DOD and VA Health Care
Incentives Program for Sharing Resources Gao ID: GAO-04-495R February 27, 2004Combined, the Department of Defense (DOD) and the Department of Veterans Affairs (VA) provide health care services to about 12 million beneficiaries at an estimated cost of about $53 billion for fiscal year 2004--$26.7 billion for DOD and $26.5 billion for VA. In 1982 the Congress passed the VA and DOD Health Resources Sharing and Emergency Operations Act (Sharing Act) to promote more cost-effective use of health care resources and more efficient delivery of care. Specifically, the Congress authorized military treatment facilities and VA medical centers to enter into sharing agreements to buy, sell, and barter medical and support services. To further encourage on-going collaboration, the Congress, in section 721 of the Bob Stump National Defense Authorization Act (NDAA) for Fiscal Year 2003, directed the Secretary of Defense and the Secretary of Veterans Affairs to establish a joint incentives program to identify and provide incentives to implement, fund, and evaluate creative health care coordination and sharing initiatives between DOD and VA. To facilitate the program, each Secretary is required to contribute a minimum of $15 million from each department's appropriation into an account established in the U. S. Treasury for each fiscal year from 2004 through 2007. DOD's TRICARE Management Activity and VA's Medical Sharing Office administer the incentive fund program. The offices have jointly issued a request for proposals from DOD and VA medical facilities around the country.
During the first five months of the program DOD and VA have established criteria for evaluating proposals. As of February 25, 2004, the departments are reviewing 57 proposals that have been submitted. DOD and VA program officials have not established a firm date for final selection but anticipate it will take place during the summer of 2004. While the agencies have made progress in implementing the program, they have not made contributions to the fund; they anticipate doing so by March 31, 2004. VA has raised a concern whether services provided to veterans will have to be commensurate with its contributions to the sharing incentive fund. DOD and VA officials are discussing how the fund contributions will be used. DOD and VA officials agreed the information in this report is accurate.
GAO-04-495R, DOD and VA Health Care: Incentives Program for Sharing Resources
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February 27, 2004:
Congressional Committees:
Subject: DOD and VA Health Care: Incentives Program for Sharing
Resources:
Combined, the Department of Defense (DOD) and the Department of
Veterans Affairs (VA) provide health care services to about 12 million
beneficiaries at an estimated cost of about $53 billion for fiscal year
2004--$26.7 billion for DOD and $26.5 billion for VA. In 1982 the
Congress passed the VA and DOD Health Resources Sharing and Emergency
Operations Act (Sharing Act) to promote more cost-effective use of
health care resources and more efficient delivery of care.[Footnote 1]
Specifically, the Congress authorized military treatment facilities and
VA medical centers to enter into sharing agreements to buy, sell, and
barter medical and support services. To further encourage on-going
collaboration, the Congress, in section 721 of the Bob Stump National
Defense Authorization Act (NDAA) for Fiscal Year 2003[Footnote 2],
directed the Secretary of Defense and the Secretary of Veterans Affairs
to establish a joint incentives program to identify and provide
incentives to implement, fund, and evaluate creative health care
coordination and sharing initiatives between DOD and VA. To facilitate
the program, each Secretary is required to contribute a minimum of $15
million from each department's appropriation into an account
established in the U. S. Treasury[Footnote 3] for each fiscal year from
2004 through 2007. DOD's TRICARE Management Activity and VA's Medical
Sharing Office administer the incentive fund program. The offices have
jointly issued a request for proposals from DOD and VA medical
facilities around the country.
The NDAA requires that we submit a report on the implementation and
effectiveness of the program by February 28, 2004, and by February 28TH
for each year thereafter that the program is in effect. As discussed
with the committees of jurisdiction, since the program is in its
initial development stage, our objective was limited to reviewing the
status of the program's implementation phase--primarily the process for
selecting proposals--during the first five months of fiscal year 2004.
To do so, we reviewed the DOD's and VA's plans for implementing the
DOD-VA Health Care Sharing Incentive Fund--including proposal
submission guidelines and evaluation and selection criteria--and
interviewed agency officials from DOD and VA involved in the oversight
of the program. Our work was conducted from October 2003 through
February 2004 in accordance with generally accepted government auditing
standards.
Results in Brief:
During the first five months of the program DOD and VA have established
criteria for evaluating proposals. As of February 25, 2004, the
departments are reviewing 57 proposals that have been submitted. DOD
and VA program officials have not established a firm date for final
selection but anticipate it will take place during the summer of 2004.
While the agencies have made progress in implementing the program, they
have not made contributions to the fund; they anticipate doing so by
March 31, 2004. VA has raised a concern whether services provided to
veterans will have to be commensurate with its contributions to the
sharing incentive fund. DOD and VA officials are discussing how the
fund contributions will be used. DOD and VA officials agreed the
information in this report is accurate.
Proposal Submission and Selection Process:
The 57 proposals that are under review by DOD and VA are considered
concept proposals--they contain a broad range of sharing activities.
DOD and VA agency officials at each submitting medical facility jointly
developed these concept proposals. Examples of sharing services and
resources included in the concept proposals are:
* magnetic resonance imaging,
* staffing,
* telemedicine,
* cardiac catheterization laboratories,
* outpatient care,
* sleep study analysis, and:
* information management/information technology.
According to program officials, the two agencies will review the
concept proposals and select the most promising. The selection and
evaluation criteria for the concept proposals include the following:
* support DOD's and VA's joint long-term approach to meeting the
health care needs of their beneficiary populations,
* improve beneficiary access,
* exportability to other facilities,
* maximize the number of beneficiaries that would benefit from the
initiative,
* result in cost savings or cost avoidance,
* develop in-house capability at a lesser cost for services now
obtained by contract, and:
* demonstrate that the initiative will be self-sustaining--that is, a
separate source of funding other than the incentive fund for recurring
costs--within one or two years of the initial award.
Officials at each location whose proposals are selected will be asked
to submit a more detailed final proposal with a business case analysis
that will be reviewed by DOD's and VA's Chief Financial Officers and
approved by the interagency Health Executive Committee[Footnote 4].
Program Funding and Use of Funds:
VA has raised a concern about the extent to which restrictions on the
use of its medical appropriations would continue to apply once funds
from those appropriations are transferred to the DOD-VA Health Care
Sharing Incentive Fund[Footnote 5]. DOD and VA officials are discussing
how the fund contributions will be used and plan to reach agreement
before final proposals for projects are selected. DOD and VA expect to
transfer funds to the DOD-VA Health Care Sharing Incentive Fund by
March 31, 2004, so that money is available when selection of final
proposals is made during the summer of 2004.
DOD and VA program officials as well as DOD's and VA's Offices of
General Counsel reviewed a draft of this report and provided technical
comments, which were included where appropriate. They agreed the
information in the report is accurate.
We are sending copies of this report to the Secretary of Defense, the
Secretary of Veterans Affairs, and other interested parties. We will
provide copies of this report to others upon request. In addition, the
report is available at no charge on the GAO Web site at http://
www.gao.gov. If you or your staffs have any questions, please contact
me at (202) 512-7101 or Michael T. Blair, Jr., at (404) 679-1944. Aditi
Archer and Helen Desaulniers made key contributions to this report.
Signed by:
Cynthia A. Bascetta:
Director, Health Care--Veterans' Health and Benefits Issues:
Congressional Committees:
The Honorable John Warner:
Chairman:
The Honorable Carl Levin:
Ranking Minority Member:
Committee on Armed Services:
United States Senate:
The Honorable Arlen Specter:
Chairman:
The Honorable Bob Graham:
Ranking Minority Member:
Committee on Veterans' Affairs:
United States Senate:
The Honorable Duncan Hunter:
Chairman:
The Honorable Ike Skelton:
Ranking Minority Member:
Committee on Armed Services:
House of Representatives:
The Honorable Christopher Smith:
Chairman:
The Honorable Lane Evans:
Ranking Minority Member:
Committee on Veterans' Affairs:
House of Representatives:
(290276):
FOOTNOTES
[1] Pub. L. No. 97-174, 96 Stat. 70.
[2] Pub. L. No. 107-314, §721(a)(1), 116 Stat. 2589, 2595 (2002).
[3] DOD-VA Health Care Sharing Incentive Fund.
[4] The Health Executive Committee membership includes senior leaders
from DOD and VA who are working to institutionalize DOD and VA sharing
and collaboration to ensure the efficient use of health services and
resources. The committee is co-chaired by the Assistant Secretary of
Defense for Health Affairs and the Department of Veterans Affairs Under
Secretary for Health.
[5] VA's medical care appropriations are available for the expenses of
medical services, medical administration, and medical facilities for VA
beneficiaries. Section 1301(a) of title 31, United States Code,
provides that appropriations shall be applied only to the objects for
which they were made, except as otherwise authorized. In addition,
section 1532 provides that, in the absence of statutory provisions to
the contrary, appropriations authorized to be transferred from one
account to another are available for the same purpose provided by the
law appropriating the funds.
