Veterans' Medical Care: FY2007 Appropriations

Veterans’ Medical Care:
FY2007 Appropriations
Updated February 28, 2007
Sidath Viranga Panangala
Analyst in Social Legislation
Domestic Social Policy Division

Veterans’ Medical Care: FY2007 Appropriations
Summary
The Department of Veterans Affairs (VA) provides benefits to veterans who
meet certain eligibility rules. Benefits to veterans range from disability compensation
and pensions to hospital and medical care. VA provides these benefits to veterans
through three major operating units: the Veterans Health Administration (VHA), the
Veterans Benefits Administration (VBA), and the National Cemetery Administration
(NCA). VHA is primarily a direct service provider of primary care, specialized care,
and related medical and social support services to veterans through an integrated
health care system.
The President’s FY2007 budget proposal to Congress requested $32.7 billion
for VHA, an 11.3% increase over the FY2006 enacted amount of $29.3 billion, and
a 10% increase over the FY2005 enacted amount of $29.7 billion. As in previous
budget proposals, the President’s FY2007 budget request also includes a set of
legislative proposals. The Administration is requesting authorization from Congress
to assess an annual enrollment fee of $250 for all Priority 7 and 8 veterans, increase
veterans’ share of pharmaceutical copayments from $8 to $15 (for each 30-day
prescription) for all enrolled veterans in Priority Groups 7 and 8, and bill veterans
receiving treatment for nonservice-connected conditions for the entire copayment
amount.
On May 19, 2006, the House passed the Military Construction, Military Quality
of Life, and Veterans Affairs Appropriations bill for FY2007 (H.R. 5385, H.Rept.
109-464). H.R. 5385 provides $32.7 billion for VHA for FY2007, an 11.4% increase
over the FY2006 enacted amount. On November 14, the Senate passed its version
of H.R. 5385 (S.Rept. 109-286). H.R. 5385, as amended by the Senate, provided
$32.7 billion for VHA, about the same as the House-passed amount and the
President’s request. Neither version of H.R. 5385 included any provisions that would
have given VA the authority to implement fee increases as requested by the
President’s FY2007 budget proposal. The 109^th Congress did not enact H.R. 5385
and funded most federal government agencies through a series of Continuing
Resolutions. The 110^th Congress passed the Revised Continuing Appropriations
Resolution, 2007 (H.J.Res. 20, P.L. 110-5) providing funding for the VHA for the
rest of FY2007. P.L. 110-5 provides $32.7 billion for the VHA for FY2007, a $14.7
million increase over the President’s request and $3.3 billion above the FY2006
enacted amount.
This report will not be updated.

Contents
Most Recent Developments .........................................1
Funding for the Defense and Veterans’ Brain Injury Center.............1
Background ......................................................3
Eligibility for Veterans’ Health Care and the Promise of Free Health Care.....6
VHA Health Care Enrollment....................................7
Funding for VHA.................................................10
Medical Services.........................................10
Medical Administration....................................10
Medical Facilities.........................................10
Medical and Prosthetic Research.............................10
Medical Care Collections Fund (MCCF)...........................10
FY2006 Budget Summary..........................................13
House Action................................................13
Budget Shortfall..............................................13
Senate Action................................................14
Conference Agreement........................................14
Defense Appropriations Bill FY2006.............................14
FY2006 Hurricane Supplemental for VA..........................15
House Action............................................15
Senate Action............................................15
Conference Agreement....................................16
FY2007 VHA Budget .............................................16
Administration’s Budget Request................................16
House and Senate Budget Resolutions.............................17
House Action................................................17
Construction Projects......................................18
Senate Action................................................19
Construction Projects......................................21
Revised Continuing Appropriations Resolution, 2007................22
Construction Projects......................................22
Key Budget Issues................................................27
Assess an Annual Enrollment Fee................................27
Increase Pharmacy Copayments..................................28
Impact of the Annual Enrollment Fee and Increase in Pharmacy
Copayments .............................................29
Third-Party Offset of First-Party Debt.............................30
Appendix 1. Priority Groups and Their Eligibility Criteria................33
Appendix 2. Veterans’ Payments for Health Care Services by Priority Group.34
Appendix 3. Financial Income Thresholds for VA Health Care Benefits.....36

List of Figures
Figure 1. Present Copayment Process.................................31
Figure 2. Copayment Process Under New Proposal......................32
List of Tables
Table 1. VHA Appropriations FY2006-FY2007..........................1
Table 2. Defense and Veterans’ Brain Injury Center Funding,
FY2005-FY2007 ..............................................3
Table 3. Number of Patients Receiving Care from VA ....................5
Table 4. Medical Care Collections, FY2002-FY2005....................12
Table 5. VHA Appropriations by Account, FY2005-FY2007..............24
Table 6. Appropriations for VA Construction Projects, FY2005-FY2007.....26

Veterans’ Medical Care:
FY2007 Appropriations
Most Recent Developments
On February 15, 2007, the President signed into law the Revised Continuing
Appropriations Resolution, 2007 (H.J.Res. 20, P.L. 110-5). P.L. 110-5, among other
things, funded several agencies including the Department of Veterans Affairs (VA).
The Revised Continuing Appropriations Resolution provides $32.7 billion for the
Veterans Health Administration (VHA) for FY2007, a $14.7 million increase over
the President’s request and $3.3 billion above the FY2006 enacted amount (see
Table 1). This amount includes $25.5 billion for medical services, $3.2 billion for
medical administration, $3.6 billion for medical facilities, and $413.7 million for
medical and prosthetic research. These amounts are the same as the President’s
request except for the medical and prosthetic research account, which is $14.7
million above the President’s request (see Table 5). The Revised Continuing
Appropriations Resolution does not include any provisions that would give VA the
authority to implement fee increases as requested by the Administration’s budget
proposal for VHA for FY2007.
Table 1. VHA Appropriations FY2006-FY2007
($ in thousands)
^FY²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁷^FY²⁰⁰⁷^FY²⁰⁰⁷
^Ena^c^t^e^d^Request^Hou^s^e^Sena^t^e^Ena^c^t^e^d
^Veter^aⁿ^s^Health
^A^d^mⁱⁿⁱ^str^a^tioⁿ^$29,340,517^$32,657,000^$32,695,⁰⁰⁰^$32,670,000^$32,671,700
^(VHA⁾
Source: H.Rept. 109-464, S.Rept. 109-286, and P.L. 110-5.
Funding for the Defense and Veterans’ Brain Injury Center¹
During Senate floor consideration of the FY2007 Department of Defense
Appropriations Act (H.R. 5631), controversy erupted over the adequacy of funding
for the Defense and Veterans’ Brain Injury Center, a facility that coordinates
treatment and research for traumatic brain injuries affecting active-duty military, their
dependents, and veterans.² Concerned about the incidence of traumatic and other

¹ Contributed by Amy Belasco, Specialist in National Defense in the Foreign Affairs,
Defense, and Trade Division of the Congressional Research Service.
² Treatment is provided at Walter Reed Army Medical Center, Washington, DC; Wilford
(continued...)

brain injuries in Iraq and Afghanistan resulting from Improvised Explosive Device
(IED) attacks, Congress increased DOD’s funding request for this program in
FY2006, and commissioned an extensive report that was due on October 6, 2006.³
In FY2007, the final funding level for this program will be set in the conference
version of the Military Construction, Military Quality of Life, Veterans Affairs and
Related Agencies bill (H.R. 5385). Notwithstanding the controversy about the
funding level for this particular program, military personnel are entitled to full
medical coverage under the TRICARE program.
The Defense and Veterans’ Brain Injury Center, funded within the Blast Injury
Prevention, Mitigation and Treatment program, received $10.7 million of the $19.6
million appropriated from the program in FY2006 (see Table 2). Last year, Congress
increased DOD’s request for the blast injury program from $7 million to $19.6
million, including monies for both treatment and research and development (R&D),
all funded under the Defense Health program.
In FY2007, the Administration again requested $7 million for the Blast Injury
Prevention, Mitigation and Treatment program, including $4.9 million for the
Defense and Veterans’ Brain Injury Center (see Table 2). On September 6, 2007, the
Senate unanimously adopted an amendment to the FY2007 DOD Appropriations bill
(H.R. 5631) offered by Senators Allen and Durbin (SA4883) that made $19 million
available from monies for Defense Health for the Defense and Veterans’ Brain Injury
Center.⁴ The House did not change DOD’s request for $7 million for the Blast Injury
Prevention, Mitigation and Treatment program, and funded the program in a different
bill, Military Construction, Military Quality of Life and Veterans Affairs
Appropriations bill (H.R. 5385).⁵

² (...continued)
Hall US Air Force Medical Center, Lackland Air Force Base TX; Brooke Army Medical
Center, Fort Sam Houston, TX; Naval Medical Center-San Diego, San Diego, CA; Hunter
McGuire VA Medical Center, Richmond, VA; James A Haley VA Hospital, Tampa, FL;
Veterans Affairs Medical Center, Minneapolis, MN; VA Palo Alto Health Care System,
Palo Alto, CA; and Lakeview Virginia NeuroCare, Charlottesville, VA (Civilian Partner
Site).
³ See Sec. 255 in P.L. 109-163, H.Rept. 109-360, pp.47-50, and p. 622 for reporting
requirement, and see H.Rept. 109-359, Conference Report on FY2006 DOD Appropriations
Bill for FY2006 Congressional action, p. 458.
⁴ See Congressional Record, vol 152, No.108 (September 6, 2006), pp. S8992 and. S9035.
⁵ For DOD request, see “Exhibit OP-5, In-House Care,” Defense Health Program, FY2007
Budget Estimates, February 2006, pp. 2-4 [http://www.dod.mil/comptroller/defbudget/
fy2007/budget_j ustification/pdfs/dhp/V OL_1/V ol_1_Sec_5_-_A_OP-5_IH C _07PB_DHP.
pdf]. Because this program is part of In-house Care and because the House did not change
DOD’s request, the House report does not specifically mention its funding.^th
At the beginning of the 109 Congress, the appropriations committees changed the
jurisdictional responsibility of various subcommittees. Funding for Defense Health is
included in Military Construction bill in the House and in the Defense Appropriations bill
in the Senate. The appropriators follow the House rules in odd years (like FY2007) and the
Senate rules in even years.

During conference, the funding provision for the Defense and Veterans’ Brain
Injury Center was dropped from H.R. 5631, and the final enacted Department of
Defense Appropriations Act, 2007 (H.R. 5631, P.L. 109-289) did not include any
funding for the Defense and Veterans’ Brain Injury Center. The Revised Continuing
Appropriations Resolution, 2007 (H.J.Res. 20, P.L. 110-5) has not explicitly
delineated the amount of funding that will go to the Defense and Veterans’ Brain
Injury Center, although it is expected that it will be funded at the FY2007 requested
level.
Table 2. Defense and Veterans’ Brain Injury Center Funding,
FY2005-FY2007
F Y 2005 F Y 2006 F Y 2007 F Y 2007 F Y 2007^FY²⁰⁰⁷
Enacted Enacted Request HouseSenate^Ena^c^t^e^d
$10,900,000$10,700,000$4,900,000$4,900,000 — $4,900,000
^Source:^T^a^bl^{e prepared by}^C^R^S^bas^e^{d on}ⁱⁿ^f^o^rm^atⁱ^oⁿ^f^r^om^t^h^{e D}^e^part^m^eⁿ^t^of^D^e^f^eⁿ^s^e.
Background
The Department of Veterans Affairs (VA) provides a range of benefits and
services to veterans who meet certain eligibility rules, including disability
compensation and pensions, education, training and rehabilitation services, hospital
and medical care, home lone guarantees, and death benefits that cover burial
expenses.⁶ VA carries out its programs nationwide through three administrations and
the board of veterans appeals (BVA). The Veterans Health Administration (VHA)
is responsible for health care services and medical research programs.⁷ The Veterans
Benefits Administration (VBA) is responsible, among other things, for providing
compensations, pensions, and education assistance.⁸ The National Cemetery
Administration (NCA) is responsible for maintaining national veterans cemeteries,
providing grants to states for establishing, expanding or improving state veterans
cemeteries, and providing headstones and markers for the graves of eligible persons,
among other things.
VA’s budget includes both mandatory and discretionary spending accounts.
Mandatory funding supports disability compensation, pension benefits, vocational
rehabilitation, and life insurance, among other benefits and services. Discretionary
funding supports a broad array of benefits and services, including medical care. In
FY2006, discretionary budget authority accounted for about 48% of the total VA

⁶ For a detailed description on eligibility for veterans disability benefits programs, see CRS
Report RL33113 Veterans Affairs: Basic Eligibility for Disability Benefit Programs, by
Douglas Reid Weimer.
⁷ For a detailed description of veterans’ health care issues, see CRS Report RL32961,
Veterans’ Health Care Issues in the 109^th Congress, by Sidath Viranga Panangala.
⁸ For a detailed description of veterans’ benefits issues, see CRS Report RL33216, Veterans
Benefits Issues in the 109th Congress, by Carol D. Davis and Christine Scott.

budget authority, with most of this discretionary funding going toward supporting
VA health care.
VHA operates the nation’s largest integrated direct health care delivery system.⁹
VA’s health care system is organized into 21 geographically defined Veterans
Integrated Service Networks (VISNs). While policies and guidelines are developed
at VA headquarters to be applied throughout the VA health care system, management
authority for basic decision making and budgetary responsibilities are delegated to
the VISNs.¹⁰ Congressionally appropriated medical care funds are allocated to the
VISNs based on the Veterans Equitable Resource Allocation (VERA) system, which
generally bases funding on patient workload.¹¹ Prior to the implementation of the
VERA system, resources were allocated to facilities primarily on the basis of their
historical expenditures. Unlike other federally funded health insurance programs,
such as Medicare and Medicaid, which finance medical care provided through the
private sector, VHA provides care directly to veterans.
In FY2005, VHA operated 156 hospitals, 135 nursing homes, 43 residential
rehabilitation treatment centers, and 711 community-based outpatient clinics
(CBOCs).¹² VHA also pays for care provided to veterans by independent providers
and practitioners on a fee basis under certain circumstances. Inpatient and outpatient
care is provided in the private sector to eligible dependents of veterans under the
Civilian Health and Medical Program of the Department of Veterans Affairs
(CHAMPVA).¹³ In addition, VHA provides grants for construction of state-owned
nursing homes and domiciliary facilities, and collaborates with DOD in sharing
health care resources and services.
During FY2005, VHA provided medical care to about 4.9 million unique
veteran patients, a caseload that is estimated to increase by about 108,000, or 2.2%
in FY2006 (see Table 3). According to VHA estimates, the number of unique

⁹ Established on Jan. 3, 1946, as the Department of Medicine and Surgery by P.L. 79-293,
succeeded in 1989 by the Veterans Health Services and Research Administration, renamed
the Veterans Health Administration in 1991.
¹⁰ Jian Gao, Ying Wang and Joseph Engelhardt, “Logistic Analysis of Veterans’ Eligibility-
Status Change,” Health Services Management Research, vol. 18, (Aug. 2005), p. 175.
¹¹ About 90% of the VHA appropriation is allocated through VERA. Networks also receive
appropriated funds not allocated through VERA for such things as prosthetics, homeless
programs, readjustment counseling, and clinical training programs. VA facilities could also
retain collections from insurance reimbursements and copayments, and use these funds for
the care of veterans.
¹² Data on the number of hospitals and nursing homes includes facilities damaged by
Hurricane Katrina. Data on the number of CBOCs differ from source to source. Some
count clinics located at VA hospitals while others count only freestanding CBOCs. The
number represented in this report excludes clinics located in VA hospitals. The data are
current as of Dec. 1, 2005.
¹³ For further information on CHAMPVA, see CRS Report RS22483, Health Care for
Dependents and Survivors of Veterans, by Jacqueline Rae Roche and Sidath Viranga
Panangala.

veteran patients is estimated to increase by approximately 45,000 in FY2007.¹⁴ As
shown in Table 3, there would be a 3.6% increase in the total number of unique
patients (both veterans and non-veterans), from 5.3 million in FY2005 to 5.5 million
in FY2007.
The total number of outpatient visits reached 52.3 million during FY2005 and¹⁵
is projected to increase to 55.5 million in FY2006 and 58.5 million in FY2007. In
FY2005, VHA spent approximately 61.7% of its medical care obligations on
outpatient care.
Table 3. Number of Patients Receiving Care from VA
F Y 2005 F Y 2006 F Y 2007
Ac t u al Estimate Estimate
Priority Groups 1-6 Veterans3,561,7093,733,4963,813,457
Priority Groups 7 and 8 Veterans1,301,2831,237,1441,202,345
Total Unique Veteran Patients^a 4,862,9924,970,6405,015,802
Non-V e terans^b 445,322 471,312 482,588
Total Unique Patients 5,308,3145,441,9525,498,390
^So^urce^:^T^a^bl^{e prepared by}^C^R^S^,^bas^e^{d on}^dat^a^f^r^om^t^h^{e D}^e^part^m^eⁿ^t^of^V^e^t^e^ran^s^A^f^f^aⁱ^r^s^.
^{a. Un}^iq^u^e^v^e^ter^aⁿ^p^a^tien^t^{s in}^clu^d^{e Op}^er^atioⁿ^{Iraqi Freedom}^(OIF)^an^{d Operation}^En^du^rin^g^Freedom
^(O^EF^{) v}^e^t^e^ran^patⁱ^eⁿ^t^s^.^T^h^es^e^patⁱ^eⁿ^t^sⁿ^u^m^{ber :}^{100,808 i}ⁿ^F^Y^2005;^{110,566 i}ⁿ^F^Y^2006;^an^d
^{109,191 i}ⁿ^F^Y²⁰⁰⁷.
^b^.^Noⁿ^-^v^e^ter^aⁿ^sⁱⁿ^clu^d^{e CHA}^M^P^V^A^p^a^tien^t^s,^r^e^im^b^u^r^s^ab^le^p^a^tien^t^{s w}^ith^VA^af^f^iliated^h^o^sp^{itals an}^d
^clⁱⁿ^ics^,^{care prov}^{ided on}^{a h}^u^m^an^itarian^basⁱ^s^,^an^{d em}^ploy^ees^receivⁱⁿ^g^prev^en^tiv^{e occu}^pation^a^l
ⁱ^m^m^uni^z^a^tⁱ^o^ns.
Since 1946, VHA has been associated with training physicians and other health
care professionals and has become an essential component of health care higher
education in the United States. Veterans’ health care facilities are affiliated with 107
of the nation’s 126 medical schools, and participate in graduate medical education
(GME) through integrated residency programs administered through medical schools
and academic health centers. VHA is also affiliated with over 1,200 other schools
offering students allied and associated education degrees and certificates in 40 health
profession disciplines. In FY2005, about 31,000 physician residents and fellows —

¹⁴ Based on information provided by VA to the House Committee on Veterans’ Affairs,
Subcommittee on Health, Feb. 14, 2006.
¹⁵ This number excludes outpatient care provided on a contract basis and outpatient visits
to readjustment counseling centers. U.S. Department of Veterans Affairs, FY2007
Congressional Budget Submissions, Medical Programs, vol. 1 of 4, p.3-17.

17,000 medical students, 24,000 nursing students, and 18,000 allied health residents
and fellows — received some or all of their training in VA medical centers.¹⁶
The rest of this report tracks VHA’s FY2007 appropriations and provides a brief
summary of funding levels for VHA for FY2006, including a discussion on
supplemental appropriations for FY2005 and FY2006. It also discusses the
Administration’s budget proposal for FY2007, and the final enacted amounts for
FY2007. The report begins with a brief overview of eligibility for VA health care,
VHA’s enrollment process, and its enrollment priority groups.
Eligibility for Veterans’ Health Care
and the Promise of Free Health Care
To understand VA’s medical care appropriations and the Administration’s major
policy proposals discussed later in this report, it is important to understand eligibility
for VA health care, VA’s enrollment process, and its enrollment priority groups.
Unlike Medicare or Medicaid, VA health care is not a entitlement program. Contrary
to numerous claims made concerning “promises” to military personnel and veterans
with regard to “free health care for life,” not every veteran is automatically entitled
to medical care from VA.¹⁷ Prior to eligibility reform in 1996, all veterans were
technically eligible for some care, however, the actual provision of care was based
on available resources.¹⁸
The Veterans’ Health Care Eligibility Reform Act of 1996, P.L. 104-262,
established two eligibility categories and required VHA to manage the provision of
hospital care and medical services through an enrollment system based on a system
of priorities.¹⁹ P.L 104-262 authorized VA to provide all needed hospital care and
medical services to veterans with service-connected disabilities, former prisoners of
war, veterans exposed to toxic substances and environmental hazards such as Agent
Orange, veterans whose attributable income and net worth are not greater than an
established “means test”, and veterans of World War I. These veterans are generally
known as “higher priority” or “core” veterans.²⁰ The other category of veterans are
those with no service-connected disabilities and with attributable incomes above an
established “means test.”

¹⁶ U.S. Department of Veterans Affairs, FY2007 Congressional Budget Submissions,
Medical Programs, vol. 1 of 4, p. 9-8.
¹⁷ For a detailed discussion of “promised benefits,” see CRS Report 98-1006, Military
Health Care: The Issue of “Promised” Benefits, by David F. Burrelli.
¹⁸ Barbara Sydell, Restructuring the VA Health Care System: Safety Net, Training and Other
Considerations, National Health Policy Forum, Issue Brief no. 716, March 1998. Available
at [http://www.nhpf.org/pdfs_ib/IB716_VA_3-25-98.pdf].
¹⁹ U.S. Congress, House Committee on Veterans Affairs, Veterans’ Health Care Eligibility
Reform Act of 1996, report to accompany H.R. 3118, 104^th Cong. 2^nd sess., H.Rept. 104-690
p. 2.
²⁰ Ibid. p.5.

P.L. 104-262 also authorized VA to establish a patient enrollment system to
manage access to VA health care. As stated in the report language accompanying
P.L. 104-262, “the Act would direct the Secretary, in providing for the care of ‘core’
veterans, to establish and operate a system of annual patient enrollment and require
that veterans be enrolled in a manner giving relative degrees of preference in
accordance with specified priorities. At the same time, it would vest discretion in the
Secretary to determine the manner in which such enrollment system would
operate.”²¹
Furthermore, P.L. 104-262 was clear in its intent that the provision of health
care to veterans was dependent upon the available resources. The Committee report
accompanying P.L. 104-262 states that the provision of hospital care and medical
services would be provided to “the extent and in the amount provided in advance in
appropriations Acts for these purposes. Such language is intended to clarify that
these services would continue to depend upon discretionary appropriations.”²²
VHA Health Care Enrollment
As stated previously, P.L. 104-262 required the establishment of a national
enrollment system to manage the delivery of inpatient and outpatient medical care.
The new eligibility standard was created by Congress to “ensure that medical
judgment rather than legal criteria will determine when care will be provided and the
level at which care will be furnished.”²³
For most veterans, entry into the veterans’ health care system begins by
completing the application for enrollment. Some veterans are exempt from the
enrollment requirement if they meet special eligibility requirements.²⁴ A veteran may
apply for enrollment by completing the Application for Health Benefits (VA Form
10-10EZ) at any time during the year and submitting the form online or in person at
any VA medical center or clinic, or mailing or faxing the completed form to the
medical center or clinic of the veteran’s choosing.²⁵ Once a veteran is enrolled in the
VA health care system the veteran remains in the system and does not have to re-
apply for enrollment annually. However, those veterans who have been enrolled in

²¹ Ibid. p.6.
²² Ibid. p.5.
²³ Ibid. p.4.
²⁴ Veterans do not need to apply for enrollment in VA’s health care system if they fall into
one of the following categories: veterans with a service-connected disability rated 50% or
more (percentage ratings represent the average impairment in earning capacity resulting
from diseases and injuries encountered as a result of or incident to military service; those
with a rating of 50% or more are placed in Priority Group 1); less than one year has passed
since the veteran was discharged from military service for a disability that the military
determined was incurred or aggravated in the line of duty, but the VA has not yet rated; or
the veteran is seeking care from VA for only a service-connected disability (even if the
rating is only 10%).
²⁵ VA Form 10-10EZ is available at [https://www.1010ez.med.va.gov/sec/vha/1010ez/
#Process].

Priority Group 5 based on income must submit a new VA Form 10-10EZ annually
with updated financial information demonstrating inability to defray the expenses of
necessary care.²⁶
Eligibility for VA health care is primarily based on “veteran’s status” resulting
from military service. Veteran’s status is established by active-duty status in the
military, naval, or air service and a honorable discharge or release from active
military service. Generally, persons enlisting in one of the armed forces after
September 7, 1980, and officers commissioned after October 16, 1981, must have
completed two years of active duty or the full period of their initial service obligation
to be eligible for VA health care benefits. Veterans discharged at any time because
of service-connected disabilities are not held to this requirement. Furthermore,
reservists who were called to active duty and who completed the term for which they
were called, and who were granted an other than dishonorable discharge, or were
National Guard members who were called to active duty by federal executive order,
and who completed the term for which they were called, and who were granted an
other than dishonorable discharge are also exempt from the 24 continuous months
of active duty requirement.
When not activated to full-time federal service, members of the reserve
components and National Guard have limited eligibility for VA health care services.
Members of the reserve components may be granted service-connection for any
injury they incurred or aggravated in the line of duty while attending inactive duty
training assemblies, annual training, active duty for training, or while going directly
to or returning directly from such duty. Additionally, reserve component
servicemembers may be granted service-connection for a heart attack or stoke if such
an event occurs during these same periods. The granting of service-connection
makes them eligible to receive care from VA for those conditions. National Guard
members are not granted service-connection for any injury, heart attack, or stroke that
occurs while performing duty ordered by a governor for state emergencies or
activities.²⁷
After veteran’s status has been established ,VA next places applicants into one
of two categories. The first group is composed of veterans with service-connected
disabilities or with incomes below a established means test. These veterans are
regarded by VA as “high priority” veterans, and they are enrolled in Priority Groups

1-6 (see Appendix 1). Veterans enrolled in Priority Groups 1-6 include:

^!veterans in need of care for a service-connected disability;²⁸
^!veterans who have a compensable service-connected condition;

²⁶ 38 C.F.R. §17.36 (d)(3)(iv) (2005).
²⁷ 38.U.S.C. §101(24); 38 C.F.R. §3.6(c).
²⁸ The term “service-connected” means, with respect to disability, that such disability was
incurred or aggravated in line of duty in the active military, naval, or air service. VA
determines whether veterans have service-connected disabilities, and for those with such
disabilities, assigns ratings from 0 to 100% based on the severity of the disability.
Percentages are assigned in increments of 10%.

^!veterans whose discharge or release from active military, naval or air
service was for a compensable disability that was incurred or
aggravated in the line of duty;
^!veterans who are former prisoners of war (POWs);
^!veterans awarded the purple heart;
^!veterans who have been determined by VA to be catastrophically
disabled;
^!veterans of World War I;
^!veterans who were exposed to hazardous agents (such as Agent
Orange in Vietnam) while on active duty; and
^!veterans who have an annual income and net worth below a VA-
established means test threshold.
VA also looks at applicants’ income and net worth to determine their specific
priority category and whether they have to pay copayments for nonservice-connected
care. In addition, veterans are asked to provide VA with information on any health
insurance coverage they have, including coverage through employment or through
a spouse. VA may bill these payers for treatment of conditions that are not a result
of injuries or illnesses incurred or aggravated during military service. Appendix 2
provides information on what categories of veterans pay for which services.
The second group is composed of veterans who do not fall into one of the first
six priority groups. These veterans are primarily those with nonservice-connected
medical conditions and with incomes and net worth above the VA established means
test threshold. These veterans are enrolled in Priority Group 7 or 8.²⁹ Appendix 3
provides information on income thresholds for VA health care benefits.

²⁹ VA considers a veteran’s previous year’s total household income (both earned and
unearned income as well as his/her spouse’s and dependent children’s income). Earned
income is usually wages received from working. Unearned income can be interest earned,
dividends received, money from retirement funds, Social Security payments, annuities, or
earnings from other assets. The number of persons in the veterans family will be factored
into the calculation to determine the applicable income threshold. 38 C.F.R. § 17.36(b)(7)
(2005).

Funding for VHA
VHA is funded through multiple appropriations accounts that are supplemented
by other sources of revenue. Although the appropriations account structure has been
subject to change from year to year, traditionally the appropriation accounts used to
support VHA include medical care, medical and prosthetic research, and medical
administration. In addition, Congress also appropriates funds for construction of
medical facilities through a larger appropriations account for construction for all VA
facilities. In FY2004, “to provide better oversight and [to] receive a more accurate³⁰
accounting of funds,” Congress changed VHA’s appropriations structure. The
Department of Veterans Affairs and Housing and Urban Development and
Independent Agencies Appropriations Act, 2004 ( P.L. 108-199, H.Rept. 108-401)
funded VHA through four accounts: (1) medical services; (2) medical
administration; (3) medical facilities; and (4) medical and prosthetic research.
Provided below are brief descriptions of these accounts.
Medical Services. The medical services account covers expenses for
furnishing inpatient and outpatient care and treatment of veterans and certain
dependents, including care and treatment in non-VA facilities; outpatient care on a
fee basis; medical supplies and equipment; salaries and expenses of employees hired
under Title 38, United States Code; and aid to state veterans homes.
Medical Administration. The medical administration account provides funds
for the expenses in the administration of hospitals, nursing homes, and domiciliaries;
billing and coding activities; quality of care oversight; legal services; and
procurement.
Medical Facilities. The medical facilities account covers, among other
things, expenses for the maintenance and operation of VHA facilities; administrative
expenses related to planning, design, project management, real property acquisition
and deposition, construction, and renovation of any VHA facility; leases of facilities;
and laundry and food services.
Medical and Prosthetic Research. This account provides funding for VA
researchers to investigate a broad array of veteran-centric health topics such as
treatment of mental health conditions, rehabilitation of veterans with limb loss,
traumatic brain injury and spinal cord injury, organ transplantation, and the
organization of the health care delivery system. VA researchers receive funding not
only through this account but also from DOD, the National Institutes of Health
(NIH), and from private sources.
Medical Care Collections Fund (MCCF)
In addition to direct appropriations through the above accounts, the Committees
on Appropriations include medical care cost recovery collections when considering
the amount of resources needed to provide funding for VHA. The Consolidated

³⁰ U.S. Congress, Conference Committees, Consolidated Appropriations Act, 2004,
conference report to accompany H.R. 2673, 108^th Cong., 1^st sess., H.Rept. 108-401, p. 1036.

Omnibus Budget Reconciliation Act of 1985 (P.L. 99-272), enacted into law in 1986,
gave VHA the authority to bill some veterans and most health care insurers for
nonservice-connected care provided to veterans enrolled in the VA health care
system, to help defray the cost of delivering medical services to veterans.³¹
The Balanced Budget Act of 1997 (P.L. 105-33) gave VHA the authority to
retain these funds in the Medical Care Collections Fund (MCCF). Instead of
returning the funds to the Treasury, VA can use them for medical services for
veterans without fiscal year limitations.³² To increase VA’s third-party collections,
P.L. 105-33 also gave VA the authority to change its basis of billing insurers from
“reasonable costs” to “reasonable charges.”³³ This change in billing was intended to
enhance VA collections to the extent that reasonable charges result in higher
payments than reasonable costs.³⁴ In FY2004, the Administration’s budget requested
consolidating several medical collections accounts into MCCF.
The conferees of the Consolidated Appropriations Act of 2004 (H.Rept.
108-401) recommended that collections that would otherwise be deposited in the
Health Services Improvement Fund (former name), Veterans Extended Care
Revolving Fund (former name), Special Therapeutic and Rehabilitation Activities
Fund (former name), Medical Facilities Revolving Fund (former name), and the
Parking Revolving Fund (former name) should be deposited in MCCF.³⁵ The
Consolidated Appropriations Act of 2005, (P.L. 108-447, H.Rept. 108-792) provided
VA with permanent authority to deposit funds from these five accounts into MCCF.
The funds deposited in MCCF would be available for medical services for veterans.
These collected funds do not have to be spent in any particular fiscal year and are
available until expended.
As shown in Table 4, MCCF collections increased by 56% from $1.2 billion in
FY2002 to almost $1.9 billion in FY2005. During this same period, first-party
collections increased by 59% from $485 million in FY2002 to $772 million in
FY2005. In FY2005, first-party collections represented approximately 41% of total
MCCF collections.

³¹ Veterans’ Health-Care and Compensation Rate Amendments of 1985, 100 Stat. 372, 373,

383.

³² For a detailed history of funding for VHA from FY1995 to FY2004, see CRS Report
RL32732, Veterans’ Medical Care Funding FY1995-FY2004, by Sidath Viranga Panangala.
³³ Under “reasonable costs” VA billed insurers based on its average cost to provide a
particular episode of care. Under “reasonable charges” VA bills insurers based on market
pricing for health care services.
³⁴ U.S. Government Accountability Office(GAO),VA Health Care: Third-Party Charges
Based on Sound Methodology; Implementation Challenges Remain, GAO/HEHS-99-124,
June 1999.
³⁵ For a detailed description of these former accounts, see CRS Report RL32548, Veterans’
Medical Care Appropriations and Funding Process, by Sidath Viranga Panangala.

Table 4. Medical Care Collections, FY2002-FY2005
($ in thousands)
^FY²⁰⁰²^FY²⁰⁰³^FY²⁰⁰⁴^FY²⁰⁰⁵
^Actua^l^Actua^l^Actua^l^Actua^l
^Firs^t-^party^ph^arm^acy^a^$377,440^$576,554^$623,215^$648,204
^copay^m^en^t^s
^Fⁱ^rs^t^-^part^y^copay^m^en^t^s^108,392^104,994^113,878^118,626
^f^o^rⁱⁿ^p^a^tien^t^an^d
^o^u^tp^atien^t^car^e
^Fir^s^t-^p^a^r^t^y^loⁿ^g^-^ter^m^b^c^3,461^5,077^5,411
^{care copay}^m^en^ts
^T^hⁱ^r^d-^part^yⁱⁿ^s^u^ran^c^e^689,767^804,141^960,176^1,055,597
^co^llectioⁿ^s
^En^h^aⁿ^{ced u}^s^{e leas}ⁱⁿ^g^d⁵⁵³²³⁴⁴⁵⁹^26,861
^r^e^ve^nue
^Co^m^p^eⁿ^sa^te^d^w^o^r^k^e^35,275^38,834^40,488^36,516
^th^erapy^collection^s
^P^a^r^kⁱ^{ng fe}^e^s^f^3,283^3,296^3,349^3,443
^C^o^m^p^en^s^a^tion^an^d^{788 376}⁶³⁴^2,431
^p^eⁿ^s^ioⁿ^livⁱⁿ^g^g
^ex^pen^s^es
^M^C^C^F^T^o^tal^$1,215,498^$1,531,890^$1,747,276^$1,897,089
^So^urce^:^T^a^bl^{e prepared by}^C^R^S^bas^e^{d on}^dat^a^provⁱ^d^{ed by}^t^h^{e D}^e^part^m^eⁿ^t^of^V^e^t^e^ran^s^A^f^f^aⁱ^r^s^.
^No^tes:^T^h^{e f}^o^llowⁱⁿ^g^accouⁿ^t^s^w^e^{re n}^o^t^con^s^{olidated in}^to^MC^C^F^uⁿ^{til FY2004:}^en^h^aⁿ^{ced u}^s^{e leas}ⁱⁿ^g
^r^e^v^eⁿ^u^e^{; co}^m^p^en^sated^w^o^r^k^th^er^ap^y^co^llectioⁿ^s^{; p}^a^r^kⁱⁿ^g^f^{ees; an}^d^co^m^p^en^satioⁿ^an^d^p^eⁿ^s^ioⁿ^livⁱⁿ^g
^ex^pen^s^es^{. C}^o^llection^fⁱ^g^u^r^es^f^o^r^th^es^e^accouⁿ^t^s^f^o^{r F}^Y^{2002 an}^{d F}^Y^{2003 are prov}^{ided f}^o^{r com}^p^aris^on
^pu^rpos^es^.
^{a. In}^F^Y^2002,^C^oⁿ^g^r^es^s^creat^{ed t}^h^{e H}^eal^t^h^S^e^rvⁱ^ces^Im^prov^em^en^t^F^uⁿ^d^(H^S^I^F⁾^t^o^col^l^ectⁱⁿ^creas^es
ⁱⁿ^ph^arm^acy^copay^m^en^t^s^(f^rom^{$2 t}^o^{$7 f}^o^r^a^30-^day^s^u^ppl^y^of^ou^t^p^atⁱ^eⁿ^t^m^e^di^catⁱ^oⁿ⁾^t^h^at^w^eⁿ^t
ⁱⁿ^t^o^ef^f^ect^on^F^e^bru^a^ry^{4, 2002. T}^h^{e C}^oⁿ^s^olⁱ^d^at^{ed A}^ppropri^a^tⁱ^oⁿ^s^R^e^s^o^l^u^tⁱ^oⁿ^,^{2003 (}^P^.^L^.¹^08-⁷⁾
^g^r^an^ted^VA^th^e^au^th^o^r^ity^to^coⁿ^s^o^lid^{ate th}^{e HSI}^F^w^ith^{MCCF an}^d^g^r^an^ted^p^e^r^m^an^en^{t au}^th^o^r^ity
^to^r^eco^v^e^r^co^p^a^y^m^en^{ts f}^o^r^o^u^tp^atien^t^m^e^dⁱ^catioⁿ^s^.
^b^.^A^u^th^o^r^ity^to^co^llect^loⁿ^g^-^ter^m^car^{e co}^p^a^y^m^en^{ts w}^a^{s estab}^lish^e^d^b^y^th^{e Millen}ⁿⁱ^u^m^Health^Car^e^an^d
^Ben^e^f^its^A^c^{t (P}^.L^{. 106-}^{117). C}^e^rtain^v^e^teran^patien^t^s^receivⁱⁿ^g^ex^ten^d^{ed care s}^e^rv^ices^f^r^om^VA
^prov^iders^{or ou}^ts^{ide con}^t^ractors^{are ch}^arg^e^{d copay}^m^en^ts.
^{c. V}^A^s^t^art^e^{d col}^l^ectⁱⁿ^g^l^oⁿ^g^-^t^e^rm^{care copay}^m^en^t^sⁱⁿ^Juⁿ^e^2002;^h^o^w^e^v^e^{r, s}^y^s^t^em^ch^an^g^e^s^w^e^ren^’^t
^pu^{t in}^{place u}ⁿ^{til FY2003 to ref}^l^{ect th}^em^uⁿ^d^{er lon}^g^-^term^{care copay}^m^en^tsⁱⁿ^FY2002.
^{d. Un}^{der th}^{e en}^h^aⁿ^ced-^u^s^e^{d leas}^{e au}^th^ority^{, VA}^m^a^y^l^eas^e^lan^d^or^bu^ildin^g^s^{to th}^{e priv}^{ate s}^{ector f}^o^r
^u^p^{to 75 y}^ears^.^In^retu^rn^VA^receiv^e^s^f^a^{ir con}^s^iderationⁱⁿ^cas^h^an^{d/or in}^-^kⁱⁿ^{d. Fu}ⁿ^d^s^receiv^e^d
^as^m^oⁿ^e^tary^con^s^ideration^s^m^a^y^be^u^s^{ed to prov}^{ide care f}^o^{r v}^e^teran^s^.
^{e. T}^h^e^co^m^p^en^sated^w^o^r^k^th^er^ap^y^p^r^o^g^r^a^m^{is a co}^m^p^r^e^h^eⁿ^s^iv^{e r}^e^h^a^b^ilitatioⁿ^p^r^o^g^r^a^m^th^{at p}^r^ep^ar^es
^v^e^ter^aⁿ^s^f^o^r^co^m^p^etitiv^{e em}^p^l^o^y^m^eⁿ^t^aⁿ^dⁱⁿ^d^e^p^eⁿ^d^en^{t liv}ⁱⁿ^g^.^A^s^p^a^r^t^o^f^th^eir^w^o^r^k^th^er^ap^y^,
^v^e^t^e^ran^s^produ^{ce i}^t^e^m^s^f^o^{r s}^a^l^e^{or u}ⁿ^d^ert^a^k^e^s^u^bcon^t^r^ac^t^s^t^o^provⁱ^d^{e cert}^aⁱⁿ^produ^ct^s^an^d/^or
^s^e^rv^ices^s^u^ch^as^prov^idin^g^tem^porary^s^t^af^fⁱⁿ^g^to^{a priv}^{ate f}ⁱ^rm^{. Fu}ⁿ^d^s^{collected f}^r^om^th^{e s}^a^le
^of^t^h^es^{e produ}^ct^s^an^d/^{or s}^e^rvⁱ^ces^{are depos}ⁱ^t^e^{d i}ⁿ^t^h^{e MC}^C^F^.
^f^.^P^a^r^kⁱⁿ^g^p^r^o^g^r^a^m^p^r^o^v^id^es^f^uⁿ^d^s^f^o^r^coⁿ^s^tr^u^c^tioⁿ^,^an^d^acq^uⁱ^sitioⁿ^o^f^p^a^r^kⁱⁿ^g^g^a^r^a^g^e^{s at VA}^m^e^dⁱ^cal
^f^{acilities. VA}^co^{llects f}^{ees f}^o^r^u^s^{e o}^f^th^{ese p}^a^r^kⁱⁿ^g^f^acilities.
^g.^Uⁿ^d^e^r^t^h^e^c^o^m^p^eⁿ^sa^tⁱ^o^{n a}ⁿ^d^p^e^nsi^o^{n l}ⁱ^vⁱ^ng^e^x^p^e^nse^s^p^r^o^g^r^a^m^,^ve^t^e^r^a^ns^w^h^o^d^o^no^t^ha^ve^eⁱ^t^h^e^r^a
^s^pou^s^e^{or ch}ⁱ^l^d^{, w}^o^u^l^{d h}^a^v^e^t^h^ei^{r m}^oⁿ^t^h^l^y^pen^sⁱ^oⁿ^redu^{ced t}^o^$90^af^t^e^r^t^h^e^t^hⁱ^r^d^m^oⁿ^t^h^a^v^e^t^e^ran
^{is ad}^m^itted^f^o^rⁿ^u^r^sin^g^h^o^m^e^car^{e. T}^h^{e d}ⁱ^f^f^e^r^eⁿ^{ce b}^e^tw^een^th^{e v}^e^ter^aⁿ^’^{s p}^eⁿ^s^ioⁿ^an^d^th^{e $}⁹⁰
^{is u}^s^ed^f^o^r^th^{e o}^p^e^r^a^tioⁿ^o^f^th^{e VA}^m^e^dⁱ^{cal f}^acility^.

FY2006 Budget Summary³⁶
During the past year, Congress considered several appropriation measures to
provide funding for VHA. Aside from the regular FY2006 appropriations bill that
provides funding for VHA, Congress passed several measures that included funding
to bridge the shortfall for VHA for FY2005 and provided additional funding for
FY2006. Given below is a brief description tracking Congressional action on
FY2006 appropriations for VHA. Table 5 provides details of funding levels for the
various accounts that comprise funding for VHA.
House Action
On May 23, 2005, the House Committee on Appropriations reported H.R. 2528
(H.Rept. 109-95), making appropriations for Military Quality of Life and Veterans
Affairs and Related Agencies for FY2006 (MilQual appropriations bill). The House
passed H.R. 2528 on May 26, 2005. The MilQual appropriations bill appropriated
$28.8 billion for VHA. Under the House-passed version of H.R. 2528, the total
amount of funds available for VHA was $31.0 billion, including $2.2 billion in
collections (see Table 5).
Budget Shortfall
On June 23, 2005, at a hearing of the House Veterans Affairs Committee the
Administration announced that the increased medical care cost for FY2005 was about
$1 billion more than the FY2005 enacted amount. Moreover, at a subsequent hearing
before the House Committee on Appropriations, Subcommittee on Military Quality
of Life and Veteran Affairs, on June 28, 2005, the Secretary testified that for FY2006
veterans’ health care programs would need $1.1 to $1.6 billion more than the
FY2006 President’s request. On June 30, 2005, and July 14, 2005, respectively, the
President submitted to Congress a supplemental request to address the FY2005
shortfall and a budget amendment to address the additional funding needs of
FY2006. These two requests totaled $2.9 billion.
On July 26, 2005, the conferees of the Department of the Interior, Environment
and Related Agencies, Appropriations bill, 2006 (H.R. 2361, H.Rept. 109-188)
provided $1.5 billion in supplemental appropriations for VA medical services for
FY2005. The bill included language that would allow VA to carry over any unused
funds into FY2006. The House passed H.R. 2361 on July 28, 2005, and the Senate
passed the measure a day later. The FY2006 Department of the Interior,
Environment, and Related Agencies appropriations bill was signed into law on
August 2, 2005 (P.L. 109-54).

³⁶ For a detailed description of VA Medical Care Appropriations for FY2006, see CRS
Report RL32975, Veterans’ Medical Care: FY2006 Appropriations, by Sidath Viranga
Panangala.

Senate Action
On July 21, 2005, the Senate Committee on Appropriations reported out of
committee H.R. 2528 (S.Rept. 109-105) making appropriations for Military
Construction and Veterans Affairs and Related Agencies for FY2006 (MilCon
appropriations bill). This bill appropriated approximately $33.5 billion for VHA,
including $2.2 billion in collections (see Table 5).
Conference Agreement
On November 18, 2005, the House voted to adopt the conference report
(H.Rept. 109-305) making appropriations for Military Quality of Life, Military
Construction, Veterans Affairs, and Related Agencies for FY2006 (MilCon-Qual-VA
Appropriations Act). The Senate adopted H.Rept. 109-305 by unanimous consent
that same day. The MilCon-Qual-VA Appropriations Act was signed into law by the
President on November 30, 2005 (P.L. 109-114). The MilCon-Qual-VA
Appropriations Act appropriated $ 29.1 billion for VHA (not shown in Table 5).
This amount included $22.5 billion for medical services, $2.9 billion for medical
administration, $3.3 billion for medical facilities and $412 million for medical and
prosthetic research. When Congress passed P.L. 109-114, it designated $1.2 billion
as an emergency requirement, and included bill language that required the President
to declare the entire amount as an emergency. On January 28, 2006, the President
designated $1.2 billion in funding for veterans’ health care as an “emergency.”
Defense Appropriations Bill FY2006
On October 28, 2005, President Bush submitted a reallocation request to
Congress to transfer previously appropriated funds to several agencies, including the
VA, to address various needs arising from the consequences of Hurricane Katrina.
Congress responded to the President’s proposed reallocation by attaching the
reallocation request to the conference version of the FY2006 Defense Appropriations
bill (H.R. 2863).
The conference agreement includes $225.2 million for VA medical services,
including $198.2 million to purchase medical equipment and supplies lost during the
Gulf Coast hurricanes, and $27.0 million for Avian Flu pandemic preparation (shown
in Table 5). H.R. 2863 also included $24.9 million for general operating expenses;
$200,000 to clean up and repair national cemeteries (these amounts are not shown
in Table 6); $368 million for construction major projects; and $1.8 million for the
construction minor projects accounts (these amounts are shown in Table 6). The
Department of Defense Appropriations Act, 2006, was signed into law on December

30, 2005 (P.L. 109-148).

FY2006 Hurricane Supplemental for VA
On February 16, 2006, the Administration submitted two separate FY2006
supplemental appropriations requests.³⁷ One of these supplemental requests would
provide $19.8 billion for recovery and reconstruction activities in hurricane-affected
Gulf Coast areas. In this request the Administration requested $600 million for VA’s
construction major projects account to be used for rebuilding the VA Medical Center
in New Orleans, which was damaged by Hurricane Katrina. Proposed funding for
this project was previously included in the October 28, 2005 reallocation request, but
Congress provided only $75.0 million of the $368 million, for the purpose of advance
planning and design of the VA Medical Center in New Orleans. The conference
committee did not include the full amount of funding because it felt that there was
insufficient information to determine the actual cost of the project. In the FY2006
conference report, H.Rept. 109-359, VA was directed to report to the Committees on
Appropriations of both houses of Congress by February 28, 2006, on the long-term
plans for the replacement hospital construction. The report submitted by VA
estimated that the cost of construction of a new VA Medical Center in New Orleans
would be $636 million.
House Action. On March 17, 2006, the House passed the Emergency
Supplemental Appropriations Act for Defense, the Global War on Terror, and
Hurricane Recovery, 2006 (H.R. 4939, H.Rept. 109-388). The House-passed bill
provides $550 million for rebuilding the VA Medical Center in New Orleans, $50.0
million less than the Administration’s request. In addition, the Secretary of Veterans
Affairs is authorized to transfer up to $275 million of this amount to the medical
services account, to be used only for unanticipated costs related to the global war on
terror. Availability of the $550 million appropriation is made contingent on the
enactment of authority for it by June 30, 2006.
Senate Action. On May 4, 2006, the Senate passed its version of H.R. 4939
(S.Rept. 109-230). The Senate-passed bill provides $623 million for the construction
major projects account, $73.0 million above the House-passed amount. This includes
$561 million for the construction of a new VA Medical Center in New Orleans.
Together with the previous appropriation of $75.0 million in P.L. 109-148, the total
amount of funding for reestablishing the VA Medical Center in New Orleans would
be $636 million. During the Senate Appropriations Committee markup of H.R.
4939, the Committee designated $62.0 million of the total amount provided for the
construction major projects account to be used for the disposal and cleanup of land
associated with the VA medical facility in Gulfport, Mississippi.
During floor consideration of H.R. 4939, the Senate adopted an amendment
offered by Senator Akaka to provide $430 million for the VHA medical services
account for FY2006. Of this amount: $168 million was designated to address
veterans’ mental health care needs, including Post-Traumatic Stress Disorder
(PTSD); and $80.0 million was designated for the provision of readjustment

³⁷ For further information see CRS Report RL33298, FY2006 Supplemental Appropriations:
Iraq and Other International Activities; Additional Katrina Hurricane Relief, coordinated
by Paul M. Irwin, and Larry Nowels.

counseling services to veterans. The amendment also included language that requires
the President to declare the entire amount of $430 million as an emergency
requirement.
Conference Agreement. On June 13 and 15, 2006, the House and Senate,
respectively, adopted the conference report to accompany the Emergency
Supplemental Appropriations Act for Defense, the Global War on Terror, and
Hurricane Recovery, 2006 (H.R. 4939, H.Rept. 109-494). The bill was signed into
law (P.L. 109-234) on June 15. P.L. 109-234 provides $586 million for construction
major projects account. Of this amount, $550 million would be for the construction
of a new VA medical center in New Orleans, Louisiana, and $36.0 million would be
for the removal of debris and cleanup of the former VA medical center in Gulf Port,
Mississippi.
P.L. 109-234 did not include a provision to provide $430 million for the VHA
medical services account for FY2006. Furthermore, it should be noted that the
Emergency Supplemental Appropriations Act for Defense, the Global War on Terror,
and Hurricane Recovery, 2006, included a provision to rescind $198.2 million
appropriated under P.L. 109-148 to the medical services account, and to
reappropriate this same amount under P.L. 109-234 (see Table 5).
FY2007 VHA Budget
Administration’s Budget Request
On February 6, 2006, the President submitted his FY2007 budget proposal to
Congress. The Administration requested $32.7 billion for VHA, an 11.3% increase
over the FY2006 enacted amount of $29.3 billion, and a 10% increase over FY2005
enacted amount of $29.7 billion (see Table 5). The FY2007 request included $25.5
billion for medical services, a 12% increase over the FY2006 enacted amount; $3.2
billion for medical administration, an 11.2% increase over FY2006; $3.6 billion for
medical facilities, an 8.2% increase over FY2006; and $399 million for medical and
prosthetic research, a 3.2% decrease from the FY2006 enacted amount.
The President’s FY2007 budget request also includes a set of legislative
proposals that the Administration asserts “will continue to concentrate VA’s health
care resources to meet the needs of high priority core veterans — those with
service-connected conditions, those with lower incomes, and veterans with special³⁸
health care needs.” These legislative proposals are discussed in detail under the key
budget issues section of this report.

³⁸ Office of Management and Budget, Budget of the United States Government, Fiscal Year

2007, Appendix, p. 956.

House and Senate Budget Resolutions
On March 31, 2006, the House Budget Committee reported H.Con.Res. 376
(H.Rept. 109-402), providing $36.9 billion for VA’s discretionary programs, which
consist mainly of VA medical care. This amount includes an amendment offered by
Representative Bradley increasing the discretionary budget authority by $795 million
over the President’s recommended level. According to the committee report
language, the recommended amount does not assume the President’s proposal to
implement enrollment fees and increase drug copayments for Priority Group 7 and
8 veterans.³⁹ H.Con.Res. 376 also calls for budget authority of $37.8 billion for VA’s
mandatory programs. In total, the committee-reported budget resolution calls for
$74.6 billion for VA programs for FY2007. H.Con.Res. 376 was adopted by the
House on May 18.
On March 9, 2006, the Senate Budget Committee marked up S.Con.Res. 83, and
the Senate passed it on March 16. On the Senate floor, $823 million was added to
the committee-recommended amount to provide an additional $795 million to VA
Medical Services, in lieu of enactment of the proposed pharmacy copayment increase
and the new enrollment fee, and $28 million to increase VA’s medical & prosthetic
research funding. In total S.Con.Res. 83 calls for $74.8 billion for VA programs for
FY2007. This includes approximately $37.0 billion for VA’s discretionary programs,
and approximately $37.8 billion for mandatory programs.
House Action
On May 10, 2006, the House Committee on Appropriations approved by voice
vote its version of the Military Construction, Military Quality of Life, and Veterans
Affairs Appropriations bill (MilCon-Qual-appropriations bill) for FY2007 (H.R.

5385, H.Rept. 109-464). The bill was reported out of committee on May 15, 2006.

The House passed H.R. 5385 on May 19, 2006.
H.R. 5385 provided $32.7 billion for VHA, a $3.4 billion (11.4%) increase
over the FY2006 enacted amount of $29.3 billion, and about the same as the
President’s request. This amount included $25.4 billion for medical services, $100
million less than the President’s request and $2.6 billion (11.6%) over the FY2006
enacted amount of $22.8 billion (see Table 5). Of the amount provided for medical
services, the committee included bill language designating that not less than $2.8
billion be used for specialty mental health care, which included funding for the
treatment of Post-Traumatic Stress Disorder (PTSD), and funding for the three
“Centers of Excellence” for mental health care treatment, established by last year’s

³⁹ U.S. Congress, House Committee on the Budget, Concurrent Resolution on the Budget-
Fiscal Year 2007, report to accompany H.Con.Res. 376, 109^th Cong., 2^nd sess., H.Rept. 109-

402, p. 45.

appropriations act (P.L. 109-114).⁴⁰ This was a $600 million increase in funding for
mental health programs compared to FY2006.⁴¹
The MilCon-Qual appropriations bill for FY2007 also provided $3.3 billion for
medical administration, $100 million above the Administration’s request of $3.2
billion, and $3.6 billion for medical facilities, $25 million above the budget request.
As stated in H.Rept. 109-464, this increase was provided for the establishment of at
least 10 new Community-Based Outpatient Clinics (CBOCs) in FY2007.⁴² These 10
CBOCs would be in addition to the 27 CBOCs that VHA plans to activate in
FY2007.⁴³
H.R. 5385 also provided $412 million for medical and prosthetic research, a
3.2% increase over the President’s request of $399 million (see Table 5). During
committee markup of H.R. 5385, several amendments were offered to increase⁴⁴
funding for veterans’ health care; however, none of these amendments was adopted.
Construction Projects. H.R. 5385 provided $599 million for VA
construction projects, including funding for Capital Asset Realignment and for
Enhanced Services (CARES) projects (see Table 6).⁴⁵ A large portion of this amount
was for construction and building improvements of VA medical facilities. The
committee-recommended amount was $83 million (12.2%) less than the President’s
request. The reason for this decrease was because the committee did not provide
funding for several construction projects that were included in the President’s budget
request, including funding for refurbishment of the operating rooms at the Columbia,
Missouri VA medical center, and for refurbishment of the Spinal Cord Injury Center
at the Milwaukee, Wisconsin VA medical center. The committee believed that these

⁴⁰ For further details about these “Centers of Excellence,” see CRS Report RL32975,
Veterans Medical Care: FY2006 Appropriations, by Sidath Viranga Panangala.
⁴¹ U.S. Congress, House Committee on Appropriations, Military Quality Of Life and
Veterans Affairs, and Related Agencies Appropriations Bill, 2007, report to accompany H.R.^th^nd

5385, 109 Congress, 2 session, H.Rept. 109-464, p. 50.

⁴² Ibid. p. 58.
⁴³ On June 23, 2006, VA announced plans to open 25 new CBOCs in 17 states and American
Somoa. The following facilities would become operational in CY2006: Bessemer,
Alabama; Tafuna, American Samoa; Miami-Globe, Northwest Tucson and Southeast
Tucson, Arizona; South Orange County, California; Dover, Delaware; Athens, Georgia;
Canyon County, Idaho; Spirit Lake, Iowa; Hazard and Florence, Kentucky; Bemidji,
Minnesota; Holdrege, Nebraska; Fallon, Nevada; Franklin, Hamlet, and Hickory, North
Carolina; Cambridge and Newark, Ohio; Hamblen, Tennessee; Conroe, Texas; Lynchburg
and Norfolk, Virginia; Rice Lake, Wisconsin.
⁴⁴ For a tally of roll call votes on these amendments, see U.S. Congress, House Committee
on Appropriations, Military Quality Of Life and Veterans Affairs, and Related Agencies^th^nd
Appropriations Bill, 2007, report to accompany H.R. 5385, 109 Congress, 2 session,
H.Rept. 109-464, pp. 80-81.
⁴⁵ For a detailed description of the Capital Asset Realignment for Enhanced Services
(CARES) program, see CRS Report RL32961, Veterans’ Health Care Issues in the 109th
Congress, by Sidath Viranga Panangala.

are “low priority projects.” In addition, the committee recommendation did not
include funding for the replacement of the VA medical center in Denver, Colorado,
because the estimate for construction of the new facility had almost doubled in less
than two years, from $328 million to $621 million. According to the committee
report, “this is a project at a stage where work can be halted before significant and
irreversible financial damage is done.”⁴⁶ The Administration issued a statement on
May 19, opposing the funding reduction for the CARES program. The
Administration stated that “this reduction would slow CARES projects designed to
renovate and modernize VA’s health care infrastructure and provide greater access
to high quality care for more veterans, closer to where they live.”⁴⁷
However, H.R. 5385 included funding for the upgrade and modernization of VA
research facilities. The committee expressed its concern that many VA research
facilities have run out of adequate research space, and that some facilities frequently
need upgrades of their ventilation, electrical supply, and plumbing systems. The
committee directed VA to institute a process by which research infrastructure needs
are given full and careful consideration.⁴⁸
The MilCon-Qual appropriations bill did not include any fee increases as
requested by the Administration’s budget proposal for VHA for FY2007.
Senate Action
On July 20, 2006, the Senate Appropriations Committee reported out of
committee its version of the Military Construction and Veterans Affairs and Related
Agencies Appropriations bill (MilCon-VA appropriations bill) for FY2007 (H.R.
5385; S.Rept. 109-286). On November 14, the Senate passed H.R. 5385, as
amended, by voice vote. The Senate-passed version provided $32.7 billion for
VHA. This amount was almost equivalent to the President’s request and the House-
passed amount (see Table 5).
H.R. 5385, as amended, provided $28.7 billion for medical services, a 26.0%
increase over the FY2006 enacted amount, a 12.5% increase over the President’s
request, and a 13.0% increase over the House-passed amount (see Table 5). The
MilCon-VA appropriations bill combined the medical administration account into
the medical services account. The Administration lauded the Senate-passed measure
for merging the medical services account with the medical administration account.
According to the Administration, “combining these appropriations into a single

⁴⁶ U.S. Congress, House Committee on Appropriations, Military Quality Of Life and
Veterans Affairs, and Related Agencies Appropriations Bill, 2007, report to accompany H.R.^th^nd

5385, 109 Congress, 2 session, H.Rept. 109-464, p.62.

⁴⁷ Executive Office of the President, Office of Management and Budget, Statement of
Administration Policy, H.R. 5385 — Military Construction, Military Quality of Life and
Veterans Affairs Appropriations Bill, FY2007, May 19, 2006, p. 2 [http://www.whitehouse.
gov/omb/legislative/sap/109-2/hr5385sap-h.pdf], visited August, 28, 2006.
⁴⁸ U.S. Congress, House Committee on Appropriations, Military Quality Of Life and
Veterans Affairs, and Related Agencies Appropriations Bill, 2007, report to accompany H.R.^th^nd

5385, 109 Congress, 2 session, H.Rept. 109-464, pp.63-64.

account would increase management flexibility to direct resources to best meet the
overall health care needs of veterans.”⁴⁹
The Senate-passed version of H.R. 5385 also provided $3.6 billion for medical
facilities (which is the same as the Administration’s request and $25.0 million less
than the House-passed amount) and $412 million for medical and prosthetic research.
This amount is the same as the House-passed amount and $13.0 million above the
President’s request (see Table 5).
Unlike the House-passed version of H.R. 5385, the Senate bill did not earmark
funding for mental health care programs, including PTSD. However, during
committee markup of the bill, the Senate Appropriations Committee expressed
interest in several areas related to veterans’ health care. The committee indicated that
it was keenly interested in knowing about progress made with the three Centers of
Excellence specializing in mental health and PTSD, created by P.L. 109-114, in
Waco, Texas; San Diego, California; and Canandaigua, New York. It also directed
the VA to begin implementing a plan to expand more outpatient blind rehabilitation
servi ces.⁵⁰
During floor debate, the Senate adopted an amendment offered by Senator Kerry
to provide discretionary authority to the VA to use up to $18 million of the funds
appropriated to the department, to provide additional mental health care services to
veterans who served in combat in Iraq and Afghanistan. These services would be
provided through readjustment counseling centers (commonly known as “Vet⁵¹
Centers”).
Furthermore, during committee markup of H.R. 5385, the committee voiced
concern about the growing number of veterans returning from combat operations
overseas who were not being properly screened for Traumatic Brain Injury (TBI).
The committee included report language encouraging the VA, in coordination with
the four Polytrauma Centers in Minneapolis, Minnesota; Palo Alto, California;
Richmond, Virginia; and Tampa, Florida, to establish a separate education and⁵²
diagnosis screening program for VA medical centers and Vet Centers.
The committee also indicated that it “recognizes the increased and ongoing
pressures facing military families, and believes it is important to take a proactive,

⁴⁹ Executive Office of the President, Office of Management and Budget, Statement of
Administration Policy, H.R. 5385 — Military Construction, and Veterans Affairs
Appropriations Bill, FY2007, November 14, 2006, p. 2 [http://www.whitehouse.gov/omb/
legislative/sap/109-2/hr5385sap-s.pdf], visited November, 16, 2006.
⁵⁰ U.S. Congress, Senate Committee on Appropriations, Military Construction and Veterans
Affairs and Related Agencies Appropriations Bill, 2007, report to accompany H.R. 5385,^th^nd

109 Cong., 2 sess., S.Rept. 109-286, p. 53.

⁵¹ Congressional Record, daily edition, vol. 152 (November 14, 2006), pp. S10898-S10899.
⁵² U.S. Congress, Senate Committee on Appropriations, Military Construction and Veterans
Affairs and Related Agencies Appropriations Bill, 2007, report to accompany H.R. 5385,^th^nd

109 Cong., 2 sess., S.Rept. 109-286, p.50.

preemptive approach in helping veterans, particularly those in the National Guard and
Reserves, and their families adjust to deployments and the transition home after the
battlefield.”⁵³ Therefore, the committee directed the VA to look at a DOD program
that has been successfully utilized by Army families, which “focuses on goals, family
strengthening, and communication as tools to deal with stressful situations.”⁵⁴
According to S.Rept. 109-286, “the program can be successfully facilitated by Vet
Center staff and can help veterans and their families to deal with both the transition
from active duty to civilian life and the call up to active duty for National Guardsmen
and Reservists.”⁵⁵ The committee also included report language requesting VA to
establish CBOCs in Bellingham and Centralia, Washington; Alpena, Michigan; and
in rural Colorado.
Construction Projects. The Senate-approved version of H.R. 5385 provided
$682 million for VA construction projects, including funding for CARES projects
(see Table 6). This was a 14.0% increase over the House-passed amount, and the
same as the President’s request. A large portion of this amount would have been for
the construction, alteration, and renovation of VA medical facilities.
Furthermore, during floor debate of H.R. 5385, the Senate adopted an
amendment offered by Senator Craig to amend Section 8104 (a)(3)(A) of Title 38
United States Codes (U.S.C.), to increase the threshold for major medical facility
projects from $7 million to $10 million.^56,57 This amendment also authorized the VA
Secretary to carry out major medical facility construction projects and leases for
which funds have already been appropriated, and also to carry out major medical
facility projects authorized by P.L. 108-170 through September 30, 2007.⁵⁸
During committee markup of the bill, the committee expressed concern about
VA’s construction schedule, and directed VA to provide reports on the delays in
construction. It also included report language directing VA to provide a report on the
Orlando, Florida, VA Medical Care Facility. According to S.Rept. 109-286, “in
FY2004, Congress appropriated $25 million for a medical care facility at Orlando,
Florida. Since then, VA has made no progress on the design and construction of this

⁵³ Ibid. p.53.
⁵⁴ Ibid. p.54.
⁵⁵ Ibid. p.54.
⁵⁶ Under current law, a “major medical facility project” is one that involves the construction,
alteration, or acquisition of a medical facility involving a projected total expenditure of
more than $7 million. The threshold for major medical facility construction projects was
increased from $4 million to $7 million by P.L. 108-170.
⁵⁷ Congressional Record, daily edition, vol.152 (November 14, 2006), p.S1092.
⁵⁸ The Veterans Health Care, Capital Asset, and Business Improvement Act of 2003 (P.L.
108-170), authorized the VA Secretary to carry out major construction projects as specified
in the final report of the Capital Asset Realignment for Enhanced Services (CARES)
Commission and approved by the Secretary without receiving congressional authorization
on an individual project basis. This blanket authority expired on September 30, 2006, and
this provision would extend this authority through FY2007.

hospital.”⁵⁹ Furthermore, the Senate Appropriations Committee urged VA to include
$28.5 million in the FY2008 budget request for the construction of a 90-bed nursing
home and adult day care center at the Beckley VA Medical Center in West Virginia,
and to include $3.6 million for planning and design work associated with the
renovation and expansion of primary, mental health, and specialty outpatient care
facilities at the Martinsburg VA Medical Center, also in West Virginia.
The MilCon-VA appropriations bill for FY2007 did not include any fee
increases as requested by the Administration’s budget proposal for VHA for FY2007,
and the Senate Appropriations Committee strongly expressed its displeasure about
the Administration’s fee proposals:
The [VA] continues to assume congressional approval of its policy and
legislative proposals before the Congress has done so.... This practice of
under-requesting the true needs of the Department to care for our veterans, with
the mandate that the Congress either enact the fees, shortchange veterans
healthcare, or make up the difference, is not responsible budgeting. In the
strongest terms possible, this Committee directs [VA] not to submit another
budget using assumed fees and copayments until such time as the Congress
approves and authorizes the Department to implement new revenue enhancing⁶⁰
policies.
Revised Continuing Appropriations Resolution, 2007
By the end of the 109^th Congress, Congress had not passed the MilCon-VA
appropriations bill for FY2007 and funded most government agencies, including the
VA, through a series of Continuing Appropriations Resolutions (P.L. 109-289,
division B, as amended by P.L. 109-369 and P.L. 109-383). On January 31, 2007,
the House passed the Revised Continuing Appropriations Resolution, 2007 (H.J.Res.

20, P.L. 110-5), and the Senate passed it without amendment on February 14. P.L.

110-5 provides $32.7 billion for VHA for FY2007.⁶¹ This is $3.3 billion above the
FY2006 enacted amount and $14.7 million above the President’s request. Under the
VHA budget, the medical services account is funded at $25.5 billion, a $2.7 billion
increase over the FY2006 enacted amount. The medical administration account is
funded at $3.2 billion, and the medical facilities account is funded at $3.6 billion.
The Revised Continuing Appropriations Resolution, 2007, provides $413.7 million
for the medical and prosthetic research account, a $14.7 million increase over the
Administration’s request (Table 5).
Construction Projects. P.L. 110-5 provides $683 million for VA
construction projects, including funding for Capital Asset Realignment and for

⁵⁹ U.S. Congress, Senate Committee on Appropriations, Military Construction and Veterans
Affairs and Related Agencies Appropriations Bill, 2007, report to accompany H.R. 5385,^th^nd

109 Cong., 2 sess., S.Rept. 109-286, p. 62.

⁶⁰ Ibid. p.44.
⁶¹ In order to calculate the total funding level remaining for VA in FY2007, the Department
would subtract the funding provided in the previously enacted FY2007 Continuing
Resolutions from the amount provided in P.L 110-5.

Enhanced Services (CARES) projects (see Table 6). A large portion of this amount
is for construction and building improvements of VA medical facilities. The FY2007
enacted amount is slightly more than the President’s request.

Table 5. VHA Appropriations by Account, FY2005-FY2007
($ in thousands)
^FY²⁰⁰⁵^FY²⁰⁰⁶^FY²⁰⁰⁶^FY²⁰⁰⁶^FY²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁷^FY²⁰⁰⁷^FY²⁰⁰⁷
^Program^Ena^c^t^e^d^Request^Hou^s^e^Sena^t^e^Ena^c^t^e^d^Request^Hou^s^e^Sena^t^e^Ena^c^t^e^d
^cal^s^e^rvⁱ^ces^$19,316,995^$19,995,141^$20,995,141^$21,^331,011^$21,322,141^$25,512,000^$25,^412,000^$28,689,000^$25,512,000
^ppl^em^en^t^a^l^appropri^a^tⁱ^oⁿ^s
^{. 108-}³²⁴⁾^38,283^—^—^—^—^—^—^—^—
^ppl^em^en^t^a^l^appropri^a^tⁱ^oⁿ^s^1,500,000^a^—^—^—^—^—^—^—^—
^erg^eⁿ^c^y^appropri^a^tⁱ^oⁿ^s^—^1,977,000^b^—^1,977,000^c^1,225,000^d^—^—^—^—
^e^r^ge^nc^y^a^p^p^r^o^p^rⁱ^a^tⁱ^o^{ns —}^D^e^fe^nse^,^t^h^e
^obal^{War on}^T^e^{rror, an}^{d H}^u^rri^can^e
^e^ry^e
^109-²³⁴⁾^—^198,265^—^—^198,265^—^—^—^—
^e^r^ge^nc^y^a^p^p^r^o^p^rⁱ^a^tⁱ^o^{ns —}^A^vⁱ^a^{n Fl}^u
ⁿ^d^e^mⁱ^c
ⁱ^{ki/CRS-RL33409}^{. 109-}¹⁴⁸⁾^—^27,000^—^—^27,000^—^—^—^—^f
^g/w^u^b^t^o^t^a^l^m^e^di^cal^s^e^r^vⁱ^ces^20,855,278^22,197,406^20,995,141^23,308,011^22,772,406^25,512,000^25,412,000^28,689,000^25,512,000
^s^.or^cal^admⁱⁿⁱ^s^t^ratⁱ^oⁿ⁴^,667,360^4,517,874^4,134,⁸⁷⁴^2,858,442^2,858,442^3,177,⁰⁰⁰^3,277,000^—^3,177,000
^le^ak^ppl^em^en^t^a^l^appropri^a^tⁱ^oⁿ^s
^://wiki^{. 108-}³²⁴⁾^1,940^—^—^—^—^—^—^—^—
^h^ttp^u^b^t^o^t^a^l^m^e^di^cal^admⁱⁿⁱ^s^t^r^atⁱ^oⁿ⁴^,669,300^4,517,⁸⁷⁴^4,134,874^2,858,442^2,858,442^3,^177,000^3,277,000^—^3,177,000
^acilities³^,^715,040^3,297,669^3,297,669^3,297,669^3,297,⁶⁶⁹^3,569,000^3,594,000^3,569,000^3,569,000
^ppl^em^en^t^a^l^appropri^a^tⁱ^oⁿ^s
^{. 108-}³²⁴⁾^46,909^—^—^—^—^—^—^—^—
^e^{dical fa}^cilities³^,761,⁹⁴⁹^3,297,669^3,297,669^3,297,669^3,297,669^3,569,000^3,594,000^3,569,000^3,569,000
^cal^an^{d pros}^t^h^etⁱ^c^res^earch^402,³⁴⁸^393,000^393,000^412,000^412,000^399,000^412,000^412,000^413,700
^u^b^t^o^t^a^l^m^e^di^cal^an^{d pr}^os^t^h^etⁱ^c^r^e^s^e^ar^ch^402,348^393,000^393,000^412,000^412,⁰⁰⁰^399,000^412,000^412,000^413,700
^f^o^rm^atⁱ^oⁿ^t^echⁿ^o^l^o^g^y^—^—^—^1,456,821^—^—^—^—^—
^t^a^{l VH}^{A a}^ppro^p^ria^t^io^{ns (}^w^it^ho^ut
^l^ecti^oⁿ^s⁾^29,688,875^30,405,949^28,820,684^31,332,⁹⁴³^29,340,517^32,657,000^32,^695,000^32,670,000^32,671,700
^t^collection^(MC^C^F)^g^1,985,984^2,170,000^2,170,000^2,170,000^2,170,000^2,329,000^2,329,000^2,329,000^2,329,000
^tal^:^V^H^A^(ap^p^r^op^ri^ati^oⁿ^s^an^d
^l^ecti^oⁿ^s⁾^$31,674,859^$32,575,949^$30,990,684^$33,502,⁹⁴³^$31,510,517^$34,986,000^$35,^024,000^$34,999,000^$35,000,700

^rce:^T^a^ble^pr^e^p^a^r^e^d^by^the^C^ong^r^e^s^sⁱ^ona^{l R}^e^s^e^a^r^c^h^Se^r^v^ic^e^ba^s^e^{d on H}^.^R^e^{pt. 108-}^{674; S.R}^e^{pt. 108-}^{353; H}^.^R^e^p^t^.^109-^{95; S.R}^e^pt.^109-^{105; H}^.^R^e^{pt. 109-}^{305; H}^.^R^e^pt.^109-^{359; H}^.^R^e^{pt. 109-}^{464; H}^.^R^e^pt.
^{494; S.R}^e^{pt. 109-}^{286; a}^{nd P}^.^L^.^110-^5.
^A^ppr^opr^ia^{tion a}^m^ounts^f^o^r^FY^{2005 a}^d^jus^t^e^d^to^a^c^c^{ount f}^o^r^the^0.8%^a^c^r^os^s^-^the^-^boa^r^d^r^e^duc^{tion in m}^o^s^t^dis^c^r^e^tiona^r^y^a^c^c^ounts^a^s^c^a^lle^{d f}^o^r^{in D}ⁱ^vⁱ^sⁱ^{on J}^,^Se^c^tⁱ^oⁿ¹²²⁽^a⁾⁽¹⁾^o^f^P.^L^.^108-^447.
^m^eⁿ^ta^l^a^ppr^opr^ia^tions^f^o^r^FY^{2005 a}^r^e^{not s}^ubje^c^t^{to the}^0.^8%^a^c^r^os^s^-^the^-^boa^r^d^r^e^duc^tions^{. A}^ppr^opr^ia^{tion a}^m^ounts^f^o^r^FY²⁰⁰⁶^{are n}^o^t^s^ubje^c^t^{to a}ⁿ^y^c^r^os^s^-^the^-^boa^r^d^r^e^duc^tions^a^s^s^tipula^t^e^dⁱⁿ
^sⁱ^{on B, T}^itle^{III, Se}^c^{tion 3801(c}^{)(2) of}^P^.^L^.^109-148.
ⁿ^A^u^g^u^s^t^{2, 2005, the}^FY^{2006 D}^e^pa^rtm^e^{nt of}^the^Inte^rior,^Envⁱ^ronm^eⁿ^{t, a}^{nd Re}^la^te^{d A}^g^eⁿ^cⁱ^e^s^a^ppropria^tions^{bill (H}^{.R. 2361,}^P^.^L^.^109-⁵⁴⁾^w^a^s^sⁱ^gⁿ^e^d^{into la}^w^.
ⁿ^J^u^ly^{14, 2005, the}^A^d^mⁱ^nis^t^ra^{tion re}^que^s^t^e^d^aⁿ^a^dditiona^{l $1.977 billion f}^o^{r m}^e^dic^a^l^s^e^rv^ic^e^s^f^o^{r FY}^2006.
ⁿ^J^u^ly^{21, 2005, the}^Se^na^te^Com^m^itte^e^{on A}^ppropria^tions^re^porte^{d H}^.^{R. 2528 f}^a^v^o^ra^bly^{out of}^c^o^m^m^itte^e^(S.Re^p^{t. 109-105), a}ⁿ^d^d^e^sⁱ^gⁿ^a^t^e^d^this^a^m^{ount a}^s^aⁿ^e^m^e^r^g^eⁿ^c^y
^a^ppr^opr^ia^tion.
ⁿ^N^o^v^e^m^b^e^r^{18, 2005, the}^H^ous^e^a^{nd Se}^na^te^a^dopte^d^the^c^onf^e^r^eⁿ^c^e^r^e^por^{t (}^H^.R^e^p^t.109-³⁰⁵⁾^to^acco^m^p^an^y^H.^R.^{2528, a}^{nd de}^sⁱ^gⁿ^a^t^e^d^this^a^m^{ount a}^s^aⁿ^e^m^e^r^g^e^nc^y^a^ppr^opr^ia^tion.
^is^a^m^{ount w}^a^s^pr^e^v^ious^ly^a^ppr^opr^ia^te^{d unde}^r^the^FY^{2006 D}^e^f^e^ns^e^A^ppr^opr^ia^tions^A^c^{t (}^P^.L^{. 109-}¹⁴⁸⁾^.
^e^Se^na^te^A^ppr^opr^ia^tions^C^o^m^m^itte^e^c^o^m^b^ine^d^the^m^e^dic^a^l^a^d^mⁱ^nis^t^r^a^{tion a}^c^c^{ount into the}^m^e^dic^a^l^s^e^r^v^ic^e^s^a^c^c^ount.
^dic^a^l^C^a^r^e^C^o^s^t^C^o^lle^c^{tion Fund (}^M^C^C^F⁾^r^ecei^p^t^s^are^rest^o^r^ed^t^o^V^H^A^{as an}ⁱⁿ^d^e^fⁱⁿⁱ^t^e^budg^e^t^a^u^thority^e^qua^{l to the}^re^v^e^nue^c^o^lle^c^t^e^d^{, e}^s^tim^a^t^e^d^{to be}^{$1.985 billion in FY}^{2005, $2.17 billion in}
^FY^{2006, a}^{nd $2.33 billion in FY}^2007.

ⁱ^{ki/CRS-RL33409}
^g/w
^s^.or
^le^ak
^://wiki
^h^ttp

Table 6. Appropriations for VA Construction Projects,
FY2005-FY2007
($ in thousands)
^FY²⁰⁰⁵^FY²⁰⁰⁶^FY²⁰⁰⁷^FY²⁰⁰⁷^FY²⁰⁰⁷^FY²⁰⁰⁷
^Ena^c^t^e^d^Ena^c^t^e^d^Request^Hou^s^e^Sena^t^e^Ena^c^t^e^d
^Co^nst^r^uc^tⁱ^o^n,^m^a^j^o^r^p^r^o^j^e^c^t^s^a^$455,130^$607,100^$399,000^$283,670^$429,000^$399,000
^Em^erg^eⁿ^c^y^A^ppropri^a^tⁱ^oⁿ^s^—^367,500^—^—^—^—
^{— Gu}^lf^C^o^as^{t Hu}^rrican^es
^(P.L^{. 109-}¹⁴⁸⁾
^Em^erg^eⁿ^c^y^A^ppropri^a^tⁱ^oⁿ^s^—^—^585,919^—^—^—^—
^D^e^f^eⁿ^s^{e, t}^h^{e G}^l^obal^{War on}
^T^e^{rror, an}^{d Hu}^rri^can^e
^R^ecov^e^ry^(P.L^109-²³⁴⁾
^Sub^to^ta^{l co}^nstructio^n,^455,130^1,560,519^399,000^283,670^429,000^399,000
^m^a^j^o^r^pr^oj^ect^s
^Co^nst^r^uc^tⁱ^o^n,^mⁱ^no^r^p^r^o^j^e^c^t^s^b^228,933^198,937^198,000^210,000^168,000^199,000
^S^u^ppl^em^en^t^a^l^A^ppropri^a^tⁱ^oⁿ^s³⁶^,³⁴³^—^—^—^—^—
^(P.L^{. 108-}³²⁴⁾
^Em^erg^eⁿ^c^y^A^ppropri^a^tⁱ^oⁿ^s^—¹^,⁸⁰⁰^—^—^—^—
^{— Gu}^lf^C^o^as^{t Hu}^rrican^es
^(P.L^{. 109-}¹⁴⁸⁾
^Sub^to^ta^{l co}^nstructio^n,^265,276^200,737^198,000^210,000^168,000^199,000
^mⁱⁿ^o^r^pr^oj^ect^s
^Gr^an^{ts f}^o^r^coⁿ^s^tr^u^c^tioⁿ^o^f^c^104,322^85,000^85,000^105,000^85,000^85,000
^{state ex}^ten^d^ed^car^{e f}^acilities
^T^o^tal^$824,728^$1,846,256^$682,000^$598,670^$682,000^$683,000
^S^o^u^rce:^T^a^ble^pr^e^p^a^r^e^d^by^C^R^S^ba^s^e^{d on H}^.^R^e^{pt. 109-}^95;^H^.^R^e^{pt 109-}^{464; H}^.^R^e^{pt. 109-}^494;^S.R^e^{pt. 109-}^{286; a}^nd^P^.^L^.
^110-^5.
^Note:^T^hⁱ^s^t^a^b^l^{e excl}^u^d^e^{s gran}^t^s^f^o^{r co}ⁿ^s^t^r^u^c^tⁱ^oⁿ^o^f^st^at^{e vet}^e^ran^s^cem^et^eri^e^s.
^a^.^T^h^is^a^c^c^{ount prov}^ide^s^f^unds^f^o^r^c^ons^truc^ting^,^a^lte^ring^{, e}^x^te^nding^{, a}^{nd im}^prov^ing^aⁿ^y^V^A^f^a^c^ility^,^inc^l^uding^pla^nning^,
^assessm^en^t^s^o^fⁿ^eed^s,^archⁱ^t^e^c^t^u^r^al^an^d^en^giⁿ^eeriⁿ^{g servi}^ces,^CA^RE^S^p^r^o^j^ect^s,^an^d^si^t^e^acq^uⁱ^si^tⁱ^oⁿ^,^w^h^{ere t}^h^e
^estⁱ^m^at^ed^co^st^o^f^{a p}^r^o^j^ectⁱ^s^{$7 m}^illioⁿ^o^r^m^o^r^e^or^w^h^e^r^e^f^unds^f^o^r^a^pr^oje^c^t^w^e^r^e^m^a^de^a^v^a^ila^ble^{in a}^pr^e^v^ious
^m^a^j^o^r^p^r^o^j^ect^ap^p^r^o^p^rⁱ^a^tⁱ^oⁿ^.^E^m^p^h^a^si^sⁱ^s^p^l^aced^oⁿ^co^rrectⁱ^oⁿ^o^f^saf^e^t^y^co^d^e^d^e^fⁱ^ci^en^ci^{es i}ⁿ^exi^s^tⁱⁿ^{g V}^A^m^e^dⁱ^cal
^f^a^c^ilitie^s.
^b.^T^h^is^a^c^c^{ount prov}^ide^s^f^unds^f^o^{r c}^ons^truc^ting^,^a^lte^ring^{, e}^x^te^nding^a^{nd im}^prov^ing^aⁿ^y^V^A^f^a^c^ility^,^inc^l^uding^pla^nning^,
^archⁱ^t^ect^u^r^al^an^d^en^giⁿ^eeriⁿ^{g servi}^ces,^CA^RE^S^p^r^o^j^ect^s,^an^d^si^t^e^acq^uⁱ^si^tⁱ^oⁿ^,^w^h^{ere t}^h^{e est}ⁱ^m^at^ed^co^st^o^f^{a p}^r^o^j^ect
^is^le^{ss th}^aⁿ^{$7 m}^illioⁿ^{. VA}^m^e^dic^a^l^c^eⁿ^te^r^pr^oje^c^t^s^tha^t^ne^e^d^mⁱ^nor^im^pr^ov^e^m^eⁿ^ts^c^o^s^ting^{$500,000 or}^m^o^r^e^a^r^e
^f^unde^{d f}^r^om^this^a^c^c^ount.
^c^.^T^hⁱ^s^a^c^c^ount^pr^ovⁱ^d^e^s^g^r^aⁿ^t^s^t^o^s^t^a^t^e^s^t^o^a^c^qui^r^e^or^c^ons^t^r^uc^t^s^t^a^t^e^nur^sⁱ^ng^hom^e^a^{nd dom}^iciliary^f^aci^litie^{s, a}^{nd to}
^re^m^ode^{l, m}^odif^y^,^{or a}^lte^{r e}^x^isting^hos^pita^{ls, nursing}^hom^e^s^{, a}^{nd dom}^ic^ilia^ry^f^a^c^ilitie^{s in sta}^t^e^hom^e^s^{. A}^g^r^aⁿ^{t m}^a^y
ⁿ^o^t^exceed⁶⁵^%^o^f^t^h^e^t^o^t^a^l^co^st^o^f^t^h^{e p}^r^o^j^ect^.^P^.^L^.^102-^{585 g}^r^aⁿ^te^{d pe}^r^m^aⁿ^eⁿ^{t a}^u^thor^ity^f^o^r^this^pr^og^r^a^m^,^a^nd^P^.^L^.
^104-^{262 a}^dde^{d A}^{dult D}^a^y^H^e^a^{lth C}^a^r^e^a^s^a^nothe^r^le^v^e^{l of}^c^a^r^e^tha^t^m^a^y^be^p^r^o^vⁱ^d^ed^b^y^s^t^a^t^e^hom^e^s^{. T}^h^is^is^a
^no-^y^e^a^r^a^c^c^ount.

Key Budget Issues
In its FY2007 budget request, the Administration proposed several legislative
changes that it asserts will “refocus the VA health care system to better meet the
needs of highest priority veterans — those with service-connected conditions, those⁶²
with lower incomes, and those with special health care needs.” These proposals are
similar to previous ones that were included in the Administration’s budget requests⁶³
for FY2003, FY2004, FY2005, and FY2006, and were rejected by Congress.
The President’s budget request includes three major policy proposals:
^!assess an annual enrollment fee of $250 for all Priority 7 and 8
veterans;
^!increase pharmaceutical copayments from $8 to $15 (for each 30-day
prescription) for all enrolled veterans in Priority Groups 7 and 8; and
^!bill veterans receiving treatment for nonservice-connected
conditions for the entire copayment amount.
A detailed description of these legislative proposals follows.
Assess an Annual Enrollment Fee
The Administration proposes to establish an annual enrollment fee of $250
beginning October 1, 2006, for all Priority 7 and 8 veterans. Priority Group 7
veterans have incomes above $26,902 for a single veteran (see Appendix 3 for VA
income thresholds) and below the Department of Housing and Urban Development⁶⁴
(HUD) geographic means test level. Priority Group 8 veterans are those with
incomes above $26,902 for a single veteran and above the HUD geographic means
test amount. The HUD geographic means test is established at a local level such as
county or city. For instance, a veteran with no dependents residing in Grant County,
Arkansas, whose annual income in 2005 was $27,145, will be placed in Priority
Group 7, because the veteran’s annual income is above VA’s means test threshold
of $26,902 and below the FY2005 geographic means test threshold of $27,150 for
that county. Similarly, a veteran with no dependents living in Orange County,
California, whose annual income in 2005 was $42,250, will be placed in Priority

⁶² U.S. Department of Veterans Affairs, FY2007 Congressional Budget Submissions,
Medical Programs, vol. 1 of 4, pp. 3-9.
⁶³ In FY2003, VA proposed a $1,500 deductible for all Priority Group 7 veterans for
nonservice-connected disabilities. For proposals included in FY2004, FY2005, and
FY2006, see CRS Report RL32548, Veterans’ Medical Care Appropriations and Funding
Process, by Sidath Viranga Panangala, and CRS Report RL32975, Veterans’ Medical Care:
FY2006 Appropriations, by Sidath Viranga Panangala.
⁶⁴ Geographic means test figures are available at [http://www.va.gov/healtheligibility/DOCS/
GMTIncomeThresholds2005.pdf]. Also note that when determining if the veterans should
be placed in Priority Group 7 or Priority Group 8 based on income, the veteran’s income
from the previous year is compared with the appropriate geographic means test threshold
for the previous fiscal year. For example, annual income for 2005 is compared to the
geographic means test threshold for FY2005.

Group 7, because the veteran’s annual income is above VA’s means test threshold
of $26,902 and below the FY2005 geographic means test threshold for of $43,000
for Orange County. It should be noted that there is wide variation in annual incomes
of veterans placed in Priority Groups 7 and 8.
In its FY2004, FY2005, and FY2006 budget submissions, the President
requested authority from Congress to levy an annual enrollment fee on all Priority 7
and Priority 8 veterans. However, Congress did not approve imposing such a fee.
In its FY2007 Views and Estimates letter to the House Budget Committee, the
House Veterans Affairs Committee did not support levying an enrollment fee. The
letter states that “while the Committee understands the policy arguments providing
the basis for the Administration’s proposal for Priority 7 and 8 veterans to assume a
greater share of the costs for their health care in the VA system, the majority of the
Committee does not support these legislative proposals.”⁶⁵
The Chairman of the Senate Veterans’ Affairs Committee, in his FY2007 views
and estimates letter to the Senate Budget Committee, did agree that “during a time
of high deficits and restrained spending in every account unrelated to national
security, the President’s proposal to shift a small portion of the cost of funding record
growth in VA’s budget on to lower priority veterans is reasonable. I have no
objection to the proposals he has chosen, but I am not necessarily wed to them.”⁶⁶
P.L. 110-5 does not include any language assessing an enrollment fee.
Increase Pharmacy Copayments
The Administration proposes increasing the pharmacy copayments from $8 to
$15 for all enrolled Priority Group 7 and Priority Group 8 veterans, whenever they
obtain medication from VA on an outpatient basis for the treatment of a nonservice-
connected condition. The Administration put forward this proposal in its FY2004,
FY2005, and FY2006 budget requests as well, but did not receive any approval from
Congress. At present, veterans in Priority Groups 2-8 pay $8 for a 30-day supply of
medication, including over-the-counter medications.⁶⁷

⁶⁵ House Committee on Veterans Affairs, Views and Estimates of the Committee on
Veterans’ Affairs regarding the Administration’s FY2007 budget request for veterans’
programs, Feb 23, 2006. Available at [http://veterans.house.gov/legislation/109/budrep07.
pdf].
⁶⁶ Senate Committee on Veterans’ Affairs, Views and Estimates of the Committee on
Veterans’ Affairs regarding the Administration’s FY2007 budget request for veterans’
programs, March 2, 2006. Available at [http://veterans.senate.gov/index.cfm?FuseAction=
Newsroom.PressReleases&month=3&ye ar=2006&id=484].
⁶⁷ The following veterans are exempt from paying copayments: Veterans receiving a
pension for a nonservice-connected disability from VA; veterans with incomes below
$10,579 (if no dependents), and $13,855 (with one dependent plus $1,806 for each
additional dependent ); veterans receiving care for conditions such as Agent Orange,
Military Sexual Trauma, and combat veterans within two years of discharge; and veterans
who are former POWs.

The Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508) authorized VA
to charge most veterans $2 for each 30-day supply of medication furnished on an
outpatient basis for treatment of a nonservice-connected condition. The Veterans
Millennium Health Care and Benefits Act of 1999 (P.L. 106-117) authorized VA to
increase the medication copayment amount and establish annual caps on the total
amount paid, to eliminate financial hardship for veterans enrolled in Priority Groups
2-6.⁶⁸ When veterans reach the annual cap, they continue to receive medications
without making a copayment.
On November 15, 2005, VHA issued a directive stating that effective January
1, 2006, the medication co-payment will be increased to $8 for each 30-day supply
of medication furnished on an outpatient basis for treatment of a nonservice-
connected condition, and that the annual cap for veterans enrolled in Priority Groups
2-6 will be $960.⁶⁹ There is no cap for veterans in Priority Groups 7 and 8 (see
Appendixes 2 and 3). P.L. 110-5 does not include any bill language that would give
VA the authority to increase copayments.
Impact of the Annual Enrollment Fee
and Increase in Pharmacy Copayments
VA estimates that about 200,000 veterans in Priority Groups 7 and 8 would be
affected by the $250 annual enrollment fee and the increase in prescription drug
copayments. According to VA’s estimates, the enrollment fees and increased
pharmacy copayments would generate $514 million in revenue and save VA an
additional $251 million due to reduced demand, resulting in a decrease of $765
million in appropriations for FY2007.
Together two recent studies suggest that veterans may be impacted by increased
pharmaceutical copayments. In one published study it was indicated that patients
with access to the VA’s prescription drug coverage had lower rates of cost-related
adherence problems than patients with Medicare or no insurance coverage. This
study also found that VA patients were also less likely than some non-VA patients
to report other detrimental consequences of medication cost pressures, such as
foregoing necessities to pay for their medication or worrying frequently about how
they could pay for their treatments. ⁷⁰

⁶⁸ This law allowed VA to increase the copayment amount for each 30-day or less supply
of medication provided on an outpatient basis (other than medication administered during
treatment) for treatment of a nonservice-connected condition. Accordingly, VA increased
the copayment amount from $2 to $7. The medication copayment charge for each
subsequent calendar year after 2002 is established by using the prescription drug component
of the Medical Consumer Price Index. When an increase occurs, the copayment will
increase in whole dollar amounts. The amount of the annual cap increases $120 for each $1
increase in the copayment amount.
⁶⁹ VHA Directive 2005-052, Implementation of Medication Copayment Changes, Nov. 15,

2005.

⁷⁰ John D. Piette, and Michele Heisler, Problems Due to Medication Costs Among VA and
Non-VA Patients With Chronic Illnesses, American Journal of Managed Care, vol. 10, no.
(continued...)

In another study that examined the impact of the increased copayment on
veterans’ use of antidepressant medication, VA researchers found that medication
cost could be a prohibitive factor for veterans with copayment obligations. The
researchers further state that veterans who had to pay copayments appear to fill the
antidepressant prescriptions less frequently than veterans who are exempt from the
copayment requirement.⁷¹
Third-Party Offset of First-Party Debt
The Administration is requesting that Congress amend VA’s statutory authority
by eliminating the practice of reducing first-party copayment debts with third-party
health insurance collections. VA asserts that this proposal would align VA with the
DOD health care system for military retirees and with the private sector.
With the enactment of P.L. 99-272 in 1986, Congress authorized VA to collect
payments from third-party health insurers for the treatment of veterans with
nonservice-connected disabilities, and it also established copayments from veterans
for this care.⁷² Under current law, VA is authorized to collect from third-party health
insurers to offset the cost of medical care furnished to a veteran for the treatment of
a nonservice-connected condition.⁷³ If VA treats an insured veteran for a
nonservice-connected disability, and the veteran is also determined by VA to have
copayment responsibilities, VA will apply the payment collected from the insurer to
satisfy the veteran’s copayment debt related to that treatment.
Under the current copayment billing process, in cases where the cost of a
veteran’s medical care for a nonservice-connected condition appears to qualify for
billing under reimbursable insurance and copayment, VA medical facilities sends the
bill to the insurance provider. The veteran’s copayment obligation is placed on hold
for 90 days pending payment from the third-party payer. If no payment is received
from the third-party payer within 90 days, then a bill is sent to the veteran for the full
copayment amount. However, when insurers reimburse VA after the 90-day period,
VA must absorb the cost of additional staff time for processing a refund if the veteran
has already paid the bill. On all insurance policies, the entire amount of the claim
payment is applied first to the copayment. The veteran is then billed only for the
portion of the copayment not covered by the insurance reimbursement and the portion
of the copayment for services not covered by the veteran’s insurance plan (see Figure

1).

⁷⁰ (...continued)

11, (November 2004), p.867.

⁷¹ M. Zimmer, L. Petersen, M. Kubeler, and J. Cully, Effects of Increased Copayment on
Antidepressant Prescription Fill Rates in VA Patients, poster presented at the 24th Annual
VA Health Services Research and Development (HSR&D) Meeting, Washington, DC, Feb.

15-17, 2006 (this study has not been published yet).

⁷² Consolidated Omnibus Budget Reconciliation Act of 1985, 100 Stat. 372, 373, 383.
⁷³ 38 U.S.C. §1729; 38 U.S.C. §1710; and 38 U.S.C. 1722A.

CRS-31
Figure 1. Present Copayment Process

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According to two reports released by the Government Accountability Office
(GAO), the practice of satisfying copayment debt with recoveries made from
third-party insurers has resulted in reduced overall cost recoveries and increased
administrative expenses.⁷⁴ Under the Administration’s proposal, VA would bill and
collect copayments from patients regardless of any amounts recovered from the
veterans private health insurance plan. As the patient’s bill is generated, VA would
bill the insurer for the full cost of VA care provided to a veteran for a nonservice-
connected condition (see Figure 2).
Figure 2. Copayment Process Under New Proposal

^Source:^C^h^{art prepared by}^C^R^S.
According to VA’s estimates, if this proposal is enacted it would contribute
approximately $31.0 million toward VA’s collections. This issue was not addressed
in the 109^th Congress.
⁷⁴ U.S. Government Accountability Office (GAO), VA Medical Care: Increasing Recoveries
From Private Health Insurers Will Prove Difficult, GAO/HEHS-98-4, Oct. 17 1997; and
VA Health Care: Guidance Needed for Determining the Cost to Collect from Veterans and
Private Health Insurers, GAO-04-938, July 2004.

Appendix 1. Priority Groups
and Their Eligibility Criteria
^P^r^io^rit^y^G^r^o^{up 1}
^Veter^aⁿ^s^w^ith^ser^v^ice-^coⁿⁿ^ected^dⁱ^sab^{ilities r}^a^ted⁵⁰^%^o^r^m^o^r^e^dⁱ^sab^lin^g
^P^r^io^rit^y^G^r^o^{up 2}
^Veter^aⁿ^s^w^ith^ser^v^ice-^coⁿⁿ^ected^dⁱ^sab^{ilities r}^a^ted³⁰^%^o^r⁴⁰^%^dⁱ^sab^lin^g
^P^r^io^rit^y^G^r^o^{up 3}
^Veteran^s^w^h^{o are f}^o^rm^{er P}^O^W^s
^Veteran^s^aw^{arded th}^{e P}^u^{rple Heart}
^Veter^aⁿ^s^w^h^o^s^{e d}ⁱ^sch^a^r^g^{e w}^a^{s f}^o^r^{a d}ⁱ^sab^ility^th^{at w}^a^{s in}^cu^r^r^ed^o^r^ag^g^r^av^atedⁱⁿ^th^{e lin}^{e o}^f^d^u^ty
^Veter^aⁿ^s^w^ith^ser^v^ice-^coⁿⁿ^ected^dⁱ^sab^{ilities r}^a^ted¹⁰^%^o^r²⁰^%^dⁱ^sab^lin^g
^Veteran^s^aw^{arded s}^p^{ecial elig}^ibility^clas^sⁱ^fⁱ^cation^uⁿ^d^{er T}^{itle 38, U.S. C}^{., Section}^1151,
^“^b^en^ef^{its f}^o^rⁱⁿ^dⁱ^vⁱ^d^u^{als d}ⁱ^sab^l^ed^b^y^tr^eatm^eⁿ^t^o^r^v^o^catioⁿ^a^{l r}^e^h^a^b^ilitatioⁿ^”
^P^r^io^rit^y^G^r^o^{up 4}
^Veteran^s^w^h^{o are receiv}ⁱⁿ^g^{aid an}^{d atten}^d^an^{ce or h}^o^u^s^ebouⁿ^d^ben^e^f^its
^V^e^t^e^ran^s^w^h^{o h}^a^v^e^been^det^e^rmⁱⁿ^{ed by}^V^A^t^o^{be cat}^as^t^r^ophⁱ^cal^l^y^di^s^a^bl^ed
^P^r^io^rit^y^G^r^o^{up 5}
^Non^s^ervⁱ^ce-^conⁿ^{ected dis}^a^{bled v}^e^teran^s^an^{d n}^oⁿ^c^om^pen^s^{able s}^e^rv^ice-^conⁿ^{ected v}^e^teran^s^rated
⁰^%^dⁱ^sa^b^l^e^d^w^h^o^s^e^a^nnua^lⁱⁿ^c^o^m^e^aⁿ^d^ne^t^w^o^r^t^{h a}^r^e^b^e^l^o^w^t^h^e^e^s^t^a^b^lⁱ^s^he^d^V^A^M^e^aⁿ^{s T}^e^st
^t^h^res^h^ol^ds
^Veteran^s^receivⁱⁿ^g^VA^pen^s^ion^ben^e^f^its
^Veter^aⁿ^s^elig^ib^{le f}^o^r^Medⁱ^caid^b^eⁿ^e^f^its
^P^r^io^rit^y^G^r^o^{up 6}
^C^o^m^p^en^s^a^{ble 0% s}^e^rv^ice-^coⁿⁿ^{ected dis}^a^{bled v}^e^teran^s
^Worl^{d Wa}^{r I v}^e^t^e^raⁿ^s
^Mexⁱ^can^{Border War v}^e^t^e^ran^s
^Veteran^s^s^o^lely^s^eekⁱⁿ^g^{care f}^o^{r dis}^o^rders^as^s^o^{ciated w}^ith
^{— ex}^p^o^s^u^r^{e to}^h^e^r^b^icid^{es w}^h^{ile ser}^vⁱⁿ^gⁱⁿ^Vietn^a^m^;^o^r
^—ⁱ^oⁿⁱ^zⁱ^{ng r}^a^dⁱ^a^tⁱ^o^{n d}^u^rⁱ^{ng a}^t^m^o^sp^he^rⁱ^c^t^e^stⁱ^{ng o}^r^d^u^rⁱ^{ng t}^h^e^o^c^c^u^p^a^tⁱ^o^{n o}^f^Hⁱ^r^o^shi^m^a^aⁿ^d
^N^a^ga^sa^ki^;^o^r
^{— f}^o^{r dis}^o^rders^as^s^o^{ciated w}^ith^s^e^rv^{ice in}^th^{e Gu}^lf^W^a^{r; or}
^{— f}^o^r^an^y^illn^{ess asso}^ciated^w^ith^ser^v^{ice in}^co^m^b^{at in}^{a w}^a^r^af^ter^th^{e Gu}^lf^W^a^r^o^r^d^u^rⁱⁿ^g^a
^{period of}^h^o^s^tility^af^{ter Nov}^e^m^b^{er 11, 1998.}
^P^r^io^rit^y^G^r^o^{up 7}
^Veteran^s^w^h^{o ag}^{ree to pay}^s^p^ecifⁱ^{ed copay}^m^en^ts^w^h^{o h}^a^v^eⁱⁿ^com^e^an^{d/or n}^e^{t w}^o^rth^above^th^e
^VA^Mean^s^T^e^s^t^th^res^h^{old an}^{d in}^com^e^bel^o^w^th^{e HUD g}^e^o^g^rap^h^{ic in}^d^e^x
^—^S^u^bpri^o^ri^t^y^a:^N^oⁿ^c^om^pen^s^abl^e^0%^s^e^rvⁱ^ce-^conⁿ^{ected dis}^a^{bled v}^e^teran^s^w^h^{o w}^e^{re en}^rolled
ⁱⁿ^th^{e VA}^Health^C^a^{re Sy}^s^t^em^on^{a s}^p^ecifⁱ^{ed date an}^{d w}^h^{o h}^a^v^e^rem^aⁱⁿ^{ed en}^{rolled s}ⁱⁿ^{ce th}^at
^dat^e
^{— Su}^bpriority^{c: Non}^s^ervⁱ^ce-^coⁿⁿ^{ected dis}^a^{bled v}^e^teran^s^w^h^{o w}^e^{re en}^{rolled in}^th^{e VA}^Health
^C^a^{re Sy}^s^t^em^on^{a s}^p^ecifⁱ^{ed date an}^{d w}^h^{o h}^a^v^e^rem^aⁱⁿ^{ed en}^{rolled s}ⁱⁿ^{ce th}^{at date.}
^—^S^u^bpri^o^ri^t^y^e:^N^oⁿ^c^om^pen^s^abl^e^0%^s^e^rvⁱ^ce-^conⁿ^{ected dis}^a^{bled v}^e^teran^sⁿ^o^{t in}^clu^d^{ed in}
^S^u^bpri^o^ri^t^y^{a abov}^e
^{— Su}^bpriority^g^:^Non^s^ervⁱ^ce-^co^nne^c^t^e^d^dⁱ^sa^b^l^e^d^ve^t^e^r^a^{ns no}^tⁱⁿ^clu^d^edⁱⁿ^Su^b^p^r^io^r^ity^{c ab}^o^v^e
^P^r^io^rit^y^G^r^o^{up 8}
^Veteran^s^w^h^{o ag}^{ree to pay}^s^p^ecifⁱ^{ed copay}^m^en^ts^w^ithⁱⁿ^com^e^an^{d/or n}^e^{t w}^o^rth^above^th^{e VA}
^Mean^{s T}^e^{st th}^resh^o^l^d^an^d^th^{e HUD g}^e^o^g^rap^h^{ic in}^d^e^x
^—^S^u^bpri^o^ri^t^y^a:^N^oⁿ^c^om^pen^s^abl^e^0%^s^e^rvⁱ^ce-^conⁿ^{ected dis}^a^{bled v}^e^teran^s^en^{rolled as}^of
^Jan^u^a^ry^{16, 2003 an}^{d w}^h^{o h}^a^v^e^rem^aⁱⁿ^{ed en}^rol^l^e^{d s}ⁱⁿ^{ce t}^h^at^dat^e
^—^S^u^bpri^o^ri^t^y^c:^N^oⁿ^s^ervⁱ^ce-^conⁿ^ect^{ed di}^s^a^bl^{ed v}^e^t^e^ran^s^en^rol^l^e^{d as}^of^Jan^u^a^ry^{16, 2003 an}^d
^w^h^{o h}^a^v^e^rem^aⁱⁿ^{ed en}^{rolled s}ⁱⁿ^{ce th}^{at date}
^—^S^u^bpri^o^ri^t^y^e:^N^oⁿ^c^om^pen^s^abl^e^0%^s^e^rv^ice-^conⁿ^{ected dis}^a^{bled v}^e^teran^s^applyⁱⁿ^g^f^o^r
^en^rol^l^m^en^t^af^t^e^{r Jan}^u^a^ry^{16, 2003}
^Source:^Departm^eⁿ^t^of^Veteran^s^A^f^f^a^irs^.
^No^te:^Ser^v^ice-^coⁿⁿ^ected^dⁱ^sab^ility^m^ean^{s w}^ith^r^e^sp^{ect to}^dⁱ^sab^ility^,^th^at^su^ch^dⁱ^sab^ility^w^a^{s in}^cu^r^r^e^d
^o^r^ag^g^r^av^atedⁱⁿ^th^{e lin}^{e o}^f^d^u^tyⁱⁿ^th^{e activ}^{e m}^ilitar^y^{, n}^a^v^a^{l o}^r^air^ser^v^ice

Appendix 2. Veterans’ Payments
for Health Care Services by Priority Group
^C^o^p^aym^en^ts^Insur^a^nc^e^Hu^m^aⁿⁱ^tari^an
^B^illing^E^m^ergency^B^illing^Inpa^tⁱ^ent^Ou^t-^Me^dⁱ^c^a^tⁱ^oⁿ^a
^pa^tⁱ^ent
^G^e^ograp^hⁱ^c^VA
^M^e^aⁿ^{s Te}^st^Me^aⁿ^s
^C^o^p^aym^en^t^Te^st
^P^r^io^r^ity^{Yes, b}^u^{t o}ⁿ^ly^if
^G^r^ou^{p 1}^{care w}^a^s^f^o^r
^No^No^No^No^no^nse^r^vi^c^e^-^No
^conⁿ^ected
^coⁿ^d^itioⁿ
^P^r^io^r^ity^Y^e^s^,^bu^t^on^l^y^f^o^r
^G^r^ou^ps^b^c^v^e^ter^aⁿ^s^w^ith^less
^{2, 3,}⁴^th^an⁵⁰^%^ser^v^ice
^conⁿ^ected
^dⁱ^sab^ility^an^d^{Yes, b}^u^{t o}ⁿ^ly^if
^m^e^dⁱ^catioⁿ^{is f}^o^r^{care w}^a^s^f^o^r
^No^No^No^no^nse^r^vi^c^e^-^no^nse^r^vi^c^e^-^No
^conⁿ^ected^conⁿ^ected
^coⁿ^d^itioⁿ^.^coⁿ^d^itioⁿ
^Fo^r^m^er^P^O^W^s
^{are ex}^em^{pt f}^r^om
^{all m}^e^dⁱ^catioⁿ^s
^copay^m^en^t^s
^P^r^io^r^ity^{Yes, b}^u^{t o}ⁿ^ly^if
^G^r^ou^{p 5}^{care w}^a^s^f^o^r
^No^No^No^Yes^no^nse^r^vi^c^e^-^No
^conⁿ^ected
^coⁿ^d^itioⁿ
^P^r^io^r^ity^{Yes, b}^u^{t o}ⁿ^ly^if
^G^r^ou^{p 6}^{care w}^a^s^f^o^r
^{(WWI, a}ⁿ^d^No^No^No^Yes^no^nse^r^vi^c^e^-^No
^{0% s}^e^rv^ice-^conⁿ^ected
^conⁿ^ected^coⁿ^d^itioⁿ
^com^p^en^s^a^ble)
^P^r^io^r^ity
^G^r^ou^{p 6}^{Yes, b}^u^{t o}ⁿ^ly^if
^(Veteran^s^d^d^d^{care w}^a^s^f^o^r
^receivⁱⁿ^g^No^No^No^No^no^nse^r^vi^c^e^-^No
^{care f}^o^r^conⁿ^ected
^ex^pos^u^r^{e or}^d^coⁿ^d^itioⁿ
^ex^perien^ce)
^P^r^io^r^ity^{Yes, b}^u^{t o}ⁿ^ly^if^{Yes, b}^u^{t o}ⁿ^ly^if
^G^r^ou^{p 7a}^{care w}^a^s^f^o^r^{care w}^a^s^f^o^r
^Yes^N^o^Y^es^no^nse^r^vi^c^e^-^no^nse^r^vi^c^e^-^No

^conⁿ^ected^conⁿ^ected
^coⁿ^d^itioⁿ^coⁿ^d^itioⁿ

^C^o^p^aym^en^ts^Hu^m^aⁿⁱ^tari^an
^Insur^a^nc^e^E^m^ergency
^B^illing^B^illing^Inpa^tⁱ^ent^Ou^t-^Me^dⁱ^c^a^tⁱ^oⁿ^a
^pa^tⁱ^ent
^G^e^ograp^hⁱ^c^VA
^M^e^aⁿ^{s Te}^st^Me^aⁿ^s
^C^o^p^aym^en^t^Te^st
^P^r^io^r^ity^{Yes, b}^u^{t o}ⁿ^ly^if^{Yes, b}^u^{t o}ⁿ^ly^if
^G^r^ou^{p 7c}^{care w}^a^s^f^o^r^{care w}^a^s^f^o^r
^Yes^N^o^Y^es^no^nse^r^vi^c^e^-^no^nse^r^vi^c^e^-^No
^conⁿ^ected^conⁿ^ected
^coⁿ^d^itioⁿ^coⁿ^d^itioⁿ
^P^r^io^r^ity^{Yes, b}^u^{t o}ⁿ^ly^if^{Yes, b}^u^{t o}ⁿ^ly^if
^G^r^ou^{p 8a}^{care w}^a^s^f^o^r^{care w}^a^s^f^o^r
^No^Yes^Y^es^no^nse^r^vi^c^e^-^no^nse^r^vi^c^e^- No
^conⁿ^ected^conⁿ^ected
^coⁿ^d^itioⁿ^coⁿ^d^itioⁿ
^P^r^io^r^ity^{Yes, b}^u^{t o}ⁿ^ly^if^{Yes, b}^u^{t o}ⁿ^ly^if
^G^r^ou^{p 8c}^{care w}^a^s^f^o^r^{care w}^a^s^f^o^r
^No^Yes^Y^es^no^nse^r^vi^c^e^-^no^nse^r^vi^c^e^-^No
^conⁿ^ected^conⁿ^ected
^coⁿ^d^itioⁿ^coⁿ^d^itioⁿ
^Source:^T^a^bl^{e prepared by}^C^R^S^bas^e^{d on}ⁱⁿ^f^o^rm^atⁱ^oⁿ^f^r^om^t^h^{e D}^e^part^m^eⁿ^t^of^V^e^t^e^ran^s^A^f^f^aⁱ^r^s^.
^No^tes:^Pri^o^ri^t^y^G^r^ou^{p 7a an}^{d 7c v}^e^t^e^ran^s^h^a^v^eⁱⁿ^com^e^abov^{e t}^h^{e V}^A^Mean^s^T^e^s^t^t^h^res^h^ol^{d bu}^t^bel^o^w^t^h^e
^G^e^og^raphⁱ^c^Mean^s^T^e^st^t^h^r^e^sho^l^{d an}^{d are res}^pon^sⁱ^bl^{e f}^o^{r 20%}^of^t^h^{e i}ⁿ^patⁱ^eⁿ^t^copay^m^en^t^an^{d 20%}^of^t^h^e
ⁱⁿ^patⁱ^eⁿ^t^{per di}^em^copay^m^en^t^.^T^h^{e g}^e^og^raphⁱ^c^m^ean^s^{test co}^p^a^y^m^en^{t r}^e^d^u^ctioⁿ^d^o^e^sⁿ^o^t^ap^p^l^y^to^o^u^tp^atien^t
^an^d^m^e^dⁱ^catioⁿ^co^p^a^y^m^en^{t an}^d^v^e^ter^aⁿ^s^w^{ill b}^e^assessed^th^{e f}^u^{ll ap}^p^licab^{le co}^p^a^y^m^en^t^ch^ar^g^e^{s. No}^{te th}^at
^redu^cedⁱⁿ^patⁱ^eⁿ^t^copay^m^en^t^s^can^appl^y^t^o^v^e^t^e^ran^sⁱⁿ^Pri^o^ri^t^y^G^r^ou^ps^{4 an}^{d 6 bas}^e^{d u}^pon^t^h^eⁱⁿ^com^e^of^t^h^e
^ve^t^e^r^a^n.
^Pri^o^ri^t^y^G^r^ou^p^8a^an^d^{8c v}^e^t^e^ran^s^h^a^v^eⁱⁿ^com^e^abov^{e t}^h^{e V}^A^Mean^s^T^e^s^t^t^h^res^h^ol^d^an^d^abov^e^t^h^e^G^e^og^raphⁱ^c
^Mean^{s T}^e^{st th}^r^e^sh^o^l^d^.^Veter^aⁿ^s^en^r^o^lledⁱⁿ^th^{is p}^r^io^r^ity^g^r^o^u^p^ar^e^r^e^sp^oⁿ^sib^l^e^f^o^r^th^{e f}^u^{ll in}^p^a^tien^t^co^p^a^y^m^en^t
^aⁿ^d^t^h^eⁱⁿ^p^a^tⁱ^eⁿ^t^p^e^r^dⁱ^e^m^c^o^p^a^y^m^eⁿ^t^f^o^r^c^a^r^e^o^f^t^h^eⁱ^rⁿ^oⁿ^s^e^r^vⁱ^c^e^-^c^oⁿⁿ^ected^coⁿ^d^itioⁿ^s^.^V^e^t^e^r^aⁿ^sⁱⁿ^t^hⁱ^s
^priority^g^r^ou^{p are als}^o^res^pon^sⁱ^{ble f}^o^{r ou}^tpatien^t^an^{d m}^e^dⁱ^c^a^tⁱ^oⁿ^c^opay^m^en^ts^f^o^{r care of}^th^{eir n}^oⁿ^s^ervⁱ^ce-
^coⁿⁿ^ected^coⁿ^d^itioⁿ^s^.
^a^.^Aⁿ^a^nnua^l^m^e^dⁱ^c^a^tⁱ^o^{n c}^o^p^a^y^m^eⁿ^t^c^a^p^ha^{s b}^e^eⁿ^e^s^t^a^b^lⁱ^s^he^d^fo^r^v^e^t^e^r^aⁿ^s^eⁿ^r^o^l^l^e^dⁱⁿ^p^rⁱ^o^rⁱ^t^y^gr^o^u^p^s²^-⁶^.
^M^e^dⁱ^c^a^tio^{n w}^{ill c}^o^ntinue^to^b^e^dⁱ^sp^eⁿ^se^d^a^f^te^r^c^o^p^a^y^m^eⁿ^t^c^a^p^{is m}^e^t.^Aⁿ^a^nnua^{l c}^o^p^a^y^m^eⁿ^{t c}^a^p^ha^{s no}^t
^b^een^estab^lish^e^d^f^o^r^v^e^ter^aⁿ^s^en^r^o^lledⁱⁿ^P^r^io^r^ity^Gr^o^u^p^s⁷^o^r⁸^.
^{b. Veteran}^sⁱⁿ^{receipt of}^{a P}^u^{rple Heart are in}^P^r^ior^ity^Grou^{p 3.}^T^h^is^ch^an^g^e^occu^{rred w}^ith^th^{e en}^actm^eⁿ^t^of
^th^{e Veteran}^s^Millenⁿⁱ^u^m^Health^C^a^{re an}^{d B}^eⁿ^e^f^its^A^c^{t (P}^.L^{. 106-}^{117) on}^Nov^.^{30, 1999.}
^c.^P^r^iority^Grou^{p 7 v}^e^teran^s^w^h^{o are determ}ⁱⁿ^{ed to be}^catas^troph^ically^dis^a^{bled an}^{d w}^h^{o are placed in}^P^r^iority
^Gr^o^u^p⁴^f^o^r^tr^eatm^eⁿ^t^ar^{e still su}^b^j^{ect to}^th^{e co}^p^a^y^m^en^{t r}^e^q^u^ir^em^en^{ts as a P}^r^io^r^ity^Gr^o^u^p⁷^v^e^ter^aⁿ^.
^d^.^P^rⁱ^o^rⁱ^t^y^G^r^o^u^p⁶^—^ve^t^e^r^a^{ns c}^l^aⁱ^mⁱ^{ng e}^x^p^o^s^ur^e^t^o^A^g^eⁿ^t^O^r^a^nge^;^ve^t^e^r^a^{ns c}^l^aⁱ^mi^{ng e}^x^p^o^s^ur^e^t^o
^en^vⁱ^r^oⁿ^m^en^{tal co}ⁿ^t^amⁱⁿ^an^{ts; v}^e^ter^aⁿ^s^ex^p^o^s^ed^to^I^oⁿⁱ^zin^g^Radⁱ^atioⁿ^;^co^m^b^{at v}^e^ter^aⁿ^s^w^ithⁱⁿ^tw^o^y^ear^s
^of^dis^c^h^a^rg^e^fr^o^m^th^{e m}^ilitary^{; v}^e^teran^s^w^h^{o participated in}^P^r^oj^{ect 112/SHA}^D^{; v}^e^teran^s^claimⁱⁿ^g
^m^ilitary^s^e^x^u^a^l^t^r^a^u^m^a^{; an}^d^v^e^teran^s^w^ith^h^ead^an^dⁿ^eck^can^{cer w}^h^o^receiv^e^dⁿ^a^so^p^h^aryⁿ^g^{eal rad}ⁱ^u^m
^tr^eatm^eⁿ^t^w^h^{ile in}^th^{e m}^ilitar^y^ar^{e su}^b^j^{ect to}^co^p^a^y^m^en^ts^w^h^en^th^eir^tr^eatm^eⁿ^t^o^r^m^e^dⁱ^atioⁿ^{is n}^o^{t r}^e^lated
^to^th^{eir ex}^p^o^s^u^r^{e o}^r^ex^p^e^rien^{ce. T}^h^{e in}^{itial reg}ⁱ^stry^ex^amⁱⁿ^atioⁿ^an^d^f^o^llo^w^-^u^p^vⁱ^{sits to}^receiv^e^resu^lts
^o^f^th^{e ex}^amⁱⁿ^atioⁿ^ar^{e n}^o^{t b}^illed^to^th^{e h}^ealthⁱⁿ^su^r^aⁿ^{ce car}^rⁱ^er^an^d^ar^{e n}^o^{t su}^b^j^ect^t^o^c^o^p^a^y^m^eⁿ^ts.
^Ho^w^e^v^e^r^,^car^{e p}^r^o^v^id^edⁿ^o^{t r}^e^lated^to^ex^p^o^s^u^r^e,ⁱ^f^{it is n}^oⁿ^s^er^vⁱ^ce-^coⁿⁿ^ected^w^{ill b}^e^b^illed^to^th^e
ⁱⁿ^s^u^ran^{ce carrier an}^{d copay}^m^en^ts^can^apply^.

Appendix 3. Financial Income Thresholds
for VA Health Care Benefits
Veterans with:Free VA Prescriptions andFree VA Inpatient and
Travel Benefits for veteransOutpatient care for veterans
with incomes of:with incomes of:
No dependents$10,579 or less$26,902 or less
1 dependent$13,855 or less$32,285 or less
2 dependents$15,661 or less$34,285 or less
3 dependents$17,467 or less$34,091 or less
4 dependents$19,273 or less$37,703 or less
For each additional$1,806$1,806
dependent, add:
^Source:^Departm^eⁿ^t^of^Veteran^s^A^f^f^a^irs^.