over fiscal year 1983. The VA's District Counsels continue to be effective in their litigation efforts which accounted for $14 million in cash collections during fiscal year 1984. The current default rate for the home loan program is 2.41%. Design specifications were completed in December 1984 for the referral of delinquent accounts to Credit Reporting Agencies in compliance with Public Law 96-466. We anticipate implementation in early 1986.

Question 23. Please discuss the effect of your legal actions to collect overdue debts. Answer. The enforced collection effort conducted by the Office of General Counsel under authority of 38 U.S.C. § 3116 has shown dramatic improvement and proven to be a valuable source of revenue since it was begun. Cash collections have risen from $2.1 million in FY 81 to $7.9 million in FY 82, to $11.6 million in FY 83 to $14 million in FY 84. We are achieving collections of $2.68 for every dollar spent on the litigation effort. Of the total cases referred we estimate approximately 25% result in voluntary repayment plans. As of the end of January 1985, a total of 150,700 complaints have been filed in court and judgments have been entered in 76,600 cases. In addition, a significant number of cases are being disposed of as a result of this effort, through recoupment from other benefits, correction of records, waiver, etc. Question 24. There has been talk of a super debt collection effort by one agency of the government. VA has a sizable debt collection program. What do you think of this idea?

Answer. We do not feel that a super debt collection effort controlled by one agency of the government would benefit the VA. The VA's accounts receivables, with the exception of education loan defaults or guaranteed loan/direct loan defaults are unlike most debts, which for the most part, are delinquent credit charges based on either a written or implied contract. The VA's accounts receivable are, for the most part, a result of overpaying VA benefits which are not contracted. In the event of a dispute, the burden of proof falls on the VA. Therefore, an outside agency could not respond to a dispute without referring the debtor back to the VA. This would result in additional costs over and above current VA collection costs. The VA would also be required to keep data current on all debts referred to another agency, resulting in additional costs.

Question 25. The Social Security Administration has been recently criticized for its automatic data processing activity. Without commenting upon that criticism, could you tell us how VA learns from other government agencies in order to always be up to the "state of the art"?

Answer. The VA keep abreast of the latest in state of the art technology through a variety of means. These can be largely grouped as interagency relationships to share and exchange ideas and information, participation and attendance in conferences and seminars, subscriptions to technical publications, training, utilization of automated tools for management and operational activities, and compliance with government directives which require continual review and evaluation of our resources and facilities. Although this grouping is not intended to be all inclusive, it is representative of the many government and private programs and activities the VA is involved with which continually promote our ability to be on top of the latest developments in data processing and telecommunications.

Question 26. What is the one time cost for moving the data processing centers and is "move" money in the fiscal year 1986 budget?

Answer. We estimate that the consolidation costs will be $3.6 million. This $3.6 million is included in the fiscal year 1986 budget.

Question 27. Does Austin and Hines have room for the moves from the data processing centers at Los Angeles and Ft. Snelling?

Answer. Both the Austin and Hines site do have sufficient room to house all of the equipment that would be relocated from the Los Angeles and St. Paul Data Processing Centers.

Question 28. Do you contemplate merging the VA Insurance function from Ft. Snelling, Minnesota, to Philadelphia, Pennsylvania? If so, what are the resultant savings?

Answer. We do not contemplate merging the two Insurance centers at this time. Question 29. What is the cost of VA toll free telephone service across the country. What would be the consequences of its elimination?

Answer: The DVB (Department of Veterans Benefits) telephone service program consists of local, FX (Foreign Exchange), and 800 service lines, Zenith and Direct Distance Dialing services, and call handling equipment with management information systems. The approximate total annual recurring cost for the DVB telephone service program is $3,130,000. This includes costs for lines, services, and equipment, but does not include the cost of staff for answering calls since many employees are not dedicated solely to this task.

Elimination of the DVB telephone service program, particularly 800 service lines, would drastically decrease the equal accessibility for all persons to benefits information and assistance. The cost and burden to the general public, service organizations, congressional offices, and the DVB would increase greatly in trying to provide the same amount of benefits information and assistance service through correspondence or personal interviews. Generally, it takes four to six times longer to process a letter and to conduct a personal interview than to handle a telephone call. Annually, the DVB handles about four times as many telephone calls as personal interviews and correspondence combined. An available study has calculated a unit cost, including labor, per telephone interview and extrapolated unit costs for correspondence and personal interviews as follows:

In summary, the DVB telephone service program provides the most efficient and cost effective means for all persons to have access to information and help about veterans benefits. Such accessibility also frequently helps to reduce accounts receivable because the DVB is notified quickly of changes which affect the amount of benefit payments.

Question 30. What is the status of your pension investigation in Georgia and Florida? What does this portend for the entire nationwide VA pension program? Is there a 1986 budget impact?

Answer. The Inspector General's office began matching programs with States' wage records in 1984. Georgia and Florida were the first two matches.

The Georgia review is essentially complete. The Florida review is still in its early stages. Based on employment verified by the IG's office, claims have been/are being reviewed to redetermine entitlement.

In the review process any necessary retroactive adjustments, usually to reduce or terminate benefits, are made resulting normally in overpayments. Cases involving fraudulent claims are referred to the Inspector General for coordination with the U.S. Attorney for possible prosecution.

The majority of the cases arising from the matches are pension claims. A few compensation claims involving payment for individual unemployability have been reviewed.

The IG expects to continue its matching programs. As matches occur, the Department of Veterans Benefits will review and adjust affected claims. We do not anticipate any budget impact from the matches provided they occur on an arranged schedule which considers the normal regional office workloads.

The projected volumes of cases involved and adjusted nationally indicate that such matches are worthwhile. We are looking at ways to streamline the overall review process to minimize impact on workload.

Question 31. We hear stories of veterans remaining in VA hospitals in excess of 21 days for the purpose of receiving 100% compensation. Is this a problem and if so what is being done about it?

Answer. Only veterans who are hospitalized for longer than 21 days for treatment for service-connected disability can qualify for temporary payment of total (100%) disability compensation benefits. The temporary increase is allowed for only as long as treatment continues for service-connected disability.

While it is possible for a patient to try to manipulate a hospital discharge date to acquire entitlement to the temporarily increased benefits, we view the likelihood of success as extremely remote. Patients do not determine length of hospital stay. The physician's judgment is the deciding factor on need for and length of hospitalization. We have no evidence of doctor and patient collusion to take advantage of the system.

The trend, overall, in length of stay for hospitalization shows a decline from prior periods. Hospitalization for neuro-psychiatric disabilities has, for some specific types of mental disease, shown a slight increase for length of hospitalization.

CONGRESSMAN BOB EDGAR TO VETERANS' ADMINISTRATION

Question 1. Even assuming the enactment of legislation reducing the number of eligible veterans, the total number of veterans seeking health care from the VA is likely to increase. Yet, the budget assumes no increase in the number of patients

treated. What provision is made in other programs to provide the medical care which these veterans will be unable to obtain from the VA?

Answer. We cannot speak for other Federal, state, local or private programs. The 1986 budget complies with the President's "feeze-plus" policy, yet it recognizes the VA's primary mandate to care for service-connected, special category, and poor veterans. The budget is sufficient for these expressed purpose in 1986. The Administration is still considering the aging issue overall and its potential out-year impact in federal medical outlays.

The legislation to be proposed will provide a means for the Agency to assure basic fairness and equity in the administration of VA health care benefits to all veterans who choose to use the VA system to meet their health care needs. This legislation also reinforces the VA's primary mission of providing medical care to service-connected and poor veterans. This is our understanding cf the historical intent of Congress and this legislation simply will reaffirm that mandate.

Question 2. We are very concerned with the requirements stated in the VA's "Caring for the Older Veteran" report. Please identify alternatives being considered for meeting the veteran nursing home care requirements, including the reliance on other than VA programs?

Answer. First it is important to keep in mind that "Caring for the Older Veteran" is a series of options for meeting the health care requirements of the aging veteran population. As the Administrator of the VA has emphasized, the options in the report and the assumptions which underlie them can and must be debated. The issues in the report have major implications for the nation's health care system as a whole. Consequently, the Congress, the Veterans Service Organizations, the principal Health Care Financing programs and provider organizations must be involved together with the VA and other members of the Administration including the White House Health Policy Group in determining an affordable and acceptable way to meet the increasing needs. We expect that the necessary decisions will take a year or so.

Nevertheless, while the larger decisions affecting the entire health care system are being made, the VA has taken the challenge of dealing with the older veterans' needs very seriously and continues to be committed to providing high quality, comprehensive health care to all eligible veterans.

For the older veteran, this has meant incorporating special programs related to medical, psychiatric and rehabilitative care into existing acute care and outpatient programs, as well as expansion of several extended care programs.

To meet the projected increases in long term care patients, particularly those requiring nursing home care, several extended care programs are being expanded this year (FY 1985), and fully operational in 1986.

-Seventeen existing Geriatric Evaluations Units (GEUs) received an additional 2 FTEE per unit. The total number of units is 40.

-Six Hospital Based Home Care (HBHC) programs will be initiated, for a total of 49.

—Five additional Adult Day Health Centers (ADHC) will be in operation by the end of 1985, for a total of 9.

-Eleven new VA Nursing Home Care units are being added, for a total of 116. It is anticipated that the nursing home census will increase by 915 in 1985 to a level of 9975.

---Two more Geriatric Research, Evaluation and Clinical Centers (GRECCs) will reach full activation, for a total of 10.

-Thirteen State Home Care construction and renovation projects will be continuing as well as new ones initiated to support a State Nursing Home Care census of 8,200.

-Community Nursing Home census will be increased by 830 over the 1984 level, for a total of 11,439.

-Staff outpatient visits increased by 100,000 over the 1984 level of 17,035,000 visits.

Also, VA medical centers will continue developing joint planning, training and service delivery initiatives with Area Agencies on Aging, State Offices on Aging, and the broad aging network in the community, thereby enabling the VA and health-related community agencies to coordinate health care services so that they are complementary rather than competitive or unnecessarily duplicative.

A national training conference will be held in May, 1985, to focus on methods and strategies for expanding VA and community joint efforts in the coordination and integration of services for elderly "at-risk" veterans.

Question 3. Why is the estimated per diem for VA nursing home care considerably higher than that for community care?

Answer. Historically the average per diem cost nationwide of operating a VA NHC Unit has been higher than State homes or contracting for CNHC. One of the reasons is that the costs used to compute the average per diems have different bases. The VA nursing home care total cost is the summation of personnel and other costs incurred at those VA medical centers with nursing home care units. These costs have been distributed from organizational cost centers (i.e., medicine, radiology, etc.) to bed sections (i.e., medical, surgical, nursing home, etc.) based on estimates of usage of personnel time and other services rather than on the basis of individual patient charges for services received. The collocation of the VA nursing home with a hospital and the methodology for distributing all medical center costs may inflate the cost of VA nursing home care. Conversely, the community nursing home care cost is the summation of payments for care based upon negotiated rates for basic nursing home care services. Because of this the average per diem cost to the VA is most likely less than the national average per diem cost for all community nursing home facilities.

Another reason for the differences in per diem cost is that the services provided in VA facilities are not the same as those for which the VA contracts with community facilities to provide to a potential veteran placement. VA facilities provide a full range of services, without exclusion, to meet the varying needs of all veterans for nursing home care. Many patients need, and receive, much more intensive patient care services than the typical nursing home care patient. For instance, they require and receive specialized therapies and other services available at a medical center. On the other hand, VA contracts for basic nursing care services from community facilities for a negotiated rate. Community facilities generally will not provide a full range of services, such as occupational and physical therapy or expensive medications, to meet the needs of all veterans for nursing home care at a rate the VA is disposed to pay. Therefore, community nursing homes will not accept all patients that the VA proposes for placement at the contract rate, and usually exclude those requiring more than moderate patient care services. If more than routine services are required by a particular patient, such services are paid for separately or provided directly by the VA. The costs of such services are reflected in the community nursing home care per diem as part of VA support cost.

A third reason for the difference is that VA Nursing Home Care Units have a higher staffing cost than community nursing home care facilities. Cost of nursing services in VA Nursing Home Care Units is greater than the cost of nursing services in community nursing home care facilities due to a greater number of nursing care hours provided per patient per day and a higher proportion of licensed nursing personnel to nursing aides. Also adding to the higher staffing cost in the VA Nursing Home Care Units is the greater utilization of appropriately trained clinical dietitians, dietetic technicians, and food service workers.

Question 4. With 40 States presently maintaining a moratorium on nursing home construction, how comfortable do you feel in relying on the private sector to assist in meeting the demand for nursing home beds?

Answer. At present, there is no definitive answer concerning the extent to which the private sector will be able to assist the VA in meeting the growing veteran demand for nursing home care (NHC). The availability of NHC beds in the next decade or so will depend on many factors that are difficult to assess at this time. Nevertheless, in order to respond to a request from Representative Montgomery, Chairman of the House Veterans Affairs Committee on this issue, the Department of Medicine and Surgery asked the Institute for Health Planning, a consulting group, to examine this question, drawing on the planning data used by each of the States. They concluded that nationally during the decade of the 1990s there will probably not be a nursing home bed surplus and, in fact, that deficits are likely in many areas. They also found that expected hospital bed surpluses may be used to relieve some of the shortages they project.

The degree to which the projected deficits can be avoided will depend on the budgetary and regulatory climate that will exist in each state as well as on many potentially independent Federal, State and private sector decisions.

In its current projections for meeting the NHC needs of an aging veteran population, the VA is assuming that it can at least maintain its current percentage of penetration into the market. This will require at a minimum that the VA remain competitive in terms of the price it can pay for care and that the proprietary sector build sufficient numbers of additional beds. The current moratoriums on nursing home construction are based on currently perceived excesses of community nursing home beds. As these excesses diminish, the VA is hopeful that other sectors will respond by building additional beds. Whether the incentive for the proprietary

sector to respond by building additional beds will exist in the future is dependent on many future economic variables which are difficult to forecast.

Question 5. Last year $34.5 million was appropriated for the State Extended Care grant program and the '86 budget requests $22 million. What are your plans for these monies? Have the increases in appropriations kept pace with applications filed by the States? Assuming the $22 million appropriation level in future years, how many years will it take to fund existing applications?

Answer. The 1985 and requested 1986 appropriations are expected to fund 26 grant requests totalling $67 million. Of the 65 eligible preapplications and applications on hand at the end of December 1984 totalling $151 million, 39 grant requests totalling $84 million will remain unfunded.

The increases in appropriations in the past have not kept pace with the dollar amount and number of applications on hand at the end of the year. From 1979 to 1984 the appropriation increased by 180 percent ($10-$18 million). During the same period, the backlog of applications at the end of the year increased in dollar amount by 318 percent ($38.7-$123.1 million). Assuming the $22 million appropriation level in future years, all the preapplications and applications on hand will be funded by the end of 1991.

Question 6. How will the increase in the number of presently eligible veterans affect the workloads of the VA health care delivery system?

Answer. The greatest increase in the number of eligible veterans will occur as veterans reach age 65. Data show that older veterans have greater health care utilization rates than younger veterans as exhibited by higher inpatient discharge rates and longer lengths of stay. This will to a great extent counterbalance the impact of the declining veteran population. The types of health care services needed by the aging veteran population will necessitate a greater emphasis on geriatric and extended care programs.

Question 7. Last year, the Department of Medicine and Surgery reported that VA medical facilities were turning away 250,000 eligible veterans annually. Have you prepared an update of this survey? Why not?

Answer. The HSR&D Service plans to repeat the survey during April 1985. Question 8. How do you plan to reduce DM&S staff by 1,916 FTEE required by the 1% Management Improvements initiative?

Answer. The 1986 employment level of 192,048 FTEE will continue to support the patients treated level included in the 1985 budget (about 1,280,000 patients treated). The net result of a productivity increase is that while average employment decreases, it is not accompanied with a corresponding workload decrease.

1. For the 1,916 FTEE to improve productivity, 32% of this reduction (613) will be assessed to all facilities based on the proportion of their indirect FTEE to all indirect FTEE. Indirect costs and costs not included in the Resource Allocation Models (for acute, ambulatory, and long term care) used for FY 86, average 32% systemwide.

2. The remaining 1,303 will be assessed to medical centers based on their relative efficiency as measured by methods derived from the Resources Allocation Models (RAMs). Under this method only facilities whose efficiency per direct care FTEE is below the system norms developed from the RAMS will be reduced on a proportionate basis. This will be applied to the 68% of facility costs that are direct medical care as measured by the RAMS.

3. All facilities will have some FTEE reduction calculated for their interest costs and costs not measured by the RAMs, and some facilities will have FTEE reductions assigned to the direct services measured by the RAMs. However, the net reduction or gain in FTEE will not be assigned to any specific category and the facility directors will make the decision as to how the FTEE change should be spread.

4. Specific facility reductions are not available at this time, nor are the specific reductions by known occupation.

5. In line with the Administrator's management initiatives, we are planning to conduct Most Efficient Organization (MEO) reviews and expect that productivity improvements will be identified and pursued.

Question 9. Many of us have read the figures in the report entitiled "Caring for the Older Veteran" on the projected demand for health care by aging veteran. What concrete initiatives are in this budget to respond to aging veterans' needs?

Answer. Although the 1986 Budget request provides for modest program increases, the medical care appropriation includes several initiatives which provide the expanded health care to the aging veteran. We believe that the FY 1986 initiatives in combination with those covered by the FY 1985 current estimates, and the considerable progress made during FY 1984 amply demonstrates that the VA is con