By Andy Sullivan and Kristin Roberts

WASHINGTON, July 25 (Reuters) - The U.S. military health care system for wounded troops is complex and confusing and must be overhauled so Iraq and Afghanistan war veterans receive needed care, a presidential commission urged on Wednesday.

The commission, appointed by President George W. Bush following the Walter Reed Army Medical Center scandal earlier this year, called for the first major reform of the military health bureaucracy in 50 years.

It called on the Bush administration to restructure how troops' disabilities are determined and compensated, and force more coordination between the Pentagon and Veterans Affairs Departments. It also urged Congress to expand laws aimed at easing the burden on families of wounded troops.

"We knew that the system had some problems and we knew Band-Aids were not going to cut it," said Donna Shalala, former Health and Human Services secretary under the Clinton administration and a co-chair of the panel.

The commission gave Bush its findings in a 29-page report. After the meeting, he told reporters the recommendations were "very interesting and important suggestions," but did not say whether or how they might be adopted.

Bush ordered a review in February of the care received by wounded U.S. troops returning from Iraq and Afghanistan after reports that many faced neglect at the Walter Reed Army Medical Center, the premier U.S. military hospital.

A Washington Post article found soldiers were living in a run-down building that was infested with mice, mold and cockroaches. Many soldiers also struggled with red tape in trying to get treatment.

More than 1.5 million U.S. service members have been sent to Iraq and Afghanistan since 2001. About 28,000 have been wounded in action, with about 3,100 classified as seriously injured.

SIX RECOMMENDATIONS

The group tasked with the review, officially called the President's Commission on Care for America's Returning Wounded Warriors, surveyed more than 1,700 current and former service members wounded in those wars and offered six recommendations.

Taken together, the recommendations aim to force the Pentagon and VA to work more closely and create a streamlined system easily understood and accessed by all troops returning from war -- both those who remain in the military and those who return to civilian life.

Among the recommendations, the commission said the Pentagon and VA should develop integrated teams of medical professionals, social workers and vocational rehabilitation staff to create recovery plans for injured troops.

The Pentagon and VA also should jointly establish a corps of case workers, or "recovery coordinators," to manage care and ensure fast treatment.

The commission called for the Pentagon and VA to create a single, standardized medical examination as well. That exam would determine a wounded service member's fitness to serve and determine initial disability levels used by the VA.

"This recommendation gets the DoD completely out of the disability business," the panel's report said, saying it eliminates confusing, parallel systems of ratings and compensation.

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