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Veterans Affairs' which was released on January 01, 2003.



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Performance and Accountability Series:



January 2003:



Major Management Challenges and Program Risks:



Department of Veterans Affairs:



GAO-03-110:



A Glance at the Agency Covered in This Report



The Department of Veterans Affairs administers a variety of programs, 

including one of the world’s largest health care systems and a 

comprehensive benefits program. The department’s complex health and 

benefits missions include

* providing directly and through contractors primary and specialty 

care, and related medical and social support services to veterans;

* managing special health care related programs, such as those for 

Gulf War veterans, post-traumatic stress disorder, and hepatitis C;

* conducting and supporting medical education and research;

* providing backup health care services to the Department of Defense 

during war, and supporting communities during national emergencies;

* providing monthly compensation payments for disabilities 

sustained or aggravated during active military service; and

* providing monthly pension payments to needy disabled wartime 

veterans and to needy surviving spouses and dependent children of 

deceased wartime veterans.



The Department of Veterans Affairs’ Budgetary and Staff Resources.



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This Series



This report is part of a special GAO series, first issued in 1999 and 

updated in 2001, entitled the Performance and Accountability Series: 

Major Management Challenges and Program Risks. The 2003 Performance 

and Accountability Series contains separate reports covering each 

cabinet department, most major independent agencies, and the U.S. 

Postal Service. The series also includes a governmentwide perspective 

on transforming the way the government does business in order to meet 

21st century challenges and address long-term fiscal needs. The 

companion 2003 High-Risk Series: An Update identifies areas at high 
risk

due to either their greater vulnerabilities to waste, fraud, abuse, and

mismanagement or major challenges associated with their economy, 

efficiency, or effectiveness. A list of all of the reports in this 

series is included at the end of this report.



GAO Highlights:



Highlights of GAO-03-110, a report to Congress included as part of 

GAO’s Performance and Accountability Series.



PERFORMANCE AND ACCOUNTABILITY SERIES

Department of Veterans Affairs



Why GAO Did This Report:



In its 2001 performance and accountability report on the Department of 

Veterans Affairs (VA), GAO identified management challenges related to 

health care quality, access, resource management, and disability claims 

processing. In addition to these  and other continuing challenges, VA 

must now prepare for biological and chemical acts of terrorism. The 

information in this report aims to sustain congressional attention and 

a departmental focus on continuing to make progress in addressing these 

challenges and ultimately overcoming them. This report is part of a 

special series of reports on government-wide and agency-specific 

issues.



What GAO Found:



VA has taken a number of actions to address its management challenges. 

VA has greatly increased veterans’ access to health care by opening 

hundreds of outpatient clinics.  While VA has made some progress in 

improving disability claims processing, GAO has added modernizing 

federal disability programs to its high-risk list because of 
fundamental

problems with outmoded criteria and the need to address challenges in 

claims processing. Additional actions are needed for VA to successfully 

overcome other challenges as well.



* Ensuring access to quality health care.  Although VA has opened 

hundreds of outpatient clinics, waiting times are still a significant 

problem.  To help address this, VA has taken several actions including 

the introduction of an automated system to schedule appointments. VA 

must also better position itself to meet the changing needs of an aging 

veteran population by improving nursing home inspections and increasing 

access to noninstitutional long-term care services.



* Managing resources and workload to enhance health care delivery. VA 

has begun to make more efficient use of its health care resources to 

serve its growing patient base. However, to meet the growing demand 

for care, VA must carry out its plan to realign its capital assets and 

acquire support services more efficiently. At the same time, VA needs 

to improve its process for allocating resources to its 21 health care 

networks to ensure more equitable funding. VA must also seek additional 

efficiencies with the Department of Defense, including more joint 

purchasing of drugs and medical supplies. 



* Preparing for biological and chemical acts of terrorism. Following 

the attacks of September 11, 2001, VA determined that it needed to 

stockpile pharmaceuticals and improve its decontamination and security 

capabilities.  VA also has new responsibilities to establish four 

medical emergency preparedness centers.



* Improving veterans’ disability program. VA acted to improve its 

timeliness and quality of claims processing, but is far from achieving 

its goals.  Of greater concern are VA’s outmoded criteria for 

determining disability and its capacity to handle the increasing 

number and complexity of claims.  VA will need to seek solutions to 

providing meaningful and timely support to veterans with disabilities.



* Developing sound departmentwide management strategies to build a 

high-performing organization. Since 1997, VA has spent about $1 billion 

annually on its information technology. VA has established executive 

support and is making strides in developing an integrated 

department-wide enterprise architecture. To safeguard financial, 
health 

care, and benefits payment information and produce reliable performance 

and workload data, VA must sustain this commitment.



What Remains to Be Done:



GAO believes that VA should



* ensure veterans have timely access to needed health care,

* aggressively pursue opportunities to more efficiently use its health 

care resources,

* establish medical emergency preparedness centers and carry out other 

activities to prepare for potential terrorist attacks,

* seek solutions to update its disability criteria and continue efforts 

to improve timeliness and quality of disability claims decisions, and

* successfully execute its information technology strategy to achieve 

its vision of providing seamless service to veterans and their 
families.



To view the full report, click on the link above.

For more information, contact Cynthia A. Bascetta, at (202) 512-7101.



Contents:



Transmittal Letter:



Major Performance and Accountability Challenges:



GAO Contacts:



Related GAO Products:



Performance and Accountability and High-Risk Series:



Transmittal Letter January 2003:



The President of the Senate

The Speaker of the House of Representatives:



This report addresses the major management challenges and program risks 

facing the Department of Veterans Affairs (VA) as it works to carry out 

its multiple and highly diverse missions. The report discusses the 

actions that VA has taken and that are under way to address the 

challenges GAO identified in its Performance and Accountability Series 

2 years ago, and major events that have occurred that significantly 

influence the environment in which the department carries out its 

mission. Also, GAO summarizes the challenges that remain, a new 

challenge that has evolved, and further actions that GAO believes are 

needed.



This analysis should help the new Congress and the administration carry 

out their responsibilities and improve government for the benefit of 

the American people. For additional information about this report, 

please contact Cynthia A. Bascetta, Director, Health Care--Veterans’ 

Health and Benefits Issues, at (202) 512-7101 or at bascettac@gao.gov.



David M. Walker

Comptroller General

of the United States:



Signed by David M. Walker:



[End of section]



Major Performance and Accountability Challenges:



In our last Performance and Accountability Series in January 2001, we 

identified the following performance and accountability challenges for 

the Department of Veterans Affairs (VA): ensuring access to quality 

health care; managing resources and workload to enhance health care 

delivery; improving disability claims processing; and developing sound 

departmentwide management strategies to build a high-performing 

organization. Over the past 2 years, the VA has undertaken a number of 

initiatives to address each of these challenges. For example, VA has 

opened hundreds of new community-based outpatient clinics (CBOC), 

increasing veterans’ access to care. To better ensure quality of care 

for a growing number of aging veterans, VA has also begun to improve 

its oversight of community nursing homes. VA has explored ways to use 

its resources more efficiently, including realigning its capital 

assets, outsourcing certain services, and partnering with the 

Department of Defense (DOD) to share health care resources. VA has 

similarly taken actions to improve its processing of disability 

compensation claims, such as hiring and training hundreds of new claims 

processing staff.



But certain areas need emphasis if VA is to achieve its goals, and 

these areas continue to be performance and accountability challenges in 

2003. For example, VA must continue to seek ways to ensure that it can 

provide veterans reasonable access to acute and long-term care. To 

enhance its health care delivery, VA must continue to aggressively 

pursue opportunities to more wisely use its health care resources. For 

example, it is critical that the department achieve additional 

efficiencies by realigning its capital assets to better meet its health 

care needs and expanding its use of alternative methods for acquiring 

support services. VA also needs to continue to work with DOD to 

identify--and implement--partnerships that offer cost-effective ways 

to serve both veterans and military personnel, including jointly 

purchasing drugs and medical supplies. At the same time, VA needs to 

improve its process for allocating resources to its 21 Veterans 

Integrated Service Networks to ensure equity of funding.[Footnote 1] In 

addition to these health care challenges, VA must meet a new challenge 

to prepare for chemical and biological acts of terrorism. VA must also 

make progress in its efforts to improve the timeliness and quality of 

disability claims processing for veterans who have disabilities 

sustained or aggravated during military service. Of greater concern are 

other complex challenges facing VA’s disability program. These include 

outmoded criteria for determining disability and expected increases in 

the number and complexity of veterans’ disability claims. Because of 

these sustained challenges, we have added modernizing federal 

disability programs to our 2003 high-risk list. Finally, VA has more 

work to do to become a high-performing organization, especially with 

regard to ensuring an appropriate information technology (IT) 

infrastructure. VA’s IT strategy, which aims to improve services 

provided to veterans and their families through new uses of information 

technology, must be successfully executed to ensure that VA can 

safeguard financial, health care, and benefits payment information and 

produce reliable performance and workload data.



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Ensure Access to Quality Health Care:



Over the past several years, VA has done much to ensure that veterans 

have greater access to care and that the care they receive is 

appropriate and of high quality. Yet VA remains challenged to ensure 

that veterans receive the care they need, when they need it--a 

challenge that has become even greater with the recent expansion of 

benefits. In addition, inadequate national oversight often hampers VA’s 

ability to assess the quality and timeliness of the care it provides 

and limits VA’s ability to identify performance problems and 

appropriate measures to improve performance.



More National Action Needed to Ensure Veterans Have Reasonable Access 

to Care:



As part of its effort to “honor and serve veterans in life” and 

“restore the capability of disabled veterans to the greatest extent”--

two of the department’s strategic goals--VA has taken significant steps 

to improve veterans’ access to health care. Reflecting trends in the 

private sector, VA has opened hundreds of new CBOCs to provide primary 

care to veterans in outpatient settings. Growth in the number of CBOCs 

increased the number of veterans having reasonable geographic access to 

VA-provided outpatient care, which VA defined as living within 30 miles 

of a VA primary care clinic until November 2002.[Footnote 2] VA 

estimated that 86 percent of VA’s patients had such access to a primary 

care clinic in fiscal year 1999.



Despite this progress, excessive waiting times for VA outpatient care-

-a problem we have reported on since October 1993--persist. A 

Presidential task force reported in its July 2002 interim report that 

veterans are finding it increasingly difficult to gain access to VA 

care in selected geographic regions.[Footnote 3] For example, the task 

force found that the average waiting time for a first outpatient 

appointment in Florida--which has a large and growing veteran 

population--is over 1 year, well in excess of VA’s 30-day standard. Our 

examination of waiting times at medical centers in Florida and other 

areas of the country indicates that meeting VA’s 30-day standard is 

also a continuing challenge for many specialty clinics.[Footnote 4] For 

example, in August 2001, we reported that, based on data from sites we 

visited, two-thirds of the specialty care clinics we visited (36 of 54) 

did not meet VA’s 30-day standard. At these clinics, waiting times 

ranged from 33 days at one urology clinic to 282 days at an optometry 

clinic (see fig. 1).[Footnote 5]



Figure 1: Range of Waiting Times for Patient Care at 54 VA Specialty 

Clinics:



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Some medical centers we visited had begun to make noteworthy progress 

in reducing waiting times at their specialty clinics, primarily by 

improving their scheduling procedures and making better use of staff. 

One medical center restructured its health care delivery system--the 

center assigned all patients to a primary care provider for all 

routine, nonurgent care; established a triage system for walk-in 

patients; and implemented a centralized scheduling system for all of 

its clinics. As a result of these and other changes, all but one of the 

center’s five specialty care clinics we reviewed were meeting the 30-

day standard. To help address these issues, VA has contracted with the 

Institute for Healthcare Improvement to disseminate best practices 

departmentwide.[Footnote 6]



VA has also taken several actions to try to mitigate the impact of long 

waiting times. Most recently, on January 17, 2003, VA issued an interim 

final rule to limit enrollment of certain veterans in 2003 to address 

excessive waiting times.[Footnote 7] This rule suspends additional 

enrollment of certain veterans, those who generally have no service-

connected disability and incomes above certain income limits set for 

geographic regions. In the fall of 2002, VA took other actions to 

better ensure that veterans with service-connected disabilities receive 

more timely care.[Footnote 8] On September 17, 2002, VA issued a 

regulation granting priority for appointments to two groups of 

veterans:



* those with moderate and severe service-connected disabilities 

regardless of whether they need treatment for their service-connected 

disabilities or for other reasons, and:



* all other veterans with a service-connected disability who need 

treatment for their service-connected disability.



VA also has other actions under way to address its waiting times 

problems. For example, it is in the process of implementing an 

automated system to improve its measurement of the length of time 

veterans are waiting for appointments to better identify problems. VA 

is also developing a national set of guidelines for primary care 

providers to use in deciding when to refer patients to specialists, as 

we recommended.



Growing Demand for Long-Term Care Needs Attention:



VA must position itself to meet the changing health care needs of an 

aging veteran population. VA expects the number of veterans over age 

85--currently estimated at about 640,000--to more than double over the 

next decade, peaking at about 1.3 million by fiscal year 2013. This 

aging will likely add to the demand for long-term care because the 

prevalence of chronic health conditions and disabilities increases 

markedly at advanced age. To meet this challenge, VA needs to improve 

its inspections to ensure quality care in community nursing homes and 

needs to ensure access to services in noninstitutional settings.



In fiscal year 2001, VA spent 92 percent of its long-term care dollars 

in institutional settings, such as nursing homes--the costliest long-

term care setting. However, VA’s oversight of community nursing homes-

-where about 4,000 veterans received care each day in fiscal year 2001-

-has not been adequate to ensure acceptable quality of care. While VA 

has begun to implement certain policies to improve oversight of these 

homes, as we recommended in July 2001, VA has yet to develop a uniform 

oversight policy for all community nursing homes under VA 

contract.[Footnote 9] Further, VA plans to rely increasingly on the 

results of state inspections of community nursing homes rather than 

conducting its own inspections, but it has not developed plans for 

systematically reviewing the quality of state inspections.



The Veterans Millennium Health Care and Benefits Act (P.L. 106-117), 

enacted in November 1999, enhanced VA’s authority to offer certain 

long-term care services in noninstitutional settings, such as adult day 

health care. VA has begun to respond to the act’s requirements, but its 

spending for long-term care in noninstitutional settings still 

comprised only 8 percent of fiscal year 2001 long-term care 

expenditures. In addition, the availability of noninstitutional long-

term care services varies across facilities (see fig. 2).



Figure 2: Number of Facilities Offering Specific Noninstitutional Long-

Term Care Services:



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Notes: Geriatric evaluation includes facilities reporting geriatric 

evaluation and management services in our survey and facilities 

reported by VA as offering geriatric primary care.



Although VA has 172 medical centers, in some instances 2 or more 

medical centers have consolidated into health care systems. Counting 

health care systems and individual medical centers that are not part of 

a health care system as single facilities, VA has 139 facilities.



VA’s Hepatitis C Initiative Could Be Improved:



Hepatitis C is a chronic blood-borne virus that can cause potentially 

fatal liver-related conditions. In 1998, VA launched a major initiative 

to screen all patients for hepatitis C risk factors and test those who 

are at risk. If detected early, transmission risks can be reduced and 

timely treatment can be ensured to prevent progression of liver 

disease. VA characterized hepatitis C as a serious national health 

problem, and at the end of fiscal year 2002, VA had identified almost 

160,000 veterans with hepatitis C infections. Since 1999, VA included a 

total of $700 million in its budgets submitted to the Congress to 

screen, test, and provide veterans who test positive with a recommended 

course of treatment.



In June 2001, we testified that VA missed opportunities to screen as 

many as 3 million veterans who visited medical facilities during fiscal 

years 1999 and 2000, potentially leaving as many as 200,000 veterans 

unaware that they have hepatitis C.[Footnote 10] Most remained 

undiagnosed primarily because local managers adopted restrictive 

hepatitis C screening practices. Moreover, of those screened, an 

unknown number likely remained undiagnosed because of flawed procedures 

for testing veterans for the infection. For example, at the clinics we 

visited, blood tests were not ordered for many veterans who were shown 

to have hepatitis C risk factors during screening. In cases where blood 

tests were ordered, clinicians frequently did not follow up to ensure 

that the ordered tests were actually completed. We pointed out that in 

order for VA to expeditiously identify undiagnosed veterans, VA would 

need to establish early detection as a standard for care and hold 

managers accountable for the timely screening and testing of veterans 

who visit VA medical centers.



In response to our testimony, VA has begun to improve screening and 

testing procedures. VA established in fiscal year 2002 a process to 

monitor screening and testing performance. This process consists of an 

external review of medical records, immediate performance feedback to 

local managers, and network manager accountability for performance 

targets. In addition to monitoring VA’s progress in screening and 

testing veterans for hepatitis C, we are assessing its efforts to 

notify veterans who test positive and to evaluate veterans’ medical 

conditions regarding potential treatment options.



Manage Resources and Workload to Enhance Health Care Delivery:



Over the past several years, VA has made more efficient use of its 

available health care resources--a critical element to achieving its 

strategic goals. The department is serving more patients and providing 

more acute care in less costly outpatient settings. Between fiscal 

years 1996 and 2002, VA’s patient base has increased from about 2.6 

million to 4.2 million--due, in part, to expanded eligibility for 

Priority 7 veterans.[Footnote 11] This growth has certain implications 

for the equity of resource allocation and for certain VA health care 

expenditures. In addition to improving the equity of its allocations, 

VA needs to continue to work to make the most efficient use of its 

resources.



Greater Equity Could Be Achieved through Changes to VA’s Resource 

Allocation System:



In fiscal year 1997, VA began allocating most of its medical care 

appropriations under the Veterans Equitable Resource Allocation (VERA) 

system, which aims to provide networks comparable resources for 

comparable workloads. Prior to its implementation, VA generally based 

its allocations on facilities’ historical expenditures. By aligning 

resources with workloads, VERA shifted substantial resources from 

certain networks to others--reflecting shifts in workload--and provided 

an incentive for networks to serve more veterans.



While VERA has resulted in more equitable allocation of resources, 

certain improvements to VERA could result in even greater equity. 

Increasing the number of categories used to adjust for patient care 

cost differences would have the largest positive effect on resource 

allocation. Currently, VERA uses three case-mix categories--complex, 

basic vested, and basic non-vested. These three categories are based on 

44 patient classes, and the average costs for patients within each 

class within a category can vary significantly. For example, in fiscal 

year 2000, the national average cost for home-based primary care and 

for ventilator-dependent care--two patient classes in complex care--was 

about $24,000 and $163,000, respectively; yet networks received 

approximately $42,000--the capitation amount for complex care--per 

patient in these two classes. As a result, networks with 

proportionately more home-based primary care patients would receive 

more resources relative to their costs than other networks, and 

networks with more ventilator-dependent care patients would receive 

fewer resources relative to their costs.



VERA does not include most Priority 7 veterans in its workload for 

allocating resources to networks. Including Priority 7 veterans--mostly 

higher income veterans who do not have service-connected disabilities-

-in VERA’s measurement of network workload would affect network 

allocations because some networks’ workloads include a greater 

proportion of Priority 7 veterans than other networks. The number of 

Priority 7 veterans VA has served has increased rapidly to more than a 

million in fiscal year 2002 (see fig. 3), representing a quarter of 

VA’s total patient workload in that year. VA expects the Priority 7 

patient population to continue growing at least through fiscal year 

2010.[Footnote 12]



Figure 3: Growth of Priority 7 Veterans Treated Nationally, Fiscal 

Years 1996 through 2002:



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Note: Because the Priority 7 classification was not developed until 

fiscal year 1999, we used VA’s previous classification that most 

closely represents this priority group, Category C. Category C data for 

fiscal years 1996 through 1998 slightly underestimate the number of 

Priority 7 veterans for those years.



The combined effect of incorporating all 44 VA patient classes in 

VERA’s case-mix categories and funding Priority 7 basic vested veterans 

at 50 percent of costs would result in the reallocation of 

approximately 

$200 million in fiscal year 2001. Although the allocation changes 

overall would represent about 2 percent of networks’ budgets, the 

change would be more substantial for some networks--as much as 5 

percent of their annual budgets (see fig. 4).



Figure 4: Estimated Change in VERA Allocations from Incorporating 44 

Case-Mix Categories and Priority 7 Basic Vested Veterans Treated, 

Fiscal Year 2001:



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Notes: We used fiscal year 1999 expenditure data for the calculations, 

the most recent data available for fiscal year 2001 VERA allocations.



In January 2002 VA merged networks 13 and 14 to form a single network.



In response to recommendations we made in February 2002 regarding 

VERA’s case-mix categories and Priority 7 workload, VA said that 

further study was needed to determine how and whether to change 

VERA.[Footnote 13] VA announced in November 2002 that it plans to make 

changes to VERA for the 2003 fiscal year when VA’s appropriation is 

finalized. Some of the planned changes, if implemented, could address 

recommendations we made. Delaying these improvements to VERA means that 

VA will continue to allocate funds in a manner that does not align 

workload and resources as well as it could. This puts some networks at 

a financial disadvantage.



Priority 7 Veterans’ Increased Use of VA’s Outpatient Pharmacy Benefit 

Has Increased VA’s Outpatient Pharmacy Expenditures:



The increase in the number of Priority 7 veterans over the past several 

years has resulted in a greater use of VA’s outpatient pharmacy 

benefit--a benefit particularly attractive to veterans covered by 

Medicare because Medicare does not offer such a benefit. This expanded 

use has increased VA’s outpatient pharmacy expenditures for Priority 7 

veterans from 

$178 million to $418 million between fiscal years 1999 and 2001--a 

growth rate more than four times that for other veterans. Priority 7 

veterans now constitute 14 percent of VA pharmacy benefit spending.



VA has been able to partially offset about 10 percent of pharmacy 

expenditures for Priority 7 veterans through the collection of 

medication copayments. This offset reduced VA’s net expenditures to 

$377 million for providing drugs and supplies to Priority 7 veterans in 

fiscal year 2001 (see table 1). VA collected $41 million in fiscal year 

2001 by charging $2 copayments for a 30-day or less drug supply. Such 

revenues are expected to grow because VA increased the copayment 

charged to Priority 7 veterans to $7 for a 30-day or less supply in 

February 2002.



Table 1: Net Expenditures for VA’s Outpatient Pharmacy Benefit Less 

Drug  Copayments, Fiscal Years 1999 through 2001:



Dollars in millions.



Priority 7 veterans; Dollars in millions: 1999: $164; Dollars in 

millions: 2000: $247; Dollars in millions: 2001: $377.



All other veterans[A]; Dollars in millions: 1999: $1,916; Dollars in 

millions: 2000: $2,169; Dollars in millions: 2001: $2,458.



Total; Dollars in millions: 1999: $2,080; Dollars in millions: 2000: 

$2,417; Dollars in millions: 2001: $2,835.



[End of table]



Source: GAO analysis of VA data.



Note: Numbers in table may not add to total outpatient pharmacy 

expenditures because of rounding.



[A] Veterans with service-connected disabilities rated greater than 50 

percent, receiving drugs for service-connected conditions, or with 

incomes lower than the VA pension level are exempt from paying drug 

copayments.



Further Realignment of VA’s Infrastructure Could Better Meet Veterans’ 

Health Care Needs:



A significant portion of VA’s annual health care budget is spent to 

operate, maintain, and improve about 4,700 buildings and 18,000 acres 

of property--including unused and underused hospitals and other 

facilities. In 1998, we reported that in the Chicago area alone, as 

much as $20 million could be freed up annually if VA served area 

veterans with three instead of four hospitals.[Footnote 14] We 

recommended that VA develop and implement a market-based plan for 

restructuring its delivery of health care.[Footnote 15] By doing so, VA 

could reduce funds spent on unneeded assets and better serve veterans’ 

needs by placing health care resources closer to where veterans live.



In response, in October 2000 VA established the Capital Asset 

Realignment for Enhanced Services (CARES) program, which calls for 

assessments of veterans’ health care needs and available service 

delivery options to meet those needs in each health care market--a 

geographic area with a high concentration of enrolled veterans. In 

2002, VA completed a pilot study in Network 12 (Chicago), which 

includes Chicago and other locations, and entered the second phase of 

the initiative--to conduct CARES in the remaining 20 networks. VA 

expects to issue its plans for each market by the end of 2003.



VA’s plan from its pilot study calls for the closing of inpatient 

services at one location, consolidation of services at remaining 

locations, and the opening of several new outpatient clinics. The plan 

also calls for leasing or demolishing 20 of the network’s 30 unneeded 

vacant buildings. For the remaining buildings, VA officials believe 

that maintaining ownership of the buildings is the least expensive 

course of action. However, all relevant cost information on the various 

disposal options was not always systematically evaluated when making 

this assessment. To ensure that VA makes the best decisions regarding 

the disposition of its vacant buildings, we recently recommended that 

VA test a model that includes complete cost information on each 

disposal option in Network 12 (Chicago).[Footnote 16]



VA needs to build and sustain the momentum necessary to achieve 

efficiencies and effectively meet veterans’ current and future needs. 

The challenge is to do this while mitigating the impact on staffing, 

communities, and other VA missions. Successfully completing this 

capital asset realignment will depend on VA’s ability to strategically 

and expeditiously complete the implementation of CARES.



VA is one of many federal agencies facing challenges in managing 

problems with excess and underutilized real property, deteriorating 

facilities, and unreliable property data. As a result, we have added 

federal real property as a high-risk area.[Footnote 17]



Expanded Use of Alternative Methods for Patient Care Support Services 

Could Realize Additional Savings:



VA’s transformation from an inpatient-to an outpatient-based health 

care system has significantly reduced the need for certain patient care 

support services, such as food and laundry. To make better use of these 

resources, some facilities have consolidated food production locations, 

used lower-cost Veterans Canteen Service (VCS) workers instead of 

higher-paid Nutrition and Food Service workers, or contracted out food 

services. VA facilities have also consolidated laundries, contracted 

for labor to operate them, or contracted out laundry services to 

commercial organizations.



However, VA needs to systematically explore further use of such options 

across its health care system. In November 2000, we recommended that VA 

conduct studies at all of its food and laundry service locations to 

identify and implement the most cost-effective way to provide these 

services at each location.[Footnote 18] At that time, we identified 63 

food production locations that could be consolidated into 29, saving 

millions of dollars annually. We also found that using lower-cost VCS 

employees at all VA food production locations could save additional 

millions annually. The potential for savings through consolidating 

laundry services was similar. VA may also be able to reduce its food 

and laundry service costs at some facilities through competitive 

sourcing--where VA would determine whether it would be more cost-

effective to contract out these services or provide them in-house. 

However, VA must ensure that contract terms on payments and service 

quality standards are met. For example, we found that weaknesses in the 

monitoring of VA’s Albany, New York, laundry contract appear to have 

resulted in overpayments, reducing potential savings.



In August 2002, VA issued a directive establishing policy and 

responsibilities for its networks to follow in implementing a 

competitive sourcing analysis to compare the cost of contracting and 

the cost of in-house performance to determine who should do the work. 

VA needs to follow through on its commitment to ensure that the most 

cost-effective, quality service options are applied throughout its 

health care system and to conduct systemwide feasibility assessments 

for consolidation and competitive sourcing.



VA and DOD Need to Increase Joint Activities to Maximize Federal Health 

Care Resources:



In an effort to save federal health care dollars, VA and DOD have 

sought ways to work together to gain efficiencies. For example, local 

VA medical centers and military treatment facilities have entered into 

agreements to exchange inpatient, outpatient, and specialty care 

services, as well as support services. Some local VA and DOD facilities 

have entered into joint venture agreements, pooling resources to build 

a joint medical facility or capitalize on an existing facility. Local 

facilities have also arranged to jointly purchase pharmaceuticals, 

laboratory services, medical supplies, and equipment. Underscoring the 

importance of maximizing federal health care resources, the President 

created the Task Force to Improve Health Care Delivery for Our Nation’s 

Veterans in May 2001. Its mission includes reviewing barriers and 

challenges that impede VA and DOD coordination and identifying 

opportunities for improved resource utilization through VA and DOD 

partnerships.[Footnote 19]



Local VA and DOD officials whom we surveyed in 1999 found that, by 

sharing resources, better use has been made of their local facilities, 

staff, and equipment; in some cases, beneficiary access and patient 

satisfaction have improved. However, in our review of VA/DOD sharing 

agreements in fiscal year 1998, we found that most sharing activity 

occurred through a relatively small number of sharing agreements and 

joint ventures.[Footnote 20] Overall, 75 percent of direct medical care 

episodes provided through sharing occurred under just 12 local 

agreements for inpatient care, 19 local agreements for outpatient care, 

and 12 local agreements for ancillary care. Joint venture activity was 

similarly concentrated in Albuquerque, New Mexico, and in southern 

Nevada.



To ensure sharing occurs to the fullest extent possible, VA needs to 

continue to work with DOD to address remaining barriers, as we 

recommended in our 2000 report. It is particularly critical that VA 

take a long-term approach to improving the VA/DOD sharing database, 

which VA administers. While the database captures information on the 

number of agreements and the range of services covered, these data are 

inadequate to assess progress. Currently, VA and DOD do not collect 

data on the volume of services provided, the amounts of reimbursements 

collected, and the costs avoided through the use of sharing agreements. 

Without a baseline of activity or complete and accurate data, VA and 

DOD--and the Congress--cannot assess the progress of VA and DOD 

sharing.



Additional opportunities also exist for VA and DOD to jointly purchase 

pharmaceuticals and obtain higher discounts from manufacturers. In 

fiscal year 2000, VA and DOD’s combined spending for pharmaceuticals 

was about $3.2 billion. While the two departments saved an estimated 

$51 million from jointly awarded national committed-use contracts with 

suppliers in that year, we reported in May 2001 that significantly more 

federal health care dollars could be saved.[Footnote 21] In response to 

our recommendation, VA and DOD have taken additional action to expand 

their use of joint national committed-use contracts.[Footnote 22] From 

August 2001 through August 2002, VA and DOD increased their joint 

contracts from 49 to 67 and decreased their “unilateral” contracts from 

57 to 24. VA reported that, overall, joint pharmaceutical contracts 

resulted in cost avoidance of more than $98 million (about $18 million 

for DOD and $80 million for VA) in fiscal year 2001. VA needs to 

continue to work with DOD to achieve even greater savings.



In a June 2002 hearing on VA’s medical procurement practices, 

opportunities were discussed for VA and DOD to achieve greater 

efficiencies through joint procurement of medical and surgical 

supplies.[Footnote 23] However, as we reported in June 2002, VA and DOD 

have not made progress in jointly contracting for such items, and it is 

unlikely that the two departments will have joint national contracts 

for medical and surgical supplies anytime soon.[Footnote 24] This lack 

of progress has, in part, been the result of their different approaches 

to “standardizing”--that is, agreeing on particular items that their 

facilities would purchase and then contracting with the manufacturers 

of these items for discounts based on their combined larger volume. 

Because DOD has opted to follow a regional approach to standardization 

and VA has opted for a national approach, opportunities for national 

joint procurement will be more difficult to achieve. In addition, 

neither department has accurate, reliable, and comprehensive 

procurement information--a basic requirement for identifying potential 

medical and surgical items to standardize.



VA Needs to Resolve Long-standing Performance Problems to Maximize 

Third-Party Collections:



In fiscal year 2002, VA collected $687 million in payments from third-

party insurers--the largest source of revenue to supplement VA’s $21 

billion medical care appropriations.[Footnote 25] These funds help pay 

for veterans’ growing demand for care.



VA’s third-party collections increased in fiscal year 2001--reversing a 

trend of declining collections--and again in fiscal year 2002. However, 

over the past several years, we have reported on persistent collections 

process weaknesses--such as lack of information on patient insurance, 

inadequate documentation of care, a shortage of qualified billing 

coders, and insufficient automation--that have diminished VA’s 

collections.[Footnote 26] VA’s Inspector General similarly reported 

that VA missed billing opportunities, had billing backlogs, and 

inadequately followed up on accounts receivable in fiscal years 2000 

and 2001.[Footnote 27] It is uncertain how much more revenue could be 

collected if VA were to collect for currently missed billing 

opportunities, all backlogged billing, and all collectable accounts 

receivable, since VA does not have a national estimate of the total 

dollar amount of potentially billable and collectable care.



VA has taken several steps to improve its collections performance, 

including developing the Veterans Health Administration Revenue Cycle 

Improvement Plan in 2001, which aims to address its long-standing 

collections problems. More recently, in May 2002, VA created a Chief 

Business Office that is planning additional initiatives to improve 

collections. However, by the end of fiscal year 2002, VA was still 

working to implement proposed initiatives for resolving its long-

standing collection problems. To ensure it maximizes its third-party 

collections, VA will need to be vigilant in implementing its plan and 

initiatives.



Prepare for Biological and Chemical Acts of Terrorism:



The September 11, 2001, attacks on the World Trade Center and the 

Pentagon and the dissemination of weaponized anthrax through the U.S. 

mail exposed our nation’s vulnerabilities to terrorism and the need for 

better emergency medical preparedness and response capabilities. In the 

month following the attacks, we reported that VA, in a supporting role, 

made a significant contribution to the emergency preparedness response 

activities carried out by lead federal agencies.[Footnote 28] As part 

of its strategic goals, VA remains committed to help improve the 

nation’s preparedness for response to war, terrorism, national 

emergencies, and natural disasters by developing plans and taking 

actions to ensure continued provision of services to veterans as well 

as support national, state, and local emergency management and homeland 

security efforts.[Footnote 29]



By October 2001, VA had quickly assessed its ability to take action in 

the event of a national emergency and concluded that it needed to 

improve its emergency management capabilities. VA also made improved 

response a goal in its 2003 Departmental Performance Plan. VA is 

currently working to address key areas of need, including 

pharmaceutical stockpiles, decontamination, and security. For example, 

VA established a policy requiring designated VA facilities to store 

caches of pharmaceuticals to treat victims. VA is also assessing its 

facilities’ needs and capabilities for decontamination and security to 

ensure that potentially large numbers of victims could be managed and 

entrances and exits controlled in the event of another terrorist 

attack.



The Department of Veterans Affairs Emergency Preparedness Act of 2002 

also created new requirements for VA.[Footnote 30] Specifically, the 

act calls for the establishment of four medical emergency preparedness 

centers. The mission of the centers includes research on detection, 

diagnosis, prevention, and treatment of injuries, diseases, and 

illnesses arising from the use of chemical, biological, radiological, 

incendiary, or explosive weapons posing threats to public health and 

safety. The centers are also charged with providing education, 

training, and advice to health care professionals through the National 

Disaster Medical System.



Improve Veterans’ Disability Program:



VA expects to provide about $25 billion in disability compensation and 

pension benefits to over 3 million veterans, family members, and 

survivors in fiscal year 2002. In administering these benefits, VA 

faces long-standing challenges to improve the timeliness and quality of 

disability claims decisions, which are made by its 57 regional offices. 

In addition to creating delays in veterans’ receipt of entitled 

benefits, untimely, inaccurate, and inconsistent claims decisions can 

negatively affect veterans’ receipt of other VA benefits and services, 

including health care, because VA’s assigned disability ratings help 

determine eligibility and priority for these benefits. Of greater 

concern, VA’s criteria for determining disability are outmoded. While 

the department is taking actions to address these problems in the short 

term, longer-term solutions may require more fundamental changes to the 

program including those that require legislative actions. For these 

reasons, we have added VA’s disability benefits program, along with 

other federal disability programs, to the 2003 high-risk list.



The Secretary has made improving claims processing performance one of 

VA’s top management priorities, setting a 100-day goal for VA to make 

accurate decisions on rating-related compensation and pension 

claims,[Footnote 31] and a reduction in the rating-related inventory to 

about 250,000 claims by the end of fiscal year 2003. The Secretary also 

established the Claims Processing Task Force in May 2001 to make 

specific recommendations to relieve the veterans’ claims backlog and 

make claims processing more timely. In fiscal years 2001 and 2002, VA 

hired and trained hundreds of new claims processing staff. VA also set 

monthly production goals for fiscal year 2002 for each of its regional 

offices, incorporating these goals into regional office directors’ 

performance standards. VA is also in the process of responding to the 

more than 30 recommendations made by the Task Force in its October 2001 

report to the Secretary.



VA Faces Short-Term and Long-Term Challenges to Improving Timeliness:



While VA has made some progress in improving production and reducing 

inventory, it is far from achieving the Secretary’s goals. VA completed 

almost two-thirds more decisions in fiscal year 2002 than fiscal year 

2001 (see table 3). However, it still did not meet its production goal 

of completing about 839,000 claims in fiscal year 2002. VA also reduced 

its end of year inventory from 420,603 claims in fiscal year 2001 to 

345,516 in fiscal year 2002, but did not meet its end-of-year inventory 

goal of about 316,000 claims.



Table 2: Changes in VA’s Workload of Rating-Related Claims, Fiscal 

Years 1997 to 2002:



Fiscal year: 1997; Rating-related compensation and pension claims: : 

Received: 740,052; Rating-related compensation and pension claims: : 

Completed: 701,717; Rating-related compensation and pension claims: End 

of year: inventory: 213,193.



Fiscal year: 1998; Rating-related compensation and pension claims: : 

Received: 691,461; Rating-related compensation and pension claims: : 

Completed: 663,400; Rating-related compensation and pension claims: End 

of year: inventory: 241,254.



Fiscal year: 1999; Rating-related compensation and pension claims: : 

Received: 639,070; Rating-related compensation and pension claims: : 

Completed: 630,145; Rating-related compensation and pension claims: End 

of year: inventory: 250,179.



Fiscal year: 2000; Rating-related compensation and pension claims: : 

Received: 578,773; Rating-related compensation and pension claims: : 

Completed: 601,451; Rating-related compensation and pension claims: End 

of year: inventory: 227,501.



Fiscal year: 2001; Rating-related compensation and pension claims: : 

Received: 674,219; Rating-related compensation and pension claims: : 

Completed: 481,117; Rating-related compensation and pension claims: End 

of year: inventory: 420,603.



Fiscal year: 2002; Rating-related compensation and pension claims: : 

Received: 721,727; Rating-related compensation and pension claims: : 

Completed: 796,814; Rating-related compensation and pension claims: End 

of year: inventory: 345,516.



[End of table]



Source: Veterans Benefits Administration data.



In addition, the average time to complete rating-related decisions 

rose, from 181 days in fiscal year 2001 to 223 days in fiscal year 2002 

(see fig. 5), missing VA’s fiscal year 2002 goal of 208 days and 

leaving it far from the Secretary’s 100-day goal for the last quarter 

of fiscal year 2003. However, VA has made recent timeliness 

improvements; in the first quarter of fiscal year 2003, VA completed 

rating-related decisions in an average of 200 days.



Figure 5: Average Days to Complete Rating-Related Claims, Fiscal Years 

1999 to 2003:



[See PDF for image] - graphic text:



[End of figure] - graphic text:



Improving timeliness, both in the short and long term, requires more 

than just increasing production and reducing inventory. VA must also 

continue addressing delays in obtaining evidence to support claims, 

ensuring that it has experienced staff for the long term, and 

implementing information systems to help improve productivity. One of 

the most significant delays is in obtaining medical evidence--such as 

medical records, examinations, and opinions--from VA medical 

facilities. However, it is not clear to what extent VA’s initiatives to 

expedite obtaining medical information--such as providing regional 

offices access to VA’s medical records database--will improve 

timeliness. Similarly, VA needs to overcome delays in implementing its 

information system improvements. In 1986, VA began developing a new 

system to replace its outdated benefits payment system. However, after 

16 years, VA still has not fully implemented this new system and 

continues to rely on its existing benefits delivery network until the 

new system can be completed.



VA will also need to continue to adjust to external factors, such as 

court decisions and the filing behavior of veterans. Since its 

establishment in 1989, the U.S. Court of Appeals for Veterans Claims 

has introduced a number of complex procedural and documentation 

requirements that VA must comply with, including providing a 

description of the evidence and rationale leading to the decision on 

each claimed disability. The implementation of the Veterans Claims 

Assistance Act of 2000 (VCAA) has added to VA’s workload. The act 

requires VA to take specific steps to assist claimants once they file 

claims for benefits. The act also allows for the reworking of claims 

previously denied because they were not well-grounded.[Footnote 32] VA 

identified 98,000 such claims and directed its regional offices to 

perform any rework needed to comply with VCAA, such as sending 

additional notifications and making new decisions. VA also directed 

regional offices to do any needed rework on 244,000 claims that were 

pending when the law was enacted. Finally, changes in veterans’ 

benefits affect VA’s workload. In July 2001, diabetes was added as a 

presumptive service-connected disability for veterans who served in 

Vietnam, significantly increasing VA’s workload. VA expects that, by 

the end of fiscal year 2003, it will receive about 197,500 diabetes 

claims. VA also expects to receive additional claims due to “concurrent 

receipt” legislation enacted in December 2002. If a military retiree 

receives VA disability compensation, the retiree’s military retirement 

payments are reduced by the amount of the VA compensation. Under the 

new legislation, DOD can provide special compensation payments to some 

disabled military retirees.[Footnote 33] The effect of this legislation 

on VA’s workload is not yet known.



In addition to these challenges, VA’s key rating-related timeliness 

measure could be improved. Currently, this measure aggregates 

timeliness data for VA’s three main disability programs, obscuring 

significant timeliness differences among the programs. Aggregating VA’s 

timeliness data by program--instead of across programs--shows that, in 

fiscal year 2002, it took VA an average of 241 days to complete 

disability compensation claims decisions, compared to 126 days for 

pension claims and 172 days for dependency and indemnity compensation 

claims. In December 2002, we recommended that VA establish separate 

claims processing timeliness goals for each program and incorporate 

these goals into VA’s strategic plan and annual performance plans, and 

report its progress in meeting these goals in its annual performance 

reports.[Footnote 34]



Effect of Efforts to Improve Quality Are Not Yet Known:



Since VA began its Systematic Technical Accuracy Review (STAR) program 

in fiscal year 1999, the accuracy of compensation and pension claims 

decisions has improved. For fiscal year 2002, preliminary STAR data 

show an 81 percent accuracy rate for rating-related decisions[Footnote 

35]--a major improvement over the 59 percent accuracy rate in fiscal 

year 2000. But it is still well below VA’s 96 percent strategic goal 

for fiscal year 2006.



Recent changes to the STAR program should provide VA with more useful 

data to measure its progress in improving decision accuracy. Beginning 

with claims decided in fiscal year 2002, VA’s key accuracy measure 

focuses on whether decisions to grant or deny benefits were correct, 

not on procedural and technical issues, such as failure to include all 

the documentation in the case file. VA also plans to review more 

decisions per year, so it can obtain statistically valid accuracy data 

at the regional office level. Further, to ensure independent reviews, 

VA has centralized the STAR program, rather than have the reviews 

conducted in the regional offices. Finally, VA is developing a quality 

review system that will measure the accuracy of individual employee 

decisions. Once these enhancements are made to the STAR program, VA 

should be better able to identify accuracy problems at the national, 

regional office, and individual employee levels, so more detailed 

reviews can be done to identify underlying causes of inaccuracies and 

target corrective actions, such as additional training.



To help improve decision accuracy and consistency across regional 

offices, VA has established the Training and Performance Support System 

(TPSS), a computer-assisted system designed to provide standardized 

training for staff at all regional offices. However, many of the 

modules were not available to help train the new claims processing 

staff VA hired during fiscal years 2001 and 2002, and, in May 2001, we 

reported that VA had pushed back its completion of all TPSS modules 

until sometime in 2004. Until VA completes TPSS implementation, it will 

not be able to evaluate the program’s impact on claims processing 

accuracy and consistency. More recently, we recommended in August 2002 

that VA establish a system to regularly assess and measure the degree 

of consistency across all levels of VA claims adjudication, as well as 

made specific recommendations to improve the quality of decisions made 

by VA’s Board of Veterans’ Appeals.[Footnote 36]



Reexamination of Disability Criteria Needed:



Of greater concern is VA’s use of outmoded criteria for determining 

disability. In 1997, we reported that VA’s disability ratings schedule 

is still primarily based on physicians’ and lawyers’ judgments made in 

1945 about the effect service-connected conditions had on the average 

individual’s ability to perform jobs requiring manual or physical 

labor. Although the ratings in the schedule have not changed 

substantially since 1945, dramatic changes have occurred in the labor 

market and in society since then. Thus, VA may not be equitably 

distributing compensation funds among disabled veterans.



More recently, we reported that the criteria used by VA and other 

federal programs to determine disability have not been fully updated to 

reflect medical and technological advances and have not incorporated 

labor market changes.[Footnote 37] We recommended that VA use its 

annual performance plan to delineate strategies for and progress in 

periodically updating its disability criteria. We also recommended that 

VA study and report to the Congress the effect that a comprehensive 

consideration of medical treatment and assistive technologies would 

have on VA disability programs’ eligibility criteria and benefit 

package. VA did not concur with our recommendations. The Secretary of 

Veterans Affairs stated that the current medically based criteria are 

an equitable method for determining disability and that VA is in the 

process of updating its criteria to account for advances in medicine. 

However, we believe that until VA aligns its disability criteria with 

medical and technological advances and holds itself accountable for 

ensuring that disability ratings are based on current information, 

future decisions affecting its disability program will not be 

adequately informed. This fundamental problem and sustained challenges 

in processing disability claims put the VA disability program at high 

risk of poor performance.



Develop Sound Departmentwide Management Strategies to Build a High-

Performing Organization:



VA faces additional challenges in several areas critical to building a 

high-performing organization: budget formulation and execution, 

information technology, and financial management. To meet its strategic 

goal of creating “One VA”--an environment that fosters the delivery of 

seamless service to veterans and their families--VA has begun to 

address some of these issues through its plans to implement an IT 

framework that supports the integration of information across the 

department and to continue to achieve unqualified audit opinions on its 

annual financial statements.



VA Needs to More Closely Link Its Health Care Budget Formulation and 

Planning Processes:



Establishing a close link between budgeting and planning is essential 

to instilling a greater focus on results. While VA’s health care budget 

formulation and planning processes are centrally managed, they are not 

closely linked. VA’s annual performance plan describes the department’s 

goals, strategies, and performance measures. However, the relationship 

between its performance plan and its health care budget formulation is 

unclear. Through fiscal year 2003, VA’s health care budget formulation 

has largely been incremental, reflecting prior years’ appropriations 

with adjustments for projected increases in workload, efficiencies, and 

new policies.



Budgeting and performance are more closely linked during the budget 

execution phase--that is, after VA receives its appropriation and funds 

are allocated to the networks. Some health care networks consider 

resource utilization, cost, and performance data in making resource 

allocations to their health care facilities and programs. They also use 

various communication methods, both within their networks and across 

other networks, to share information on performance measures and ways 

to meet those measures.



VA officials noted that steps are being taken to better integrate their 

health care budget formulation and planning processes. However, VA 

continues to face challenges in further integrating these processes and 

in defining areas for improvement.



VA Continues to Face Information Technology Challenges:



Over the past 5 years, VA has spent an estimated $1 billion annually on 

its IT program to help realize its vision of providing seamless service 

to veterans and their families. In August 2000, we recommended that VA 

take certain actions to improve its decision-making process for IT 

investments and to fully implement key provisions of the Clinger-Cohen 

Act of 1996, which aims to strengthen IT leadership and management at 

federal agencies. Over the past 2 years, VA’s commitment to addressing 

critical weaknesses in the department’s IT management has been evident. 

To provide leadership, VA hired a department-level chief information 

officer, who, in October 2002, was given authority over all IT 

appropriations across the department. In addition, VA has established 

crucial executive support and a strategy to define products and 

processes essential to the development of an integrated departmentwide 

enterprise architecture.[Footnote 38] Further, to address numerous 

computer security weaknesses, VA established a department-level 

information security management program and hired an executive-level 

official to head it. VA also instituted information security 

performance standards that require greater management accountability 

among senior executives.



Nonetheless, challenges to improve key areas of IT performance remain. 

Specifically, VA’s success in developing, implementing, and using a 

complete and enforceable enterprise architecture hinges upon continued 

attention to putting in place a sound program management structure. In 

addition, VA’s computer security management program requires further 

actions to ensure that the department can protect its computer systems, 

networks, and sensitive health and benefits data from vulnerabilities 

and risks.



In June 2002, we recommended that VA take specific actions to achieve a 

more stable, reliable, and modernized systems environment to 

effectively support critical decision making and operations and to 

realize better overall returns on its IT investments.[Footnote 39] VA 

concurred with our recommendations and has initiated a number of 

actions to address them. For example, in September 2002, the Secretary 

approved the initial version of VA’s enterprise architecture that 

focused on defining the “as is” and desired “to be” target environments 

for selected business functions. Also, to help provide a more solid 

foundation for detecting, reporting, and responding to security 

incidents, VA contracted to expand departmentwide incident response and 

analysis capabilities, including enhancing security monitoring and 

detection. However, VA’s IT investment and management challenges are 

significant, and its ability to resolve them with the right combination 

of people, processes, and technology that are focused on achieving 

solid results will take time and sustained effort and commitment. Table 

4 summarizes the challenges that VA continues to face to strengthen the 

leadership and management of its IT initiatives and the department’s 

status in responding to each.



Table 3: Status of IT Challenges Facing VA:



Challenge: IT investment management: Sound IT investment management 

requires maximizing the value and return on IT investments and 

mitigating associated risks.; Status: IT investment management: In 

2002, as part of its enterprise architecture development effort, VA (1) 

synchronized in-process reviews of IT projects within an integrated IT 

management process, and (2) began developing guidance to manage IT 

projects under the integrated management process..



Challenge: IT investment management: Before making major IT 

investments, agencies are required under the Clinger-Cohen Act to 

analyze their missions and revise and improve mission-related and 

administrative processes accordingly. To do this, agencies should have 

an overall business process improvement strategy--one that coordinates 

and integrates ongoing reengineering and improvement projects, sets 

priorities, and makes appropriate budget decisions.; Status: IT 

investment management: In September 2002, VA completed version 1.0 of 

its departmentwide enterprise architecture. The document identified the 

business process reengineering opportunities in VA’s registration and 

eligibility and contact management functions, but it does not provide 

specifics on how these functions may be reengineered. Therefore, VA has 

not yet developed an overall business process improvement strategy..



Challenge: IT investment management: In achieving the department’s 

strategic and IT goals, CIOs are charged with implementing an 

architecture that will provide a framework for evolving or maintaining 

existing IT and for acquiring new IT.; Status: IT investment 

management: In 2001, VA initiated an effort to develop a departmentwide 

enterprise architecture. In September 2002, VA completed its first 

version of this architecture, containing high-level elements of the 

department’s baseline and target architectures, technical reference 

model, and standards profiles. VA plans to further develop this 

document to support IT investment management and its “One VA” concept..



Challenge: IT investment management: A uniform mechanism for tracking 

IT expenditures allows agencies to make informed decisions on whether 

to modify, accelerate, or discontinue projects.; Status: IT investment 

management: Although VA Directive 6000 and VA’s capital investment 

guide require it to maintain complete and accurate cost data for IT 

projects, there is no uniform mechanism for tracking IT expenditures 

across the department. In 2001, VA reported that it would begin using a 

numbering system within the department’s financial management system to 

track IT capital investment costs beginning with the execution of the 

fiscal year 2002 projects. However, this system would not allow VA to 

track personnel costs for IT projects automatically. VA planned to 

extend this numbering scheme once its new financial management system 

is implemented in October 2004..



Challenge: IT investment management: The Clinger-Cohen Act requires 

executive branch agencies to establish performance measures that relate 

to how well IT supports their programs.; Status: IT investment 

management: While VA’s fiscal year 2003 performance plan identified IT 

initiatives for improving claims processing quality and timeliness, it 

did not include performance goals. Without such goals, it will be 

difficult to assess the performance of these initiatives..



Challenge: IT investment management: VA also needs to implement 

appropriate security measures to ensure that financial, health care, 

and benefits payment information is not at risk of inadvertent or 

deliberate misuse, fraud, improper disclosure, or destruction.; Status: 

IT investment management: Since September 1998, we and VA’s IG have 

reported on VA’s computer security weaknesses, which continue to place 

financial, health care, and benefits payment information at risk of 

misuse, fraud, improper disclosure, or destruction--possibly occurring 

without detection. In 2001, VA established a department-level 

information security management program and hired an executive-level 

official to head it. As of November 2000, VA had finalized an 

information security management plan to provide a framework for 

addressing long-standing departmentwide computer security weaknesses. 

The plan does not articulate critical actions that VA will need to take 

to correct specific control weaknesses or the time frames for 

completing key actions. Also, the plan does not provide a framework to 

guide the monitoring activities by identifying the specific security 

areas to be reviewed, the scope of compliance work to be performed, the 

frequency of reviews, the reporting requirements, or the resolution of 

reported issues. VA continues to be without a comprehensive, centrally 

managed process that will enable it to identify, track, and analyze all 

computer security weaknesses..



[End of table]



Source: GAO analysis of VA documentation.



VA is also challenged to develop an effective IT strategy for sharing 

information on patients who are both VA and DOD beneficiaries or who 

seek care from DOD under a VA/DOD sharing agreement. The lack of 

complete, accurate, and accessible data is particularly problematic for 

veterans who are prescribed drugs under both systems. While each 

department has established safeguards to mitigate the risk of 

medication errors, these safeguards are not necessarily effective in a 

shared environment--in part because VA’s and DOD’s IT systems are 

separate. Consequently, DOD providers and pharmacists cannot 

electronically access health information captured in VA’s system to aid 

in making medication decisions for veterans, nor can they take 

advantage of electronic safeguards such as computerized checks for drug 

allergies and interactions.



Financial Management Enhancements Needed to Correct Material 

Deficiencies:



In December 2002, VA’s independent auditor issued an unqualified audit 

opinion on VA’s consolidated financial statements for fiscal years 2002 

and 2001.[Footnote 40] However, the unqualified opinion was achieved, 

for the most part, through extensive efforts of both program and 

financial management staff and the auditors to overcome material 

internal control weaknesses to produce auditable information after 

year-end. The auditor reported two long-standing systems and control 

problems that remain unresolved. In addition, VA’s accounting systems-

-similar to those of most major agencies--did not comply substantially 

with Federal Financial Management Improvement Act (FFMIA) requirements. 

These weaknesses continue to make VA’s program and financial data 

vulnerable to error and fraud and limit the department’s ability to 

monitor programs through timely internal financial reports throughout 

the fiscal year.



VA has demonstrated management commitment to addressing material 

internal control weaknesses previously reported and made significant 

improvements in financial management. For example, in February 2001 the 

auditor reported that VA had improved on its reporting and reconciling 

of fund balances with Treasury--removing this as a material 

weakness.[Footnote 41] VA also continued to make progress in 

implementing recommendations from our March 1999 report[Footnote 42] 

that resulted in improved control and accountability over VA’s direct 

loan and loan sale activities and compliance with credit reform 

requirements.



However, during its audit of VA’s fiscal year 2002 financial statements 

the auditor reported that two previously reported material weaknesses 

still exist in the areas of information systems security and financial 

management system integration. A brief description of each material 

weakness follows.



* Departmentwide weaknesses in security controls over automated data 

processing continue to make VA’s sensitive financial and veteran 

medical and benefit information at risk of inadvertent or deliberate 

misuse or fraudulent use. Examples of weaknesses include inappropriate 

access privileges and inadequate segregation of duties. Additionally, 

security and process control weaknesses were observed in critical loan 

guaranty system applications due to a lack of accountability and 

definition of responsibility for implementing and enforcing consistent 

security administration standards and the lack of appropriate 

reconciliation procedures.



* Material weaknesses continue to hamper timely completion of financial 

statements. Specifically, VA continues to have difficulty related to 

the preparation, processing, and analysis of financial information to 

support the efficient and effective preparation of its financial 

statements. In many cases, significant manual work-arounds and out-of-

date feeder systems are still in place because VA has not yet completed 

its transition to a fully integrated financial management system.



In its discussion of compliance with laws and regulations, the auditor 

reported that VA’s financial systems did not substantially comply with 

federal financial systems requirements--one of the three requirements 

of FFMIA. The auditor found significant weaknesses in (1) the design 

and operation of internal controls over financial reporting, 

particularly with the control, monitoring, and reconciliation processes 

in support of the preparation of VA’s consolidated financial 

statements, and (2) the effectiveness of the information technology 

security controls.



VA has demonstrated management commitment to addressing material 

internal control weaknesses and made significant improvements in 

financial management. The target dates for completing corrective 

actions on the information technology security control weaknesses is 

fiscal year 2003, while the target date for corrective action on 

financial management system deficiencies is fiscal year 2004, when 

implementation of VA’s integrated financial system is scheduled for 

completion. It is important that VA meet these targets because 

noncompliance with federal financial systems requirements impedes VA’s 

ability to provide reliable, useful, and timely information needed to 

manage day-to-day operations.



[End of section]



GAO Contacts:



Subject(s) covered in this report: Ensuring access to quality health 

care; ; Managing resources and workload to enhance health care 

delivery; ; Preparing for biological and chemical acts of terrorism; ; 

Improving veterans’ disability program; Contact person: Cynthia A. 

Bascetta; Director, Health Care--Veterans’ Health and Benefits Issues; 

(202) 512-7101; bascettac@gao.gov.



Subject(s) covered in this report: Linking budget formulation and 

performance planning processes; Contact person: Paul L. Posner; 

Managing Director, Federal Budget Analysis, Strategic Issues; (202) 

512-9573; posnerp@gao.gov.



Subject(s) covered in this report: Overcoming information technology 

challenges; Contact person: Joel C. Willemssen; Managing Director, 

Information Technology; (202) 512-6253; willemssenj@gao.gov; ; Robert 

F. Dacey, Director; Information Security Issues; Information 

Technology; (202) 512-3317; daceyr@gao.gov.



Subject(s) covered in this report: Enhancing financial management to 

correct material deficiencies; Contact person: McCoy Williams; 

Director, Financial Management and Assurance; (202) 512-6906; 

williamsm1@gao.gov.



[End of table]



[End of section]



Related GAO Products:



Ensure Access to Quality Health Care:



VA Long-Term Care: Implementation of Certain Millennium Act Provisions 

Is Incomplete, and Availability of Noninstitutional Services Is Uneven. 

GAO-02-510R. Washington, D.C.: March 29, 2002.



VA Health Care: More National Action Needed to Reduce Waiting Times, 

but Some Clinics Have Made Progress. GAO-01-953. Washington, D.C.: 

August 31, 2001.



VA Long-Term Care: Oversight of Community Nursing Homes Needs 

Strengthening. GAO-01-768. Washington, D.C.: July 27, 2001.



Veterans’ Health Care: Standards and Accountability Could Improve 

Hepatitis C Screening and Testing Performance. GAO-01-807T. Washington, 

D.C.: June 14, 2001.



VA Health Care: Community-Based Clinics Improve Primary Care Access. 

GAO-01-678T. Washington, D.C.: May 2, 2001.



Veterans’ Health Care: Observations on VA’s Assessment of Hepatitis C 

Budgeting and Funding. GAO-01-661T. Washington, D.C.: April 25, 2001.



VA Drug Formulary: Better Oversight Is Required, but Veterans Are 

Getting Needed Drugs. GAO-01-183. Washington, D.C.: January 29, 2001.



Veterans’ Health Care: VA Needs Better Data on Extent and Causes of 

Waiting Times. GAO/HEHS-00-90. Washington, D.C.: May 31, 2000.



Disabled Veterans’ Care: Better Data and More Accountability Needed to 

Adequately Assess Care. GAO/HEHS-00-57. Washington, D.C.: April 21, 

2000.



Manage Resources and Workload to Enhance Health Care Delivery:



VA Health Care: Improved Planning Needed for Management of Excess Real 

Property. GAO-03-326. Washington, D.C.: January 29, 2003.



VA Health Care: Expanded Eligibility Has Increased Outpatient Pharmacy 

Use and Expenditures. GAO-03-161. Washington, D.C.: November 8, 2002.



VA and Defense Health Care: Increased Risk of Medication Errors for 

Shared Patients. GAO-02-1017. Washington, D.C.: September 27, 2002.



VA and DOD Health Care: Factors Contributing to Reduced Pharmacy Costs 

and Continuing Challenges. GAO-02-969T. Washington, D.C.: July 22, 

2002.



VA and Defense Health Care: Potential Exists for Savings through Joint 

Purchasing of Medical and Surgical Supplies. GAO-02-872T. Washington, 

D.C.: June 26, 2002.



VA Health Care: Allocation Changes Would Better Align Resources with 

Workload. GAO-02-338. Washington, D.C.: February 28, 2002.



VA Health Care: VA Has Not Sufficiently Explored Alternatives for 

Optimizing Third-Party Collections. GAO-01-1157T. Washington, D.C.: 

September 20, 2001.



VA Health Care: Continuing Oversight Needed to Achieve Formulary Goals. 

GAO-01-998T. Washington, D.C.: July 24, 2001.



Veterans’ Health Care: Standards and Accountability Could Improve 

Hepatitis C Screening and Testing Performance. GAO-01-807T. Washington, 

D.C.: June 14, 2001.



DOD and VA Pharmacy: Progress and Remaining Challenges in Jointly 

Buying and Mailing Out Drugs. GAO-01-588. Washington, D.C.: May 25, 

2001.



VA Laundry Service: Consolidations and Competitive Sourcing Could Save 

Millions. GAO-01-61. Washington, D.C.: November 30, 2000.



VA Health Care: Expanding Food Service Initiatives Could Save Millions. 

GAO-01-64. Washington, D.C.: November 30, 2000.



VA and Defense Health Care: Evolving Health Care Systems Require 

Rethinking of Resource Sharing Strategies. GAO/HEHS-00-52. Washington, 

D.C.: May 17, 2000.



VA Health Care: VA Is Struggling to Address Asset Realignment 

Challenges. GAO/T-HEHS-00-88. Washington, D.C.: April 5, 2000.



VA Health Care: Collections Fall Short of Expectations. GAO/T-HEHS-99-

196. Washington, D.C.: September 23, 1999.



VA Health Care: Improvements Needed in Capital Asset Planning and 

Budgeting. GAO/HEHS-99-145. Washington, D.C.: August 13, 1999.



VA Health Care: Closing a Chicago Hospital Would Save Millions and 

Enhance Access to Services. GAO/HEHS-98-64. Washington, D.C.: April 16, 

1998.



Prepare for Biological and Chemical Acts of Terrorism:



Homeland Security: Need to Consider VA’s Role in Strengthening Federal 

Preparedness. GAO-02-145T. Washington, D.C.: October 15, 2001.



Improve Veterans’ Disability Program:



Veterans’ Benefits: Claims Processing Timeliness Performance Measures 

Could Be Improved. GAO-03-282. Washington, D.C.: December 19, 2002.



Veterans’ Benefits: Quality Assurance for Disability Claims and Appeals 

Processing Can Be Further Improved. GAO-02-806. Washington, D.C.: 

August 16, 2002.



SSA and VA Disability Programs: Re-Examination of Disability Criteria 

Needed to Help Ensure Program Integrity. GAO-02-597. Washington, D.C.: 

August 9, 2002.



Veterans’ Benefits: VBA’s Efforts to Implement the Veterans Claims 

Assistant Act Need Further Monitoring. GAO-02-412. Washington, D.C.: 

July 1, 2002.



Veterans’ Benefits: Despite Recent Improvements, Meeting Claims 

Processing Goals Will Be Challenging. GAO-02-645T. Washington, D.C.: 

April 26, 2002.



Veterans Benefits Administration: Clarity of Letters to Claimants Needs 

to Be Improved. GAO-02-395. Washington, D.C.: April 23, 2002.



Veterans’ Benefits: Quality Assurance for Disability Claims Processing. 

GAO-01-930R. Washington, D.C.: August 23, 2001.



Veterans’ Benefits: Training for Claims Processors Needs Evaluation. 

GAO-01-601. Washington, D.C.: May 31, 2001.



Veterans’ Benefits: Veterans Have Mixed Views on a Lump Sum Disability 

Payment Option. GAO-01-172. Washington, D.C.: December 18, 2000.



Veterans Benefits Administration: Problems and Challenges Facing 

Disability Claims Processing. GAO/T-HEHS/AIMD-00-146. Washington, 

D.C.: May 18, 2000.



Veterans’ Benefits: Promising Claims-Processing Practices Need to Be 

Evaluated. GAO/HEHS-00-65. Washington, D.C.: April 7, 2000.



Veterans Benefits Administration: Progress Encouraging, but Challenges 

Still Remain. GAO/T-HEHS-99-77. Washington, D.C.: March 25, 1999.



Veterans’ Benefits Claims: Further Improvements Needed in Claims-

Processing Accuracy. GAO/HEHS-99-35. Washington, D.C.: March 1, 1999.



VA Disability Compensation: Disability Ratings May Not Reflect 

Veterans’ Economic Losses. GAO/HEHS-97-9. Washington, D.C.: January 7, 

1997.



Veterans’ Benefits: Effective Interaction Needed Within VA to Address 

Appeals Backlog. GAO/HEHS-95-190. Washington, D.C.: September 27, 1995.



Veterans’ Benefits: VA Can Prevent Millions in Compensation and Pension 

Overpayments. GAO/HEHS-95-88. Washington, D.C.: April 28, 1995.



Develop Sound Departmentwide Management Strategies to Build a High-

Performing Organization:



Managing For Results: Efforts to Strengthen the Link Between Resources 

and Results at the Veterans Health Administration. GAO-03-10. 

Washington, D.C.: December 10, 2002.



VA Information Technology: Management Making Important Progress in 

Addressing Key Challenges. GAO-02-1054T. Washington, D.C.: 

September 26, 2002.



Veterans Affairs: Sustained Management Attention Is Key to Achieving 

Information Technology Results. GAO-02-703. Washington, D.C.: June 12, 

2002.



VA Information Technology: Progress Made, but Continued Management 

Attention Is Key to Achieving Results. GAO-02-369. Washington, D.C.: 

March 13, 2002.



Veterans Affairs: Status of Achieving Key Outcomes and Addressing Major 

Management Challenges. GAO-01-752. Washington, D.C.: June 15, 2001.



Computer-Based Patient Records: Better Planning and Oversight by VA, 

DOD, and IHS Would Enhance Health Data Sharing. GAO-01-459. Washington, 

D.C.: April 30, 2001.



Managing for Results: Emerging Benefits From Selected Agencies’ Use of 

Performance Agreements. GAO-01-115. Washington, D.C.: October 30, 2000.



VA Information Technology: Progress Continues Although Vulnerabilities 

Remain. GAO/T-AIMD-00-321. Washington, D.C.: September 21, 2000.



Computer Security: Critical Federal Operations and Assets Remain at 

Risk. GAO/T-AIMD-00-314. Washington, D.C.: September 11, 2000.



VA Information Systems: Computer Security Weaknesses Persist at the 

Veterans Health Administration. GAO/AIMD-00-232. Washington, D.C.: 

September 8, 2000.



Information Technology: VA Actions Needed to Implement Critical 

Reforms. GAO/AIMD-00-226. Washington, D.C.: August 16, 2000.



Information Technology: Update on VA Actions to Implement Critical 

Reforms. GAO/T-AIMD-00-74. Washington, D.C.: May 11, 2000.



Executive Guide: Maximizing the Success of Chief Information Officers, 

Learning From Leading Organizations. GAO/AIMD-00-83. Washington, D.C.: 

March 2000.



Information Systems: The Status of Computer Security at the Department 

of Veterans Affairs. GAO/AIMD-00-5. Washington, D.C.: October 4, 1999.



Internal Controls: VA Lacked Accountability Over Its Direct Loan and 

Loan Sale Activities. GAO/AIMD-99-24. Washington, D.C.: March 24, 1999.



Credit Reform: Key Credit Agencies Had Difficulty Making Reasonable 

Loan Program Cost Estimates. GAO/AIMD-99-31. Washington, D.C.: January 

29, 1999.



Information Systems: VA Computer Control Weaknesses Increase Risk of 

Fraud, Misuse, and Improper Disclosure. GAO-AIMD-98-175. Washington, 

D.C.: September 23, 1998.



Observations on the Department of Veterans Affairs’ Fiscal Year 1999 

Performance Report and Fiscal Year 2001 Performance Plan. GAO/HEHS-00-

124R. Washington, D.C.: June 30, 2000.



[End of section]



Performance and Accountability and High-Risk Series:



Major Management Challenges and Program Risks: A Governmentwide 

Perspective. GAO-03-95.



Major Management Challenges and Program Risks: Department of 

Agriculture. GAO-03-96.



Major Management Challenges and Program Risks: Department of Commerce. 

GAO-03-97.



Major Management Challenges and Program Risks: Department of Defense. 

GAO-03-98.



Major Management Challenges and Program Risks: Department of Education. 

GAO-03-99.



Major Management Challenges and Program Risks: Department of Energy. 

GAO-03-100.



Major Management Challenges and Program Risks: Department of Health and 

Human Services. GAO-03-101.



Major Management Challenges and Program Risks: Department of Homeland 

Security. GAO-03-102.



Major Management Challenges and Program Risks: Department of Housing 

and Urban Development. GAO-03-103.



Major Management Challenges and Program Risks: Department of the 

Interior. GAO-03-104.



Major Management Challenges and Program Risks: Department of Justice. 

GAO-03-105.



Major Management Challenges and Program Risks: Department of Labor. 

GAO-03-106.



Major Management Challenges and Program Risks: Department of State. 

GAO-03-107.



Major Management Challenges and Program Risks: Department of 

Transportation. GAO-03-108.



Major Management Challenges and Program Risks: Department of the 

Treasury. GAO-03-109.



Major Management Challenges and Program Risks: Department of Veterans 

Affairs. GAO-03-110.



Major Management Challenges and Program Risks: U.S. Agency for 

International Development. GAO-03-111.



Major Management Challenges and Program Risks: Environmental Protection 

Agency. GAO-03-112.



Major Management Challenges and Program Risks: Federal Emergency 

Management Agency. GAO-03-113.



Major Management Challenges and Program Risks: National Aeronautics and 

Space Administration. GAO-03-114.



Major Management Challenges and Program Risks: Office of Personnel 

Management. GAO-03-115.



Major Management Challenges and Program Risks: Small Business 

Administration. GAO-03-116.



Major Management Challenges and Program Risks: Social Security 

Administration. GAO-03-117.



Major Management Challenges and Program Risks: U.S. Postal Service. 

GAO-03-118.



High-Risk Series: An Update. GAO-03-119.



High-Risk Series: Strategic Human Capital Management. GAO-03-120.



High-Risk Series: Protecting Information Systems Supporting the Federal 

Government and the Nation’s Critical Infrastructures. 

GAO-03-121.



High-Risk Series: Federal Real Property. GAO-03-122.



FOOTNOTES



[1] VA’s 21 health care networks have responsibilities for allocating 

resources to their facilities, such as medical centers, and managing 

operations to ensure efficient provision of health care delivery. 



[2] In November 2002, VA redefined reasonable access in terms of 

minutes rather than distance from primary, inpatient, and tertiary 

care. VA defines reasonable access to primary outpatient care as that 

which is available by no more than a 30 minute drive by veterans 

residing in urban and rural areas, and a 60 minute drive by veterans in 

highly rural areas. 



[3] President’s Task Force to Improve Health Care Delivery for Our 

Nation’s Veterans, Interim Report, (Washington, D.C.: July 31, 2002).



[4] VA’s medical centers include primary and specialty care clinics.



[5] U.S. General Accounting Office, VA Health Care: More National 

Action Needed to Reduce Waiting Times, but Some Clinics Have Made 

Progress, GAO-01-953 (Washington, D.C.: Aug. 31, 2001).



[6] The Institute for Healthcare Improvement is a not-for-profit 

organization VA contracted with in July 1999 to develop strategies to 

reduce patient waiting times.



[7] Provision of Hospital Outpatient Care to Veterans Subpriorities of 

Priority Categories 7 and 8 and Annual Enrollment Level Decision, 68 

Fed. Reg. 2670 (2003) (to be codified as 38 C.F.R. pt 17) (interim 

final rule Jan. 17, 2003).



[8] Priorities for Outpatient Medical Services and Inpatient Hospital 

Care, 67 Fed. Reg. 58528 (2002)(to be codified as 38 C.F.R. pt. 17) 

(interim final rule Sept. 17, 2002).



[9] U.S. General Accounting Office, VA Long-Term Care: Oversight of 

Community Nursing Homes Needs Strengthening, GAO-01-768 (Washington, 

D.C.: July 27, 2001).



[10] U.S. General Accounting Office, Veterans’ Health Care: Standards 

and Accountability Could Improve Hepatitis C Screening and Testing 

Performance, GAO-01-807T (Washington, D.C.: June 14, 2001).



[11] The Veterans’ Health Care Eligibility Reform Act of 1996 required 

VA to establish priority categories for enrollment to manage access in 

relation to available resources. VA established seven priority 

categories, with Priority 1 veterans--those with service-connected 

disabilities rated 50 percent or more--having the highest priority for 

enrollment. Priority 7 veterans are primarily nonservice-connected 

veterans with higher incomes. The act also eliminated restrictions that 

previously prevented VA from treating some veterans in outpatient 

settings. 



[12] In October 2002, VA issued a new regulation that divided the 

Priority 7 veteran category into two new priority categories--Priority 

7 and Priority 8. The new Priority 7 veterans are primarily veterans 

with no service-connected disabilities who have incomes under limits 

established for geographic regions by the U.S. Department of Housing 

and Urban Development to reflect regional costs of living. By contrast, 

Priority 8 veterans are primarily veterans with no service-connected 

disabilities whose incomes are above the limits set for these 

geographic regions.



[13] U.S. General Accounting Office, VA Health Care: Allocation Changes 

Would Better Align Resources with Workload, GAO-02-338 (Washington, 

D.C.: Feb. 28, 2002).



[14] U.S. General Accounting Office, VA Health Care: Closing a Chicago 

Hospital Would Save Millions and Enhance Access to Services, GAO/HEHS-

98-64 (Washington, D.C.: Apr. 16, 1998).



[15] To determine their asset needs, OMB guidelines suggest that 

agencies conduct market-based assessments that include determining a 

target population’s needs, evaluating the capacity of existing assets, 

identifying any excesses or deficiencies, estimating assets’ life-cycle 

costs, and comparing such costs with alternatives for meeting the 

target population’s needs. (See Capital Programming Guide, ver. 1.0, 

Washington, D.C.: OMB, July 1997).



[16] U.S. General Accounting Office, VA Health Care: Improved Planning 

Needed for Management of Excess Real Property, GAO-03-326 (Washington, 

D.C.: Jan. 29, 2003).



[17] U.S. General Accounting Office, High-Risk Series: Federal Real 

Property, GAO-03-122 (Washington, D.C.: January 2003). 



[18] U.S. General Accounting Office, VA Laundry Service: Consolidations 

and Competitive Sourcing Could Save Millions, GAO-01-61 (Washington, 

D.C.: Nov. 30, 2000); U.S. General Accounting Office, VA Health Care: 

Expanding Food Service Initiatives Could Save Millions, GAO-01-64 

(Washington, D.C.: Nov. 30, 2000).



[19] The task force issued an interim report in July 2002. Its final 

report is expected in March 2003.



[20] U.S. General Accounting Office, VA and Defense Health Care: 

Evolving Health Care Systems Require Rethinking of Resource Sharing 

Strategies, GAO/HEHS-00-52 (Washington, D.C.: May 17, 2000).



[21] U.S. General Accounting Office, DOD and VA Pharmacy: Progress and 

Remaining Challenges in Jointly Buying and Mailing Out Drugs, GAO-01-

588 (Washington, D.C.: 

May 25, 2001).



[22] Under committed-use contracts, VA commits to using primarily the 

contract drug, instead of other therapeutically interchangeable drugs, 

to guarantee drug companies a high volume of use in exchange for lower 

prices.



[23] Hearing on H.R. 3645 Veterans Health-Care Items Procurement Reform 

and Improvement Act of 2002:, Before the Veterans Affairs Subcommittee 

on Health, 107th Cong. June 26, 2002. 



[24] U.S. General Accounting Office, VA and Defense Health Care: 

Potential Exists for Savings through Joint Purchasing of Medical and 

Surgical Supplies, GAO-02-872T (Washington, D.C.: June 26, 2002).



[25] VA can bill insurers for care it provides to veterans for medical 

conditions not related to service-connected disabilities. Beginning in 

1997, VA was allowed to retain these collections to supplement its 

medical care appropriations.



[26] U.S. General Accounting Office, VA Health Care: VA Has Not 

Sufficiently Explored Alternatives for Optimizing Third-Party 

Collections, GAO-01-1157T (Washington, D.C.: Sept. 20, 2001); U.S. 

General Accounting Office, VA Health Care: Collections Fall Short of 

Expectations, GAO/T-HEHS-99-196 (Washington, D.C.: Sept. 23, 1999).



[27] VA Office of Inspector General, Audit of the Medical Care 

Collection Fund Program (Washington, D.C.: Feb. 26, 2002).



[28] U.S. General Accounting Office, Homeland Security: Need to 

Consider VA’s Role in Strengthening Federal Preparedness, GAO-02-145T 

(Washington, D.C.: Oct. 15, 2001).



[29] Department of Veterans Affairs, Secretary’s Annual Statement 2002-

2003 (Washington, D.C.: December 2002).



[30] Pub. L. No. 107-287, 116 STAT. 204 (2002).



[31] Rating-related claims are primarily original claims for 

compensation and pension benefits and “reopened” claims by veterans.



[32] In its July 1999 Morton decision, the U.S. Court of Appeals for 

Veterans Claims held that VA did not have a duty to assist veterans in 

developing their claims unless they were “well-grounded”--that is, 

enough information was provided for VA to determine that the claim was 

plausible.



[33] Military retirees are eligible for this new benefit if the 

disability (1) was caused by an injury for which they received the 

Purple Heart and which was rated by the military service or VA as 10 

percent disabling or higher, or (2) was service-connected, incurred 

under certain conditions, and rated 60 percent disabling or higher by 

the military service or VA.



[34] U.S. General Accounting Office, Veterans’ Benefits: Claims 

Processing Timeliness Performance Measures Could Be Improved, GAO-03-

282 (Washington, D.C.: Dec. 19, 2002).



[35] This accuracy is based on STAR reviews completed through December 

31, 2002. 



[36] U.S. General Accounting Office, Veterans’ Benefits: Quality 

Assurance for Disability Claims and Appeals Processing Can Be Further 

Improved, GAO-02-806 (Washington, D.C.: Aug. 16, 2002).



[37] U.S. General Accounting Office, SSA and VA Disability Programs: 

Re-Examination of Disability Criteria Needed to Help Ensure Program 

Integrity, GAO-02-597 (Washington, D.C.: Aug. 9, 2002). This report 

also identified claims processing challenges in the Social Security 

Administration.



[38] An integrated IT architecture is a blueprint, consisting of 

logical and technical components, to guide and constrain the 

development and evolution of a collection of related systems. At the 

logical level, the architecture provides a high-level description of an 

organization’s mission, the business functions performed and the 

relationships among them, the information needed to perform the 

functions, and the flow of information among functions. At the 

technical level, the architecture provides the rules and standards 

needed to ensure that the interrelated systems are built to be 

interoperable and maintainable.



[39] U.S. General Accounting Office, Veterans Affairs: Sustained 

Management Attention Is Key to Achieving Information Technology 

Results, GAO-02-703 (Washington, D.C.: June 12, 2002).



[40] Report of the Audit of the Department of Veterans Affairs 

Consolidated Financial Statements for Fiscal Years 2002 and 2001, 

Office of the Inspector General, Report No. 02-02-01638-47 (Washington, 

D.C.: Jan. 22, 2003).



[41] Report of the Audit of the Department of Veterans Affairs 

Consolidated Financial Statements for Fiscal Years 2000 and 1999, 

Office of the Inspector General, Report No. 00-01702-50 (Washington, 

D.C.: Feb. 28, 2001).



[42] U.S. General Accounting Office, Internal Controls: VA Lacked 

Accountability Over Its Direct Loan and Loan Sale Activities, GAO/AIMD-

99-24 (Washington, D.C.: Mar. 24, 1999).



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