United States
GAO General Accounting Office
Washington, D.C. 20548
Health, Education, and
Human Services Division
B-277400
July 11, 1997
The Honorable Richard K. Armey
Majority Leader
House of Representatives
The Honorable John Kasich
Chairman, Committee on the Budget
House of Representatives
The Honorable Dan Burton
Chairman, Committee on Government
Reform and Oversight
House of Representatives
The Honorable Bob Livingston
Chairman, Committee on Appropriations
House of Representatives
Subject: The Results Act: Observations on the Department of Health and
Human Services’ April 1997 Draft Strategic Plan
On June 12, 1997, you asked us to review the draft strategic plans
submitted by the cabinet departments and selected major agencies for
consultation with the Congress as required by the Government
Performance and Results Act of 1993 (the Results Act). This letter reports
on our review of the Department of Health and Human Services’ (HHS)
draft strategic plan.
Our overall objective was to review and evaluate the latest available
Objectives, Scope, version of HHS’ draft strategic plan, dated April 1997. As you requested, we
and Methodology (1) assessed the plan’s response to the Results Act’s six requirements and
the strengths and weaknesses of the plan’s elements; (2) assessed whether
the plan covers the agency’s key statutory authorities; (3) examined
whether any agency programs, activities, or functions are crosscutting,
that is, similar to or related to goals, activities, or functions of other
agencies, and the extent to which the strategic plan reflects interagency
coordination; (4) determined if the draft plan addresses major
management problems; and (5) provided a preliminary assessment of the
agency’s capacity to provide reliable information about performance.
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The focus of our review was HHS’ April 1997 strategic plan; we did not
examine any plans prepared by HHS’ component agencies because HHS
intends to submit only a Department-wide plan. As agreed, to review the
plan, we relied on the Results Act, the Office of Management and Budget’s
(OMB) guidance on developing the plans (Circular A-11, Part 2), our
May 1997 guidance for congressional review of the plans (GAO/GGD-10.1.16),
our general knowledge of HHS’ operations, and the many reports and
testimonies on HHS and its programs that we have issued over the last
several years. (See Related GAO Products at the end of this
correspondence.) As you requested, we coordinated our work on HHS’ key
statutory authorities and HHS’ capacity to provide reliable information with
the Congressional Research Service and HHS’ Office of Inspector General
(OIG), respectively.
In passing the Results Act, the Congress anticipated that several planning
cycles might be needed to perfect the process of developing a strategic
plan and that the plan would be continually refined. Thus, our comments
reflect a “snapshot” of the status of the plan at a particular point. We
recognize that developing a strategic plan is a dynamic process and that
HHS is continuing to work to revise the draft with input from OMB,
congressional staff, and other stakeholders.
We did our work between June 16 and July 8, 1997, in accordance with
generally accepted government auditing standards. We met with HHS
officials on July 8 to discuss a draft of this correspondence; they also
provided written comments, which are presented in enclosure II.
The Results Act seeks to shift the focus of federal management and
Background decision-making from staffing, activity levels, and tasks completed toward
results. Under the Results Act, federal agencies must develop (1) strategic
plans by September 30, 1997; (2) annual performance plans for fiscal year
1999 and beyond; and (3) annual performance reports beginning on
March 31, 2000. The act states that agencies’ strategic plans should cover
at least 5 years1 and that these plans should include, among other
requirements, a set of strategic goals. Although it was expected to
encourage agencies to focus their strategic goals on results, the act does
not require that all of an agency’s strategic goals be explicitly results
oriented. The act does not require agencies to have final plans until
1
OMB Circular A-11, Part 2, requires that strategic plans span a minimum 6-year period: the fiscal year
it is submitted, and at least 5 years following that fiscal year.
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September 30, 1997, so many of these plans will most likely be imperfect,
reflecting their status as draft documents.
The sheer size and complexity of HHS’ responsibilities create great
challenges for complying with the requirements of the Results Act. HHS is
one of the largest federal departments, the nation’s largest health insurer,
and the largest grant-making agency in the federal government. Its fiscal
year 1996 outlays were $319.8 billion. The Department comprises several
large agencies, each of which manages a number of programs with many
parts. (See enc. I.) The size, range, and interrelatedness of HHS’ activities
and responsibilities make it especially important for HHS to use the
framework of the Results Act to integrate program goals and activities at a
departmental planning level; improve coordination and accountability
among its own agencies; and work successfully with other federal
agencies, state and local governments, and private-sector grantees.
HHS is familiar with the kind of results-oriented management promoted by
the Results Act. HHS conducted two of the Results Act pilots designated by
OMB: one in the Administration for Children and Families’ (ACF) Office of
Child Support Enforcement (OCSE) and the other in the Food and Drug
Administration’s (FDA) Prescription Drug User Fee Program.2 The pilots
helped OCSE and FDA identify and progress toward performance goals. In
October 1996, we reported that OCSE’s Results Act pilot had made progress
in redirecting its management of the child support enforcement program
toward results.3 For example, OCSE approved national goals and objectives
focused on key program outcomes such as increasing the number of
paternities established, support orders obtained, and child support
collections received. At the time of our review, OCSE and the states had
begun to develop performance measures as statistical tools for measuring
state progress toward meeting program goals.
A second HHS Results Act pilot involved the Prescription Drug User Fee
Act of 1992 (PDUFA), which allows FDA to collect user fees from drug
companies seeking approval to market drugs. PDUFA dedicated the
revenues to expediting FDA’s review of human drug applications and
2
When it passed the Results Act, the Congress understood that most agencies would need to make
fundamental management changes to implement this law properly and that these changes would not
come quickly or easily. To facilitate this process, the act included a pilot phase during which federal
agencies could gain experience in implementing key parts of the law to provide valuable lessons for
the rest of the government. OMB designated about 70 pilot tests in 26 federal entities for performance
planning and reporting.
3
Child Support Enforcement: Reorienting Management Toward Achieving Better Program Results
(GAO/HEHS/GGD-97-14, Oct. 25, 1996).
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established time-specific performance goals to be achieved by the end of
fiscal year 1997. To meet these objectives, FDA consulted with its
stakeholders to determine appropriate performance indicators and target
levels and developed output-oriented performance goals. In its Fourth
Annual Performance Review, for fiscal year 1996, FDA reported that the
PDUFA program had exceeded its performance goals, improving the speed
and efficiency of the drug review process.
In addition, Healthy People 2000, the Public Health Service’s (PHS) national
public health initiative that seeks to improve the health of all Americans, is
an example of a results-based HHS management effort. In consultation with
HHS stakeholders, other government agencies, and the public health
community, PHS developed a series of outcome-based public health goals
and measures, with 300 disease prevention and health promotion
objectives. In 1995, PHS reviewed the nation’s progress in meeting these
objectives and reported that progress had been made toward achieving
half of the objectives; movement away from the target or no movement at
all had occurred for 21 percent; and insufficient data existed to assess
29 percent.
HHS’ draft strategic plan is more a summary of current programs than a
Results in Brief document projecting actions the Department might take in the next
several years to achieve its six goals. Although a description of current
programs is helpful, a strategic plan should allow the Congress and the
American people to understand the direction in which HHS’ programs will
move. The plan in its draft form does not provide a useful basis for
consultation with the Congress and others interested in the Department’s
future. Greater attention in the plan to the six critical elements in the
Results Act would allow for more informed evaluation of the
appropriateness of HHS’ goals and objectives and the strategies for
achieving them. HHS officials recognize that the plan is incomplete but felt
that it was important to make available at least the framework for the plan
in time to get comments from their many stakeholders. Officials said they
have been working on the missing elements and expect to have them in
place by September 30.
Specifically, while the plan’s mission statement successfully captures the
broad array of the Department’s activities, many required elements of HHS’
draft strategic plan are incomplete or missing. The draft plan identifies six
overarching Department-wide goals, such as to improve the quality of
health care, public health, and human services and to promote
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self-sufficiency and parental responsibility. It also recognizes that many
different departmental agencies, such as the Health Care Financing
Administration (HCFA), the National Institutes of Health (NIH), and ACF, are
responsible for achieving the goals. HHS has not, however, consistently
identified strategies for achieving the goals or included measurable
objectives indicating, for example, how to measure an increase in
self-sufficiency. Nor did HHS adequately discuss how its component
agencies, such as HCFA and the Health Resources and Services
Administration, will coordinate their efforts to reach common goals.
Similarly, the draft plan does not sufficiently acknowledge the many other
federal partners, like the Department of Education, that share
responsibility with HHS for many of the same kinds of programs, such as
education and training. Also missing are discussions of the considerable
management challenges HHS faces in carrying out both its program
responsibilities and the type of strategic planning and performance
measurement the Results Act requires. In particular, the draft plan does
not give enough weight to the role that state and local governments play in
carrying out many of HHS’ programs and the fact that these partners may
lack the capacity to provide reliable and comparable information on
achieving HHS’ goals.
HHS’ draft strategic plan does not adequately address five of the Results
Draft Strategic Plan Act’s six key elements. The six elements are (1) mission statement,
Omits Discussion of (2) goals and objectives, (3) approaches to achieve goals and objectives,
Key Elements (4) relationship between long-term goals/objectives and annual
performance goals, (5) key external factors beyond the agency’s control,
Required by the and (6) how program evaluations were used to establish/revise strategic
Results Act goals. All of these elements are important for establishing a meaningful
starting point and foundation for HHS’ consultations with the Congress and
stakeholders in defining the Department’s aims, identifying the strategies it
will use to achieve desired results, and then determining its success in
meeting its goals and objectives. More completely addressing the six key
elements of the Results Act is essential for HHS to move from a draft
strategic plan that too often merely describes the Department’s programs
and processes to a tool useful for projecting organizational priorities and
unifying the Department’s staff in the pursuit of shared goals. Although HHS
has developed a mission statement that successfully captures the broad
array of the Department’s activities related to the health and well-being of
the nation as well as the Department’s support for social- and
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health-related research, discussion of the remaining five elements in its
draft strategic plan is missing or incomplete.
Goals and Objectives HHS has partially addressed the Results Act requirement to establish
Statement Is Incomplete general goals and objectives in the agency’s draft strategic plan. Although
HHS has established six goals that are overarching for its operating
divisions and staff offices, the Department needs to take further action in
three areas to completely address the Results Act requirements for goals
and objectives.
First, HHS states that these six goals relate to those activities that have
priority over the next 6 years; they do not relate to every Department
activity that contributes to the overall mission. The Results Act and OMB
Circular A-11 require, however, that agency plans cover the Department’s
major functions and operations. The current HHS draft plan may be missing
major functions and operations that are reflected in statute or are
otherwise important to HHS’ mission. Excluding some significant programs
and activities obscures their relationship to the six departmental goals and
the methods for ensuring the accountability of these efforts. The draft
strategic plan, for example, makes no mention of HHS’ responsibilities for
certifying medical facilities, such as clinical laboratories and
mammography providers. Furthermore, to achieve the objectives of the
Government Management Reform Act of 1994 (GMRA), agencies must have
implemented financial management systems that provide adequate
safeguards and accountability. Despite numerous known financial
management weaknesses, however, the draft plan is silent about how HHS
plans to address these major operational issues. Including all major
programs and activities in the draft strategic plan would help to identify
their goals and hold managers accountable for achieving them.
Second, the plan does not always state the goals in a way that would allow
future assessment of whether the goals have been met. Under the Results
Act, goals are to be stated in a way that clarifies what results are expected
from the agency’s major functions and when results are expected. The
draft plan is explicit, for example, in presenting an objective of reducing
the number of uninsured children by half by the year 2002. More often,
however, the discussions supporting the goals explain the processes and
outputs of individual programs and activities without specifying their
intended results. For example, one HHS goal is to promote self-sufficiency,
but the draft plan only lists the programs and activities that support this
goal. It is therefore unclear whether success will be measured by reducing
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the number of people on federal assistance, improving the earning
potential of families beyond certain levels, or some other means.
Third, some HHS goals relate closely to those of other agencies, yet the
draft plan hardly discusses any coordination that may have taken place to
ensure that these goals are complementary rather than duplicative or even
contradictory. For example, the plan’s discussion of HHS’ responsibility for
maternal and child health programs makes no reference to the Department
of Agriculture’s closely related Special Supplemental Food Program for
Women, Infants, and Children. Similarly, the plan’s section on health
professions workforce programs does not discuss Department of
Education programs for training health professionals. HHS’ coordination of
program goals with other agencies should help to conserve scarce funds,
minimize confusion and frustration for program customers, and improve
the overall effectiveness of the federal effort.
Approaches and Strategies HHS’ strategic plan has not yet fully addressed the Results Act requirement
Lacking in Draft Plan to include the approaches and strategies for meeting goals and objectives.
Under the Results Act, strategies are to describe the operational
processes, staff skills, and technologies as well as the human, capital,
information, and other resources needed to achieve agency goals. In
addition, according to OMB Circular No. A-11, Part 2, these strategies
should outline how the agency will communicate strategic goals
organizationwide and hold managers and staff accountable for achieving
the goals.
HHS’s draft plan discusses its current programs and activities, but it does
not discuss how these programs and activities will operate and meet the
Department’s goals. For example, the draft plan cites research supported
by a number of HHS agencies on sexually transmitted diseases (STD). It does
not, however, specify the types of research initiatives that are planned or
under way or how they relate to a strategy for guiding clinical and public
health practice in preventing and treating STDs.
Nor does the plan specify how HHS’ various program strategies will work
together to reach common goals. Many of HHS’ programs developed over
time as the federal government responded to new needs and problems,
resulting in many cases in fragmented programs that may conflict with one
another. Especially important, therefore, is HHS’ need to identify and align
individual program strategies to support achievement of its overall
strategic goals and mission.
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An example of the need to discuss strategies for linking program goals is
the relationship between the child care and Head Start sections of the
draft plan. The Temporary Assistance for Needy Families (TANF) program
requires clients to increase their hours of work or work-related activity.
The draft plan recognizes that as these parents increase their work hours,
they will need additional child care services, and it mentions some HHS
activities related to child care. The plan fails to note, however, that Head
Start, which currently serves children of some TANF clients and therefore
could meet child care needs to some extent, is limited by being generally a
half-day, part-year program. Nor does the plan discuss strategies for
coordinating these programs, such as increasing HHS’ current efforts to
encourage partnerships between Head Start grantees and child care
providers, so that parents will have access to full-day child care services.4
In addition, HHS’ draft plan fails to discuss additional resources the
Department needs to reach its goals. For example, although the Health
Insurance Portability and Accountability Act of 1996 adds new funds to
fight fraud and abuse in the Medicare program, we have reported that this
additional funding will still leave per claim safeguard funding in 2003 at
about one-half the 1989 level after adjusting for inflation.
Similarly, the new welfare reform law gives HHS new administrative and
oversight responsibilities, the performance of which will rely on data
provided by the states. For example, using data provided by the states, HHS
is to establish a national directory of newly hired employees and a registry
of child support orders to strengthen child support enforcement. Yet the
plan makes no mention of the financial and data resources HHS needs for
this.
Moreover, HHS officials often cite changes needed in legislation or
regulation to provide them with the flexibility they need to manage
programs more effectively. For example, HHS has been working with the
Congress to try to group large numbers of individual programs into
consolidated program “clusters” to provide not only administrative savings
but also greater flexibility to respond to changing national needs.5 The
draft plan does not discuss these and similar matters, however.
4
Welfare Reform: Implications of Increased Work Participation for Child Care (GAO/HEHS-97-75,
May 29, 1997).
5
Health Professions Education: Clarifying the Role of Title VII and VIII Programs Could Improve
Accountability (GAO/T-HEHS-97-117, Apr. 25, 1997).
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Holding managers responsible for progress in meeting goals is a major
focus of the Results Act as a whole. HHS’ draft plan, however, does not
discuss what means or incentives the Department will use to achieve this.
By making managers responsible for the cost-effectiveness of programs
and activities, the Results Act can help move managers from a traditional
role as “caretaker” of federal programs to one of actively improving
efficiency and reducing the costs of federal interventions.
Relationship Between HHS’draft plan does not define the relationship between the plan’s goals
Long-Term Goals and and those it will include in its annual performance plans. The Results Act
Annual Performance Goals requires a description of these goals’ relationship to help the Congress
judge whether agencies are progressing toward meeting their long-term
Missing goals. Because HHS’ draft plan has overlooked this discussion, it is difficult
to know what many of the goals mean and how the Congress will evaluate
whether they have been met.
HHS’ draft strategic plan states that the Department’s operating divisions
and staff offices are developing the performance plans that will specify
how resources will be used to meet goals and describe the objectives and
targets relevant to specific programs. The Results Act, however, requires
HHS’ strategic plan to describe how the annual performance goals will
relate to the strategic goals. One way to clarify the link is for the plan to
define the performance measures that will be used. For example, HHS
mentions using objectives in Healthy People 2000—which sets targets for
national health promotion and disease prevention—for two of its strategic
goals. The draft plan does not, however, clarify the relationship between
these objectives and the programs and activities.
Little Mention of Key HHS’ draft plan pays only scant attention to some of the major external
External Factors factors that could significantly affect the plan’s goals. The Results Act
requires HHS to discuss such factors and encourages the Department to
identify actions that could reduce or ameliorate their potential impact. The
act requires such a discussion to help HHS and the Congress assess the
likelihood of HHS’ meeting the strategic goals and determine the actions
needed to meet those goals. A factor the draft plan does discuss is the
impact of the growing size of the aged population on Medicare’s solvency.
The draft plan is silent, however, about other key factors. One major
external factor missing from the draft plan’s discussion is changes in the
economy, which could significantly affect how and whether HHS meets its
strategic goals. For example, although the nation is now in a period of
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economic growth, diminished national or even regional growth could
increase the demand on state health and income assistance programs
when state revenues may be unable to meet the need. Implementation of
welfare-to-work initiatives could also be compromised. As families’
economic stress would grow, so too would the risks to their children,
suggesting a need for increased attention to children’s well-being.
Use of Program HHS’ draft strategic plan does not reflect the role program evaluation plays
Evaluations to Establish or in structuring and refocusing Department goals and strategies. Such a
Revise Strategic Goals Not discussion would help show the Congress that HHS has an evaluation
system in place to ensure the reasonableness and validity of its goals and
Discussed strategies as well as identify factors likely to affect performance.
Many evaluations of HHS programs by the Department, its OIG, and us have
raised issues that will affect the Department’s ability to implement the
Results Act, yet the draft strategic plan does not address these issues. For
example, many of these evaluations have pointed out that programs do not
gather data necessary to evaluate their overall effectiveness. Other
evaluations have pointed out the absence of systems to produce reliable
performance and cost data needed to set goals, evaluate results, and
improve performance. Several HHS and our own evaluations, for example,
have pointed out the inability of the Department’s health care shortage
area systems to target over $1 billion spent by over 30 programs each year
to alleviate medical underservice.6 In addition, the midpoint evaluation of
Healthy People 2000 reported that insufficient data existed to measure
progress for over one-fourth of the initiative’s 300 objectives.
Moreover, the draft plan does not reflect HHS’ experience with its Results
Act pilot programs, which could help the Department develop strategies
for meeting its goals. For example, OCSE gained experience in developing
strategic plans and working with diverse stakeholders. It also worked
closely with state and local governments to develop national goals and
performance measures.
The Results Act offers an opportunity for HHS to discuss in its plan the role
of future program evaluations in improving performance and informing
congressional decision-making. Many HHS programs established before
6
Two of the most recent studies include Health Care Shortage Areas: Designations Not a Useful Tool
for Directing Resources to the Underserved (GAO/HEHS-95-200, Sept. 8, 1995) and The Measurement
of Underservice and Provider Shortage in the United States: A Policy Analysis, North Carolina Rural
Health Research Program, Cecil G. Sheps Center for Health Services Research, University of North
Carolina (Chapel Hill, N.C.: 1994).
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1990 have never been evaluated. HHS has authority to set aside up to 1
percent of PHS program funding for evaluations, which in 1992 amounted
to $119 million. HHS has often used these funds for other purposes,
however.7 Refocusing these resources to evaluate program performance
may provide HHS and the Congress with the information they need to
explain reasons performance goals are not met and identify appropriate
strategies to meet unmet goals.
A broad range of statutes governs HHS’ activities.8 Among these statutes, as
HHS’ Strategic Plan reflected in the plan, are the Social Security Act (including, among others,
Reflects Key Statutory programs pertaining to Medicare, Medicaid, child welfare services, child
Authorities but Omits support, foster care, and adoption assistance); the Public Health Service
Act; and the Federal Food, Drug, and Cosmetic Act. Major recent
Others legislation includes the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 (which, largely through amendments to the
Social Security Act, authorizes TANF block grants, revises the child support
enforcement program, and increases flexibility and funding available for
child care programs) and the Health Insurance Portability and
Accountability Act of 1996 (HIPAA).
Although HHS’ draft plan generally reflects the key statutory authorities
governing the agency’s activities, it does not address all significant statutes
and the programs for which HHS is responsible. For example, the plan says
nothing about agency responsibilities such as regulation of the nation’s
blood supply, operation of a network for organ procurement and
transplant, and certification of clinical laboratories and mammography
facilities. The Results Act requires that the comprehensive mission
statement and the general goals and objectives cover all major agency
functions and operations. HHS specifically acknowledges, however, that its
plan does not include all activities that contribute to the agency’s overall
mission—only those that HHS believes should have priority over the next 6
years.
7
Public Health Service: Evaluation Set-Aside Has Not Realized Its Potential to Inform the Congress
(GAO/PEMD-93-13, Apr. 8, 1993).
8
When we performed our review, no comprehensive list of HHS’ statutory responsibilities was
available, and the draft plan did not provide any linkage between the mission, goals, and key statutory
authorities. In view of the limited time available for our review, we could not comprehensively
compare the plan with the statutory authorities governing HHS. We did not identify any major agency
activity not grounded in explicit statutory authority.
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HHS’ array of interrelated activities and responsibilities makes it especially
Plan Pays Insufficient important for HHS managers to work together to address the Department’s
Attention to overarching program goals. Moreover, many programs that are HHS’
Crosscutting responsibility share goals with or relate closely to programs administered
by other federal agencies. In addition to coordinating the activities of its
Programs own agencies, HHS must also coordinate its efforts with these other
agencies. Although HHS’ draft strategic plan recognizes that many different
HHS agencies and programs are responsible for meeting each of the
Department’s goals, it does not discuss strategies for coordinating such
efforts. Nor does the draft discuss HHS’ need to coordinate its work with
other federal agencies.
The following examples are a few of the many opportunities HHS has for its
plan to discuss both intra- and interdepartmental crosscutting issues. One
program area that requires HHS to focus on both internal and external
coordination is alcohol and drug abuse treatment and prevention.9
Programs addressing alcohol and drug abuse issues are located not only in
several HHS agencies—including the Substance Abuse and Mental Health
Services Administration (SAMHSA), NIH, ACF, and the Centers for Disease
Control and Prevention—but also in 15 other federal agencies. These
include the Departments of Veterans Affairs, Education, Housing and
Urban Development, and Justice.
Substance abuse programs also have a bearing on other aspects of the
Department’s mission. HHS has previously reported that the number of
child protective service (CPS) cases involving substance abuse can range
from 20 to 90 percent, depending on the area of the country. Although the
draft strategic plan mentions the use of illicit drugs as a major threat to the
health of Americans and notes its impact on the complexity of family
problems, it does not discuss how ACF and SAMHSA programs can work
together to alleviate the problems that have produced a crisis for the CPS
system.
Nor does the draft plan discuss HHS’ work that overlaps with that of other
agencies in addressing the dramatic increase in the number and severity of
cases of child abuse and neglect over the last 20 years. HHS has recognized
the need for interagency cooperation on child abuse issues and has
participated in forums with the Department of Justice’s National Institute
of Justice, Office for Victims of Crime, and Office of Juvenile Justice and
Delinquency Programs.
9
Substance Abuse and Mental Health: Reauthorization Issues Facing the Substance Abuse and Mental
Health Services Administration (GAO/T-HEHS-97-135, May 22, 1997).
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Another example involves the new welfare reform law, which requires
recipients to work after 2 years as a condition of receiving further benefits
and requires states to achieve specified and increasing levels of recipient
participation in work activities until the required rate reaches 50 percent
in fiscal year 2002. State officials have expressed concern that as the most
employable recipients find jobs, the remaining caseload will consist of
individuals with substantial barriers to employment, making the higher
target rates difficult to achieve. Although HHS’ draft plan does not mention
them, the employment, training, and education programs administered by
the Departments of Labor and Education will probably be essential to
TANF’s success and to HHS’ goal of promoting self-sufficiency and parental
responsibility.
Finally, the draft plan does recognize the enormous impact the aging of the
baby boomers will have on HHS programs. It does not, however, discuss the
effects of this demographic change on related programs that affect
economic well-being, such as Social Security and the Department of
Labor’s protections of private pensions, and the need for HHS to work
closely with these other agencies to manage the consequences of such
profound social change.
HHS faces many major management challenges in carrying out both its
Strategic Plan Does program responsibilities and the type of strategic planning and
Not Fully Address performance measurement the Results Act requires.10 Although HHS is
Major Management aware of many of these challenges, its plan does not address them. By
acknowledging these challenges in its plan, however, HHS could foster a
Challenges more useful dialogue with the Congress about its goals and the strategies
for achieving them. We would like to point out two areas in particular: HHS’
reliance on state, local, and private agencies to carry out many programs
for which it is responsible and the maintenance of financial management
and program integrity.
Partnership With State and Many HHS programs are operated by states, localities, or nongovernmental
Local Agencies Makes organizations, which requires HHS agencies to develop ways to make their
Accountability for Results many partners accountable for program results. In administering programs
jointly with state governments or that involve many local grantees, HHS
Difficult must continually balance program flexibility with oversight and
maintaining program controls. To further complicate HHS’ task, state data
10
Department of Health and Human Services: Management Challenges and Opportunities
(GAO/T-HEHS-97-98, Mar. 18, 1997).
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necessary for meaningful performance measurement may not be currently
available or may not be comparable from state to state.
The changes associated with recently enacted welfare reform exemplify
many of these difficulties and will challenge HHS to assess the effects of
reform on children and families. Under the TANF program, states have
flexibility to design and implement their own assistance programs within
federal guidelines, and HHS has a broad range of responsibilities for
ensuring accountability from the states. The law also gives HHS authority to
assess penalties if states fail to comply with certain requirements and
provides for states to receive bonuses if they meet certain performance
standards. HHS will need comparable and reliable state data to ensure that
states are enforcing the federal 5-year lifetime limit on receiving welfare
benefits, meeting minimum work participation rates, and maintaining a
certain level of welfare spending, as well as to assess penalties and
provide performance bonuses. Enforcing the time limit exemplifies the
difficulty of HHS’ task because information on the total amount of time a
person has received welfare is often unavailable in an individual state, let
alone across states.
Administering the Medicaid program presents the same difficulty in
balancing flexibility and accountability. Federal statutes and regulations
allow states substantial flexibility in designing and administering their
Medicaid programs. Because HCFA is authorized to waive certain statutory
requirements, such as those for managed care or home- and
community-based service alternatives to long-term care, it may provide
states with even greater latitude. Although HCFA performs structural
reviews of waiver programs during the planning stage, problems have
developed in some states as programs are implemented and continue to
operate. Flexibility can be positive for beneficiaries as well as the states;
however, HCFA’s ongoing monitoring and oversight are important to ensure
the appropriate use of federal funds. The need for accountability will be
even more pronounced if the need for waivers to enroll beneficiaries in
managed care is eliminated as the President and the Congress have
proposed.11
Financial Management and With HHS’ broad range of programs, large number of grantees and
Program Integrity Require contractors, huge volume of vendor payments, and millions of
Constant Vigilance beneficiaries, the Department must constantly protect its programs from
11
Medicaid Managed Care: Challenge of Holding Plans Accountable Requires Greater State Effort
(GAO/HEHS-97-86, May 16, 1997).
Page 14 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
B-277400
fraud, abuse, mismanagement, and waste. Safeguarding Medicare, the
government’s second largest social program, which in fiscal year 1996 had
expenses of about $200 billion and processed 822 million claims, has been
a long-standing management challenge for HHS.12 The draft strategic plan
recognizes the role of program integrity in meeting departmental goals in
its discussion of Operation Restore Trust but does not discuss many
important aspects of this issue.
The draft plan, for example, does not address HHS’ problems in complying
with GMRA. To provide decisionmakers with reliable, consistent financial
data on the operations of federal agencies, GMRA requires each department
and major independent agency to submit to OMB an audited agencywide
financial statement beginning with fiscal year 1996. The magnitude of this
task for HHS is extraordinary. HHS’ expenses exceed $300 billion a year.
Over 80 percent of this amount is spent by HCFA, primarily for the Medicare
and Medicaid programs. Although the OIG tried to audit HCFA’s financial
statements in prior years, it could not express an opinion on the reliability
of these statements mainly because of inadequate supporting
documentation for some of the significant reported amounts. Financial
management problems identified by the fiscal year 1996 financial
statement audit effort include an estimated $23 billion in improper
Medicare benefit payments made during that year.
Another critical challenge that HHS’ plan does not address and that we have
reported on is long-standing concerns about Medicare’s claims processing
systems. These systems do not allow for cross-checking of claims
processed by carriers and intermediaries or for prepayment alerts of
unusual increases in billing for particular items. HHS has been developing a
single, integrated database system, the Medicare Transaction System
(MTS), but ineffective planning and management of MTS modernization
contributed to a substantial increase—from about $151 million to
$1 billion—in the total costs estimated for developing and implementing
this system. This occurred because HCFA did not carefully plan its MTS
transition, effectively manage MTS as an investment, and fully follow
commonly accepted system development practices. The MTS project is at
risk of not meeting its revised schedule, which calls for completion of the
design by October 1998. To address these issues, we made numerous
12
Medicare: Inherent Program Risks and Management Challenges Require Continued Federal Attention
(GAO/T-HEHS-97-89, Mar. 4, 1997).
Page 15 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
B-277400
recommendations to the Secretary of HHS that, if implemented effectively,
would help ensure that a successful system will be delivered.13
HHS’ draft strategic plan also fails to address the issue of information
security that was identified during the fiscal year 1996 financial statement
audit effort. HCFA’s electronic data processing security program, which
should provide a framework for managing risk, developing security
policies, assigning responsibility, and monitoring the adequacy of
computer-related controls, is ineffective. These weaknesses could allow
unauthorized individuals to access sensitive medical history and personal
beneficiary and claims data, and then inappropriately disclose or alter
such data. HCFA’s officials informed us that they plan to implement a plan
to address this issue.
Nothing is more crucial to effectively managing an enterprise of HHS’ size
Agency Capacity to and scope than accurate information about programs and their effects. Yet
Provide Reliable HHS’ draft strategic plan does not discuss either key aspect of the
Information on Department’s capacity to provide needed information—the use of
information technology and the availability of reliable data on program
Meeting Strategic performance.
Goals Is Not
Recent information technology reform legislation, including the
Discussed Paperwork Reduction Act of 1995 and the Clinger-Cohen Act of 1996, set
forth requirements that promote more efficient and effective use of
information technology to support agency missions and improve program
performance. Under the information technology reform laws, agencies are
to better relate their technology plans and information technology use to
their programs’ missions and goals. However, HHS’ plan does not discuss
how it plans to use information technology to achieve its missions, goals,
and objectives, nor does the plan describe how HHS intends to use
information technology to improve performance and reduce costs.
The plan is also silent on how HHS will meet the “year 2000” problem in
connection with existing and planned automated systems. This problem
stems from the common practice of abbreviating years by using their last
two digits only. Thus, miscalculations in all kinds of activities—such as
benefit payments—could occur because the computer system would
interpret 00 as 1900 instead of the year 2000. HHS, along with other
13
Medicare Transaction System: Success Depends Upon Correcting Critical Managerial and Technical
Weaknesses (GAO/AIMD-97-78, May 16, 1997).
Page 16 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
B-277400
agencies that maintain time-based systems, must develop strategies to
resolve this potential problem in the near future.
To implement its programs and meet its responsibilities successfully, HHS
must have access to data that are both reliable and appropriate to the
task.14 Without such data, HHS cannot inform the Congress or the American
people of its progress toward meeting its performance goals. For example,
because several important HHS programs, including Medicaid and TANF, are
joint federal-state efforts, the current lack of comparable data among
states increases the difficulty of obtaining timely and reliable data.
The federal government has only limited data on the Medicaid program,
some of which are of questionable accuracy. Some of these problems stem
from collecting data from 50 states and the District of Columbia, which do
not all use identical definitions for data categories. HHS’ adoption of
standardized data sets, as required by HIPAA, will provide a structure for
reporting but will not solve other problems such as some duplicate
reporting on the number of managed care enrollees.
Some of Medicaid’s long-standing data problems could worsen because of
the program’s growing reliance on managed care to provide health
services to beneficiaries. The proportion of Medicaid beneficiaries
enrolled in managed care, as reported by HCFA, quadrupled from about
10 percent in 1991 to about 40 percent in 1996. Although HIPAA requires the
adoption of a standardized encounter transaction format for managed
care, unless proper and sufficient data are required for that format, HHS
will still lack the detailed utilization data it needs to meaningfully compare
the data available under fee-for-service billing. This, in turn, makes
evaluating the program’s success even more difficult.
HHS officials agreed that the Department’s draft plan omitted many of the
Agency Comments elements required by the Results Act. They explained that the remaining
elements of the plan are now being prepared and they expect that the plan
will be complete by the time it is due in September. Even though they
recognized in April when they released the draft that it did not contain all
required elements, they believed that it was more important to allow
enough time to consult with their many stakeholders, including state and
local governments, than to devote the time to developing a more complete
plan. They also believed that the plan as distributed in April provided a
14
Department of Health and Human Services: Management Challenges and Opportunities
(GAO/T-HEHS-97-98, Mar. 18, 1997).
Page 17 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
B-277400
sufficient framework for consultation. Furthermore, officials were
concerned that providing a level of detail to the extent we have suggested
would make the strategic plan a poor vehicle for communicating with the
Department’s stakeholders. Finally, they believed that it was important to
recognize that the strategic plan was a work in progress and not a final
product to be evaluated against the requirements of the Results Act. HHS’
comments are included in enclosure II. HHS officials also provided
technical comments, which we incorporated in the correspondence as
appropriate.
As arranged with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this correspondence until 30
days after its issue date. At that time, we will send copies to the Ranking
Minority Members of your Committees; the Chairmen and Ranking
Minority Members of the House Committees on Commerce and Ways and
Means; the Secretary of HHS; the Director, Office of Management and
Budget; and other interested parties. We will also send copies to others on
request.
This work was done under the direction of Bernice Steinhardt, Director,
Health Services Quality and Public Health Issues, who may be reached on
(202) 512-7119 if you or your staffs have any questions. Other major
contributors to this letter are in enclosure III.
Richard L. Hembra
Assistant Comptroller General
Enclosures - 3
Page 18 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Page 19 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure I
HHS’ Major Operating Divisions
Note: Operating divisions marked with an asterisk are part of PHS.
Page 20 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure II
Comments From the Department of Health
and Human Services
Page 21 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure II
Comments From the Department of Health
and Human Services
Page 22 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure II
Comments From the Department of Health
and Human Services
Page 23 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure II
Comments From the Department of Health
and Human Services
Page 24 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure II
Comments From the Department of Health
and Human Services
Page 25 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure II
Comments From the Department of Health
and Human Services
Page 26 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure II
Comments From the Department of Health
and Human Services
Page 27 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Enclosure III
Major Contributors to This Correspondence
Marsha Lillie-Blanton, Associate Director
Helene Toiv, Project Manager
Lacinda Baumgartner, Senior Evaluator
Lisanne Bradley, Senior Evaluator
Kay Brown, Assistant Director
Kay Daly, Senior Auditor
Mark E. Heatwole, Assistant Director
Christie M. Motley, Assistant Director
Dayna Shah, Assistant General Counsel
Stefanie Weldon, Senior Attorney
Page 28 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Page 29 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Page 30 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Page 31 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
Related GAO Products
Medicare: Control Over Fraud and Abuse Remains Elusive
(GAO/T-HEHS-97-165, June 26, 1997).
Medicare: Need to Hold Home Health Agencies More Accountable for
Inappropriate Billings (GAO/HEHS-97-108, June 13, 1997).
Managing for Results: Analytic Challenges in Measuring Performance
(GAO/HEHS/GGD-97-138, May 30, 1997).
Head Start: Research Provides Little Information on Impact of Current
Program (GAO/HEHS-97-59, Apr. 15, 1997).
Child Welfare: States’ Progress in Implementing Family Preservation and
Support Services (GAO/HEHS-97-34, Feb. 18, 1997).
High-Risk Series: Medicare (GAO/HR-97-10, Feb. 1, 1997).
Medical Device Reporting: Improvements Needed in FDA’s System for
Monitoring Problems With Approved Devices (GAO/HEHS-97-21, Jan. 29,
1997).
Rural Health Clinics: Rising Program Expenditures Not Focused on
Improving Care in Isolated Areas (GAO/HEHS-97-24, Nov. 22, 1996).
Child Support Enforcement: States’ Experience With Private Agencies’
Collection of Support Payments (GAO/HEHS-97-11, Oct. 23, 1996).
Drug and Alcohol Abuse: Billions Spent Annually for Treatment and
Prevention Activities (GAO/HEHS-97-12, Oct. 8, 1996).
Information Management Review: Effective Implementation Is Essential
for Improving Federal Performance (GAO/T-AIMD-96-132, July 17, 1996).
At-Risk and Delinquent Youth: Multiple Federal Programs Raise Efficiency
Questions (GAO/HEHS-96-34, Mar. 6, 1996).
Medicare: Millions Can Be Saved by Screening Claims for Overused
Services (GAO/HEHS-96-49, Jan. 30, 1996).
(108336) Page 32 GAO/HEHS-97-173R HHS’ Draft Strategic Plan
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Address Correction Requested
The Results Act: Observations on the Department of Health and Human Services' April 1997 Draft Strategic Plan
Published by the Government Accountability Office on 1997-07-11.
Below is a raw (and likely hideous) rendition of the original report. (PDF)