Major Management Challenges and Program Risks: Department of Veterans Affairs

Published by the Government Accountability Office on 2003-01-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

               United States General Accounting Office

GAO            Performance and Accountability Series

January 2003
               Major Management
               Challenges and
               Program Risks
               Department of
               Veterans Affairs

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

Budgetary Resources a, b, c                                        Staff Resources b
Dollars in billions                                                FTEs in thousands

    72                                                             220
                                                                          207       206       203      207          207
                                        57        61
    54             52                                              165

    36                                                             110

    18                                                               55

    0                                                                 0
         1998     1999      2000       2001       2002                    1998      1999     2000      2001         2002
         Fiscal year                                                      Fiscal year
Source: Budget of the United States Government.

a Budgetary resources include new budget authority (BA) and unobligated balances of previous BA.

b Budget and staff resources are actuals for FY 1998-2001. FY 2002 are estimates from the FY 2003 budget, which
  are the latest publicly available figures on a consistent basis as of January 2003. Actuals for FY 2002 will be
  contained in the President’s FY 2004 budget to be released in February 2003.
c To ensure consistency, the balances for veterans insurance programs are excluded from the 1998 totals.

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.
                                                    January 2003

                                                    PERFORMANCE AND ACCOUNTABILITY SERIES

                                                    Department of Veterans Affairs
Highlights of GAO-03-110, a report to
Congress included as part of GAO’s
Performance and Accountability Series

In its 2001 performance and                         VA has taken a number of actions to address its management challenges. VA
accountability report on the                        has greatly increased veterans’ access to health care by opening hundreds of
Department of Veterans Affairs                      outpatient clinics. While VA has made some progress in improving disability
(VA), GAO identified management                     claims processing, GAO has added modernizing federal disability programs
challenges related to health care                   to its high-risk list because of fundamental problems with outmoded criteria
quality, access, resource
management, and disability claims
                                                    and the need to address challenges in claims processing. Additional actions
processing. In addition to these                    are needed for VA to successfully overcome other challenges as well.
and other continuing challenges,
VA must now prepare for biological                  •   Ensuring access to quality health care. Although VA has opened
and chemical acts of terrorism. The                     hundreds of outpatient clinics, waiting times are still a significant
information in this report aims to                      problem. To help address this, VA has taken several actions including
sustain congressional attention and                     the introduction of an automated system to schedule appointments. VA
a departmental focus on continuing                      must also better position itself to meet the changing needs of an aging
to make progress in addressing                          veteran population by improving nursing home inspections and
these challenges and ultimately                         increasing access to noninstitutional long-term care services.
overcoming them. This report is
part of a special series of reports
on governmentwide and agency-                       •   Managing resources and workload to enhance health care
specific issues.                                        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,
GAO believes that VA should                             VA needs to improve its process for allocating resources to its 21 health
                                                        care networks to ensure more equitable funding. VA must also seek
• ensure veterans have timely                           additional efficiencies with the Department of Defense, including more
  access to needed health care,                         joint purchasing of drugs and medical supplies.
• aggressively pursue opportunities
  to more efficiently use its health
  care resources,                                   •   Preparing for biological and chemical acts of terrorism.
• establish medical emergency                           Following the attacks of September 11, 2001, VA determined that it
  preparedness centers and carry                        needed to stockpile pharmaceuticals and improve its decontamination
  out other activities to prepare for                   and security capabilities. VA also has new responsibilities to establish
  potential terrorist attacks,                          four medical emergency preparedness centers.
• seek solutions to update its
  disability criteria and continue                  •   Improving veterans’ disability program. VA acted to improve its
  efforts to improve timeliness and                     timeliness and quality of claims processing, but is far from achieving its
  quality of disability claims                          goals. Of greater concern are VA’s outmoded criteria for determining
  decisions, and                                        disability and its capacity to handle the increasing number and
• successfully execute its
                                                        complexity of claims. VA will need to seek solutions to providing
  information technology strategy
  to achieve its vision of providing                    meaningful and timely support to veterans with disabilities.
  seamless service to veterans and
  their families.                                   •   Developing sound departmentwide management strategies to
                                                        build a high-performing organization. Since 1997, VA has spent about
www.gao.gov/cgi-bin/getrpt?GAO-03-110                   $1 billion annually on its information technology. VA has established
To view the full report, click on the link above.
                                                        executive support and is making strides in developing an integrated
For more information, contact Cynthia A.                departmentwide enterprise architecture. To safeguard financial, health
Bascetta, at (202) 512-7101.                            care, and benefits payment information and produce reliable
                                                        performance and workload data, VA must sustain this commitment.

Transmittal Letter                                                                                                1

Major Performance                                                                                                  2

and Accountability

GAO Contacts                                                                                                      35

Related GAO Products                                                                                              36

Performance and                                                                                                   42
Accountability and
High-Risk Series

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                       Page i                                                          GAO-03-110 VA Challenges
United States General Accounting Office
Washington, D.C. 20548
                                                                                           Comptroller General
                                                                                           of the United States

           January 2003                                                                                           T

           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

                                                                                     GAO-03-110 VA Challenges
Major Performance and Accountability

              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. 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

               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.

              Page 2                                                               GAO-03-110 VA Challenges
                      Major Performance and Accountability

                      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.

                           Performance and
                           Accountability Challenges
                               Ensure access to quality health care

                               Manage resources and workload to enhance health care delivery

                               Prepare for biological and chemical acts of terrorism

                               Improve veterans’ disability program

                               Develop sound departmentwide management strategies to build a high-performing

Ensure Access to      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
Quality Health Care   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.

                      Page 3                                                           GAO-03-110 VA Challenges
                            Major Performance and Accountability

More National Action        As part of its effort to “honor and serve veterans in life” and “restore the
Needed to Ensure Veterans   capability of disabled veterans to the greatest extent”—two of the
                            department’s strategic goals—VA has taken significant steps to improve
Have Reasonable Access to   veterans’ access to health care. Reflecting trends in the private sector, VA
Care                        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 2002.2 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.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. 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).5

                             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.
                             President’s Task Force to Improve Health Care Delivery for Our Nation’s Veterans,
                            Interim Report, (Washington, D.C.: July 31, 2002).
                            VA’s medical centers include primary and specialty care clinics.
                             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).

                            Page 4                                                             GAO-03-110 VA Challenges
Major Performance and Accountability

Figure 1: Range of Waiting Times for Patient Care at 54 VA Specialty Clinics
                       0        30        60        90       120        150       180      210      240   270   300







                       0       30      60       90     120      150               180      210      240   270   300
                         Clinic met 30-day waiting times standard
                          Clinic did not meet 30-day waiting times standard
Source: Clinic data provided by VA officials during site visits from November 2000 through March 2001.

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.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.

Page 5                                                                                         GAO-03-110 VA Challenges
                            Major Performance and Accountability

                            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.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.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-    VA must position itself to meet the changing health care needs of an aging
Term Care Needs Attention   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.

                             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).
                             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).

                            Page 6                                                            GAO-03-110 VA Challenges
Major Performance and Accountability

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.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

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.

 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).

Page 7                                                     GAO-03-110 VA Challenges
                              Major Performance and Accountability

                              Figure 2: Number of Facilities Offering Specific Noninstitutional Long-Term Care
                              140 VA facilites offering service









                                                                               alu ic
                                        alt me


                                                                                                                               nti er's


                                                                               ary sed


                                                                 h c ay
                                          alt r/

                                                                                                   nti nit

                                                                             ev riatr


                                      he ake


                                                           he ult d

                                    he ho


                                                                                                ide mu

                                                                                                                            me im

                                                                          pr -ba


                                  me m


                                                                                                                          de lzhe

                                                                                             res Com
                                ho ome





                                VA long-term care service
                                Source: GAO survey of VA facilities; VA headquarters data.

                              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   Hepatitis C is a chronic blood-borne virus that can cause potentially fatal
Could Be Improved             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.

                              Page 8                                                                                   GAO-03-110 VA Challenges
Major Performance and Accountability

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.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.

 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).

Page 9                                                        GAO-03-110 VA Challenges
                              Major Performance and Accountability

Manage Resources and          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.
Workload to Enhance           The department is serving more patients and providing more acute care in
Health Care Delivery          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.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       In fiscal year 1997, VA began allocating most of its medical care
Achieved through Changes      appropriations under the Veterans Equitable Resource Allocation (VERA)
                              system, which aims to provide networks comparable resources for
to VA’s Resource Allocation
                              comparable workloads. Prior to its implementation, VA generally based its
System                        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

                               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.

                              Page 10                                                          GAO-03-110 VA Challenges
Major Performance and Accountability

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 2010.12

  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.

Page 11                                                            GAO-03-110 VA Challenges
Major Performance and Accountability

Figure 3: Growth of Priority 7 Veterans Treated Nationally, Fiscal Years 1996 through
1,200,000 Veterans



 600,000                                                  574,516

 400,000                                       397,230


               1996         1997        1998       1999        2000        2001          2002
            Fiscal years
Source: GAO analysis of VA data.

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

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).

Page 12                                                                   GAO-03-110 VA Challenges
                                                            Major Performance and Accountability

Figure 4: Estimated Change in VERA Allocations from Incorporating 44 Case-Mix Categories and Priority 7 Basic Vested
Veterans Treated, Fiscal Year 2001
            Network                                                                                  In dollars
          1 (Boston)                                                                                                                                     41,360,897

          2 (Albany)                                                       -8,718,416

           3 (Bronx)                                                                                                                                     41,573,159

      4 (Pittsburgh)                                                                                                                             35,767,167

       5 (Baltimore)                                -23,395,750

         6 (Durham)                                                                                               6,757,548

          7 (Atlanta)                                               -13,596,270

      8 (Bay Pines)                                                                                                           14,540,999

       9 (Nashville)                                                                                                                        30,637,119

     10 (Cincinnati)                                                         -7,454,361

    11 (Ann Arbor)                                                                                                     11,133,452

       12 (Chicago)                                                           -6,647,790

  13 (Minneapolis)                                                                                           5,335,814

        14 (Lincoln)                                                                                       4,298,150

   15 (Kansas City)                                                                 -2,041,802

       16 (Jackson)                                                                       -541,935

         17 (Dallas)                                                -12,456,323

       18 (Phoenix)                                   -21,888,405

        19 (Denver)                                                                                      2,735,082

       20 (Portland)         -39,781,854

21 (San Francisco)                                -23,159,943

   22 (Long Beach)                 -$34,456,538

Source: GAO analysis of VA Data.

                                                            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.

                                                            Page 13                                                                        GAO-03-110 VA Challenges
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                             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.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’         The increase in the number of Priority 7 veterans over the past several
Increased Use of VA’s        years has resulted in a greater use of VA’s outpatient pharmacy benefit—a
                             benefit particularly attractive to veterans covered by Medicare because
Outpatient Pharmacy          Medicare does not offer such a benefit. This expanded use has increased
Benefit Has Increased VA’s   VA’s outpatient pharmacy expenditures for Priority 7 veterans from
Outpatient Pharmacy          $178 million to $418 million between fiscal years 1999 and 2001—a growth
Expenditures                 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.

                              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).

                             Page 14                                                       GAO-03-110 VA Challenges
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                              Table 1: Net Expenditures for VA’s Outpatient Pharmacy Benefit Less Drug
                              Copayments, Fiscal Years 1999 through 2001

                              Dollars in millions
                              Net outpatient pharmacy expenditures                         1999             2000            2001
                              Priority 7 veterans                                          $164             $247            $377
                              All other veteransa                                        $1,916           $2,169          $2,458
                              Total                                                      $2,080           $2,417          $2,835
                              Source: GAO analysis of VA data.

                              Note: Numbers in table may not add to total outpatient pharmacy expenditures because of rounding.
                               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   A significant portion of VA’s annual health care budget is spent to operate,
Infrastructure Could Better   maintain, and improve about 4,700 buildings and 18,000 acres of property—
                              including unused and underused hospitals and other facilities. In 1998, we
Meet Veterans’ Health Care
                              reported that in the Chicago area alone, as much as $20 million could be
Needs                         freed up annually if VA served area veterans with three instead of four
                              hospitals.14 We recommended that VA develop and implement a market-
                              based plan for restructuring its delivery of health care.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

                               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,
                               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).

                              Page 15                                                                GAO-03-110 VA Challenges
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                          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).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.17

Expanded Use of           VA’s transformation from an inpatient- to an outpatient-based health care
Alternative Methods for   system has significantly reduced the need for certain patient care support
                          services, such as food and laundry. To make better use of these resources,
Patient Care Support
                          some facilities have consolidated food production locations, used lower-
Services Could Realize    cost Veterans Canteen Service (VCS) workers instead of higher-paid
Additional Savings        Nutrition and Food Service workers, or contracted out food services. VA

                           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).
                            U.S. General Accounting Office, High-Risk Series: Federal Real Property, GAO-03-122
                          (Washington, D.C.: January 2003).

                          Page 16                                                        GAO-03-110 VA Challenges
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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.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.

 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).

Page 17                                                        GAO-03-110 VA Challenges
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VA and DOD Need to             In an effort to save federal health care dollars, VA and DOD have sought
Increase Joint Activities to   ways to work together to gain efficiencies. For example, local VA medical
                               centers and military treatment facilities have entered into agreements to
Maximize Federal Health        exchange inpatient, outpatient, and specialty care services, as well as
Care Resources                 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.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.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

                                The task force issued an interim report in July 2002. Its final report is expected in March
                                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).

                               Page 18                                                           GAO-03-110 VA Challenges
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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.21 In response to our
recommendation, VA and DOD have taken additional action to expand their
use of joint national committed-use contracts.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.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.24 This lack of progress has, in part, been the result

 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).
 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.
 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,
 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).

Page 19                                                        GAO-03-110 VA Challenges
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                            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-   In fiscal year 2002, VA collected $687 million in payments from third-party
standing Performance        insurers—the largest source of revenue to supplement VA’s $21 billion
                            medical care appropriations.25 These funds help pay for veterans’ growing
Problems to Maximize        demand for care.
Third-Party Collections
                            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.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 2001.27 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 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.
                             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).
                             VA Office of Inspector General, Audit of the Medical Care Collection Fund Program
                            (Washington, D.C.: Feb. 26, 2002).

                            Page 20                                                           GAO-03-110 VA Challenges
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                         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   The September 11, 2001, attacks on the World Trade Center and the
                         Pentagon and the dissemination of weaponized anthrax through the U.S.
and Chemical Acts of     mail exposed our nation’s vulnerabilities to terrorism and the need for
Terrorism                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.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.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.

                          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).
                          Department of Veterans Affairs, Secretary’s Annual Statement 2002-2003 (Washington,
                         D.C.: December 2002).

                         Page 21                                                       GAO-03-110 VA Challenges
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                     The Department of Veterans Affairs Emergency Preparedness Act of 2002
                     also created new requirements for VA.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’    VA expects to provide about $25 billion in disability compensation and
                     pension benefits to over 3 million veterans, family members, and survivors
Disability Program   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,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

                          Pub. L. No. 107-287, 116 STAT. 204 (2002).
                      Rating-related claims are primarily original claims for compensation and pension benefits
                     and “reopened” claims by veterans.

                     Page 22                                                         GAO-03-110 VA Challenges
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                          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   While VA has made some progress in improving production and reducing
Long-Term Challenges to   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
Improving Timeliness
                          (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

                          Table 2: Changes in VA’s Workload of Rating-Related Claims, Fiscal Years 1997 to

                                                                           Rating-related compensation and pension claims
                                                                                                                 End of year
                          Fiscal year                                            Received       Completed         inventory
                          1997                                                     740,052          701,717          213,193
                          1998                                                     691,461          663,400          241,254
                          1999                                                     639,070          630,145          250,179
                          2000                                                     578,773          601,451          227,501
                          2001                                                     674,219          481,117          420,603
                          2002                                                     721,727          796,814          345,516
                          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.

                          Page 23                                                                    GAO-03-110 VA Challenges
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Figure 5: Average Days to Complete Rating-Related Claims, Fiscal Years 1999 to
250 Average days

       166                                                 165




       1999     2000           2001          2002   2002   2003    2003
      Fiscal year                                                  Last


 Source: Veterans Benefits Administration.

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.

Page 24                                                                     GAO-03-110 VA Challenges
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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.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.33 The effect of this legislation on VA’s workload is not yet

 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.
 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.

Page 25                                                               GAO-03-110 VA Challenges
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                               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.34

Effect of Efforts to Improve   Since VA began its Systematic Technical Accuracy Review (STAR) program
Quality Are Not Yet Known      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 decisions35—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.

                                U.S. General Accounting Office, Veterans’ Benefits: Claims Processing Timeliness
                               Performance Measures Could Be Improved, GAO-03-282 (Washington, D.C.: Dec. 19, 2002).
                                    This accuracy is based on STAR reviews completed through December 31, 2002.

                               Page 26                                                         GAO-03-110 VA Challenges
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                              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.36

Reexamination of Disability   Of greater concern is VA’s use of outmoded criteria for determining
Criteria Needed               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

                              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.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’

                               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).
                               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.

                              Page 27                                                           GAO-03-110 VA Challenges
                              Major Performance and Accountability

                              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                 VA faces additional challenges in several areas critical to building a high-
                              performing organization: budget formulation and execution, information
Departmentwide                technology, and financial management. To meet its strategic goal of
Management Strategies         creating “One VA”—an environment that fosters the delivery of seamless
                              service to veterans and their families—VA has begun to address some of
to Build a High-              these issues through its plans to implement an IT framework that supports
Performing                    the integration of information across the department and to continue to
Organization                  achieve unqualified audit opinions on its annual financial statements.

VA Needs to More Closely      Establishing a close link between budgeting and planning is essential to
Link Its Health Care Budget   instilling a greater focus on results. While VA’s health care budget
                              formulation and planning processes are centrally managed, they are not
Formulation and Planning
                              closely linked. VA’s annual performance plan describes the department’s
Processes                     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

                              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

                              Page 28                                                  GAO-03-110 VA Challenges
                         Major Performance and Accountability

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

                          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.

                         Page 29                                                            GAO-03-110 VA Challenges
Major Performance and Accountability

networks, and sensitive health and benefits data from vulnerabilities and

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.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.

 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,

Page 30                                                       GAO-03-110 VA Challenges
                                               Major Performance and Accountability

Table 3: Status of IT Challenges Facing VA

Challenge                                                             Status
IT investment management
Sound IT investment management requires maximizing the value          In 2002, as part of its enterprise architecture development effort, VA
and return on IT investments and mitigating associated risks.         (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
Integrated business process reengineering
Before making major IT investments, agencies are required under       In September 2002, VA completed version 1.0 of its
the Clinger-Cohen Act to analyze their missions and revise and        departmentwide enterprise architecture. The document identified
improve mission-related and administrative processes accordingly.     the business process reengineering opportunities in VA’s
To do this, agencies should have an overall business process          registration and eligibility and contact management functions, but it
improvement strategy—one that coordinates and integrates              does not provide specifics on how these functions may be
ongoing reengineering and improvement projects, sets priorities,      reengineered. Therefore, VA has not yet developed an overall
and makes appropriate budget decisions.                               business process improvement strategy.
Integrated IT architecture
In achieving the department’s strategic and IT goals, CIOs are        In 2001, VA initiated an effort to develop a departmentwide
charged with implementing an architecture that will provide a         enterprise architecture. In September 2002, VA completed its first
framework for evolving or maintaining existing IT and for acquiring   version of this architecture, containing high-level elements of the
new IT.                                                               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”
Tracking IT expenditures
A uniform mechanism for tracking IT expenditures allows agencies      Although VA Directive 6000 and VA’s capital investment guide
to make informed decisions on whether to modify, accelerate, or       require it to maintain complete and accurate cost data for IT
discontinue projects.                                                 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.
Assessing IT performance
The Clinger-Cohen Act requires executive branch agencies to        While VA’s fiscal year 2003 performance plan identified IT initiatives
establish performance measures that relate to how well IT supports for improving claims processing quality and timeliness, it did not
their programs.                                                    include performance goals. Without such goals, it will be difficult to
                                                                   assess the performance of these initiatives.

                                               Page 31                                                            GAO-03-110 VA Challenges
                                               Major Performance and Accountability

(Continued From Previous Page)
Challenge                                                              Status
Computer security
VA also needs to implement appropriate security measures to            Since September 1998, we and VA’s IG have reported on VA’s
ensure that financial, health care, and benefits payment information   computer security weaknesses, which continue to place financial,
is not at risk of inadvertent or deliberate misuse, fraud, improper    health care, and benefits payment information at risk of misuse,
disclosure, or destruction.                                            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
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

                                               Page 32                                                            GAO-03-110 VA Challenges
                         Major Performance and Accountability

Financial Management     In December 2002, VA’s independent auditor issued an unqualified audit
Enhancements Needed to   opinion on VA’s consolidated financial statements for fiscal years 2002 and
                         2001.40 However, the unqualified opinion was achieved, for the most part,
Correct Material         through extensive efforts of both program and financial management staff
Deficiencies             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.41 VA
                         also continued to make progress in implementing recommendations from
                         our March 1999 report42 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.

                          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).
                          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).
                          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).

                         Page 33                                                         GAO-03-110 VA Challenges
Major Performance and Accountability

• 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.

Page 34                                                GAO-03-110 VA Challenges
GAO Contacts

               Subject(s) covered in this report            Contact person
               Ensuring access to quality health care       Cynthia A. Bascetta
                                                            Director, Health Care—Veterans’ Health
               Managing resources and workload to           and Benefits Issues
               enhance health care delivery                 (202) 512-7101
               Preparing for biological and chemical acts
               of terrorism

               Improving veterans’ disability program
               Linking budget formulation and               Paul L. Posner
               performance planning processes               Managing Director, Federal Budget
                                                            Analysis, Strategic Issues
                                                            (202) 512-9573
               Overcoming information technology            Joel C. Willemssen
               challenges                                   Managing Director, Information Technology
                                                            (202) 512-6253

                                                            Robert F. Dacey, Director
                                                            Information Security Issues
                                                            Information Technology
                                                            (202) 512-3317
               Enhancing financial management to correct McCoy Williams
               material deficiencies                     Director, Financial Management and
                                                         (202) 512-6906

               Page 35                                                        GAO-03-110 VA Challenges
Related GAO Products

Ensure Access to Quality   VA Long-Term Care: Implementation of Certain Millennium Act
Health Care                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,

Manage Resources and       VA Health Care: Improved Planning Needed for Management of Excess
Workload to Enhance        Real Property. GAO-03-326. Washington, D.C.: January 29, 2003.
Health Care Delivery
                           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.

                           Page 36                                            GAO-03-110 VA Challenges
Related GAO Products

VA and DOD Health Care: Factors Contributing to Reduced Pharmacy
Costs and Continuing Challenges. GAO-02-969T. Washington, D.C.: July 22,

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,

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.

Page 37                                            GAO-03-110 VA Challenges
                               Related GAO Products

                               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,

Prepare for Biological and     Homeland Security: Need to Consider VA’s Role in Strengthening Federal
Chemical Acts of Terrorism     Preparedness. GAO-02-145T. Washington, D.C.: October 15, 2001.

Improve Veterans’ Disability   Veterans’ Benefits: Claims Processing Timeliness Performance Measures
Program                        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.

                               Page 38                                            GAO-03-110 VA Challenges
                           Related GAO Products

                           Veterans’ Benefits: Veterans Have Mixed Views on a Lump Sum
                           Disability Payment Option. GAO-01-172. Washington, D.C.: December 18,

                           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,

                           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,

                           Veterans’ Benefits: Effective Interaction Needed Within VA to Address
                           Appeals Backlog. GAO/HEHS-95-190. Washington, D.C.: September 27,

                           Veterans’ Benefits: VA Can Prevent Millions in Compensation and
                           Pension Overpayments. GAO/HEHS-95-88. Washington, D.C.: April 28,

Develop Sound              Managing For Results: Efforts to Strengthen the Link Between Resources
Departmentwide             and Results at the Veterans Health Administration. GAO-03-10.
                           Washington, D.C.: December 10, 2002.
Management Strategies to
Build a High-Performing    VA Information Technology: Management Making Important Progress in
Organization               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,

                           Page 39                                            GAO-03-110 VA Challenges
Related GAO Products

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,

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.

Page 40                                            GAO-03-110 VA Challenges
Related GAO Products

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.

Page 41                                          GAO-03-110 VA Challenges
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.

              Major Management Challenges and Program Risks: Department of
              Transportation. GAO-03-108.

              Page 42                                         GAO-03-110 VA Challenges
Performance and Accountability and High-
Risk Series

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.

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.

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

Page 43                                          GAO-03-110 VA Challenges
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