Major Management Challenges and Program Risks
Department of Veterans Affairs Gao ID: GAO-03-110 January 1, 2003In its 2001 performance and accountability report on the Department of Veterans Affairs (VA), GAO identified management challenges related to health care quality, access, resource management, and disability claims processing. In addition to these and other continuing challenges, VA must now prepare for biological and chemical acts of terrorism. The information in this report aims to sustain congressional attention and a departmental focus on continuing to make progress in addressing these challenges and ultimately overcoming them. This report is part of a special series of reports on government-wide and agency specific issues.
VA has taken a number of actions to address its management challenges. VA has greatly increased veterans' access to health care by opening hundreds of outpatient clinics. While VA has made some progress in improving disability claims processing, GAO has added modernizing federal disability programs to its high-risk list because of fundamental problems with outmoded criteria and the need to address challenges in claims processing. Additional actions are needed for VA to successfully overcome other challenges as well. Ensuring access to quality health care: Although VA has opened hundreds of outpatient clinics, waiting times are still a significant problem. To help address this, VA has taken several actions including the introduction of an automated system to schedule appointments. VA must also better position itself to meet the changing needs of an aging veteran population by improving nursing home inspections and increasing access to non-institutional long-term care services. Managing resources and workload to enhance health care delivery: VA has begun to make more efficient use of its health care resources to serve its growing patient base. However, to meet the growing demand for care, VA must carry out its plan to realign its capital assets and acquire support services more efficiently. At the same time, VA needs to improve its process for allocating resources to its 21 health care networks to ensure more equitable funding. VA must also seek additional efficiencies with the Department of Defense, including more joint purchasing of drugs and medical supplies. Preparing for biological and chemical acts of terrorism: Following the attacks of September 11, 2001, VA determined that it needed to stockpile pharmaceuticals and improve its decontamination and security capabilities. VA also has new responsibilities to establish four medical emergency preparedness centers. Improving veterans' disability program: VA acted to improve its timeliness and quality of claims processing, but is far from achieving its goals. Of greater concern are VA's outmoded criteria for determining disability and its capacity to handle the increasing number and complexity of claims. VA will need to seek solutions to providing meaningful and timely support to veterans with disabilities. Developing sound department-wide management strategies to build a high-performing organization: Since 1997, VA has spent about $1 billion annually on its information technology. VA has established executive support and is making strides in developing an integrated department-wide enterprise architecture. To safeguard financial, health care, and benefits payment information and produce reliable performance and workload data, VA must sustain this commitment.
GAO-03-110, Major Management Challenges and Program Risks: Department of Veterans Affairs
This is the accessible text file for GAO report number GAO-03-110
entitled 'Major Management Challenges and Program Risks: Department of
Veterans Affairs' which was released on January 01, 2003.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products‘ accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
Performance and Accountability Series:
January 2003:
Major Management Challenges and Program Risks:
Department of Veterans Affairs:
GAO-03-110:
A Glance at the Agency Covered in This Report
The Department of Veterans Affairs administers a variety of programs,
including one of the world‘s largest health care systems and a
comprehensive benefits program. The department‘s complex health and
benefits missions include
* providing directly and through contractors primary and specialty
care, and related medical and social support services to veterans;
* managing special health care related programs, such as those for
Gulf War veterans, post-traumatic stress disorder, and hepatitis C;
* conducting and supporting medical education and research;
* providing backup health care services to the Department of Defense
during war, and supporting communities during national emergencies;
* providing monthly compensation payments for disabilities
sustained or aggravated during active military service; and
* providing monthly pension payments to needy disabled wartime
veterans and to needy surviving spouses and dependent children of
deceased wartime veterans.
The Department of Veterans Affairs‘ Budgetary and Staff Resources.
[See PDF for Image]
[End of Figure]
This Series
This report is part of a special GAO series, first issued in 1999 and
updated in 2001, entitled the Performance and Accountability Series:
Major Management Challenges and Program Risks. The 2003 Performance
and Accountability Series contains separate reports covering each
cabinet department, most major independent agencies, and the U.S.
Postal Service. The series also includes a governmentwide perspective
on transforming the way the government does business in order to meet
21st century challenges and address long-term fiscal needs. The
companion 2003 High-Risk Series: An Update identifies areas at high
risk
due to either their greater vulnerabilities to waste, fraud, abuse, and
mismanagement or major challenges associated with their economy,
efficiency, or effectiveness. A list of all of the reports in this
series is included at the end of this report.
GAO Highlights:
Highlights of GAO-03-110, a report to Congress included as part of
GAO‘s Performance and Accountability Series.
PERFORMANCE AND ACCOUNTABILITY SERIES
Department of Veterans Affairs
Why GAO Did This Report:
In its 2001 performance and accountability report on the Department of
Veterans Affairs (VA), GAO identified management challenges related to
health care quality, access, resource management, and disability claims
processing. In addition to these and other continuing challenges, VA
must now prepare for biological and chemical acts of terrorism. The
information in this report aims to sustain congressional attention and
a departmental focus on continuing to make progress in addressing these
challenges and ultimately overcoming them. This report is part of a
special series of reports on government-wide and agency-specific
issues.
What GAO Found:
VA has taken a number of actions to address its management challenges.
VA has greatly increased veterans‘ access to health care by opening
hundreds of outpatient clinics. While VA has made some progress in
improving disability claims processing, GAO has added modernizing
federal disability programs to its high-risk list because of
fundamental
problems with outmoded criteria and the need to address challenges in
claims processing. Additional actions are needed for VA to successfully
overcome other challenges as well.
* Ensuring access to quality health care. Although VA has opened
hundreds of outpatient clinics, waiting times are still a significant
problem. To help address this, VA has taken several actions including
the introduction of an automated system to schedule appointments. VA
must also better position itself to meet the changing needs of an aging
veteran population by improving nursing home inspections and increasing
access to noninstitutional long-term care services.
* Managing resources and workload to enhance health care delivery. VA
has begun to make more efficient use of its health care resources to
serve its growing patient base. However, to meet the growing demand
for care, VA must carry out its plan to realign its capital assets and
acquire support services more efficiently. At the same time, VA needs
to improve its process for allocating resources to its 21 health care
networks to ensure more equitable funding. VA must also seek additional
efficiencies with the Department of Defense, including more joint
purchasing of drugs and medical supplies.
* Preparing for biological and chemical acts of terrorism. Following
the attacks of September 11, 2001, VA determined that it needed to
stockpile pharmaceuticals and improve its decontamination and security
capabilities. VA also has new responsibilities to establish four
medical emergency preparedness centers.
* Improving veterans‘ disability program. VA acted to improve its
timeliness and quality of claims processing, but is far from achieving
its goals. Of greater concern are VA‘s outmoded criteria for
determining disability and its capacity to handle the increasing
number and complexity of claims. VA will need to seek solutions to
providing meaningful and timely support to veterans with disabilities.
* Developing sound departmentwide management strategies to build a
high-performing organization. Since 1997, VA has spent about $1 billion
annually on its information technology. VA has established executive
support and is making strides in developing an integrated
department-wide enterprise architecture. To safeguard financial,
health
care, and benefits payment information and produce reliable performance
and workload data, VA must sustain this commitment.
What Remains to Be Done:
GAO believes that VA should
* ensure veterans have timely access to needed health care,
* aggressively pursue opportunities to more efficiently use its health
care resources,
* establish medical emergency preparedness centers and carry out other
activities to prepare for potential terrorist attacks,
* seek solutions to update its disability criteria and continue efforts
to improve timeliness and quality of disability claims decisions, and
* successfully execute its information technology strategy to achieve
its vision of providing seamless service to veterans and their
families.
To view the full report, click on the link above.
For more information, contact Cynthia A. Bascetta, at (202) 512-7101.
Contents:
Transmittal Letter:
Major Performance and Accountability Challenges:
GAO Contacts:
Related GAO Products:
Performance and Accountability and High-Risk Series:
Transmittal Letter January 2003:
The President of the Senate
The Speaker of the House of Representatives:
This report addresses the major management challenges and program risks
facing the Department of Veterans Affairs (VA) as it works to carry out
its multiple and highly diverse missions. The report discusses the
actions that VA has taken and that are under way to address the
challenges GAO identified in its Performance and Accountability Series
2 years ago, and major events that have occurred that significantly
influence the environment in which the department carries out its
mission. Also, GAO summarizes the challenges that remain, a new
challenge that has evolved, and further actions that GAO believes are
needed.
This analysis should help the new Congress and the administration carry
out their responsibilities and improve government for the benefit of
the American people. For additional information about this report,
please contact Cynthia A. Bascetta, Director, Health Care--Veterans‘
Health and Benefits Issues, at (202) 512-7101 or at bascettac@gao.gov.
David M. Walker
Comptroller General
of the United States:
Signed by David M. Walker:
[End of section]
Major Performance and Accountability Challenges:
In our last Performance and Accountability Series in January 2001, we
identified the following performance and accountability challenges for
the Department of Veterans Affairs (VA): ensuring access to quality
health care; managing resources and workload to enhance health care
delivery; improving disability claims processing; and developing sound
departmentwide management strategies to build a high-performing
organization. Over the past 2 years, the VA has undertaken a number of
initiatives to address each of these challenges. For example, VA has
opened hundreds of new community-based outpatient clinics (CBOC),
increasing veterans‘ access to care. To better ensure quality of care
for a growing number of aging veterans, VA has also begun to improve
its oversight of community nursing homes. VA has explored ways to use
its resources more efficiently, including realigning its capital
assets, outsourcing certain services, and partnering with the
Department of Defense (DOD) to share health care resources. VA has
similarly taken actions to improve its processing of disability
compensation claims, such as hiring and training hundreds of new claims
processing staff.
But certain areas need emphasis if VA is to achieve its goals, and
these areas continue to be performance and accountability challenges in
2003. For example, VA must continue to seek ways to ensure that it can
provide veterans reasonable access to acute and long-term care. To
enhance its health care delivery, VA must continue to aggressively
pursue opportunities to more wisely use its health care resources. For
example, it is critical that the department achieve additional
efficiencies by realigning its capital assets to better meet its health
care needs and expanding its use of alternative methods for acquiring
support services. VA also needs to continue to work with DOD to
identify--and implement--partnerships that offer cost-effective ways
to serve both veterans and military personnel, including jointly
purchasing drugs and medical supplies. At the same time, VA needs to
improve its process for allocating resources to its 21 Veterans
Integrated Service Networks to ensure equity of funding.[Footnote 1] In
addition to these health care challenges, VA must meet a new challenge
to prepare for chemical and biological acts of terrorism. VA must also
make progress in its efforts to improve the timeliness and quality of
disability claims processing for veterans who have disabilities
sustained or aggravated during military service. Of greater concern are
other complex challenges facing VA‘s disability program. These include
outmoded criteria for determining disability and expected increases in
the number and complexity of veterans‘ disability claims. Because of
these sustained challenges, we have added modernizing federal
disability programs to our 2003 high-risk list. Finally, VA has more
work to do to become a high-performing organization, especially with
regard to ensuring an appropriate information technology (IT)
infrastructure. VA‘s IT strategy, which aims to improve services
provided to veterans and their families through new uses of information
technology, must be successfully executed to ensure that VA can
safeguard financial, health care, and benefits payment information and
produce reliable performance and workload data.
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Ensure Access to Quality Health Care:
Over the past several years, VA has done much to ensure that veterans
have greater access to care and that the care they receive is
appropriate and of high quality. Yet VA remains challenged to ensure
that veterans receive the care they need, when they need it--a
challenge that has become even greater with the recent expansion of
benefits. In addition, inadequate national oversight often hampers VA‘s
ability to assess the quality and timeliness of the care it provides
and limits VA‘s ability to identify performance problems and
appropriate measures to improve performance.
More National Action Needed to Ensure Veterans Have Reasonable Access
to Care:
As part of its effort to ’honor and serve veterans in life“ and
’restore the capability of disabled veterans to the greatest extent“--
two of the department‘s strategic goals--VA has taken significant steps
to improve veterans‘ access to health care. Reflecting trends in the
private sector, VA has opened hundreds of new CBOCs to provide primary
care to veterans in outpatient settings. Growth in the number of CBOCs
increased the number of veterans having reasonable geographic access to
VA-provided outpatient care, which VA defined as living within 30 miles
of a VA primary care clinic until November 2002.[Footnote 2] VA
estimated that 86 percent of VA‘s patients had such access to a primary
care clinic in fiscal year 1999.
Despite this progress, excessive waiting times for VA outpatient care-
-a problem we have reported on since October 1993--persist. A
Presidential task force reported in its July 2002 interim report that
veterans are finding it increasingly difficult to gain access to VA
care in selected geographic regions.[Footnote 3] For example, the task
force found that the average waiting time for a first outpatient
appointment in Florida--which has a large and growing veteran
population--is over 1 year, well in excess of VA‘s 30-day standard. Our
examination of waiting times at medical centers in Florida and other
areas of the country indicates that meeting VA‘s 30-day standard is
also a continuing challenge for many specialty clinics.[Footnote 4] For
example, in August 2001, we reported that, based on data from sites we
visited, two-thirds of the specialty care clinics we visited (36 of 54)
did not meet VA‘s 30-day standard. At these clinics, waiting times
ranged from 33 days at one urology clinic to 282 days at an optometry
clinic (see fig. 1).[Footnote 5]
Figure 1: Range of Waiting Times for Patient Care at 54 VA Specialty
Clinics:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Some medical centers we visited had begun to make noteworthy progress
in reducing waiting times at their specialty clinics, primarily by
improving their scheduling procedures and making better use of staff.
One medical center restructured its health care delivery system--the
center assigned all patients to a primary care provider for all
routine, nonurgent care; established a triage system for walk-in
patients; and implemented a centralized scheduling system for all of
its clinics. As a result of these and other changes, all but one of the
center‘s five specialty care clinics we reviewed were meeting the 30-
day standard. To help address these issues, VA has contracted with the
Institute for Healthcare Improvement to disseminate best practices
departmentwide.[Footnote 6]
VA has also taken several actions to try to mitigate the impact of long
waiting times. Most recently, on January 17, 2003, VA issued an interim
final rule to limit enrollment of certain veterans in 2003 to address
excessive waiting times.[Footnote 7] This rule suspends additional
enrollment of certain veterans, those who generally have no service-
connected disability and incomes above certain income limits set for
geographic regions. In the fall of 2002, VA took other actions to
better ensure that veterans with service-connected disabilities receive
more timely care.[Footnote 8] On September 17, 2002, VA issued a
regulation granting priority for appointments to two groups of
veterans:
* those with moderate and severe service-connected disabilities
regardless of whether they need treatment for their service-connected
disabilities or for other reasons, and:
* all other veterans with a service-connected disability who need
treatment for their service-connected disability.
VA also has other actions under way to address its waiting times
problems. For example, it is in the process of implementing an
automated system to improve its measurement of the length of time
veterans are waiting for appointments to better identify problems. VA
is also developing a national set of guidelines for primary care
providers to use in deciding when to refer patients to specialists, as
we recommended.
Growing Demand for Long-Term Care Needs Attention:
VA must position itself to meet the changing health care needs of an
aging veteran population. VA expects the number of veterans over age
85--currently estimated at about 640,000--to more than double over the
next decade, peaking at about 1.3 million by fiscal year 2013. This
aging will likely add to the demand for long-term care because the
prevalence of chronic health conditions and disabilities increases
markedly at advanced age. To meet this challenge, VA needs to improve
its inspections to ensure quality care in community nursing homes and
needs to ensure access to services in noninstitutional settings.
In fiscal year 2001, VA spent 92 percent of its long-term care dollars
in institutional settings, such as nursing homes--the costliest long-
term care setting. However, VA‘s oversight of community nursing homes-
-where about 4,000 veterans received care each day in fiscal year 2001-
-has not been adequate to ensure acceptable quality of care. While VA
has begun to implement certain policies to improve oversight of these
homes, as we recommended in July 2001, VA has yet to develop a uniform
oversight policy for all community nursing homes under VA
contract.[Footnote 9] Further, VA plans to rely increasingly on the
results of state inspections of community nursing homes rather than
conducting its own inspections, but it has not developed plans for
systematically reviewing the quality of state inspections.
The Veterans Millennium Health Care and Benefits Act (P.L. 106-117),
enacted in November 1999, enhanced VA‘s authority to offer certain
long-term care services in noninstitutional settings, such as adult day
health care. VA has begun to respond to the act‘s requirements, but its
spending for long-term care in noninstitutional settings still
comprised only 8 percent of fiscal year 2001 long-term care
expenditures. In addition, the availability of noninstitutional long-
term care services varies across facilities (see fig. 2).
Figure 2: Number of Facilities Offering Specific Noninstitutional Long-
Term Care Services:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Notes: Geriatric evaluation includes facilities reporting geriatric
evaluation and management services in our survey and facilities
reported by VA as offering geriatric primary care.
Although VA has 172 medical centers, in some instances 2 or more
medical centers have consolidated into health care systems. Counting
health care systems and individual medical centers that are not part of
a health care system as single facilities, VA has 139 facilities.
VA‘s Hepatitis C Initiative Could Be Improved:
Hepatitis C is a chronic blood-borne virus that can cause potentially
fatal liver-related conditions. In 1998, VA launched a major initiative
to screen all patients for hepatitis C risk factors and test those who
are at risk. If detected early, transmission risks can be reduced and
timely treatment can be ensured to prevent progression of liver
disease. VA characterized hepatitis C as a serious national health
problem, and at the end of fiscal year 2002, VA had identified almost
160,000 veterans with hepatitis C infections. Since 1999, VA included a
total of $700 million in its budgets submitted to the Congress to
screen, test, and provide veterans who test positive with a recommended
course of treatment.
In June 2001, we testified that VA missed opportunities to screen as
many as 3 million veterans who visited medical facilities during fiscal
years 1999 and 2000, potentially leaving as many as 200,000 veterans
unaware that they have hepatitis C.[Footnote 10] Most remained
undiagnosed primarily because local managers adopted restrictive
hepatitis C screening practices. Moreover, of those screened, an
unknown number likely remained undiagnosed because of flawed procedures
for testing veterans for the infection. For example, at the clinics we
visited, blood tests were not ordered for many veterans who were shown
to have hepatitis C risk factors during screening. In cases where blood
tests were ordered, clinicians frequently did not follow up to ensure
that the ordered tests were actually completed. We pointed out that in
order for VA to expeditiously identify undiagnosed veterans, VA would
need to establish early detection as a standard for care and hold
managers accountable for the timely screening and testing of veterans
who visit VA medical centers.
In response to our testimony, VA has begun to improve screening and
testing procedures. VA established in fiscal year 2002 a process to
monitor screening and testing performance. This process consists of an
external review of medical records, immediate performance feedback to
local managers, and network manager accountability for performance
targets. In addition to monitoring VA‘s progress in screening and
testing veterans for hepatitis C, we are assessing its efforts to
notify veterans who test positive and to evaluate veterans‘ medical
conditions regarding potential treatment options.
Manage Resources and Workload to Enhance Health Care Delivery:
Over the past several years, VA has made more efficient use of its
available health care resources--a critical element to achieving its
strategic goals. The department is serving more patients and providing
more acute care in less costly outpatient settings. Between fiscal
years 1996 and 2002, VA‘s patient base has increased from about 2.6
million to 4.2 million--due, in part, to expanded eligibility for
Priority 7 veterans.[Footnote 11] This growth has certain implications
for the equity of resource allocation and for certain VA health care
expenditures. In addition to improving the equity of its allocations,
VA needs to continue to work to make the most efficient use of its
resources.
Greater Equity Could Be Achieved through Changes to VA‘s Resource
Allocation System:
In fiscal year 1997, VA began allocating most of its medical care
appropriations under the Veterans Equitable Resource Allocation (VERA)
system, which aims to provide networks comparable resources for
comparable workloads. Prior to its implementation, VA generally based
its allocations on facilities‘ historical expenditures. By aligning
resources with workloads, VERA shifted substantial resources from
certain networks to others--reflecting shifts in workload--and provided
an incentive for networks to serve more veterans.
While VERA has resulted in more equitable allocation of resources,
certain improvements to VERA could result in even greater equity.
Increasing the number of categories used to adjust for patient care
cost differences would have the largest positive effect on resource
allocation. Currently, VERA uses three case-mix categories--complex,
basic vested, and basic non-vested. These three categories are based on
44 patient classes, and the average costs for patients within each
class within a category can vary significantly. For example, in fiscal
year 2000, the national average cost for home-based primary care and
for ventilator-dependent care--two patient classes in complex care--was
about $24,000 and $163,000, respectively; yet networks received
approximately $42,000--the capitation amount for complex care--per
patient in these two classes. As a result, networks with
proportionately more home-based primary care patients would receive
more resources relative to their costs than other networks, and
networks with more ventilator-dependent care patients would receive
fewer resources relative to their costs.
VERA does not include most Priority 7 veterans in its workload for
allocating resources to networks. Including Priority 7 veterans--mostly
higher income veterans who do not have service-connected disabilities-
-in VERA‘s measurement of network workload would affect network
allocations because some networks‘ workloads include a greater
proportion of Priority 7 veterans than other networks. The number of
Priority 7 veterans VA has served has increased rapidly to more than a
million in fiscal year 2002 (see fig. 3), representing a quarter of
VA‘s total patient workload in that year. VA expects the Priority 7
patient population to continue growing at least through fiscal year
2010.[Footnote 12]
Figure 3: Growth of Priority 7 Veterans Treated Nationally, Fiscal
Years 1996 through 2002:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Note: Because the Priority 7 classification was not developed until
fiscal year 1999, we used VA‘s previous classification that most
closely represents this priority group, Category C. Category C data for
fiscal years 1996 through 1998 slightly underestimate the number of
Priority 7 veterans for those years.
The combined effect of incorporating all 44 VA patient classes in
VERA‘s case-mix categories and funding Priority 7 basic vested veterans
at 50 percent of costs would result in the reallocation of
approximately
$200 million in fiscal year 2001. Although the allocation changes
overall would represent about 2 percent of networks‘ budgets, the
change would be more substantial for some networks--as much as 5
percent of their annual budgets (see fig. 4).
Figure 4: Estimated Change in VERA Allocations from Incorporating 44
Case-Mix Categories and Priority 7 Basic Vested Veterans Treated,
Fiscal Year 2001:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Notes: We used fiscal year 1999 expenditure data for the calculations,
the most recent data available for fiscal year 2001 VERA allocations.
In January 2002 VA merged networks 13 and 14 to form a single network.
In response to recommendations we made in February 2002 regarding
VERA‘s case-mix categories and Priority 7 workload, VA said that
further study was needed to determine how and whether to change
VERA.[Footnote 13] VA announced in November 2002 that it plans to make
changes to VERA for the 2003 fiscal year when VA‘s appropriation is
finalized. Some of the planned changes, if implemented, could address
recommendations we made. Delaying these improvements to VERA means that
VA will continue to allocate funds in a manner that does not align
workload and resources as well as it could. This puts some networks at
a financial disadvantage.
Priority 7 Veterans‘ Increased Use of VA‘s Outpatient Pharmacy Benefit
Has Increased VA‘s Outpatient Pharmacy Expenditures:
The increase in the number of Priority 7 veterans over the past several
years has resulted in a greater use of VA‘s outpatient pharmacy
benefit--a benefit particularly attractive to veterans covered by
Medicare because Medicare does not offer such a benefit. This expanded
use has increased VA‘s outpatient pharmacy expenditures for Priority 7
veterans from
$178 million to $418 million between fiscal years 1999 and 2001--a
growth rate more than four times that for other veterans. Priority 7
veterans now constitute 14 percent of VA pharmacy benefit spending.
VA has been able to partially offset about 10 percent of pharmacy
expenditures for Priority 7 veterans through the collection of
medication copayments. This offset reduced VA‘s net expenditures to
$377 million for providing drugs and supplies to Priority 7 veterans in
fiscal year 2001 (see table 1). VA collected $41 million in fiscal year
2001 by charging $2 copayments for a 30-day or less drug supply. Such
revenues are expected to grow because VA increased the copayment
charged to Priority 7 veterans to $7 for a 30-day or less supply in
February 2002.
Table 1: Net Expenditures for VA‘s Outpatient Pharmacy Benefit Less
Drug Copayments, Fiscal Years 1999 through 2001:
Dollars in millions.
Priority 7 veterans; Dollars in millions: 1999: $164; Dollars in
millions: 2000: $247; Dollars in millions: 2001: $377.
All other veterans[A]; Dollars in millions: 1999: $1,916; Dollars in
millions: 2000: $2,169; Dollars in millions: 2001: $2,458.
Total; Dollars in millions: 1999: $2,080; Dollars in millions: 2000:
$2,417; Dollars in millions: 2001: $2,835.
[End of table]
Source: GAO analysis of VA data.
Note: Numbers in table may not add to total outpatient pharmacy
expenditures because of rounding.
[A] Veterans with service-connected disabilities rated greater than 50
percent, receiving drugs for service-connected conditions, or with
incomes lower than the VA pension level are exempt from paying drug
copayments.
Further Realignment of VA‘s Infrastructure Could Better Meet Veterans‘
Health Care Needs:
A significant portion of VA‘s annual health care budget is spent to
operate, maintain, and improve about 4,700 buildings and 18,000 acres
of property--including unused and underused hospitals and other
facilities. In 1998, we reported that in the Chicago area alone, as
much as $20 million could be freed up annually if VA served area
veterans with three instead of four hospitals.[Footnote 14] We
recommended that VA develop and implement a market-based plan for
restructuring its delivery of health care.[Footnote 15] By doing so, VA
could reduce funds spent on unneeded assets and better serve veterans‘
needs by placing health care resources closer to where veterans live.
In response, in October 2000 VA established the Capital Asset
Realignment for Enhanced Services (CARES) program, which calls for
assessments of veterans‘ health care needs and available service
delivery options to meet those needs in each health care market--a
geographic area with a high concentration of enrolled veterans. In
2002, VA completed a pilot study in Network 12 (Chicago), which
includes Chicago and other locations, and entered the second phase of
the initiative--to conduct CARES in the remaining 20 networks. VA
expects to issue its plans for each market by the end of 2003.
VA‘s plan from its pilot study calls for the closing of inpatient
services at one location, consolidation of services at remaining
locations, and the opening of several new outpatient clinics. The plan
also calls for leasing or demolishing 20 of the network‘s 30 unneeded
vacant buildings. For the remaining buildings, VA officials believe
that maintaining ownership of the buildings is the least expensive
course of action. However, all relevant cost information on the various
disposal options was not always systematically evaluated when making
this assessment. To ensure that VA makes the best decisions regarding
the disposition of its vacant buildings, we recently recommended that
VA test a model that includes complete cost information on each
disposal option in Network 12 (Chicago).[Footnote 16]
VA needs to build and sustain the momentum necessary to achieve
efficiencies and effectively meet veterans‘ current and future needs.
The challenge is to do this while mitigating the impact on staffing,
communities, and other VA missions. Successfully completing this
capital asset realignment will depend on VA‘s ability to strategically
and expeditiously complete the implementation of CARES.
VA is one of many federal agencies facing challenges in managing
problems with excess and underutilized real property, deteriorating
facilities, and unreliable property data. As a result, we have added
federal real property as a high-risk area.[Footnote 17]
Expanded Use of Alternative Methods for Patient Care Support Services
Could Realize Additional Savings:
VA‘s transformation from an inpatient-to an outpatient-based health
care system has significantly reduced the need for certain patient care
support services, such as food and laundry. To make better use of these
resources, some facilities have consolidated food production locations,
used lower-cost Veterans Canteen Service (VCS) workers instead of
higher-paid Nutrition and Food Service workers, or contracted out food
services. VA facilities have also consolidated laundries, contracted
for labor to operate them, or contracted out laundry services to
commercial organizations.
However, VA needs to systematically explore further use of such options
across its health care system. In November 2000, we recommended that VA
conduct studies at all of its food and laundry service locations to
identify and implement the most cost-effective way to provide these
services at each location.[Footnote 18] At that time, we identified 63
food production locations that could be consolidated into 29, saving
millions of dollars annually. We also found that using lower-cost VCS
employees at all VA food production locations could save additional
millions annually. The potential for savings through consolidating
laundry services was similar. VA may also be able to reduce its food
and laundry service costs at some facilities through competitive
sourcing--where VA would determine whether it would be more cost-
effective to contract out these services or provide them in-house.
However, VA must ensure that contract terms on payments and service
quality standards are met. For example, we found that weaknesses in the
monitoring of VA‘s Albany, New York, laundry contract appear to have
resulted in overpayments, reducing potential savings.
In August 2002, VA issued a directive establishing policy and
responsibilities for its networks to follow in implementing a
competitive sourcing analysis to compare the cost of contracting and
the cost of in-house performance to determine who should do the work.
VA needs to follow through on its commitment to ensure that the most
cost-effective, quality service options are applied throughout its
health care system and to conduct systemwide feasibility assessments
for consolidation and competitive sourcing.
VA and DOD Need to Increase Joint Activities to Maximize Federal Health
Care Resources:
In an effort to save federal health care dollars, VA and DOD have
sought ways to work together to gain efficiencies. For example, local
VA medical centers and military treatment facilities have entered into
agreements to exchange inpatient, outpatient, and specialty care
services, as well as support services. Some local VA and DOD facilities
have entered into joint venture agreements, pooling resources to build
a joint medical facility or capitalize on an existing facility. Local
facilities have also arranged to jointly purchase pharmaceuticals,
laboratory services, medical supplies, and equipment. Underscoring the
importance of maximizing federal health care resources, the President
created the Task Force to Improve Health Care Delivery for Our Nation‘s
Veterans in May 2001. Its mission includes reviewing barriers and
challenges that impede VA and DOD coordination and identifying
opportunities for improved resource utilization through VA and DOD
partnerships.[Footnote 19]
Local VA and DOD officials whom we surveyed in 1999 found that, by
sharing resources, better use has been made of their local facilities,
staff, and equipment; in some cases, beneficiary access and patient
satisfaction have improved. However, in our review of VA/DOD sharing
agreements in fiscal year 1998, we found that most sharing activity
occurred through a relatively small number of sharing agreements and
joint ventures.[Footnote 20] Overall, 75 percent of direct medical care
episodes provided through sharing occurred under just 12 local
agreements for inpatient care, 19 local agreements for outpatient care,
and 12 local agreements for ancillary care. Joint venture activity was
similarly concentrated in Albuquerque, New Mexico, and in southern
Nevada.
To ensure sharing occurs to the fullest extent possible, VA needs to
continue to work with DOD to address remaining barriers, as we
recommended in our 2000 report. It is particularly critical that VA
take a long-term approach to improving the VA/DOD sharing database,
which VA administers. While the database captures information on the
number of agreements and the range of services covered, these data are
inadequate to assess progress. Currently, VA and DOD do not collect
data on the volume of services provided, the amounts of reimbursements
collected, and the costs avoided through the use of sharing agreements.
Without a baseline of activity or complete and accurate data, VA and
DOD--and the Congress--cannot assess the progress of VA and DOD
sharing.
Additional opportunities also exist for VA and DOD to jointly purchase
pharmaceuticals and obtain higher discounts from manufacturers. In
fiscal year 2000, VA and DOD‘s combined spending for pharmaceuticals
was about $3.2 billion. While the two departments saved an estimated
$51 million from jointly awarded national committed-use contracts with
suppliers in that year, we reported in May 2001 that significantly more
federal health care dollars could be saved.[Footnote 21] In response to
our recommendation, VA and DOD have taken additional action to expand
their use of joint national committed-use contracts.[Footnote 22] From
August 2001 through August 2002, VA and DOD increased their joint
contracts from 49 to 67 and decreased their ’unilateral“ contracts from
57 to 24. VA reported that, overall, joint pharmaceutical contracts
resulted in cost avoidance of more than $98 million (about $18 million
for DOD and $80 million for VA) in fiscal year 2001. VA needs to
continue to work with DOD to achieve even greater savings.
In a June 2002 hearing on VA‘s medical procurement practices,
opportunities were discussed for VA and DOD to achieve greater
efficiencies through joint procurement of medical and surgical
supplies.[Footnote 23] However, as we reported in June 2002, VA and DOD
have not made progress in jointly contracting for such items, and it is
unlikely that the two departments will have joint national contracts
for medical and surgical supplies anytime soon.[Footnote 24] This lack
of progress has, in part, been the result of their different approaches
to ’standardizing“--that is, agreeing on particular items that their
facilities would purchase and then contracting with the manufacturers
of these items for discounts based on their combined larger volume.
Because DOD has opted to follow a regional approach to standardization
and VA has opted for a national approach, opportunities for national
joint procurement will be more difficult to achieve. In addition,
neither department has accurate, reliable, and comprehensive
procurement information--a basic requirement for identifying potential
medical and surgical items to standardize.
VA Needs to Resolve Long-standing Performance Problems to Maximize
Third-Party Collections:
In fiscal year 2002, VA collected $687 million in payments from third-
party insurers--the largest source of revenue to supplement VA‘s $21
billion medical care appropriations.[Footnote 25] These funds help pay
for veterans‘ growing demand for care.
VA‘s third-party collections increased in fiscal year 2001--reversing a
trend of declining collections--and again in fiscal year 2002. However,
over the past several years, we have reported on persistent collections
process weaknesses--such as lack of information on patient insurance,
inadequate documentation of care, a shortage of qualified billing
coders, and insufficient automation--that have diminished VA‘s
collections.[Footnote 26] VA‘s Inspector General similarly reported
that VA missed billing opportunities, had billing backlogs, and
inadequately followed up on accounts receivable in fiscal years 2000
and 2001.[Footnote 27] It is uncertain how much more revenue could be
collected if VA were to collect for currently missed billing
opportunities, all backlogged billing, and all collectable accounts
receivable, since VA does not have a national estimate of the total
dollar amount of potentially billable and collectable care.
VA has taken several steps to improve its collections performance,
including developing the Veterans Health Administration Revenue Cycle
Improvement Plan in 2001, which aims to address its long-standing
collections problems. More recently, in May 2002, VA created a Chief
Business Office that is planning additional initiatives to improve
collections. However, by the end of fiscal year 2002, VA was still
working to implement proposed initiatives for resolving its long-
standing collection problems. To ensure it maximizes its third-party
collections, VA will need to be vigilant in implementing its plan and
initiatives.
Prepare for Biological and Chemical Acts of Terrorism:
The September 11, 2001, attacks on the World Trade Center and the
Pentagon and the dissemination of weaponized anthrax through the U.S.
mail exposed our nation‘s vulnerabilities to terrorism and the need for
better emergency medical preparedness and response capabilities. In the
month following the attacks, we reported that VA, in a supporting role,
made a significant contribution to the emergency preparedness response
activities carried out by lead federal agencies.[Footnote 28] As part
of its strategic goals, VA remains committed to help improve the
nation‘s preparedness for response to war, terrorism, national
emergencies, and natural disasters by developing plans and taking
actions to ensure continued provision of services to veterans as well
as support national, state, and local emergency management and homeland
security efforts.[Footnote 29]
By October 2001, VA had quickly assessed its ability to take action in
the event of a national emergency and concluded that it needed to
improve its emergency management capabilities. VA also made improved
response a goal in its 2003 Departmental Performance Plan. VA is
currently working to address key areas of need, including
pharmaceutical stockpiles, decontamination, and security. For example,
VA established a policy requiring designated VA facilities to store
caches of pharmaceuticals to treat victims. VA is also assessing its
facilities‘ needs and capabilities for decontamination and security to
ensure that potentially large numbers of victims could be managed and
entrances and exits controlled in the event of another terrorist
attack.
The Department of Veterans Affairs Emergency Preparedness Act of 2002
also created new requirements for VA.[Footnote 30] Specifically, the
act calls for the establishment of four medical emergency preparedness
centers. The mission of the centers includes research on detection,
diagnosis, prevention, and treatment of injuries, diseases, and
illnesses arising from the use of chemical, biological, radiological,
incendiary, or explosive weapons posing threats to public health and
safety. The centers are also charged with providing education,
training, and advice to health care professionals through the National
Disaster Medical System.
Improve Veterans‘ Disability Program:
VA expects to provide about $25 billion in disability compensation and
pension benefits to over 3 million veterans, family members, and
survivors in fiscal year 2002. In administering these benefits, VA
faces long-standing challenges to improve the timeliness and quality of
disability claims decisions, which are made by its 57 regional offices.
In addition to creating delays in veterans‘ receipt of entitled
benefits, untimely, inaccurate, and inconsistent claims decisions can
negatively affect veterans‘ receipt of other VA benefits and services,
including health care, because VA‘s assigned disability ratings help
determine eligibility and priority for these benefits. Of greater
concern, VA‘s criteria for determining disability are outmoded. While
the department is taking actions to address these problems in the short
term, longer-term solutions may require more fundamental changes to the
program including those that require legislative actions. For these
reasons, we have added VA‘s disability benefits program, along with
other federal disability programs, to the 2003 high-risk list.
The Secretary has made improving claims processing performance one of
VA‘s top management priorities, setting a 100-day goal for VA to make
accurate decisions on rating-related compensation and pension
claims,[Footnote 31] and a reduction in the rating-related inventory to
about 250,000 claims by the end of fiscal year 2003. The Secretary also
established the Claims Processing Task Force in May 2001 to make
specific recommendations to relieve the veterans‘ claims backlog and
make claims processing more timely. In fiscal years 2001 and 2002, VA
hired and trained hundreds of new claims processing staff. VA also set
monthly production goals for fiscal year 2002 for each of its regional
offices, incorporating these goals into regional office directors‘
performance standards. VA is also in the process of responding to the
more than 30 recommendations made by the Task Force in its October 2001
report to the Secretary.
VA Faces Short-Term and Long-Term Challenges to Improving Timeliness:
While VA has made some progress in improving production and reducing
inventory, it is far from achieving the Secretary‘s goals. VA completed
almost two-thirds more decisions in fiscal year 2002 than fiscal year
2001 (see table 3). However, it still did not meet its production goal
of completing about 839,000 claims in fiscal year 2002. VA also reduced
its end of year inventory from 420,603 claims in fiscal year 2001 to
345,516 in fiscal year 2002, but did not meet its end-of-year inventory
goal of about 316,000 claims.
Table 2: Changes in VA‘s Workload of Rating-Related Claims, Fiscal
Years 1997 to 2002:
Fiscal year: 1997; Rating-related compensation and pension claims: :
Received: 740,052; Rating-related compensation and pension claims: :
Completed: 701,717; Rating-related compensation and pension claims: End
of year: inventory: 213,193.
Fiscal year: 1998; Rating-related compensation and pension claims: :
Received: 691,461; Rating-related compensation and pension claims: :
Completed: 663,400; Rating-related compensation and pension claims: End
of year: inventory: 241,254.
Fiscal year: 1999; Rating-related compensation and pension claims: :
Received: 639,070; Rating-related compensation and pension claims: :
Completed: 630,145; Rating-related compensation and pension claims: End
of year: inventory: 250,179.
Fiscal year: 2000; Rating-related compensation and pension claims: :
Received: 578,773; Rating-related compensation and pension claims: :
Completed: 601,451; Rating-related compensation and pension claims: End
of year: inventory: 227,501.
Fiscal year: 2001; Rating-related compensation and pension claims: :
Received: 674,219; Rating-related compensation and pension claims: :
Completed: 481,117; Rating-related compensation and pension claims: End
of year: inventory: 420,603.
Fiscal year: 2002; Rating-related compensation and pension claims: :
Received: 721,727; Rating-related compensation and pension claims: :
Completed: 796,814; Rating-related compensation and pension claims: End
of year: inventory: 345,516.
[End of table]
Source: Veterans Benefits Administration data.
In addition, the average time to complete rating-related decisions
rose, from 181 days in fiscal year 2001 to 223 days in fiscal year 2002
(see fig. 5), missing VA‘s fiscal year 2002 goal of 208 days and
leaving it far from the Secretary‘s 100-day goal for the last quarter
of fiscal year 2003. However, VA has made recent timeliness
improvements; in the first quarter of fiscal year 2003, VA completed
rating-related decisions in an average of 200 days.
Figure 5: Average Days to Complete Rating-Related Claims, Fiscal Years
1999 to 2003:
[See PDF for image] - graphic text:
[End of figure] - graphic text:
Improving timeliness, both in the short and long term, requires more
than just increasing production and reducing inventory. VA must also
continue addressing delays in obtaining evidence to support claims,
ensuring that it has experienced staff for the long term, and
implementing information systems to help improve productivity. One of
the most significant delays is in obtaining medical evidence--such as
medical records, examinations, and opinions--from VA medical
facilities. However, it is not clear to what extent VA‘s initiatives to
expedite obtaining medical information--such as providing regional
offices access to VA‘s medical records database--will improve
timeliness. Similarly, VA needs to overcome delays in implementing its
information system improvements. In 1986, VA began developing a new
system to replace its outdated benefits payment system. However, after
16 years, VA still has not fully implemented this new system and
continues to rely on its existing benefits delivery network until the
new system can be completed.
VA will also need to continue to adjust to external factors, such as
court decisions and the filing behavior of veterans. Since its
establishment in 1989, the U.S. Court of Appeals for Veterans Claims
has introduced a number of complex procedural and documentation
requirements that VA must comply with, including providing a
description of the evidence and rationale leading to the decision on
each claimed disability. The implementation of the Veterans Claims
Assistance Act of 2000 (VCAA) has added to VA‘s workload. The act
requires VA to take specific steps to assist claimants once they file
claims for benefits. The act also allows for the reworking of claims
previously denied because they were not well-grounded.[Footnote 32] VA
identified 98,000 such claims and directed its regional offices to
perform any rework needed to comply with VCAA, such as sending
additional notifications and making new decisions. VA also directed
regional offices to do any needed rework on 244,000 claims that were
pending when the law was enacted. Finally, changes in veterans‘
benefits affect VA‘s workload. In July 2001, diabetes was added as a
presumptive service-connected disability for veterans who served in
Vietnam, significantly increasing VA‘s workload. VA expects that, by
the end of fiscal year 2003, it will receive about 197,500 diabetes
claims. VA also expects to receive additional claims due to ’concurrent
receipt“ legislation enacted in December 2002. If a military retiree
receives VA disability compensation, the retiree‘s military retirement
payments are reduced by the amount of the VA compensation. Under the
new legislation, DOD can provide special compensation payments to some
disabled military retirees.[Footnote 33] The effect of this legislation
on VA‘s workload is not yet known.
In addition to these challenges, VA‘s key rating-related timeliness
measure could be improved. Currently, this measure aggregates
timeliness data for VA‘s three main disability programs, obscuring
significant timeliness differences among the programs. Aggregating VA‘s
timeliness data by program--instead of across programs--shows that, in
fiscal year 2002, it took VA an average of 241 days to complete
disability compensation claims decisions, compared to 126 days for
pension claims and 172 days for dependency and indemnity compensation
claims. In December 2002, we recommended that VA establish separate
claims processing timeliness goals for each program and incorporate
these goals into VA‘s strategic plan and annual performance plans, and
report its progress in meeting these goals in its annual performance
reports.[Footnote 34]
Effect of Efforts to Improve Quality Are Not Yet Known:
Since VA began its Systematic Technical Accuracy Review (STAR) program
in fiscal year 1999, the accuracy of compensation and pension claims
decisions has improved. For fiscal year 2002, preliminary STAR data
show an 81 percent accuracy rate for rating-related decisions[Footnote
35]--a major improvement over the 59 percent accuracy rate in fiscal
year 2000. But it is still well below VA‘s 96 percent strategic goal
for fiscal year 2006.
Recent changes to the STAR program should provide VA with more useful
data to measure its progress in improving decision accuracy. Beginning
with claims decided in fiscal year 2002, VA‘s key accuracy measure
focuses on whether decisions to grant or deny benefits were correct,
not on procedural and technical issues, such as failure to include all
the documentation in the case file. VA also plans to review more
decisions per year, so it can obtain statistically valid accuracy data
at the regional office level. Further, to ensure independent reviews,
VA has centralized the STAR program, rather than have the reviews
conducted in the regional offices. Finally, VA is developing a quality
review system that will measure the accuracy of individual employee
decisions. Once these enhancements are made to the STAR program, VA
should be better able to identify accuracy problems at the national,
regional office, and individual employee levels, so more detailed
reviews can be done to identify underlying causes of inaccuracies and
target corrective actions, such as additional training.
To help improve decision accuracy and consistency across regional
offices, VA has established the Training and Performance Support System
(TPSS), a computer-assisted system designed to provide standardized
training for staff at all regional offices. However, many of the
modules were not available to help train the new claims processing
staff VA hired during fiscal years 2001 and 2002, and, in May 2001, we
reported that VA had pushed back its completion of all TPSS modules
until sometime in 2004. Until VA completes TPSS implementation, it will
not be able to evaluate the program‘s impact on claims processing
accuracy and consistency. More recently, we recommended in August 2002
that VA establish a system to regularly assess and measure the degree
of consistency across all levels of VA claims adjudication, as well as
made specific recommendations to improve the quality of decisions made
by VA‘s Board of Veterans‘ Appeals.[Footnote 36]
Reexamination of Disability Criteria Needed:
Of greater concern is VA‘s use of outmoded criteria for determining
disability. In 1997, we reported that VA‘s disability ratings schedule
is still primarily based on physicians‘ and lawyers‘ judgments made in
1945 about the effect service-connected conditions had on the average
individual‘s ability to perform jobs requiring manual or physical
labor. Although the ratings in the schedule have not changed
substantially since 1945, dramatic changes have occurred in the labor
market and in society since then. Thus, VA may not be equitably
distributing compensation funds among disabled veterans.
More recently, we reported that the criteria used by VA and other
federal programs to determine disability have not been fully updated to
reflect medical and technological advances and have not incorporated
labor market changes.[Footnote 37] We recommended that VA use its
annual performance plan to delineate strategies for and progress in
periodically updating its disability criteria. We also recommended that
VA study and report to the Congress the effect that a comprehensive
consideration of medical treatment and assistive technologies would
have on VA disability programs‘ eligibility criteria and benefit
package. VA did not concur with our recommendations. The Secretary of
Veterans Affairs stated that the current medically based criteria are
an equitable method for determining disability and that VA is in the
process of updating its criteria to account for advances in medicine.
However, we believe that until VA aligns its disability criteria with
medical and technological advances and holds itself accountable for
ensuring that disability ratings are based on current information,
future decisions affecting its disability program will not be
adequately informed. This fundamental problem and sustained challenges
in processing disability claims put the VA disability program at high
risk of poor performance.
Develop Sound Departmentwide Management Strategies to Build a High-
Performing Organization:
VA faces additional challenges in several areas critical to building a
high-performing organization: budget formulation and execution,
information technology, and financial management. To meet its strategic
goal of creating ’One VA“--an environment that fosters the delivery of
seamless service to veterans and their families--VA has begun to
address some of these issues through its plans to implement an IT
framework that supports the integration of information across the
department and to continue to achieve unqualified audit opinions on its
annual financial statements.
VA Needs to More Closely Link Its Health Care Budget Formulation and
Planning Processes:
Establishing a close link between budgeting and planning is essential
to instilling a greater focus on results. While VA‘s health care budget
formulation and planning processes are centrally managed, they are not
closely linked. VA‘s annual performance plan describes the department‘s
goals, strategies, and performance measures. However, the relationship
between its performance plan and its health care budget formulation is
unclear. Through fiscal year 2003, VA‘s health care budget formulation
has largely been incremental, reflecting prior years‘ appropriations
with adjustments for projected increases in workload, efficiencies, and
new policies.
Budgeting and performance are more closely linked during the budget
execution phase--that is, after VA receives its appropriation and funds
are allocated to the networks. Some health care networks consider
resource utilization, cost, and performance data in making resource
allocations to their health care facilities and programs. They also use
various communication methods, both within their networks and across
other networks, to share information on performance measures and ways
to meet those measures.
VA officials noted that steps are being taken to better integrate their
health care budget formulation and planning processes. However, VA
continues to face challenges in further integrating these processes and
in defining areas for improvement.
VA Continues to Face Information Technology Challenges:
Over the past 5 years, VA has spent an estimated $1 billion annually on
its IT program to help realize its vision of providing seamless service
to veterans and their families. In August 2000, we recommended that VA
take certain actions to improve its decision-making process for IT
investments and to fully implement key provisions of the Clinger-Cohen
Act of 1996, which aims to strengthen IT leadership and management at
federal agencies. Over the past 2 years, VA‘s commitment to addressing
critical weaknesses in the department‘s IT management has been evident.
To provide leadership, VA hired a department-level chief information
officer, who, in October 2002, was given authority over all IT
appropriations across the department. In addition, VA has established
crucial executive support and a strategy to define products and
processes essential to the development of an integrated departmentwide
enterprise architecture.[Footnote 38] Further, to address numerous
computer security weaknesses, VA established a department-level
information security management program and hired an executive-level
official to head it. VA also instituted information security
performance standards that require greater management accountability
among senior executives.
Nonetheless, challenges to improve key areas of IT performance remain.
Specifically, VA‘s success in developing, implementing, and using a
complete and enforceable enterprise architecture hinges upon continued
attention to putting in place a sound program management structure. In
addition, VA‘s computer security management program requires further
actions to ensure that the department can protect its computer systems,
networks, and sensitive health and benefits data from vulnerabilities
and risks.
In June 2002, we recommended that VA take specific actions to achieve a
more stable, reliable, and modernized systems environment to
effectively support critical decision making and operations and to
realize better overall returns on its IT investments.[Footnote 39] VA
concurred with our recommendations and has initiated a number of
actions to address them. For example, in September 2002, the Secretary
approved the initial version of VA‘s enterprise architecture that
focused on defining the ’as is“ and desired ’to be“ target environments
for selected business functions. Also, to help provide a more solid
foundation for detecting, reporting, and responding to security
incidents, VA contracted to expand departmentwide incident response and
analysis capabilities, including enhancing security monitoring and
detection. However, VA‘s IT investment and management challenges are
significant, and its ability to resolve them with the right combination
of people, processes, and technology that are focused on achieving
solid results will take time and sustained effort and commitment. Table
4 summarizes the challenges that VA continues to face to strengthen the
leadership and management of its IT initiatives and the department‘s
status in responding to each.
Table 3: Status of IT Challenges Facing VA:
Challenge: IT investment management: Sound IT investment management
requires maximizing the value and return on IT investments and
mitigating associated risks.; Status: IT investment management: In
2002, as part of its enterprise architecture development effort, VA (1)
synchronized in-process reviews of IT projects within an integrated IT
management process, and (2) began developing guidance to manage IT
projects under the integrated management process..
Challenge: IT investment management: Before making major IT
investments, agencies are required under the Clinger-Cohen Act to
analyze their missions and revise and improve mission-related and
administrative processes accordingly. To do this, agencies should have
an overall business process improvement strategy--one that coordinates
and integrates ongoing reengineering and improvement projects, sets
priorities, and makes appropriate budget decisions.; Status: IT
investment management: In September 2002, VA completed version 1.0 of
its departmentwide enterprise architecture. The document identified the
business process reengineering opportunities in VA‘s registration and
eligibility and contact management functions, but it does not provide
specifics on how these functions may be reengineered. Therefore, VA has
not yet developed an overall business process improvement strategy..
Challenge: IT investment management: In achieving the department‘s
strategic and IT goals, CIOs are charged with implementing an
architecture that will provide a framework for evolving or maintaining
existing IT and for acquiring new IT.; Status: IT investment
management: In 2001, VA initiated an effort to develop a departmentwide
enterprise architecture. In September 2002, VA completed its first
version of this architecture, containing high-level elements of the
department‘s baseline and target architectures, technical reference
model, and standards profiles. VA plans to further develop this
document to support IT investment management and its ’One VA“ concept..
Challenge: IT investment management: A uniform mechanism for tracking
IT expenditures allows agencies to make informed decisions on whether
to modify, accelerate, or discontinue projects.; Status: IT investment
management: Although VA Directive 6000 and VA‘s capital investment
guide require it to maintain complete and accurate cost data for IT
projects, there is no uniform mechanism for tracking IT expenditures
across the department. In 2001, VA reported that it would begin using a
numbering system within the department‘s financial management system to
track IT capital investment costs beginning with the execution of the
fiscal year 2002 projects. However, this system would not allow VA to
track personnel costs for IT projects automatically. VA planned to
extend this numbering scheme once its new financial management system
is implemented in October 2004..
Challenge: IT investment management: The Clinger-Cohen Act requires
executive branch agencies to establish performance measures that relate
to how well IT supports their programs.; Status: IT investment
management: While VA‘s fiscal year 2003 performance plan identified IT
initiatives for improving claims processing quality and timeliness, it
did not include performance goals. Without such goals, it will be
difficult to assess the performance of these initiatives..
Challenge: IT investment management: VA also needs to implement
appropriate security measures to ensure that financial, health care,
and benefits payment information is not at risk of inadvertent or
deliberate misuse, fraud, improper disclosure, or destruction.; Status:
IT investment management: Since September 1998, we and VA‘s IG have
reported on VA‘s computer security weaknesses, which continue to place
financial, health care, and benefits payment information at risk of
misuse, fraud, improper disclosure, or destruction--possibly occurring
without detection. In 2001, VA established a department-level
information security management program and hired an executive-level
official to head it. As of November 2000, VA had finalized an
information security management plan to provide a framework for
addressing long-standing departmentwide computer security weaknesses.
The plan does not articulate critical actions that VA will need to take
to correct specific control weaknesses or the time frames for
completing key actions. Also, the plan does not provide a framework to
guide the monitoring activities by identifying the specific security
areas to be reviewed, the scope of compliance work to be performed, the
frequency of reviews, the reporting requirements, or the resolution of
reported issues. VA continues to be without a comprehensive, centrally
managed process that will enable it to identify, track, and analyze all
computer security weaknesses..
[End of table]
Source: GAO analysis of VA documentation.
VA is also challenged to develop an effective IT strategy for sharing
information on patients who are both VA and DOD beneficiaries or who
seek care from DOD under a VA/DOD sharing agreement. The lack of
complete, accurate, and accessible data is particularly problematic for
veterans who are prescribed drugs under both systems. While each
department has established safeguards to mitigate the risk of
medication errors, these safeguards are not necessarily effective in a
shared environment--in part because VA‘s and DOD‘s IT systems are
separate. Consequently, DOD providers and pharmacists cannot
electronically access health information captured in VA‘s system to aid
in making medication decisions for veterans, nor can they take
advantage of electronic safeguards such as computerized checks for drug
allergies and interactions.
Financial Management Enhancements Needed to Correct Material
Deficiencies:
In December 2002, VA‘s independent auditor issued an unqualified audit
opinion on VA‘s consolidated financial statements for fiscal years 2002
and 2001.[Footnote 40] However, the unqualified opinion was achieved,
for the most part, through extensive efforts of both program and
financial management staff and the auditors to overcome material
internal control weaknesses to produce auditable information after
year-end. The auditor reported two long-standing systems and control
problems that remain unresolved. In addition, VA‘s accounting systems-
-similar to those of most major agencies--did not comply substantially
with Federal Financial Management Improvement Act (FFMIA) requirements.
These weaknesses continue to make VA‘s program and financial data
vulnerable to error and fraud and limit the department‘s ability to
monitor programs through timely internal financial reports throughout
the fiscal year.
VA has demonstrated management commitment to addressing material
internal control weaknesses previously reported and made significant
improvements in financial management. For example, in February 2001 the
auditor reported that VA had improved on its reporting and reconciling
of fund balances with Treasury--removing this as a material
weakness.[Footnote 41] VA also continued to make progress in
implementing recommendations from our March 1999 report[Footnote 42]
that resulted in improved control and accountability over VA‘s direct
loan and loan sale activities and compliance with credit reform
requirements.
However, during its audit of VA‘s fiscal year 2002 financial statements
the auditor reported that two previously reported material weaknesses
still exist in the areas of information systems security and financial
management system integration. A brief description of each material
weakness follows.
* Departmentwide weaknesses in security controls over automated data
processing continue to make VA‘s sensitive financial and veteran
medical and benefit information at risk of inadvertent or deliberate
misuse or fraudulent use. Examples of weaknesses include inappropriate
access privileges and inadequate segregation of duties. Additionally,
security and process control weaknesses were observed in critical loan
guaranty system applications due to a lack of accountability and
definition of responsibility for implementing and enforcing consistent
security administration standards and the lack of appropriate
reconciliation procedures.
* Material weaknesses continue to hamper timely completion of financial
statements. Specifically, VA continues to have difficulty related to
the preparation, processing, and analysis of financial information to
support the efficient and effective preparation of its financial
statements. In many cases, significant manual work-arounds and out-of-
date feeder systems are still in place because VA has not yet completed
its transition to a fully integrated financial management system.
In its discussion of compliance with laws and regulations, the auditor
reported that VA‘s financial systems did not substantially comply with
federal financial systems requirements--one of the three requirements
of FFMIA. The auditor found significant weaknesses in (1) the design
and operation of internal controls over financial reporting,
particularly with the control, monitoring, and reconciliation processes
in support of the preparation of VA‘s consolidated financial
statements, and (2) the effectiveness of the information technology
security controls.
VA has demonstrated management commitment to addressing material
internal control weaknesses and made significant improvements in
financial management. The target dates for completing corrective
actions on the information technology security control weaknesses is
fiscal year 2003, while the target date for corrective action on
financial management system deficiencies is fiscal year 2004, when
implementation of VA‘s integrated financial system is scheduled for
completion. It is important that VA meet these targets because
noncompliance with federal financial systems requirements impedes VA‘s
ability to provide reliable, useful, and timely information needed to
manage day-to-day operations.
[End of section]
GAO Contacts:
Subject(s) covered in this report: Ensuring access to quality health
care; ; Managing resources and workload to enhance health care
delivery; ; Preparing for biological and chemical acts of terrorism; ;
Improving veterans‘ disability program; Contact person: Cynthia A.
Bascetta; Director, Health Care--Veterans‘ Health and Benefits Issues;
(202) 512-7101; bascettac@gao.gov.
Subject(s) covered in this report: Linking budget formulation and
performance planning processes; Contact person: Paul L. Posner;
Managing Director, Federal Budget Analysis, Strategic Issues; (202)
512-9573; posnerp@gao.gov.
Subject(s) covered in this report: Overcoming information technology
challenges; Contact person: Joel C. Willemssen; Managing Director,
Information Technology; (202) 512-6253; willemssenj@gao.gov; ; Robert
F. Dacey, Director; Information Security Issues; Information
Technology; (202) 512-3317; daceyr@gao.gov.
Subject(s) covered in this report: Enhancing financial management to
correct material deficiencies; Contact person: McCoy Williams;
Director, Financial Management and Assurance; (202) 512-6906;
williamsm1@gao.gov.
[End of table]
[End of section]
Related GAO Products:
Ensure Access to Quality Health Care:
VA Long-Term Care: Implementation of Certain Millennium Act Provisions
Is Incomplete, and Availability of Noninstitutional Services Is Uneven.
GAO-02-510R. Washington, D.C.: March 29, 2002.
VA Health Care: More National Action Needed to Reduce Waiting Times,
but Some Clinics Have Made Progress. GAO-01-953. Washington, D.C.:
August 31, 2001.
VA Long-Term Care: Oversight of Community Nursing Homes Needs
Strengthening. GAO-01-768. Washington, D.C.: July 27, 2001.
Veterans‘ Health Care: Standards and Accountability Could Improve
Hepatitis C Screening and Testing Performance. GAO-01-807T. Washington,
D.C.: June 14, 2001.
VA Health Care: Community-Based Clinics Improve Primary Care Access.
GAO-01-678T. Washington, D.C.: May 2, 2001.
Veterans‘ Health Care: Observations on VA‘s Assessment of Hepatitis C
Budgeting and Funding. GAO-01-661T. Washington, D.C.: April 25, 2001.
VA Drug Formulary: Better Oversight Is Required, but Veterans Are
Getting Needed Drugs. GAO-01-183. Washington, D.C.: January 29, 2001.
Veterans‘ Health Care: VA Needs Better Data on Extent and Causes of
Waiting Times. GAO/HEHS-00-90. Washington, D.C.: May 31, 2000.
Disabled Veterans‘ Care: Better Data and More Accountability Needed to
Adequately Assess Care. GAO/HEHS-00-57. Washington, D.C.: April 21,
2000.
Manage Resources and Workload to Enhance Health Care Delivery:
VA Health Care: Improved Planning Needed for Management of Excess Real
Property. GAO-03-326. Washington, D.C.: January 29, 2003.
VA Health Care: Expanded Eligibility Has Increased Outpatient Pharmacy
Use and Expenditures. GAO-03-161. Washington, D.C.: November 8, 2002.
VA and Defense Health Care: Increased Risk of Medication Errors for
Shared Patients. GAO-02-1017. Washington, D.C.: September 27, 2002.
VA and DOD Health Care: Factors Contributing to Reduced Pharmacy Costs
and Continuing Challenges. GAO-02-969T. Washington, D.C.: July 22,
2002.
VA and Defense Health Care: Potential Exists for Savings through Joint
Purchasing of Medical and Surgical Supplies. GAO-02-872T. Washington,
D.C.: June 26, 2002.
VA Health Care: Allocation Changes Would Better Align Resources with
Workload. GAO-02-338. Washington, D.C.: February 28, 2002.
VA Health Care: VA Has Not Sufficiently Explored Alternatives for
Optimizing Third-Party Collections. GAO-01-1157T. Washington, D.C.:
September 20, 2001.
VA Health Care: Continuing Oversight Needed to Achieve Formulary Goals.
GAO-01-998T. Washington, D.C.: July 24, 2001.
Veterans‘ Health Care: Standards and Accountability Could Improve
Hepatitis C Screening and Testing Performance. GAO-01-807T. Washington,
D.C.: June 14, 2001.
DOD and VA Pharmacy: Progress and Remaining Challenges in Jointly
Buying and Mailing Out Drugs. GAO-01-588. Washington, D.C.: May 25,
2001.
VA Laundry Service: Consolidations and Competitive Sourcing Could Save
Millions. GAO-01-61. Washington, D.C.: November 30, 2000.
VA Health Care: Expanding Food Service Initiatives Could Save Millions.
GAO-01-64. Washington, D.C.: November 30, 2000.
VA and Defense Health Care: Evolving Health Care Systems Require
Rethinking of Resource Sharing Strategies. GAO/HEHS-00-52. Washington,
D.C.: May 17, 2000.
VA Health Care: VA Is Struggling to Address Asset Realignment
Challenges. GAO/T-HEHS-00-88. Washington, D.C.: April 5, 2000.
VA Health Care: Collections Fall Short of Expectations. GAO/T-HEHS-99-
196. Washington, D.C.: September 23, 1999.
VA Health Care: Improvements Needed in Capital Asset Planning and
Budgeting. GAO/HEHS-99-145. Washington, D.C.: August 13, 1999.
VA Health Care: Closing a Chicago Hospital Would Save Millions and
Enhance Access to Services. GAO/HEHS-98-64. Washington, D.C.: April 16,
1998.
Prepare for Biological and Chemical Acts of Terrorism:
Homeland Security: Need to Consider VA‘s Role in Strengthening Federal
Preparedness. GAO-02-145T. Washington, D.C.: October 15, 2001.
Improve Veterans‘ Disability Program:
Veterans‘ Benefits: Claims Processing Timeliness Performance Measures
Could Be Improved. GAO-03-282. Washington, D.C.: December 19, 2002.
Veterans‘ Benefits: Quality Assurance for Disability Claims and Appeals
Processing Can Be Further Improved. GAO-02-806. Washington, D.C.:
August 16, 2002.
SSA and VA Disability Programs: Re-Examination of Disability Criteria
Needed to Help Ensure Program Integrity. GAO-02-597. Washington, D.C.:
August 9, 2002.
Veterans‘ Benefits: VBA‘s Efforts to Implement the Veterans Claims
Assistant Act Need Further Monitoring. GAO-02-412. Washington, D.C.:
July 1, 2002.
Veterans‘ Benefits: Despite Recent Improvements, Meeting Claims
Processing Goals Will Be Challenging. GAO-02-645T. Washington, D.C.:
April 26, 2002.
Veterans Benefits Administration: Clarity of Letters to Claimants Needs
to Be Improved. GAO-02-395. Washington, D.C.: April 23, 2002.
Veterans‘ Benefits: Quality Assurance for Disability Claims Processing.
GAO-01-930R. Washington, D.C.: August 23, 2001.
Veterans‘ Benefits: Training for Claims Processors Needs Evaluation.
GAO-01-601. Washington, D.C.: May 31, 2001.
Veterans‘ Benefits: Veterans Have Mixed Views on a Lump Sum Disability
Payment Option. GAO-01-172. Washington, D.C.: December 18, 2000.
Veterans Benefits Administration: Problems and Challenges Facing
Disability Claims Processing. GAO/T-HEHS/AIMD-00-146. Washington,
D.C.: May 18, 2000.
Veterans‘ Benefits: Promising Claims-Processing Practices Need to Be
Evaluated. GAO/HEHS-00-65. Washington, D.C.: April 7, 2000.
Veterans Benefits Administration: Progress Encouraging, but Challenges
Still Remain. GAO/T-HEHS-99-77. Washington, D.C.: March 25, 1999.
Veterans‘ Benefits Claims: Further Improvements Needed in Claims-
Processing Accuracy. GAO/HEHS-99-35. Washington, D.C.: March 1, 1999.
VA Disability Compensation: Disability Ratings May Not Reflect
Veterans‘ Economic Losses. GAO/HEHS-97-9. Washington, D.C.: January 7,
1997.
Veterans‘ Benefits: Effective Interaction Needed Within VA to Address
Appeals Backlog. GAO/HEHS-95-190. Washington, D.C.: September 27, 1995.
Veterans‘ Benefits: VA Can Prevent Millions in Compensation and Pension
Overpayments. GAO/HEHS-95-88. Washington, D.C.: April 28, 1995.
Develop Sound Departmentwide Management Strategies to Build a High-
Performing Organization:
Managing For Results: Efforts to Strengthen the Link Between Resources
and Results at the Veterans Health Administration. GAO-03-10.
Washington, D.C.: December 10, 2002.
VA Information Technology: Management Making Important Progress in
Addressing Key Challenges. GAO-02-1054T. Washington, D.C.:
September 26, 2002.
Veterans Affairs: Sustained Management Attention Is Key to Achieving
Information Technology Results. GAO-02-703. Washington, D.C.: June 12,
2002.
VA Information Technology: Progress Made, but Continued Management
Attention Is Key to Achieving Results. GAO-02-369. Washington, D.C.:
March 13, 2002.
Veterans Affairs: Status of Achieving Key Outcomes and Addressing Major
Management Challenges. GAO-01-752. Washington, D.C.: June 15, 2001.
Computer-Based Patient Records: Better Planning and Oversight by VA,
DOD, and IHS Would Enhance Health Data Sharing. GAO-01-459. Washington,
D.C.: April 30, 2001.
Managing for Results: Emerging Benefits From Selected Agencies‘ Use of
Performance Agreements. GAO-01-115. Washington, D.C.: October 30, 2000.
VA Information Technology: Progress Continues Although Vulnerabilities
Remain. GAO/T-AIMD-00-321. Washington, D.C.: September 21, 2000.
Computer Security: Critical Federal Operations and Assets Remain at
Risk. GAO/T-AIMD-00-314. Washington, D.C.: September 11, 2000.
VA Information Systems: Computer Security Weaknesses Persist at the
Veterans Health Administration. GAO/AIMD-00-232. Washington, D.C.:
September 8, 2000.
Information Technology: VA Actions Needed to Implement Critical
Reforms. GAO/AIMD-00-226. Washington, D.C.: August 16, 2000.
Information Technology: Update on VA Actions to Implement Critical
Reforms. GAO/T-AIMD-00-74. Washington, D.C.: May 11, 2000.
Executive Guide: Maximizing the Success of Chief Information Officers,
Learning From Leading Organizations. GAO/AIMD-00-83. Washington, D.C.:
March 2000.
Information Systems: The Status of Computer Security at the Department
of Veterans Affairs. GAO/AIMD-00-5. Washington, D.C.: October 4, 1999.
Internal Controls: VA Lacked Accountability Over Its Direct Loan and
Loan Sale Activities. GAO/AIMD-99-24. Washington, D.C.: March 24, 1999.
Credit Reform: Key Credit Agencies Had Difficulty Making Reasonable
Loan Program Cost Estimates. GAO/AIMD-99-31. Washington, D.C.: January
29, 1999.
Information Systems: VA Computer Control Weaknesses Increase Risk of
Fraud, Misuse, and Improper Disclosure. GAO-AIMD-98-175. Washington,
D.C.: September 23, 1998.
Observations on the Department of Veterans Affairs‘ Fiscal Year 1999
Performance Report and Fiscal Year 2001 Performance Plan. GAO/HEHS-00-
124R. Washington, D.C.: June 30, 2000.
[End of section]
Performance and Accountability and High-Risk Series:
Major Management Challenges and Program Risks: A Governmentwide
Perspective. GAO-03-95.
Major Management Challenges and Program Risks: Department of
Agriculture. GAO-03-96.
Major Management Challenges and Program Risks: Department of Commerce.
GAO-03-97.
Major Management Challenges and Program Risks: Department of Defense.
GAO-03-98.
Major Management Challenges and Program Risks: Department of Education.
GAO-03-99.
Major Management Challenges and Program Risks: Department of Energy.
GAO-03-100.
Major Management Challenges and Program Risks: Department of Health and
Human Services. GAO-03-101.
Major Management Challenges and Program Risks: Department of Homeland
Security. GAO-03-102.
Major Management Challenges and Program Risks: Department of Housing
and Urban Development. GAO-03-103.
Major Management Challenges and Program Risks: Department of the
Interior. GAO-03-104.
Major Management Challenges and Program Risks: Department of Justice.
GAO-03-105.
Major Management Challenges and Program Risks: Department of Labor.
GAO-03-106.
Major Management Challenges and Program Risks: Department of State.
GAO-03-107.
Major Management Challenges and Program Risks: Department of
Transportation. GAO-03-108.
Major Management Challenges and Program Risks: Department of the
Treasury. GAO-03-109.
Major Management Challenges and Program Risks: Department of Veterans
Affairs. GAO-03-110.
Major Management Challenges and Program Risks: U.S. Agency for
International Development. GAO-03-111.
Major Management Challenges and Program Risks: Environmental Protection
Agency. GAO-03-112.
Major Management Challenges and Program Risks: Federal Emergency
Management Agency. GAO-03-113.
Major Management Challenges and Program Risks: National Aeronautics and
Space Administration. GAO-03-114.
Major Management Challenges and Program Risks: Office of Personnel
Management. GAO-03-115.
Major Management Challenges and Program Risks: Small Business
Administration. GAO-03-116.
Major Management Challenges and Program Risks: Social Security
Administration. GAO-03-117.
Major Management Challenges and Program Risks: U.S. Postal Service.
GAO-03-118.
High-Risk Series: An Update. GAO-03-119.
High-Risk Series: Strategic Human Capital Management. GAO-03-120.
High-Risk Series: Protecting Information Systems Supporting the Federal
Government and the Nation‘s Critical Infrastructures.
GAO-03-121.
High-Risk Series: Federal Real Property. GAO-03-122.
FOOTNOTES
[1] VA‘s 21 health care networks have responsibilities for allocating
resources to their facilities, such as medical centers, and managing
operations to ensure efficient provision of health care delivery.
[2] In November 2002, VA redefined reasonable access in terms of
minutes rather than distance from primary, inpatient, and tertiary
care. VA defines reasonable access to primary outpatient care as that
which is available by no more than a 30 minute drive by veterans
residing in urban and rural areas, and a 60 minute drive by veterans in
highly rural areas.
[3] President‘s Task Force to Improve Health Care Delivery for Our
Nation‘s Veterans, Interim Report, (Washington, D.C.: July 31, 2002).
[4] VA‘s medical centers include primary and specialty care clinics.
[5] U.S. General Accounting Office, VA Health Care: More National
Action Needed to Reduce Waiting Times, but Some Clinics Have Made
Progress, GAO-01-953 (Washington, D.C.: Aug. 31, 2001).
[6] The Institute for Healthcare Improvement is a not-for-profit
organization VA contracted with in July 1999 to develop strategies to
reduce patient waiting times.
[7] Provision of Hospital Outpatient Care to Veterans Subpriorities of
Priority Categories 7 and 8 and Annual Enrollment Level Decision, 68
Fed. Reg. 2670 (2003) (to be codified as 38 C.F.R. pt 17) (interim
final rule Jan. 17, 2003).
[8] Priorities for Outpatient Medical Services and Inpatient Hospital
Care, 67 Fed. Reg. 58528 (2002)(to be codified as 38 C.F.R. pt. 17)
(interim final rule Sept. 17, 2002).
[9] U.S. General Accounting Office, VA Long-Term Care: Oversight of
Community Nursing Homes Needs Strengthening, GAO-01-768 (Washington,
D.C.: July 27, 2001).
[10] U.S. General Accounting Office, Veterans‘ Health Care: Standards
and Accountability Could Improve Hepatitis C Screening and Testing
Performance, GAO-01-807T (Washington, D.C.: June 14, 2001).
[11] The Veterans‘ Health Care Eligibility Reform Act of 1996 required
VA to establish priority categories for enrollment to manage access in
relation to available resources. VA established seven priority
categories, with Priority 1 veterans--those with service-connected
disabilities rated 50 percent or more--having the highest priority for
enrollment. Priority 7 veterans are primarily nonservice-connected
veterans with higher incomes. The act also eliminated restrictions that
previously prevented VA from treating some veterans in outpatient
settings.
[12] In October 2002, VA issued a new regulation that divided the
Priority 7 veteran category into two new priority categories--Priority
7 and Priority 8. The new Priority 7 veterans are primarily veterans
with no service-connected disabilities who have incomes under limits
established for geographic regions by the U.S. Department of Housing
and Urban Development to reflect regional costs of living. By contrast,
Priority 8 veterans are primarily veterans with no service-connected
disabilities whose incomes are above the limits set for these
geographic regions.
[13] U.S. General Accounting Office, VA Health Care: Allocation Changes
Would Better Align Resources with Workload, GAO-02-338 (Washington,
D.C.: Feb. 28, 2002).
[14] U.S. General Accounting Office, VA Health Care: Closing a Chicago
Hospital Would Save Millions and Enhance Access to Services, GAO/HEHS-
98-64 (Washington, D.C.: Apr. 16, 1998).
[15] To determine their asset needs, OMB guidelines suggest that
agencies conduct market-based assessments that include determining a
target population‘s needs, evaluating the capacity of existing assets,
identifying any excesses or deficiencies, estimating assets‘ life-cycle
costs, and comparing such costs with alternatives for meeting the
target population‘s needs. (See Capital Programming Guide, ver. 1.0,
Washington, D.C.: OMB, July 1997).
[16] U.S. General Accounting Office, VA Health Care: Improved Planning
Needed for Management of Excess Real Property, GAO-03-326 (Washington,
D.C.: Jan. 29, 2003).
[17] U.S. General Accounting Office, High-Risk Series: Federal Real
Property, GAO-03-122 (Washington, D.C.: January 2003).
[18] U.S. General Accounting Office, VA Laundry Service: Consolidations
and Competitive Sourcing Could Save Millions, GAO-01-61 (Washington,
D.C.: Nov. 30, 2000); U.S. General Accounting Office, VA Health Care:
Expanding Food Service Initiatives Could Save Millions, GAO-01-64
(Washington, D.C.: Nov. 30, 2000).
[19] The task force issued an interim report in July 2002. Its final
report is expected in March 2003.
[20] U.S. General Accounting Office, VA and Defense Health Care:
Evolving Health Care Systems Require Rethinking of Resource Sharing
Strategies, GAO/HEHS-00-52 (Washington, D.C.: May 17, 2000).
[21] U.S. General Accounting Office, DOD and VA Pharmacy: Progress and
Remaining Challenges in Jointly Buying and Mailing Out Drugs, GAO-01-
588 (Washington, D.C.:
May 25, 2001).
[22] Under committed-use contracts, VA commits to using primarily the
contract drug, instead of other therapeutically interchangeable drugs,
to guarantee drug companies a high volume of use in exchange for lower
prices.
[23] Hearing on H.R. 3645 Veterans Health-Care Items Procurement Reform
and Improvement Act of 2002:, Before the Veterans Affairs Subcommittee
on Health, 107th Cong. June 26, 2002.
[24] U.S. General Accounting Office, VA and Defense Health Care:
Potential Exists for Savings through Joint Purchasing of Medical and
Surgical Supplies, GAO-02-872T (Washington, D.C.: June 26, 2002).
[25] VA can bill insurers for care it provides to veterans for medical
conditions not related to service-connected disabilities. Beginning in
1997, VA was allowed to retain these collections to supplement its
medical care appropriations.
[26] U.S. General Accounting Office, VA Health Care: VA Has Not
Sufficiently Explored Alternatives for Optimizing Third-Party
Collections, GAO-01-1157T (Washington, D.C.: Sept. 20, 2001); U.S.
General Accounting Office, VA Health Care: Collections Fall Short of
Expectations, GAO/T-HEHS-99-196 (Washington, D.C.: Sept. 23, 1999).
[27] VA Office of Inspector General, Audit of the Medical Care
Collection Fund Program (Washington, D.C.: Feb. 26, 2002).
[28] U.S. General Accounting Office, Homeland Security: Need to
Consider VA‘s Role in Strengthening Federal Preparedness, GAO-02-145T
(Washington, D.C.: Oct. 15, 2001).
[29] Department of Veterans Affairs, Secretary‘s Annual Statement 2002-
2003 (Washington, D.C.: December 2002).
[30] Pub. L. No. 107-287, 116 STAT. 204 (2002).
[31] Rating-related claims are primarily original claims for
compensation and pension benefits and ’reopened“ claims by veterans.
[32] In its July 1999 Morton decision, the U.S. Court of Appeals for
Veterans Claims held that VA did not have a duty to assist veterans in
developing their claims unless they were ’well-grounded“--that is,
enough information was provided for VA to determine that the claim was
plausible.
[33] Military retirees are eligible for this new benefit if the
disability (1) was caused by an injury for which they received the
Purple Heart and which was rated by the military service or VA as 10
percent disabling or higher, or (2) was service-connected, incurred
under certain conditions, and rated 60 percent disabling or higher by
the military service or VA.
[34] U.S. General Accounting Office, Veterans‘ Benefits: Claims
Processing Timeliness Performance Measures Could Be Improved, GAO-03-
282 (Washington, D.C.: Dec. 19, 2002).
[35] This accuracy is based on STAR reviews completed through December
31, 2002.
[36] U.S. General Accounting Office, Veterans‘ Benefits: Quality
Assurance for Disability Claims and Appeals Processing Can Be Further
Improved, GAO-02-806 (Washington, D.C.: Aug. 16, 2002).
[37] U.S. General Accounting Office, SSA and VA Disability Programs:
Re-Examination of Disability Criteria Needed to Help Ensure Program
Integrity, GAO-02-597 (Washington, D.C.: Aug. 9, 2002). This report
also identified claims processing challenges in the Social Security
Administration.
[38] An integrated IT architecture is a blueprint, consisting of
logical and technical components, to guide and constrain the
development and evolution of a collection of related systems. At the
logical level, the architecture provides a high-level description of an
organization‘s mission, the business functions performed and the
relationships among them, the information needed to perform the
functions, and the flow of information among functions. At the
technical level, the architecture provides the rules and standards
needed to ensure that the interrelated systems are built to be
interoperable and maintainable.
[39] U.S. General Accounting Office, Veterans Affairs: Sustained
Management Attention Is Key to Achieving Information Technology
Results, GAO-02-703 (Washington, D.C.: June 12, 2002).
[40] Report of the Audit of the Department of Veterans Affairs
Consolidated Financial Statements for Fiscal Years 2002 and 2001,
Office of the Inspector General, Report No. 02-02-01638-47 (Washington,
D.C.: Jan. 22, 2003).
[41] Report of the Audit of the Department of Veterans Affairs
Consolidated Financial Statements for Fiscal Years 2000 and 1999,
Office of the Inspector General, Report No. 00-01702-50 (Washington,
D.C.: Feb. 28, 2001).
[42] U.S. General Accounting Office, Internal Controls: VA Lacked
Accountability Over Its Direct Loan and Loan Sale Activities, GAO/AIMD-
99-24 (Washington, D.C.: Mar. 24, 1999).
GAO‘s Mission:
The General Accounting Office, the investigative arm of Congress,
exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO‘s commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO‘s Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as ’Today‘s Reports,“ on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select ’Subscribe to daily E-mail alert for newly
released products“ under the GAO Reports heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. General Accounting Office
441 G Street NW,
Room LM Washington,
D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.
General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.
20548:
