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106th Congress                                                   Report
  1st Session           HOUSE OF REPRESENTATIVES                106-237

======================================================================



 
                  VETERANS' MILLENNIUM HEALTH CARE ACT

                                _______


 July 16, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Stump, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2116]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 2116) to amend title 38, United States Code, to 
establish a program of extended care services for veterans and 
to make other improvements in health care programs of the 
Department of Veterans Affairs, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill as amended do pass.

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS; REFERENCES TO TITLE 38, 
                    UNITED STATES CODE.

  (a) Short Title.--This Act may be cited as the ``Veterans' Millennium 
Health Care Act''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents; references to title 38, United 
States Code.

                        TITLE I--ACCESS TO CARE

Sec. 101. Extended care services.
Sec. 102. Reimbursement for emergency treatment.
Sec. 103. Eligibility for care of combat-injured veterans.
Sec. 104. Access to care for military retirees.
Sec. 105. Benefits for persons disabled by participation in compensated 
work therapy program.
Sec. 106. Pilot program of medical care for certain dependents of 
enrolled veterans.
Sec. 107. Enhanced services program at designated medical centers.
Sec. 108. Counseling and treatment for veterans who have experienced 
sexual trauma.

                    TITLE II--PROGRAM ADMINISTRATION

Sec. 201. Medical care collections.
Sec. 202. Health Services Improvement Fund.
Sec. 203. Veterans Tobacco Trust Fund.
Sec. 204. Authority to accept funds for education and training.
Sec. 205. Extension and revision of certain authorities.
Sec. 206. State Home grant program.
Sec. 207. Expansion of enhanced-use lease authority.
Sec. 208. Ineligibility for employment by Veterans Health 
Administration of health care professionals who have lost license to 
practice in one jurisdiction while still licensed in another 
jurisdiction.

                        TITLE III--MISCELLANEOUS

Sec. 301. Review of proposed changes to operation of medical 
facilities.
Sec. 302. Patient services at Department facilities.
Sec. 303. Report on assisted living services.
Sec. 304. Chiropractic treatment.
Sec. 305. Designation of hospital bed replacement building at Ioannis 
A. Lougaris Department of Veterans Affairs Medical Center, Reno, 
Nevada.

             TITLE IV--CONSTRUCTION AND FACILITIES MATTERS

Sec. 401. Authorization of major medical facility projects.
Sec. 402. Authorization of major medical facility leases.
Sec. 403. Authorization of appropriations.
  (c) References to Title 38, United States Code.--Except as otherwise 
expressly provided, whenever in this Act an amendment or repeal is 
expressed in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to a section or 
other provision of title 38, United States Code.

                        TITLE I--ACCESS TO CARE

SEC. 101. EXTENDED CARE SERVICES.

  (a) Requirement To Provide Extended Care Services.--(1) Chapter 17 is 
amended by inserting after section 1710 the following new section:

``Sec. 1710A. Extended care services

  ``(a) The Secretary (subject to section 1710(a)(4) of this title and 
subsection (c) of this section) shall operate and maintain a program to 
provide extended care services to eligible veterans in accordance with 
this section. Such services shall include the following:
          ``(1) Geriatric evaluation.
          ``(2) Nursing home care (A) in facilities operated by the 
        Secretary, and (B) in community-based facilities through 
        contracts under section 1720 of this title.
          ``(3) Domiciliary services under section 1710(b) of this 
        title.
          ``(4) Adult day health care under section 1720(f) of this 
        title.
          ``(5) Such other noninstitutional alternatives to nursing 
        home care, including those described in section 1720C of this 
        title, as the Secretary considers reasonable and appropriate.
          ``(6) Respite care under section 1720B of this title.
  ``(b)(1) In carrying out subsection (a), the Secretary shall provide 
extended care services which the Secretary determines are needed (A) to 
any veteran in need of such care for a service-connected disability, 
and (B) to any veteran who is in need of such care and who has a 
service-connected disability rated at 50 percent or more.
  ``(2) The Secretary, in making placements for nursing home care in 
Department facilities, shall give highest priority to veterans (A) who 
are in need of such care for a service-connected disability, or (B) who 
have a service-connected disability rated at 50 percent or more. The 
Secretary shall ensure that a veteran described in this subsection who 
continues to need nursing home care shall not after placement in a 
Department nursing home be transferred from the facility without the 
consent of the veteran, or, in the event the veteran cannot provide 
informed consent, the representative of the veteran.
  ``(c)(1) The Secretary, in carrying out subsection (a), shall 
prescribe regulations governing the priorities for the provision of 
nursing home care in Department facilities so as to ensure that 
priority for such care is given (A) for patient rehabilitation, (B) for 
clinically complex patient populations, and (C) for patients for whom 
there are not other suitable placement options.
  ``(2) The Secretary may not furnish extended care services for a non-
service-connected disability other than in the case of a veteran who 
has a service-connected disability rated at 50 percent or more unless 
the veteran agrees to pay to the United States a copayment for extended 
care services of more than 21 days in any year.
  ``(d)(1) A veteran who is furnished extended care services under this 
chapter and who is required under subsection (c)(2) to pay an amount to 
the United States in order to be furnished such services shall be 
liable to the United States for that amount.
  ``(2) In implementing subsection (c)(2), the Secretary shall develop 
a methodology for establishing the amount of the copayment for which a 
veteran described in subsection (c) is liable. That methodology shall 
provide for--
          ``(A) establishing a maximum monthly copayment (based on all 
        income and assets of the veteran and the spouse of such 
        veteran);
          ``(B) protecting the spouse of a veteran from financial 
        hardship by not counting all of the income and assets of the 
        veteran and spouse (in the case of a spouse who resides in the 
        community) as available for determining the copayment 
        obligation; and
          ``(C) allowing the veteran to retain a monthly personal 
        allowance.
  ``(e)(1) There is established in the Treasury of the United States a 
revolving fund known as the Department of Veterans Affairs Extended 
Care Fund (hereinafter in this section referred to as the ``fund''). 
Amounts in the fund shall be available, without fiscal year limitation 
and without further appropriation, exclusively for the purpose of 
providing extended care services under subsection (a).
  ``(2) All amounts received by the Department under this section shall 
be deposited in or credited to the fund.''.
  (2) The table of sections at the beginning of such chapter is amended 
by inserting after the item relating to section 1710 the following new 
item:

``1710A. Requirement to provide extended care.''.

  (b) Requirement To Increase Extended Care Services.--(1) Not later 
than January 1, 2000, the Secretary of Veterans Affairs shall develop 
and begin to implement a plan for carrying out the recommendation of 
the Federal Advisory Committee on the Future of Long-Term Care to 
increase, above the level of extended care services which were provided 
as of September 30, 1998--
          (A) the options and services for home and community-based 
        care for eligible veterans; and
          (B) the percentage of the Department of Veterans Affairs 
        medical care budget dedicated to such care.
  (2) The Secretary shall ensure that the staffing and level of 
extended care services provided by the Secretary nationally in 
facilities operated by the Secretary during any fiscal year is not less 
than the level of such services provided nationally in facilities 
operated by the Secretary during fiscal year 1998.
  (c) Adult Day Health Care.--Section 1720(f)(1)(A) is amended to read 
as follows:
  ``(f)(1)(A) The Secretary may furnish adult day health care services 
to a veteran enrolled under section 1705(a) of this title who would 
otherwise require nursing home care.''
  (d) Respite Care Program.--Section 1720B is amended--
          (1) in subsection (a), by striking ``eligible'' and inserting 
        ``enrolled'';
          (2) in subsection (b)--
                  (A) by striking ``the term `respite care' means 
                hospital or nursing home care'' and inserting ``the 
                term `respite care services' means care and services'';
                  (B) by striking ``is'' at the beginning of each of 
                paragraphs (1), (2), and (3) and inserting ``are''; and
                  (C) by striking ``in a Department facility'' in 
                paragraph (2); and
          (3) by adding at the end the following new subsection:
  ``(c) In furnishing respite care services, the Secretary may enter 
into contract arrangements.''.
  (e) Conforming Amendments.--Section 1710 is amended--
          (1) in subsection (a)(1), by striking ``may furnish nursing 
        home care,''; and
          (2) in subsection (a)(4), by inserting ``, and the 
        requirement in section 1710A of this title that the Secretary 
        provide a program of extended care services,'' after ``medical 
        services''.
  (f) State Homes.--Section 1741(a)(2) is amended by striking ``adult 
day health care in a State home'' and inserting ``extended care 
services described in any of paragraphs (4) through (6) of section 
1710A(a) of this title under a program administered by a State home''.
  (g) Effective Date.--(1) Except as provided in paragraph (2), the 
amendments made by this section shall take effect on the date of the 
enactment of this Act.
  (2) Subsection (c)(2) of section 1710A(a) of title 38, United States 
Code (as added by subsection (a)), shall take effect on the effective 
date of regulations prescribed by the Secretary of Veterans Affairs 
under subsections (c)(2) and (d) of such section. The Secretary shall 
publish the effective date of such regulations in the Federal Register.
  (3) The provisions of section 1710(f) of title 38, United States 
Code, shall not apply to any day of nursing home care on or after the 
effective date of regulations under paragraph (2).

SEC. 102. REIMBURSEMENT FOR EMERGENCY TREATMENT.

  (a) Authority To Provide Reimbursement.--Chapter 17 is amended by 
inserting after section 1724 the following new section:

``Sec. 1725. Reimbursement for emergency treatment

  ``(a) General Authority.--(1) Subject to subsections (c) and (d), the 
Secretary may reimburse a veteran described in subsection (b) for the 
reasonable value of emergency treatment furnished the veteran in a non-
Department facility.
  ``(2) In any case in which reimbursement is authorized under 
subsection (a)(1), the Secretary, in the Secretary's discretion, may, 
in lieu of reimbursing the veteran, make payment of the reasonable 
value of the furnished emergency treatment directly--
          ``(A) to a hospital or other health care provider that 
        furnished the treatment; or
          ``(B) to the person or organization that paid for such 
        treatment on behalf of such veteran.
  ``(b) Eligibility.--(1) A veteran referred to in subsection (a)(1) is 
an individual who is an active Department health-care participant who 
is personally liable for emergency treatment furnished the veteran in a 
non-Department facility.
  ``(2) A veteran is an active Department health-care participant if 
the veteran--
          ``(A) is described in any of paragraphs (1) through (6) of 
        section 1705(a) of this title;
          ``(B) is enrolled in the health care system established under 
        such section; and
          ``(C) received care under this chapter within the 12-month 
        period preceding the furnishing of such emergency treatment.
  ``(3) A veteran is personally liable for emergency treatment 
furnished the veteran in a non-Department facility if the veteran--
          ``(A) is financially liable to the provider of emergency 
        treatment for that treatment;
          ``(B) has no entitlement to care or services under a health-
        plan contract;
          ``(C) has no other contractual or legal recourse against a 
        third party that would, in whole or in part, extinguish such 
        liability to the provider; and
          ``(D) is not eligible for reimbursement for medical care or 
        services under section 1728 of this title.
  ``(c) Limitations on Reimbursement.--(1) The Secretary, in accordance 
with regulations prescribed by the Secretary, shall--
          ``(A) establish the maximum amount payable under subsection 
        (a);
          ``(B) delineate the circumstances under which such payments 
        may be made, to include such requirements on requesting 
        reimbursement as the Secretary shall establish; and
          ``(C) provide that in no event may a payment under that 
        subsection include any amount for which the veteran is not 
        personally liable.
  ``(2) Subject to paragraph (1), the Secretary may provide 
reimbursement under this section only after the veteran or the provider 
of emergency treatment has exhausted without success all claims and 
remedies reasonably available to the veteran or provider against a 
third party for payment of such treatment.
  ``(3) Payment by the Secretary under this section, on behalf of a 
veteran described in subsection (b), to a provider of emergency 
treatment, shall, unless rejected and refunded by the provider within 
30 days of receipt, extinguish any liability on the part of the veteran 
for that treatment. Neither the absence of a contract or agreement 
between the Secretary and the provider nor any provision of a contract, 
agreement, or assignment to the contrary shall operate to modify, 
limit, or negate the requirement in the preceding sentence.
  ``(d) Independent Right of Recovery.--(1) In accordance with 
regulations prescribed by the Secretary, the United States shall have 
the independent right to recover any amount paid under this section 
when, and to the extent that, a third party subsequently makes a 
payment for the same emergency treatment.
  ``(2) Any amount paid by the United States to the veteran (or the 
veteran's personal representative, successor, dependents, or survivors) 
or to any other person or organization paying for such treatment shall 
constitute a lien in favor of the United States against any recovery 
the payee subsequently receives from a third party for the same 
treatment.
  ``(3) Any amount paid by the United States to the provider that 
furnished the veteran's emergency treatment shall constitute a lien 
against any subsequent amount the provider receives from a third party 
for the same emergency treatment for which the United States made 
payment.
  ``(4) The veteran (or the veteran's personal representative, 
successor, dependents, or survivors) shall ensure that the Secretary is 
promptly notified of any payment received from any third party for 
emergency treatment furnished to the veteran. The veteran (or the 
veteran's personal representative, successor, dependents, or survivors) 
shall immediately forward all documents relating to such payment, 
cooperate with the Secretary in the investigation of such payment, and 
assist the Secretary in enforcing the United States right to recover 
any payment made under subsection (c)(3).
  ``(e) Waiver.--The Secretary, in the Secretary's discretion, may 
waive recovery of a payment made to a veteran under this section that 
is otherwise required by subsection (d)(1) when the Secretary 
determines that such waiver would be in the best interest of the United 
States, as defined by regulations prescribed by the Secretary.
  ``(f) Definitions.--For purposes of this section:
          ``(1) The term `emergency treatment' means medical care or 
        services furnished, in the judgment of the Secretary--
                  ``(A) when Department or other Federal facilities are 
                not feasibly available and an attempt to use them 
                beforehand would not be reasonable;
                  ``(B) when such care or services are rendered in a 
                medical emergency of such nature that delay would be 
                hazardous to life or health; and
                  ``(C) until such time as the veteran can be 
                transferred safely to a Department facility or other 
                Federal facility.
          ``(2) The term `health-plan contract' includes any of the 
        following:
                  ``(A) An insurance policy or contract, medical or 
                hospital service agreement, membership or subscription 
                contract, or similar arrangement under which health 
                services for individuals are provided or the expenses 
                of such services are paid.
                  ``(B) An insurance program described in section 1811 
                of the Social Security Act (42 U.S.C. 1395c) or 
                established by section 1831 of such Act (42 U.S.C. 
                1395j).
                  ``(C) A State plan for medical assistance approved 
                under title XIX of such Act (42 U.S.C. 1396 et seq.).
                  ``(D) A workers' compensation law or plan described 
                in section 1729(a)(2)(A) of this title.
                  ``(E) A law of a State or political subdivision 
                described in section 1729(a)(2)(B) of this title.
          ``(3) The term `third party' means any of the following:
                  ``(A) A Federal entity.
                  ``(B) A State or political subdivision of a State.
                  ``(C) An employer or an employer's insurance carrier.
                  ``(D) An automobile accident reparations insurance 
                carrier.
                  ``(E) A person or entity obligated to provide, or to 
                pay the expenses of, health services under a health-
                plan contract.''.
  (b) Conforming Amendments.--(1) Section 1729A(b) is amended--
          (A) by redesignating paragraph (6) as paragraph (7); and
          (B) by inserting after paragraph (5) the following new 
        paragraph:
          ``(6) Section 1725 of this title.''.
  (2) The table of sections at the beginning of chapter 17 is amended 
by inserting after the item relating to section 1724 the following new 
item:

``1725. Reimbursement for emergency treatment.''.

  (c) Effective Date.--The amendments made by this section shall take 
effect 180 days after the date of the enactment of this Act.
  (d) Implementation Reports.--The Secretary of Veterans Affairs shall 
include with the budget justification materials submitted to Congress 
in support of the Department of Veterans Affairs budget for fiscal year 
2002 and for fiscal year 2003 a report on the implementation of section 
1725 of title 38, United States Code, as added by subsection (a). Each 
such report shall include information on the experience of the 
Department under that section and the costs incurred, and expected to 
be incurred, under that section.

SEC. 103. ELIGIBILITY FOR CARE OF COMBAT-INJURED VETERANS.

  (a) Priority of Care.--Chapter 17 is amended --
          (1) in section 1710(a)(2)(D), by inserting ``or who was 
        injured in combat'' after ``former prisoner of war''; and
          (2) in section 1705(a)(3), by inserting ``or who were injured 
        in combat'' after ``former prisoners of war''.
  (b) Definition of Injured in Combat.--Section 1701 is amended by 
adding at the end the following new paragraph:
          ``(10) The term `injured in combat' means wounded in action 
        as the result of an act of an enemy of the United States or 
        otherwise wounded in action by weapon fire while directly 
        engaged in armed conflict (other than as the result of willful 
        misconduct by the wounded individual).''.

SEC. 104. ACCESS TO CARE FOR MILITARY RETIREES.

  (a) Improved Access.--(1) Section 1710(a)(2) is amended--
          (A) by striking ``or'' at the end of subparagraph (F);
          (B) by striking the period at the end of subparagraph (G) and 
        inserting ``; or''; and
          (C) by adding at the end the following new subparagraph:
          ``(H) who has retired from active military, naval, or air 
        service in the Army, Navy, Air Force, or Marine Corps, is 
        eligible for care under the TRICARE program established by the 
        Secretary of Defense, and is not otherwise described in 
        paragraph (1) or in this paragraph.''.
  (2) Section 1705(a) is amended--
          (A) by redesignating paragraph (7) as paragraph (8);
          (B) by inserting after paragraph (6) the following new 
        paragraph (7):
          ``(7) Veterans who are eligible for hospital care, medical 
        services, and nursing home care under section 1710(a)(2)(H) of 
        this title.''; and
          (C) in paragraph (6), by inserting ``(other than subparagraph 
        (H) of such section)'' before the period at the end.
  (b) Interagency Agreement.--(1) The Secretary of Defense shall enter 
into an agreement (characterized as a memorandum of understanding or 
otherwise) with the Secretary of Veterans Affairs with respect to the 
provision of medical care by the Secretary of Veterans Affairs to 
eligible military retirees in accordance with the amendments made by 
subsection (a). That agreement shall include provisions for 
reimbursement of the Secretary of Veterans Affairs by the Secretary of 
Defense for medical care provided by the Secretary of Veterans Affairs 
to an eligible military retiree and may include such other provisions 
with respect to the terms and conditions of such care as may be agreed 
upon by the two Secretaries.
  (2) Reimbursement under that agreement shall be in accordance with 
rates agreed upon by the Secretary of Defense and the Secretary of 
Veterans Affairs. Such reimbursement may be made by the Secretary of 
Defense or by the appropriate TRICARE Managed Care Support contractor, 
as determined in accordance with that agreement.
  (3) In entering into the agreement under paragraph (1), particularly 
with respect to determination of the rates of reimbursement under 
paragraph (2), the Secretary of Defense shall consult with TRICARE 
Managed Care Support contractors.
  (4) The Secretary of Veterans Affairs may not enter into an agreement 
under paragraph (1) for the provision of care in accordance with the 
amendments made by subsection (a) with respect to any geographic 
service area, or a part of any such area, of the Veterans Health 
Administration unless--
          (A) in the judgment of that Secretary, the Department of 
        Veterans Affairs will recover the costs of providing such care 
        to eligible military retirees; and
          (B) that Secretary has certified and documented, with respect 
        to any geographic service area in which the Secretary proposes 
        to provide care in accordance with the amendments made by 
        subsection (a), that such geographic service area, or 
        designated part of any such area, has adequate capacity 
        (consistent with the requirements in section 1705(b)(1) of 
        title 38, United States Code, that care to enrollees shall be 
        timely and acceptable in quality) to provide such care.
  (5) The agreement under paragraph (1) shall be entered into by the 
Secretaries not later than nine months after the date of the enactment 
of this Act. If the Secretaries are unable to reach agreement, they 
shall jointly report, by that date or within 30 days thereafter, to the 
Committees on Armed Services and the Committees on Veterans' Affairs of 
the Senate and House of Representatives on the reasons for their 
inability to reach an agreement and their mutually agreed plan for 
removing any impediments to final agreement.
  (c) Depositing of Reimbursements.--Amounts received by the Secretary 
of Veterans Affairs under the agreement under subsection (b) shall be 
deposited in the Department of Veterans Affairs Health Services 
Improvement Fund established under section 1729B of title 38, United 
States Code, as added by section 202.
  (d) Phased Implementation.--(1) The Secretary of Defense shall 
include in each TRICARE contract entered into after the date of the 
enactment of this Act provisions to implement the agreement under 
subsection (b).
  (2) The amendments made by subsection (a) and the provisions of the 
agreement under subsection (b)(2) shall apply to the furnishing of 
medical care by the Secretary of Veterans Affairs in any area of the 
United States only if that area is covered by a TRICARE contract that 
was entered into after the date of the enactment of this Act.
  (e) Eligible Military Retirees.--For purposes of subsection (b), an 
eligible military retiree is a member of the Army, Navy, Air Force, or 
Marine Corps who--
          (1) has retired from active military, naval, or air service;
          (2) is eligible for care under the TRICARE program 
        established by the Secretary of Defense;
          (3) has enrolled for care under section 1705 of title 38, 
        United States Code; and
          (4) is not described in paragraph (1) or (2) of section 
        1710(a) of such title (other than subparagraph (H) of such 
        paragraph (2)), as amended by subsection (a).

SEC. 105. BENEFITS FOR PERSONS DISABLED BY PARTICIPATION IN COMPENSATED 
                    WORK THERAPY PROGRAM.

  Section 1151(a)(2) is amended--
          (1) by inserting ``(A)'' after ``proximately caused''; and
          (2) by inserting before the period at the end the following: 
        ``, or (B) by participation in a program (known as a 
        `compensated work therapy program') under section 1718 of this 
        title''.

SEC. 106. PILOT PROGRAM OF MEDICAL CARE FOR CERTAIN DEPENDENTS OF 
                    ENROLLED VETERANS.

  (a) In General.--(1) Chapter 17 is amended by inserting after section 
1713 the following new section:

``Sec. 1713A. Medical care for certain dependents of enrolled veterans: 
                    pilot program

  ``(a) The Secretary may, during the program period, carry out a pilot 
program to provide primary health care services for eligible dependents 
of veterans in accordance with this section.
  ``(b) For purposes of this section:
          ``(1) The term `program period' means the period beginning on 
        the first day of the first month beginning more than 180 days 
        after the date of the enactment of this section and ending 
        three years after that day.
          ``(2) The term `eligible dependent' means an individual who--
                  ``(A) is the spouse or child of a veteran who is 
                enrolled in the system of patient enrollment 
                established by the Secretary under section 1705 of this 
                title; and
                  ``(B) is determined by the Secretary to have the 
                ability to pay for such care or services either 
                directly or through reimbursement or indemnification 
                from a third party.
  ``(c) The Secretary may furnish health care services to an eligible 
dependent under this section only if the dependent (or, in the case of 
a minor, the parent or guardian of the dependent) agrees--
          ``(1) to pay to the United States an amount representing the 
        reasonable charges for the care or services furnished (as 
        determined by the Secretary); and
          ``(2) to cooperate with and provide the Secretary an 
        appropriate assignment of benefits, authorization to release 
        medical records, and any other executed documents, information, 
        or evidence reasonably needed by the Secretary to recover the 
        Department's charges for the care or services furnished by the 
        Secretary.
  ``(d)(1) The health care services provided under the pilot program 
under this section may consist of such primary hospital care services 
and such primary medical services as may be authorized by the 
Secretary. The Secretary may furnish those services directly through a 
Department medical facility or, subject to paragraphs (2) and (3), 
pursuant to a contract or other agreement with a non-Department 
facility (including a health-care provider, as defined in section 
8152(2) of this title).
  ``(2) The Secretary may enter into a contract or agreement to furnish 
primary health care services under this section in a non-Department 
facility on the same basis as provided under subsections (a) and (b) of 
section 1703 of this title or may include such care in an existing or 
new agreement under section 8153 of this title when the Secretary 
determines it to be in the best interest of the prevailing standards of 
the Department medical care program.
  ``(3) Primary health care services may not be authorized to be 
furnished under this section at any medical facility if the furnishing 
of those services would result in the denial of, or a delay in 
providing, access to care for any enrolled veteran at that facility.
  ``(e)(1) In the case of an eligible dependent who is furnished 
primary health care services under this section and who has coverage 
under a health-plan contract, as defined in section 1729(i)(1) of this 
title, the United States shall have the right to recover or collect the 
reasonable charges for such care or services from such health-plan 
contract to the extent that the individual or the provider of the care 
or services would be eligible to receive payment for such care or 
services from such health-plan contract if the care or services had not 
been furnished by a department or agency of the United States.
  ``(2) The right of the United States to recover under paragraph (1) 
shall be enforceable with respect to an eligible dependent in the same 
manner as applies under subsections (a)(3), (b), (c)(1), (c)(2), (d), 
(f), (h), and (i) of section 1729 of this title with respect to a 
veteran.
  ``(f)(1) Subject to paragraphs (2) and (3), the pilot program under 
this section shall be carried out during the program period in not more 
than four veterans integrated service networks, as designated by the 
Secretary. In designating networks under the preceding sentence, the 
Secretary shall favor designation of networks that are suited to serve 
dependents of veterans because of--
          ``(A) the capability of one or more medical facilities within 
        the network to furnish primary health care services to eligible 
        dependents while assuring that veterans continue to receive 
        priority for care and services;
          ``(B) the demonstrated success of such medical facilities in 
        billings and collections;
          ``(C) support for initiating such a pilot program among 
        veterans in the network; and
          ``(D) such other criteria as the Secretary considers 
        appropriate.
  ``(2) In implementing the pilot program, the Secretary may not 
provide health care services for dependents who are children--
          ``(A) in more than one of the participating networks during 
        the first year of the program period; and
          ``(B) in more than two of the participating networks during 
        the second year of the program period.
  ``(3) In implementing the pilot program, the Secretary shall give 
priority to facilities which operate women veterans' clinics.''.
  (2) The table of sections at the beginning of such chapter is amended 
by inserting after the item relating to section 1713 the following new 
item:

``1713A. Medical care for certain dependents and enrolled veterans: 
pilot program.''.

  (b) GAO Review and Recommendations.--(1) Beginning six months after 
the commencement of the pilot program, the Comptroller General, in 
consultation with the Under Secretary for Health of the Department of 
Veterans Affairs, shall monitor the conduct of the pilot program.
  (2) Not later than 14 months after the commencement of the pilot 
program, the Comptroller General shall submit to the Secretary of 
Veterans Affairs a report setting forth the Comptroller General's 
findings and recommendations with respect to the first 12 months of 
operation of the pilot program.
  (3)(A) The report under paragraph (2) shall include the findings of 
the Comptroller General regarding--
          (i) whether the collection of reasonable charges for the care 
        or services provided reasonably covers the costs of providing 
        such care and services; and
          (ii) whether the Secretary, in carrying out the program, is 
        in compliance with the limitation in subsection (d)(3) of 
        section 1713A of title 38, United States Code, as added by 
        subsection (a).
  (B) The report shall include the recommendations of the Comptroller 
General regarding any remedial steps that the Secretary should take in 
the conduct of the program or in the billing and collection of charges 
under the program.
  (4) The Secretary, in consultation with, and following receipt of the 
report of, the Comptroller General, shall take such steps as may be 
needed to ensure that any recommendations of the Comptroller General in 
the report under paragraph (2) with respect to billings and 
collections, and with respect to compliance with the limitation in 
subsection (d)(3) of such section, are carried out.
  (5) For purposes of this subsection, the term ``commencement of the 
pilot program'' means the date on which the Secretary of Veterans 
Affairs begins to furnish services to eligible dependents under the 
pilot program under section 1713A of title 38, United States Code, as 
added by subsection (a).

SEC. 107. ENHANCED SERVICES PROGRAM AT DESIGNATED MEDICAL CENTERS.

  (a) Findings.--Congress makes the following findings:
          (1) Historically, health care facilities under the 
        jurisdiction of the Department of Veterans Affairs have not 
        consistently been located in proximity to veteran population 
        concentrations.
          (2) Hospital occupancy rates at numbers of Department medical 
        centers are at levels substantially below a level needed for 
        efficient operation and optimal quality of care.
          (3) The costs of maintaining highly inefficient medical 
        centers, which were designed and constructed decades ago to 
        standards no longer considered acceptable, substantially 
        diminish the availability of resources which could be devoted 
        to the provision of needed direct care services.
          (4) Freeing resources currently devoted to highly inefficient 
        provision of hospital care could, through contracting for acute 
        hospital care and establishing new facilities for provision of 
        outpatient care, yield improved access and service to veterans.
  (b) Enhanced Services Program at Designated Medical Centers.--The 
Secretary of Veterans Affairs, in carrying out the responsibilities of 
the Secretary to furnish hospital care and medical services through 
network-based planning, shall establish an enhanced service program at 
Department medical centers (hereinafter in this section referred to as 
``designated centers'') that are designated by the Secretary for the 
purposes of this section. Medical centers shall be designated to 
improve access, and quality of service provided, to veterans served by 
those medical centers. The Secretary may designate a medical center for 
the program only if the Secretary determines, on the basis of a market 
and data analysis (which shall include a study of the cost-
effectiveness of the care provided at such center), that the medical 
center--
          (1) can, in whole or in part, no longer be operated in a 
        manner that provides hospital or other care efficiently and at 
        optimal quality because of such factors as--
                  (A) the current and projected need for hospital or 
                other care capacity at such center;
                  (B) the extent to which the facility is functionally 
                obsolete; and
                  (C) the cost of operation and maintenance of the 
                physical plant; and
          (2) is located in proximity (A) to one or more community 
        hospitals which have the capacity to provide primary and 
        secondary hospital care of appropriate quality to veterans 
        under contract arrangements with the Secretary which the 
        Secretary determines are advantageous to the Department, or (B) 
        to another Department medical center which is capable of 
        absorbing some or all of the patient workload of such medical 
        center.
  (c) Medical Center Plan.--The Secretary shall, with respect to each 
designated center, develop a plan aimed at improving the accessibility 
and quality of service provided to veterans. Each plan shall be 
developed in accordance with the requirements for strategic network-
based planning described in section 8107 of title 38, United States 
Code. In the plan for a designated center, the Secretary shall describe 
a program which, if implemented, would allow the Secretary to do any of 
the following:
          (1) Provide for a Department facility described in subsection 
        (b)(2)(B) to absorb some or all of the patient workload of the 
        designated center.
          (2) Contract, under such arrangements as the Secretary 
        determines appropriate, for needed primary and secondary 
        hospital care for veterans--
                  (A) who reside in the catchment area of each 
                designated center;
                  (B) who are described in paragraphs (1) through (6) 
                of section 1705(a) of title 38, United States Code; and
                  (C) whom the Secretary has enrolled for care pursuant 
                to section 1705 of title 38, United States Code.
          (3) Cease to provide hospital care, or hospital care and 
        other medical services, at such center.
          (4) If practicable, lease, under subchapter V of chapter 81 
        of title 38, United States Code, land and improvements which 
        had been dedicated to providing care described in paragraph 
        (3).
          (5) Establish, through reallocation of operational funds and 
        through appropriate lease arrangements or renovations, 
        facilities for--
                  (A) delivery of outpatient care; and
                  (B) services which would obviate a need for nursing 
                home care or other long-term institutional care.
  (d) Employee Protections.--(1) In entering into any contract or lease 
under subsection (c), the Secretary shall attempt to ensure that 
employees of the Secretary who would be displaced under this section be 
given priority in hiring by such contractor, lessee, or other entity.
  (2) In carrying out subsection (c)(5), the Secretary shall give 
preference to providing services through employee-based delivery 
models.
  (e) Required Consultation.--In developing a plan under subsection 
(c), the Secretary shall obtain the views of veterans organizations, 
exclusive employee representatives, and other interested parties and 
provide for such organizations and parties to participate in the 
development of the plan.
  (f) Submission of Plan to Congress.--The Secretary may not implement 
a plan described in subsection (c) with respect to a medical center 
unless the Secretary has first submitted a report containing a detailed 
plan and justification to the appropriate committees of Congress. No 
action to carry out such plan may be taken after the submission of such 
report until the end of a 45-day period following the date of the 
submission of the report, not less than 30 days of which shall be days 
during which Congress shall have been in continuous session. For 
purposes of the preceding sentence, continuity of a session of Congress 
is broken only by adjournment sine die, and there shall be excluded 
from the computation of any period of continuity of session any day 
during which either House of Congress is not in session during an 
adjournment of more than three days to a day certain.
  (g) Implementation of Plan.--In carrying out the plan described in 
subsection (c), or a modification to that plan following the submission 
of such plan to the appropriate committees of Congress, the Secretary--
          (1) may, without regard to any limitation under section 1703 
        of title 38, United States Code, contract for hospital care for 
        veterans who are--
                  (A) described in paragraphs (1) through (6) of 
                section 1705(a) of title 38, United States Code; and
                  (B) enrolled under subsection (a) of such section 
                1705;
          (2) may enter into any contract under section 8153 of title 
        38, United States Code;
          (3) shall, in exercising the authority of the Secretary under 
        this section to contract for hospital care, provide for ongoing 
        oversight and management, by employees of the Department, of 
        the hospital care furnished such veterans; and
          (4) shall, in the case of a designated center which ceases to 
        provide services under the program--
                  (A) ensure a reallocation of funds as provided in 
                subsection (h); and
                  (B) provide reemployment assistance to employees.
  (h) Funds Allocation.--In carrying out subsection (g)(4), the 
Secretary shall ensure that not less than 90 percent of the funds that 
would have been made available to a designated center to support the 
provision of services, but for such mission change, shall be made 
available to the appropriate health care region of the Veterans Health 
Administration to ensure that the implementation of the plan under 
subsection (g) will result in demonstrable improvement in the 
accessibility, and quality of service provided, to veterans in the 
catchment area of such center.
  (i) Specialized Services.--The provisions of this section do not 
diminish the obligations of the Secretary under section 1706(b) of 
title 38, United States Code.
  (j) Report.--Not later than 12 months after implementation of any 
plan under subsection (b), the Secretary shall submit to Congress a 
report on the implementation of the enhanced service program.
  (k) Residual Authority.--Nothing in this section may be construed to 
diminish the authority of the Secretary to--
          (1) consolidate, eliminate, abolish, or redistribute the 
        functions or missions of facilities in the Department;
          (2) revise the functions or missions of any such facility or 
        activity; or
          (3) create new facilities or activities in the Department.

SEC. 108. COUNSELING AND TREATMENT FOR VETERANS WHO HAVE EXPERIENCED 
                    SEXUAL TRAUMA.

  (a) Extension of Period of Program.--Subsection (a) of section 1720D 
is amended--
          (1) in paragraph (1), by striking ``December 31, 2001'' and 
        inserting ``December 31, 2002''; and
          (2) in paragraph (3), by striking ``December 31, 2001'' and 
        inserting ``December 31, 2002''.
  (b) Mandatory Nature of Program.--(1) Subsection (a)(1) of such 
section is further amended by striking ``may provide counseling to a 
veteran who the Secretary determines requires such counseling'' and 
inserting ``shall operate a program under which the Secretary provides 
counseling and appropriate care and services to veterans who the 
Secretary determines require such counseling and care and services''.
  (2) Subsection (a) of such section is further amended--
          (A) by striking paragraph (2); and
          (B) by redesignating paragraph (3) (as amended by subsection 
        (a)(2)) as paragraph (2).
  (c) Outreach Efforts.--Subsection (c) of such section is amended--
          (1) by inserting ``and treatment'' in the first sentence and 
        in paragraph (2) after ``counseling'';
          (2) by striking ``and'' at the end of paragraph (1);
          (3) by redesignating paragraph (2) as paragraph (3); and
          (4) by inserting after paragraph (1) the following new 
        paragraph (2):
          ``(2) shall ensure that information about the counseling and 
        treatment available to veterans under this section--
                  ``(A) is revised and updated as appropriate;
                  ``(B) is made available and visibly posted at 
                appropriate facilities of the Department; and
                  ``(C) is made available through appropriate public 
                information services; and''.
  (d) Report on Implementation of Outreach Activities.--Not later than 
six months after the date of the enactment of this Act, the Secretary 
of Veterans Affairs shall submit to the Committees on Veterans' Affairs 
of the Senate and House of Representatives a report on the Secretary's 
implementation of paragraph (2) of section 1720D(c) of title 38, United 
States Code, as added by subsection (c). Such report shall include 
examples of the documents and other means of communication developed 
for compliance with that paragraph.
  (e) Study of Expanding Eligibility for Counseling and Treatment.--(1) 
The Secretary of Veterans Affairs, in consultation with the Secretary 
of Defense, shall conduct a study to determine--
          (A) the extent to which former members of the reserve 
        components of the Armed Forces experienced physical assault of 
        a sexual nature or battery of a sexual nature while serving on 
        active duty for training;
          (B) the extent to which such former members have sought 
        counseling from the Department of Veterans Affairs relating to 
        those incidents; and
          (C) the additional resources that, in the judgment of the 
        Secretary, would be required to meet the projected need of 
        those former members for such counseling.
  (2) Not later than 16 months after the date of the enactment of this 
Act, the Secretary of Veterans Affairs shall submit to the Committees 
on Veterans' Affairs of the Senate and House of Representatives a 
report on the results of the study conducted under paragraph (1).
  (f) Oversight of Outreach Activities.--Not later than 14 months after 
the date of the enactment of this Act, the Secretary of Veterans 
Affairs and the Secretary of Defense shall submit to the appropriate 
congressional committees a joint report describing in detail the 
collaborative efforts of the Department of Veterans Affairs and the 
Department of Defense to ensure that members of the Armed Forces, upon 
separation from active military, naval, or air service, are provided 
appropriate and current information about programs of the Department of 
Veterans Affairs to provide counseling and treatment for sexual trauma 
that may have been experienced by those members while in the active 
military, naval, or air service, including information about 
eligibility requirements for, and procedures for applying for, such 
counseling and treatment. The report shall include proposed 
recommendations from both the Secretary of Veterans Affairs and the 
Secretary of Defense for the improvement of their collaborative efforts 
to provide such information.
  (g) Report on Implementation of Sexual Trauma Treatment Program.--Not 
later than 14 months after the date of the enactment of this Act, the 
Secretary of Veterans Affairs shall submit to the Committees on 
Veterans' Affairs of the Senate and House of Representatives a report 
on the use made of the authority provided under section 1720D of title 
38, United States Code, as amended by this section. The report shall 
include the following with respect to activities under that section 
since the enactment of this Act:
          (1) The number of veterans who have received counseling under 
        that section.
          (2) The number of veterans who have been referred to non-
        Department mental health facilities and providers in connection 
        with sexual trauma counseling and treatment.

                    TITLE II--PROGRAM ADMINISTRATION

SEC. 201. MEDICAL CARE COLLECTIONS.

  (a) Limited Authority To Set Copayments.--(1) Section 1722A is 
amended--
          (A) by redesignating subsections (b) and (c) as subsections 
        (c) and (d), respectively;
          (B) by inserting after subsection (a) the following new 
        subsection (b):
  ``(b) The Secretary, pursuant to regulations which the Secretary 
shall prescribe, may--
          ``(1) increase the copayment amount in effect under 
        subsection (a);
          ``(2) establish a maximum annual pharmaceutical copayment 
        amount under subsection (a) for veterans who have multiple 
        outpatient prescriptions; and
          ``(3) require a veteran, other than a veteran described in 
        subsection (a)(3), to pay to the United States a reasonable 
        copayment for sensori-neural aids, electronic equipment, and 
        any other costly item or equipment furnished the veteran for a 
        nonservice-connected condition, other than a wheelchair or 
        artificial limb.''; and
          (C) in subsection (c), as redesignated by subparagraph (A)--
                  (i) by striking ``this section'' and inserting 
                ``subsection (a)''; and
                  (ii) by adding at the end the following new sentence: 
                ``Amounts collected through use of the authority under 
                subsection (b) shall be deposited in Department of 
                Veterans Affairs Health Services Improvement Fund.''.
  (2)(A) The heading of such section is amended to read as follows:

``Sec. 1722A. Copayments for medications and certain costly items and 
                    equipment''.

  (B) The item relating to such section in the table of sections at the 
beginning of chapter 17 is amended to read as follows:

``1722A. Copayments for medications and certain costly items and 
equipment.''.

  (b) Outpatient Treatment of Category C Veterans.--(1) Section 1710(g) 
is amended--
          (A) in paragraph (1), by striking ``the amount under 
        paragraph (2) of this subsection'' and inserting ``in the case 
        of each outpatient visit the applicable amount or amounts 
        established by the Secretary by regulation''; and
          (B) in paragraph (2), by striking all after ``for an amount'' 
        and inserting ``which the Secretary shall establish by 
        regulation.''.

SEC. 202. HEALTH SERVICES IMPROVEMENT FUND.

  (a) Establishment of Fund.--Chapter 17 is amended by inserting after 
section 1729A the following new section:

``Sec. 1729B. Health Services Improvement Fund

  ``(a) There is established in the Treasury of the United States a 
fund to be known as the `Department of Veterans Affairs Health Services 
Improvement Fund'.
  ``(b) Amounts received or collected after the date of the enactment 
of this section under any of the following provisions of law shall be 
deposited in the fund:
          ``(1) Section 1713A of this title.
          ``(2) Section 1722A(b) of this title.
          ``(3) Section 8165(a) of this title.
          ``(4) Section 104(c) of the Veterans' Millennium Health Care 
        Act.
  ``(c) Amounts in the fund are hereby available, without fiscal year 
limitation, to the Secretary for the purposes stated in subparagraphs 
(A) and (B) of section 1729A(c)(1) of this title.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
1729A the following new item:

``1729B. Health Services Improvement Fund.''.

SEC. 203. VETERANS TOBACCO TRUST FUND.

  (a) Findings.--Congress finds the following:
          (1) Smoking related illnesses, including cancer, heart 
        disease, and emphysema, are highly prevalent among the more 
        than 3,000,000 veterans who use the Department of Veterans 
        Affairs health care system annually.
          (2) The Department of Veterans Affairs estimates that it 
        spent $3,600,000,000 in 1997 to treat smoking-related illnesses 
        and that over the next five years it will spend $20,000,000,000 
        on such care.
          (3) Congress established the Department of Veterans Affairs 
        in furtherance of its constitutional power to provide for the 
        national defense in order to provide benefits and services to 
        veterans of the uniformed services.
          (4) There is in the Department of Veterans Affairs a health 
        care system which has as its primary function to provide a 
        complete medical and hospital service for the medical care and 
        treatment of such veterans as can be served through available 
        appropriations.
          (5) The Federal Government, including the Department of 
        Veterans Affairs, has lacked the means to prevent the onset of 
        smoking-related illnesses among veterans and has had no 
        authority to deny needed treatment to any veteran on the basis 
        that an illness is or might be smoking-related.
          (6) With some 20 percent of its health care budget absorbed 
        in treating smoking-related illnesses, the Department of 
        Veterans Affairs health care system has lacked resources to 
        provide needed nursing home care, home care, community-based 
        ambulatory care, and other services to tens of thousands of 
        other veterans.
          (7) The network of academically affiliated medical centers of 
        the Department of Veterans Affairs provides a unique system 
        within which outstanding medical research is conducted and 
        which has the potential to expand significantly ongoing 
        research on tobacco-related illnesses.
          (8) It is in the public interest for Congress to enact 
        legislation requiring that a portion of any amounts received 
        from manufacturers of tobacco products be used to meet the 
        costs of (A) treatment for diseases and adverse health effects 
        associated with the use of tobacco products by those who served 
        their country in uniform, and (B) medical and health services 
        research relating to prevention and treatment of, and 
        rehabilitation from, tobacco addiction and diseases associated 
        with tobacco use.
  (b) Establishment of Trust Fund.--(1) Chapter 17 is amended by 
inserting after section 1729B, as added by section 202(a), the 
following new section:

``Sec. 1729C. Veterans Tobacco Trust Fund

  ``(a) There is established in the Treasury of the United States a 
trust fund to be known as the `Veterans Tobacco Trust Fund', consisting 
of such amounts as may be appropriated, credited, or donated to the 
trust fund.
  ``(b) If a lawsuit is brought by the United States against the 
tobacco manufacturers seeking recovery of costs incurred or to be 
incurred by the United States that are attributable to tobacco-related 
illnesses, there shall be credited to the trust fund from any amount 
recovered by the United States pursuant to that lawsuit, without 
further appropriation, the amount that bears the same ratio to the 
amount recovered as the amount of the Department's costs for health 
care attributable to tobacco-related illnesses for which recovery is 
sought in the suit bears to the total amount sought by the United 
States in the suit.
  ``(c) After September 30, 2004, amounts in the trust fund shall be 
available, without fiscal year limitation, to the Secretary of Veterans 
Affairs for the following purposes:
          ``(1) Furnishing medical care and services under this 
        chapter, to be available during any fiscal year for the same 
        purposes and subject to the same limitations (other than with 
        respect to the period of availability for obligation) as apply 
        to amounts appropriated from the general fund of the Treasury 
        for that fiscal year for medical care.
          ``(2) Conducting medical research, rehabilitation research, 
        and health systems research, with particular emphasis on 
        research relating to prevention and treatment of, and 
        rehabilitation from, tobacco addiction and diseases associated 
        with tobacco use.''.
  (2) The table of sections at the beginning of such chapter is amended 
by inserting after the item relating to section 1729B, as added by 
section 202(b), the following new item:

``1729C. Veterans Tobacco Trust Fund.''.

SEC. 204. AUTHORITY TO ACCEPT FUNDS FOR EDUCATION AND TRAINING.

  (a) Establishment of Nonprofit Corporations at Medical Centers.--
Section 7361(a) is amended--
          (1) by inserting ``and education'' after ``research'';
          (2) by adding at the end the following: ``Such a corporation 
        may be established to facilitate either research or education 
        or both research and education.''.
  (b) Purpose of Corporations.--Section 7362 is amended--
          (1) in the first sentence, by inserting ``and education and 
        training as described in sections 7302, 7471, 8154, and 
        1701(6)(B) of this title'' after ``of this title''; and
          (2) in the second sentence--
                  (A) by inserting ``or education'' after ``research''; 
                and
                  (B) by striking ``that purpose'' and inserting 
                ``these purposes''.
  (c) Board of Directors.--Section 7363(a) is amended--
          (1) in subsection (a)(1), by striking all after ``medical 
        center, and'' and inserting ``as appropriate, the assistant 
        chief of staff for research for the medical center and the 
        associate chief of staff for education for the medical center, 
        or, in the case of a facility at which such positions do not 
        exist, those officials who are responsible for carrying out the 
        responsibilities of the medical center director, chief of 
        staff, and, as appropriate, the assistant chief of staff for 
        research and the assistant chief for education; and'';
          (2) in subsection (a)(2), by inserting ``or education, as 
        appropriate'' after ``research''; and
          (3) in subsection (c), by inserting ``or education'' after 
        ``research''.
  (d) Approval of Expenditures.--Section 7364 is amended by adding at 
the end the following new subsection:
  ``(c)(1) A corporation established under this subchapter may not 
spend funds for an education activity unless the activity is approved 
in accordance with procedures prescribed by the Under Secretary for 
Health.
  ``(2) The Under Secretary for Health shall prescribe policies and 
procedures to guide the expenditure of funds by corporations under 
paragraph (1) consistent with the purpose of such corporations as 
flexible funding mechanisms.''.

SEC. 205. EXTENSION AND REVISION OF CERTAIN AUTHORITIES.

  (a) Readjustment Counseling Program.--Section 1712A(a)(1)(B)(ii) is 
amended by striking ``2000'' and inserting ``2003''.
  (b) Committee on Mentally Ill Veterans.--Section 7321(d)(2) is 
amended by striking ``three'' and inserting ``five''.
  (c) Committee on Post-Traumatic Stress Disorder.--Section 110 of 
Public Law 98-528 (38 U.S.C. 1712A note) is amended--
          (1) in subsection (e)(1), by striking ``March 1, 1985'' and 
        inserting ``March 1, 2000''; and
          (2) in subsection (e)(2), by striking ``February 1, 1986'' 
        and inserting ``February 1, 2001''.
  (d) Extension of Authority To Make Grants.--Section 3(a)(2) of the 
Homeless Veterans Comprehensive Service Programs Act of 1992 (38 U.S.C. 
7721 note) is amended by striking ``September 30, 1999'' and inserting 
``September 30, 2002''.
  (e) Authority To Make Grants for Homeless Veterans.--Section 3(b)(2) 
of the Homeless Veterans Comprehensive Service Programs Act of 1992 (38 
U.S.C. 7721 note) is amended by striking ``and no more than 20 programs 
which incorporate the procurement of vans as described in paragraph 
(1)''.

SEC. 206. STATE HOME GRANT PROGRAM.

  (a) General Regulations.--Section 8134 is amended--
          (1) by redesignating subsection (b) as subsection (c);
          (2) by striking the matter in subsection (a) preceding 
        paragraph (2) and inserting the following:
  ``(a)(1) The Secretary shall prescribe regulations for the purposes 
of this subchapter.
  ``(2) In those regulations, the Secretary shall prescribe for each 
State the number of nursing home and domiciliary beds for which 
assistance under this subchapter may be furnished. Such regulations 
shall be based on projected demand for such care 10 years after the 
date of the enactment of the Veterans Millennium Health Care Act by 
veterans who at such time are 65 years of age or older and who reside 
in that State. In determining such projected demand, the Secretary 
shall take into account travel distances for veterans and their 
families.
  ``(3)(A) In those regulations, the Secretary shall establish criteria 
under which the Secretary shall determine, with respect to an 
application for assistance under this subchapter for a project 
described in subparagraph (B) which is from a State that has a need for 
additional beds as determined under subsections (a)(2) and (d)(1), 
whether the need for such beds is most aptly characterized as great, 
significant, or limited. Such criteria shall take into account the 
availability of beds already operated by the Secretary and other 
providers which appropriately serve the needs which the State proposes 
to meet with its application.
  ``(B) This paragraph applies to a project for the construction or 
acquisition of a new State home facility, to a project to increase the 
number of beds available at a State home facility, and a project to 
replace beds at a State home facility.
  ``(4) The Secretary shall review and, as necessary, revise 
regulations prescribed under paragraphs (2) and (3) not less often than 
every four years.
  ``(b) The Secretary shall prescribe the following by regulation:'';
          (3) by redesignating paragraphs (2) and (3) of subsection 
        (b), as designated by paragraph (2), as paragraphs (1) and (2);
          (4) in subsection (c), as redesignated by paragraph (1), by 
        striking ``subsection (a)(3)'' and inserting ``subsection 
        (b)(2)''; and
          (5) by adding at the end the following new subsection:
  ``(d)(1) In prescribing regulations to carry out this subchapter, the 
Secretary shall provide that in the case of a State that seeks 
assistance under this subchapter for a project described in subsection 
(a)(3)(B), the determination of the unmet need for beds for State homes 
in that State shall be reduced by the number of beds in all previous 
applications submitted by that State under this subchapter, including 
beds which have not been recognized by the Secretary under section 1741 
of this title.
  ``(2)(A) Financial assistance under this subchapter for a renovation 
project may only be provided for a project for which the total cost of 
construction is in excess of $400,000 (as adjusted from time to time in 
such regulations to reflect changes in costs of construction).
  ``(B) For purposes of this paragraph, a renovation project is a 
project to remodel or alter existing buildings for which financial 
assistance under this subchapter may be provided and does not include 
maintenance and repair work which is the responsibility of the 
State.''.
  (b) Applications With Respect to Projects.--Section 8135 is amended--
          (1) in subsection (a)--
                  (A) by striking ``set forth--'' in the matter 
                preceding paragraph (1) and inserting ``set forth the 
                following:'';
                  (B) by capitalizing the first letter of the first 
                word in each of paragraphs (1) through (9);
                  (C) by striking the comma at the end of each of 
                paragraphs (1) through (7) and inserting a period; and
                  (D) by striking ``, and'' at the end of paragraph (8) 
                and inserting a period;
          (2) by redesignating subsections (b), (c), (d), and (e) as 
        subsections (c), (d), (e), and (f), respectively;
          (3) by inserting after subsection (a) the following new 
        subsection (b):
  ``(b)(1) Any State seeking to receive assistance under this 
subchapter for a project that would involve construction or acquisition 
of either nursing home or domiciliary facilities shall include with its 
application under subsection (a) the following:
          ``(A) Documentation (i) that the site for the project is in 
        reasonable proximity to a sufficient concentration and 
        population of veterans who are 65 years of age and older, and 
        (ii) that there is a reasonable basis to conclude that the 
        facilities when complete will be fully occupied.
          ``(B) A financial plan for the first three years of operation 
        of such facilities.
          ``(C) A five-year capital plan for the State home program for 
        that State.
  ``(2) Failure to provide adequate documentation under paragraph 
(1)(A) or to provide an adequate financial plan under paragraph (1)(B) 
shall be a basis for disapproving the application.'';
          (4) in subsection (c), as redesignated by paragraph (2)--
                  (A) in paragraph (1), by striking ``for a grant under 
                subsection (a) of this section'' in the matter 
                preceding subparagraph (A) and inserting ``under 
                subsection (a) for financial assistance under this 
                subchapter'';
                  (B) in paragraph (2)--
                          (i) by striking ``the construction or 
                        acquisition of'' in subparagraph (A); and
                          (ii) by striking subparagraphs (B), (C), and 
                        (D) and inserting the following:
          ``(B) An application from a State for a project at an 
        existing facility to remedy a condition or conditions that have 
        been cited by an accrediting institution, by the Secretary, or 
        by a local licensing or approving body of the State as being 
        threatening to the lives or safety of the patients in the 
        facility.
          ``(C) An application from a State that has not previously 
        applied for award of a grant under this subchapter for 
        construction or acquisition of a State nursing home.
          ``(D) An application for construction or acquisition of a 
        nursing home or domiciliary from a State that the Secretary 
        determines, in accordance with regulations under this 
        subchapter, has a great need for the beds to be established at 
        such home or facility.
          ``(E) An application from a State for renovations to a State 
        home facility other than renovations described in subparagraph 
        (B).
          ``(F) An application for construction or acquisition of a 
        nursing home or domiciliary from a State that the Secretary 
        determines, in accordance with regulations under this 
        subchapter, has a significant need for the beds to be 
        established at such home or facility.
          ``(G) An application that meets other criteria as the 
        Secretary determines appropriate and has established in 
        regulations.
          ``(H) An application for construction or acquisition of a 
        nursing home or domiciliary from a State that the Secretary 
        determines, in accordance with regulations under this 
        subchapter, has a limited need for the beds to be established 
        at such home or facility.''; and
                  (C) in paragraph (3), by striking subparagraph (A) 
                and inserting the following:
          ``(A) may not accord any priority to a project for the 
        construction or acquisition of a hospital; and''.
  (c) Transition.--The provisions of sections 8134 and 8135 of title 
38, United States Code, as in effect on June 1, 1999, shall continue in 
effect after such date with respect to applications described in 
section 8135(b)(2)(A) of such title, as in effect on that date, that 
are identified on the list that (1) is described in section 8135(b)(4) 
of such title, as in effect on that date, and (2) was established by 
the Secretary of Veterans Affairs on October 29, 1998.
  (d) Effective Date for Initial Regulations.--The Secretary of 
Veterans Affairs shall prescribe the initial regulations under 
subsection (a) of section 8134 of title 38, United States Code, as 
added by subsection (a), not later than April 30, 2000.

SEC. 207. EXPANSION OF ENHANCED-USE LEASE AUTHORITY.

  (a) Authority.--Section 8162(a)(2) is amended--
          (1) by striking ``only if the Secretary'' and inserting 
        ``only if--
          ``(A) the Secretary'';
          (2) by redesignating subparagraphs (A), (B), and (C) as 
        clauses (i), (ii), and (iii), respectively, and realigning 
        those clauses so as to be four ems from the left margin;
          (3) by striking the period at the end of clause (iii), as so 
        redesignated, and inserting ``; or''; and
          (4) by adding at the end the following:
          ``(B) the Secretary determines that the implementation of a 
        business plan proposed by the Under Secretary for Health for 
        applying the consideration under such a lease to the provision 
        of medical care and services would result in a demonstrable 
        improvement of services to eligible veterans in the geographic 
        service-delivery area within which the property is located.''.
  (b) Term of Enhanced-Use Lease.--Section 8162(b) is amended--
          (1) in paragraph (2), by striking ``may not exceed--'' and 
        all that follows and inserting ``may not exceed 75 years.''; 
        and
          (2) by striking paragraph (4) and inserting the following:
  ``(4) The terms of an enhanced-use lease may provide for the 
Secretary to--
          ``(A) obtain facilities, space, or services on the leased 
        property; and
          ``(B) use minor construction funds for capital contribution 
        payments.''.
  (c) Designation of Property Proposed To Be Leased.--(1) Subsection 
(b) of section 8163 is amended--
          (A) by striking ``include--'' and inserting ``include the 
        following:'';
          (B) by capitalizing the first letter of the first word of 
        each of paragraphs (1), (2), (3), (4), and (5);
          (C) by striking the semicolon at the end of paragraphs (1), 
        (2), and (3) and inserting a period; and
          (D) by striking subparagraphs (A), (B), and (C) of paragraph 
        (4) and inserting the following:
                  ``(A) would--
                          ``(i) contribute in a cost-effective manner 
                        to the mission of the Department;
                          ``(ii) not be inconsistent with the mission 
                        of the Department;
                          ``(iii) not adversely affect the mission of 
                        the Department; and
                          ``(iv) affect services to veterans; or
                  ``(B) would result in a demonstrable improvement of 
                services to eligible veterans in the geographic 
                service-delivery area within which the property is 
                located.''.
  (2) Subparagraph (E) of subsection (c)(1) of that section is amended 
by striking clauses (i), (ii), and (iii) and inserting the following:
                  ``(i) would--
                          ``(I) contribute in a cost-effective manner 
                        to the mission of the Department;
                          ``(II) not be inconsistent with the mission 
                        of the Department;
                          ``(III) not adversely affect the mission of 
                        the Department; and
                          ``(IV) affect services to veterans; or
                  ``(ii) would result in a demonstrable improvement of 
                services to eligible veterans in the geographic 
                service-delivery area within which the property is 
                located.''.
  (d) Use of Proceeds.--Section 8165(a) is amended--
          (1) by striking paragraph (1) and inserting the following:
  ``(a)(1) Funds received by the Department under an enhanced-use lease 
and remaining after any deduction from those funds under subsection (b) 
shall be deposited in the Department of Veterans Affairs Health 
Services Improvement Fund established under section 1729B of this 
title. The Secretary shall make available to the designated health care 
region of the Veterans Health Administration within which the leased 
property is located not less than 75 percent of the amount deposited in 
the fund attributable to that lease.''; and
          (2) by adding at the end the following new paragraph:
  ``(3) For the purposes of paragraph (1), the term `designated health 
care region of the Veterans Health Administration' means a geographic 
area designated by the Secretary for the purposes of the management of, 
and allocation of resources for, health care services provided by the 
Veterans Health Administration.''.
  (e) Repeal of Termination Provision.--(1) Section 8169 is repealed.
  (2) The table of sections at the beginning of chapter 81 is amended 
by striking the item relating to section 8169.
  (f) Repeal of Obsolete Provisions.--Section 8162 is amended--
          (1) by striking the last sentence of subsection (a)(1); and
          (2) by striking subsection (c).

SEC. 208. INELIGIBILITY FOR EMPLOYMENT BY VETERANS HEALTH 
                    ADMINISTRATION OF HEALTH CARE PROFESSIONALS WHO 
                    HAVE LOST LICENSE TO PRACTICE IN ONE JURISDICTION 
                    WHILE STILL LICENSED IN ANOTHER JURISDICTION.

  Section 7402 is amended by adding at the end the following new 
subsection:
  ``(f) A person may not be employed in a position under subsection (b) 
(other than under paragraph (4) of that subsection) if--
          ``(1) the person is or has been licensed, registered, or 
        certified (as applicable to such position) in more than one 
        State; and
          ``(2) either--
                  ``(A) any of those States has terminated such 
                license, registration, or certification for cause; or
                  ``(B) the person has voluntarily relinquished such 
                license, registration, or certification in any of those 
                States after being notified in writing by that State of 
                potential termination for cause.''.

                        TITLE III--MISCELLANEOUS

SEC. 301. REVIEW OF PROPOSED CHANGES TO OPERATION OF MEDICAL 
                    FACILITIES.

  Section 8110 of title 38, United States Code, is amended by adding at 
the end the following new subsections:
  ``(d) The Secretary may not in any fiscal year close more than 50 
percent of the beds within a bed section (of 20 or more beds) of a 
Department medical center unless the Secretary first submits to the 
Committees on Veterans' Affairs of the Senate and the House of 
Representatives a report providing a justification for the closure. No 
action to carry out such closure may be taken after the submission of 
such report until the end of the 21-day period beginning on the date of 
the submission of the report.
  ``(e) The Secretary shall submit to the Committees on Veterans' 
Affairs of the Senate and the House of Representatives, not later than 
January 20 of each year, a report documenting by network for the 
preceding fiscal year the following:
          ``(1) The number of medical service and surgical service 
        beds, respectively, that were closed during that fiscal year 
        and, for each such closure, a description of the changes in 
        delivery of services that allowed such closure to occur.
          ``(2) The number of nursing home beds that were the subject 
        of a mission change during that fiscal year and the nature of 
        each such mission change.
  ``(f) For purposes of this section:
          ``(1) The term `closure', with respect to beds in a medical 
        center, means ceasing to provide staffing for, and to operate, 
        those beds. Such term includes converting the provision of such 
        bed care from care in a Department facility to care under 
        contract arrangements.
          ``(2) The term `bed section', with respect to a medical 
        center, means psychiatric beds (including beds for treatment of 
        substance abuse and post-traumatic stress disorder), 
        intermediate, neurology, and rehabilitation medicine beds, 
        extended care (other than nursing home) beds, and domiciliary 
        beds.
          ``(3) The term `justification', with respect to closure of 
        beds, means a written report that includes the following:
                  ``(A) An explanation of the reasons for the 
                determination that the closure is appropriate and 
                advisable.
                  ``(B) A description of the changes in the functions 
                to be carried out and the means by which such care and 
                services would continue to be provided to eligible 
                veterans.
                  ``(C) A description of the anticipated effects of the 
                closure on veterans and on their access to care.''.

SEC. 302. PATIENT SERVICES AT DEPARTMENT FACILITIES.

  (a) Scope of Services.--Section 7803 is amended--
          (1) in subsection (a)--
                  (A) by striking ``(a)'' before ``The canteens''; and
                  B) by striking ``in this subsection;'' and all that 
                follows through ``the premises'' and inserting ``in 
                this section''; and
          (2) by striking subsection (b).
  (b) Technical Amendments.--(1) Paragraphs (1) and (11) of section 
7802 are each amended by striking ``hospitals and homes'' and inserting 
``medical facilities''.
  (2) Section 7803, as amended by subsection (a), is amended--
          (A) by striking ``hospitals and homes'' each place it appears 
        and inserting ``medical facilities''; and
          (B) by striking ``hospital or home'' and inserting ``medical 
        facility''.

SEC. 303. REPORT ON ASSISTED LIVING SERVICES.

  Not later than April 1, 2000, the Secretary of Veterans Affairs shall 
submit to the Committees on Veterans Affairs of the Senate and House of 
Representatives a report on the feasibility of establishing a pilot 
program to assist veterans in receiving needed assisted living 
services. The Secretary shall include in such report recommendations 
on--
          (1) the services and staffing that should be provided to a 
        veteran receiving assisted living services under such a pilot 
        program;
          (2) the appropriate design of such a pilot program; and
          (3) the issues that such a pilot program should be designed 
        to address.

SEC. 304. CHIROPRACTIC TREATMENT.

  (a) Establishment of Program.--(1) Within 120 days after the date of 
the enactment of this Act, the Under Secretary for Health of the 
Department of Veterans Affairs, after consultation with chiropractors, 
shall establish a policy for the Veterans Health Administration 
regarding the role of chiropractic treatment in the care of veterans 
under chapter 17 of title 38, United States Code.
  (b) Definitions.--For purposes of this section:
          (1) The term ``chiropractic treatment'' means the manual 
        manipulation of the spine performed by a chiropractor for the 
        treatment of such musculo-skeletal conditions as the Secretary 
        considers appropriate.
          (2) The term ``chiropractor'' means an individual who--
                  (A) is licensed to practice chiropractic in the State 
                in which the individual performs chiropractic services; 
                and
                  (B) holds the degree of doctor of chiropractic from a 
                chiropractic college accredited by the Council on 
                Chiropractic Education.

SEC. 305. DESIGNATION OF HOSPITAL BED REPLACEMENT BUILDING AT IOANNIS 
                    A. LOUGARIS DEPARTMENT OF VETERANS AFFAIRS MEDICAL 
                    CENTER, RENO, NEVADA.

  The hospital bed replacement building under construction at the 
Ioannis A. Lougaris Department of Veterans Affairs Medical Center in 
Reno, Nevada, is hereby designated as the ``Jack Streeter Building''. 
Any reference to that building in any law, regulation, map, document, 
record, or other paper of the United States shall be considered to be a 
reference to the Jack Streeter Building.

             TITLE IV--CONSTRUCTION AND FACILITIES MATTERS

SEC. 401. AUTHORIZATION OF MAJOR MEDICAL FACILITY PROJECTS.

  The Secretary of Veterans Affairs may carry out the following major 
medical facility projects, with each project to be carried out in the 
amount specified for that project:
          (1) Renovation to provide a domiciliary at Orlando, Florida 
        in a total amount not to exceed $2,400,000, to be derived only 
        from funds appropriated for Construction, Major Projects, for a 
        fiscal year before fiscal year 2000 that remain available for 
        obligation.
          (2) Surgical addition at the Kansas City, Missouri, 
        Department of Veterans Affairs medical center, in an amount not 
        to exceed $13,000,000.

SEC. 402. AUTHORIZATION OF MAJOR MEDICAL FACILITY LEASES.

  The Secretary of Veterans Affairs may enter into leases for medical 
facilities as follows:
          (1) Lease of an outpatient clinic, Lubbock, Texas, in an 
        amount not to exceed $1,112,000.
          (2) Lease of a research building, San Diego, California, in 
        an amount not to exceed $1,066,500.

 SEC. 403. AUTHORIZATION OF APPROPRIATIONS.

  (a) In General.--There are authorized to be appropriated to the 
Secretary of Veterans Affairs for fiscal year 2000 and for fiscal year 
2001--
          (1) for the Construction, Major Projects, account $13,000,000 
        for the project authorized in section 401(2); and
          (2) for the Medical Care account, $2,178,500 for the leases 
        authorized in section 402.
  (b) Limitation.--The project authorized in section 401(2) may only be 
carried out using--
          (1) funds appropriated for fiscal year 2000 or fiscal year 
        2001 pursuant to the authorization of appropriations in 
        subsection (a);
          (2) funds appropriated for Construction, Major Projects, for 
        a fiscal year before fiscal year 2000 that remain available for 
        obligation; and
          (3) funds appropriated for Construction, Major Projects, for 
        fiscal year 2000 for a category of activity not specific to a 
        project.

                              Introduction

    H.R. 2116 addresses a spectrum of issues reviewed by the 
Committee in hearings and through other oversight mechanisms 
over the course of this year.
    The Committee's hearing on February 11, on the Department's 
budget for fiscal year 2000 set an important framework for its 
oversight and legislative agenda this year.
    On February 24, 1999, the Committee's Subcommittee on 
Health held a hearing to develop in greater depth an 
understanding of the VA Medical Care budget for fiscal year 
2000 and the fiscal state of the VA health care system. Those 
testifying at the hearing included: Dr. Thomas Garthwaite, the 
VA's Deputy Under Secretary for Health; William (Ted) Galey, 
M.D., Director VISN 20; Mr. James Farsetta, Director VISN 3; 
Ms. Laura Miller, Director VISN 10; Mr. Thomas Trujillo, former 
Director of VISN 18; Mr. Nick Bacon, Director of the Arkansas 
Department of Veterans Affairs; Mr. Dennis Cullinan, Director, 
National Legislative Service, Veterans of Foreign Wars; Ms. 
Jacqueline Garrick, Deputy Director, National Veterans Affairs 
and Rehabilitation Commission, The American Legion; Mr. Richard 
A. Wannemacher, Jr., Associate National Legislative Director, 
Disabled American Veterans; Mr. Harley L. Thomas, Associate 
Legislative Director, Paralyzed Veterans of America; Ms. 
Veronica A'zera, Legislative Director, AMVETS; and Mr. George 
C. Duggins, National President, Vietnam Veterans of America.
    Thereafter, the Subcommittee on Health held oversight 
hearings on issues central to future planning for VA health 
care. On March 10, 1999, the Subcommittee took testimony on the 
Veterans Health Administration's management of its capital 
assets. Among those testifying at that hearing were Mr. Stephen 
P. Backhus, Director, Veterans' Affairs and Military Health 
Care Issues, Health, Education, and Human Services Division, 
General Accounting Office; Dr. Daniel H. Winship, Dean, Loyola 
University, Chicago Stritch School of Medicine; Dr. Thomas 
Garthwaite, the VA's Deputy Under Secretary for Health.
    On April 22, 1999, the Subcommittee on Health received 
testimony on the future of VA's long-term care program. Those 
testifying at this hearing included: Dr. Kenneth W. Kizer, the 
VA's Under Secretary for Health; Dr. Judith A. Salerno, Chief 
Consultant of VA's Geriatrics and Extended Care Strategic 
Healthcare Group; Dr. John Rowe, Chairman, Federal Advisory 
Committee on the Future of VA Long-Term Care; Mr. Robert Shaw, 
President, National Association of State Veterans Homes; Pamela 
Zingeser of Birch and Davis; Kathleen Greve, VA's Chief of 
State Home Construction; Mr. Steve Watson, Administrator of the 
Ocala Harborside Healthcare Nursing Home, and Mr. Rick Jelinek, 
Senior Vice President, Managed Care Solutions.
    Following up on its prior hearings and oversight work, the 
Subcommittee developed, and on May 19, 1999, received testimony 
on a draft bill entitled the Veterans' Millennium Health Care 
Act and on a second draft bill to establish a pilot program for 
the care of certain veterans' dependents. Among those 
testifying at this hearing were: Dr. Kenneth W. Kizer, the VA's 
Under Secretary for Health; Mr. John R. Vitikacs, Assistant 
Director, Veterans Affairs and Rehabilitation Commission, The 
American Legion; Mr. Dennis M. Cullinan, National Legislative 
Director, Veterans of Foreign Wars; Mr. Richard A. Wannemacher, 
Jr., Associate National Legislative Director, Disabled American 
Veterans; Mr. Larry D. Rhea, Deputy Director of Legislative 
Affairs, Non Commissioned Officers Association; Mr. Harley L. 
Thomas, Associate National Legislative Director, Paralyzed 
Veterans of America; Colonel Robert F. Norton, USA (Ret.), 
Deputy Director of Government Relations, The Retired Officers 
Association; Mr. John J. Daly, Legislative Assistant, The 
Retired Enlisted Association; and Mr. Rick Weidman, Legislative 
Director, Vietnam Veterans of America.
    In light of the testimony on May 19, substantial changes 
were made to the draft legislation. On June 9, the Subcommittee 
on Health held a meeting to consider the revised draft, 
captioned the Chairman's mark of the Veterans' Millennium 
Health Care Act. This draft bill was approved by the 
Subcommittee with an amendment offered by the Ranking Member of 
the Health Subcommittee, Rep. Luis Gutierrez. The amendment 
would provide for a one-year extension of VA's sexual trauma 
counseling program (through 2002) and for mandating that VA 
operate that program. The Subcommittee recommended that the 
legislation, subsequently introduced as H.R. 2116, be referred 
for consideration by the Full Committee.

                      Summary of the Reported Bill

I. Long-term care reform
    These provisions would:

    (1)  Lmandate that VA operate and maintain a national 
program of extended care services and would specify that that 
program must include geriatric evaluations, nursing home care 
(in-house and contract), adult day health care, domiliciary 
care and respite;
    (2)  Lrequire VA to maintain nationally the level of ``in-
house'' extended care services provided as of September 30, 
1998;
    (3)  Lrequire VA, in addition to maintaining such capacity, 
to develop and begin to implement by January 1, 2000 a plan for 
carrying out the recommendation of the Federal Advisory 
Committee on the Future of Long-Term Care that VA should 
increase both home and community-based care options as well as 
the percentage of the medical care budget dedicated to such 
care;
    (4)  Lmandate VA to provide needed extended care services 
in the case of veterans who are 50 percent service-connected or 
in need of such care for a service-connected condition; and 
provide such veterans highest priority for placement in VA 
nursing homes;
    (5)  Lprovide, in the case of a veteran in need of extended 
care services for a nonservice-connected condition (other than 
a veteran described in paragraph (4) above), that VA shall--
          (a) Lin providing nursing home care in VA facilities, 
        give priority to placements (i) to rehabilitate 
        patients, (ii) for unique patient populations (such as 
        Alzheimers' disease), and (iii) for patients with no 
        other good placement options;
          (b) Lestablish a copayment policy (applicable to 
        extended care of more than 21 days in a year) which 
        would be based on the following principles applied in 
        State veterans' homes:
                 L(i) the establishment of a maximum monthly 
                copayment;
                 L(ii) the payment requirement would be based 
                on an ability-to-pay formula tied to income and 
                assets of a veteran and spouse;
                 L(iii) provision would be made to protect the 
                veteran's spouse (if she/he lives in the 
                community) from financial hardship by exempting 
                at least part of the couple's income and assets 
                from consideration in determining the copayment 
                obligation; and
                 L(iv) providing for the veteran to retain a 
                monthly personal allowance.
    (6)  Lestablish a revolving fund in the Treasury in which 
to deposit copayments under paragraph (5)(b) to be used to 
expand extended care services, as described in paragraph (3) 
above;
    (7)  LLift the six-month limit on VA providing adult day 
health care;
    (8)  LAuthorize VA to furnish respite care services under 
contract in the veteran's home or in any other setting;
    (9)  LAuthorize VA to expand the scope of the State home 
program to encompass all extended care services;
    (10) LRevise the priority system for the award of grants 
under the State home construction program (A) to provide a 
higher priority for renovation projects than accorded under 
current law (with highest priority for projects to remedy life-
safety problems), (B) for applications for bed-producing 
projects, prioritize based on the relative need for adding new 
beds (with higher priority to states with great need vs. those 
with moderate or limited need, and taking into account existing 
VA and community nursing home beds), and (C) to ``grandfather'' 
those VA-approved projects for which states have provided 
funding in advance; and
    (11) LRequire VA to report to Congress on the feasibility 
of a pilot program to provide veterans assisted living 
services.
II. Improved access through facility realignment
    These provisions would:

    (1) LRequire VA to establish enhanced-service programs to 
improve access and quality of service provided at medical 
centers which (A) are no longer providing high quality, 
efficient hospital care based on such factors as (i) current 
and projected need for the service, (ii) functional 
obsolescence, and (iii) aging physical plant, and (B) could 
obtain needed hospital care services from a nearby VA facility 
or under reasonable contract arrangements;
    (2) Lprovide for the development of an enhanced service 
plan at a designated center (to be based on strategic network 
planning) that would allow for--
          (a) Lceasing to provide hospital (or other) care at 
        the medical center;
          (b) Lcontracting or otherwise arranging for the 
        provision of needed hospital or other care;
          (c) Llong-term leasing of buildings or grounds which 
        are no longer needed;
          (d) Lretaining locally operational savings as well as 
        the proceeds of long-term leases to be used to 
        establish and operate modern clinics and/or extended 
        care services;
          (e) Lproviding re-employment assistance to those 
        displaced;

    (3) Lrequire VA to provide for veterans organizations, 
employee unions, and other interested parties to participate in 
developing an enhanced service plan;
    (4) Lprovide that such a plan may in no way diminish the 
VA's obligation to maintain specialized medical programs;
    (5) Lprovide that VA cannot implement an enhanced service 
plan without first submitting the proposed plan and 
justification to Congress, and waiting for a period of 45 days;
    (6) Lexpand VA's authority to enter into enhanced-use 
leases by
          (a) Lauthorizing VA to enter into a long-term lease 
        of property when that would enable it (as demonstrated 
        in a business plan) to apply the proceeds of the lease 
        to demonstrably improve services in that geographic 
        area (such as by using such monies to lease and operate 
        a new outpatient clinic);
          (b) Lextending the duration of such a lease term for 
        up to 75 years (to encourage maximum return);
          (c) Lproviding that funds from enhanced use or other 
        long-term leases shall be deposited in a new Health 
        Services Improvement Fund (with not less than 75 
        percent of the proceeds to be made available to the 
        network where the property is located); and
          (d) Lauthorizing VA to use minor construction funds 
        (rather than medical care funds alone) to meet costs 
        involved in such leasing.
III. Eligibility reform
    These provisions would:

    (1) Lprovide specific authority for VA care and treatment 
for veterans who have sustained an injury in combat recognized 
by the award of the Purple Heart, and would provide them the 
same priority as former POW's and veterans who are 10 or 20 
percent service-connected;
    (2)(a) provide specific authority for VA care and treatment 
for those TRICARE-eligible military retirees who are not 
otherwise eligible for VA care as ``category A'' veterans (this 
legislation would make them category A veterans with priority 
immediately below ``group 6'');
    (b) require VA and DoD to enter into an implementing 
agreement under which DoD would reimburse VA at rates to be 
agreed upon by the Secretaries, but which must be sufficient 
for VA to recover the costs of treating such retirees;
    (c) limit VA from entering into an agreement to provide 
care to these veterans in any area unless VA would recover its 
costs and has certified and documented that it has the capacity 
to provide such care; and
    (d) provide for phased implementation.
IV. Enhanced revenues
    These provisions would:

    (1) Ldirect VA to establish a copayment policy applicable 
to extended care services, as described in section I(5)(b), 
above, with revenues to be used to expand home and community-
based extended care;
    (2) Lsubject to the current statutory exemptions, authorize 
VA, though regulations which VA may promulgate, to (a) increase 
the copayment amount on prescription drugs; and (b) establish 
reasonable copayments on hearing aids, eyeglasses, electronic 
equipment, and other costly items or equipment furnished a 
veteran for a nonservice-connected condition (but specifically 
exempt wheelchairs and artificial limbs from any copayment 
requirement);
    (3) Lestablish that new revenues under the bill (other than 
those for extended care services and in paragraph (5) below) 
would be for deposit into a new Health Services Improvement 
Fund, which would be free of any requirement that such amounts 
must be made available for expenditure in appropriations acts;
    (4) Ldirect the Secretary to establish a more appropriate 
copayment, or schedule of copayments, applicable to outpatient 
care provided to category C veterans (in lieu of the current 
requirement that the copayment is 20 percent of the average 
cost of an outpatient visit); and
    (5) Lrequire (if the United States prevails in a suit 
against tobacco companies to recover costs incurred to the 
Government attributable to tobacco-related illnesses) that (a) 
VA shall retain the proportionate amount of the recovery 
attributable to VA's costs of providing care for tobacco-
related illnesses, and (b) such funds are to be deposited in a 
trust fund in the Treasury to be available after fiscal year 
2004 for furnishing medical care and conducting research.
V. Other Program Improvements
    (1)  LProvide compensation under title 38, United States 
Code, section 1151 and, health care coverage to a veteran who 
suffers disability or death as a result of participation in a 
VA compensated work therapy program;
    (2)  LExtend, through December 31, 2002, eligibility for 
Vet Center counseling to Vietnam-era veterans;
    (3)  LExtend, until September 30, 2002, VA's authority to 
make grants to assist homeless veterans, and strike limits on 
the number of vans which such grants may support;
    (4)  LExtend the requirement that VA maintain special 
committees relating to post-traumatic stress disorder and to 
the care of the seriously chronically mentally ill;
    (5)  LAuthorize VA nonprofit corporations to accept 
donations to support VA continuing education needs;
    (6)  LClarify the authority of VA's canteen service to sell 
items to outpatients and for use off the premises.
    (7)  LAuthorize VA to establish and make reasonable 
emergency care payments for ``category A'' (priority 1-6) 
veterans who (a) have no health insurance or other medical care 
coverage, and (b) are enrolled in the VA health care system and 
have received VA care within the twelve months before the 
emergency treatment.
    (8)  LAuthorize VA to establish a three-year pilot program 
in up to four networks to provide primary care services 
(subject to reimbursement) to dependents of veterans.
    (9)  LRequire VA to report to Congress on proposed closures 
within a fiscal year of 50 percent or more of the beds in 
certain bed sections at any VA medical center, and to notify 
Congress annually by network of closures and mission changes in 
other bed sections.
    (10) LRequire VA to establish a policy on the role of 
chiropractic treatment in the Department's care of veterans.
    (11) LProvide that VA may not employ a health care 
professional if a state has terminated for cause the 
individual's license to practice.
    (12) LExtend by one year VA's authority to provide sexual 
trauma counseling, and direct that the VA operate the program 
during that period.
    (13) LAuthorize two major construction projects and two 
major medical facility leases.
    (14) LName a new replacement hospital building at the Reno, 
Nevada VA medical center for a veteran who is the most 
decorated combat veteran in that State.

                       Background and Discussion

    Three years ago, this Committee developed and held hearings 
on legislation to reform VA rules governing eligibility for 
care. That ``eligibility reform'' legislation, Public Law 104-
262, paved the way for a major shift--from primary reliance on 
VA hospital care to less costly outpatient care. It also 
resulted in vastly improved access for many veterans.
    That legislation was described as a first step on a path to 
reform of the VA health care system. With H.R. 2116, the 
Committee takes another very significant step in tackling some 
of the major challenges facing VA. In addressing in this 
legislation many of the key issues discussed in hearings over 
the course of this year, the Committee offers a blueprint to 
help position VA to meet pressing veterans' needs in the new 
millennium.
    Overall, the bill has four central themes: (1) to provide 
new direction to address veterans' long-term care needs; (2) to 
expand veterans' access to care; (3) to close gaps in current 
eligibility law; and (4) to establish needed reforms to improve 
the VA health care system.

                             LONG-TERM CARE

    The Department of Veterans Affairs has long recognized the 
aging of America's World War II and Korean War veterans as a 
major challenge for its health care system. Aging veterans' 
access to acute-care services has expanded significantly since 
the publication in 1984 of a VA needs assessment entitled 
``Caring for the Older Veteran''. In contrast, VA extended care 
and long-term care programs have not experienced comparable 
growth. Thus, veterans who have enjoyed markedly improved 
access to ambulatory or hospital care have been at greater risk 
with respect to needed nursing home care or alternatives to 
institutional care.
    The VA's fiscal year 2000 budget cited the need to increase 
spending for community-based long-term care. However, rather 
than presenting a realistic plan for expanding the delivery of 
such services, that budget effectively proposed a dramatic 
reduction in VA's real spending power. As documented in the 
Committee's budget hearings earlier this year, the 
Administration's ``plan'' for VA health care for the coming 
fiscal year is for reductions in services; its budget provides 
no plausible strategy or mechanism to expand long-term care.
    While VA may be faulted for years of skirting its 
responsibility to plan and budget for veterans' long-term care 
needs, its policy of decentralizing decisionmaking authority 
has compounded the problem.
    Since its decentralization in 1995, the Veterans Health 
Administration (VHA) has undergone enormous change. Long-term 
care programs have been affected by changes in workload and 
policy. Twenty-two network directors nationwide now make 
decisions about policy and funding that were once made at VA 
Headquarters. National service chiefs who once made decisions 
about various programs became ``consultants''. In their new 
roles, consultants could offer only advice about program 
management.
    Coinciding with the implications of these organizational 
changes, tighter budgets created additional challenges for VHA. 
Many viewed the payment methodology under VA's new funding 
allocation mechanism as a disincentive to operating long-term 
nursing home care programs. Nursing home care, which VA 
officials came to see as a ``discretionary'' program, became 
vulnerable to cost-cutting, and Headquarters, by design, had 
little ability to affect network decisions.
    A survey of VA chiefs of staff initiated by the Committee's 
Ranking Member last year documented these and other changes 
which have affected VA long-term care programs. Among its 
findings, the survey documented that many medical centers have 
changed the mission of their nursing home units, offering post-
acute restorative, rehabilitative, and palliative care, rather 
than ongoing care for age-associated problems. The survey also 
found that the number of beds VA funds or operates devoted to 
providing long-term care had dropped.
    The Committee believes that, while VA has demonstrated some 
improvements in quality and increased the number of new 
veterans it treats, decentralization has also led to troubling 
shifts in long-term care delivery patterns. The result has been 
marked variability--from network to network--in veterans' 
access to VA nursing home care and nursing home care 
alternatives.
    It is untenable that VA network or facility directors 
should dismantle critically needed care programs on the basis 
that nursing home care is costly or that Congress has somehow 
invited VA officials to exercise the discretion to provide or 
not provide such care.
    Veterans' advocates have rightly called for a legislative 
response to this disturbing situation. But formulating such 
legislation requires a measured, balanced hand. That effort 
must acknowledge budget constraints as well as other areas of 
unmet or only partially-met need. It must also recognize that 
the formidable costs associated with long-term care create 
access barriers for Americans at large.
    This Committee has for some time pressed the Department to 
formulate a plan to provide for veterans' long-term care needs. 
In response, the Under Secretary for Health established a 
Federal Advisory Committee on the Future of VA Long-Term Care 
early in 1997. Among its charges, the Advisory Committee was 
asked to evaluate access to long-term care for veterans, 
appropriate models for service delivery, and the VA's 
appropriate investment in long-term care. The Committee's 
findings and recommendations were published in June 1998 in 
``VA Long-Term Care At The Crossroads: Report of the Federal 
Advisory Committee on the Future of VA Long-Term Care.'' Unlike 
VA's 1984 report, ``Caring for Older Veterans,'' which assessed 
veterans' needs but failed to provide a strategy for meeting 
them, the advisory committee's report frankly acknowledged that 
its charge was to take account of budget constraints in 
formulating a plan for the future of VA long-term care.
    Among its recommendations, the Advisory Committee called on 
VA to establish performance measures, financial incentives and 
broad national guidance for VA long-term care. VA now operates 
or funds three nursing home programs; the Committee recommended 
that VA maintain a core of VA-delivered services, but meet 
additional service goals through contracting and use of the 
State home program.
    The Advisory Committee also recommended VA triple the 
percentage of the VA health care budget devoted to home and 
community based long-term care services and double the 
proportion of long-term care spending invested in home care, 
community-based services, and ``enriched housing'' programs. It 
recommended establishing a ``grandfather'' clause for patients 
who have resided in VA facilities for more than 1000 days. 
Notwithstanding its receipt of this report last year from an 
Advisory Committee, the Department has been slow to adopt or 
otherwise act on those recommendations.
    The reported bill builds on the Advisory Committee's 
findings and recommendations, but goes considerably further. 
The bill squarely addresses the notion that VA long-term care 
programs are simply ``discretionary''. This notion holds that--
because the Secretary ``may'' provide such care to veterans 
(rather than ``shall'' provide, subject to the availability of 
resources)--the Secretary (or his subordinates) may also opt 
not to provide such services. If the Secretary has the 
authority not to provide such services to all veterans in need, 
some officials apparently reason, he must also be free not to 
operate such programs. While such reasoning is spurious, it has 
clearly taken hold among those whose decisions are apparently 
colored by the high cost of operating these programs. It is 
most disturbing that this misconception is held at the highest 
levels of the Department, as reflected in the recent testimony 
of VA's chief physician:

          Dr. KIZER. . . . [U]nder the law we are mandated to 
        provide acute care services. Long-term care is a 
        discretionary item.

           *       *       *       *       *       *       *

          [T]oday under the law, long-term care is considered a 
        discretionary program, not on the same footing as acute 
        care service. And in an era of severe budget 
        limitations and constraints, some of the changes that 
        have been seen with regard to the service of long-term 
        care should really come as no surprise given the 
        inequity between how those are treated under the law. 
        And we hope that as a result of this and continuing 
        dialogue, we will achieve parity for long-term care and 
        acute care, and the statutory recognition that these 
        are merely different points along a continuum of care 
        that should be provided for, not only veterans, but by 
        all health plans.'' (Subcommittee on Health, Hearing on 
        Long-Term Care, April 22, 1999)

    It is important that Congress set to rest the notion that 
its actions have created a legal chasm requiring VA to provide 
acute care, on the one hand, while permitting it not to provide 
long-term care, on the other. The reported bill, accordingly, 
would bury the myth that VA medical centers may cease to 
provide nursing home care, for example, as a matter of 
budgetary or programmatic discretion. To the contrary, the bill 
makes clear that extended care (as defined in new section 
1710A) is as much an element of VA's medical care mission as is 
ambulatory or other acute care. However, given the implications 
of a Congressional Budget Office cost estimate of any 
legislation which employs the phrase ``the Secretary shall 
provide . . . '' specified services, this measure does not 
state that VA shall provide extended care services to all 
veterans whom it enrolls for VA care. At the same time, that 
omission is not intended to signal that VA has a greater 
obligation to provide acute care services than long-term care, 
or that VA must deploy its resources so as to maximize the 
number who receive acute care services, while limiting the 
number to whom it provides long-term care. With respect to the 
April 22 testimony quoted above, nothing in this bill (or 
chapter 17 of title 38, United States Code, as so amended) 
would bar the Secretary from limiting the number of veterans 
enrolled (under section 1705 of title 38) to a population which 
could receive a complete continuum of care.
    The reported bill would, however, make several significant 
changes to lift limits that may now impede VA from providing a 
needed continuum of care or that limit VA from providing care 
in the most appropriate mode. The measure directs VA to develop 
a plan for, and begin to carry out, the Advisory Committee's 
recommendation to expand home and community-based care options 
for veterans needing long-term care through an increase in 
spending on such services. The measure would also adopt the 
Advisory Committee's recommendation regarding the assignment of 
priorities for nursing home placements. But it would go further 
to direct that highest priority for such placements should go 
to veterans in need of such care for a service-connected 
disability and to those in need of such care who have a 
service-connected disability rated 50 percent or greater. H.R. 
2116 also directs VA to provide extended care services, as 
needed, to these service-connected veterans. Such direction 
should not effect a substantial change from current practice, 
which has long recognized the debt owed both the service-
connected veteran needing care for a service-connected 
disability as well as the veteran with profound service-
incurred health problems. By way of increasing VA's flexibility 
to meet veterans' long-term care needs, the measure would lift 
a six-month limitation in current law on provision of adult day 
health care. It would also authorize VA to provide respite care 
(now limited to care in VA facilities) through contract 
arrangements. VA could, accordingly, provide respite care in 
the veteran's home (which in the view of the Advisory Committee 
represents the preferred location), in community nursing homes, 
or in other residential care facilities.
    With these provisions, the reported bill makes it clear 
that VA has broad authority to provide extended care services, 
through VA facilities and staff and under contract 
arrangements, as appropriate. (As VA medical care 
appropriations are in the nature of ``discretionary spending'', 
however, it should be noted that these provisions do not 
establish an entitlement to care as such.)
    With respect to VA's authority, however, the Subcommittee 
heard testimony at its April 22 hearing which suggests that it 
may be cost-effective for VA to explore contracting for ``care 
coordination and management'' of non-institutionalized veterans 
in need of long-term care services. The Committee learned that 
there are entities experienced in long-term care management 
under Medicaid or similar long-term care programs which may be 
able to provide VA such services. The Committee would encourage 
the Department to consider the development of a pilot program, 
giving first priority for participation to service-connected 
veterans needing such care for service-connected conditions or 
with service-connected conditions rated 50 percent or more. The 
Committee envisions a contractor managing the delivery of 
services under such a pilot. This would include ``leveraging'' 
available VA services (such as outpatient treatment, a home 
improvement/structural alteration grant, and respite care, for 
example) while contracting for or providing directly other 
services which VA is authorized to provide but may not have the 
capacity to do so (to include such noninstitutional 
alternatives to nursing home care as VA has determined 
appropriate under section 101).
Cost-sharing
    The Committee is cognizant that there are budget 
implications associated with its long-term care provisions. It 
is important to note that other provisions of the reported bill 
provide means of offsetting those costs. (See, for example, 
section 107(c)(5)(B).) Section 101 specifically directs the 
Secretary to establish copayments applicable to provision of 
extended care services (as defined in section 101) of 21 days 
or more in any year for a nonservice-connected disability. The 
measure would specifically exempt only veterans who have a 
service-connected disability rated 50 percent or greater from 
responsibility for such cost-sharing.
    The Committee believes that the adoption of such a policy 
is not only a reasonable component of its effort to address 
veterans' long-term care needs, but a step that should be taken 
as a matter of equity. Under current law, largely arbitrary 
circumstances often dictate whether similarly-situated veterans 
will receive entirely cost-free VA nursing home care or bear 
very substantial costs of care--either in a State veterans' 
home or through a required spend-down of assets to qualify for 
Medicaid. All but three states participate in the State home 
program, and in all but one State veterans are required to make 
payments toward the cost of their care, up to a prescribed 
maximum and subject to ability to pay.
    In 1986, Congress established co-payments for VA and 
contract community nursing home care applicable to veterans who 
do not qualify for priority care as so-called ``category A'' 
beneficiaries. Amendments enacted in 1990 subjected such 
veterans to an additional $5-a-day copayment for nursing home 
care. In 1992, the General Accounting Office published a report 
exploring whether VA could more extensively offset some of the 
costs of long-term care. GAO noted that in fiscal year 1990, 
when VA spent some $1.3 billion to provide nursing home and 
domiciliary care, VA offset less than one-tenth of one percent 
of its costs through copayments, which totalled $260,389. GAO, 
in studying the experience in State veterans' homes, found that 
seven of the eight State homes it visited required veterans to 
contribute to their care by means of a co-payment, and that co-
payments were collected from 90 percent of their veteran 
residents. GAO also found that 39 of the (then) 40 states with 
veterans homes required veterans to contribute to the cost of 
their care. Of the 39, 16 set variable copayments based on 
incomes and assets, 15 set variable copayments based only on 
incomes, and 8 charged a fixed copayment regardless of incomes 
or assets.
    In its study, GAO found that states used only financial 
criteria for exempting some veterans from cost-sharing, but 
that states used stricter criteria in determining a veteran's 
ability to make copayments than the ``means test'' threshold 
(then set at $18,171 for a single veteran) in VA. GAO noted 
that none of the homes they visited automatically classifies a 
veteran as unable to pay if he or she received a VA pension or 
was eligible for Medicaid. Two of the eight states, for 
example, required single veterans to make at least minimal 
copayments if their annual incomes exceeded $2400 and $1080, 
respectively. Among the eight, GAO reported that the maximum 
daily copayments were, respectively, $92.56, $90.60, $79.40, 
$77.56, $66.14, $29.59, $18.74, and $5. In setting the 
applicable copayment for any particular veteran, each state 
surveyed had provisions to protect the veteran's spouse by 
excluding the principal residence and a portion of the 
veteran's income from computation towards co-payment. And all 
eight excluded a specified amount of the veteran's monthly 
income from the copayment computation as a personal needs 
allowance.
    GAO concluded that in the face of rising health care costs, 
Congress ``may wish to consider changing the current policy for 
charging veterans for care in VA and community facilities to 
help offset increased operating costs, fund care for more 
veterans, or both.'' The Committee concurs with this 
recommendation, and the reported bill, accordingly, makes 
provision that such copayments are to be deposited into a new 
revolving fund to be used exclusively to provide extended care 
services. In so providing, the Committee intends that such 
copayments would help offset the costs of expanding home and 
community-based long-term care as required under section 101(b) 
of the reported bill and any other new costs under section 101.
    While section 101 vests some discretion in the Secretary to 
develop a methodology for establishing copayment amounts, it 
directs that such a methodology provide for variable copayments 
(based on all family income and assets). The measure also 
requires that the copayment policy provide (in the case where 
the veteran has a spouse who resides in the community) for 
protecting the spouse from financial hardship by not counting 
all of the income and assets as available for determining the 
copayment obligation, and allow the veteran to retain a monthly 
personal allowance. The Committee does not intend that the 
copayment be simply a symbolic or token payment. It is intended 
to help offset the significant costs of VA long-term care 
programs, and to address the inequity in current law, described 
above. Thus, it is the Committee's intention that VA implement 
a copayment methodology under which the maximum copayment 
amount would not be less than the median figure among the 
maximum amounts employed by the various states which require a 
copayment.
State homes
    Perhaps the most important partners in VA's efforts to 
provide for the long-term care needs of eligible veterans are 
the states, which provide care through 95 State veterans homes. 
The State home program is a longstanding Federal-state 
partnership under which the VA provides both grant support (of 
up to 65 percent of cost) for the construction and renovation 
of homes and per diem payments to cover up to 50 percent of the 
cost of caring for eligible veterans in these homes. Forty-
three states are operating homes under the program, up from 35 
in 1988; four states which do not have State homes have 
recently been awarded grants or filed applications. Over the 
last decade the State homes have expanded from some 18,400 beds 
to 24,000.
    The increased participation of states in the program owes 
much to provisions of Public Law 99-576, enacted in 1986. 
Public Law 99-576 revised provisions of law under which VA had 
previously administered the program. Under then-existing law, 
VA maintained that it had no basis to differentiate among and 
establish priorities by which to rank or weight applications. 
Accordingly, the Department awarded grants in the order in 
which applications (which met the statutory criteria) were 
received. This ``first-come/first served'' system, however, was 
seen as a disincentive to states which had not participated in 
the program. Notwithstanding the benefits of constructing and 
operating State-operated extended-care beds in previously non-
participating states, such states' applications might be years 
away from receipt of grant support, in a queue behind earlier-
filed (but not necessarily more worthy) applications. Public 
Law 99-576, accordingly, revised the enabling law for the State 
home construction program. Among its changes, the law 
established a framework for VA to assign priorities to State 
home applications. The law directed VA to accord highest 
priority to applications for which the state has made available 
its share of funds for the project. Second priority was to go 
to applications from states that do not have any State home 
facilities, third to states that have the greatest need for 
nursing home or domiciliary beds, and fourth to applications 
meeting any other criteria determined by VA.
    The changes established by Public Law 99-576 were 
successful in realizing that law's goals, with both many more 
states participating in the program and a substantial increase 
in the number of new State home beds. The law had unintended 
consequences, however. With the high priority given in the law 
(and its implementing regulations) to bed-producing projects, 
state applications for renovation of existing homes have 
necessarily been given a lower priority. Thus, even renovations 
needed to remedy conditions which may threaten patient safety 
have consistently fallen below bed-producing projects. With the 
requirement in existing law that the Secretary publish a list 
of approved applications in the order of their priority on the 
basis of which to grant awards, these renovation projects have 
consistently been ``outranked'' and gone unfunded. Thus, even 
states which have appropriated their share of funds for such 
projects have seen them languish.
    Both the states and the Department of Veterans Affairs have 
recognized the need to revise existing law. While the National 
Association of State Veterans Homes (NASVH) has proposed a 
legislative remedy, the VA has been more cautious in embracing 
any specific legislative solution. Last year the Department 
contracted with a consultant to conduct a study of the program 
and to develop recommendations for changes in the 
prioritization methodology. The Subcommittee heard testimony on 
April 22 on these issues from the contractor, Birch & Davis 
Associates, Inc.; Department officials; an NASVH 
representative; and a representative of the nursing home 
industry.
    The reported bill addresses many concerns raised by these 
parties. In its review of the program, the consultant, for 
example, identified a number of issues inherent in the current 
prioritization methodology reflected in VA's regulations 
governing the grant program. The consultant reported that:

        [several] issues emanate from the fact that bed need is 
        measured in terms of the maximum bed capacity or bed 
        supply the VA would help finance if Congress 
        appropriated the money. Veterans are assumed to need 
        these beds, and their need is assumed to be uniform 
        nationally. Unmet need is said to exist whenever a 
        state does not have the maximum bed capacity that the 
        VA would fund, regardless of the availability of 
        suitable beds in VA facilities, community nursing and 
        domiciliary homes, or existing State homes. The maximum 
        bed capacity that the VA will fund is 4 nursing home 
        beds per 1,000 veterans and 2 domiciliary beds per 
        1,000 veterans. We found no empirical justification for 
        these bed standards. Second, bed need is measured in 
        terms of the entire veteran population rather than 
        veterans who are likely to utilize beds in State homes 
        . . . Third, unmet bed need is predicated on the number 
        of veterans residing in a state at the time a grant 
        request is submitted rather than the number of veterans 
        who are likely to seek care during a home's useful life 
        . . . Fourth, unmet bed need plays a role in the 
        assignment of priorities to grant requests submitted by 
        states with an unmet bed need at or above 91 per cent 
        of the maximum allowable or ``fundable'' capacity. 
        Unmet bed need has no bearing on the priority assigned 
        to other grant requests, however.

    The reported bill directs the Secretary to prescribe new 
regulations (and thus revise its current regulation at 38 Code 
of Federal Regulations, section 17.211) to set the number of 
beds for each state for which grant assistance may be provided. 
The Committee expects that VA will consult with the NASVH in 
developing such regulations. The bill specifies that such 
regulations are to based on projected demand for such care (ten 
years from date of enactment) on the part of veterans who at 
such time are 65 or older, and that in projecting such demand, 
VA is to take account of travel distance for veterans and their 
families. (In so specifying, the Committee intends that such 
regulations take account of situations where, for example, a 
state may already have a substantial number of State nursing 
home beds, but such facility or facilities are remote from a 
major population center. In such a case, the existence of 
nursing home bed capacity at a great distance from such 
population center should not preclude the state from 
establishing additional State home beds if needed to serve that 
population center.)
    The reported bill also calls for the Secretary to establish 
the criteria (based on each state's relative need for 
additional beds) by which VA would determine whether, with 
respect to applications for bed-producing projects, the state's 
need for additional beds is most aptly characterized as 
``great'', ``significant'', or only ``limited''. This 
characterization would determine the relative priority of any 
bed-producing project under the revised prioritization 
methodology established under the bill. In establishing these 
criteria, VA is to take into account the availability of VA-
operated beds and community nursing home beds which would 
appropriately serve the needs for nursing home care or 
domiciliary care, as pertinent. (The reference to 
``appropriately'' serving such needs reflects the Committee's 
view that levels and quality of care may differ substantially 
from institution to institution. Accordingly, excess capacity 
in one domain (involving a lower level or substantially lower 
quality of care) should not necessarily be construed to 
``appropriately'' serve veterans' need for a particular level 
of care.
    The Committee is also aware that there is variability in 
VA's long-term care resources from network to network. The 
Committee anticipates, accordingly, that in a state where, for 
example, VA provides little or no long-term care in VA nursing 
homes (and relies to a greater extent than in other networks 
and other states on the State home program to meet that need), 
there should be recognition of a greater relative need for 
State-operated nursing home beds in that state than in other 
states in which VA meets a greater ``market share'' of such 
long-term nursing home care needs.
    Rather than adopting the proposal that a first-come/first 
served principle be reestablished, the Committee seeks to 
retain priorities, but to reorder those priorities to achieve a 
better balance between bed-producing projects and renovations, 
and to prioritize within those categories as well. In addition, 
the measure would require clearer direction to the states on a 
number of issues. Among these, the bill would require clearer 
distinctions be drawn between the states' obligations to keep a 
home in good maintenance and repair, on the one hand, and a 
renovation project which may be the subject of grant support, 
on the other. The measure would also place stricter control on 
the states in siting new State home facilities to ensure that 
future State home projects are located in reasonable proximity 
to veteran population centers.
    In the Committee's view, section 206 should help strengthen 
the State home program and thereby maintain a valuable Federal/
state partnership in support of veterans.

                        IMPROVED ACCESS TO CARE

Enhanced Services Program
    Paralleling the experience of medical care in the private 
sector, the VA health care system has undergone a major 
transformation in recent years. Until recently, VA has been 
primarily a hospital-based system. Now, however, most VA care 
is delivered on an outpatient basis, with more and more VA care 
delivered closer to where veterans live. Many factors have 
enabled VA to make these changes. Among them, a reduction of 
over 25,000 acute care beds since September 1994 has permitted 
VA to shift much of its workload from the hospital ward to the 
ambulatory care arena. Along with other changes, it has also 
freed up resources to permit VA to establish more than 200 
community-based outpatient clinics since October 1996. With 
these changes, VA over the last four years has seen an increase 
of 9 million ambulatory care visits and a 31.7 percent decline 
in hospital admissions.
    While the pace of VA's transformation has not been without 
problems, the changes have renewed focus, within VA and 
without, on the infrastructure of VA's health care system. Seen 
from the perspective of veterans' health care needs on the 
brink of a new millennium, VA's health care ``real estate'' 
represents at once both a national expression of the country's 
commitment to veterans and at the same time something of an 
anachronism. VA delivers care at 181 major delivery locations, 
but over 40 percent of its 4,700 buildings have been in 
operation for more than 50 years; almost 200 of them were built 
before 1900. (As the General Accounting Office has noted, many 
organizations in the private sector consider 40-50 years to 
represent the useful life of a building.)
    Many of VA's facilities were designed to provide care in a 
very different manner than the way care is provided today. As 
the VA health care system was being developed, hospitals were 
designed to provide most of the care patients needed, care 
which typically required long lengths of stay. Such buildings, 
however, lacked physician examination rooms where ambulatory 
care is delivered; they were designed without sensitivity to 
patient privacy. While VA has maintained these old structures 
and made renovations to keep them operational and safe, many 
are functionally obsolete. Historically, VA hospitals were not 
consistently sited near veteran population centers. To the 
contrary, facilities to care for an illness like tuberculosis 
or mental illness, which at the time was thought to require a 
tranquil, rural location, are situated in relatively remote 
locations. The rural location once thought beneficial to 
treating these illnesses is now a liability, complicating the 
recruitment of scarce medical specialists, nurses, and 
technicians. Today, occupancy rates at numbers of those 
hospitals are substantially below levels needed for efficient 
operation and optimal quality of care. Maintaining highly 
inefficient hospitals, which were designed and constructed 
decades ago to standards no longer deemed acceptable, 
substantially diminishes the availability of funds needed to 
strengthen care-delivery in facilities which should be 
retained.
    Despite its aging infrastructure and a backlog of major 
construction proposals initiated by VA medical centers 
estimated to be in the billions, VA budget plans have for 
several years clearly given major construction work a very low 
priority. (In contrast to major construction budgets of more 
than $500 million earlier in this decade, VA sought major 
medical construction funding of $121 million in fiscal year 
1998, $84 million in fiscal year 1999, and $73 million in 
fiscal year 2000. Merely maintaining this infrastructure has 
huge costs. In testimony presented to the Subcommittee on 
Health, the General Accounting Office projected that one of 
every four VA medical care dollars is spent on maintaining and 
operating VA's thousands of buildings. GAO warned that VA is 
likely to spend billions of dollars over the next five years to 
operate hundreds of unneeded buildings.
    Congress cannot simply ignore VA's management of its 
capital assets. Until recently, however, it appeared that VA 
itself was ignoring that responsibility. As GAO reported to the 
Subcommittee on Health in a March 10, 1999 hearing, ``VHA's 
planning focuses on individual needs of assets at its 181 
[major] delivery locations, even though most locations operate 
in markets that also include other VA locations.'' GAO 
recommended that VA should instead be focusing its capital 
asset planning not on individual facilities as such but on 
``markets''. GAO urged VA to focus particularly on those 40 
areas (or ``markets'') in which VA has multiple delivery sites 
(from 2 to 9) and on those 66 markets in which there is a 
single VHA facility. GAO expressed the view that VA's 40 
multiple-facility markets offer great opportunity for ``asset 
restructuring and benefit enhancements for veterans'' because 
they have 115 major delivery sites in which utilization is 
significantly below inpatient capacity and these sites 
``compete with other VA locations to serve rapidly declining 
veteran populations.''
    Of VHA's 40 multiple-location markets, GAO estimated that 
VHA spends about $2.7 billion annually to operate and maintain 
3,000 buildings and 10,000 acres in these markets, and plans to 
invest over $1.2 billion to improve these assets over the next 
five years. GAO testified that this ``represents a drain on 
VHA's health care resources because most locations in these 
markets have delivery capacity that VHA considers functionally 
obsolete'', including substandard inpatient and outpatient 
capacity, and safety concerns.
    Illustrating the situation of multiple sites in a single 
market, the Subcommittee on Health heard testimony from the 
dean of a medical school affiliated with one of VA's four 
medical centers in Chicago. Dr. Daniel Winship, a former senior 
official in the Veterans Health Administration, and Dean of 
Loyola University Stritch Medical School, stated that ``by any 
objective measure . . . [the area] does not need four VA 
medical centers. I am confident it could do acceptably well 
with two, probably more optimally with three . . . The VA can 
take a lesson from other health care systems . . . , i.e., 
savings gained by real elimination of duplications and 
redundancies . . . and, yes, even closure of unneeded 
facilities can be applied to more rapidly and completely 
creating ambulatory sites for care. This strategy is NOT one of 
closing the system. Rather, it will replace an archaic, 
decrepit, inefficient delivery system with a new, better, cost 
effective one. Quality will improve, access will improve . . . 
[VA managers] must be allowed to let go of practices which will 
lead to the demise of the system.'' This view generally mirrors 
the findings of the GAO, which in an April 1998 report 
concluded that closing a VA hospital in Chicago would save 
millions and enhance access to services. (GAO/HEHS-98-64, April 
16, 1998).
    VA medical center mission changes and even hospital 
closures have been under discussion for at least a decade, but 
the subject is no longer simply hypothetical. As recently as 
last summer, the Paralyzed Veterans of America for the first 
time called on VA in a resolution ``to develop a plan within 
one year to close down VAMCs which are no longer needed''. The 
resolution's clear goal is that the savings achieved by such 
closures be redirected to improve delivery of needed care.
    For years, VA evaded serious consideration of closing 
inefficient hospitals, despite widespread hospital closures in 
the private sector. Ironically, the first VA hospital closure 
in decades came about not through the persuasiveness of health 
planners, but as a result of an earthquake. The lessons of that 
experience are telling, however. The closure of the Martinez, 
California VA Medical Center and the decision not to build a 
replacement hospital--but instead to establish a full-service 
ambulatory clinic--are widely recognized as having resulted in 
improving care-delivery. The subsequent decision, rejecting 
proposed construction of a replacement hospital in northern 
California, and relying instead on multi-site contracts for 
hospital care, provide an important case study. This experience 
and subsequent mission-changes at other facilities across the 
country suggest a model, provided for in the reported bill, for 
improving VA care-delivery.
    Some have proposed adoption of a ``Base Realignment and 
Closure Commission'' (BRAC) model. But the nature of the BRAC 
process--from enacting such legislation, to establishing a 
commission, conducting exhaustive system and facility review 
and analysis, and carrying out required community hearings--
would take years to reach and carry out final decisions. It is 
also a process which takes authority away from officials 
responsible to Congress for meeting veterans' health care needs 
and vests it in a commission dedicated simply to closing 
facilities.
    The distinction between a BRAC model and this legislation 
was aptly summarized by Dr. Kenneth Kizer, testifying on May 
19, 1999 before the Subcommittee on Health on the draft 
legislation subsequently introduced as H.R. 2116:

        Dr. KIZER: The analogy to the BRAC is a fatally flawed 
        analogy. It is one that contaminates the thinking in 
        the whole process here. BRAC is about taking something 
        away. And despite what the words of BRAC may mean, what 
        it has meant is taking something away from a community. 
        When we talk about realignment of VA facilities, what 
        we are talking about is how can we get the best health 
        care return on investment for the limited dollars that 
        we have. It is not about taking health care away.

    The reported bill gives real meaning to that concept, in 
requiring specifically that any hospital or medical center 
closure must enhance patient care in that area through 
reinvestment of operating funds and capital in new facilities 
or services, such as a new, full-service outpatient clinic or 
community-based clinics, for example.
    In the context of discussions about a ``closure 
commission'', the reported bill very clearly identifies the 
Department charged with responsibility to meet veterans' health 
care needs as the appropriate entity to identify VHA' core 
infrastructure needs. VA clearly has authority under current 
law to take such actions, but it has not done so in a broad-
based manner. The reported bill provides a framework for the 
requisite analysis, planning, participation, and review so 
central to this difficult subject.
    As GAO has testified, VA must begin by asking the right 
questions. It must look methodically and in-depth at geographic 
areas or ``markets'' in which it operates facilities--not 
narrowly and arbitrarily at individual facilities. VA 
contracted for such a market analysis in considering veterans' 
needs for hospital care in northern California, and ultimately 
concluded, prudently in the Committee's view, that construction 
of a $211 million hospital at Travis Air Force Base was not its 
best option. As GAO noted, VA initiated a market-based 
assessment in Chicago in response to GAO's recommendation.
    The intent underlying section 107 is to provide a 
framework--not now provided for under law or published policy--
for VA to realign its health care infrastructure. This 
provision aims to substitute a statutory structure for ad hoc 
decisionmaking, and to provide stakeholders and VA 
administrators confidence that there is a credible path to make 
needed system changes and safeguards against error.
    Section 107 underscores that capital asset management and 
facility realignment--where it can improve access and quality 
of service to the veteran--are responsibilities of the 
Secretary. The measure outlines a two-pronged framework for 
exercising that responsibility. Consistent with GAO's 
recommendations, it envisions a data-driven analysis of 
pertinent VA ``markets'' (as described in GAO's testimony). 
Such an analysis would answer at least two basic questions with 
respect to any such market. First, are one or more VA medical 
centers--in whole or in part--unable to be operated efficiently 
(and to provide care of high quality) because of such factors 
as the cost of operating and maintaining an aging physical 
plant, its functional obsolescence, and limited need for such 
care capacity? A second question follows only if the preceding 
is answered affirmatively. If so, then the bill asks whether 
that inefficiency is so great that it would be demonstrably 
beneficial in terms of patient care, in VA's judgment, to cease 
operating that facility (or cease providing a particular level 
or levels of care there), and either provide for one or more 
other VA facilities in proximity to it to absorb some or all of 
the patient workload, or contract with one or more community 
hospitals which have the capacity and capability to provide 
care of appropriate quality. (Thus, even assuming that a 
particular VA facility is demonstrably ``inefficient'', this 
measure effectively rules out consideration of closure if 
alternative options provide no net benefit. For example, the 
bill would not seek the closure of an ``inefficient'' rural 
facility if such closure meant VA would provide care through 
contract arrangements with a community facility where care is 
clearly of markedly inferior quality.
    Where such a market analysis leads VA officials to conclude 
that a mission change or facility closure is warranted and can 
result in improved access to and quality of care, section 107 
provides VA tools to achieve the best possible outcome for 
veterans and protections for affected VA employees. Consistent 
with the discussion above--that this bill is not aimed at 
closing facilities, but at enhancing services--its focus is on 
the establishment of ``enhanced services programs'' and the 
development of a plan in each instance to achieve it. To that 
end, the bill requires in the case of a medical center or 
centers designated as a site for an enhanced service program, 
that VA is to provide for the participation of veterans 
organizations and employee unions in the development of such 
plans. Central to the development of such plan and to 
materially improving access and care quality is the requirement 
that operating funds (as well as funds under an ``enhanced use 
lease'' of VA property under section 207) be reinvested. In 
that manner, the closure of an obsolete hospital can ``fund'' 
the establishment of a full service VA outpatient clinic or 
series of smaller clinics, for example. Importantly, the 
measure also provides not only contracting authority to ensure 
that a service capability is not lost, but the requirement that 
in such contracting VA maintain ongoing oversight and care-
management of patients placed in community hospitals.
    Rather than a hospital closure provision, section 107 
provides new protections for veterans, employees, and other 
stakeholders, and greater confidence that vital decisions 
regarding VA health care will result not only in a more 
efficient health care system, but a better one.
Reimbursement for emergency treatment
    Section 102 of the reported bill would authorize VA to make 
reasonable payments for emergency treatment which non-VA 
facilities have provided certain enrolled veterans who have no 
medical insurance and no other recourse for payment. VA advises 
that, under current law, it lacks authority (other than through 
the mechanism of a contract) to pay for emergency care of a 
nonservice-connected condition. In the Committee's view, 
uninsured veterans who have a high priority for VA care 
(``category A'' veterans), have relied on VA as their primary 
health-care provider, and have no other recourse for payment 
should not incur extraordinary costs in medical emergencies 
where a VA facility is not reasonably accessible.
    The Committee is aware that many uninsured individuals 
often use emergency rooms as a source of primary care. The 
reported bill is clearly not intended to cover such care. To 
that end, section 102 defines emergency care narrowly to cover 
only situations in which to delay treatment would be hazardous 
to life or health (and does not cover care rendered after the 
patient's condition has been stabilized). The measure also 
provides ample authority for VA to effectively and efficiently 
administer this authority to ensure that scarce resources are 
not inappropriately paid out on claims not contemplated under 
this section. VA should make provision in its implementing 
regulations for an appropriate screening requirement. For 
example, VA could require providers of care to contact the 
Department within a specified period to obtain ``clearance'' or 
confirmation that it is providing true emergency treatment to a 
veteran. (Since such a communication could not reasonably 
address the other elements inherent in establishing eligibility 
under this provision, it could not provide a basis for a VA 
commitment to reimburse for the treatment. Thus any such 
``clinical clearance'' would remain subject to an appropriate 
VA determination that the other conditions specified in the 
bill had been met.) It would serve, however, to provide the 
necessary clinical determination that treatment is being 
rendered in a true medical emergency. At the same time, it 
would also serve to put the provider on notice of the 
importance--in light of the limits on VA coverage for emergency 
care under the measure and the VA's interest that the veteran 
not be billed for services--of transferring the veteran to a VA 
treatment facility at such time as a transfer can be safely 
accomplished.
    The Committee also strongly believes that to ensure even-
handed and efficient administration of this clinical review and 
clearance process, VA should consider establishing a central 
processing office or function that could carry out that 
process, rather than having the function performed at a medical 
center or VISN level. Indeed, the Committee believes it would 
be reasonable and prudent for VA to use a single centralized 
office to administer the entire emergency care reimbursement 
process.
    In adopting the emergency care provision in the bill, the 
Committee recognized the significant potential cost of such a 
measure if limitations were not imposed. To contain costs, the 
Committee has taken steps to ensure that VA will pay for this 
non-VA care only when a veteran has no other recourse for 
payment for the care. The Committee intends that VA truly be a 
payer of last resort.
    The Committee recognizes that for VA to be a payer of last 
resort, it must ascertain before authorizing any payment under 
this section that a veteran has no medical insurance whatsoever 
or any other medical coverage. It must also ascertain that the 
veteran or provider (as pertinent) has exhausted all other 
possible claims and remedies reasonably available against a 
third party which may be liable for payment of the emergency 
care (such as in the case of a work-related injury or a motor 
vehicle accident, for example). In the interest of ensuring 
that scarce VA medical care funds are protected, the Committee 
expects that VA will act aggressively in this regard both in 
the development of implementing policies as well as in the day-
to-day management of this new authority, to ensure that it is 
obtaining all needed information from both the veteran and the 
provider of care.
    In that regard, the Committee understands that as part of 
its enrollment process the VA now seeks information from 
veterans on insurance coverage. With the enactment of section 
102, obtaining complete information on health insurance 
coverage is not only essential to the success of VA's current 
collection efforts, but would help ensure sound administration 
of this proposed new authority. It is not clear, in that 
connection, that the current policy fully elicits such 
information, however. Moreover, it does not identify other 
benefit programs for which a veteran may be eligible, including 
Medicare and Medicaid. The Committee recommends, accordingly, 
that the Department expand and strengthen its efforts to obtain 
all necessary information regarding health insurance and 
benefits coverage. In the Committee's view, such effort should 
be undertaken as part of the enrollment process (rather than in 
the context of an individual or entity filing a claim for 
reimbursement when there may be a greater incentive for less 
than full disclosure).
    The reported bill further provides that VA will promulgate 
regulations which would establish the basis under which it 
would make payments for ``the reasonable value'' of non-VA 
emergency treatment. It is the Committee's view that in setting 
such payment regulations VA should avoid a policy which gives 
providers of emergency care a windfall. In that connection, the 
Committee takes notice of the frequency with which providers of 
emergency care ``write off'' such debts in cases where the debt 
is deemed uncollectable or the costs of collection exceed the 
likely recovery. VA serves a population which is substantially 
elderly, indigent, and chronically ill. Given that this bill 
covers a subset of this population which has no private or 
public medical insurance or coverage, it stands to reason that 
in most instances under current law providers would write off 
the debts arising from the provision of emergency care to these 
veterans. The Committee thus envisions that VA would establish 
rates that are significantly below those paid under the 
Medicare or Medicaid system (or under 38 United States Code, 
section 1728). Such lower rates should also provide a 
significant incentive to the providers of care to actively try 
and obtain reimbursement from those other benefit programs 
before seeking reimbursement from VA. As a further incentive to 
the providers of care, the bill also provides that they must 
accept VA's payment as payment in full.
    The reported bill also limits reimbursement for emergency 
treatment to enrolled veterans who have actually received some 
VA treatment in the preceding twelve months. That requirement 
is intended to ensure that the emergency treatment benefit is 
available only to veterans who rely on VA for their care, not 
those who have simply enrolled for VA care but typically obtain 
their care elsewhere. In including the provision, the Committee 
recognizes that situations may arise where a veteran has sought 
VA care in the previous twelve months, but has been unable to 
obtain care solely due to a VA scheduling problem or error. In 
this limited situation, the Committee contemplates that VA 
regulations might permit the Secretary to waive the treatment 
requirement if to deny reimbursement on that basis would be 
unfair to and likely to subject the veteran to personal 
expense. The Committee would anticipate that such waivers would 
be considered and used very sparingly.
    In the event that the Department has made payment for 
emergency treatment under the terms of the bill and 
subsequently learns of a third party which is liable, the 
measure would provide a remedy. If a third party makes payment 
for care that VA has also paid, the bill would make VA's 
payment an enforceable lien against any recovery the payee has 
received from that third party.
    With the adoption of section 102, the Committee proposes to 
vest the Secretary with important new spending authority. In 
crafting the provision, the Committee has been very cognizant 
of the budget pressures already facing the VA health care 
system. Given existing program demands and budget constraints, 
the Committee has incorporated significant limitations into 
this measure to contain costs and avoid unwarranted outlays. A 
failure to establish meaningful administrative controls, 
however, could jeopardize that goal. The Committee is very 
concerned, accordingly, that in implementing, and designing 
appropriate administrative mechanisms for this important new 
authority the Department give the fullest consideration to the 
importance of instituting appropriate safeguards and controls. 
To that end, the Committee strongly encourages the Department 
to contract for appropriate consultant support to develop 
strong implementing regulations and shape sound mechanisms and 
controls to carry out this authority.
Enhanced revenues
    Through its long years of service to America's veterans, 
the VA health care system has found support primarily as a 
system which is both dedicated to the care and rehabilitation 
of service-connected veterans and serves as a ``safety net'' 
for other veterans who lack medical insurance or other health 
care options. Consistent with this mission, Congress has long 
authorized VA to provide cost-free care.
    Current law sets only very limited cost-sharing 
requirements on veterans. Only one category of veterans is 
subject to copayment requirements for outpatient care, hospital 
care and nursing home care. That requirement applies only to 
those who are not service-connected, have no special 
eligibility for care (such as status as a former prisoner of 
war or in-service exposure to radiation or other such hazards), 
and whose income exceeds the thresholds established under the 
law's ``means test'' formula. For other veterans, however, the 
only cost-sharing requirement under existing law is a modest $2 
copayment for each 30-day supply of medication furnished on an 
outpatient basis for treating a nonservice-connected condition. 
The requirement does not apply to veterans who are 50 percent 
or more service-connected disabled, or to those with low 
incomes.
    Cost-sharing requirements in title 38 have their origin in 
the context of budget reconciliation deliberations. Uncertainty 
regarding the current budget has been a critical factor in 
bringing the subject of cost-sharing into renewed focus. In 
submitting a budget for fiscal year 2000 which proposed no 
increase in funding, the Administration acknowledged that VA 
would face a funding shortfall of more than $1 billion. VA has 
conceded that it has no plan whatsoever to operate under such a 
funding shortfall, that there are no identified ``management 
efficiencies'' that could achieve cost-savings of that 
magnitude (other than reductions and cuts which would have a 
severe impact on patient care), and that network directors 
would simply be tasked to develop and execute plans to operate 
under such a constrained budget. At a budget hearing held by 
the Subcommittee on Health, a panel of network directors 
acknowledged that the level of funding proposed by the 
Administration would require massive reductions in workforce 
and ``draconian cuts'' in services, programs, and potentially 
even closure of needed facilities. While this Committee is 
clearly on record in support of a $1.7 billion increase above 
the Administration's request for fiscal year 2000, the severe 
reductions anticipated under that budget raise the prospect 
that many nonservice-connected veterans who now enjoy free or 
nearly cost-free VA care could lose access to VA services 
entirely. In that regard, the Committee notes the marked 
contrast between cost-sharing in the VA health care system and 
the requirements applicable to military retirees under DoD 
medical programs, health plans offered under the Federal 
Employee Health Benefits Program, and other health plans.
    Retirees who enroll under DoD's TRICARE Prime plan are 
liable for copayments for many medical services in addition to 
office visits, including a $9 copayment for each 30-day 
prescription, a $12 copayment for a home health care visit, and 
20 percent of the contractor fee for durable medical equipment.
    Cost sharing is used extensively in health plans in the 
private sector. A survey of copayment trends in 1996-7 found 
the most common copayment among members of the American 
Association of Health Plans to be $10 for a primary care visit 
and prescription drug copayments in the range of $5 to $10 per 
prescription. Many managed care plans vary copayments for 
pharmacy benefit according to the brand of drug ordered, with a 
lower copayment often required for generic drugs than for brand 
name medications. A recent news account highlights that those 
with other health-care options would, for example, face managed 
care plan prescription copayments of $5 for generic drugs, $15 
to $20 for a brand-name drug on a plan's formulary, and up to 
$40 for a brand-name non-formulary drug (Wall Street Journal, 
January 12, 1999).
    In the Committee's view, authorizing the Secretary to set 
reasonable copayment increases on prescription drugs is a 
reasonable policy in the face of VA's mounting pharmaceutical 
costs--approaching $2 billion annually. Notwithstanding an 
aggressive pharmacy benefits management policy, VA's pharmacy 
costs have nearly doubled since copayments were instituted some 
nine years ago. In that regard, as VA's Under Secretary for 
Health noted in discussing prescription copayments at its May 
19 hearing, VA has become a very attractive provider--
particularly because of the availability of free or very low-
cost prescription drugs--to numbers of veterans who have other 
health care coverage, notably Medicare. The insight of VA's 
Under Secretary for Health on this point, as reflected in a 
colloquy at a May 19 Subcommittee hearing, is illuminating:

          Mr. STEARNS: Do you have any indication whether 
        Medicare-eligible veterans are turning to VA for 
        prescription drugs?
          Dr. KIZER: I can't quantify it in precise dollars, 
        but it is a generally recognized phenomenon that is 
        occurring across the country and for very 
        understandable reasons. It is a hell of a deal to go to 
        the VA for your drugs. I would expect that it is in the 
        hundreds of millions of dollars range.

    As with pharmaceuticals, VA has faced dramatically 
increased costs in prosthetics, with an annual budget now 
approaching $500 million. Since the enactment of Public Law 
104-262, which eased restrictions on providing needed 
prosthetics, VA costs have been increasing at a rate of some 18 
percent annually. VA is providing large numbers of veterans 
hearing aids, eyeglasses and other devices which would either 
not be covered under other health plans or would be subject to 
significant out-of-pocket costs under copayment or deductible 
provisions. In contrast, nonservice-connected veterans, 
receiving a benefit not previously available (other than as 
needed in connection with hospitalization), bear no cost. The 
bill authorizes the Secretary to establish reasonable 
copayments on sensori-neural aids (such as hearing aids and 
eyeglasses), electronic equipment, and any other item or 
equipment (other than a wheelchair or artificial limb) 
furnished for a nonservice-connected condition.
    The Committee believes it is necessary that the Secretary 
implement the cost-sharing policy authorized in the reported 
bill. As the VA health care system in many areas has been under 
strain to serve the many new nonservice-connected veterans who 
have sought care, and has sought authority to provide new 
services such as emergency care, it is unrealistic for it to 
pursue such policies without the assurance of offsetting 
revenues. The Committee seeks improvements in veterans' access 
to care and in the quality of that care. Section 201 provides a 
mechanism to help achieve those objectives.
    The Committee notes that the Secretary has relatively broad 
discretion under section 201. In exercising that discretion, 
however, the Committee believes the Secretary should take into 
account the payments required of military retirees under the 
TRICARE program as well as practices under other health plans, 
while exercising caution that copayments not be set so high as 
to result in veterans not seeking needed care and services 
(particularly in connection with rehabilitative programs). The 
Secretary should also give consideration to revising the manner 
in which existing copayments, particularly on prescription 
drugs, are administered. The failure to require such copayments 
at the time drugs are dispensed to the patient is a major 
factor underlying the poor collections' record in this area. At 
a time that veterans with other health care coverage appear 
increasingly to seek VA care for prescription drugs, VA must 
give greater consideration to securing these payments.
    The Committee notes as well that the cost-sharing 
provisions of the reported bill would enable VA to reassess 
prior policy regarding medications which have been viewed as 
``quality of life'' drugs. The Under Secretary for Health has 
issued a policy regarding one such drug, Viagra, which is not 
included on the VA formulary. VA's policy poses the dilemma 
that such a drug may be denied to even a service-connected 
veteran for whom it may be prescribed to overcome a service-
connected condition, while other Federal programs have 
authorized furnishing the medications. To the extent that VA 
policy has been based on, or influenced by, the high cost of 
this drug, the proposed new copayment authority would provide a 
foundation for the Secretary to set higher copayments for 
particularly costly ``quality of life'' drugs prescribed for 
the treatment of a nonservice-connected condition.
    While the current VA cost-sharing burden on care of 
nonservice-connected conditions of category A veterans is very 
low, the copayments applicable to routine treatment afforded 
so-called ``category C'' veterans is extraordinarily high. 
Under current law, such veterans are liable to pay an amount 
for each outpatient visit equal to 20 percent of the estimated 
average cost of an outpatient visit to a VA facility. The 
Committee understands that the current requirement under that 
provision subjects the veteran to a $45 copayment, without 
regard to whether the patient is seen for a routine office 
visit or for ambulatory surgery. Notwithstanding that veterans 
who are liable for such copayments are deemed under law to be 
able ``to defray the expenses of necessary care'', this 
amount--in the case of routine office visits, in particular--
may in many cases approach the full cost for the episode of 
treatment. Requiring so high a copayment for a routine, primary 
care visit appears to the Committee to be unreasonable. Section 
201 of the reported bill would require the Secretary to 
establish a new copayment policy with respect to so-called 
category C outpatient visits. The Committee recommends that the 
Secretary not set a single copayment amount, but consider 
practices within the health care industry to differentiate 
between primary care and specialty clinic visits.
    Section 202 of the reported bill would establish a new fund 
in the Treasury for deposit of payments under section 201 and 
other specific categories of payments provided for under this 
act. Amounts in the fund would be available without fiscal year 
limitation (and without any requirement that such funds be 
specifically appropriated) for providing care and treatment to 
veterans. The Committee envisions that such payments would help 
in covering the cost of the new emergency treatment authority, 
opening new community-based clinics, and covering the 
increasing costs of drugs and prosthetics.
Military retirees
    Section 104 of the reported bill addresses a longstanding 
concern regarding military retirees' access to medical care. 
With the downsizing and closure of military treatment 
facilities and other changes in DoD health care programs, many 
who made a career of military service have voiced frustration 
at what they view as a broken promise, an assurance of free 
medical care at military treatment facilities. Over the years, 
some retirees--eligible for government care as veterans--have 
turned to the VA. Historically, however, military retirees' 
career status and years of service have afforded them no 
special eligibility for VA medical care. Specifically, retirees 
who have no service-connected disabilities, have no other 
special eligibility status (such as is accorded former 
prisoners of war or those exposed to herbicides during the 
Vietnam War), and whose income exceeds the law's ``means test'' 
threshold have generally had limited access to VA medical 
services. This legislation reflects a recognition that the VA 
health care system can and should be an option for retirees who 
do not otherwise have a priority for VA care.
    Congress has historically sought to maximize opportunities 
for closer coordination and sharing between the VA and DoD 
health care programs. With the enactment in 1982 of the 
Veterans' Administration and Department of Defense Health 
Resources Sharing and Emergency Operations Act, Public Law 97-
174, Congress established a framework to stimulate increased 
sharing of health care resources between VA and DoD in an 
effort to minimize duplication and underuse of those resources. 
That law sought to encourage medical facilities of the 
respective departments to provide services on a reimbursable 
basis to primary beneficiaries of the other department.
    Congress expanded this concept further with the enactment 
in title II of the Veterans Health Care Act of 1992 of a 
provision authorizing VA to treat DoD beneficiaries as a 
subcontractor to DoD contractors. As the Subcommittee on Health 
learned in a field hearing in Boise, Idaho on June 30, 1998, 
the existence of a contract between a TRICARE contractor and a 
VA medical facility does not ensure that the contractor refers 
any patients to VA. Notwithstanding both repeated requests from 
VA to ``activate'' this contract and the urging of the Chairman 
of the Subcommittee on Health, the contractor has not availed 
itself of VA's services.
    In short, notwithstanding the mechanisms in law to expand 
interdepartmental sharing of health care resources and 
increased reliance on VA facilities to treat DoD beneficiaries, 
VA reports that TRICARE contractors have not made extensive use 
of VA as a provider. VA data for fiscal year 1999, for example, 
show that for the first six months of the fiscal year TRICARE 
reimbursements to VA facilities nationwide totalled only $2.3 
million.
    This Committee recognizes that, with the implementation of 
the TRICARE program, the Department of Defense has established 
a national system that links the health care resources of the 
military services with networks of civilian health care 
professionals. All active duty members and their families, 
retirees and their families, and survivors who are not eligible 
for Medicare may participate in at least one of the three 
TRICARE options.
    This legislation is not intended to damage the TRICARE 
program or to interfere with the Department of Defense's 
ability to maximize the use of military treatment facilities in 
order to provide cost effective services and support readiness 
training. The Secretaries of the Departments of Veterans 
Affairs and Defense shall take account of these requirements 
when negotiating the terms of the memorandum of agreement 
implementing this provision. Indeed, the number of those both 
eligible and likely to avail themselves of such benefits would 
not be large, in the Committee's view. Of the approximately 1.8 
million military retirees, 54 percent are 65 or older, and thus 
not TRICARE-eligible, and accordingly, not eligible under this 
proposal. Some 218,000 of the approximately 885,000 TRICARE 
eligibles are disability retired, and thus already eligible for 
priority VA care. Another large cohort--estimated at almost 
200,000--have compensable service-connected disabilities; they 
too, as well as a significant number of retired enlisted 
personnel whose income falls below the law's ``means test'' 
threshold, are already eligible for priority VA care. These 
retirees, all eligible for VA care under section 1710(a)(1) and 
(2), would not be covered by this provision. While the number 
eligible under this provision is estimated at less than 
400,000, several considerations diminish the likelihood of 
widespread utilization of this benefit.
    Only a fraction of retirees eligible for VA care live close 
enough to VA facilities to actually seek to use them. Of that 
number, the limitations associated with receiving care from VA 
under this provision may further diminish utilization among 
retirees, most of whom already have provider relationships 
under TRICARE. For example, the legislation would not give 
retirees' dependents access to VA care. The Committee believes 
that an individual with dependents would be somewhat unlikely 
to alter an arrangement where his or her family gets its care 
from a single plan to an arrangement where the retiree receives 
care from VA while the dependents get their care elsewhere. 
Similarly, the rules associated with enrolling for VA care 
would likely create disincentives that would diminish the 
likelihood that retirees would enroll in significant numbers. 
For example, a decision to enroll with VA for care is effective 
for only a single year at a time, and a retiree's priority for 
VA enrollment under this provision would still be relatively 
low. It would be somewhat unlikely, therefore, for a retiree to 
opt out of a care plan which provided satisfactory care to 
enroll with VA given that VA care might not be ``open'' to the 
retiree in the second or following years.
    These considerations offer some basis for assessing the 
impact of this legislation on the TRICARE program. Not only 
would the numbers seeking VA care not be large, but it appears 
most likely that those who might seek VA care under this new 
mechanism would do so cautiously, given its potential for 
change in access from year to year. It would appear more 
likely, accordingly, that individuals participating in TRICARE 
Standard, for example, who have the option of choosing any 
physician, would elect to receive some services from VA under 
the reported bill, than for an individual who had been enrolled 
in TRICARE Prime to switch out of that plan altogether for a 
previously untested alternative. In light of these 
considerations, the Committee encourages the VA to limit its 
enrollment efforts on military retirees who participate in the 
TRICARE ``Standard'' and ``Extra'' options rather than on 
``Prime'' enrollees.
    This section directs the respective Secretaries to enter 
into an agreement to implement this provision. The agreement 
must make provision for reimbursing VA at rates to be 
negotiated by the Secretaries. The section also makes clear 
that VA may not enter into an agreement with DoD with respect 
to any VA network or part of a network unless the Department 
would recover the costs of providing care to military retirees 
under this section, and unless VA has certified and documented 
(and so reports to Congress) that it has the capacity to 
provide such care in such areas.
    This section includes a provision which permits 
reimbursement under the memorandum of agreement to be made by 
the Secretary of Defense or by a Department of Defense TRICARE 
Managed Care Support contractor. This provision is intended 
only to minimize disruptions in the management of the 
Department of Defense TRICARE Managed Care Support Contracts, 
by providing a mechanism to avoid instituting a bid price 
adjustment to these contracts. This provision is not intended 
to replicate or in any way interfere with any arrangements the 
managed care support contractors may already have with VA 
treatment facilities participating as network providers in the 
TRICARE managed care networks.
    The Committee contemplates that the implementing VA-DoD 
agreement would include other provisions needed to effectuate 
the purposes of the section. Among these are provisions which 
the Committee believes would be necessary to ensure ongoing 
health care coverage for retirees. Under law, VA can offer a 
veteran an opportunity to enroll for only a year at a time 
(subject to the possibility that resource limitations in the 
following year might not permit re-enrollment). The Committee 
urges that provision be made in the implementing agreement to 
address that contingency to ensure that a retiree who elects to 
receive care from VA under this section is not precluded from 
subsequently re-enrolling for TRICARE coverage in the event 
that a funding shortfall precludes VA from re-enrolling the 
individual in a subsequent year.
    The section also provides for a phased implementation 
process, given existing DoD TRICARE Managed Care Support 
Contracts. Thus, the enhanced priority afforded certain 
military retirees under section 104 would take effect in any 
area of the country only if that area is covered by a TRICARE 
contract which is entered into after the date of enactment or 
by an existing TRICARE contract, the terms of which have been 
extended after the date of enactment. The measure also directs 
DoD to include in each TRICARE contract entered into or 
extended after the date of enactment provisions to implement 
the required VA-DoD agreement.
Pilot program for veterans' dependents
    Section 106 of the reported bill would authorize the 
Secretary to carry out a three-year pilot program in up to four 
of VA's networks to provide primary care services (subject to 
reimbursement) to dependents of veterans.
    As this Committee works to maintain and strengthen an 
independent health care system for America's veterans, it has 
from time to time identified untested ideas, and where they 
have merit, proposed time-limited programs or pilot programs. 
Last year, representatives of The American Legion urged the 
Subcommittee on Health to consider authorizing a pilot program 
targeted at veterans' dependents. It proposed that such an 
initiative could benefit the VA health care system. In the 
Legion's view, it could bring VA new revenues, helping to meet 
the goal of the Under Secretary for Health that ten percent of 
VA health care revenues come from non-appropriated funds. It 
could improve the effectiveness of existing programs--such as 
women's clinics--by increasing utilization, and hence quality, 
of such services. And it could help sustain the health of 
veterans as their caregivers receive good care.
    VA treatment of non-veterans, with appropriate safeguards 
to avoid displacing veterans, is no longer a remarkable 
phenomenon. Under provisions of law in effect since 1992, 
numbers of VA facilities provide treatment to DoD dependents, 
including children. Under the CHAMPVA program authorized under 
section 1713 of title 38, United States Code, dependents and 
survivors of certain veterans are eligible for care under a 
program modelled on the former Civilian Health and Military 
Program of the Uniformed Services (CHAMPUS). Significantly, 
section 1713 provides that in ``cases in which Department 
medical facilities are equipped to provide the care and 
treatment,'' VA may treat these patients in VA facilities. A 
number of facilities which have the capacity provide such care 
directly. Still other VA facilities provide services ranging 
from primary care to diagnostic studies to non-veterans under 
so-called ``sharing'' agreements. The revenues from such 
sharing agreements and TRICARE contracts help support the 
treatment of veterans.
    Section 106 proposes a pilot to permit VA managers to test 
the concept of treating certain veterans' dependents. To help 
foster the success of this proposal, the measure provides 
specific direction on where such programs should be mounted. In 
contrast to other pilot programs authorized or directed in law, 
section 106 includes no requirement for siting this initiative 
in geographically-dispersed locations. Of more significance 
regarding this proposal, the Committee notes the variability 
from network to network and facility to facility in VA's 
capacity to enroll (and provide services to) additional primary 
care patients (without displacing or delaying care to veterans) 
and in VA's success in billing and collecting from third-party 
payers. Both elements would be critical to the pilot's success, 
and should therefore be key elements in selecting the 
participating networks. By way of further clarification, the 
Committee does not envision that the pilot would necessarily be 
mounted throughout an entire network. More likely, the program 
might start at limited numbers of facilities, and if successful 
and deemed feasible, might be expanded within a participating 
network during the program period. The measure reflects a 
preference for selecting facilities for participation which 
operate women veterans' clinics. While the existence of such a 
clinic would not be a requirement for participation, giving 
priority to such facilities, particularly for the start-up 
phase, would help realize the pilot's potential. In 
establishing that priority, the Committee underscores its 
intention that the operation of this program reflect fiscal 
prudence. In that regard, the Committee envisions that, to the 
extent possible, the costs of providing such services will be 
on the margin (adding new patients without employing additional 
staff, for example), and that the program will be administered 
so that VA not ``lose money''. The Committee seeks to avoid a 
situation where the medical care appropriation substantially 
subsidizes dependents' care. To that end, the measure provides 
for GAO monitoring, to include determining whether the 
collection of reasonable charges reasonably covers the marginal 
costs (as applicable) of providing care and services.
    The Committee recognizes that unlike veterans who are 
liable only for a portion of the cost of their VA medical care, 
dependents under this measure must agree to pay an amount 
representing VA's reasonable charges for that care as 
determined by the Secretary. (In that regard, the Committee 
believes that participation in the pilot program should be 
limited to individuals who have health care coverage, and 
expects VA to take measures (to include verification with the 
carrier) to ensure the person has health coverage.) In order to 
maximize VA's recoveries from such health plans, the Committee 
envisions that VA's reasonable charges under this bill will be 
the same as those utilized for third party health-plans under 
section 1729 of title 38.
    In considering the issue of balance billing to dependents 
(their remaining liability after payment by their health-plan), 
the Committee notes that individuals in the private sector are 
often protected against such personal liability by provider 
agreements which compel the provider to accept the plan's 
payment as payment in full. Furthermore, under section 1729 of 
title 38, United States Code, as well as this bill, health 
plans are protected against VA charges that they can 
demonstrate are above the amount they usually pay for such 
services in the private sector.
    VA is unlike private sector providers who often negotiate 
agreements with health-plans that eliminate balance billing to 
the patient. VA's authority to collect from health plans and 
patients is statutory, not contractual. Thus, with respect to 
the issue of balance billing, insured dependents could be 
placed at a disadvantage when obtaining medical care from VA. 
The Committee envisions that the Secretary will give 
consideration to issuing regulations that minimize or eliminate 
that disadvantage to dependents. The Committee also envisions 
that the Secretary's regulations will address appropriate 
adjustments to VA's charges to a dependent in instances where, 
for example, the dependent's plan denies coverage.

                         PROGRAM ADMINISTRATION

Enhanced-use Leasing
    One of the tools the Committee contemplates VA would deploy 
in carrying out enhanced services programs under section 107 is 
long-term leasing under subchapter V of chapter 81 of title 38, 
United States Code. Congress, in Public Law 102-86, authorized 
VA to enter into long-term (up to 35 years) agreements--which 
it termed ``enhanced-use leases''--under which VA could permit 
development of non-VA uses or activities on VA property, 
provided that such uses are not inconsistent with VA's mission 
and the overall objective of the lease enhances a VA mission. 
The measure authorizes VA, in return for the lease, to accept 
any combination of monetary consideration, services, facilities 
or other benefits deemed to be ``fair consideration''.
    Enhanced-use leasing has offered VA an opportunity to 
benefit from capital assets that the agency is not using to 
provide care or services to veterans. This authority has 
permitted VA to partner with private sector enterprises to 
develop new uses ranging from child care centers to cost-
effective laundry, energy generation, and parking projects. One 
medical center at Indianapolis will lease a facility to a 
private nursing home which will provide discounted care to 
veterans among its other patients.
    The Committee believes, however, given the capital 
resources at VA's disposal, that long-term leasing could be 
used even more extensively to enhance health care delivery to 
veterans. VA estimates that it owns and operates a physical 
plant of more than 22,000 acres of land, 4,700 buildings, and 
140 million square feet of owned or leased space at more than 
1200 sites. Exactly how much of this plant is necessary for 
mission-critical service delivery is unknown. However, in its 
March 10, 1999 testimony to the Subcommittee on Health, the 
General Accounting Office estimated that VA spends 
approximately a quarter of its appropriated dollars on asset 
ownership-much of it on ``underused and inefficient 
buildings''.
    In its budget for VA for fiscal year 2000, the 
Administration proposed legislation under which VA would 
``sell, transfer, or exchange excess and underutilized 
properties'' in up to 30 locations. The Administration failed 
to submit such legislation, and its assumptions remain unclear 
to the Committee. Although VA developed some considerable 
experience and sophistication in long-term leasing and 
associated development of VA property, VA has little or no 
experience in sale or other disposal of its capital assets. 
Moreover, it is not at all clear to the Committee that the 
Administration's goals in proposing such authority--to generate 
revenue from unneeded VA capital assets, and apply such revenue 
to improve VA care--cannot be realized through long-term 
leasing arrangements similar to those VA has successfully 
employed under its existing authority. The reported bill, in 
section 207, would expand VA's leasing authority to accomplish 
that goal.
    Accordingly, the key elements of section 207 would make 
several changes to VA's enabling law on enhanced-use leasing. 
First, it would extend the maximum term of leasing from the 
current 35 years to 75 years. The Committee understands that 
the current 35-year maximum term is at variance with standard 
commercial lending practices, and even with the requirements of 
other Federal agencies. Based on expert advice, the Committee 
believes that extending the maximum term to 75 years would 
enable VA to tailor leases to real property development 
practice, market consideration, and thus realize maximum 
benefit to VA.
    The measure would also provide the Secretary the latitude 
to enter into such a long-term lease--not simply to enhance VA 
property with an activity that contributes to the VA mission--
but to realize the broader goal of improving services to 
veterans in the area. That is, this leasing authority could be 
used to accomplish the purpose described above--to generate 
revenue from unneeded VA capital assets, and apply such revenue 
to improve VA care. To that end, section 207 would require a 
finding, based on a business plan, that applying the 
consideration under such a lease to the VA's provision of 
medical care and services would result in a demonstrable 
improvement of services to veterans in the network in which the 
property is located. To assure such an outcome, section 207 
also calls for depositing any funds VA receives from a lease 
under subchapter V, of chapter 81 of title 38, United States 
Code, into a new fund (to be used for furnishing VA medical 
care and services as authorized under chapter 17) established 
under section 202 of the reported bill.
    The measure would also amend existing law (title 38, United 
States Code, section 8162(b)(4)) which limits VA to using 
medical care monies to fund any costs associated with leasing 
under that section. Section 207 of the reported bill would 
permit VA to use minor construction funds as needed under the 
terms of these leasing arrangements. This provision would give 
the Department additional flexibility to allocate funds so as 
to provide the greatest benefit or return.
    While the Committee believes section 207 would be 
beneficial in enabling VA to reinvest savings from unneeded 
property into improved health care delivery, it does not 
contemplate that such leasing authority would be used to 
``privatize'' the very services VA is currently providing at a 
facility. The Committee will monitor the implementation of this 
authority to ensure it is not used for such purpose.
Bed Closure Reporting
    The Committee has become increasingly concerned over the 
impact that closing inpatient beds is having on veterans with 
complex health problems which may require ongoing, costly care 
(such as psychiatric care, intensive rehabilitation, and 
subacute care for other chronic conditions). Over the years, VA 
has developed special expertise in these areas. It is not 
clear, however, that the steady transformation of VA health 
care from a bed-based model to reliance on ambulatory care is 
taking adequate account of such special patient needs. With the 
accompanying decentralization of authority to 22 network 
directors, and mere consultant role played by clinical experts 
in VA's headquarters, the Committee lacks a satisfactory 
mechanism to monitor the impact of these changes on VA patients 
or to be assured that the special needs of often voiceless 
patients are being met despite bed closures.
    Information from direct care providers and veterans calls 
into question whether adequate steps are being taken from 
network to network to ensure that the clinical expertise which 
had resided in VA's inpatient mental health and rehabilitative 
care units is available to veterans who must now depend on 
community and ambulatory programs. One troubling indicator-a 
declining number of so-called ``dual diagnosis'' patients being 
treated for both substance abuse problems and mental illness--
suggests that the answer to that question is ``no''. With their 
multiple needs for resource-intensive, specialized care, these 
veterans present a special challenge. A decline in the number 
of these patients suggests that system changes may be causing 
some of VA's most-in-need patients to ``fall between the 
cracks''.
    Section 301 would establish new reporting requirements 
associated with certain proposed bed closures. This provision 
is not intended to proscribe bed closures but to institute what 
the Committee believes is a needed safeguard. The Committee is 
not opposed to well-planned alternatives to inpatient care. The 
Committee has found Intensive Psychiatric Community Care 
programs operating at more than twenty VA medical centers to 
exemplify a well conceived, cost-effective alternative to 
inpatient care. What is troubling, however, are closures of 
specialized inpatient beds which are undertaken simply to avoid 
costs and without developing adequate alternatives.
    The Committee is pleased that VA has outlined a plan to 
manage more aggressively its mental health programs. Aware of 
the pressures its field managers now face in managing costly 
care under fiscal restraints, the Under Secretary reported on 
plans to direct field managers to report any significant 
changes in behavioral health program operations to his office 
for approval. This would be a welcome intervention and could 
diminish the need for Congressional reports in the future.
Sexual Trauma Counseling
    On April 23, 1998, the Subcommittee on Health of the 
Committee on Veterans' Affairs, held a hearing at which it 
heard testimony on the VA's sexual trauma counseling program. 
Witnesses at the hearing included officials from VA, the 
Department of Defense (DoD), the General Accounting Office 
(GAO) and AMVETS, a national veterans' service organization; 
Vietnam Veterans of America also submitted testimony.
    In providing testimony assessing the program, GAO found 
that VA has made impressive headway since implementing the 
program in 1993. In particular, GAO cited VA's extensive 
efforts in educating staff to deal with sexual trauma and in 
performing outreach that has produced significant program 
growth. Witnesses attested to the need for the program. VA 
testified that between 15-20 percent of women veterans reported 
being raped or sexually assaulted during military service, 
while 35-50 percent reported sexual harassment of some sort. In 
1995, DoD reported that 55 percent of women in service claimed 
at least one incident of sexual harassment in the past year. 
GAO reported that symptoms experienced by sexually-traumatized 
women include post-traumatic stress disorder, stress, impaired 
concentration, and nightmares.
    In recognition of the ongoing need for VA to provide these 
services, Congress, in Public Law 105-368, extended the program 
for three years through December 31, 2001. With the ``benefit'' 
of an additional year's perspective, however, the Committee has 
concerns as it relates to this program regarding the 
uncertainty and potential inadequacy of funding for the coming 
fiscal year. With the possibility of a serious funding problem, 
the Committee is concerned that VA might consider scaling back 
or even ceasing to provide sexual trauma counseling. Based on 
its reading of similar provisions of law, VA could construe the 
program to be ``merely discretionary''. Clearly, this is not 
the intent of the Committee, and, accordingly, the reported 
bill would provide both that VA ``shall'' operate this program 
and that the program be extended for an additional year.
    Questions have also arisen over the course of the program 
as to the scope of eligibility for this benefit. The VA's 
General Counsel addressed those questions in a precedent 
opinion of July 1, 1997 (VAOPGCADV 17-97). Among its holdings, 
the General Counsel concluded that ``[b]ecause VA provides 
sexual trauma counseling and care pursuant to title 38, United 
States Code, section 1720D only for sexual trauma-related 
disabilities which the Department determines are incurred in 
service, the minimum length of service requirement in section 
5303A does not apply to the provision of these benefits.'' In 
light of that precedent, with which the Committee concurs, 
there is no need to amend section 1720D, as some advocates have 
suggested, to provide specifically that the two-year service 
requirement in section 5303A does not apply. As regards another 
facet of that decision, the Committee has seen only minimal 
information regarding the scope of any similar problems in the 
reserve components of the armed forces. The reported bill, 
accordingly, calls on VA to conduct a study regarding the 
extent of such problems in the reserves, the extent to which 
former reservists have sought sexual trauma counseling from VA, 
and the resource implications associated with expanding 
eligibility for such counseling to former members of the 
reserves.
    Under current law (section 1720D of title 38, United States 
Code), VA, in addition to providing counseling, may provide 
appropriate care and services to a veteran for an injury, 
illness, or other psychological condition that VA determines to 
be the result of a battery, assault or sexual harassment. In 
general, section 1720D provides authority for mental health 
care; the scope of practice under that provision is limited in 
nature. It is not a general treatment authority and does not 
enlarge the scope of treatment VA is otherwise authorized to 
provide an eligible veteran. Section 108 of the reported bill 
would not enlarge the scope of VA's treatment authority under 
section 1720D or permit VA to change the scope of its practice 
under that section.
Compensated Work Therapy Program
    The Compensated Work Therapy Program (CWT) is a therapeutic 
program which VA employs in the rehabilitation of veteran-
patients. Veterans are paid for work performed on contracts 
with governmental and industrial entities. This work-based 
model helps veterans re-enter the work force while enabling 
them to increase self confidence and improve their ability to 
adjust appropriately to the work setting. VA data indicate that 
some 85 percent admitted to the program have substance abuse 
problems; 56 percent are homeless, and 44 percent have been 
diagnosed with major psychiatric disability. The program has 
enjoyed success in assisting these often challenging patients 
in making the transition from medical settings into the 
community by developing the capacity for work and increasing 
their self-esteem.
    Over 13,000 veterans were treated in 100 different CWT 
programs throughout the country in fiscal year 1997. These 
veterans earned over $29 million for work performed on more 
than 3,100 contracts. The traditional CWT setting was in the 
nature of a sheltered workshop environment at the VA medical 
center. Work may range from simple collating tasks to 
fabrication of elaborate electromechanical subassemblies or 
machine shop operations using technologically sophisticated 
equipment. VA employs a second model, in the nature of a 
``transitional work experience,'' in which participants work at 
industry sites (including VA medical centers and other Federal 
agency settings). The latter mode has proven highly effective 
in helping veterans transition to full employment.
    The Committee has become aware that as the ``transitional 
work experience'' component of the program has grown, more 
program participants are placed at risk of work-related injury 
for which they can receive no compensation. Although the 
Committee is not aware of the occurrence of any such on-the-job 
injuries, the risk is very real with therapeutic work 
opportunities being provided in manufacturing settings, at 
construction sites, and at other locations having inherent 
risks.
    In the event of work-related injury while participating in 
a CWT program, participants are not entitled to any workers' 
compensation benefits. As participants in a CWT program, 
veterans are not considered ``employees'' of either the United 
States, or of the private entity where they may work. Rather, 
their status is as patients and the work they are performing is 
a form of medical treatment. To ensure that these participants 
in the work therapy program are protected financially in the 
event of work-related injury, the reported bill would make them 
eligible for compensation benefits under title 38, United 
States Code, section 1151 without regard to whether the injury 
was the result of negligence.
    In proposing to provide CWT participants with such 
financial protection in the event of injury, the Committee is 
proposing the same remedy as Congress took three years ago in 
an analogous situation. In that instance it provided such 
protection to participants in VA's Vocational Rehabilitation 
Program. Under that program, as under the CWT program, 
participants work in community settings where they are at risk 
for injury. In 1996, Congress provided that veterans injured 
while working in the vocational rehabilitation program could 
receive compensation benefits under title 38, United States 
Code, section 1151 without regard to whether the injury was the 
result of negligence. The reported bill would provide the same 
coverage to CWT program participants.
Licensure of health care professionals
    The law governing the qualifications of physicians, 
dentists, and most other categories of health care 
practitioners employed by the Department of Veterans Affairs 
currently requires, with respect to licensure, that a VHA 
practitioner have a full, active, and unrestricted license 
(registration or certification, as applicable) in a state. The 
law does not require these practitioners (except social 
workers) to be licensed in the state in which they work for the 
Department. Historically, such flexibility in VHA's employment 
qualifications has permitted the Department to assign and 
transfer its health care professionals throughout the 
nationwide system as needed to meet changing staffing 
requirements.
    The Committee has become aware, however, that this 
particular flexibility can, in the rare instance, lead to an 
undesired result. A VHA health care professional who is 
licensed (registered or certified) by more than one state 
remains qualified for VHA employment even when one of those 
licenses is terminated for cause as long as the individual 
maintains other active, full, and unrestricted license. In 
contrast VHA health care practitioners licensed in only one 
state automatically become ineligible for VHA employment in the 
event their license is terminated for cause.
    Section 208 of the reported bill would make any 
practitioner who is licensed to practice in more than one state 
ineligible for VHA employment if the practitioner has or had 
one of those licenses terminated for cause. It would further 
make a practitioner ineligible for VHA employment if the 
practitioner licensed by more than one state voluntarily 
relinquishes one of those licenses upon learning that it may be 
terminated for cause.
    The Committee has a long record of concern regarding issues 
of care-quality in the VA, and believes this provision is 
needed to ensure patient safety and quality of care.
Chiropractic care
    Disabling back pain is a prevalent health problem in the 
United States. ``Back pain is one of the most frequent reasons 
that patients visit primary care physicians and is the second 
most common reason for time taken off from work.'' (Carey TS et 
al. New England Journal of Medicine 1995;333:913-7). A 1997 
survey of U.S. adults found that 11 percent of U.S. adults 
chose chiropractic treatment (principally for low back pain); 
on average, they visited chiropractors ten times per year 
(Eisenberg DM et al. Journal of the American Medical 
Association 1998;280:1569-75). Back problems were not only the 
most frequently reported health problem (24.0 percent), but 
also a problem for which a large proportion of patients (47.6 
percent) used ``alternative'' therapy. Thus, while still an 
``alternative'' therapy, chiropractic is also becoming 
``mainstream'' (Cherkin DC, Mootz RD. Agency for Health Care 
Policy and Research. 1997).
    While still controversial, substantial scientific evidence 
supports the use of chiropractic treatment of low back pain. 
``. . . [T]here is as much or more evidence for the 
effectiveness of spinal manipulation as for other non-surgical 
treatments for back pain'' (AHCPR 1997). ``That spinal 
manipulation is a somewhat effective symptomatic therapy for 
some patients with low back pain is, I believe, no longer in 
dispute'' (Shekelle PG. New England Journal of Medicine 
1998;339:1074-5). The effectiveness of chiropractic 
manipulation has been most clearly demonstrated in the 
acceleration of short-term recovery from acute low back pain. 
In addition, several studies indicate that patient satisfaction 
in the relief of low back pain is as great or greater with 
chiropractic than with other approaches, even when volunteer 
patients are randomly assigned to a treatment approach.
    In 1995, the annual national cost attributable to back pain 
was $25 billion for medical services alone. A 1997 survey 
indicated that approximately 56 percent of chiropractic 
services in the U.S. were completely or partially covered by 
insurance (including Medicare and Medicaid), a proportion that 
grew substantially since the prior survey in 1990. Perhaps 
because of the frequency of visits incurred, chiropractic 
treatment of low back pain has generally been found to be more 
expensive than primary care treatment, but comparable to 
treatment by orthopedic surgeons (Carey et al. New England 
Journal of Medicine 1995;333:913-7).
    In 1985, Congress required the VA to conduct a pilot 
program ``to evaluate the therapeutic benefits and cost-
effectiveness of furnishing certain chiropractic services to 
veterans eligible for medical services . . . '' (Public Law 99-
166). Unfortunately, as indicated in the program evaluation 
report (Department of Veterans Affairs, 1990), the law 
restricted the patient population to a small and 
unrepresentative fraction of the low back pain patients. 
Further, it did not cover the cost of the range of standard 
chiropractic services; thus, it did not represent standard 
chiropractic methods. Participation criteria were so 
restrictive that, during the course of the pilot program, three 
of ten VAMCs had to drop out of the program because they could 
not recruit sufficient numbers of patients. While the study 
design projected a study population of 700, only 204 patients 
finished the study, and recruitment of these patients required 
more time than provided by law. Furthermore, because patients 
were allowed to choose a therapeutic approach (i.e., usual VA 
care or chiropractic care) and were not randomly assigned to 
one treatment or the other, the pilot program could not 
effectively evaluate the therapeutic benefits of the 
chiropractic approach, as required by the law. Notwithstanding 
its limitations the pilot program suggested that patients with 
chronic, recurrent, unresolved low back pain had similar 
outcomes whether treated under medical or chiropractic 
approaches. However, it raised questions about cost-
effectiveness in that treatment costs over a three-month period 
were greater with the chiropractic manipulation than with 
(outpatient) medical treatment.
    The Committee recognizes the growing use of complementary 
health care in traditional medical practice, and notes that, 
despite the above-described medical literature, VA has made 
only the most limited use of chiropractic care.
    In recognition of evolving medical practice, section 304 of 
the reported bill would require VA to establish a policy which 
would permit greater access to chiropractic care, particularly 
in rural and medically underserved areas. VA should consult 
with Doctors of Chiropractic to assist VHA in the development 
and implementation of its chiropractic treatment policy.
Nonprofits corporations to foster education
    Under a provision of Public Law 100-322, VA has established 
nonprofit research corporations at 73 VA medical centers to 
accept and administer gifts and grants to carry out clinically-
relevant research. The corporations have played a significant 
role in support of the VA research program. In 1998, for 
example, they received $100 million for VA research activities, 
funds which would not otherwise have been available to VA. The 
Committee views these corporations as an extremely important 
mechanism to further VA's research mission.
    Given this proven mechanism for administering grants and 
other funds, the Committee finds merit in expanding the ambit 
of such corporations to further VA's responsibilities in the 
area of medical education. That is, just as the nonprofit 
corporation has proven a flexible funding mechanism for 
research, the Committee supports the creation of new 
corporations, or the expansion of existing ones, to administer 
gifts and grants for appropriate educational purposes. Under 
such a mechanism, VA can readily avail itself of funds to 
support continuing medical education needs of its employees 
(which VA itself may not have sufficient funds to support), 
such as training, and related travel, for technicians in the 
use of new medical equipment. The National Association of 
Veterans' Research and Education Foundations estimates its 
member corporations could reasonably expect to receive some $15 
to 20 million annually in support for such VA-approved 
activities.
Assisted Living
    The June 1998 Report of the Federal Advisory Committee on 
the Future of VA Long-Term Care, VA Long-Term Care at the 
Crossroads, noted that assisted living programs might be an 
appropriate and cost-saving option for VA patients. The report 
also noted that VA financial support of assisted living is not 
authorized by law. The Committee recommended that the VA ``. . 
. take advantage of this remarkable development in selected 
long-term care markets.'' The report acknowledged, however, 
that the term ``assisted care'' was not well defined in terms 
of even its most basic characteristic, i.e., the care provided.
    In response to the Chairman's questioning regarding the 
Federal Advisory Committee report at the Subcommittee's April 
22 hearing, VA Under Secretary for Health Dr. Kenneth Kizer 
released a draft document entitled ``A Strategic Plan for Long-
Term Care Provided by the Veterans Health Administration.'' 
Addressing the issue of assisted living as a VA program, the 
plan proposed in one brief statement to ``initiate a request 
for new legislative authority for payment or copayment of 
facilitated residential living (assisted living) for eligible 
veterans.'' The plan included no information regarding VA 
choices among the wide range of assisted living program options 
currently available in the U.S. or the processes by which the 
VA would conduct a program appropriate for its user population.
    A recent GAO report (GAO/HEHS-99-27), Assisted Living. 
Quality-of-Care and Consumer Protection Issues in Four States, 
notes that ``there is no uniform assisted living model, and 
considerable variation exists in what is labeled as assisted 
living facility.'' For example, almost all programs provide 
housekeeping, meals, laundry; fewer programs provide special 
diets, supervision of medication and transportation; still 
fewer programs provide skilled therapy, hospice, skilled 
nursing, iv therapy, and tube feeding. Further, while some 
facilities provide for the increasing needs of their clients, 
others require that clients whose needs exceed staff capacities 
be immediately discharged. Skill level requirements for staff 
in assisted living facilities also vary by state. The GAO 
report notes that many assisted living facilities do not 
provide prospective clients with information on services and 
policies adequate for informed decisions about those 
facilities. The GAO survey of 622 facilities in four states 
found a range of monthly charges from less than $1,000 to more 
than $4,000, probably associated with differences in services 
provided. Medicaid funds are used to support assisted living 
programs in some states and could offset support which might be 
provided for veterans.
    States also differ substantially in their requirements and 
regulation of assisted living programs (GAO/HEHS-97-93; GAO/
HEHS-99-27). For example, frequencies of required inspection 
vary by state and by level of services offered. The GAO report 
notes three topics variously specified under state regulations, 
i.e., requirements for the living unit, admission and 
retention, and the types and levels of services provided. It 
found that 27 percent of the facilities surveyed were reported 
to have five or more noteworthy problems in client care during 
the survey period (including inadequate care, insufficient 
staffing, medication errors, abuse, and improper discharge).
    In the Committee's view, VA must explore and resolve a 
series of issues before it could reasonably request Congress to 
enact legislation to enable it to provide support to veterans 
in need of assisted living services. Among these complex issues 
are the following.

    1. LServices offered. The VA must specify for purposes of 
such a benefit what ``assisted living'' means and what minimal 
services must be provided.

    2. LEligibility criteria. The VA must determine what degree 
of functional impairment would establish a need, and 
eligibility, for assisted living services.

    3. LVA role. The VA must consider the nature of such a 
program, whether, for example, it would (a) be limited to VA's 
providing partial payment to or on behalf of a veteran who 
makes his or her own arrangements, (b) involve VA's planning 
and approving the particular placement, or (c) VA's contracting 
for a time-limited placement. In that regard, VA must consider 
the extent to which it would oversee the operation of the 
facility and establish requirements which might exceed those 
established by some states.

    If the above questions can be satisfactorily resolved, VA 
must also address complex financing questions, central to 
design of any legislative proposal. The Committee notes that 
neither the Department or program officials have resolved or 
even fully addressed these questions. The reported bill, 
accordingly, directs the Secretary, by way of exploring the 
feasibility of an assisted living pilot program, to address the 
above and other related questions and to report to Congress. 
The bill envisions receipt of a report by next April, providing 
sufficient time for Congress to consider the merits of any 
proposed legislation in the next session.
Construction authorization
    In Public Law 105-368, the Committee authorized funding for 
fiscal years 1999 and 2000 for several major construction 
projects. Funds were not appropriated for several of these 
projects, of which the following had been identified as high VA 
priorities: an ambulatory care addition in Washington, DC; 
seismic corrections in Palo Alto, CA; a spinal cord injury unit 
in Tampa, Florida; and a mental health addition in Dallas. 
Although the Administration has not requested appropriations 
for these projects (and instead proposed two new projects in 
its budget request for fiscal year 2000), each is identified in 
the VA's Capital Plan for fiscal year 2000 as a pending 
proposal and three of the four were recommended by VA for 
funding in fiscal year 2000. The Committee believes these 
projects are needed, and continues to recommend that they be 
funded. With the compelling need for a large increase in 
medical care funding for fiscal year 2000, and a list of 
needed, but still-unfunded construction projects ``in the 
queue'', the Committee is reluctant to recommend that 
additional funds be appropriated for more than a single 
additional major construction project this year. The Committee 
would authorize funding for construction of new surgical space 
at the VA Medical Center in Kansas City, Missouri, as the 
highest-ranked VA project on which construction could begin if 
funds were made available. This recommendation is made without 
prejudice to consideration next year of VA's proposal to 
renovate psychiatric-care facilities in Murfreesboro, 
Tennessee.

                      Section-By-Section Analysis

    Section 101(a) would amend chapter 17 to add a new section 
1710A. That section would direct VA, subject to the 
availability of appropriations, to operate and maintain a 
program to provide extended care services to eligible veterans. 
The measure specifies in new subsection (a) that extended care 
services range from geriatric evaluations to nursing home care, 
and include noninstitutional alternatives to nursing home care. 
New section 1710A(b) would provide that the Secretary shall 
provide those services as needed to 50 percent or more service-
connected veterans and service-connected veterans requiring 
such care for a service-connected condition. Those two 
categories of veterans would also have highest priority for 
placement in a VA nursing home. New section 1710A(c)(1) would 
require VA to prescribe regulations for additional specified 
priorities for nursing home placement. New section 1710A(c)(2) 
would provide that VA may not furnish extended care services 
for more than 21 days in any year (other than to those two 
classes of service-connected veterans described above) unless 
the veteran agrees to pay a copayment. New section 1710A(d) 
would describe the methodology VA is to employ in establishing 
these copayments. New section 1710A(e) would establish an 
extended care revolving fund in the Treasury.

    Section 101(b) would require VA to develop and begin to 
implement a plan to increase (above the level provided as of 
September 30, 1998) the level of services and options 
available, and extent of the budget, for furnishing home and 
community based care to eligible veterans.

    Section 101(c) would amend current law to lift the six-
month limitation on provision of adult day health care 
services.

    Section 101(d) would amend current law to lift the 
limitation that respite care services must be provided in VA 
facilities, and would authorize VA to contract for provision of 
respite care.

    Section 101(e) would amend current law to condition VA's 
obligation under law to provide extended care services to the 
availability of appropriations.

    Section 101(f) would amend current law to authorize VA to 
establish a program of per diem payments to State homes for 
noninsitutional care services and respite care (as well as 
adult day health care, authorized under current law).

    Section 101(g) would state that the provisions of the 
section would be effective on the day of enactment, except that 
the copayment requirements under new section 1710A(c)(2) would 
be effective on the effective date of the regulations 
establishing those copayments; subsection (g) would also 
provide that the current copayment requirement on provision of 
nursing home care to so-called ``category C'' veterans would 
cease to be effective as of the date of those new regulations.

    Section 102 would authorize, but not require, VA to make 
payments (at levels VA would establish) for emergency care on 
behalf of certain veterans. VA could make such payments for a 
veteran who meets the following criteria: the veteran is 
described in paragraphs (1) through (6) of section 1705(a); is 
enrolled in, and has received VA care within the year preceding 
the emergency treatment; has no health insurance (compehensive 
or limited) or any other entitlement to health care; is 
personally liable to the provider for emergency treatment (as 
defined) and has no other recourse against a third party which 
would even partially extinguish the veteran's liability. The 
measure would grant VA broad authority to limit the amount and 
circumstances under which reimbursement would be paid (to 
include the availability of appropriations therefor); and would 
provide that VA payment to a provider, unless rejected, would 
extinguish any liability on the part of the veteran. The 
measure would also establish that the government has an 
independent right to recover any amount which a third party 
subsequently pays to the provider, and would provide means to 
ensure that the government can effect such recovery. Lastly, it 
would authorize the Secretary to waive recovery of a payment 
made to the veteran.

    Subsections (b), (c), and (d), respectively, of section 102 
would make conforming amendments, establish an effective date 
for the section 180 days after enactment of the act, and 
provide for reports on implementation.

    Section 103 would amend current law to establish specific 
eligibility (and a priority for enrollment) for VA health care 
for a veteran who was injured in combat (as that term is 
defined).

    Section 104(a) would amend current law to establish 
specific eligibility (and a priority within so-called 
``category A'' for enrollment) for VA health care for a veteran 
who has retired from active military service, is eligible for 
care under the TRICARE program, and is not otherwise eligible 
for VA care under ``category A''.

    ``Section 104(b) would require VA and DoD to enter into an 
implementing agreement not later than nine months after 
enactment under which DoD would reimburse VA at rates to be 
agreed upon by the Secretaries. (If the Secretaries are unable 
to reach agreement, they are to report jointly on the reasons 
therefor and on a plan for removing any impediments to final 
agreement.) The section further provides that VA may not enter 
into an agreement to provide care to military retirees under 
this new authority in any network or facility unless VA would 
recover its costs of providing such care and has certified and 
documented that it has the capacity to provide such care.

    Section 104(c) would provide for VA to deposit such DoD 
payments in a new fund established under section 202.

    Section 104(d) would (1) require the Secretary of Defense 
to include in each TRICARE contract entered into after the date 
of enactment provisions to implement the VA-DoD agreement under 
section 104(b), and (2) provide for phased implementation of 
the pertinent provisions of section 104.

    Section 105 would amend section 1151(a)(2) of title 38, 
United States Code, to establish entitlement to VA compensation 
in cases in which a veteran who is disabled or dies as a result 
of participation in the compensated work therapy program under 
section 1718 of that title.

    Section 106(a) would amend current law to authorize VA to 
conduct a three-year pilot program in up to four of its 
networks under which it could provide health care services (as 
defined) to dependents of enrolled veterans.

    Section 106(b) would provide for the General Accounting 
Office (GAO) to monitor and report on the conduct of the pilot 
program, and for VA to take such appropriate remedial steps as 
necessary in light of GAO recommendations.

    Section 107 would provide for the establishment of enhanced 
service programs (described in the section) in designated 
locations in order to improve access and quality of service 
provided to veterans in such locations. Subsection (a) makes 
findings of fact relating to the requirement to establish such 
programs.

    Subsection (b) would describe the circumstances under which 
the VA would designate a location for such a program.

    Subsection (c) would establish the requirements for 
development of a plan for such an enhanced service program, and 
would provide VA tools for implementing such a plan (to include 
contracting (as further authorized in subsection (g)), and 
long-term leasing authority. Subsection (d) and (e), 
respectively, would establish protections for employees who 
might be displaced under this section and a requirement that 
veterans' organizations, employee unions, and others 
participate in the development of a plan.

    Subsection (f) would establish a reporting requirement to 
provide for congressional review before implementation of the 
plan.

    Subsection (h) would require that 90 percent of the funds 
that would have been used to maintain and operate a facility 
(or a part of a facility) for a service or services which 
(under an enhanced services plan) would no longer be provided 
at such facility are to be made available to implement the plan 
to enhance accessibility and quality of services in the 
catchment area of that facility.

    Subsection (i) and (j), respectively, would provide that 
this section does not alter the Secretary's obligations under 
title 38, United States Code, section 1706(b), and would 
provide that VA is to report to Congress within 12 months of 
implementing any plan under subsection (b).

    Subsection (k) would provide that the section does not 
diminish the Secretary's authority to consolidate or otherwise 
change functions or missions at VA facilities, or create new 
facilities or activities.

    Section 108(a) and (b) would amend current law to extend by 
one year VA's authority to provide sexual trauma counseling, 
and to provide that the VA ``shall'' operate such program 
during that period. Section 108(c) and (d), respectively, would 
require VA to expand its efforts to conduct outreach on the 
program, and to report on those expanded activities.

    Section 108(e) would require VA to conduct a study relating 
to the need for and resource implications of expanding 
eligibility for such counseling to former members of the 
reserves. Section 108(f) would require a VA-DoD report on their 
joint efforts to inform separating servicemembers about these 
programs. Section 108(g) would require VA to provide a one-time 
report to Congress on veterans' use of services under the 
program.

    Section 201(a) would amend current law to authorize VA to 
prescribe regulations to (1) increase prescription copayments 
(and to establish a maximum annual payment applicable to an 
individual with multiple outpatient prescriptions), (2) to 
establish copayment requirements (subject to the limitations in 
title 38, United States Code, section 1722A(a)(3) on VA's 
provision (for a nonservice-connected condition) of hearing 
aids, eyeglasses and other sensori-neural devices; electronic 
equipment; and any other costly item or equipment (other than a 
wheelchair or artificial limb). Such payments are for deposit 
in a fund to be established under section 202.

    Section 201(b) would amend current law to direct VA to 
prescribe by regulation new copayment requirements applicable 
to providing outpatient treatment to a so-called ``category C'' 
veteran.

    Section 202 would establish a new fund in the Treasury for 
deposit of specific categories of payments provided for under 
this act, with amounts in the fund to be available without 
fiscal year limitation (and without any requirement that such 
funds be specifically appropriated) for provision of care to 
veterans under chapter 17 of title 38.

    Section 203 would add a new section 1729C in title 38, 
United States Code, which would establish a Veterans Tobacco 
Trust Fund in the Treasury to hold monies that are 
appropriated, credited, or donated to this trust fund. The 
measure would provide that monies (attributable to VA costs) 
recovered from any lawsuit brought against the tobacco 
industries by the United States in an effort to recover 
Government costs of tobacco-related health care are to be 
credited to the trust fund. Amounts in the trust fund are to be 
available to the Secretary of Veterans Affairs after fiscal 
year 2004 for use in providing medical care and services for 
tobacco-related illnesses. This trust fund would also provide 
monies to conduct medical research, rehabilitation research, 
and health systems research with particular emphasis in 
relation to tobacco addiction and diseases associated with 
tobacco use.

    Section 204 would amend current law to expand the scope of 
activities which could be carried out by nonprofit corporations 
at VA medical facilities to include activities in support of 
VA's education missions.

    Section 204(a) would authorize establishment of 
corporations to facilitate either or both research and 
education, and authorize existing corporations to so expand 
their charters.

    Section 204(b) would specify that such corporations may 
foster education and training involving employees' continuing 
medical (and medical-related) education, patient education, and 
VA's core education mission described in section 7302 of title 
38, United States Code.

    Section 204(c) would clarify those members of the VA 
facility staff who should serve on the board of directors of 
such corporation.

    Section 204(d) would specify the mechanisms through which 
VHA would establish policies governing corporation expenditures 
for education activities.

    Section 205(a) would extend through December 31, 2003, VA's 
authority to provide so-called readjustment counseling to 
Vietnam-era veterans who have not previously sought such 
assistance.

    Section 205(b) would extend, through 2003, the requirement 
in title 38, United States Code, section 7321, that VA support 
and receive reports from a Committee on Care of Severely 
Chronically Mentally Ill Veterans.

    Section 205(c) would reinstate a requirement that VA 
support and receive reports from a Committee on Post-traumatic 
Stress Disorder.

    Section 205(d) and (e), respectively, would extend through 
September 30, 2002, VA's authority to make grants under the 
Homeless Veterans Comprehensive Service Programs Act of 1992, 
and would lift the restriction in law on the number of grants 
which may be awarded which involve the procurement of vans.

    Section 206(a) would amend section 8134 of title 38 to (1) 
provide greater specificity regarding the general regulations 
VA is to prescribe (and revise from time to time as needed) 
governing the number of nursing home and domiciliary beds for 
which VA grant assistance may be provided, and (2) to provide 
for additional regulations to determine eligibility for grant 
support.

    Section 206(b) would amend section 8135 of title 38, United 
States Code, to establish (1) new requirements to govern award 
of a grant, (2) revised criteria for assigning the relative 
priority given any particular application for grant assistance.

    Section 206(c) would establish a rule to govern the 
transition to the new priority system under subsection (b).

    Section 206(d) would direct the VA to prescribe the initial 
regulations required under section 8134(a), as amended, not 
later than April 30, 2000.

    Section 207(a) would amend current law to establish an 
additional, independent basis on which VA may enter into a so-
called ``enhanced-use'' lease, namely on a determination that 
applying the consideration under such a lease to provide 
medical care and services (as proposed in a business plan) 
would demonstrably improve services to eligible veterans in the 
network where the leased property is located. Section 207(b) 
would amend current law to extend the maximum term of an 
enhanced-use lease, and to authorize VA to provide in the terms 
of such lease for it to use minor construction funds for 
capital contribution payments.

    Section 207(c) and (d), respectively, would (1) make 
conforming amendments, and (2) provide that funds received 
under such a lease (after any necessary deductions under law) 
would be deposited to the new fund established in section 202, 
and VA is to make no less than 75 percent of the amount 
attributable to that lease available to the network in which 
the leased property is located.

    Section 207(e) and (f), respectively, would repeal (1) 
section 8169 of title 38, United States Code, which had 
provided for sunsetting the VA's authority to enter into 
enhanced-use leases, and (2) obsolete provisions of section 
8162.

    Section 208 would amend current law to provide that a 
``title 38'' health care professional may not be employed by 
VHA if the person has been licensed, certified, or registered 
in more than one state and one of those licenses has been 
terminated for cause, or the individual has voluntarily 
terminated his or her professional credentials after being 
notified by that state in writing of his or her potential 
termination for cause.

    Section 301 would amend current law to establish new 
reporting requirements relating to the (1) proposed closure of 
the certain beds (psychiatric, intermediate, neurology, 
rehabilitative medicine, extended care (other than nursing 
home), and domiciliary beds), (2) the closure of medical and 
surgical beds, and (3) mission changes in nursing home units.

    Section 302 would amend current law relating to the 
Veterans Canteen Service. Subsection (a) would delete 
restrictions in law on the sale of items or services for off-
premises use. Subsection (b) would clarify that canteens may be 
established and operated at any VA medical facility, not simply 
``hospitals and homes''.

    Section 303 would provide for VA to report to the 
Committees on Veterans Affairs no later than April 1, 2000, on 
the potential for establishing a pilot program to assist 
veterans in receiving assisted living services. The Secretary 
is to include recommendations on the staffing and services that 
should be provided under this pilot program, the design of the 
program, and the issues the program should address.

    Section 304 would require the Under Secretary for Health of 
the Department of Veterans Affairs to establish a policy for 
the Veterans Health Administration regarding the role of 
chiropractic treatment in the care of veterans under chapter 17 
of title 38, United States Code.

    Section 401 would authorize two major medical construction 
projects, (1) renovations to provide a domiciliary in Orlando, 
Florida, using $2.4 million in previously appropriated funds, 
and (2) a surgical addition in Kansas City, Missouri, of up to 
$13 million.

    Section 402 would authorize two major medical facility 
leases.

    Section 403 would authorize appropriations for fiscal years 
2000 and 2001 of $13 million in major construction and $2.1785 
million for leases.

                            Department Views

    The Department testified at an April 22, 1999 hearing on a 
draft bill which, with some modifications, was introduced as 
H.R. 2116. In testifying, VA expressed strong support for the 
concepts proposed in that measure.

               Congressional Budget Office Cost Estimate

    The following letter was received from the Congressional 
Budget Office concerning the cost of the reported bill:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 28, 1999.
Hon. Bob Stump,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.

    Dear Mr. Chairman: At your request, the Congressional 
Budget Office (CBO) has prepared the enclosed cost estimate for 
H.R. 2116, the Veterans' Millennium Health Care Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sunita 
D'Monte, who can be reached at 226-2840.
            Sincerely,
                                            Dan L. Crippen,
                                                           Director
    Enclosure.

               congressional budget office cost estimate

H.R. 2116--Veterans' Millennium Health Care Act, As introduced on June 
                                9, 1999

    SUMMARY. The bill contains several provisions that would 
have a significant budgetary impact, including provisions to 
increase access to long-term care for certain veterans, allow 
the Department of Veterans Affairs (VA) to reimburse veterans 
or providers for the cost of emergency care, extend medical 
benefits to combat-injured veterans, and permit VA to spend 
some of the money that the United States might receive from 
litigation with tobacco companies. Assuming appropriation of 
the necessary amounts, CBO estimates that the bill would entail 
discretionary costs of about $138 million in 2000 and about 
$1.4 billion in 2004. In addition, the provisions to spend 
proceeds from tobacco litigation would raise direct spending by 
about $20 million in 2003, $30 million in 2004, and $170 
million in 2009. Because the bill would affect direct spending, 
pay-as-you-go procedures would apply.
    H.R. 2116 contains intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA). 
The costs to state, local, and tribal governments as a result 
of the mandates would not exceed the threshold specified in the 
act ($50 million, adjusted annually for inflation). Similarly, 
costs of the private-sector mandate are unlikely to exceed the 
corresponding threshold specified in UMRA ($100 million, 
adjusted annually).

    ESTIMATED COST TO THE FEDERAL GOVERNMENT. The estimated 
budgetary impact of H.R. 2116 is shown in the following table. 
The costs of this legislation fall within budget function 700 
(veterans' affairs).


                                                        [By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           1999             2000             2001             2002             2003             2004
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                            SPENDING SUBJECT TO APPROPRIATION
Spending Under Current Law for Veterans' Medical
 Care
    Estimated Authorization Level1................        17,862           17,862           17,862           17,862           17,862           17,862
    Estimated Outlays.............................        17,609           17,958           17,975           17,782           17,751           17,751
Proposed Changes:
  Extended Care Services
    Estimated Authorization Level.................             0               50              250              600              800            1,000
    Estimated Outlays.............................             0               40              230              560              780              980
  Reimbursement for Emergency Care
    Estimated Authorization Level.................             0               90              270              380              390              400
    Estimated Outlays.............................             0               80              250              360              380              400
  Care for Combat-Injured Veterans
    Estimated Authorization Level.................             0                5               15               21               22               23
    Estimated Outlays.............................             0                5               14               21               22               23
  Extension and Revision of Authorities
    Estimated Authorization Level.................             0               15               18               21               10               10
    Estimated Outlays.............................             0               14               18               21               11               10
  Other Provisions
    Estimated Authorization Level.................             0                2                2                2                2                2
    Estimated Outlays.............................             0                2                2                2                2                2
                                                   -----------------------------------------------------------------------------------------------------
        Total--Proposed Changes
      Estimated Authorization Level...............             0              160              553            1,022            1,222            1,433
      Estimated Outlays...........................             0              138              512              961            1,193            1,413


Spending Under the Bill for Veterans' Medical Care
    Estimated Authorization Level.................        17,862           18,022           18,415           18,884           19,084           19,295
    Estimated Outlays.............................        17,609           18,096           18,487           18,743           18,944           19,164

                                                                CHANGE IN DIRECT SPENDING
Estimated Budget Authority........................             0                3                3                3               31               51
Estimated Outlays.................................             0                3                3                3               21               31
                                                   =====================================================================================================
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 The figure shown for 1999 is the amount appropriated for that year.
2 CBO does not have enough information to estimate the costs of some provisions.
3 Less than $500,000.

                   Spending Subject to Appropriation

    Extended Care Services.--Spending for veterans' medical 
care is limited by discretionary appropriations. An enrollment 
system ensures that care is provided to veterans with the 
highest priority. These priorities established in law require 
VA to treat veterans with service-connected disabilities before 
other beneficiaries. The law states that VA shall provide 
medical services such as hospital and outpatient care and may 
provide nursing home care. Thus, VA has discretion whether to 
provide nursing home care to high-priority beneficiaries or to 
use its resources to provide additional hospital or outpatient 
care to other veterans.
    VA currently provides nursing home care to about 34,000 
veterans each day. In total, it provides nursing home or other 
long-term care to approximately 65,800 veterans a day at an 
annual cost of about $2.6 billion. Of the veterans who receive 
long-term care from VA on any given day, about 11,000 have 
service-connected disabilities of 50 percent or greater even 
though about 535,000 veterans in total are disabled to that 
degree.
    The need for long-term care by veterans is very large 
because many veterans are disabled or elderly. According to the 
Federal Advisory Commission on the Future of VA Long-Term Care 
about 610,000 veterans a day needed some form of long-term care 
in 1997. Among the veterans with higher priority for medical 
care from VA, so-called Category A veterans, the daily need 
totaled an estimated 295,000. (Category A veterans are those 
with service-connected disabilities, those who fall into 
special categories (such as former prisoners of war), and those 
with incomes below a certain threshold. Most Category A 
veterans have relatively low incomes, and low-income veterans 
comprise most of the roughly 3 million veterans who enroll with 
VA for health care).
    Section 101 of H.R. 2116 would limit the discretion allowed 
to VA under current law by requiring that extended care be 
available for veterans whose service-connected disabilities are 
rated 50 percent or greater or who require long-term care 
because of a service-connected disability. The program of care 
would include geriatric evaluations, nursing home care (in VA 
and community-based facilities), domiciliary services, respite 
care, and adult day health care. CBO estimates that this 
section would take three to four years to implement and would 
eventually cost about $1.0 billion a year in fiscal year 2000 
dollars.
    CBO's estimate relies on data from VA, the 1992 National 
Survey of Veterans, and the National Long-Term Care Survey 
(NLTCS). CBO determined the probability of a person being 
institutionalized as a function of his age, marital status, and 
number of limitations in activities of daily living--one 
indicator of an individual's need for long-term care. Applying 
those probabilities to a distribution of veterans with service-
connected disability ratings of 50 percent or higher, CBO 
estimates that by 2010 about 45,000 additional veterans would 
receive care in nursing homes for an annual cost of $1.2 
billion. This method of estimation takes into account that 
spouses often act as caregivers within the home to veterans who 
might otherwise require a nursing home stay. In the near term, 
demand for nursing home care through the VA would be lower 
because some veterans currently rely on Medicaid, private 
insurance, relatives, and certain Medicare-funded services to 
provide or finance their care. Initially, those veterans might 
not want to change their arrangements with providers. CBO 
assumes that eventually veterans with ratings of 50 percent or 
higher who enter nursing homes would turn to the VA for their 
care because, unlike other private or public insurance 
programs, it would be free to them. CBO expects that most 
nursing home patients would be placed in community nursing 
homes for an average stay of 179 days and at a cost of about 
$152 a day per patient (in 2000 prices). (Nursing homes owned 
and operated by VA are almost twice as expensive as privately 
operated homes.)
    In addition, veterans who have disability ratings of 50 
percent or more may need long-term, personal care short of that 
provided in a nursing home, often in their own home. CBO 
estimates that 62,000 such veterans would require home-based 
care at an annual cost of $0.1 billion (an average of 2\1/2\ 
hours of care per week at an hourly cost of $18).
    The bill would require copayments from veterans receiving 
long-term care if the veteran does not have a service-connected 
disability rated at 50 percent or greater. VA would be allowed, 
without further appropriation, to spend these amounts on 
providing long-term care. VA would be required to base the 
copayment on the assets and income of the veteran and spouse. 
The maximum monthly copayment would allow for protecting the 
spouse from financial hardship and for the veteran to retain a 
monthly personal allowance.
    CBO estimates that collections from copayments would amount 
to $0.3 billion in 2010. The estimate assumes that veterans 
with no service-connected disability or with a disability 
rating less than 50 percent would be charged copayments on 
about 69,000 stays at VA nursing homes, community nursing 
homes, and VA domiciliaries if that stay were longer than 21 
days. CBO also assumes that single veterans would keep a 
minimum personal allowance of $1,000 per year, while those with 
a living spouse would retain at least $13,000 per year. Based 
on VA's Patient Treatment Files, the vast majority of the 
69,000 stays would be low-income veterans who would be unable 
to defray the full cost of their care. If VA were to require 
veterans to draw down their personal assets or if it pursued 
estate recoveries, copayment revenues might be higher.

    Reimbursement for Emergency Care.--Section 102 would 
significantly expand VA's authority to reimburse veterans and 
institutions for emergency care. It would allow VA to pay for 
care stemming from life- or health-threatening emergencies 
involving a veteran who is enrolled with VA for care, has no 
other coverage for emergencies, and has received care from VA 
within the 12 months preceding the emergency. CBO estimates 
that this provision would increase spending by about $80 
million in 2000 about $400 million a year by 2004, assuming 
appropriation of the necessary amounts. Those costs would stem 
from the costs of emergency room care and any subsequent 
hospital care.
    Of the 3 million veterans enrolled with VA, CBO estimates 
that about 750,000 are uninsured and would be eligible for 
benefits under the bill. Emergency room care represents about 3 
percent of the costs of private health plans. Emergency room 
costs would be two to three times greater for veterans covered 
by the bill, however, based on their generally poorer health. 
Thus, CBO estimates that the immediate costs of emergencies 
would amount to about $155 million annually (in 2000 dollars).
    CBO estimates that two-thirds of all visits to the 
emergency room would be urgent and that 16 percent of those 
visits would lead to admitting the veteran for an inpatient 
stay. For veterans under 65 years of age, the average hospital 
stay would cost about $7,000. For veterans 65 years old or 
older, Medicare would cover the hospital costs, but VA would 
pay physicians' costs for those veterans without Part B 
coverage; CBO estimates that those costs would average about 
$1,000 for the small fraction of veterans who lack Part B 
coverage. The costs of the subsequent hospital stay would raise 
the annual bill to VA under this provision by about $195 
million (also in 2000 dollars).

    Care for Combat-Injured Veterans.--VA currently accords 
highest priority to veterans with service-connected 
disabilities that are rated at least 50 percent disabling. The 
lowest priority is given to veterans without such disabilities 
and with incomes over a certain threshold. Section 103 would 
raise the priority status for medical care of combat-injured 
veterans. Because medical care is a discretionary program, 
available appropriations limit the number of veterans who 
receive care, and this bill would make it more likely that VA 
would provide care to a combat-injured veteran who does not 
receive a high priority under current law. CBO estimates that 
this provision would raise the costs of veterans' medical care 
by about $20 million a year, assuming that additional 
appropriations would allow VA to treat the new beneficiaries as 
well as veterans who would receive care under current law.
    For this estimate, CBO assumes that the population of 
combat-injured veterans is about as large as the number of 
individuals who have been awarded a Purple Heart. According to 
data from the Military Order of the Purple Heart, about 550,000 
veterans with the award were still living in 1995. Roughly half 
of those veterans already qualify for priority-level care based 
on service-connected disabilities or income, according to data 
from VA.
    Although the remaining veterans--roughly 250,000--would be 
eligible for priority care, it is likely that only a small 
portion would seek VA services--only about 2 percent of all 
veterans in the lowest priority category used VA's medical 
services in 1996. We assume that the same percentage of such 
veterans who were injured in combat currently seek care from VA 
and would use VA's medical services a bit more intensively 
under this bill. We also assume that another 2 percent of those 
veterans would become new users of VA care under the bill. CBO 
assumes the average cost of care for combat-injured veterans 
would be the same as that of other veterans in the same 
priority grouping.

    Extension and Revision of Authorities.--Section 205(a) 
would extend the eligibility of Vietnam-era veterans for 
readjustment counseling from January 1, 2000, through January 
1, 2003. Vietnam-era veterans currently account for 19 percent 
of the patients in this program and an estimated 15 percent of 
the program's total costs--about $70 million in 1999. CBO 
estimates that this provision would cost about $8 million in 
2000 and $34 million over the 2000-2004 period.
    Section 205(d) would amend the Homeless Veterans 
Comprehensive Service Programs Act and would extend the 
program's ability to make grants through fiscal year 2002, from 
its current deadline at the end of fiscal year 1999. Based on 
recent experience in this program, CBO expects annual grants to 
construct shelters for homeless veterans in the amount of $6 
million over the 2000-2002 period. These grants would lead to a 
stream of payments to operate the shelters in subsequent years. 
The construction and operating expenses would total $37 million 
through 2004.
    Section 205(e) would allow the Homeless Veterans Program to 
subsidize the purchase of vans for the purpose of outreach to 
homeless veterans. Based on the number of vans purchased in 
earlier years, CBO estimates annual expenditure of $520,000 to 
assist in the purchase of 20 vans a year for four years.

    Other Provisions.--CBO does not have enough information to 
estimate the budgetary impacts of some provisions in the bill. 
Section 104 would allow VA to provide medical care to certain 
military retirees on a priority basis and be reimbursed by the 
Department of Defense (DoD) at the rate that DoD would have 
paid to a contractor under TRICARE. For the most part, the 
payments by DoD to VA would not add to the costs of TRICARE, 
but the provision could lead to somewhat greater use of medical 
benefits and thus higher overall payments by DoD. DoD would 
incur extra expenses to the extent that retirees increase their 
use of medical care because VA's copayments are less than under 
TRICARE.
    Section 106 would authorize VA to conduct a three-year 
pilot program to provide medical care for certain dependents of 
enrolled veterans. The provision would require payment of a 
reasonable charge by the dependent or the dependent's parent or 
guardian. CBO estimates that this provision would probably 
raise costs to VA but by a small amount. Most enrolled veterans 
have low incomes, and although ability to pay would be a 
criterion for care, it is likely that some of the dependents 
would be unable to make the payment.
    Section 107 would require VA to establish a program 
designed to improve access to and utilization of medical 
centers. Under current law, the Secretary already has broad 
powers to allocate resources to facilities and to lease, 
renovate, and close facilities. CBO estimates this provision 
would have little or no budgetary impact.
    Section 108 would extend by one year a counseling and 
treatment program for veterans who have experienced sexual 
trauma. The program would be extended from December 31,2001, to 
December 31, 2002, and would probably cost a few million 
dollars.
    Section 207 would expand VA's program of enhanced-use 
leases. Such leases provide VA with cash or other items of 
value in exchange for the right to use assets of the 
department. Under current law, these arrangements usually 
result in barter instead of cash payments to VA because cash 
proceeds must be returned to the Treasury. The bill would allow 
VA to spend any proceeds from enhanced-use leases; thus, VA 
would be more likely to accept cash payment. Although the 
increase in receipts would equal the increase in spending, 
using the proceeds from the leases could offset an equal amount 
of discretionary appropriations.

                            Direct Spending

    Veterans' Tobacco Trust Fund.--Section 203 of the bill 
would give VA direct spending authority over any amounts the 
federal government receives on its behalf from the tobacco 
industry for recovery of costs associated with tobacco-related 
illnesses. CBO estimates that the additional resources 
available to VA would total $80 million over the 2000-2004 
period and $0.8 billion over the 2000-2009 period. Because of 
normal lags in spending this provision would increase federal 
outlays by about $50 million over the 2000-2004 period and 
about $640 million over the 2000-2009 period. These outlays 
could supplement or supplant discretionary spending for 
veterans' medical care.
    There is substantial uncertainty about whether the federal 
government will file a lawsuit against the tobacco industry, 
whether it would win or settle, and if so, for what amounts. 
Earlier this year the Justice Department announced its intent 
to file a suit, and it is currently assessing the legal 
theories and strategies it will use. The President's budget 
request includes $20 million for preparing the lawsuit, but the 
report accompanying the Senate-reported appropriation bill for 
the Department of Justice states that no funds are provided for 
tobacco litigation.
    To develop an estimate that would fall within the range of 
possible outcomes, CBO made assumptions about three factors. 
First, how much would the federal government recover if it won 
or settled a lawsuit? Second, what proportion would be 
attributable to the costs of the VA? Finally, what is the 
likelihood that the federal government will enter into a 
lawsuit and either win or settle?

    Amount of Potential Recoveries.--To estimate the amount 
that the federal government could recover in any lawsuit 
against the tobacco industry, CBO examined available research 
on the cost of smoking and considered the arguments made by the 
states in their recent lawsuits. Many studies have examined the 
medical and other costs associated with smoking and have 
arrived at different conclusions. Smoking probably increases 
the net costs of some federal programs but decreases the costs 
of others. Two methods typically used by researchers to 
estimate the costs of smoking are the prevalence-based method, 
which estimates the costs of smoking by calculating the average 
difference in costs over a given period between smokers and 
nonsmokers, and the life-cycle method, which makes a similar 
comparison over the lifetimes of smokers and nonsmokers. In 
general, the two methods reach different conclusions because 
smokers, on average, have shorter life spans than nonsmokers. 
By comparing the costs of only living smokers and nonsmokers, 
the prevalence-based method does not include either the avoided 
costs or lost tax revenue from smokers in years in which they 
are no longer alive. In contrast, the life-cycle method 
accounts for the shorter life spans of smokers relative to 
nonsmokers.
    CBO's review of the research finds that estimates of the 
cost to the federal government of cigarette smoking (for 
programs other than Medicaid) range from negligible under some 
of the life-cycle estimates to as high as $30 billion to $40 
billion a year under some of the prevalence-based estimates. 
The states based their lawsuits, at least partly, on a 
prevalence-based analysis that showed the costs of smoking to 
Medicaid in fiscal year 1993 was $13 billion.1 This 
figure could correspond to as much as $40 billion in current 
dollars for other federal programs. In another study, the 
Centers for Disease Control estimated the total costs of 
smoking in 1993 to be $50 billion, with federal programs other 
than Medicaid paying for 30 percent and state programs 
(including Medicaid) paying for about 13 percent.2 
This finding would suggest total federal costs of about $20 
billion this year and total state costs of about $9 billion.
---------------------------------------------------------------------------
    \1\ Leonard S. Miller and others, ``State Estimates of Medicaid 
Expenditures Attributable to Cigarette Smoking, Fiscal Year 1993,'' 
Public Health Reports, vol. 113 (March/April 1998).
    \2\ Centers for Disease Control and Prevention, ``Medical-Care 
Expenditures Attributable to Cigarette Smoking--United States, 1993,'' 
Morbidity and Mortality Weekly Report, vol. 43, no 26 (1994).
---------------------------------------------------------------------------
    The annual payments under the November 1998 settlement 
between tobacco companies and the states ultimately rise to 
about $9 billion a year before adjustments for inflation and 
the volume of cigarette sales. The Justice Department contends 
that the amount of money paid out by the federal government for 
smoking related illnesses is even larger than that paid out by 
the states through the Medicaid program.3 For the 
purpose of this estimate, CBO assumes that if the federal 
government wins a lawsuit or settles with tobacco companies, it 
will receive slightly over twice the amounts the states are 
slated to receive under their settlement. CBO further assumes 
that these amounts will be adjusted for inflation and cigarette 
sales in the same manner as in the state settlement, resulting 
in payments of between $16 billion and $25 billion a year over 
the 2000-2009 period.
---------------------------------------------------------------------------
    \3\ U.S. Department of Justice, ``Developing a Plan to Take the 
Tobacco Industry to Court'' (Department of Justice Fact Sheet, 
Washington D.C., January 1999).

    Proportion Attributable to Veterans' Programs.--In 1998 the 
federal government spent about $18 billion on health care for 
veterans through VA. That figure represents 7 percent of 
spending on all federal non-Medicaid health care benefits 
(including Medicare, the Federal Employee Health Benefits 
Program, the Department of Defense health care programs, and 
the Indian Health Service). For this estimate CBO assumes that 
7 percent of the amounts recovered under a federal lawsuit 
---------------------------------------------------------------------------
would be attributable to the VA.

    Probability of Recovery of Amounts.--CBO assumes that there 
is ultimately a ten percent probability that the federal 
government will enter into a lawsuit and win or settle for 
recoveries in these amounts. Because the timing is unclear, CBO 
assumes no recoveries until 2003 and a lower but growing 
probability of recoveries over the 2003-2006 period.

    Other Copayments and Collections.--The bill contains 
several other provisions that would allow VA to collect and 
spend funds. The bill would allow VA to charge higher 
copayments for prescriptions and outpatient visits of certain 
veterans and to set copayments for certain costly items of 
equipment other than wheelchairs and artificial limbs. The 
proceeds from these charges would be either used for medical 
care or deposited in the Treasury.
    The budgetary effects of using these authorities would be 
felt in mandatory and appropriated accounts. The provisions 
would have an impact on direct spending because the receipts 
and subsequent spending would not be subject to appropriation, 
but the net effect would be negligible in a typical year 
because the extra spending would roughly equal the 
corresponding receipts. The extra spending could reduce the 
need for appropriated funds if VA would otherwise request 
funding for the expenses met through the use of the receipts. 
CBO does not expect, however, that VA would make much use of 
these authorities.

    Compensated Work Therapy Program.--Section 105 would make 
veterans eligible for disability compensation benefits for 
injuries proximately caused by the veteran's receipt of care in 
the Compensated Work Therapy Program (CWT). CWT is a 
therapeutic work program for veterans that takes place in 
various types of workplaces. Under current law, these veterans 
are not eligible for disability compensation benefits because 
of injuries suffered while participating in the program. The 
budgetary impact of this provision would depend on how many 
veterans are participating in this program and the rate at 
which they are injured while working. Information from VA 
indicates that about 15,000 veterans a year participate in this 
program. Based on data from the Bureau of Labor Statistics on 
the incidence of occupational illnesses and injuries, CBO 
estimates that the provision would increase direct spending by 
less than $500,000 a year over the 2000-2002 period and by 
about $1 million a year thereafter.

    PAY-AS-YOU-GO CONSIDERATIONS. Section 252 of the Balanced 
Budget and Emergency Deficit Control Act sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts. The net changes in outlays and governmental receipts 
that are subject to pay-as-you-go procedures are shown in the 
following table. For the purposes of enforcing pay-as-you-go 
procedures, only the effects in the current year, the budget 
year, and the succeeding four years are counted.


                                                        [By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008    2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays..............................................       0       0       0       0      21      31      61      91     121     151     171
Changes in receipts.............................................                                      Not Applicable
--------------------------------------------------------------------------------------------------------------------------------------------------------


    INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT. Section 102 of 
the bill would authorize the Department of Veterans Affairs to 
reimburse providers for the reasonable cost of emergency 
treatment furnished to certain veterans. The provision would 
impose a private-sector and intergovernmental mandate on 
providers (including public hospitals) because, in the event of 
a dispute over reasonable cost, it would extinguish any 
liability on the part of the veteran for that treatment unless 
the provider rejects and refunds the department's payment 
within 30 days. It is not clear whether the provision would 
lead to a net financial loss or gain for providers. All 
providers would face costs if the department's payment were 
lower than the amount billed. But some providers might 
experience a net gain under this provision if reimbursements 
from the department more than offset liabilities that otherwise 
would not be collected and any associated collection costs. In 
any event, costs of the provision are unlikely to exceed the 
thresholds specified in UMRA for intergovernmental costs ($50 
million, adjusted annually for inflation) or private-sector 
costs ($100 million, adjusted annually).

    COMPARISON WITH OTHER ESTIMATES. The Administration's 
budget request for fiscal year 2000 contains a proposal for 
veterans' out-of-network emergency care that is similar to 
section 102 of H.R. 2116. The Administration's proposal, 
however, would cover fewer than half as many veterans. The 
budget request includes about $244 million in 2000 to cover the 
out-of-network emergency care for uninsured, enrolled veterans 
with compensable disabilities related to military service. H.R. 
2116 would cover that kind of care for all uninsured. enrolled 
veterans, including veterans whose eligibility is based on 
income.

    ESTIMATE PREPARED BY:
    Federal Costs:
    Extended Care Services: Sunita D'Monte (226-2840), Stuart 
Hagen (225-2644), and Rachel Schmidt (226-2900).
    Reimbursement for Emergency Care: Michael A. Miller (226-
2840).
    Care for Combat-Injured Veterans: Michael A. Miller (226-
2840).
    Extension and Revision of Authorities: Sarah T. Jennings 
(226-2840).
    Veterans' Tobacco Trust Fund: Dorothy A. Rosenbaum (226-
9010).
    Compensated Work Therapy Program: Charles R. Riemann (226-
2840).
    Other Provisions: Sunita D'Monte (226-2840).
    Impact on State, Local, and Tribal Governments: Susan Sieg 
(225-3220).
    Impact on the Private Sector: Rachel Schmidt (226-2900).

    ESTIMATE APPROVED BY:
    Paul N. Van de Water, Assistant Director for Budget 
Analysis.

       VA Committee Rebuttal of CBO's Cost Estimate on H.R. 2116

    The Committee has ordered reported a bill which authorizes 
an expansion of certain medical benefits while providing for 
both new revenues (which can help offset program expansions) 
and significant reforms in the VA health care system. With the 
failure of the Congressional Budget Office (CBO) to meet the 
Committee's May 12 request for a cost estimate, the 
Subcommittee marked up this bill without the benefit of CBO's 
views on its cost implications. Still lacking a CBO estimate at 
the scheduled full committee markup of the bill, the Committee 
deferred final action on the measure in order to permit the 
Subcommittee to take testimony on the cost implications of the 
bill.
    The Subcommittee's June 30 hearing on the bill's cost 
impact apparently served as a catalyst leading to CBO's 
submitting an estimate, published herein. But it also served to 
underscore the frail foundation underlying CBO's projections.
    Significantly, CBO has acknowledged that its estimate is 
based on the tenuous assumption that there would be 
``appropriation of the necessary amounts'' to fund the 
provisions authorized by the bill. As CBO testified at the June 
30 hearing, however, ``legislative changes such as those in 
H.R. 2116 authorizing long-term and emergency care for veterans 
do not raise federal outlays, because funding for them is 
subject to appropriation''. CBO noted that VA's ``appropriation 
limits how much the VA may actually spend regardless of how 
much spending is authorized.'' Given historic (constrained) 
levels of funding for VA medical care (as described in CBO's 
testimony of June 30), it is a misnomer to characterize CBO's 
projections as a ``cost estimate''.
    CBO's projections of the potential for increased spending 
under the bill--an additional $1.4 billion in the fiscal year 
2004--are clearly not insignificant. But closer scrutiny as 
reflected in the Subcommittee's June 30 hearing, calls into 
question the underpinnings of CBO's projections. It is apparent 
to this Committee, in the light of the points below, that those 
projections are not a reliable mirror of even potential costs.

    1. CBO attributes unreasonable costs to a population which 
has the highest priority for VA care and a high percentage of 
which VA is already serving: CBO projects large new costs based 
on a provision directing VA to provide needed long-term care to 
service-connected veterans who are rated 50 percent or more 
disabled. These veterans already have the highest priority for 
VA long-term care. A VA long-term care expert testified at the 
June 30 hearing that the Department is already providing long-
term care to approximately two-thirds of those service-
connected veterans who need such care. Rather than exposing the 
Department to up to $1 billion in new long-term care costs, 
that official testified that new costs would be under $185 
million per year, and might be entirely offset by VA's 
implementation of required long-term care copayments under the 
bill.

    Rather than witnessing a battle of experts, what the 
Subcommittee learned was that VA based its estimate on a 
sophisticated planning model while CBO began wrestling only 
recently with a question of first impression. VA's model had 
only recently undergone a rigorous analysis (and approval) by a 
Federal advisory committee composed of top experts on long-term 
care from around the country. That committee had been 
established to study the future demand for VA care and the 
adequacy of VA programs to meet that demand. The VA, in 
developing its estimate of the impact of section 101, focused 
on the disabled service-connected population which actually 
uses VA services. The Congressional Budget Office, professing 
ignorance of VA's model and insufficient time to refine its 
work, relied heavily on data which suggested that large numbers 
of 50 percent service-connected veterans would likely qualify 
for nursing home care based on degree of functional impairment. 
As CBO acknowledged, it based its estimate that by 2010 45,000 
additional veterans would receive care in nursing homes on 
``the probability of a person being institutionalized as a 
function of his age, marital status, and number of limitations 
in activities of daily living.'' What CBO did not factor, and 
in fact largely disregarded, is the ``real world'' data on such 
veterans' actual utilization of VA services. In short, the CBO 
assumption that vast numbers of 50 percent service-connected 
veterans who do not now rely on VA care would be induced to 
seek it under this bill simply has little evidence to support 
it. That assumption ignores the fact that those veterans 
already have the highest priority for VA long-term care and 
could readily receive VA care.
    It is the Committee's view that CBO has vastly overinflated 
the impact of this provision. First it fails to acknowledge 
that some veterans do not and would not use VA health care 
services, for any number of reasons. Secondly, CBO failed to 
address the fact that veterans, like other Americans, typically 
do not want to be institutionalized in a nursing home unless 
they have no other option. The fact that a large number of 50 
percent service-connected veterans may qualify for such care 
(based on degree of functional impairment) is not a meaningful 
predictor of extensive utilization of VA nursing home care.

    2. While projecting new long-term care costs to VA, CBO has 
failed to project the substantial savings to the Medicare and 
Medicaid programs which would necessarily result under its 
scenario.

    Many veterans in need of long-term care are eligible for 
other Federal health care programs which fund such care. To 
illustrate, in a cost estimate developed last year on 
legislation to provide for Medicare to reimburse VA for care of 
certain dual-eligible veterans, (H.R. 3828, the Veterans 
Medicare Access Improvement Act of 1998), CBO noted the extent 
to which veterans have dual eligibility for VA medical care and 
for Medicare. CBO projected that the proportion of veterans who 
are at least 65 will increase from 36 percent in 1997 to 41 
percent in 2008. VA is already heavily subsidizing the Medicare 
program. In its estimate on H.R. 3828, CBO estimated that about 
one-half of the $17 billion in VA health outlays in 1997 were 
for Medicare-covered services furnished to Medicare-eligible 
veterans.
    The Congressional Research Service (CRS) recently estimated 
that about 60 per cent of the nation's long-term care 
expenditures are paid by the Federal and state governments. CRS 
reported that Medicare pays for over half of the home and 
community-based care, and Medicaid pays more than 40 percent of 
the costs of nursing home care. In projecting substantial 
increases in VA expenditures for both nursing home care and 
home and community-based long-term care, CBO's estimate is 
strikingly silent regarding the impact of these changes on 
Medicare or Medicaid. One would expect that if veterans qualify 
for long-term care benefits under Medicare and Medicaid at the 
same rate as other Americans, there should be a 60 percent 
savings in these programs for each additional dollar spent by 
VA.
    At the Subcommittee's hearing on June 30, CBO conceded that 
there could be savings to the Medicaid program of some $150 
million annually, but inexplicably its prepared testimony and 
written cost estimate failed to reflect that. CBO failed to 
offer any persuasive explanation for assuming no savings to 
Medicare.

    3. CBO projects new costs, but fails to project any 
offsetting revenues provided for in other provisions of the 
bill.

    H.R. 2116 was intended to provide some balance between 
program expansion and programmatic reforms which would provide 
offsetting revenues. CBO's estimate of the costs of the bill is 
altogether misleading in failing to identify and credit 
offsetting revenues.
    Cost-savings or new revenues should have been projected for 
the following provisions:

        a. LSection 201 of the bill would substantially revise 
        current VA rules on cost-sharing. It envisions VA's 
        increasing a $2 copayment on pharmaceuticals and 
        establishing copayment requirements on provision of 
        hearing aids and other costly items. It would also 
        require VA to revise copayment requirements on 
        outpatient visits by so-called category C veterans. 
        CBO's estimate fails to identify any revenue associated 
        with those provisions. Nor did CBO offer any revenue 
        projection at the June 30 hearing, despite testimony 
        from VA that the Department intended to implement these 
        authorities. CBO's failure to provide any such 
        projection is particularly troubling given its 
        projections to the Congress as recently as April 1999 
        to the effect that additional revenues of some $200 
        million per year could be realized through legislation 
        to increase VA drug copayment requirements.

        b. LSection 207, which would extend and expand VA's 
        authority to enter into long-term leases of underused 
        VA property, should result in VA's gaining additional 
        revenues.

    CBO's projections are strikingly inconsistent. CBO appeared 
to discount the significance of the bill's revenue-generating 
provisions either because they are authorizations (rather than 
explicit requirements) or because the pertinent provisions of 
the bill were not more explicit. Ironically, CBO was not 
unwilling to provide very specific estimates of the cost of a 
provision, such as emergency care payments under section 102. 
Like the drug copayment provision section 102 simply authorizes 
VA to establish a new program and leaves broad discretion on 
payment levels to the Department.

    4. CBO has ignored provisions which would limit the costs 
of the bill:

        Section 102 of the bill would authorize--but not 
        require--VA to pay for emergency care for certain 
        veterans who lack health insurance or any other health 
        coverage. This section directs VA to set emergency care 
        payment levels and to establish appropriate limitations 
        on payment. As VA acknowledged at the June 30 hearing 
        it has an obvious incentive to set low rates so as to 
        limit its liability. CBO fails to take account of VA's 
        authority to limit its liability under the bill, and 
        clearly assumed that VA would make payments at the same 
        reimbursement rate as private health plans. VA 
        indicated in its testimony that it would not be 
        reasonable to base a cost estimate of this measure on 
        the experience of private health plans. The Committee 
        believes the CBO projection that this measure would 
        entail additional costs of up to $400 million in fiscal 
        year 2004 is not only unreasonably speculative but 
        based on entirely faulty assumptions. In contrast, VA 
        staff projected the cost of implementing this measure 
        to be approximately $150 million/year.

    5. CBO has a poor track record on estimating demand for VA 
care.

    The Committee has two additional reasons for questioning 
CBO's cost estimate and concluding that that estimate is not a 
reliable basis for gauging the fiscal impact of enacting H.R. 
2116. First, the Committee notes the inherent difficulty of 
making long-term projections in a dynamic sector like health 
care, particularly as it involves the VA health care system, 
which is itself still undergoing dramatic changes. Second, the 
Committee notes the lack of success CBO has had in the recent 
past in estimating with any degree of reliability the impact of 
changing provisions of law governing eligibility for particular 
health care benefits.
    The enactment of H.R. 2116 would have a substantial, and 
the Committee believes, beneficial impact on the VA health care 
system. The bill represents the most significant legislative 
change since the enactment of the Veterans Health Care 
Eligibility Act of 1996, which expanded veterans' eligibility 
for outpatient care. CBO, in its 1996 estimate of the costs 
attributable to enacting that legislation, projected that ``the 
new benefit for outpatient care would entail net costs of about 
$3 billion each year.'' In fact, the ``costs'' of that 
expansion of eligibility have largely been offset by savings, 
as VA had projected. The Committee would expect much the same 
under this legislation.

                   Appicability to Legislative Branch

    The reported bill would not be applicable to the 
legislative branch under the Congressional Accountability Act, 
Public Law 104-1, because it would apply only to certain 
Department of Veterans Affairs programs and activities.

                     Statement of Federal Mandates

    The reported bill would not establish any significant 
federal mandate under the Unfunded Mandates Reform Act, Public 
Law 104-4.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the U.S. Constitution, 
the reported bill would be authorized by Congress' power to 
``provide for the common Defence and general Welfare of the 
United States.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

TITLE 38 UNITED STATES CODE

           *       *       *       *       *       *       *


PART II--GENERAL BENEFITS

           *       *       *       *       *       *       *


CHAPTER 11--COMPENSATION FOR SERVICE-CONNECTED DISABILITY OR DEATH

           *       *       *       *       *       *       *


Sec. 1151. Benefits for persons disabled by treatment or vocational 
                    rehabilitation

  (a)  * * *

           *       *       *       *       *       *       *

          (2) the disability or death was proximately caused 
        (A) by the provision of training and rehabilitation 
        services by the Secretary (including by a service-
        provider used by the Secretary for such purpose under 
        section 3115 of this title) as part of an approved 
        rehabilitation program under chapter 31 of this title, 
        or (B) by participation in a program (known as a 
        ``compensated work therapy program'') under section 
        1718 of this title.

           *       *       *       *       *       *       *


CHAPTER 17--HOSPITAL, NURSING HOME, DOMICILIARY, AND MEDICAL CARE

           *       *       *       *       *       *       *


                          subchapter i--general

Sec.
1701.    Definitions.
     * * * * * * *

 subchapter ii--hospital, nursing home or domiciliary care and medical 
                                treatment

1710.    Eligibility for hospital, nursing home, and domiciliary care.
1710A.   Requirement to provide extended care.
     * * * * * * *
1713A.   Medical care for certain dependents and enrolled veterans: 
          pilot program.
     * * * * * * *

   subchapter iii--miscellaneous provisions relating to hospital and 
           nursing home care and medical treatment of veterans

1721.    Power to make rules and regulations.
     * * * * * * *
[1722A.   Copayment for medications.]
1722A.   Copayments for medications and certain costly items and 
          equipment.
     * * * * * * *
1725.    Reimbursement for emergency treatment.
     * * * * * * *
1729B.   Health Services Improvement Fund.
1729C.   Veterans Tobacco Trust Fund.
     * * * * * * *

                         SUBCHAPTER I--GENERAL

Sec. 1701. Definitions

  For the purposes of this chapter--
  (1)  * * *

           *       *       *       *       *       *       *

  (10) The term ``injured in combat'' means wounded in action 
as the result of an act of an enemy of the United States or 
otherwise wounded in action by weapon fire while directly 
engaged in armed conflict (other than as the result of willful 
misconduct by the wounded individual).

           *       *       *       *       *       *       *


Sec. 1705. Management of health care: patient enrollment 
                    system

  (a)  * * *

           *       *       *       *       *       *       *

          (3) Veterans who are former prisoners of war or who 
        were injured in combat, veterans with service-connected 
        disabilities rated 10 percent or 20 percent, and 
        veterans described in subparagraphs (B) and (C) of 
        section 1710(a)(2) of this title.

           *       *       *       *       *       *       *

          (6) All other veterans eligible for hospital care, 
        medical services, and nursing home care under section 
        1710(a)(2) of this title (other than subparagraph (H) 
        of such section).
          (7) Veterans who are eligible for hospital care, 
        medical services, and nursing home care under section 
        1710(a)(2)(H) of this title.
          [(7)] (8) Veterans described in section 1710(a)(3) of 
        this title.

           *       *       *       *       *       *       *


 SUBCHAPTER II--HOSPITAL, NURSING HOME OR DOMICILIARY CARE AND MEDICAL 
TREATMENT

           *       *       *       *       *       *       *


Sec. 1710. Eligibility for hospital, nursing home, and domiciliary care

  (a)(1) The Secretary (subject to paragraph (4)) shall furnish 
hospital care and medical services, and [may furnish nursing 
home care,] which the Secretary determines to be needed--

           *       *       *       *       *       *       *

  (2) The Secretary (subject to paragraph (4)) shall furnish 
hospital care and medical services, and may furnish nursing 
home care, which the Secretary determines to be needed to any 
veteran--
          (A)  * * *

           *       *       *       *       *       *       *

          (D) who is a former prisoner of war or who was 
        injured in combat;

           *       *       *       *       *       *       *

          (F) who was exposed to a toxic substance, radiation, 
        or other conditions, as provided in subsection (e); 
        [or]
          (G) who is unable to defray the expenses of necessary 
        care as determined under section 1722(a) of this 
        title[.]; or
          (H) who has retired from active military, naval, or 
        air service in the Army, Navy, Air Force, or Marine 
        Corps, is eligible for care under the TRICARE program 
        established by the Secretary of Defense, and is not 
        otherwise described in paragraph (1) or in this 
        paragraph.

           *       *       *       *       *       *       *

  (4) The requirement in paragraphs (1) and (2) that the 
Secretary furnish hospital care and medical services, and the 
requirement in section 1710A of this title that the Secretary 
provide a program of extended care services, shall be effective 
in any fiscal year only to the extent and in the amount 
provided in advance in appropriations Acts for such purposes.

           *       *       *       *       *       *       *

  (g)(1) The Secretary may not furnish medical services under 
subsection (a) of this section (including home health services 
under section 1717 of this title) to a veteran who is eligible 
for hospital care under this chapter by reason of subsection 
(a)(3) of this section unless the veteran agrees to pay to the 
United States [the amount determined under paragraph (2) of 
this subsection] in the case of each outpatient visit the 
applicable amount or amounts established by the Secretary by 
regulation.
  (2) A veteran who is furnished medical services under 
subsection (a) of this section and who is required under 
paragraph (1) of this subsection to agree to pay an amount to 
the United States in order to be furnished such services shall 
be liable to the United States, in the case of each visit in 
which such services are furnished to the veteran, for an amount 
[equal to 20 percent of the estimated average cost (during the 
calendar year in which the services are furnished) of an 
outpatient visit in a Department facility. Such estimated 
average cost shall be determined by the Secretary.] which the 
Secretary shall establish by regulation.

           *       *       *       *       *       *       *


Sec. 1710A. Extended care services

  (a) The Secretary (subject to section 1710(a)(4) of this 
title and subsection (c) of this section) shall operate and 
maintain a program to provide extended care services to 
eligible veterans in accordance with this section. Such 
services shall include the following:
          (1) Geriatric evaluation.
          (2) Nursing home care (A) in facilities operated by 
        the Secretary, and (B) in community-based facilities 
        through contracts under section 1720 of this title.
          (3) Domiciliary services under section 1710(b) of 
        this title.
          (4) Adult day health care under section 1720(f) of 
        this title.
          (5) Such other noninstitutional alternatives to 
        nursing home care, including those described in section 
        1720C of this title, as the Secretary considers 
        reasonable and appropriate.
          (6) Respite care under section 1720B of this title.
  (b)(1) In carrying out subsection (a), the Secretary shall 
provide extended care services which the Secretary determines 
are needed (A) to any veteran in need of such care for a 
service-connected disability, and (B) to any veteran who is in 
need of such care and who has a service-connected disability 
rated at 50 percent or more.
  (2) The Secretary, in making placements for nursing home care 
in Department facilities, shall give highest priority to 
veterans (A) who are in need of such care for a service-
connected disability, or (B) who have a service-connected 
disability rated at 50 percent or more. The Secretary shall 
ensure that a veteran described in this subsection who 
continues to need nursing home care shall not after placement 
in a Department nursing home be transferred from the facility 
without the consent of the veteran, or, in the event the 
veteran cannot provide informed consent, the representative of 
the veteran.
  (c)(1) The Secretary, in carrying out subsection (a), shall 
prescribe regulations governing the priorities for the 
provision of nursing home care in Department facilities so as 
to ensure that priority for such care is given (A) for patient 
rehabilitation, (B) for clinically complex patient populations, 
and (C) for patients for whom there are not other suitable 
placement options.
  (2) The Secretary may not furnish extended care services for 
a non-service-connected disability other than in the case of a 
veteran who has a service-connected disability rated at 50 
percent or more unless the veteran agrees to pay to the United 
States a copayment for extended care services of more than 21 
days in any year.
  (d)(1) A veteran who is furnished extended care services 
under this chapter and who is required under subsection (c)(2) 
to pay an amount to the United States in order to be furnished 
such services shall be liable to the United States for that 
amount.
  (2) In implementing subsection (c)(2), the Secretary shall 
develop a methodology for establishing the amount of the 
copayment for which a veteran described in subsection (c) is 
liable. That methodology shall provide for--
          (A) establishing a maximum monthly copayment (based 
        on all income and assets of the veteran and the spouse 
        of such veteran);
          (B) protecting the spouse of a veteran from financial 
        hardship by not counting all of the income and assets 
        of the veteran and spouse (in the case of a spouse who 
        resides in the community) as available for determining 
        the copayment obligation; and
          (C) allowing the veteran to retain a monthly personal 
        allowance.
  (e)(1) There is established in the Treasury of the United 
States a revolving fund known as the Department of Veterans 
Affairs Extended Care Fund (hereinafter in this section 
referred to as the ``fund''). Amounts in the fund shall be 
available, without fiscal year limitation and without further 
appropriation, exclusively for the purpose of providing 
extended care services under subsection (a).
  (2) All amounts received by the Department under this section 
shall be deposited in or credited to the fund.

           *       *       *       *       *       *       *


Sec. 1712A. Eligibility for readjustment counseling and related mental 
                    health services

  (a)(1)(A)  * * *
  (B) Subparagraph (A) applies to the following veterans:
          (i)  * * *

           *       *       *       *       *       *       *

          (ii) Any veteran (other than a veteran covered by 
        clause (i)) who served on active duty during the 
        Vietnam era who seeks or is furnished such counseling 
        before January 1, [2000] 2003.

           *       *       *       *       *       *       *


Sec. 1713A. Medical care for certain dependents of enrolled veterans: 
                    pilot program

  (a) The Secretary may, during the program period, carry out a 
pilot program to provide primary health care services for 
eligible dependents of veterans in accordance with this 
section.
  (b) For purposes of this section:
          (1) The term ``program period'' means the period 
        beginning on the first day of the first month beginning 
        more than 180 days after the date of the enactment of 
        this section and ending three years after that day.
          (2) The term ``eligible dependent'' means an 
        individual who--
                  (A) is the spouse or child of a veteran who 
                is enrolled in the system of patient enrollment 
                established by the Secretary under section 1705 
                of this title; and
                  (B) is determined by the Secretary to have 
                the ability to pay for such care or services 
                either directly or through reimbursement or 
                indemnification from a third party.
  (c) The Secretary may furnish health care services to an 
eligible dependent under this section only if the dependent 
(or, in the case of a minor, the parent or guardian of the 
dependent) agrees--
          (1) to pay to the United States an amount 
        representing the reasonable charges for the care or 
        services furnished (as determined by the Secretary); 
        and
          (2) to cooperate with and provide the Secretary an 
        appropriate assignment of benefits, authorization to 
        release medical records, and any other executed 
        documents, information, or evidence reasonably needed 
        by the Secretary to recover the Department's charges 
        for the care or services furnished by the Secretary.
  (d)(1) The health care services provided under the pilot 
program under this section may consist of such primary hospital 
care services and such primary medical services as may be 
authorized by the Secretary. The Secretary may furnish those 
services directly through a Department medical facility or, 
subject to paragraphs (2) and (3), pursuant to a contract or 
other agreement with a non-Department facility (including a 
health-care provider, as defined in section 8152(2) of this 
title).
  (2) The Secretary may enter into a contract or agreement to 
furnish primary health care services under this section in a 
non-Department facility on the same basis as provided under 
subsections (a) and (b) of section 1703 of this title or may 
include such care in an existing or new agreement under section 
8153 of this title when the Secretary determines it to be in 
the best interest of the prevailing standards of the Department 
medical care program.
  (3) Primary health care services may not be authorized to be 
furnished under this section at any medical facility if the 
furnishing of those services would result in the denial of, or 
a delay in providing, access to care for any enrolled veteran 
at that facility.
  (e)(1) In the case of an eligible dependent who is furnished 
primary health care services under this section and who has 
coverage under a health-plan contract, as defined in section 
1729(i)(1) of this title, the United States shall have the 
right to recover or collect the reasonable charges for such 
care or services from such health-plan contract to the extent 
that the individual or the provider of the care or services 
would be eligible to receive payment for such care or services 
from such health-plan contract if the care or services had not 
been furnished by a department or agency of the United States.
  (2) The right of the United States to recover under paragraph 
(1) shall be enforceable with respect to an eligible dependent 
in the same manner as applies under subsections (a)(3), (b), 
(c)(1), (c)(2), (d), (f), (h), and (i) of section 1729 of this 
title with respect to a veteran.
  (f)(1) Subject to paragraphs (2) and (3), the pilot program 
under this section shall be carried out during the program 
period in not more than four veterans integrated service 
networks, as designated by the Secretary. In designating 
networks under the preceding sentence, the Secretary shall 
favor designation of networks that are suited to serve 
dependents of veterans because of--
          (A) the capability of one or more medical facilities 
        within the network to furnish primary health care 
        services to eligible dependents while assuring that 
        veterans continue to receive priority for care and 
        services;
          (B) the demonstrated success of such medical 
        facilities in billings and collections;
          (C) support for initiating such a pilot program among 
        veterans in the network; and
          (D) such other criteria as the Secretary considers 
        appropriate.
  (2) In implementing the pilot program, the Secretary may not 
provide health care services for dependents who are children--
          (A) in more than one of the participating networks 
        during the first year of the program period; and
          (B) in more than two of the participating networks 
        during the second year of the program period.
  (3) In implementing the pilot program, the Secretary shall 
give priority to facilities which operate women veterans' 
clinics.

           *       *       *       *       *       *       *


Sec. 1720. Transfers for nursing home care; adult day health care

  (a)  * * *

           *       *       *       *       *       *       *

  [(f)(1)(A) The Secretary is authorized to furnish adult day 
health care as provided for in this subsection. For the purpose 
only of authorizing the furnishing of such care and specifying 
the terms and conditions under which it may be furnished to 
veterans needing such care--]
  (f)(1)(A) The Secretary may furnish adult day health care 
services to a veteran enrolled under section 1705(a) of this 
title who would otherwise require nursing home care.

           *       *       *       *       *       *       *


Sec. 1720B. Respite care

  (a) The Secretary may furnish respite care services to a 
veteran who is [eligible] enrolled to receive care under 
section 1710 of this title.
  (b) For the purpose of this section, [the term ``respite 
care'' means hospital or nursing home care] the term ``respite 
care services'' means care and services which--
          (1) [is] are of limited duration;
          (2) [is] are furnished [in a Department facility] on 
        an intermittent basis to a veteran who is suffering 
        from a chronic illness and who resides primarily at 
        home; and
          (3) [is] are furnished for the purpose of helping the 
        veteran to continue residing primarily at home.
  (c) In furnishing respite care services, the Secretary may 
enter into contract arrangements.

           *       *       *       *       *       *       *


Sec. 1720D. Counseling and treatment for sexual trauma

  (a)(1) During the period through [December 31, 2001] December 
31, 2002, the Secretary [may provide counseling to a veteran 
who the Secretary determines requires such counseling] shall 
operate a program under which the Secretary provides counseling 
and appropriate care and services to veterans who the Secretary 
determines require such counseling and care and services to 
overcome psychological trauma, which in the judgment of a 
mental health professional employed by the Department, resulted 
from a physical assault of a sexual nature, battery of a sexual 
nature, or sexual harassment which occurred while the veteran 
was serving on active duty.
  [(2) During the period referred to in paragraph (1), the 
Secretary may provide appropriate care and services to a 
veteran for an injury, illness, or other psychological 
condition that the Secretary determines to be the result of a 
physical assault, battery, or harassment referred to in that 
paragraph.]
  [(3)] (2) In furnishing counseling to a veteran under this 
subsection, the Secretary may, during the period through 
[December 31, 2001] December 31, 2002, provide such counseling 
pursuant to a contract with a qualified mental health 
professional if (A) in the judgment of a mental health 
professional employed by the Department, the receipt of 
counseling by that veteran in facilities of the Department 
would be clinically inadvisable, or (B) Department facilities 
are not capable of furnishing such counseling to that veteran 
economically because of geographical inaccessibility.

           *       *       *       *       *       *       *

  (c) The Secretary shall provide information on the counseling 
and treatment available to veterans under this section. Efforts 
by the Secretary to provide such information--
          (1) shall include availability of a toll-free 
        telephone number (commonly referred to as an 800 
        number); [and]
          (2) shall ensure that information about the 
        counseling and treatment available to veterans under 
        this section--
                  (A) is revised and updated as appropriate;
                  (B) is made available and visibly posted at 
                appropriate facilities of the Department; and
                  (C) is made available through appropriate 
                public information services; and
          [(2)] (3) shall include coordination with the 
        Secretary of Defense seeking to ensure that individuals 
        who are being separated from active military, naval, or 
        air service are provided appropriate information about 
        programs, requirements, and procedures for applying for 
        counseling and treatment under this section.

           *       *       *       *       *       *       *


   SUBCHAPTER III--MISCELLANEOUS PROVISIONS RELATING TO HOSPITAL AND 
NURSING HOME CARE AND MEDICAL TREATMENT OF VETERANS

           *       *       *       *       *       *       *


[Sec. 1722A. Copayment for medications]

Sec. 1722A. Copayments for medications and certain costly items and 
                    equipment

  (a)  * * *

           *       *       *       *       *       *       *

  (b) The Secretary, pursuant to regulations which the 
Secretary shall prescribe, may--
          (1) increase the copayment amount in effect under 
        subsection (a);
          (2) establish a maximum annual pharmaceutical 
        copayment amount under subsection (a) for veterans who 
        have multiple outpatient prescriptions; and
          (3) require a veteran, other than a veteran described 
        in subsection (a)(3), to pay to the United States a 
        reasonable copayment for sensori-neural aids, 
        electronic equipment, and any other costly item or 
        equipment furnished the veteran for a nonservice-
        connected condition, other than a wheelchair or 
        artificial limb.
  [(b)] (c) Amounts collected under [this section] subsection 
(a) shall be deposited in the Department of Veterans Affairs 
Medical Care Collections Fund. Amounts collected through use of 
the authority under subsection (b) shall be deposited in 
Department of Veterans Affairs Health Services Improvement 
Fund.
  [(c)] (d) The provisions of subsection (a) expire on 
September 30, 2002.

           *       *       *       *       *       *       *


Sec. 1725. Reimbursement for emergency treatment

  (a) General Authority.--(1) Subject to subsections (c) and 
(d), the Secretary may reimburse a veteran described in 
subsection (b) for the reasonable value of emergency treatment 
furnished the veteran in a non-Department facility.
  (2) In any case in which reimbursement is authorized under 
subsection (a)(1), the Secretary, in the Secretary's 
discretion, may, in lieu of reimbursing the veteran, make 
payment of the reasonable value of the furnished emergency 
treatment directly--
          (A) to a hospital or other health care provider that 
        furnished the treatment; or
          (B) to the person or organization that paid for such 
        treatment on behalf of such veteran.
  (b) Eligibility.--(1) A veteran referred to in subsection 
(a)(1) is an individual who is an active Department health-care 
participant who is personally liable for emergency treatment 
furnished the veteran in a non-Department facility.
  (2) A veteran is an active Department health-care participant 
if the veteran--
          (A) is described in any of paragraphs (1) through (6) 
        of section 1705(a) of this title;
  (B) is enrolled in the health care system established under 
such section; and
  (C) received care under this chapter within the 12-month 
period preceding the furnishing of such emergency treatment.
  (3) A veteran is personally liable for emergency treatment 
furnished the veteran in a non-Department facility if the 
veteran--
          (A) is financially liable to the provider of 
        emergency treatment for that treatment;
          (B) has no entitlement to care or services under a 
        health-plan contract;
          (C) has no other contractual or legal recourse 
        against a third party that would, in whole or in part, 
        extinguish such liability to the provider; and
          (D) is not eligible for reimbursement for medical 
        care or services under section 1728 of this title.
  (c) Limitations on Reimbursement.--(1) The Secretary, in 
accordance with regulations prescribed by the Secretary, 
shall--
          (A) establish the maximum amount payable under 
        subsection (a);
          (B) delineate the circumstances under which such 
        payments may be made, to include such requirements on 
        requesting reimbursement as the Secretary shall 
        establish; and
          (C) provide that in no event may a payment under that 
        subsection include any amount for which the veteran is 
        not personally liable.
  (2) Subject to paragraph (1), the Secretary may provide 
reimbursement under this section only after the veteran or the 
provider of emergency treatment has exhausted without success 
all claims and remedies reasonably available to the veteran or 
provider against a third party for payment of such treatment.
  (3) Payment by the Secretary under this section, on behalf of 
a veteran described in subsection (b), to a provider of 
emergency treatment, shall, unless rejected and refunded by the 
provider within 30 days of receipt, extinguish any liability on 
the part of the veteran for that treatment. Neither the absence 
of a contract or agreement between the Secretary and the 
provider nor any provision of a contract, agreement, or 
assignment to the contrary shall operate to modify, limit, or 
negate the requirement in the preceding sentence.
  (d) Independent Right of Recovery.--(1) In accordance with 
regulations prescribed by the Secretary, the United States 
shall have the independent right to recover any amount paid 
under this section when, and to the extent that, a third party 
subsequently makes a payment for the same emergency treatment.
  (2) Any amount paid by the United States to the veteran (or 
the veteran's personal representative, successor, dependents, 
or survivors) or to any other person or organization paying for 
such treatment shall constitute a lien in favor of the United 
States against any recovery the payee subsequently receives 
from a third party for the same treatment.
  (3) Any amount paid by the United States to the provider that 
furnished the veteran's emergency treatment shall constitute a 
lien against any subsequent amount the provider receives from a 
third party for the same emergency treatment for which the 
United States made payment.
  (4) The veteran (or the veteran's personal representative, 
successor, dependents, or survivors) shall ensure that the 
Secretary is promptly notified of any payment received from any 
third party for emergency treatment furnished to the veteran. 
The veteran (or the veteran's personal representative, 
successor, dependents, or survivors) shall immediately forward 
all documents relating to such payment, cooperate with the 
Secretary in the investigation of such payment, and assist the 
Secretary in enforcing the United States right to recover any 
payment made under subsection (c)(3).
  (e) Waiver.--The Secretary, in the Secretary's discretion, 
may waive recovery of a payment made to a veteran under this 
section that is otherwise required by subsection (d)(1) when 
the Secretary determines that such waiver would be in the best 
interest of the United States, as defined by regulations 
prescribed by the Secretary.
  (f) Definitions.--For purposes of this section:
          (1) The term ``emergency treatment'' means medical 
        care or services furnished, in the judgment of the 
        Secretary--
                  (A) when Department or other Federal 
                facilities are not feasibly available and an 
                attempt to use them beforehand would not be 
                reasonable;
                  (B) when such care or services are rendered 
                in a medical emergency of such nature that 
                delay would be hazardous to life or health; and
                  (C) until such time as the veteran can be 
                transferred safely to a Department facility or 
                other Federal facility.
          (2) The term ``health-plan contract'' includes any of 
        the following:
                  (A) An insurance policy or contract, medical 
                or hospital service agreement, membership or 
                subscription contract, or similar arrangement 
                under which health services for individuals are 
                provided or the expenses of such services are 
                paid.
                  (B) An insurance program described in section 
                1811 of the Social Security Act (42 U.S.C. 
                1395c) or established by section 1831 of such 
                Act (42 U.S.C. 1395j).
                  (C) A State plan for medical assistance 
                approved under title XIX of such Act (42 U.S.C. 
                1396 et seq.).
                  (D) A workers' compensation law or plan 
                described in section 1729(a)(2)(A) of this 
                title.
                  (E) A law of a State or political subdivision 
                described in section 1729(a)(2)(B) of this 
                title.
          (3) The term ``third party'' means any of the 
        following:
                  (A) A Federal entity.
                  (B) A State or political subdivision of a 
                State.
                  (C) An employer or an employer's insurance 
                carrier.
                  (D) An automobile accident reparations 
                insurance carrier.
                  (E) A person or entity obligated to provide, 
                or to pay the expenses of, health services 
                under a health-plan contract.

           *       *       *       *       *       *       *


Sec. 1729A. Department of Veterans Affairs Medical Care Collections 
                    Fund

  (a)  * * *
  (b) Amounts recovered or collected after June 30, 1997, under 
any of the following provisions of law shall be deposited in 
the fund:
          (1)  * * *

           *       *       *       *       *       *       *

          (6) Section 1725 of this title.
          [(6)] (7) Public Law 87-693, popularly known as the 
        ``Federal Medical Care Recovery Act'' (42 U.S.C. 2651 
        et seq.), to the extent that a recovery or collection 
        under that law is based on medical care or services 
        furnished under this chapter.

           *       *       *       *       *       *       *


Sec. 1729B. Health Services Improvement Fund

  (a) There is established in the Treasury of the United States 
a fund to be known as the ``Department of Veterans Affairs 
Health Services Improvement Fund''.
  (b) Amounts received or collected after the date of the 
enactment of this section under any of the following provisions 
of law shall be deposited in the fund:
          (1) Section 1713A of this title.
          (2) Section 1722A(b) of this title.
          (3) Section 8165(a) of this title.
          (4) Section 104(c) of the Veterans' Millennium Health 
        Care Act.
  (c) Amounts in the fund are hereby available, without fiscal 
year limitation, to the Secretary for the purposes stated in 
subparagraphs (A) and (B) of section 1729A(c)(1) of this title.

Sec. 1729C. Veterans Tobacco Trust Fund

  (a) There is established in the Treasury of the United States 
a trust fund to be known as the ``Veterans Tobacco Trust 
Fund'', consisting of such amounts as may be appropriated, 
credited, or donated to the trust fund.
  (b) If a lawsuit is brought by the United States against the 
tobacco manufacturers seeking recovery of costs incurred or to 
be incurred by the United States that are attributable to 
tobacco-related illnesses, there shall be credited to the trust 
fund from any amount recovered by the United States pursuant to 
that lawsuit, without further appropriation, the amount that 
bears the same ratio to the amount recovered as the amount of 
the Department's costs for health care attributable to tobacco-
related illnesses for which recovery is sought in the suit 
bears to the total amount sought by the United States in the 
suit.
  (c) After September 30, 2004, amounts in the trust fund shall 
be available, without fiscal year limitation, to the Secretary 
of Veterans Affairs for the following purposes:
          (1) Furnishing medical care and services under this 
        chapter, to be available during any fiscal year for the 
        same purposes and subject to the same limitations 
        (other than with respect to the period of availability 
        for obligation) as apply to amounts appropriated from 
        the general fund of the Treasury for that fiscal year 
        for medical care.
          (2) Conducting medical research, rehabilitation 
        research, and health systems research, with particular 
        emphasis on research relating to prevention and 
        treatment of, and rehabilitation from, tobacco 
        addiction and diseases associated with tobacco use.

           *       *       *       *       *       *       *


SUBCHAPTER V--PAYMENTS TO STATE HOMES

           *       *       *       *       *       *       *


Sec. 1741. Criteria for payment

  (a)(1)  * * *

           *       *       *       *       *       *       *

  (2) The Secretary may pay each State per diem at a rate 
determined by the Secretary for each veteran receiving [adult 
day health care in a State home] extended care services 
described in any of paragraphs (4) through (6) of section 
1710A(a) of this title under a program administered by a State 
home, if such veteran is eligible for such care under laws 
administered by the Secretary.
  (b) In no case shall the payments made with respect to any 
veteran under this section exceed one-half of the cost of the 
veterans' care in such State home.

           *       *       *       *       *       *       *


PART V--BOARDS, ADMINISTRATIONS, AND SERVICES

           *       *       *       *       *       *       *


CHAPTER 73--VETERANS HEALTH ADMINISTRATION--ORGANIZATION AND FUNCTIONS

           *       *       *       *       *       *       *


SUBCHAPTER II--GENERAL AUTHORITY AND ADMINISTRATION

           *       *       *       *       *       *       *


Sec. 7321. Committee on Care of Severely Chronically Mentally Ill 
                    Veterans

  (a)  * * *

           *       *       *       *       *       *       *

  (d)(1)  * * *
  (2) Not later than February 1, 1998, and February 1 of each 
of the [three] five following years, the Secretary shall submit 
to the Committees on Veterans' Affairs of the Senate and House 
of Representatives a report containing information updating the 
reports submitted under this subsection before the submission 
of such report.

           *       *       *       *       *       *       *


SUBCHAPTER IV--RESEARCH CORPORATIONS

           *       *       *       *       *       *       *


Sec. 7361. Authority to establish; status

  (a) The Secretary may authorize the establishment at any 
Department medical center of a nonprofit corporation to provide 
a flexible funding mechanism for the conduct of approved 
research and education at the medical center. Except as 
otherwise required in this subchapter or under regulations 
prescribed by the Secretary, any such corporation, and its 
directors and employees, shall be required to comply only with 
those Federal laws, regulations, and executive orders and 
directives which apply generally to private nonprofit 
corporations. Such a corporation may be established to 
facilitate either research or education or both research and 
education.

           *       *       *       *       *       *       *


Sec. 7362. Purpose of corporations

  Any corporation established under this subchapter shall be 
established solely to facilitate research as described in 
section 7303(a) of this title and education and training as 
described in sections 7302, 7471, 8154, and 1701(6)(B) of this 
title in conjunction with the applicable Department medical 
center. Any funds received by the Secretary for the conduct of 
research or research at the medical center other than funds 
appropriated to the Department may be transferred to and 
administered by the corporation for [that purpose] these 
purposes.

           *       *       *       *       *       *       *


Sec. 7363. Board of directors; executive director

  (a) The Secretary shall provide for the appointment of a 
board of directors for any corporation established under this 
subchapter. The board shall include--
          (1) the director of the medical center, the chief of 
        staff of the medical center, and [the assistant chief 
        of staff for research of the medical center; and] as 
        appropriate, the assistant chief of staff for research 
        for the medical center and the associate chief of staff 
        for education for the medical center, or, in the case 
        of a facility at which such positions do not exist, 
        those officials who are responsible for carrying out 
        the responsibilities of the medical center director, 
        chief of staff, and, as appropriate, the assistant 
        chief of staff for research and the assistant chief for 
        education; and
          (2) subject to subsection (c), members who are not 
        officers or employees of the Federal Government and who 
        are familiar with issues involving medical and 
        scientific research or education, as appropriate.

           *       *       *       *       *       *       *

  (c) An individual appointed under subsection (a)(2) to the 
board of directors of a corporation established under this 
subchapter may not be affiliated with, employed by, or have any 
other financial relationship with any entity that is a source 
of funding for research or education by the Department unless 
that source of funding is a governmental entity or an entity 
the income of which is exempt from taxation under the Internal 
Revenue Code of 1986.

           *       *       *       *       *       *       *


Sec. 7364. General powers

  (a)  * * *

           *       *       *       *       *       *       *

  (c)(1) A corporation established under this subchapter may 
not spend funds for an education activity unless the activity 
is approved in accordance with procedures prescribed by the 
Under Secretary for Health.
  (2) The Under Secretary for Health shall prescribe policies 
and procedures to guide the expenditure of funds by 
corporations under paragraph (1) consistent with the purpose of 
such corporations as flexible funding mechanisms.

           *       *       *       *       *       *       *


              CHAPTER 74--VETERANS HEALTH ADMINISTRATION--
PERSONNEL

           *       *       *       *       *       *       *


SUBCHAPTER I--APPOINTMENTS

           *       *       *       *       *       *       *


Sec. 7402. Qualifications of appointees

  (a)  * * *

           *       *       *       *       *       *       *

  (f) A person may not be employed in a position under 
subsection (b) (other than under paragraph (4) of that 
subsection) if--
          (1) the person is or has been licensed, registered, 
        or certified (as applicable to such position) in more 
        than one State; and
          (2) either--
                  (A) any of those States has terminated such 
                license, registration, or certification for 
                cause; or
                  (B) the person has voluntarily relinquished 
                such license, registration, or certification in 
                any of those States after being notified in 
                writing by that State of potential termination 
                for cause.

           *       *       *       *       *       *       *


CHAPTER 78--VETERANS' CANTEEN SERVICE

           *       *       *       *       *       *       *


Sec. 7802. Duties of Secretary with respect to Service

  The Secretary shall--
          (1) establish, maintain, and operate canteens where 
        deemed necessary and practicable at [hospitals and 
        homes] medical facilities of the Department and at 
        other Department establishments where similar essential 
        facilities are not reasonably available from outside 
        commercial sources;

           *       *       *       *       *       *       *

          (11) authorize the use of funds of the Service when 
        available, subject to such regulations as the Secretary 
        may deem appropriate, for the purpose of cashing 
        checks, money orders, and similar instruments in 
        nominal amounts for the payment of money presented by 
        veterans hospitalized or domiciled at [hospitals and 
        homes] medical facilities of the Department, and by 
        other persons authorized by section 7803 of this title 
        to make purchases at canteens. Such checks, money 
        orders, and other similar instruments may be cashed 
        outright or may be accepted, subject to strict 
        administrative controls, in payment for merchandise or 
        services, and the difference between the amount of the 
        purchase and the amount of the tendered instrument 
        refunded in cash.

           *       *       *       *       *       *       *


Sec. 7803. Operation of Service

  [(a)] The canteens at [hospitals and homes] medical 
facilities of the Department shall be primarily for the use and 
benefit of veterans hospitalized or domiciled at such 
[hospitals and homes] medical facilities. Service at such 
canteens may also be furnished to personnel of the Department 
and recognized veterans' organizations employed at such 
[hospitals and homes] medical facilities and to other persons 
so employed, to the families of all the foregoing persons who 
reside at the [hospital or home] medical facility concerned, 
and to relatives and other persons while visiting any of the 
persons named [in this subsection; however, service to any 
person not hospitalized, domiciled, or residing at the hospital 
or home shall be limited to the sale of merchandise or services 
for consumption or use on the premises] in this section.
  [(b) Service at canteens other than those established at 
hospitals and homes shall be limited to sales of merchandise 
and services for consumption or use on the premises, to 
personnel employed at such establishments, their visitors, and 
other persons at such establishments on official business.]

           *       *       *       *       *       *       *


PART VI--ACQUISITION AND DISPOSITION OF PROPERTY

           *       *       *       *       *       *       *


   CHAPTER 81--ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY 
    FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL 
PROPERTY

           *       *       *       *       *       *       *


           subchapter v--enhanced-use leases of real property

Sec.
8161.    Definitions.
     * * * * * * *
[8169.    Expiration.]
     * * * * * * *

SUBCHAPTER I--ACQUISITION AND OPERATION OF MEDICAL FACILITIES

           *       *       *       *       *       *       *


Sec. 8110. Operation of medical facilities

  (a)(1)  * * *

           *       *       *       *       *       *       *

  (d) The Secretary may not in any fiscal year close more than 
50 percent of the beds within a bed section (of 20 or more 
beds) of a Department medical center unless the Secretary first 
submits to the Committees on Veterans' Affairs of the Senate 
and the House of Representatives a report providing a 
justification for the closure. No action to carry out such 
closure may be taken after the submission of such report until 
the end of the 21-day period beginning on the date of the 
submission of the report.
  (e) The Secretary shall submit to the Committees on Veterans' 
Affairs of the Senate and the House of Representatives, not 
later than January 20 of each year, a report documenting by 
network for the preceding fiscal year the following:
          (1) The number of medical service and surgical 
        service beds, respectively, that were closed during 
        that fiscal year and, for each such closure, a 
        description of the changes in delivery of services that 
        allowed such closure to occur.
          (2) The number of nursing home beds that were the 
        subject of a mission change during that fiscal year and 
        the nature of each such mission change.
  (f) For purposes of this section:
          (1) The term ``closure'', with respect to beds in a 
        medical center, means ceasing to provide staffing for, 
        and to operate, those beds. Such term includes 
        converting the provision of such bed care from care in 
        a Department facility to care under contract 
        arrangements.
          (2) The term ``bed section'', with respect to a 
        medical center, means psychiatric beds (including beds 
        for treatment of substance abuse and post-traumatic 
        stress disorder), intermediate, neurology, and 
        rehabilitation medicine beds, extended care (other than 
        nursing home) beds, and domiciliary beds.
          (3) The term ``justification'', with respect to 
        closure of beds, means a written report that includes 
        the following:
                  (A) An explanation of the reasons for the 
                determination that the closure is appropriate 
                and advisable.
                  (B) A description of the changes in the 
                functions to be carried out and the means by 
                which such care and services would continue to 
                be provided to eligible veterans.
                  (C) A description of the anticipated effects 
                of the closure on veterans and on their access 
                to care.

           *       *       *       *       *       *       *


   SUBCHAPTER III--STATE HOME FACILITIES FOR FURNISHING DOMICILIARY, 
NURSING HOME, AND HOSPITAL CARE

           *       *       *       *       *       *       *


Sec. 8134. General regulations

  [(a) Within six months after the date of enactment of any 
amendment to this section with respect to such amendment, the 
Secretary shall prescribe the following by regulation:
          [(1) The number of beds required to provide adequate 
        nursing home care to veterans residing in each State.]
  (a)(1) The Secretary shall prescribe regulations for the 
purposes of this subchapter.
  (2) In those regulations, the Secretary shall prescribe for 
each State the number of nursing home and domiciliary beds for 
which assistance under this subchapter may be furnished. Such 
regulations shall be based on projected demand for such care 10 
years after the date of the enactment of the Veterans 
Millennium Health Care Act by veterans who at such time are 65 
years of age or older and who reside in that State. In 
determining such projected demand, the Secretary shall take 
into account travel distances for veterans and their families.
  (3)(A) In those regulations, the Secretary shall establish 
criteria under which the Secretary shall determine, with 
respect to an application for assistance under this subchapter 
for a project described in subparagraph (B) which is from a 
State that has a need for additional beds as determined under 
subsections (a)(2) and (d)(1), whether the need for such beds 
is most aptly characterized as great, significant, or limited. 
Such criteria shall take into account the availability of beds 
already operated by the Secretary and other providers which 
appropriately serve the needs which the State proposes to meet 
with its application.
  (B) This paragraph applies to a project for the construction 
or acquisition of a new State home facility, to a project to 
increase the number of beds available at a State home facility, 
and a project to replace beds at a State home facility
  (4) The Secretary shall review and, as necessary, revise 
regulations prescribed under paragraphs (2) and (3) not less 
often than every four years.
  (b) The Secretary shall prescribe the following by 
regulation:
          [(2)] (1) General standards of construction, repair, 
        and equipment for facilities constructed or acquired 
        with assistance received under this subchapter.
          [(3)] (2) General standards for the furnishing of 
        care in facilities which are constructed or acquired 
        with assistance received under this subchapter, which 
        standards shall be no less stringent than those 
        standards prescribed by the Secretary pursuant to 
        section 1720(b) of this title.
  [(b)] (c) The Secretary may inspect any State facility 
constructed or acquired with assistance received under this 
subchapter at such times as the Secretary deems necessary to 
insure that such facility meets the standards prescribed in 
subsection [(a)(3)] (b)(2).
  (d)(1) In prescribing regulations to carry out this 
subchapter, the Secretary shall provide that in the case of a 
State that seeks assistance under this subchapter for a project 
described in subsection (a)(3)(B), the determination of the 
unmet need for beds for State homes in that State shall be 
reduced by the number of beds in all previous applications 
submitted by that State under this subchapter, including beds 
which have not been recognized by the Secretary under section 
1741 of this title.
  (2)(A) Financial assistance under this subchapter for a 
renovation project may only be provided for a project for which 
the total cost of construction is in excess of $400,000 (as 
adjusted from time to time in such regulations to reflect 
changes in costs of construction).
  (B) For purposes of this paragraph, a renovation project is a 
project to remodel or alter existing buildings for which 
financial assistance under this subchapter may be provided and 
does not include maintenance and repair work which is the 
responsibility of the State.

Sec. 8135. Applications with respect to projects; payments

  (a) Any State desiring to receive assistance for a project 
for construction of State home facilities (or acquisition of a 
facility to be used as a State home facility) must submit to 
the Secretary an application. Such application shall [set 
forth--] set forth the following:
          (1) [the] The amount of the grant requested with 
        respect to such project which may not exceed 65 percent 
        of the estimated cost of construction (or of the 
        estimated cost of facility acquisition and 
        construction) of such project[,].
          (2) [a] A description of the site for such 
        project[,].
          (3) [plans] Plans and specifications for such project 
        in accordance with regulations prescribed by the 
        Secretary pursuant to section 8134(a)(2) of this 
        title[,].
          (4) [reasonable] Reasonable assurance that upon 
        completion of such project the facilities will be used 
        principally to furnish to veterans the level of care 
        for which such application is made and that not more 
        than 25 percent of the bed occupancy at any one time 
        will consist of patients who are not receiving such 
        level of care as veterans[,].
          (5) [reasonable] Reasonable assurance that title to 
        such site is or will be vested solely in the applicant, 
        a State home, or another agency or instrumentality of 
        the State[,].
          (6) [reasonable] Reasonable assurance that adequate 
        financial support will be available for the 
        construction of the project (or for facility 
        acquisition and construction of the project) by July 1 
        of the fiscal year for which the application is 
        approved and for its maintenance and operation when 
        complete[,].
          (7) [reasonable] Reasonable assurance that the State 
        will make such reports in such form and containing such 
        information as the Secretary may from time to time 
        reasonably require, and give the Secretary, upon 
        demand, access to the records upon which such 
        information is based[,].
          (8) [reasonable] Reasonable assurance that the rates 
        of pay for laborers and mechanics engaged in 
        construction of the project will be not less than the 
        prevailing local wage rates for similar work as 
        determined in accordance with the Act of March 3, 1931 
        (40 U.S.C. 276a-276a-5) (known as the Davis-Bacon 
        Act)[, and].
          (9) [in] In the case of a project for acquisition of 
        a facility, reasonable assurance that the estimated 
        total cost of acquisition of the facility and of any 
        expansion, remodeling, and alteration of the acquired 
        facility will not be greater than the estimated cost of 
        construction of an equivalent new facility.
  (b)(1) Any State seeking to receive assistance under this 
subchapter for a project that would involve construction or 
acquisition of either nursing home or domiciliary facilities 
shall include with its application under subsection (a) the 
following:
          (A) Documentation (i) that the site for the project 
        is in reasonably proximity to a sufficient 
        concentration and population of veterans who are 65 
        years of age and older, and (ii) that there is a 
        reasonable basis to conclude that the facilities when 
        complete will be fully occupied.
          (B) A financial plan for the first three years of 
        operation of such facilities.
          (C) A five-year capital plan for the State home 
        program for that State.
  (2) Failure to provide adequate documentation under paragraph 
(1)(A) or to provide an adequate financial plan under paragraph 
(1)(B) shall be a basis for disapproving the application.
  [(b)] (c)(1) Upon receipt of an application [for a grant 
under subsection (a) of this section] under subsection (a) for 
financial assistance under this subchapter, the Secretary--
          (A)  * * *

           *       *       *       *       *       *       *

  (2) Subject to paragraphs (3) and (5)(C) of this subsection, 
the Secretary shall accord priority to applications in the 
following order:
          (A) An application from a State that has made 
        sufficient funds available for [the construction or 
        acquisition of] the project for which the grant is 
        requested so that such project may proceed upon 
        approval of the grant without further action required 
        by the State to make such funds available for such 
        purpose.
          [(B) An application from a State that does not have a 
        State home facility constructed or acquired with 
        assistance under this subchapter (or for which such a 
        grant has been made).
          [(C) An application from a State which the Secretary 
        determines, in accordance with criteria and procedures 
        specified in regulations which the Secretary shall 
        prescribe, has a greater need for nursing home or 
        domiciliary beds or adult day health care facilities 
        than other States from which applications are received.
          [(D) An application that meets such other criteria as 
        the Secretary determines are appropriate and has 
        established in regulations.]
          (B) An application from a State for a project at an 
        existing facility to remedy a condition or conditions 
        that have been cited by an accrediting institution, by 
        the Secretary, or by a local licensing or approving 
        body of the State as being threatening to the lives or 
        safety of the patients in the facility.
          (C) An application from a State that has not 
        previously applied for award of a grant under this 
        subchapter for construction or acquisition of a State 
        nursing home.
          (D) An application for construction or acquisition of 
        a nursing home or domiciliary from a State that the 
        Secretary determines, in accordance with regulations 
        under this subchapter, has a great need for the beds to 
        be established at such home or facility.
          (E) An application from a State for renovations to a 
        State home facility other than renovations described in 
        subparagraph (B).
          (F) An application for construction or acquisition of 
        a nursing home or domiciliary from a State that the 
        Secretary determines, in accordance with regulations 
        under this subchapter, has a significant need for the 
        beds to be established at such home or facility.
          (G) An application that meets other criteria as the 
        Secretary determines appropriate and has established in 
        regulations.
          (H) An application for construction or acquisition of 
        a nursing home or domiciliary from a State that the 
        Secretary determines, in accordance with regulations 
        under this subchapter, has a limited need for the beds 
        to be established at such home or facility.
  (3) In according priorities to projects under paragraph (2) 
of this subsection, the Secretary--
          [(A) shall accord priority only to projects which 
        would involve construction or acquisition of either 
        nursing home or domiciliary buildings or construction 
        (other than new construction) of adult day health care 
        buildings; and]
          (A) may not accord any priority to a project for the 
        construction or acquisition of a hospital; and

           *       *       *       *       *       *       *

  [(c)] (d) No application submitted to the Secretary under 
this section shall be disapproved until the Secretary has 
afforded the applicant notice and an opportunity for a hearing.
  [(d)] (e) The amount of a grant under this subchapter shall 
be paid to the applicant or, if designated by the applicant, 
the State home for which such project is being carried out or 
any other agency or instrumentality of the applicant. Such 
amount shall be paid, in advance or by way of reimbursement, 
and in such installments consistent with the progress of the 
project as the Secretary may determine and certify for payment 
to the Secretary of the Treasury. Funds paid under this section 
for an approved project shall be used solely for carrying out 
such project as so approved.
  [(e)] (f) Any amendment of any application, whether or not 
approved, shall be subject to approval in the same manner as an 
original application.

           *       *       *       *       *       *       *


SUBCHAPTER V--ENHANCED-USE LEASES OF REAL PROPERTY

           *       *       *       *       *       *       *


Sec. 8162. Enhanced-use leases

  (a)(1) The Secretary may in accordance with this subchapter 
enter into leases with respect to real property that is under 
the jurisdiction or control of the Secretary. Any such lease 
under this subchapter may be referred to as an ``enhanced-use 
lease''. The Secretary may dispose of any such property that is 
leased to another party under this subchapter in accordance 
with section 8164 of this title. The Secretary may exercise the 
authority provided by this subchapter notwithstanding section 
8122 of this title, section 321 of the Act of June 30, 1932 (40 
U.S.C. 303b), sections 202 and 203 of the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 483, 484), or 
any other provision of law (other than Federal laws relating to 
environmental and historic preservation) inconsistent with this 
section. [The applicability of this subchapter to section 
421(b) of the Veterans' Benefits and Services Act of 1988 
(Public Law 100-322; 102 Stat. 553) is covered by subsection 
(c).]
  (2) The Secretary may enter into an enhanced-use lease [only 
if the Secretary] only if--
          (A) the Secretary determines that--
                  [(A)] (i) at least part of the use of the 
                property under the lease will be to provide 
                appropriate space for an activity contributing 
                to the mission of the Department;
                  [(B)] (ii) the lease will not be inconsistent 
                with and will not adversely affect the mission 
                of the Department; and
                  [(C)] (iii) the lease will enhance the use of 
                the property[.]; or
          (B) the Secretary determines that the implementation 
        of a business plan proposed by the Under Secretary for 
        Health for applying the consideration under such a 
        lease to the provision of medical care and services 
        would result in a demonstrable improvement of services 
        to eligible veterans in the geographic service-delivery 
        area within which the property is located.

           *       *       *       *       *       *       *

  (b)(1) If the Secretary has determined that a property should 
be leased to another party through an enhanced-use lease, the 
Secretary shall select the party with whom the lease will be 
entered into using selection procedures determined by the 
Secretary that ensure the integrity of the selection process.
  (2) The term of an enhanced-use lease [may not exceed--
          [(A) 35 years, in the case of a lease involving the 
        construction of a new building or the substantial 
        rehabilitation of an existing building, as determined 
        by the Secretary; or
          [(B) 20 years, in the case of a lease not described 
        in subparagraph (A).] may not exceed 75 years.

           *       *       *       *       *       *       *

  [(4) Any payment by the Secretary for the use of space or 
services by the Department on property that has been leased 
under this subchapter may only be made from funds appropriated 
to the Department for the activity that uses the space or 
services. No other such payment may be made by the Secretary to 
a lessee under an enhanced-use lease unless the authority to 
make the payment is provided in advance in an appropriation 
Act.]
  (4) The terms of an enhanced-use lease may provide for the 
Secretary to--
          (A) obtain facilities, space, or services on the 
        leased property; and
          (B) use minor construction funds for capital 
        contribution payments.
  [(c)(1) Subject to paragraph (2), the entering into an 
enhanced-use lease covering any land or improvement described 
in section 421(b)(2) of the Veterans' Benefits and Services Act 
of 1988 (Public Law 100-322; 102 Stat. 553) shall be considered 
to be prohibited by that section unless specifically authored 
by law.
  [(2) The entering into an enhanced-use lease by the Secretary 
covering any land or improvement described in such section 
421(b)(2) shall not be considered to be prohibited under that 
section if under the lease--
          [(A) the designated property is to be used only for 
        child-care services;
          [(B) those services are to be provided only for the 
        benefit of--
                  [(i) employees of the Department;
                  [(ii) individuals employed on the premises of 
                such property; and
                  [(iii) employees of a health-personnel 
                educational institution that is affiliated with 
                a Department facility;
          [(C) over one-half of the employees benefited by the 
        child-care services provided are required to be 
        employees of the Department; and
          [(D) over one-half of the children to whom child-care 
        services are provided are required to be children of 
        employees of the Department.]

           *       *       *       *       *       *       *


Sec. 8163. Designation of property to be leased

  (a)  * * *
  (b) Before conducting such a hearing, the Secretary shall 
provide reasonable notice of the proposed designation and of 
the hearing. The notice shall [include--] include the 
following:
          (1) [the] The time and place of the hearing[;].
          (2) [identification] Identification of the property 
        proposed to be leased[;].
          (3) [a] A description of the proposed uses of the 
        property under the lease[;].
          (4) [a] A description of how the uses to be made of 
        the property under a lease of the general character 
        then contemplated--
                  [(A) would contribute in a cost-effective 
                manner to the mission of the Department;
                  [(B) would not be inconsistent with the 
                mission of the Department; and
                  [(C) would not adversely affect the mission 
                of the Department; and]
                  (A) would--
                          (i) contribute in a cost-effective 
                        manner to the mission of the 
                        Department;
                          (ii) not be inconsistent with the 
                        mission of the Department;
                          (iii) not adversely affect the 
                        mission of the Department; and
                          (iv) affect services to veterans; or
                  (B) would result in a demonstrable 
                improvement of services to eligible veterans in 
                the geographic service-delivery area within 
                which the property is located.
          (5) [a] A description of how those uses would affect 
        services to veterans.
  (c)(1)  * * *

           *       *       *       *       *       *       *

          (E) A description of how the proposed lease--
                  [(i) would contribute in a cost-effective 
                manner to the mission of the Department;
                  [(ii) would not be inconsistent with the 
                mission of the Department; and
                  [(iii) would not adversely affect the mission 
                of the Department.]
                  (i) would--
                          (I) contribute in a cost-effective 
                        manner to the mission of the 
                        Department;
                          (II) not be inconsistent with the 
                        mission of the Department;
                          (III) not adversely affect the 
                        mission of the Department; and
                          (IV) affect services to veterans; or
                  (ii) would result in a demonstrable 
                improvement of services to eligible veterans in 
                the geographic service-delivery area within 
                which the property is located.

           *       *       *       *       *       *       *


Sec. 8165. Use of proceeds

  [(a)(1) Of the funds received by the Department under an 
enhanced-use lease and remaining after any deduction from such 
funds under subsection (b), 75 percent shall be deposited in 
the nursing home revolving fund established under section 8116 
of this title and 25 percent shall be credited to the Medical 
Care Account of the Department for the use of the Department 
facility at which the property is located.]
  (a)(1) Funds received by the Department under an enhanced-use 
lease and remaining after any deduction from those funds under 
subsection (b) shall be deposited in the Department of Veterans 
Affairs Health Services Improvement Fund established under 
section 1729B of this title. The Secretary shall make available 
to the designated health care region of the Veterans Health 
Administration within which the leased property is located not 
less than 75 percent of the amount deposited in the fund 
attributable to that lease.

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  (3) For the purposes of paragraph (1), the term ``designated 
health care region of the Veterans Health Administration'' 
means a geographic area designated by the Secretary for the 
purposes of the management of, and allocation of resources for, 
health care services provided by the Veterans Health 
Administration.

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[Sec. 8169. Expiration

  [The authority of the Secretary to enter into enhanced-use 
leases under this subchapter expires on December 31, 2001.]
                              ----------                              


VETERANS' HEALTH CARE ACT OF 1984

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TITLE I--HEALTH PROGRAMS

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                     POST-TRAUMATIC-STRESS DISORDER

  Sec. 110. (a)  * * *

           *       *       *       *       *       *       *

  (e)(1) Not later than [March 1, 1985] March 1, 2000, the 
Administrator shall submit to the Committees on Veterans' 
Affairs of the Senate and House of Representatives a report on 
the implementation of this section. The report shall include 
the following:
          (A)  * * *

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  (2) Not later than [February 1, 1986] February 1, 2001, and 
February 1 of each of the three following years, the 
Administrator shall submit to the Committees on Veterans' 
Affairs of the Senate and House of Representatives a report 
containing information updating the reports submitted under 
this subsection before the submission of such reports.

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                              ----------                              


HOMELESS VETERANS COMPREHENSIVE SERVICE PROGRAMS ACT OF 1992

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SEC. 3. GRANTS.

  (a) Authority to Make Grants.--(1) * * *
  (2) The authority of the Secretary to make grants under this 
section expires on [September 30, 1999] September 30, 2002.
  (b) Criteria for Award of Grants.--The Secretary shall 
establish criteria and requirements for the award of a grant 
under this section, including criteria for entities eligible to 
receive such grants. The Secretary shall publish such criteria 
and requirements in the Federal Register not later than 90 days 
after the date of the enactment of this Act [Nov. 10, 1992]. In 
developing such criteria and requirements, the Secretary shall 
consult with organizations with experience in the area of 
providing service to homeless veterans and to the maximum 
extent possible shall take into account the findings of the 
assessment of the Secretary under section 107 of the Veterans' 
Medical Programs Amendments of 1992 [Public Law 102-405, 38 
U.S.C. 527 note]. The criteria established under this section 
shall include the following:
          (1) * * *
           (2) Specification as to the number of projects for 
        which grant support is available, which shall include 
        provision for no more than 25 service centers [and no 
        more than 20 programs which incorporate the procurement 
        of vans as described in paragraph (1)].

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