oversight

Observations on the Department of Health and Human Services' Fiscal Year 2000 Performance Plan

Published by the Government Accountability Office on 1999-07-20.

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

United States General Accounting Office                                                 Health, Education, and
Washington, D.C. 20548                                                                 Human Services Division




                 B-282988

                 July 20, 1999

                 The Honorable Dick Armey
                 Majority Leader
                 House of Representatives

                 The Honorable Dan Burton
                 Chairman, Committee on Government Reform
                 House of Representatives

                 The Honorable Fred Thompson
                 Chairman, Committee on Governmental Affairs
                 United States Senate

                 Subject: Observations on the Department of Health and Human Services’ Fiscal Year 2000
                 Performance Plan

                 As you requested, we have reviewed and evaluated the fiscal year 2000 performance plans for
                 the 24 Chief Financial Officers (CFO) Act agencies that were submitted to the Congress in
                 accordance with the Government Performance and Results Act of 1993 (Results Act).
                 Enclosure I to this letter provides our observations on the fiscal year 2000 performance plan
                 for the Department of Health and Human Services (HHS). Enclosure II lists management
                 challenges we and HHS’ Inspector General identified that face the agency and the applicable
                 goals and measures in the fiscal year 2000 annual performance plan. Enclosure III is HHS’
                 comments.

                 Our objectives were to (1) assess the usefulness of the agency’s plan for decisionmaking and
                 (2) identify the degree of improvement the agency’s fiscal year 2000 performance plan
                 represents over the fiscal year 1999 plan. Our observations were generally based on the
                 requirements of the Results Act, guidance to agencies from the Office of Management and
                 Budget (OMB) for developing the plan (OMB Circular A-11, Part 2), our previous reports and
                 knowledge of HHS’ operations and programs, and our observations on HHS’ fiscal year 1999




                 Page 1                                     GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
B-282988


performance plan. Our summary report on the CFO Act agencies’ fiscal year 2000 plans
                                                                          1
contains a complete discussion of our objectives, scope, and methodology.

As agreed, unless you announce the contents of this letter earlier, we plan no further
distribution until 30 days from the date of the letter. The major contributors to this report are
listed in enclosure IV. Please call me on (312) 220-7600 if you or your staff have any questions.




Leslie Aronovitz
Associate Director, Health Financing
  and Public Health Issues

Enclosures - 4




1
 Managing for Results: Opportunities for Continued Improvements in Agencies’ Performance Plans (GAO/GGD/AIMD-99-215, July
20, 1999).




Page 2                                                  GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure I

Observations on the Department of
Health and Human Services'
Performance Plan for Fiscal Year
2000
HHS’ fiscal year 2000 annual performance plan consists of a 250-page department wide
summary and 13 individual agency plans. Although the plan more clearly ties performance
goals to the Department’s strategic plan than the 1999 plan did, HHS’ 2000 performance plan
provides a limited picture of intended performance across the Department, a limited
discussion of strategies and resources the Department will use to achieve its goals, and
limited confidence that HHS’ performance information will be credible. For example, the
Substance Abuse and Mental Health Services Administration (SAMHSA) characterizes the
data that will be used to measure progress in offering outreach services to homeless and
mentally ill persons as “very good” because “the sources of the data are the local agencies
that provide the services.” SAMHSA appears to be assuming that these data are valid without
making any effort to verify the quality of these data, which are critical to measuring the
agency’s performance. The following figure highlights the plan’s major strength and key
weaknesses as HHS seeks to make additional improvements to its plan.

Figure I.1: Major Strength and Key Weaknesses of Fiscal Year 2000 Annual Performance Plan

Major Strengths
• Agency performance goals that are tied to Department strategic plan and program activities.

Key Weaknesses
• Agency performance goals not consistently measurable.
• Some key management challenges, such as Year 2000 compliance for certain key systems
and financial system weaknesses, are not adequately addressed.
• Agency procedures to verify and validate performance data or identify actions to
compensate for low quality data are not adequately described.
• The strategies and resources the agency will use to achieve its performance goals are not
always adequately discussed.
• Sufficient information about strategies to mitigate external factors and to marshal the
human capitol needed to achieve results are not provided.


HHS’ fiscal year 2000 performance plan indicates some degree of progress in addressing the
weaknesses that we identified in our assessment of its fiscal year 1999 performance plan. In
reviewing HHS’ fiscal year 1999 plan, we observed that the plan could (1) more consistently
set measurable performance goals; (2) provide information about how HHS agencies will
coordinate with one another and other performance partners, such as states, to achieve
related goals; (3) identify the resources HHS needs to accomplish its goals; (4) discuss how
HHS intends to address problems with performance data; and (5) more consistently link
performance goals with HHS’ mission, strategic goals, and program activities. Improvements
in the fiscal year 2000 plan include (1) a description of how Department strategic goals relate
to key programs and initiatives, and identification of some agency performance goals that




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Enclosure I
Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




implement Department strategic goals; (2) better descriptions of strategies and resources
needed to accomplish performance goals; and (3) better identification of data to be used to
measure performance and better discussions of data weaknesses. For example, HHS’ fiscal
year 2000 performance plan includes an expanded departmentwide summary that links
Departmental strategic goals to programs and initiatives and selected performance goals and
measures from the agencies’ performance plans. Further, the plan identifies the agencies
responsible for implementing departmentwide goals.

HHS’ Performance Plan Provides a Limited Picture of Intended
Performance Across the Agency
HHS’ annual performance plan for fiscal year 2000 provides a limited picture of intended
performance across the Department. To provide a clearer picture of intended performance,
the plan should contain sets of performance goals as well as measures that address important
dimensions of program performance. HHS’ individual agency performance plans do not
consistently do this. For example, although ensuring product safety is one of the Food and
Drug Administration’s (FDA) strategic initiatives, the human drug section of the plan contains
no goals to improve the inspection of foreign pharmaceutical facilities—an area GAO has
                                           1
identified as needing many improvements.

Some performance goals do not include specific baseline and trend data to allow an
evaluation of goal accomplishment. For example, the Administration for Children and
Families (ACF) has a performance goal to increase employment among adult recipients of
Temporary Assistance for Needy Families (TANF). Three areas of performance ACF plans to
measure with respect to this goal are an increase in the number of adult TANF recipients who
become newly employed, an increase in the number who retain employment, and an increase
in their average quarterly earnings. However, these goals are considered in the
“developmental” stage and the baselines, against which ACF could measure such results,
have not been established.

Performance plans should also include performance goals or strategies addressing mission
critical management problems. The Health Care Financing Administration (HCFA) plan
contains such goals, including ones that relate to areas of concern previously highlighted by
GAO and HHS’ Office of the Inspector General. For example, HCFA has goals related to Year
2000 computer challenges, implementation of the Balanced Budget Act of 1997 provisions,
improvements in HCFA’s fiscal year 1998 financial statement audit opinion, and security of
information systems. However, other plans do not include comparable goals. For example,

1
 See Food and Drug Administration: Improvements Needed in the Foreign Drug Inspection Program (GAO/HEHS-98-21, Mar. 17,
1998).




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Enclosure I
Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




the Program Support Center (PSC) operates and maintains the Payment Management System
(PMS)—one of only two such systems in the federal government—which serves 11 different
federal agencies and disburses approximately $165 billion in grants annually, including half of
all federal grants and all Medicaid grants to states. Yet the PMS section of the PSC
                                                                                     2
performance plan contains no reference to that system’s Year 2000 renovation effort.

While HHS’ performance plan recognizes the importance of financial management goals,
goals to improve financial weaknesses were not established in some areas where financial
weaknesses had been identified. For example, the fiscal year 1998 financial statement audit
of HHS noted that both the departmentwide and draft financial statements for some HHS
                                                                                          3
operating divisions have material weaknesses related to their financial reporting process.
Yet the plans of HCFA, ACF, and the National Institutes of Health (NIH) did not address these
financial reporting weaknesses. Further, HHS’ plan does not specify which material
weaknesses the Department wants to eliminate by fiscal year 2000, and it does not indicate a
specific date for achieving the goal of substantial compliance with the requirements of the
Federal Financial Management Improvement Act (FFMIA).

Some discussions of goals in the agencies’ plans identify programs in other agencies or
departments that contribute to the same or similar goals and indicate that coordination will
occur. For example, FDA has a goal to develop and make available an improved method for
the detection of several foodborne pathogens. FDA’s discussion of this goal refers to an
interagency research plan that more effectively coordinates the food safety research activities
in FDA and the U.S. Department of Agriculture.

By linking complementary performance goals of different agencies, the plan’s
departmentwide summary suggests how differing program strategies can be mutually
reinforcing. For example, one of HHS’ strategic objectives is to reduce tobacco use,
especially among youth. To contribute to this objective, the Centers for Disease Control and
Prevention (CDC) has a performance goal to reduce the percentage of teenagers who smoke
by conducting education campaigns, providing funding and technical assistance to state
programs, and working with nongovernmental entities. FDA has a complementary goal to
reduce easy access to tobacco products and eliminate the strong appeal of these products to


2
 GAO recently testified before the House Government Reform Subcommittee on Government Management, Information and
Technology that PMS is not yet Year 2000 compliant and that is unclear when it will be. See Year 2000 Computing Crisis:
Readiness Status of the Department of Health and Human Services (GAO/AIMD-99-92, Feb. 26, 1999). PMS was scheduled for
replacement with a new system that would be Year 2000 compliant, but since its inception, the planned PMS replacement has
encountered problems and is still not operational.
3
HHS, Office of the Inspector General, Report on the Department of Health and Human Services Consolidated/Combined
Financial Statement for Fiscal Year 1998, A-17-98-00015 (Feb. 1999), pp. V-8 through V-12, as taken from United States
Department of Health and Human Services Accountability Report: Fiscal Year 1998 (Feb. 26, 1999).




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Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




children by conducting 400,000 compliance checks and selecting certain sites to target for
intensified enforcement efforts to determine the effectiveness of different levels of effort.

HHS’ fiscal year 2000 performance plan shows moderate improvement over last year’s plan in
portraying intended performance across the agency. In our review of the fiscal year 1999
plan, we observed that it would have been more useful if it had more consistently linked
performance goals with HHS’ mission, strategic goals, and program activities. The fiscal year
2000 performance plan includes an expanded departmentwide summary that links
departmental strategic goals to agency programs and initiatives and selected performance
goals and measures from the agencies’ performance plans. Further, the plan identifies the
agencies responsible for implementing departmentwide goals.

Although the linkages have been improved, in some cases, agencies that are identified in the
departmentwide summary as being responsible for contributing to the accomplishment of a
strategic goal have not included related performance goals in their agency plans. For
example, according to the HHS performance plan, the Health Resources and Services
Administration (HRSA) supports the strategic goal, “improve the diet and the level of physical
activity of Americans.” Specifically, HRSA’s health centers are to expand the counseling of
patients regarding tobacco, alcohol, drug use, oral health, fitness, and nutrition. However,
the HRSA performance plan does not mention such an expansion in counseling services.
Further, in a table linking HHS’ strategic goals to its own performance goals, HRSA did not
identify this particular HHS goal as one that HRSA supports.

Our review of the fiscal year 1999 plan also noted that HHS could substantially improve its
plan by consistently acknowledging the crosscutting nature of many programs and discussing
coordination among its own agencies and with other agencies that work toward related
program goals. In the fiscal year 2000 plan, HHS’ agencies more consistently state their
intention to coordinate their efforts with other programs both within and outside the agency.
However, the descriptions of how the agencies will accomplish this continue to be
insufficiently detailed.

For example, CDC’s plan notes that the HIV/AIDS program will continue to work closely with
HRSA and the National Academy of Sciences to implement the Ryan White legislation and to
evaluate state efforts to reduce perinatal transmission of HIV, and it will collaborate with
SAMHSA and the National Institute for Drug Abuse on issues related to transmission of HIV
among the population of injecting drug users. The plan does not, however, indicate what
specific collaborative efforts will take place among these agencies. Further, while the plan
states that CDC has established a work group related to its HIV/AIDS program, it does not
identify the agencies participating in the work group.

Similarly, although HCFA recognizes the groups with which it should work to achieve many
performance goals, specific details about planned coordination strategies are sometimes




Page 6                                             GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure I
Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




limited. For example, HCFA developed a performance goal to decrease the prevalence of
pressure ulcers in patients residing in long-term care facilities, partially in response to
                                                               4
concerns we raised in earlier reviews of nursing home care. In addressing this performance
goal, HCFA’s plan notes only that it intends to work with national provider associations,
national experts on pressure ulcer reduction, peer review organizations, states, and consumer
advocates. The plan does not indicate how and for what specific purposes HCFA will work
with these groups.

HHS’ Performance Plan Provides a Limited Discussion of the
Strategies and Resources the Agency Will Use to Achieve Its
Goals
HHS’ performance plan does not provide sufficiently specific discussions of strategies and
resources the Department will use to achieve performance goals. Although some individual
agency performance plans show how program activities and budgetary resources are linked
to the achievement of performance goals, not all agencies do so. For example, the Indian
Health Service (IHS) plan connects budgetary resources with the achievement of
performance goals, provides a matrix linking program activities and budgetary accounts to
IHS’ four strategic goals, and links these strategic goals to a series of performance indicators.

NIH’s plan, however, does not provide clear and easily understandable linkages between
budget accounts and program activities. NIH elected to aggregate its program activities in its
performance plan. It maintains that because of the crosscutting nature of the missions of its
25 institutes and centers, there is a similarity across the institutes and centers in performance
goals and the relevant activities to accomplish these goals. However, such aggregation makes
it difficult to link specific program outcomes with budgetary resources, especially because
most NIH institutes and centers receive individual appropriations. Other than the aggregated
crosswalk of its three core programs—research, research training and career development,
and facilities—there is little discussion in the NIH plan of the resources required to
accomplish the performance goals for each program.

HHS’ agencies do not always adequately discuss how strategies and programs link to
performance goals. For example, in the area of child welfare programs, ACF has a goal to
provide children permanency and stability in their living situations and related performance
measures, such as increasing the percentage of children who are adopted within 2 years of



4
 See California Nursing Homes: Care Problems Persist Despite Federal and State Oversight (GAO/HEHS-98-202, July 27, 1998)
and California Nursing Homes: Federal and State Oversight Inadequate to Protect Residents in Homes With Serious Care
Violations (GAO/T-HEHS-98-219, July 28, 1998).




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Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




foster care placement. However, ACF does not identify the strategies it will rely on to
achieve this goal.

The agencies also do not adequately explain how they plan to build, maintain, and marshal
the human capital needed to achieve results. For example, as we recently testified, over the
next 5 years, almost a quarter of HCFA’s staff—who make up a large part of the agency’s
                                                                5
management and technical expertise—will be eligible to retire. Although HCFA officials told
GAO that they are taking the initial steps toward developing a long-term human resources
plan, strategies for meeting workforce needs are not described in HCFA’s performance plan.

The individual agency performance plans do not always identify strategies to leverage or
mitigate the effects of external factors on the accomplishment of performance goals. For
example, FDA’s plan discusses the performance goals for its tobacco program in great detail.
However, this discussion makes no mention of the multibillion-dollar settlement between the
states and tobacco companies or state efforts to accomplish the agency’s goal of reducing the
incidence of youth smoking. States have already used some of the settlement proceeds to
initiate tobacco use prevention and control programs—in many cases, with the assistance of
CDC. Yet FDA’s plan does not mention these state activities or how they affect FDA’s goals.

HHS’ fiscal year 2000 performance plan recognizes the weaknesses that we identified in our
assessment of its fiscal year 1999 performance plan as it relates to providing a specific
discussion of strategies and resources the Department will use to achieve performance goals
and makes specific commitments to address those weaknesses. However, real progress is
not yet evident. Among improvements in the fiscal year 2000 plan are that agencies more
frequently identify strategies they will use to achieve their goals; in some cases, they provide
more thorough descriptions of how the strategies will help them meet their performance
goals. For example, HCFA’s performance plan generally provides information on strategies
to accomplish each of its 30 performance goals, the rationale for selecting a particular
performance measure, and pertinent background information. In several instances, HCFA
provides highly detailed information on how its planned strategy will help achieve
performance goals. One such instance is HCFA’s work to improve heart attack survival rates
by encouraging hospitals to improve performance on six specific clinical interventions,
including administering aspirin early in the hospital stay to prevent blood clot formation and
prescribing certain medications when the patient is discharged from the hospital.




5
See HCFA Management: Agency Faces Multiple Challenges in Managing Its Transition to the 21st Century (GAO/T-HEHS-99-58,
Feb. 11, 1999).




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Enclosure I
Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




HHS’ Performance Plan Provides Limited Confidence That
Agency Performance Information Will Be Credible
HHS’ fiscal year 2000 performance plan provides limited confidence that the Department’s
performance information will be credible. Many of the agency plans provide, at best, sketchy
descriptions of agencies’ efforts to verify and validate performance data. For example, some
verification processes described in SAMHSA’s performance plan do not provide confidence in
the credibility of its performance information. In characterizing the data that will be used to
measure progress in offering outreach services to homeless and mentally ill persons,
SAMHSA’s plan states “since the sources of the data are the local agencies that provide the
services, the quality of the data is very good.” SAMHSA appears to be assuming that these
data are valid without indicating that it plans to verify the quality of the data.

Some HHS agencies also do not adequately identify actions to compensate for unavailable or
poor quality data. For example, ACF’s plan notes that in the area of child support
enforcement, not all states have certified statewide-automated systems and some states still
maintain their data manually. Additionally, the agency’s Office of Child Support Enforcement
has reported that where automated systems are not in place, problems of duplication and
                                  6
missing information could result. Yet the plan does not discuss the actions ACF will take to
compensate for possibly unreliable data or the implications of these data limitations.

HHS’ fiscal year 2000 performance plan shows little improvement over its 1999 plan with
regard to providing confidence that the Department’s performance information will be
credible. The plan acknowledges the weaknesses that we identified in our assessment of the
fiscal year 1999 plan and makes some attempt to address those weaknesses. However, real
progress is not yet evident. While parts of the fiscal year 2000 plan contain more thorough
discussions of data verification and validation, others do not, and the discussions frequently
do not address serious problems with the underlying data.

For example, HCFA has a performance goal to “increase health plan choices available to
Medicare beneficiaries.” According to HCFA, in fiscal year 1997, 70 percent of Medicare
beneficiaries had at least one managed care option and they have set this as the baseline
against which its performance results will be measured. HCFA describes several data files
and discusses how they will be used to provide the performance information required.
However, as in last year’s plan, the validation and verification section mentions only that the
data are validated and verified internally on at least a quarterly basis. There are no specific



6
See HHS, Administration for Children and Families, Office of Child Support Enforcement, Child Support Enforcement:
Twentieth Annual Report to Congress (Sept. 1995), pp. 166-67.




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Enclosure I
Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




mentions of verification and validation procedures, general data quality control procedures,
or recognition of possible data shortcomings.

From an overall perspective, it does not appear that HHS has the information sources and the
capacity needed to generate valid data to support its performance plan and to produce
credible performance reports. The plan’s departmentwide summary generally notes
problems with performance information including challenges in data validation, difficulties in
moving from output/process measures to outcome measures, and the need to involve
partners and stakeholders in developing performance objectives and measures. However,
overcoming these limitations could take the HHS agencies many years.

Other Observations on HHS’ Implementation of Performance-
Based Management
Because Year 2000 compliance has been the primary computer concern this year for HHS,
there is little progress from fiscal year 1999 to fiscal year 2000 in the quality of HHS’ financial
and information systems, which generally do not contain reliable information. During GAO’s
fiscal year 1998 audit of the consolidated financial statements of the United States, we
reported that widespread computer control weaknesses within HHS place significant
amounts of federal assets at risk for fraud and misuse, financial information at risk of
unauthorized modification or destruction, and sensitive information at risk of inappropriate
             7
disclosure. Weaknesses such as these place confidential HHS information—especially
information contained in sensitive medical and other personal records maintained by
HCFA—at risk of disclosure. Also, we reported under FFMIA that HHS’ financial
management systems were not in compliance with federal financial management systems
                 8
requirements. HHS’ Office of the Inspector General also reported significant departures from
systems requirements, such as access and application control weaknesses at HCFA’s central
                                              9
office and its Medicare contractor systems.




7
    Financial Audit: 1998 Consolidated Financial Statements of the United States Government (GAO/AIMD-99-130, Mar. 31, 1999).
8
See Financial Management: Federal Financial Management Improvement Act Results for Fiscal Year 1997 (GAO/AIMD-98-268,
Sept. 30, 1998).
9
HHS, Office of the Inspector General, Report on the Financial Statement Audit of the Health Care Financing Administration for
Fiscal Year 1998, A-17-98-00098 (Feb. 1999), pp. 109–12, as taken from United States Department of Health and Human Services’
Health Care Financing Administration Report Fiscal Year 1998 (Feb. 1999).




Page 10                                                      GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure I
Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




Agency Comments
HHS disagreed with our assessment of its fiscal year 2000 performance plan. Specifically, the
Department expressed disagreement in five areas.

First, HHS said that our conclusion that agency performance goals are not consistently
measurable is incorrect, noting that the plan contains about 1,400 concrete performance
measures. It is HHS’ position that while performance measures associated with some goals
are in a developmental stage, all the goals are measurable and will be the subject of specific
performance measures. While the HHS plan contains many measurable goals that provide the
Congress and the public with information about intended performance, many goals for
important HHS programs are not measurable. Furthermore, some significant programs, such
as FDA’s program for inspecting foreign pharmaceutical facilities, do not have performance
goals.

Second, HHS disagreed with our assessment that its plan does not adequately address key
management challenges, such as Year 2000 compliance and financial systems weaknesses.
HHS believes that it has included appropriate goals in the plan and that it has provided more
detailed information on these issues in other documents, such as the Department’s quarterly
Y2K reports and plans, the HHS Financial Management Status Report and Five-Year Plan, and
the HHS Accountability Report. As we indicated in our assessment, however, we believe the
plan has significant omissions with regard to how some key programs will address these
problems. Furthermore, the other documents HHS refers to do not always provide the
relevant information. For example, HHS’ fiscal year 1998 Financial Management CFO Five-
Year Plan states that the area of financial reporting is not a high priority.

Third, HHS disagreed with our assessment of the credibility of its performance data and said
that we expect excessive documentation of data verification and validation. We reported that
the plan provides limited confidence that HHS’ performance information will be credible
because many of the individual agency plans provide, at best, sketchy descriptions of agency
efforts to verify and validate performance data. In addition, they often contain insufficient
information about how agencies will compensate for data they know are unavailable or of
poor quality. Regarding the extent of data verification and validation, our expectation was
that the plan consistently adhere to the Results Act requirement to provide some description
of efforts to verify and validate performance data.

HHS also disagreed with our assessment that the performance plan does not sufficiently
discuss strategies and resources the Department will use to achieve its performance goals,
and the Department expressed concern that we expected the plan to duplicate information in
HHS’ budget justification. Our analysis showed that some HHS agencies have not provided
sufficient information to link their program goals with their capital, human, information, and
other resources and, in some cases, with the strategies they plan to use to achieve the goals.




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Observations on the Department of Health and Human Services' Performance Plan for Fiscal Year 2000




We do not expect HHS to duplicate information. However, information on the strategies
planned to achieve some performance goals does not exist in either the performance plan or
other sections of the budget justification; in other instances, HHS does not clearly link
discussions of performance goals in the plans with discussions of strategies that appear
elsewhere in the budget justification.

Finally, HHS disagreed with our assessment that the plan does not provide sufficient
information about strategies to mitigate external factors and to marshal the human capital
needed to achieve results. In particular, HHS contends that it does not marshal directly the
human capital that can achieve results for most HHS programs because programs are
implemented and administered by performance partners. As HHS explained in its plan, it is a
very complex responsibility to carry out major programs like HHS’ through performance
partners. We believe that this is precisely why it is so important for HHS to have a clear plan
for marshaling the considerable human capital within the Department—over 59,000
employees in fiscal year 1999--to work with its partners to ensure achievement of HHS’ goals.

We have made technical corrections in response to HHS’ comments, where appropriate.

We believe that HHS’ fiscal year 2000 performance plan has a number of improvements
compared to its first annual plan. In its comments, HHS stated that it will continue to work
with OMB and its performance partners to ensure that future performance plans continue to
provide data that support budget and program decisions for HHS.




Page 12                                            GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure II

Management Challenges


The following table shows major management challenges confronting HHS and goals and
measures in the HHS fiscal year 2000 performance plan relating to those challenges.

Table II.1 Management Challenges
Management challenges identified by GAO                     Applicable goals and measures in HHS’ fiscal
                                                            year 2000 annual performance plan
Scope and complexity of HHS programs create                 No HHS departmentwide performance goals, but
coordination, oversight, and performance                    summary includes discussion of crosscutting strategic
measurement challenges. To manage their wide-               objectives. Selected examples of performance goals
ranging programs effectively and efficiently, HHS           from individual agency plans:
agencies must coordinate with each other, other             HRSA—Increase to 50 the number of state offices of
federal agencies, and state and local government and        rural health, which have implemented performance
private program partners. Balancing program flexibility     outcome measurement indicators and reported a
with oversight responsibilities and the challenge of        summary of their outcomes.
measuring program outcomes make it difficult for HHS        HCFA—Develop a performance standard concerning
to ensure accountability for results.                       the Health Insurance Portability and Accountability
                                                            Act’s effectiveness in resolving complaints against
                                                            insurers, states, or plans.
HHS needs reliable data and data systems to manage          HHS departmentwide performance goals:
programs and assess results. Data needed to manage          100% of HHS information systems will function
and evaluate HHS’ programs are often unavailable,           properly into the Year 2000.
inaccurate, or inconsistent, and obtaining comparable       Business continuity and contingency plans will be
data from programs carried out by state and local           available for 100% of critical business processes and
partners is difficult. Year 2000 challenges will            mission critical systems.
compound these problems and could put benefits and          Selected examples of performance goals from
services at risk.                                           individual agency plans:
                                                            HCFA—Ensure Year 2000 compliance (readiness) of
                                                            HCFA computer systems.
                                                            FDA—Develop Sentinel Surveillance System for
                                                            device injury reporting based on representative user
                                                            facilities.
                                                            FDA—Establish an electronic data system to facilitate
                                                            the submission, processing, and analysis of error and
                                                            accident reports for unlicensed blood facilities.
                                                            CDC—Encourage state health departments to
                                                            develop efficient and comprehensive public health
                                                            information and surveillance systems by promoting
                                                            the use of the Internet for surveillance and electronic
                                                            data interchange and by focusing on development of
                                                            standards for data elements.
Program integrity is a continuing challenge. HHS            HHS departmentwide performance goals:
programs are attractive targets for fraud, waste, abuse,    HHS and its operating divisions will receive
and mismanagement: Medicare is particularly                 unqualified opinions in their FY 2000 financial
vulnerable and remains a high-risk area. HHS’ fiscal        statement audits.
year 1998 financial statements had serious                  The number of material weaknesses identified in
deficiencies.                                               financial statement audits will be reduced from 22 in
                                                            FY 1997 to not more than 3 in FY 2000.
                                                            All HHS operating divisions will be in substantial
                                                            compliance with the requirements of FFMIA.
                                                            HHS’ FY 2000 debt collections will be 10% higher
                                                            than those for FY 1999.




Page 13                                              GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure II
Management Challenges




Management challenges identified by GAO                   Applicable goals and measures in HHS’ fiscal
                                                          year 2000 annual performance plan
                                                          Selected performance goals from HCFA’s plan:
                                                          Reduce the percentage of improper Medicare fee-for-
                                                          service payments to 7 percent by 2000 and 5 percent
                                                          by 2002.
                                                          Improve the efficiency of medical claims reviews to
                                                          permit a 10-percent increase in the number of claims
                                                          reviewed.
                                                          Increase the ratio of recoveries to audit dollars spent.
                                                          Increase Medicare secondary payer liability and no-
                                                          fault recoveries.
                                                          Reduce improper payments for home health services.
                                                          Ensure Year 2000 compliance of HCFA computer
                                                          systems.



Other areas identified by HHS’ Office of the              Applicable goals and measures in HCFA’s fiscal
Inspector General                                         year 2000 performance plan
Highly questionable payments for mental health            Reduce the percentage of improper payments made
services                                                  under the Medicare fee-for-service program.
Growth of Medicare managed care                           Ensure timely enrollment of beneficiaries into
                                                          managed care plans.
                                                          Improve Medicare managed care plans'
                                                          administration of the appeals process.
Questionable home health payments                         Reduce the percentage of Medicare home health
                                                          services provided for which improper payments are
                                                          made.
Nursing facilities payment reforms and implementation     Develop new Medicare payments systems in fee-for-
of other Balanced Budget Act provisions                   service and Medicare+Choice.




Page 14                                            GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure III

Comments From the Department of Health &
Human Services




                Page 15   GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure III
Comments From the Department of Health & Human Services




Page 16                    GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure III
Comments From the Department of Health & Human Services




Page 17                    GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan
Enclosure IV

GAO Contacts and Staff
Acknowledgments

GAO Contacts
William J. Scanlon, (202) 512-7114
Cynthia M. Fagnoni, (202) 512-7215




Acknowledgments
In addition to those named above, Paul D. Alcocer; Sheila K. Avruch; Laura E. Castro; Gale C.
Harris; Robert C. Norris, Jr.; Sandra S. Silzer; Victoria M. Smith; Helene F. Toiv; and Paul T.
Wagner, Jr. made key contributions to this product.




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Page 18                                          GAO/HEHS-99-149R HHS’s Fiscal Year 2000 Performance Plan