VA Health Care
Challenges in Budget Formulation and Execution Gao ID: GAO-09-459T March 12, 2009The Department of Veterans Affairs (VA) estimates it will provide health care to 5.8 million patients with appropriations of $41.2 billion in fiscal year 2009. The President has proposed an increase in VA's health care budget for fiscal year 2010 to expand services for veterans. VA's patient population includes aging veterans who need services such as long-term care-- including nursing home and noninstitutional care provided in veterans' homes or community-- and veterans returning from Afghanistan and Iraq. Each year, VA formulates its medical care budget, which involves developing estimates of spending for VA's health care services. VA is also responsible for budget execution-- spending appropriations and monitoring their use. GAO was asked to discuss challenges related to VA's health care services budget formulation and execution. This statement focuses on (1) challenges VA faces in formulating its health care budget, and (2) challenges VA faces in executing its health care budget. This testimony is based on three GAO reports: VA Health Care: Budget Formulation and Reporting on Budget Execution Need Improvement (GAO-06-958) (Sept. 2006); VA Heath Care: Spending for Mental Health Strategic Plan Initiatives Was Substantially Less Than Planned (GAO-07-66) (Nov. 2006); and VA Health Care: Long-Term Care Strategic Planning and Budgeting Need Improvement (GAO-09-145) (Jan. 2009).
VA faces challenges formulating its health care budget each fiscal year. As noted in GAO's 2006 report on VA's overall health care budget, these include making realistic assumptions about the budgetary impact of policy changes, making accurate calculations, and obtaining sufficient data for useful budget projections. For example, GAO found that VA made unrealistic assumptions about how quickly it would realize savings from proposed changes in nursing home policy. While VA took steps to respond to GAO's 2006 recommendations about VA budgeting, recent GAO work found similar issues. In 2009, GAO reported on VA's long-term care budget--namely, on challenges in projecting the amount and cost of VA long-term care. GAO found that in its fiscal year 2009 budget justification, VA used assumptions about the cost of nursing home and noninstitutional care that appeared unrealistically low given recent VA experience and other indicators. VA said it would complete an action plan responding to GAO's 2009 recommendations by the end of March 2009. VA also faces challenges executing its health care budget. These include spending and tracking funds for specific initiatives and providing timely and useful information to Congress on budget execution progress and problems. GAO's 2006 report on VA funding for new mental health initiatives found VA had difficulty spending and tracking funds for initiatives in VA's mental health strategic plan to expand services to address service gaps. The initiatives were to enhance VA's larger mental health program and were to be funded by $100 million in fiscal year 2005. Some VA medical centers did not spend all the funds they had received for the initiatives by the end of the fiscal year, partly due to the time it took to hire staff and renovate space for mental health programs. Also, VA did not track how funding allocated for the initiatives was spent. GAO's 2006 report on VA's overall health care budget found that VA monitored its health care budget execution and identified execution problems for fiscal years 2005 and 2006, but did not report the problems to Congress in a timely way. GAO also found that VA's reporting on budget execution to Congress could have been more informative. VA has not fully implemented one of GAO's two recommendations for improving VA budget execution. Sound budget formulation, monitoring of budget execution, and the reporting of informative and timely information to Congress for oversight continue to be essential as VA addresses budget challenges GAO has identified. Budgeting involves imperfect information and uncertainty, but VA has the opportunity to improve the credibility of its budgeting by continuing to address identified problems. This is particularly true for long-term care, where for several years GAO work has highlighted concerns about workload assumptions and cost projections. By improving its budget process, VA can increase the credibility and usefulness of information it provides to Congress on its budget plans and progress in spending funds. GAO's prior work on new mental health initiatives may provide a cautionary lesson about expanding VA programs--namely, that funding availability does not always mean that new initiatives will be fully implemented in a given fiscal year or that funds will be adequately tracked.
GAO-09-459T, VA Health Care: Challenges in Budget Formulation and Execution
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Testimony:
Before the Subcommittee on Military Construction, Veterans Affairs, and
Related Agencies, Committee on Appropriations, House of
Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Thursday, March 12, 2009:
VA Health Care:
Challenges in Budget Formulation and Execution:
Statement of Randall B. Williamson:
Director, Health Care:
GAO-09-459T:
GAO Highlights:
Highlights of GAO-09-459T, a testimony before the Subcommittee on
Military Construction, Veterans Affairs, and Related Agencies,
Committee on Appropriations, House of Representatives.
Why GAO Did This Study:
The Department of Veterans Affairs (VA) estimates it will provide
health care to 5.8 million patients with appropriations of $41.2
billion in fiscal year 2009. The President has proposed an increase in
VA‘s health care budget for fiscal year 2010 to expand services for
veterans. VA‘s patient population includes aging veterans who need
services such as long-term care”including nursing home and
noninstitutional care provided in veterans‘ homes or community”and
veterans returning from Afghanistan and Iraq. Each year, VA formulates
its medical care budget, which involves developing estimates of
spending for VA‘s health care services. VA is also responsible for
budget execution”spending appropriations and monitoring their use.
GAO was asked to discuss challenges related to VA‘s health care
services budget formulation and execution. This statement focuses on
(1) challenges VA faces in formulating its health care budget, and (2)
challenges VA faces in executing its health care budget.
This testimony is based on three GAO reports: VA Health Care: Budget
Formulation and Reporting on Budget Execution Need Improvement
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-958] (Sept. 2006);
VA Heath Care: Spending for Mental Health Strategic Plan Initiatives
Was Substantially Less Than Planned [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-66] (Nov. 2006); and VA Health Care: Long-Term Care
Strategic Planning and Budgeting Need Improvement [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-09-145] (Jan. 2009).
What GAO Found:
VA faces challenges formulating its health care budget each fiscal
year. As noted in GAO‘s 2006 report on VA‘s overall health care budget,
these include making realistic assumptions about the budgetary impact
of policy changes, making accurate calculations, and obtaining
sufficient data for useful budget projections. For example, GAO found
that VA made unrealistic assumptions about how quickly it would realize
savings from proposed changes in nursing home policy. While VA took
steps to respond to GAO‘s 2006 recommendations about VA budgeting,
recent GAO work found similar issues. In 2009, GAO reported on VA‘s
long-term care budget”namely, on challenges in projecting the amount
and cost of VA long-term care. GAO found that in its fiscal year 2009
budget justification, VA used assumptions about the cost of nursing
home and noninstitutional care that appeared unrealistically low given
recent VA experience and other indicators. VA said it would complete an
action plan responding to GAO‘s 2009 recommendations by the end of
March 2009.
VA also faces challenges executing its health care budget. These
include spending and tracking funds for specific initiatives and
providing timely and useful information to Congress on budget execution
progress and problems. GAO‘s 2006 report on VA funding for new mental
health initiatives found VA had difficulty spending and tracking funds
for initiatives in VA‘s mental health strategic plan to expand services
to address service gaps. The initiatives were to enhance VA‘s larger
mental health program and were to be funded by $100 million in fiscal
year 2005. Some VA medical centers did not spend all the funds they had
received for the initiatives by the end of the fiscal year, partly due
to the time it took to hire staff and renovate space for mental health
programs. Also, VA did not track how funding allocated for the
initiatives was spent. GAO‘s 2006 report on VA‘s overall health care
budget found that VA monitored its health care budget execution and
identified execution problems for fiscal years 2005 and 2006, but did
not report the problems to Congress in a timely way. GAO also found
that VA‘s reporting on budget execution to Congress could have been
more informative. VA has not fully implemented one of GAO‘s two
recommendations for improving VA budget execution.
Sound budget formulation, monitoring of budget execution, and the
reporting of informative and timely information to Congress for
oversight continue to be essential as VA addresses budget challenges
GAO has identified. Budgeting involves imperfect information and
uncertainty, but VA has the opportunity to improve the credibility of
its budgeting by continuing to address identified problems. This is
particularly true for long-term care, where for several years GAO work
has highlighted concerns about workload assumptions and cost
projections. By improving its budget process, VA can increase the
credibility and usefulness of information it provides to Congress on
its budget plans and progress in spending funds. GAO‘s prior work on
new mental health initiatives may provide a cautionary lesson about
expanding VA programs”namely, that funding availability does not always
mean that new initiatives will be fully implemented in a given fiscal
year or that funds will be adequately tracked.
View [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-459T] or key
components. For more information, contact Randall B. Williamson at
(202) 512-7114 or williamsonr@gao.gov.
[End of section]
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today as you discuss the Department of Veterans
Affairs' (VA) health care programs and consider the President's budget
request for fiscal year 2010. These programs form one of the largest
health care delivery systems in the nation and provide, for eligible
veterans, a range of services, including preventive and primary health
care, outpatient and inpatient services, and prescription drugs. For
example, VA provides a variety of outpatient and inpatient mental
health services for veterans with conditions such as depression, post-
traumatic stress disorder, and substance abuse disorders. VA also
provides a range of long-term care services--including nursing home
care and noninstitutional care provided in veterans' homes or in the
community--for veterans needing assistance due to chronic illness or
physical or mental disability. VA estimated that in fiscal year 2009,
its health care programs would serve 5.8 million patients with
appropriations of $41.2 billion. The President recently proposed an
increase in VA's health care budget for fiscal year 2010 to expand
health care services for veterans.
VA formulates its health care budget by developing annual estimates of
its likely spending for all of its health care programs and services,
and includes these estimates in its annual congressional budget
justification to the appropriations subcommittees. VA's formulation of
its budget is by its very nature challenging, as it is based on
assumptions and imperfect information on the health care services VA
expects to provide. For example, VA is responsible for anticipating the
service needs of two very different populations--an aging veteran
population and a growing number of veterans returning from the military
operations in Afghanistan and Iraq, known as Operation Enduring Freedom
(OEF) and Operation Iraqi Freedom (OIF), respectively--calculating the
future costs associated with providing VA services, and using these
factors to develop the department's budget request submitted to the
Office of Management and Budget (OMB).[Footnote 1] VA uses an actuarial
model to develop the annual budget estimates for most, but not all, of
its health care programs, including inpatient acute surgery, outpatient
care, and prescription drugs. This model estimates future VA health
care costs by using projections of veterans' demand for VA's health
care services as well as cost estimates associated with particular
health care services.[Footnote 2] In fiscal year 2006, VA used the
actuarial model to estimate about 86 percent of its projected health
care spending for that year. VA uses other approaches to develop its
spending estimates for its remaining health care services, such as long-
term care. Long-term care accounted for about 10 percent of VA's
estimated health care spending for fiscal year 2006.
VA is also responsible for executing its budget--a responsibility that
includes spending appropriated funds efficiently and effectively and
monitoring the use of funds throughout the fiscal year to ensure that
those funds are used to provide health care services as authorized. VA
typically receives appropriations that support all its health care
services rather than appropriations specifically for certain types of
services. As a result, VA has considerable discretion in how it
allocates its resources among its various health care services. VA
allocates most of the appropriations for its health care services to
VA's 21 health care networks, which in turn allocate funds to the
medical centers within their networks.[Footnote 3]
In 2006 and 2009, we issued three reports that examined some of the
challenges VA faces in budget formulation and execution; these reports
pertained to VA's overall health care budget as well as portions of its
budget that pertain to long-term care and to specific mental health
initiatives.[Footnote 4] You asked us to discuss budget challenges VA
faces related to its health care programs, and today my remarks are
based on our issued work on this subject.[Footnote 5] Specifically, I
will discuss (1) challenges VA faces formulating its health care
budget, and (2) challenges VA faces executing its health care budget.
For our 2006 report on VA's overall health care budget for fiscal years
2005 and 2006, we analyzed and reviewed budget documents, including
VA's budget justifications for health care programs for fiscal years
2005 and 2006, and interviewed VA officials responsible for VA health
care budget issues and for developing budget projections. In addition,
from August to September 2008, we reviewed VA documents to determine
whether VA had implemented the recommendations we made in our 2006
report. For our other 2006 report, on VA's budget for specific mental
health initiatives, we reviewed documents related to the funding of
these initiatives. We interviewed VA headquarters officials responsible
for VA's mental health services and budget functions. We also conducted
site visits and phone interviews with officials from selected VA health
care networks and VA medical centers. In September 2008, we reviewed VA
documents to determine whether VA had implemented the recommendations
we made in that report. For our 2009 report on VA's long-term care
budget, we reviewed VA's fiscal year 2009 congressional budget
justification and related documents. We also interviewed VA officials.
We conducted our work for these performance audits in accordance with
generally accepted government auditing standards.[Footnote 6] Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
VA Faces Challenges in Formulating Its Health Care Budget:
Our prior work highlights some of the challenges VA faces in
formulating its budget. As we reported in 2006, these challenges
include making realistic assumptions about the budgetary impact of some
of its policies, making accurate calculations, and obtaining sufficient
data for useful budget projections. In 2009, we again reported on VA's
budget formulation challenges--specifically, VA's challenges projecting
the amount of long-term care it will provide and estimating the costs
of this care.
Challenges Making Realistic Assumptions Related to Proposed Policy
Changes, Making Accurate Calculations, and Obtaining Sufficient Data:
Our 2006 report on VA's overall health care budget illustrated that in
formulating its budget, VA faces challenges making realistic
assumptions about the budgetary impact of its proposed policies. We
reported that the President's requests for additional funding for VA's
medical programs for fiscal years 2005 and 2006[Footnote 7] were in
part due to unrealistic assumptions VA made about how quickly the
department would realize savings from proposed changes in its nursing
home policy.[Footnote 8] Specifically, we found that:
* VA's fiscal year 2005 budget justification included a proposal to
reduce the amount of care VA provides--known as workload--in VA-
operated nursing homes, one of three settings which provide VA nursing
home services.[Footnote 9] VA assumed that savings from this reduction
in workload would be realized on the first day of fiscal year 2005. VA
officials later told us that this assumption had been unrealistic
because of the accelerated time frame of the planned policy change. The
change would have required transferring or discharging veterans from
the nursing homes in an extremely compressed time frame; moreover,
achievement of substantial savings from this policy would have also
likely required reducing the number of VA employees.
* VA's fiscal year 2006 budget justification included a policy proposal
to reduce patient workload and costs by prioritizing the veterans who
would receive a certain type of VA nursing home care.[Footnote 10] VA
assumed that savings resulting from the policy change could be realized
before the start of the 2006 fiscal year; however, VA officials said
they later realized that time frame was unrealistic.
In our 2006 report, we recommended that VA improve its budget
formulation processes by explaining in its budget justifications the
relationship between the implementation of proposed policy changes and
the expected timing of cost savings to be achieved. VA agreed with this
recommendation and acted on this recommendation in VA's fiscal year
2009 budget justification.
Our 2006 report also illustrated that VA faces challenges making
accurate calculations during budget formulation. As we reported, VA
made computation errors when estimating the effect of its proposed
fiscal year 2006 nursing home policy, and this contributed to requests
for supplemental funding that year. We found that VA underestimated
workload and the costs of providing care in all three of its nursing
home settings. VA officials said that the errors resulted from
calculations being made in haste during the OMB appeal process,
[Footnote 11] and that a more standardized approach to long-term care
calculations could provide stronger quality assurance to help prevent
future mistakes. In 2006, we recommended that VA strengthen its
internal controls to better ensure the accuracy of calculations it uses
in preparing budget requests. VA agreed with and implemented this
recommendation and had the savings estimates from proposed policy
changes in its fiscal year 2009 budget justification validated by an
outside actuarial firm.
In formulating its budget, VA also faces the challenge of obtaining
sufficient data for useful workload projections, as illustrated in our
2006 report. We reported that the President's requests for additional
funding for VA health care programs in fiscal years 2005 and 2006 were,
in part, due to the lack of sufficient data on how many OEF/OIF
veterans VA would care for in those fiscal years. In its fiscal year
2005 budget justification, VA projected that it would need to provide
care to about 23,500 returning OEF/OIF veterans. VA subsequently
revised its projections to indicate that VA would serve nearly 100,000
OEF/OIF veterans. According to VA officials, the original projections
for providing care to OEF/OIF veterans had been understated for fiscal
year 2005 in part because the projections were based on insufficient
data on veterans returning from Iraq and Afghanistan. Insufficient data
on returning OEF/OIF veterans continued to be a challenge in
formulating VA's fiscal year 2006 budget justification. VA officials
told us they did not have sufficient data for that fiscal year due to
challenges obtaining data needed to identify these veterans from the
Department of Defense (DOD). After the President submitted the fiscal
year 2006 budget request, VA determined that it expected to provide
care to approximately 87,000 more veterans than initially projected for
fiscal year 2006. According to VA officials, the agency subsequently
began receiving the DOD data it requires to identify OEF/OIF veterans
on a monthly basis rather than the quarterly reports it used to
receive.
Challenges Projecting the Amount and Cost of Long-Term Care Services:
Our recent work on VA's budget showed how VA continued to face
challenges formulating its budget for long-term care services.[Footnote
12] In January 2009, we reported on VA's challenges developing
realistic assumptions to project the amount of noninstitutional long-
term care services it would provide to veterans. We found that, in its
fiscal year 2009 budget justification, VA included a spending estimate
for noninstitutional long-term care services that appeared unreliable,
in part because this spending estimate was based on a workload
projection that appeared to be unrealistically high, given recent VA
experience providing these services. Specifically, in an effort to help
meet veterans' demand for noninstitutional services, VA projected that
it would increase its noninstitutional workload 38 percent from fiscal
year 2008 to fiscal year 2009. VA included this projection in the
budget despite the fact that from fiscal year 2006 to fiscal year 2007-
-the most recent year for which workload data are available--VA's
actual workload for these services decreased about 5 percent, rather
than increasing as projected. (See figure 1.) In its fiscal year 2009
budget justification, VA did not provide information regarding its
plans for how it will increase noninstitutional workload 38 percent
from fiscal year 2008 to fiscal year 2009.
Figure 1: VA Actual and Estimated Noninstitutional Workload, Fiscal
Year 2006 through Fiscal Year 2009:
[Refer to PDF for image: vertical bar graph]
Fiscal year: 2006;
Actual Workload: 43,325.
Fiscal year: 2007;
Actual Workload: 41,022 (decrease of about 5%).
Fiscal year: 2008;
Estimated Workload: 44.192.
Fiscal year: 2009;
Estimated Workload: 61,029.
Source: GAO analysis of VA data.
Note: Workload is measured in average daily census. Average daily
census reflects the average number of veterans in VA noninstitutional
long-term care services on any given day during the course of a year.
[End of figure]
To strengthen the credibility of the estimates of long-term care
spending in VA's budgeting proposals and increase transparency for
Congress and stakeholders, we recommended that in future budget
justifications VA use workload projections for estimating
noninstitutional long-term care spending that are consistent with VA's
recent experience or report the rationale for using projections that
are not. In commenting on a draft of our report, VA did not indicate
whether it agreed with this recommendation, but stated it would
complete an action plan that responds to the recommendation by the end
of March 2009.
In addition to having difficulty developing reliable projections on the
amount of long-term care services it will provide, VA also faces
challenges developing realistic assumptions about the cost of providing
these services when formulating its budget. In January 2009, we
reported that VA may have underestimated its nursing home spending for
fiscal year 2009 because it used a cost assumption that appeared
unrealistically low, given both recent VA experience and economic
forecasts of increases in health care costs. To formulate its nursing
home spending estimate, VA assumed that the cost of providing a day of
nursing home care would increase 2.5 percent from fiscal year 2008 to
fiscal year 2009. However, from fiscal year 2006 to fiscal year 2007--
the most recent year for which actual cost data are available--the cost
to provide this care increased approximately 5.5 percent. Similarly,
for fiscal year 2007 to fiscal year 2008, VA estimated that its nursing
home costs would increase approximately 11 percent. In addition to its
recent experience, VA's 2.5 percent cost increase is also less than the
rate provided in OMB guidance to VA to help with its budget estimates-
-which forecasted a rate of inflation for medical services of 3.8
percent for the same time period.
In our January 2009 report, we also found that VA's estimate of the
amount it would spend for noninstitutional long-term care services in
fiscal year 2009 appeared to be unreliable--in part because VA based
this estimate on a cost assumption that appeared unrealistically low,
when compared to VA's recent experience and to economic forecasts of
increases in health care costs. Specifically, VA assumed that the cost
of providing a day of noninstitutional long-term care would not
increase from its fiscal year 2008 level. VA used this assumption to
formulate its noninstitutional long-term care spending estimate despite
the fact that from fiscal year 2006 to fiscal year 2007--the most
recent year for which actual cost data are available--the cost of
providing these services increased 19 percent. VA's cost assumption is
also inconsistent with the OMB guidance provided to VA. In its fiscal
year 2009 budget justification, VA did not provide information
regarding its nursing home or noninstitutional cost assumptions.
However, VA officials told us that they made these assumptions in order
to be conservative in VA's fiscal year 2009 budget estimates.
To strengthen the credibility of the estimates of long-term care
spending in VA's budgeting proposals and increase transparency for
Congress and stakeholders, we recommended that VA, in future budget
justifications, use cost assumptions for estimating both nursing home
and noninstitutional long-term care spending that are consistent with
VA's recent experience or report the rationale for using cost
assumptions that are not. In commenting on a draft of our report, VA
did not indicate whether it agreed with these recommendations, but
stated it would complete an action plan that responds to the
recommendations, again by the end of March 2009.
VA Faces Challenges in Executing Its Budget for Health Care Services:
Our prior work highlights some of the challenges VA faces in executing
its health care budget. These challenges include spending and tracking
funds designated by VA for specific health care initiatives as well as
providing timely and useful information to Congress regarding budget
execution progress and problems.
Challenges Spending and Tracking Funds Designated for VA Health Care
Initiatives:
After formulating its estimates of likely spending on its health care
services, VA is also responsible for executing its budget efficiently
and effectively. However, our 2006 report on VA's funding for specific
mental health initiatives[Footnote 13] showed that in executing its
budget, VA faces challenges spending and tracking the use of funds
designated by VA for specific VA health care initiatives, in particular
funds that VA intends to use to expand services to improve access to
care for its veteran population. For example, in 2006, we reported that
in fiscal years 2005 and 2006, VA had difficulty spending and tracking
funds it had designated for new initiatives included in VA's mental
health strategic plan, which were to expand mental health services in
order to address gaps previously identified by VA. These initiatives--
which were to be funded by $100 million in fiscal year 2005 and $200
million in fiscal year 2006--were intended to enhance VA's larger
mental health program.[Footnote 14] In both fiscal years, VA allocated
funds to VA medical centers and offices that were to be used for mental
health strategic plan initiatives during those fiscal years, as part of
VA's efforts to expand these services. As we reported in 2006, VA faced
challenges in both spending the funds and tracking their use in fiscal
years 2005 and 2006:
* Challenges in spending funds--We found that, by the end of fiscal
years 2005 and 2006, some VA medical centers had not spent all of the
funds they had received for mental health strategic plan initiatives
for those fiscal years, according to VA medical center officials and
other available information. In fiscal year 2005, this was due to
factors such as the length of time it took the medical centers to hire
new staff and locate or renovate space for new mental health programs.
* Challenges in tracking the use of funds--In both fiscal years, VA did
not have an adequate method in place for tracking spending for its new
mental health strategic plan initiatives. VA did not track how funds
allocated for plan initiatives were spent, and as a result, VA could
not determine to what extent the funds for plan initiatives were spent
on those initiatives.
To provide information for improved management and oversight, we
recommended that VA track the extent to which the funds allocated for
mental health strategic plan initiatives are spent for those
initiatives. Since we reported on this issue in November 2006, VA has
implemented a tracking system to monitor spending on mental health
strategic plan initiatives and help determine the extent to which funds
allocated for mental health strategic plan initiatives are spent for
those initiatives.
Although VA took steps to address its challenges tracking its spending
on mental health initiatives, our more recent work in 2009 shows how VA
continues to face spending challenges when the department undertakes
efforts to expand services for veterans. In January 2009 we reported
that VA's fiscal year 2009 budget justification included plans to
increase VA's spending on noninstitutional long-term care services, in
order to partially close previously identified gaps in the provision of
these services. VA assumed it would be able to increase its
noninstitutional workload by 38 percent from fiscal year 2008 to fiscal
year 2009. However, in our report we raised questions about VA's
ability to achieve this increase in workload. As we noted in our
report, VA officials stated that increasing noninstitutional workload
is challenging. Similar to VA's prior mental health initiatives, many
of VA's noninstitutional services are provided by VA personnel, and as
a result, VA must take the time to hire and train more personnel before
it has the capacity to serve an increased workload. These factors
suggest that VA may have difficulty spending its resources as planned.
In its budget justification, VA did not explain how it plans to achieve
this increase in noninstitutional workload.
Challenges Providing Timely and Useful Information to Congress
Regarding Budget Execution Progress and Problems:
As VA executes its budget, VA also faces the challenge of providing
timely information to Congress about the agency's progress and any
problems the agency encounters during this process. For example, in our
2006 report on VA's overall health care budget, we reported that
although VA staff had closely monitored its budget execution and
identified problems for fiscal years 2005 and 2006, VA did not report
this information to Congress in a timely manner. For example,
anticipating challenges in managing within its resources, VA had
closely monitored the fiscal year 2005 budget as early as October 2004.
However, Congress did not learn of the budget challenges facing VA
until April 2005.
In addition, VA faces a challenge in providing information to Congress
that would be useful for congressional oversight of VA's budget. For
example, in 2006, we also found that VA's reporting of its budget
execution progress and problems to Congress could have been more
informative. In the appropriations act for fiscal year 2006, Congress
included a requirement for VA to submit quarterly reports regarding the
status of the medical programs budget during that fiscal year.[Footnote
15] In addition, the conference report accompanying the appropriations
act directed VA to include waiting list performance measures, among
other things.[Footnote 16] We found that VA did not include in its
quarterly reports certain types of information that would have been
useful for congressional oversight. For example, in its reports to
Congress, VA used a patient workload measure that counted patients only
once no matter how many times they used VA services within the fiscal
year. This measure did not capture the difference between patients
predominantly using low-cost services such as primary care outpatient
visits and those using high-cost services such as acute inpatient
hospital care. In contrast, VA provided in its reports to OMB other
workload measures that provided a more complete picture of whether new
patients were receiving low-or high-cost services. Some of those
measures provided to OMB included a measure of one type of inpatient
care--nursing home workload--and the number of outpatient visits.
In addition, in one of its quarterly reports to Congress, VA reported
access measures for existing VA patients--the percentage of primary
care and percentage of specialty care appointments scheduled within 30
days of the desired date--where VA was exceeding its performance goals.
However, VA did not provide one access measure identified in the
conference report: the time required for new patients to get their
first appointment. Although not the same measure, a similar measure VA
produced for other purposes showed the number of new patients waiting
for their first appointment to be scheduled. This measure showed that
the number of new patients waiting for their first appointment to be
scheduled almost doubled from April 2005 to March 2006, indicating a
potential problem in the first quarter of fiscal year 2006.
We recommended that VA improve its reporting of budget execution
progress to Congress by incorporating measures of patient workload to
capture the costliness of care and a measure of waiting times. These
measures might help alert Congress to potential problems VA may face in
managing within its budget in future years. VA implemented part of this
recommendation in the quarterly report it submitted to Congress in May
2008, in which VA reported two measures related to waiting times.
Although the inclusion of these measures in VA's quarterly reports can
help facilitate congressional oversight, VA could provide additional
information to inform Congress about the costliness of VA care.
Concluding Observations:
Sound budget formulation, monitoring of budget execution, and the
reporting of informative and timely information to Congress for
oversight continue to be essential as VA addresses budget challenges we
have identified in recent years. While the budget process inevitably
involves imperfect information and uncertainty about future events, VA
has the opportunity to improve the credibility of its budgeting process
by continuing to address problems that we have identified in recent
years. Doing so can increase the credibility and usefulness of
information that VA provides to Congress and affected stakeholders on
its annual budget plans and the progress it makes in spending
appropriated funds as planned. This is particularly the case for long-
term care services, where budget workload assumptions and cost
projections, as highlighted by our work for several years, raise
questions regarding the credibility and usefulness of projected
spending estimates. In addition, our prior report on new VA mental
health initiatives to address identified gaps in services may provide a
cautionary lesson regarding the expansion of new VA health care
programs more generally. Namely, that the availability of funding for
new health care initiatives does not in itself mean that these
initiatives will be fully implemented within a given fiscal year--in
part because new initiatives can bring challenges in hiring and
training new staff--or that monitoring and tracking of such funding
will be adequate to report the extent to which new initiatives are
being implemented as planned.
Mr. Chairman, this concludes my prepared remarks. I would be happy to
answer any questions you or other members of the Subcommittee may have.
Contact and Acknowledgments:
For more information regarding this testimony, please contact Randall
B. Williamson at (202) 512-7114 or williamsonr@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this statement. In addition, James C.
Musselwhite, Assistant Director; Deirdre Brown; Robin Burke; and
Krister Friday made key contributions to this testimony.
Footnotes:
[1] VA begins to formulate its own budget request approximately 18
months before the start of the fiscal year to which the request relates
and about 10 months before transmission of the President's budget
request, which usually occurs in early February.
[2] The actuarial model reflects factors such as the age, sex, and
morbidity of the veteran population as well as the extent to which
veterans are expected to seek care from VA rather than health care
providers reimbursed by other payers such as Medicare and Medicaid.
[3] VA delegates decision making regarding health care financing and
service delivery to its health care networks, including most budget and
management responsibilities concerning medical center operations.
[4] See GAO, VA Health Care: Budget Formulation and Reporting on Budget
Execution Need Improvement, [hyperlink,
http://www.gao.gov/products/GAO-06-958] (Washington, D.C.: Sept. 20,
2006); GAO, VA Health Care: Long-Term Care Strategic Planning and
Budgeting Need Improvement, [hyperlink,
http://www.gao.gov/products/GAO-09-145] (Washington, D.C.: Jan. 23,
2009); and GAO, VA Health Care: Spending for Mental Health Strategic
Plan Initiatives Was Substantially Less Than Planned, [hyperlink,
http://www.gao.gov/products/GAO-07-66] (Washington, D.C.: Nov. 21, 2006).
[5] We currently have work underway on other VA health care related
issues, including aspects of VA's mental health programs.
[6] We conducted our work on VA's overall health care budget from
October 2005 through September 2006, our work on VA's mental health
initiative funding from January through November 2006, and our work on
VA's long-term care budget from November 2007 through January 2009.
[7] In June 2005, the President requested a $975 million supplemental
appropriation for fiscal year 2005, and in July 2005, the President
submitted a $1.977 billion budget amendment for the fiscal year 2006
appropriation.
[8] See [hyperlink, http://www.gao.gov/products/GAO-06-958].
[9] VA also provides nursing home services through community nursing
homes and state veterans' nursing homes.
[10] This policy proposal was related to long-stay nursing home care
provided in all three of VA's nursing home settings. Long-stay care
includes nursing home care needed by veterans who cannot be cared for
at home because of severe, chronic physical or mental impairments such
as the inability to independently eat or the need for supervision
because of dementia. Under the proposed policy, many veterans receiving
VA nursing home care would no longer have qualified for long-stay care.
[11] In late November, OMB "passes back" budget decisions to the
agencies on the President's budget requests for their programs, a
process known as "passback." These decisions may involve, among other
things, funding levels, program policy changes, and personnel ceilings.
The agencies may appeal decisions with which they disagree.
[12] See [hyperlink, http://www.gao.gov/products/GAO-09-145].
[13] See [hyperlink, http://www.gao.gov/products/GAO-07-66].
[14] These funds represented a small portion of the overall funds
available to support VA mental health services in those two fiscal
years. For example, VA expected to spend more than $2 billion on mental
health services in fiscal year 2006.
[15] Pub. L. No. 109-114, § 222, 119 Stat. 2372, 2391 (2005).
[16] See H.R. Conf. Rep No. 109-305, at 50 (2005).
[End of section]
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