sometimes happens or more than sometimes a delay until the i.t. budget gets released. so that now it can catch up to him and then in a case last year i think the budget cr lasted until april. so pretty significant period. we're a bit off stride here and i'm trying to figure out how we can get this together. and link up the authorities you provide along with the budget to do his budget and get him the tools that allow him to see patients. there's no separation between medical i.t. and medicine today. it's all one treatment discussion. >> well, i just want to let us -- let us know how we can help you be more effective in the i.t. area and i think the charge murray and ranking members will help on this too. i think it's really important in this day and age. and just -- >> can i just follow up very quickly. madam chair, i'll just add here, what has happened last year the

i.t. budget is now released in april. and it's big number because it's all i.t. well really in it you have the paperless system that goes with secretary hickey's operation. and you have medical i.t. that goes with dr. petzel's. i'm just trying to be clear here. a piece that i'm concerned about is the medical i.t. so we link decision to do things for veterans in the medical sense along with the, you know, the tools to be able to do that. what happened last year sometimes happened, this large i.t. budget gets, you know, identified in april. we can now go forward. and the assessment is made, well, they can't possibly spend that before the end of the year. so we lose $300 million in a detrimental process. and at a time when we really

needed to marry the two things up. he can now not deliver what we have already approved a year before and we're delaying that. so i think there's a mech -- >> timing issue? >> yeah. i think there's a mechanism here, getting stride on both ideas and i'd be happy to work with you on it. >> thank you. i want to thank everybody for being here today. i'd get into the rural cemetery thing, but we'll propose those questions in writing. thank you very much. >> thank you. senator moran? >> madam chairman, thank you very much. mr. secretary, in 2008, congres pad -- passed the rural access act. and i was involved in it in my days in house. the program is now referred to as project arch. access received closer to home. and that legislation set certain

criteria that if a veteran lived a certain number of miles from an outpatient clinic or v.a. hospital, they'd provide those services locally. using a local hospital. my legislation was broad in its initial form, it was narrowed by congress to create pilot programs. and the division that kansas was in is included as one of the pilots. i have expressed my complaint to the v.a. before because when the v.a. implemented the pilot program, it didn't choose a visen as a pilot program, but it chose a community. we have taken legislation and created a pilot program within a pilot program. and we now have a project on going in pratt, kansas, to demonstrate whether or not this idea works. i would -- i would love to hear the report of progress being made, but also use this moment as an opportunity to again

encourage the department to expand this pilot so that you can take more than one community. what happens in pratt, kansas, which is less than an hour from wichita is significantly different than what happens in atwood, kansas, which is five hours from wichita. the access to providers is totally different between those kind of communities. while i'm pleased the pilot program is on going, i'm completely uncertain -- let me say that different, i'm completely certain that the v.a. has not chosen wisely as it's narrowed the project to a very small scope to determine how it works. in that records along the same topic of the c box, we have an ongoing problem. similar to what has been expressed in regard to mental health by senator tester. i understand the doctor's testimony about the inability to attract and retain professionals, but it's becoming

clear to me that we have that same problem outside mental health. our ability to retain physicians in c box across rural kansas, and i assume across the country, is a huge problem. and we have physician assistants, that the availability of a physician has become very limited and we have many c box that many times no physician is present. i understand the secretary's testimony about i.t. as a potential solution. we have offered to -- our vizen to make sure we do everything as a member of the senate to provide the v.a. with the resources to provide the necessary personnel. and my assumption is my answer will be similar to what you told senator tester and the same one i here from the folks in kansas is. it's not really a resource issue. we can pay sufficient amounts of money to attract medical professionals, but we're struggling like everyone else to

attract the professionals. i've heard that answer for a long time. you said it again today, dr. petzel. in some fashion that can't be the final answer. just because everyone else is struggling to attract professionals to take care of patients, we can't allow the is v.a. -- i understand the problem. i don't want to be critical in that sense. there has to be a path to the solution. >> i would say, senator, we -- in the rural areas in particular are challenged because of the availability. dr. petzel said that. and our tools are really reaching out to -- we want highly qualified. we want talent. and our tools are what we're able to compensate, what we're

able to award, recognize and performance of good people doing outstanding work. and retaining through bonuses the high quality ones. so our tools are limited. and -- but we owe you the best efforts we can to go after that talent and the biggest challenge is our end rural communities and we have to circle our wagons here. >> mr. secretary, i appreciate that your sentence that you owe that. we understand we owe the veterans that. but i would also tell you that congress, i owe you every tool possible to help you meet that criteri criteria. and the complaint or concern i have is i'm not being asked to do something to solve the problem. so what i'm asking for is tell us what we can do to provide the assistance so that when we have a hearing six months from now or we're back here next year talking about the budget, the answer to whether or not that

we're meeting the health needs of veterans particularly in rural areas is not every health care provider, every community, every rural state is having the same struggle we are. help us help you solve the problem. thank you. >> senator begich? do you want to respond really quickly? >> i'll try to be quick. thank you, senator moran. m.d. issue first. you're absolutely right. we have this difficulty in certain parts of the rural country. if you look at the m.d. system, across the whole system, we don't have a recruitment problem. it's important we focus on the fact this is rural america. two things we'd like to do. one is that we need to expand our tuition reimbursement program to be able to provide an incentive for people to go to rural areas by reimbursing them for the tuition from the medical

school. the second one was an idea that the secretary had. i don't want to get into the details about it, but to do something like the military does with their uniformed services medical school and that is recruit people, pay for their medical education with an obligation to follow to work with us in particular parts of the country. those are two areas that we are trying to explore. >> thanks, senator. i'd put a finer point on what dr. petzel said. i thought if we went into areas, rural areas, and found a highly talented youngster, great potential, and targeted that individual and got them through the college and the medical process, they'd be going home. and so in the long run, we would not be facing the retention bonuses and this kind of thing. you'd have provided someone for the long term as a solution to that requirement, that

community. that's part of the discussion here. >> i appreciate your thoughts and please consider me an ally. we can follow up with the arch question at a later time. >> thank you. >> thank you. >> thank you, senator begich? >> thank you very much. i want to echo the same kind of comments and senator moran, i like some of the things you've said. i'd be anxious to participate. i know in one of the hospitals in alaska they give a bonus to recruit and retain nurses because of the high capacity and need. thank you for offering those ideas. let me also say thank you, mr. secretary, for the two staff that you sent up to alaska. i think it was last week or the week before. and the chairwoman murray, and also it's important to come up to alaska to understand what rural is all about. i know you have been there. thank you for your visit and your team's visit. it makes a difference to the people there.

but also i think it opens the eyes to a lot of folks how we have to deliver healthcare in the most remote rural areas of this country. thank you for that commitment. let me if i can, i know we have had some conversation with regards to the ideas of the alaska heroes card and the idea of trying to weave through this access issue in parts of the country that have limited access to veterans care. in alaska specifically. we talk about the roadless areas. those areas of 80% of the communities of alaska do not have access by roads. so when we read -- and i noted your testimony about internet connect. then get the mobile van out there. there's no mobile van possible. the mobile van is in the air. that's the only way to get it there. so i know we have talked in a very positive way about how to create this access. i want to check in with you on kind of update of that. i know we have kind of talked about the quality of care

through our indian health services which is in -- superior to so much care that's being given today across the country and it is high quality care. tell me kind of what -- where you think we're at this point. i know we have -- you have been very responsive. i know we have been badgering you and your team on a pretty regular basis because as you have seen the veterans all they want to do is go across the street to the indian health service clinic to get their regular checkups as a choice, not as a requirement. if they choose to go to the v.a. hospital clinic, so be it. but if it's across the street, let's make it happen. because the quality care is equal or sometimes better in certain specialties than the v.a. what's your thought on that? >> i think as you and i have discussed, i think you'll recall that we have put in a policy that would allow veterans from alaska to go locally and reduce

the amount of veterans having to travel to the lower 48. there's rather robust program underway there. as i describe, we're working with the indian health service to establish this mou which would open a lot of processes for -- especially for alaska native veterans. but in the meantime, based on my visit to alaska, the alaskan native medical consortium, we've also established discussions with them trying to ensure that however the ihs mou progressing that we have are ready to provide help to veterans who are

being seen now. >> you feel that's going in the right direction with the travel concerns? >> let me talk to dr. petzel since -- >> in negotiations and discussion. >> thank you, mr. secretary. senator begich, i really do sim -- sympathize with the ruralness of alaska. as well as other parts of the country. while we're waiting for the mou to be finished, alaska is one of two places where we are proceeding with tribal interactions and i hesitate to use the word pilot. but to get specific agreements within a tribal unit in alaska. i believe it's the southeast alaskan tribal association and we are progressing in getting some arrangements made. it would be wonderful from my perspective if a veteran could make a choice, and access tribal clinics if indeed that was more convenient and the care was -- if it was successful and that we could work out the reimbursement arrangements. i think that's what we're trying to do in alaska and we have another effort in south dakota.

>> and you feel -- the ultimate question, you feel it's moving in the right direction? >> absolutely. >> i have two quick ones. the one is senate bill 914, it authorizes a waiver i have introduced for telehealth and telemedicine. i guess the general comment is i know we have about 200 veterans or so. i think a hundred or so are in the program in alaska. telehealth service, i think it works successfully. we have asked that to be waived through the legislation. the copay. so it increases the capacity of telehealth. can you give me a thought of supportive? i know any time you take dollars away, telehealth is a money saver and the shortage of mental health services this is a potential way to meld the two problems and create a solution. >> neither dr. petzel or i are

familiar with this legislation. so if i may -- >> absolutely. >> i'll provide that for the record. >> right. we'll give you some information on that. the last comment if i can, if i can just add to my concern undersecretary hickey, our call was on friday from someone who couldn't get on the 800 number. so it's not old. i know one of the things -- we had a call center. as you can imagine a lot of people are upset when the loan rates changed or didn't get their payment in so we had to see where the possibilities are. you had mentioned that you're going to have -- or you have a system that you can see the metrics of success. wait time. call time. hold time. response. all those. i would want to echo what my

colleague on the other side said that i would anxiously want to see that. because we -- this is our number one caseload work is around v.a. issues. second to that within the v.a., the 800 number, lack of response or inadequate response i should say. that's current, not six months ago or a year ago. this is very current, and customer service is name of the game. how to make sure the veterans have the services they need. is that something you can provide sooner than later so i can get a better understanding? >> i'm going to dive into those numbers today. >> very good. >> based on the testimony. >> thank you. i think the only solution the your issue on the i.t. is your whole department should be a two-year budget process instead of a one year and a two year. that's my personal opinion. >> thank you very much. >> thank you, madam chair. i have a couple of concerns, the budget question includes operational efficiencies that are estimated could save $1.2

billion. that's been done in the past by, you know, various administrations. last years budget request also included operational efficiencies of just over $1 billion. the -- in the past, gao has questioned whether or not those savings has come about. i guess if they don't come about how are you planning for the risk? what's your contingency plan if we don't see $1 billion in savings? >> i'm going to call on dr. petzel to respond to -- since this is they looked at his budget for the savings. anticipated savings. but i can tell you that right off the top, $362 million saved because of dialysis using a

medicare standard pay rate instead of the rates we were being charged previously. $200 million in proper payments because we reduced those. through the program management accountability program office in i.t., about $200 million in savings because we terminated the projects that were not going to deliver. and then about $100 million first notice of death on which we stopped payment on veterans accounts when they transpired in the past. this has been an issue. sometimes as much as $100 million in overpayments. and for the future we are agreed to provide as a minimum $173 million in savings. reducing waste and 2012 and 2013.

and that's part of our effort to get at the savings and efficiencies and let me ask dr. petzel to provide more detail. >> thank you, mr. secretary. the savings -- let's go through a little bit of what went on in '11. we saved a large amount of money. the gao reviewed that and we're still actually negotiating with them about what they actually found. we indeed can validate the savings that we have claimed from the various operational efficiencies. they do have a legitimate criticism about the way we measured things and the in which we'll be improving. for 2013, as the secretary mentioned we are going to save a large amount of money in dialysis. we have got contracts now or blanket purchase agreement

virtually every dialysis centers we will use will save us hundreds of millions of dollars. the medicare rate payment change that occurred with the regulations allowing us to charge -- to collect medicare -- charge medicare rates for both the professional fee and the facility fee is going to save us about $300 million that's absolute money that we would have spent otherwise had we not been able to do that. and in the efficiencies with v care, something we can measure easy. acquisition fees about $355 million in savings. there's a long list and i'm not going to take the time to go through that. but i'm absolutely confident we will be able to save this money. >> madam chair, one last comment here. we're going to look at all of this and look at it hard. i have cautioned us that in the end, we have to focus on what makes sense for veterans. i'll use dialysis as an example.

we're after the best prices we can get and, you know, if you just look at that, you may be encouraged to outsource all of it. i have argued that dialysis is something we have to retain a handle on. we should do a certain amount, certain portion of it in house. why do i say that? i'm just concerned that if we provide funds and let somebody else take care of dialysis, we ignore what a medical profession is supposed to do and that is as long as we're doing dialysis, we'll have to ask ourselves what causes it? why do we have to do this? what are the things on the front end that allow us to deal with preventing diabetes so that dialysis doesn't become a fact that we have to live with? and i think the medical profession is the best at asking those questions and that's why i think within v.a. we need to

retain a piece of that operation. >> very quickly, the president has proposed a billion dollars in funding for the veterans conservation corps. he anticipates that will create 20,000 jobs for veterans. we all agree there's a lot of backlog and work that needs to be done in the parks and the fracture and those kind of things. i had the opportunity to be the chairman and then the ranking member on economic opportunity on the house side. and really worked very closely. and visited with lots of veterans about their dreams and aspirations. and i have a lot of concern about spending a billion dollars in that direction. that is not, you know, kind of the direction that we were going in the committee. i don't believe. and like i said, visited with lots of veterans. and i really don't know -- a billion dollars is a lot of money. i think that could be put to

good use. but for myself, i really don't believe that's the direction that we need. i've never heard a veteran express to me that that's the route they would like to go. so again, i just want to express real concern in that regard. >> thank you, very much, mr. secretary. obviously we've had a lot of participation. we have another panel that needs to present today. we want to give them sufficient time and i've been called to the capital. i'm going to submit the rest of my questions for the record. any more comments? >> madam chairman, i'm going to submit is lengthy set of questions. i would ask for a quick response to them in lieu of asking a second round of questions. these are disturbing trends that i see from the information as we analyze the prior year. v.a. took in 430,000 more claims than were decided.

two appeals that resulted in a decision took 1,023 days to come to fruition. that's disturbing. staffing includesed 40% since '08. in that same time frame, administration increased 80%. for vizzens created in 1995, we envisioned 22 vizzens. and an annual budget of $27 million. today we have 21 vizzens, roughly 1,340 staff and $165 million annual cost. many of my questions will be referenced to these four areas. and i look forward, dr. petzel, with you and others to discuss some of the trends i see that

should raise and do for me and hopefully would raise flags for both of us. again, i thank you. >> may i respond, madam chairman? i'd be happy to provide details. and i like you am concerned and watch the growth. there's been growth in the veteran population the last two years added 800,000 veterans to our enrollment. the v.a. headquarters is 1% of our budget today as it was in 2008. and it's a reflection of accommodating that growth. i'll be happy to provide the details. >> thank you very much to youd your committee today. we appreciate that and ask that you answer the questions that will be submitted to you by myself and the members of this committee in a timely fashion. with that, i would like to invite our second panel to join us today. and as i

to the capitol, so i will introduce the panel. let our first speaker go. and i'll turn the gavel over in a bipartisan way to my colleague senator burr. not to give you practice, only to let you do it today. appreciate your accommodating me with this. >> thank you for that. thank you very much to you. >> if we can keep the room quiet as everybody changes chairs here, i'd appreciate it. i'd like to introduce the panel as they're coming up. we're going to be moving now to our second panel. as they come up and join us and are seated in the appropriate places, i want to especially --

again, if we could have it quiet in the room. i want to extend a very, very warm welcome to a friend of mine from washington. bill shrirer. he is the vice commander. bill, thank you so much for being here today. for coming all the way across the country, for the work you do and for your participation on this panel today to bring a local perspective that i think is important for all of us to hear. i appreciate that. mr. shrier is joined by the legislative commission for american legion. we also have the witnesses here who are here on behalf of the independent budget. carl blake, the paralyzed veterans of america. diane zamotta director of a.m.

vets. and finally i want to welcome to the panel tom tarantino. we're going to begin with mr. shrier and move down the table in order. the independent budget witnesses will have 15 minutes total and the american legion and iraq veterans of america will be given five minutes each. i apologize to all of you. we've had tremendous participation in this hearing. it's gone longer. i and my staff and all the members will be looking at your testimonies. it's extremely important to us and we'll submit you questions as well even though we don't have a lot of members present. and i especially want to thank senator burr for his accommodating my schedule as well. so with that, mr. shirer, thank you again. we'll begin with you. >> chairman murray, ranking