talk about today -- and i know you wanted to focus on the appropriations process which is still ongoing, i will hope very soon that the senate will move and move a piece of legislation so we can get the va budget passed, i think it's critical that we get that done, but if we didn't have the choice program to fall back on today, that $10 billion, $9 billion, whatever the number is today, how would this problem be solved? >> well, mr. chairman, we agree with you, as we said last week, and as we've said from the very beginning, we very much favor the choice program. the choice program is the shock absorber that has allowed us to care for veterans at a time when -- when more veterans are entering the system and when that care is necessary. you know, the choice program allocated $10 billion for care over three years. we're already spending $6 billion for community care from the current va budget. so the idea that has been propagated in the media that shower' against the choice

program or we're gutting the choice program is absolutely positively wrong, proven by the data. $6 billion we've overspent $6 billion this year in in community care. community care is absolutely essential. >> i think the issue is your hepatitis c drug, $1.5 billion or whatever the number is for hepatitis c is part of the issue, and i don't think any one of us thinks that we should not be providing that drug. in no budget submission that i can recall was it discussed about that, although i'm hoping that somebody -- and ms. brown actually talked about the forecasting -- that somebody was

looking at the approval of that drug and that it was coming on and that if it did come on that it was going to cause a significant issue as it relates to the non-va care item, line item he, of $6 billion, which is gone now, it's never been gone before, but all of a is sudden this year it's disappeared. and my question was if we didn't have the pot of money that you're looking at now to solve this crisis, how would we solve the crisis? >> mr. chairman, what we're saying is that based on the laws that the congress has passed there are certain benefits we have to give to veterans and the budget has to match that. without the choice act the budget clearly would not match the laws that we provide to veterans. remember, as i said, only just about over a third of veterans are using the system and with every new 1 percentage point of veterans who enter the system we're talking about $1.5 billion. i think an incremental $1.5 billion. i think the point you make on the hepatitis c drug is an

important one. i talked about the length of budget cycles in the federal government. we started the appropriate appreciation for 2015 because it's an advanced appropriation sometime around 2015. these drugs were invented between 2013 and 2015. i couldn't have been anticipated. we had two more hepatitis c drugs come out. how do we work together to create the flexibility in the budget cycle so that we can deal with incremental demand of veterans and new special causes like new drugs? and that's what we're proposing to work together with you on. >> according to your staff the veterans health administration has taken a number of steps to curtail the shortfall, including revised guidance on the use of non-va care, halting all nonessential hires, purchasing and travel and pulling salary dollars for medical center can accounts.

one area that i see that hasn't been looked at and that is the issue of bonuses. what is sacred about the bonus $350 million bonus pot that would prevent you from accessing that money and if you need flexibility we will be glad to give you flexibility to use that, too. would you not look at every crevice possible? >> mr. chairman, you probably recall the meeting you and i had in your office where we went through the relative ranking and the accountability steps that we've taken within va. one of those steps as you may recall, is nobody in in the veterans health administration, nobody, is receiving a bonus for 2014.

and also the relative ranking that we did of their performance, no one in the veterans health administration received an outstanding rating and i would deny you, as i did that day, to compare our relative rating, our relative performance rating, versus the relative performance rating of any other department of government and the best companies in the private sector because we were following the principles of the best companies in the private sector. >> and i appreciate the meeting that we had, the information you provided and my time has expired but i want to get for clarity, nobody within the veteran health administration is getting a bonus? >> no executive. yes, sir. >> there's a very distinct difference between executive and the line employee. i just wanted to make that clear. ms. brown. >> thank you, mr. chairman. first of all, let me just say that it was a beautiful services that we had here last week in the capital for the vietnam veterans and, you know, that glitter is very nice, i mean, they deserve it, but they also deserve the services.

now, i participated in every choice meeting, every conference, voted on it and the purpose of the choice was to provide veterans services to veterans, their care. can you expound more on the flexibility that you need? because when i think about it, i think about the gi bill. veterans can go to any school that they want to, so the money follows the veterans. so can you expound on that flexibility that you need, that you've come to congress both openly and in private and explain to us that you need the flexibility. >> yes, ma'am. thank you ms. ranking member. as we've said, there are about 23 million veterans in this country, only 9 million are signed up for our healthcare system and probably only 6, 7 million use it on any given day. so there's an opportunity for

every veteran to use our health system and we would like that, but in order for that to happen we've got to have the flexibility to be able to deal with an influx of veterans as we improve care. one of the things that you're probably aware of is if you get your knee replaced with medicare it will cost you roughly $5,000, if you are a veteran and you get your knee replaced using the va you save $5,000. so to the degree we improve our system and we improve access to our system more and more veterans will enter the system. as we said earlier, every percentage point of veterans who enter the system is going to add another $1.5 billion of cost. with 70 plus line items of budget where we can't move money interest one line item to another it distorts what we do. it causes situations like we're this today and the whole purpose of the choice act was to improve care for veterans.

the whole purpose of the choice act was to get veterans' care in the community. what we're talking about is a shortfall in care in the community. so it really defies my logic to understand why we can't use choice care money for care in the community since that's the reason it was appropriated. the money has already been appropriated, it's sitting there, we'd like to use it to care for veterans. as more veterans come into the system we want to care for them, too. >> one of the complaints or challenges is -- that you talked about knee replacement. so if someone goes into one of the choice programs for knee and the doctor determined that both knees need to be replaced, you condition do it based on exactly how the choice is working right now because that other knee has had to carry -- i mean, i know it's getting technical -- can the medical person explain to me why? >> so i think if the veteran

needs both knees replaced under the choice program they could get both knees replaced, it would require a second authorization for the second procedure that needs to be done. i think that the challenge for us is really, you know, the chairman asked, well, what would we do if we weren't in the situation where we have the choice funds. and the fact of the matter is we probably this year would have done what we always have done, we would have managed to a budget, but we didn't do that this year. we managed to our requirement and that requirement was that no veteran would wait more than 30 days for care. and while we have worked very hard to make the choice program an option for that patient who needs that knee replacement the fact of the matter is today a lot of our care is going -- we're buying it through mechanisms outside the choice program, but we are doing it so

that no veteran waits more than 30 days for care. and then accessing the resources to be able to pay for that is, i think, our challenge today. >> my concern is those community programs that we've been working with for years, universities, other stakeholders. what's happening to those programs? because we've cut the uses of some of those programs because of the shortfall. >> we have curtailed the use of those programs for elective care today. our interest is actually making choice programs the premiere program. to make that program the predominant way that we get care and we have worked very hard with both health net and tri-west to get the 87,000 providers that we have used in the past, some of those are our academic affiliates, to sign up to be providers under the choice program. and for our academic affiliates we offer them both indirect and

direct medical education overhead expenses and the reimbursement that they have negotiated with cms. >> thank you. thank you, mr. chairman. >> mr. lamborn, you're recognized. >> thank you, mr. chairman. thank you for having this important hearing. secretary mcdonald, you've come in here basically demanding $3 billion or healthcare in large part shuts down on august 20th. and i'm just amazed that we're in this position. do you -- do you and your leadership team at the va have any accountability or any responsibility at all for this happening, and if so, how much? >> well, of course we do. and as secretary -- deputy secretary gibson laid out in the last hearing on the same subject, just a few weeks ago, there are many reasons that we

are where we are. and i think we all share some of the responsibility, including members of congress. we have a new program called the choice program, it's hard to predict new programs, we have seven different ways of providing care in the community and at the time the choice -- >> okay. >> excuse me, is sir, you want to interrupt? >> yes. let me interrupt because my time is limited. we've described what the layout of the land is, you -- >> i was going to go through the reasons we are where we are and i was going to show you what accountability we have. >> okay. do you have any role in this? >> we all do. >> is what i'm getting at. >> we all do. one of the first things you learn your first day at west point is to say no excuse, sir. one of the thing that baffles me is we're dealing with a computer system that's over 30 years old, called the fms system, it's written on cobal which was a language i wrote in 1973. we've got to change the management system of the financials of this enterprise called the va. the problem that we have is when

we benchmark private industry our it budget is about 50% of what a healthcare system i.t. budget is so we've got to fix that. at the same time we've got to improve our management of the financial systems and we're going to work hard to do that. at the same time it would help us if we had flexibility rather than over 70 line items of different budget that we can't move around. >> see, my issue is that every time one of these problems comes up on an almost weekly basis it seems like this year, we want -- we hear pleas for more money or more flexibility to go forward but we never get to the bottom of what caused it in the first place. that's what i and the rest of us are trying to get to the bottom

of. >> i you want me to repeat my opening statement? i thought i was clear about what caused it. last year you talked about miss management not giving veterans care, no you miss management is giving veterans too much care. >> no. no. no. here is my -- here -- here is my real problem here. you say that on august 20th there's no other option for -- except for an emergency supplemental by congress, you're going to start closing down operating rooms, hospitals, clinics all over this country and there's -- and with a $60 billion healthcare budget out of $160 billion total budget there's no other way for you to see around this problem than to tell veterans they can't come into the operation room after august 20th. >> sir, i didn't say that. i did not talk about a supplemental. what i talked about was using part of the $10 billion that's already been appropriated by congress for care in the community to pay for care in the community.

that's -- that's the lunacy of why we're here talking about this. we're talking about using it to pay for care in the community. >> mr. chairman, i yield back. >> mrs. brownley. >> thank you, mr. chairman. thank you, mr. secretary for your continued leadership to right the ship here. i appreciate it very much. i do think that flexibility is part of the solution. it's not the panacea, but it is part of the solution. i think clearly we need to be more nimble to serve our veterans and to serve them appropriately, and the way they deserve it. closing hospitals is not a choice as far as i am concerned. i think we have an i.t. system that can't track spending and can't reconcile a budget in a

timely way, and i would argue -- and i think you've eluded to this in your testimony, but i would argue that, yes, there has been an increase in demand from our veterans, but i would also argue that the v.a. is pushing more resources out the door than they have in the past. and that's a good thing. because pushing more resources means that more veterans are being served and being served appropriately. i guess, you know, my question, you mentioned about areas that we need to improve upon, and you mentioned i.t., we're spending 50% of what private industry spends in their i.t. systems, and better management, checks and balances. what are we going to do? i think before we need before we move forward in any way, shape or form, we need assurances these kinds of things are going to get fixed.

we can't move towards flexibility and hope and pray the next time we will be better off. we need assurances that these are going to be fixed and we will know in a timely way where we are if we ask the question today, we know exactly where we are in terms of money that has been spent and what the balances are, so share with us the specifics and when you think these things are going to be fixed so that we don't approach another fiscal year with the same kind of calamity that we are facing today. >> thank you, and i, again, want to reiterate, we do own these problems and want to fix the problems and i didn't want to give any different kind of impression with the questions, and it starts with getting the right people in place. as you know, we just got confirmed, mr. laverne counsel who is the secretary for the

office of information technology. she was the i.t. leader for johnson & johnson and dell, and i have been working to recruit her for many months, almost since the day i was confirmed. we have to get the right leaders in place, and i think we now have them. what we then need to do is benchmark other operations, which we are doing. in the case of the fms, the cobalt system i am talking about, we have to replace it and until we replace it we have to take brute force effort to make sure we are doing a better job of keeping track of the budgets and keeping you informed of them. one of the issues here was when you pass the choice act, you demanded in the choice act that we account for here in the community in a different way than we were doing it previously. you asked us to centralize that,

and that change helped exacerbate this situation. nevertheless, we tried through brute force to try and keep that accounting whole so that we could understand what was going on. but there is no question we have got to do a better job. >> mr. secretary, for me at least, i presume we have the right resources to find the people for the right job, and that's part of the solution. i have to say i don't have a lot of confidence having served on this committee now for 2 1/2 years that the v.a. -- you have not asked us for additional money for an i.t. system, yet. i assume that will come. and i don't have the confidence that within a year we will have

a new i.t. system that provides tools that we would need to be able to have a timely data and timely information in terms of where we are. is there something that you are working on specifically -- >> obviously, this is a high priority for us. before we design an i.t. system to deal with seven different ways of paying for care in the community, we ought to work together as we talked about at the breakfast, to making one way to pay for it and making the i.t. system will be easier. >> thank you, mr. secretary for being here, and i guess my biggest problem, frankly, and i agree with having more flexibility in accounting, and nothing irks me more than seeing new windows put in a v.a. and we don't have other things, so i agree with that. i am concerned about the fact that we didn't know about this

whole situation until, what, two weeks ago or less than that? we had mr. gibson here, and all of a sudden it's like a crisis. i think from my perspective i was kind of hoping that you would have a plan to reform the v.a. and, you know, make it, you know, all good, and you talked about some of that here, but i have not really seen you come out and tell me -- maybe the chairman knows something, but i don't know about the reform process going on. i am really disappointed in the $3 billion shortfall. why didn't we know more about this in advance? what is the story with that? why don't we know about it sooner? >> i want to draw your attention to this, we give you this on june 5th. it was about denver, about

replacing the denver facility, but i thought it was important at the time we published this to give you a heads up on the work to reform the v.a. if you turn to the back of the book, the last 56 pages are all about the transformation of v.a., and we have sat down with those members of congress who are interested and gone through the detail, and they happen to be mostly in the senate, but we would love you to take you through the detail, and we set up an advisory board that includes some of the most outstanding ceos in the country helping us, and every member on this committee has 56 pages of what is going on. we're happy to spend more time with you, and we would like you to be part of it and in fact we would like to have hearings talking about what we are doing to transform the future. relative to the shortfall, our

first knowledge of it was around the middle of may. at the time we had a meeting with the eight corners, both the senate and the house appropriations and authorizing, and at that time we mentioned three issues, one was hepatitis c, and one was denver, and denver was the reason for the community, and the third was the cost of care in the community and at that time we thought we could solve the problem, we thought we could solve it by putting more veterans into the choice program and therefore not relying as much on our internal care for the community budget. we obviously could not solve the problem. we thought we could use unspent money from previous years to do it, and we got legal opinions and omb opinions -- >> is there unspent money from previous years?

>> yes, sir. anytime you have budget line items over 70 where you are inflexible in moving money from one budget line item to another, you will have unspent money. one way to rid the government of unspent money -- that's the way businesses do it. >> so in the last five years, and as those obligations are expensed the obligations -- there are funds that get deobligated, and those funds sit in the treasury. >> how much is there? >> for about the last five years, there is $1.3 billion. >> i had another question about maybe third party reimbursement for nonservice connected care, and i have heard that is an issue that the collections are not what they should be. can you give me a situation update with that?

>> i think -- so our collections this year are actually up significantly. i have not refreshed that number in my head and i think it's about 7% higher than we anticipated, and we are working hard to improve the collections. a lot of patients who have insurance have a gap coverage, and without an eob they -- >> eob? >> explanation of benefits. because we are not medicare, those providers don't pay us. we are working hard to collect every penny that we can. >> i am out of time, apparently. >> mrs. titus. >> thank you, mr. chairman. a lot of that money leftover, though, was used quietly to pay for the continuation of the denver project, wasn't it?

>> are you talking about the money from the treasury for the last five years? >> wherever you found that. >> that money is in the treasury. it's not available to us. we can't use that money. we thought we could, and it's money that essentially becomes, as i said, deobligated as expenses come in, and also sometimes that -- there are new expenses for whatever might have happened in, let's say, in '14, and that money is used in that year, so you can become anti-deficient after the fact, so to speak. so that $1.3 billion was not available to us. we had hoped it would be. i was the staff person that had the cryptic conversation with the house staff back in june, and we had -- we thought we had

a plan when -- i mean, in my opinion, quite frankly, we are a victim of our success. we have gotten many more veterans care -- >> okay. but where did you find that money for denver? >> the money for the denver project that we talked about for this year came from the current year budget, not from previous years' budgets. >> also in that report that you reference, that's where you also listed as a possible solution for denver taking a 1% across the board cut, which in retrospect now seems like not a very good idea when we are so in the hole now, we could not have afforded a 1% cut, but at that time apparently you thought you could? >> that's correct. >> well, there is a lot of teeth gnashing and hair pulling here

today, and i agree with many of the things that already have been said but the fact of the matter is we can't let hospitals close and we have to look for flexibility. i think some confusion here, over the difference in the care in the community programs that have been consolidated and choice, and it seems to me there is very little difference from those, aside from naming and contractors and they are both about care in the community. is that accurate? does that mean flexibility is not that big of a problem? >> yes, your statement is accurate in principle. in execution, though, it's incredibly complex. i would ask you to look at the chart that we gave you. what you will find, we have seven different programs, all of which have different payment methods and exclusion amounts. i was traveling with a senator that brought in providers and

they all complained to me about every program we had except for one, and obviously i knew the reimbursement rate for that program was higher. because you have different reimbursement rates you have providers distorting the system and encouraging one program over another. what we proposed, legislation to the chairman and senate is to bring them all under one program and one reimbursement rate and make it easier for the veteran and va employee. >> doesn't that mean the flexibility that you need from the choice program to that consolidated community in the care would make sense? >> yes, ma'am. >> i am trying to help you, ma'am. >> that's exactly right. >> our community care programs are what we used to call purchase care, and used to call fee, and there are a lot of things in those programs right now that are not covered by

choice and will require statutory change to fix that. so long-term care is not covered by choice right now. home care is not covered by choice. >> can you work with us to look for legislative fixes and not just the senate but maybe some of us on this committee? >> we absolutely have. we are working on 13 things that we think need to be changed and we will have made a commitment to sit down from staff from this committee and the senate to address those issues. >> i have been notified that you all are looking at moving southern nevada from the vision 22 to 21, and that means veterans instead of driving four hours to los angeles will drive nine and ten hours to san francisco. i will be speaking this week later with somebody, but i want to put it on your radar because this is something that we are very concerned about. >> thank you.

we are trying to simplify the organization structure, but we want to make sure that it's better for veterans and not worse. >> thank you. mr. secretary, you have provided us with draft legislative language that would combine -- >> i have not as yet. i made a mistake when i said that. we have not yet provided the consolidation legislation language. >> mrs. titus, the biggest difference between the non-va fee care of what sits in there today and the choice, the non-va fee care money, so that was the biggest thing that was done from our standpoint. >> and mr. secretary, i appreciate you coming. this is a very difficult discussion for me.

i had great hopes we would move forward in the last two years to fix some of these programs, but as i see it you are coming here before us with the most massive short fall in va history, nearly $3 billion. i am not certain, when did you personally know when you had the short fall? >> around the middle of may. >> if i understand the numbers correctly in this particular line item it's approximately 50% over the budgeted amount? is there a level where they come to you than halfway through the fiscal year to say, hey, we have a problem? do they not come to your attention until they are 50% over their budget?

>> when there is budget overage, you try to fix it. >> there's a $10 billion source of funds called choice and what we are talking about -- >> i do know that. i do know that. what i would like to know is why you low balled va care estimates? the actuals -- you came in and projected they be 25% less of the actual figures for 2014. you came in and projected you would save $1.5 billion, and they would be lower and they are coming in at 1.5 billion over your estimates. on one hand --

>> when did i say that? >> in the budget submission to congress. >> in my 2016 budget testimony. >> maybe your staff didn't tell you this, and that's why i ask about the 50%. fiscal 2014 $6.3 billion of actual spending and you come in and say we need a $4.9 billion, and that's a 24% cut, and then you are surprised to come in and say you are going to spend more than in 2014. you low ball the figures and then you come here and say not only did we not cut $1.5 billion, we are going to add another billion on top of it. that's what i don't understand. >> i'm not familiar with the figures you're talking about. maybe jim is. >> i don't need to hear an explanation. >> i got the information as quickly forward as we can. >> mr. secretary -- please. >> the deputy secretary was here and we're here today. >> i would like an explanation of why you projected a 25%

reduction in this line item. saying you want a 25% increase over last year? >> i am not familiar actually with the information that you have, and i would be happy to look at it. what i can tell you -- >> if i could yield back. >> very quickly, i believe it was the va cfo that did provide that information to us. >> here is my concern, mr. secretary, and i know in our closed door meeting in february you did tell us on this panel, you do support va choice, and then you come in and requested to raid those funds and use them elsewhere, and you hear from others in the department that you have many employees that are not very supportive of choice, and somehow we don't have a lot of veterans moving into choice, and came in well under budget. but then somehow a few months

later, we come in and we requests essentially what we wouldn't do for you earlier. i believe your department either low balled purposely or severely created a severe mistake. how can you claim that massive cut? that's what i don't understand. >> actually i don't know what you have, but i can tell you this year we started off with a budget of $8.2 billion for care in the community, and -- >> no, you are wrong on that. that's what you spent last year. >> no, i am not wrong on that. >> the budget amount of $7.2 billion. that's what you put in your budget. >> what we budgeted internally was $8.2 billion for purchase care, and we had hopes that the choice program would offset some of that and we took $688 million out to pay for hepatitis c drug. >> out of a $3 billion that

leaves 80%, and those are not the numbers you provided to the committee. i would like to see those clarified, mr. chairman. one last thing as well, and for the secretary, for everybody here, i know yesterday you apparently told the vfw we were cutting the budget, and that has never happened, and hopefully that has been misreported in the media that you told them the congress cut your budget, but i don't want to know how many employees have been fired for the waiting scandal. is that only two? is that correct? >> i think as you know we sought discipline terry action for six gone and two already retired and we have over 100 investigation for wait-time manipulation, and last week i think you saw an announcement that the fbi actually indicted someone, so these investigations do take time, congressman, and the good news is they are getting to

fruition, and as they do we are taking action. as you know, i have been secretary, since over 1,300 people have been terminated. we have nine of our 17 members and new leadership team in the medical centers, and 91% of the medical actors are new, and i hope we have a change in culture and performance and that's why we have 7 million more appointments this year than last year. >> thank you. >> mr. secretary we do have an outstanding question in to you in regards to the 1,300 have been terminated, and how many were probationary? >> we will get that to you. we have to count that by hand. >> i want to try and focus in on an issue that i think may be

causing confusion. community nursing homes, i think -- the v.a. redefined it to include some other programs. state veterans homes of which i'm very proud of the one in new hampshire. community nursing homes. i think you've mentioned home health care. and i just want to be realistic, given the aging demographic of veterans in new hampshire. we have 65,000 vietnam veterans who we are committed to serving. but just so that we all understand going forward, we're

referring to this as sort of a crisis situation in the short-term, but long-term, if we're making the commitment, a bipartisan commitment that we've made to shorten timeframes for waiting, to provide greater access to hire more professionals, i want to understand exactly what is in this umbrella of community care and how we expect to meet this need and pay for this need going forward. >> so we -- in the legislation, we were required actually to centralize all these programs under the chief business office and to centralize those -- >> required by whom? >> by the choice legislation. >> so we did that and when we did, we have always called them purchased care really. when i came in 23 years ago, it was fee care.

we were calling it non-v.a. care. when 20% of our care on a cost basis is out in the community, it's not non-v.a. care anymore. it is v.a. care so we call it now v.a. community care. we're trying to change how we talk about it and the mindset in the organization about what we're trying to accomplish. so you are correct. both outpatient and inpatient care that you think of, it also includes our nursing home care, our state home care home care, champ v.a. those list of things are there. i'm happy to get you the detailed list of those and the breakout financially of what's being spent in each of those. >> and is it your proposal going forward that we would consolidate all of those into one program that we on capitol hill refer to as choice but it

could also be referred to as community? >> so we have all these programs and then we also have as the secretary said seven different ways of acquiring those services, through sharing agreements, through contracts pc3, arch, all these things. i think our proposal, and we really want to sit down with the staff and jointly hammer out what a future state might look like. i think that the choice program is a good program. i think that if we can figure out how to make that model work across all of these community care benefits so that we have a more unified and structured way where we have one billing system, one way to authorize the care one way to get information back, the same kinds of providers that can provide those services, then i think we would be much better off. we can actually explain it not

only to other people, but to ourselves. >> and then let me understand when that was consolidated under the choice act to a central -- presumably here in washington, or is it located somewhere else? >> well the chief business officer is here, but we have pieces of that office in atlanta and denver and austin. >> when that was consolidated it sounds like there was an unintended consequence or an inadvertent result in that you no longer had the information that is very regional. i know in our area these are individual decisions, and as the secretary mentioned the reimbursement rates, whether a particular clinic a particular nursing home, a particular home care program is going to accept this rate, enter into a contract. have we -- is it fair to say

inadvertent that congress wrote it that way -- is it fair to say that's created a problem? >> i think you hit the nail on the head. i think that these programs -- most of the outpatient care, the big bulk of it, the nursing home care, state homes all that stuff, was managed locally by a medical center. they had a budget for it. they had the clunky information systems that we had. but they kind of were able to keep track on it. and when we centralized that maybe we should have anticipated some of the problems but we didn't. and i think that we lost a lot of intelligence about the obligations that were being made, because you have the authorizations in one system and you have the obligations in a different system. and at a time, quite frankly when we have unprecedented volume of care that we're buying in the community. so maybe we should have anticipated those things, but i think it was an unintended

consequence, and we did not expect this to happen. >> and i appreciate your candor. this is something that we also have to own on our side of the table, having drafted the legislation that way. i think we were probably anticipating a better data system, which clearly we have a problem with. but this is not unique to the v.a. that the federal government made authorizations and obligations, and then ends up having to pay the piper. so our focus is meeting the needs of the v.a. and the veterans all across our districts in every corner from el paso to pittsburgh my northern most town in new hampshire on the canadian border. but the question becomes going forward, how do we reintegrate that vital information? my time is well up.

i apologize, mr. chair. i was watching his clock. i thought i was on the way down. i was on the way back up. excuse me. >> was there a question that needed to be answered? >> mr. chairman, i think the answer is we're going to work with you to develop that legislation that integrates all the different ways of community care. >> ms. brown has a statement. >> i just want a follow-up to that question. because once we passed the choice and we move how -- we had the accounting system. you all caught the problem because when you all reviewed it and you were looking ging at it coming in, it wasn't adding up. so that's when you all went in for an individual audit. can you explain that? >> yes, that's exactly correct. so back when the first quarter ended, we were -- it was clear that we had about a 40-something

percent increase in the authorizations, but we were on plan with our $7.6 billion expenditures for a purchase care in the community. when we sat down and said somehow this doesn't make sense i could think of a lot of reasons why it might actually make sense, but we didn't really know and we felt like we needed to look at this. so we did. in january and february look at that. it took us a while to understand exactly what the problem was going through the system. and then once we did that, we had to sit down and reconcile millions of authorizations by hand to understand the magnitude of the problem. and it wasn't until really late april that we understood that, the magnitude of that problem. we put a plan together, which we thought was going to resolve the situation. and as i said, the pillars of that plan started getting pulled

out kind of from underneath us. and it wasn't really until may, the middle of may when we said look, the plan is not viable and we don't really know how to fix this problem without driving more of the care really through choice and accessing choice dollars for their intended purpose, which is to buy care in the community. >> thank you. >> i do think it's important to note that just prior to folks finding out that this was an issue, we swept -- >> is that you? >> no but somebody's got a cell on on that needs to be turned off. we've got $150 million that we swept out of the v.a. to give to denver. is that correct? >> i believe so. i don't know for sure. >> so you knew that there was a

shortfall coming. but you thought it was critical that you go take $150 million and give to denver rather than allocate it -- >> i wouldn't have sequenced it that way. i think the action on denver pre-dated this understanding that was discussed. i mean please understand that every tool was being pulled out of the tool box to do away with this. even to the point where we had medical center directors voluntarily reducing their salary budgeted their compensation budgets. we had employees willing to give up their compensation in order to meet this need of veterans in the community. >> maybe some bonuses, too. >> mr. secretary, good to see you. thanks for being here today. you know, the problem that i don't understand with this -- this is what i don't get. so that it seems like it keeps coming back to this issue of perception. you know, you come today, you

talk -- you have all your stats you have your tables and your graphs and those kinds of things. and we over here, we want solutions just as badly as everybody else, because we're fighting for veterans in our district and in a bipartisan everything that we can do legally through a leg slave theislative process but what we've been up to is multiple hearings that go on every other day in this place. we looked the at the continued whistle blower retaliation, failure, systematic failures in philadelphia, oakland, denver cost over runs and i've been involved and every time your it chief has been here and we talked about this as well earlier, getting answers from the i.t. department do you need money to upgrade what you have? no, ma'am, no, we don't. do you have what you need and have needed to keep up with? yes, we do. do you have a domain issue that's been encrypted? no, we don't. that's what we've been up to and the american people. we've been sitting here asking

questions since the last time we met permsonally in a body like this and this issue of trust and verify is dominant in my mind because my fear is that i love the issue of flexibility. you know i sit with another member, i am on the armed services committee. they need to move funds i understand that. there is a history i can track that is transparent and open and the american people seen there is a verifiable need. my concern is back to the other points folks made is what is going to be the guarantee today when we leave here and we're going to continue our pursuit of all this oversight of everything else that goes on in the v.a. that the american people hear about and i sit here shocked thinking we just heard about that crisis and is there anything other number one than the threat of shutting down medical facilityiesfacilities, is there anything else that can be done but if the flexibility of funds

is the answer, where is the guarantee? are we looking for a marker you can say in six months this is what you'll see and i guarantee it. i put the pow of my office behind it. >> i think the only guarantee i can give you is one that we're putting the right leaders in place, and that those leaders are leaders who are trustworthy and we have to earn your trust. i think that's the strongest guarantee i can give you. >> i understand and i appreciate that and with all due respect, i accept that as your answer, i guess the problem is this, that we've been at this longer than you've been table and we're still celebrating the day you kale and came and took this and your confirmation was a year ago and in some areas you've been incredibly helpful. my concern is this, that when we talk about being flexible and moving funds and we don't see and you know, we're the eyes and ears for a quarter of a million

people, that's what we hear and see and when we get the information and sit here in hearings and don't have the verification on 1300 people we don't see the shake rattle and roll of your side and those are the kind of things that i want to see you know. it wasn't too long ago veterans were dying because of intolerable instances exposed here in this place through media of what was happening to the veterans. i want to see people go to prison. there were people that died that will never be accounted for again and the gross abnormalities happening at the ends of v.a. administrators and i would think with the 1300 people terminated the fbi investigation and those things that maybe we wouldn't have as many hearings as we've had but we still have instances of offenses against whistle-blowers. i.t. issues american people shake their head at no reform

and we sit here today and i feel bad. >> i wouldn't say nothing is working. a year ago, more than a year ago we virtually 300,000 people on wait lists. today we have 7 million more completed appointments and wait times on average that are five days for specialty four days for primary care three days for mental health. i defy you to find another medical system in the country that has that. i mean we are here and we are all for shining light on what we're doing because we think it makes us better. and we appreciate your partnership to do that like we appreciate -- >> i don't want to make light this is an easy decision and don't want the american people to think in the state of indiana, $2.5 billion is more than real money. it's shocking money. we toss that figure around of $168 billion budget like we're

asking for this little amount of money but i'm asking for a guarantee and for somebody someplace to stand up and say, you know, never again on my watch, never again on the secretary of defense watch or anybody else's or this president will we tolerate what happened and i want a guarantee that says here is what history says, we're still having hearings on massive amount of issues. that's what history says. i want a guarantee going forward this will stop and the final question i have for you is when did the president know that there was a crisis in the v.a.? >> i think the the president has been working on a crisis in the v.a. for a long time. >> when did the president know about this budget crisis? >> the first discussion i had with the president is the crisis that we have. >> when -- >> that's -- >> when did our president know about this hearing we're having today we're $2.5 billion short? did you tell the president? >> pardon me? >> did you tell the president? >> of course told chief of staff, sure. >> when did you do that, in june? may? when it started happening?

okay. >> i knew about the middle of may so probably around that time. >> i appreciate it. thank you mr. chairman. i give back my time. >> i have information your office did provide to us regarding terminations and i have 958 were probationary terminations out of that number. mr. ororke. >> thank you for your answers today, your testimony and your service to the country. i had a town hall meeting this saturday, and as with almost every town hall it was dominated by concerns about access to the v.a. and primarily mental health care access which seems to reflect your own recent rankings as of july 1 out of 141 mental health care systems within the v.a. el past sew ranks 141s, we're dead last. one of the veterans who came up

wonderful young man, incredibly patient and polite said that friday, the day before he had a mental health care appointment scheduled for sometime at 9:30 a.m. at 7:00 a.m. he was called and told his provider wasn't available. he would be called back. nobody called him back. he came to town hall to let me know. i called gail gram and she got him an appointment this week so he's going to be seen. but i tell you that anbecause we're ranked worst in the country for access, show us at about 17 days when i ask the veterans in my community and we did a statistically valid survey about access with a margin of error under 4% they tell me that it takes about 64 days on average to see someone. so i just want to register this note of concern especially given the wait time scandal we had last year that i don't think v.a. statistics and reporting on

wait times reflect what veterans actually experience and when i ask veterans as opposed to the v.a., i get a very different number. and so i just want to register that with you and i want to thank you for your commitment to turning the situation around in el past sewo. we haven't provided flexibility. the worst nightmare for veterans and currently experiencing in el paso, they are unable to get access to see somebody and 34% of the veterans could not see a provider at all for mental health care access, whether 16 days, 60 days 34% could not get in. i want to make sure that we go back and look at those numbers and make sure they reflect the reality as veterans are experiencing. >> i would suggest we do that. let's get our numbers and your numbers together and understand the basis of your research and the basis of our numbers and see if we can sort through it.

we have work to do in el paso, you and i and others have been working on that. we know that. >> we've submitted a proposal a pilot project to you and i thank you for reviewing it so quickly would love to work with you going forward to implement that or a better idea if you got one but we've been at the bottom the of the barrel and that translates into care deferred, care denied, suffering on the part of veterans and veteran suicides in my community. i met with too many families, surviving members, this cannot go on. so i don't mean to be but i got to on behalf of the veterans tell you we're in crisis now and need your help. whether it's our plan or yours, let's turn this around. i'd like you to talk about i don't disagree with your request for flexibility. i think it makes sense. and i don't know that i would have a problem long term if i knew you were going to be the v.a. secretary for the next five

or ten years to carry the this out. but in thinking about a policy and a set of rules that we laid down for future secretaries and the v.a. to follow going forward, how do we not create a moral hazard in the aurora funding in this $3 billion short fall in future requests from the v.a. that whatever happens at the v.a. and what additional resources are needed congress will provide them without necessarily getting accountability or safeguards going forward we won't need to plug additional gaps to the tune of billions of dollars. >> we want to help with that as we put together the proposed legislation, we would like to put in safeguards and restrictions we think would be necessarily regardless of who is in office. that's certainly part of it and i said that in my prepared remarks. the thing we got to work on is we got to find a better way to predict what demand will be. i talked about the 34% of veterans who are accessing care in a 1% take point defense being

1 billion and a half dollars. we got to get a handle on that and we've got to work together forecasting what that will be and building the system. as i said 2014 the crisis was because of the vietnam era of veterans, not because of iraq and afghanistan if we don't get ready today we won't be ready 20, 30, 40 years from now. >> i'd like to ask you to consider an idea, not my original idea, it was brought by the summers family at a hearing we had on the survivors veterans that committed suicide because of lack of access or problems within v.a. and that suggestion was as you are referring care out and said you had a 36% increase in community care last year, their suggestion, which i think holds a lot of sense is why not refer that care out that is comparable to what the civilian population would need?

i use the example of diabetes where you have the flu or dental care and for those signature disabilities and conditions related to service and combat, posttraumatic stress military sexual trama, v.a. becomes the center of excellence for access quality of care and outcomes. any quick thoughts on that suggestion from the summers family? >> my only quick thought is that patients like to go through the same medical doctors so if you have a primary care physician, you want the primary care physician connected to the specialty physicians. one of the things i'm trying to work given we're given community care is to improve the understanding of the military culture among private sector doctors. we've been working with secretary burwell on this and if somehow we've got to do that. the primary care physician has to ask the person have you served? have you been in the military because there is a different

culture and set of questions that need to be asked if they have. we are working on that. >> i think we agree with your position actually, i'm not, i think coordination of care issues says we need to provide as much of the services as we can but there are some things, mental health is one of them that you cannot readily go out and buy and we have to be the center of excellence. we have to be able to provide the infrastructure to support those services for veterans. >> great. i'd like to use this basis of agreement to prototype this in el paso, somewhere to see if this actually works. with that i yield back to the chair. >> why el paso? >> i don't know. just comes to mind. >> i want to wish a very happy birthday to dr. row who is now recognized for his five minutes. >> thank you, mr. chairman and couple of things. obviously, mr. secretary you're here for the same reasons, to provide the highest quality care for veterans that we can provide

in this country as they have earned. i think one of the frustrations that i've had on this committee is that we have as a committee i've been here six and a half years and we keep providing more and more and more and more money and then we have the v.a. come back for more money. and we see things like the building in aurora, beat that horse to death. i think of a billion dollars, those wasted at aurora that could have provided v.a. veterans health care. i don't know where it went. we had a failed system between dod and v.a. that spent $1 billion to try to integrate two health care records vanished. the money is gone. that's the waste that i see and no way on the this earth would you have allowed that to happen at your shop when you were and no way would i allow that to happen when i was the mayor

where i was or in my own practice i couldn't have survived doing that and what has happened is both sides of the isle want to provide for the care and we feel like we're caught in this trap and the chairman mentioned bonuses and things we see, we go back out and go home and talk to our red veterans and i got to tell you in johnson city, tennessee these numbers in the v.a. hospital they do a fine job and matter of fact, i get veterans all the time that tell me how much they appreciate the care they get there but there is no way on the this earth that the primary care is four days and the mental health is three days and the specialty care is five days. i don't know where that information came from. it doesn't exist at our shop, i can tell you and mr. ororke just pointed it. not to beat a dead horse, but i don't know where that came from. >> i would love to get the information from you, the

veteran, name, date where you believe that that's not true because we really do need to make sure that our data is has integrity and the only way we can solve that problem is if we work together to make sure we have the right data but we those are helpful but we need names and dates. >> i can get a big long thick stack of names and dates of people that can't get in and i think that's amazing that you can, if this is true, i certainly couldn't do this in my own private practice. i couldn't meet that criteria an average clinic appointment four days or five days. most doctors are booked up for weeks ahead or at least a month ahead. anyway, enough on that. the other thing i wanted to bring up and i think the choice program, as i understand it as we envisioned is to help get rid of the backlog not the v.a. care but eliminate the backlog. if that program is going to

continue and it is sunset, i think you're absolutely right, there ought to be one system of taking a veteran from the v.a. to outsource care. i don't think there ought to be three or four ways to do it. it ought to be easy. i've talked to several veterans and i'll be delighted to let you talk to a veteran service officer and hawkins county, tennessee that can't make sense of the choice program to this day. his comment was it's a joke. i put that in the record. his letter to us and he doesn't mind using his name. the other issue i think that disturbed me was when the veterans choice program came out, the first $500 million that was spent and we had a hearing on that, $300 million was administration. i don't understand that. i don't understand why 60% of the money went to the bureaucracy and $200 million of it actually went to get veterans in to see me as a doctor and

maybe that was needed. i don't know. that seemed excessive to me. >> well, that was the amount required to set up the network. nevertheless nevertheless, we're trying to maximize the use of that network as much as we can to provide more care to veterans. >> i think the other thing i would look into and certainly the flexibility has been talked about, you need any ceo needs that to operate the shop. i agree with that. the other thing i want to comment in the last few seconds i have the moral at v.a. hospitals is down. those folks feel beat down. there needs to be an evaluation of the moral. the other thing i'll do is bring a bill up very soon as a trial process and a lot of people have done this. when you go to your doctor, not only does the assistant come into the room but another person and that person is described and because of electronic records,

they use ascribe to enter da tomore patients. i want to let scribes come in and see if physicians that are providers are not more productive. i guarantee they will be. i had friends that work in the v.a. say they can see 25 30% more people. >> this is a big issue about the scribe. we're piloting a program with scribes. it's uneven right but we're in the process of it. moral also is a big issue. as i've said earlier we have 91% of the medical centers with new leadership teams, we had a lot of people leave for various reasons and moral is a big issue and v.a. people one-third of which are veterans don't want to be called out as somehow different and failing to perform. they really care about veterans and working hard every single

day. >> i yield back mr. chairman. >> thank you, ms. rice? >> thank you mr. chairman. mr. secretary i just want to make sure i heard you correctly. you said you found out about the extent of the short fall in may? >> yes. >> so i believe that we were given information, this committee was given information the short fall was actually discovered as far back as either february or actually, we actually think it goes back to december. can you explain that discrepancy discrepancy? >> no, i can't. i haven't heard that. >> i don't think we knew there was a short fall. what we knew in february was that there was a different between the increase in authorizations that were up substantially and the obligations for that care which were on plan. so all the data we had in february actually suggested that

financially we were on path to, for our 7.6 billion estimated expenditures for the year. we questioned that data right? the that doesn't make sense why would you have 40% more authorizations but obligation isn't up. that's what we knew in february and it was at that time we sat down and said we got to figure this out. maybe there is a good explanation and makes sense but maybe it doesn't. it wasn't really until april that we understood the problem and the magnitude of that problem. >> so that just sounds like semantics to me. >> in what way? >> you knew about a short fall, you just don't want to say that word. >> no, i think it gets to do you have a solution? we said is we thought we had a solution until about the middle of may. and that solution fell apart as we tended to work the different

options for that solution. >> okay so. >> we said that earlier in the hearing. >> mr. secretary if you can put it in 30 words or less, tell me hep c, give me an idea. >> more veterans are coming for care. 7 million more appointments than a year ago. >> so that is the reason? >> that's the reason. >> so i kind of feel like, you see the movie, mr. chairman "ground hog day" this committee is sitting here with members of the v.a., whether it's you or sloan glib son or anyone else talking about a crisis in the v.a., right? that's a reoccurring theme. another request for yet more money, and and the most disturbing point to me is a complete and utter lack of

accountability. >> yeah, i don't agree with you, obviously and remember this money is appropriated. we're not asking you to the appropriate new money. we're asking you to use money appropriated for the choice program for care in the commune city to be spent for care in the community. >> how -- >> that's what we're asking. it's already appropriated. >> how are you going to pay for care in the community next year? >> what we're asking for is a part of the choice budget, what we've talked about is let's put together an integrated way of doing care in the community. one way to do it, not the seven that we have today that members of the committee said veterans don't understand, members of the committee don't understand and our employees have trouble actually executing. >> so where is the account accountability accountability? there is no part of the short fall that is related to misuse of funds or potential fraud or

anything like that? >> there has been no misuse of funds or fraud. >> have you done an audit? have you had someone maybe the externally do an audit yes or no? >> we've done an internal reconciliation. >> is that a yes or a no? >> we had not had an external audit. >> do you think that might be a good idea, yes or no? >> i'm not sure it's necessary. we have 40% more authorizations for care in the community. you asked us to make sure that no veteran was waiting for than 30 days for care. we've done that. that's exactly what we are trying to do. >> okay. what i think is disgraceful because i have about 20 seconds left is for you to insinuate by not giving money no one on this committee cares about veterans. hold on a second, i'm so sick and tired of that insinuation and i yield back my time.

thank you, mr. chairman. >> thank you. just to be clear, we didn't insinuate that, we think you-all care for veterans dramatically. what we're faced with is you passed the laws to give veterans benefits. you passed the budget to pay for the benefits and we've got to execute that. when there is a mismatch between those laws and that budget it's a difficult proposition. i get letters from all of you every single day trying to give more benefits to more veterans and i'm all for it. we got to have the money to do it. >> i think the law says that the secretary must manage within available resources. but the choice act is not a resource that is available to you at this point. mr. kaufman? >> thank you, mr. chairman. ms. secretary, thank you for your service in the united states army and although, i think that the president, i

would like to think the president shows you recognition of your experience in packroct the or and gamble, we requested a study of major construction projects and that study was done and published in april of 2013 and it said at that time that there were four on going projects, one in las vegas, one in orlando, one in new orleans and roar ra colorado listed as denver that they averaged $366 million over budget and that so we knew there was a big problem. if you and proctor and gamble

were to step in and you had a department that dysfunctional, you would have fired the management team, straightened it out and spun it off. and your core competency health care being a significant part of that construction management is not a core of mission and i would love it if you would re-examine the va from being involved, we'll have legislation today that i talked to sloan gibson and the figure projects above 250 million dollars would be outsourced to the gsa or army corps of engineers. one of the problems in the

legislation today is that the denver construction administrative constriction board was supposed to be finished with work in june and will not be done in june may be done in september. we held a hear income denver on the aurora projects at the state capitols last year the chairman was there. and stuck to this $604 million figure the project could be built for $604 million lost in litigation late in 2014 on every count this was a plan over $1 billion that could not be built for $604 million. the army corps of engineers is in the process of taking over the project but we're talking

about a short fall today and we're also talking about a half finished half hopefully a little over half finished which is for than the ininitial projected amount to finish the hospital. i would really ask you as a veteran that it's not the core come competency and leave as many other agencies that the federal government do that these major construction projects to others. >> i love your response. >> congressman coffman, we agree in part as you indicated the only difference between your point of view and ours is what the right level is. 250 or 100, i do want you to know we've taken a lot of steps to improve our construction

process. we're doing master planning now and requiring that mayor construction has 35% plans and that we're doing very deliberate control process that we're instituting a private review board and that we're establishing a v.a. activation office. i could go on. all of these are best practices that come from the private sector at the same time we also have met repeatedly with the association of general contractors, they had boycotted v.a. we met with them deputy secretary gibson and did. we took them through changes we were making to our process and we ask them their point of view if we're missing anything and they are helping us redesign. wherever we end up with

legislation, we are now operating against the new and improved process and what happened in denver which is regrettable was awful should have never happened will not happen again. >> we've gone through the cycles before where. v.a. was going to try to reinvent itself. we'll end up in the same position. a $100 million ceiling will be a $300 billion ceilmillion ceiling. >> thank you. >> i want to be quick but as we move forward with this construction discussion, when you say general service or army corps of engineer, i think you got to have some of the input and i know no one likes the word but we have to have someone i know what happened with katrina and that project. we need accountability, i don't care what agency is handling that.

i yield back. >> thank you mr. chairman, mr. secretary, introducing a new way of talking about contract not care with non-va providers providers not sallied within the v.a., is that correct? >> yes, sir. >> you will care this care in the community and on a bipartisan we cooperate more and non-v.a. providers and trying to change the culture of the v.a. so that there is not a conspiracy to disappear to the v.a. that's where i'm reading. >> that's why we change from non-v.a. care to care. we own the care even throw in the community. >> relative to that, i've seen others within v.a. health testify before this committee

that the concern since you do own the care and ultimately responsible for it there needs to be ways in which the contractor, the contract providers are also accountable, that that care is accountable and we've raised the issue of health records. you've centralized the billing and payment operations from the regional areas and you're saying in your testimony that what i've heard is that centralization had a lot to do with driving the short fall the misunderstanding that arousalse from the central billing. is that somewhat accurate? >> the requirement in the choice act to centralize the accounting and billing and administration of the choice act helped make it

more onbaman obscure for us. >> in february you were seeing a discrepancy between the authorizations and pay outs and you weren't able to figure that out, this centralization on cured wasobscuring a clear understanding of what your cash position was. >> yes, sir, a new practice. >> my concern is there any fueling the that centralized authorization resulted in inappropriateina prop inappropriate authorizations because the regional office had problems with records that were paper records being passed and complaints that stacks and stacks of records and delayed payments. has the centralization improved

that? >> so far from what we know centralization not just of the choice act but across the payment function the v.a. accelerated our ability to pay bills. >> we're not worried about the rise in authorizations, authorizations that were authorized that shouldn't have been? the accountability in the system -- >> if anything, if anybody, centralization usually leads to better security. that's my experience. >> the care is still determined at a local facility level, clinic in addition seeing a patient, decides the patient needs something, puts in the request and the authorization is entered at a local level by the business office people at that facility into the system and the medical record information is transmitted to the third party administrator. >> there is always a great deal about this surprise and

information we have to about on rather immediately. the overall narrative that i'm getting is that more money is being pushed out the door appropriately. more veterans are being served. more veterans are finding out about the superior service meaning that you used the example of knee replacement. there is no co-pay and co-pays under medicare are significant. it's a rational decision that a lot of veterans are choosing to come to the v.a. that accounts for, can you give me the number again, the increase on the number of people coming to the v.a. that you had before? >> it's over 2 million. 7 million more appointments in the last year. >> doctor, i was looking at the increase 4.5 million in community care 2.5 million in v.a. care. >> well, and this was obscured by the part of it by the change

and choice act and how you did accounting. well i don't like these short notices but we have to act quickly and the important thinltg is we serve veterans and let's keep doing it. >> dr. windstrom. >> i thank you both for being here. we spoke today about the increase in productivity and i think that every 1% of increased is $1.4 billion is that the number i got? >> i may have confused you. basic ly basically veterans getting 34%. in any increase leads to a $1.5 billion increase in budget need. >> sure. >> that's different than an increase in productivity. >> okay. >> but on that with the

increase in productivity the v.a. is different because when you increase productivity, that's not money coming in, that's money going out. there may be some silos there but, you know, whereas on the flip side, your productivity you got more coming in. that's the reality that we have to face in this situation. we ask for more productivity. one question i have is that is that amount of productivity, that increase, within the same amount of hours if you will in other words, if i increase on saturdays and sundays that's different than did i increase my productivity during the same amount of time? >> right. also what we looked at was productivity disregarding how many more physicians we brought in. but as we shared first chart we shared was on the 8.5% increase in productivity.

jim can drill down on this more. >> so we've done it, i think, increase productivity in a number of ways. one of them is what you suggested in that we have evening clinics, we have had weekend clinics, and particularly those evening clinics have been very popular with younger female veterans in particular. >> one of the things we really need to focus and this is a comparison of private practice to the v.a. is how do we increase the productivity in the same amount of time? we've talked about poor setups within a clinic. you have one room when you need four. those things. the increase no productivity has to be looked at realistically as well. these are good things to add but if we're not getting the caregivers more productive in the same amount of time, then we're hurting ourself. >> we are. it's a little bit of both. it's a little bit of increasing productivity during their kind

of normal hours, as well as using extended hours and one of our biggest hurdles to improving access to care is the physical plant infrastructure we have and if we use that physical plant infrastructure more efficiently by having extended hours, having weekend hours, everybody benefits from that. >> i know i had a little frustration when i came here before phoenix broke where i went to the former secretary and said i'll go into clinics with you, as a doctor, i'll go into the o.r. and tell you why you're not productive and getting more out of caregivers. we still need to do that. we got doctors that would be willing to partake. the other thing is we talked one time before about third party payments. i would love to see the v.a. be centers of excellence for something our veterans wouldn't want to go anymore else and people outside that aren't veterans would prefer to go to the v.a. but in that process, we

have tretveterans that come in and have other insurance and i'm not sure how this is really taking place what percentage are capturing that can bring more money into the v.a. but maybe we should turf that out to people that do claims like this all the time and take it out of the v.a. and let it be done and increase the revenue to the v.a. these are productive things we can do and when we see more people going to the v.a. and if they have other insurance, that's what we should do and be good at it. >> our collections are up substantially this year but we are sitting down and reevaluating a lot of our business office practices and one of the things we're looking at is whether that collections is something that should be -- >> i would suggest we take bids from outside sources on what that would look like. the other thing we talked about before is at some point we have got to be able to know what we spend per r.v.u, relative value

unit. if we don't know that, we don't know our cost compared to when we pay somebody per r.v.u. outside of the walls of the v.a. i agree, care in the community. i agree with that rather than non-v.a. care because if i was still in practice seeing veterans, i'd like to see i'm a v.a. provider even if it's in my private practice. >> we should come over and discuss that. >> i've been asking and secretary gibson said, i'mstaff, supplies everything involved would be important to this entire committee, the cost is not just the paper. >> dr. ruiz. >> thank you to the chairman and ranking member for holding this hearing when brave young men and women volunteer to serve in our

armed forces, they swear to support and defend the constitutional of the united states against all enemies foreign and domestic. the service members make a promise to their country to all of us to keep us safe and protect our way of life in recognition of that service we promise to care for them when they return. so veterans is served and sacrificed and we must do whatever it takes to hold up our end. many veterans in my district excluded from the strict requirements ochof the choice program don't receive care for what they are authorized because the v.a. has begun delaying elective care due to the budget short fall and as a physician, i can the tell you that even if a condition arguably does not meet the v.a.'s working standards for authorizationing non-choiced purchase care it may feel painful and very urgent to the patient.

veterans being deprived of health care they earned whether due to unforeseen increases in cost or demand, budget tarry mismanagement at the v.a. congressional dysfunction, or any other problem outside the veterans control that's completely unacceptable and absolutely critical we stabilize the immediate problem and resume surfing veterans who need community care at full capacity prevent any furloughs or facility closures and reform whatever structural systems at the v.a. have failed. you are actively searching for new ways to be able to predict the future needs of veterans. this is a problem due to the success of having 7 million more appointments but as a physician and public health expert i understand that you really can't predict to the tee the health needs of a growing population of

a system in transition that needs to take risk to identify best practices and understand that some of these practices may fail and therefore we may need to learn from those lessons in order to improve. and your mention before the term management is what this come myth thety has done in the past now you're managing to the requirement and i want to one requirement you're managing to is only one larger piece and complex and whether a veteran gets seen in 30 days is not the same with quality care and respect they need and efficiency of care when they are being seen and thankfully, a lot of veterans rate their care very highly, but so we need to manage to the veterans health care needs with efficiency and to the

point of measuring how much it cost and efficiency and percentage rate of cost due to or the amount of cost due to an increase in 1% of v.a. care that reflects on the efficiency of the v.a. so i really want to stress those points and my concern here is these claims that we're shutting down facilities that it's not being and the way it's being presented is that you're holding these v.a.'s hostage because you're not getting your way and that's absolutely, i know, with the sentiment not true so can you first question can you explain more what's going on in denver and how the this is affecting the care of our veterans in receiving that care and two, one of the concerns is that if you take, if with the this flexibility, which i think it's a great idea, if you take

money from one pot that you already have for another there is always going to be take aways. so is this a surplus fund is the this what is the take away that is at risk here? >> the choice care act itself that congress approved was to provide care in the community for veterans and there is a $10 billion appropriation that is to expire in three years. what we're talking about is care in the community largely there is another half a million dollars, half a million dollar for hepatitis c drugs. so we would be using money for what it is set aside for, care in the community and that way, you know we're using the money that was set aside for, not a new appropriation. secondly the issue you raised about denver is because we have flexibility of moving money between accounts the accounts

that the money came from this fiscal year for denver veterans and and has no enimpact and we got to put that money in the 2016 budget. budget. >> thank you. >> yield back. >> mr. costello. >> thank you. i would certainly like to associate my comments with those of congresswoman rice and congresswoman ruiz in term it is of frustrations, at least what i'll hearing in my district and i want to assure those veterans that i will work at 110% to make sure there is no uninterrupted

care for veterans out there and i'm confident in the leadership. we're going to resolve this so that there is in no way, i want to focus on a couple things that are either in your written testimony or that i've learned that are very very frustrating for me and i want to start with the issue of technology. i want to talk about technology and your use of the term flexibility. so in 2004, the v.a. received $475 million for their i.t. system. g.a.o. report comes out and says that there is essentially nothing to show for it. in 2010 congress was going to provide 400 million for another update and the v.a. pulled the

plug on that. you weren't around then. i wasn't around then. it's clear in the past the v.a. identified the need for updated technology capacity as well as congress being willing to invest in that. this request relates to the financial system and to why you have a budget short fall. sort of what you said in your testimony thus far. but on the issue of flexibility you indicate the quote on page 3, all together over 70 line items are influxble. freed up they would help us give the v.a. what they deserve.

are you talking about the entire $170 plus billion budget and is that all the line items? >> yes, with the choice act we've given the veteran a choice whether they get their care in the v.a. or outside the v.a. very simplistically, they cannot be co-mingled. i got to predict how that veteran makes that choice. >> right. >> or come back to you each week. >> i think dr. ruiz, i get where he's going. look, the need, you don't always know what the medical need is going to be. i understand there has to be flexibility within a budget to appropriately address the medical needs of the veteran but i also feel that in a budget of $170 billion that if that is itemized among 70 line items 70 line items for $170 billion isn't that many line items and

in terms of flexibility, the more money we say oh, here is $700 billion, do what you like with it, the more we get into the issue of $475 million disappearing into an i.t. budget or oh, that didn't really work out over there and so i don't like the aspect of just shifting things around without there being acontinuebility to congress, i don't think taxpayers -- >> we agree with you. if we're able to do this, we would work together on what are the restrictions and what are the budgets that should be co-mingled. co-mingled. >> let me just, next question related to that and you're looking to use choice money and there is and that there is just a reluctance by many in the v.a. to sort of buy in pardon the pun, to the choice program.

congress policy not only did we want to offer but we wanted encourage it. now i feel that because some in the v.a. since there is money left over and time to institute that legislation we can take it out of the popular programs and shift it elsewhere and again, gets back to the issue of accountability and transparency. you use the term flexibility and i understand why you need it is to be painting too much of a broad brush using the term flexibility or budgeting purpose and lose the accountability we need and haven't had and the source of some of the problems that cause us to be here today. >> we're very much in favor of care in the community and in favor of the choice program so

if you're, if you or veterans are encountering employees we need to know about it because that would be wrong. i mean, we're trying to create a culture where we don't care where the veteran gets care as long as they get great care. >> final point here as you're talking about a new i.t. system to better handle budgeting and planning, for my opinion, mismanagement can be very visible, i'm not suggesting you have mismanagement, it can be visible and not visible and i think on the i.t. side it's easy to mismanage things through the years and not really have any ability for those doing oversight to really know about it. because it's sort of on the planning side behind the scenes. i think moving forward, as you're talking about i presume coming forward with what your needs are going to be for new i.t. system, it has to be

thorough, it has to be comprehensive and the ad hawk we need money here and money after and i think it needs to be a comprehensive plan so we have confidence in what you're proposing is going to solve problems and over the long term reduce cost because from a management perspective, you have more transparency and things will be more efficient. i yield back. >> we agree and would love to have laverne counsel the head of i.t. come talk. i think she's going to be terrific for us. she has experience as the head of i.d.t for johnson & johnson and dell. >> thank you, mr. chairman. i want to thank you, mr. secretary, for your service in the army and secretary in this very complicated transition period and we hope it turns out well and we'll do our best to make sure that it does.

my first question has to do with public-private partnerships. secretary gibson mentioned on a june 25th hearing, you and he had spoke about this and you're in favor can i ask you that question, do you feel the va could benefit from public private partnerships? >> one of the five strategies for my v.a. transformation to the v.a. is strategic partnerships. we have a leader of the office and yesterday when i was in pittsburgh working in our medical center, there was a wonderful example. i met with the chancellor university of pittsburgh, dean of the medical school. we have a great partnership between the medical provider with the university and with the v.a. this is a system omar bradley set up in 1946, '47 to make sure veterans get the best care. those partnerships are critical

to us. >> thank you. mr. secretary i've looked at this graph that the v.a. care and community short fall and if you divide 7.6, it's clear you're going to miss the target what took so lock given this information or was this not available in what we protected was lower. we, the obligation data was under stated early in the year that reflects the experience. >> how much of the $3 billion short fall is due to understand casting? >> i don't think it's under forecasting. i think we had anticipated of

the care in the community would have gone through the choice program and been paid for out of choice dollars appropriated for the program. that program, you know i'm you know, it's a complex program that was as it was structured is, we have pay back on our contract to get it done because no one else in the intusdustry was interested in taking this on and we have business processes that quite frankly need to improvement and we're working on those things. so i think that we had a choice, we have a choice program that we and you need to get more care in the community for veterans were not waiting for care. we have not been able to get and

maybe some of it is cultural but we have not been able to get the number we anticipated. that has not shopped us to be faithful to the intention of congress passing the choice which was no veteran should be waiting. so really what we're asking for is to be able to use funds that were appropriated for the purchase of care in the community through the choice program to pay for care that we purchased in the community that is not through choice but through the normal mechanisms because we have over subscribed to those programs. >> how soon do you think we could provide that flexibility. we're asking you to do it before you leave in august, so by the end of this month. >> so it would require it would be passed and signed into law by the end of august or by the end

of july. >> the money has been appropriated so i'm not an expert on what congress does so i yield to the chairman on that but yes, i assume it's some kind of of bill. >> we would have to authorize the transfer of those dollars out of a finite amount from the choice program. >> well a painful question. can you provide a list of the facilities that would be closed if you don't get that money? or how soon can you provide that list? >> we have an entire plan together which we can share with you. >> i would just say that when we run out of money, so we would move fund around between facilities as best we think. medical services will be the first approachation that runs out. it will affect essentially every facility in the country. >> thank you, mr. chairman. >> dr. abraham.

>> thank you mr. chairman. let me i guess, just start big by saying the old adage in business, you can delegate authority, but never responsibility. mr. secretary i know you were ceo of a major firm before you came aboard. i would think if you had came to the board of drejters at the 11th hour like my brown indicated, they, too, would be a little incredulous at the shortfall, the lack of vision so to speak. and we don't want to disparage that. we understand that everybody in this room certainly on this committee and yourself and in this room has the veterans' best interest at heart and i do believe that. let me hit it just from the hepatitis c. you and i both know it's an insidious disease. i had three vietnam veterans come up to me and say that they had yet to receive anything from the va because i understand

that's in the pipeline and i do understand that the help titus drug was only approved in 2013. but still saying that that still gives us about a year and three quarters to formulate plans, delegate how this medicine is going to be divvied up so to speak and it hasn't been done yet. can you give me some indication as to when our vietnam veterans, our iraqi, afghanistan veterans can expect some hard data as to if they are at this point of the disease they can get the treatment? >> yes. so we of course, those drugs were not approved by the fda when we submitted our budget for -- >> i understand that. >> so we have a plan. we've had a plan all along for the treatment of hepatitis c. >> but when will the veteran he or she know that hey, i can get

treatment mow. >> we've treated over -- how are you delegating which veteran gets treated and which veteran does not? >> so you may be getting a little bit over my head in terms of help titus c. our hepatologists are managing that. we have a severity score, based on whether the veteran has advanced liver disease. >> if you can't answer if you would just give me that information as to how that determination is made, there are blood tests, their bile load, liver biopsy results. i've treated hundreds if not thousands of hep c cases -- >> i'd be happy to get you the information. today, we've treated over 20,000 veterans with hepatitis c today. and we continue to treat patients with advanced liver disease and patients who can go

out into the community, have choice program as an option to do that. >> and secretary, you had that of that 2.5 to 3 billion that you were anticipating, shortfall, that 500 million of that would be designated for hepatitis c treatment? for the treatment itself? >> yes, sir. >> okay. i yield back, mr. chairman. >> thank you, mr. chairman and thank you, mr. secretary, for testifying today. with regard to the medical scribes, elaborate on that part of the program. i know in the private sector these are great private sector solutions and i know that the doctor will have more time. it's been proven in the private sector that the doctor will have more time with the patient. i had a town meeting that lasted four hours a couple of weeks ago. people were bringing that up. so, you know you want the doctor to focus on medicine. elaborate on that program, that

pilot program. >> well we -- i've heard a lot of this. i've been to 195 different va facilities and every one i go to there's a different approach. but we are pretty consistent in the operation of a p.a.c. team which is a patient care team, a team working with a particular patient. i think what jim was describing is let's pilot the scribe so everybody on that team can be working on the patient and not just entering information into the medical record. >> i didn't come prepared today to really expect this question. so i will have to take it for the record and get you information about where we are in terms of standing up a pilot program. >> okay. thank you. any other innovative medical solutions coming from the private sector that you've implemented in the last year? do you have an adviserry council set up possibly to work in the

private sector to get these ideas and make -- >> yes, we do. we have -- believe it or not, we have more than 25 advisory councils, but we have two that i'd like to tell you about. one is our special medical advisory council which is the best medical mind, i think some of the best medical mind in the country that's shared by the chairman is john kurlin. john is the chairman of the american medical hospital association. he's the chief medical officer of hca. he's also a former undersecretary of health. they're providing tremendous leadership. on the -- on the my va work that we're doing the transform va, we've set up an external advisory council. we have many doctors that are part of that including toby kos grove who is the head of the cleveland clinic, rich carmona a former surgeon general and a veteran. but i have to tell you, one of

the things they're bringing is they're not only bringing their innovations and their ideas, but they're taking away our innovations. a couple of weeks ago, we published an article that was picked up in medical journals not broadly in the newspaper, about a new monte carlo simulation technique we can use to predict suicide. this is a break through. if we can validate this model of predicting suicide, this will be a break through for the va, but it will also been be a break through for the american public. a lot of what we've seen and you and i have talked about in the past has been innovations that start in the va, part of our $1.8 billion of research spending that you appropriate and we appreciate it that result in positive results for the american people. here is a copy of the article, mr. chairman, if you'd be willing, i'd be happy to put it in the record about this break through. and we have more of these

breakthroughs coming. >> we need to get the word out on this choice program. a lot of people don't know. i know you sent out a card. what else have you done to get the word out? and then i have another question with regard to access. >> so we've mailed letters to everybody. we've mailed now i think three letters totally to everybody. first with their card and then follow up. we have another flyer that we've just developed. we have a website that we have just re-engineered. so we've been doing surveys of veterans who use the choice program asking them what they think about the program and one of the biggest issues they've had is with the website and the availability of information. so we now have a redesigned website that's about to go live. it has a live chat on it so that the veteran, while they're looking, if they can't find the information, they can click the chat button and talk to somebody right then and there.

so we've really done a lot. we had a set of outbound phone calls to people initially who were actually waiting for care more than 30 days, so i can contact them about the choice program. so we've tried to do a lot of outreach. >> sir, we're -- my constituents are having trouble getting access to the program. describe for the benefit of the constituents, our veterans our heroes, describe the scenario. how would it work? they would call the va for an appointment. can you describe a real life scenario? >> yeah. so there's two benefits under the choice program. one is if you're waiting more than 30 days. if you're waiting more than 30 days for an appointment our staff, if you either call in or while you're checking out of clinic and getting a follow-up appointment, our staff will tell you if you cannot get an appointment within 30 days, that the choice program is available to you. they have information that they can hand out to the veteran about the choice program. at the moment, we are both booking an appointment for the

veteran in the va and offering them a choice program and making that resolve to the third party administrator. the veteran can decide which of those two options they want at any time. we're about to chase that program so that what will happen is at the time the veteran asks for an appointment, if we cannot give them aan appointment within 30 days, we will ask them if they want an appointment in the va beyond 30 days or if they would like to go to the community and then our staff will contact the tpa and get an appointment for the patient. we need to do a contract modification to be able to put that program in place, but it's coming down the pike. and that should improve i think, the coordination and the level of service. if you're in the 40 mile group what happens today is that the tpas already have your information and you can contact them