Hearing of the Senate Veterans Affairs Committee - Panel I: Budget for Veterans Programs for FY 2010

PANEL I OF A HEARING OF THE SENATE VETERANS AFFAIRS COMMITTEE
SUBJECT: BUDGET FOR VETERANS PROGRAMS FOR FY 2010

CHAIRED BY: SENATOR DANIEL K. AKAKA (D-HI)

WITNESS: GENERAL ERIC K. SHINSEKI (RET.), SECRETARY, DEPARTMENT OF VETERANS AFFAIRS

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SEN. AKAKA: (Off mike) -- Senate will come to order. Aloha and welcome to all.

Today the committee begins its review of fiscal year 2010 funding for the Department of Veterans Affairs. When we talk about the VA, we're talking about people. I've had a few chats with the secretary and that's what we've been talking about, people and the people in VA, those who have served and the nearly 280,000 VA employees who work on their behalf.

The budget outline presented by the president last month appears to be a good one which reflects many important priorities of this administration. From my vantage point as chairman of this committee, I am committed to ensuring that veterans receive quality benefits and quality services.

When troops are sent into battle on behalf of our nation, there is a commitment to care for them when they return home. They must be given the best health care and the best rehabilitation. They must be fairly compensated for their injuries. And now, in this time of war, VA must have the resources it needs to carry out its mission.

The troop surge in Iraq and the increases in Afghanistan will soon be felt at VA. To date this generation of veterans as a group has been slow to come to VA for benefits and services. VA must be prepared to reach out to those now coming home and bring them into the system.

While many details of the administration's final budget proposal have yet to be presented, the committee is required to submit their views and estimates to the Budget Committee by the end of this week. I intend to meet that deadline, but doing so will not complete our work on next year's budget. We will evaluate the president's final budget once it is received and make additional recommendations.

One of the most pressing issues facing VA is ensuring timely, sufficient and predictable funding from year to year. Last month I introduced legislation with bipartisan support to help secure the timely funding of veterans' health care through advanced appropriations. Too often VHA's budget is subject to delay and uncertainty, hampering planning and threatening health care quality. This situation must end.

Another serious issue is the backlog in VA construction. I am eager to learn how the committee can help the department complete pending construction projects so that VA can provide veterans with more access to care and better facilities.

There are many other important areas of health care that the committee is concerned about such as care in rural areas, the health care needs of women veterans, recruitment and retention of medical providers, research programs and homelessness among veterans.

On the benefits side of the ledger timely and accurate adjudication of disability claims and appeals remains a significant problem. Veterans deserve to have their claims addressed fairly and without needless delay. The president's budget proposes to invest in better technology and I am pleased that the department will invest in the development of rules-based electronic processes to improve accuracy, consistency and timeliness in claims processing.

As one who knows firsthand the value of education benefits under the GI Bill, I want to hear how VA intends to implement the Post-9/11 GI Bill. I know that VA shares my commitment to providing a seamless transition from military to civilian life for today's service members. VA must be an active partner with the Department of Defense to ensure that troops are cared for appropriately when they transition from active service to veteran status. I look forward to learning in more detail how the president's budget proposal responds to this issue.

I am committed to working with the secretary and my colleagues in Congress on both sides of the aisle to ensure that the department gets what it needs to deliver high-quality benefits and services to veterans. We must acknowledge the fact that the needs of veterans are costs of war.

I look forward to our dialogue with Secretary Shinseki as well as the representatives of veterans' service organizations here with us today.

And now I'd like to call on our ranking member, my good friend Senator Burr.

SEN. RICHARD BURR (R-NC): Aloha, Mr. Chairman.

SEN. AKAKA: Aloha.

SEN. BURR: And to my colleagues, welcome, and to our witnesses.

Mr. Secretary, this is the first time you've been you've been before the committee; therefore, it's the first time I've been able to address you formally as Mr. Secretary, and I want you to know what a special privilege it is to have you in this position. As I've said in the past, we're fortunate to have a person of your caliber as the head of the Veterans Administration. I'm looking personally forward to working with you as you chart the future of VA in the shared mission to save America's veterans. I thank you for being here.

We're here this morning to learn more about the president's fiscal year 2010 budget request. There are very few issues that are more important, in my estimation, than to ensure that the programs and the services for our veterans are adequately funded.

Mr. Secretary, I'm counting on you to be very candid with us and with this budget. More importantly, I'm counting on you to make sure that our veterans' lives are improved with the resources that we provide the Veterans Administration.

We have very few details about what's within the budget. In fact, we really only have a 134page book submitted by the Office of Management and Budget but only two pages of that devoted to the veterans' budget. Let me say that for the upcoming fiscal year, this budget appears to be a very strong one, with an 11 percent increase in discretionary spending. This is consistent with the increases shown in recent years.

I'm especially pleased that the budget appears to fund legislation I authored and was signed into law last year to help our veterans who are at risk of becoming homeless. This new law, Public Law 110-387, authorized the VA to make grants to nonprofit organizations to provide supportive services to these veterans.

I believe that when it comes to dealing with the problems of homelessness we must approach it in a proactive and, more importantly, a holistic way. My hope with this new effort is that we can end the cycle of homelessness by ensuring it never begins in the first place. I commend the president for making this a priority of the '10 budget.

Although the fiscal year '10 outlook appears promising, I'm concerned about what the president's budget tells us for subsequent years. I'm concerned because I believe the president when he says his goal is to bring a new level of transparency to government. In fact, here's what the president had to say about his own budget -- I quote: "But this budget does begin the hard work of bringing new levels of honesty and fairness to government. It looks ahead a full 10 years, making good-faith estimates about what costs we would incur," end quote.

That's why when I look at the tables in the back of the budget and I see a proposed 2.3 percent increase in fiscal year '11, 2.6 in '12, 2.7 in '13, 2.8 in '14, I get very concerned. We all know medical inflation alone has been averaging around 4 to 5 percent per year. On top of that we're expecting more veterans to enter the system in the near future, especially as 100,000plus troops are drawn down in Iraq and as our weak economy is leaving many veterans out of work and, I might also add, a goal of absorbing 500,000 Priority 8's over the next several years.

I don't know how these numbers add up to ensure our veterans get the quality of care that they've earned -- more importantly, that we've promised -- but again, if indeed these are good-faith estimates, I'm confident you'll be able to defend these numbers.

In closing, let me also acknowledge the contribution of the veterans' service organizations on our second panel. Not only have they given us the benefit of their expertise in determining appropriate funding levels for the VA for the upcoming year, but they have also given us a guide to reform what I think is a broken budget process. I've joined as an original cosponsor of the Veterans Health Care Budget Reform and Transparency Act. I believe this bill will start the discussion in Congress on how we can deliver a timely, predictable and sufficient budget for our veterans. It will also lend new transparency to the budget process, which I believe is consistent with the president's own goal.

Mr. Chairman, again I thank you for calling this hearing and I look forward to the testimony of not just the secretary but of the other veterans' organizations.

SEN. AKAKA: Thank you very much, Senator Burr, for your opening statement.

And now I'd like to call on Senator Rockefeller for his opening statement.

SEN. JOHN D. ROCKEFELLER IV (D-WV): Thank you, Mr. Chairman.

Good morning, Mr. Secretary.

We've chatted on two occasions and I've expressed to you my profound pride in your selection. And all I can do is repeat that with the same heartfelt feeling. I think it's one of the best selections the president's made. If I were in a veterans' service organization, I'd be jumping up and down with happiness and with a sense that there's somebody who really cares, who understands, who's humble in nature but steel in spine and who will fight hard for the veterans.

Veterans have so many problems it's almost difficult to pick one or two out. Senator Burr mentioned homelessness. That's huge. He also mentioned sort of the five-year running budget, which, as we discussed, may not actually work out, it being very unique if we were to do that. And he mentioned the health care inflation thing. I have to leave to go to a Finance Committee meeting on that precise subject.

But let it be just said that the stimulus package gave the veterans an enormous boost. That boost is here to stay. And the question is: How do you take the multiplicity of the visible and invisible wounds that veterans bring home with them, will continue to bring home with them, will have living with them for the rest of their lives? I haven't even given up an inch on the Gulf War syndrome; you know, I think that's still out there, it's still an active matter of consideration and still more or less denied by the Department of Defense.

But I think a lot of Americans thrive on hope. They see somebody or they see something which is turning the corner, let's say, in the economic crisis, if we could see that it would be nice. They see somebody like you if they're veterans and their life gets better simply because there's hope because of your integrity, your strength. I think the bond already you have with each of us on this committee, with the veterans' service organizations, so I congratulate you. I'm really looking forward to your being a superb secretary.

Thank you, Mr. Chairman.

SEN. AKAKA: Thank you very much, Senator Rockefeller.

Now I'd like to call on Senator Brown for his opening statement.

SEN. SHERROD BROWN (D-OH): Thank you, Mr. Chairman.

I echo the words of Senator Rockefeller in saying this is I believe one of the president's best choices for a Cabinet secretary.

I also thank the veterans' organizations here, particularly the paralyzed vets, the DAV, the AMVETS and the VFW, for the independent budget. I think that helped get us on our way and the president's way and General Shinseki, Secretary Shinseki's way on a much better VA budget than we've had in years past. And I also thank the Legion and the Vietnam Vets for being with us today and helping us shine a light on the direction we need to go.

I appreciate Secretary Shinseki's already having said that in earlier discussions that he's had three meetings with Defense Secretary Gates. I guess having a four-star general as VA secretary helps get into the Pentagon and understand the Pentagon a little better than others and the relationship he's had with Secretary Gates, but I think that's so important as we've really worked for the last couple of years in trying to integrate the two departments better in easing the transition from active duty to veteran status.

And I hear from -- I've done probably a dozen roundtables where I'll sit down with 20 vets, similar to what I know Senator Rockefeller does in a different format but the same kind of thing, and just talk to them about their experiences and what they're seeing with the VA and what they're seeing with c-vox (ph) and what they're seeing just generally with their treatment as veterans, and one of the most common complaints from veterans' service organizations is they can't find veterans when they come home, the screening for PTSD isn't done, all the problems that happen because we sort of lose track. And veterans don't always step up because when they get home they want to get integrated back -- particularly if they're Guard or Reserve -- integrated back into their homes and their neighborhoods and their churches and their workplaces.

I appreciate especially the work that the VA has done, starting 10 years ago, on IT and the success -- I know that Secretary Shinseki's going to mention that in his opening testimony  but what strides that the VA's made with information technology, how it's made such a difference in cutting down the number of medical errors. That should be instructive to the Finance Committee and to the HELP Committee and to the House and Senate on how we do health care in this country because the VA really has done better than anybody else in reducing medical errors.

A couple of other points I wanted to make: I did a vets roundtable yesterday in Columbus at the vets memorial and a couple of things came out. One is -- this is a problem unique to Ohio -- Ohio has the second-lowest average payment for disability compensation. I want to understand that better and make sure that doesn't continue to happen.

More national in scope is the VA, as it moved towards privatization of all kinds of services, has moved away from hiring the number of veterans they ought to hire. It's probably meant less diversity, too, at the VA, but it's so important that there be a focus on hiring of veterans that I think the VA has lost its way on hiring veterans for a whole host of issues.

I also heard a lot yesterday about dental care, that there's a window during which vets have to get dental care; if they don't get inside that window they lose their option to have VA dental care. I'm not sure of that. That was said by several people at this panel.

And last the whole issue of mental health and there were several women there that talked passionately about the VA's inability to deal with sexual trauma from veterans who had been assaulted, men and women veterans they said, who'd been assaulted. They were soldiers that had been assaulted, and they weren't getting the help from the VA in terms of counseling because some mental health counselors typically specialized in alcohol and drug abuse and other kinds of PTSD issues but not a lot about sexual trauma. And that's an issue that we need to raise and work through in the months and years ahead.

But I'm thrilled that you're the secretary, General Shinseki, and I look forward to hearing your testimony. I have another hearing so I may not get to hear everything today, but I appreciate your being here.

SEN. AKAKA: Thank you very much, Senator Brown.

Now I'll call on Senator Graham for your opening statement.

SEN. LINDSEY GRAHAM (R-SC): (Off mike.)

SEN. AKAKA: Thank you very much.

Now we'll call on Senator Tester for the opening statement.

SEN. JON TESTER (D-MT): Thank you, Chairman Akaka.

And I want to thank all the distinguished witnesses who are going to testify today on the 2010 budget for veterans' programs.

And Secretary Shinseki, it's good to see you again. I want to publicly reaffirm my support and confidence in your leadership. I look forward to the testimony.

As the global war on terrorism enters its eighth year, servicemen and women continue to experience traumatic mental and physical injuries as they are placed in harm's way. Since fighting began, more than 4,914 U.S. service members have been killed and more than 40,000 have been injured. The lives of our service members and their families have truly been changed forever.

Suicide rates are at an all-time high. The rates of psychological and neurological injuries are high and rising, and according to IAVA, about one in five new veterans are experiencing symptoms of PTSD or major depression. Nineteen percent of Iraq and Afghanistan veterans have experienced probable traumatic brain injury during their deployment.

Tens of thousands of new veterans are coping with both psychological injuries and TBI, the effects of which can compound each other, but less than half of those suffering from psychological and neurological injuries are receiving sufficient treatment. Multiple tours and inadequate time at home between deployments are increasing the rates of combat stress.

For me it's personal. It's serious. Our decisions directly impact the lives of veterans and their families. We've accomplished a lot, but as just about every member of this committee said going around, more needs to be done. More needs to be done to ensure the care of our veterans and their families. And is the VA adequately prepared to address these issues? What more do we need to do?

There are over 100,000 veterans living in Montana. This number includes a significant number of Native American veterans. This is an extraordinary group of veterans that is disproportionately affected by service-connected health conditions. Their access to primary and mental health care is further limited by distance and underfunded often inadequate community health care IHS services.

Veterans living in rural and highly rural areas deserve better. We've got to improve the way we administer and deliver VA services in rural areas. The budget needs to fully support these programs and personally I need to know that the dollars allocated to support rural health initiatives are being appropriately applied.

Overall, as I look at this budget, I think it looks pretty decent. It funds IT infrastructure, telemedicine, upgrades VA facilities, improves health care for rural veterans and extends care to our Priority 8 veterans, something that I've heard a lot about. However, there's still a big gap  almost $2 billion  between the VA president's budget and the independent budget, and as stewards of the taxpayer dollar, we need to reconcile these differences.

Once again, General Shinseki, very, very good to see you. I look forward to your testimony. I look forward to working on this budget for 2010.

SEN. AKAKA: Thank you very much, Senator Tester.

Senator Sanders, for your opening statement.

SEN. BERNARD SANDERS (I-VT): Thank you very much, Mr. Chairman.

General Shinseki, it's great to see you again. And I concur in the feelings of my fellow senators that in these difficult times you are the right person for the job and we look forward to working with you.

Over the last several years we have made some significant progress in addressing many areas that had been long neglected, and I want to thank quite sincerely our chairman, Danny Akaka, Bob Filner in the House, because we have made some real progress.

We have among other things begun the process of bringing our Priority 8 veterans back into the system. That is not a small thing.

We have passed the GI Bill, which is the greatest expansion in veterans' educational opportunity since World War II, and especially in these very difficult economic times, that is a huge step forward for hundreds of thousands of veterans and their families.

At a time when we almost had to rush money into the VA several years ago when the VA ran out of money, we have year after year in recent years proposed record breaking budgets for the VA and that's the right thing to do.

We have raised mileage reimbursement rates. That may not seem like a big deal, but when you're in a rural state like mine, the fact that people now can get decent compensation to get to the clinic or get to the hospital is quite a big deal.

So we've made some progress in recent years, but obviously we have a long way to go. And I think as Senator Brown indicated a moment ago, one of the reasons that we have made progress is we have worked with the service organizations who are on the ground to know what the problems are and we have come very close to matching the independent budget that they have brought forth. And I want to thank the Paralyzed Veterans of America, the DAV, the AMVETS, the VFW, the American Legion, the Vietnam Veterans of America, thank them very much for their help in making our job easier in terms of allowing us to know what is going on on the ground.

Now, in terms of this budget, let me talk about very briefly what I see some of the highlights are. This budget will allow 500,000 Priority 8 veterans back into the VA health care system over the next three years. And as you and I discussed the other day, that is in my view exactly the right thing to do. It was wrong for the previous administration to throw those people out and deny them admission to our VA system and we're making some progress in bringing them back in.

This budget enhances outreach and other services related to mental health care, TBI, and other areas, with a focus on rural areas through increased use of vet centers and mobile health clinics. We can have the best health care in the world for our veterans, but if they don't know how to access it and if they are not brought into the system, it does nobody any good. So I absolutely support and appreciate the effort to increase outreach. We're making some progress in Vermont in that sense, and I'm glad that we're doing it around the country.

Clearly one of the problems, Mr. Secretary, that you have heard over and over again is the backlog in terms of getting benefits to our veterans in a timely manner.

And I believe that this budget begins the process of addressing that very serious problem and I know that that is high on your priority list. You know, in an age of sophisticated hardware and all of these computer technology, it makes no sense that veterans have to wait as long as they are currently waiting for the benefits that they are entitled to.

This budget ends the disabled veterans' tax by supporting full concurrent receipt. That is something the veterans' organizations have fought for for a long time.

And this budget makes sure that the new GI Bill hits the ground running. Once again, we have a wonderful benefit out there in terms of educational opportunities for veterans. It doesn't do anybody any good unless they fully understand the benefits to which they are entitled to and know how to access those benefits.

I share some concerns that my colleagues have raised about this budget. We're going to want to work on the amount of money in the budget. I think we can do a little bit better than the president has proposed. And we also want to make some more progress on advanced appropriations, something that I think many of us think is the right direction.

So I think the budget is off to a good start. It's going to need some work, and we look forward, Mr. Secretary, to working with you and the veterans' organizations on these issues.

Thank you very much.

SEN. AKAKA: Thank you very much, Senator Sanders.

And now I'll call on Senator Burris for your opening statement.

SEN. ROLAND BURRIS (D-IL): Thank you very much, Mr. Chairman.

And to Secretary Shinseki and to those who will be testifying on the second panel, my congratulations and hopes, wishes and prayers for you to be very, very successful as we undertake this great mission to deal with those individuals who've caused us to be where we are today and those are our veterans.

And, you know, Mr. Chairman, we have a person who's joined you from the great state of Illinois, a young lady by the name of Tammy Duckworth, and we're looking forward to bringing her knowledge and what she did for veterans in our state. I understand she's met with you and you've really given her the green light in putting up some of those programs that we have put into place in Illinois for our veterans. And I think the president has put together a very good team.

As you know, I was hoping and praying I would get on this committee, Mr. Chairman, and thanks to the leadership, they did put me on the Veterans' Affairs Committee. And all my activities since I've been in office for these 50 days or 60 days have been dealing with our veterans. I've already been to the Great Lakes Hospital. I met with veterans in my office. I met with all the veterans' groups that's come here to Washington because we must take care of our veterans. And with your leadership -- and you know what it is -- I'm pretty sure that that will be dealt with.

So in dealing with the budget, this proposed 2010 budget has the potential to lead the way in the transformation of the VA. It has provisions to improve many different parts of the VA system, from homeless prevention to the expansion of IT capabilities. Secretary Shinseki and his staff have used their considerable experience and expertise to create this budget, and I commend them for their hard work on behalf of our veterans.

However, as I said last week, veterans' advocacy groups like those here today are our eyes and our ears on the ground, and I want to commend each and every one of those groups that are keeping us informed as to what is happening out there with their colleagues.

I'm here to gather from each of you the insight into how we can fully take advantage of the opportunities provided in this budget. And furthermore, Mr. Chairman, I've come here with my own questions. I'm also a member of the Homeland Security and Government Affairs Committee and lately I've been thinking a lot about oversight, transparency, accountability in relation to a recovery act.

Well, in fact, I've been thinking about oversight, transparency and accountability for most of my working life, first as an old federal bank examiner where I was making sure that the banks were sound -- maybe we should do something about that today  and as comptroller of my state and as the attorney general of my state. And now as a United States senator from my state, I don't want to squander the opportunity for change afforded by this budget because of miscalculations or misuse of funds.

We have increased the budget to some extent and we must make sure that those dollars are spent and they're spent wisely, effectively for the benefit, Mr. Secretary, of our veterans.

And I will have some questions if I have time -- I have to go to my other committee, Mr. Chairman  but I will have some questions if I can be in two places at the same time.

Thank you very much.

SEN. AKAKA: Thank you very much, Senator Burris.

And now we'll hear from Senator Murray.

SEN. PATTY MURRAY (D-WA): Good morning, Mr. Chairman.

Thank you very much -- and to you, Senator Burr -- for holding this very important hearing on the proposed 2010 VA budget.

I want to extend a warm welcome to the representative of the veterans' service organizations. Every year you put an incredible amount of time and hard work into producing your own budget estimates and policy recommendations, and everyone on this committee appreciates all the work you do in that regard.

I also want to extend a warm welcome to Secretary Shinseki. As I said at your confirmation hearing, you have one of the most challenging and rewarding positions in our government. I appreciate what you are doing.

Modernizing our VA into a 21st century organization is not an easy task. We have a lot of work ahead of us in improving access and understanding mental health, improving the seamless transition process, fixing the disability claims project, leveraging information technology so we can improve the delivery of services, and preparing the VA to care for an increasing number of female veterans. By themselves none of these is an easy task and together they are very complicated, so we appreciate the tremendous amount of energy you have given, Mr. Secretary, to putting this system to the right.

We have not seen a lot of details on the proposed budget yet, but there are some good things I'm seeing and I want to mention a couple of them.

As the lead sponsor of the Women Veterans Health Care Improvement Act, I was especially glad to see the budget enabled the VA to provide additional specialty care for female veterans. Women now make up 14 percent of our active-duty forces and they represent one of the fastest growing groups coming into the VA for health care, so getting the VA to be ready for the unique needs of women veterans is a very important task ahead of us and I appreciate that this budget recognizes that reality.

I was also pleased that the budget provides funding to bring more than 500,000 Priority 8 veterans back into the VA system by 2013. I introduced legislation along with others in the 110th Congress to overturn the Bush administration's 2003 ban on enrollment of new Priority 8 veterans. I believe that all veterans should be able to get the care they've earned. We've made some progress on this issue and I look forward to working with the VA to make all Priority 8 veterans again eligible.

Additionally, I want to commend you for including in your budget a pilot program to combat homelessness by providing stable housing for vets who are at risk of falling into homelessness. I chaired an Appropriations subcommittee last year on this issue and the VA testified at that committee saying that the best strategy with this new generation of veterans is to reach them very early. That was a quote. And in order to start addressing those needs, I included funding for a similar pilot project in the '09 transportation and housing appropriations bill which we are on the floor considering now. I hope we send it very quickly to the president.

When we pass that there will be a demonstration program and it directs HUD to work with the VA and the Department of Labor, all the agencies, to test different strategies to prevent veterans from becoming homeless.

Finally, I do want to mention one concern I have with the budget -- and Secretary Shinseki, you and I talked about it last week -- and that is the rumored proposal that the VA will allow veterans -- or would allow the VA to bill a veteran's insurance company for service- connected disabilities and injuries. I believe that veterans with service-connected injuries have already paid by putting their lives on the line for our safety, and when our troops are injured while serving our country, we should take care of those injuries completely. I don't think we should nickel and dime them for their care. So I know no formal proposal has been made on this but I can assure you that it will be dead on arrival if it lands here in Congress, and I think I shared that with you last week.

But again, Mr. Chairman, I really appreciate the opportunity to take a look at the budget proposal as we see it so far and have our questions, so thank you very much for your testimony today.

SEN. AKAKA: Thank you very much, Senator Murray.

Senator Begich, for your opening remarks.

SEN. MARK BEGICH (D-AK): Thank you very much, Chairman Akaka and Senator Burr, for holding this meeting.

And Secretary Shinseki, I know we already had our conversation. It was good information we exchanged. And as you know, one of the big issues that I have -- and I'll be looking forward as the budget progresses -- is rural health care for veterans and how we bridge that gap, especially in a rural community like Alaska, which is very unique. And I know there's some great ideas materializing from the local veterans community as well as the Veterans Administration on what we can do to achieve that.

Mr. Chairman, I'm going to keep my comments brief. As always, I like to get to the questions and also to the presentation by our guests, so I'll end it there. Thank you very much.

SEN. AKAKA: Thank you very much, Senator Begich.

I would like to now welcome, with much aloha, Secretary Eric K. Shinseki. I hope this will be the first of many appearances you will have before this committee as head of the Department of Veterans Affairs.

I thank you for joining us today to give your perspective on the department's fiscal year 2010 budget. I think I speak for all of the members of this committee when I say that we are here to support you in any manner appropriate, but we do need to know that VA is on track for a fair budget based on our needs for the upcoming fiscal year. I would just state for the record that VA and OMB are still negotiating on specific amounts for various VA programs. As I said in my opening statement, this committee must still provide input to the budget committee.

Your full statement, Mr. Secretary, of course will appear in the record of the committee. Secretary Shinseki, will you please begin with your statement?

MR. SHINSEKI: Thank you, Chairman Akaka, Ranking Member Burr, other members of this distinguished committee. Thank you for the opportunity to present an overview of the 2010 budget for the Department of Veterans Affairs. I appreciate also the opportunity to have had a chance to speak with a number of the committee members prior to coming to testimony today and I regret that I wasn't able to get to everyone, but I'll certainly make up for that in the future.

Let me also acknowledge, as many of you have, and thank the leaders of our veterans service organizations who are present here today. We look at each other as partners in this effort to ensure that our veterans remain sort of the center of focus of all that we do. So I welcome them and I thank them for their help and support to the VA as well as to those of you who sit on this committee.

As I've said before, President Obama has charged me with transforming the VA into a 21st century organization. Not change for the sake of change, not nibbling around the edges, but a fundamental and comprehensive review of all that we do for veterans, and then moving boldly to acknowledge new times, new demographic realities, leveraging new technologies to renew our commitment to our veterans, wherever they live.

I've been conducting that comprehensive and fundamental review for nearly seven weeks now and it's not nearly over, but I'd like to share with you sort of a snapshot of what I've gleaned thus far since my last appearance before this committee.

New GI Bill: We hired an outside consultant to conduct a quick- look study to validate our plans and procedures for executing this large new program of educational benefits. The quick-look was completed on 27 February, and it basically validated all the steps and procedures we put into place -- what we are doing. They provided eight additional risk areas, risk factors, for us to consider, which we had not thought about. I've accepted them all except for one, and that one was solved internally. And I'm satisfied that we will get veterans who apply in time into schools this fall.

I will tell you it remains a high-risk enterprise only because of the very compressed timelines we're working with, but we've mitigated that risk responsibly. I've reviewed it and at this point I classify the risk as acceptable.

But as you know, there are milestones that have to be met between now and the execution dates in August, and if any of those are delayed or founder I'll have to readjust that risk assessment. But that's something I'll do and keep the committee updated as we progress.

The 2009 plan for this new GI Bill will be a computer-assisted, manual system. That's the best I can do at this point -- computer- assisted manual system. We hope to move to a fully automated system in 2010, but we're not able to do that this year.

For 2009, user testing of the interim IT solution was completed, and phase one training for our newly hired 530 employees began yesterday. The final regulation is at OMB, the contingency plan is finished, final coordination is under way. In my estimation, all is in order to meet the August 2009 implementation date. We still have multiple milestones to meet, as I've indicated, and I will keep you abreast of how we fare in meeting them.

Paperless: Our goal is to re-engineer the claims process into a fully paperless environment by no later than 2012. Our lead systems integrator has been on board since October of this past year, reviewing all of our business processes and beginning key design deliverables which we expect by August of this year.

Application developers will then begin building specific components in early FY 2010, capitalizing on recent successes with VETSNET and leveraging funding that should be available early in next year's budget. We are already processing loan guarantees, insurance and educational claims electronically and plan to conduct a business transformation pilot at the Providence regional office later this year.

In conjunction with this paperless initiative, DOD and VA have met three times now to address the potential for automatically enrolling all military personnel into the VA upon their entry into the armed forces -- just a statement of what we're seeking to do. We call this initiative uniform registration. We are in agreement about the goodness of such a system and have people working towards making this a reality.

Uniform registration will push both of us, both the VA and the DOD, to create a single, electronic record that would govern how we acknowledge, identify, track and manage each of our clients -- those in active service, those in the reserve components and, when they become veterans, how we continue that same management process. This automatic enrollment is intended to take place when the first oath of allegiance is sworn by a youngster donning one of our country's uniforms.

Our management decisions will be better, faster, more consistent and fair, and less subject to lost files or destroyed claims. Such electronic records would have a personnel component and a medical component. We have benefited from the insights, experience and advice of Secretary Gates and Deputy Secretary Lynn about not trying to build a single large database, so we are committed, both of us, to doing the smartly and differently than from some of our recent past hard lessons learned.

In the VA's experience, the EHR, the electronic health record, has figured prominently in the growth and quality of medical services. In 1997 we rolled out an enterprise update -- enterprise white update for our EHR. We've had an electronic health record experience for 20 years, but in 1997 we rolled out an enterprisewide update that by 1999 provided for us a clinical data repository, including privacy protection with real-time data flow across the entire system, with clinical decision support and clinical alert templates, notification systems and disease management features.

Today it has an imaging capability that allows a tracking of all tests done on any patient -- everything from EKGs, the studies, procedures, endoscopies, scan documents. Some international observers, I'm told, have called it the gold standard in clinical informatics.

What's been the impact of this improved EHR for the VA? Between '96 and 2004, this updated electronic medical record enabled VA's ability to handle a 69 percent increase in patients, reduce the workload by over 35 percent and hold the cost of medical treatment steady when the cost of health care across the country was climbing significantly.

Now, some would suggest that the VA's lower costs of treatment were as much a function of its lean budget in some of those years as they were efficiencies that we practiced, but in reality I think it's fair to say that lean budgets were not just visited on the VA but other government institutions as well, and at Medicare, health costs rose 26 percent at a time when we were able to keep ours under control.

So that's where we are with what we understand the potential for what we can achieve working with DOD and coming to this single electronic record. The challenge for all of us is making health care more accessible to more folks, keeping the cost down and increasing the quality. If we can do those three things, we will have achieved something significant.

Regarding the backlog that some of you have already mentioned, this is the area I've got to tell you that I've not made much headway, at least not in seven weeks, in attacking the problem, either in understanding it or solving this dilemma, other than to acknowledge that it's a significant obstacle to building trust with veterans and the organizations who represent them.

I'm not sure that I personally have a valid working definition for backlog. When I ask if a claim is initiated today is it part of the backlog tomorrow, I'm told it is. So I need a way to come up with a set of metrics that allow me to solve a problem that right now I can't address. But I'm personally working this issue. I intend to develop a valid way of defining what the backlog is and not defining myself out of a situation but defining myself into a way to measure it properly and then to set about fixing it. If I can't do that, I don't think any of us will be able to solve it.

So our efforts to institute uniform registration and create a single electronic record lays the foundation for eventually controlling the inputs to the backlog dilemma, but I must find ways to control and reduce the backlog as it exists today, and I must tell you that's probably a brute-force solution which requires a lot of hands on.

Now having provided you this update, let me now report that our proposed 2010 budget is critical to realizing the president's vision for a 21st century VA, and it's also critical to helping me begin to solve some of the problems I've touched on.

The proposal would increase VA's budget to $112.8 billion, up $15 billion or 15 percent from the 2009 enacted budget. This is the largest dollar and percentage increase ever requested by a president on behalf of veterans. Nearly two-thirds of the increased $9.7 billion would go to mandatory programs -- up 20 percent. The remaining third, ($)5.6 billion, would be discretionary funding, up 11 percent.

The total budget would be almost evenly split between mandatory funding of $56.9 billion and discretionary funding, ($)55.9 billion. The 2010 budget funds the new GI Bill, would allow a gradual expansion of health care eligibility Priority Group 8 veterans who have been excluded from VA care since 2003, and expansion of latest figures up to 550,000 new enrollees by year 2013.

Further, it contains sufficient resources to ensure that we will maintain our quality of health care for veterans, which sets the national standard for excellence, in my opinion, with no adverse impact on wait times for those already being served.

The 2010 budget provides greater benefits for veterans who are medically retired from active duty by phasing in an expansion of concurrent receipt eligibility to military disability retirees. The proposal allows highly disabled veterans to receive both their military retired pay and VA disability compensation benefits.

The budget provides resources to effectively implement the Post- 9/11 GI Bill, streamline the disability claim system. It supports additional specialty care in such areas as aging, women's health, mental health, homelessness, prosthetics, vision, spinal cord injury, and it helps to extend VA services to rural communities which lack access to care.

The details of the president's budget are still being finalized and expect that it'll be available in April, so I lack budgetary detail on specific programs and activities today.

I do, however, look forward to your questions and will do my best to answer them.

Thank you, Mr. Chairman.

SEN. AKAKA: Thank you very much, Secretary Shinseki. And I would say it's remarkable and I must commend you for what you've been doing for the last seven weeks. And you've certainly accomplished a lot in dealing with needs of VA and how you've worked with the secretary of Defense on some of these issues. So I thank you very much.

I do have questions but I'd like to give my committee members a chance to ask their questions first, so I'll ask Senator Burr to begin with his questions.

SEN. BURR: Well, I thank the chair for his generosity.

Mr. Secretary, thank you for that report.

Well, let me go right to the meat of it. I am concerned, as I expressed in my opening statement, that though the '10 budget I think targets a number that is very realistic, I'm concerned with the out years -- '11 at 2.3, '12 at 2.6.

So I guess my question is multi-pronged. If Priority 8's are being considered in the '10, what number of the Priority 8's have you modeled into the '10? And is the '11, is the '12 reflective of additional Priority 8's, of potentially those active duty that will be part of the Veterans Administration by '11, by '12, by '13? Is that modeled into the projections that we see reflective?

MR. SHINSEKI: Senator, the figure for 2010 is we expect about 266,000 Priority Group 8 veterans to be registered with us, and then over the period to 2013 building that number up to 550,000 veterans.

I don't have a good figure on the entire population now. Some of that is due to the fact, as you describe, we are constantly growing that population. But we are, you know, working with trying to get a better estimate so I can provide a little better detail. But at least out through 2010, we're looking at 266,000 veterans.

SEN. BURR: I'd like to ask you on the committee's (behalf ?) today, as we go through '10 and you begin to bring Priority 8's in, will you regularly make us aware of how many Priority 8's have come into the system?

The pre-enrollment into the VA that you talked about certainly changes the projections for the out years as far as how many veterans would then choose the VA for their home for medicine. Is that policy change also incorporated into these out-year budget projections?

MR. SHINSEKI: Not at this point. We are still working on an agreement on how to do this. I think the vast majority -- the enrollment will be for identity and tracking purposes.

The vast majority of youngsters who leave the service don't enroll with the VA for a variety of reasons but in later years find reasons to come to us, and the challenge at that point is doing all the kinds of things we could do now -- identify, track and be ready to help with a claims submission in a way that we're not today.

SEN. BURR: Many members brought up in their opening statements concerns as it relates to the VA's intent to raise revenue by billing insurance companies and charging for the VA's care-related, I think, medical services, even for service-connected injuries. Is that policy contained in this budget?

MR. SHINSEKI: It's a consideration. It is not -- a final decision hasn't been made yet, Senator. But it would fall into the category of what I would describe as risk. It's the risk we carry every year in third-party collections.

SEN. BURR: I appreciate your candor. It's an important matter to be finalized prior to understanding exactly whether the budget allocations are in fact correct and certainly as it relies on the out years when you're dealing with such small percentages of projected increase. If in fact you give up a revenue stream as significant as that -- and I think I would agree with Senator Murray, I think you will give that up -- then it makes those out years look even more problematic.

Mr. Secretary, I appreciate your commitment to using the automation to help improve the disability claims process. I think we can all agree that paperless claims process would be a significant improvement, but automation alone may not be enough to significantly reduce the delays and frustrations experienced by many veterans seeking VA benefits. Do you agree that the independent budget that VA -- that with the independent budget that the VA also needs to take steps to improve training, quality assurance and accountability, and if so, does this budget allow you to accomplish those goals?

MR. SHINSEKI: I agree with the comment on training and sustainment training for people who do this, and yes, that kind of training is included.

SEN. BURR: Let me -- Mr. Chairman, my time's expired.

I challenged the VSO several weeks ago, General, to start with a clean piece of paper and tell us how to design that process so that we wouldn't have a backlogged system, and I say for all of them that are here today, I'm still waiting for those plans. I know they're all working on them, but time is of the essence right now.

Thank you, General.

MR. SHINSEKI: Senator, I've made the same challenge to my people. If we're going to start with a clean slate here, how would you redesign the process? And this is sort of trying to paint a moving train, but they owe me some answers as well.

SEN. BURR: I think we may all be shocked at how close the ideas come to --

MR. SHINSEKI: Yeah. I just would like to make one comment on the third-party collections, and I know that VSOs and I have personally had discussion on this, so I know there's a different perspective on this.

Health care delivery has two pieces, one is financing and the other is delivery of quality care. What is not at issue here is the delivery, timely, highest quality care in the nation and that we can provide. That is not a question here. This is about financing, and that's where the dialogue continues.

SEN. BURR: General, I believe you on that and I believe that that is the mission of VA. I know you understand why I have to raise the issue when if you eliminate a built-in revenue stream that's gone into the projections for construction of the budget, you eliminate that -- when the last administration was in, with a tremendous amount of liberty individuals on this committee questioned the accuracy of the last administration's budget.

As a matter of fact, the president at the time talked about budget gimmicks in the last administration. My attempt is to make sure that all of the items that are there to construct the budget are foundational; they don't go away with the wind. So if we're going to eliminate some of them, let's eliminate them up front. Let's know what we're going to deal with. Let's know the -- let's have the transparency of the budget process, and I only encourage you to try to get the administration to come to that conclusion sooner rather than later.

MR. SHINSEKI: Okay.

SEN. AKAKA: Thank you very much, Senator Burr.

Now Senator Murray, for your questions.

SEN. MURRAY: Yes, thank you, Mr. Secretary. Can you tell us what the revenue impact of the third-party billing proposal is?

MR. SHINSEKI: What the impact is?

SEN. MURRAY: The revenue impact, yeah.

MR. SHINSEKI: Well, you know, I usually have a third-party collections for non-service-connected, and in the past we have exceeded our targets in 2008. I think we are at ($)2.4 billion. 2009 looks like it's going to be slightly above, maybe closer to 2.5 (billion dollars).

Using that as a general start point, I would guess that something on the order of ($)500 million is probably the target that would appear here, but again, that's being --

SEN. MURRAY: Right. And then we did have this discussion. I just again tell you that I think our veterans already paid, and proposals that just simply balance the VA budget on their backs are, you know, as far as I'm concerned, dead on arrival. But again, we'll be looking for that.

But I question the revenue impacts on that, so I'm sure we'll have more discussions if that proposal becomes real.

MR. SHINSEKI: True.

SEN. MURRAY: Let me thank you on the Priority 8 veterans again. I think the best thing to do is to completely overturn the 2003 ban. I appreciate your moving forward with your target of 550,000 by 2013, but I will continue to work with you on that.

Let me just --

MR. SHINSEKI: We'll look at that en route and just make sure our metrics are right. Again, part of the decision here is to ensure we don't impact any other services we're providing. So if we can go faster, you know, that's fine.

SEN. MURRAY: Okay.

MR. SHINSEKI: If we have to slow down a little bit, the end state is still clear.

SEN. MURRAY: Okay, very good. I appreciate that.

Let me ask you -- the economy is number one on everybody's mind and people are very concerned about it, and I've been concerned watching our veterans come home. We know that in 2007 the unemployment rate for veterans 18 to 24 who served in Iraq and Afghanistan was considerably higher than the rate for non-veterans. I'm assuming that trend is continuing, and as many of our veterans come home and transition into civilian employment, there's a lot of different federal agencies that have different support services -- the VA does, of course; the DOL does, Veterans Employment and Training Service.

And I'm concerned about the complexity of that and wanted to know what your thoughts are in improving the transition for our veterans into civilian jobs and working with these other agencies to address some of the gaps.

MR. SHINSEKI: Senator, I will tell you that this is one of those areas where I would describe lots going on and yet I don't have my fingers around all of it. I'm still discovering that there are programs out there that are in being and in fact some of them are doing very well, others less so.

For the transition, I think it's fair to say -- and the president has said it, so I will use his words -- that veterans lead the country in joblessness, homelessness, substance abuse, mental health problems, and so that's a tall order because it's not one thing, it's a multiplicity of things. Some of them touch, some of them don't touch.

But I think as was said earlier here, if we prevent homelessness, we have a much better chance of solving some of the other things. So the first order of business here is paying attention to that.

Secretary Donovan and I have met. We've met with the coalition of homeless veterans' organizations -- representatives of some 20 organizations. We've committed to working together, he and I, with his opportunity to provide safe housing and my opportunity to prioritize how we get people in there.

We look at that as sort of the first piece. Once we have them safely housed -- and families are included in our discussions -- then we can begin the rest of this, talking about getting them off of whatever ailments they may have -- substance abuse, get mental health treatments going -- and then talk about training for either education or jobs. And for that, I'll have to reach out to other departments, much as I have with DOD.

And so there's a lot of work to be done, but I think, as I say, it's a large issue, lots going on. I'm not sure all of it is as well synchronized as we would like, and I intend to get into that.

SEN. MURRAY: Well, I appreciate that, and again, once we get the '09 bill passed, hopefully tonight, we do have money in there for some pilot projects on homelessness. I agree with you, you've got to have a home in order to be able to go to work. But I hope we can really begin to focus on some of the efforts to bring our agencies together to make sure that these young men and women come home and don't end up on unemployment rolls and really look at how we can get them into the job market.

Quick question: You used the word "brute force" on the claims backlog; I assume that means funding and staffing. Do you have adequate money for that brute force that you're going to need?

MR. SHINSEKI: For 2009, that's clear. I am still waiting on a report that says we have to increase those numbers. This year alone, we hired another, I think, 1,100 people -- 3,000 in the last two years, and so we have right now 11,300 people doing this.

If I'm going to increase those personnel assets in 2010, I'm going to -- I'll want to see what the return on investment is going to be. Just adding people to this problem may not be the only approach and so I need to press ourselves for doing this better, not just with more hands.

SEN. MURRAY: Okay. Thank you very much.

SEN. AKAKA: Thank you very much, Senator Murray.

And now I'd like to call on Senator Graham for his questions.

SEN. GRAHAM: Thank you, Mr. Chairman.

General, I appreciate you serving your country yet again. You have a tough job, but when it comes to dealing with the claims backlog, there was an initiative I think a year ago, two years ago, about looking at providing legal representation to our veterans as they pursue claims. How do you feel about that proposal?

MR. SHINSEKI: Senator, I would never stand in the way of a veteran seeking assistance in putting together the best claim he or she can put together so that we have the best shot of giving a quality decision quickly.

SEN. GRAHAM: I tell you what -- why don't you, if you could, just have your people look at the proposal a couple years ago and just let me know what you think about that idea.

MR. SHINSEKI: I would prefer that that not be on a paid basis.

SEN. GRAHAM: That what?

MR. SHINSEKI: It not be on a paid basis. I mean, I think I'm very comfortable with pro bono support, volunteer support for our veterans, but, you know, my primary responsibility is to help veterans.

SEN. GRAHAM: Would you feel that way about Social Security? Why should a Social Security recipient be entitled to paid representation and a veteran not?

MR. SHINSEKI: I wasn't aware of that, Senator. I don't know that I have a good opinion today, but my job is to make sure that veterans have what they're entitled to with the least obstruction, and if they seek legal advice on it, I think that's fine. I would hope that we could do this in a way that veterans could get what they deserve with --

SEN. GRAHAM: Thank you.

How can 500,000 people being added to the system not impede care for some people? I mean, are we so well staffed that you could add 500,000 Priority 8 veterans and it not hurt someone who's been permanently disabled or a severely paralyzed veteran in terms of the care they would receive?

MR. SHINSEKI: I believe that -- well, that's our intent. I don't know that I can give you an absolute here, but this is a process by which we grow to 550,000 over a period of time, and we'll have to make those assessments as we go, either --

SEN. GRAHAM: And the only reason I raise that is I guess I would be -- well, income-wise, I wouldn't be eligible, but if you believe that organizations can't be all things to all people and you serve as many as you can, you know, and the military's sort of a triage system here that we want to make sure those who have been most severely injured, have the highest medical needs are taken care of. So we'll just cross that bridge when we get there. The one thing about expanding coverage in terms of the people you treat, something usually has to give, unless you just continue to increase the size of the organization. And that's something I'd like to talk with you as we get into this.

MR. SHINSEKI: Sure.

SEN. GRAHAM: Have you looked at the Senator Dole-Secretary Shalala proposals about how we would go forward in terms of claims and compensation?

MR. SHINSEKI: Yes, I have.

SEN. GRAHAM: What was your view of that?

MR. SHINSEKI: Well, it was a -- well, frankly, it was one of several views that are being looked at. We have another Scott commission's views that provided similar recommendations, and what I've asked for is a harnessing -- harmonizing of these reports out of multiple studies on the same subject and find out where there's common ground and --

SEN. GRAHAM: But that would be part of the study mix in their proposal.

MR. SHINSEKI: Yes, that's correct.

SEN. GRAHAM: Have you heard of the Charleston model of where the Medical University of South Carolina and the VA hospital in Charleston are trying to build a new hospital in collaboration?

MR. SHINSEKI: I am aware, yeah.

SEN. GRAHAM: Does that sound like a reasonable proposal as we go forward to improve health care for veterans?

MR. SHINSEKI: I think -- well, we are reviewing all of our major construction initiatives. I think --

SEN. GRAHAM: I would really encourage you to do that, because there are a lot of teaching hospitals, university hospitals, private organizations that serve veterans that if you combined the two funding pools you would have a better service for the veteran and get more bang for your buck. And the goal is to add to, not take away, so I appreciate you looking at that.

MR. SHINSEKI: We do that now, Senator. About 108 of our 153 hospitals are affiliated with medical centers, so this would be --

SEN. GRAHAM: Yeah, I'm talking about as we construct new ones.

MR. SHINSEKI: Right.

SEN. GRAHAM: And I think you can get a bigger hospital to help veterans as well as the people in the area.

One last question: You said something to me that was pretty intriguing, that you've been able to manage the health care costs of the veteran population significantly without the inflationary costs associated with Medicare. Medicare's grown in terms of health care inflation much faster than the VA.

What would you say would account for that, and would you be willing to go to the Medicare people and talk to them? (Laughter.) We'll pay your mileage.

MR. SHINSEKI: Well, it's -- this is an area that has a little bit of debate, because part of the cost factor was some lean budgets. So you can say it was induced, but out of that came some tough decisions on what we could do, what we would keep, what we had to sort of put on the back burner or discard.

And so for a variety of reasons, not just the electronic health record, our costs were maintained -- slightly reduced in a period of time when others, to include Medicare, it was increasing by 26 percent.

What are the things I'm talking about? Prior to '97, patient records were available to doctors about 60 percent of the time, which meant the other 40 percent either a doctor's time arriving at a patient's bedside nothing could happen or maybe even worse, you know -- flying by the seat of our pants. That has changed -- 100 percent of our records are available all the time now. '96, we lagged industry in providing a pneumonia vaccine to patients over 65, something around 28 or 29 percent. Today we're at 94 percent and leading industry. So in terms of delivering quality health care when needed at the appropriate time, without a lot of repeats, without a lot of tests being redone because we didn't know what was in the system, we've been able to reduce the cost of --

SEN. GRAHAM: One final comment: I have been following this, like most people on the committee, and being a military member myself, pretty closely, and the number of complaints about veterans' health care, at least in my state, has gone down.

I'm sure there are problems, but one thing I want you to tell the people that work for you, particularly in the hospitals and the service organizations and our VSOs, I think we have the best system in the world, and don't ever lose sight of that. I would like to make it better, but there are a lot of complaints always talked about in Congress, but to those people working in the VA, I think you do a heck of a job and let's just -- you're the right guy at the right time, I agree with that.

Thank you very much.

MR. SHINSEKI: Thanks, Senator.

SEN. AKAKA: Thank you very much, Senator Graham.

Now we'll have questions from Senator Tester.

SEN. TESTER: Thank you, Chairman Akaka.

And I want to echo those remarks of Senator Graham in that your people do great work, and we always need to continue to look for ways to improve the system, as I know you do, but the truth is I get a lot of positive comments from the veterans back in Montana about the health care that they receive.

That being said, just very quickly, could you tell me your perspective on Priority 8 vets as to why you think they should be in the system?

MR. SHINSEKI: Well, for one thing, Senator, they are part of our veterans programs. I mean, the fact that they haven't been serviced for the past eight years doesn't mean they weren't veterans. They are veterans, they're part of our system, they have entitlements based on economics and location, and given the current economic situation, I think the stress on all of our veterans is even greater and therefore I look forward to taking care of this part of our responsibility.

SEN. TESTER: I appreciate your commitment to them. I agree with you wholeheartedly. I guess I'm going to push in a little different direction in that the program here talks about a five-year schedule to get the Priority 8's into the system. Is there any way it could be done quicker than that -- say, two to three years?

MR. SHINSEKI: We'll certainly look at that, Senator. I would just say again bringing Priority 8's on is a function of ensuring that what we do today remains at the high quality for the variety of services we provide. So it's a rheostat. We will do it faster if we can assure these other things are -- remain at high quality.

SEN. TESTER: I appreciate that, General.

The '09 VA appropriations bill provides about ($)250 million for rural health initiatives. We know where some of the dollars are going. Is it possible -- and I don't expect you to do that today unless you know -- to get an update on where all the money is going for rural health initiatives?

MR. SHINSEKI: Certainly. I'd like to provide that once I have more detail.

SEN. TESTER: That'd be good. I'm sure as well as Montana and other rural states, including Alaska, would love to know that.

MR. SHINSEKI: I can certainly provide the '09 priorities now.

SEN. TESTER: And how the money's being utilized?

MR. SHINSEKI: That's correct.

SEN. TESTER: That'd be great.

You talked about electronic health records pretty extensively in your opening statement and the benefits for moving forward with that with the DOD. I guess the question is, have we allocated enough resources to meet the needs of that transition, number one, and number two, has your conversations with the higher-ups in the DOD indicated a willingness to work with you?

MR. SHINSEKI: Yes. Yes. There is agreement that uniform registration makes sense and that a single electronic record is something we need to go to work on. As in all things, the devil's in the details here in exactly what that constitutes, but yes.

SEN. TESTER: Okay. Have we fully funded the mental health diagnosis treatment to this point, to your knowledge?

MR. SHINSEKI: I believe so. I can tell you we're doing it, and I would say yes, we have funded it.

SEN. TESTER: Okay. Kind of along those lines, as long as I've got about a minute left here, could you give me any indication as to what, if anything, VA is doing to track mental health concerns amongst our military folks who are in your system?

MR. SHINSEKI: You're talking about OIF/OEF --

SEN. TESTER: Yeah, specifically those, and if you want to talk more generally, that's fine, because there's issues that revolve around the previous force too.

MR. SHINSEKI: I would say that we participate with DOD and have participated with them in assessments that they do since 2005, and through our joint work, over 93,000 referrals have taken place. We --

SEN. TESTER: Go ahead.

MR. SHINSEKI: We are participating in demobilization enrollment for reserve component personnel. In terms of -- these are OIF/OEF transitions, and so we are actively engaged in that. Let me just give you some -- yeah, we have -- for example, we now have 18,000 full-time equivalent staff, $4 billion going to mental health programs, and we are interviewing veterans -- returnees from Iraq and Afghanistan.

When they come in for services from us we screen them, or we've called them and -- you know, phone calls in the number of 600,000. We've only gotten about 150,000 responses, but we continue to work that. We are outreaching to this population.

SEN. TESTER: If I just might, Mr. Chairman -- there's a program called -- that deals with reservists and guardsmen. It's a pilot program in five states called Beyond the Yellow Ribbon. Are you familiar with that program at all?

MR. SHINSEKI: I am.

SEN. TESTER: Good. Do you think that that program has enough merit to be implemented at least initially with guards (sic) and reservists throughout all 50 states?

MR. SHINSEKI: I'll have to look at that, but yeah, I think there's merit to the program. When you say all 50 states, I --

SEN. TESTER: And while you're looking at that, see if you think it has merit for active duty, too.

MR. SHINSEKI: Okay.

SEN. TESTER: The reason I say that is because we had a hearing here two or three weeks ago that the chairman called that dealt with mental health issues, and it requires screening every six months for two years after they're out and it takes away the stigma, I think, and it really does help folks that serve that, quite honestly, get screwed up. It helps get them treatment when they need it early, and it saves money over the long haul.

But General, I want to thank you for being here today. I really appreciate your testimony and your perspective and your leadership in the VA. Thank you.

MR. SHINSEKI: Okay. Thank you.

SEN. AKAKA: Thank you very much, Senator Tester.

And now we'll have Senator Begich ask his questions.

SEN. BEGICH: Thank you, Mr. Chairman.

Just a couple; I wanted to do a little follow-up. I know Senator Graham had some questions regarding the claims issue. Have you -- and I thought maybe I don't know if it was when we were talking about it, but of the claims that are filed for disability and services, about how many -- what's the percentage of approval rate? In other words, after they go through a process? Maybe the short process -- in other words, right when they come in the door or they go through an appeal process. What's usually the --

MR. SHINSEKI: Well, I think the stats I've looked at say that of a set of claims that are handled, 90 percent of them are accepted. In other words, whether it was an approval or a declination, 90 percent don't result in an appeal. About 10 percent do.

Now, of that 90 percent, two years down the road someone may have another --

SEN. BEGICH: An additional issue.

MR. SHINSEKI: Yeah, another opportunity to reinitiate. That's what's -- the backlog issue is complex because you have all of these factors playing in each case.

SEN. BEGICH: Is there -- and I know when we talked, we talked a lot about system changes and system improvements -- is there a process you're going through to not only look at the data of claims but is there systematic issues that it seems like there's a certain group where just routinely approving at some point anyway, and maybe there's a front-end improvement that could be done so they don't go down this long process? Does that make -- am I making sense there?

MR. SHINSEKI: Right, right. There are claims that have two or three -- there are cases that have two or three or maybe up to five or six cases associated with it, and if they're one of those claims, would it result in, you know, immediate payment? We start that.

SEN. BEGICH: Got you.

MR. SHINSEKI: And then we work through the other issues. We don't do this as well as I would like. We need to continue doing that. But this whole area of the claims backlog is something that I've taken on, and I'll get into it.

SEN. BEGICH: Great.

With the GI system -- and I know you have mentioned to me and I know here in the committee that it's a tight time frame to get to where you need to be. Do you -- and you'll be kind of automated- manual kind of combo this year and then next year to try to get to a full automation. Does the '10 budget -- I think you answered yes, but I want to confirm -- does the '10 budget give you enough resources to get to full automation as you see it, or do you think you might have to have an adjustment after you go through this first kind of six months or whatever that period might be where you have the combo?

MR. SHINSEKI: Yeah, we're setting those numbers now, but yes, my intent is to have an automation program funded for 2010.

SEN. BEGICH: Okay, so the resource is in the budget itself.

MR. SHINSEKI: It will be.

SEN. BEGICH: That's the hope. (Laughs.) That's a good attitude.

And I don't know the debate and I'm afraid to get to it because it sounds like both majority and minority members don't want you to do this so I'm afraid to ask about it, but it's such a big number on the third-party collection issue.

If I got the numbers right -- and I know you're just kind of ranging them because you didn't have the document right in front of you, but you thought it was around ($)500 million.

MR. SHINSEKI: That's --

SEN. BEGICH: In that range.

MR. SHINSEKI: That's an estimate based on the collections I've done in the past. We have been collecting for non-service-connected disabilities for a number of years now, since 2004. That account has grown from ($)1.7 billion to ($)2.4 billion last year, so we've exceeded our targets each year.

SEN. BEGICH: Can you give me, just in a brief -- and again, I don't want to get into the great debate on this one at this point -- but what some of the discussion might be around it? Why there's -- because it's hard always in these formats to get that kind of discussion. And if you don't want to do that right now, that's fine.

MR. SHINSEKI: Well, it's a consideration. It's under consideration, and I would say it's the -- the basis is the same for non-service-connected disabilities that are currently approved and we are collecting on, and it is to see whether or not there is a contribution from insurance companies that makes sense.

SEN. BEGICH: Got you. And if in the budget proposal -- and you've heard some of the discussion already -- I mean, will you have some opportunity if you do include this, an option if not included, and what kind of service reduction and/or other revenue sources? I mean, will that be part of the discussion if you go down that path?

MR. SHINSEKI: I intend for it to be.

SEN. BEGICH: Okay, great.

I know my time's up, Mr. Chairman, but again, thank you very much.

Thank you for your time that you spent with me. Thanks for coming to the committee meeting and presenting, and I know we'll be in a lot of discussion, especially around rural health care.

MR. SHINSEKI: Yes.

SEN. BEGICH: Thanks.

MR. SHINSEKI: Thanks, Senator.

SEN. AKAKA: Thank you very much, Senator Begich.

Mr. Secretary, I continue to have concerns about the effectiveness of VA's outreach -- its outreach efforts -- especially as it applies to those who suffer from PTSD and TBI. This is especially true for those National Guard and Reserve members who live in rural areas. Will you please explain how the proposed budget addresses improving the effectiveness of VA's outreach efforts?

MR. SHINSEKI: Well, Senator, I indicated that we are outreaching to OIF/OEF veterans as they return, both with DOD and in particular with the reserve component units. We have participated at their demobilization, within their demobilization process, this contact.

We have 27 VHA liaison personnel at DOD hospitals -- at 13 of the DOD hospitals to facilitate this outreach and transition. We in the VA have contacted OEF and OIF veterans who have enrolled with us -- and there are a number who have not enrolled with us, but for the ones who have enrolled with us, we put them through a PTSD/TBI screen so we have some sense of what the impacts from combat are or traumatic experiences are, even though they're not carried as PTSD or TBI accounts, and we're coming up with patients.

We have also reached out to about 630,000 veterans, as I indicated, and have spoken with about 150,000 of them, trying to get them to come in and talk to us at VA health care.

We have PTSD clinical teams or specialists at each of our 153 medical centers and many of our larger community-based outpatient clinics, so professional people on site. We've provided training to over 1,200 providers in evidence-based psychotherapy. A key element of our treatment has been to move mental health into the primary care area of the hospital to reduce the stigma of folks not wanting to be seen going into the mental health.

So in the primary care area we've included mental health and we've included training of primary care personnel in how to get into the discussion here and begin to identify people that may need follow- up and then get them into the professional care.

By and large, other efforts to increase awareness to mental health -- for us, PTSD increased from FY '99 -- 120,000 people were carried on our roles with PTSD issues to 342,000 veterans as of September of last year, so significant growth in PTSD.

About 23 percent of returning OEF and OIF veterans who come to VA have received a preliminary diagnosis of PTSD and about 50 percent of those with any mental health diagnosis. Our standards have been initial evaluation within 24 hours with immediate urgent care where needed and a full evaluation and treatment plan initiated within 14 days for people who have been validated for PTSD.

In terms of TBI, we've been involved with TBI for about 15 years and have just learned more as a result of the ongoing operations. Early intervention and specialized care can reduce physical and cognitive impairment, so the sooner we identify and get into this makes a huge difference.

Since April of 2007, any OEF/OIF veteran seen by a VA health care provider is screened. If the screen is positive, again, veteran is referred for evaluation by a specialized team. Through FY 2008, 235,000 OIF/OEF veterans screened, about 43,000 of them came up with indications for follow-up, possible TBI, (28,000 ?) received follow-up evaluations, 12,000 confirmed with diagnosis of TBI. About 10,000 were not validated, and we still have about 5,000 follow-ups to do.

So we are doing this, but not as quickly as we would like it. We're reaching the veterans who enroll with us, and I can't give you data for the veterans who we're not able to contact, which goes back to the earlier discussion about why this automatic enrollment becomes important. And now we've got a wider safety net where we can begin to get a better assessment on the larger problem.

SEN. AKAKA: Mr. Secretary, you indicated that the quick-look study of VA's plans for implementation of a new GI Bill -- I just want to ask a question on that. That was completed at the end of February, identified eight high-risk areas that needed to be addressed. Could you expand on what those areas are and how they are being addressed, and especially how one of the eight was addressed in-house?

MR. SHINSEKI: Yeah. The eight were no single executive with authority over the integrative product team, and I've fixed that by appointing -- the recommendation was that I hire somebody from outside. I thought the amount of time to take someone from the outside to come in and learn what we are trying to do is probably time I couldn't afford, so I appointed someone from within my organization as the expediter here, with those authorities.

The other observations were regulations were not complete. They're now complete. No critical path defined for milestones -- that's in the process now of laying out. The milestones are clear; it's identifying a critical path. Training material not complete -- training started yesterday, so we completed -- in the time between when the survey started and ended, we have now completed our training materials.

Call center telephone structure inadequate -- that I don't have a final response on, and I will look into that.

The phase one of the front-end tool is compromised due to limited resources, short development time, unstable requirements -- all of that's true, but we are where we are and we are working to improve on those things. Phase one training began yesterday, and so I'll know more as training evolves.

Workflow to support median changes is inefficient. We'll do better. Not all DOD data required to determine eligibility may be readily available -- that's being corrected.

So those were the eight items. The one was the hire an expediter and put him charge of the process. I have appointed somebody to do that.

SEN. AKAKA: I was very interested in your comments about your schedule in putting the GI Bill into effect and we look into the fall as you are in trying to implement.

I've been pleased with the efforts of the Joint V and DOD Senior Oversight Committee. And I'm encouraged that you and Secretary Gates have continued these efforts and recently co-chaired the SOC yourselves.

Would you please address how this budget will improve the level of collaboration and cooperation between VA and DOD?

MR. SHINSEKI: I'm not sure there will be a direct impact on the budget, but I will tell you that there is a direct impact of Gates and Shinseki taking responsibility for the SOC. The reason we held the first meeting was that both he and I were without deputies who would normally chair this. I am still without a deputy.

And so we will have the second meeting. He's agreed to co-chair it with me, even though his new deputy has arrived. And at some point we'll transition that over to our deputies. But for the time being, he and I have accepted responsibility for conducting the SOC, studying the agenda and providing vectors for what we would like to accomplish. And I've shared some of those priorities with you.

SEN. AKAKA: Mr. Secretary, I have no other questions.

Let me ask, do you have any further questions?

As we may do, we might put some of these questions in the record for you. So Secretary Shinseki, once we see the details on the budget, we'll have more questions. Perhaps we'll submit them in writing or perhaps, who knows, maybe have another hearing on this another time.

And so for now I want to thank you so much for your testimony, your responses to our questions. And we look forward to continuing to work with you. And of course we want to wish you will with much aloha. Thank you.

MR. SHINSEKI: Thank you, Mr. Chairman. Thank you, Senator.

END.

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