oversight

VA/DOD Federal Health Care Center: Costly Information Technology Delays Continue and Evaluation Plan Lacking

Published by the Government Accountability Office on 2012-06-26.

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

                             United States Government Accountability Office

GAO                          Report to Congressional Committees




June 2012
                             VA/DOD FEDERAL
                             HEALTH CARE
                             CENTER
                             Costly Information
                             Technology Delays
                             Continue and
                             Evaluation Plan
                             Lacking


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GAO-12-669
                                               June 2012

                                               VA/DOD FEDERAL HEALTH CARE CENTER
                                               Costly Information Technology Delays Continue and
                                               Evaluation Plan Lacking
Highlights of GAO-12-669, a report to
congressional committees




Why GAO Did This Study                         What GAO Found
The NDAA for Fiscal Year 2010                  Officials at the Department of Veterans Affairs (VA) and Department of Defense
authorized VA and DOD to establish a           (DOD) Captain James A. Lovell Federal Health Care Center (FHCC) have
5-year demonstration to integrate VA           continued to make progress implementing provisions of the Executive
and DOD medical care into a first-of-          Agreement’s 12 integration areas, but delays in the information technology (IT)
its-kind FHCC in North Chicago,                area have proven costly. Specifically, for 6 integration areas, all provisions have
Illinois. Expectations for the FHCC are        been implemented. Some of these areas were implemented at the time of GAO’s
outlined in the Executive Agreement            2011 report, including establishing the facility’s governance structure and patient
signed by VA and DOD in April 2010.            priority system, while 2 areas—quality assurance and contingency planning—
The NDAA for Fiscal Year 2010, as              were more recently implemented. In addition, 5 integration areas, such as
amended by the NDAA for Fiscal Year            property and fiscal authority, remain in progress. However, as previously
2012, directed GAO to report on the            reported by GAO, there have been delays implementing 1 of the integration
FHCC demonstration in 2011, 2012,              areas—IT—which have resulted in additional costs for the FHCC, although the
and 2015. This is the second of the            FHCC has been unable to quantify the total costs resulting from these delays.
three reports and examines (1) to what         Despite an investment of more than $122 million for IT capabilities at the FHCC,
extent VA and DOD have continued to            VA and DOD have not completed work on all components required by the
implement the Executive Agreement to           Executive Agreement, which were to have been in place in time for the FHCC’s
establish and operate the FHCC and             opening in October 2010. These delays have resulted in additional costs and
(2) what plan, if any, VA and DOD              administrative burden for the FHCC because of the need for workarounds to
have to assess the provision of care           address them. There also are other IT capabilities required by the Executive
and operations of the FHCC.
                                               Agreement that are ill-defined and for which plans have not been established.
To conduct its work, GAO reviewed
                                               Although they are required by the National Defense Authorization Act (NDAA) for
FHCC documents; interviewed VA,
DOD, and FHCC officials; and                   Fiscal Year 2010 to assess the FHCC at the end of the 5-year demonstration, VA
reviewed related GAO work.                     and DOD officials said the departments have not yet established an evaluation
                                               plan. Officials told GAO that in addition to the performance data already being
What GAO Recommends                            collected from 15 integration benchmarks established by the Executive
                                               Agreement, the departments also expect to consider other factors; however,
GAO recommends that VA and DOD
                                               these factors, which may include performance measures, have not yet been
(1) determine the costs associated with
the workarounds required because of
                                               established. VA and DOD officials also have not yet established the standards,
delays in implementing IT capabilities         such as target scores for the benchmarks, the departments will use to evaluate
laid out in the FHCC Executive                 FHCC performance. GAO has previously found that well-defined measures and
Agreement; (2) develop plans with              standards are essential to a sound evaluation plan. Furthermore, without VA and
clear definitions, specifications,             DOD agreement on the measures and standards, FHCC leadership is unable to
deliverables, and time frames for IT           track progress and make any midcourse adjustments to improve performance in
capabilities required by the Executive         areas VA and DOD have determined are necessary for the FHCC’s success.
Agreement but not yet defined;                 Although including measures of FHCC costs in the evaluation would be
 (3) develop and agree to an evaluation        consistent with the FHCC’s purpose, VA and DOD departmental priorities, and
plan, to include all performance               federal financial accounting standards, no such cost measures have been
measures and standards to be used in           established for evaluating the FHCC.
evaluating the FHCC demonstration;
and (4) establish measures related to
the cost-effectiveness of the FHCC as
part of their evaluation. VA and DOD
generally concurred and noted steps to
address GAO’s recommendations.
View GAO-12-669. For more information,
contact Debra A. Draper at (202) 512-7114 or
draperd@gao.gov.

                                                                                       United States Government Accountability Office
Contents


Letter                                                                                       1
               Background                                                                    4
               Further Progress Has Been Made Implementing the Executive
                 Agreement, but Costly IT Delays and Lack of MTF Designation
                 Continue to Pose Challenges                                                 9
               VA and DOD Have Not Yet Established a Plan for Evaluating the
                 FHCC Demonstration                                                        19
               Conclusions                                                                 22
               Recommendations for Executive Action                                        23
               Agency Comments and Our Evaluation                                          24

Appendix I     Federal Health Care Center Integration Benchmarks, by Number
               of Reported Measures                                                        28



Appendix II    Comments from the Department of Defense                                     29



Appendix III   Comments from the Department of Veterans Affairs                            36



Appendix IV    GAO Contact and Staff Acknowledgments                                       44



Tables
               Table 1: Key Provisions of Federal Health Care Center (FHCC)
                        Executive Agreement Integration Areas                                6
               Table 2: Federal Health Care Center (FHCC) Executive
                        Agreement—Status of Key Provisions of Currently
                        Implemented Integration Areas                                      12
               Table 3: Federal Health Care Center (FHCC) Executive
                        Agreement—Status of Key Provisions of Currently In
                        Progress Integration Areas                                         14




               Page i                   GAO-12-669 VA and DOD Federal Health Care Center Update
Figures
          Figure 1: Federal Health Care Center (FHCC) Oversight Structure                           8
          Figure 2: Status of Federal Health Care Center (FHCC)
                   Implementation of Provisions for the 12 Executive
                   Agreement Integration Areas, as of May 2012                                      10




          Abbreviations

          DOD               Department of Defense
          FHCC              Federal Health Care Center
          HEC               Health Executive Council
          IT                information technology
          JEC               Joint Executive Council
          MTF               military treatment facility
          NCVAMC            North Chicago Veterans Affairs Medical Center
          NDAA              National Defense Authorization Act
          NHCGL             Naval Health Clinic Great Lakes
          VA                Department of Veterans Affairs



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          Page ii                         GAO-12-669 VA and DOD Federal Health Care Center Update
United States Government Accountability Office
Washington, DC 20548




                                   June 26, 2012

                                   Congressional Committees

                                   The Departments of Veterans Affairs (VA) and Defense (DOD) expanded
                                   their efforts to share health care resources in 2010 following
                                   congressional authorization of a 5-year demonstration to more fully
                                   integrate VA and DOD facilities located in proximity to one another in the
                                   North Chicago, Illinois, area. As authorized by the National Defense
                                   Authorization Act (NDAA) for Fiscal Year 2010 (NDAA 2010), VA and
                                   DOD facilities in and around North Chicago were integrated into a first-of-
                                   its-kind system known as the Captain James A. Lovell Federal Health
                                   Care Center (FHCC). Although DOD and VA have shared resources at
                                   some level since the 1980s, 1 the FHCC is unique in that it is the first fully
                                   integrated federal health care center for use by both VA and DOD
                                   beneficiaries, 2 with an integrated workforce, a joint funding source, and a
                                   single line of governance. In addition to delivering integrated health care
                                   services to both VA and DOD beneficiaries, this unprecedented
                                   partnership is expected to offer lessons for decision makers about
                                   whether this is a model of care that might be effective if replicated at other
                                   VA and DOD locations. Among other things, the NDAA 2010 requires the
                                   Secretaries of VA and Defense to submit a report to the House and
                                   Senate Committees on Armed Services and Veterans’ Affairs by October
                                   2015, the year in which the demonstration ends, to include an
                                   assessment of the demonstration and a recommendation as to whether
                                   the FHCC should continue. 3

                                   VA and DOD signed an Executive Agreement in April 2010 that outlined
                                   the FHCC’s structure. Beginning October 1, 2010, the new structure
                                   integrated services previously provided by the former North Chicago VA


                                   1
                                    The Veterans’ Administration and Department of Defense Health Resources Sharing and
                                   Emergency Operations Act was enacted in 1982. See 38 U.S.C. § 8111. The Department
                                   of Veterans Affairs was previously known as the Veterans Administration.
                                   2
                                    VA beneficiaries include veterans of military service and certain dependents and
                                   survivors; DOD beneficiaries include active duty servicemembers and their dependents,
                                   medically eligible National Guard and Reserve servicemembers and their dependents,
                                   and military retirees and their dependents and survivors. Active duty personnel include
                                   Reserve component members on active duty for at least 30 days.
                                   3
                                    See Pub. L. No. 111-84, § 1701(d), 123 Stat. 2190, 2568 (2009).




                                   Page 1                         GAO-12-669 VA and DOD Federal Health Care Center Update
Medical Center (NCVAMC) and its community-based outpatient clinics
and the Naval Health Clinic Great Lakes (NHCGL) and its associated
clinics, as well as services provided by a new ambulatory care center
constructed by DOD. 4 The FHCC reported providing care to more than
86,000 patients in its first year of operation (October 2010 through
September 2011), including about 25,000 veterans and 59,000 DOD
beneficiaries, including Navy recruits. 5

NDAA 2010, as amended by the NDAA for Fiscal Year 2012 (NDAA
2012), requires that we review and assess the progress made in
implementing the Executive Agreement and the effects of the agreement
on the provision of care and operation of the facility, and issue reports
based on those assessments in 2011, 2012, and 2015. 6 We first reported
in July 2011 7 on the status of the FHCC’s integration efforts and found
that for the 12 integration areas defined in the Executive Agreement, 8
4 had been implemented, 7 were in progress, and 1—information
technology (IT) integration—was delayed. We also found weaknesses in
the tool created to collect and report performance results and
recommended that the FHCC reexamine its process for assessing and
reporting performance to ensure accurate and meaningful information. In
addition, we recommended that DOD seek a legislative change to
designate the FHCC as a military treatment facility (MTF) to eliminate the
need for burdensome workarounds to address several administrative




4
 The NHCGL includes a main clinic and three branch clinics that provide health care
services to Navy recruits, as well as active duty personnel and their families.
5
 In addition to veterans and DOD beneficiaries, the FHCC reported providing care to
approximately 2,000 other patients, including FHCC employees.
6
 NDAA 2010—Pub. L. No. 111-84, § 1701(e), 123 Stat. 2190, 2568 (2009)—required
GAO to report annually beginning in 2011; NDAA 2012—Pub. L. No. 112-81, § 1098,
125 Stat. 1298, 1609 (2011)—amended that reporting requirement to include reports in
2011, 2012, and 2015.
7
 GAO, VA and DOD Health Care: First Federal Health Care Center Established, but
Implementation Concerns Need to Be Addressed, GAO-11-570 (Washington, D.C.:
July 19, 2011).
8
 The 12 integration areas are (1) governance structure, (2) access to health care at the
FHCC, (3) research, (4) contracting, (5) quality assurance, (6) integration benchmarks,
(7) property (i.e., construction and physical plant management), (8) reporting
requirements, (9) workforce management and personnel, (10) contingency planning,
(11) fiscal authority, and (12) information technology.




Page 2                          GAO-12-669 VA and DOD Federal Health Care Center Update
challenges that arose because the FHCC lacked such a designation. 9
Specifically, we reported that the FHCC encountered challenges in the
areas of managing beneficiary co-payments, contracting to meet
temporary staffing needs, using drug pricing arrangements, and clarifying
providers’ authority to sign medical readiness forms for active duty Navy
servicemembers.

In this second required report, we address the following questions:

1. To what extent have VA and DOD continued to implement the
   Executive Agreement to establish and operate the FHCC?

2. What plan, if any, do VA and DOD have to assess the provision of
   care and operations of the FHCC?

To determine the extent to which VA and DOD have continued to make
progress in establishing and operating the FHCC, we examined the 12
integration areas (and the provisions within each area) outlined in the
Executive Agreement and assessed the FHCC’s progress in meeting
them. Specifically, we reviewed VA and DOD policies pertaining to FHCC
operations; meeting minutes documenting discussions of FHCC, VA, and
DOD officials about patient care and operations; and financial planning
documents, such as the operating plan and budget. 10 For the areas we
noted in our prior report as having been implemented, we reexamined
these for any changes that might affect their current status. We also
reviewed our earlier work, including our first report on implementation
progress, and a separate 2011 report specifically examining IT
capabilities and planning for the FHCC integration. 11 In addition, we
interviewed officials at VA, DOD, and the FHCC about continued progress
in establishing and operating the FHCC.




9
 According to DOD policy, an MTF is a medical facility, owned and operated by DOD,
established for the purpose of furnishing medical care, dental care, or both to eligible
individuals.
10
  In the area of financial systems, we did not perform a financial audit of the FHCC, but
rather assessed its progress in establishing and operating a model for joint funding.
11
  See GAO-11-570, and GAO, Electronic Health Records: DOD and VA Should Remove
Barriers and Improve Efforts to Meet Their Common System Needs, GAO-11-265
(Washington, D.C.: Feb. 2, 2011).




Page 3                           GAO-12-669 VA and DOD Federal Health Care Center Update
             To determine what plan, if any, VA and DOD have to assess the provision
             of care and operations of the FHCC, we interviewed officials at the FHCC,
             VA, and DOD regarding the provision of care and operations, standards
             used to measure and assess performance, and plans to evaluate and
             report results. We also reviewed relevant documents that describe the
             plans for measuring the FHCC’s performance in delivering care to
             patients and for assessing the operations in support of care delivery. In
             addition, we examined best practices for program evaluation, mainly
             within federal agencies, including some specific to demonstrations. 12

             We conducted this performance audit from November 2011 to June 2012
             in accordance with generally accepted government auditing standards.
             Those standards require that we plan and perform the audit to obtain
             sufficient, appropriate evidence to provide a reasonable basis for our
             findings and conclusions based on our audit objectives. We believe that
             the evidence obtained provides a reasonable basis for our findings and
             conclusions based on our audit objectives.


             VA and DOD have a long-standing history of sharing health care
Background   resources to provide services to their beneficiaries. However, the FHCC
             is unique among VA and DOD collaborations to deliver health care
             services in several ways, notably its level of integration, the way it is
             funded, and its governance structure. The Executive Agreement, signed
             by the Secretaries of both departments, contains provisions to be met in
             12 integration areas regarding specific aspects of FHCC operations,
             including establishing a governance structure and combining VA and
             DOD staff into a single, joint workforce. The FHCC’s leadership remains
             directly accountable to VA and DOD individually, through formal reporting
             relationships, and jointly, through oversight and advisory entities
             comprising VA and DOD officials.




             12
              GAO, Limitations in DOD’s Evaluation Plan for EEO Complaint Pilot Program Hinder
             Determination of Pilot Results, GAO-08-387R (Washington, D.C.: Feb. 22, 2008), and Tax
             Administration: IRS Needs to Strengthen Its Approach for Evaluating the SRFMI Data-
             Sharing Pilot Program, GAO-09-45 (Washington, D.C.: Nov. 7, 2008).




             Page 4                        GAO-12-669 VA and DOD Federal Health Care Center Update
FHCC Established a New        VA and DOD have been authorized since the 1980s to enter into sharing
Level of Sharing for VA and   agreements with each other to improve access to, and the quality and
DOD                           cost-effectiveness of, health care provided by the two departments. Since
                              that time, VA and DOD have entered into a number of sharing
                              agreements to provide services—such as emergency, specialty, inpatient,
                              and outpatient care—to VA and DOD beneficiaries and to reimburse one
                              another for the cost of such services. Starting in the 1990s, VA and DOD
                              expanded their sharing efforts to include “joint ventures”—locations where
                              sharing agreements are in place that encompass multiple health care
                              services for VA and DOD beneficiaries. The FHCC is one of 10 joint
                              venture locations across the country. 13

                              The October 2010 launch of the FHCC demonstration established a new
                              level of sharing and integration for VA and DOD. Specifically, the FHCC is
                              unique among other VA and DOD joint ventures in three key ways:

                              1. The FHCC’s integration of the provision of care and operations
                                 represents the highest level of collaboration among the 10 VA and
                                 DOD joint ventures. For example, the FHCC has a more integrated
                                 staffing structure than any other joint venture site.

                              2. The FHCC has a joint funding source, to which VA and DOD
                                 contribute, unlike the other joint venture sites, which each have
                                 separate VA and DOD funding sources. NDAA 2010 established the
                                 Joint DOD-VA Medical Facility Demonstration Fund (Joint Fund) as
                                 the funding mechanism for the FHCC, with VA and DOD both making
                                 transfers to the Joint Fund from their respective appropriations. 14

                              3. The FHCC operates under a single line of governance to manage
                                 medical and dental care, and has an integrated workforce of
                                 approximately 3,100 civilian and active duty military employees from


                              13
                                The other nine joint venture locations are Anchorage, Alaska; Fairfield, California; Key
                              West, Florida; Honolulu, Hawaii; Las Vegas, Nevada; Albuquerque, New Mexico; Biloxi,
                              Mississippi; Charleston, South Carolina; and El Paso, Texas. Charleston became the
                              newest joint venture when it was added in 2011.
                              14
                                The Consolidated Appropriations Act, 2012 provided funds for VA and DOD to transfer
                              to the Joint Fund for fiscal year 2012. Pub. L. No. 112-74, div. A, § 8104, div. H, §§ 224,
                              225, 125 Stat. 786, 830-31, 1158 (2011). Prior to the enactment of the Department of
                              Defense and Full-Year Continuing Appropriations Act, 2011, the FHCC received funding
                              from VA and DOD through an alternative funding mechanism outlined in the Executive
                              Agreement.




                              Page 5                           GAO-12-669 VA and DOD Federal Health Care Center Update
                                             both VA and DOD. 15 None of the other joint venture sites have
                                             integrated governance structures; rather, they maintain separate VA
                                             and DOD lines of authority.


Executive Agreement                     In April 2010, the Secretaries of VA and Defense signed the Executive
                                        Agreement that established the FHCC and defined the relationship
                                        between VA and DOD for operating the new, integrated facility, in
                                        accordance with NDAA 2010. The Executive Agreement contained
                                        provisions in 12 integration areas regarding specific aspects of FHCC
                                        operations (see table 1).

Table 1: Key Provisions of Federal Health Care Center (FHCC) Executive Agreement Integration Areas

Integration area                      Key provisions
Governance structure                  FHCC leadership structure and advisory bodies
Access to health care at the FHCC     Patient priority system and eligibility of members of the uniformed services for care
Research                              Institutional Review Board approval and policy for the protection of human subjects
Contracting                           Departments of Veterans Affairs (VA) and Defense (DOD) responsibility for contracting
                                      support
Quality assurance                     Accreditation and oversight from external entities and credentialing and privileging of health
                                      care providers
Contingency planning                  Emergency and disaster management and security
Integration benchmarks                Completion of 15 integration benchmarks may occur before 2015
Property                              Construction, transfer of property, and physical plant management
Reporting requirements                VA and DOD reports to congressional committees and Comptroller General reviews
Workforce management and personnel    Staffing, training, and the transfer of DOD civilian personnel to VA
Fiscal authority                      Budgeting, joint funding authority, and reconciliation
Information technology (IT)           Administrative and clinical IT, including efforts to achieve interoperability between VA and
                                      DOD systems
                                        Source: GAO.



                                        Each of the 12 integration areas contains a number of specific provisions
                                        describing how the FHCC should be jointly operated by VA and DOD.
                                        Some provisions have designated deadlines, while others do not. For
                                        example, within the IT integration area, the Executive Agreement included
                                        provisions identifying three specific IT capabilities that VA and DOD were



                                        15
                                          This 3,100-employee figure is an FHCC estimate including civilian employees, active
                                        duty servicemembers, and contractors.




                                        Page 6                           GAO-12-669 VA and DOD Federal Health Care Center Update
                 to have in place by opening day of the FHCC, October 1, 2010 (for
                 example, medical single sign-on, which would allow staff to use one
                 screen to access both the VA and DOD electronic health record systems)
                 while other provisions (such as those for financial management and
                 outpatient appointment enhancement solutions) had no scheduled due
                 dates.


FHCC Oversight   As established in the Executive Agreement, the FHCC’s leadership and
                 workforce remain directly accountable to both VA and DOD (see fig. 1).
                 The FHCC Director, a VA executive, is accountable to VA for the
                 fulfillment of the FHCC mission, while the Deputy Director and
                 Commanding Officer, a Navy Captain, is accountable to DOD. In addition,
                 the Joint Executive Council (JEC) and the Health Executive Council
                 (HEC) provide oversight for all of the joint ventures, including the FHCC.
                 The JEC is made up of senior VA and DOD officials and provides broad
                 strategic direction for collaboration and resource sharing between the two
                 departments. The HEC, a sub-council of the JEC, provides oversight for
                 the specific cooperative efforts of each department’s health care
                 organizations—VA’s Veterans Health Administration and DOD’s Military
                 Health System. The HEC has organized itself into a number of work
                 groups to carry out its work and focus on specific high-priority areas of
                 national interest.




                 Page 7                    GAO-12-669 VA and DOD Federal Health Care Center Update
Figure 1: Federal Health Care Center (FHCC) Oversight Structure




Notes: Since our 2011 report, the FHCC Advisory Board has become a working group of the Health
Executive Council, formalizing its reporting relationship. Some oversight of the FHCC within VA is
conducted by Veterans Integrated Service Network 12 and within DOD by the U.S. Navy Bureau of
Medicine and Surgery.


The FHCC Advisory Board, a HEC workgroup co-chaired by and
comprising senior officials from VA and DOD, was created specifically to
provide guidance and support to FHCC leaders and to resolve issues that
arise at the FHCC. The Advisory Board provides guidance for the
integration and operations of the facility, including monitoring the FHCC’s
performance and advising on issues related to strategic direction,
mission, vision, and policy. It also serves as a communication link
between the FHCC and VA and DOD executive leadership by reporting
on FHCC activities to the HEC. FHCC issues that are not able to be



Page 8                             GAO-12-669 VA and DOD Federal Health Care Center Update
                        resolved by the Advisory Board are elevated to the HEC for final
                        resolution. The Stakeholders Advisory Council also provides feedback on
                        how well the FHCC is meeting customers’ needs and VA and DOD
                        missions. The Stakeholders Advisory Council is made up of members
                        from various regional and local organizations representing FHCC
                        interests, including representation from local government, TRICARE, and
                        two nearby VA medical facilities.


                        Eleven of 12 integration areas are now either “implemented” or “in
Further Progress Has    progress.” The remaining integration area, IT, remains “delayed,” as it
Been Made               was at our last review, resulting in costly and time-consuming
                        workarounds. DOD’s decision not to seek an MTF designation for the
Implementing the        FHCC, as we had recommended in our July 2011 report, has resulted in
Executive Agreement,    continued implementation challenges. 16
but Costly IT Delays
and Lack of MTF
Designation Continue
to Pose Challenges
All but 1 of the 12     FHCC officials have implemented or made progress implementing 11 of
Executive Agreement     the 12 Executive Agreement integration areas. Specifically, FHCC
Integration Areas Are   officials have implemented 6 integration areas, meaning all associated
                        provisions in the Executive Agreement have been met. Five of the
Implemented or In       integration areas are in progress, meaning some, but not all, associated
Progress                provisions have been met, with FHCC officials maintaining or making
                        additional progress meeting the provisions in each integration area. The
                        1 integration area not implemented or in progress is IT, which is delayed,
                        meaning at least one provision had a deadline provided in the Executive
                        Agreement that was not met. This integration area is discussed in more
                        detail later in this report. (See fig. 2.)




                        16
                         See GAO-11-570.




                        Page 9                    GAO-12-669 VA and DOD Federal Health Care Center Update
Figure 2: Status of Federal Health Care Center (FHCC) Implementation of Provisions for the 12 Executive Agreement
Integration Areas, as of May 2012




                                        Note: Integration areas that are categorized as “implemented” are areas in which all the identified
                                        provisions in the Executive Agreement have been completed, those categorized as “in progress” are
                                        areas in which at least one provision has not been completed, and those categorized as “delayed” are
                                        areas in which at least one provision had not met a deadline provided in the Executive Agreement.
                                        a
                                         In our prior review conducted in 2011, the status of this integration area was “in progress.”


Six Integration Areas Are               FHCC officials have implemented all provisions in 6 of the 12 Executive
Implemented                             Agreement integration areas. Of these 6, 4 were integration areas we
                                        previously reported as implemented: (1) governance structure, (2) access
                                        to health care at the FHCC, (3) research, and (4) contracting. The two
                                        other implemented integration areas, quality assurance and contingency
                                        planning, moved from in progress at the time of our last review to
                                        implemented in this review. Integration areas we previously reported as
                                        implemented have remained in that status by maintaining activities or
                                        policies that meet the associated provisions in the Executive Agreement.



                                        Page 10                              GAO-12-669 VA and DOD Federal Health Care Center Update
For example, in the area of governance structure, the Stakeholders
Advisory Council meets quarterly as required by the Executive Agreement
and in another integration area, research, existing policies remain in
place. Since our 2011 report, the FHCC met two additional required
provisions for the quality assurance integration area: (1) officials obtained
accreditation for the integrated facility by relevant external accrediting
bodies—the Commission on Accreditation of Rehabilitation Facilities, and
The Joint Commission 17—and (2) FHCC officials reviewed the FHCC’s
policy on professional practices. 18 In addition, FHCC officials have
established a formal agreement to outline the jurisdiction of VA and DOD
related to the security program for the FHCC campus, as the Executive
Agreement requires. (See table 2.)




17
  The Commission on Accreditation of Rehabilitation Facilities and The Joint Commission
are independent organizations that accredit health care organizations and programs.
18
  The FHCC is required by the Executive Agreement to review its policy on professional
practices, which deals with staff certification and training, 1 year after the FHCC became
operational to determine if it meets the Navy and FHCC mission requirements.




Page 11                         GAO-12-669 VA and DOD Federal Health Care Center Update
Table 2: Federal Health Care Center (FHCC) Executive Agreement—Status of Key Provisions of Currently Implemented
Integration Areas
                                                                             a
Integration area             Status of key provisions as of July 2011                      Status of key provisions as of May 2012
                        b
Governance structure         FHCC leadership structure and advisory bodies were Maintained establishment of leadership
                             in place.                                          structure; continued to meet provision for the
                                                                                Stakeholders Advisory Council to meet at least
                                                                                quarterly.
Access to health care at the Patient priority system to ensure access was in place Continued to meet provisions related to patient
     b
FHCC                         and FHCC maintained its “pipeline to the fleet”       priority system and the “pipeline to the fleet”
                             readiness goal by monitoring the medical readiness    readiness goal.
                             of enlisted Navy recruits.
           b
Research                     Institutional Review Board approval and policy for the Continued the existing policies related to the
                             protection of human subjects were in place.            Institutional Review Board.
               b
Contracting                  Department of Veterans Affairs (VA) responsibility for Maintained implementation of contracting
                             contracting support established.                       provisions, with VA continuing to oversee
                                                                                    contracting support. The Department of Defense
                                                                                    (DOD) is responsible for personal services
                                                                                    contracts.
                    c
Quality assurance            Accreditation and oversight from external entities            Met final two provisions:
                             were ongoing and policies on credentialing and                (1) accreditation as a joint facility by relevant
                             privileging of health care providers were in place.           external accrediting bodies—the Commission on
                                                                                           Accreditation of Rehabilitation Facilities and The
                                                                                           Joint Commission—and (2) review of the
                                                                                                                                        d
                                                                                           FHCC’s policy on professional practices.
                        c
Contingency planning         Emergency management personnel, training                      Met final provision: formal agreement outlining
                             standards, and programs were in place. Officials              the jurisdiction of VA and DOD related to FHCC
                             were working on a formal agreement outlining the              campus security established.
                             jurisdiction of VA and DOD related to FHCC campus
                             security.
                                            Source: GAO.
                                            a
                                             See GAO, VA and DOD Health Care: First Federal Health Care Center Established, but
                                            Implementation Concerns Need to Be Addressed, GAO-11-570 (Washington, D.C.: July 19, 2011).
                                            b
                                                We reported this integration area as implemented in July 2011 (see GAO-11-570).
                                            c
                                            We reported this integration area as in progress in July 2011 (see GAO-11-570).
                                            d
                                             The Commission on Accreditation of Rehabilitation Facilities and The Joint Commission are
                                            independent organizations that accredit health care organizations and programs.


Five Integration Areas Remain               Five other integration areas in the Executive Agreement remain in
In Progress                                 progress: (1) integration benchmarks, (2) property, (3) reporting
                                            requirements, (4) workforce management and personnel, and (5) fiscal
                                            authority. Each of these integration areas was also in progress at the time
                                            of our first report in July of 2011. FHCC officials have actively maintained
                                            past progress while continuing to work toward implementation of the
                                            provisions in the Executive Agreement associated with these integration
                                            areas.




                                            Page 12                               GAO-12-669 VA and DOD Federal Health Care Center Update
Some integration areas cannot be met until a certain point in the
integration or depend on other conditions being met. For example, for the
integration benchmarks area and the property area, the Executive
Agreement specifies that in accordance with NDAA 2010, property
transfer may occur upon the earlier of (1) completion of the 15 integration
benchmarks or (2) 5 years from the date the Executive Agreement was
executed. Thus, the FHCC may address the property integration area
prior to the end of the demonstration, in 2015, but it is not required to do
so.

FHCC officials also are in the process of addressing other integration
areas with provisions that do not have specific deadlines associated with
them. For example, for the fiscal authority integration area, FHCC officials
continue to make progress implementing the provisions, although they
have experienced some challenges. Since our last review, the Joint Fund,
into which both VA and DOD contribute, has become operational. 19
However, the provision of the Executive Agreement in the fiscal authority
integration area that requires the FHCC to develop an operating plan by
month that includes workload data has not yet been met. Specifically, the
FHCC’s operating plan does not include workload data, which officials
reported is because the current VA and DOD IT systems calculate
workload data differently. (See table 3.)




19
  The FHCC was not able to operate the Joint Fund until funds had been authorized and
appropriated for VA and DOD to transfer into the Joint Fund, which occurred in April 2011.
Pub. L. No. 112-10, div. A, § 8107, div. B, §§ 2017, 2018, 125 Stat. 38 (2011).




Page 13                         GAO-12-669 VA and DOD Federal Health Care Center Update
Table 3: Federal Health Care Center (FHCC) Executive Agreement—Status of Key Provisions of Currently In Progress
Integration Areas
                   a                                                     b
Integration area             Status of key provisions as of July 2011                  Status of key provisions as of May 2012
Integration benchmarks       Collection of data and assessment of performance on       Past progress maintained by continued
                             the 15 benchmarks had begun. Benchmarks may be            collection and assessment of data on the
                             addressed prior to the conclusion of demonstration in     15 benchmarks to be addressed prior to 2015.
                             2015.
Property                     Construction of the facility was completed. Transfer of Property transfer provision may be met by
                             property to the Department of Veterans Affairs (VA)     completion of demonstration by 2015.
                             may occur by completion of demonstration in 2015.
Reporting requirements       VA and the Department of Defense (DOD) required to Provision to report to congressional committees
                             report to congressional committees following          to be met following completion of
                             completion of demonstration. This final report is due demonstration in October 2015.
                             October 2015.
Workforce management and Provisions related to staffing, training, and the transfer    Past progress in staffing, training, and transfer
personnel                of DOD civilian personnel were met. VA is required to         of employees maintained. Provision to evaluate
                         evaluate the extension of collective bargaining rights        the extension of the collective bargaining rights
                         for the transferred employees by October 2012.                to be met by October 2012.
Fiscal authority             Developed an integrated budgeting and financial           Joint Fund has been implemented, and past
                             reconciliation process. Developed the Joint DOD-VA        progress of implemented provisions
                             Medical Facility Demonstration Fund (Joint Fund)          maintained. An automated reconciliation report
                             process, but had not implemented it. An automated         to be generated by December 31, 2013. An
                             reconciliation report is to be generated by               operating plan by month including workload
                             December 31, 2013, and additional provisions are to       data to be developed.
                             be met at a future date.
                                           Source: GAO.
                                           a
                                            We reported these integration areas as in progress in July 2011; see GAO, VA and DOD Health
                                           Care: First Federal Health Care Center Established, but Implementation Concerns Need to Be
                                           Addressed, GAO-11-570 (Washington, D.C.: July 19, 2011). Two additional integration areas—quality
                                           assurance and contingency planning—were in progress at the time of the last report and are now
                                           implemented (see table 2).
                                           b
                                            See GAO-11-570.




                                           Page 14                           GAO-12-669 VA and DOD Federal Health Care Center Update
Continued Delays in the   Despite some progress, the FHCC continues to face costly delays in the
Remaining Executive       IT integration area. The Executive Agreement specified three key IT
Agreement Integration     capabilities that VA and DOD were required to have in place on opening
                          day, in October 2010, to facilitate interoperability of VA and DOD
Area—IT                   electronic health record systems. 20 In our 2011 report, we found that all
Implementation—Have       three of these IT components were delayed; some of them continue to
Resulted in Additional    remain so. As a result of these delays, the FHCC has had to implement
Costs for the FHCC        costly workarounds to address the needs these capabilities were intended
                          to serve. In addition to delays in developing these specific IT capabilities,
                          other IT capabilities required by the Executive Agreement have not been
                          well defined and implementation plans for them have not been
                          established.

                          Specifically, in our 2011 report, we noted that none of the following three
                          IT capabilities required by the Executive Agreement to be in operation by
                          October 2010 were implemented by that time: (1) medical single sign-on,
                          which would allow staff to use one screen to access both the VA and
                          DOD electronic health record systems; (2) single patient registration,
                          which would allow staff to register patients in both systems
                          simultaneously; and (3) orders portability, which would allow VA and DOD
                          clinicians to place, manage, and update clinical orders from either VA or
                          DOD electronic health records systems for radiology, laboratory, consults
                          (specialty referrals), and pharmacy services.

                          Although none of these capabilities were in place at the time of the
                          FHCC’s opening, FHCC officials reported that subsequently, in December
                          2010, medical single sign-on and single patient registration became
                          operational, as we noted in our 2011 report. Two orders portability
                          components—pharmacy and consults—remain delayed as of May 2012.
                          While orders portability for pharmacy remains delayed, VA and DOD
                          officials have estimated completion of the consults component by March
                          2013. Since our last review, orders portability for radiology became
                          operational in June 2011 and for laboratory in March 2012. Officials report
                          that as of March 2012, VA and DOD have spent more than $122 million
                          on IT capabilities at the FHCC.




                          20
                           VA and DOD rely on separate electronic health record systems to create, maintain, and
                          manage patient health information.




                          Page 15                       GAO-12-669 VA and DOD Federal Health Care Center Update
VA and DOD officials reported several reasons for the delays in each of
the orders portability components and described the workarounds
implemented as a result of these delays.

•   Pharmacy component: Officials have said that they no longer plan to
    develop a FHCC-specific capability that will allow VA’s and DOD’s
    electronic health record systems to exchange information for
    pharmacy orders, as required by the Executive Agreement, until a
    more long-term effort to merge the departments’ electronic health
    record systems into a single system is complete. In March 2011, the
    Secretaries of VA and Defense announced that the two departments
    had committed to this broader effort, but the departments have not
    determined when this single electronic health record system will be
    completed. Officials reported that they have assigned a project team
    to address this requirement and estimate that they will award a
    contract for the pharmacy solution by November 2012. Meanwhile, the
    FHCC continues to maintain the interim orders portability workaround
    that we previously reported on, which includes five dedicated, full-time
    pharmacists to conduct manual checks of patient records to reconcile
    allergy information and identify possible interactions between drugs
    prescribed in VA and DOD systems. Additionally, FHCC officials
    reported that they have also hired a full-time pharmacy technician to
    assist in this process. FHCC officials reported that as of March 2012,



Page 16                    GAO-12-669 VA and DOD Federal Health Care Center Update
    they have spent close to $1 million to institute this workaround and
    that they anticipate spending an additional $750,000 to fund this
    process from April 2012 through April 2013.

•   Consults component: VA and DOD officials reported that this
    component, which will allow VA’s and DOD’s electronic health record
    systems to exchange information for consult orders, remains delayed
    because of changes to the requirements for this component in
    response to lessons learned since the FHCC opened. Officials
    reported that they completed the process of documenting changes to
    the requirements in February 2012 and will use that information to
    develop the consults component. Until this IT component is
    implemented, the FHCC staff in the specialty care clinics manage the
    consult orders manually by reviewing daily all consult requests to
    determine if care could be provided at the FHCC, in which case the
    order is manually entered into the appropriate system.

•   Radiology component: Officials told us that this area was delayed in
    part because they underestimated the amount of work required to
    allow VA’s and DOD’s electronic health record systems to exchange
    information for radiology orders, and they needed additional time to
    resolve software defects related to the work.

•   Laboratory component: Officials reported that there were delays in
    delivering a capability that would allow the VA and DOD systems to
    exchange information for laboratory orders because they needed to
    address software differences between the VA and DOD systems,
    such as how the systems detect and combine duplicate orders. In
    addition, they acknowledged that they underestimated the time and
    effort required to address such differences. Before the laboratory
    component was implemented, the FHCC instituted a workaround that
    required health care providers to review both VA and DOD systems
    for notifications of laboratory results.

Although they were unable to quantify the total cost for all the
workarounds resulting from delayed IT capabilities, FHCC officials
reported that staff time equivalent to 23 full-time employees is being used
to manage the workarounds as a result of delays in IT capabilities to
support pharmacy, consults, radiology, and laboratory as well as delays
to the other IT components not delivered on time.

In addition to the three delayed IT capabilities that were to be in operation
by opening day, implementation of three other IT capabilities required, but
not defined, by the Executive Agreement—documentation of patient care


Page 17                    GAO-12-669 VA and DOD Federal Health Care Center Update
                           to support medical and dental operational readiness, financial
                           management solutions, and outpatient appointment enhancements—also
                           have not been implemented, and in some cases work on them has not
                           begun. The Executive Agreement does not provide clear and specific
                           definitions of these three capabilities, nor does it outline deadlines or
                           specific deliverables. Officials reported that as of May 2012, they had not
                           begun to address the requirements for two of the three capabilities—
                           documentation of patient care to support medical and dental operational
                           readiness and outpatient appointment enhancements—nor had they
                           developed plans or time frames for doing so. VA and DOD officials
                           reported that they have determined the requirements for and have begun
                           the technical development of the financial management solutions, such as
                           automated financial reconciliation and billing processes, and they
                           estimate that testing of the initial capability for the financial reconciliation
                           requirement will occur in July 2012.


Lack of an MTF             FHCC officials continue to experience implementation challenges related
Designation for the FHCC   to the FHCC’s lack of an MTF designation. In our July 2011 report, we
Continues to Pose          noted several challenges associated with the lack of an MTF designation
                           at the FHCC, including limits on its ability to access DOD’s drug pricing
Implementation             arrangements for DOD beneficiaries and to use personal services
Challenges                 contracts to meet staffing needs, as had been done by DOD prior to the
                           integration. 21 As a result, we recommended that DOD seek a legislative
                           change to designate the FHCC as an MTF to facilitate sharing of all DOD
                           authorities and privileges for the facility. Although DOD concurred with
                           our assessment of challenges based on the lack of an MTF designation,
                           the department has opted not to pursue our recommendation. DOD
                           stated that it anticipates that as the FHCC stabilizes and matures, the
                           confusion caused by the lack of an MTF designation will dissipate and
                           that the challenges we noted in the last report have been addressed by
                           workarounds. However, we have found that some of the integration
                           implementation challenges that could be solved with such a designation
                           remain. In particular, officials told us the FHCC has been denied access
                           to DOD’s drug pricing arrangements for its DOD beneficiaries, which has
                           resulted in the FHCC paying higher prices for certain drugs for DOD
                           beneficiaries than would be the case if it were an MTF, although FHCC
                           officials were unable to quantify the added expense. DOD officials told us



                           21
                            See GAO-11-570.




                           Page 18                     GAO-12-669 VA and DOD Federal Health Care Center Update
                        that the department continues to explore ways to access DOD’s drug
                        pricing arrangements, despite the lack of an MTF designation, but that so
                        far these efforts have not been successful. In addition, FHCC officials
                        have instituted a workaround to enable them to fulfill staffing needs using
                        personal services contracts—a preferred method for accommodating
                        fluctuations in medical and dental workloads resulting from increases in
                        the number of Navy recruits on-site at any given time. 22 If the FHCC was
                        designated as an MTF, it would have the authority to use personal
                        services contracts, making such a workaround unnecessary. We continue
                        to believe that an MTF designation is important to address the challenges
                        the FHCC faces based on the lack of such a designation, and because it
                        would set a precedent for future VA and DOD integrations to help make
                        the integration process smoother.


                        Although they are required by NDAA 2010 to conduct a comprehensive
VA and DOD Have         evaluation of the FHCC at the end of the 5-year demonstration and
Not Yet Established a   submit a report on this evaluation to the House and Senate Committees
                        on Armed Services and Veterans’ Affairs, VA and DOD officials said the
Plan for Evaluating     departments have not yet established an evaluation plan. We have
the FHCC                previously found that developing a sound evaluation plan before a
Demonstration           demonstration program is implemented can increase confidence in results
                        and facilitate decision making about broader applications of the
                        demonstration. 23 Without such a plan in place during the demonstration—
                        including well-defined measures and standards, such as target scores, for
                        determining performance on each measure—FHCC leadership cannot
                        track progress and make adjustments to improve performance in areas
                        that VA and DOD determine are necessary for the FHCC’s success. 24 In
                        addition, we have previously found that joint agreement on commonly
                        desired outcomes, such as those established as performance measures
                        and standards in an evaluation plan, is important for collaborating
                        agencies, such as VA and DOD, to successfully overcome differences in




                        22
                          The FHCC processes nearly 40,000 Navy recruits each year, ensuring that each recruit
                        is medically ready for service.
                        23
                         GAO-08-387R and GAO-09-45.
                        24
                         GAO-09-45.




                        Page 19                       GAO-12-669 VA and DOD Federal Health Care Center Update
their agency missions, cultures, and established ways of doing
business. 25

VA and DOD officials told us that at the end of the demonstration, they
expect the FHCC Advisory Board, along with the HEC and JEC—the
governing bodies that provide executive oversight for VA and DOD
collaborations—to assess the demonstration and provide
recommendations to the departments about whether the FHCC should
continue. These assessments will inform the Secretaries of VA and
Defense, who will ultimately issue a report and recommendation to
congressional committees regarding the FHCC. Officials confirmed that
they will use the 15 integration benchmarks established in the Executive
Agreement as part of the assessment (see app. I), 26 which as we
previously reported, are monitored and reported by FHCC officials using a
FHCC-developed tool. 27 In addition to these benchmarks, VA and DOD
officials also have said they expect to consider additional factors, which
may include performance measures, in evaluating the FHCC’s
performance at the end of the demonstration. Officials explained that the
15 integration benchmarks do not address all factors relevant to
determining the FHCC’s utility as an integrated model for delivering health
care. Among the additional factors DOD and VA officials say they are
considering are the following:

•    an Institute of Medicine study commissioned by DOD to determine
     whether the quality of, and access to, services provided by the



25
 GAO, Results-Oriented Government: Practices That Can Help Enhance and Sustain
Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 2005).
26
  The 15 integration benchmarks comprise 38 individual performance measures. For
example, the patient satisfaction benchmark is measured using 2 performance
measures—a VA measure and a DOD measure based on separate surveys that assess
beneficiaries’ experience with care at the FHCC.
27
  In response to a recommendation we made in our July 2011 report, FHCC officials have
made changes to this tool. Specifically, we raised concerns regarding the accuracy and
transparency of the information generated by this reporting tool and also about the ability
of FHCC’s use of a single monthly summary score to provide a meaningful gauge of
success. We were particularly concerned about the use of this summary score given that
VA and DOD had not established specific targets to define success. In response to our
concerns, officials have (1) corrected a calculation error to make the summary score more
accurate and (2) altered their methodology to ensure that the summary score better
reflects performance rather than fluctuations caused by varied data collection time frames,
as had occurred previously. See GAO-11-570.




Page 20                         GAO-12-669 VA and DOD Federal Health Care Center Update
      integrated FHCC meet or exceed those of NCVAMC and NHCGL as
      separate facilities prior to the integration; 28

•     an evaluation of whether the services available at the FHCC are
      appropriate for the needs of its beneficiary population (for example,
      whether the pediatrics workload is sufficient to maintain a pediatrics
      department at the FHCC or whether it would be more cost-effective to
      contract for pediatrics care in the local community);

•     personnel-related factors, such as whether corpsmen are able to be
      used at their full capacity at the FHCC and develop the medical skills
      needed for deployment; 29 and

•     FHCC costs.

Furthermore, VA and DOD have not set specific target scores for
determining successful performance for the existing 15 integration
benchmarks. Officials told us they do not expect to establish these scores
until the end of the 5-year FHCC demonstration.

Although federal financial accounting standards, VA and DOD
departmental priorities, and the Executive Agreement—which lays out the
purpose of the FHCC—indicate that reliable cost information is important
for evaluating the FHCC, VA and DOD officials have not determined what
cost measures, if any, will be used in the FHCC’s evaluation. In particular,
federal financial accounting standards state that Congress and federal
executives need reliable cost information to compare alternative courses
of action and evaluate program performance. 30 In addition, both the
Veterans Health Administration’s vision statement and the Military Health
System’s core values statement highlight the importance of cost or value
of health care to VA and DOD. Furthermore, VA and DOD jointly agreed
through the Executive Agreement that the FHCC itself was designed to


28
    The Institute of Medicine expects to publish the results of this study in the fall of 2012.
29
  Officials explained that corpsmen—enlisted personnel who receive advanced training to
provide treatment and administer medications—must be able to fully develop skills at the
FHCC that they will need to be ready for service in the field when deployed, such as
medical skills needed in combat areas.
30
  Federal Accounting Standards Advisory Board, Statement of Federal Financial
Accounting Standards 4: Managerial Cost Accounting Standards and Concepts
(Washington, D.C.: July 1995).




Page 21                             GAO-12-669 VA and DOD Federal Health Care Center Update
              improve cost-effectiveness of health care delivery, along with access and
              quality, for the beneficiaries of NHCGL and NCVAMC. Prior to the
              integration, FHCC officials reported that cost savings, mainly one-time
              construction savings, were one of the original considerations in deciding
              to integrate the two facilities, but FHCC officials told us that they are
              unable to determine whether these savings were actually realized. 31 We
              have previously reported that cost-effectiveness information is important
              for ensuring that a program produces sufficient benefits in relation to its
              costs. 32 Although the existing FHCC integration benchmarks include
              measures related to access and quality, they do not include any
              measures related to cost-effectiveness, and while VA and DOD officials
              said they are considering incorporating cost into the evaluation, they still
              have not determined whether to do so or what cost measures will be
              used.


              The FHCC is a 5-year demonstration that has the potential to be a model
Conclusions   for future VA and DOD collaborations to deliver high-quality and cost-
              effective integrated health care services. However, the demonstration has
              notable problems. The lack of an MTF designation; costly delays in IT
              implementation and the lack of clear definitions, deliverables, and time
              frames for certain IT capabilities; and the lack of an overall evaluation
              plan for the demonstration pose challenges to VA, DOD, and FHCC
              officials.

              Because the FHCC does not have an MTF designation, FHCC officials
              continue to experience additional costs and administrative burden. The
              FHCC is unable to use DOD drug pricing arrangements for DOD
              beneficiaries, which has resulted in additional costs for the FHCC, and
              also cannot use personal services contracts without the need for a
              workaround. Because of these ongoing problems, we continue to believe



              31
                In a 2009 report, FHCC officials projected that the integration would result in one-time
              cost savings of $67 million by avoiding the need to build a new naval hospital and
              recurring annual cost savings of $22.3 million by reducing operating costs and staff size
              when compared to the projected costs for NCVAMC and NHCGL separately. They have
              contracted with the Center for Naval Analyses to conduct an assessment of the costs
              associated with the FHCC’s integration, including past and current costs through the early
              stages of the demonstration. This assessment is also intended to document any cost
              savings associated with FHCC patient care.
              32
               GAO-09-45.




              Page 22                         GAO-12-669 VA and DOD Federal Health Care Center Update
                      that the Secretary of Defense should seek a legislative change to
                      designate the FHCC as an MTF, even if only for the period of the 5-year
                      demonstration.

                      Delays in the implementation of key IT components required by the
                      Executive Agreement to be in place by October 2010 have resulted in the
                      FHCC establishing workarounds in an effort to maintain patient care and
                      safety. In some cases, these workarounds have been costly and
                      inefficient, necessitating the hiring of additional staff or using additional
                      staff time to do manually what the IT systems are intended to automate.
                      After spending more than $122 million on IT capabilities needed for the
                      FHCC, key deliverables remain delayed, resulting in additional costs to
                      the FHCC. For example, officials have spent more than $1 million as of
                      May 2012 on workarounds for the pharmacy component alone, with an
                      additional $750,000 of spending expected through April 2013. Having a
                      clear understanding of the costs associated with workarounds needed
                      when IT systems are not in place is essential in planning any future VA
                      and DOD integration efforts. In addition, the lack of clarity for time frames
                      and deliverables for two other IT requirements included in the Executive
                      Agreement may pose challenges for implementing them during the
                      demonstration.

                      Despite the fact that the demonstration is in its second of 5 years, DOD
                      and VA have yet to develop and implement an overall evaluation plan.
                      Without such a plan, decision makers at all levels lack the information
                      needed to evaluate the FHCC in a transparent way that ensures
                      confidence in the results. Establishing an evaluation plan, including
                      relevant measures and standards, such as target scores for the
                      benchmarks, as early as possible during the demonstration also provides
                      FHCC officials the opportunity to make informed midcourse changes to
                      better ensure the delivery of high-quality and cost-effective care. It also
                      will better facilitate decision making about whether replicating the model
                      in other locations is prudent. Finally, without assessing the cost-
                      effectiveness of the FHCC, VA and DOD decision makers, as well as
                      Congress, will be unable to adequately assess whether the integrated
                      health care delivery model of the FHCC produces sufficient benefits in
                      relation to its costs.


                      To clarify IT requirements within the Executive Agreement, to enable VA
Recommendations for   and DOD to make an informed recommendation about whether the FHCC
Executive Action      should continue after the end of the demonstration, and to provide useful
                      information for other integrations that may be considered in the future, we


                      Page 23                    GAO-12-669 VA and DOD Federal Health Care Center Update
                     recommend that the Secretaries of Veterans Affairs and Defense take the
                     following four actions:

                     •   determine the costs associated with the workarounds required
                         because of delayed IT capabilities at the FHCC for each year of the
                         demonstration, including the costs of hiring additional staff and of
                         managing the administrative burden caused by the workarounds;

                     •   develop plans with clear definitions and specific deliverables,
                         including time frames for two IT capabilities—documentation of patient
                         care to support medical and dental operational readiness and
                         outpatient appointment enhancements—and formalize these plans,
                         for example, by incorporating them into the Executive Agreement;

                     •   expeditiously develop and agree to an evaluation plan, including the
                         performance measures and standards, such as target scores, to be
                         used to evaluate the FHCC demonstration, and formalize the plan, for
                         example, by incorporating it into the Executive Agreement; and

                     •   establish measures related to the cost-effectiveness of the FHCC’s
                         care and operations to be included as a part of the evaluation plan.


                     DOD and VA each provided comments on a draft of this report. In their
Agency Comments      comments, both agencies generally concurred with each of the four
and Our Evaluation   recommendations to the Secretaries of Defense and Veterans Affairs.
                     (DOD’s comments are reprinted in app. II; VA’s comments are reprinted
                     in app. III.) In addition, both VA and DOD provided technical comments
                     which we have incorporated as appropriate. The agencies’ specific
                     responses to each of our recommendations are as follows:

                     •   To determine the costs associated with the workarounds required
                         because of delayed IT capabilities at the FHCC, DOD indicated that it
                         will collaborate with VA to determine these costs. VA stated the FHCC
                         will convene a workgroup to review these costs and to identify any
                         additional needs associated with IT development delays. VA
                         suggested changing “workaround” to “impacts and changes to
                         business practices.” We maintain that “workaround” is used
                         appropriately in the context of this report because we use it to
                         describe processes that are temporarily in place for the purpose of
                         mitigating IT delays rather than permanent changes to business
                         practices.




                     Page 24                   GAO-12-669 VA and DOD Federal Health Care Center Update
•   To develop plans with clear definitions and specific deliverables,
    including time frames for two IT capabilities, both VA and DOD stated
    that they are working together through their joint Interagency Program
    Office to develop and formalize these plans. DOD added that the
    Interagency Program Office will also consider how these plans relate
    to the larger effort to implement an integrated electronic health record.
    Both agencies noted that formalization of these plans does not require
    incorporation into the Executive Agreement. We offered amending the
    Executive Agreement as an example of how plans could be
    formalized and leave it to the agencies’ discretion how best to do so.

•   To expeditiously develop and agree to an evaluation plan, VA and
    DOD mentioned that although a methodology and framework for a
    final evaluation have not been determined, they are tracking some
    measures of performance through the 15 integration benchmarks. In
    addition, VA stated that the JEC has directed the HEC to outline an
    evaluation plan to include analysis of personnel, logistics, resources,
    and regulatory issues. Again, both agencies noted that formalizing of
    the evaluation plan does not require incorporation into the Executive
    Agreement. As we noted above, amending the Executive Agreement
    is one option for how the plan could be formalized and the agencies
    may determine the most effective way to do so.

•   To establish measures related to the cost-effectiveness of the FHCC’s
    care and operations to be included as a part of the evaluation plan,
    VA stated that it will develop a process to expedite creation of an
    evaluation plan. Both agencies concurred with the recommendation to
    include cost-related measures.

VA provided an additional comment regarding the issue of MTF
designation at the FHCC. They suggest that VA and DOD agree on the
matter of seeking an MTF designation before any action is taken
regarding establishing the FHCC as an MTF.


We are sending copies of this report to the Secretary of Defense,
Secretary of Veterans Affairs, and appropriate congressional committees.
In addition, the report is available at no charge on the GAO website at
http://www.gao.gov.




Page 25                    GAO-12-669 VA and DOD Federal Health Care Center Update
If you or your staff have any questions about this report, please contact
me at (202) 512-7114 or draperd@gao.gov. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this report
are listed in appendix IV.




Debra A. Draper
Director, Health Care




Page 26                   GAO-12-669 VA and DOD Federal Health Care Center Update
List of Committees

The Honorable Carl Levin
Chairman
The Honorable John S. McCain
Ranking Member
Committee on Armed Services
United States Senate

The Honorable Patty Murray
Chairman
The Honorable Richard Burr
Ranking Member
Committee on Veterans’ Affairs
United States Senate

The Honorable Howard P. “Buck” McKeon
Chairman
The Honorable Adam Smith
Ranking Member
Committee on Armed Services
House of Representatives

The Honorable Jeff Miller
Chairman
The Honorable Bob Filner
Ranking Member
Committee on Veterans’ Affairs
House of Representatives




Page 27                  GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix I: Federal Health Care Center
                                             Appendix I: Federal Health Care Center
                                             Integration Benchmarks, by Number of
                                             Reported Measures


Integration Benchmarks, by Number of
Reported Measures

                                                                                                         Number of individual performance
Integration benchmarks                                                                                           measures to be reported
1.   Patient satisfaction measures meet Federal Health Care Center (FHCC) targets.                                                                 2
2.   Staff surveys meet FHCC targets.                                                                                                              2
3.   Health profession trainee satisfaction measures meet FHCC targets.                                                                            1
4.   Stakeholders Advisory Council determination that the FHCC meets both Department
                                                                       a
     of Veterans Affairs (VA) and Department of Defense (DOD) missions.                                                                            1
5.   Clinical and administrative performance measures meet FHCC targets.                                                                           4
6.   Patient access to care meets FHCC targets.                                                                                                    3
7.   Evidence-based health care measures meet FHCC targets.                                                                                        2
8.   Clinical/dental productivity meets FHCC targets.                                                                                              3
9.   Information technology solution timeline is met and has no negative impact on
     patient safety.                                                                                                                               1
10. Pre-FHCC academic and clinical research missions are maintained.                                                                               2
11. Navy servicemember medical readiness for duty meets Navy targets.                                                                              3
12. Navy advancement/retention meets Navy targets.                                                                                                 3
13. Successful annual GAO review.                                                                                                                  1
14. Validation of FHCC fiscal reconciliation model by an annual independent audit.                                                                 1
15. Satisfactory facility and clinical inspection, accreditation, and compliance outcomes
    from several external oversight/groups, such as VA and DOD Offices of the
                                                      b
    Inspector General and The Joint Commission.                                                                                                    9
Total                                                                                                                                              38
                                             Source: GAO.
                                             a
                                              The Stakeholders Advisory Council is composed of members from various organizations
                                             representing FHCC interests, including a local government representative, as well as officials from
                                             TRICARE and nearby VA medical facilities located in Hines, Illinois, and Milwaukee, Wisconsin. It
                                             provides feedback on how well the FHCC is meeting customers’ needs and whether the FHCC is
                                             meeting VA and DOD missions.
                                             b
                                              The Joint Commission is an independent organization that accredits and certifies health care
                                             organizations and programs in the United States.




                                             Page 28                             GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix II: Comments from the Department
                               Appendix II: Comments from the Department
                               of Defense



of Defense




Note: GAO received
DOD’s letter commenting
on a draft of this report on
June 11, 2012.




                               Page 29                       GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix II: Comments from the Department
of Defense




Page 30                       GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix II: Comments from the Department
of Defense




Page 31                       GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix II: Comments from the Department
of Defense




Page 32                       GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix II: Comments from the Department
of Defense




Page 33                       GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix II: Comments from the Department
of Defense




Page 34                       GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix II: Comments from the Department
of Defense




Page 35                       GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix III: Comments from the
              Appendix III: Comments from the Department
              of Veterans Affairs



Department of Veterans Affairs




              Page 36                        GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix III: Comments from the Department
of Veterans Affairs




Page 37                        GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix III: Comments from the Department
of Veterans Affairs




Page 38                        GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix III: Comments from the Department
of Veterans Affairs




Page 39                        GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix III: Comments from the Department
of Veterans Affairs




Page 40                        GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix III: Comments from the Department
of Veterans Affairs




Page 41                        GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix III: Comments from the Department
of Veterans Affairs




Page 42                        GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix III: Comments from the Department
of Veterans Affairs




Page 43                        GAO-12-669 VA and DOD Federal Health Care Center Update
Appendix IV: GAO Contact and Staff
                  Appendix IV: GAO Contact and Staff
                  Acknowledgments



Acknowledgments

                  Debra A. Draper, (202) 512-7114 or draperd@gao.gov
GAO Contact
                  In addition to the contact named above, Marcia A. Mann, Assistant
Staff             Director; Jill K. Center; Regina Lohr; and Rasanjali Wickrema made key
Acknowledgments   contributions to this report. Lisa A. Motley provided legal support, and
                  Jennie F. Apter assisted in message and report development.




(290987)
                  Page 44                        GAO-12-669 VA and DOD Federal Health Care Center Update
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