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The Veterans Health Administration operates a taxpayer-funded health system to provide our nation’s veterans physical and mental health services. The Veterans Choice Program is a fundamental change to that system as it allows veterans to get taxpayer-funded health care in the private sector. In this episode, learn the history of the Veterans Choice Program, discover the changes that Congress and the Trump Administration have made to the program this year, and get some insights into the future of the program. Please Support Congressional Dish Click here to contribute using credit card, debit card, PayPal, or Bitcoin Click here to support Congressional Dish for each episode via Patreon Mail Contributions to: 5753 Hwy 85 North #4576 Crestview, FL 32536 Thank you for supporting truly independent media! Bills H.R. 3230: Veterans Access, Choice, and Accountability Act of 2014 Allows veterans to get medical care outside the Veteran's Administration system; they can go to any health facility that serves Medicare patients, health centers, the Defense Department, and the Indian Health Service. Veterans are only given this option if they'd have to wait over 30 days for an appointment with the Veteran's Administration or if they live 40 miles or further from a Veteran's Administration clinic. If eligible, the veteran will receive a special identification card. How it works: Veteran notifies VA, VA puts Veteran on an electronic waiting list or authorizes their request, VA works out a payment agreement with the health care provider, VA reimburses health care provider but no more than they would for Medicare services. If the veteran gets treated for a problem that was not related to their military service, their health insurance plan will be responsible for payment and the health care provider will be responsible for going after the insurance company for the money. Veterans can not be charged higher co-payments for care at private facilities than they would have been charged at the Veteran's Administration. This program will end in three years. Orders a private-sector review, establishes a fifteen person commission, and creates a technology task force to review VA practices. Wait times for care can not be considered when determining performance bonuses for top officials at the Veteran's administration and performance goals that disincentivize using private health providers for veteran care will be eliminated. Wait times for health care at the VA, VA facility quality measures, and VA doctor credentials will be published online. The VA will add 1,500 graduate medical education residency positions for five years to address staffing shortages. Extends the program that reimburses medical students for education costs and increases the amounts they'll receive for working for the VA. Expands coverage for mental health care related to sexual assaults, which will include veterans on inactive duty. This will be effective August 7, 2015. Extends a pilot program for assisted living care for veterans with traumatic brain injuries until October 2017. Disqualifies public colleges that charge veterans more than State residents from being qualified schools for veteran education benefits. Makes it easier to fire or transfer senior executives at the Department of Veteran's Affairs. Appropriates $15 billion to implement these changes. S. 544: A bill to amend the Veterans Access, Choice, and Accountability Act of 2014 to modify the termination date for the Veterans Choice Program, and for other purposes Eliminates the end date for the Choice Program, which was supposed to expire when the money ran out of after three years. Changes the payment system from one where the veteran's health insurance plan must pay for non-service related treatments, with doctors getting reimbursed directly from the insurance companies to a new system where the Veterans Department will pay and be reimbursed by the insurance companies. Establishes legal permission for the government to share medical records of veterans with "private entities" S. 1094: Department of Veterans Affairs Accountability and Whistleblower Protection Act Title I: Office of Accountability and Whistleblower Protection Creates a new office, headed by a Presidential appointee, in charge of VA employee accountability and processing of whistleblower complaints. This office will have the power to impose disciplinary actions. The identities of whistleblowers must be protected unless the whistleblower consents to disclosure. The Department of Veterans' Affairs must train employees on the whistleblowing process. Title II: Accountability of senior executives, supervisors, and other employees Gives the Secretary of Veterans Affairs the power to suspend, demote, or fire senior executives as long as the executive receives 15 days advance notice and all evidence against him or her, legal representation, and the ability to argue their case in an official process created by the Secretary that takes no more than 21 days. Gives the Secretary of Veterans Affairs the power to remove, demote, or suspend Veterans Administration employees for performance or misconduct. Demoted employees will have their pay decreased. The demotion or removal process must be completed within 15 business days and the employee has 7 business days to respond. These new procedures "shall supercede any collective bargaining agreement to the extend that such agreement is inconsistent with such procedures.". There is an appeal process but it must be started within 10 business days after the date of the removal, demotion, or suspension. The appeal must be decided within 180 days. The Secretary can not remove, demote, or suspend a whistleblower without approval of a Special Counsel or unless the Assistant Secretary refuses to act on the whistleblower account or unless a final decision has been made regarding the whistleblower's disclosure. Gives the Secretary of Veterans Affairs the power to order the repayment of bonuses or relocation expenses paid to VA employees if the Secretary determines that the employee engaged in misconduct or poor performance before the bonus was awarded. There is an appeal process via the Office of Personnel Management. S.114: VA Choice and Quality Employment Act of 2017 Title I: Appropriation for Veterans Choice Program Deposits $2.1 billion in the Veterans Choice Fund, which will not expire. Title II: Personnel matters Doubles the number of positions that can be labeled has having staffing shortages and gives the Secretary of Veterans Affairs the ability to directly hire people to those positions. "Executive Management Fellowship Program" A program to give VA employees 1 year of training in the private sector and to give private sector employees 1 year of training in the VA. Between 18 & 30 people from the private sector and the same amount from the VA will be selected in August of each year to participate. To accept the fellowship, the person must agree to work as a full-time employee of the VA for two years and is prohibited from working the corresponding private sector industry for two years after completing the program. Performance Evaluations Political appointees of the VA will have annual performance plans similar to the ones administered to career employees. Promotions Gives the Secretary of Veterans Affairs the ability to easily promote existing employees or people who voluntarily left within 2 years, one employment status at a time. Employment Opportunity Database Creates a website that will list vacant positions at the Department of Veterans Affairs. Title III: Major medical facility leases We're paying to replace VA facilities in 28 locations. H.R. 3236: Surface transportation and veterans health care choice improvement act of 2015 Recommended Congressional Dish Episodes CD080: The July Laws Additional Reading Article: VA secretary David Shulkin: I don't consider this Texas church gunman as a veteran by Melissa Quinn, Washington Examiner, November 6, 2017. Article: Funding for a new veterans choice program remains the big, unresolved question for VA by Nicole Ogrysko, Federal News Radio, October 24, 2017. Article: AFGE ramping up anti-privatization campaign, as VA readies new Choice draft by Nicole Ogrysko, Federal News Radio, October 17, 2017. Article: Focus on VA hiring, not Veterans Choice, AFGE says by Nicole Ogrysko, Federal News Radio, October 6, 2017. Article: Trump signs bill to speed up VA disability appeals process by Richard Sisk, Military.com, August 23, 2017. Article: Last-minute Veterans Choice funding bill filled with key VA hiring flexibilities by Nicole Ogrysko, Federal News Radio, July 28, 2017. Article: Fix for Veterans Choice shortfalls fails in the House with little funds left by Nicole Ogrysko, Federal News Radio, July 24, 2017. Radio Transcript: VA pane report to suggest more private care choices for veterans, Morning Edition with David Greene, NPR, July 6, 2017. Article: Shulkin offers first glimpse at a new VA Choice plan by Nicole Ogrysko, Federal News Radio, June 8, 2017. Article: Trump extends program allowing some veterans to use local doctors, hospitals by Lisa Lambert, Reuters, April 19, 2017. News Report: Barry Coates dead; veteran was at heart of VA scandal by Scott bronstein, Nelli Black, Drew Griffin and Curt Devine, CNN Investigations, January 27, 2016. Article: How the VA developed its culture of coverups by David Farenthold, The Washington Post, May 30, 2014. Article: Obama accepts resignation of VA secretary Shinseki by Greg Jaffe and Ed O'Keefe, The Washington Post, May 30, 2014. References Budget Plan: 2018 FY Homeland Security Budget-in-Brief GAO Report: Veterans health care: Preliminary observations on veterans access to Choice Program care House Amendment Act: S.114 of the 115th Congress Interactive Timeline: Veterans Choice Program Slideshow: Billing Procedures, VA Veterans Choice Program and Patient-Centered Community Care Strawman Document: Proposed Strawman Assessment Sound Clip Sources Hearing: Bills related to veterans choice; House Committee on Veterans Affairs; October 24, 2017. 02:42 Rep. Phil Roe (TN): To that end, I believe it’s important to state yet again that this effort is in no way, shape, or form intended to create a pipeline to privatize the V.A. healthcare system. I want to be completely clear about that. Everyone who participated in the roundtable earlier this month and contributed to the development of this legislation should be completely clear on that. Everyone listening today should also be completely clear on that. Supplemental care sourced from within the community has been a part of the V.A. healthcare system since the 1940s and services to expand V.A.’s reach and strengthen and support the care that V.A. provides. Rhetoric aside, strengthening and support V.A. is what this consideration is about—this conversation is about. It should go without saying that V.A. cannot be everywhere providing everything to every veteran. Expecting V.A. to perform like that sets up the V.A. to fail. That’s why my draft bill preserves V.A.’s role as the central coordinator of care for enrolled veteran patients. In addition to consolidating V.A.’s menu of existing community-care programs into one cohesive program, my bill would create a seamless, integrated V.A. system of care that incorporates V.A. providers and V.A. medical facilities where and when they are available to provide care a veteran seeks and a network of V.A. providers in the community who can step up when needed. Under my draft bill, the V.A. generally retains the right of first refusal, meaning that if V.A. medical facilities can reasonably provide a needed service to a veteran, that care will be provided in that facility. But when the V.A. can’t do that, my bill would ensure that veterans aren’t left out to dry. Press Conference: Trump signs veterans health care bill; C-Span; August 12, 2017. 0:30 David Shulkin: The V.A. Choice and Quality Employment Act has three important components. The first is that this helps us expand our ability to hire medical-center directors and other senior executives to serve in the V.A. This is about leadership, and it’s really important that we get the right leaders helping us to do the job for veterans. The second is that this bill authorizes 28 new facility leases that will be in different parts of the country that provide our veterans with updated facilities, something that, again, we are committed to providing our veterans with world-class care. And third, and most important, this bill allows us to continue to be able to provide care in the community for our veterans to make sure that they’re getting high-quality care and not waiting for care. Already this year, in the first six months of this year, we have authorized over 15 million appointments for veterans in the community. That’s 4 million appointments more than what was experienced at this time last year. So we’re making a lot of progress in expanding Choice. Hearing: Fiscal year 2018 Veterans Affairs budget; Senate Veterans Affairs Committee; June 14, 2017. 12:29 David Shulkin: Two years ago—I’m sure you’re going to remember in July of 2015 we had too little money in our community-care accounts within the V.A., which we solved with your help by accessing unused funds in the Choice account. So we transferred money from Choice into community care. We now have too little money in the Choice account, which we’re working to solve, again working with you, with legislative authority, to replenish funds into the Choice account. So this is the situation that we’ve described before where for a single purpose of providing care in the community we have two checking accounts, and I will tell you, I wish it were easier than it is. We have to figure out how to balance these two checking accounts at all times. And obviously it’s not a science, it’s an art; and we’re having difficulty with that once again, and that’s why we need to work with you to solve it. The Veterans CARE program that we outlined for you last week will solve this recurring problem permanently by modernizing and consolidating all of the community-care accounts, including Choice. Hearing: Examining the Veterans Choice program and the future of care in the community; Committee on Veterans Affairs; June 7, 2017. Witness: David Shulkin - Veterans Affairs Secretary 12:55 David Shulkin: Just in the first quarter of fiscal year 2017, we saw 35% more authorizations for Choice than we did in the first quarter of 2016. So far in fiscal year 2017, we have approximately 18,000 more Choice-authorized appointments per day than we did in fiscal year 2016. But we still have a lot more work to do. That’s why we’re seeking support for the Veterans Coordinated Access and Rewarding Experiences program, the Veterans CARE program. Let me just go over that again because you need a good acronym in Washington. The Veterans Coordinated Access—that’s the C and the A—Rewarding Experiences program—the CARE program. I’ve testified before and I’ll report again today that our overarching concern remains veterans’ access to high-quality care when and where they need it. That’s regardless of whether the care is in the V.A. or in the community. Our goal is to modernize and consolidate community care. We owe veterans a program that’s easy to understand, simple to administer, and that meets their needs. That’s the CARE program, and now it’s time to get this right for veterans. So we need your help. 14:23 David Shulkin: Here’s how veterans could experience V.A. healthcare, with your help. The veteran talks with their V.A. provider. That’s a conversation over the phone, virtually, or in person. The outcome is a clinical assessment. The clinical assessment may indicate that the V.A. specialist is the best for the veteran, or it may indicate that community care is best to meet the veteran’s needs. If community care is the answer, then the veteran chooses a provider from a high-performing network. That’s the veteran choosing a provider from the high-performing network. Assessment tools help veterans evaluate community providers and make the best choices themselves. We may help veterans schedule appointments in the community, or in some circumstances, veterans can schedule the appointments themselves. We make sure community providers have all the information they need to treat the veteran. We get the veteran’s record back. We pay the veteran’s bill. This is all about individualized, convenient, well-coordinated, modern healthcare and a positive experience for the veteran. If the V.A. doesn’t offer the necessary service, then the veteran goes to the community. If the V.A. can’t provide timely services, the veteran goes to the community. If there are unusual burdens in receiving care, the veteran goes to the community. If a service at a V.A. clinic isn’t meeting quality metrics for specific services, veterans needing that service go to the community while we work to support that clinic to improve its performance. And veterans who need care right away will have access to a network of walk-in clinics. 19:20 David Shulkin: We want to make sure that if the service is low performing, if it’s below what the veteran could get in the community, that they have the opportunity—they don’t have to leave the V.A. They’re given a choice so that they are able to get care in the community or stay at the V.A., because, you know, if a veteran has a good experience and they have trust in their provider, they’re going to want to stay where they are. But that is the purpose. The whole idea here is to improve the V.A., not to get more care in the community. And the very best way that I know how to improve health care is to give the patient, in this case the veteran, choice and to make those choices transparent to let everybody see, because then if you’re not performing as high-quality service, you’re going to want to provide a higher-quality service, because you want to be proud of what you’re working on. And I want the V.A. to be improving over time, and I think this will help us do that. 24:42 Sen. Patty Murray (WA): Secretary Shulkin, in your draft of Veteran CARE plan, you outline a number of pilot projects that sound to me uncomfortably like a proposals that are made by the so-called straw-man document. It’s from the commission on CARE and by the extreme, and to me unacceptable, plan put forward by the Concerned Veterans of America. And those include creating a V.A. insurance plan and separating it from CARE delivery, dividing the governance of a V.A. insurance plan and the health system, and alternative CARE model that sends veterans directly to the private sector. The goal of those types of initiatives, as originally stated in the straw-man document, is “as V.A. facilities become obsolete and are underused, they would be closed when availability and accessibility of care in the community is assured.” Those policies serve not only to dismantle the V.A. and start the health system down to a road to privatization, I just want you to know I will not support them, and I will fight them with everything I have. So, I want to ask you, why are you agreeing to pursue those unacceptable policy options? David Shulkin: Well, first of all, I appreciate you sharing your thoughts and as clearly as you have. I share your goal. I am not in support of a program that would lead towards privatization or shutting down the V.A. programs. What I am in support of is using pilots to test various ideas about governance, about the way that the system should be, organized in the way that we should evolve, because I don’t know without testing different ideas whether they’re good ideas or not. 35:28 Sen. Jerry Moran (KS): You said something that caught my attention: this will not be an unfettered Choice program— David Shulkin: Yep. Moran: —and I wanted to give you the opportunity to explain to me and to the committee what that means. Shulkin: Yeah. There are some that have suggested that the very best approach is just give veterans a card, a voucher, and let them go wherever they want to go. And I think that there are some significant concerns about that, and you’re going to see this proposal is not that. This proposal is to develop a system that is designed for veterans, that coordinates their care, and gives them the options when it’s best for in the V.A. and when it’s best in the community. Unfettered Choice is appealing to some, but it would lead to, essentially, I believe, the elimination of the V.A. system all together. It would put veterans with very difficult problems out into the community, with nobody to stand up for them and to coordinate their care. And the expense of that system is estimated to be at the minimum $20 billion more a year than we currently spend on V.A. health care. So for all those reasons, I am not recommending that we have unfettered access. At some point in the future, if you design a system right, giving veterans complete choice, I believe in principle, is the direction we should be headed in, but not in 2017. 39:05 Sen. Jon Tester (MT): I want to go back to the Choice program, community care versus V.A. care, and tell you where we’re probably all on the same page around this rostrum, but as we’re all on the same page and the budget comes out and gives a 33% increase for private-sector care versus a 1.2% increase for care provided directly by the V.A., it doesn’t take very many budgets like that and pretty soon you’re not going to have any vets going to the V.A., because all the money’s going to community care, and they will follow the money. I promise you they will follow the money. I think that—I don’t want to put words in the VSO’s mouth. He’ll have a chance here in a bit—but I think most of the veterans I talk to say, build the V.A.’s capacity. In Montana we don’t have enough docs, we don’t have enough nurses, we don’t have enough of anything. And quite frankly, that takes away from the experience and the quality of care, and so by putting 1.2% increase for care provided directly by the V.A. and 33% for private-sector care, we’re privatizing the V.A. with that budget. David Shulkin: Yeah. I told you I wasn’t going to say that you were right again, but there’s a lot that you said that I think that we both agree with. And the goal is not to privatize the V.A. What we’re asking for in this is something we don’t have. We need additional flexibility between the money that goes into the community and the money that can be spent in the V.A. Right now we’re restricted to a 1% ability to transfer money between. We are seeking that you give us more latitude there for exactly the reason you’re talking about, Senator. We need our medical centers and our VISNs to be able to say that they need to build capacity in the V.A. where it’s not available. The reason why we’re letting people go in the community now is because the V.A. doesn’t have it. We have to get them that care. Tester: I got it, but if we don’t make the investments so they can get that health care, they’ll never get that health care there. Shulkin: I— Tester: Okay. Hearing: Veterans affairs oversight; House Appropriations Subcommittee on Military Construction and Veterans Affairs; May 3, 2017. Witness: Dr. David Shulkin - Veterans Affairs Secretary   16:13 David Shulkin: More veterans are opting for Choice than ever before, five times more in fiscal year 2016 than fiscal year 2015, and Choice authorizations are still rising. We’ve issued 35% more authorizations in the first quarter of fiscal year 2017 than in the same quarter of 2016. 18:00 David Shulkin: My five priorities as secretary are to provide greater Choice for veterans, to modernize our systems, to focus resources more efficiently, to improve the timeliness of our services, and suicide prevention among veterans. We are already taking bold steps towards achieving each of these priorities. Two weeks ago the president signed a reauthorization of the Veterans Choice Act, ensuring veterans can continue to get care from community providers. Just last week the president ordered the establishment of a V.A. accountability office, and we’re moving as quickly as we can within the limits of the law to remove bad employees. V.A. has removed medical center directors in San Juan; Shreveport, Louisiana; and recently we’ve relieved the medical center director right here in Washington, D.C. and removed three other senior executive service leaders due to misconduct or poor performance. We simply cannot tolerate employees who act counter to our values or put veterans at risk. Since January of this year, we’ve authorized an estimated 6.1 million community-care appointments, 1.8 million more than last year, a 42% increase. We now have same-day services for primary care and mental health at all of our medical centers across the country. Veterans can now access wait-time data for their local V.A. facilities by using an easy online tool where they can see those wait times. No other healthcare system in the country has this type of transparency. V.A. is setting new trends with public-private partnerships. Last month we announced a public-private partnership of an ambulatory care development center, with a donation of roughly $30 million in Omaha, Nebraska, thanks to Mr. Fortenberry’s help there. Veterans now have, or will have, a facility that’s being built with far fewer taxpayer dollars than in the past. Finally, V.A. is saving lives. My top clinical priority is suicide prevention. On average 20 veterans a day die by suicide. A few months ago the Veterans Crisis Line had a rollover rate to a backup center of more than 30%. Today that rate is less than 1%. In support of our efforts to reduce suicides, we’ve launched new predictive modeling tools that allow V.A. to provide proactive care and support for veterans who are at the highest risk of suicide. And I’ve recently announced the V.A. will be providing emergency mental health care to former service members with other-than-honorable discharges at all of our medical facilities. We know that these veterans are at greater risk for suicide, and we’re now caring for them as well as we can. 23:19 David Shulkin: The VISTA system is something that, frankly, V.A. should be proud of. It invented it, it was the leader in electronic health records, but, frankly, that’s old history, and we have to look at keeping up and to modernize the system. I’ve said two things, Mr. Chairman, in the past. I’ve said, number one is, V.A. has to get out of the business of becoming a software developer. This is not our core competency. I don’t see why it serves veterans. I think we’re doing this in a way that, frankly, we can’t keep up with. So, I’ve said that we’re going to get out of that business. We’re either going to find a commercial company that will take over and support VISTA or we’re going to go to an off-the-shelf product. And that’s really what we’re evaluating now. We have an RFI out for, essentially, the commercialization of VISTA that we wouldn’t longer be doing internally. 27:33 David Shulkin: We also, as we get more veterans out into the community, out into the private-sector hospitals, we have to be very concerned about interoperability with those partners as well. 38:24 Rep. Debbie Wasserman Schultz (FL): Given that your goal is one program, are you analyzing which program ultimately would be phased out, because we have a tendency to instead of phasing out programs because they have people with a vested interest in them, simply— David Shulkin: Yes. Schultz: —going along to get along rather than rocking the boat, and so if we’re adding $3 1/2 billion to the Choice program and it had 950 million left, there have been challenges with the Choice program and confusion, and there are still challenges with the community care program, in what direction is the V.A. thinking of going when we—and what is the timeline for ultimately— Shulkin: Right. Schultz: — phasing out one program and only having one? Shulkin: Right. Well, with almost certainty I can tell you there will not be three programs, because the current Choice program will run out of money— Schultz: Right. Shulkin: —by the end of this calendar year. So, that program is going to go away and should be through December of this year. What we are hoping to do is to work with you so that we can introduce a community-care funding program—the chairman referred to it as Choice 2.0—which is a program that makes sense for veterans, which is a single program that operates under one set of rules for how veterans get care in the community. And that new legislation, which we believe needs to be introduced by late summer or early fall in order to make the timeline, would end up with a single program. Schultz: So, you eventually envision phasing out community care with the advent— Shulkin: Yes. Schultz: —of Choice 2.0. 1:33:11 Rep. Charles Dent (PA): In the one-page FY ’18 skinny budget we received in March, there’s a V.A. request for $2.9 billion in new mandatory funding, presumably to complete the FY ’18 funding for the Choice program after the mandatory $10 billion of the program is completely exhausted in January, I guess. Does this indicate the administration’s intent to fund the successor Choice program out of mandatory funding? David Shulkin: Yes. 1:45:37 Rep. Tom Rooney (FL): And many of the providers that are technically participating in the Choice program are refusing to accept Choice patients because they know that they’ll have to wait a long time to get paid themselves. So some providers that don’t accept the Choice patients will only do so if the veteran agrees to pay for the services up front. And that leaves the veterans in that same bind they were in before Choice, which was either face the excessive wait times at the V.A. facility with no option to obtain immediate care elsewhere without paying out of pocket first. And obviously that’s not the point, or that’s not what we’re looking to do. So, I mean, you as a doctor can probably appreciate, you know, with these people that want to take the Choice program to help veterans but they know that it’s going to take forever to get reimbursed be like, hey, will you pay me first, and then, you know, we’ll deal with getting reimbursed later. I don’t know if that’s the rationale, but it sounds like that. The OIG has criticized the V.A.’s monitoring oversight for these contracts and reported that these contracts still don’t have performance measures to ensure the contractors pay their providers in a timely manner, and the OIG made this recommendation January 30 of this year. So, as you work to expand the Choice program, how are you implementing the OIG’s recommendation specifically with regard to timely reimbursements? David Shulkin: Well, there is no doubt that this is an area of significant risk for us, that monitoring and making sure that the providers are paid is critical because of the issues that you’re saying: the veterans are being put in the middle. I would not recommend the veterans put out money for this. That is, as you said, is not the point of it. What we have done is we have done multiple contract modifications. We’ve actually advanced money to the third-party administrators. I’ve suspended the requirement that providers have to provide their medical records to us in order to get paid. We are improving our payment cycles through the Choice program, but it’s not perfect by any means. We have to get better at our auditing of these processes, and those were the IG recommendations, and we are working on doing that. So this is a significant area of risk for us. In the reauthorization, or the redesign, of the Choice program, what we’re calling Choice 2.0, we want to eliminate the complexity of this process. The private sector does not have to do the type of adjudication of claims that we do. They do auto adjudification. They do electronic claims payments. We just are not able to, under this legislation, do all the things that, frankly, we know are best practices. That’s what we want to get right in Choice 2.0. 1:56:40 David Shulkin: Our care needs to be focused on those that are eligible for care, particularly when we have access issues. So, I’d be glad to talk to you more about that. I do want to just mention two things. First of all, our policy is for emergency mental health care for other-than-honorable, not dishonorably, discharged; dishonorably discharged who were not— Rep. Scott Taylor (VA): Sorry if I misspoke. David Shulkin: Yeah, yeah, okay. Rep. Scott Taylor (VA): But I do applaud you for those efforts. David Shulkin: I just wanted to clarify that. Rep. Scott Taylor (VA): I know that there are a lot of wounds that are mental, of course, and— David Shulkin: Absolutely. Rep. Scott Taylor (VA): —I get that. I applaud you for those efforts. Hearing: Veterans affairs choice program; House Committee for Veterans Affairs; March 7, 2017. Witness: David Shulkin - Veterans Affairs Secretary Michael Missal - Veterans Affairs Inspector General Randall Williamson - GAO Health Care Team Director 20:35 David Shulkin: However, we do need your help. The Veterans Choice Program is going to expire in less than six months, but our veterans’ community-care needs will not expire. This looming expiration is a cause for concern among veterans, providers, and V.A. staff, and we need help in eliminating the expiration date of the Choice program on August 7, 2017 so that we can fully utilize the remaining Choice funds. Without congressional action, veterans will have to face longer wait times for care. Second, we need your help in modernizing and consolidating community care. Veterans deserve better, and now is the time to get this right. We believe that a modernized and revised community-care program must have seven key elements. First, maintain a high-performing integrated network that includes V.A., federal partners, academic affiliates, and community providers. Second, increase Choice for all veterans, starting with those with cer—(audio glitch). Third, ensure that enrolled veterans get the care they need closer to their homes, when appropriate. Fourth, optimize coordination of V.A. healthcare benefits with the health insurance that an enrolled veteran already has. Fifth, maintain affordability of healthcare options for the lowest-income enrolled veterans. Sixth, assist in coordination of care for veterans served by multiple providers. And last, apply industry standards for performance quality, patient satisfaction, payment models, and healthcare outcomes. 23:24 Michael Missal: In October 2015, V.A. provided Congress with a plan to consolidate all V.A.’s purchased care programs into V.A.’s community-care program. Under consolidation, V.A. continues to have problems determining eligibility for care, authorizing care, making accurate payments, providing timely payments to providers, and ensuring the necessary coordination of care provided to veterans outside the V.A. healthcare system. 30:30 Randall Williamson: Finally, substantial resources will likely be needed to carry out Choice 2.0. Resources needed to fund IT upgrades and new applications for Choice are largely unknown but could be costly. Proposed changes in Choice eligibility requirements, such as eliminating the 30-day, 40-mile requirement for eligibility, could potentially greatly increase the number of veterans seeking care through community providers and drive costs up considerably. Also, if medical-center staff begin scheduling all appointments under Choice 2.0, as V.A. currently envisions, hiring more V.A. staff will likely be costly and tediously slow. Already, since Choice was established, V.A. medical-center staff devoted to helping veterans access non-V.A. care have increased threefold or more at many locations. 1:04:00 David Shulkin: We are looking primarily at technological solutions, and we are looking at the use of telehealth, which we are doing across V.A. on a scale that no other health system in America is even approaching—2.1 million visits; over 700,000 veterans getting access through telehealth services—and so we are looking at this very seriously about dramatically expanding its use to be able to support where we don’t have health professionals. 1:06:20 David Shulkin: Remember, we have four missions. The clinical care is what we always talk about, but we also have an education mission. We train more American healthcare professionals than any other organization in the country, we have research that’s dedicated solely to the improvement of the wellbeing of veterans, and we also serve a national emergency-preparedness role. So, all four of these missions are very important to us. I would just say two things. One thing is we know from the Choice program that only 5,000 of the several—of more now than a million veterans who’ve used the program chose only to use the Choice program. So they’re saying exactly what your constituent told you, which is the V.A. is essential and important to them. But we are not going to allow the V.A. programs to be diluted, and one of the reasons why that’s so important is that we need to modernize the V.A. system. Our lack of capitalizing the V.A. system in terms of the buildings, the equipment, the IT systems, could make it a noncompetitive system. But we’re going to make sure that the facilities that are open are the best for veterans, and veterans are going to want to continue to get their care there. The community-care program is a way to make sure that we supplement the V.A. in an integrated fashion. 1:10:00 Rep. Mike Bost (IL): The department itself has estimated that it can treat and cure most of the remaining 124,000 diagnosed cases of hepatitis C within the next three years. Is it the V.A.’s commitment that that timeline will be held to and that these will be treated regardless of the level of their liver disease or where they might be at? David Shulkin: Yes. Thanks to the support from Congress, we were provided the resources to meet that timeline. I actually think we’re going to beat it, but with one caveat. What we’ve learned is that our initial outreaches, we were getting thousands and thousands of veterans to come in and to get treatment. We have a treatment, of course, as you know, that now cures more than 95% of hepatitis C. So it’s tremendous medical advance. The doctor to my right is one of those doctors. He’s an I.D. doctor who does this in his clinical work at the V.A. Unknown Speaker: Thank you. Shulkin: What we’re finding now is, and if Dr. Yehia wants to comment on this, we’re finding that we’re now seeing less and less veterans coming in to get cured. There is a substantial number of veterans for a number of reasons, either psychological reasons or social reasons, who are not taking advantage of this care. And so this is now becoming a research question for us. How do we have to begin to approach people that are saying, I have a disease that may end up killing me, but I’m not interested in the treatment. And so I think we’re going to beat your three-year timeline, but there's still going to be a subset of veterans that don’t want to come in and get care. 1:12:50 Rep. Mike Bost (IL): What would happen if we didn’t make that extension go past the August 7, and what would be the final cutoff if we don’t get it past? David Shulkin: Well, first of all, if we don’t do this extension, this is going to be a disaster for American veterans. We’re going to see the same situation that we saw in April 2014, that Senator Kaine started out tonight with, that we saw in Phoenix. And so here’s the timeline. We do need to do this now. As I think Chairman Roe referred to, already today veterans are not able to use the Choice program, because the law states that we have to obligate the funds now for when the care is going to be delivered. So a pregnant veteran who comes to us and says, I want to get care using the Choice program, they no longer can, because nine months from now is past August 7. But this is now beginning to happen with care that is multiple months in length, like oncology care and chemotherapy and other types of therapies. We have a chart that shows that when you start getting towards the end of April to May, this is where you’re going to start seeing a large number of veterans not being able to get access to care, because episodes of care that we’re used to, like hip replacements and other things, are generally three to four months. So we think the time is now that we need to act. Bost: Okay, so, but what we’re doing is not any intention to privatize or anything like that. This is just making sure that those people who are on the Choice program, that we are moving forward to make sure that those services are provided. Shulkin: Not only that, but this is not going to cost any additional money. We are just seeking the authority to spend the money that you’ve already given us past August 7 of this year. 1:17:15 David Shulkin: We are going to go and we are going to start providing mental health care for those that are other-than-honorably discharged for urgent mental health. And we want to work with Representative Coffman on his bill on this, and we want to do as much as we can. But I don’t think it can wait, and so we’re going to start doing that now. I believe that’s in the secretary’s authority to be able to do that.   Hearing: A call for system-wide change; House Committee for Veterans Affairs; October 7, 2015. Witnesses: Robert McDonald: then Secretary of U.S. Department of Veterans Affairs David Shulkin: Under Secretary for Health, U.S. Department of Veterans Affairs Brett Giroir: Senior Fellow at the Texas medical Center Health Policy Institute 13:37 Robert McDonald: As you know, we have five strategies: first is improving the veteran experience, second is improving the employee experience, third is achieving support-service excellence, fourth is establishing a culture of continuous improvement, and fifth is enhancing strategic partnerships, and we would be happy to drill down on those during the question period. 14:17 Robert McDonald: In the past year, we’ve moved out aggressively in response to the access crisis, meeting increasing demand and expanding capacity on four fronts: more staffing, more space, more productivity, and more V.A. care in the community. During that period of time, we’ve completed 7 million more appointments for veterans of completed care: 4 1/2 million in the community, 2 1/2 million within V.A. We’ve added more space, we’ve added more providers, we’ve added more extra hours, all in effect to get more veterans in. But because of that, and because we’ve done a better job of caring for veterans, we have more veterans desiring care. So even those 97% of appointments are now completed within 30 days of the needed or preferred date, the number not completed in 30 days has grown from 300,000 to nearly 500,000. 16:15 Robert McDonald: We simply can’t make many necessary changes because of statutory limitations. We need to consolidate our various care in the community programs. We need a freer hand to hire, assign, and reward the executives we task to act as change agents. We need a freer hand in disposing of outdated, unused, or little-used facilities. We need a freer hand in the management of existing facilities so facilities’ managers can adjust their use of resources to the changing needs of veterans. 25:47 Brett Giroir: As background, in 2014 9.1 million of 21.6 million U.S. veterans were enrolled in the VHA. Of these, 5.8 million were actual patients, and on average these patients relied on the VHA for much less than 50% of their healthcare services. These demographic data combined with access challenges suggest reconsideration of whether the VHA should aim to be the comprehensive provider for all veterans’ health needs or whether the VHA should evolve into more focus centers providing specialized care while utilizing non-VHA providers for the majority of veterans’ healthcare needs. Either paradigm could be highly beneficial to veterans as long as the demand and resources are prospectively aligned and there is a consolidation of current programs to simplify access to non-VHA providers. 30:05 David Shulkin: The V.A. approach is to find the very best care that serves the veterans, and I think that we’ve shown that in response to our access crisis that we have encouraged the use of community care to address our access issues. I think the difference here between—maybe what I would expand on what Dr. Giroir said is that the care that V.A. provides is very, very different than the care that the private sector provides. The V.A. provides a much more comprehensive approach than just dealing with physical-illness issues. It provides psychological and social aspects of care that actually meet the needs of what veterans require. And that's why I think that we really do need to do what Dr. Giroir said, which is to see what VHA provides best for our veterans and what care can be provided by the private sector, and it’s that hybrid-type system that's going to meet our veteran's needs. 34:39 Former Rep. Corrine Brown (FL): I think the elephant in the room is that there are people out there that would actually want to just completely close the V.A. and privatize the entire V.A. system, which is totally unacceptable and it is absolutely not what the veterans want. And as you begin, I want you to discuss flexibility, but I want you to let people know how many people we actually serve every day throughout this country. Robert McDonald: Thank you, Ranking Member Brown. As I was going through my confirmation process, I often got the question from senators why—you know, from some senators, small group—why don't we get rid of the V.A. and just give out vouchers? So I studied that—as a business person, I wanted to know—and what I discovered was V.A.'s not only essential for veterans, it's essential for American medicine and it's essential for the American people. Three-legged stool: research. We spent $1.8 billion a year on research. We invented the nicotine patch. We were the ones who discovered the aspirin was important for heart disease—take an aspirin every day. First liver transplant. First implantable pacemaker. Last year two V.A. doctors invented the shingles vaccine. I could go on. That research is important for the American people, and I didn't even mention posttraumatic stress or traumatic brain injury or prosthetics, things that we're known for. Second, training. We trained 70% of the doctors in this country. Who's going to train those doctors without the V.A.? We have also the largest employer of nurses and the largest trainer of nurses. Third leg is clinical work. Our veterans get the best clinical care because our doctors are doctors that not only do the clinical care but also do research and teach in the best medical schools of our country. So I think the American people benefit from the V.A., and it would be a big mistake to even think about privatizing it. 1:06:06 Rep. Phil Roe (TN): Let me go right to what I wanted to talk about which is my own veteran’s officer at home—person that does my work at home—and basically what she’s saying is, how do you get an appointment through the Veterans Choice Program? She said she had been trying to put together a summary, and what's happening is there’re two ways you get in there: a veteran can either be eligible by a 30-day wait list or more than 40 miles. And the most of problems she saw were the 30-day list. And this is what happens. Below is the information’s been given to me by the roll out of the program. In my experience, there appears to be a breakdown somewhere in this process but have been unable to get clear answers on how to fix it. The V.A. blames TriWest; TriWest blames the V.A. Eligibility is determined by the V.A. primary-care doctor if the appointment’s passed 30 days. The non-V.A. care staff then uploads this list of eligible veterans to the V.A. central office here in Washington nightly, and the veteran’s told to wait five to seven days and then call TriWest. The central office then sends the information to TriWest, can take three to seven days. If the consults don't get added, medical documentation didn't get uploaded, authorizations gets canceled, then the veteran’s on a merry-go-round. Look, when they came to my office to get an appointment, I said, you need an appointment with Dr. Smith. They went out front and made the appointment. That's what should happen. It ain’t that complicated. And all of this in between—and I could go on and on—TriWest has a different view of it, and I want to submit this to the record because it really gets to the bottom of what’s actually going— Unknown Chairman: Not objection. Roe: Thank you, Mr. Chairman. The non-V.A. care staff were given no training on this, and they basically were left just to wing it, how to make these appointments. That was one of the things was brought up in the report. Our local V.A. care—non-V.A. care staff—increased from 5 to 15 but still are struggling to make all these appointments, and there's talk of—now, listen to this right here—there is talk of calling each patient for every appointment to make sure they keep it. If the patient says, I don't want to go, they still are told to call them two times a month until the past the appointment time. That's a complete waste of time. And the outpatient clinics also ought to be able to add patients to the electronic wait list instead of sending them over because appointment may come up; veterans get left out like that. And the TriWest portal is not very friendly. Private doctors did not like jumping through all the hoops of the Choice programmers saying they must give a percent of their fee to TriWest in order for TriWest to file the claim. So, we have a clinic that’s closing in our office, in our V.A., on a chiropractic and pulmonary clinic, because the doctors are just fed up with the way the system is. It’s so bureaucratic. So, anyway, I could go on and on. This is a very extensive—this is on-the-ground stuff that’s going on today at our medical center, and I bet you it's going on around the country. And I think these are things I will submit to you so you can get to work on this, and, again, appreciate the effort that you put into it. Mr. Chairman, there’s some valuable information here for the V.A. to use. And I yield back. Unknown Chairman: Thank you. Ms. Brown, you had a question. Corrine Brown: I do, because I want the secretary to answer that, because I think—I'm meeting with TriWest today—but the important thing is, you can't send a veteran to an agency or anywhere until they get prior approval from the V.A. because the most important thing is that that doctor get that reimbursement. So can you clear this up? I mean, no person in my office can send someone to a doctor; it must go through the system so that you get prior approval. And once that's done, how long—why does it take so long for that physician to get reimbursed, and can he answer that question? Robert McDonald: We have flowcharted that process, and let me let David talk about the improvements that we’ve made to that process. He'll answer questions one and three, and I'll take two on the facilities. David Shulkin: Okay. Dr. Roe, I think your old adage on the three A's is exactly right. And you have to remember we brought this Choice system up in 90 days. This is a national, very complex system, and what we've heard after bringing it up in 90 days is exactly the type of feedback that you've been hearing from your constituents. The secretary and I are both out in the field, we understand that these problems are happening, and so what we've begun to do is to redesign the system and to process-map it out. Both the secretary and I spoke to the CEO of TriWest last evening, and we are beginning now to make outbound calls to the veterans before they had to call in. We are beginning to actually embed TriWest staff in the V.A. so that they're working in teams, and we're beginning to start eliminating some of those steps. It is going to take a while. It is painful to watch this when you hear stories like what you're hearing, but we understand the problems there, we are working very hard, we think TriWest and Health Net are working to help us make the system better, and we're committed to doing this with urgency. 1:58:08 David Shulkin: We do have a crisis in leadership. We have too many open, vacant positions. We have too many people in acting positions and interim positions. You can't expect that you're going to have a transformation in a health system unless you have stable leadership in place. We need your help on this. We need your help to help create the V.A. to be an environment people want to come and serve and to be excited about, and we are asking for your help in Title 38 for the—Hybrid Title 38—to be able to help get the right type of compensation for leadership positions in V.A. That will help us a lot. Hearing: HR 1994 VA accountability act and HR 3236 surface transportation and veterans health care choice improvement act; House Rules Committee; July 28, 2015. 1:28:40 Bradley Byrne (AL): We don’t need to have a government-run healthcare system for our veterans. We need to transition out of it and give all of our veterans a card, just like an insurance card. Hearing: Veterans Affairs health care and budget; House Veterans Affairs Committee; July 22, 2015. 19:20 Robert McDonald Clinical output has increased 8% while budget has increased 2%, 35% more people (1.5 million beneficiaries) 20:22 Robert McDonald Increased Choice authorizations by 44% (900,000), 4% more appointments, percentages of wait times, wait times for types of care 21:50 Robert McDonald Care crisis of 2014 was caused by an imbalance in supply and demand, VA has been governing to fit a budget, not making budget fit the care, stats on new enrollees, 147% increase. enrolled veterans use VA for 34% of their care 56:00 Robert McDonald Here is a packet explaining the transformation of the VA, we have an advisory board full of CEOs, VA is going through the largest transformation in it’s history 1:09:40 Tim Heulskamp (KS) Concerned that money will be redirect away from Choice and he thinks “many employees” are not supportive of Choice, throws out bullshit numbers James Tuchschmidt corrects him and said they took money out to pay for the Hepatitis C drug 1:11:50 Tim Heulskamp wants to know why only two people have been fired for the wait time scandal. Robert McDonald many have retired, one indictment, 1,300 have been fired, new leadership, 7 million more appointments this year 1:27:30 Rep.Jackie Walorski (IN) Veterans died because of the Veteran’s Administration, I wanted to see people go to prison, list of things she’s pissed about, "Nothing is working” Robert McDonald 300,000 on wait list a year ago, low wait times, 1:35:00 McDonald we need a better system for anticipating what demand will be. 34% of eligible people are using VA system right now 1:35:20 Robert McDonald the crisis in 2014 was due to Vietnam vets, not Iraq & Afghanistan and we need to prepare as they age 1:36:00 Rep. Beto O’Rourke (D-TX) Why don’t we “refer out" the care that’s not directly related to military service? Robert McDonald people like to have all their doctors in one place, private sector doctors have to treat veterans differently - different questions to ask 1:41:00 Phil Roe (TN) Getting veterans outside care should be be through 1 program because it "aught to be easy" 1:43:50 Robert McDonald Moral is low because people don't want to be called out for not caring. They work hard every day 1:46:00 Kathleen Rice (D-NY) Why is there a budget shortfall? Robert McDonald 7 million more veterans needed care. "That's the reason" 1:56:00 Mark Takano (D-CA) New way of operating with non-VA providers - "Care in the Community" - not a conspiracy to "disappear the VA" - That's why we changed the name 2:05:00 Brad Wenstrup (R-OH) We should "outsource" collections” of payment from veterans with other insurance James Tuchschmidt We are looking at doing that. Wenstrup we should take bids. 2:18:00 Robert McDonald We are in favor of Choice program & we need to know about any employees who aren't because "that would be wrong" - Don't care where they get care as long as it's great care 2:20:00 Jerry McNerney (D-CA) Do you favor public private partnerships? Robert McDonald Yes, it's part of our transformation strategy. we have an “office of strategic parterships” 2:22:55 James Tuchschmidt We thought more people would use Choice, the goal was to not have vets waiting more than 30 days for care, we're asking to use that money to pay for care we purchased, we want a bill before you leave in August 2:28:00 James Tuchschmidt We’ve treated over 20,000 veterans with hepatitis C and veterans can use the Choice Program to get their treatment Rep.Ralph Abraham (LA) $500 million would be designated for Hepatitis C treatment Robert McDonald yes Hearing: Non-VA care: An integrated solution for veteran access; House Veterans Affairs Committee; June 18, 2014. 50:40 Rep. Beto O’Rourke (TX): Why have the V.A. at all? Why not privatize that care? The private sector could do it better. What’s missing in the V.A. is competition. Our veterans deserve the very best. Let’s not keep them in this institution that’s not working. From veterans, almost to a person, I hear, if I get in the V.A., I love the care. I’m treated very, very well. The outcomes are great. Don’t touch the V.A. So, what do you do best, and what does the V.A. do best? And five years down the road, after we get out of this current crisis, what will this look like? Unknown Speaker: That’s a great question. And it’s an honor to serve El Paso, where I spent part of my childhood when my dad was in the army as a doc. I will tell you that I hope it does not take five years. And I think everybody else would echo that statement. My belief is that the first phase is to make sure that the program that the V.A. has invested taxpayer money in—VAPC3—is put in place, is mature, that the processes on the V.A. side are mature, that our processes are mature, and that together we’re identifying where those pockets of veterans are that might not otherwise be able to get what they need in a complete capacity through the direct V.A. system because they lack the capacity to deliver on all the needs, and that the V.A. syst— Yes, sir. O’Rourke: Let me—I’m sorry to interrupt you, but I do want to understand what you think beyond taking care of capacity issues when the V.A.’s not able to see someone in a reasonable period of time. Are there specific kinds of care that you all would be better equipped to take care of? For example, I often think the V.A. is or should be better at handling PTSD or the aftereffects of traumatic brain injury because they see so many people like that as opposed to your typical health system or hospital. Maybe that’s a V.A. center of excellence. Is there something on the outside that we should just move all appointments or consults or procedures in a given area over to the private sector or let the private sector compete for? Unknown Speaker: Great question. My personal view is that it’s too early to ask that question—or to answer it, probably a better way to put it. It’s early to ask it, it’s right to ask it, you’re looking over the horizon line, but that we first need to get the pieces plugged together. And then there needs to be a make-by decision, category by category, and facility by facility, to look at what’s best done with taxpayer funds. Is it best to have the direct system provide care for four veterans in a particular category? Is that really necessary? Or should we buy that on the outside because it’s more efficient and more effective? 54:30 O’Rourke: You know, I’ve been on this committee for a year and a half now—it’s my first year in Congress—but I’d never been approached by a lobbyist on my way in to a meeting. Today I was, who represents providers in the private sector in El Paso and said, we have a hard time getting paid. It takes us a year sometimes. We want to see these veterans who are not able to be seen by the V.A., but it’s going to be really hard to do this if we don’t get paid. 1:34:00 Jolly: We need to do even more in providing a veteran choice. This, bottom line. The question, though, is how do we do that in a way that’s fiscally responsible? And so my question for you generally—and again, if you don’t have enough information, that’s certainly fine—in your role of supporting non-V.A. care, can you give either an assessment, if you have the technical information, or if it’s just in a working opinion on the cost effectiveness compared to traditional care, realizing that we have hard infrastructure costs within our V.A. system that aren’t reflective when you go to non-V.A. We can look at all sorts of data. I’m somebody who thinks typically data’s manipulated to get whatever outcome or position we want to finally be able to support. But can you give an opinion or assessment on the cost effectiveness of non-V.A. care versus within the V.A.? Ms. Doody: I can tell you from our experience with Project ARCH—and I wish I could give you specific numbers, sir—the company Altarum, who was contracted to collect this information—my understanding is they’re going to report back to you folks in 2015—are looking at the cost of care per veteran. From my understanding, it is less than if they would have gone to a V.A. facility for certain procedures. So, again, it’s anecdotal. It may be geographic; I can’t comment on the other regions or other states in our nation. But also just limiting the amount of mileage, the travelling that the veteran would have to do travelling to a V.A. hospital to receive care as a savings to the system also. 1:45:00 Titus: You confirm that you can’t talk about the cost effectiveness; there’s just not enough data there, yet you think it’s working pretty well, but we don’t have any hard figures, and we also know that CVO’s been kind of unable to assess the cost going forward, and nobody’s talking about how to pay for it. Yet, we are moving pell mell towards more veterans using this kind of non-V.A. care. And it’s not that I’m opposed to that, but I want us to do it right or else we’ll be having hearings five years from now, talking about all the problems with non-V.A. care. Now, to hear y’all talk about it, you’re not having any problems; things are working great under your networks. But we know that’s not true, either. I mean, there are problems out there, and we need to be serious about how to address them from the beginning. Now, as I understand it, y’all are just kind of like the middleman, like Sallie Mae and Medicare Advantage, where you have a contract to provide a service. That’s fine, but as you push more people out into the private sector, do you see your kind of business growing, or is your network going to cover more areas, or are more new networks and competition going to come on to be part of this new system that we’re going to be creating? Hearing: A continued assessment of delays in VA medical care and preventable veteran deaths; House Veterans Affairs Committee; April 9, 2014. 2:35 Rep. Jeff Miller (FL): On Monday, shortly before this public hearing, V.A. provided evidence that a total of 23 veterans have died due to delays and care at V.A. medical centers. Even with this latest disclosure as to where the deaths occurred, our committee still doesn’t know when they may have happened beyond the statement from V.A. that they most likely occurred between 2010 and 2012. These particular deaths resulted primarily from delays in gastrointestinal care. Information on other preventable deaths due to consult delays remains unavailable. Outside of the V.A.’s consult review, this committee has reviewed at least 18 preventable deaths that occurred because of mismanagement, improper infection-control practices, and a whole host—a whole host—of maladies that plagued the V.A. healthcare system all across this great nation. 8:53 Rep. Jeff Miller (FL): Mr. Coates waited for almost a year and would have waited even longer had he not personally persistently insisted on receiving the colonoscopy that he and his doctors knew that they needed. That same colonoscopy revealed that Mr. Coates had Stage IV colon cancer that had metastasized to his lungs and to his liver. 13:55 Barry Coates: My name is Barry Lynne Coates, and due to the inadequate and lack of followup care I received through the V.A. system, I stand here before you terminally ill today

  Kelly: Hello, this is Kelly Coughlin, CEO of BankBosun. Today we're going to launch a series of podcasts on community banks and the role they have played in our history and the future. Community banks are critical to a community's social and economic ecosystem. I use the term ecosystem carefully and intentionally to describe a system of inter-connected elements formed by the interaction of a community with their environment, and in terms of a social and economic community, in my mind community banks are critical members of that ecosystem. That brings me to this podcast series, in which we're going to focus on community banks. In this series we're talking to a number of executives who are leaders in community banking, and I'm asking them to make community banks more fun and interesting. I think I used the term “humanize” community banks. The community bank has been around a long time. From the Revolutionary War in Massachusetts to the Santa Fe Trail in Kansas; expansions and contractions, recessions and depressions, community banks have seen it all. With that in mind, I have one of those leaders, Sammie Dixon, CEO of Prime Meridian Bank in Tallahassee, Florida. He's not been around since the Revolutionary War, I don't think, but he has seen a lot. Sammie, are you on the line there? Sammie: I am. Kelly: Have you been around since the Revolutionary War, Sammie? Sammie: No, I barely made the '60s. Kelly: Barely made the '60s, excellent.  Sammie, I wanted to talk to you because when I look at your bio and some of the community involvement…I looked at all the involvement that you guys have…and I counted nearly 50 organizations, whether it be the Treehouse of Florida, Toys for Tots, Young Actors Theatre, Good News Outreach, Holy Comforter School, Lee's Place, Opening Nights. I'm not sure what Opening Nights is but..., you've got Florida Tax Watch. You've got over 50 organizations that you guys support one way or another. Talk to me about that. Sammie: Well, Kelly, there was a famous banker here in town by the name of Godfrey Smith, that always stated that a healthy community makes a healthy bank. And if you take care of the community, then the bank will be taken care of, if you're providing good service and charging good, honest rates, paying people good rates, and just making sure that the well-being of each individual client and the community as a whole is taken care of. Kelly: Kind of jumping forward here, what happens in a community when a community bank ends up getting acquired by a national bank or a large regional bank? Does that go away do you think? Sammie: It does to some extent. You've got someone outside of the individual community that really doesn't understand what's important, making decisions or providing budgets to the local leadership of that regional or money center bank. And they cannot react as quickly to the needs of the community. Whereas your community banks are able to really provide a nimble outlook. And by that I mean that if there's something happening that needs to be taken care of. The decision can be made within 5 minutes and let's get the problem squared away, from supporting one of the individual not-for-profits that are providing services to our community to the hospitals, the school system. It's having that ability to make a decision on the ground floor. Kelly: That's a segue into maybe the bigger picture here. That dynamic doesn't just relate to non-profit involvement, but it gets at the for-profit activities that a bank is involved in. When you're not part of that community, you can't respond as quickly, whether it be granting a commercial loan or that sort of thing. Talk about that a little bit. How is that impacted? Sammie: Every business is nothing more than a story with substance behind it. Having people and having the executive leadership having the opportunity to not only listen and hear the story, but live it. You get to see what they do each and every day and you're able to make decisions and make judgments in extending credit; what type of depository services they need; and there's nothing about a story that fits in a box. Every one of them is different. Every individual character, if you want to say, within the story is different. Having that ability to take the time, sit down, understand what the story is and where it's going, gives us an opportunity to make very quick and rational decisions that helps each individual business that then helps the community. Kelly: You mentioned story. What's your story? What's Prime Meridian's story? Sammie: Well, Prime Meridian Bank is a newer bank, one of the last in the state of Florida to get chartered. We opened our doors February 4th, 2008. We initially capitalized with about $12.9 million dollars. We have now since grown in excess of $275 million, over the last 8 years. We decided to start the bank, myself and Chris Jensen, and we thought we could provide service to our clientele, and decisions that would help them move more prudently and faster. Kelly: You saw a need specifically in the Tallahassee market? Sammie: We did. We thought that we could provide service and compete with everybody in town. We didn't have a group of people come together and say, "Let's start a bank." We put our story together and put our model together, and went to individual business leaders within town, here in Tallahassee and said, "We're going to start a bank we'd like you to be a part of," and that was the genesis of Prime Meridian Bank. Kelly: Was there a lot of consolidation and acquisitions that had gone on prior to that, and so that kind of created this market opportunity for you guys? Sammie: No. You had several community banks here in town already, most of your southeastern regional banks and your money center bank. We just thought there was an opportunity for us to come in and provide a little different level of service that would make us a profitable entity and serve Tallahassee very well. Kelly: Let's talk about the name Prime Meridian. You do know that you're not on the Prime Meridian? You do know that you're 84 degrees west, right? Sammie: I do, but the Prime Meridian for all metes and bounds in the state of Florida is here in Tallahassee. Kelly: Oh, got it. Sammie: If you look at the Prime Meridian, what is it? It's a starting point of the metes and bounds here for the state of Florida, and starting point of time, or the starting point of a new financial institution. The Meridian line is an unwavering line going over the Earth. We're unwavering in our outlook and care of our shareholder's money, but more importantly, our clients. Kelly: The Brits claimed Greenwich was the Prime Meridian. They don't own that, so you'd redefine Tallahassee to be the Prime Meridian. Sammie: At least for a new financial institution. Kelly: Very good. Continue with the evolution of the bank and the challenges you've faced in the past, as you went from de novo Bank? You didn't acquire another bank, right? Sammie: Right. Several things that we're proud of through the evolution of our company. Number one, which goes back to the quality of our team. When we started our bank, the average startup cost was about $800,000. The day that we opened the doors and took the write-off to capital for the expenses, we wrote off $395,000. That goes to the knowledge and expertise of our team of not having to hire a lot of consultants, and understanding each and every thing that we did. Going on to 2012, four years after we opened, we looked around with the team that we had, and realized that we could do our own data items processing. Instead of having a service bureau that was processing our checks, we decided we would do it ourselves. That added an immediate $8,500 a month to the bottom line. Kelly: Wow. Sammie: That same year, we also became cumulatively profitable. That was pretty exciting for us. And then in December 11th of 2013, we became an effective SEC registered company and then started listing our stock in 2015 on the OTCQX. So those are some of the things that we have done and we're very, very proud of. Dealing with the SEC, we went through a full review, when we filed our S1, our initial going public document. Our comment letter back from the SEC was simply 2 1/2 pages, which goes to say just how good our team is, and how detailed we are in each and every thing that we do. Kelly: Yeah. I know access to capital has been good once you go public, but it's quite a task to a) go public, and b) maintain that. The requirements are immense as you know. Was it worth it, do you think? Sammie: Absolutely. We went public for 3 reasons. Number one is we could raise our capital the way that we wanted to. We didn't have to worry about an accredited offering or anything of that nature. Number two is we're looking to grow the company and grow outside of the Tallahassee MSA, and if we do that we want to have a currency that we can use. In order to have your stock act as a currency, you've got to have a market for it, and the only way to do that was to be an SEC registered trading company. Then number three, when we decided to do it, our bank is still very clean. We do not have many non-performings or any crazy things on the books. It would never be easier to go through and do it. And we look at it like these days, with capital, you can't say, "Okay, we're going to go buy someone or do something. Now let's go get approval and say, 'Okay, if you give us approval we'll get the capital.'" You've got to have capital already on hand. There's no more just in time capital. And the same way we look at it is there's no just in time human capital. Kelly: Let's talk about human capital for a minute. How challenging is it for you to compete for new talent and retain existing talent with the compensation structure that community banks have to deal with? Sammie: Well, Kelly, that's been one of our strong points. When we started the bank in 2008, we were the new kids on the block. Nobody knew us. All we had was a story. It was nothing but air. So going out and getting the top absolute talent was difficult. People had their banks, things were going well. So we decided that we would start building our own bankers. And being here in Tallahassee and having Florida State and FAMU and TCC here, gave us the opportunity to go get a lot of talented younger folks to bring in, that had the capacity, train them, educate them. And one thing that we've done is we've been very transparent with our team. Up until we went public, we went through our financials with our entire team once a month. Now that we're a publicly traded company, we do it once a quarter. But giving them the exposure, I cannot give them experience, but giving them the exposure to what we're doing, why we're doing it, and how we're doing it, is as important as finding experienced people. And our entire culture is surrounded by a one-word question and that's “why”. Any teller, relationship manager, operations person, whoever, can ask me or anybody in the bank why are we doing something. And that causes two things. Number one, the hardest thing to get people to do is think. If they're asking you questions, then they're thinking. And if you answer their questions: Why did we go public? Why did we raise capital? Why are we looking to acquire banks? What does that mean to the bottom line? Now, all of the sudden you've created an inclusive ecosystem, as you say, that people can buy-in. The biggest thing people want is to be a part of something, and what we've afforded a lot of folks to do is come in and be a part of building something from the foundation up. And constantly giving them that transparency of what we're doing and why we're doing it, is very, very inclusive. And we listen. I can't tell a teller how to make a teller line more efficient. So if I can't listen to what they're doing like I ask them to listen to me and do what I say. If we don't have a partnership there, we're not going to get any better. That's the number one. Number two, if someone asks me a question. Why are we doing this? and I can't answer it, then I might need to rethink what I'm doing. Does that make sense? Kelly: It certainly does. Have you used non-qualified benefit plans as part of that overall compensation structure? This is not a pitch for that. I was just curious if you'd ever talked about that. Sammie: Yes. We're in the process of looking at our entire compensation structure now, and figuring out how to better enhance it to a) retain, b) attract, and c) incentivize. Kelly: So say another side of say the balance sheet, since we're talking about that, municipal bonds. Anything that you've seen change here since the 2008 Dodd-Frank and all this other stuff of municipal bond rating agencies? Have you guys had to modify any of your practices on that? Sammie: We're using a third party right now to monitor our municipal portfolio. So in the old days of just buying bonds and putting them on the books, we actually have a quarterly review of all of our municipalities. Kelly: So you've had to upgrade that since the regulatory changes? Sammie: We have. And I don't think it's all that bad from the standpoint that you look at a lot of municipalities out there that are having weakness due to the down-turn, and the one thing that we have made the decision from day one, is we take risk, and there's risk in everything you do, but we take the real risk in our loan portfolio. We do not want any risk in our investment portfolio. We're looking at it as simply a hedge against interest rates, and also as just a liquidity source. Kelly: Well then you better load up with bank-owned life insurance. You've got about 50% of your financial assets in muni’s and I like the lower balance sheet risk that BOLI offers. That’s another discuss with you and Glenn. What's the future look like for community banking in general, threats that you see, opportunities? For example, 80% of millennials haven't even walked into a bank before. Sammie: Let's stop right there for a second and talk about the millennials for a minute. Number one, I talked about how we hire and what we do. The average age of our bank is 38. The average age of our management team is 41. As far as dealing with millennials and all, one thing most people have forgotten is most millennials have yet to start a company. A lot of them, due to the recession, still live with their parents. So therefore, they really haven't needed to walk into a bank. Now a lot of the millennials that we have found, and we talk with, and we do this a lot. They want to be a part of something. And they're much more community driven and doing something for the greater good. Once you are able to show them from a teammate standpoint what we're doing, they buy in. Once they actually need something other than just a regular checking account, i.e. buy their first house; buy a business or trying to finance the start of a business, they need to sit down and talk with someone who understands the market. And we have found, we've been very successful with millennials. Now we're not out there with everything online, rocket mortgage and things of that nature. We're finding a lot of success dealing with the millennials. What that comes back to is we generally don't get them until they need something. And every individual, every household is nothing different than a story too. Where's your income coming from? Is it going to be sustainable? Can you afford whatever asset you're trying to purchase? That has been very, very beneficial to us. As far as whether or not banks are going to be here, I've talked with bankers that go back to the '60s that said the community bank's not going to be around much longer. Well, as long as you have people, there's a certain segment of the population that wants to talk with people, when it comes to their financial situation. Coming up from a small town in south Georgia, and growing up the 3 most important people in the town was your doctor, your preacher, and your banker; your health care, your faith care, and your financial care. And you generally didn't do that via an email. I truly believe that there will always be a place for the community bank. Now with the regulations and thought process out there, there's going to be fewer and fewer community banks due to the fact that what we're required to do. We're operating in most cases from an asset-liability standpoint, overall balance sheet management standpoint, like a larger bank. However, we don't have the economies of scale to do it. So we have to be more innovative and more nimble. And that goes right down to talking with your regulators on a consistent basis to understanding what the rules are. If you're going to form a hospital, or if you're going to start a power company, there's regulations you have to abide by. As a community banker, you had better understand the rules and abide by them or find something else to do. That's just the approach that we've taken. And it creates a lot less heartache and stress, when you come at it from that standpoint, versus saying, "The regulators are going to kill me." Regardless what they're going to do, they're going to do it. So you better find out or figure a way to cope with it. Kelly: Great. What's the biggest threat, other than let's say cyber-security risk, which probably keeps you up at night…other than that, what's the biggest risk or fear that you have, say for the next 10 years? Sammie: As we expand, finding the human capital, finding the talent, the teammates. Kelly: Really? Sammie: The human capital. Kelly: So in Tallahassee or in some of your outlying branches? You have access to plenty of talent there, right? Sammie: There is a good supply, and it's just finding the right people that believe in what we believe in. Our culture is the most important aspect of what we do each and every day, and I go back to the question “why”. If you're questioning why we're doing something, some people look at that as somewhat of a negative. We look at it as a positive, because if you cannot explain what's going on, and you cannot understand it, then the “how” really doesn't matter. Kelly: What's the biggest opportunity that you see? What gets you up every morning after you've had a sleepless night worrying about cyber-security risks? What gets you going? Sammie: The opportunity to grow, to build our franchise here within Tallahassee; the opportunities outside of Tallahassee. Within our investor presentation, we show that we don't want to go any further north than Macon, south of Ocala, east of the Atlantic and west of the eastern border of the state of Mississippi. That is south Alabama, south Georgia, and north Florida. The opportunities to be there are endless. And that is something to get excited about and get out of bed every day, and figuring out a new challenge to go build upon. Kelly: That's great. All right. In closing, I always like to ask either your favorite quote and/or the stupidest thing you've done in your business career. Sammie: I will give you my favorite quote, and it's on our boardroom wall, and it is by a retired General, Eric Shinseki, who has been re-retired. The quote is, "If you do not like change, you are going to like irrelevance even less." Shinseki is the most recent former head of the VA. He's pretty irrelevant right now. Kelly: I would say so. Alright. Very good. Anything else you want to add Sammie, or should we sign it off? Sammie: You tell me. Thank you. Kelly: I think we're good. Thank you very much for your time. It was a pleasure talking to you. I wish you well, Sammie. Stay safe! And that’s it for my interview with Sammie Dixon from Prime Meridian Bank in Tallahassee, Florida. Thank you.