period. >> is any of that in the mental healthier? >> yes, ma'am, it is. >> what percentage? >> mental health has been a smaller percentage of care because often times veterans experience issues that va providers are potentially better positioned and more knowledgeable to be able to respond to. there is certainly mental health care out there but the vast majority is delivered inside the va. >> i am going to yield back my time and i hope we will have a separate round. >> i think we will have an opportunity to do that. one question real quick mr. secretary. over the past month we have

examined improper precurement to pay in a timely fashion and gross issues with construction and i will yield to the gentlemen from colorado in a second but this committee has heard many instances of simple smaller ways of fraud and abuse by poor management that appears to be the culter within the -- culprit within the system. i know you are trying to root it out. but in my state, we discussed st. augustine, and how can va continue to justify paying thousands and thousands of dollars in fines and penalties each month to retain a sea balk in a facility they knew a long time ago they would have to relocate. how does that happen?

>> it happens when we fair to forecast far enough in advance to relocate from the expiring lease facility. what happens is we wait too long and then we start working to define requirements and run through all of the process and we find there were issues with site selection that denied it and we wound up in the situation you are describing. we have i don't know how many hundreds of lease transactions in the pipeline, that is a major part of the business and we allocated parts of funding. we have to better manage it and streamline the process and developing more standardization and lease design so we can work through the process and the design more expiditiously.

>> it is my part of the state and in addition we had a briefing on that when you and i was in orlando and it is not as simple and complicated in that the city and the county and how we can -- this is something we need to address. if a city wants to give us property to relocate we can't just take it. that is something we need to address. >> yes ma'am. >> all apples are not the same. >> saint augstine is just one example. this is happening all too often where we didn't make plans far enough in advance to run through the process to get to the point where we are ready to replace the facility before the lease expires >> and this only happening in st. augustine it happened in tallahassee as well. we need to address this and

change the process. >> we are working on it and that is the guy responsible for fixing it. >> i saw him pointing at you mr. giddens. >> i point at him a lot. >> st. augustine is important to the veterans in that area but trying to change this culture that has been allowed to go on for too long. mr. lamborn you are recognized. >> secretary gibson although i am glad to see you saying the va is committed to doing what is right for the veterans in colorado, i am disturbed by the additional time and money it will take. thanks to reallocation of funds we are good through the end of the fiscal year but much more remains to be funded.

this is a critical facility that our colorado veterans are earned and need. i remain committed along with my colleague representative coffman and others that we remain committed to finishing this process. where is the accountability i have to have? we have poor construction projects and where is the accountability? we have given authorization and don't see it being used. >> if you look back as i have at the entire change of command from the secretary all the way down to the project engineer i believe there is only one person involved in the project who still remains at va. and i think that is the project. not project engineer but executive. there has been an aib in the process of wrapping up.

i think we talked earlier in this committee about early evidence that was gathered that the being used to draw charges against a senior investigator who retired. a similar process happened recently with the senior attorney who was involved in denver. and i expect the aib to wrap it up quickly and we will consider the evidence graced by the aib for any additional individuals that are still on the payroll end of the department. >> thank you. and also secretary gibson, you asked for additional flexibility in allocating your funds, but haven't provided what, i believe is the supporting data needed for that. more importantly, i want to insure there isn't the impression that the va decided to fund the hospital project in colorado ahead of hepatitis c

treatment or any other care. that will not be the case? >> there is no intention to trade hep-c care for denver. we have gone through a sears of proposals with denver starting with what i believe was the best proposal for taxpayers and veterans and utilize construction funds that were provided as part of the $5 billion under choice. there were other alternatives considered where we would reprogram dollars from major construction projects. projects that are not due to start construction for three or four years. that got nowhere. we looked at alternatives to reduce our proposed funds in 2016 from non-reoccurring

maintenance maintenance. we got the attention that the va would have to time over the course of the year to manage reductions on a very micro-level so we insure we are not adversely impacting veteran care. >> i want to speak for myself week not do any fix that compromises health care. >> thank you secretary gibson for your acknowledgment that things could have been better planned out and could have been better manages management. when you talk about the administration or the outdated software what are you referring to? >> we have companies in the private sector. we have a major technology system it system, software

system that we use to account for all of the financial activity of the department. i recently interviewed a candidate to come in and head it who was astounded to learn we were using it. >> we are talking about it. >> yes we are. i know there are problems in engaging non va providers and the va has the responsibility to manage the accountability and there is a lack in the medical electronic records with the system. so we need to look at investing and upgrading that system. i understand the large part of the shortfall comes from increase payments for fee-base care and contracts with non-va providers. do you have an estimate for how

much of that care could have been provided through the choice program but wasn't? in other words how many veterans qualified for the choice program but were delayed because of the slow rollout? if you don't have the number you can give it to me later. >> let me take that for follow-up. but it was not a hundred percent. choice dollars are not used for long term care or denist -- dentist. and there are not many eye doctors who are providers. >> so a big chunk of this money we are talking about could have been qualified them? >> yes. >> and you are saying this is all sorts of reimbursement rates out there for the different

kinds of non-va care. my next question was of the remainder of the folks that would not have qualified, how much could that was attributed to the lack of capacity at the va that were not fully disappear staffed up at the va? if you were staffed up could we have taken care of more people? >> i think the short answer is yes, if we were fully staffed up and had all of the facilities we needed, yes we could have. but there were instances we relied and came to rely on state nursing homes to care for veterans. and so that winds up being, i am going to say $100 billion and a half dollars. bill is that in the neighborhood? that is a substantial portion of that that we come to rely on

outside providers for that. >> i want to turn to hepatitis c. i am concerned about the lack of funds to continue to provide treatment for veterans with heptitis c. it is estimated 180,000 veterans are infected with this disease. i command the work the va did to treat the disease. the treatments can cost as much as $1,000 a bill. luckily the va has been able to negotiate with a lower cost and i have heard estimates they are instead paying closer to $600 a bill. is that correct? you may not have it with you. >> i would like to not have to answer that question. we work very closely and collaborate with the

manufacturers of those drugs and have been able to reach an adjustment in the purchase and we continue to have those conversations. scombl >> what i am curious about is if maybe our veterans are choosing to go to va as opposed to private care or tricare or other options because they might get access to this medication more easily and the doctors might be able to get the treatment done in a timely manner. >> i think that is serm the case. if a veteran who is medicare eligible was to go to a private provider he would wind up with a substantial co-pay in order to receive that care. >> thank you. for the record this congress has provided hundreds of millions of dollars in the past few years, in fact one particular system called core

fls, and this money was squandered and we had nothing to show for. >> can you explain about the core? >> it was a financial system and the name -- >> oh you were talking about the it. and again i agree with what you are saying. i am saying there has been hundreds of millions of dollars spent in the air somewhere and never used. >> i appreciate that. and sense being here my sense that the rollout, i had a feeling if they didn't have this ability to have electronic medical records and do it by paper they would have a hard time engaging non-va providers. that is my point. >> and a great point. thank you very much.

mr. bilirakis, you are recognized. >> thank you, mr. chairman and thank you mr. secretary for your testimony. the va estimated $2.6 billion shortfall for the remainder of the year impacting the delivery of care to the veterans and may affect the following year's budget. how firm are you on the $2.6 billion? >> we are slightly over three months away and i would say it is a very accurate forecast. it does assume business as usual. >> how did you come to that conclusion? >> as i alluded to earlier, we have had people go back and look and do reconcilements millions of transaction in the fee-based care system looking at past patterns of authorization and numbers of appointments per and the cost of each appointment

looking at the month-by-month track record and the numbers of authorizations and the forecast is built from the bottom up. so so >> considering va -- how much of the shortfall in your estimation was due to mismanagement of funds as opposed to the level of funding appropriated by congress? how much is due to dis dismanagement? >> should we have done a better job of managing the different buckets appropriated? yes. but we are pushing to ecaccelerate

care. we have a 36% increase for veterans in the community. >> none of this is due to mismanagement? >> this is about providing more care to more veterans. that is what this is about. >> how much has the va spent in retention and performance bonuses for fiscal year 2015? >> i take that for the record. i don't know the answers. >> can anyone on the panel answer that question? >> i think most of the performance awards are paid at the end of the fiscal year and paid on an ongoing bases to physicians. >> can some of the funds, in those accounts, be reprogrammed to address a portion of the budget shortfall? do you need specific authority

from congress to do that? to reprogram some of these funds? >> i would not expect it. i would not expect it. we would need authority from congress to reprogram some of those funds. as we work -- >> that the -- is that your intention? >> we are looking everywhere we can to identify funds to support care for veterans in the community. >> thank you. i yield back mr. chairman. >> ms. brownly. >> thank you, mr. chairman. i was back in my district last week and i had a meeting with our veterans and triwest came out and we talked about the choice program and provided more information and education to our veterans there. i also had a meeting with the -- there is a network director in my district as well. and she provided me with information on hearing from my

veterans i heard from her as well that a private group that provides adult day services in my district happen to be right next door to our c-balk. theas a certain synergy there between the c-balk and day center for the veteran. we have been told because of lack of funds from the va that the family circle is not going to receive more funds and we have a queue of 15 veterans waiting to get into facility and the va said sorry we will not be able to accommodate that. maybe on a case-by-case basis given the circumstances we might be able to accommodate a few. so, you know, that is a concern for me because i am beginning to already, at least in my district, feel the implication of the delima you are presenting

here. and i am concerned that is going to you know bleed into other areas in home health care services and other kinds of things. at the same time we have providers in the district mental health providers, that va has contracted with and we are not utilizing them to the extent they can be utilized. we are not pushing our veterans to chose contracts. and thirdly, i would say that triwest, i think it is very committed to administering the choice program. they indicated they plan on hiring lots of folks to do a better job of providing the choice program. so all of these issues that i am raising right now are sort of fighting against each other. we are going to need resources for the choice program in order to increase and enhance the program and we would not want tri-west to hire a lot of people

and tell them sorry. we have to push people for the people we contracted with and my veterans in ventura county are not receiving the services and beginning to feel the delima. i am not sure i have a question except to say i thank you for your leadership i do believe if you were not asking the hard questions, your issue around financial management system and continuing to ask those hard questions, you and the secretary both, that we still might not be aware of this problem surfacing the way it is. i don't think we can look past at mistakes. we have to look forward. the money needs to follow the veterans in term of what he or she selects in terms of their

service. so again just very very concerned about what is happening in my district to my veterans as we speak and wondering if there is any remedy to that. >> we are concerned as well. adult daycare and home-based care are two services we are not able to use choice to fund. that would be part of the flexibility we would love to have because we don't want to see that care disrupted. we will do homework on the mentalal health-- mental health providers and look into that. i mentioned we are up to 33% of all authorization in the country going to choice and tri-west is up to 41% and i think it is because of the determined effort they are making on the ground day in and day out to see that we are using choice in every case we possibly can.

>> if i could add on about the mental health provider. we have long-standing relationships with 87,000 providers around the country and we are doing everything in our power to reach out to folks, sending them letters, asking to meet with providers and encouraging them to sign up and become choice providers. the providers our patients have been seeing, we want them to continue to see them under the choice program. >> thank you and i yield back, mr. chairman. >> i had a similar situation, and i brought in the hud, and we were able to get 30 veterans signed up because they had no income. and now they will have that income

income. the agencies need to work together. >> dr. beneshek? >> thank you for your testimony, mr. gibson. frankly, i am shocked by the fact you sit there saying there is no mismanagement and we have a billion fund looking for a hospital in denver. if that is not mismanagement then is is just standard way of doing things at the va. frankly i was really hoping that the new secretary would be able to revamp the va. i think business as usual is not working very well for the last 30 years. that the lawyers of the buand there are many levels and i was hoping to see a dramatic change in the organizations of the va

so things would be leaner and meaner and that 20-year-old it systems wouldn't be used as an ex excuse to explain there is a 2 .7 billion cost overrun. you know i still have a labile of hope that something like that is still in the offing. is anything in the offing like that? a revamping of the va or will it continue the way it is? i am not happy with the progress we are seeing today and in other instances of the surprise cost overrun not being able to figure out the hepatitis is going to cost money and all of the things you mentioned. >> first of all, to be clear, there was gross mismanagement in denver. the question i heard being asked had to do with the $2.5 billion -- >> that is part of it. >> 2.5 billion are missing -- >> it is not missing. no sir, it is not missing. it is money that is going to pay

for veterans' care in the community. that is what we are talking about. >> there is a cost overrun that money in your department has been spent on all kinds of stuff. we don't know what most of it is because it is all disappearing. it spending hundreds of millions that haven't been updated. it disappears within your system. that is what i mean about having -- it is more control over what is happening with the money. >> we would love to come brief you on my va which is the long term plan for the transformation of the department. we would relish at the opportunity to do that. the organizational, culture, staffing -- >> i would like to see something dramatic done to change the status of the va so it is much better than what we have now. this hearing is another example of that. >> i would just mention you alluded to the fact that it has

been going on for 30 years. secretary mcdonald said ten months. that doesn't mean we don't need to be getting things done. we do. but i think we have to take into account the fact that changing an organization as large as va in less than a year i am not sure who would be able to do that inside the federal government no less. >> i have another question about the choice act. i think part of it is the problem with getting a provider list up there. and my understanding is that we were going to be paying medicare rates for care. but it is always my understanding that the third party providers are getting medicare rates but the people doing the care are not getting medicare rates. they are getting a less than

medicare rate. and some of the providers said the rates are 30% less. so they are not signing up for it because you know they are loosing money.

>> >> we would be glad to share with you the letter going now to providers but you recognized. >> thank you for being here. i now the v.a. has been overwhelmed for problems of the past with the old id

system is a lack of a planning system with treating hepatitis and the medical technology is changing so rapidly that we did not plan for this backlog for the appeals process and as you mention and andrew have a good way to plan for a demographic shift i worry about places like las vegas where demand is increasing. but to give or take a few

going through money quicker will we run not moved money sooner? how do you make up for that kind of money? >> that is the great question. recently giving the budget guidance when i got to that recommendation page to mention the number down or another up but that is not the way we will do this. the requirement starts with what we expect to deliver to the veteran. so i will take appeals. to give the veteran and appeal decision now it is

like four years or five years obviously we cannot beat that standard immediately to decide how long it would take and that conversation we have is the only resources even hepatitis c. the last time i was here i propose the idea to take the hepc prevalence at a functional o that we all agree to that to understand what it would cost and executes to that that starts with the veteran experience you try to deliver. >> just for the record and

for that era hospital it was the patch from other projects but i cannot vote 1% across-the-board cut it is a bad way to do budgeting airways voting against amendments not just where you don't but i hope you come with another proposal but i cannot cut veterans' benefits across the board to bail out a bad construction project in denver. >> mr. secretary of one to follow-up with what we discussed with the opening questions from the chairman of the committee. i didn't hear exactly the

answer of a 40% cost overrun >> it became clear there was of very large variants into late may or mid may to live cattle whole series of alternatives with different solutions that fund may or may not have had direct control. >> where are we at today with the choice fund? i know the president submitted a of budget. >> is a little over $1 billion? >> 402,000,940,000,000 i was

close what is it? >> back when we did our first estimates on tories will look dash utilization of $3 billion the first year. so it is interesting as we look at what we have done to decelerate care what we originally forecasted. >> but to propose to raid that choice find it sounds like what you are doing today is a rare you predicted it was? >> i don't understand the question. >> in the president's budget you propose to raise a choice find -- fund including v.a. care the you said we ran short even though we did not know about it and tell day even through

the 2016 budget proposal so where are you back today? what did you project you would spend. >> between now and the end of the year? to be optimistic is a total of billion and a half dollars. id if we can spend that that reduces the 2.5 billion dollar shortfall. >> when you knew about the shortfall with new told congress do you wait until the end of the fiscal year then add up the bills it looks like we were 40 percent over. , often do you figure out your budget? >> looking inside the financial management system

to provide reports to appropriators. >> at least on a monthly basis but the point i made earlier but we are under obligating and we have people to do manual reconcile with millions of transactions for what is obligated. >> but what happened? so that march memo was falsified as inaccurate? >> there reported the financial management system did not take into account the specific details of every authorization. >> they give you reports.

>> historically it would have been done at the medical center level where we kept the budget but congress passed the choice act to require less to consolidate into the chief business office. >> you do that in march. so how do have the 40% cost overrun and kong to congress in june and say we have a couple months left in don't forget it's? i am concerned about the implementation. >> dilution is the secretary that has said repeatedly give us the flexibility to use money to follow the veterans. veterans make decisions faster than the budget cycle. quite frankly we cannot change as fast as we need to

change. >> to fire understand correctly you hire 12,000 individuals. >> net increase. >> county direct care providers? >> more than 1,000 our physicians 2700 verses i cannot tell how many were psychiatrist. >> i would like to know that based on the figures only one-third of what you hired we could render carry a two-thirds. >> the biggest challenge is to don't leverage providers with sufficient support staff so that means they cannot be as productive as they need to me. >> dr. reese you are recognized. >> thank you for holding this hearing into our guest for being here but my question is with the implementation of the choice program so we have some money you want to take from that program into other non

v.a. care and i am always in the view we have to take care of our patients so you need to take care of them by purchasing more medications for certain illnesses bin that is what we have to do. however when i am concerned about is why is there money not utilized with the choice program when i know in my district after speaking with 70 specialist in high demand special days -- specialties there is not a clear understanding of the process or implementation there is no efforts by the v.a. as much as we would like to see? so the actual implementation

is slow and not very efficient so why is there money left over from that choice program? and could that be used with the implementation of the choice program? >> we're on the same wavelength. first of all, we're not looking to move money out of choice but to use the choice funds to pay for care in the community we just want to access to pay for care in the community. and the opening statement went through a litany of seven or eight different factors that have gotten in the way and many have to do directly with the implementation of choice. i was surprised the other day with our daily stand at a meeting when folks were describing the five-year process under way to put in place the procedures to utilize care in the

community the old traditional program and they're still working on it after five years. we rolled out choice in 90 days and i reminded one refers went to the industry for third-party administrators they said it would take 80 months. the idea to do with in 90 days they said it would never happen and eight months into this we are learning the time required to recruit providers and change the internal process that every process has a different payment mechanisms are different reimbursement rates and with every issue has gotten in the way to run out of the characters' stories. -- choice but day-by-day that is improving. >> what about the idea to consolidate. >> yes. yes. yes. yes.

that is exactly what i described and i referred to in the opening statement. we want to do precisely that but we need congress's help to do that. >> so we actually have informed the field we want choice to be the number one mechanism by which we send people into the community for care. we have work to do to streamline the process. we are treating our staff to day and we will do more coordination of that care with the purchase care program but that movement to streamline those channels is already under way. >> whenever a system was to change they have coaches that go into a hospital. there should be some coaches that go into a community to

help set it up for the providers to set up training for the veterans to work with members of congress so we can help others do the same thing. >> you are correct. for example, tri-west goes around the country to meet with providers to get them to sign up to be choice providers. that has been pretty successful effort because they work very hard. >> we will take a short recess. we have two votes we will resume a the hearing immediately following the last vote. [inaudible conversations]

[inaudible conversations] we will resume the hearing some members are making their way back from the last series of votes. thank you for your

indulgence. are you prepared to begin with your line of questions? you are recognize. >> thank you for being here i was looking through emails that i just received from new hampshire. it is some good news. we have signed up an important partner of ours from the north country that is in a sparsely populated area to be part of the tories programmer want to reference that because we have talked a bit about the transition and how long it takes and vital part of that is to line up the private community partners and health care providers and in particular care for seniors and adults day care and home

care. but looking forward we can all agree there is bipartisan concern about this transition, but some colleagues may not be familiar with the notion of the other six types of programs. as i have sat down with my v.a. we have talked about when the choice program is applicable or when are the others. through a multitude of dimensions one is the availability of services whether a network or a local provider willing and able and available. the other is cost to the taxpayer to provide the service but also he made an

important point about the out-of-pocket cost to the veterans because until we have an understanding of these decisions being made, we will my grasp the dimension to open access. we had a note that said previously that v.a. has controlled access through distance and delay and that is the reality. we made this promise to our veterans then the space lid on the cost for either was too far away or too long to get the service. so going forward with the change that you bring to this organization what

would be the path forward to streamline these programs and provide direction in each of these different communities to get access to the veteran is no way that is timely, high-quality, and cost-effective and efficient for the taxpayer. >> if he could start off in this area he has done a lot of working in this area. >> and what do you need from us? is a day congressional changing and how do we get together with you in a bipartisan way to make that happen? >> we have been spending almost fell last year since the legislation was put in place in november. we ask them to bring the

commercial side of the business to look at our business office and how we managed care in the community against best practices of private sector health insurance industry. we have identified core competencies and they did a maturity assessment against the best practices in the private sector. we have taken at hand are developing a plan to make sure we can build those competencies using the current business office function with the foundation on which we will build over the next year some of those competencies' we will have to make decisions and to rebuild tattersalls or buy back? because the expertise is out

there and it is more cost-effective and efficient to buy it. we have a group right now with our process to say going for word what it does look like? what do we want to point to into the tpa contract for the future with the much more robust program. we will need help to rationalize these programs. ultimately we would want the project folded into the choice program so we can get rid of the multiple channels. and we need some changes to the choice act itself the way it is structured. we have alluded to those several times like the medicare providers verses those we believe are qualified to deliver that k.

witte -- care with the 60 day authorization period. second pair is problematic it is very problematic in places where i was like alaska talking with the folks with dod it is really problematic if we want dod to be providers to read my eighth time is up if we can get everything going for word. >> i apologize. >> you are recognize. >> secretary gibson, in march what we talk about is the shortfall of the budget available for health care. but if we look at the v.a.

historically initially it was service connected issues for military personnel. then we expanded at at some point to the low in, the veterans on a means tested basis. then we expanded again at some point to give automatic eligibility for returning active duty for civilian life that is not means tested that is four or five years to have eligibility but march of this your v.a. announced it would no longer used the asset tests to determine v.a. eligibility expanding again. but you did it at a time and i guess you have the

statutory authority to do that, but you have to make an assessment if you have those resources available to read that expansion clearly you don't have that. so what you do about this? >> i will have to follow-up on this but maya understanding is we were able to substitute another means test we could get directly from the irs or social security in place of the annual requirement on the part of the veteran to file about net worth. we will validate and come back for the record but it was not a move to open the aperture by read the favored and administratively. >> we need to find that out because i got this information through veterans magazine touting it as an

expansion of eligibility by relaxing asset requirement to make more individuals eligible they would be any way but there would have to pay for a portion this would relax the requirement so it is an expansion of care sorry think more people would go through. look at that and get back to the committee on that because it is a concern three don't have the resources to meet current obligations we cannot spare expand eligibility. >> you are absolutely right. i agree and we will follow up for the record. >> thanks for bringing this to light. given that the cost overruns are a problem to you feel

the va could benefit from expanded use of public-private partnerships the major construction projects that allows nonfederal stakeholders and construction experts to work on projects? >> dash george answer is yes. in fact secretary mcdonald and i met two weeks ago with the leadership of the association of general contractors with large and smaller contractors that work with us on a regular basis. this was a very specific topic every talked-about and we agreed to come together to look specifically at those opportunities here also actively considering an opportunity is emphasis go for public-private partnership. >> will the cost overrun of the denver medical center from the outpatient clinic

and other construction projects the president has prioritized? >> i don't expect what we're doing in denver will have any adverse effects. depending on the ultimate funding source that we worked out with congress, i cannot say that it will not affect major construction projects because that is an option on the table but i think there is a strong desire to not adversely impact those projects images less likely to see that as a source of funding. >> in april there was an announcement at 15 major projects would be too late for the corps of engineers and five were still questions for courage you have an idea which are still under consideration?

>> in terms to ring gauge the court to become the construction agent there were five that v.a. agreed there were too far along. we have taken the not - - the number up to seven that we agreed we were turned over for them to be the construction agent and three were relatively smaller transactions fell be felt the most sense to hang on to. >> can you identify which is which? >> i will get that for you. we have the list and he may have it in his book over here. >> what is the price differential between the v.a. medical service vs. non at v.a. by whatever metric you have? >> i will defer to the

clinician. >> i am not sure. it is not in my head but we can get that information for the record. >> what about health care outcomes what is the difference from v.a. first non v.a. base services is? >> i don't know that we actually have our own data but there are plenty of research studies that have been done looking at outcomes between private sector and v.a. that have found the quality is comparable whether v.a. or outside. one of the things i would suggest we do is a comprehensive tool briefing to evaluate the care quality patient safety access, satisfaction and many metrics that we use are also accused in the private sector's we have the ability to compare the rates to get

somebody to have a briefing. >> what about the hepatitis c treatment is to is that show a good health care outcome? >> it is very early to assess that process. many of these arms over months as a course of therapy but the study done shows they have very high cure rates with much lower side effect profile than what we had in the past. >> since so much resources are in that direction we need have a clear understanding edition results -- it did show results. >> thanks for being here today and want to expand upon what he was talking about the cost and we had this discussion before you told me you are always away

from assessing that and one of the best ways how much are you spending from your physical plant and supplies and administrators because that is what a private practice has to do i assume you're not at that point yet? >> i don't think we are but we are getting closer. >> we have done it cost per rvu based on the data i'm about to'' is based upon the salary and benefits than direct cost so it is equivalent to what we would pay the provider that cost per rvu is much lower than private sector. >> probably would be but you don't take into account the private sector pays for their insurance and all those things but that is how you really evaluate because

in a business model which is what we're trying to get to that i don't think v.a. has ever been there but you have to assess because at some point he'll have to say we have more buildings then we need your read the more than we have. that is where we needed to be headed bayou have to take into account all of that because that is what the private person does when the v.a. pays the provider they are not accountable for the other expenses that the person takes in so we're not comparing apples to apples apples, as we do that. we'll flee we will proceed to make wise decisions together going forward we need to keep looking how to reduce the fixed cost and still provide the same level of care. i am encouraged today that 11 of 10% increase how did you do that? >> i think it is a combination of factors like

extended hours that has allowed us to make more efficient use of airspace. have scrubbed primary-care panels and appointment grids that kind of scrubbing process to develop a couple of different productivity assessment tools to push the data out to the individual medical center to the provider to see how a relatively productive the clinic is in relation to the volume of appointment activity and folks are beginning to now make adjustments that they have access capacity. >> are we reaching a to the providers to ask what do you have to do that makes you less efficient? we talk about you were

working out of one treatment room that is inefficient so we need that feedback from the providers especially those cetera in private practice. you each me up to restock the cabinets when they should be seeing patients. i hope we get a good provider implies. >> my sense is that we are and i get it in the field. we undertook a major initiative one year ago to look at support staff for specialty providers which gathered vast amounts of data in the field with the obvious conclusion we were way under leveraging the specialty providers so we have been insuring the we are adding support staff into the support clinics. >> another thought that veterans do choose to go to the v.a. they want to be there even with other care

like private insurance. if the v.a. is their choice then build their insurance to get on the plan. >> if they have it somewhere else then veterans don't use v.a. because they want more funds to be there are. >> today if they have private insurance we do build their insurance sometimes it is the medigap coverage and we may not get paid to them don't have the authority to bill medicare or medicaid for the tri care >> that is robbing peter to pay paul with taxpayer dollars but private insurance is different. >> those collection rates have been going up steadily year after year. >> i yield back. >> mr. chairman thank you for being here.

the statement on fiscal responsibility i was reading the is richer general's report last week who said they didn't know they have $43 billion in the account it was sitting there three years then i looked at the choice act but there are $360 million put aside for awards and bonuses? being a businessman i am in support of the bonus and award when it is appropriate but is that accurate? >> no. is not there is no money set aside for bonuses. you may be referring to the caps upon the cost

associated with the administration of the plan. >> 360 million? >> i think the initial was 300 million if i remember right to it is now higher than that but the money we paid a third-party administrator to do the program. >> let's talk about the lack of non v.a. providers to get them into the choice program. you brought up the subject of the rate of being paid that what i see in our district and the redress to this previously is not the rate but just getting paid and i was in district last weekend with three separate providers say i have not got my money going on tour three years. water redoing?

i know you give us figures before and we're doing better but the word on the street is there is still some issues. >> one of the advantages of choice the party is paid by the third-party administration that is consistent with than 30 days we monitor that. v.a. is known to pay a low and slow and that is not how you want to deal with your provider network. >> do we have something in place? >> over the last nine months is to organizationally consolidate. organizationally river to when the payment process through 21 separate headquarters through 70 different physical locations to process invoices for care. based on what i have heard we probably did it in 150

different ways so we consolidated organizationally tears tackle the staffing issues issues, the process issues and technology issues none of which were tackled unless they were addressed in a work around situation at another location we have locations instead of establishing a call center available to handle those inbound questions, we have a processor processing and payment they would answer the phone and to do business in the way you would never see in the private sector. we now have that report and receive the times improve and we are sailing into a headwind but they are processing a lot more

invoices but they're barely keeping up the we have made progress. >> but then you have to come back to a. >> we are short. but for 16 that is not adequate unless we ration care. but then we put those two choices with that safety valve. >> thank you mr. chairman.

>> i want to continue with my line of questioning on hepatitis c but right now you don't ration care. i wanted to get some idea about the experience of the veteran who has hepatitis c. does the physician have full discretion when that medication and shed a accessed or prescribed? what is the internal process we have guidelines for treatment of patients with hepatitis a when they should be used as well as a hierarchy for those to be

treated first with the decision to treat or not is individual between a clinician and patient. >> so the physician has a considerable amount of autonomy i have been reading disturbing cases and in the eric times about a woman and her physician that would rather provide the of medication at a later stage of the disease with the advantage plans the current situation now is honored. >> there are many places

then medicaid will not cover the new drugs some private insurance is to and don't and the patience that has advanced liver disease as a result of hepatitis a iraq risk of cirrhosis if you have advanced liver disease you're definitely a candidate for their pay if you don't have active liver disease you were low were down in a priority list and infectious to other people it is a blood borne disease through contact with my wife and kids and people in my household if you do not have active and liver disease but

may still have concerns. >> you are reluctant for what you pay. was the correct with the manufacturers or is there more than one? >> i a misunderstanding there is only one patent. >> there are multiple manufacturers but they each make one patent drug. >> medicare cannot negotiate in the way v.a. can and medicare spent with the hepatitis c treatments 50 times over what is spent the year before i don't know the experience of the v.a. i know you're not willing to reveal that looking at what

people are experiencing with private health care insurance. especially the seniors to not wait on the insurance company with a much more superior service to the veterans and demon gin to secretary gibson for the seniors that are limited to year medicare with the medication verses of a veteran. >> later standing is that medicare has an annual cost ceiling. so you would be capped out.

>> so they have to pay that difference? while. for low income that is a big problem. >> it is a strong incentive and it applies not just to the hepc treatment but whenever a veteran may be pursuing there is some preventive treatment that medicare has no copays so truly they have a choice with -- without consequences but if it has a co pay then they will make a rational economic decision. >> i will respond your comments because i don't thank you were here that the prescription drug bill when we pass it may directed the

secretary not to negotiate the price of the drug so that was a part of the bill the ready to hear when we did that but in addition to the affordable care act that is now standing so seniors will not be out of pocket. >> was aware that i was trying to suggest the nba is doing business in the better way. >> absolutely. thank you. >> good afternoon secretary thank you for your testimony especially about the improvements and access to health care for veterans

faded to the secretary for the feet -- v.a. pacific islands to represent your department during the most important holiday in america, flag day commemorating the netherworld and thank you very much. i don't know a few are aware of the medical personnel that are provided in the va clinic audiology and equipment but no specialist operated by a branch of physical therapy equipment but no physical therapy specialist so how many if any staff members for american samoa?

>> i am not able to answer your question off the top of my head i see the doctor writing down we will give you an answer back. how can the va improve the budget planning to make sure the department is better able to anticipate to react to higher demand for care. >> that is the great question and i alluded in reopening statement as we had is a department to forecast of two changes of reliance with the v.a. care and with market penetration

in a particular market and how many are in bold for care with v.a. i know phoenix was under penetrated so there is a part that looks at the response that we saw earlier that is not necessarily surprised but it typically we don't factor those elements or measure them effectively. and in the relatively short period of time it gives us an opportunity to gain better insight and data as the forecast future instances we can look a the lists to understand better the anticipated response and

lastly on vacation one of the lessons we learned was very early to identify what you will read characterize a high price tag to build into planning as early as we can with cardiology drug setter in the pipeline that are blockbusters coming down the pipe that we try to make allowances for. >> to just add to that today we use the best ensure it - - actuarial firms in the world and those models work well in stable environments but when that environment is perturbed by changing the benefit structure in some way it is hard to predict to

understand what would happen with a lot of interest with the 40-mile benefits. we try to see what that looks like but you have to make assumptions that may or may not be correct there may be in dynamically conditions it is hard to do the modeling the you were talking about. >> thank you, mr. chairman chairman i yield back. >> 84 a very short question. >> ag for your indulgence i appreciated for i have highlighted by earlier testimony the impacts might district is already feeling. the issues that they raise the is the evaluations are slowing down as well those that work in my congressional office feel the impact but you said

600 million you found a 600 million i am wondering will that mitigate the impact my district faces in the short term? and if congress does not act on the shortfall but will this look like in july and august and october the first? >> the number we could have used that we could have provided congress for care in the community without the ability to open the aperture with the additional choice funds we get into dire

circumstances before we get to the end of august but to deny care to veterans for the resources i don't think anybody wants to see that happen. it could be unpleasant and unsatisfactory situation. >> would you give us that information to have that real data? so if we can those dollars you will have to sustain care for veterans the feeling that there will have to be a lot of communication that goes down to the

medical center level so they a understand what happens in their district. >> is with the transfer of money, 358? can i go back to my district to tell those that are waiting for adult day care we have extra money to address the issue? >> part of what we are going through right now is leveling against different locations so a lot of bad is happening where one may have one center that has additional resources ed there is leveling happening at the top of the h.j.. we will look internally in the short term for opportunities that we're able to distribute while waiting for the appropriators not on the additional