Veterans' Health Care Budget Estimate
Changes Were Made in Developing the President's Budget Request for Fiscal Years 2012 and 2013 Gao ID: GAO-11-622 June 14, 2011The Veterans Health Care Budget Reform and Transparency Act of 2009 requires GAO to report whether the amounts for the Department of Veterans Affairs' (VA) health care services in the President's budget request are consistent with VA's budget estimates as projected by the Enrollee Health Care Projection Model (EHCPM) and other methodologies. Based on the information VA provided, this report describes (1) the key changes VA identified that were made to its budget estimate to develop the President's budget request for fiscal years 2012 and 2013 and (2) how various sources of funding for VA health care and other factors informed the President's budget request for fiscal years 2012 and 2013. GAO reviewed documents describing VA's estimates projected by the EHCPM and changes made to VA's budget estimate that affect all services, including estimates developed using other methodologies. GAO also reviewed the President's budget request, VA's congressional budget justification, and interviewed VA officials and staff from the Office of Management and Budget (OMB).
VA officials identified changes made to its estimate of the resources needed to provide health care services to reflect policy decisions, savings from operational improvements, resource needs for initiatives, and other items to help develop the President's budget request for fiscal years 2012 and 2013. For example, VA's estimate for non-recurring maintenance to repair health care facilities was reduced by $904 million for fiscal year 2012 and $1.27 billion for fiscal year 2013, due to a policy decision to fund other initiatives and hold down the overall budget request for VA health care. VA's estimates were further reduced by $1.2 billion for fiscal year 2012 and $1.3 billion for fiscal year 2013 due to expected savings from operational improvements, such as proposed changes to purchasing and contracting. Other changes had a mixed impact on VA's budget estimate, according to VA officials; some of these changes increased the overall budget estimate, while other changes decreased the overall estimate. The President's request for appropriations for VA health care for fiscal years 2012 and 2013 relied on anticipated funding from various sources. Specifically, of the $54.9 billion in total resources requested for fiscal year 2012, $50.9 billion was requested in new appropriations. This request assumes the availability of $4.0 billion from collections, unobligated balances of multiyear appropriations, and reimbursements VA receives for services provided to other government entities. Of the $56.7 billion in total resources requested for fiscal year 2013, $52.5 billion was requested in new appropriations, and $4.1 billion was anticipated from other funding sources. The President's request for fiscal year 2012 also included a request for about $953 million in contingency funding to provide additional resources should a recent economic downturn result in increased use of VA health care. Contingency funding was not included in the advance appropriations request for fiscal year 2013. Budgeting for VA health care is inherently complex because it is based on assumptions and imperfect information used to project the likely demand and cost of the health care services VA expects to provide. The iterative and multilevel review of the budget estimates can address some of these uncertainties as new information becomes available about program needs, presidential policies, congressional actions, and future economic conditions. As a result, VA's estimates may change to better inform the President's budget request. The President's request for VA health care services for fiscal years 2012 and 2013 was based, in part, on reductions to VA's estimates of the resources required for certain activities and operational improvements. However, in 2006, GAO reported on a prior round of VA's planned management efficiency savings and found that VA lacked a methodology for its assumptions about savings estimates. If the estimated savings for fiscal years 2012 and 2013 do not materialize and VA receives appropriations in the amount requested by the President, VA may have to make difficult trade-offs to manage within the resources provided. GAO is not making recommendations in this report. GAO provided a draft of this report to the Secretary of VA and the Director of OMB for comment. VA had no comments on this report. OMB provided technical comments, which GAO incorporated as appropriate.
GAO-11-622, Veterans' Health Care Budget Estimate: Changes Were Made in Developing the President's Budget Request for Fiscal Years 2012 and 2013
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United States Government Accountability Office:
GAO:
Report to Congressional Committees:
June 2011:
Veterans' Health Care Budget Estimate:
Changes Were Made in Developing the President's Budget Request for
Fiscal Years 2012 and 2013:
GAO-11-622:
GAO Highlights:
Highlights of GAO-11-622, a report to congressional committees.
Why GAO Did This Study:
The Veterans Health Care Budget Reform and Transparency Act of 2009
requires GAO to report whether the amounts for the Department of
Veterans Affairs‘ (VA) health care services in the President‘s budget
request are consistent with VA‘s budget estimates as projected by the
Enrollee Health Care Projection Model (EHCPM) and other methodologies.
Based on the information VA provided, this report describes (1) the
key changes VA identified that were made to its budget estimate to
develop the President‘s budget request for fiscal years 2012 and 2013
and (2) how various sources of funding for VA health care and other
factors informed the President‘s budget request for fiscal years 2012
and 2013. GAO reviewed documents describing VA‘s estimates projected
by the EHCPM and changes made to VA‘s budget estimate that affect all
services, including estimates developed using other methodologies. GAO
also reviewed the President‘s budget request, VA‘s congressional
budget justification, and interviewed VA officials and staff from the
Office of Management and Budget (OMB).
GAO is not making recommendations in this report. GAO provided a draft
of this report to the Secretary of VA and the Director of OMB for
comment. VA had no comments on this report. OMB provided technical
comments, which GAO incorporated as appropriate.
What GAO Found:
VA officials identified changes made to its estimate of the resources
needed to provide health care services to reflect policy decisions,
savings from operational improvements, resource needs for initiatives,
and other items to help develop the President‘s budget request for
fiscal years 2012 and 2013. For example, VA‘s estimate for non-
recurring maintenance to repair health care facilities was reduced by
$904 million for fiscal year 2012 and $1.27 billion for fiscal year
2013, due to a policy decision to fund other initiatives and hold down
the overall budget request for VA health care. VA‘s estimates were
further reduced by $1.2 billion for fiscal year 2012 and $1.3 billion
for fiscal year 2013 due to expected savings from operational
improvements, such as proposed changes to purchasing and contracting.
Other changes had a mixed impact on VA‘s budget estimate, according to
VA officials; some of these changes increased the overall budget
estimate, while other changes decreased the overall estimate.
The President‘s request for appropriations for VA health care for
fiscal years 2012 and 2013 relied on anticipated funding from various
sources. Specifically, of the $54.9 billion in total resources
requested for fiscal year 2012, $50.9 billion was requested in new
appropriations. This request assumes the availability of $4.0 billion
from collections, unobligated balances of multiyear appropriations,
and reimbursements VA receives for services provided to other
government entities. Of the $56.7 billion in total resources requested
for fiscal year 2013, $52.5 billion was requested in new
appropriations, and $4.1 billion was anticipated from other funding
sources. The President‘s request for fiscal year 2012 also included a
request for about $953 million in contingency funding to provide
additional resources should a recent economic downturn result in
increased use of VA health care. Contingency funding was not included
in the advance appropriations request for fiscal year 2013.
Budgeting for VA health care is inherently complex because it is based
on assumptions and imperfect information used to project the likely
demand and cost of the health care services VA expects to provide. The
iterative and multilevel review of the budget estimates can address
some of these uncertainties as new information becomes available about
program needs, presidential policies, congressional actions, and
future economic conditions. As a result, VA‘s estimates may change to
better inform the President‘s budget request. The President‘s request
for VA health care services for fiscal years 2012 and 2013 was based,
in part, on reductions to VA‘s estimates of the resources required for
certain activities and operational improvements. However, in 2006, GAO
reported on a prior round of VA‘s planned management efficiency
savings and found that VA lacked a methodology for its assumptions
about savings estimates. If the estimated savings for fiscal years
2012 and 2013 do not materialize and VA receives appropriations in the
amount requested by the President, VA may have to make difficult trade-
offs to manage within the resources provided.
View [hyperlink, http://www.gao.gov/products/GAO-11-622] or key
components. For more information, contact Randall B. Williamson at
(202) 512-7114 or williamsonr@gao.gov or Denise M. Fantone at (202)
512-6806 or fantoned@gao.gov.
[End of section]
Contents:
Letter:
Background:
Changes Were Made to VA's Budget Estimate Based on Policy Decisions
and Other Factors to Help Develop the President's Budget Request:
The President's Budget Request for VA Health Care Relied on Funding
from Various Sources and Included a Request for Contingency Funding:
Concluding Observations:
Agency Comments:
Appendix I: GAO Contacts and Staff Acknowledgments:
Related GAO Products:
Tables:
Table 1: VA and OMB Review Process Resulting in the Fiscal Year 2012
President's Budget Request and Advance Appropriations Request for
Fiscal Year 2013:
Table 2: Non-Recurring Maintenance (NRM) Amounts Reflected in the
President's Budget Request and VA's NRM Spending, Fiscal Years 2006 to
2013:
Table 3: Funding Sources for VA Health Care for Fiscal Years 2012 and
2013 in the President's Budget Request:
Abbreviations:
CHAMPVA: Civilian Health and Medical Program of the Department of
Veterans Affairs:
DOD: Department of Defense:
EHCPM: Enrollee Health Care Projection Model:
MCCF: Medical Care Collections Fund:
NRM: non-recurring maintenance:
OMB: Office of Management and Budget:
VA: Department of Veterans Affairs:
VHA: Veterans Health Administration:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
June 14, 2011:
Congressional Committees:
The Department of Veterans Affairs (VA) operates one of the largest
health care delivery systems in the nation. In fiscal year 2010, VA
served 6 million patients and spent $48.2 billion on a range of health
care services for eligible veterans including primary care, inpatient
and outpatient surgery, prosthetics, mental health services,
prescription drugs, and nursing home care.[Footnote 1] The amount of
funding VA receives to provide its health care services is determined
by Congress in the annual appropriations process, which also provides
funds for a wide range of other national programs, such as those
supporting defense, education, and transportation. In preparation for
the appropriations process, VA must develop annually a budget estimate
of the resources needed for its health care services, including the
costs for the administration and operation of VA facilities.
Developing a budget estimate is the first step in a complex, multistep
budget formulation process, which culminates in the President's annual
budget request to Congress. VA begins developing its budget estimate
for health care services approximately 10 months before the President
submits the budget to Congress in February each year.
As we have previously reported, VA uses what is known as the Enrollee
Health Care Projection Model (EHCPM) to develop most of its estimate
of the resources needed to meet the expected demand for health care
services, and uses other methods to estimate the remaining resources
needed.[Footnote 2] VA's estimate of the resources needed is reviewed
through successively higher levels within the agency and revised until
consolidated into a departmentwide annual budget estimate that is
submitted to the Office of Management and Budget (OMB) for review and
consideration. OMB subsequently includes a request for VA in the
President's annual budget request to Congress, which represents the
administration's priorities and funding decisions for federal
programs, including VA health care services.
VA's formulation of its health care budget estimate is inherently
complex, as assumptions and imperfect information are used to project
the likely quantity and cost of the health care services VA expects to
provide.[Footnote 3] Most of these projections are 3 to 4 years into
the future based on data from the most recent fiscal year. As such,
VA's budget estimate is prepared in the context of uncertainties about
the future--not only about program needs, but also about future
economic conditions, presidential policies, and congressional actions
that may affect the funding needs in the year for which the request is
made. In addition, our prior work has highlighted some of the
challenges VA has faced in obtaining sufficient data, making accurate
calculations, and making realistic assumptions when formulating its
budget estimate.[Footnote 4]
In 2009, the Veterans Health Care Budget Reform and Transparency Act
was enacted and provided that VA's annual appropriations for health
care include advance appropriations that become available 1 fiscal
year after the fiscal year for which the appropriations act was
enacted.[Footnote 5] The 2009 law also required that we report whether
the amounts for VA health care services in the President's budget
request are consistent with the estimates of the resources required by
VA for the provision of medical care and services as projected by the
EHCPM or using other methodologies.[Footnote 6] In response to this
act, we report on: 1) the key changes VA identified that were made to
its budget estimate to develop the President's budget request for
fiscal years 2012 and 2013 and 2) how various sources of funding for
VA health care and other factors informed the President's budget
request for fiscal years 2012 and 2013.
To describe the key changes VA identified that were made to its budget
estimate for the President's budget request, we reviewed VA documents
that described the estimate projected by the EHCPM and key changes
made to the estimates for all health care services, including
estimates developed for services using other methodologies for fiscal
years 2012 and 2013. We also reviewed the President's fiscal year 2012
budget request for VA health care services, including VA's
congressional budget justification supporting the President's request.
We interviewed VA officials and OMB staff to discuss these changes.
To describe how various sources of funding and other factors informed
the President's budget request, we reviewed the President's request
and VA's supporting congressional budget justification that detail
funds expected to be available for VA's health care services. We
discussed with VA officials and OMB staff the availability of
resources from prior years, anticipated collections, and other factors
that affected decisions on funding for VA health care services
reflected in the President's budget request.
To assess the reliability of the estimates VA provided, changes made
to these estimates, and VA's sources of funding, we obtained documents
containing these data and verified the consistency of the information
in these documents. We confirmed that the changes to VA's estimates
for which VA provided documentation were reflected in the President's
budget request for VA health care services for fiscal year 2012 and
for fiscal year 2013 advance appropriations. We also relied on our
prior work to compare data and check for internal consistency and
discussed these data with VA officials. We found the data reliable for
the purpose of describing certain changes to VA's budget estimate, the
requested amounts in the President's budget request, and VA's sources
of funding for fiscal years 2012 and 2013.
We requested that VA provide us with the components of its total
health care budget estimate that informed the President's budget
request of $54.9 billion for fiscal year 2012 and $56.7 billion for
fiscal year 2013. VA provided an estimate of $47.1 billion for fiscal
year 2012 and $49.8 billion for fiscal year 2013 as projected by the
EHCPM at the beginning of VA's 10-month budget formulation process. VA
did not, however, provide the estimates it developed at the same point
in time, or any other point in time, for the remainder of the budget
estimate using other methodologies. VA also provided information on
certain changes made to the underlying estimates, including those
projected by the EHCPM and those developed using other methodologies.
However, we were unable to determine when all of these changes were
made.
We conducted our work from December 2010 through June 2011 in
accordance with all sections of GAO's Quality Assurance Framework that
are relevant to our objectives. The framework requires that we plan
and perform the engagement to obtain sufficient and appropriate
evidence to meet our stated objectives and to discuss any limitations
in our work. We believe that the information and data obtained, and
the analysis conducted, provide a reasonable basis for any findings
and conclusions in this product.
Background:
VA provides health care services to various veteran populations--
including an aging veteran population and a growing number of younger
veterans returning from the military operations in Afghanistan and
Iraq. VA operates 152 hospitals, 133 nursing homes, 824 community-
based outpatient clinics, and other facilities to provide care to
veterans.[Footnote 7] In general, veterans must enroll in VA health
care to receive VA's medical benefits package--a set of services that
includes a full range of hospital and outpatient services,
prescription drugs, and long-term care services provided in veterans'
own homes and in other locations in the community.[Footnote 8] VA also
provides some services that are not part of its medical benefits
package, such as long-term care provided in nursing homes.[Footnote 9]
To meet the expected demand for health care services, VA develops a
budget estimate each year of the resources needed to provide these
services. This budget estimate includes the total cost of providing
health care services, including direct patient costs as well as costs
associated with management, administration, and maintenance of
facilities. VA develops most of its budget estimate using the EHCPM.
The EHCPM's estimates are based on three basic components: the
projected number of veterans who will be enrolled in VA health care,
the projected quantity of health care services enrollees are expected
to use, and the projected unit cost[Footnote 10] of providing these
services.[Footnote 11] The EHCPM makes these projections 3 or 4 years
into the future for budget purposes based on data from the most recent
fiscal year. For example, in 2010, VA used data from fiscal year 2009
to develop its health care budget estimate for the fiscal year 2012
request and advance appropriations request for 2013.
VA uses other methods to estimate needed resources for long-term care,
other services,[Footnote 12] and health-care-related initiatives
proposed by the Secretary of VA or the President. As previously
reported, these methods estimate needed resources based on factors
that may include historical data on costs and the amount of care
provided, VA's policy goals for health care services such as long-term
care, and predictions of the number of users. For example, VA's
projections for long-term care for fiscal year 2012 were based on
fiscal year 2010 data on the amount of care provided and the unit cost
of providing a day of this care.
Typically, VA's Veterans Health Administration (VHA)[Footnote 13]
starts to develop a health care budget estimate approximately 10
months before the President submits the budget to Congress in
February. The budget estimate changes during the 10-month budget
formulation process in part due to successively higher levels of
review in VA and OMB before the President's budget request is
submitted to Congress. For example, the successively higher levels of
review resulting in the fiscal year 2012 President's budget request
are described in table 1. The Secretary of VA considers the health
care budget estimate developed by VHA when assessing resource
requirements among competing interests within VA, and OMB considers
overall resource needs and competing priorities of other agencies when
deciding the level of funding requested for VA's health care services.
OMB issues decisions, known as passback, to VA and other agencies on
the funding and policy proposals to be included in the President's
budget request. VA has an opportunity to appeal the passback decisions
before OMB finalizes the President's budget request, which is
submitted to Congress in February. Concurrently, VA prepares a
congressional budget justification that provides details supporting
the policy and funding decisions in the President's budget request.
Table 1: VA and OMB Review Process Resulting in the Fiscal Year 2012
President's Budget Request and Advance Appropriations Request for
Fiscal Year 2013:
Date: April-September, 2010;
Budget formulation events:
* The Veterans Health Administration (VHA) developed most of its
health care budget estimate for fiscal years 2012 and 2013 through the
Enrollee Health Care Projection Model (EHCPM), which used data from
fiscal year 2009. VHA developed the rest of its health care budget
estimate for fiscal years 2012 and 2013 using methodologies other than
the EHCPM.
* VHA used the budget estimate to inform its budget submission for
health care for fiscal year 2012, including estimated resources for
fiscal year 2013.
* The VHA Undersecretary for Health reviewed the budget submission for
health care.
* The Secretary of the Department of Veterans Affairs (VA) reviewed
the budget submission for health care along with the submissions from
other components of VA.
* VA Office of Budget compiled the Department's budget submission to
the Office of Management and Budget (OMB).
* The Secretary approved VA's budget submission to OMB.
Date: September, 2010;
Budget formulation event:
* VA delivered the budget submission to OMB.
Date: October-December, 2010;
Budget formulation event:
* OMB reviewed VA's budget submission.
* OMB issued decisions on funding and policy priorities for VA, and VA
appealed some of the decisions.
* OMB issued a final decision on the funding and policy priorities for
VA to use for the fiscal year 2012 President's budget request and
advance appropriations request for fiscal year 2013.
Date: January, 2011;
Budget formulation event:
* OMB prepared the fiscal year 2012 President's budget request, and VA
concurrently prepared its congressional budget justification, which
supports the policies and funding decisions in the President's budget
request.
Date: February 14, 2011;
Budget formulation event:
* The President submitted the budget request, which requested
resources for VA health care, to Congress.
Date: October 1, 2011;
Budget formulation event:
* Fiscal year 2012 begins.
Date: October 1, 2012;
Budget formulation event:
* Fiscal year 2013 begins.
Source: GAO analysis and presentation of VA and OMB information.
[End of table]
Each year, Congress provides funding for VA health care through the
appropriations process. For example, Congress provided new
appropriations[Footnote 14] of about $48.0 billion for fiscal year
2011 and advance appropriations of $50.6 billion for fiscal year 2012
for VA health care.[Footnote 15] In addition to new appropriations
that VA may receive from Congress as a result of the annual
appropriations process, funding may also be available from unobligated
balances from multiyear appropriations, which remain available for a
fixed period of time in excess of 1 fiscal year. For example, VA's
fiscal year 2011 appropriations provided for some amounts to be
available for 2 fiscal years. These funds may be carried over from
fiscal year 2011 to fiscal year 2012 if they are not obligated by the
end of fiscal year 2011. VA and OMB consider anticipated unobligated
balances when formulating the President's budget request.
VA has statutory authority to collect amounts from patients, private
insurance companies, and other government entities to be obligated for
health care services. VA collects first-party payments from veterans,
such as copayments for outpatient medications, and third-party
payments from veterans' private health insurers for deposit into the
Medical Care Collections Fund (MCCF). Amounts in the MCCF are
available without fiscal year limitation for VA health care and
expenses of certain activities related to collections subject to
provisions of appropriations acts.[Footnote 16] VA also receives
reimbursements from services it provides to other government entities,
such as the Department of Defense (DOD), or to private or nonprofit
entities. For example, in 2006, we reported that VA received
reimbursements from other entities by selling laundry services.
[Footnote 17] These amounts also contribute to decisions on funding in
the President's budget request.
Congress provides funding for VA health care through three
appropriations accounts:
* Medical Services, which funds health care services provided to
eligible veterans and beneficiaries in VA's medical centers,
outpatient clinic facilities, contract hospitals, state homes, and
outpatient programs on a fee basis;
* Medical Support and Compliance, which funds the management and
administration of the VA health care system, including financial
management, human resources, and logistics; and:
* Medical Facilities, which funds the operation and maintenance of the
VA health care system's capital infrastructure, such as costs
associated with nonrecurring maintenance, utilities, facility repair,
laundry services, and grounds keeping.[Footnote 18]
Funding was appropriated for fiscal year 2012 for the three accounts
in the following proportions: Medical Services at 78 percent, Medical
Support and Compliance at 11 percent, and Medical Facilities at 11
percent.
Changes Were Made to VA's Budget Estimate Based on Policy Decisions
and Other Factors to Help Develop the President's Budget Request:
Changes to VA's Budget Estimate Based on Policy Decisions and
Operational Improvements Resulted in Reduced Requested Resource Levels:
VA identified several changes that were made to its budget estimate to
help develop the President's budget request for VA for fiscal years
2012 and 2013. In one change, VA identified that the resources
identified in its budget justification for non-recurring maintenance
(NRM) were lower than the amount estimated using the EHCPM by $904
million for fiscal year 2012 and $1.27 billion for fiscal year 2013.
Funds for NRM are used to repair and improve VA health care facilities
and come from the Medical Facilities appropriations account.[Footnote
19] The President's budget request reflected resource levels of $869
million for NRM for fiscal year 2012 and $600 million for fiscal year
2013. OMB staff said that amounts identified for NRM in VA's
congressional budget justification were lower than estimated amounts
due to a policy decision to fund other initiatives and to hold down
the overall budget request for VA health care without affecting the
quality and timeliness of VA's health care services. VA officials said
NRM amounts that were identified for fiscal years 2012 and 2013 should
be sufficient to maintain VA health care facilities in their current
conditions.
In recent years, VA's spending on NRM has been greater than the
amounts identified in VA's budget justifications and reflected in the
President's budget requests (see table 2). The higher spending is
consistent with VA's authority to increase or decrease the amounts VA
allocates from the Medical Facilities account for NRM and with
congressional committee report language.[Footnote 20] While VA's NRM
spending has exceeded amounts identified in VA's budget justifications
over the last several years, VA's projection of the NRM backlog for
health care facilities--which reflects the total amount needed to
address facility deficiencies--has increased to nearly $10 billion.
[Footnote 21]
Table 2: Non-Recurring Maintenance (NRM) Amounts Reflected in the
President's Budget Request and VA's NRM Spending, Fiscal Years 2006 to
2013:
Fiscal year: 2006;
NRM amount reflected in President's budget request: $376 million;
Amount spent by VA on NRM[A]: $415 million.
Fiscal year: 2007;
NRM amount reflected in President's budget request: $514 million;
Amount spent by VA on NRM[A]: $815 million.
Fiscal year: 2008;
NRM amount reflected in President's budget request: $573 million;
Amount spent by VA on NRM[A]: $1.58 billion.
Fiscal year: 2009[B];
NRM amount reflected in President's budget request: $800 million;
Amount spent by VA on NRM[A]: $1.64 billion.
Fiscal year: 2010[C];
NRM amount reflected in President's budget request: $972 million;
Amount spent by VA on NRM[A]: $2.16 billion.
Fiscal year: 2011;
NRM amount reflected in President's budget request: $1,110;
Amount spent by VA on NRM[A]: Not available.
Fiscal year: 2012;
NRM amount reflected in President's budget request: $869 million;
Amount spent by VA on NRM[A]: Not available.
Fiscal year: 2013;
NRM amount reflected in President's budget request: $600 million;
Amount spent by VA on NRM[A]: Not available.
Source: GAO analysis of VA's congressional budget justifications for
fiscal years 2006 through 2012.
[A] Spending totals reflect obligated amounts.
[B] VA was provided $1 billion for NRM--in addition to the fiscal year
2009 appropriations for the Medical Facilities account--as part of the
American Recovery and Reinvestment Act of 2009 (Recovery Act). The
Recovery Act funding was outside the scope of the President's fiscal
year 2009 budget request. VA spent about $260 million of this Recovery
Act funding on NRM in fiscal year 2009.
[C] The NRM amount reflected in the President's fiscal year 2010
budget request included $510 million from the Recovery Act. However,
VA had about $740 million in Recovery Act funding available for fiscal
year 2010, and VA spent all of the remaining Recovery Act funding in
fiscal year 2010.
[End of table]
Changes also were made to EHCPM estimates for health care equipment.
For equipment purchases, VA identified that the resource request in
its budget justification was $15 million lower than the amount
estimated using the EHCPM for fiscal year 2012 and $410 million lower
than the amount estimated using the EHCPM for fiscal year 2013. The
President's budget reflected a request of $1.034 billion for fiscal
year 2012 and $700 million for fiscal year 2013 to purchase health
care equipment. OMB staff said amounts identified for equipment were
lower than estimated amounts due to a policy decision to fund other
initiatives and to hold down the overall budget request for VA health
care without affecting the quality and timeliness of VA's health care
services.
In addition, estimates of resource needs for employee salaries were
reduced due to the enactment of a law requiring the elimination of
across-the-board pay raises for federal employees in 2011 and 2012.
[Footnote 22] This 2-year pay raise freeze led to a reduction of $713
million for fiscal year 2012 and $815 million for fiscal year 2013
from VA's health care budget estimate. The amount of the reduction was
calculated separately from the EHCPM because the EHCPM does not have
an explicit assumption for pay increases. VA officials said that OMB
staff calculated the impact on the President's budget request for VA
health care for fiscal year 2013. The lower salary base that resulted
from the pay freeze in 2011 and 2012 also would reduce the overall
salary level for fiscal year 2013.
According to VA's budget justification, VA's health care budget
estimate was further reduced by $1.2 billion for fiscal year 2012 and
by $1.3 billion for fiscal year 2013 to reflect expected savings from
what VA identified as six operational improvements. Expected savings
from these operational improvements are a result of planned changes in
the way VA manages its health care system to lower costs.[Footnote 23]
The operational improvements for fiscal years 2012 and 2013 from VA's
budget justification are the following:
* Acquisitions. The operational improvements with the largest amount
of estimated cost savings are VA's proposed changes to its purchasing
and contracting strategies for which VA estimates a savings of $355
million a year for fiscal years 2012 and 2013.[Footnote 24] For
example, VA has proposed savings by increasing competition for
contracts that were formerly awarded on a sole-source basis.
* Changing rates. VA proposed to purchase dialysis treatments and
other care from civilian providers at Medicare rates instead of
current community rates. VA estimates a savings of $315 million for
fiscal year 2012 and $362 for fiscal year 2013 as a result of this
rate change.
* Fee care. VA proposed initiatives to generate savings from health
care services that VA pays contractors to provide. VA estimates a
savings of $200 million a year for fiscal years 2012 and 2013 from
reductions in its payments for fee-based care.
* Realigning clinical staff and resources. VA proposed to realign
clinical staff and resources to achieve savings by using less costly
health care providers. Specifically, VA plans to use selected non-
physician providers instead of certain types of physicians, use
selected licensed practical nurses instead of certain types of
registered nurses, and more appropriately align required clinical
skills with patient care needs. VA estimates a savings of $151 million
a year for fiscal years 2012 and 2013 from clinical staff and resource
realignment.
* Medical and administrative support. VA proposed to employ resources
more efficiently in various medical care, administrative, and support
activities at each medical center and in other VA locations. For
example, a VA official said that VA could examine job vacancies for
medical and administrative support to see whether vacant positions
need to be filled. VA estimates a savings of $150 million a year for
fiscal years 2012 and 2013 for this operational improvement.
* VA real property. VA proposed initiatives to repurpose its vacant or
underutilized buildings, demolish or abandon other vacant or
underutilized buildings, decrease energy costs, change procurement
practices for building supplies and equipment, and change building-
service contracts. VA estimates a savings of $66 million a year for
fiscal years 2012 and 2013 from real property initiatives.
In the past, VA has proposed management efficiencies to achieve
savings in order to reduce the amount of funding needed to provide
health care services. However, in a 2006 report, we reported that VA
lacked a methodology for its assumptions about savings estimates it
had detailed for fiscal years 2003 through 2006, and we concluded that
VA may need to take actions to stay within its level of available
resources if VA fell short of its savings goals.[Footnote 25]
According to VA officials, VA is planning to develop a system to
monitor the operational improvements to determine whether they were
generating the intended savings.
Changes to VA's Budget Estimate Based on Administration's Initiatives
Resulted in Increased Requested Resource Levels:
VA's health care budget estimate was increased overall by about $1.4
billion for fiscal year 2012 and $1.3 billion for fiscal year 2013 to
support health-care-related initiatives proposed by the
administration, according to VA officials.[Footnote 26] Some of the
proposed initiatives can be implemented within VA's existing
authority, while other initiatives would require a change in law.
VA officials estimated that the majority of initiatives would increase
resource needs for new health care services or expanded existing
services. Four initiatives which make up over 80 percent of the total
amount for initiatives in the President's budget request are:
* Homeless veterans programs. VA officials estimated that this
initiative, which supports the agency's goal to end homelessness among
veterans, would increase VA's resource needs by $460 million for
fiscal year 2012 as well as for fiscal year 2013. This would allow VA
to expand existing programs and develop new ones to prevent veterans
from becoming homeless and help those veterans who are currently
homeless, programs such as assisting veterans with acquiring safe
housing, receiving needed health care services, and locating
employment opportunities.
* Opening new health care facilities. This initiative would provide VA
with the resources to purchase equipment and supplies and complete
other activities that are necessary to open new VA health care
facilities and begin providing health care services to veterans. VA
officials estimated that this initiative would increase VA's resource
needs by $344 million for fiscal year 2012 as well as for fiscal year
2013.
* Additional services for caregivers. This initiative would give VA
the resources to expand services to caregivers of the most severely
wounded veterans returning from Afghanistan and Iraq, as required by
the Caregivers and Veterans Omnibus Health Services Act of 2010.
[Footnote 27] For example, this initiative would provide caregivers a
monthly stipend and eligibility to receive VA health care benefits. To
provide these additional services to caregivers, VA officials
estimated that the agency's resource needs would increase by $208
million for fiscal year 2012 and $248 million for fiscal year 2013.
* Benefits for veterans exposed to Agent Orange. This initiative would
provide VA with the resources to implement activities required by the
Agent Orange Act of 1991 that directs the Secretary of VA to extend
health care benefits to veterans with certain conditions, such as some
types of leukemia, who were known to be exposed to Agent Orange and to
issue regulations establishing presumptions of service connection for
diseases that the Secretary finds to be associated with exposure to an
herbicide agent.[Footnote 28] VA officials estimated that to provide
these additional benefits, its resource needs would increase by $171
million for fiscal year 2012 and $191 million for fiscal year 2013.
VA officials estimated a small number of initiatives in the
President's budget request would decrease VA's spending needs. These
initiatives propose ways for VA to reduce costs. For example, the
Medicare ambulatory rates initiative proposes that Congress amend
current law to allow VA to reimburse vendors for certain types of
transportation, such as ambulances, at the local prevailing Medicare
ambulance rate in the absence of a contract. VA expects that by paying
transportation vendors the Medicare rate over their current billing
rate--which VA reported may be up to three to four times the Medicare
rate--VA's resource needs related to certain types of transportation
would decrease by about $17 million for fiscal year 2012 as well as
for fiscal year 2013.
Changes to VA's Estimate Based on More Current Information and Other
Factors Had a Mixed Impact on VA's Estimate:
VA's overall estimate for long-term care and other services was
reduced, according to VA officials and OMB staff, to reflect more
current data that became available during the 10-month budget
formulation process. To meet OMB's timeline for preparing the
President's budget request, VA initially produced estimates for long-
term care and CHAMPVA services in May 2010. These estimates were based
on a mix of available data representing the actual amount of care
provided and unit costs for these services to-date and projections for
these services for the remainder of the 2010 fiscal year. VA had to
project data because only partial-year data were available in May.
Between May and November 2010, VA provided OMB with periodic updates
of the most current data available. OMB staff, with input from VA
officials, finalized the estimate for the President's budget request
using this information, which according to VA officials and OMB staff,
resulted in a lower estimate overall for long-term care and other
services than the estimate VA produced in May 2010. VA, however, did
not provide us with the amount of the decrease in the estimate.
According to VA officials, VA's health care budget estimate was
increased by $420 million for fiscal year 2012 and by $434 million for
fiscal year 2013 to account for the costs of providing health care to
non-veterans, including active duty service members and other DOD
beneficiaries under sharing agreements, and certain VA employees who
are not enrolled as veterans.[Footnote 29] Since VA's estimates from
the EHCPM are based on the cost of treating veterans, the agency
developed the estimates for providing health care to non-veterans
separately.
VA's estimate from the EHCPM was also increased by $220 million for
fiscal year 2012 to reflect enhancements for rural health care for
veterans, according to VA officials. Congress directed VA to spend
$250 million on enhancements for rural health care in fiscal year
2009,[Footnote 30] and VA made a policy decision to continue spending
this amount on enhancements for rural health care in subsequent years,
according to VA officials. However, VA was not able to spend the
entire $250 million in fiscal year 2009 and spent only $30 million.
[Footnote 31] Since VA used data from fiscal year 2009 in the EHCPM to
develop its health care budget estimate for fiscal year 2012, VA's
estimate projected $30 million in spending for enhancements for rural
health care for that fiscal year. As a result, VA's estimate was
increased by about $220 million to reflect the agency's planned $250
million spending for this policy change.
The President's Budget Request for VA Health Care Relied on Funding
from Various Sources and Included a Request for Contingency Funding:
The President's Budget Request for New Appropriations Was Based in
Part on Consideration of Collections, Unobligated Balances, and
Reimbursements:
The President's request for appropriations for VA health care for
fiscal years 2012 and 2013 relied on anticipated funding from several
sources. Of the $54.9 billion requested by the President for fiscal
year 2012 to fund VA's health care services, $50.9 billion was
requested in new appropriations. This request was an increase of 5.5
percent from the amount requested for fiscal year 2011--the lowest
requested percent increase in recent years. The request assumes the
availability of about $4.0 billion from collections, unobligated
balances of mulitiyear appropriations, and reimbursements. Similarly,
of the $56.7 billion requested by the President for fiscal year 2013,
$52.5 billion was requested in new appropriations--an increase of 3.3
percent from the fiscal year 2012 request. About $4.1 billion was
expected to be available from other funding sources. (See table 3.) VA
estimates the amount of funding from these other sources as part of
its congressional budget justification supporting the President's
request.
Table 3: Funding Sources for VA Health Care for Fiscal Years 2012 and
2013 in the President's Budget Request:
President's budget request;
Fiscal year 2012: $54.87 billion;
Advance appropriations for fiscal year 2013: $56.69 billion.
New appropriations[A];
Fiscal year 2012: $50.85 billion;
Advance appropriations for fiscal year 2013: $52.54 billion.
Collections;
Fiscal year 2012: $3.08 billion;
Advance appropriations for fiscal year 2013: $3.29 billion.
Unobligated balances;
Fiscal year 2012: $600 million;
Advance appropriations for fiscal year 2013: $500 million.
Reimbursements;
Fiscal year 2012: $343 million;
Advance appropriations for fiscal year 2013: $358 million.
Source: GAO analysis of VA's congressional budget justification for
fiscal year 2012.
[A] We use the term "new appropriations" to refer to the
appropriations provided during the current annual appropriations
process for the upcoming fiscal year and, with respect to advance
appropriations, the next fiscal year.
[End of table]
As table 3 shows, the President's budget request assumes that VA will
collect about $3.1 billion for fiscal year 2012 and $3.3 billion for
fiscal year 2013. These funds are from health insurers of veterans who
receive VA care for nonservice-connected conditions, as well as from
other sources, such as veterans' copayments. VA has the authority to
retain these collections in the MCCF and may use them without fiscal
year limitation for providing VA medical care and services and for
paying departmental expenses associated with the collections program.
According to VA officials, VA reduced its $3.7 billion estimate for
collections included in the fiscal year 2012 advance appropriations
request by approximately $600 million for the fiscal year 2012
President's budget request. VA officials said that because of the
depressed economy, fewer enrollees have comprehensive health insurance
that VA can bill for third party payments for services that VA
provides. In addition, even if enrollees do have health insurance that
VA can bill, insurance companies are increasingly reducing payment
amounts to levels stipulated in the insurers' own policies. Finally,
because the enrollee population is aging, the percentage of enrollees
who are Medicare beneficiaries is rising. As a result, VA is
increasingly limited to billing enrollees' Medicare Supplement
Insurance policies, because fewer enrollees have full health insurance
policies that VA can bill.[Footnote 32]
The President's budget request also assumes that VA will have
unobligated balances left from fiscal years 2011 and 2012 totaling
$1.1 billion to obligate in fiscal years 2012 and 2013. Specifically,
VA proposes to carry over $600 million of the funds left from fiscal
year 2011 to obligate in fiscal year 2012 and to carry over $500
million of the funds left from fiscal year 2012 to obligate in fiscal
year 2013. VA assumes that Congress will provide some multiyear
funding and thus, VA will be able to carry over any unobligated
balances from one fiscal year to the next fiscal year. The fiscal year
2011 full-year continuing resolution provided that $1.2 billion would
be available for 2 fiscal years,[Footnote 33] so VA has the ability to
use unobligated balances in fiscal year 2012, including the $600
million proposed, if that amount remains available. If the fiscal year
2012 appropriations also provide funding that is available for 2
fiscal years, VA would be able to carry over the $500 million in
unobligated balances, if available, from fiscal year 2012 into fiscal
year 2013 as proposed.
The President's budget request also assumes that VA will receive $343
million and $358 million in reimbursements for fiscal years 2012 and
2013, respectively, from services it provides to other government
entities as well as prior year recoveries. For example, VA receives
reimbursements for medical services it provides under sharing
agreements with DOD, including to TRICARE beneficiaries.[Footnote 34]
VA estimates that prior year recoveries will be approximately $3
million for each of the fiscal years 2012 and 2013.
The President's Budget Request Included Funding Contingent on Certain
Conditions:
Of the $54.9 billion in total resources requested by the President for
fiscal year 2012, $953 million represents contingency funding to be
available under certain circumstances for health care services,
supplies, and materials. This contingency funding would only be made
available to VA through the Medical Services appropriations account if
the Director of OMB concurs with the Secretary of VA's determination
that economic conditions warrant the additional funds. The Secretary's
determination would reflect an examination of national unemployment
rates, the quantity of VA health care services enrollees use, and the
amount of spending for VA's health care services. According to staff
at OMB, any unused contingency funds would expire at the end of the
fiscal year and could not be used to fund VA health care services in
future years.
OMB determined that the contingency funding request for fiscal year
2012 would be the amount projected by the EHCPM with some adjustment
for OMB's economic assumptions. This amount was calculated by
estimating the potential impact of a recent downturn in the economy on
veterans' use of VA health care. VA conducted an analysis of
unemployment rates and their effect on enrollees' use of VA's health
care services. VA showed that enrollees under age 65 who lost their
jobs, and therefore their access to employer-sponsored health
insurance, relied more heavily on VA health care services. For the
first time since developing the model, VA incorporated unemployment
rates into estimates developed using the EHCPM to estimate the effect
of the economic downturn on VA's needed resources.
The President's fiscal year 2012 budget request did not include
contingency funding for fiscal year 2013 advance appropriations
because OMB was uncertain if the increased costs VA anticipated as a
result of the economic downturn would materialize. OMB staff said they
planned to monitor VA's fiscal year 2011 performance and would request
contingency funding for fiscal year 2013 if needed, as part of the
President's fiscal year 2013 budget request.
Concluding Observations:
Budgeting for VA health care, by its very nature, is complex because
assumptions and imperfect information are used to project the likely
demand and cost of the health care services VA expects to provide. The
complexity is compounded because most of VA's projections anticipate
events 3 to 4 years into the future. To address these challenges, VA
uses an iterative, multilevel process to mitigate various levels of
uncertainty not only about program needs, but also about presidential
policies, congressional actions, and future economic conditions that
may affect funding needs in the year for which the request is made.
VA's continuing review of estimates in this iterative process does
attempt to address some of these uncertainties, and as a result, VA's
estimates may change to better inform the President's budget request.
Essential to the usefulness of these estimates, as our prior work has
shown, is obtaining sufficient data, making accurate calculations, and
making realistic assumptions. However, the uncertainty inherent in
budgeting always remains.
The President's request for VA health care services for fiscal years
2012 and 2013 was based, in part, on reductions in VA's estimates for
certain activities that were made using the EHCPM or other methods.
The changes in VA's estimates reflected a decline in expected spending
for these activities compared to what VA officials said would have
been the case if the management and provision of health care services
had continued unchanged. For example, VA estimated that various
operational improvements would substantially reduce the costs for
carrying out some activities, such as contracting and purchasing, in
fiscal years 2012 and 2013. As a result of these anticipated changes,
VA estimated that it would achieve savings that could be used for
other purposes. However, in 2006, we reported on a prior round of VA's
planned management efficiency savings and found that VA lacked a
methodology for its assumptions about savings estimates. If the
estimated savings for fiscal years 2012 and 2013 do not materialize
and VA receives appropriations in the amount requested by the
President, VA may have to make difficult tradeoffs to manage within
the resources provided.
Agency Comments:
We provided a draft of this report to the Secretary of VA and the
Director of OMB for comment. VA had no comments on this report. OMB
provided technical comments, which we incorporated as appropriate.
We are sending copies of this report to the Secretary of Veterans
Affairs, the Director of the Office of Management and Budget, and
appropriate congressional committees. In addition, the report will be
available at no charge on the GAO Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact Randall B. Williamson at (202) 512-7114 or at
williamsonr@gao.gov, or Denise M. Fantone at (202) 512-6806 or at
fantoned@gao.gov. Contact points for our Offices of Congressional
Relations and Public Affairs may be found on the last page of this
report. GAO staff who made key contributions to this report are listed
in appendix I.
Signed by:
Randall B. Williamson:
Director, Health Care:
Signed by:
Denise M. Fantone:
Director, Strategic Issues:
List of Congressional Committees:
The Honorable Kent Conrad:
Chairman:
The Honorable Jeff Sessions:
Ranking Member:
Committee on the Budget:
United States Senate:
The Honorable Patty Murray:
Chairman:
The Honorable Richard Burr:
Ranking Member:
Committee on Veterans' Affairs:
United States Senate:
The Honorable Paul Ryan:
Chairman:
The Honorable Chris Van Hollen:
Ranking Member:
Committee on the Budget:
House of Representatives:
The Honorable Jeff Miller:
Chairman:
The Honorable Bob Filner:
Ranking Member:
Committee on Veterans' Affairs:
House of Representatives:
The Honorable Tim Johnson:
Chairman:
The Honorable Mark Kirk:
Ranking Member:
Subcommittee on Military Construction, Veterans' Affairs, and Related
Agencies:
Committee on Appropriations:
United States Senate:
The Honorable John Culberson:
Chairman:
The Honorable Sanford Bishop:
Ranking Member:
Subcommittee on Military Construction, Veterans' Affairs, and Related
Agencies:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: GAO Contacts and Staff Acknowledgments:
Contacts:
Randall B. Williamson, Director, Health Care, (202) 512-7114,
williamsonr@gao.gov Denise M. Fantone, Director, Strategic Issues,
(202) 512-6806, fantoned@gao.gov:
Acknowledgments:
In addition to the contacts named above, James C. Musselwhite and
Melissa Wolf, Assistant Directors; Rashmi Agarwal; Matthew Byer;
Jennifer DeYoung; Amber G. Edwards; Krister Friday; Lauren Grossman;
Tom Moscovitch; Lisa Motley; Leah Probst; and Steve Robblee made key
contributions to this report.
[End of section]
Related GAO Products:
Veterans' Health Care: VA Uses a Projection Model to Develop Most of
Its Health Care Budget Estimate to Inform the President's Budget
Request. [hyperlink, http://www.gao.gov/products/GAO-11-205].
Washington, D.C.: January 31, 2011.
VA Health Care: Spending for and Provision of Prosthetic Items.
[hyperlink, http://www.gao.gov/products/GAO-10-935]. Washington, D.C.:
September 30, 2010.
VA Health Care: Reporting of Spending and Workload for Mental Health
Services Could Be Improved. [hyperlink,
http://www.gao.gov/products/GAO-10-570]. Washington, D.C.: May 28,
2010.
Continuing Resolutions: Uncertainty Limited Management Options and
Increased Workload in Selected Agencies. [hyperlink,
http://www.gao.gov/products/GAO-09-879]. Washington, D.C.: September
24, 2009.
VA Health Care: Challenges in Budget Formulation and Issues
Surrounding the Proposal for Advance Appropriations. [hyperlink,
http://www.gao.gov/products/GAO-09-664T]. Washington, D.C.: April 29,
2009.
VA Health Care: Challenges in Budget Formulation and Execution.
[hyperlink, http://www.gao.gov/products/GAO-09-459T]. Washington,
D.C.: March 12, 2009.
VA Health Care: Long-Term Care Strategic Planning and Budgeting Need
Improvement. [hyperlink, http://www.gao.gov/products/GAO-09-145].
Washington, D.C.: January 23, 2009.
VA Health Care: Budget Formulation and Reporting on Budget Execution
Need Improvement. [hyperlink, http://www.gao.gov/products/GAO-06-958].
Washington, D.C.: September 20, 2006.
VA Health Care: Preliminary Findings on the Department of Veterans
Affairs Health Care Budget Formulation for Fiscal Years 2005 and 2006.
[hyperlink, http://www.gao.gov/products/GAO-06-430R]. Washington,
D.C.: February 6, 2006.
Veterans Affairs: Limited Support for Reported Health Care Management
Efficiency Savings. [hyperlink,
http://www.gao.gov/products/GAO-06-359R]. Washington, D.C.: February
1, 2006.
VA Long-Term Care: Trends and Planning Challenges in Providing Nursing
Home Care to Veterans. [hyperlink,
http://www.gao.gov/products/GAO-06-333T]. Washington, D.C.: January 9,
2006.
VA Long-Term Care: More Accurate Measure of Home-Based Primary Care
Workload Is Needed. [hyperlink,
http://www.gao.gov/products/GAO-04-913]. Washington, D.C.: September
8, 2004.
[End of section]
Footnotes:
[1] Eligibility is determined on the basis of service-connected
disability, income, and other special statuses, such as former
prisoners of war, and is used to determine priority for VA services.
VA is required to provide a specified set of health care services,
including hospital care, to eligible veterans. 38 U.S.C. §§
1710(a)(1), (2), 1701(5), (6). VA is authorized to provide these
health care services to other veterans not identified in these groups.
38 U.S.C. § 1710(a)(3). The population of veterans to whom VA is
required to provide nursing home care is more limited than the
population to whom VA is required to provide other health care
services, although VA also makes nursing home care available to other
veterans on a discretionary basis as resources permit. See 38 U.S.C. §
1710A.
[2] For fiscal year 2011, VA used the EHCPM to develop approximately
83 percent of VA's budget estimate. See GAO, VA Health Care: VA Uses a
Projection Model to Develop Most of Its Health Care Budget Estimate to
Inform the President's Budget Request, GAO-11-205 (Washington, D.C.:
Jan. 31, 2011).
[3] See GAO, VA Health Care: Challenges in Budget Formulation and
Execution, [hyperlink, http://www.gao.gov/products/GAO-09-459T]
(Washington, D.C.: Mar. 12, 2009).
[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) and 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).
[5] Pub. L. No. 111-81, § 3, 123 Stat. 2137, 2137-38 (2009), codified
at 38 U.S.C. § 117. The act provided for advance appropriations for
VA's Medical Services, Medical Support and Compliance, and Medical
Facilities appropriations accounts.
[6] The law requires that we report on our analysis within 120 days
after the President's budget requests are submitted in 2011, 2012, and
2013. The President's budget request is submitted to Congress in
February for the fiscal year that starts the following October. For
example, the President's budget submission in February 2011 was for
fiscal year 2012--which starts October 1, 2011--and includes a request
for advance appropriations for VA health care for fiscal year 2013.
[7] VA is required by law to provide health care services, including
hospital care, to certain veterans and may provide care to other
veterans. See 38 U.S.C. §§ 1710(a)(1)-(3), 1701(5), (6). Requirements
for VA health care services are effective in any fiscal year only to
the extent and in the amount provided in advance in appropriations
acts for such purposes. 38 U.S.C. § 1710(a)(4).
[8] Under 38 U.S.C. § 1710B, VA is required to provide adult day care
and respite care. VA provides these and other noninstitutional long-
term care services as part of its medical benefits package and makes
them available to veterans enrolled in VA health care.
[9] The population of veterans to whom VA provides nursing home care
is more limited than the population to whom VA provides other health
care services. See 38 U.S.C. § 1710A.
[10] Unit costs are the costs to VA of providing a unit of service,
such as a 30-day supply of a prescription or a day of care at a
medical facility.
[11] For fiscal years 2012 and 2013, VA used the EHCPM to estimate the
resources needed to provide 61 health care services.
[12] Other services include the Civilian Health and Medical Program of
the Department of Veterans Affairs (CHAMPVA), which provides health
coverage for spouses, widowed spouses, and children of veterans who
are permanently and totally disabled from a service-connected
disability or who died in the line of duty or from a service-connected
disability. See 38 U.S.C. § 1781.
[13] VHA administers VA's health care system. VHA is one of three
administrations that comprise VA and are included in the President's
budget request for VA: VHA, the Veterans Benefits Administration, and
the National Cemetery Administration.
[14] We use the term "new appropriations" to refer to the
appropriations provided during the current annual appropriations
process for the upcoming fiscal year and, with respect to advance
appropriations, the next fiscal year.
[15] The Military Construction and Veterans Affairs and Related
Agencies Appropriations Act, 2010 provided advance appropriations for
fiscal year 2011. Pub. L. No. 111-117, div. E, tit. II, 123 Stat.
3034, 3298-3300 (2009). The Department of Defense and Full-Year
Continuing Appropriations Act, 2011, rescinded 0.2 percent of the
fiscal 2011 appropriations and provided advance appropriations for
fiscal year 2012. Pub. L. No. 112-10, div. B, tit. I, § 1119, 125
Stat. 38, 107 (2011); Pub. L. No. 112-10, div. B, tit. X, § 2015, 125
Stat. 38, 175 (2011).
[16] Appropriations acts have authorized VA to transfer collections to
its appropriation for Medical Services, but provide for these amounts
to be available without fiscal year limitation. See, e.g., Pub. L. No.
111-117, § 215, 123 Stat. 3034, 3305 (2009); Pub. L. No. 110-329, §
215, 122 Stat. 3574, 3711 (2008).
[17] [hyperlink, http://www.gao.gov/products/GAO-06-958].
[18] This account does not include funding for major or minor
construction or for information technology because separate
appropriations provide funds for these purposes.
[19] NRM funds are used for expansion, renovation, and infrastructure
improvements that cost more than $25,000. Funds for recurring
maintenance--which includes routine repair of facilities and upkeep of
land that costs less than $25,000--and operating equipment maintenance
are tracked separately and are not included in the NRM estimate. In
addition, expansion, renovation, and infrastructure improvements can
be categorized as minor construction or major construction. Minor
Construction and Major Construction are separate VA appropriations
accounts. The Minor Construction account funds projects estimated to
cost at least $500,000 but not more than $10 million, and the Major
Construction account funds projects estimated to cost more than $10
million.
[20] See, e.g., S. Rep. No. 111-40 (2009), at 57; H.R. Rep. No. 111-
188 (2009), at 43-44.
[21] VA reported a repair backlog for VHA facilities of $7.8 billion
in the fiscal year 2010 budget justification to Congress, $9.3 billion
in the fiscal year 2011 budget justification, and $9.7 billion in the
fiscal year 2012 budget justification.
[22] See Continuing Appropriations and Surface Transportation
Extensions Act, 2011, Pub. L. No. 111-322, § 1, 124 Stat. 3518, 3518-
19 (2010).
[23] According to VA's fiscal year 2012 budget justification, VA
estimates that it will realize savings from operational improvements
in fiscal years 2012 and 2013 to partly pay for a total of $2.8
billion in proposed initiatives in those 2 years.
[24] VA's budget justification lists the following eight initiatives
for acquisition improvements: consolidated contracting, increasing
competition of contracts, converting contracting workload from the
U.S. Army Corps of Engineers to workload within VA, reverse auctioning
of utilities to lower costs, procurement of supplies at lower prices,
converting contracted services to services within VA, reutilizing
excess equipment to avoid costs of purchasing new equipment, and using
medical and surgical vendors rather than VA for inventory management.
[25] GAO, Veterans Affairs: Limited Support for Reported Health Care
Management Efficiency Savings, [hyperlink,
http://www.gao.gov/products/GAO-06-359R] (Washington, D.C.: Feb. 1,
2006).
[26] The President's budget request includes 17 initiatives for fiscal
year 2012 and 12 initiatives for fiscal year 2013.
[27] Pub. L. No. 111-163, 124 Stat. 1130 (2010).
[28] See 38 U.S.C. § 1116. The requirement to issue regulations will
terminate on September 30, 2015. VA published final regulations on
August 31, 2010, that established presumptive service connection for
veterans who were exposed to certain herbicides and subsequently
developed hairy cell leukemia and other chronic B-cell leukemias,
Parkinson's disease, and ischemic heart disease. See 75 Fed. Reg.
53,202 (Aug. 31, 2010) (amending 38 C.F.R. § 3.309).
[29] See 5 U.S.C. § 7901; 38 U.S.C. § 8111.
[30] See Pub. L. No. 110-329, 122 Stat. 3574, 3704-05 (2008).
[31] According to VA officials, the agency subsequently spent $470
million on enhancements for rural health in fiscal year 2010, which
consisted of the remaining $220 million from fiscal year 2009 and $250
million for fiscal year 2010.
[32] VA can bill enrollees' private health insurance policies,
including Medicare Supplement Insurance, but cannot bill Medicare.
[33] Pub. L. No. 112-10, div. B, tit. X, § 2014, 125 Stat. 38, 174-75
(2011).
[34] TRICARE is DOD's program that provides health care to active duty
military personnel and other beneficiaries, including retired service
members.
[End of section]
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