relative value units up 19%. and veterans using v.a. for care are up 10%. and in all of these lowecations, dramatic increases of care in the community. as mcdonnell has testified during budget hearings the primary reason for increasing demand for an aging veteran population increases in the number of medical conditions veterans claim and arise in the degree of disability. and as we can see here improving access to care. at the outset, community care is critical for improving access. we use it and have for years. in programs other than choice. in fiscal year '13, we spent approximately $7.9 billion on community care other than choice. in 2014, that rose to $8.5 billion. and we estimate that at the current rate of growth, v.a. will spend $9.9 billion, including choice a 25% increase in care in the community in just two years.

at the same time, we've had a large increase in care in the community, choice hasn't worked as intended. here are some things we're doing to fix it. on april 24th we changed the measure from straight line to driving distance. using the fastest route. this roughly doubles the number of veterans eligible for the 40-mile program under choice. excuse me. but there is much more to do. a follow-on mailing to all eligible veterans is about to go out. we've just launched a major change in internal processes to make choice the default option for care in the community. additional staff training and communication extensive provider communications, improvement to the website and ramped up social networking. new mechanisms together, timely feedback. directly from both veterans as well as from front line staff. these are all, already in place or about to launch. in the longer term, we must

rationalize community care into a single channel. the different programs with different rules and reimbursement rates methods of payment and funding routes are too complicated. they are too complicated for veterans, for providers and for v.a. employees who coordinate care. i'm confident we will need your help on that. next, let me touch on the other 40-mile issue. we've completed in-depth analysis using patient level data to estimate the cost of a legislative change to provide choice to all veterans more than 40 miles from where they can get the care they need. we've shared that analysis with some members of the committee with staff and with the cbo. it confirms the extraordinary cost that had been estimated previously. we've also briefed the staff on a broad range of other options and believe there are one or more options worthy of discussion and careful consideration.

while we are working together on an intermediate term solution we're requesting congress grant v.a. greater flexibility to expand the hardship criteria and choice beyond just geographic barriers. this authority would allow us to mitigate the impact of distance and other hardships for many veterans. we also request greater flexibility around some requirements that preclude us from using choice for services such as obstetrics, dentistry, and long-term care. as described above, we accelerated access to care in the community this year anticipating that a substantial portion would be funded through choice. for various reasons, most touched on previously we will be unable to sustain that pace without greater program flexibility and flexibility to utilize at least some portion of choice program funds to cover the cost of other care in the community. we are requesting some measure of funding flexibility to support this care for veterans.

on may 1st v.a. sent congress a legislative proposal providing major improvements to v.a.'s authority to use provider agreements for the purchase of community care. we request your support. lastly, we are requesting flexibility in one other area of veteran care, hepatitis c treatment. you're all familiar with the miraculous impact of the new generation of drugs. veterans that have been hep c positive for years now have a cure within reach. with minimal side effects. because of the newness of these drugs, there was no funding provided in our 2015 budget request or appropriation. we moved $688 million from care in the community anticipating the shift in cost to choice to fund treatment for veterans with these new drugs. it was the right thing to do. but it wasn't enough. we're requesting flexibility to

use a limited amount of choice program dollars to make this cure available for veterans between now and the end of the fiscal year. so, we are improving access to care. notwithstanding the reported wait times that you see. that means we've still got work to do on wait times but we are improving access to care. we're committed to making choice work and have very specific actions underway to do just that. and we need some help, especially additional flexibility to allow us to meet the health care needs of our veterans. we look forward to your questions. >> mr. chairman, ranking member blumenthal and members of the distinguished committee, i'm grateful for the opportunity to appear before you this afternoon on behalf of our company's employees and its nonprofit owners to discuss the work in which we're privileged to do in support of the department of veterans affairs.

i would like to focus my oral testimony on three topics. the realities of this program's implementation, the process of identifying and resolving gaps and those which remain to be resolved, and what i believe to be the art of the possible going forward. mr. chairman before the veteran's choice program there was was, purchasing care in the community from community providers has been a long practice to the v.a. in fact, in september of 2013 after two years of planning, v.a. sought to change that with the awarding of the patient center community care contracts to we and health net. that contract was designed to have a consolidated, integrated delivery system built in the community across the 28 states that we're primpled to serve. and make sure at the end of the day we weren't there to replace the v.a., supplement it.

when the furnace lit off in our hometown of phoenix, arizona, 6,300 providers lean forward at the sight of the v.a. medical center to assist them in eliminating the backlog. and by august, 14000 veterans had moved through that process. and within 90 days we stood up a network of primary care providers. we now have over 100,000 providers across 28 states in the pacific under contract, along with 4,500 facilities, and we're not finished. and the reason why we're not finished is that we need to make sure that the networks are tailored to match the demand that exists in a particular market that's not able to be met by the v.a. facilities itself. the fact of the matter is that was a complicated program to set up. it was done under very short order.

it was training for what was to come next. we had to design and produce the card. and we had to stand up a contact center to handle all of the calls coming in. after two weeks of design and two weeks of hiring and training of 850 people. no one went into three-hour waits. the phones were answered. the work had only begun. and we'd been on a pathway since to try and mature the operations. the secretary talked about the 40-mile issue. there's additional refinements that may will be needed and desired in that area. and if so we stand prepared to support what those might look like. there are some other changes that may well be needed to the program as we go forward.

secondly, we need to aggressively identify and dissolve or gaps. and we're in the process of doing that together. we're modernizing our i.t. systems rolling out after memorial day after a 24/7 build, a new portal system that will serve all of the facilities and our own staff as we seek to move the veteran information back and forth between the two facilities as care is rendered downtown. and we're in the process of tailoring networks to match the demand that exists in each market across our area. the choice program is up, it's operational and there's refinement still needed. i believe that because of the collaborative work that's been underway between all of us that are engaged in this that we are refining the pieces that need to be refined. we're identifying the policy gaps that need to work. and those things as the secretary said are getting attended to.

i think there are a couple of policy issues, though, that remain the jurisdiction of this particular committee. one is i would encourage a re-look at the 60-day authorization limitation that's been applied. secondly, i would respectively submit that there needs to be harmonization between the two programs. and between all of the facets of how the v.a. buys its currently. in order to make this work right. i believe the art of the possible, which you sought is truly within our grasp. i'd like to point to dallas texas, for a second if you'll permit me to do so. we're under the engaged leadership of the visn 17 director. a couple of weeks ago, we sat with the medical center director and the entire staff there including behavioral health staff and looked at the full

demand that exists for veterans in that market. we then took out and looked at, what's the network that's constructed to stand at its side? which is the base on which choice rides. so in other words, if there's not a network provider you can set up an engagement with an individual provider to deliver services under choice. we then designed a network map that we're now in the process of constructing together. and over the next 90 days from behavioral health to primary care to specialty care, we will rack and stack the network to meet the demands that can't otherwise be met by the medical center in dallas. that is being repeated between the area and the pacific as we seek to do our part to mature the operations of choice. it's a privilege to serve in support of those that serve this country. it's an honor to serve the veterans from the states that are represented by half of the

members of this committee. and mr. chairman, i look forward to taking questions after my colleague donna hoffmeyer is finished with her remarks. >> thank you. ms. hoffmeyer? >> members of the committee. i appreciate the opportunity to testify on health net's administration of the veterans choice program. health net is proud to be one of the longest serving health care administrators. we are dedicated to ensuring our nation's veterans have prompt access to needed health care services. and believe there's great potential for the choice program to help v.a. deliver timely, coordinated and convenient care to veterans. in september 2013 health net was awarded a contract for 3 of the 6 pc regions. we implemented pc 3 across our regions in the 6-month implementation schedule. completing implementation at the

beginning of april 2014. then in october, after congress passed and the president signed the veterans access choice and accountability act of 2014 v.a. amended our pc-3 contract to include several components of the choice program. with less than a month to implement choice as dave just mentioned, we literally hit the decks running and we haven't slowed down since. to meet the required start date of november 5th we worked very closely with v.a. and triwest to develop an aggressive implementation schedule and time lines. the ambitious schedule required us to hire and train staff quickly and to reconfigure our systems for the new program. despite this very aggressive implementation schedule, on november 5th veterans started to receive their choice cards, and they were able to call into the toll-free choice number to speak directly with a customer

service representative about their questions on the choice program or to request an appointment for services. having said that, there certainly have been challenges that have resulted in veteran frustration as well as frustration on the part of v.a. and to be honest, even our own staff, including call center and appointing staff. with such an aggressive schedule, there was little time to make system changes. we literally had less than a week from the date we signed a contract modification with veteran to the actual go live date. while the collaboration with v.a. since the start of the choice program has been good, there still is considerable work that needs to be done to reach a state of stability. where the program is operating smoothly and the veteran experience is consistent and gratifying. we appreciate the opportunity to offer our thoughts and the future of the choice program. the choice program is a new program that was implemented in record time. as a result, there are a number

of policy and process decisions and issues that are either unresolved or undocumented. if choices to succeed these items must be addressed quickly. as i mentioned earlier we've been working very closely with v.a. to address these issues. many of the items simply could not have been anticipated before the start of the choice program. others, however, should've been addressed before the program started but the implementation time line did not provide adequate time to do so. the identification and policy and operational issues and concerns has been occurring very quickly. as a result, we've struggled to keep up with developments and to adequately train our staff with the most up-to-date and accurate information. this situation is not ideal. based on these dynamics we have one overall recommendation, excuse me, for moving choice forward. we recommend v.a. develop a comprehensive, coordinated strategy for choice that clearly

defines the program requirements, process flows and rules of engagement. the strategy should provide a clear road map for all of us to follow. one that's communicated to all of the stake holders. v.a. leadership, visn medical leadership and staff both contractors, congress and most importantly, the veterans. while the strategy needs to identify key initiatives and reasonable time lines for implementing those initiatives, it also needs to contain the flexibility flexibility. guides that are mandated across the program. comprehensive training of both v.a. and contractor staff using consistent process flows, operational guides and scripting. and a clear and responsive process for resolving legitimate issues and challenges. in closing, i would like to

thank the committee for its leadership and ensuring prompt access to needed health care services. we believe there's great potential for the choice program to help v.a. deliver appropriate, coordinated and convenient care to veterans. we are committed to collaborating with v.a. to ensure the choice program succeeds. working together and with the leadership of this committee we are confident that choice will deliver on our obligation to this country's veterans. thank you. i look forward to your questions. >> well thank you all, very much. and i had all these preplanned questions and listening to your testimony, i've canceled all of them and going to raise the ones you've raised. it was quick, i want to make sure i got it all. you were encouraging us to look at the authorization of what? >> i would look at the limitation on 60 days for authorized care under choice. it puts people who have cancer in a position where we need to move them back and forth between the v.a. medical center. it takes a person who might be

with us under choice because of a pregnancy and does the same. and i don't think that was intended. i think it was intentional that there were parameters drafting around it. but the notion that certain types of care would have to move back and forth between the v.a. medical center and downtown is not neither efficient or effective in the delivery of care. >> this is very important. watching everybody's head bob. i think i would leave it to the clinicians. i got it sir. what i would do is to evaluate which types of care are there needed authorizations that would last more than 60 days. >> in other words, i want to make sure -- what you're saying is the limitation causes things like cancer treatments a pregnancy, for example, and things like that, for that patient to have to go back and

forth between private and v.a. health care because of the 60-day limitation. >> the administrative process requires us to go back and forth in support of that veteran when it's probably unnecessary, is what i would submit. >> it's like medicare -- >> yes, sir. >> it's one of those unintended consequences. >> yes, sir. >> is there any reason we can't fix that? >> we're going to work on it. we'll come back to you with a proposal. >> listening to it, seems like to me, it'd be more cost effective rather than go back and forth. got to be money involved every time you're doing that, is that right? >> there is a fee that's paid for each authorization. the bigger concern is the potential disruption to the veteran. >> efficiency is always less expensive. >> i appreciate your raising that in your testimony. >> you're welcome sir. >> do you have any credit cards? >> you have a right to remain

silent. >> i'm trying to think. which ones do i acknowledge? >> do you ever get the annual mailing of the required government notification of security? it's about four pages long and the print's so small you can't read it. >> i think that goes in the recycle bin. >> i heard from you a clear statement that we needed to simplify and coordinate the instructions, the rules and the processes under which veteran choice works is that right? >> it is, mr. chairman. >> go ahead. >> no, i just think, you know, it's -- as i said in my -- both my written statement and opening remarks, everything's been moving very, very quickly. and as a result, there are a number of things that maybe haven't been addressed as completely as ideally we would all like to see. and it makes it really difficult. i mean, it's hard for us. you know, we talk about this. at our level to keep up with everything. you're talking about call center representatives and appointing

clerks that are trying to keep up with all of the developments. and somehow we have to find a way to make it easy for not, not us to understand, but the people that are working closely with veterans to make this program work. they need to understand it. >> that goes a little bit further than just to y'all. i think the veteran needs to have it simpler to understand it, too. all i did as a businessman. we served people with college degrees and masters degrees but wrote everything to an eighth-grade level. that's the way you can communicate to the majority of the american people. some of these things, some of these things i read on drug notices when i get my drugs you know, regular drugs the real ones, the prescriptions. you read all these things you're not supposed to do or supposed to watch out for. it's so long and cumbersome, i can't understand it. i don't do the right thing sometimes. i think that could be our veterans, as well and the instructions they're getting. sloan, i would hope what all of

you would do is work together to find some ways to simplify the communication mechanism to the beneficiary, which is the veteran and the provider, which is the local provider in veterans choice. and the simpler it is. most, i know it's complicated. i'm not trying to oversimplify, but sometimes out of fear or out of desire to make sure we've covered everything, we cover so much that we don't accomplish the goals. i appreciate both of you raising that testimony. and my last question is going to be of sloan until we come back to a second round, if we do. you kept talking about you wanted us to give you more flexibility. >> yes, sir. >> put some meat on that bone. what flexibility on what? >> well, i'd say at the very top of the list it's flexibility around the determination of hardship for veterans to be able to have access to choice care. and so the way the law is written today, it's restricted to geographic barriers i think is the right is the language that's in the bill. we want to open that which would

give us more flexibility to extend care to choice to veterans. >> to be a type of illness? >> it could be a type of illness, it could be distance. there could be an instance where a veteran lives within 40 miles of a v.a. facility that doesn't deliver the care. and we want to be able to refer the care into the community. >> in other words -- >> while we're working on the -- >> my time's up. in other words, you want the ability to exercise judgment? >> yes, sir. >> and what you do in terms of hardship? >> yes, sir. >> you want the chance to exercise judgment in terms of the 60-day authorization, is that right? >> yes, sir. >> okay. there ought to be ways to accomplish both of those things. >> yes, sir. >> and i think in raising those -- really excited about that answer. or either he needs to leave. i don't know. whatever the case is, you can help us write that. i think those are both determinations we ought to be able to do. and i recognize in those -- your flexibility on the 60-day authorization sounds to me more cost effective and less

expensive. yours probably raises some cost questions any time you do things like that. but in the end, again, we've got to remember a person we want to serve is the veteran. >> yes. >> and deny them service because of hardship is not the right thing to do. >> yes, sir. >> ranking member blumenthal? >> thanks, mr. chairman. just at the outset, let me say that, you will be asked shortly by senator sanders i believe, about the letter that he's written to secretary mcdonnell urging he use his authority as secretary of veterans affairs to break patents on hepatitis c medications for the treatment of veterans suffering from that disease. i would strongly urge that you consider using your authority under 28 united states codes, section 1498 to take that action that will make this medication more widely available to veterans who need and deserve it. especially since the v.a. was

involved through one of its employees and the research that undertook this initiative and successfully reached the result. i want to focus, for the moment on the v.a.'s proposal to fund construction costs at the denver facilities, specifically the $1 billion cost overruns out of the choice programs provisions for long deferred maintenance and facility capacity issues in the v.a. system. these funds were very specifically designated and intended by congress to improve veterans' health care. veterans in my state who are aware of this proposal are absolutely outraged that their health care specifically the primary care upgrade at the west haven facility would be indefinitely deferred because of

$1 billion cost overruns in aurora, colorado. i suspect the same reaction will be felt equally deeply by veterans at the more than 220 other facilities whose health care will be compromised as a result of the proposed redesignation of these funds. so i would like assurance from you, secretary gibson, since we're talking here about choice program funds, and we're talking about not just a few dollars here or there but actually 1/5 of all the funds in that $1 billion pot that you are considering alternatives to that action. >> senator, we've sent a letter earlier today to the to this

committee, to the house committee and to the appropriations committee requesting the increase in the authorization to be able to complete that facility as well as requesting the use of $730 million of those $5 billion to be used to complete the denver facility. we have identified -- >> well, i just want to interrupt you -- and i apologize, for me, that alternative is a nonstarter. it's just unacceptable. and i've expressed that view to appropriate administration officials. i realize that you're dealing the hand you were dealt. i'm simply urging you to consider alternatives. there are alternatives in my view, responsible, and available alternatives that do not involve deferring health care improvements through construction and maintenance at those facilities across the

country, whether in connecticut or georgia or montana or louisiana or vermont, and all the other states represented on this committee as well as many who are not. >> senator, in years past, i would tell you it's very likely if the v.a. had gone looking for that kind of money, there's a pretty good chance that we could've found it. but because of the work that we've been doing over the past year to accelerate access to care, to make hepatitis c care available to veterans, under the circumstances, we don't have $700 million sitting on the sideline. there are no easy answers here. >> and i'm not asking you to find $1 billion sitting on the sideline. but this nation is capable of doing better for its veterans. and a supplemental appropriation, for example, might be an alternative. i'm asking you to go back to the drawing board and use different pencils not necessarily sharpen

pencils, but different alternatives to compensate for the absolutely unacceptable cost overruns and delays in aurora. the project should be be completed. but not at the sacrifice of health care for other veterans around the country. and what i say to you today is not personal to you or secretary mcdonnell. and we have talked at great length about this issue. we have visited that facility together. along with the chairman. and i have seen that vast hulking shell of a campus that is a mockery of government contracting. so we need to address this situation to complete the project, but it cannot be done

in effect at the sacrifice of other veterans. new time has expired. thank the witnesses for being here today. >> i wouldn't normally do this, but for benefit of everybody in the committee to know. i think we all have an obligation to ourselves to make out of the box suggestions on what we do about the cost overruns, particularly those of us that have been there and seen it. but everybody at the committee i've taken a couple of actions which i'll share at the committee leading up to a committee we're going to have tomorrow. i've got the democrats and republican leaders coming together to say okay, what are we going to do with this? which i hope the v.a. people are back in their office saying, what are we going to do this with this, too? i've ordered the gao to do a surplus of property to try to find a way to offset what might be borrowed from it. you're dealing with a situation where you've got until about may

20th about as much time as we've got right now. we need to get at least until july 15th. we have a way to do that. getting us to july 15th only gets us time to determine how close to $700 million it is we need, first of all. with the core and the veterans administration working together to do that. in that time period, we're going to have to interim bridges which i'm working on to present to the committee tomorrow. if everybody on the committee would think outside the box if it was your problem if you were in sloan gibson's place and you inherited $700 million shortfall and ran an agency second biggest in the government, where would you go looking? i want sloan to revisit the two places i mentioned to him in denver. seems like to me if we're going to take you out of the construction business, which we are, and that's going to happen at least to a certain major extent, there's going to be savings within your department. and also look at the 77 ftes.

maybe those ftes aren't as necessary as helping to build that hospital in denver. i think if everybody's making a contribution like that, it's like that movie "the american president," when the guy became president as a fill-in for super bowl, called the cabinet and got a yellow pad out and started working on solutions. we need to get the yellow pad out and start working on solutions and find a way to do it. not building the hospital is a nonstarter, but saying we're going to borrow it i agree with mr. blumenthal, it's not the right way to do that. i apologize for interjecting. >> i am not speaking for the chairman, obviously, but i have some alternative suggestions, as well. i have no pride of authorship. i don't think any of us does in meeting the needs of completing that facility, but doing it without sacrificing these other projects. and i'll have specific ideas and proposals tomorrow. >> my apologies for taking a

little time. and i'll turn now to senator moran. >> mr. chairman thank you and senator blumenthal for your communities and conducting this hearing. mr. secretary and others, welcome to the committee. i hope to ask a series of questions, but the time on the clock will run quickly. i want to start with a story that i've told before about a vietnam veteran named larry. larry mcintyre lived in florida and indicates that he he's a vietnam veteran. a swift vote navy veteran. indicates while he was in florida, he received excellent care from the v.a. moved to rural kansas and became my constituent. lives about 25 miles and three hours from a hospital. and i started this story or this story began in july 2014 when larry, this vietnam veteran needed a cortisone shot. the v.a.'s instructions were come to wichita.

so a 3-hour drive each way to get a cortisone shot. we raised this topic with secretary mcdonnell at a hearing here on september 9th. larry had contacted us and said i don't care how it comes, if the choice act or any other way that the v.a. can provide this service. and so we raised this topic with the secretary in september of last year. then in shortly thereafter the visn director in kansas city took this issue to heart and at least solved the problem, but unfortunately, temporarily. in december, larry was granted an appointment in hayes, the place where the cbak exists. he got care in the private sector on december of last year. the doctor who treated him provided the colonoscopy asked to treat him again and to -- and to follow-up. the v.a. denied that request and sent him back to wichita.

they denied that request because he was not eligible for choice. exists within the 40 miles of his home. so he's back to wichita, ultimately he then needed a -- instead of a cortisone shot, a colonoscopy. and he's trapped in this system of no one telling him what he can do or what he qualifies except he doesn't qualify for choice, go to wichita. he's done that. but then, just recently last week, he received a letter from the v.a. approving him for choice. he then calls triwest and triwest says you're not eligible. we don't have you on our list. but i got this letter. he indicates he talked to four different operators at triwest all who gave him a different answer that anyone else than the three other operators.

he called the 866 number and was told he wasn't eligible, got the four different answers, and now we're back to the question, what happens to larry? and my point here is even from the beginning, if he was not eligible for choice. and even if he's not eligible today because the cbac is there even though it doesn't provide the colonoscopy or the cortisone shot, someone not at triwest or the v.a. telling him oh, we have these other authorities. this would work for you as compared to just leaving larry hanging about whether he's eligible and what he should do. how do we solve that problem? i don't think it's totally unique. i hope it is. but i doubt that larry's the only veteran that experiences this circumstance. >> i doubt that the problem is unique. i suspect there are other veterans that are having similar

experiences. as i described in my opening statement, we are asking for additional flexibility, which would give us some more authority to be able to handle that kind of situation inside choice -- we handle, many of those situations through other v.a. care in the community routinely, which is why we have incurred so much expension on the year-to-date basis, but we find ourselves running out of resources in order to be able to sustain that. and so we end up making suboptimal decisions. you've given two great examples. whether or not we would be using judgment around the nature of the procedure. the answer is yes. i would tell you for someone who has a routine requirement like a cortisone shot, therest no reason to travel 150 miles to go do that. that's something we ought to be getting done locally.

for the veteran that has to go get a colonoscopy, i've got to tell you, i'm not going to drive 150 miles to get a colonoscopy, that's not going to happen. that's something that else that needs to be provided inside the community. if the veteran needed a knee replacement, i might say, okay, under the circumstances, make the trip. but for the therapy that has to follow-up after that no i don't want the veteran traveling 150 miles each time he needs to go to physical therapy. 40 miles where you can get the care, we keep running the numbers, and the tab is horrendous. it's huge. what we've got to do is find a way to be able to manage this in such a way that we're doing the right thing for veterans. at the same time we're being the best stewards of the taxpayer dollar. >> as you know you and i have had a number of conversations on this topic. and today i'm not arguing. i would argue, given the chance, but i won't argue today about whether or not the -- how the 40 miles should be interpreted. my point on this episode, one is

the uncertainty and the burden lying in the wrong place. it ought to lie with the v.a. or triwest. not the veteran. and my second point is that if you have these other authorities authorities whether or not larry qualifies for the choice act ought not matter in the answer he gets. >> i agree completely. >> thank you. >> senator manchin has kindly yielded to me because i've got to run out of the door. >> to the gentleman that's got to run out of the door, senator sanders. >> thank you for the work you have been doing and for your maintaining the bipartisan spirit of this committee. i want to say, o make two points. first of all, i want to thank sloan gibson and his boss for the impressive work they are doing. i understand as the former chair of this committee how easy it is to beat up on the v.a.

running 151 medical centers, 900 cboks. in a nation which has a dysfunctional health care system, the private sector also has one or two problems. and i won't go into them. but i think we should recognize that when you talk to the major veterans organizations the american legion, the vfw the paralyzed veterans of america. you know what they say? and you've heard this. they say when people walk into the va, the quality of care they get is pretty good. and i want to thank you for trying to improve. that i personally will fight vigorously those who want to privatize the v.a. or dismember the v.a. i think our goal is to strengthen the v.a. i think our goal is to be creative in terms of using the new program that we have developed so the people can get care in their community locally. that's a good mix. but i will oppose efforts to privatize the v.a. which is serving our veterans so very well. i wanted to get to another

issue. and senator blumenthal touched on it today. i wrote a letter to secretary mcdonnell about an issue that has concerned me for a while. and that is the high cost of the drug savaldi, which is a miracle drug, so to speak, which is now treating the veterans of our country who have very high rates of hepatitis c. mr. chairman, to me, it is an outrage that you have a company whose profits have soared in the last few years. their revenues have doubled, i believe, in the last year. they've come up with the drug. they are charging the general public $1,000 a pill for that drug. they're charging i believe the v.a., i don't know if this is a great secret but i will tell it anyhow something like $540 a drug, is that right? no comment. all right. but that's because the v.a. negotiates drug prices.

but you're running out of money. and we had sever hundred thousand veterans suffering with hepatitis c, which can be a fatal fatal disease. you don't have any money to treat them. and frankly, i think, it's time to talk to gilead, the manufacturer of it and basically ask them if they are currently being very generous and providing these drugs hepatitis c drugs to countries like india and the republic of georgia for free. very generous. for whatever reasons they are doing that. but maybe at a time when their profits are soaring maybe they might want to respect the veterans of this country who might die or become much sicker because they don't have access to this wonderful product. and as senator blumenthal mentioned. if they're not prepared to come to the table, i'm not impressed that you're paying $540 a pill. for people who put their lives on the line to defend our country.

i would suggest to them, you sit down again with them and tell them that you're prepared to utilize federal law 28usc1998 to break the patents unless they're prepared to come down significantly lower than they are right now. it's not a question of taking money. i know you've requested to take money out of the choice program. maybe that's a good idea. but it is a better idea to have them treat the veterans of this country with respect and charge the v.a. a reasonable price rather than ripping off the v.a. as they currently are. and with that, i would yield. >> turn that clock on when they start talking, if you would. >> we have senator rounds followed by manchin, tillis and tester. >> thank you, mr. chairman. and i appreciate your work and also the ranking member's work with regard to the issues on the hospital in aurora. i agree that it should not come out of the choice program. but as the alternative, mr.

gibson, i was looking back at the notes i've taken here. and you gave some very encouraging notes with regard to some of the stats about some of the areas of the country with regard to some additional care being provided. and that's encouraging. i'm just curious do you believe that those stats are consistent across the country? are you finding evidence of that across the rest? >> actually, that's -- i always worry when people quote arranges to me averages to me. you find wide disparity in terms of the length of wait times. and therefore in terms of the specific areas where we're making the most intensive investments. and so what i would tell you is where we have been making consequential investments, you pretty consistently see a material improvement in access measured by completed appointments measured by growth and relative value units.

but what we're not seeing pretty consistently is a material improvement in wait times. and so you look behind that. and you realize that what's happening is -- as we improve access to care, either more veterans are coming or veterans that are already there are making additional utilization of v.a. care. >> i'm just curious, sounds almost like we have an -- and i think senator sanders suggested this in a way, but i really think we have to have the discussion about how we deliver care long-term for our veterans. and i guess i come back to -- i'd love to be able to allow the veterans to make that decision themselves as to how we deliver the care to them. and i think the choice act allows that to begin. and, you know, i understand that right now, we've got a significant investment, if we've got over 150 health care communities, or health care centers in the 900 cboks right now. what do you see as the answer

here that one of the comments was made that we're looking at providing the choice opportunity there. if we can't, if the care can't be met by the v.a. itself and sounds to me like what we're saying is that the v.a. should be making the decision about whether or not they're delivering the care or whether or not the veterans should be making that decision. and it sounds to me like maybe we ought to take the other approach here and say, if we gave that choice to the veterans, i would suspect a number of them who have a very great care may want to continue that on. you've looked at asking for the

ability to flexibility to make that choice. if we took an alternative and said, once again, i think we're talking about dollars and cents now being the deciding factor in this case. what happened if we allowed the veterans to decide for themselves whether they wanted to have the care through a v.a. facility or through utilizing the choice program more fully and skip all of the extra stuff you've talked about here in terms of the 40-mile rule or whether or not they've already had care and now they've got to go back in after 60 days and so forth. it's still the v.a. making the decision. why not -- and share with me your thoughts. i'm sure this is not a new thought. share with me your reasoning and logic and why you're where you're at in terms of not allowing the veterans to make the choice themselves. >> alluded to some options we've briefed the staff on. one of the things first to keep in mind. 81% of all the veterans that we

provide care for have either medicare medicaid tricare or some form of private health insurance. and so often times what you see today. you mentioned the fact earlier that veterans have given the option for choice some would elect to stay in. and, in fact that's precisely what happens today. roughly half 40% 50%, somewhere in that neighborhood, depending on whose survey you're listening to. and i would tell you my perspective, part of those are deciding to stay because they want to stay, because they're getting great care they enjoy the comradery with other veterans. they've got continuity of care there because they've been receiving care for a long time. others komg there because they have an economic incentive to come there. because if they go out to medicare, they've got a 20% copay for a procedure. so you look at that or whatever it happens to be or the knee replacement which is an example that we use often times in the veteran can go get with

medicare. but he's going to wind up with a $7,500 bill to foot. i think the answer, we step back and look at some of the economic distortion that exists today. and find ways to eliminate that. for example, what if medicare/medicaid tricare and other providers became the primary payer. then you really are providing the veteran with choice. then you've really got -- and you wind up the taxpayer doesn't wind up paying twice for the same, for the same care. so i -- i think therein lies the kind of answer. this isn't about protecting the turf. all we're about is doing the right thing for veterans and being good stewards of taxpayer resources. and wherever that leads us, that's where we're ready to go. >> mr. chairman, my time's up but i think that's something we should seriously consider on

this committee. thank you, sir. >> mr. chairman thank you very much, and thank all of you for being here today. let me just say that needless to say that the v.a. has a lot of problems and had a lot of problems you all have been dealt. some of all have been dealt. some of you have been there longer than others. some of you have had careers at it and some come from the private sectors. nobody has problems like colorado has right now with what's happening there but let me just say i need to get this on record. i have a situation in beckley va medical center. i don't know if it's been brought to your attention or not, but last month the office of special counsel released a report of switching antipsychotic drugs based solely on costs. the providers said this is what the veteran needs and they made an executive decision that it was too cost prohibitive cut the medicine, didn't get the right application. we don't -- i was told there was a new policy in place and i haven't been able to obtain a copy of that.

at the same time i'm also told that there's a follow along investigation into the matter. haven't heard much about that. at the same beckley va the green briar clinic has been closed three times because of air quality. i'm having a horrendous time because we have a very rural state trying to get our veterans the care they need. only thing i can ask, if it hasn't gotten to your level if you can get me an answer back as quickly as you can. >> we'll get you the regulation. two, i believe the follow on investigation that's referred to here is often times -- well routinely when the office of special counsel has a finding that substantiates a whistle-blower allegation, if it's medical care, it's turned over to the office of the medical inspector and we have a team of physicians that really bore it out and come and determine exactly what happened, where the accountability was and then those often times will come to me. >> sure. sir, i've heard already it's at that level now, it's been there and i've been trying to get an

answer back. >> we will get you an answer. >> if you can help me, i would appreciate it very much. really what it comes down to this leads up to everything we've talked about here and i think senator sanders says privatization -- i just care about the veterans. there's going to be an awful lot of them coming back that need a lot of care. my generation coming out of vietnam, here they are 40 years later having tremendous need. with that being said do you believe, you come from the private sector, you come from the private sector. you're public you're public. >> she's private. >> private? i read here you had 15 years in government. okay. all righty. well, those who have more public -- more private would understand. do you believe we can get better care to our veterans through private -- through the private sector and i mean that in the case of the quality of care, the time, and also the cost. and i'm not saying we're going to shut the va down but before we expand -- i don't think we're

going to build another hospital. i don't think we're going to build anything else. we have to maintain what we have and give better care for more people. >> no i don't believe that that's the case. if you look -- >> and why? >> if you look at the typical veteran we provide care for, they're older, sicker and poorer. we have a highly lyly fragmented health care system in america and that's precisely the person i don't think fares best when turned loose in that fragmented system. if you go talk to veterans to a large number of veterans consistently what you're going here, are there instances they had to wait too long for care? are there instances where we made a mistake in yes, there absolutely are. 55 million outpatient appointments -- >> look at alaska. use alaska as an example. we use alaska for the choice. we used alaska and how they were given so much better quality of care and quicker wait times than anywhere else and they don't even have a va hospital. who wants to take that one. juno that market very well. >> if i might i know alaska a

fair bit, and about a decade of public service experience. i would offer the following. i think it takes both. >> okay. >> and i think the real question at the end of the day is which things fundamentally are done best by the va directly? which things have enough demand where it justifies building it, and which things ought to be supplemented by the private sector because it's either not -- there isn't enough demand to justify a build or where it makes sense to spread the supply simply because of the amount of resourcing that's needed to deliver services. i think that's always been true. i think that's true in the dod system. that's why you see tricare constructed the way it is. and alaska has a joint use facility in anchorage, but when you get outside of anchorage, most 69of the footprint tends to be public in the dod public through the indian health service, or private, and it's those two pieces working

together that are ultimately going to deliver what needs to be done. >> i can talk to you all, but my time has run out. the thing on drugs, the drug dispensing to our veterans is almost criminal, what we're doing to them. concoction of drugs we're giving them without proper guidance and when you look at high unemployment rates in our veterans and you look to drug addiction, we've got to do something there. prescription drug abuse is the biggest killer i have in my state of west virginia, it's everywhere. it's horrific, but in the ranks of our military and our veterans, it's absolutely off the charts. so we're putting a drug -- prescription drug abuse caucus together, democrats and republicans working together. we're going to need your help because this is where we can -- >> we would love to participate. we agree with you. we recognize that it is a national problem, and it's a problem inside va. >> thank you. >> it's a problem in general society. thank you senator manchin. senator tillis.

>> thank you mr. chair. thank you all for being here. just a couple of things. one is based on a comment here earlier about there are some here in the senate that are thinking that we should completely privatize the va. i honestly have not had a single serious discussion with any member that saw that as an end state, and if they did, if anyone here did, all they need to do is spend some time in the vas to understand the unique nature of what the va has to offer. there is no other more welcoming place for a veteran than the va. not that there aren't opportunities for private care. there clearly are already. the non-va care is a very significant part of what all do every day long before choice was ever implemented. choice is just another safety valve. so, you know, i realize in these committee meetings sometimes our words carry more weight than perhaps they should, but i don't think anybody should leave this committee meeting thinking that anybody here has any serious

goal or objective to privatize the entire va. i want to go back to the point that senator blumenthal mentioned. i also have concerns about the overrun in the denver hospital. completely understand your predicament. can you give me an idea of what the thought process was because presumably if you were going to shift that money over for the short-term need to fund the build out of the aurora facility what would that cause in terms of delay or ramping down of what we'd be doing with choice over the period of time that that money would not be available? >> what we basically did is in identifying the nonrecurring maintenance and minor construction projects, what we did was we pulled in -- we have a capital planning process that actually builds a prioritized list that's years long based upon the pace of funding that we normally expect to get. and so when we looked at the $5

billion in choice funds we basically reached into that skip list and pulled a segment out to put into that priority bucket. what happens now is the substantial portion of those if we were permitted to do this in all likelihood would wind up in the 2017 budget because they then fall back -- would fall back into that prioritized queue. >> that's why i was asking the question because you could infer from some of the discussion that there's a $700 million hit and care not being provided versus taking a look at how that money was spent over time to build the ramp out of the choice program. that's why i was asking. it sounds like there's some leveling assumptions you're making about having the money when you need it. >> that's exactly right. our commitment has been we would work it back into the funding stream as quickly as we could. there are hundreds --

>> i think it's critically -- in order for what you've requested in the letter that you've sent us to have any prayer of serious consideration, you need to map out how we would have assurances that it doesn't really materially affect it because of the way that you would plan to spend that money anyway. >> thank you. thank you for raising the issue. >> because otherwise i would tend to go back to i think the well articulated position of the ranking member. the other question that i had or the thing that i think is very important is we need to get a five-year, ten-year 20-year picture of what choice non-va care means. i mean to get some parameters set about it. because that is critically important for you going back and relooking at your capital improvement plan and figure out how to do it. the answer is going to be different depending upon where

you are. senator sullivan will rightly say his state has a higher per capita veterans population than any state in the nation. i have a veterans population that exceeds the population of several states. the capital planning requirements in north carolina will be necessarily different than non-va care and the choice mix in alaska will be necessarily different, but we have to come up with that long-term vision so we can relook the current capital improvement plans based on what appears to be the interest of the senate to continue down that multiprong path so that you are taking pressure off of capital requirements in some areas and maybe redoubling them in other areas, so that's a very important thing that i think this committee needs to see, but then we need to be very specific about what we want beyond just brick and mortar va presence in the form of non-va care and choice care to get this right. >> if i can make two quick observations. i think you're absolutely spot

on. first of all we have to force ourselves to make certain decisions about what care can be most efficiently delivered in the community. so we've talked before my example the chairman remembers optometry. why would we send a veteran 100 miles to get his eyes checked and get some glasses. we can do that anywhere. we wouldn't we routinely be referring that out to the community unless a veteran really wants to come to va. we are learning right now again working to manage towards requirements rather than just a budget number, every time we improve access to care with a new facility, with additional staff, demand changes. part of what we're trying to understand are what are the dynamics. for example, you look in phoenix where we know we're under penetrated in the veteran market. we improve access to care and we get a disproportionate response back. we've got to understand that market penetration phenomenon

because it will affect our capital planning. i have already talked with the folks in phoenix about getting beyond -- looking over the horizon as it relates to demand for care among veterans in phoenix. we can't keep incrementally doing this because we're just going to stay behind. we have to get ahead of that demand. points are accidentexcellent. >> thank you. >> thank you. >> thank you. there's a shortage of medical personnel in the va, and i note in your testimony, secretary sloan, that you're going to be creating some 1500 new residency positions, and this is a matter i have discussed with our va person in hawaii because if you can create residency positions in the state more likely that those folks will be able to practice in the state. so how will these residency spots be allocated, by region, by capacity? are there any planning to increase for hawaii medical students?

>> i don't have the list with me today specifically of where the slots are going. >> have you already determined where the residency -- >> not all 1,500. so that is a multiyear plan to deploy the 1,500, and the first round of those started this fiscal year. we actually went out -- i quite frankly did not think our office of academic affiliations would be able to do it but they went out and sought applications. there are very specific criteria in the law about them going to under resourced communities and specialties. they went out and specifically caught those. we have awarded several hundred for this first round this year. not as many as we had thought maybe, but a lot more than i anticipated that they would be able to award, and i can get you specifically where those -- >> because hawaii has a lot of rural areas on the islands that are underserved by the va.

thank you. you can send me the information or the committee. as we look at the requests of secretary gibson to pay for the denver facility and we're looking -- i think that is really difficult for us to accept that you want to take money from the choice program to do that. so i'd like to ask you this, when a veteran goes to the va to get care for a nonservice connected matter, and this veteran has private insurance, do you have the authority to get reimbursed from the private insurance company for the care that the va provides? >> so if the patient goes out into the community in our normal purchase care program and has insurance, we will bill that insurance company and collect to offset the cost of the care we provided. under choice we're actually the secondary payer. so under the choice program, the way the law was written, if the

patient has commercial insurance, the commercial insurance is the primary payer and then we will make the provider whole up to the medicare rate. >> all right. so under the choice program, that's good because va becomes a secondary payer. my understanding is that in the first instance where the veteran goes to the va and gets the treatment, then often there is no reimbursement from his or her private insurance company. you're telling me otherwise. >> we will bill the private insurance company if the patient has insurance. >> yes. and do they reimburse you? >> we get paid from them. a lot of the patients actually have -- that have insurance have medigap insurance. and without a medicare eob often times those insurance companies will not pay for the care because it's not medicare -- the insurance is specifically medicare gap coverage and so we

will not often times get paid by those insurers. >> so you're reassuring me that the vagos after every dime from the private insurance carriers that you can get your hands on. >> i can assure you we go after every dime we can collect. about $3 billion a year. >> that's reassuring. there are some questions about the outreach and the choice card program. there's still confusion out there and whether you have found all of the veterans who would qualify for the choice card, so my question goes to -- what are the outreach efforts that you've engaged in? do you think that you are succeeding in explaining the choice program and also to va employees and community health care providers who need to get training on how to explain the program. >> so we originally mailed -- we know who the people are who are eligible to get a choice card, and we mail a letter to every one of those people back when the program started in november. >> i have talked to veterans,

and they found that letter to be rather confusing. >> yeah. we're about to mail a second letter to all of them. hopefully it's a lot simpler to understand. we have actually tested that with veterans before we put it in the envelope. >> good idea. >> and we've made a lot of phone calls and outreach to people. there is no question that i think we can do more to reach veterans through our website through mobile technology, through mailings and other forms of communication and we need to do a better job of educating them. >> good. >> we do need to do a much better job. one of the things we've got to remind ourselves of is there's no parallel to this out there. it's not like an insurance card where you just walk into your doctor's office and present your insurance card. there's no frame of reference for people to understand how it

works. you know, do i have a benefit or do i not have a benefit? and that's one of the reasons it's hard for us to explain and why we have to keep trying. >> if we get feedback from my veterans, for example, that could help you all do a better job, i'd be happy to pass that on. >> we'd love it. >> thank you. >> thank you, senator. senator bozeman followed by senator tester. >> thank you, mr. chairman. really very briefly i'd like to ask a question of efficiency. i understand that the third-partied ay administrateors have raised the issue of how much clinical documentation is being sent to them by the va. apparently va is sending the clinical documentation of every veteran who was approved do you to having a wait time in excess of 30 days which presumably is overwhelming the tpas. you now have a pilot program in 8 and 17 to only send the clinical information of veterans who choose to participate in the

choice program. i guess the question is are the pilots proving successful? and then also mr. mcintyre and miss hoff meier, if you'd like to comment from your standpoint as to what's going on? >> when we first set up the program, we put -- we gave every patient in the system an appointment in our system and put them on the choice list so that they could decide at any point this time which direction they wanted to go. we have learned through experience over the last six months that that doesn't work. it's not -- it doesn't help the veteran, it doesn't help us and, quite frankly it's not cost-effective. so we have the pilots. we have just started these pilots to see how this goes and how we can improve those business processes but we are moving, quite frankly, in the direction of at the point of service offering the veteran -- finding out what is the appointment we can provide in the va offering the veteran that appointment, or offering

them the opportunity to go outside through the choice program, and at that time if the veteran chooses to go out, then our staff much like they do outside of choice for all of our other purchase care appointments will work directly with triwest and health net to get that patient an appointment through the choice program, and at that time we hope we have learned from our pilots in 8 and 17 how to do this smarter and better so that we will greatly reduce the volume of people that we are referring to the tpa and are only providing medical record documentation for those patients who actually choose to go out the system. >> that sounds excellent. >> the pilot is a very good idea. sitting at the table in the initial design when we were getting ready to launch, we had two days to make a decision. and the question was how do you make sure that all the right information is in the right place to be able to serve people on the front end? the back end consequences are now obvious and making the

change makes a lot of sense and we're looking forward to supporting it. >> okay. >> the pilot has been going exceptionally well in our area and, in fact, we just approved a schedule with va to move forward with implementing the concept across all of our regions here very soon. so it's -- we're getting the con 1u89s in less than 24 hours on the veterans we need. it's very effective. >> good. that's excellent. i know that it's kind of a rocky road as you're working through these things, but it sounds -- that's encouraging that you are working through it. so thank you mr. chairman. >> thank you senator. the patience of the year award goes to senator tester. >> just because you have a very very good committee meeting here, mr. chairman. >> you got good testimony. >> and i thank the ranking member for having you guys and thank you for your work. i just really don't know where to start quite frankly. first of all, you guys do do a good job. i think the private sector does a good job. you have your fallibilities. don't think the private sector

doesn't have their fal abilities, too. they're short in doctors and nurses and mental health professionals and mental health facilities just like you guys are. and the bookkeeping nightmare -- let me give you an example. just say i was a vet. i live 50 miles from a sea box. my nearest hospital is 12 miles away. but that nearest hospital doesn't have a doctor in it. it's staffed by nurse practitioner. so then the question becomes is that somewhere where you want to go an appointment and, second of all, if i don't, guess where the nearest hospital is, in the time town where the sea box is. the bookkeeping here is just amazing and i know we're all here trying to do the right thing and you're trying to do the right thing, but sometimes even when you do the right thing, people are mad because they think it's the wrong thing. sloan, you talked about the 40 mile thing several times and you talked about how it doesn't make any sense if a guy is going to have a set of glasses why ship

them halfway across the country. when you did your analysis, did you also include the savings that would occur to the va by not shipping them a long ways away because i think that's really important. look, if i was a veteran and had to do over again, i probably would have signed up just for this benefit, but the truth is that if you're talking about what it costs to ship them to the private sector it also is a savings if just in mileage alone, and did you include that in the overall net dollar figure? >> no. so we actually do not -- in the analysis -- we've worked through several options from what 40 miles from the care you need might look like. >> yeah. >> we have not taken into account a lot of savings. >> okay. >> in the short run -- so we were modeling this for the choice program in the short run, our cost structure is

highly fixed. 90% of our costs are fixed. so there are variable costs and it's mostly the eyeglasses that you don't prescribe. but the rest of the infrastructure, the building a lot of the people, et cetera, don't go -- >> but the mileage is also not a fixed cost and if you have to put them up in a room, that's not a fixed cost. >> we have not specifically looked at the bene travel and there's two aspects of the bene travel. there's the true cost savings and the cost avoided because you haven't made them travel. >> that's correct. >> but that's not a real savings. that's a cost that you didn't realize. >> yeah, yeah. but really, i mean come on. that sounds like cbo stuff here truthfully. i mean i don't want to get in this debate, but the fact is if you're doing the actual cost analysis and you would have spent the money if they went to a facility of yours, you have to include that in the savings, and i by no means think that the

veterans -- but truthfully, if we're going to deal with honest figures, it has -- that savings has to be included even if it didn't accrue. >> clearly it does have to be included. >> right. >> even though the level of analysis today -- >> isn't to that level. >> -- a better than what we had initially all the way down to the individual patient level, we haven't picked up some of those incidental costs. >> mr. mcintyre, you talked about harmonization, i talked with sloan about harmonization before with the arch program and pc-3 and choice. i'm assuming you're for harmonization. just nod your head if that's correct. >> yes. >> sloan you're for harmonization. can i ask you a question can you get us some language on how we can harmonize the programs. if you need language to harmonize the programs i think it's reasonable thing to do. >> and we need to do that. i think part of that picture is how do we manage the 40-mile

issue. i think we need to think through this, are we going to look at va becoming a secondary provider to those that have other insurance alternatives because it changes the nature -- >> okay. well -- >> but it's wrapped up in that and it needs to be a very near-term exercise. >> let's deal with that because i think it's confusing right now and i think there's a little manipulation going on. >> well, and if i might one of the issues i was attempting to address and allude to is the fact that we built a network out now in our area that's got 100,000 providers in it. the requirements are more extensive than those under choice. >> yeah. >> if you're a participating provider. those things need to be blended together so that we don't have disincentive to participate in one program versus another. >> fair enough. >> and the reimbursement rates need to be the same. >> hep c. you want some additional dollars, $700 million transferred, $400 million?

>> if we're allowed -- >> to be able to tap it. i don't have a problem with that, by the way. the question i have is this is a miracle drug. when do you anticipate those costs for hep c to flatten out so you won't need those kind of dollars? >> i think the conversation that needs to be held with this committee, with the house committee, and with the appropriators has to do with the requirement that we manage tort. i would tell you my thought, our thought, va's thought is we should be talking about a requirement where veterans that are hep c positive we manage that number to functional zero by the end of 2018. that's what i think the requirement should be, and so what we need to do is step back from that and lay out a plan that says this is what would be required in order to manage to that requirement. >> i agree with that. >> so we're not back and forth about -- because the first time we deny a veteran access to the treatment who is hep c positive because he's not -- doesn't have

advanced liver disease everybody thinks we're depriving a veteran of care. we need to reach agreement on what the requirement is. >> one last question if i might since i get the award for being patient, you talked about residency slots, and i think that's great and i support it and we'll do everything we can but i believe residencies are three years. >> it varies depending on the specialty. >> how about for an internist? >> that's three years. >> that's what we're short on, right? >> yeah. >> the question i have is this place changes every two years, and to have three years in a residency, you have to have the money for that residency. >> yes. >> talk to me about how this works because you got a two-year -- you got forward funding but you don't have forward funding for three years. and so what do you do if congress does something irresponsible, and that has been known to happen a time or two, and doesn't fund you? >> i think this is actually one of our concerns.

so these residents all have tails. when we start a new residency slot, all of those slots have to be funded for the duration of that res -- >> in that budget. >> exactly. and that's not the case today. >> okay. that's important to know as we move forward. and just if i might, when are you going to start the residency program? is it going to start in this fiscal year? >> so we actually don't own the residency slots. they're owned by the academic centers. >> yes. >> we pay for trainees off set their salary. the additional slots we added started this academic year. >> this fiscal year. >> the academic year that will start this coming july. >> in this budget we're dealing with this. >> yes. >> if you're budget comes in a little short this may be a program that goes bye-bye. >> i doubt it because we've made

commitments at this point. >> appreciate it. thank you for your work. appreciate the flexibility, mr. chairman. >> thank you senator tester. thanks to all the witnesses. it's been a long but productive hearing. i think we're on the path to solving some problems and recognizing a few we need to solve but i appreciate everybody's time and effort very much. we'll take a two minute break while we shift name plates and go to panel two. >> we appreciate the collaborative working championship, mr. chairman. >> it's the only way to do it. >> it is.

it was a good first panel. i apologize to our second panel ifss it took so long. i'm sure you enjoys it too. so thank you very much. welcome back to the senate veterans affairs committee. we have mr. roscoe butler the deputy director of the health care for the american legion here. roscoe, good to have you. darren she will nick, senior veterans affairs adviser for concerned veterans for america. joseph velante, national legislative director of days abled american veterans. mr. bill raush who is missing in action right now. or awol. political director for iraq and afghanistan veterans of america, and carlos ffuentes senior legislative associate for the veterans ever foreign wars. we'll start with you, mr. butler. >> chairman, ranking member

blumenthal, and distinguished members of the committee, on behalf of our national commander, michael ham, and the 2.3 million members of the american legion, we thank you for this opportunity to testify regarding the american legion's views of the progress of the veterans choice program. the american legion supported the veterans access choice and accountability act of 2014 as a means of addressing emerging problems within the department of veterans affairs. va wait times for appointment medical care had reached an unacceptable level nationwide as veterans struggle to receive access to timely health care within the va health care system. it was clear swift changes were needed to ensure veterans could access health care in a timely manner. as a result the american legion immediately took charge by setting up veterans benefits centers in big and small cities across the country to assist veterans in need and their families as a result of the

systemic scheduling crisis facing the va. the american legion vbc's charge is to work firsthand with veterans experiencing difficulties in obtaining health care or having difficulties in receiving their benefits. on november the 5th 2014 va rolled out the veterans choice card program, and after six months, it is clear that the program fell short of the initial projections from the cbo. according to the va latest daily choice metrics dated november 31st 2015, there were approximately 51,000 authorizations issued for nonva care since implementation of the choice program with about 49,000 appointments scheduled. when you compare these numbers to the over 8 million cards -- choice cards issued, one would ask why did va issue so many choice cards? nevertheless, the american legion is optimistic that the

recent rule change by eliminating the straight line rule and using the actual driving distance will allow more veterans access to health care under the choice program. the american legion also believes that if va were to move forward with the 40 mile rule change to only include a va medical facility that can provide the needed services everyone would see increases in utilization and access to non-va health care. the american legion applauds the senate for unanimously passing the amendment reminding the department of veteran affairs they have the obligation to provide non-va care when it cannot offer the same treatment at one of its own facilities that is within the 40-mile driving distance from the veteran's home. we now call upon the house to take up hr-572 the veterans access to community care act, and ensure its swift passage. let's get these bills to the president's desk and make sure we're taking care of our rural

veterans. during a recent visit last month to examine the health care system in puerto rico the american legion learned that va staff had been mistakenly telling veterans that no one on the island is eligible for health care under the veterans choice card program because there is no medical facility that is further than 40 miles from anywhere anyone lives on the island. the american legion is concerned that as a result of inadequate training, there could be staff at many health care facilities who fail to receive proper training as a result of bad communications and providing incorrect information to veterans. recently the american legion learned that the va contract with health net required these third-party administrators to report daily choice metrics. however, this contractor requirement has now expired and the tpas are no longer required to report these daily metrics. the last report va provided to

vsos was dated march 31st 2015. the american legion is concerned since the tpas nor longer required to provide that's daily metrics, va can easily lose track of the numbers. the american legion calls on congress to require them to continue reporting these daily metrics throughout the duration of the contract or explain how they will continue to track this information. in fiscal year 2014, va spent over $7 billion on non-va health care. many of the non-va purchase care programs are managed by different offices and some of the services are handled outside of va claim fee processing system. va should streamline the model to incorporate all of va's non-va care programs into a single integrated purchase care model model. congress should look into streamlining the non-va care statutory authorities.

once congress gets a better sense of how the choice program will play out over the next couple years va's non-va care statutory authorities should be consolidated and rationalized incorporating lessons learned from the va choice program. thank you and, again, mr. chairman ranking member blumenthal, i appreciate the opportunity to present the american legion's views and look forward to answering ness questions you may have. >> and we appreciate the legion's willingness to follow up and come to all the hearings and give us the testimony we need. thank you, roscoe. darren selnik, senior veterans adviser for the concerned veterans of america. >> members of the committee i appreciate the opportunity to testify at today's hearing on the irm plementtation and future of the veterans choice program and thank you for your leadership in ensuring that veterans get the quality health care they deserve. today true choice in veterans health care remains out of reach for most veterans. like a mar raj in the desert, as you move closer to recreeds into the horizon.

we have developed recommendations for comprehensive reform through the fixing veterans health care task force. the current rules pertaining to choice do not represent real choice. they require veterans to obtain approval from va before they were able to make a choice. veterans should not have to ask for permission to collect a health care provider. va implementation of the choice program has been a failure. folk, the associated press reported gao said veterans health care cost are a high risk for taxpayer. the number of medical appointments that take longer than 90 days to complete have nearly doubled. only 37,000 appointments have been made through april 11th. the national poll of veterans 90% favored effort to reform. 88% said eligible veterans should be given the choice to receive health care from any choice. 77% said they want more choices even if it involved higher out of pocket costs. choice and competition are the bedrock of today's health care system. we choose our health care

insurance provider and primary care physician. health care organizations provide quality and convenient care because they know if they don't, they will lose their patients to someone else. in order to fix the va health care system both choice and competition must be injected into the system. va recognized that when they said evaluate options for potential reorganization that puts the veteran in control of how, when, and where they wish to be served. unfortunately, veterans do not have that control and will not under the current va health care system. va needs to have a 2015 health care system. we believe the veterans independence act is a road map and solution to do just that. this road map was developed by the fixing the veterans health care task force co-chaired by dr. bill frist, jim marshall and dr. mike kesman former vha under secretary. we developed ten veteran sen tick core principles that serve as the guiding foundation. they included the veteran must not first, not the va. veterans should be able to choose where to get their health

care, refocus on veterans with specialized needs. grandfather current enrollees and vha needs accountability. to implement these principles we laid out three major categories of reform and nine policy recommendations. first, restructure the vha as an independent government chartered nonprofit corporation. empowered to make decisions of personnel, it facilities, partnerships and other priorities. second, give veterans the option to seek private health care coverage with the va funds. third, refocus veterans health care on those with service connected injuries, va's original mission. the key policy recommendations included separate the payer and provider functions into separate institutions. establish the veterans health insurance program in vha. establish the accountable care organization as a nonprofit government corporate organization. preserve the benefit for

enrollees who prefer it. federal, full access to the health care system with no changes to benefits or cost sharing. select any private health care insurance program legally available through their state and veterans can use the va funds to defray to says. lastly compete a commission to implement the veterans independence act. hsi determined a properly designed version of these policy recommendations is likely to be deficit neutral. in order to fix veterans health care we must always keep in mind what general omar bradley said in 1947. we are dealing with veterans not procedures. with their problems not ours. this is why we urge you to use the independent -- veterans independence act road map to develop the road map that will fix and be the future of veterans health care. they must be assured they will be able to get the access, cho i

was, and quality health care they deserve. in this mission failure is not an option. we are committed to overcoming all obstacles and look forward to working with the chairman ranking member, and all members of this committee to achieve this shared mission. thank you. >> thank you, mr. selnick. let me interject at this point. i have read and i'm sure richard has, too, the fixing veterans health care report that your organization did which is an outstanding report. i think it's basically called ultimate choice. wouldn't that be a good name? >> yeah, that would be a good name. >> in your representation of the changes are probably far more broad than some on the panel might look for us to do in terms of preserving what va does without giving choice, but i want to commend you on that and let you know we're watching what you recommended. we're taking a look at it. we're trying to make sure -- richard and i have -- senator blumenthal and i have one underlying principle. we're going to make veterans

choice work. it's not an option that it might work. if it doesn't work we'll think of something else. we're going to make it work. how it works will take the best ideas and input and your organization's report is one of those that will help us as is each of your organizations to tell us. this is a process and an evolution as we go through but one thing is for sure. we're not just hoping it's going to be over one day. we're going to make it happen one way or another. >> thank you. >> children isaacson ranking member blumenthal on behalf of the dav and our 1.2 million members, all of whom were wounded, injured, or made ill from war time service thank you for the opportunity to testify on temporary choice program. while it is too early to reach conclusions about this program, we are beginning to see some lessons. as of last week, almost 54000 choice authorizations have been made and 43,000 appointments have been scheduled. by comparison, about 6 million appointments are completed monthly inside va and another

1.3 million appointments are completed outside va. using norn va care programs other than choice. a number of reasons likely contribute to this lower than expected utilization of the choice program. since last spring, va has used every available resource to increase its capacity to provide timely care that may have shifted some of the demand away from choice. va was slow in rolling out choice cards and in educating its staff. we also hear troubling reports of a significant lag time between when a va clinician determines a veteran is he will jabl for choice and a third party administrator can see the authorization in the system. finally, some veterans simply prefer to go to virginia. we do not have adequate information today and need to take steps to gather sufficient data before making any permanent changes. we must study private sector wait times and access standards coordination of care, patient

satisfaction, and health outcomes for those who use the choice program. mr. chairman recently dav, vfw, the legion iava and others wrote to congressional leaders to extend the mandate of the commission on care to allow at least 12 months for its interim report and at least additional six months for the final report. we called on congress to refrain from taking any permanent systemic changes until after the commission submitted its recommendations and then allow sufficient opportunity for stakeholders and congress to engage in a debate worthy of the men and women who served. for more than 150 years going back to president lincoln's solemn vow to care for him who where have borne the battle the va health care system has been an embodiment of our national promise. yet today some are proposing to make it just another choice among health care providers

while others are calling for the va to be downsized or eliminated. but for millions of veterans wounded, injured, or ill from their service, there is only one choice for receiving the specialized care they need and that's a healthy and robust va. although the va provides comprehensive medical care to more than 6 million veterans, the va's primary mission is to meet the unique specialized health care needs of the nation's 3.8 million service connected disabled veterans. if va was downsized or eliminated, it would -- the private health care system would be unable to provide timely access to the specialized care they require. even if all disabled veterans were disbushed into private care, they would only be 1.5% of the total adult population. does anyone truly believe that a market based civilian health care system would provide the focused and resources necessary

for this small minority in the way va does? mr. chairman while far too soon to settle on how to reform the va health care system and integrate nonva care we can at least outline a framework for rebuilding, restructuring, realigning, and reforming the va health care system. first, rebuild and sustain va's capacity by recruiting, hiring and retaining sufficient clinical staff and by funding a long-term strategy to repair and maintain va facilities. second restructure the many non-va care programs into a single integrated extended care network which incorporates the best featureses of fee based, arch, pc-3, and other purchase care programs and provide this program with a separate and guaranteed funding source. third, realign and expand va health care to meet the diverse needs of future generations of

veterans including women veterans. this should include new urgent care nationwide with extended operating hours. fourth reform va management by redesigning its performance and accountability report and restructuring its budget process by implementing a ppbe system which stands for planning programming, budget, and execution. mr. chairman, this framework is not intended to be a final or detailed plan nor could it be part of one at this point but it offers a new pathway towards a future that truly fulfills lincoln's promise. that concludes my testimony. i'd be happy to answer any questions. >> thank you very much mr. ross. >> chairman isaacson, ranking member blumenthal, on behalf of iraq and afghanistan veterans of america and our nearly 400,000 members and supporters thank you for the opportunity to share our views with you at today's hearing. as you know ieva was one of the leading veterans organizations

involved in the early negotiations on the veterans access to choice and accountability act. as it was being drafted and in the breadth of its final language it was being debated. it's a complex law the department is working to implement to ensure veterans are not left waiting to receive health care services. my remarks will focus on the experiences of utilizing the va choice program members have recently reported to us by way of survey research. i will provide recommendations congress and the secretary must consider in order to get the program operating at the height of its potential. these recommendations include legislative clarification of the eligibility cryiteria for accessing the choice program strengthening trading guidelines for va schedulers charged to explain the eligibility criteria to veterans, and continued active engagement with veterans organizations to more broadly identify a comprehensive strategy and plan for delivering norn-va care in the community moving forward. in examining the current

criteria for determining which vel transare eligible those who must wait longer than 30 days for an appointment and those who live more than 40 miles from a va. medical facility, more clarity is required. veterans are frequently reporting they're unsure if they're eligible for choice and va in some cases has been inconsistent in communicating whether or not a veteran can access it in individual cases. based on our most recent survey data, over one-third of our members have reported they do not know how to access the choice program. this is compounded by reports that in some cases va schedulers are not explaining eligible for choice while offering appointments outside the 30-day window. the secretary and va senior leadership just engage va front facing scheduling personnel with ongoing and evolving training standards so when veterans call the va they receive consistent and clear understanding of their eligibility for the choice program. the va has improved in this area but with so many veterans still confused boo eligibility,

training criteria must be strengthened. congress should aid in the implementation effort by clarifying that the 40 mile criteria must relate specifically to the va facility in which the needed care will be required. but through strict interpretation of the current law is ineligible because a local sea bock or other facility may be near the veterans address notwithstanding the facility cannot provide the required care. one of our members illustrated this recently bay stating quote, because there is a c bock in my area i was denied. the clinic doesn't provide any service or treatment i need for my primary service connect the disability. the nearest facility is 153 miles away. congress must provide needed clarity and work with va and it sounds like you are to eliminate cases like those just described. there have been encouraging developments related to the

implementation of the choice program, specifically va's action to step up and fix the initial ineffectiveness of the 40 mile rule calculations. that regulatory correction was much needed and as a result there are hundreds of thousands of new veterans who are now eligible for the choice program. on behalf of our members we applaud secretary bob mcdonald and deputy secretary sloan gibson for their leadership. statistics on choice utlytation among veteran population state there have been nearly 59,000 authorizations for care and nearly 47,000 appointments. this data verifies that veterans are using the program and va has been making progress to implement what is a complex yet important program. ieva is ghited to remaining actively edge gained in the veterans making use of the choice program. we are mindful that with thousands of appointments being conducted, there will inevitably be thousands of unique experiences and we want to gauge those levels of satisfaction

with our members for this program. the satisfaction of veterans utilizing choice, the cost of care purchased outside va facilities and understanding issue that is come up along the way will allow us to better realize a veteran-focused strategy and plan for non-va care in the community moving forward. we appreciate the hard work of this congress, the va, and the veteran community and recognize we have to stay focused on improving veteran health care did he livery. robust discussion on the scope and cost of maintaining health care networks is complicated which is why our next recommendation is simple. we must continue to work together and keep communication active between all relevant stakeholders. mr. chairman, we sincerely appreciate your committee's hard work in in area, your invitation to allow me to testify again and we want you to know we stand ready to assist this congress and our secretary to achieve the best results for the choice program now and in the future and we look forward to taking your questions. thank you. >> thank you very much.

mr. fuentes. is that close enough? >> yes, sir. >> chairman isaacson ranking member blumenthal, i would like to thank you for the opportunity to present our views on the veterans choice program. the vfw opposes va's change to the way veterans choose to use the veterans choice program. veterans must have the opportunity to explore their private sector options before rejecting their va appointments. this change is a bureaucratic convenience that will negatively affect veterans experiences. the vfw continues to play an integral part in identifying new issues the veterans choice program faces in recommending reasonable solutions. yesterday we published our second report evaluating this important program which made 13 recommendations on how to ensure it accomplishes its intended goal of expanding access to health care for america's

veterans. our initial report identified a gap between the number of veterans who were eligible for the program and those who were given the opportunity to participate. our second report has found that va has made progress in addressing this gap. 35% of second survey participants who believe they were eligible were given the opportunity to participate. that's a 16% increase from our initial survey. for 30 dayers, participation hinges on va's schedulers informing them of their em jint. the lack of systemwide training for front line staff has resulted in veterans receiving dated or misleading information. va continues to -- have must continue to improve its processes and trainings to ensure all veterans who are eligible are guven the opportunity to participate. our second report found a decrease in patient satisfaction among veterans who received non-va care. it's been a direct result of

veterans not being able to find viable options in the private sector. the 40-mile standard used to establish geographic based eligibility for the veterans choice program was based on eligibility for tricare prime. however, there is a distinct difference between the veterans population and the military population. 36% of veterans enrolled in va health care live in rural areas. thus measuring the distance service members travel to military treatment facilities and using that same standard to measure distance traveled by veterans to medical -- va medical facilities does not appropriately account for the diversity of veterans population. our second report found that a commute time standard based on population densities would more appropriately reflect the travel burden veterans face when accessing va health care. regardless congress and va must commission a study to determine the most appropriate

geographic-based standard for health care furnished by va. as the future of the va health care system and its purchase care model are evaluated, it is important to recognize that the quality of care veterans receive from va is significantly better than what is available in the private sector. moreover, many of va's capabilities cannot be duplicated or properly supplemented by private sector health care, especially for combat related mental health, blast injuries or service related toxic exposures just to name a few. with this in mind, va must continue to serve as the initial touch point and guarantor of quar for all enrolled veterans. all enrollment in the va health care system is not mandatory and despite more than 75% of veterans having other forms of health care coverage, more than 6.5 million of them choose to rely on their earned va health care benefits and are by and large satisfied with the care they receive. moving forward, the lessons

learned in the veterans choice program should be incorporated into a single systemwide non-va care bram with veteran centric and clinically driven access standards which afford veterans veteran centric and clinically driven standards which afford veterans the opportunity to receive private sector health care if va is unable to meet those standards. more importantly, non va care must sup lement the care. ideally, va would have the capps thety to provide timely access and direct care for all the veterans it serves. we know however, that va medical facilities continue to operate at 115% capacity and may never be able to build enough capacity to provide direct care to all the veterans that it serves. va must continue to expand capacity based on stamping models for each health care specialty and patient density thresholds. however, va cannot rely on

building new facilities alone. when thresholds are exceeded, va must use the sharing adpreemtgreements with other health care systems and affiliates hospitals when hospital and purchase care when it must. mr. chairman, this concludes my testimony. i'm prepared to answer any questions you may have. >> at the beginning of your testimony, you said va must immediately address, i couldn't write fast enough to put it down, but i couldn't find it in the testimony. what was that very first in your first two or three sentences? >> yes, my first statement was the change that the doctor just announced on how veterans elect to to use the choice program. right now, they are scheduled an appointment at va and if that appointment is beyond 30 days, then they keep that appointment and they call triwest or health net and explore their options in the private sector.

that means they're making an informed decision when they decide to reject the va appointment. if you change that to having the veteran make the election before exploring their private sector options, it's not an informed decision and actually, leads to veterans if they go to the private sector having to go to the back of the line and restart their va scheduling process all over again. >> i want to make sure we understand or i understand. i'm a veteran that lives more than 40 miles from a clinic. i'm eligible for veterans choice. you're saying i should both, make the private appointment through the midwest -- and make a va appointment and choose which i want? i shouldn't automatically go to the private provider? >> for 40 milers i believe they should continue to just contact

triwest, 30 dayers. if the va can't find me an appointment within 30 days, right now, va schedules that. say it's 60 days from now but from talking to triwest, for dermatology, the average appointment is is 60 to 90 days, so now, i'm waiting. i'm choosing from waiting 60 days in va to waiting 90 days in private sector. i should know that the wait time in the private sector is 90 days before making that choice. >> will you answer this question? zwl if i'm a veteran and more than 40 miles from a clinic and i've got my card i can call triwest and make an appointment, right? >> if you're more than 40 miles, yes, you can. the example he's citing is 30 day days wait time and the proposed process would truncate we were talking before, senator boseman mentioned, about all of the administrative material that's

being sent over. we're trying to streamline that part of the process. when this case if the veteran's not pleased with the appointment, that process happens within a couple of days and they should be able to come back to va to say i wasn't able to get a timely appointment or the tp refers the authorization back. but it is a consequence of making the change rather than booking the appointment in va and referring to veteran over to the third party admin strart. >> mr. chairman, just to be clear, there are two processes for one for 30 dayers and one for 40 milers. and i think one of the issues that the proposed changes is is looking to address is is no shows and cancellations. when the veteran accepts an

appointment in the prift sector, then tells the local facility that veteran has chosen choice cancel that appointment, however, currently, a va scheduler or a va staff member has to go and manually cancel the appointments. this would prevent that. houf however, this would come at the cost of the veteran's experience. >> i was hearing a potential problem with two appointments being made but one not being kept. >> there are better ways to addressing that issue. i'd feel that an automative process could work. but just a more seamless way of triwest and health net notifying va that the veteran has accepted a private sector appointment. >> i'm going to open the hornet's nest, but i'm going to do it any way. you know i'm going i have, i had to pay a $30 penalty from the guy keeping an appointment back in atlanta for some health care i was getting. and i think we can put everything on the shoulder of

triwest or the va. if somebody is, doesn't do their by letting the va and tricare know which appointment they're going keep i would be the first person to say there ought to be a penalty to that person for not keeping the appointment. that way, you have people, communication is complete. i know there are some not going to like that idea, sounds like a copayment, but it gets everybody's attention. if we're going to be more efficient, i think everybody's got to be part of the efficiency including the veteran getting the benefits. just wanted to put that in there, but thank you for raisinging that question. that's very helpful. >> senator blumenthal. >> thanks, mr. chairman. >> we've been talking a little bit about how to pay for the denver crossover and -- >> just figured it out. >> and the chairman has told me we just figured it out. so, this has been a more

productive afternoon than you could have have hoped. >> i apologize. >> and i want to thank all of you for your thinking through issues in such a constructive and positive way. i was taught as a trial lawyer never ask a question if you don't know what the answer is going to be, but i want to ask a kind of open ended question. give p that the choice program and the choice and accountability act creates this fund of $15 billion, my view is that the potential raid on this money and the effort to use it as a kind of slush fund to pay for cost overruns in aurora and orlando and new orleans and las vegas, where in fact, in total,

there have been $2.5 billion in cost overrun. it's a real threat to veteran's health care and we can debate how much private care should be provided. and how much it should be through va facilities. but there's no question in my mind at least that va facilities are an essential part of the health care mix. mix of opportunities. to veterans. and therefore, to say we're going to defer projects delay construction on those facilities all around the country to pay for cost overruns in those medical facilities under new construction is a very dangerous threat.

so let me make that statement and throw it open to you for comment. >> record to state his position that he opposes that taking money from the choice program and using that funding to support other means. i've heard a lot of interesting conversations today about exploring other options. thinking outside of the box, so i think that members of congress, va need to do just that. they need to put their hats on and to think about what is best for veterans. how can we come to a resolution that would serve veterans best without taking money from a program that is early in its infancy stage and utilizing that funding for other means and purposes.

i think that should, if that's an option, that should be the last option after you've explored all the others. >> let me just chime in. i would agree with him that and what you're saying in that we do not want that money rated. i worked at the va from 2001 to 2009, and every time there was a management failure $300 million i.t. program failure there was no accountability. just give me more money, give me more money. can't give any more alcohol if they're fail, you've got to fix it other ways. i always like having a bit of a va that he should do an audit of the books. maybe that money's not off the table anymore, but i'd love to see an audit to see what's really there and what's not. >> va -- oh. veterans should not suffer because va is unable to get itself in order.