words that they are nested above the crimes. he would like to know an empirical fact, how is this, if of a larger nest, actually used in indiana? it might be it is really used against people involved in a violent situation or it might not be because there are a whole lot of other ones around. i have no idea whatsoever and go and do it empirical research. why doesn't the government do it? >> we have know what to begin. i think there is a difficulty and unmanageability suggests it is not what congress had in mind. but congress had in mind was identifying classes of offenses that judges are confident involve serious potential risks

of physical injury to another possibly the similarity when the mens rea is not satisfied. what congress expected courts to do was to analyze what the conduct is that is involved in the, compared to the listed offenses and see if the risks are similar. >> does the department of justice do any of that? it is one the prosecutor asked for, is there any guidance coming from the department of justice? guidance to the u.s. attorneys who will be asking when they should and when they shouldn't? >> yes, and just as ginsburg's decision we used a primarily an analysis that focuses on looking at the conduct that the elements of a crime embraces and logically analyzing what does it entail? doesn't entail a risk of confrontation? >> there is brand guidance in

the department of guidance to u.s. attorneys? >> yes, there is. in the work of memos that involve analytical efforts to separate different analysts is into different context. you have talked about the needs for statistics. we think they played the role of the court use them for in sykes. first, the court talked in sykes about what happened when someone flees from a police officer. what are the risks -- >> what about extortion? i mean, extortion -- the other three i can see. burglary, arson, explosives, sure. but what about extortion? i would be amazed if many of those involved violence, but you would know. are there violence by the extortee? i'm sure it is not the other and

above postal communication -- if you do not give me money, and i'm in new york and you are in hawaii, i will reveal sets and such. >> i think what congress had in mind was the kind of extortion where someone threatens to inflict injury on a personal property in order to achieve a demand. congress was concerned that the person who makes that threat poses a risk of carrying it out which creates a degree of danger. >> is that the justice department's position? extortion is not covered by the provision. when you threaten to reveal something about the person's life, is that covered? >> we would argue the definition is seeking to get property from a person with his consent to the use of threats, force, or fear. >> threats or force? or fear?

well, fear includes being afraid . >> that is right. >> so you don't assert that extortion does not mean only the extortion that the mafia might -- pay up or he will hurt you? >> i think it is not quite get you to the narrow view of extortion you expressed in your separate opinion in james, i believe, but that is a legal question. the government makes that argument in this court might think lewd under the principle that some of the words must reconstruct similarly and extortion has an error meaning -- a more narrow meaning. >> the problem is what the prosecutor threatens when he has entered the plea bargain negotiations. this is the point that justice jamesburg touched on -- justice jamesburg test on. they have to interpret and make a decision on where they want to

plead the five years or risk the mandatory minimum of 15. your guidelines say a lot, but i got one of the insecure guidelines say is that you should prosecute the maximum extent that you can, right? you should charge the maximum if you charge and the prosecutors go in and say, look, i could charge you this much or i could add discharge to what i got and you face 15 years and the defense comes and says, all right, let me see if we are guilty of that. he will read that and have no idea if they are covered by it or not. that is exaggerating. >> it is an exaggeration. >> not enough of an idea to risk an extra 10 years for their clients. >> they are not charges in the same way that the criminal charge brought an indictment. typically, criminal history is not assembled until after the defendant has picked guilty and report is being prepared. at that point, the parties are more aware of what the defendant might be exposed to the criminal act or not.

sometimes the analysis is done and can be done fairly reliably. again, this court sees cases that really pose hard questions. that generate circuit splits, that result in legal questions that have divided the lower courts. there is a wealth of activity below the surface that that does not get to this court in which there is not nearly as much difficulty in figuring it out. on page eight and nine of our brief, which my friend refer to several times, we cited 17 times of what we thought were easy cases. in fact, the petitioner came back and said three are not easy because they are circuit splits. in two of them, the splits are really because the definition of the offenses and elements of the offense is what i different. child abuse meant something very different in one jurisdiction from another. >> you take the position, so long as there are so many cases the statute cannot be faked. >> i don't think the court has to do merely that park, because in this case -- >> you don't take that position?

>> this court's decisions do suggest that. i don't think the court has to go all the way to that position in order to conclude -- >> what is the standard? and this goes back to a justice scalia was saying before. there are rates that everybody agrees forge -- that are unjust and reasonable, so how much do we have to say that the corps has shrunk and the margins have taken over before we are willing to do this? >> i think the starting point justice kagan, it -- i think the starting point, justice kagan, is in the distance of unreasonable rates, that is a standard that an administrative agency could flesh that out before a court to do it would really it just involve -- -- could flesh that out before a court to do it >>. identify crimes -- dangers

crimes that pose the risk of danger. how much danger? well, as much as these four enumerated offenses. how many risk to these posts? no one is really sure. one seems to oppose the lot a few select cases so it just seems, even as you describe it as the kind of thing that congress ought to be doing. >> let me add one thing, justice kagan, to your description of what to do when they apply this analysis. there will look to see if they can identify the ordinary case and then it will determine whether the whisk -- whether the risk is confrontation or the arson or explosive risk of unleashing a destructive force. finally, there may be cases where the gay analysis applies. this is a really important point and i want you to think about -- where the analysis applies. this is a really important point

and i want you to think about. the government loses but not because it is they but because if the court is not confident and a normative criteria that they have established -- >> there is no such thing as a fake statute? every statute is vague. therefore, there is no such thing as a vague statute. >> i think as reflected in this court's opinions is where there is a tinge of first amendment or other protected activity. or cases like the standard is unreasonable rates and sure, everybody would agree that some rates aren't reasonable but it is a subjective -- >> the hardest part of this test is determining what is the typical case of this particular violation. what is the typical case of extortion? to take one of the four

enumerated, what is the typical case of extortion? you seem to think a typical case is, i will break your leg unless you pay up. i would have thought the typical case is, i will disclose something about your life unless you pay up. >> i think if the court is faced with that conundrum, it looks to reported decisions of convicted cases as the court indicated in james and it attempts to stamp -- to determine whether it can identify the ordinary convicted case. if it cannot conclude the ordinary case involves the greater degree of violence, then it will conclude that the government has not -- >> blood about one you think is easy, kidnapping? what if the statistics show in 40% of the cases they are talking about the parent that does not have custodial rights taking the child from school and not returning him or her run ever? that is not pose a serious risk of potential violence.

the parent will not harm the child and yet, you say that is an easy case. it's easy if it does at the margin, if 1% of the cases are. i don't know if kidnapping is prosecuted more often in the case like that or other more violent case where it is extortion for money as opposed to just wanting the custody of the child. >> we would have to undertake the effort to try and persuade the court but we don't ordinary case was to. if we failed, if we did not muster whatever the court thought it needed to understand -- >> how do you do that? to look at every charged case of kidnapping in the state of arkansas if it involves a lot from arkansas? >> we would look at reported cases in arkansas -- >> i want to just get the justice kagan's earlier question. for the reasons that you have heard, i would just like you to spend one hour sometime before you sit down, on the suggestion

of limiting it through the use of your appendix which he described a minute ago. looking at the language, i think it is possible within the language to go about interpretation. >> i don't really think that interpretation is correct because if you look at -- >> i don't know what you are talking about. read the words that you look at the four examples, you say in each of the four examples, there was a jury determination that it fell within one of the four and we should read those words, too as requiring the jury to make a determination that there is a serious potential risk, and the way you do that is that you insist an element of the crime has the words or the equivalent of serious potential risk. that is roughly what the suggestion was on the other side. i just did not want you to sit

down. at any point you would like without addressing that possibility. >> i can address it quickly because i don't think it is construction of the statute that really works. the exemplar crimes -- >> excuse me, she did not propose it as a construction of the statute. she said very clearly the court cannot adopt that but that congress could. she asked how congress could fix this. that was her proposal on how congress could fix it. >> i just one in -- we agree with the petitioner on this one. exemplar crimes burglary, extortion, arsenic, do not involve an element care stays -- characteristically of serious injury to another. it allows because of elements of the crime and the residuals which were originally a freestanding closet and exemplars were added back in before it was passed -- >> let's go back to justice kagan. >> i do think the bible solution in this area is for that many

crimes, they do not pose the empirical conundrums that can be hypothesized. when they do and the government is not able to satisfy the court or the court is not the -- not able to become satisfy, it is a fix on the ordinary case and they can say with some degree of confidence that the risk is complement -- is comparable. you have many crimes that no one can ever contest are covered. mail fraud, scandals, and then you have kinds that we have listed that are not seriously contested. we listed 17 and they contested three. i think two of the contest really have to be set aside. >> i think even in the ones that you think are easy, they are only easy in the abstract. the vehicular flight one was a good example in the abstract. everybody just had a sense it is really dangerous if people flee

from a police officer in a car, but it turns out there are all kinds of the grease and we have zero idea what the charge is. -- kinds of degrees and we have zero idea what the charges. we don't have a sense of how they connect to each other and what statutes are used for the dangerous ones and what statutes are used for more minor areas of the same offenses. that is kind of an endemic problem in this. is that not right? >> justice kagan, i think with the court is asking is up when it attempts to apply off got is not -- to apply aca is not -- congress understood that in most burglaries, probably no one used hurt. in extortion, nobody realizes that it regarded the kind of person who was willing to undertake a crime that could lead to that kind of

confrontation as properly subject it to an enhanced sentence when they have not just one but two other convictions and they go out and use a gun. >> you are talking about very did. -- you are talking about something different. is this the kind of conduct that a bad person engages in? >> no, i don't think it is that amorphous. there is a much more specific inquiry into the risk and the way that courts are conducted that i think -- this court's decision in sykes was the exemplar but there are many cases where the lower courts look at the conduct, they examined the conduct, does this involve a minor and adult, what is likely to ensue? i think it is kind of critical to keep the perspective here that the idea of substantial risk is shot through criminal law.

>> this brings me to the statutes in your appendix. it does seem to me that those statutes do require a case-by-case determination by the finder in fact that there was a danger in the particular case. and so that is different from a categorical approach. >> yes -- >> and most of those statutes would survive if this court ruled against you here. >> it depends on the rationale. if the rationale were the conflict of substantial risk is to amorphous to be grasped at all or applied in any kind of consistent manner, i think that would raise -- >> we would never say that. >> i think as a logical matter, that is essentially what petitioner is saying. that it is not possible to really get a fix on what those words -- >> she is saying that you can't tell what the typical crime is. when you cannot tell with the

typical crime is, you cannot tell what the risk is. you can't do it for extortion. >> if you cannot tell with the typical crime is, the government loses. >> that's not an answer -- that answer sounds wonderful but government rose because of the role that ties those to the defendant. that sounds wonderful but the fact is, one court will say, yes, the government loses. another court, given the vagueness, will say the government wins. we will have to read every one of these until the law is clear? >> no, i think the court does with it typically does which is reviewed cases, established principles, and harmonize their rulings in light of them. it is not unique that this statute has generated a lot of litigation. section 924 see, for example three different cases interpreting the meaning of the word use and one interpreting the word carry. that is a higher ratio of cases the words. but i think what it says -- [laughter]

when there is a lot at stake when many years of prison time are at stake, people litigate hard. >> is the test the same here for vagueness as an we determine the validity of the statute that classifies as a crime? >> i don't think that is so clear. there is a lesser degree of clarity required for vagueness in the sentencing context. >> when i said it is mandatory this is mandatory, five years and a possibility. this case is a good illustration because the judge says, if it were up to me, this person should get half or what did he say? two thirds. i am locked into this by, who wants to have that kind of enhancement and with a clear

statement? >> this statute will -- involves recidivism. there were never questions the petitioner should what condit was prohibited. he should have known he should not possess a gun. the second thing is because this statute as applied by a matter of law with a review, it achieves a degree of clarity through the litigation process that i think is going to be sufficient to whatever height and standard the court might oppose on it. -- impose on it. >> i disagree with the statement you made. because there is so many years and fall people litigate hard. i think because there are so many years involved, people will not litigate at all. if they go to trial such a large enhancement, i think they will be compelled -- it gives so much more power to the prosecutor in the pre-negotiations which is where all the cases -- >> that's a mature for two reasons, mr. chief justice.

one is section 922 g prohibits possession of a weapon by a firearm. i'm not going to say that there are no contested cases, but it is not the hardest crime to prove or if you are found in the car with the gun and suppression motion fails, trial would not get you a lot. second thing is, it is not totally up to the prosecutor. the presentence report will indicate criminal history and the judge will have to apply whether or not the government asked for it to be applied if in fact it is legally applicable. i don't think this context has quite the pre-bargaining pressure. >> how would they know about the prior crimes -- how is the judge supposed to know unless the prosecutor tells the court? >> may i answer? >> of course. >> the presentence report is required to be prepared by the probation officer does the criminal history check. gathers that information synthesizes it, make second nations to the sentencing court. >> thank you, counsel.

ms. menendez, you had three minutes remaining. >> thank you. usually, first, i think it is illusory solution in this case. after they suggested lenity as the answer, we look to every opinion we could find on the courts of appeals and the district court and we did not find a single case nationwide where court has applied lenity to say it should not count under the residual class. this lenity will post a solution that the government suggests any substantial invigoration by this court to be the answer in the great areas. the second thought is, this suggestion that the court can decide what the ordinary cases from reported decisions is actually skewed in favor of the government. consider a standard offense where somebody commits a much less a egregious case. resisting arrest where all they do is refuse to be handcuffed versus resisting arrest where they kick and punch and fight officer.

this case is likely to get a higher sentence and more likely to lead to appeals and challenges and reported decision. this case is perhaps more likely to be resolved with a suspended sentence and never to appear in the reported case at all. it is -- we are returning to the case to try and determine what the ordinary cases. that will give an artificially skewed sense of aggressive nature of those cases. finally, you're on the, it is -- while it is to this court has grappled with things like 924 c repeatedly, 924 c provides an example of what is supposed to happen which is when this court points out a flaw in the statute, which your honors have now done for different times congress answered. change 924 c to try and address the court's decision and address the concerns of bailing, and that answer has led to additional questions. that gave and take, that this course is missing in this case where it is being cleared for a long time that this statute

needs help and there has been in action on the part of congress. your honors, i think that the idea that the tie should go to the defendant is important but it is just not happening because of this objective that check your honor has mentioned. judges substitute a feeling sexual offense involving a minor sounds bad and it sounds finally, so therefore, it must out. but i would invite your honors to look at the footnote in our brief where we highlight that there are several cases that find where the offense is unlawful because of the age of the victim, it does not count as a violent offense. so that debt check has to mean -- has to be more quantified, has to have specific guidance. the last point i would like to me is that whether this court decides in favor or not of mr. johnson or an application of the role of lenity i'm a whether this court decides whether this statute is unconstitutionally vague as applied to possessory offensive or apply to mayor possession of the short barreled shotgun or whether this court

takes a step i think it is time for and declares this clause unconstitutionally vague in every instance, i think the appropriate result is for mr. johnson to win and be resentenced. thank you. >> thank you. the case is submitted. >> a decision on that supreme court case announced yesterday was an 8-1 decision striking down the law. we also saw a ruling on same-sex marriage where the justices decided 5-4 that name sex couples are allowed to marry in all 50 states. the -- according to "politico," louisiana and mississippi have yet to issue marriage licenses between same-sex couples. eight states attorney general says the court's decision did not make same-sex marriage immediately affected. on this morning's "washington journal," we took a look at how another state was responding to yesterday's decision. >> you go to the pages of "boston american statesman," and it tells you how they are reacting to yesterday's

decision. the headline -- supreme court oks gay marriage. joining us on the phone of the "austin american statesman." what was a few initial reaction to the decision and are licenses being issued statewide? guest: they're not being issued yet statewide. it's done on a county by county basis and texas counties decide or issue marriage licenses. the reaction in texas was different. the statewide republican leadership and every statewide elected official is a republican. roundly condemned it to the point where our tea party lieutenant governor dan patrick sought to try to protect county officials who have religious objection to gay marriage to protect them from having to issue licenses. our governor greg abbott issued a memo to state agency saying

anybody who opposes gay marriage on religious grounds can't be held against them, that no adverse reaction can be taken against them. and then here in austin, travis county austin is home to a very vibrant gay community and is completely democratic embraced this ruling. our county clerk is very supportive of gay marriage had a plan in place and within 90 minutes, travis county was issuing marriage licenses, a couple of hundred by the time the night was done. host: so and forgive me if i'm misunderstanding, there is a patchwork system in place in texas even though the decision was made yesterday? guest: some of the counties were waiting for new forms to be issued from the state that applications for licenses that right now, they say man and woman. or husband and wife.

they wanted more gender-neutral forms even though county attorneys across the state were saying that doesn't matter. you can't wait for that. there was a little foot dragging going on. we'll have to see monday what happens because it looks like the forms have tow been updated. host: so monday is when you expect more people to come in across the state and ask for licenses to get married? guest: i do. host: you talked about reaction on the state level. have you heard any reaction from former president bush there or anybody -- him and/or others? guest: not from our former president. we have a lot of republicans running for office from texas and ted cruz, rick perry, you know, thought that this was an attack on the u.s. constitution. host: chuck lindell of the austin american statesman giving us a little sense of what's going on. what's the opinion like? i know you talked about

leadership. but what's the opinions of texans overall to same-sex marriage? guest: like absolutely everywhere else. they either thought it was great >> three cases remain with the supreme court as they approached the end of their term. there are undecided cases involving lethal injection redistricting, and limits on mercury missions -- emissions from power plants and we expect them to come monday. june 30, the deadline for iran nuclear negotiations as you get closer to that deadline. tonight, we will take an in-depth look at iran, including its government, culture, and views of the u.s. you will hear from those who favor engaging with the country and others who say the regime cannot be trusted.

>> iran cannot be trusted. this is the country that is there a, very nationalistic. of their weak strong sense of self and i always tell people when you go to iran, which i am sure you all will at some point your host will take you to something called a zurhorne. e-house of strength where people do synchronized weight lifting -- it is a house of strength where people do zynga and i weightlifting. the point i am making is this is not a country that gets in -- that gives them off the bowling. it is a strong sense of self very nationalistic, sort of a martial quality there and it is simply does not work. >> you can see more of our

in-depth look at iran, beginning tonight at 8:00 eastern on c-span. this summer, "the tv" will cover book festivals around the country and top nonfiction authors and books. we are live at the harlem book fair at the five ship national literary event with panels and discussions. in september, we are live from the nation's capital for the national book festival celebrating the 15th year. those are a few offense on this summer's "the tv -- "look tv." >> the new congressional directory is a handy guide to the congress with colored photos of every senator and house member plus i'll and contact information and twitter handles. also, district maps, foldout map of capitol hill and a look at congressional committees, the president's cabinet, federal agencies and state governors. order your copy today. it is or $2.95 less shipping and

handling through the c-span online store at www.c-span.org. -- it is $13.95 plus shipping and handling through the c-span online store at www.c-span.org. sloan gibson and dr. james who serves as acting principal deputy under secretary for health at the v a. they testified on a $2.6 billion budget shortfall at the department and they'll look into address and the state of health care for veterans. this is just two hours.

representative miller: looks at we will have another full -- another vote 12 or so after. we will go ahead and start this process. the committee will come to order. i would like to thank everybody for coming today to talk about the state of the v.a. fiscal year 2015 budget. members i called this hearing two weeks ago following a series concerning an inconsistent report from veterans and the department of veterans affairs employees around the country about the current state of v.a. funding. i don't believe anybody was aware then of the troubling extent of the v.a.'s current budget crisis except maybe those in the central office. unfortunately, i suspect that had i not called this hearing we would still not be aware

today of the $2.6 billion funding shortfall that the veterans health administration is currently estimating. largely as a result of increased ephedrine demand for non-ca care and rising costs of hepatitis c treatments that v.a. did not properly plan for or manage. given the extensive demand for care that was exposed during last year's hearings on weight time manipulation, v.a. had ample time to adjust its budgetary needs with the office of management and we are now seeing today. in february through april of this year, secretary mcdonald appeared at four separate budget hearings. since those that concluded, the secretary and i have met and spoken regularly on a number of important emerging issues. at no point in these discussions

or hearings has the secretary expressed to me that the department had a budget shortfall of a magnitude of $2.6 billion. one that threatens the v.a.'s ability to meet its obligations to the veterans of this country. nor did other bn leaders or officials communicate how much in the red the v.a. was either. even though the committee was informed late last week that the department you as early as march that there were giant disparities between the amount of money to be a was spending and the amount of money that had been budgeted. the only message that congress received in march regarding the state of v.a.'s budget was financial report that the v.a. submitted to the appropriations committee for the first quarter of fiscal year 2015, which showed the v.a. was actually under planned in terms of its spend out rate.

meanwhile, just two weeks ago, the v.a. proposed a plan that congress authorized as -- at the department's energy to transfer $150 million in fiscal year 2015 funding to support the continued construction of the replacement center in aurora, colorado. the v.a. also proposed an across-the-board rescission of just under 1% in the fiscal year 2016 funds to devote to the roller project. -- to the aurora project. a proposal that the veterans health administration's chief financial officer told committee staff last week that she did not even know about until after it had already been transmitted to congress. look, i think these actions clearly showed that the a leaders believe that moving forward with the project, which is not scheduled to open to

veteran patients until 2017, at the earliest, is a higher priority to ensuring that veterans who need care now are able to access the care. i have come to expect a startling lack of transparency and accountability from the v a over the last years, but failing to inform congress of a multibillion dollar funding deficit until this late in the fiscal year while continuing to advance but i believe are lower priority needs that further deplete the departments offers in support of construction profit -- project that that -- that benefits no better and for at least two more years is disturbing on an entirely different level. earlier this week, v.a. issued a fact sheet that claims that the v.a. formerly requested limited budget flexibility in february. and in march, and in may of this

year. and that they plainly articulated the a's need for additional resources. -- the v.a.'s need for additional resources. buried on page 167 in the second point of the a's budget submission is a single statement that reads, and i quote -- "in the coming months, the administration will submit legislation to reallocate a portion of choice program funding to support essential investments in the a's system priority." secretary mcdonald repeated this testimony without providing any additional supporting details or justification. and to date, there has been no legislative proposal that has been submitted by the administration to the congress. in may of 2012, a letter was sent to the chairman and ranking members of the house and senate renderings affairs committees

and appropriation committees regarding the project. the v.a. stated the department "request flexibility to make the choice program work better for veterans to limited authority to use funds from section 802 from the choice act to fund care in the extent it exceeds our fy 2015 budget." again, no further information or supporting materials have been subsided -- have been provided. those two statements absent of any supporting evidence or details is what the v.a. calls formally budgeting flexibility and plainly articulating the department's needs, then i understand why it v.a. has in fact found themselves suffering nothing but string after string of failures since last year. what is more, it proves to me once more again that the v.a.'s current problem for reflecting management issue far more than

they represent a money issue. this committee cannot help the v.a. solve its problems if ca refuses to be honest, to be upfront and transparent with us and with the american people about the position it is in. the struggles it is facing, and the help that it needs. congress has consistently provided v.a. with the funding that the department has requested. as a result, v.a. funding has risen 73% since 2009. the number of veterans using the for care has grown by only about 2% and this comes from the v.a.'s own testimony. i know that i should speak for every membrane of this committee would i say we are committed to ensuring that v.a. has been funding it needs to deliver the world-class health care are veterans deserve. but, v.a. has got to do its part to confront and correct the poor

budget planning and poor management issues to hold poor performing executives accountable and employees accountable and perhaps most importantly, to prioritize our veterans needs over the ones of -- the wants of the bureaucracy. if the shortfall shows us anything, it it is that what our veterans need and what they want is to have a say in and where they get their health care. assuming v.a.'s numbers are two it now makes up 20% of all ca appointments. with veterans receiving more than one million appointments from community providers each month. in the coming weeks, i will work with my colleagues on the appropriations committee to try to give the v.a. the flexibility it is seeking to use a limited amount of choice funds for non-v.a. care and ensure that no vendor in suppers as basalt of

v.a.'s mismanagement of the generous budget the american taxpayers have provided. however, going forward, there has to be a dedicated appropriation account to fund non-v.a. care under a single streamlined, integrated authority with a dedicated funding stream contained within the v.a. base budget. rather than the seven desperate ill executed non-v.a. care programs that are outlined in the testimony. this morning i look forward to discussing the proposal with my friend, the deputy secretary sloan gibson and with the committee members that all share the same concerns and want the same outcomes. i want to thank you all for coming back so quickly. i appreciate the ranking member being here today and i will yield to miss brown for opening. this brown: thank you, mr. chairman. today's hearing is on the state of v.a.'s fiscal year 2015

budget. i can tell you all that the state of v.a.'s budget is not strong. the v.a. is facing a shortfall of 2.6 billion for veteran health care. this shortfall must be addressed immediately. we cannot put the health and lives of our veterans at risk by spending our time and attention pointing fingers and assigning blame. v.a. will be facing an additional shortfall at the start of the next fiscal year in october. a shortfall that will be made worse by the cost saving steps the v.a. is taking right now. we must address this upcoming shortfall. i know that this committee, as we have done so many times in the past, will work together to

stall this crisis and fix this mess. and i know that we all recognize that sometimes it takes money to really fix a problem. and not just slapping some tape on it and calling it a day. in the words of deputy secretary gibson, we will get our checkbooks out, but i'm concerned there may be nothing left in the account as long as we continue to pretend that we can find the essential requirements of government without budget caps. we seem to be hearing -- i am sorry, let me be clear -- we are heading towards a government shutdown. let me say that again. we are heading towards a government shutdown. i am concerned over the facts

that the shutdown will have on ephedrine health care -- on veteran health care. 10 years ago, we addressed another v.a. shortfall. that shortfall was due to lack of sufficient planning and years of not providing the v.a. the resources that it needed. today's shortfall also seems to because by the lack of proper planning regarding the demand of veterans for v.a. health care. i am also concerned that inadequate planning leads to insufficient resources requests. we need to begin to fix these problems. my bill, the department of veterans budget planning and reform act of 2015, past the house 420-nothing. it is a much-needed response in the houses v.a. plan and budget for the future. it is time that our colleagues in the senate passed a bill and

send it to the president. if the v.a. is going to be there for our veterans their we are going to have to fix the problem . this will call for more than us just opening our checkbooks or writing blank checks to the v.a. it requires major reform so that we can ensure that in the years ahead, the v.a. is worthy of our veterans. but today, right now, we have veterans that need health care and checks we need to write to pay for them and we need to make sure that these checks are not returned because we do not have a sufficient fund in the account. then, and only then, can we start the reform efforts so that the v.a. is how we -- is the model of how we care for those who have sacrificed for us and honored as with their service.

thank you and i yield back the balance of my time. >> thank you, ranking member. that is so critical to funding for our veterans so they can get the health care that they have earned and thank you for your comments. joining us on our first panel is sloan gibson, deputy secretary of the department of affairs and joining him is dr. james the interim principal deputy under secretary for health edward married the acting assistant secretary for management and interim chief financial officer

gregory giddens, the principal executive director of the office of acquisitions, logistics, and construction. thank you for being here. mr. gibson, you are recognized for your opening statement. esther gibson: -- mr. gibson: one year ago today thousands of veterans were waiting for care today. that represented needs we were not able to make timely. with the past year, improving access to care has been among v.a.'s top priorities and we have made real progress. we completed 7 million more appointments for care inside the v.a. and in the community than the previous 12 months. -- initial capacity to required -- double the initial capacity required to meet those needs when you go. average time to make appointment, four day for primary and five for specialty and three days for mental health. scheduled appointments inside the v.a. are up 12%. authorizations for v.a. care in the community are up 44%.

97% of appointments inside v.a. are completed within 30 days of the clinically indicated they or the date the veteran requested. we know that for many veterans, 30 days is far too long to wait so we tracked shorter time frames. 93% completed within 14 days, 88% completed within seven days and 22% of appointments completed on the same day. after hours and weekend appointments are up 12%. we have expanded the use of virtual care, secure messaging up 36%. a consult up 36%. the near risk, then you in rowley appointment request list down 93%. the electronic waitlist down 97%. all clear indications of improving access. to achieve this, v.a. has been executing a strategy builds on achieving capacity to staffing space, productivity and v.a. community care.

highlights -- we have grown v.a. staffing by 12,000 since april of last year including 1000 physicians and 2700 nurses. we activated new leases that add 1.3 million square feet to r health care care footprint plus another 400,000 square feet in the a owned properties. our relative value unit of a standard measure of clinical output has increased 10% while health care budget is up less than 3%. and 1.5 million veterans have been authorized for care in the community. a 36% increase year over year. clearly, we are improving access, providing more care to more veterans. what is the challenge? as we improve access, even more veterans are coming to v.a. for their care. as a result, in -- appointments pending over 30 days are now up 50% from where they were one year ago.

consider phoenix, after adding 337 staff, completing 100,000 more appointments and 91 percent increase in care and the community, wait times are actually up. why? in the same period of time, the number of veterans receiving primary is up 70% and mental health care of 60%. we also saw in las vegas -- primary is up 17% and mental health care is up 16%. care in las vegas has jumped 18%. as we think about what is going on, let's not lose sight of the broader context. we are doing with an aging veteran opposition and over half of those veterans receiving care at v.a. are over 65. more veterans are filing disability claims for more conditions. the average degree of disability today is near 50%. among veterans receiving

disability, the average disability is 50% meaning many more veterans are eligible for health care in v.a. we also know that many veterans prefer v.a. health care. dsw's march survey reports that 47% of veterans who were offered choice elected to wait to get their care inside v.a. 78% said they were satisfied with their v.a. care experience and 82% would recommend v.a. to a fellow veteran. one more thing that is very important for all of us to keep in mind, most veterans already have a choice. 81% have either medicare, medicaid, tri-care, or some care -- some form of private insurance. any come to v.a. because of disparity and out-of-pocket cost between insurance and their v.a. care. for example, the average medicare reimbursement for a knee replacement is about $25,000. with a co-pay of 20%. choosing v.a. saves veterans

$5,000. so as v.a. improves access which we are continuing to do, more veterans are going to come to v.a. because they either want to, or because they have a financial incentive to come. now, as we look inside v.a. what you are saying is evidence in the way we operate. historically, as many of you heard me say in the past, we have managed to budget numbers instead of -- based on veterans needs. as we improve access to see veterans within 30 days, federal response is replacing demands on resources. could we have managed this transition more effectively? i think we could have and should have. but remember, we are running the largest health care organization in the country on a 20-year-old financial management is done. we have had a hard time effectively factoring into our predictive analysis market penetration, changing better in alliance on v.a., and improving access and the impact it has on veterans choices.

we did not fully appreciate the challenge associated with changing internal v.a. processes quickly enough to accommodate the shift to choice. we underestimated the time required for third-party administrators to build provider networks and resistance that many providers would have to join those networks. notwithstanding our best efforts and much help from our dso partners, many veterans still do not understand how choice works. the limitations, particularly around geographic burning, which congress has recently amended made it impossible to use choice in many instances and created additional demand for v.a.'s traditional community care programs. lastly, veterans are demonstrating very clearly that their decision cycle timeline for care for outpaces the federal budget cycle timeline. likewise, medical breakthroughs do not follow the budget cycle timeline either. hepatitis c is an example of a

new requirement impossible to forecast on active -- when the 2015 budget was first proposed. the first of a new generation to care hepatitis c was approved by the fda in early fiscal year 2014. over one year after we began the 2014-2015 finance budgeting process and less than one year before the fiscal year actually began. after adding these drugs in april, we realized we would not have enough money to pay for them in 2015. in september, we alerted congress to the impending shortfall. they have approved to more hepatitis c drugs but expensive. we moved $619 million from the a community care. but it was not enough. veterans desired for this treatment has been extraordinarily strong and simultaneously, we build capacity internally to make veterans needs quicker than we

anticipated we would. in may, to keep hepatitis c veterans from waiting, we asked for budget flexibility as a limited a lot of choice program funding. secretary mcdonald raised the flexibility issue with this committee in february when he asked to use choice funding to meet the needs of veterans as they arose. the choice program is making a positive difference in the lives of veterans and in every instance, if the veteran is eligible for choice, we want to use choice rather than any other community care option. i would point out that in february, approximately 5% of choice eligible care in the community was being authorized through choice. by the time you get to the first week in may, that number was i now receive daily updates on our choice penetration for choice eligible care as of the 19th of june. we were up to 33% and authorizations that word choice eligible and i expect that number to continue to climb. but we still need flexibility in

the use of choice funds for the ballast of 2015 and 2016. further, we expecting a congress is help us to consolidate community care channels as the chairman alluded to. including you were program by program restrictions on those channels. existing choice act funding can help meet these needs when we first made the request in february. but investments have paid off. we are providing more care to more veterans to keep progressing and to keep providing veterans greater access to care today, we need the flexibility to use as much as 2.5 billion of choice funds that were appropriated for veterans care to pay for veterans community care. exactly what choice is for. we already anticipate that we will rely heavily on choice in fiscal year 16 to meet growing needs in the fiscally tight year. our strategy will remain the same. staffing of, and care to

maximum capacity. we are going to do the right thing for veterans and be good stewards of taxpayer resources and continue to work to make choice of success. but to succeed, we need the flexibility to use funds to meet veterans as those needs arise. we look forward to working collaboratively with this committee that congress and we look forward to your questions. >> can you tell us when you first became aware of the major shortfall of what is now becoming a multibillion-dollar shortfall? at what point was that evident to you or the secretary? mr. gibson: i actually brought with me in my folder a memo i received from the phc of dated

that indicated based on our financial system, we were still showing that we were under obligated. from that time forward, the process launched that covered several months during which millions of transactions in the care system were audited and reconciled in order to be able to determine the 92 to of the shortfall. it has only been within the last three or four weeks that we have begun to get clarity around the magnitude of this disconnect. three issues here. one has to do with the push to accelerate access to care. one has to do with an antiquated financial system that does not have the automated interfaces that it needs with other systems like the fee basis care system and the third fundamental change that affected this this past year is the requirement in the choice act that we pull all of the budgeted funds for care in the community out of the medical centers and consolidate it in

the chief business office. those three factors together created this disconnect and the lack of clarity around what was actually going on in the fee basis care area. >> i was looking at a document that i guess encapsulates the first quarter which would have been the last quarter of last year that was provided to the appropriators in march of this year and into showing everything is on track at that point. mr. gibson: we were showing everything was under got -- under obligated through february and the questions i kept asking work, how can we and -- how can we be under obligated when you we have of 40% increase in authorizations and care in the community? >> that is what launched the review and reconcile meant of the millions of transactions that were in the fee basis care system to determine actually would have been obligated. >> so, you can see why the

questions that will come from this committee today are absolutely -- mr. gibson: absolutely right. inexcusable. i find -- find the health care company out in the private sector of our order of magnitude that is operating under a 20-year-old financial management system. you will not find that. part of that we have to do is we have to find workarounds. if a congress asked us to do is pull all the budget money in what historically -- what had historically happened was here in the community against budgeted funds that managed out in the medical centers. decisions were still being made out in the medical centers but all the budget dollars were sitting centrally. so you had a fundamental disconnect between those two developments. now, we will have to build a work around. should we have built a workaround? yes, we should have. should be have asked congress for relief from that requirement? yes, we should have. we see that clearly with the benefit of hindsight. >> have you requested any

specific legislation or changes at this point or is the central office still we should build a workaround. should we have built a workaround? yes, we should have. we see that clearly with the benefit of hindsight. >> have you requested specific legislation or changes at this point? as i stated in my opening statement, we got very limited questions and statements saying we would like to get more, we would like to reform the choice program, but i haven't seen any request from va yet. >> we will -- we have done briefings with staff, we will deliver a very promptly written request asking were flexibility and utilization of choice funds to pay for care in the community for veterans. >> if we go down this path, and it isn't a path that i want to go down, it may be the only solution to a problem coming for a considerable amount of time. reforms have got to be made.

they have to be specific and we want to work with you through the process. >> thank you and we appreciate that. >> thank you. i am going to ask a question because i want something cleared up. explain the difference to us between the fee-based and the choice. >> we use the fee-base to track patients for care and reconcile back to an invoice and insuring we receive the clinical information from the individual's veterans' care. i think the fee-base system captures choice. >> can i go to a dollar before -- doctor before picking a choice in the community? >> there is an authorization you would prefer to schedule and if

we cannot do it timely we can transfer you to third party administrator and they will schedule or if you live 40 miles away. >> and choice? >> that is choice. there are six or seven different programs. it confuses veterans. and it is confusing to the staff and to providers. different payment reimbursement rates and requirements for authorization and different processes. it is thoroughly confusing. >> i understand it is. but are the veterans getting the care in the community?

>> we are estimating in fiscal year '14 we'll see in the neighborhood of 21-23 million appointments for care in the community. that is up from about 16 and a half million in 2014. as i mentioned, there are a record number of veterans who are receiving authorizations for care in the community. 1.5 million over the last 12 months. a 36 increase over the prior period. >> is any of that in the mental health area? >> yes, ma'am, it is. >> what percentage? >> mental health has been a smaller percentage of care

because often times veterans experience issues that va providers are potentially better positioned and more knowledgeable to be able to respond to. there is certainly mental health care out there but the vast majority is delivered inside the va. >> i am going to yield back my time and i hope we will have a separate round. >> i think we will have an opportunity to do that. one question real quick mr. secretary. over the past month we have examined improper precurement to pay in a timely fashion and gross issues with construction and i will yield to the gentlemen from colorado in a second, but this committee has heard many instances of simple smaller ways of fraud and abuse by poor management that appears to be the culter within the -- culprit within the system. i know you are trying to root it out. but in my state, we discussed

st. augustine, and how can va continue to justify paying thousands and thousands of dollars in fines and penalties each month to retain a sea balk in a facility they knew a long time ago they would have to relocate. how does that happen? >> it happens when we fail to forecast far enough in advance to relocate from the expiring lease facility. what happens is we wait too long and then we start working to define requirements and run through all of the process and we find there were issues with site selection that denied it -- delayed it and we wound up in the situation you are describing. we have, i don't know how many hundreds of lease transactions

in the pipeline, that is a major part of the business and we allocated parts of funding. we have to better manage it and streamline the process and developing more standardization and lease design so we can work through the process and the design more expiditiously. >> it is my part of the state and in addition we had a briefing on that when you and i was in orlando and it is not as simple and complicated in that the city and the county and how we can -- this is something we need to address. if a city wants to give us property to relocate, we can't just take it. that is something we need to address. >> yes, ma'am.

>> all apples are not the same. >> saint augstine is just one example. this is happening all too often where we didn't make plans far enough in advance to run through the process to get to the point where we are ready to replace the facility before the lease expires >> and this not only happening in st. augustine it happened in tallahassee as well. we need to address this and change the process. >> we are working on it and that is the guy responsible for fixing it. >> i saw him pointing at you mr. giddens. >> i point at him a lot. >> st. augustine is important to the veterans in that area but trying to change this culture that has been allowed to go on for too long. mr. lamborn, you are recognized.

>> secretary gibson, although i am glad to see you saying the va is committed to doing what is right for the veterans in colorado, i am disturbed by the additional time and money it will take. thanks to reallocation of funds we are good through the end of the fiscal year but much more remains to be funded. this is a critical facility that our colorado veterans are earned and need. i remain committed along with my colleague representative coffman and others that we remain committed to finishing this process. where is the accountability i have to have? we have poor construction projects and where is the accountability? we have given authorization and don't see it being used.

>> if you look back as i have at the entire change of command from the secretary all the way down to the project engineer, i believe there is only one person involved in the project who still remains at va. and i think that is the project. not project engineer but executive. there has been an aib in the process of wrapping up. i think we talked earlier in this committee about early evidence that was gathered that the being used to draw charges against a senior investigator who retired. a similar process happened recently with the senior attorney who was involved in denver. and i expect the aib to wrap it up quickly and we will consider the evidence graced by the aib for any additional individuals that are still on the payroll end of the department.

>> thank you. and also, secretary gibson, you asked for additional flexibility in allocating your funds, but haven't provided what, i believe is the supporting data needed for that. more importantly, i want to insure there isn't the impression that the va decided to fund the hospital project in colorado ahead of hepatitis c treatment or any other care. that will not be the case? >> there is no intention to trade hep-c care for denver. we have gone through a sears of proposals with denver starting with what i believe was the best proposal for taxpayers and veterans and utilize construction funds that were provided as part of the $5 billion under choice. there were other alternatives considered where we would reprogram dollars from major construction projects.

projects that are not due to start construction for three or four years. that got nowhere. we looked at alternatives to reduce our proposed funds in 2016 from non-reoccurring maintenance maintenance. we got the attention that the va would have to time over the course of the year to manage reductions on a very micro-level so we insure we are not adversely impacting veteran care. >> i want to speak for myself, week not do any fix that compromises health care. >> thank you, secretary gibson for your acknowledgment that

things could have been better planned out and could have been better manages management. when you talk about the administration or the outdated software what are you referring to? >> we have companies in the private sector. we have a major technology system, it system, software system, that we use to account for all of the financial activity of the department. i recently interviewed a candidate to come in and head it who was astounded to learn we were using it. >> we are talking about it. >> yes, we are. i know there are problems in engaging non va providers and the va has the responsibility to manage the accountability and

there is a lack in the medical electronic records with the system. so we need to look at investing and upgrading that system. i understand the large part of the shortfall comes from increase payments for fee-base care and contracts with non-va providers. do you have an estimate for how much of that care could have been provided through the choice program but wasn't? in other words, how many veterans qualified for the choice program but were delayed because of the slow rollout? if you don't have the number you can give it to me later. >> let me take that for follow-up. but it was not a hundred percent. choice dollars are not used for long term care or denist --

dentist. and there are not many eye doctors who are providers. >> so a big chunk of this money we are talking about could have been qualified them? >> yes. >> and you are saying this is all sorts of reimbursement rates out there for the different kinds of non-va care. my next question was of the remainder of the folks that would not have qualified, how much could that was attributed to the lack of capacity at the va that were not fully disappear staffed up at the va? if you were staffed up could we have taken care of more people? >> i think the short answer is yes, if we were fully staffed up and had all of the facilities we needed, yes we could have. but there were instances we

relied and came to rely on state nursing homes to care for veterans. and so that winds up being, i am going to say $100 billion and a half dollars. bill, is that in the neighborhood? that is a substantial portion of that that we come to rely on outside providers for that. >> i want to turn to hepatitis c. i am concerned about the lack of funds to continue to provide treatment for veterans with heptitis c. it is estimated 180,000 veterans are infected with this disease. i command the work the va did to treat the disease. the treatments can cost as much as $1,000 a bill. luckily the va has been able to negotiate with a lower cost and i have heard estimates they are

instead paying closer to $600 a bill. is that correct? you may not have it with you. >> i would like to not have to answer that question. we work very closely and collaborate with the manufacturers of those drugs and have been able to reach an adjustment in the purchase and we continue to have those conversations. >> what i am curious about is if maybe our veterans are choosing to go to va as opposed to private care or tricare or other options because they might get access to this medication more easily and the doctors might be able to get the treatment done in a timely manner. >> i think that is serm the case.

if a veteran who is medicare eligible was to go to a private provider he would wind up with a substantial co-pay in order to receive that care. >> thank you. for the record, this congress has provided hundreds of millions of dollars in the past few years, in fact one particular system called core fls, and this money was squandered and we had nothing to show for. >> can you explain about the core? >> it was a financial system and the name -- >> oh, you were talking about the it. and again i agree with what you are saying. i am saying there has been hundreds of millions of dollars spent in the air somewhere and never used. >> i appreciate that.

and sense being here, my sense that the rollout, i had a feeling if they didn't have this ability to have electronic medical records and do it by paper they would have a hard time engaging non-va providers. that is my point. >> and a great point. thank you very much. mr. bilirakis, you are recognized. >> thank you, mr. chairman and thank you mr. secretary for your testimony. the va estimated $2.6 billion shortfall for the remainder of the year impacting the delivery of care to the veterans and may affect the following year's budget. how firm are you on the $2.6 billion? >> we are slightly over three months away and i would say it is a very accurate forecast. it does assume business as usual.

>> how did you come to that conclusion? >> as i alluded to earlier, we have had people go back and look and do reconcilements, millions of transaction in the fee-based care system looking at past patterns of authorization and numbers of appointments per and the cost of each appointment looking at the month-by-month track record and the numbers of authorizations and the forecast is built from the bottom up. >> considering va -- how much of the shortfall in your estimation was due to mismanagement of funds as opposed to the level of funding appropriated by congress? how much is due to dis dismanagement?

>> should we have done a better job of managing the different buckets appropriated? yes. but we are pushing to ecaccelerate care. we have a 36% increase for veterans in the community. >> none of this is due to mismanagement? >> this is about providing more care to more veterans. that is what this is about. >> how much has the va spent in retention and performance bonuses for fiscal year 2015? >> i take that for the record. i don't know the answers. >> can anyone on the panel answer that question?

>> i think most of the performance awards are paid at the end of the fiscal year and paid on an ongoing bases to physicians. >> can some of the funds, in those accounts, be reprogrammed to address a portion of the budget shortfall? do you need specific authority from congress to do that? to reprogram some of these funds? >> i would not expect it. i would not expect it. we would need authority from congress to reprogram some of those funds. as we work -- >> that the -- is that your intention? >> we are looking everywhere we can to identify funds to support care for veterans in the community. >> thank you. i yield back, mr. chairman.

>> ms. brownly. >> thank you, mr. chairman. i was back in my district last week and i had a meeting with our veterans and triwest came out and we talked about the choice program and provided more information and education to our veterans there. i also had a meeting with the -- there is a network director in my district as well. and she provided me with information on hearing from my veterans i heard from her as well that a private group that provides adult day services in my district happen to be right next door to our c-balk. theas a certain synergy there between the c-balk and day center for the veteran. we have been told because of lack of funds from the va that the family circle is not going to receive more funds and we have a queue of 15 veterans waiting to get into facility and

the va said sorry we will not be able to accommodate that. maybe on a case-by-case basis given the circumstances we might be able to accommodate a few. so, you know, that is a concern for me because i am beginning to already, at least in my district, feel the implication of the delima you are presenting here. and i am concerned that is going to, you know, bleed into other areas in home health care services and other kinds of things. at the same time, we have providers in the district, mental health providers, that va has contracted with and we are not utilizing them to the extent they can be utilized. we are not pushing our veterans to chose contracts. and thirdly, i would say that triwest, i think it is very committed to administering the choice program.

they indicated they plan on hiring lots of folks to do a better job of providing the choice program. so all of these issues that i am raising right now are sort of fighting against each other. we are going to need resources for the choice program in order to increase and enhance the program and we would not want tri-west to hire a lot of people and tell them sorry. we have to push people for the people we contracted with and my veterans in ventura county are not receiving the services and beginning to feel the delima. i am not sure i have a question except to say i thank you for your leadership, i do believe if you were not asking the hard questions, your issue around financial management system and continuing to ask those hard questions, you and the secretary both, that we still might not be aware of this problem surfacing

the way it is. i don't think we can look past at mistakes. we have to look forward. the money needs to follow the veterans in term of what he or she selects in terms of their service. so again, just very, very concerned about what is happening in my district to my veterans as we speak and wondering if there is any remedy to that. >> we are concerned as well. adult daycare and home-based

care are two services we are not able to use choice to fund. that would be part of the flexibility we would love to have because we don't want to see that care disrupted. we will do homework on the mentalal health-- mental health providers and look into that. i mentioned we are up to 33% of all authorization in the country going to choice and tri-west is up to 41% and i think it is because of the determined effort they are making on the ground day in and day out to see that we are using choice in every case we possibly can. >> if i could add on about the mental health provider. we have long-standing relationships with 87,000 providers around the country and we are doing everything in our power to reach out to folks, sending them letters, asking to meet with providers and encouraging them to sign up and become choice providers.

the providers our patients have been seeing, we want them to continue to see them under the choice program. >> thank you, and i yield back mr. chairman. >> i had a similar situation and i brought in the hud, and we were able to get 30 veterans signed up because they had no income. and now they will have that income income. the agencies need to work together. >> dr. beneshek? >> thank you for your testimony, mr. gibson. frankly, i am shocked by the fact you sit there saying there is no mismanagement and we have a billion fund looking for a hospital in denver. if that is not mismanagement then is is just standard way of doing things at the va. frankly i was really hoping that the new secretary would be able to revamp the va.

i think business as usual is not working very well for the last 30 years. that the lawyers of the buand there are many levels and i was hoping to see a dramatic change in the organizations of the va so things would be leaner and meaner and that 20-year-old it systems wouldn't be used as an ex excuse to explain there is a 2 .7 billion cost overrun. you know, i still have a labile of hope that something like that is still in the offing. is anything in the offing like that? a revamping of the va or will it continue the way it is? i am not happy with the progress

we are seeing today and in other instances of the surprise cost overrun not being able to figure out the hepatitis is going to cost money and all of the things you mentioned. >> first of all, to be clear there was gross mismanagement in denver. the question i heard being asked had to do with the $2.5 billion -- >> that is part of it. >> 2.5 billion are missing -- >> it is not missing. no, sir, it is not missing. it is money that is going to pay for veterans' care in the community. that is what we are talking about. >> there is a cost overrun that money in your department has been spent on all kinds of stuff. we don't know what most of it is because it is all disappearing. it spending hundreds of millions that haven't been updated. it disappears within your system. that is what i mean about having -- it is more control over what is happening with the money. >> we would love to come brief you on my va which is the long term plan for the transformation

of the department. we would relish at the opportunity to do that. the organizational, culture, staffing -- >> i would like to see something dramatic done to change the status of the va so it is much better than what we have now. this hearing is another example of that. >> i would just mention you alluded to the fact that it has been going on for 30 years. secretary mcdonald said ten months. that doesn't mean we don't need to be getting things done. we do. but i think we have to take into account the fact that changing an organization as large as va in less than a year i am not sure who would be able to do that inside the federal government no less. >> i have another question about the choice act.

i think part of it is the problem with getting a provider list up there. and my understanding is that we were going to be paying medicare rates for care. but it is always my understanding that the third party providers are getting medicare rates but the people doing the care are not getting medicare rates. they are getting a less than medicare rate. and some of the providers said the rates are 30% less. so they are not signing up for it because you know they are loosing money.

ithey go, we did not know that. >> administrators said, we had a better deal for when we were doing the fee-for-service. >> we were doing a one-off contract with ba -- va. >> we would be glad to share with you the letter going now to providers but you recognized. >> thank you for being here.

i now the v.a. has been overwhelmed for problems of the past with the old id system is a lack of a planning system with treating hepatitis and the medical technology is changing so rapidly that we did not plan for this backlog for the appeals process and as you mention and andrew have a good way to plan

for a demographic shift i worry about places like las vegas where demand is increasing. but to give or take a few going through money quicker will we run not moved money sooner? how do you make up for that kind of money? >> that is the great question. recently giving the budget guidance when i got to that recommendation page to mention

the number down or another up but that is not the way we will do this. the requirement starts with what we expect to deliver to the veteran. so i will take appeals. let's say we want to give the veteran and appeal decision now it is like four years or five years obviously we cannot beat that standard immediately to decide how long it would take and that conversation we have is the only resources even hepatitis c. the last time i was here i propose the idea to take the hepc prevalence at a functional

o that we all agree to that to understand what it would cost and executes to that that starts with the veteran experience you try to deliver. >> just for the record and for that era hospital it was the patch from other projects but i cannot vote 1% across-the-board cut it is a bad way to do budgeting airways voting against amendments not just where you don't but i hope you come with another proposal but i cannot cut veterans' benefits across the board to bail out a bad construction project in denver.

>> mr. secretary of one to follow-up with what we discussed with the opening questions from the chairman of the committee. i didn't hear exactly the answer of a 40% cost overrun >> it became clear there was of very large variants into late may or mid may to live cattle whole series of alternatives with different solutions that fund may or may not have had direct control. >> where are we at today with the choice fund? i know the president submitted a of budget.

>> is a little over $1 billion? >> 402,000,940,000,000 i was close what is it? >> back when we did our first estimates on tories will look dash utilization of $3 billion the first year. so it is interesting as we look at what we have done to accelerate care what we originally forecasted.

are doing today is a rare you predicted it was? >> i don't understand the question. >> in the president's budget you propose to raise a choice find -- fund including v.a. care the you said we ran short even though we did not know about it and tell day even through the 2016 budget proposal so where are you back today? what did you project you would spend. >> between now and the end of the year? to be optimistic is a total of billion and a half dollars. id if we can spend that that reduces the 2.5 billion dollar shortfall. >> when you knew about the shortfall with new told congress do you wait until the end of the fiscal year then add up the

bills it looks like we were 40 percent over. often do you figure out your budget? >> looking inside the financial management system to provide reports to appropriators. >> at least on a monthly basis but the point i made earlier but we are under obligating and we have people to do manual reconcile with millions of transactions for what is obligated. >> but what happened? so that march memo was falsified as inaccurate?

>> there reported the financial management system did not take into account the specific details of every authorization. >> they give you reports. >> historically it would have been done at the medical center level where we kept the budget but congress passed the choice act to require less to consolidate into the chief business office. >> you do that in march. so how do have the 40% cost overrun and kong to congress in june and say we have a couple months left in don't forget it's?

i am concerned about the implementation. >> dilution is the secretary that has said repeatedly give us the flexibility to use money to follow the veterans. veterans make decisions faster than the budget cycle. quite frankly we cannot change as fast as we need to change. >> to fire understand correctly you hire 12,000 individuals. >> net increase. >> county direct care providers? >> more than 1,000 our physicians 2700 verses i cannot tell how many were psychiatrist. >> i would like to know that based on the figures only one-third of what you hired we could render carry a two-thirds. >> the biggest challenge is to don't leverage providers with sufficient support staff so that means they cannot be as productive as they need to me.

>> dr. reese you are recognized. >> thank you for holding this hearing into our guest for being here but my question is with the implementation of the choice program so we have some money you want to take from that program into other non v.a. care and i am always in the view we have to take care of our patients so you need to take care of them by purchasing more medications for certain illnesses bin that is what we have to do. however when i am concerned about is why is there money not utilized with the choice program when i know in my district after speaking with 70 specialist in high demand special days --

specialties there is not a clear understanding of the process or implementation there is no efforts by the v.a. as much as we would like to see? so the actual implementation is slow and not very efficient so why is there money left over from that choice program? and could that be used with the implementation of the choice program? >> we're on the same wavelength. first of all, we're not looking to move money out of choice but to use the choice funds to pay for care in the community we just want to access to pay for care in the community. and the opening statement went through a litany of seven or eight different factors that have gotten in the way and many

have to do directly with the implementation of choice. i was surprised the other day with our daily stand at a meeting when folks were describing the five-year process under way to put in place the procedures to utilize care in the community the old traditional program and they're still working on it after five years. we rolled out choice in 90 days and i reminded one refers went to the industry for third-party administrators they said it would take 80 months. the idea to do with in 90 days they said it would never happen and eight months into this we are learning the time required to recruit providers and change the internal process that every process has a different payment mechanisms are different reimbursement rates and with every issue has gotten in the way to run out of the characters' stories.

-- choice but day-by-day that is improving. >> what about the idea to consolidate. >> yes. yes. yes. yes. that is exactly what i described and i referred to in the opening statement. we want to do precisely that but we need congress's help to do that. >> so we actually have informed the field we want choice to be the number one mechanism by which we send people into the community for care. we have work to do to streamline the process. we are treating our staff to day and we will do more coordination of that care with the purchase care program but that movement

to streamline those channels is already under way. >> whenever a system was to change they have coaches that go into a hospital. there should be some coaches that go into a community to help set it up for the providers to set up training for the veterans to work with members of congress so we can help others do the same thing. >> you are correct. for example, tri-west goes around the country to meet with providers to get them to sign up to be choice providers. that has been pretty successful effort because they work very hard. >> we will take a short recess.

we have two votes we will resume a the hearing immediately following the last vote. [inaudible conversations]

>> we will resume the hearing some members are making their way back from the last series of votes. thank you for your indulgence. are you prepared to begin with your line of questions? you are recognized.

>> thank you for being here. i was looking through emails that i just received from new hampshire. it is some good news. we have signed up an important partner of ours from the north country that is in a sparsely populated area to be part of the choice program. i want to reference that because we have talked a bit about the transition and how long it takes and vital part of that is to line up the private community partners and health care providers and in particular care for seniors and adults day care and home care. but looking forward, we can all agree there is bipartisan concern about this transition, but some colleagues may not be familiar with the notion of the other six types of programs.

as i have sat down with my v.a. we have talked about when the choice program is applicable or when are the others. through a multitude of dimensions one is the availability of services whether a network or a local provider willing and able and available. the other is cost to the taxpayer to provide the service but also he made an important point about the out-of-pocket cost to the veterans because until we have an understanding of these decisions being made, we will my grasp the dimension to open access. -- we will not grasp the dimension to open access.

we had a note that said previously that v.a. has controlled access through distance and delay and that is the reality. we made this promise to our veterans then the space lid on the cost for either was too far away or too long to get the service. so going forward with the change that you bring to this organization, what would be the path forward to streamline these programs and provide direction in each of these different communities to get access to the veteran is no way that is timely, high-quality, and

cost-effective and efficient for the taxpayer. >> if he could start off in this area he has done a lot of working in this area. >> and what do you need from us? is this going to be a congressional changing and how do we get together with you in a bipartisan way to make that happen? >> we have been spending almost fell last year since the legislation was put in place in november. we ask them to bring the commercial side of the business to look at our business office and how we managed care in the community against best practices of private sector health insurance industry. we have identified core competencies and they did a

maturity assessment against the best practices in the private sector. we have taken at hand are developing a plan to make sure we can build those competencies using the current business office function with the foundation on which we will build over the next year some of those competencies' we will have to make decisions and to rebuild tattersalls or buy back? because the expertise is out there and it is more cost-effective and efficient to buy it. we have a group right now with our process to say going for word what it does look like? what do we want to point to into the tpa contract for the future with the much more robust program.

we will need help to rationalize these programs. ultimately we would want the project folded into the choice program so we can get rid of the multiple channels. and we need some changes to the choice act itself the way it is structured. we have alluded to those several times like the medicare providers verses those we believe are qualified to deliver that k. witte -- care with the 60 day authorization period. secondary pair is problematic it is very problematic in places where i was like alaska talking with the folks with dod it is really problematic if we want

dod to be providers to read my -- roviders -- providers. >> my time is up if we can get everything going for word. >> i apologize. >> you are recognize. >> secretary gibson, in march what we talk about is the shortfall of the budget available for health care. but if we look at the v.a. historically, initially it was service connected issues for military personnel. then we expanded at at some point to the low in, the veterans on a means tested basis. then we expanded again at some point to give automatic

eligibility for returning active duty for civilian life that is not means tested that is four or five years to have eligibility but march of this your v.a. announced it would no longer used the asset tests to determine v.a. eligibility expanding again. but you did it at a time and i guess you have the statutory authority to do that, but you have to make an assessment if you have those resources available to read that expansion clearly you don't have that. so what you do about this? >> i will have to follow-up on this but maya understanding is

we were able to substitute another means test we could get directly from the irs or social security in place of the annual requirement on the part of the veteran to file about net worth. we will validate and come back for the record but it was not a move to open the aperture by read the favored and administratively. >> we need to find that out because i got this information through veterans magazine touting it as an expansion of eligibility by relaxing asset requirement to make more individuals eligible they would be any way but there would have to pay for a portion this would relax the requirement so it is an expansion of care sorry think