We began joint discussions with the IHS and DVA last year. The objectives of these talks centered on looking at ways in which the Departments can assist one another in meeting their individual missions, as well as identifying barriers and constraints on sharing and the means to overcome them.

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I am aware of this committee's interest in the potentials of federal health sharing, and I agree with the positive benefits to be derived. We are approaching these initiatives prudently, however, based on the significant reductions in both the Defense budget and the manpower endstrengths, as well as the unique missions of each Department. Additionally, a major thrust of our coordinated care endeavor is to optimally utilize our military medical facilities. With the changes occurring within the military health service system, we must proceed with care when committing our own resources. Nevertheless, as we pursue network development in both catchment and noncatchment areas, a real opportunity may exist to include beneficiaries from the other Departments thereby allowing for increased negotiating power.

PHYSICIANS IN COMMAND ASSIGNMENTS

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This committee has registered concern with the administrative expertise of our military hospital commanders. Our goal is to select the best qualified health professional officers for command of military medical treatment facilities. One premise in achieving that goal is that an individual must have a minimum amount of knowledge, skills and leadership experience to be a good commanding officer. A second premise is that there are many ways in which these qualifications might be acquired by an individual, via a combination of formal education, military schooling, and career experiences; and, that the resultant diversity will strengthen the management expertise within the military health services system.

Responding to the committee's concern, I created a task force comprised of DoD representatives from Force Management and Personnel, Reserve Affairs, the Joint Staff, the Military Services, the Uniformed Services University of the Health

Sciences, the Army's health care administration affiliate program with Baylor University, and my staff. The task force was charged to thoroughly analyze all aspects of this issue and to formulate processes for certifying that prospective commanders have the requisite knowledge, skills and experience needed to be

successful. I expect strong and specific recommendations from the task force; and, following my review, I will direct

implementation promptly.

CONCLUSION

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Military medicine is a vibrant part of the Department of Defense as well as an active leader in this nation's health care

arena. Our objectives, our directions are many and they are ambitious. We are responsible for the consolidated Defense Health Program, we are implementing coordinated care, we are forging ahead with the Composite Health Care System, we are initiating and refining quality assurance programs, we are moving out with health promotion initiatives, we are maintaining the pulse of medical readiness, and much more. All of these endeavors focus on our single goal, which is to provide the highest quality health care to our beneficiaries.

As we progress with coordinated care and these many activities and programs, I look forward to future deliberations with this committee, and hope you will continue your strong support for military medicine.

BUDGET JUSTIFICATION

Mr. MURTHA. Do the Surgeons General have a statement?

Dr. MENDEZ. No, sir.

Mr. MURTHA. Thank you, Dr. Mendez. We feel just starting to look at the budget for military medicine that the justification leaves something to be desired. For instance, this is a $16 billion program. We have Committees that meet all year long and have hearings all year long for $10 billion and $12 billion programs. This justification was 17 pages, and when I was walking around the room here someone said we are micro-managing the military end of military medicine. I will tell you this; we are trying to help people. That is what we are trying to do. I get infuriated when I run into bureaucratic obstacles to helping people because some people just want their own jurisdiction. Some of the results we heard today are that kind of bureaucratic red tape.

A woman told us this morning that she is bankrupt. She lost her house. Her husband is a retired service person. Now the military department is suing her for $200,000. She has nothing. She is taking care of a husband, herself, and finally we are getting it worked out. We tried to change the law because of Congressman Bill Young's suggestion so that these disabled people would be taken care of and someone says we are micro-managing military medicine. If it comes to micro-managing, we will get more than 17 pages of justification. We know it is an important program and our job on this Committee is to take care of people and we think that you have the same thing in mind. We hope that you have the same thing in mind.

I get so frustrated about excuses that we hear about what can't be done rather than taking care of these people. We have provided extra money for AIDS research. We are providing a research facility at Walter Reed, which we think will be a premiere facility because of work done on this Committee.

Because of some of the things we have found out in the field, we have tried to add programs which we thought would be beneficial, working closely with you trying to promote initiatives that would finally take care of dependents. When I hear complaints-and I don't represent a military district from dependents that they can't have access to military hospitals, it is really frustrating.

When I hear a woman testify before this Committee that the Department is suing her after she has been bankrupt by some bureaucratic discrepancy, it is abhorrent. But we have to have more than 17 pages of justification material for a program that is $16 billion, and our staff will be working with your staff to get more justifica

tion.

CHAMPUS REFORM INITIATIVE

We have started to pay more and more attention as we go along, trying to make sure that we provide good quality care at the lowest possible price. The Rand Corporation gave us some estimates. A preview of the latest Rand study indicates that the CHAMPUS Reform Initiative in California worked very successfully, a 28 percent drop in mental health costs there versus a 64 percent increase in non-CRI areas. We know that is a big cost to all departments.

But we have a system that is working successfully there. We are disappointed in the request for proposal-RFP. We think you make it impossible-whether it is this contract or any contract, to bid on the same type of care, and when you have a 95 percent satisfaction rate-that is the rate and Rand agrees with this. When we read articles like we did in the Wall Street Journal about some of the dissatisfaction, we know it can be improved and we stand ready to work with you in trying to improve it.

DISABLED BENEFICIARIES

Let's talk, first of all, about the disabled provision that we put in the bill this past year at Congressman Young's recommendation. You know what provision I am talking about?

Dr. MENDEZ. Yes, sir.

Mr. MURTHA. Have you implemented this legal provision?

Dr. MENDEZ. No, Mr. Chairman. Our reactions about that were similar. Let me share mine with you. When I learned recently the significant time that was still required to complete the administrative steps for implementation of this provision I was not only dismayed but I was deeply upset. I immediately directed my staff to proceed with an interim rapid implementation of claims statements even before rule making is completed. I believed that that was the fair thing to do. As a result of that direction, a firm plan was put together. It is now complete.

We will be working with various beneficiary organizations in getting information to potentially eligible beneficiaries. A letter is going to the fiscal intermediaries specifically about that and we will be able to accept claims within about one week.

Remember, these were my patients or still are. To that effect, I know, indeed, what the feeling is from people in terms of their needs. So this was my reaction, not unlike yours.

This action is quite recent, but it is now in place so that we will be able to follow through.

Mr. MURTHA. One of the things I asked the panel of association representatives this morning was had anyone contacted you about any of the changes? So you have not got even-you have just made the decision and you haven't had

Dr. MENDEZ. I received the finalities of what I just said to you yesterday, sir, from the Office of CHAMPUS in Denver.

Mr. MURTHA. We look forward to seeing what the results are and how many people are covered by that provision.

Dr. MENDEZ. I look forward to sharing it with you also, because we are seeking the same thing.

CENTRALIZED HEALTH CARE POLICY

Mr. MURTHA. Last year, the department recognized the need to centralize the health care policy funding in your office. As you know, we supported that policy. Under the DOD concept, the Service Surgeons General executed consistent centralized policy guidance. How has this new policy worked?

Dr. MENDEZ. We reorganized on the basis of the directive from the Deputy Secretary of Defense 1 October. Under this DOD con