Introduction

The Department of Veterans Affairs (VA) provides a range of benefits and services to veterans who meet certain eligibility criteria. These benefits and services include, among other things, hospital and medical care;¹ disability compensation and pensions;² education;³ vocational rehabilitation and employment services;⁴ assistance to homeless veterans;⁵ home loan guarantees;⁶ administration of life insurance, as well as traumatic injury protection insurance for servicemembers; and death benefits that cover burial expenses.⁷

The department 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 and prosthetic research programs. The Veterans Benefits Administration (VBA) is responsible for, among other things, providing compensation, pensions, and education assistance. The National Cemetery Administration (NCA)⁸ is responsible for maintaining national veterans cemeteries; providing grants to states for establishing, expanding, and improving state veterans cemeteries; and providing headstones and markers for the graves of eligible persons, among other things. The BVA reviews all appeals made by veterans or their representatives for entitlement to veterans' benefits, including claims for service connection, increased disability ratings, pensions, insurance benefits, and educational benefits, among other things.

Scope and Limitations of This Report

This report provides an overview of the FY2023 President's request for VA and subsequent congressional action. It begins with a discussion of various appropriations and funds that constitute VA's budget, followed by a brief overview of the FY2022 congressional appropriations process and enacted amounts for FY2022. It then discusses the President's request for FY2023 for care, benefits, and services for veterans and administration of the department, followed by congressional action on the FY2023 request. The report provides funding levels for the accounts as presented in the Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) appropriations bill; it does not provide funding levels at the subaccount, program, or activity levels. Generally, VA accounts are purpose specific rather than program specific. For example, VHA's supply chain modernization program could include funding from the medical support and compliance account and the information technology account. Table 1 lists FY2022-FY2023 VA appropriations and FY2024 advance appropriations from the MILCON-VA appropriations act, accompanying committee reports, and the Joint Explanatory Statement released by the House and Senate Appropriations Committees regarding the Consolidated Appropriations Act, 2023. Appendix B lists appropriations to VA from FY1995 to FY2022. Funding amounts shown in the appendices may include transfers in and out of accounts and exclusions of loan guarantees as calculated by VA; therefore, those amounts may be different from those shown in Table 1.

The Department of Veterans Affairs Budget

Certain budgetary concepts related to mandatory spending (direct spending), appropriated entitlements, and discretionary spending are useful in understanding the various accounts that fund VA's benefits and services, as well as recent funding provided in the Cost of War Toxic Exposures Fund⁹ established by the Honoring our PACT Act of 2022 (P.L. 117-168).

Mandatory (Direct) Spending

Mandatory spending, also known as direct spending, is generally characterized as spending that is provided through authorizing legislation in which the budget authority is not provided for in advance by appropriations acts.¹⁰ "The fundamental characteristic of mandatory spending is the lack of annual discretion to establish spending levels. Instead, mandatory spending usually involves a binding legal obligation by the [federal government] to provide funding for an individual, program, or activity."¹¹ There are several types of mandatory (direct) spending, and one such category is entitlement authority. Entitlement authority generally meets a three-part test:

1. Specified benefits: The program's authorizing legislation specifies particular sums of money to be paid;

2. Specified beneficiaries: The payments are to be made to a class of persons of governments who meet specific eligibility requirements; and

3. Federal government has a legal obligation to pay which is not subject to appropriations: The payment is not discretionary, i.e., the legislation obligates the United States to make the specified payments to the eligible class and the legal obligation to make the specified payments to the eligible class of recipients is not contingent on appropriations being enacted. Therefore, if insufficient appropriations are available, the government may presumably be sued for payment of the benefits.¹²

Although some entitlement programs such as Medicare and Social Security are permanently appropriated, some programs (e.g., veterans disability compensation, veteran survivor's Dependency and Indemnity Compensation (DIC) program, and pensions) are annually appropriated entitlements and are known as appropriated entitlements.

Appropriated Entitlements¹³

Generally, appropriated entitlements go through the annual appropriations process, but they are not subject to annual appropriations decisions of the congressional appropriations committees. "The Appropriations Committees have little or no discretion as to the amounts they provide."¹⁴ "Even though this funding is included in an appropriations bill, it is still considered mandatory spending rather than discretionary spending."¹⁵ For example, through the annual Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, Congress provides monthly, tax-free disability compensation payments to eligible veterans with disabilities due to disease or injury incurred or aggravated during military service. However, the actual funding level for disability compensation is determined by the "entitlement" criteria in Chapter 11, Title 38, of the U.S. Code.¹⁶ The appropriations act appropriates the sums necessary to cover the cost of disability compensation payments. Congress, during the appropriations process, does not have the discretion to change the amount spent on the disability compensation program.

Discretionary Spending¹⁷

Funding for discretionary programs is provided and controlled through the annual enactment of appropriations legislation. "If the Appropriations Committees decide to lower funding for a [discretionary program] they can simply reduce the annual appropriation, notwithstanding the authorized funding level sought by the authorizing committee. Unlike entitlement programs, no formulas need to be changed to alter funding levels for discretionary spending."¹⁸

VA Funding

VA's budget includes both mandatory and discretionary accounts. The accounts for VA's mandatory programs (appropriated entitlements) fund disability compensation for veterans, the survivor's Dependency and Indemnity Compensation (DIC) program, pensions, vocational rehabilitation and employment, education, life insurance, housing, clothing allowances, and burial benefits (such as burial allowances, grave liners, outer burial receptacles, and headstones and markers), among other benefits and services.

Discretionary accounts fund medical care (which comprises medical services, medical community care, medical support and compliance, and medical facilities accounts), medical research, construction programs (which comprises major construction, minor construction, grants for state-extended care facilities, and grants for state cemeteries accounts), information technology, Electronic Health Care Record Modernization (EHRM), the Office of Inspector General, BVA, NCA, and general operating expenses, among other accounts. These accounts are further supplemented by revolving funds, such as the Canteen Service Revolving Fund; the Pershing Hall Revolving Fund and Franchise Fund; trust funds, such as the Department of Veterans Affairs Cemetery Gift Fund and the General Post Fund; and special funds, such as the Medical Care Collections Fund, Capital Asset Fund, and Recurring Expense Transformational Fund.¹⁹

Advance Appropriations²⁰

VA has advance appropriation authority for specified medical care and benefits accounts. In 2009, Congress enacted the Veterans Health Care Budget Reform and Transparency Act of 2009 (P.L. 111-81), authorizing advance appropriations for three of the four VHA accounts: medical services, medical support and compliance, and medical facilities.²¹ In 2014, Congress passed the Consolidated and Further Continuing Appropriations Act, 2015 (H.R. 83; P.L. 113-235), which amended 38 U.S.C. §117 and included three more accounts to the advance appropriations list of accounts. This act authorized advance appropriations for three mandatory VA benefits programs within the Veterans Benefits Administration: compensation and pensions, readjustment benefits, and veterans insurance and indemnities. Beginning with the FY2016 Military Construction and Veterans Affairs, and Related Agencies Appropriations Act (MILCON-VA; P.L. 114-113), those accounts received advance appropriations for the first time in FY2017, in addition to the three VHA accounts already authorized to receive advance appropriations.

Section 4003 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41) required the establishment of a separate account for medical community care beginning with the FY2017 appropriations cycle. The Jeff Miller and Richard Blumenthal Veterans Health Care and Benefits Improvement Act of 2016 (P.L. 114-315) authorized advance appropriations for the medical community care account.

Congress had authorized (through P.L. 111-81, P.L. 113-235, and P.L. 114-315) advance appropriations of new budget authority for the aforementioned VBA and VHA accounts to prevent potential delays in the delivery of care and benefits to veterans that may have arisen in the event of a funding lapse.

Generally, VA's budget estimates for advance appropriations included in its annual budget request are developed using data that is typically three to four years old.²² For example, the advance appropriations estimates for FY2023 included in the FY2022 annual budget request to Congress were developed by VA from about May through July 2020, using data from FY2019. The Government Accountability Office (GAO) has stated that the "process to develop these estimates is inherently complex, as it requires making assumptions based on imperfect information to predict obligations for VA health care 3 and 4 years into the future. For this reason, VA's budget estimate is prepared in the context of uncertainties about the future—including changes in veterans' needs, future economic conditions, and shifting leadership priorities."²³ Therefore, each year the department updates its annual budget request to reflect the most recent data, actual program experience, and other factors, such as economic trends in unemployment and inflation.²⁴ This "revised request" for the upcoming fiscal year is displayed as additional funding over the 2023 advance appropriations amount.

Under present budget scoring guidelines, advance appropriations are scored as new budget authority in the fiscal year in which they become available for obligation, not in the fiscal year the appropriations are enacted, and required to be accommodated within the annual statutory spending caps.²⁵ Therefore, the advance appropriations numbers noted in the tables of this report are labeled "memorandum" and appear in the corresponding fiscal year column.

Cost of War Toxic Exposures Fund (TEF)

On August 10, 2022, President Biden signed the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics Act of 2022, or "Honoring our PACT Act of 2022" (P.L. 117-168). Section 805(a) of this act established the Cost of War Toxic Exposure Fund, to be administered by the VA Secretary.²⁶ The Honoring our PACT Act of 2022 appropriates $500 million for the Cost of War Toxic Exposures Fund for FY2022, to remain available until September 30, 2024, and further authorizes appropriations (such sums as are necessary) to this fund for FY2023 and each subsequent fiscal year for costs associated with the delivery of health care associated with environmental hazards during active military service. Additionally, funds from the Cost of War Toxic Exposure Fund may be used for costs associated with medical and other research related to environmental hazards, administrative expenses related to benefits (including information technology), benefit claims processing, and adjudicating appeals from veterans.²⁷ The act states that appropriations provided for the Cost of War Toxic Exposure Fund will be considered "direct spending" and will be treated as an "appropriated entitlement." Furthermore, the law states that the fund is exempt from mandatory sequestration provisions in Section 256(h) of the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended (also see discussion under "Consolidated Appropriations Act, 2023 [H.R. 2617; P.L. 117-328]").

TEF and Future Authorizing Legislation

During a House Veterans' Affairs Committee mark-up of several measures on September 21, 2022, the then-Ranking Member Mike Bost raised the issue regarding how the Congressional Budget Office (CBO) plans to score certain authorizing legislation pertaining to VA health care in the future because of the new TEF. The then-Chairman Mark Takano acknowledged that the TEF has created some issues for the committee in terms of how future authorizing legislation would be scored.²⁸ On December 7, 2022, CBO issued a statement on how the agency plans to score future veterans benefits and programs authorizing legislation because of the TEF:

The TEF will provide support for five kinds of activities: health care, processing disability claims, medical research, modernizing information technology (IT) programs, and other services. Some future authorizing bills may affect the costs of those types of activities, both for veterans generally and for veterans with toxic exposures. As a result, some of those costs could now be paid in part from the TEF (thereby increasing mandatory spending) and some could be paid, as they have been previously, from discretionary appropriations (thereby increasing discretionary authorization levels). CBO would therefore include the effects of both types of payments in its cost estimates for such legislation.... CBO would allocate 21 percent of the added costs of subsequent legislation to the TEF in 2023; that amount would grow to 42 percent by 2032. Those amounts would be shown as mandatory spending in CBO's cost estimates.²⁹

Historical Perspective

Figure 1 illustrates funding trends for mandatory, discretionary, and total VA-enacted appropriations from FY1995 through FY2022 in nominal dollars. Between FY1995 and FY2022, total mandatory appropriations grew from $19.45 billion to $154.27 billion, a compound annual growth rate (CAGR) of 7.97%. During this same period, discretionary appropriations grew from $18.02 billion to $112.22 billion, a CAGR of 7.01%. The total VA appropriations from FY1995 through FY2022 grew from $37.47 billion to $266.48 billion, a CAGR of 7.53%.

Figure 1. VA Appropriations, FY1995-FY2022

Source: Prepared by CRS based on figures from the Department of Veterans Affairs, Office of Management, Office of Budget (see Appendix B). Notes: Amounts in nominal, or noninflation-adjusted, dollars. Discretionary funding excludes offsetting collections deposited in the Medical Care Collections Fund (MCCF). FY2009: American Recovery and Reinvestment Act (P.L. 111-5) provided supplemental funding. VHA received $1.0 billion for the medical facilities account, and the $700 million was for the economic recovery payments. The supplemental $700 million is not included in the discretionary subtotal but included in overall VA total. FY2014: Amounts include $15 billion in mandatory funding provided in the Veterans Choice Act (P.L. 113-146). FY2021: Amounts include American Rescue Plan (ARP) Act (P.L. 117-2) funding. FY2022: Amounts include unobligated balances of expired discretionary funds transferred to the Recurring Expenses Transformational Fund.

Figure 2 illustrates funding trends for mandatory, discretionary, and total VA-enacted appropriations from FY1995 through FY2021 in both nominal and inflation-adjusted dollars. When adjusted for inflation, between FY1995 and FY2021 total mandatory appropriations grew from $32.08 billion to $154.15 billion, a compound annual growth rate (CAGR) of 6.22%. During this same period, discretionary appropriations grew from $29.73 billion to $104.43 billion, a CAGR of 4.95%. The total VA appropriations from FY1995 through FY2021 grew from $61.81 billion to $260.71 billion, a CAGR of 5.69%.

Figure 2. Nominal and Inflation-Adjusted VA Appropriations, FY1995-FY2021

Source: Prepared by CRS based on figures from the Department of Veterans Affairs, Office of Management, Office of Budget. Notes: Nominal (or current) dollar values are adjusted to real (constant) dollars using the Gross Domestic Product (GDP) Price Index Series deflator where 2021 = 100; https://www.meps.ahrq.gov/about_meps/Price_Index.shtml.

FY2022 Budget Summary³⁰

President Biden submitted his formal budget request for FY2022 on May 28, 2021. The President's budget requested $268.41 billion for VA. This amount included $155.44 billion in mandatory funding and $112.97 billion in discretionary appropriations (see Figure 3). The President's budget also requested $156.59 billion in advance appropriations for FY2023 for VBA mandatory accounts and $111.29 billion in advance appropriations for FY2023 for VHA discretionary accounts.

On July 29, 2021, the House passed H.R. 4502, consisting of seven appropriations bills. Division F of H.R. 4502 (H.Rept. 117-81) included the Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) appropriations bill for FY2022. The House-passed bill provided $268.59 billion for VA, including $155.44 billion in mandatory spending and $113.15 billion in discretionary spending. On August 4, 2021, the Senate Appropriations Committee reported its version of the MILCON-VA bill for FY2022 (S. 2604; S.Rept. 117-35). The Senate Appropriations Committee-reported bill recommended $268.37 billion for VA for FY2022, including $155.44 billion in mandatory spending and $112.93 billion in discretionary spending. Both the House-passed and Senate-reported versions of the MILCON-VA bill for FY2022 include $267.87 billion in advance appropriations for FY2023. On March 15, 2022, the Consolidated Appropriations Act, 2022 (P.L. 117-103), was signed into law. The act provides $269.26 billion for VA for FY2022, including $157.05 in mandatory spending and $112.22 billion in discretionary spending. About 51.69% of VA's $269.26 billion total budget authority for FY2022 is for compensation and pensions, while around 36.37% of VA's total budget is for medical care and research (see Figure 4). The act also includes $272.32 billion in advance appropriations for FY2023.

Figure 3. FY2022 VA Budget Request

Source: Prepared by CRS based on U.S. Congress, House Committee on Appropriations, Military Construction, Veterans Affairs, and Related Agencies Appropriations Bill, 2022, report to accompany H.R. 4355, 117th Cong., 1st sess., July 2, 2021, H.Rept. 117-81. Notes: Total budget authority excludes offsetting collections deposited in the Medical Care Collections Fund (MCCF). Totals may not add up due to rounding.

Figure 4. FY2022 VA-Enacted Appropriations (P.L. 117-103)

Source: Prepared by CRS based on U.S. Congress, committee print, prepared by House Committee on Appropriations Consolidated Appropriations Act, 2022 (H.R. 2471; P.L. 117-103) [Legislative Text and Explanatory Statement Book 2 of 2 Divisions G–L,],117th Cong., 2nd sess., April 2022 (Washington: GPO, 2022), pp. 2209-2221. Notes: Total budget authority excludes offsetting collections deposited in the Medical Care Collections Fund (MCCF). Totals may not add up due to rounding.

Budget Request for FY2023 and Congressional Action

President's Request

On March 28, 2022, President Biden submitted his budget request for FY2023. The President's request for VA was $298.61 billion. The request included $135.05 billion in discretionary appropriations and $163.58 billion in mandatory appropriations. As it did with the FY2022 budget request, the Administration proposed to use $968 million from the Recurring Expenses Transformational Fund to supplement the discretionary budget request. This request anticipated the transfer of $968 million in unobligated balances into the Recurring Expenses Transformational Fund at the end of 2022. Of this amount, $805 million was to be obligated in 2023 for major construction projects, and $163.49 million was to be obligated for minor construction projects, along with installation of zero-emission vehicle charging infrastructure on VA facility grounds.³¹ Additionally, the President's FY2024 advance appropriations request included $155.35 billion for VBA mandatory accounts and $128.10 billion for VHA discretionary accounts. Figure 5 provides a breakdown of the FY2023 request. The $10.81 billion for departmental administration includes the following accounts: general administration, BVA, and information technology systems (IT systems); veterans electronic health record modernization (EHRM), Office of Inspector General, construction major and minor accounts, and grants for construction of state-extended care facilities; grants for the construction of veterans cemeteries, and administrative expenses related to the Asset and Infrastructure Review (AIR) Commission's work.

In its FY2023 budget proposal, the Administration proposed a third new budget category within the overall federal discretionary budget. The Budget Control Act of 2011 (BCA; P.L. 112-25), as amended, imposed annual statutory discretionary spending limits by categorizing spending by defense and nondefense spending.³² The defense category consists of discretionary spending in budget function 050 (national defense) only. The nondefense category includes discretionary spending in all other budget functions, including a majority of budget function 700 (veterans' benefits and services).³³ The statutory limits on discretionary spending were in effect through FY2021.³⁴ According to the President's budget proposal, "[t]he Budget separates VA medical care as a third category within the discretionary budget based on a recognition that VA medical care has grown much more rapidly than other discretionary spending over time, largely due to system wide growth in health care costs. Setting a separate budget allocation for VA medical care could help ensure adequate funding for veterans' health care without shortchanging other critical programs."³⁵

Figure 5. FY2023 VA Budget Request

Source: Prepared by CRS based on U.S. Congress, House Committee on Appropriations, Military Construction, Veterans Affairs, And Related Agencies Appropriations Bill, 2023, report to accompany H.R. 8238, 117th Cong., 2nd sess., June 27, 2022, H.Rept. 117-391. Note: Total budget authority excludes offsetting collections deposited in the Medical Care Collections Fund (MCCF).

House Action

On June 15, 2022, the House Committee on Appropriations, Subcommittee on Military Construction, Veterans Affairs, and Related Agencies, held a markup of the FY2023 Military Construction, Veterans Affairs, and Related Agencies (MILCON-VA) appropriations bill, and approved the draft bill by voice vote. On June 23, the House Appropriations Committee held a markup of the FY2023 MILCON-VA appropriations bill, and the bill was reported to the full House on June 27 (H.R. 8238; H.Rept. 117-391). Subsequently, the text of H.R. 8283 was included in a six-bill appropriations package (H.R. 8294) consisting of the FY2023 Transportation/Housing and Urban Development, Agriculture/Rural Development, Energy and Water Development, Financial Services and General Government, Interior/Environment, and Military Construction, and Veterans Affairs appropriations bills (House Committee Print 117-55).

The measure passed the House on July 20. Division F of H.R. 8294 contained the FY2023 MILCON-VA appropriations bill. The House-passed bill (H.R. 8294) provided $298.56 billion for VA, including $163.56 billion in mandatory appropriations and $135.01 billion in discretionary appropriations.

The House committee report (H.Rept. 117-391) supported the Administration's proposal to use the Recurring Expenses Transformational Fund to supplement VA's discretionary budget amount. During House floor debate, amendments were passed to not provide any funding for the Asset and Infrastructure Review Commission's work (see discussion below). Table 1 provides a comparative breakdown, by account, of House-passed amounts for FY2023.

Senate Committee

On July 28, 2022, Senate Appropriations Committee Chairman Senator Patrick Leahy released drafts of 12 appropriations bills and explanatory statements to accompany the draft measures.³⁶ On August 3, a version of the FY2023 MILCON-VA appropriations bill, identical to the majority committee draft, was introduced in the Senate as S. 4759. As introduced, S. 4759 recommended $299.91 billion for VA for FY2023, including $164.96 billion in mandatory appropriations and $134.95 billion in discretionary funding. The FY2023 MILCON-VA appropriations bill (S. 4759) recommended $1.40 billion to remain available until September 30, 2027, for the Cost Of War Toxic Exposures Fund established by the Honoring our PACT Act of 2022 (P.L. 117-168).³⁷ Table 1 provides a comparative breakdown, by account, of recommended amounts in S. 4759.

Continuing Appropriations (Continuing Appropriations and Ukraine Supplemental Appropriations Act, 2023, H.R. 6833; P.L. 117-180)

Because none of the regular appropriations bills were enacted by the beginning of the fiscal year on October 1, Congress passed a continuing resolution (CR), the Continuing Appropriations and Ukraine Supplemental Appropriations Act, 2023, (H.R. 6833; P.L. 117-180), which the President signed into law on September 30, 2022. The act provided continuing appropriations for VA through December 16, 2022, at FY2022 funding levels.³⁸ Since seven accounts (compensation and pensions, readjustment benefits, insurance and indemnities, medical services, medical community care, medical support and compliance, and medical facilities) received advance appropriations budget authority for FY2023 in the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2022 (Division J of P.L. 117-103), these accounts are not affected by the CR.

Division E of P.L. 117-180 also included provisions related VA expiring authorities that were set to expire by the end of the FY2022 or calendar year 2022. The following authorities were extended to the dates shown below.

• 38 U.S.C. §111A(a)(2). Transportation of individuals to and from department facilities, until September 30, 2024.
• 38 U.S.C. §315(b). Maintain a regional office in the Republic of the Philippines, until September 30, 2024.
• 38 U.S.C. §322(d)(4). Office of National Veterans Sports Programs and Special Events, monthly assistance allowance for disabled veteran athletes, until September 30, 2026.
• 38 U.S.C. §503(c). Administrative error; equitable relief reporting, until December 31, 2024.
• 38 U.S.C. §521A(g) and (l). Adaptive sports programs for disabled veterans and members of the Armed Forces, until September 30, 2026.
• 38 U.S.C. §544(e). Advisory Committee on Minority Veterans, until September 30, 2026.
• 38 U.S.C. §1710 (f)(2)(B). Copayments for hospital and nursing home care, until September 30, 2024.
• 38 U.S.C. §1710A(d). Nursing home care for certain service-connected veterans, until September 30, 2024.
• 38 U.S.C. §2021(e). Homeless veterans reintegration programs, until September 30, 2024.
• 38 U.S.C. §2021A. Homeless women veterans and homeless veterans with children reintegration grant program, until September 30, 2024.
• 38 U.S.C. §2031(b). Treatment and rehabilitation for seriously mentally ill and homeless veterans, general treatment, until September 30, 2024.
• 38 U.S.C. §2033(d). Additional services at certain locations for seriously mentally ill and homeless veterans, until September 30, 2024.
• 38 U.S.C. §2044(e)(1)(H). Financial assistance for supportive services for very low-income veteran families in permanent housing, until September 30, 2024.
• 38 U.S.C. §2061(d). Grant program for homeless veterans with special needs, until September 30, 2024.
• 38 U.S.C. §2066(d). Advisory Committee on Homeless Veterans, until September 30, 2026.
• 38 U.S.C. §2102A(e). Temporary grant assistance program for individuals residing temporarily in housing owned by a family member, until December 31, 2024.
• 38 U.S.C. §2108(g). Specially adapted housing assistive technology grant program, until September 30, 2024.
• 38 U.S.C. §3692(c).Veterans' Advisory Committee on Education, until December 31, 2026.
• 38 U.S.C. §8111(d)(3). Authority to Continue DOD-VA Health Care Sharing Incentive Fund, until September 30, 2026.
• 38 U.S.C. §8118(a)(5). Authority for the transfer of real property, until September 30, 2024.
• Payments and allowances for beneficiary travel to Vet Centers initiative (Section 104(a) of the Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012 [P.L. 112-154]), until September 30, 2023.
• Authority for joint Department of Defense-Department of Veterans Affairs medical facility demonstration fund (Section 1704(e) of the National Defense Authorization Act for Fiscal Year 2010 [P.L. 111-84]), until September 30, 2024.
• Two short term CRs (P.L. 117-229, P.L. 117-264) were enacted until Congress passed and the President signed into law the consolidated appropriations bill (H.R. 2617).

Consolidated Appropriations Act, 2023 (H.R. 2617; P.L. 117-328)

On December 20, 2022, the House and Senate Appropriations Committees released the text of the Consolidated Appropriations Act, 2023 (as an amendment to H.R. 2617). After Senate passage on December 22 and House passage on December 23, the bill was signed into law on December 29, 2022 (P.L. 117-328). Division J of P.L. 117-328 contained the MILCON-VA Appropriations Act of 2023. The FY2023 MILCON-VA Appropriations Act provides $303.28 billion for VA for FY2023 (without collections). This includes $168.56 billion in mandatory funding and $134.73 billion in discretionary funding (see Table 1).

The act also provides $5.0 billion in mandatory (direct) funding for the Cost of War Toxic Exposures Fund (TEF) to remain available until September 30, 2027. These funds would be used for new costs associated with eligibility expansions authorized in the Honoring our PACT Act of 2022 (P.L. 117-168). According to Explanatory Statement accompanying the Consolidated Appropriations Act, 2023, there is no shift in discretionary appropriations to the TEF.³⁹

Additionally, the FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $283.46 billion in advance appropriations for FY2024 that would become available on October 1, 2023. The FY2023 MILCON-VA Appropriations Act includes Section 252 in support of the Administration's proposal to use the Recurring Expenses Transformational Fund to supplement VA's discretionary budget amount. This includes, $804.51 million for constructing, altering, extending, and improving VHA medical facilities; $88.49 million for VHA facility improvements, and $75.0 million for infrastructure or equipment upgrades to support Executive Order on "Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability" (Executive Order 14057). Table 1 provides a comparative breakdown by account of FY2023 enacted appropriations.

The following sections discuss account-level details of the President's FY2023 request and congressional action on regular VA appropriations.

Mandatory Programs Funding

Major mandatory program funding includes (1) Compensation and Pensions (VA's disability compensation program; pensions to low-income veterans, their surviving spouses, and dependent children), (2) Readjustment Benefits (education and vocational rehabilitation assistance), and (3) Veterans Insurance and Indemnities (the provision of life insurance).

Compensation and Pensions

The Compensation and Pensions category includes payments for benefits such as disability compensation, dependency and indemnity compensation (DIC), pension benefits for low-income disabled or elderly wartime veterans and their survivors, burial benefits (allowances, flags, headstones, etc.), and a clothing allowance for certain disabled veterans.

For FY2023, VA requested $152.02 billion for the Compensation and Pensions account, an increase of $12.83 billion over the FY2022-enacted funding level. The largest portion of the budget is disability compensation, and VA estimates that $141.42 billion in compensation payments would go to an estimated 5.5 million veterans, 482,949 survivors, and 1,098 children in FY2023. Pension payments are estimated to be $3.5 billion to approximately 162,377 veterans and 114,250 survivors. Finally, an estimated $411.78 million would be allocated for burial benefits.⁴⁰

The increase in requested funding reflected several policy changes that occurred in 2021 and 2022. In August 2021, VA established presumption of service connection for three respiratory health conditions associated with exposure to particulate matter: asthma, sinusitis, and rhinitis. These presumptions apply to Persian Gulf War and Post-9/11 veterans, and VA estimates it will increase compensation and pension obligations by $1.1 billion in 2022. In September 2021, VA amended its adjudication regulations for chronic multisymptom illness suffered by Persian Gulf War veterans and extended the presumptive period for qualifying disabilities to December 31, 2026. VA estimates that doing so will increase compensation and pension obligations by $14 million in 2022. In November 2021, changes and updates to the VA Schedule for Rating Disabilities (VASRD) went into effect for the cardiovascular and genitourinary systems. VA estimates these changes will increase compensation and pension obligations by $45.8 million in 2022. Finally, the average payments for benefits, including disability compensation, pension, and survivor benefits, were expected to increase due to the annual cost-of-living adjustment (COLA).⁴¹

The House-passed measure (Division F, Title II, of H.R. 8294), and the Senate Appropriations Committee (S. 4759) bill would have provided $152.02 billion for the compensation and pensions account. The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $152.02 billion, which is equal to VA's FY2023 request (see Table 1). The act also provides $146.78 billion in advance appropriations for FY2024 for this account.

Readjustment Benefits

The Readjustment Benefits category reflects several benefits related to the transition of servicemembers from active duty status to veteran status, as well as benefits for disabled veterans. Some of these programs include education benefits for veterans, survivors, and dependents; vocational rehabilitation and employment training for service-connected disabled veterans; and assistance to help veterans purchase and/or rehabilitate homes.

For FY2023, VA requested appropriations of $8.91 billion to provide funding for Readjustment Benefits. In addition to the appropriated funds, VA is to combine $154.2 million in offsetting collections from the Department of Defense (DOD) and an estimated unobligated balance of $8.3 billion from FY2022 to sufficiently provide the required benefits.⁴²

The requested appropriations include changes to education and Vocational Rehabilitation and Employment (VR&E) benefits that were authorized in response to the COVID-19 pandemic in the Responsible Education Migrating Options and Technical Extensions Act of 2021 (P.L. 117-76). This law extended multiple expiring provisions, including authorizing VA to continue to pay housing and subsistence allowances, and to extend the usage periods, and prohibiting VA from changing entitlement if beneficiaries are adversely affected by the pandemic.

The House Appropriations Committee, in its report, encouraged VA to increase coordination with Departments of Labor and Defense to help veterans transition from service to civilian life. The committee also stressed the importance of technology in modernizing tools such as the GI Bill Comparison tool, which could be updated to provide greater assistance to veterans seeking higher education programs.⁴³

The House-passed measure (Division F, Title II, of H.R. 8294), and the Senate Appropriations Committee (S. 4759) bill would have provided $8.91 billion for the readjustment benefits account. The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $8.91 billion, which is equal to VA's FY2023 request (see Table 1). The act also provides $8.45 billion in advance appropriations for FY2024 for this account.

Veterans Insurance and Indemnities

The Veterans Insurance and Indemnities account is the mandatory funding mechanism for several government life insurance programs for veterans. In addition to direct payments made to insured veterans and their beneficiaries, this category includes supplemental funding for National Service Life Insurance (NSLI),⁴⁴ Service-Disabled Veterans Insurance (S-DVI),⁴⁵ and Veterans Mortgage Life Insurance (VMLI).⁴⁶

For FY2023, VA estimates that this account will require a combined appropriation of $109.86 million and collections of $6.5 million to fund a total obligation of $116.4 million. Provided appropriations would enable VA to transfer $10,000 to the NSLI program, $31.6 million to the VMLI program, and $78.3 million to the S-DVI program.⁴⁷ As of December 31, 2022, VA is to no longer accept new policyholders for the S-DVI program; appropriations and payouts are to remain for those policyholders already in the program who do not choose to switch to the new insurance program.

The Veterans Affairs Life Insurance (VALI) program created under the Johnny Isakson and David P. Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020 (P.L. 116-315) began on January 1, 2023. This program is designed to be self-supporting.

The House-passed measure (Division F, Title II, of H.R. 8294), and the Senate Appropriations Committee (S. 4759) bill would have provided $109.86 million for FY2023 insurance and indemnities account, the exact amount requested by VA. The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides the same amount. Additionally, the act provides $121.13 million in advance appropriations for FY2024 (see Table 1).

Medical Care and Medical Research Discretionary Programs Funding

Background

The VA's Veterans Health Administration (VHA) operates the nation's largest public integrated direct health care delivery system.⁴⁸ VHA's primary mission is to provide health care services to eligible veterans.⁴⁹ VHA generally provides care directly through over 1,700 sites of care, including hospitals, clinics, and health care facilities.⁵⁰

VHA is not a health insurance financing program that provides reimbursement to providers for all or a portion of a patient's health care costs. It operates associated facilities and employs clinicians.⁵¹ This model differs from the predominant health care financing and delivery model in the United States, in which there is a payer for health care services (e.g., Medicare, private health insurance plan), a provider (e.g., hospital, physician), and a recipient of care (the patient).

The VA's health care system is organized into 18 geographically defined administrative regions known as Veterans Integrated Service Networks (VISNs). Although VA headquarters develops policies and guidelines to be applied throughout the VA health care system, management authority for basic decisionmaking and budgetary responsibilities is delegated to the VISNs.⁵² As of September 30, 2021, VHA operated 145 hospitals, 134 nursing homes, 727 community-based outpatient clinics (CBOCs),⁵³ and 300 Readjustment Counseling Centers (Vet Centers).⁵⁴ In 2009, VA began a pilot Mobile Vet Center (MVC) program to improve access to services for veterans in rural areas, and the department has deployed 83 MVCs to date.⁵⁵

Although VHA provides most health care services to eligible veterans through its integrated network of facilities, it does pay for care in the community under certain circumstances. The Veterans Community Care Program (VCCP) applies eligibility for care in the community broadly to all enrolled veterans based on specific criteria.⁵⁶ VA is authorized to provide care in the community through individual agreements with community providers, called veterans care agreements. VA is also authorized to reimburse for emergency care visits if specific criteria are met.⁵⁷ 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).⁵⁸ In addition, VHA provides grants for construction of state-owned nursing homes and domiciliary facilities⁵⁹ and collaborates with the Department of Defense in sharing health care resources and services.

VHA has additional statutory missions besides providing direct patient care to veterans.⁶⁰ It is required to conduct medical research,⁶¹ serve as a contingency backup to the DOD medical system during a national security emergency,⁶² provide support to the National Disaster Medical System and the Department of Health and Human Services as necessary,⁶³ and train health care professionals to provide an adequate supply of health personnel for VA and the nation.⁶⁴

The Veteran Patient Population

VA projects that in FY2023, the overall population of veterans nationwide will decrease but enrollment in the VA health care system and utilization of the system will increase.⁶⁵ In FY2022, approximately 9.2 million of the 18.8 million total veterans were enrolled in VA's health care system.⁶⁶ VA estimates that in FY2023, enrollment will grow by approximately 29,000. In FY2022, VA anticipated treating approximately 6.48 million unique veteran patients and 827,000 nonveteran patients.⁶⁷ VHA estimates that in FY2023, it will treat about 6.49 million unique veteran patients and 856,000 nonveterans.

VHA estimates that outpatient visits will increase from 137.42 million visits in FY2022 to 148.38 million visits in FY2023, an increase of 10.97 million, or 8.0%. VHA anticipates an increase in the total number of inpatients treated in all inpatient facilities from 1.28 million patients in FY2022 to 1.30 million patients in FY2022, an increase of 1.54%.⁶⁸

The FY2023 increase in enrollment and utilization is indicative of a long-term trend. The veteran population is declining—due to the death of World War II and Vietnam-era veterans—while enrollment in the VA health care system and health care utilization is growing (see Figure 6 and Table A-1). In FY2000, 18.4% of the veteran population enrolled in the health care system. In FY2023, 50% of the veteran population will have enrolled in the health care system.

Figure 6. Veteran Population, VA Enrollees, and VA Patients, FY2000-FY2023

Sources: Total "Veteran Population" numbers are from VetPop2018 (FY2018-FY2023), available at https://www.va.gov/vetdata/docs/Demographics/New_Vetpop_Model/1L_VetPop2018_National.xlsx., and an archived copy of an earlier version no longer available on the website (FY2000-FY2017). "Enrolled-VA Veterans" numbers and "Veteran Patients" numbers were obtained from the VA and/or the VA budget submissions to Congress for FY2002-FY2023; the number for each fiscal year is taken from the budget submission two years later (e.g., the FY2021 number is from the FY2023 budget submission). Notes: FY2023 total veteran population projected as of September 30, 2021. FY2022 and FY2023 veteran enrollee and patient data are estimates.

Some portion of the increase in enrollment among living veterans is likely due to maturity of the modern enrollment system.⁶⁹ However, multiple other factors may be contributing to increased enrollment and utilization of the health care system. For instance, Congress on multiple occasions has expanded qualifying criteria for enrollment in VA health care.⁷⁰ The services provided through VHA have also expanded over time, such as the addition of benefits for family caregivers, expansion of gender-specific care, and expansion of long-term care benefits, thereby increasing the appeal of the VA health care system.

VA anticipates that the veteran population will continue to decline—projecting 11.9 million veterans in FY2050.⁷¹ In addition, VA projects that enrollment will remain relatively constant through 2030 while the veteran population declines overall.⁷²

President's Request and Congressional Action

The VA's annual appropriations for the medical services, medical community care, medical support and compliance, and medical facilities accounts include advance appropriations that become available one fiscal year after the fiscal year for which the appropriations act was enacted. Therefore, the Consolidated Appropriations Act, 2022 (Division J; P.L. 117-103), provided FY2023 funding for these four accounts. However, in any given year, the Administration could request additional funding for the upcoming fiscal year and Congress could revise these amounts through the annual appropriations process. Across all four accounts, the President's budget increased by $7.46 billion over the advance appropriations amount in FY2023.⁷³ Most of this increase is due to an adjustment to the projected cost of claims for community care.⁷⁴ The FY2023 budget request for VHA totaled $123.57 billion, including medical care collections.⁷⁵

As required by the Veterans Health Care Budget Reform and Transparency Act of 2009 (P.L. 111-81), the President's FY2023 budget requests $128.1 billion in advance appropriations for the four medical care appropriations (medical services, medical community care, medical support and compliance, and medical facilities) for FY2024, an increase of approximately 7.9% over the FY2023-requested amount of $118.75 billion. In FY2024, the Administration's budget request would provide $74.0 billion for the medical services account, $33.0 billion for medical community care, $12.3 billion for the medical support and compliance account, and $8.8 billion for the medical facilities account.

The House-passed version of the MILCON-VA appropriations bill (Division F of H.R. 8294; H.Rept. 117-391) would have provided a larger VHA appropriation than the President's request for FY2023 ($83 million more), while the Senate Appropriations Committee MILCON-VA bill for FY2023 (S. 4759) recommended the same amount as the President's request. The House-passed bill would have included additional funding for existing medical care initiatives, such as gender-specific care for women and the substance use disorder program.

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides a total VHA appropriation of $123.57 billion including collections; equal to both the President's requested amount and the Senate Appropriations Committee (S. 4759) recommended amount (see Table 1).

The sections below detail the amounts requested for each VHA account for FY2023, including the funds provided in the House-passed bill, recommended in the Senate Appropriations Committee bill (S. 4759) for each account, and ultimately included in the enacted FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328).

Medical Services

The medical services account covers expenses for furnishing inpatient and outpatient care and treatment of veterans and certain dependents. It also includes 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 of the U.S. Code; cost of hospital food service operations; grants for adaptive sports programs for disabled veterans and members of the Armed Forces; beneficiary travel; prosthetics; Long-Term Services and Supports (LTSS); aid to state veterans' homes; assistance and support services for family caregivers; and costs associated with activation of newly constructed or leased VA medical care facilities, among other distinct activities.

For FY2023, the President's budget requested $70.58 billion for the medical services account, a $261 million increase from the FY2023 advance appropriated amount. The House-passed version of the MILCON-VA appropriations bill (Division F, Title II, of H.R. 8294), provided $78 million over the FY2023 President's request. The Senate Appropriations Committee MILCON-VA bill recommendation for FY2023 was the same as the President's request. Both the House-passed bill and the Senate Appropriations Committee bill provided FY2024 advance appropriations equal to the President's request of $74.0 billion.

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $70.58 billion for the medical services account, equal to both the President's requested amount and the Senate Appropriations Committee amount. It also provides FY2024 advance appropriations equal to the President's request of $74.0 billion.

Medical Community Care

Section 4003 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (P.L. 114-41) required the establishment of a separate new account for medical community care, beginning with the FY2017 appropriations cycle. The Jeff Miller and Richard Blumenthal Veterans Health Care and Benefits Improvement Act of 2016 (P.L. 114-315) authorized advance appropriations for the medical community care account. The account consolidates all community care programs in a single appropriation. It is the funding source for care that that eligible veterans receive through community health care providers. These programs include the Veterans Community Care Program (VCCP), the Camp Lejeune Family Member Program (CLFMP), CHAMPVA, the Foreign Medical Program (FMP), the Spina Bifida Health Care Program, the Children of Women Vietnam Veterans Health Care Benefits Program (CWVV), and the Indian Health Service (IHS)/Tribal Health Programs (THP) Reimbursement Agreements Program.

The medical support and compliance and the Information Technology accounts fund some expenses related to the community care program. These expenses include administrative expenses related to claims processing performed by the Third-Party Administrators (TPAs) and VHA, and software required for information technology (IT) systems related to the community care program.⁷⁶

The President's budget requested $28.46 billion for the medical community care account, a $4.3 billion increase over the FY2023 advance appropriated amount. The revised request amount is due to an adjustment to the projected cost of different types of community care claims (e.g., ambulatory care).⁷⁷

The House-passed version of the MILCON-VA appropriations bill (Division F, Title II, of H.R. 8294), provided $5 million less than the President's request. The Senate Appropriations Committee MILCON-VA bill for FY2023 (S. 4759) recommended the same amount as the FY2023 request. Both bills would have provided FY2024 advance appropriation amounts equivalent to the President's request.

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $28.46 billion for the medical community care account, equal to both the President's requested amount and the Senate Appropriations Committee amount. It also provides FY2024 advance appropriations equal to the President's request of $33.0 billion.

Medical Support and Compliance

The medical support and compliance account provides for expenses related to the management, security, and administration of VA's health care system through the operation of VA medical centers (VAMCs) and other medical facilities, such as community-based outpatient clinics (CBOCs) and Vet Centers. This includes among other things, VMAC leadership teams (Director, Chief of Staff, Chief Medical Officer, and Chief Nurse) and VAMC support functions, such as "quality of care oversight, security services, legal services, billing and coding activities, acquisition, procurement, and logistics activities, human resource management, logistics and supply chain management, and financial management."⁷⁸ This account also funds 18 Veterans Integrated Service Network (VISN)⁷⁹ offices, which include network management activities such as the following network leadership teams within each VISN: Network Director, Deputy Network Director, Chief Financial Officer, Chief Medical Officer, and Chief Information Officer.⁸⁰ This account also provides for expenses related to VHA Central Office (VHACO) operating units, such as offices of the Assistant Under Secretary for Community Care and Deputy Assistant Under Secretary for Community Care, the Office of the Assistant Under Secretary for Health for Clinical Services and the Chief Medical Officer (AUSH/CS), and the Office of Discovery, Education, and Affiliate Networks (DEAN), among other offices and suboffices.

The President's budget requested $11.07 billion for the medical support and compliance account, a $1.4 billion increase over the FY2023 advance appropriated amount.

Both the House-passed version of the MILCON-VA appropriations bill and the Senate Appropriations Committee bill would have provided the same amount as the President's request, and would have provided FY2024 advance appropriation amounts equivalent to the President's request.

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $11.07 billion for the medical support and compliance account, equal to both the President's requested amount, the House-passed MILCON-VA bill and Senate Appropriations Committee recommended amount. It also provides FY2024 advance appropriations equal to the President's request of $12.3 billion.

Medical Facilities

The medical facilities account funds expenses pertaining to the operations and maintenance of VHA's capital infrastructure. These expenses include utilities and administrative expenses related to planning, designing, and executing construction or renovation projects at VHA facilities. It also funds medical facility leases, including clinical space in CBOCs, engineering and environmental management, grounds maintenance, fire protection, nonrecurring maintenance, recurring maintenance and repairs, textile care processing and maintenance, and operating equipment maintenance and repairs, among others.

The President's budget requested $8.63 billion for the medical facilities account, a $1.5 billion increase over the FY2023 advance appropriated amount.

Both the House-passed version of the MILCON-VA appropriations bill and the Senate Appropriations Committee bill would have provided the same amount as the President's request. Both bills would have also provided FY2024 advance appropriation amounts equivalent to the President's request.

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $8.63 billion for the medical facilities account, equal to both the President's requested amount, the House-passed MILCON-VA bill and Senate Appropriations Committee amount. It also provides FY2024 advance appropriations equal to the President's request of $8.8 billion.

Medical and Prosthetic Research

As required by law, the medical and prosthetic research program (medical research) focuses on research into the special health care needs of veterans. This account provides funding for many types of research, such as investigator-initiated research; mentored research; large-scale, multisite clinical trials; and centers of excellence. VA researchers receive funding not only through this account but also from DOD, the National Institutes of Health (NIH), and private sources. The medical services, medical support and compliance, and medical facilities accounts also provide funds for additional expenses required for VAMCs supporting research activities.

In general, VA's research program is intramural; VA investigators conduct research at VA facilities and in approved off-site space occupied by VA under a legal agreement. Unlike other federal agencies, such as NIH and DOD, VA does not have the statutory authority to make research grants to colleges and universities, cities and states, or any other non-VA entities.

The President's budget requested $916 million for the medical and prosthetic research account, an increase of $34 million, or 3.9%, above the FY2022-enacted amount of $882 million. The VHA's major research priorities in FY2022 include, among others, traumatic brain injury (TBI), military exposures, precision oncology, and implementation of the Commander John Scott Hannon Veterans Mental Health Care Improvement Act of 2019 (P.L. 116-171).⁸¹

The House-passed version of the MILCON-VA appropriations bill would have provided $10 million more than the FY2023 request. The amount recommended by the Senate Appropriations Committee bill for FY2022 was the same as the request.

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $916 million for the medical and prosthetic research account, equal to both the President's requested amount and the Senate Appropriations Committee recommended amount.

Nonmedical Discretionary Programs Funding

National Cemetery Administration (NCA)

The majority of NCA's discretionary funding falls into the Operations and Maintenance category. VA requested a total of $430 million in FY2023 for this account—a $36 million increase for NCA's operations and maintenance expenses over the FY2022-enacted amount. The requested funding will provide for an estimated 135,079 interments, continued perpetual care of 4.2 million gravesites, and the operations and maintenance of 158 national cemeteries and 34 additional sites.⁸² The request also includes funding to support hiring an additional 64 full-time equivalent (FTE) employees, bringing the total number of FTEs from 2,217 in FY2022 to 2,281 in FY2023.⁸³

VA continues to work toward its goal of providing 95% of veterans with access to a cemetery within 75 miles of their homes. The $140 million major construction request would provide funding for a replacement cemetery in Albuquerque, NM; a gravesite expansion at Jefferson Barracks, St. Louis, MO; and Phase 1C at Western New York cemetery. VA requests 157.3 million in minor construction to assist with additional gravesite expansion and columbaria projects to continue providing burial space at the national cemeteries.⁸⁴

Division F of H.R. 8924 would have provided $430 million for NCA expenses in FY2023, the exact amount that VA requested in its budget submission. The House Appropriations Committee, in its report, expressed concern that VA is not adequately serving veterans in rural and geographically isolated areas. The committee also asserted that the criteria for creating a new national cemetery may not be adequate for certain areas and states where the state cemeteries do not meet the "national shrine standards."⁸⁵ The Senate Appropriations Committee also recommended $430 million for NCA in FY2023. The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $430 million for NCA expenses in FY2023.

VBA, General Operating Expenses

VA requested $3.86 billion in funding for VBA General Operating Expenses for FY2023. This amount was an estimated $409 million, or 11.8% increase, over the enacted FY2022 budget and was to support the hiring of 1,189 more FTEs than in 2022. The majority of the new hires were to be designated to address claims associated with environmental exposures.⁸⁶ In addition, VA's two "strategic and overarching themes" driving the increased budget request are benefits delivery and service connection for environmental exposure.⁸⁷

To address these priorities, VA requested $120.5 million to update, automate, and modernize the compensation and pension claims process to allow employees to focus on decisionmaking processes such as the adjudication and authorization of benefits. In addition, VA requested $34.7 million to continue expanding the pension automation efforts, which it estimated would decrease processing times from months to weeks or days.

Division F of H.R. 8294 would have provided $3.86 billion for VBA General Operating Expenses in FY2023, the exact amount VA requested. The committee asserted that this request will improve VBA's ability to address and process benefit claims, hire new claims processors, and continue the modernization and automation of the claims process. The main concerns expressed by the committee were toxic exposures, disability claims, data tracking and reporting related to burn pits, compensation and pension exams, and military sexual assault claims. The committee directed VA to continue reporting to Congress on its progress in these areas, along with its work to train, educate, and inform staff processing these claims.⁸⁸

The Senate Appropriations Committee, in S. 4759, recommended $3.86 billion for VBA general operating expenses in FY2023, the exact amount VA requested. The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $3.86 billion for necessary VBA operating expenses in FY2023.

Board of Veterans' Appeals

The Board of Veterans' Appeals (BVA) is an agency within VA established in 1933.⁸⁹ The BVA's role is to conduct hearings and make final decisions on behalf of the VA Secretary regarding appeals for veterans' benefits and services from VBA, VHA, and NCA, as well as the Office of General Counsel (OGC), that are presented to BVA for appellate review.

The FY2023 request for BVA was $285 million, a $57 million increase over the FY2022-enacted amount. The increased funding takes into consideration overtime payments to address the projected workload increase resulting from expanding the decisions that are now appealable, including new presumptive service conditions and VHA caregivers ability to appeal.⁹⁰ The requested budget would support 250 new full-time equivalent (FTE) staff and an additional 12 Veteran Law Judges.

Division F of H.R. 8294, would have provided $285 million for BVA in FY2023, the same amount VA requested. In its report, the committee acknowledged the work and number of hearings (mostly virtual) that BVA held during the COVID-19 pandemic and said that the recommended funding would allow BVA to increase the number of hearings it can hold.⁹¹ The Senate Appropriations Committee, in S. 4759, also recommended $285 million for BVA FY2023, and the final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $285 million for necessary BVA operating expenses in FY2023.

Information Technology

The information technology (IT) account provides funding for department-wide IT activities such as IT and telecommunications support, management of data systems, and acquisition of IT systems and department-wide cybersecurity efforts, among other things.

The President's FY2023 request for IT was $5.78 billion, an increase of 939.2 million above the FY2022-enacted level. The requested amount included $142.1 million for IT development, such as building new software applications; $4.15 billion for operations and maintenance (O&M); and $1.49 billion for staffing and administrative support services.⁹²

The House-passed measure, Division F of H.R. 8294, would have provided approximately $5.78 billion. During floor debate, amendments were adopted that would have transferred $1 million from this account to the medical services account to support VA Suicide Prevention Coordinators, and transferred another $1 million to the grants for construction of state veterans cemeteries account to help states and tribal organizations establish, expand, and improve veterans cemeteries.⁹³ The Senate majority committee FY2023 MILCON-VA appropriations bill (S. 4759 as introduced) recommended $5.78 billion for this account, which was same as the Administration's request.

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $5.78 billion for the IT systems account (see Table 1). This amount includes $1.49 billion for salaries and expenses, $4.15 billion for operation and maintenance of existing IT programs, and $142.1 million for IT development.

Electronic Health Record Modernization (EHRM)⁹⁴

On May 17, 2018, VA signed a contract with Cerner Corporation (now Oracle Cerner, after Oracle Corporation completed the acquisition of Cerner on June 8, 2022) to modernize its electronic health care record system. This account provides funding for activities required to plan and deploy the Cerner Millennium electronic health care record system at VA medical facilities. This includes funding for the Electronic Health Record (EHR) contract, infrastructure readiness, and expenses related to the Project Management Office (PMO). Beginning with the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act for FY2018 (P.L. 115-141), Congress established this account, which is "intended to be the single source of funding within VA for the electronic health record effort" (H.Rept. 115-673). The Office of the Deputy Secretary is the only office responsible for administering the funds in this account.

On October 24, 2020, VA began initial deployment of the Cerner Millennium EHR at the Mann-Grandstaff VAMC in Spokane, WA, and the West Consolidated Patient Account Center. Due to various implementation challenges, and potential patient safety issues encountered during transition to the new EHR system, as highlighted by the Government Accountability Office (GAO), VA OIG, and medical center staff, on March 19, 2021, Secretary Denis McDonough announced a strategic review of the EHRM program.⁹⁵ The results of this review were released in July 2021, and a final update was released in November 2021.⁹⁶ On December 1, 2021, VA announced an updated plan to move forward with the EHRM Program, mitigating challenges documented during the strategic review and implementing lessons learned and feedback from VA medical providers at initial deployment sites.⁹⁷ Under the new plan, VA has revised its EHRM deployment schedule for FY2022, FY2023, and the start of FY2024, and is working to finalize the remainder of the 10-year deployment timeline. The new plan also includes revised EHRM governance and management structures.⁹⁸ Thus far, VA has deployed the new EHR to VA medical facilities in Spokane, WA; Columbus, OH; Walla Walla, WA; Roseburg, OR; and White City, OR.⁹⁹ Several recent congressional hearings have highlighted the ongoing challenges of the new EHR rollout.¹⁰⁰ Generally, these issues can be categorized as (1) patient safety, (2) system reliability (i.e., system outages and degradations of the of the Oracle Cerner Millennium EHR platform), (3) adequate training of clinicians and staff, (4) information technology (IT) and other physical infrastructure readiness, and (5) program governance. On October 13, 2022, VA announced that it has paused further EHR deployment at all sites until June 2023.¹⁰¹

The Further Consolidated Appropriations Act, 2020 (P.L. 116-94); the Consolidated Appropriation Act, 2021 (P.L. 116-260); the Consolidated Appropriations Act, 2022 (P.L. 117-103), and the Consolidated Appropriations Act, 2023 (P.L. 117-328) requires VA to submit quarterly reports to Senate and House Committees on Appropriations detailing obligations, expenditures, and EHR deployment strategy by VA medical facility. Additionally, GAO is required to perform quarterly reviews of the EHR deployment.

The President's FY2023 appropriation request for the EHRM effort was $1.76 billion, about $541 million less than the FY2022-enacted level. Of this amount $1.12 billion was for EHR deployment at VAMC and its associated clinics and other ancillary facilities, $441 million was for infrastructure readiness to cover IT infrastructure costs prior EHR deployment, and $199 million was for program management for costs associated with staff, contractor support, leases, and employee training.

The House-passed measure, Division F of H.R. 8294, would have provided $1.76 billion for the EHRM effort, the same amount as the President's request. The Senate majority committee FY2023 MILCON-VA appropriations bill (S. 4759 as introduced) recommended $1.68 billion, including the administrative rescission.

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $1.61 billion for the EHRM initiative. In the explanatory statement to accompany the act, the committees stated

While the Committees remain supportive of the need to modernize VA's electronic health record system, there continue to be wide-ranging and alarming implementation issues with the new system, including serious usability problems that have led to or contributed to instances of patient harm and reduced employee productivity. The Committees support the Department's decision to pause further deployments to address problems with the new system and improve the operation at existing sites. The Committees are hopeful that the Department will resolve outstanding issues expeditiously and in a manner that will allow the Department to resume rollout of the new system safely and efficiently in Summer 2023, as planned.¹⁰²

Furthermore, the committees are requiring the VA to submit reports to the Committees on Appropriations on action taken to

(1) revise and enhance the EHR training program; (2) independently validate the efficacy of the super user program and the training for such program; (3) ensure proper medication management and accurate patient data through such record; (4) demonstrate that patient record flags that identify veterans who are at high risk for suicide are properly displayed in such record; and (5) implement a policy for regular updates to affected employees about progress on and estimated completion dates for issues arising from trouble tickets.¹⁰³

Construction

Construction accounts include major construction, minor construction, and construction and renovation grants for state-extended care facilities, as well as grants for state veterans cemeteries.

The major construction account provides funds for capital projects costing $20 million or more that are intended to design, build, alter, extend, or improve a VHA facility. Projects identified through the Strategic Capital Investment Planning (SCIP) process are submitted for congressional authorization. Congress reviews, approves, and funds major construction on a project-by-project basis. Typical major VA construction projects are replacements of hospital buildings, the addition of large ambulatory care centers, and new hospitals or nursing homes.

The minor construction account provides funds for capital projects costing less than $20 million that are intended to design, build, alter, extend, or improve a VHA facility. The total cost of a minor construction project cannot be greater than this statutory threshold. Minor construction projects are approved by the Office of Capital Asset Management and Support at the VA Central Office through the SCIP process. The grants to the state-extended care facilities account provides participating states funding to construct or acquire of state home facilities, including funds to remodel, modify, or alter existing buildings used for furnishing domiciliary, nursing home, or hospital care to veterans.¹⁰⁴ A grant may not exceed 65% of the total cost of the project. Lastly, the grants for the construction of veterans cemeteries account provides funding to states, territories, and federally recognized tribal governments for the establishment, expansion, or improvement of state and tribal veterans cemeteries.

The President's FY2023 budget request for construction and construction grants was approximately $2.27 billion. This amount included $1.45 billion for the major construction account, $626.1 million for the minor construction account, $150 million for grants for construction of state-extended care facilities, and $50 million for grants for construction of veterans cemeteries. In addition, the budget request proposed $804.5 million from the Recurring Expenses Transformational Fund to supplement the major construction account and $163.5 million from this fund for minor construction projects in FY2023.¹⁰⁵

The House-passed measure, Division F of H.R. 8294, provided $2.2 billion for construction and construction grants. This amount included $1.37 billion for the major construction account, $626.11 million for the minor construction account, $150 million for grants for construction of state-extended care facilities, and $51 million for grants for construction of veterans cemeteries. According to the House Committee report (H.Rept. 117-391), "the Committee supports the Department's plan to allocate [$804.5 million] from the Recurring Expenses Transformational Fund to support Major Construction projects in Portland, OR, Canandaigua, NY, Fort Harrison, MT, and for other purposes within the account"; furthermore, "[the] Committee supports the Department's plan to allocate [$163.5 million] from the Recurring Expenses Transformational Fund to support Minor Construction projects, which would support the completion of construction projects at VA facilities nationwide as well as installation of zero-emission vehicle charging infrastructure on VA campuses."¹⁰⁶

The final FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) provides $2.2 billion for construction and construction grants. This includes $1.45 billion for major construction account, $626.11 million for the minor construction account, $150 million for grants for construction of state-extended care facilities, and $50 million for grants for construction of veterans cemeteries. The final enacted MILCON-VA Appropriations Act does not provide the requested new authority for VHA to use funds from the major construction account for land acquisition (see Table 1).

The explanatory statement to accompany the act, supports VA's plan to allocate $804.5 million of the Recurring Expenses Transformational Fund balances to fund construction projects in Portland, OR; Canandaigua, NY; Fort Harrison, MT. Additionally, the agreement supports VA's plan to allocate $88.49 million of the Recurring Expenses Transformational Fund balances to fund facility improvements at existing VA medical facilities.¹⁰⁷

Asset and Infrastructure Review

Title II of the VA MISSION Act (P.L. 115-182) included the VA Asset and Infrastructure Review (AIR) Act of 2018. The AIR Act establishes a process for realigning and modernizing VHA facilities. Under this process, VA is to develop criteria for selecting VHA facilities to dispose of, modernize, or acquire, so as to better meet the health care needs of veterans.¹⁰⁸ VA must then create a list of recommendations based on those criteria and submit it to a newly created Asset and Infrastructure Review Commission (the Commission). This nine-member commission reviews and evaluates VA's recommendations but may not alter them, unless it determines that one or more recommendations are inconsistent with the criteria. The Commission submits the list of recommendations to the President, who either approves the list in its entirety or sends it back to the Commission with the reasons for disapproval. The Commission shall take into account the reasons for disapproval and submit a second report to the President with recommendations for realignment and modernization of VHA facilities. The President may approve or disapprove the revised list. If the President approves the original or revised list, then VA must begin implementation of the recommendations within three years, unless Congress passes a joint resolution of disapproval, in which case the process terminates.¹⁰⁹

As required by the AIR Act, VA conducted its market assessments, which are health care service delivery plans for 96 Veterans Integrated Services Networks (VISNs) markets, known as the Market Area Health Systems Optimization (MAHSO) analysis, and publicly released the department's recommendations on March 14, 2022.¹¹⁰ Furthermore, as required by the AIR Act, President Biden submitted nominees to the AIR Commission to the Senate. On June 27, 2022, Senate Veterans' Affairs Committee Chairman Jon Tester and several other Senators issued a statement stating that the AIR Commission process would not move forward. According to the press release, "Without the Senate's approval of the nominees, no Commission will be established and the process as outlined by the VA MISSION Act will not move forward."¹¹¹

The Administration's budget request for FY2023 included a request of $5 million to support the work of the Commission, including staff, contractual services, and travel costs. During floor debate of Division F of H.R. 8294, an amendment offered by Representative Jim McGovern was adopted that eliminated funding for the AIR Commission and transferred the $5 million to the medical services account to support health care for homeless veterans.¹¹²

The Senate majority committee FY2023 MILCON-VA appropriations bill (S. 4759 as introduced) provided no funding for the AIR Commission. According to the majority explanatory statement:

The Committee provides no funding for the AIR account. While VA providing recommendations to the AIR Commission was required by statute, bipartisan concerns were raised related to the inaccuracy, completeness, and poor quality of the data used for the market analysis, much of which was done prior to shifts in healthcare resulting from the COVID-19 pandemic. Additional concerns were raised related to the potential consequences of specific recommendations, such as the creation of additional barriers to care (e.g., increased travel time), and at this time, the nominated Commissioners are not expected to be approved by the Senate or seated as part of the Commission. Without Commissioners to review and act upon recommendations, the AIR account requires no funding.¹¹³

Section 208 of the AIR Act provides the Secretary authority to continue certain activities. This includes recommendations for future asset reviews, where the Secretary may, after consulting with veterans service organizations (VSO), include in congressional budget submissions recommendations for future commissions or other capital asset realignment and management processes. Similarly, the VA MISSION Act (P.L. 115-182) included a requirement for a Quadrennial VHA review, which requires VHA to perform a market area assessments regarding the health care services furnished under the laws administered by the Secretary.¹¹⁴ During a monthly press conference held on July 20, 2022, Secretary Denis McDonough stated

The Mission ACT does require us to update the market assessments on which the recommendations from March were based. So, they require us to do that. That statute requires us to do that every four years. I don't see any of the provisions in the House or Senate right now stopping us from doing that and doing that, updating those assessments is really important. I think one thing everybody agrees on is the assessments that were made initially are now dated in as much as they're based on a pre-pandemic view of healthcare. So, we will continue to update those market assessments. We will then use those market assessments to collaborate with our stakeholders across the board. That includes Congress, of course, but it also includes Veterans, VSOs, local providers who are in our network for example, our academic affiliates that Dr. Ramoni talked about. And that will then inform our internal infrastructure modernization planning, the so-called [Strategic Capital Investment Planning] SCIP process, the strategic capitalization investment program. So we will continue that of our own accord, using this requirement to do the quadrennial reviews. Lastly, I anticipate, given the steps the President has taken to date and his focus on the fact that our facilities are relatively older by an order of magnitude than the average facility in the private sector, that the President will continue to ask for the kind- the levels of funding necessary for us to modernize the system.¹¹⁵

The FY2023 MILCON-VA Appropriations Act (Division J of P.L. 117-328) does not provide any funding for this account. In the explanatory statement to accompany the act, the committees' state

The agreement provides no funding for the Asset and Infrastructure Review account given the Asset and Infrastructure Review Commission was not seated. As the Department moves forward with the quadrennial market assessments and Strategic Capital Investment Planning Process, when recommending future infrastructure changes the Department is urged to focus on maintaining or improving veterans' access to medical care nationwide, including in dense urban or rural areas. In addition, the Department should consider how any changes could create additional barriers to care (e.g., increased travel time).¹¹⁶

Appendix A. Veteran Population, VA Enrollees, and VA Patients, FY2000-FY2023

Appendix B. VA Appropriations FY1995-FY2022