Order Code RL32961
CRS Report for Congress
Received through the CRS Web
Veterans’ Health Care Issues
in the 109th Congress
Updated February 7, 2006
Sidath Viranga Panangala
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service ˜ The Library of Congress

---

Veterans’ Health Care Issues in the 109th Congress
Summary
The Department of Veterans Affairs (VA) provides services and benefits to
veterans who meet certain eligibility criteria. VA carries out its programs nationwide
through three administrations and the Board of Veterans Appeals (BVA). The
Veterans Health Administration (VHA) is responsible for veterans health care
programs. The Veterans Benefits Administration (VBA) is responsible for providing
compensation, pensions, and education assistance among other things. The National
Cemetery Administration’s (NCA) responsibilities include maintaining national
veterans cemeteries.
VHA operates the nation’s largest integrated health care system. Unlike other
federal health programs, VHA is a direct service provider rather than a health insurer
or payer for health care. VA health care services are generally available to all
honorably discharged veterans of the U.S. Armed Forces who are enrolled in VA’s
health care system. VA has a priority enrollment system that places veterans in
priority groups based on various criteria. Under the priority system VA decides each
year whether its appropriations are adequate to serve all enrolled veterans. If not, VA
could stop enrolling those in the lowest-priority groups.
Congress continues to grapple with a number of issues facing current veterans
and new veterans returning from Operation Enduring Freedom (OEF) and Operation
Iraqi Freedom (OIF). They include trying to ensure a seamless transition process for
veterans moving from active duty into the VA health care system, and improving
mental health care services such as Post-traumatic Stress Disorder (PTSD) treatment
programs for returning veterans.
In recent years, VA has made an effort to realign its capital assets, primarily
buildings, to better serve veterans’ needs. VA established the Capital Asset
Realignment for Enhanced Services (CARES) initiative to identify how well the
geographic distribution of VA health care resources matches the projected needs of
veterans. Given the tremendous interest in the implementation of the CARES
initiative in the previous Congress, the 109th Congress would continue to monitor the
CARES implementation.
Several veterans health care-related bills were introduced and passed by either
the House or Senate during the first session of this Congress. At present, these bills
are pending action in the other chamber. It is likely that some of these measures will
be enacted into law during the second session.
This report will be updated as events warrant.

---

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Veterans Health Administration (VHA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Transformation of VHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Evolution of Veterans’ Eligibility for VA Health Care . . . . . . . . . . . . . . . . . 5
Eligibility Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Health Care Issues in the 109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Seamless Transition of Returning Servicemembers . . . . . . . . . . . . . . 13
Two-Year Eligibility for Veterans Returning from Iraq and
Afghanistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Mental Health and Post-Traumatic Stress Disorder (PTSD) . . . . . . . . 17
Setting Funding for VA Medical Care . . . . . . . . . . . . . . . . . . . . . . . . . 21
Continued Suspension of Priority Group 8 Veterans . . . . . . . . . . . . . . 22
Effect of the Enrollment Freeze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
VA’s Cost Recoveries from Medicare . . . . . . . . . . . . . . . . . . . . . . . . . 24
Filling of Privately Written Prescriptions at VA . . . . . . . . . . . . . . . . . 26
Capital Asset Realignment for Enhanced Services (CARES) . . . . . . . 27
VA as a Model for Other Health Care Systems . . . . . . . . . . . . . . . . . . 30
Beneficiary Travel Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Veterans Health Care Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
House-Passed Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Servicemembers Health Insurance Protection Act of 2005
(H.R. 2046) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Department of Veterans Affairs Information Technology
Management Improvement Act of 2005 (H.R. 4061) . . . . . . . . . 34
Senate-Passed Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Vet Center Enhancement Act of 2005 (S. 716) . . . . . . . . . . . . . . . . . . 35
Veterans’ Health Care Act of 2005 (S. 1182) . . . . . . . . . . . . . . . . . . . 35
Appendix 1. Map of All 21 Veterans’ Integrated Services Networks . . . . . . . . 40
Appendix 2. Priority Groups and Their Eligibility Criteria . . . . . . . . . . . . . . . . 41
List of Figures
Figure 1. Eligibility Criteria for Outpatient Care Prior to Eligibility Reform . . . 9
Figure 2. Total Number of Veteran Enrollees and Number of Veterans
Receiving Medical Care, FY1999-FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . 12

---

List of Tables
Table 1. Access to VA Health Care Services Prior to the 1996 Eligibility
Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 2. Total Number of New and Established Patients Who Will Have to
Wait Six Months or More . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

---

Veterans’ Health Care Issues
in the 109th Congress
Background

The history of the present-day Department of Veterans Affairs (VA) can be
traced back to July 21, 1930, when President Hoover issued Executive Order 5398,
creating an independent federal agency known as the Veterans Administration by
consolidating many separate veterans’ programs.1 On October 25, 1988, President
Reagan signed legislation (P.L. 100-527) creating a new federal cabinet-level
Department of Veterans Affairs to replace the Veterans Administration, effective
March 15, 1989. VA carries out its veterans’ programs nationwide through three
administrations and the Board of Veterans Appeals (BVA). The Veterans Health
Administration (VHA) is responsible for veterans’ health care programs. The
Veterans Benefits Administration (VBA) is responsible for compensation, pension,
vocational rehabilitation, education assistance, home loan guaranty and insurance
among other things. The National Cemetery Administration’s (NCA) responsibilities
include maintaining 120 national cemeteries in 39 states and Puerto Rico. The Board
of Veterans Appeals renders final decisions on appeals on veteran benefits claims.
This report provides an overview of major issues facing veterans’ health care
during the 109th Congress.2 The report’s primary focus is on veterans and not
military retirees. While any person who has served in the armed forces of the United
States is regarded as a veteran, a military retiree is someone who has completed a full
active duty military career (almost always at least 20 years of service), or who is
disabled in the line of military duty and meets certain length of service and extent of
disability criteria, and who is eligible for retired pay and a broad range of
nonmonetary benefits from the Department of Defense (DOD) after retirement. A
veteran is someone who has served in the armed forces (in most, but not all, cases for
a few years in early adulthood), but may not have either sufficient service or
disability to be entitled to post-service retired pay and nonmonetary benefits from
DOD. Generally, all military retirees are veterans, but all veterans are not military
retirees.
Currently, VA health care services are generally available to all honorably
discharged veterans of the U.S. Armed Forces who are enrolled in VA’s health care
system. In general, veterans have to enroll in the VA’s health care system to receive
care from VA. Typically veterans are enrolled in priority enrollment groups based on
1 In the 1920s three federal agencies, the Veterans Bureau, the Bureau of Pension in the
Department of the Interior, and the National Home for Disabled Volunteer Soldiers,
administered various benefits for the nation’s veterans.
2 For detailed information on veterans benefits issues see CRS Report RL33216, Veterans
Benefits Issues in the 109th Congress, by Paul J. Graney.

---

CRS-2
service-connectedness and income (described later in this report). Persons enlisting
in one of the armed forces after September 7, 1980, and officers commissioned after
October 16, 1981 must have completed two years of active duty or the full period of
their initial service obligation to be eligible for benefits. Veterans discharged at any
time because of service-connected disabilities are not held to this requirement.3 Also
eligible on a more limited basis are members of the armed forces reserve components
called to active duty and who serve the length of time for which they were activated,
and National Guard personnel who are called to active duty by a federal declaration
and serve the full period for which they were called. These servicemembers can
receive care from VA for an initial two-year period for conditions presumably related
to military service and for proven service-connected conditions thereafter.
To provide some context to veterans’ health care issues, this report will first
provide a brief history of the Veterans Health Administration (VHA).4 Second, it
will provide a brief overview of the evolution of eligibility for VA health care.
Third, it will discuss major issues facing veterans’ health care programs during the
109th Congress, and fourth, it will provide a summary of major veterans health care-
related legislation that has been reported to or passed by either the House or the
Senate during the first session.5
Veterans Health Administration (VHA)
History. VA’s largest and most visible operating unit is the Veterans Health
Administration (VHA). Established in 1946 as the Department of Medicine and
Surgery, it was succeeded in 1989 by the Veterans Health Services and Research
Administration, and renamed the Veterans Health Administration (VHA) in 1991.6
The veterans’ medical system was first developed to provide needed care to veterans
injured or sick as a result of service during wartime. When there was excess capacity
in VA hospitals, Congress gave wartime veterans without service-connected
conditions access to VA hospitals, provided space was available and the veterans
signed an oath indicating they were unable to pay for their care.7 At the end of World
War II, the federal government undertook the task of increasing the number of VA
medical facilities to meet the expected demand for health care for veterans returning
with injuries or illnesses sustained during hostilities. The primary focus of the
3 A service-connected disability is one that results from an injury or disease or physical or
mental impairment incurred or aggravated during military service. VA determines if
veterans have service-connected disabilities and, for those with such disabilities, assigns
ratings from 0% to 100% based on the severity of the disability.
4 This report will use VA and VHA interchangeably to describe the Veterans Health
Administration.
5 For a summary of veterans benefits legislation see CRS Report RL33216, Veterans
Benefits Issues in the 109th Congress, by Paul J. Graney.
6 Prior to the establishment of VHA, Public Health Service (PHS) hospitals treated veterans.
In 1921 these PHS hospitals treating veterans were transferred to the newly established
Veterans Bureau.
7 World War Veterans Act of 1924 (P.L. 68-242).

---

CRS-3
expansion was to immediately tend to the medical needs of returning combatants for
acute care and then to address the long-term rehabilitation needs of more seriously
injured veterans. Within a few years after the cessation of hostilities, the initial
demand for acute care services for service-connected conditions diminished and VA
initiated what was later to become its specialized services mission, in part because
services such as spinal cord injury care, blind rehabilitation, and prosthetics were
almost non-existent in the private medical market during the late 1940s.
The VA system has evolved and expanded since World War II. Congress has
enlarged the scope of the VA’s health care mission and has enacted legislation
requiring the establishment of new programs and services. Through numerous laws,
some narrowly focused, others more comprehensive, Congress has also extended to
additional categories of veterans’ eligibility for the many levels of care the VA now
provides. No longer a health care system focused only on service-connected
veterans, the VA has also become a “safety net” for the many lower-income veterans
who have come to depend upon it.
Transformation of VHA. Over the past decade, VA has transformed its
health care system through structural and organizational changes. In the early 1990s
VA recognized that its system might want to respond to certain changes taking place
in the private health care market and began a process of restructuring and
rationalizing services. VA established regional networks and decentralized certain
budgetary authority to these networks. Furthermore, advances in medical technology,
such as laser and other minimally invasive surgical techniques, allowed care
previously provided in hospitals to be provided on an outpatient basis. Similarly,
development of psychotherapeutic drugs to treat mental illness have led to fewer and
shorter hospital admissions for psychiatric patients, as well as the
deinstitutionalization of many long-term psychiatric patients. With the passage of
eligibility reform legislation in 1996 (P.L. 104-262) and in response to changing
trends in medical practice, VA began to shift its focus from primarily inpatient
hospital care to outpatient care in order to provide more accessible and efficient
delivery of health care to veterans.
Today, VA operates the nation’s largest integrated health care system. VHA is
divided into 21 Veterans Integrated Service Networks (VISNs, see Appendix 1 for
a map of VISNs). Each network includes a management office responsible for
making basic budgetary, planning and operating decisions. Each office oversees
between 5 and 11 hospitals as well as community- based outpatient clinics (CBOCs),
nursing homes and readjustment counseling centers (Vet Centers) located within each
VISN. In FY2005, VA operated 157 hospitals, 750 CBOCs, 134 nursing homes and
42 domiciliary care facilities.8,9
8 A domiciliary is a facility that provides rehabilitative and long-term health care for
veterans who require minimal medical care. VA now refers to these as Residential
Rehabilitation Treatment Facilities.
9 Department of Veterans Affairs, FY2006 Budget Submission, Medical Programs, vol. 2
of 4, pp. 4-21. (Hereafter cited as VA, FY2006 Budget Submission.)

---

CRS-4
Unlike other federal health programs (such as Medicaid and Medicare), the VA
is a direct service provider rather than a health insurer or payer for health care
services. VHA offers a standardized medical benefits package that includes a full
range of outpatient and inpatient services with an emphasis on preventive and
primary care. As defined in regulations, VA medical benefits include among other
things, preventive services, including immunizations, screening tests, and health
education and training classes, primary health care diagnosis and treatment,
prescription drugs, comprehensive rehabilitative services, mental health services
including professional counseling, home health care, respite (inpatient), hospice, and
palliative care, and emergency care.10 Some veterans are also eligible to receive
long-term care including nursing home care, domiciliary care, adult day care, and
limited dental care.
In FY2005, there were 7.7 million enrolled veterans, and 4.8 million unique
veteran patients received care from VA.11 That same fiscal year, VA treated 768,651
inpatients, 89,961 veterans in nursing home care units or in community nursing home
facilities, and 30,118 veterans in home and community-based facilities. The VHA’s
outpatient clinics registered more than 52 million visits by veterans in FY2005.12
In addition to providing direct health care to veterans, since 1946 VA has been
authorized to enter into agreements with medical schools and their teaching hospitals.
Under these agreements, VA hospitals provide training for medical residents and
students and appoint medical school faculty as VA staff physicians to supervise
resident education and patient care. Across the nation, VA is currently affiliated with
107 medical schools, 54 dental schools, and over 1,000 other schools offering
students allied and associated education degrees or certificates in 40 health profession
disciplines. More than one-half of all practicing physicians in the U.S. received at
least part of their clinical educational experiences in the VA health care system. In
FY2005, more than 87,000 health care professionals received training in VA medical
centers.13 VA is also the largest employer of registered nurses in the United States,
with 32,582 nurses on its payroll in FY2005.14
10 38 C.F.R. § 17.38.
11 Under current law, most veterans have to enroll to receive health care from VHA.
However, in any given year, some enrollees do not seek any medical care, either because
they do not become ill or because they rely on other sources of care. In some cases, VHA
provides care to non-enrolled veterans in the following classes: veterans who need
treatment for a VA rated service-connected disability; veterans who are VA rated as 50%
or more service-connected disabled; and veterans who were released from active duty within
the previous 12 months for a disability incurred or aggravated in the line of duty. In
addition, VA provides care to certain eligible dependents of veterans through a program
called the Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA) and to VA employees. These users of VA do not enroll for VA care.
12 VA, FY2006 Budget Submission.
13 Ibid., pp. 8-9.
14 Ibid., pp. 2-26.

---

CRS-5
Evolution of Veterans’ Eligibility for VA Health Care
To understand some of the issues facing veterans’ health care programs
discussed later in this report, it is important to get a sense of how veterans’ eligibility
for health care has evolved over time. While a full description of this evolution is
beyond the scope of this report, this report will provide a brief overview. Generally,
veterans’ eligibility for VA health care services has evolved from treating veterans
with service-connected conditions or veterans with low incomes to veterans with
nonservice-connected conditions and higher incomes. Moreover, VA’s health care
coverage has changed from not having a well-defined medical benefits package to a
standardized benefits package.
Eligibility criteria used to determine which veterans must be served by VA and
what type of medical care that they can be provided has undergone many changes
since the establishment of VA. Congress has made several major changes throughout
the years concerning the provision of hospital care, outpatient care and nursing home
care. Initially veterans could receive care only for treatment of service-connected
conditions that were incurred or aggravated during wartime service. In 1924,
Congress gave access to hospital care to World War I veterans with nonservice-
connected conditions on a space available basis who signed an oath of poverty. In
1943, hospital care was extended to World War II veterans with nonservice-
connected conditions and outpatient care was limited to those with service-connected
conditions. However, with the passage of P.L. 86-639 in 1960, Congress authorized
VA to provide outpatient treatment for nonservice-connected conditions in
preparation for or to complete treatment of hospital care. In 1973, with the passage
of the Veterans Health Care Expansion Act (P.L. 93-82), Congress further extended
outpatient treatment for nonservice-connected veterans to “obviate the need of
hospital admission.”15

By 1985, VA was authorized to provide most categories of veterans with
hospital, nursing home, and domiciliary care. However, VA was not required or
obligated to do so. This is evidenced by the use of the phrase “may provide” in the
statutes. In 1986, with passage of P.L. 99-272, Congress established three categories
of eligibility for VA health care. The law provided that hospital care shall be
provided, free of direct charge, to veterans within Category A. The term “shall” was
interpreted by many as meaning “entitled” to hospital care. These Category A
veterans were defined to include those with service-connected disabilities,
low-income veterans without such disabilities, and certain “exempt” veterans,
including (for example) former prisoners of war, those exposed to Agent Orange,
recipients of VA pensions, and those eligible for Medicaid. Moreover, P.L. 99-272
provided that Category A veterans may be provided outpatient and nursing home
care. The term “may” was interpreted by many as meaning “eligible” for outpatient
and nursing home care. Veterans not in Category A were assigned to either Category
B or Category C on the basis of current income and net worth; VA could furnish care
to these veterans on a resources-available basis. Veterans not eligible for Category
15 U.S. General Accounting Office, VA Health Care: Issues Affecting Eligibility Reform,
GAO/T-HEHS-95-213, p. 6.

---

CRS-6
B on the basis of either income or net worth were placed in Category C.16 Veterans
in Categories B and C were eligible to receive care but were not entitled to care.
It should be noted that the terms eligibility and entitlement had different
meanings under the VA health care system than under other public health care
programs such as Medicare. For instance, all beneficiaries who meet the basic
eligibility requirements for Medicare are entitled to all medically necessary care
under the Medicare benefits package. Under the VA health care system, the term
“eligible” meant that VA “may” provide care, and the term “entitled” meant that VA
was required or “must” provide care.17 However, neither being eligible for nor being
entitled to health care services guaranteed the availability of health services. Since
funding for VA health care was, and still is, based on fixed annual appropriations,
once the funds were expended VA could no longer provide care, even to veterans
who were entitled to care. Being entitled to care essentially gave veterans a higher
priority for care than being eligible for VA health care.
Eligibility Reform. Although from time to time Congress expanded access
to VA health care, certain criteria that accompanied these expansions were an
apparent source of frustration not only for veterans, but also for VA physicians and
VA administrative staff who applied and enforced these provisions. As mentioned
earlier, some veterans were entitled to outpatient care only if it was for pre- and post-
hospitalization and to obviate the need for hospital care. As illustrated in Figure 1,
for most categories of veterans, eligibility for outpatient care was subject to the
obviate the need for hospitalization criterion. Only two categories of veterans were
not subject to this criterion: they were veterans with a service-connected disability
rated 50% or more who were entitled to care, and nonservice-connected veterans with
special status, such as former prisoners of war, who were only eligible for care.
However, the obviate the need statutory authority was interpreted by VA
medical centers in several different ways. Some medical centers interpreted it as care
for any medical condition, whereas other medical centers interpreted this statutory
authority as care for only certain medical conditions.18 Similarly, since there was no
defined health benefits package prior to eligibility reform, veterans were often
uncertain about whether they were entitled to certain services or were merely eligible
to receive some services. Likewise, VA health care providers complained that when
treating certain veterans, they could only treat the service-connected conditions and
not the entire patient, although the nonservice-connected condition could affect the
veteran’s overall health.
These limitations were addressed by Congress with the passage of the Veterans
Health Care Eligibility Reform Act of 1996 (P.L. 104-262). This act required VA to
16 For a comprehensive history of eligibility for VA health care, see U.S. General
Accounting Office, VA Health Care: Issues Affecting Eligibility Reform Efforts,
GAO/HEHS-96-160. Much of the history described in this section was drawn from this
GAO report.
17 This is evidenced by the use of words “shall” and “may” throughout 38 U.S.C.§1710.
18 U.S. General Accounting Office, VA Health Care: Issues Affecting Eligibility Reform
Efforts, GAO/HEHS-96-160, p. 44.

---

CRS-7
establish priority categories and operate a patient enrollment system to manage access
to VA health care if sufficient resources were not available to serve all veterans
seeking care. It also substantially revised statutes governing care for veterans,
putting inpatient and outpatient care on the same statutory footing so that VA can
provide care the patient needs in the most medically appropriate setting.19 The intent
of these changes was to expand the services VHA could provide to veterans while
eliminating statutory barriers to providing care in the most economical manner, and
to lower the expenses associated with providing care to veterans.20
VHA began enrolling veterans beginning October 1, 1998.21 A detailed list of
priority enrollment groups is provided in Appendix 2.22 23 Table 1 provides details
on eligibility for VA health care prior to the enactment of P.L. 104-262, as it relates
to the current priority enrollment groups. For example, as illustrated in Table 1,
veterans with service-connected conditions rated 50%-100% currently are correlated
to Priority Group1 veterans. Veterans with service-connected conditions rated 0%-
40% may either be Priority Group 2 or Priority Group 3 depending upon their
disability rating. These veterans, along with other veterans discharged for disability,
would have had the clearest entitlement to VA services prior to eligibility reform.
19 Kenneth W. Kizer et al., “Reinventing VA Health Care, Systematizing Quality
Improvement and Quality Innovation,” Medical Care, vol. 28, no. 6, pp. 1-8.
20 U.S. Congress, House Committee on Veterans’ Affairs, Veterans Eligibility Reform Act
of 1996, report to accompany H.R. 3118, 104th Cong., 2nd sess., H.Rept. 104-690, pp. 5, 8,
25.
21 VA has eight priority enrollment groups, with Priority 1 veterans — those with service
connected disabilities rated 50% or more — having the highest priority for enrollment. By
contrast, Priority 8 veterans are primarily veterans with no service-connected disabilities and
higher incomes.
22 For a detailed description of the current VA enrollment process, see CRS Report
RL32548, Veterans’ Medical Care Appropriations and Funding Process, by Sidath Viranga
Panangala.
23 Under current law, most veterans have to enroll to receive health care from VHA.
However, in any given year, some enrollees do not seek any medical care, either because
they do not become ill or because they rely on other sources of care. In some cases, VHA
provides care to non-enrolled veterans in the following classes: veterans who need
treatment for a VA rated service-connected disability; veterans who are VA rated as 50%
or more service-connected disabled; and veterans who were released from active duty within
the previous 12 months for a disability incurred or aggravated in the line of duty. In
addition, VA provides care to certain eligible dependents of veterans through a program
called the Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA) and to VA employees. These users of VA do not enroll for VA care.

---

CRS-8
Although the prior eligibility criteria have no direct correlation to today’s enrollment
priority groups, in general, Category A correlated with Priority Groups 1 through 6,
and Category C correlated with Priority Groups 7 and 8. Category B (not shown in
Table 1) included veterans with nonservice-connected disabilities who may have
received hospital and nursing home care if they were unable to defray the cost of the
said care based on a defined income threshold. Category B most closely correlated
with veterans in Priority Group 4 and certain veterans classified in Priority Group 5.
Former Category B veterans cannot be isolated in Table 1 because it is spread among
multiple priority groups.

---

CRS-9
Figure 1. Eligibility Criteria for Outpatient Care Prior to Eligibility Reform
Source: Chart prepared by CRS based on U.S. General Accounting Office, Variabilities in VA Outpatient Care, GAO-HRD-93-106, p. 27.

---

CRS-10
Table 1. Access to VA Health Care Services Prior to the 1996
Eligibility Reform
Veteran
category
New enrollment
prior to
priority groups after
Inpatient
Outpatient
Nursing
eligibility reform
eligibility reform
hospital care
care
home care
Category A
Service-
Priority Group 1
connected rated
50%-100%
Entitled
obtaining care for
any condition
Service-
Priority Group 2
connected rated
Priority Group 3
Entitled
Entitled,
Eligible
0%-40%
limited to pre-
obtaining care for
and post-
service-connected
hospitalization
conditions only
and to obviate
the need for
Veterans
Priority Group 3
hospital care
discharged for
disability
Service-
Priority Group 2
connected rated
30%-40%
obtaining care for
a nonservice-
connected
Entitled,
condition
limited to pre-
and post-
Veterans
Priority Group 5
Entitled
hospitalization
Eligible
receiving VA
and to obviate
pension benefits
the need for
or income under
hospital care
VA means test
threshold
Disabled due to
Priority Group 3
treatment by VA
Prisoner of War
Priority Group 3
(POW)
World War I and
Priority Group 6
Mexican Border
War veterans
Entitled
Eligible
Eligible
Veterans
Priority Group 4
receiving a
pension with aid
and attendance
payments

---

CRS-11
Veteran
category
New enrollment
prior to
priority groups after
Inpatient
Outpatient
Nursing
eligibility reform
eligibility reform
hospital care
care
home care
Service-
Priority Group 3
connected rated
0-20% obtaining
care for a
nonservice-
connected
condition
Eligible,
limited to pre-
Nonservice-
Priority Group 5
and post-
connected with an
Entitled
hospitalization
Eligible
income below VA
and to obviate
means test
the need for
threshold (no
hospital care
dependents)
Veterans exposed
Priority Group 5
to agent orange,
Priority Group 6
radiation or
Medicaid eligible
Category C
Nonservice-
Priority Group 7
Eligible with
Eligible with
Eligible
connected with
Priority Group 8
copayments
copayments,
with
income above
limited to pre-
copayments
VA means test
and post-
threshold (no
hospitalization
dependents)
and to obviate
the need for
hospital care
Source: Table prepared by CRS based on U.S. General Accounting Office, VA Health Care, Issues
Affecting Eligibility Reform, GAO/T-HEHS-95-213, p. 8.
Today, 10 years after the passage of the Veterans Health Care Eligibility Reform
Act of 1996, when Congress dramatically restructured the VA health care system,
VA has experienced unprecedented growth in demand for medical care. The total
number of veteran enrollees has grown by 79.5% from FY1999, the first year of
enrollment, to FY2005 (Figure 2). During this same period the number of unique
veterans receiving medical care has grown by 49.2% — from 3.2 million veteran
patients in FY1999 to 4.8 million veteran patients in FY2005 (Figure 2). This
growth in demand for care, and the budgetary constraints placed on the federal
budget has once again opened the debate in Congress as to what categories of
veterans should have priority to receive care. Some in Congress are concerned about
the growing costs, question the current eligibility for VA medical care, and suggest
that it should be narrowed. They believe that VA’s primary responsibility is to care
for veterans with service-connected medical problems and that the system should not
be providing care to veterans with nonservice-connected conditions with higher
incomes. However, most of the veterans currently enrolled in VA were eligible for,
if not entitled to, certain care from VA prior to the 1996 reforms. The reform act
clarified and expanded veterans’ access to outpatient care. It also built in

---

CRS-12
mechanisms to limit enrollment in the event that VA funding was insufficient to meet
the demand for care. Most of the issues discussed in the next section are linked to
these fundamental concerns.
Figure 2. Total Number of Veteran Enrollees and Number of Veterans Receiving Medical
Care, FY1999-FY2005
9
8
7
6
Total Number of
Veteran
ns
Enrollees
5
etera
4
Total Number of
f V
o
Unique Veterans
ns
Receiving
3
io
ill
Medical Care
M 2
1
0
FY1999
FY2000
FY2001
FY2002
FY2003
FY2004
FY2005
Source: Graph prepared by CRS. Data provided by the Office of Actuary, Office of Policy, Planning,
and Preparedness, U.S. Department of Veterans Affairs (VA).
Health Care Issues in the 109th Congress

Introduction. Shortly after the terrorist attacks on the U.S. on September 11,
2001, military personnel began deploying to Afghanistan. Beginning in late 2002
and early 2003, additional military personnel were deployed to Iraq. Operation
Enduring Freedom (OEF) in Afghanistan and Operation Iraqi Freedom (OIF)
produced a new generation of war veterans. The return of thousands of these
veterans from the Iraq and Afghanistan theaters in need of medical services has put
considerable pressure on both VHA personnel and budgets. During the 109th
Congress, policymakers will face a number of issues affecting these and other
veterans. Among other things, Congress will continue to focus on attempting to
ensure a “seamless transition” process for veterans moving from active duty into the
VA health care system, improving mental health care services for veterans, funding
the growing demand for veterans’ health care services, and overseeing improvements
to the effectiveness and efficiency of VA’s provision of health care services.
Moreover, in recent years, some in Congress have shown a keen interest in using VA
as a model to inform changes in certain aspects of private and public health care
delivery systems; that intent is likely to continue in this Congress as well. The
discussion below focuses on these major issues facing VA’s health care programs.

---

CRS-13
Seamless Transition of Returning Servicemembers. As of October 21,
2005, 433,398 OEF and OIF veterans had separated from active duty. Of this amount,
185,230 veterans, or 42.7%, were separated Active Duty troops, while 248,168 were
separated Reservists or National Guard members. Approximately 28%, or 119,247,
of these separated veterans have sought health care from VA. Most of these veterans
have received outpatient care, while approximately 3% of 119,247 enrolled veterans
have been hospitalized at least once in a VA health care facility. Reservists and
National Guard members make up the majority of those who have sought VA health
care, accounting for approximately 61,759, or 51.7%, of those who received care.
Those who separated from regular active duty have accounted for 48.2%, or 57,488
veterans.
Veterans’ advocates are concerned that returning servicemembers from OIF and
OEF do not have a smooth transition from DOD health care to VA health care; the
shift from active duty to private citizen can be particularly frustrating and confusing
for those who need health care services. At a congressional hearing held in October
2003, some witnesses testified about a lack of an integrated medical information
system between DOD hospitals and the VA. The then VA Undersecretary for Health
testified that “too often Reservists and National Guard personnel have not received
timely information about the benefits and access to health care they have earned.”24
The President’s Taskforce to Improve Health Care Delivery for Our Nation’s
Veterans had also discussed the importance of providing a seamless transition from
military to veteran status, including the coordination and sharing of electronic health
information between VA and DOD. In March 2005, the Government Accountability
Office (GAO) testified that VA still does not have systematic access to DOD data
about returning servicemembers who may need its services.25

In response to these criticisms, VA has stationed its employees at major DOD
Military Treatment Facilities (MTFs) to act as VHA/DOD liaisons.26 VA has also
identified staff members at every Veterans Administration Medical Center (VAMC)
to serve as Points of Contacts (POCs). VHA/DOD liaisons help the MTF treatment
team with a veteran’s discharge from the MTF and informs the POC that the veteran
is being transferred to the VA medical facility.27 VA has provided a vocational
rehabilitation counselor to work with hospitalized patients at Walter Reed Army
24 Statement of Robert H. Roswell, M.D., Undersecretary for Health, Department of
Veterans Affairs, before the House Committee on Veterans’ Affairs, Subcommittee on
Health on “Handoffs or Fumbles?” Are DOD and VA Providing Seamless Health Care
Coverage to Transitioning Veterans?, Oct. 16, 2003.
25 U.S. Government Accountability Office, VA Disability Benefits and Health Care,
Providing Certain Services to the Seriously Injured Poses Challenges, GAO-05-444T, p. 5.
26 There are nine VA/DOD Liaisons located at Walter Reed Army Medical Center (two
VA/DOD liaisons); National Naval Medical Center; Brooke Army Medical Center;
Eisenhower Army Medical Center; Fort Hood Army Medical Center; Madigan Army
Medical Center (two VA/DOD liaisons); and Evans Army Medical Center.
27 Statement of Harold Kudler, M.D., Co-Chair, Undersecretary for Health’s Special
Committee on PTSD, Department of Veterans Affairs, before the House Committee on
Veterans’ Affairs, Subcommittee on Health, Oct. 16, 2003.

---

CRS-14
Medical Center (WRAMC), where the largest number of seriously injured service-
members has been treated.
In August 2003 VA created a Seamless Transition Task Force to coordinate and
streamline VBA and VHA activities and work with DOD on long-range activities.
According to this task force, VA has been increasing its presence in MTFs and has
educated servicemembers still receiving care about VA benefits including health
care. Its annual report states that VA staff have coordinated more than 1,400
transfers of veterans from MTFs to VHA medical facilities in FY2004.28
VA has also stated that it has enhanced its outreach efforts through the Vet
Center program. This is a special VHA program designed to provide readjustment
counseling to veterans returning from military service. VA’s Vet Center program
consists of 206 community-based Vet Centers located across the country. VA has
emphasized that it has augmented the Vet Center program’s capacity to provide
outreach to veterans returning from combat operations in Afghanistan and Iraq.
Specifically, the Vet Centers have hired and trained up to 50 new outreach workers
from among the ranks of recently separated OIF and OEF veterans at targeted Vet
Centers. The Vet Center outreach is primarily for the purpose of providing
information that will facilitate a seamless transition and the early provision of VA
services to new returning veterans and their family members upon their separation
from the military. These positions are being located on or near active military
out-processing stations, as well as National Guard and Reserve facilities. New
veteran hires are providing briefing services to transitioning servicemen and women
regarding military-related readjustment needs, as well as the complete spectrum of
VA services and benefits available to them and their family members.
On April 30, 2004, the Army, at the direction of the Acting Secretary of the
Army, introduced the Disabled Soldier Support System (DS3), and later renamed it
the U.S. Army Wounded Warrior (AW2), to serve as a program advocate for severely
disabled soldiers and their families. AW2 is available to all active and reserve
component soldiers who have been classified as a Special Category as a result of
war-related injuries or illness incurred after September 10, 2001, and who have been
awarded an Army disability rating of 30% or greater.29
In November 2004, DOD and VA signed an agreement to implement
cooperative separation processes and physical examinations for the service- members
28 Department of Veterans Affairs, Seamless Transition Task Force Year End Report, Dec.
2004. This number represents the transfer of medical records from DOD to VA, and the
number may be different from those who received treatment at a VA facility.
29 A patient is Special Category when one of the following conditions exist: (a) Has a severe
injury, such as loss of sight or limb, (b) Has a permanent and unsightly disfigurement of a
portion of the body normally exposed to view, (c) Has an incurable and fatal disease and has
limited life expectancy, (d) Has an established psychiatric condition, (e) May require
extensive medical treatment and hospitalization, (f) Has been released from the Service for
a psychiatric condition, (g) Is paralyzed, Army Regulation 40-400, 12 March 2001. For
further information on AW2 see CRS Report, CRS Report RS22366, Military Support to the
Severely Disabled: Overview of Service Programs, by Charles A. Henning.

---

CRS-15
at discharge sites. Servicemembers who file for VA disability compensation must
have two physical examinations, one provided by VA and the other by DOD, within
months of each other; neither exam fully satisfies the needs of both VA and DOD.
These redundant examinations are said to inconvenience servicemembers, delay
claims processing and access to VA healthcare, and create added costs. VA and
DOD agreed to begin exploring the technical feasibility, scheduling, and cost
requirements for the implementation of an electronic physical exam, through a single,
consistent electronic physical examination record, which will meet military service
and VA requirements.
To identify and monitor those whose injuries may result in a need for VA
disability and health services, VA has been working with DOD to develop a formal
agreement on what specific information to share. VA has requested personal
identifying information, medical information, and DOD’s injury classification for
each listed servicemember. VA has also requested monthly lists of servicemembers
being evaluated for medical separation from military service. Since late 2003, DOD
has provided updated rosters on a recurring basis to the VA of those servicemembers
who served in OIF and OEF and then separated from active duty. VA has used these
lists to determine the rates of VA health care utilization.
On January 3, 2005, VA established the National Veterans Affairs Office of
Seamless Transition to ensure that there is no interruption of care as a person moves
from being a DOD patient to a VA patient, that whatever kinds of treatment are being
delivered in the MTF are continued, and that treatment plans are shared. The office
also facilitates priority access to care by enrolling patients in the VA system before
they leave an MTF.
In June 2005, VA and DOD signed a Memorandum of Understanding (MOU)
to share appropriate protected health information. The issues that hinder a formal
agreement between DOD and VA include their differing understanding of the Health
Insurance Portability and Accountability Act of 1996 (HIPAA), particularly the
HIPAA privacy provisions that govern the sharing of individually identifiable health
data.30 According to GAO, VA believes that HIPAA allows DOD to share
servicemembers’ health data with VA because the departments serve the same or
similar populations — active duty servicemembers who transition to veteran status.
In contrast, DOD believes that serving the same or similar populations would mean
that servicemembers have a dual eligibility for both DOD and VA services.
Although DOD acknowledges that some former servicemembers are dually eligible
for DOD and VA services, not all qualify for both services simultaneously.
Furthermore, according to VA, HIPAA allows DOD to share data sooner than the
decision by DOD that the servicemember will separate from active duty. However,
DOD is reluctant to provide individually identifiable health data to VA until DOD
is certain that a service member will separate from the military. Furthermore, DOD
is concerned that VA’s outreach to servicemembers who are still on active duty could
work at cross-purposes to the military’s retention goals.31
30 P.L. 104-191, § 264, 110 Stat. 1936, 2033-34; 45 C.F.R. §164.500.
31 U.S. Government Accountability Office, DOD and VA: Systematic Data Sharing Would
(continued...)

---

CRS-16
The Veterans Health Care Act of 2005 (S. 1182) as passed by the Senate on
December 21, 2005, included a provision that would provide VA with access to
certain medical records of servicemembers while they are still on active duty. This
provision would ensure that DOD would not violate HIPAA by providing VA with
access to certain medical records. This bill is pending House approval.
Two-Year Eligibility for Veterans Returning from Iraq and
Afghanistan. Veterans who have served or are now serving in Iraq and
Afghanistan may, following separation from active duty, enroll in the VA health care
system and, for a two-year period following the date of their separation, receive VA
health care without copayment requirements for conditions that are or may be related
to their combat service. Following this initial two-year period, they may continue
their enrollment in the VA health care system but may become subject to any
applicable copayment requirements.32 There were several legislative proposals (H.R.
1588, S. 481) in the first session of this Congress to extend the period of eligibility
for health care for combat service in the Persian Gulf War or future hostilities from
two years to five years after discharge or release. During a hearing in June 2005, the
Administration voiced opposition to this proposal. According to VA, the current
two-year post-combat eligibility period provides ample opportunity for a veteran to
apply for enrollment in the VA system.33 However, some proponents of this proposal
are concerned that restricting enrollment eligibility for only a two-year period may
prevent veterans from enrolling in VHA when health conditions manifest, especially
for conditions such as PTSD that may not manifest until years after veterans return
from combat. The Administration’s response to this concern has been that “if PTSD
appears in a non-enrolled combat veteran following the end of his or her two-year
period of eligibility, and is subsequently determined to be service-connected, that
veteran would then become eligible for enrollment in Priority Group 1, 2, or 3, and
thus they would be able to receive needed care.”34
31 (...continued)
Help Expedite Servicemember’s Transition to VA Services, GAO-05-722T, p. 7.
32 The Veterans Programs Enhancement Act of 1998 (P.L. 108-368) [38 U.S.C. §
1710(e)(1)(D) and § 1710(e)(3)(C)] authorized VA to provide health care for an initial
two-year period after discharge from service for veterans (including National Guard and
reserve components) in combat during any period of war after the first Gulf War or during
any other future period of hostilities after Nov. 11, 1998, even if there is insufficient medical
evidence to conclude that such illnesses are attributable to such service. For combat
veterans who do not enroll with VA during the two-year post-discharge period, eligibility
for enrollment and subsequent health care is subject to such factors as a service-connected
disability rating, VA pension status, catastrophic disability determination, or financial
circumstances. If their financial circumstances place them in Priority Group 8, they will be
“grandfathered” into a Priority Group 8a or Priority Group 8c, and their enrollment in VA
will be continued, regardless of the date of their original VA application.
33 U.S. Congress, Senate Committee on Veterans Affairs, hearing on legislation related to
veterans’ health care, 109th Cong., 1st sess., June 9, 2005.
34 U.S. Congress, Senate Committee on Veterans Affairs, hearing on the Proposed FY2006
Budget for the Department of Veterans Affairs Programs, 109th Cong., 1st sess., Feb. 15,
(continued...)

---

CRS-17
Mental Health and Post-Traumatic Stress Disorder (PTSD). With the
ongoing conflicts in Iraq and Afghanistan, Congress is greatly concerned about VA’s
current and future capacity to treat mental health issues of these new veterans.
Among the mental health issues that could affect veterans, Post-Traumatic Stress
Disorder (PTSD) has attracted the most attention. This a psychiatric disorder that can
occur following the experience or witnessing of life-threatening events such as
military combat, natural disasters, terrorist incidents, serious accidents, or violent
personal assaults like rape. People who suffer from PTSD often relive the experience
through nightmares and flashbacks, have difficulty sleeping, and feel detached or
estranged; these symptoms can be severe enough and last long enough to
significantly impair the person’s daily life.35 While there is no cure for PTSD, mental
health experts believe that early identification and treatment of PTSD symptoms may
lessen the their severity and improve the overall quality of life for individuals with
PTSD.
According to DOD, only 3% of soldiers report serious mental health issues in
post-deployment assessments given as they prepare to return home.36 Early in the
Iraq War, the Army surveyed 3,671 returning veterans and found that up to 17% of
the soldiers were already suffering from depression, anxiety and symptoms of
PTSD.37 Other studies have indicated that protracted warfare in Iraq — with its
intense urban street fighting, civilian combatants and terrorism — could drive PTSD
rates even higher.38 According to the VA, of the 119,247 OEF and OIF veterans who
have sought care from VA, 37,618 have been diagnosed with a psychiatric disorder.
As of October 21, 2005, 3.7% of those veterans who have been diagnosed with a
psychiatric disorder have been classified as having symptoms of PTSD.39
Among the challenges faced by DOD and VA in treating returning
servicemembers with mental health issues is the apparent stigma associated with
disclosing PTSD symptoms to DOD clinicians. Reportedly, there is less stigma
associated with disclosing PTSD symptoms in VA settings, but there are perceived
34 (...continued)
2005, p. 36.
35 National Center for PTSD Fact Sheet, available at [http://www.ncptsd.org/
facts/general/fs_what_is_ptsd.html].
36 Scott Shane, “Military Plans a Delayed Test for Mental Issues,” New York Times, Jan. 30,
2005. Many returning servicemembers do not disclose mental health concerns at the time
of discharge in order to avoid being held up at their bases. Therefore, there is concern
among health care professionals about underreporting of mental health issues.
37 Charles W. Hoge, et al., “Combat Duty in Iraq and Afghanistan, Mental Health Problems,
and Barriers to Care,” New England Journal of Medicine, vol. 351, no. 1 (July 1, 2004),
p. 16.
38 Brett T. Litz, The Unique Circumstances and Mental Health Impact of the Wars in
Afghanistan and Iraq (Information for Professionals), Department of Veterans Affairs,
National Center for PTSD, available at [http://www.ncptsd.va.gov/facts/veterans/fs_Iraq-
Afghanistan_wars.html].
39 B. Christopher Frueh, Improving PTSD Treatment for Veterans, presentation given at the
American Enterprise Institute for Public Policy Research, Nov. 7, 2005.

---

CRS-18
risks associated with disclosure within military settings.40 Nondisclosure could result
in servicemembers not receiving early intervention and an underestimation of the
future demand for VA mental health services.
For more than two decades, Congress has highlighted the importance of PTSD
services for veterans. In 1984 Congress established the Special Committee on Post-
Traumatic Stress Disorder (Special Committee) to determine VA’s capacity to
provide assessment and treatment for Post-Traumatic Stress Disorder and to guide
VA’s educational, research and benefits activities with regard to PTSD.41 The
Special Committee is composed of PTSD experts from across a broad spectrum of
VA’s Mental Health and Readjustment Counseling Services (RCS). The Special
Committee issued its first report on ways to improve VA’s PTSD services in 1985
and its latest report, which includes 37 recommendations for VA, in 2004.42
The Special Committee’s 2004 report indicates that combat veterans of OEF
and OIF are at high risk for PTSD and related problems. According to the Special
Committee, the suicide rate for soldiers in Iraq is higher than the Army’s base rate
and higher than suicide rates during the first Gulf War or the Vietnam War. It
estimates that an estimated 40% of OEF and OIF casualties returning by the way of
Walter Reed Army Medical Center report symptoms consistent with PTSD.43
Moreover, the Special Committee in its 2004 report concluded that “VA must meet
the needs of new combat veterans while still providing for veterans of past wars.
Unfortunately, VA does not have sufficient capacity to do this.”44
GAO reported in September 2004 that VA does not have a reliable estimate of
the total number of veterans it currently treats for PTSD and lacks the information
it needs to determine whether it can meet an increased demand for PTSD services.45
In February 2005, GAO reviewed 24 of the Special Committee’s 37
recommendations and reported that VA has not fully met any of the 24
40 Matthew Friedman, “Veterans’ Mental Health in the Wake of War,” New England Journal
of Medicine, vol. 352, no. 13 (Mar. 31, 2005), p. 1288.
41 Section 110 of Veterans Health Care Act of 1984 (P.L. 98-528), as amended by Section
206 of the Veterans Millennium Health Care and Benefits Act (P.L. 106-117).
42 Department of Veterans Affairs Undersecretary for Health’s Special Committee on Post-
Traumatic Stress Disorder, Fourth Annual Report of the Department of Veterans Affairs:
Under secretary for Health’s Special Committee on Post-Traumatic Stress Disorder, 2004.
The Special Committee has issued 15 reports since its establishment, but did not issue a
report in every year.
43 Department of Veterans Affairs, Undersecretary for Health’s Special Committee on Post-
Traumatic Stress Disorder, Fourth Annual Report, p. 4.
44 Ibid., p. 5.
45 U.S. Government Accountability Office, VA and Defense Health Care: More Information
Needed to Determine if VA Can Meet an Increase in Demand for Post-Traumatic Stress
Disorder Services, GAO-04-109, Sept. 20, 2004.

---

CRS-19
recommendations.46 Specifically, GAO determined that VA has not met 10
recommendations and has partially met 14 of these 24 recommendations.47
Furthermore, as stated in the House report (H.Rept. 109-95) accompanying the
Military Quality of Life and Veterans Affairs, and Related Agencies appropriations
bill, 2006 (H.R. 2528), VA has not been able to meet the Special Committee’s
recommendation to set up a PTSD Clinical Team (PCT) in every VA medical center.
The House Appropriations Committee expressed its concerns about the lack of PCTs
in every VA medical center in its committee report language:
VA’s primary care program is a de facto mental health system for the majority
of those seeking VA care. But the VA must ensure that PTSD services are
provided in primary care settings by design, not by default. To provide the true
continuum of care necessary to treat PTSD effectively, the primary care services
need to be fully integrated with general mental health and specialty PTSD
services. The VA has a long road to travel before this becomes the actual
practice, but effective PCTs at the VA Medical Centers will provide the basis to
travel down that road. The Committee is very concerned about this lack of
responsiveness to the Special Committee recommendation in this regard and
directs the VA to develop a plan for implementation of effective PCTs at each
VA Medical Center and identify any resource shortfalls which would impede
implementation. 48
The Senate report (S.Rept. 109-105) accompanying the Military Construction
and Veterans Affairs and Related Agencies appropriations bill, 2006 (H.R. 2528),
also express concern about returning veterans who are experiencing PTSD. The
Senate Appropriations Committee requested VA to establish three PTSD “Centers
of Excellence.” These centers will be established at the Waco Veterans Affairs
Medical Center (VAMC), in Texas; the San Diego VAMC, in California; and the
Canandaigua VAMC, in New York. Furthermore, the Committee encouraged VA
to establish a PTSD clinical team at each VA Medical Center; provide a certified
family therapist within each Vet Center; and appoint a regional PTSD coordinator
within each VISN and Readjustment Counseling Service region to evaluate
programs, promote best practices, and make resource recommendations.49
According to VA it has undertaken many efforts to improve PTSD care
delivered to veterans. VA points out that it has developed an Iraqi War guide for
46 U.S. Government Accountability Office, VA Health Care, VA Should Expedite the
Implementation of Recommendations Needed to Improve Post-Traumatic Stress Disorder
Services, GAO-05-287. Of the 37 recommendations proposed by the Special Committee,
GAO examined only 24 recommendations related to clinical care. The full list of 24
recommendations is listed on pp. 41-43.
47 Ibid., p. 3.
48 U.S. Congress, House Committee on Appropriations, Military Quality of Life and
Veterans Affairs and Related Agencies appropriations bill ,2006, report to accompany H.R.
2528, 109th Cong., 1st sess., H.Rept. 109-95, p. 16.
49 U.S. Congress, Senate Committee on Appropriations, Military Construction and Veterans
Affairs and Related Agencies appropriations bill, 2006, report to accompany H.R. 2528,
109th Cong., 1st sess., S.Rept. 109-105, p. 53.

---

CRS-20
clinicians; implemented a national clinical reminder to prompt clinicians to assess
OEF and OIF veterans for PTSD, depression, and substance abuse; implemented a
national system of 144 specialized PTSD programs in all states;50 required all VA
outpatient clinics to either have a psychiatrist or psychologist on staff full-time or
ensure that veterans can consult a mental health provider in their community;
elevated the VHA’s chief psychiatrist to the agency’s National Leadership Board (a
key policymaking group that includes VHA’s other top executives and medical
personnel); and established uniform budgets for mental health care at VA’s 21
VISNs.51 In 2004, a new Mental Illness Research, Education and Clinical Center
(MIRECC) was established at the VAMC in Durham, North Carolina, to focus on
issues of post-deployment health for returning OIF and OEF veterans. This center
will collaborate with the National Center for Post-Traumatic Stress Disorder
(NCPTSD) and nine other MIRECCs spread throughout the country.52 VHA also
established a new MIRECC in Denver, Colorado, to focus on suicide and its
prevention, which is a growing concern in the OIF and OEF veteran population.
Furthermore, in October 2004, in response to GAO’s report that stated that VA
lacked the information it needs to determine whether it can meet an increased
demand for VA PTSD services, VA consolidated the necessary data into a national
report and distributed the report to all VISNs, medical centers, and Vet Centers to
assist them in estimating potential PTSD workload expansion. VA has pointed out
that it updates and distributes this report on a quarterly basis.
PTSD Claims Review Controversy. On May 19, 2005, VA’s Inspector
General (IG) reported on an examination of files from a sample of 2,100 randomly
selected veterans with disability ratings for PTSD.53 The IG cited insufficient
documentation in the files and a dramatic increase in veterans filing for disability
compensation for PTSD since 1999. The IG reported that about 25% of the 2,100
PTSD awards it reviewed were based on inadequate evidence of the occurrence of
a traumatic event (stressor). VA conducted its own review of the 2,100 cases
reviewed by the IG. VA’s preliminary findings showed that some of the decisions
on PTSD claims were premature. According to VA, it found that a large percentage
of cases judged to have insufficient evidence were older cases in which VA statutes
prohibit a change in the rating decision. According to statute, if a condition has been
determined to be service-connected for a period of 10 years or more, service
connection is protected and may not be severed except for a finding of fraud on the
50 Statement of Jonathan B. Perlin, Mar. 17, 2005.
51 George Cahlink, “VA to Boost Mental-Health Services for Returning Troops,”
Government Executive, Sept. 28, 2004, available at [http://www.govexec.com/dailyfed/
0904/092804g1.htm].
52 The National Center for PTSD, promotes research, and education on PTSD within VA
and in collaboration with DOD. The NCPTSD maintains a website [http://www.ncptsd.org]
that describes the NCPTSD Divisions and their accomplishments and provides fact sheets
for clinicians, veterans, their families and the general public.
53 U.S. Department of Veterans Affairs, Office of Inspector General, Review of State
Variances in VA Disability Compensation Payments, Report No: 05-00765-137, May 19,
2005.

---

CRS-21
part of the veteran.54 Following the IG’s finding, VA proposed to review 72,000
individual cases of veterans who were rated at 100% disabled and unemployable
within the last five years due to PTSD. After intense criticism by both Congress and
veterans advocacy groups, on November 10, 2005, VA announced that it will not
initiate a review of the 72,000 claims.
On November 16, 2005, VA announced that it has requested the Institutes of
Medicine (IOM) to conduct a review of PTSD. Under the agreement, one IOM
committee will be established to review the current scientific and medical literature
related to the assessment of PTSD, and assess how accurate the current screening
instruments are. Another IOM committee will provide technical assistance on issues
related to treatment, prognosis, and compensation of PTSD. The first committee’s
report is expected to be completed within six months, and IOM expects that the
second committee will complete its task in 12 months.
Setting Funding for VA Medical Care. Veterans’ advocates say that the
unpredictable timing, if not uncertain funding amounts, inherent in the yearly
discretionary appropriations process is a major management problem for VA.
Therefore, national veterans’ organizations have been calling for “assured funding”
for veterans’ health care. This has also been called “mandatory funding” by other
veterans’ advocates. This discussion will use mandatory funding to refer to these
policy proposals.
To understand mandatory funding proposals, it is essential to understand how
VA programs are funded presently. Under current law, VA programs are funded
through both mandatory and discretionary spending authorities. The following
programs are among mandatory spending programs: cash benefit programs, i.e.,
compensation and pensions (and benefits for eligible survivors); readjustment
benefits (education and training, special assistance for disabled veterans); home loan
guarantees; and veterans’ insurance and indemnities. Each of these programs is an
appropriated entitlement program that is funded through annual appropriations. With
any entitlement program, because of the underlying law, the government is required
to provide eligible recipients with the benefits to which they are entitled, whatever
the cost. With these mandatory veterans’ programs, Congress must appropriate the
money necessary to fund the obligation. If the amount Congress provides in the
annual appropriations act is not enough, it must make up the difference in a
supplemental appropriation. Like other entitlement programs, spending
automatically increases or decreases over time as the number of recipients eligible
for benefits varies. Certain of these VA entitlement benefits are indexed for
inflation; the benefit amount will increase automatically based on the measured
increase in the cost-of-living adjustment.
The remaining programs, primarily VA health care programs, medical facility
construction, medical research, and VA administration, are funded through annual
discretionary appropriations. Congress must act each year to provide budget
authority for discretionary programs. As a discretionary program, the amount of
54 38 U.S.C. 1159; 38 C.F.R. 3.957; 38 U.S.C. 110; 38 C.F.R. 3.951(b).

---

CRS-22
funds VHA can spend on health care programs for veterans is limited by the amount
of its appropriation.
Generally the mandatory funding proposals that have been suggested by
veterans’ advocates are based on a formula that takes into account the number of
enrolled and nonenrolled veterans eligible for VA medical care, and the rate of
medical care inflation. Proponents believe that mandatory funding will eliminate the
year-to-year uncertainty about funding levels and close the gap between funding and
demand for veterans’ health care. Opponents believe that with these proposals
spending for VHA will increase significantly as enrollment in the VA health care
system soars; in most of the proposed funding formulas, automatic funding increases
are primarily based on enrollment figures. Furthermore, critics believe that a static
funding formula cannot adequately take into consideration the changing needs of
veterans, which could affect the funding level necessary to provide a different mix
of services, and that Congress is better able to evaluate the funding needs through the
current appropriation process.
As highlighted by some budget analysts, changing veterans’ medical care into
a mandatory budget authority will not solve the issue of closing the gap between
funding and demand for veterans’ health care, since Congress could place caps on
spending for mandatory programs through budget reconciliation language which
could limit spending on veterans’ health programs. 55 Since Congress can act to
change the formula or cap the spending amounts, the issue of uncertainty in funding
amounts may not be resolved either.
Assured Funding for Veterans Health Care Act, 2005 (H.R. 515) was introduced
during the first session. This proposal would require the Secretary of the Treasury
to make mandatory appropriations for VA health care based on the following
formula: the amount of funds available for VA medical care in FY2007 would equal
130% of the total obligations made by VA for medical care programs in FY2005.
The amounts in succeeding years would be adjusted for medical inflation and growth
in the number of veterans enrolled in VA’s health care system and other non-veterans
eligible for care from VA. A companion measure, S. 331, was introduced in the
Senate. Another measure introduced in the Senate, S. 13, uses a similar formula for
determining funding available for VA health care and adjusts spending for changes
in the veteran population and inflation. Neither measure has yet seen any legislative
action.
Continued Suspension of Priority Group 8 Veterans. Veterans’
advocates want the suspension of Priority Group 8 veterans from enrolling in VA’s
health care system lifted, since they believe that all veterans must be able to receive
care from VA. It should be noted that some of these veterans may have other types
of health care coverage. The Veterans Health Care Eligibility Reform Act of 1996
(P.L. 104-262) included language that stipulated that medical care to veterans will
be furnished to the extent appropriations were made available by Congress on an
55 Testimony of Richard Kogan, of the Center on Budget and Policy Priorities at the
Alternative Processes for Funding Veterans Health Care Forum, Thurs., June 3, 2004.
Transcript available at [http://www.dav.org/voters/mandatory_funding.html].

---

CRS-23
annual basis. Based on this statutory authority, the Secretary of Veterans Affairs
announced on January 17, 2003 that VA would temporarily suspend enrolling
Priority Group 8 veterans. Those who enrolled prior to January 17, 2003 in VA’s
health care system were not to be affected by this suspension. VA claims that,
despite its funding increases, it cannot provide all enrolled veterans with timely
access to medical services because of the tremendous increase in the number of
veterans seeking care from VA. In July 2002, VA estimated that there were more
than 310,000 enrolled veterans who had been unable to schedule an appointment or
have an appointment scheduled by VA more than six months from the veteran’s
desired date of appointment for a non-emergency clinic visit. As of September 15,
2005, VA is reporting that there are 56,257 veterans waiting for six months or more
for a non-emergency clinic visit (Table 2).
Table 2. Total Number of New and Established Patients
Who Will Have to Wait Six Months or More
Number of new
Number of established
Total number of
VISN
enrolleesa
patientsb
Veterans
1
1,510
3,002
4,512
2
26
199
225
3
0
18
18
4
227
532
759
5
3
81
84
6
920
1,294
2,214
7
4,055
4,416
8,471
8
2,062
3,944
6,006
9
1,929
3,126
5,055
10
299
1,604
1,903
11
1,041
1,025
2,066
12
1,508
2,335
3,843
15
698
1,067
1,765
16
2,686
4,075
6,761
17
52
497
549
18
251
900
1,151
19
299
409
708
20
3,945
3,061
7,006
21
241
884
1,125
22
363
602
965
23
223
848
1,071
Totals
22,338
33,919
56,257
Source: Table prepared by CRS based on data provided by the Department of veterans Affairs (VA).
Data current as of September 15, 2005.
a. Represents a manual count of veterans who have enrolled and requested an appointment, but the
veteran’s preferred site of care cannot schedule the appointment within six months, and the
veteran is placed on a wait list.
b. Represents a manual count of established patients (patients have been seen at least once) who are
on a wait list (cannot be scheduled within six months) for follow-up care for a Primary Care
Clinic or Specialty Care Clinic visit. (Examples would include veterans waiting for
reassignment to a new Primary Care Provider, or patients waiting for consults in Specialty Care
clinics). It is also a count of veterans scheduled electronically for appointments; however, the
wait time meets or exceeds six months.

---

CRS-24
Effect of the Enrollment Freeze. According to VA data, in FY2003
approximately 164,000 Priority Group 8 veterans could not enroll in VA health care
because of the suspension. In FY2004 an estimated 360,000 Priority Group 8
veterans were similarly effected; this number is expected to grow to 522,000 veterans
by the end of FY2005.56 Moreover, the number of Priority Group 8 veterans already
enrolled in VA’s health care system is expected to decline from 1.27 million in
FY2005 to 1.22 million in FY2006; this will be mostly due to projected death rates
for these veterans as well as the continued suspension of new enrollments.57 In 2004,
VA estimated that resumption of enrollment for Priority Group 8 veterans would
require an additional $519 million over the FY2005 requested VHA budget and an
estimated $2.3 billion in FY2012.58
Congress has shown a keen interest in access to care for Priority Group 8
veterans, and it is likely that legislative proposals will be introduced in this Congress
directly related to lifting the freeze on enrollment. However, since enrollment of
lower priority veterans is tied to available resources, there are doubts that such
measures will be enacted into law.
VA’s Cost Recoveries from Medicare. In general, VA is statutorily
prohibited from receiving Medicare payments for services provided to Medicare-
covered veterans.59 Many veterans’ advocates have suggested that VA should receive
Medicare payments for nonservice-connected disability care that VA provides for
veterans who are also covered by Medicare. However, there has been opposition to
these proposals because authorizing VA recoveries from Medicare could further
jeopardize the solvency of the Medicare trust fund and increase overall federal health
care costs, since Medicare is an entitlement program without a cap on its total
spending. GAO suggested that allowing VA to bill and retain recoveries from
Medicare would create strong incentives for VA facilities to shift their priorities
towards providing care to veterans with Medicare coverage.60
In past Congresses proposals have been introduced to authorize VA recoveries
from Medicare either for all Medicare-eligible veterans or for those with higher
incomes. In the 106th and 107th Congresses this issue was known as Medicare
Subvention, meaning a transfer of money from the Medicare trust funds to VA to pay
for Medicare-covered services provided to veterans who are Medicare beneficiaries.
56 Department of Veterans Affairs, “Enrollment — Provision of Hospital and Outpatient
Care to Veterans Subpriorities of priority Categories Seven and Eight and Annual
Enrollment Level Decision; Final Rule,” 68 Federal Register, Jan. 17, 2003.
57 Department of Veterans Affairs, FY2006 Budget Submission, Medical Programs, vol. 2
of 4, pp. 2-4.
58 U.S. Congress, Senate Committee on Appropriations, Department Veterans Affairs, and
Housing and Urban Development and Independent Agencies Appropriations for FY2005,
hearings on H.R. 5041/S. 2825, 108th Cong., 2nd sess., Apr. 6, 2004, S.Hrg. 108-776, p. 379.
59 42 U.S.C § 1395f(c).
60 U.S. Government Accountability Office, VA Health Care, Issues Affecting Eligibility
Reform Efforts, GAO/HEHS-96-160, Sept. 1996, p. 85.

---

CRS-25
The Balanced Budget Act of 1997 (P.L. 105-33) authorized the DOD to
implement a Medicare subvention pilot program in their MTFs. The Medicare
subvention demonstration permitted DOD to create managed care organizations that
participated in the Medicare+Choice program (now Medicare Advantage) and enroll
Medicare-eligible retirees. In this demonstration, Medicare payments were structured
on a capitation basis, with DOD receiving monies after meeting its level of effort to
ensure that it sustained its prior level of spending on its Medicare beneficiaries.
Under the demonstration, enrolled retirees received their Medicare-covered benefits
and additional TRICARE benefits (notably prescription drugs) through TRICARE
Senior Prime, the DOD-run managed care organizations set up by the demonstration.
To be eligible for Senior Prime, retirees had to reside in one of the six geographic
areas covered by the demonstration, be enrolled in both Medicare Part A and Part B,
and had to be eligible for military health care benefits. They also had to have either
(1) used an MTF before July 1, 1997, or (2) turned age 65 on or after July 1, 1997.
While the demonstration had positive results for enrollees, the three-year pilot
program was judged not to be cost-effective for DOD and it expired at the end of
2001.61
VA was not authorized to establish a similar Medicare subvention
demonstration. However, with its decision to no longer accept applications for
enrollment of Priority Group 8 veterans, VA and the Centers for Medicare and
Medicaid Services (CMS) began discussions to form a VA Advantage proposal in
2004. According to VA, it had planned to offer Medicare-eligible Priority 8 veterans
who were unable to enroll for VA health care the option of receiving their Medicare
benefits through VA. To accomplish this, VA would have contracted with an
existing Medicare Advantage organization with the stipulations that VA would define
the benefit package to be offered, and enrollees in VA Advantage would receive the
majority of their health care benefits through VA facilities. Other benefits under the
VA Advantage plan that are not provided in VA facilities would have been provided
via arrangements with providers and facilities that contract with VA. It is likely that
out-of-plan-area emergency and urgent care services would have fallen into this last
category. Under the VA Advantage proposal, Medicare would have borne the full
cost of care for veterans enrolled in the program.
Although VA had made plans to implement this program in September 2004,
VA’s General Counsel determined that legislation authorizing the implementation
of the program was necessary. Moreover, it was not clear how attractive this option
would have been to Medicare-eligible veterans. As mentioned earlier, only
Medicare-eligible Priority 8 veterans who were unable to enroll for VA health care
would have been offered the option of enrolling in VA Advantage. The veteran’s
spouse or other Medicare-eligible dependents of the veteran would not have been
eligible for the VA Advantage plan. It is unclear at this time if Congress may
introduce legislation to implement the VA Advantage program.
61 U.S. General Accounting Office, Medicare Subvention Demonstration: Pilot Satisfies
Enrollees, Raises Costs and Management Issues for DOD Health Care, GA0-02-284, Feb.
2002, pp. 3-4.

---

CRS-26
Filling of Privately Written Prescriptions at VA. As part of VA’s
comprehensive medical care benefits package, VA provides all veterans who are
enrolled for VA care appropriate prescription medications, at the nominal charge of
$7 for a 30-day supply. In general, the copayments are waived if the prescription is
for a service-connected condition or if the veteran is severely disabled or indigent.
VA dispenses medications, however, only to those veterans who are enrolled for, and
who actually receive VA-provided care. Generally, VA does not provide medications
to veterans unless those medications are prescribed by a physician who is employed
by or under contract with VA.
However, to address the growing wait lists for primary care and specialty care
appointments and to reduce the waiting times for a first appointment, VA
implemented a program in September 2003 to provide access to VA prescription
drugs for veterans experiencing long waits for their initial primary care appointment.
This temporary program was known as the Transitional Pharmacy Benefit (TPB).
Under this program, VA pharmacies and VA’s Consolidated Mail Outpatient
Pharmacies (CMOPs) were authorized to fill prescriptions written by non-VA
(private) physicians until a VA physician could examine the veteran and determine
an appropriate course of treatment. The TPB included most, but not all, of the drugs
listed on the VA National Formulary (VANF). To be eligible for the program,
veterans had to be enrolled in the VA health care system prior to July 25, 2003, and
had to have requested their initial primary care appointment prior to July 25, 2003.
To qualify for this program, veterans also must have been waiting more than 30 days
for the initial primary care appointment as of September 22, 2003.
Although VA anticipated that around 200,000 veterans would be eligible to
participate in the program, only about 41,000 veterans were finally eligible to enroll
in the program; of those veterans about 8,300 veterans participated in the program.
VA attributes low participation to the fact that many veterans had already received
VA services by the start of the program. According to the VA, the TPB program
increased the administrative prescription processing costs due to the increased labor
requirements associated with contacting private physicians to suggest formulary
alternatives because many private physicians had prescribed medications that were
not on VA’s formulary. At present VA has discontinued this pilot program.
There was considerable interest in the 108th Congress to provide a prescription-
only health care benefit for veterans. While several bills were introduced none of
them were enacted into law. Furthermore, in FY2004 and FY2005 the House and
Senate Committees on Appropriations, and the conference committee, included bill
language authorizing the dispensing of prescription drugs from VHA pharmacies to
enrolled veterans with privately written prescriptions based on requirements
established by VHA.62 63 The following bills were introduced during the first session
62 U.S. Congress, Conference Committees, Making Appropriations for Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies for the Fiscal Year
Ending September 30, 2004, Conference Report to accompany H.R. 2673, 108th Cong., 1st
sess., H.Rept. 108-401, p. 365.
63 U.S. Congress, Conference Committees, Making Appropriations for Foreign Operations,
(continued...)

---

CRS-27
of the 109th Congress: H.R. 693, H.R. 1585, H.R. 2379, S. 13, and S. 614. These
measures would, among other things, require VA pharmacies to dispense medications
on prescriptions written by private medical practitioners. Of these measures, a
hearing was held on S. 614 by the Senate Veterans Affairs Committee on June 9,
2005. At this hearing, both the Administration and several Veterans Service
Organizations (VSO’s) expressed concerns about the legislation. Many believed that
opening up the VA pharmacy system, as proposed in S. 614, would ultimately change
the basic, primary mission of the entire VA. The Administration testified that
“enactment of this measure could encourage situations where a veteran is receiving
care and prescriptions from VA, and from outside sources, yielding increased costs,
increased confusion, and decreased patient safety.”64

Capital Asset Realignment for Enhanced Services (CARES). VA
holds a substantial inventory of real property and facilities throughout the country.
A majority of these buildings and property support VHA’s mission. Much of VA’s
medical infrastructure was built decades ago when its focus was inpatient care. In
the past several years VA has been shifting from a hospital-based system and, today,
more than 80% of the treatment VA provides is on an outpatient basis through
Community Based Outpatient Clinics (CBOCs). GAO projected that one in four
medical care dollars is spent on maintaining and operating VA’s buildings and land,
and estimated that VA has over 5 million square feet of vacant space which can cost
as much as $35 million a year to maintain.65
In October 2000, VA established the CARES program with the goal of
evaluating the projected health care needs of veterans over the next 20 years and of
realigning VA’s infrastructure to better meet those needs. In August 2003, VA’s
Undersecretary for Health issued a preliminary Draft National CARES Plan (DNCP).
The DNCP, among other things, recommended that seven VA health care facilities
close and duplicative clinical and administrative services delivered at over 30 other
VHA facilities be eliminated. The sites slated to be closed were in the following
locations: Canandaigua, New York; Pittsburgh, Pennsylvania (Highland Drive
Division); Lexington, Kentucky (Leestown Division); Cleveland, Ohio (Brecksville
Unit); Gulfport, Mississippi; Waco, Texas; and Livermore, California. Patients
currently provided services at these VHA facilities would have been provided care
at other nearby sites. The DNCP recommended that new major medical facilities be
built in Las Vegas, Nevada and East Central Florida. Furthermore, the DNCP
recommended significant infrastructure upgrades at numerous sites including, at or
near locations where VA proposed to close facilities. In addition, the draft plan
called for the establishment of 48 new high-priority CBOCs.
63 (...continued)
Export Financing, and Related Programs for the Fiscal Year Ending September 30, 2005,
Conference Report to accompany H.R. 4818, 108th Cong., 2nd sess., H.Rept. 108-792, p. 483.
64 Testimony of Secretary of Veterans Affairs R. James Nicholson, in U.S. Congress, Senate
Committee on Veterans Affairs, Veterans’ Health Care Legislation, hearings, 109th
Congress 1st sess., June 9, 2005.
65 U.S. General Accounting Office, VA Health Care: Capital Asset Planning and Budgeting
Need Improvement, GAO/T-HEHS-99-83, Mar. 10, 1999, pp. 1-6.

---

CRS-28
Following the release of the DNCP, the VA Secretary appointed a 16-member
independent commission to study the draft plan. The commission was composed of
individuals from a wide variety of backgrounds outside of the federal government.
The CARES Commission developed and applied six factors in the review of each
proposal in the DNCP: (1) impact on veterans’ access to health care; (2) impact on
health care quality; (3) veteran and stakeholder views; (4) economic impact on the
community; (5) impact on VA missions and goals; and (6) cost to the government.
The commission conducted 38 public hearings and 81 site visits throughout 2003,
and submitted its recommendations to the Secretary in February 2004. After
reviewing the recommendations, the Secretary announced the final details of the
CARES plan in May 2004 (Secretary’s CARES Decision).
The final plan includes consolidating the following facilities: (1) Highland
Drive campus in Pennsylvania with University Drive and Heinz campuses in
Pennsylvania; (2) Brecksville campus in Ohio with Wade Park campus in Cleveland,
Ohio; and (3) Gulfport campus with Biloxi campus in Mississippi. The following
facilities will be partially realigned: (1) Knoxville campus in Iowa; (2) Canandaigua
campus in New York; (3) Dublin campus in Georgia; (4) Livermore campus in
California; (5) Montrose campus in New York; (6) Butler campus in Pennsylvania;
(7) Saginaw campus in Michigan; (8) Ft. Wayne campus in Indiana, and (9) Kerrville
campus in Texas.66
The final plan also calls for building new hospitals in Orlando and Las Vegas;
adding 156 new CBOCs, four new spinal cord injury centers, and two blind
rehabilitation centers; and expanding mental health outpatient services nationwide.
By opening health care access to more veterans, VA expects to increase the
percentage of enrolled veterans from 28% of the veterans’ population today, to 30%
in 2012 and 33% in 2022. This percentage increase can be attributed in part to a
projected decline in the veteran population. Nationally, the number of veteran
enrollees is projected to increase 6% by 2012 and decrease 5% by 2022 from the
number of veteran enrollees reported in 2001. VA asserts that the CARES plan will
reduce the cost of maintaining vacant space over the period 2006 to 2022 from an
estimated $3.4 billion to $750 million and allow VA to redirect those funds to patient
care.67
Critics of the CARES plan contend that closures are being considered without
assessing what kind of facilities will be needed for long-term care and mental health
care in the future. For instance, at the time of the release of the DNCP, projections
for outpatient and acute psychiatric inpatient care contained data inconsistencies on
future needs. VA asserted that it would improve its forecasting models to ensure that
projections adequately reflect future need. Also, some believe that the CARES plan
does not focus enough on future nursing home needs, would leave VA short of beds
in a few decades, and thus VA would not have any choice but to privatize some parts
66 The Draft National CARES Plan (DNCP) defines realignment as: moving services from
one facility to another, contracting for care to ensure inpatient access to care is available
when needed, and in all cases maintaining outpatient services in the community.
67 Department of Veterans Affairs, Office of the Secretary, Secretary of Veterans Affairs,
CARES Decision, May 2004, pp. 1-8.

---

CRS-29
of the health care system. Moreover, some veterans’ groups believe that CARES is
only about closing “surplus” hospitals and do not believe that CARES will result in
the building of new and modern facilities. Finally, the closure of some VA medical
facilities raised serious concern among some Members of Congress who felt that they
had little control over the CARES process.68
In December 2003, the Veterans Health Care, Capital Asset, and Business
Improvement Act of 2003 (P.L.108-170) was signed into law. Section 222 of this act
requires a 60-day notice and a waiting period before VA could close any facilities
under the final CARES plan. In addition, Section 221 of this act requires VA to wait
45 days after reporting to the Veterans’ and Appropriations Committees before
carrying out major construction projects as specified in the final CARES report. The
Veterans Health Programs Improvement Act of 2004 (P.L.108-422) signed in to law
on November 30, 2004 requires VA to notify Congress of the impact of actions that
may result in a facility closure, consolidation, or administrative reorganization. The
law also prohibits such actions from occurring until 60 days following the
notification or 30 days of continuous session of Congress as specified. This law
superseded Section 221 of P.L.108-170.
The Secretary’s CARES Decision identified implementation issues that required
further study, including additional stakeholder input at selected sites. On September
29, 2004, the Secretary of VA established an Advisory Committee for CARES
Business Plan Studies. The committee and its subcommittees generally consists of
representatives from veterans’ service organizations, governmental agencies, health
care providers, planning agencies, and community organizations with a direct interest
in the CARES process. This committee will consult with stakeholders during
implementation of the Secretary’s CARES Decision. The committee will ensure that
the full range of stakeholder interests and concerns are assembled, publicly
articulated, accurately documented, and considered in the development of site-level
business plans. In January 2005, VA awarded a contract to PriceWaterhouseCoopers
to complete studies at 18 sites throughout the country during a 13-month period as
required by the Secretary’s CARES Decision. According to VA, the studies will be
completed no later than February 2006.69
Furthermore, the Senate Appropriations Committee expressed concern about the
ongoing CARES implementation process. As stated in S.Rept. 109-105 to
accompany the Military Construction and Veterans Affairs and Related Agencies
appropriations bill, 2006:
68 Honorable Bob Graham, “Statements on Introduced Bill and Joint Resolutions,” remarks
in the Senate, Congressional Record, 108th Congress, vol. 149 (June 18, 2003), p. S8135.
69 The 18sites are: Boston, MA (VISN1); Canandaigua, NY (VISN 2); Montrose, NY
(VISN 3); New York City, NY(VISN 3); St. Albans, NY (VISN 3); Perry Point, MD (VISN
5); Montgomery, AL (VISN 7); Louisville, KY (VISN 9); Lexington, KY (VISN 9); Poplar
Buff, MO (VISN15); Biloxi, MS(VSIN 16); Muskogee, OK (VISN 16); Waco, TX (VISN
17); Big Spring, TX (VISN 18); Walla Walla, WA (VISN 20); White City, OR (VISN 20)
Livermore, CA (VISN 21); West LA, CA (VISN 22).

---

CRS-30
The Committee understands that the VA is now seeing large concentrations of
veterans in areas that were not originally anticipated to receive the increased
workload. The Committee is concerned that the original 2004 snapshot of the
Department’s infrastructure and mission requirements for each facility has
changed due to the large number of veterans returning from Operations Enduring
Freedom and Iraqi Freedom [OEF/OIF], as a result of these issues, it would be
prudent to carefully and systematically reevaluate the 18 facilities on the
Secretary’s list requiring additional study based on a more global situation now
facing our Nation’s veterans and the impact of the returning OEF/OIF veterans.70
The Senate Appropriations Committee included bill language prohibiting VA
from using any funds appropriated to VA to change the current infrastructure,
service, or mission of the 18 facilities that are been studied. The Committee
encouraged the VA to continue studying these locations and submit its
recommendations to Congress as part of the CARES recommendation in the VA’s
FY2007 capital plan.
VA as a Model for Other Health Care Systems. For decades the VA
health care system had a reputation for providing suboptimal care to veterans, at least
in certain circumstances.71 These quality problems were highlighted in the popular
press at that time.72 As described earlier, however, VA initiated a systemwide
reengineering, among other things, to improve the quality of care.73 VA is seen by
many as a leader in improving quality of care. One of the most highly regarded VA
initiatives is the National Surgical Quality Improvement program (NSQIP). The
initiatives key components are: periodic performance measurement and feed back,
along with self-assessment tools, site visits, and best practices to improve the
outcome of major surgeries performed by VA surgeons.
Recent studies have shown that VA’s quality of care has improved dramatically
when compared to the quality of care in the VA health care system before its
reengineering.74 Moreover, studies done following VA’s transformation have shown
that some aspects of VA’s quality of care are better than what is offered in the
general health care system. For instance, researchers (affiliated with VA, the RAND
Corporation, and several universities) found that patients in the VA health care
70 U.S. Congress, Senate Committee on Appropriations, Military Construction and Veterans
Affairs and Related Agencies Appropriations Bill, 2006, report to accompany H.R. 2528,
109th Cong., 1st sess., S.Rept. 109-105, p. 64.
71 Sheldon Greenfield, “Creating a Culture of Quality: The Remarkable Transformation of
the Department of Veterans Affairs Health Care System,” Annals of Internal Medicine, vol.
141, no. 4 (Aug. 17, 2004), p. 316.
72 “Investigator Cites Poor Care at Veterans Hospitals,” New York Times, Nov. 22, 1991, p.
A26.
73 Ashish K. Jha, et. al., “Effect of the Transformation of the Veterans Affairs Health Care
System on the Quality of Care,” New England Journal of Medicine, vol. 348, no. 22 (May
29, 2003), p. 2219.
74 Ibid., p. 2222. See also E.A. Kerr, et al., “Diabetes Care Quality in the Veterans Affairs
Health Care System and Commercial Managed Care: The TRIAD Study,”Annals of Internal
Medicine, vol. 141, no. 4 (Aug. 17, 2004), pp. 272-281.

---

CRS-31
system are more likely to receive better chronic and preventive care than the general
population. This study also found that VA performed better across the entire
spectrum of care: screening, diagnosis, treatment, and follow-up.75
Moreover, certain attributes of VA’s health care system may have relevance to
improving the quality of care provided in the broader health care system. For
instance, VHA’s Barcode Medication Administration System for dispensing
pharmaceuticals has been in place since 2000, before the Food and Drug
Administration’s (FDA) attempt to put a similar system in place in the broader health
care system.76 The Barcode Medication Administration System, which is in all VA
hospitals now, lets doctors and nurses verify the time, dose and name of a patient
receiving a medication. VA hospitals give patients a bar-coded wristband inscribed
with patient information, and attaches a bar code to every medication. A nurse scans
the patient’s wristband for identity verification, and the system retrieves the
medication record from VA’s Electronic Healthcare Record System and displays it
on the PC or handheld screen.
VA is also leading an effort to reduce medication errors with a wireless
application designed to ensure that patients receive the correct medications. Industry
press indicates that VA not only has outpaced private hospitals in implementing
health care IT systems, but the department is leapfrogging its private-sector
counterparts in using mobile and wireless devices and applications directly in patient
care.77
The VHA is also known for its Electronic Healthcare Record (EHR) technology.
The Veterans Health Information Systems and Technology Architecture (VistA)
system (VA’s electronic health record system) is currently in more than 1,300 VA
facilities to maintain the records of over 5 million veterans. CMS and VHA are
collaborating to configure VistA technology so that it might be adopted for use in the
private physician office setting nationwide. The new product will be known as “The
VistA-Office EHR,” and the targeted release date is July 2005.
Since the late 1990s, VA has been generally recognized as a leader in patient
safety. In 1999, the VA established a National Center for Patient Safety (NCPS) to
lead the agency’s patient safety efforts and develop a culture of safety throughout the
VA health care system. The NCPS developed an internal, confidential, non-punitive
reporting and analysis system, the Patient Safety Information System (PSIS), which
permits VA employees to report both adverse events and close calls without fear of
75 Steven M. Asch, et al., “Comparison of Quality of Care for Patients in the Veterans Health
Administration and Patients in a National Sample,” Annals of Internal Medicine, vol. 141,
no. 12, p. 942.
76 FDA issued its final bar coding rule in Feb. 2004. It applies to medications used in
hospitals, as well as blood and blood products used in transfusions. New medications
covered by the rule will have to include bar codes within 60 days of their approval; most
previously approved medicines and all blood and blood products will have to comply with
the new requirements within two years.
77 Mary Mosquera, “VA’s Dose of WiFi,”Government Computer News, vol. 24, no. 9 (Apr.
24, 2005).

---

CRS-32
punishment. Other countries such as Australia, Japan, Denmark, the United
Kingdom have adopted strategies from portions of VA’s patient safety program.
Furthermore, the Joint Commission for the Accreditation of Health Care
Organization’s (JCAHO) patient safety goals have been influenced by VA’s advances
in this area. In May 2000, the VA signed an agreement with the National
Aeronautics and Space Administration (NASA) to develop the Patient Safety
Reporting System (PSRS), an independent, external reporting system. The PSRS,
which was inaugurated in 2002 at VA hospitals nationwide, is operated by NASA.
It is intended to provide VA employees with a “safety valve” that allows them
confidentially to report close calls or adverse events that, for whatever reason, would
otherwise go unreported.
In the area of pharmaceutical purchasing VA has been able to obtain
prescription drugs at competitive prices. VA has been successful in using a number
of purchasing arrangements to obtain substantial discounts on prescription drugs.
For the bulk of its pharmaceutical purchases, VA obtains favorable prices through the
Federal Supply Schedule (FSS).78 By statute, in order to be able to obtain
reimbursement for drugs for Medicaid beneficiaries, manufacturers must offer their
drugs on the FSS.79 FSS prices are intended to be no more than the prices
manufacturers charge their most-favored non-federal customers under comparable
terms and conditions. VA also buys some brand-name drugs for prices less than-
those listed under the FSS. For example, by statute VA can buy brand-name drugs-
at a price at least 24% lower than the non-federal average manufacturer price
(NFAMP), which may be lower than the FSS price for many drugs.80 In addition, VA
has obtained some drugs at lower than FSS prices through national contracts with a
single manufacturer based on a competitive-bid process. VA may solicit competitive
bids for therapeutically equivalent drugs and may select one winner based on price
alone for exclusive or preferred use on their formularies. Often VA and DOD
consolidate their buying power and negotiate contracts together. In FY2003, the total
cost avoidance was estimated to be $376 million for VA and DOD contacts.81 82
Several measures (H.R. 376, H.R. 563, H.R. 1626, H.R. 4610, H.R. 4652, S.
123, S. 563) were introduced in the first session of this Congress to allow the
78 The pharmaceutical portion of the Federal Supply Schedule (FSS) contains over 17,000
products available to federal agencies and other entities.
79 38 U.S.C. § 8126(a)(4).
80 The Veterans Health Care Act of 1992 (P.L. 102-585). The other agencies covered by this
act are: DOD, the Public Health Service, and the Coast Guard.
81 Based on experience, about 74% of joint VA/DOD drug purchases are consumed by VA
beneficiaries. The VA’s FY2003 projections assumed that 74.4% of the total cost avoidance
figure would be attributable to VA beneficiaries. Actual data from the first three quarters
of FY2003 reflected a 74.3% share.
82 The VA does not provide a figure on how much it saves by purchasing pharmaceuticals
through negotiations. According to the VA officials, it is difficult to put an exact amount
on the amount of money that VA “saves” by its contracting in regard to prescription drugs
because although VA knows what the price paid is, it is difficult to develop a baseline
comparison.

---

CRS-33
Department of Health and Human Services (DHHS) to negotiate contracts with
manufacturers of covered Medicare Part D pharmaceuticals similar to VA. However,
many veterans’ advocates have voiced concerns that if prices offered to VA were
extended to Medicare recipients or other entities, it would result in increased prices
for VA, since pharmaceutical companies will not give the same price discounts that
it presently offers VA.

Beneficiary Travel Program. In general, the beneficiary travel program
reimburses certain veterans for the cost of travel to VA medical facilities when
seeking health care. P.L. 76-432, passed by Congress on March 14, 1940, authorized
VA to pay the actual travel expenses, or instead an allowance based upon the mileage
traveled by any veteran traveling to or from a VA facility or other place for the
purpose of examination, treatment, or care. P.L. 85-857, signed into law on
September 2, 1958, authorized VA to pay necessary travel expenses to any veteran
traveling to or from a VA facility or other place in connection with vocational
rehabilitation counseling or for the purpose of examination, treatment, or care.
However, this law changed VA’s travel reimbursement into a discretionary authority
by stating that VA “may pay” expenses of travel. On April 13, 1987, VA published
final regulations that sharply curtailed eligibility for the beneficiary travel program.
The Veterans’ Benefits and Services Act of 1988, P.L. 100-322, section 108, in large
part restored VA travel reimbursement benefits. It required that if VA provides any
beneficiary travel reimbursement under section 111 in any given fiscal year, then
payments must be provided in that year in the cases of travel for health care services
for all the categories of beneficiaries specified in the statute. In order to limit the
overall cost of this program, the law imposed a $3 one-way deductible applicable to
all travel, except for veterans otherwise eligible for beneficiary travel reimbursement
who are traveling by special modes of transportation such as ambulance, air
ambulance, wheelchair van, or to receive a compensation and pension examination.
In order to limit the overall impact on veterans whose clinical needs dictate frequent
travel for VA medical care, an $18-per-calendar-month cap on the deductible was
imposed for those veterans who are pre-approved as needing to travel on a frequent
basis.
With the rise in gasoline prices throughout 2005, several measures (H.R. 3147,
H.R. 3948, H.R. 4025 and S. 996) were introduced to change the method of
determining the milage reimbursement rate and also to eliminate the current
deductible amount. However, none of these bills has seen legislative action. One
reason that these bills did not get enacted is because funds for transportation of
beneficiaries are used from appropriations for medical services for veterans. There
is a strong sense that funds available to provide health care to veterans are more
appropriately used for direct patient care programs rather than for transportation
costs.
Veterans Health Care Legislation
This section provides a brief summary of veterans health care legislation
reported by the House or Senate Veterans Affairs Committees or passed by either the

---

CRS-34
House or Senate during the first session of the 109th Congress. This summary does
not include appropriation measures for veterans health care programs.83
House-Passed Legislation
Servicemembers Health Insurance Protection Act of 2005 (H.R.
2046). This bill was introduced on May 3, 3005, and on May 11, 2005, the House
Committee on Veterans Affairs reported the measure as amended by unanimous vote
(H.Rept. 109-88). The House passed H.R. 2046 as amended on May 23, 2005. This
bill is awaiting Senate action. Given below is a brief summary of major provisions
of this bill.
! Limitation on Premium Increases for Reinstated Health Insurance
of Servicemembers Released from Active Military Service. This
provision would require health insurance companies to allow
servicemembers leaving the armed forces to rejoin their previous
civilian health plans at the same rate they were previously paying.
The Servicemembers Civil Relief Act (PL 108-189) ensures that
returning reserve members can reinstate their old policies, but does
not address premium increases to protect servicemembers against
premium increases when they reinstate their health insurance as
civilians. However, H.R. 2046 would permit health insurance
companies to increase a servicemember’s premium if such a general
premium increase was implemented for persons similarly covered
during the period between the termination and the reinstatement.
Department of Veterans Affairs Information Technology
Management Improvement Act of 2005 (H.R. 4061). This bill was introduced
on October 17, 2005, and was reported out of the House Veterans Affairs Committee
on October 27, 2005 (H.Rept. 109-256). The bill was passed by the House on
November 2, 2005. This bill awaiting Senate action. Given below is a brief
summary of major provisions of this bill.
! Management of Information Technology in Department of Veterans
Affairs. This provision would improve the management of
information technology (IT) within VA by giving the Chief
Information Officer (CIO) authority over resources, budget, and
personnel related to the support function of information technology
for the Department. At present, VA IT resources are operated and
managed within a decentralized management structure. While the
CIO is charged with overall responsibility for the successful
management of all VA IT resources, the CIO has no direct
management control or organizational authority over any of these
resources. As stated in H.Rept. 109-256, the Committee believes
83 For detailed information on FY2006 appropriations for veterans health care programs, see
CRS Report RL32975, Veterans Medical Care: FY2006 Appropriations, by Sidath Viranga
Panangala.

---

CRS-35
that the failure of several major IT projects at VA are related to this
decentralized management structure.
Senate-Passed Legislation
Vet Center Enhancement Act of 2005 (S. 716). This bill was introduced
on April 6, 2005, and was reported by the Senate Veterans Affairs Committee
without an amendment on September 15, 2005 (S.Rept. 109-180). The Senate passed
the measure on December 22 (legislative day of December 21), 2005. S. 716 is
awaiting House action. Given below is a brief summary of major provisions of this
bill.
! Expansion of Outreach Activities of Vet Centers. This provision
would authorize 50 additional veterans of OIF and OEF to perform
outreach efforts for Vet Centers. Under the Senate-passed bill, these
veteran-employees may be assigned to any Vet Center deemed
appropriate by the Secretary of Veterans Affairs. Furthermore,
under this provision outreach coordinators would not be subject to
VA’s stipulation that these positions be limited to only three years
of hiring authority. It should be noted here that shortly after the
introduction of S. 716, VA announced that it has hired 50 additional
outreach workers for Vet Centers. However, the Senate Veterans
Affairs Committee believed that as the number of returning OIF and
OEF veterans continues to grow, the number of outreach workers
needed must be increased to provide services to veterans.
! Clarification and Enhancement of Bereavement Counseling. This
provision would provide express authority to Vet Centers to provide
bereavement counseling to all immediate family members. The
provision would also ensure the furnishing of bereavement
counseling services to parents by defining them as members of the
immediate family when a servicemember dies in active duty. In
August of 2003, the Secretary of Veterans Affairs enabled Vet
Centers to provide bereavement counseling services to immediate
family members of servicemembers who died while on active duty,
as well as federally activated Reserve and National Guard personnel
on active duty. However, the Committee believed that the current
law is unclear on whether or not a bereaved parent can receive such
services. Therefore, this provision would give VA the authority to
to provide bereavement counseling to all immediate family
members, including parents.
! Funding for the Vet Center Program. This provision would
authorize $180 million for VA in FY2006 for the purpose of
increased funding for Vet Centers.
Veterans’ Health Care Act of 2005 (S. 1182). This bill was introduced
on June 9, 2005. On September 15, 2005, the Senate Veterans Affairs Committee
reported the measure, as amended, to incorporate provisions derived from the
Veterans Mental Health Care Capacity Enhancement Act of 2005 (S. 1177);

---

CRS-36
Sheltering All Veterans Everywhere Act of 2005 (S. 1180); an act to require the
Secretary of Veterans Affairs to publish a strategic plan for long-term care (S. 1189);
Blinded Veterans Continuum of Care Act of 2005 (S. 1190); as well as an
amendment offered by Committee Ranking Member Daniel K. Akaka and an
amendment from Committee Ranking Member Daniel K. Akaka, as amended by
Committee Chairman Larry E. Craig (S. Rept.109-139). The Senate passed the
measure on December 22 (legislative day of December 21), 2005. S. 1182 is
awaiting House action. Given below is a brief summary of major provisions of this
bill.
! Care for Newborn Children of Women Receiving Maternity Care.
This provision would authorize VA to provide up to 14 days of care
for newborn children of female veterans who are receiving maternity
care furnished by VA. Under current law, VA is only authorized to
provide medical care and treatment to veterans. Therefore, VA
provides maternity, prenatal, and postnatal care for female veterans.
However, VA is not authorized to provide, or pay for, any care for
the newborn child of a female veteran.
! Enhancement of Payer Provisions for Health Care Furnished to
Certain Children of Vietnam Veterans. This would permit private-
sector providers of care to certain disabled children of Vietnam
veterans to bill private insurers for costs of care not paid by VA.
Under current law, VA provides, or pays for, care for certain
children of Vietnam veterans. In general, the payment provided by
VA is considered payment in full for all services provided to the
patient. However, in some circumstances a care provider may seek
reimbursement for certain services not otherwise covered by VA. S.
1182 would designate VA as the primary payer for care or services
furnished to certain children of Vietnam veterans, and permit a
provider who furnishes care to children to seek payment for the
difference between the amount billed and the amount paid by the VA
from a third-party payer if the beneficiary has health insurance that
would otherwise be responsible for the payment. Furthermore, this
bill would prohibit the health care provider from imposing any
additional charges on the beneficiary who received the care, or on
the beneficiary’s family, for any service that VA has paid for.
! Improvements to Homeless Veterans Service Providers Programs.
This provision would permanently authorize the Homeless Grant and
Per Diem Program and would increase the amount of money
authorized for these efforts to $130 million in FY2006 and each
fiscal year thereafter. The grantee assistance program would be
authorized through 2011 with an authorized funding level of $1
million for FY2006 and each fiscal year thereafter.
! Additional Mental Health Providers. This would add the
professions of “Marriage and Family Therapist” and “Licensed
Mental Health Counselor” to the list of clinical care providers VA

---

CRS-37
is authorized to hire. Under current law, VA is not permitted to
employ any professional not mentioned in statute.
! Repeal of Cost Comparison Studies Prohibition. This provision
would allow VA to compare its performance with the experience of
those conducting a similar business in the private sector. Under
current law, VA is prohibited from using any appropriated funds to
carry out studies comparing the costs of services provided by VHA
with the same services provided under contract through a private-
sector company.
! Improvement and Expansion of Mental Health Services. This
provision would require VA to enhance and improve mental health
services for veterans. Specifically, it would require VA to 1) expand
the number of clinical treatment teams dedicated to the treatment of
PTSD; 2) expand treatment and diagnosis services for substance
abuse; 3) expand telehealth initiatives dedicated to mental health
care in communities located great distances from current VA
facilities; 4) improve programs that provide education in mental
health treatment to primary care clinicians; and 5) expand the
number of community based outpatient clinics (CBOC) capable of
providing treatment for mental illness. Furthermore, this provision
would authorize $95 million in FY2006 and FY2007 to carry out
these activities. It establishes a joint VA — DOD workgroup that
will consist of seven experts in the fields of mental health and
readjustment counseling from VA and DOD. The workgroup is
tasked with looking at ways to combat stigmas associated with
mental health, to better educate families of servicemembers on how
to deal with such issues, and is required to report its findings to
Congress.
! Data Sharing Improvements. This provision would permit DOD to
share certain medical records of servicemembers with VA, and
ensure that DOD would not violate the Health Insurance Portability
and Accountability Act (HIPAA) of 1996 (P.L. 104-191) by
providing such information. As stated in S.Rept. 109-177, due to
requirements under HIPAA, VA must wait until the veteran actually
enrolls for care at a VA facility before requesting that DOD send the
veteran’s medical records from active duty service. This delay
hinders the seamless transition from active duty to veterans status.
! Expansion of National Guard Outreach Program. This provision
would require VA to expand the total number of personnel employed
by the Department as part of the Readjustment Counseling Service’s
Global War on Terrorism (GWOT) Outreach Program. It also
requires VA to ensure that all appropriate health, education, and
benefits information is available to returning members of the
National Guard.

---

CRS-38
! Expansion of Telehealth Services. This provision would require VA
to expand the number of Vet Centers capable of providing health
services and counseling through telehealth linkages. According to
S.Rept. 109-177, the Committee believes that it will allow VA to
reach more veterans in rural areas and provide more services in a
setting closer to veterans’ homes.
! Mental Health Data Sources Report. This provision would require
VA to submit a report to the Senate and House Committees on
Veterans’ Affairs describing the mental health data maintained by
VA. The report must include a comprehensive list of the sources of
all such data, including the geographic locations of VA facilities
maintaining such data; an assessment of the limitations or
advantages of maintaining the current data configurations and
locations; and any recommendations for improving the collection,
use, and location of mental health data maintained by VA.
! Strategic Plan for Long-term Care. This provision would require
VA to publish a strategic plan for long-term care. The plan must
include policies and strategies for the delivery of care in many
different settings such as domiciliaries, residential treatment
facilities, and nursing homes. It must also include policies to
maximize the use of state veterans nursing homes, locate domiciliary
units as close to patient populations as feasible, and identify
freestanding nursing homes as an acceptable model for care. The
plan must also include data on the care of catastrophically disabled
veterans, and the geographic distribution of catastrophically
disabled veterans. Furthermore, the plan must address the full
spectrum of noninstitutional long-term care options, including
respite care, home-based primary care, geriatric evaluation, adult day
health care, skilled home health care, and community residential
care. The strategic plan must provide an analysis on cost and quality
among all the different levels of care, detailed information about
geographic distribution of services and gaps in care, and specific
plans for working with Medicare, Medicaid, and private insurance
companies to expand care.
! Blind Rehabilitation Outpatient Specialists. This provision directs
VA to employ 35 new Blind Rehabilitation Outpatient Specialists at
VA facilities over the next three years.
! Health Care and Services for Veterans Affected by Hurricane
Katrina. This provision would authorize VA to treat any veteran
from one of the affected states in the Gulf Coast in any VA facility,
regardless of whether the veteran is enrolled in the VA health care
system or eligible to enroll. This authority also waives any
applicable copayments or fees. This authority would expire on
January 31, 2006.

---

CRS-39
! Reimbursement for Certain Veterans’ Outstanding Emergency
Treatment Expenses. This provision would reimburse certain
veterans for expenses resulting from emergency treatment furnished
to the veteran in a non-VA facility for which the veteran remains
personally liable. Under current law, VA is authorized to pay for
emergency care services provided to veterans in non-VA facilities if
the veteran seeking the services is an enrolled patient and has seen
a VA health care provider in the past two years. However, a veteran
who obtains emergency care in a non-VA facility for a
nonservice-connected condition is not eligible for VA
reimbursement for the related expenses if the veteran has any
insurance or other coverage for the cost of the care, in whole or in
part. This provision would amend the current law and authorize VA
to reimburse veterans who receive emergency treatment from a
non-VA medical facility for costs that the veteran remains personally
liable for if the veteran is enrolled in VA’s health care system,
received medical care from VA during the 24-month period
preceding emergency treatment, has health insurance that partially
reimburses the cost of emergency treatment, is financially liable for
the cost of treatment that is not reimbursed by his or her health
insurance, and is not eligible for reimbursement under current law.

---

CRS-40
Appendix 1. Map of All 21 Veterans’ Integrated
Services Networks
1
20
2
23
12
19
11
21
4
3
10
5
15
9
22
6
18
16
7
17
21
8
8
21
20
Veteran’s Health Administration – Veterans Integrated Service Network (VISNs)
1
New England Healthcare System
7
The Atlanta Network
2
VA Healthcare Network Upstate NY
8
VA Sunshine Healthcare Network
3
VA NY/NJ Veterans Healthcare Network
9
Mid South Veterans Healthcare Network
4
Stars & Stripes Healthcare Network
10
VA Healthcare System of Ohio
5
Capitol Health Care Network
11
Veterans Integrated Service Network
6
The Mid-Atlantic Network
12
The Great Lakes Health Care System
15
VA Heartland Network
21
Sierra Pacific Network
16
South Central Healthcare Network
22
Desert Pacific Healthcare Network
17
VA Heart of Texas Health Care Network
23
Minneapolis & Lincoln Offices
18
VA Southwest Health Care Network
19
Rocky Mountain Network
In January 2002, VISNs 13 & 14
20
Northwest Network
were integrated as VISN 23
Source: Information provided by the Department of Veteran Affairs. Map Resources.
Adapted by CRS. (K.Yancey 1/31/06).

---

CRS-41
Appendix 2. Priority Groups and Their Eligibility
Criteria
Priority Group 1
Veterans with service-connected disabilities rated 50% or more disabling
Priority Group 2
Veterans with service-connected disabilities rated 30% or 40% disabling
Priority Group 3
Veterans who are former POWs
Veterans awarded the Purple Heart
Veterans whose discharge was for a disability that was incurred or aggravated in the line of duty
Veterans with service-connected disabilities rated 10% or 20% disabling
Veterans awarded special eligibility classification under Title 38, U.S.C., Section 1151, “benefits for
individuals disabled by treatment or vocational rehabilitation”
Priority Group 4
Veterans who are receiving aid and attendance or housebound benefits
Veterans who have been determined by VA to be catastrophically disabled
Priority Group 5
Nonservice-connected veterans and noncompensable service-connected veterans rated 0% disabled whose
annual income and net worth are below the established VA means test thresholds
Veterans receiving VA pension benefits
Veterans eligible for Medicaid benefits
Priority Group 6
Compensable 0% service-connected veterans
World War I veterans
Mexican Border War veterans
Veterans solely seeking care for disorders associated with
— exposure to herbicides while serving in Vietnam; or
— ionizing radiation during atmospheric testing or during the occupation of Hiroshima and Nagasaki; or
— for disorders associated with service in the Gulf War; or
— for any illness associated with service in combat in a war after the Gulf War or during a period of hostility
after November 11, 1998.
Priority Group 7
Veterans who agree to pay specified copayments with income and/or net worth above the VA means test
threshold and income below the HUD geographic index
Subpriority a: Noncompensable 0% service-connected veterans who were enrolled in the VA Health Care
system on a specified date and who have remained enrolled since that date
Subpriority c: Nonservice-connected veterans who were enrolled in the VA health care system on a specified
date and who have remained enrolled since that date.
Subpriority e: Noncompensable 0% service-connected veterans not included in Subpriority a above
Subpriority g: Nonservice-connected veterans not included in Subpriority c above
Priority Group 8
Veterans who agree to pay specified copayments with income and/or net worth above the VA means test
threshold and the HUD geographic index
Subpriority a: Noncompensable 0% service-connected veterans enrolled as of January 16, 2003 and who
have remained enrolled since that date
Subpriority c: Nonservice-connected veterans enrolled as of January 16, 2003 and who have remained
enrolled since that date
Subpriority e: Noncompensable 0% service-connected veterans applying for enrollment after January 16,
2003
Source: Department of Veterans Affairs.
crsphpgw
Note: Service-connected disability means with respect to disability, that such disability was incurred or
aggravated in the line of duty in the active military, naval or air service

---