oversight

Year 2000 Computing Crisis: Action Needed to Ensure Continued Delivery of Veterans Benefits and Health Care Services

Published by the Government Accountability Office on 1999-04-15.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Oversight and Investigations,
                          Committee on Veterans’ Affairs, House of Representatives




For Release on Delivery
Expected at
9:30 a.m.
                          YEAR 2000 COMPUTING
Thursday,
April 15, 1999            CRISIS

                          Action Needed to Ensure
                          Continued Delivery of
                          Veterans Benefits and
                          Health Care Services
                          Statement of Joel C. Willemssen
                          Director, Civil Agencies Information Systems
                          Accounting and Information Management Division




GAO/T-AIMD-99-136
                        Mr. Chairman and Members of the Subcommittee:

                        We appreciate the opportunity to participate in today’s hearing on the
                        readiness of the Department of Veterans Affairs (VA) to deliver benefits and
                        health care services through the turn of the century. We will focus on the
                        Year 2000 (Y2K) readiness of automated systems that support such
                        delivery, the compliance status of biomedical equipment used in patient
                        care, and the Y2K readiness of the pharmaceutical and medical-surgical
                        manufacturers upon which VA relies. In discussing biomedical equipment
                        and pharmaceutical products, we will also share with you information on
                        the Food and Drug Administration’s (FDA) Y2K efforts.1

                        In brief, VA continues to make progress in its Y2K readiness. However, key
                        actions remain to be performed. For example, the Veterans Benefits
                        Administration (VBA) and Veterans Health Administration (VHA) have not
                        yet completed testing of their mission-critical systems to ensure that these
                        systems can reliably accept future dates--such as January 1, 2000. Also,
                        VHA has not completed assessments for its facility systems, which can be
                        essential to ensuring continuing health care. In addition, neither VA nor
                        FDA have implemented our prior recommendation to review the test
                        results for biomedical equipment used in critical care/life support
                        environments. Further, VHA’s pharmaceutical operations are at risk
                        because the automated systems supporting its consolidated mail outpatient
                        pharmacies are not Y2K compliant. Finally, VHA does not know if its
                        medical facilities will have a sufficient supply of pharmaceutical and
                        medical-surgical supplies on hand because it does not have complete
                        information on the Y2K readiness of these manufacturers. It is critical that
                        these concerns be addressed if VA is to continue reliably delivering benefits
                        and health care.



Key Actions Remain to   Like many organizations, VA faces the possibility of computer system
                        failures at the turn of the century due to incorrect information processing
Ensure That VA Can      relating to dates. The reason for this is that in many systems, the year 2000
Deliver Benefits and    is indistinguishable from 1900, since the year is represented only by “00.”
                        This could make veterans who are eligible for benefits and medical care
Health Care Into the    appear ineligible. If this happens, the issuance of benefits and the
Next Century

                        1 Biomedicalequipment refers to both medical devices regulated by FDA and scientific and research
                        instruments, which are not subject to FDA regulation.




            Leter       Page 1                                                                        GAO/T-AIMD-99-136
provision of medical care that veterans rely on could be delayed or
interrupted.

As we reported last August, 2 VBA had made progress in addressing the
recommendations in our May 1997 report3 and making its information
systems Y2K compliant. It reported it had renovated 75 percent of its
mission-critical applications as of June 1998. At the same time, VHA
reported it had assessed all and renovated the vast majority of its mission-
critical information systems.

Despite this progress, VBA was making limited progress in renovating two
key mission-critical applications--the compensation and pension online
application and the Beneficiary Identification and Record Locator Sub-
System. And, except for its Insurance Service, VBA had not developed
business continuity and contingency plans for its program services--
Compensation and Pension (the largest), Education, Loan Guaranty, and
Vocational Rehabilitation and Counseling--to ensure that they would
continue to operate if Y2K failures occurred.

VHA’s Y2K program likewise had areas of concern. For example, although
VHA’s medical facilities had hospital contingency plans, as required by the
Joint Commission on Accreditation of Healthcare Organizations, they had
not yet completed Y2K business continuity and contingency plans. To
address these areas and to reduce the likelihood of delayed or interrupted
benefits and health care services, we recommended that VA

• reassess its Y2K mission-critical efforts for the compensation and
  pension online application and the Beneficiary Identification and
  Record Locator Sub-System, as well as other information technology
  initiatives, such as special projects, to ensure that the Y2K efforts have
  adequate resources, including contract support, to achieve compliance
  in time;
• establish critical deadlines for the preparation of business continuity
  and contingency plans for each core business process or program
  service so that mission-critical functions affecting benefits delivery can
  be carried out even if software applications and commercial-off-the-


2
 Year 2000 Computing Crisis: Progress Made in Compliance of VA Systems, But Concerns Remain
(GAO/AIMD-98-237, August 21, 1998).

3 Veterans Benefits Computer Systems: Risks of VBA’s Year 2000 Efforts (GAO/AIMD-97-79, May 30,
1997).




Page 2                                                                       GAO/T-AIMD-99-136
                         shelf (COTS) products fail, including a description of resources, staff
                         roles, procedures, and timetables needed for implementation; and
                       • ensure rapid development of business continuity and contingency plans
                         for each medical facility so that mission-critical functions affecting
                         patient care can be carried out if software applications, COTS products,
                         and/or facility-related systems and equipment do not function properly,
                         including a description of resources, staff roles, procedures, and
                         timetables needed for implementation. 4


VA Continues to Make   VA has been responsive to our recommendations. For example, VBA
Progress               reassessed its mission-critical efforts for the compensation and pension
                       online application and the Beneficiary Identification and Record Locator
                       Sub-System, as well as other information technology initiatives. It also
                       reallocated resources to ensure that the Y2K efforts had adequate
                       resources, including contract support, to achieve compliance.

                       In addition, VBA completed a draft business continuity and contingency
                       plan in January 1999 for its core business processes, as well as a related
                       planning template for its regional offices. The plan provides a high-level
                       overview of the resources, staff roles, procedures, and timetables for its
                       implementation. It addresses risks, including mitigation actions to reduce
                       the impact of Y2K-induced business failures, and analyzes the effect on
                       each business line of a number of potential Y2K disasters--such as loss of
                       electrical power, loss of communications, loss of data processing
                       capabilities, and failure of internal infrastructure. According to VBA, the
                       plan, which it expects to test this August, is an evolving document, to be
                       revised and updated periodically until January 1, 2000.

                       VBA’s plan makes no reference to contingencies for the failure of three of
                       VBA’s benefit payment systems--Compensation and Pension, Education,
                       and Vocational Rehabilitation and Counseling. However, it is currently
                       developing a payment contingency plan for these systems and expects this
                       to be completed in May 1999. A VBA official told us that the payment
                       contingency plan should have been referenced in VBA’s business continuity
                       and contingency plan and will be in future versions. The current plan also
                       does not contain the designation of an information technology security
                       coordinator and a physical security coordinator--individuals that VBA
                       acknowledges are essential to the agency’s Y2K efforts--with responsibility


                       4 GAO/AIMD-98-237, August   21, 1998.




                       Page 3                                                     GAO/T-AIMD-99-136
for ensuring overall security for VBA's network and web site and backing
up data storage before, during, and following January 1, 2000. This type of
information will be necessary if security-related failures occur. According
to VBA, it expects to designate these individuals by August 1999.

VHA has also made progress in developing business continuity and
contingency plans for its medical facilities. Last month, VHA issued its
Patient-Focused Year 2000 Contingency Planning Guidebook to its medical
facilities describing actions they can take to minimize Y2K-related
disruptions to patient care. The guidebook discusses how the facilities
should develop contingency plans for each major hospital function--such as
radiology, pharmacy, and laboratory--as well as each major support
function--such as telecommunications, facility systems, medical devices,
and automated information systems. The guidebook also contains
examples of plans, policies, and solutions for problems that a medical
facility may face and provides Y2K templates describing the areas a facility
should address by specific hospital function. VA provided this guidebook
to the medical facilities early last month and expects the facilities to use it
to prepare their individual business continuity and contingency plans, set
to be completed by April 30. The guidebook stresses that these plans
should be tested and suggests that the medical facilities begin testing in
June.

The guidebook addresses external emergency preparedness as well as
internal operations. Specifically, it discusses three functions that medical
facilities should perform in order to ensure that potential external hazards
are considered and planned for. These are (1) performing an assessment of
hazard vulnerabilities--that is, the types and kinds of Y2K problems that are
anticipated within the community, (2) conducting an inventory of
community resources--people, money, clinical space, supplies, and
equipment--available to address these hazards, and (3) closing the gap
between vulnerabilities and capabilities by putting into place measures that
will mitigate potential disruptions in critical services by developing new
working relationships with various government agencies, non-VA health
care organizations, and vendors of critical supplies.

In addition to implementing our recommendations, VA continues to make
progress renovating, validating, and implementing its systems. On
March 31, 1999, VA reported to the Office of Management and Budget
(OMB) that the department has renovated and implemented all of the
mission-critical applications supporting its 11 systems areas. As shown in
table 1, VBA has six of these areas, and VHA has two.



Page 4                                                       GAO/T-AIMD-99-136
                              Table 1: Reported Status of VA’s Mission-Critical Computer Systems Areas and
                              Their Applications

                              Component/office                                                           Number of applications
                              (number of systems)             Systems areas                               renovated or replaced
                              Veterans Benefits               Compensation and Pension                                      30
                              Administration (6)              Education                                                     24
                                                              Insurance                                                      3
                                                              Loan Guaranty                                                 19
                                                              Vocational Rehabilitation                                      4
                                                              Administrative                                                27
                                                              Total                                                        107
                              Veterans Health                 Veterans Health Information
                              Administration (2)              Systems and Technology
                                                              Architecture                                                 105
                                                              Veterans Health Administration
                                                              Corporate Systems                                             95
                                                              Total                                                        200
                              National Cemetery               Burial Operations Support System/
                              System (1)                      Automated Monument Application
                                                              System                                                         1
                                                              Reengineer                                                     1
                                                              Total                                                               2
                              Office of Financial             Personnel and Accounting
                              Management (2)                  Integrated Data                                                8
                                                              Financial Management System                                    1
                                                              Total                                                          9
                              VA total                        11                                                          318a
                              aOf   this total, 316 applications were renovated and two were replaced.
                              Source: VA. We have not independently verified this information.




Testing of Mission-Critical   Complete and thorough Y2K testing is essential to providing reasonable
Systems Not Yet Complete      assurance that new or modified systems will process dates correctly and
                              will not jeopardize an organization’s ability to perform core business
                              operations.5 Because the Y2K problem is so pervasive, potentially affecting
                              an organization’s systems software, applications software, databases,
                              hardware, firmware, embedded processors, telecommunications, and


                              5 Year   2000 Computing Crisis: A Testing Guide (GAO/AIMD-10.1.21, November 1998).




                              Page 5                                                                         GAO/T-AIMD-99-136
interfaces, the requisite testing can be extensive and expensive.
Experience is showing that Y2K testing is consuming between 50 and 70
percent of a Y2K project’s time and resources.

According to our Y2K guide, to be done effectively, testing should be
planned and conducted in a structured and disciplined fashion. Our guide
describes a step-by-step framework for managing Y2K testing, which
includes the following key processes:

• Software unit testing to verify that the smallest defined module of
  software (individual subprograms or procedures) continues to work as
  intended.
• Software integration testing to verify that units of software, when
  combined, continue to work together as intended. Typically, integration
  testing focuses on ensuring that the interfaces work correctly and that
  the integrated software meets requirements.
• System acceptance testing to verify that the complete system--that is,
  the full complement of application software running on the target
  hardware and systems software infrastructure--satisfies specific
  requirements and is acceptable to users. This testing can be run
  separately or in some combination in an operational environment
  (actual or simulated) and collectively verifies that the entire system
  performs as expected.

According to VBA and VHA officials, their testing criteria were based on
their software development life cycle guidance documents. They said that
upon completion of software unit and integration testing, a system is
considered Y2K compliant. They said this type of testing had been
completed for all of their mission-critical systems.

As of March 31, 1999, neither VBA nor VHA had completed systems
acceptance testing--which requires that each system be tested, including
full forward-date testing, on a compliant platform--for all their mission-
critical systems. Specifically, according to VBA officials, the agency had
completed systems acceptance testing for half of its mission-critical
systems--Insurance, Loan Guaranty, and Vocational Rehabilitation and
Counseling. According to VBA’s March 1999 draft test plan, systems
acceptance testing of the Compensation and Pension and most of the
Education systems was to start in mid-April 1999. According to a VBA
official, one of the reasons for the late systems testing was that the IBM
platform at its Hines, Illinois, data center was not made Year 2000




Page 6                                                     GAO/T-AIMD-99-136
compliant until the compiler 6 was upgraded in February 1999. According
to VBA, the Compensation and Pension and most of the Education systems
will be future-date tested throughout April.

VHA also plans to begin system acceptance testing of its mission-critical
systems this month and complete it this June. According to VHA officials,
they could not perform this type of testing before March of this year
because VHA did not have a separate Y2K-compliant test environment to
isolate the testing from the hospital systems in use.

In addition to testing of individual systems, end-to-end testing of multiple
systems is also critical. End-to-end testing, as defined in our test guide,
verifies that a defined set of interrelated systems, which collectively
support an organizational core business area or function, continues to
work as intended in an operational environment, either actual or simulated.
For example, in order to successfully process a compensation benefit
payment to a veteran, VBA’s Compensation and Pension System must work
correctly with its Beneficiary Identification and Records Locator Sub-
System, Treasury’s Financial Management System, the Federal Reserve
System, and financial institution systems.

VBA and VHA plan to conduct end-to-end testing between now and this
July. VBA is defining end-to-end testing as verification that core mission-
critical business functions, including benefit payments and vendor and
payroll payments, process correctly. The interfaces between VBA’s benefits
system and Treasury’s Financial Management System are to be tested in
May. VBA also plans to test transactions that interface with VHA systems,
such as information related to veteran eligibility. VHA is defining end-to-
end testing as verification that core mission-critical business functions,
including patient-care transactions and vendor and payroll payments,
process correctly. Once these tests are completed, VBA and VHA plan to
conduct a “business process simulation” during the July 4, 1999, weekend.
This simulation of day-to-day work at VA is to include users at the VBA
regional offices and VHA test laboratories, who will simulate various
transactions and process them through a set of interrelated systems
necessary to complete a core business function. VBA expects to pretest the
business process simulation during May.



6Acompiler is a computer program that converts human-readable source code into a sequence of
machine instructions that the computer can run.




Page 7                                                                     GAO/T-AIMD-99-136
Assessment of VHA’s        VA’s facility systems are essential to the continued delivery of health care
Facility Systems Not Yet   services. For example, heating, ventilating, and air conditioning equipment
                           is used by hospitals to ensure that contaminated air is confined to a
Complete                   specified area such as an isolation room or patient ward. If computer
                           systems used to maintain these systems were to fail, any resulting climate
                           fluctuations could affect patient safety.

                           Despite their importance, VHA has not yet completed its assessment of
                           facility systems. As of February 28, 1999, VHA medical facilities reported
                           that they had assessed 55 percent of their facility systems. According to
                           VHA’s Director of Safety and Technical Programs, the remaining 45 percent
                           have not been fully assessed primarily because (1) facility systems tend to
                           be a combination of unique elements that have to be separately assessed
                           for compliance--a time-consuming process--and (2) VHA is still awaiting
                           compliance status information from facility system manufacturers. VHA
                           has not established milestones for completing its assessment and
                           implementation of compliant facility systems. To help ensure that sufficient
                           time remains to complete these activities, we recommend that VHA
                           consider setting such deadlines.

                           In the event that facility-related systems and equipment do not function
                           properly due to Y2K problems, VHA medical facilities will need to ensure
                           that they have business continuity and contingency plans addressing how
                           mission-critical functions affecting patient care will be carried out.
                           According to VHA’s Director of Safety and Technical Programs, most of its
                           facility systems have some kind of manual override or reset that will allow
                           them to continue functioning after a Y2K problem. He agreed, however,
                           with the importance of developing contingency plans that fully document
                           continued delivery of essential services in the event of a facility system
                           failure. VHA medical facilities expect to have individual business
                           continuity and contingency plans completed by April 30.

                           On April 14, 1999, VA informed us that its February 28, 1999, report
                           contained an error. The corrected numbers for facility systems at the end
                           of February were 91 percent assessed and 9 percent not assessed.




                           Page 8                                                     GAO/T-AIMD-99-136
Biomedical Equipment:    The question of whether medical devices such as magnetic resonance
                         imaging (MRI) systems, x-ray machines, pacemakers, and cardiac
Additional Status        monitoring equipment can be counted on to work reliably on and after
Information Available,   January 1, 2000, is also critical to VHA. To the extent that biomedical
                         equipment uses embedded computer chips, it is vulnerable to the Y2K
But Test Results Not     problem. Such vulnerability carries with it possible safety risks. This could
Reviewed                 range from the more benign--such as incorrect formatting of a printout--to
                         the most serious--such as incorrect operation of equipment with the
                         potential to adversely affect the patient. The degree of risk depends in
                         large part on the role the equipment plays in a patient’s care.


Additional Biomedical    Last September we testified before this Subcommittee that VHA was
Equipment Status         making progress in assessing its biomedical equipment, but that it did not
                         know the full extent of the Y2K problem with this equipment because it had
Information Available    not received compliance information from 398 manufacturers (26.7
                         percent).7 According to VHA, as of March 16, 1999, the number of
                         nonresponsive manufacturers had been reduced to 126 (8.5 percent).8 As
                         shown in table 2, about 19 percent of the manufacturers in VHA’s database
                         of suppliers had at least one biomedical equipment item that was either
                         noncompliant or conditionally compliant.




                         7 Year
                              2000 Computing Crisis: Leadership Needed to Collect and Disseminate Critical Biomedical
                         Equipment Information (GAO/T-AIMD-98-310, September 24, 1998).

                         8 According   to VHA, 101 of the 126 letters sent to manufacturers were marked “return to sender.”




                         Page 9                                                                            GAO/T-AIMD-99-136
Table 2: Status of Manufacturer Responses to VHA as of March 16, 1999

                                                                  Number of           Percentage of
Category                                                       manufacturers          manufacturers
Compliant manufacturersa                                                     816                   55.2
Noncompliant manufacturers b                                                 126                       8.5
                                            c
Conditional-compliant manufacturers                                          156                   10.5
Pending manufacturersd                                                        29                       2.0
Manufacturers merged or bought out                                           226                   15.3
Nonresponsive manufacturerse                                                 126                       8.5
Total                                                                      1,479                  100.0
aForinclusion in this category, 100 percent of the manufacturer’s products had to be considered
compliant.
bForinclusion in this category, only one of the manufacturer’s products had to be considered
noncompliant.
c For
    inclusion in this category, the manufacturer had to have no noncompliant equipment, no
equipment pending, and at least one conditional-compliant item.
d
 For inclusion in this category, the manufacturer had to have no noncompliant equipment and at least
one equipment item pending.
e
    For inclusion in this category, VHA had to have no compliance information from the manufacturer.
Source: VHA. We did not independently verify these data.


To identify specific biomedical equipment in the inventories of VHA’s
medical facilities that still require Y2K compliance status information from
manufacturers, VHA’s Chief Network Officer sent a letter to the directors of
VHA's 22 Veterans Integrated Service Networks (VISN). This letter
requested that they (1) review VHA’s list of manufacturers that have yet to
respond and compare it with a list of manufacturers from whom their
medical facilities still require compliance information and (2) indicate the
equipment item that the facility owns for each manufacturer. According to
VHA’s Y2K project director, as of mid-March--with 135 of 147 medical
reporting sites--47 biomedical equipment items involving 35 manufacturers
were identified as still requiring compliance status information. The
project director told us that VHA medical facilities have been instructed to
replace or eliminate equipment in their inventories for which they do not
know the compliance status by June 30. According to VHA's February 1999
status report on medical devices, medical facilities estimated that the total
cost of renovations will be about $41 million.




Page 10                                                                            GAO/T-AIMD-99-136
We have previously reported that most manufacturers citing noncompliant
products listed incorrect display of date and/or time as the Y2K problem.9
According to VA, these cases do not present a risk to patient safety because
health care providers, such as physicians and nurses, can work around the
problem. Of more serious concern are situations in which devices depend
on date calculations--the results of which can be incorrect. One
manufacturer cited the example of a product used for planning delivery of
radiation treatment using a radioactive isotope as the source. An error in
calculating the strength of the radiation source on the day of treatment
could result in a dose that is too high or too low, which could have an
adverse effect on the patient. Other examples of equipment presenting a
risk to patient safety identified by manufacturers to FDA include
hemodialysis delivery systems; therapeutic apheresis systems;10 alpha-
fetoprotein kits for neural tube defects;11 various types of medical imaging
equipment; and systems that store, track, and recall images in
chronological order.

To track the compliance status of its biomedical equipment, VHA uses a
monthly status report on medical devices based on information provided
by the VISNs. According to the February 1999 report, approximately
426,000 of 531,000 medical devices in VHA medical facilities are compliant.
Of the remaining devices, 86,452 were identified as conditional-compliant
or were not assessed for Y2K compliance because the manufacturers
certified that the equipment contained no software or embedded chips, and
19,073 were reported as being noncompliant. Of the noncompliant devices
identified, 15,621 are to be repaired, 1,582 are to be replaced, 757 are to be
used as is, 255 are to be retired, and 858 are still awaiting a decision on the
remedy. According to VHA’s Chief Biomedical Engineer, most of the
noncompliant devices identified incorrectly displayed date/time.

As we reported last September, FDA was also trying to determine the Y2K
compliance status of biomedical equipment.12 Its goal is to provide a


9 Year 2000 Computing Crisis: Compliance Status of Many Biomedical Equipment Items Still Unknown
(GAO/AIMD-98-240, September 18, 1998).

10Such equipment allows therapeutic apheresis, which refers to the exchange or purification of blood
plasma. Therapeutic apheresis is recognized as a successful treatment for more than 40 autoimmune
diseases.

11Devices  that use computer calculations of gestational status to help assess the risk of neural tube
defects in the fetuses of pregnant women.

12GAO/AIMD-98-240,    September 18, 1998.




Page 11                                                                           GAO/T-AIMD-99-136
comprehensive, centralized source of information on the Y2K compliance
status of biomedical equipment used in the United States and make this
information publicly available on a web site. At the time, however, FDA
had a disappointing response rate from manufacturers to its letter
requesting compliance information. And, while FDA made this
information available to the public, it was not detailed enough to be useful.
Specifically, FDA’s list of compliant equipment lacked information on
particular make and model.

To provide more detailed information on the compliance status of
biomedical equipment, as well as to integrate more detailed compliance
information gathered by VHA, we recommended that VA and the
Department of Health and Human Services (HHS) jointly develop a single
data clearinghouse that provides such information to all users. We said
development of the clearinghouse should involve representatives from the
health care industry, such as the Department of Defense and the Health
Industry Manufacturers Association. We recommended that the
clearinghouse contain such information as (1) the compliance status of all
biomedical equipment by make and model and (2) the identity of
manufacturers that are no longer in business. We also recommended that
VHA and FDA determine what actions should be taken regarding
biomedical equipment manufacturers that have not provided compliance
information.

In response to our recommendation, FDA--in conjunction with VHA--has
established the Federal Year 2000 Biomedical Equipment Clearinghouse.
With the assistance of VHA, the Department of Defense, and the Health
Industry Manufacturers Association, FDA has made progress in obtaining
compliance-status information from manufacturers. For example,
according to FDA, as of April 5, 1999, 4,251 biomedical equipment
manufacturers had submitted data to the clearinghouse. As shown in
figure 1, about 54 percent of the manufacturers reported having products
that do not employ a date, while about 16 percent reported having date-
related problems such as incorrect display of date/time. FDA is still
awaiting responses from 399 manufacturers.




Page 12                                                     GAO/T-AIMD-99-136
Figure 1: Biomedical Equipment Compliance-Status Information Reported to FDA by
Manufacturers as of April 5, 1999




Note: Total number of manufacturers = 4,251.
Source: FDA.


FDA has also expanded the information in the clearinghouse. For example,
users can now find information on manufacturers that have merged with or
have been bought out by other firms. In collaboration with the National
Patient Safety Partnership,13 FDA is in the process of obtaining more
detailed information from manufacturers on noncompliant products, such
as make and model and descriptions of the impact of the Y2K problem on
products left uncorrected.




13The National Patient Safety Partnership is a coalition of public and private health care providers,
including VA, the American Medical Association, the American Hospital Association, the American
Nurses Association, and the Joint Commission on Accreditation of Healthcare Organizations.




Page 13                                                                           GAO/T-AIMD-99-136
Review of Biomedical     We reported last September that VHA and FDA relied on manufacturers to
Equipment Test Results   validate, test, and certify that equipment is Y2K compliant. 14 We also
                         reported that there was no assurance that the manufacturers adequately
Lacking                  addressed the Y2K problem for noncompliant equipment because FDA did
                         not require medical device manufacturers to submit test results to it
                         certifying compliance. Accordingly, we recommended that VA and HHS
                         take prudent steps to jointly review manufacturers’ compliance test results
                         for critical care/life support biomedical equipment. We were especially
                         concerned that VA and FDA review test results for equipment previously
                         determined to be noncompliant but now deemed by manufacturers to be
                         compliant, or equipment for which concerns about compliance remain. We
                         also recommended that VA and HHS determine what legislative, regulatory,
                         or other changes were necessary to obtain assurances that the
                         manufacturers’ equipment was compliant, including performing
                         independent verification and validation of the manufacturers’
                         certifications.

                         At the time, VA stated that it had no legislative or regulatory authority to
                         implement the recommendation to review test results from manufacturers.
                         In its response, HHS stated that it did not concur with our recommendation
                         to review test results supporting medical device equipment manufacturers’
                         certifications that their equipment is compliant. It believed that the
                         submission of appropriate certifications of compliance was sufficient to
                         ensure that the certifying manufacturers are in compliance. HHS also
                         stated that it did not have the resources to undertake such a review, yet we
                         are not aware of HHS’ requesting resources from the Congress for this
                         purpose.

                         More recently, VHA’s Chief Biomedical Engineer told us that VHA medical
                         facilities are not requesting test results for critical care/life support
                         biomedical equipment; they also are not currently reviewing the test results
                         available on manufacturers’ web sites. He said that VHA’s priority is
                         determining the compliance status of its biomedical equipment inventory
                         and replacing noncompliant equipment. The director of FDA’s Division of
                         Electronics and Computer Science likewise said FDA sees no need to
                         question manufacturers’ certifications.




                         14GAO/AIMD-98-240,   September 18, 1998.




                         Page 14                                                    GAO/T-AIMD-99-136
In contrast to VHA’s and FDA’s positions, some hospitals in the private
sector believe that testing biomedical equipment is necessary to prove that
they have exercised due diligence in the protection of patient health and
safety. Officials at three hospitals told us that their biomedical engineers
established their own test programs for biomedical equipment, and in many
cases contacted the manufacturers for their test protocols. Several of
these engineers informed us that their testing identified some
noncompliant equipment that the manufacturers had certified as
compliant. According to these engineers, to date, the equipment found to
be noncompliant all had display problems and was not critical care/life
support equipment. We were told that equipment found to be incorrectly
certified as compliant included a cardiac catheterization unit, a pulse
oxymeter, medical imaging equipment, and ultrasound equipment.

VHA, FDA, and the Emergency Care Research Institute15 continue to
believe that manufacturers are best qualified to analyze embedded systems
or software to determine Y2K compliance. They further believe that
manufacturers are the ones with full access to all design and operating
parameters contained in the internal software or embedded chips in the
equipment. VHA believes that such testing can potentially cause
irreparable damage to expensive health care equipment, causing it to lock
up or otherwise cease functioning. Further, a number of manufacturers
also have recommended that users not conduct verification and validation
testing.

We continue to believe that rather than relying solely on manufacturers'
certifications, organizations such as VHA or FDA can provide users of
medical devices with a greater level of confidence that the devices are Y2K
compliant through independent reviews of manufacturers’ compliance test
results. The question of whether to independently verify and validate
biomedical equipment that manufacturers have certified as compliant is
one that must be addressed jointly by medical facilities’ clinical staff,
biomedical engineers, and corporate management. The overriding
criterion should be ensuring patient health and safety.




15An international, nonprofit health services research agency. This organization believes that
superficial testing of biomedical equipment by users may provide false assurances, as well as create
legal liability exposure for health care institutions.




Page 15                                                                         GAO/T-AIMD-99-136
VHA Pharmaceutical     Another critical component to VA’s ability to deliver health care at the turn
                       of the century is ensuring that the automated systems supportingVHA’s
Operations Also Face   medical facility pharmacies and its consolidated mail outpatient
Y2K Risks              pharmacies (CMOP) are Y2K compliant. VHA reported that in 1998, it filled
                       about 72 million prescriptions for 3.4 million veterans, at an estimated cost
                       of about $2 billion. About half of the prescriptions were filled by the over
                       200 pharmacies located in VA’s medical centers, clinics, and nursing homes.
                       These pharmacies rely on the pharmaceutical applications in the Veterans
                       Health Information Systems Architecture (VISTA) for (1) drug distribution
                       and inventory management, (2) dispensing of drugs to inpatients and
                       outpatients, (3) patient medication information, and (4) an electronic
                       connection between the pharmacies and the CMOPs. Y2K failures in these
                       applications could impair the pharmacies’ ability to fill prescriptions.

                       The remaining 50 percent of VHA’s prescriptions are filled by seven CMOPs,
                       geographically located throughout the United States. These facilities are
                       supported by automated systems provided by one of two contractors--
                       SI/Baker, Inc. and Siemens ElectroCom.16 For example, the CMOP
                       electronically receives a prescription for a veteran through the medical
                       center. The prescription is downloaded to highly automated dispensing
                       equipment to be filled. The filled prescription is then validated by a
                       pharmacist who compares the medication against a computerized image of
                       the prescribed medication. Afterward, the prescription is packaged and an
                       automatically generated mailing label is applied for delivery to the veteran.
                       Finally, the medical center is electronically notified that the prescription
                       has been filled. Because of the reliance on automation, the CMOPs’ ability
                       to fill prescriptions could be delayed or interrupted if a Y2K failure
                       occurred.

                       VHA has determined that the automated systems supporting its CMOPs are
                       not Y2K compliant. Specifically, neither of the systems provided by their
                       contractors are Y2K compliant. According to the Y2K coordinator for the
                       SI/Baker facilities, failure to make the SI/Baker systems Y2K compliant
                       may delay the filling of outpatient prescriptions. The SI/Baker systems are
                       used by three of VHA’s CMOPs--Hines, Illinois; Charleston, South Carolina;
                       and Murfreesboro, Tennessee; they handle about 58 percent of all
                       prescriptions filled by CMOPs. In contrast to the SI/Baker systems,
                       according to a contractor hired by the CMOPs that use these systems,


                       16These   include operating systems, databases, and pharmacy fulfillment application software.




                       Page 16                                                                         GAO/T-AIMD-99-136
failure to make the Siemens ElectroCom systems Y2K compliant may result
in delays in processing management reports for prescriptions filled, but not
the actual filling of prescriptions.

Although the CMOPs plan to replace their noncompliant systems with
compliant ones, these systems are not scheduled to be implemented until
mid- to late-1999. As shown in table 3, the earliest estimated completion
date for implementing a compliant system is June 30, 1999, while the latest
is December 1, 1999. This leaves little time to address any unexpected
implementation problems.



Table 3: Schedule of Estimated Implementation Completion Dates and Current Daily
Workload by Consolidated Mail Outpatient Pharmacies

                                     Estimated
                                     completion           Current daily workload
Location                             date                   (prescriptions filled)
West Los Angeles,                    June 30, 1999
Californiaa                                                                15,000
Bedford, Massachusettsa              June 30, 1999                         15,000
                 a
Dallas, Texas                        June 30, 1999                         14,000
Leavenworth, Kansasa                 July 31, 1999                         16,000
Charleston, South Carolinab          September 1, 1999                     23,000
Murfreesboro, Tennesseeb             September 30, 1999                    38,000
                 b
Hines, Illinois                      December 1, 1999                      21,000
a
    Siemens ElectroCom automation.
bSI/Baker,   Inc. automation.
Source: VA.


Given the late schedule for implementing compliant systems, it is crucial
that the CMOPs develop business continuity and contingency plans to
ensure that veterans will continue to receive their medications if these
systems are not implemented in time or fail to operate properly. As of
March 31, VA had not completed a business continuity and contingency
plan for the CMOPs. The Y2K coordinator for the Siemens ElectroCom
system has been tasked with developing this plan, which is to be completed
by the end of this month.

Further, VA did not include the CMOP systems in its quarterly reports of
mission-critical systems to OMB. According to VHA’s Y2K project director,
VHA considered the CMOP systems to be COTS products and, therefore,



Page 17                                                       GAO/T-AIMD-99-136
                             did not report them as mission-critical systems. Given the criticality of
                             these systems to VHA’s ability to fill prescriptions at the turn of the century,
                             we believe VA should reassess this decision, reporting CMOPs as mission-
                             critical to VA top management and OMB to help ensure that necessary
                             attention is paid to and action is taken on them.


VA Taking Action to          VA, like other users of pharmaceutical and medical-surgical products,
Determine Y2K Readiness of   needs to know whether it will have a sufficient supply of these items for its
                             customers. Therefore, it has taken a leadership role in the federal
Pharmaceutical and
                             government in determining whether manufacturers supplying these
Medical-Surgical             products to VHA are Y2K-ready. This information is essential to VHA’s
Manufacturers                medical facilities and CMOPs because of their “just-in-time”17 inventory
                             policy. Accordingly, they must know whether their manufacturers’
                             processes, which are highly automated,18 are at risk, as well as whether the
                             rest of the supply chain will function properly.

                             To determine the Y2K readiness of their suppliers, on January 8, 1999, VA’s
                             National Acquisition Center (NAC)19 sent a survey to 384 pharmaceutical
                             firms and 459 medical-surgical firms with which it does business. The
                             survey contained questions on the firms’ overall Y2K status and inquired
                             about actions taken to assess, inventory, and plan for any perceived impact
                             that the century turnover would have on their ability to operate at normal
                             levels. In addition, the firms were asked to provide status information on
                             progress made to become Y2K compliant and a reliable estimated date
                             when compliance will be achieved for business processes such as
                             (1) ordering and receipt of raw materials, (2) mixing and processing
                             product, (3) completing final product processing, (4) packaging and
                             labeling product, and (5) distributing finished product to distributors/
                             wholesalers and end customers.

                             According to NAC officials, of the 455 firms that responded to the survey as
                             of March 31, 1999, about 55 percent completed all or part of the survey.
                             The remainder provided general information on their Y2K readiness status


                             17This   term refers to maintaining a limited inventory on hand.

                             18Many pharmaceutical manufacturers rely on automated systems for production, packaging, and
                             distribution of their products, as well as for ordering of raw materials and supplies.

                             19This organization is responsible for supporting VHA’s health care delivery system by providing an
                             acquisition program for items such as medical, dental, and surgical supplies and equipment;
                             pharmaceuticals; and chemicals. NAC is part of VA's Office of Acquisition and Materiel Management.




                             Page 18                                                                       GAO/T-AIMD-99-136
or literature20 on their efforts. As shown in table 4, more than half of the
pharmaceutical firms surveyed responded (52 percent), with just less than
one-third (32 percent) of those respondents reporting that they are
compliant. Among the pharmaceutical firms that had not responded as of
March 31, however, were two of VA’s five largest suppliers.21 The three
large pharmaceutical suppliers that did respond provided general
information on their Y2K readiness status, rather than answering the
survey, and estimated that they will be compliant by June 30, 1999.



Table 4: Status of Companies Surveyed by VHA as of March 31, 1999

Responses                                                   Pharmaceutical           Medical-surgical
Y2K compliant                                                                65                      166
Will be compliant by 1/1/2000 or earlier a                                   90                       70
Provided no compliant date                                                   50                       14
 Total number of responses                                                 205                       250
Non-responses                                                              179                       209
 Total number of firms surveyed                                            384                       459
aEstimated  compliance status ranged from March 31,1999 through January 1, 2000; about 71 percent
of pharmaceutical firms and 80 percent of medical-surgical firms estimated they will be compliant by
July 31, 1999. One firm responded that it will be compliant by January 1, 2000.
Source: VA. We did not independently verify these data.


Table 4 also shows that 54 percent of the medical-surgical firms surveyed
responded, with about two-thirds of them (166) reporting that they are Y2K
compliant. All five of VA’s largest medical-surgical suppliers have
responded. Specifically, two reported being compliant, two reported they
would be compliant by June 30, 1999, and the remaining supplier did not
report an expected compliance date.

On March 17, 1999, NAC sent a second letter to its pharmaceutical and
medical-surgical firms, informing them of VA’s plans to make Y2K readiness
information previously provided to VA available to the public through a
web site (www.va.gov/oa&mm/nac/y2k). VA made the survey results
available on its web site on April 13, 1999. The letter also requested that


20
   This includes annual and quarterly financial reports required by the Securities and Exchange
Commission for companies listed on the New York Stock Exchange.

21On April 14, 1999, a NAC official told us that of the two suppliers that had not responded as of
March 31, one responded on April 12, and the other responded on April 14.




Page 19                                                                           GAO/T-AIMD-99-136
                            manufacturers that had not previously responded provide information on
                            their readiness. NAC’s Executive Director said that he would personally
                            contact any major VA supplier that does not respond. On a broader level,
                            VHA has taken a leadership role in obtaining and sharing information on
                            the Y2K readiness of the pharmaceutical industry. Specifically, VHA chairs
                            the Year 2000 Pharmaceuticals Acquisitions and Distributions
                            Subcommittee, which reports to the Chair of the President’s Council on
                            Year 2000 Conversion. The purpose of this subcommittee is to bring
                            together federal and pharmaceutical representatives to address issues
                            concerning supply and distribution as they relate to the year 2000. The
                            subcommittee consists of FDA, federal health care providers, and industry
                            trade associations such as the Pharmaceutical Research and Manufacturers
                            of America (PhRMA), the National Association of Chain Drug Stores, and
                            the National Wholesale Druggists’ Association. Several of these trade
                            associations have surveyed their members on their Y2K readiness and
                            made the results available to the public. However, the information is not
                            manufacturer-specific or as detailed as VHA's survey results.


FDA’s Y2K Efforts for       FDA’s oversight and regulatory responsibility for pharmaceutical and
Pharmaceutical and          biological products22 is to ensure that they are safe and effective for public
                            use. Because of its concern about the Y2K impact on manufacturers of
Biological Products
                            these products, FDA has taken several actions to raise the Y2K awareness
Industries Were Initially   of the pharmaceutical and biological products industries. In addition, it is
Focused on Awareness        thinking about conducting a survey to determine the industry’s Y2K
                            readiness.

                            One of FDA’s actions to raise industry awareness was the January 1998
                            issuance of industry guidance by the Center for Biologics Evaluation and
                            Research (CBER) on the Y2K impact of computer systems and software
                            applications used in the manufacture of blood products. In addition, as
                            shown in table 5, FDA has issued several letters to pharmaceutical and
                            biological trade associations and sole-source drug manufacturers.




                            22Biological   products include vaccines, blood, and blood products.




                            Page 20                                                                GAO/T-AIMD-99-136
Table 5: FDA Letters to Manufacturers Regarding Y2K

Date             FDA source                   Recipient                   Purpose
October          Center for                   Pharmaceutical              To relay to members FDA’s expectation that the
1998             Drug Evaluation and          manufacturer trade          pharmaceutical industry would (1) make resolution of
                 Research                     associations                Y2K a high priority, (2) ensure that production systems
                                                                          were fixed and tested prior to January 1, 2000, and (3)
                                                                          urge manufacturers to develop Y2K contingency plans.
October          Center for Biologics         Biologics manufacturer trade Same as above.
1998             Evaluation and Research      associations
January 1999     Center for                   Sole-source drug            Same as above. Also (1) noted that the impact of Y2K
                 Drug Evaluation and          manufacturers               on pharmaceutical safety, efficacy, and availability
                 Research                                                 merits special attention for firms who are the sole
                                                                          manufacturers of drug components, bulk ingredients,
                                                                          and finished products and (2) stated that
                                                                          pharmaceutical industry suppliers must have Y2K-
                                                                          compliant systems to protect against disruption in the
                                                                          flow of product components, packaging materials, and
                                                                          equipment to pharmaceutical manufacturers.
                                           Source: FDA.


                                           Further, on February 11, 1999, FDA’s director of emergency and
                                           investigation operations sent a memorandum on FDA’s interim inspection
                                           policy for the Y2K problem to the directors of FDA’s investigations branch.
                                           The policy emphasizes FDA’s Y2K awareness efforts for manufacturers. It
                                           states that FDA inspectors are to (1) inform the firm of FDA’s Y2K web page
                                           (URL http://www.fda.gov/cdrh/yr2000/year2000.html), (2) provide the firm
                                           with copies of the appropriate FDA Y2K awareness letter, (3) explain that
                                           Y2K problems could potentially affect aspects of the firm’s operations,
                                           including some areas not regulated by FDA, and that FDA anticipates that
                                           firms will take prudent steps to ensure that they are not adversely affected
                                           by Y2K, and (4) provide firms with a copy of FDA’s compliance policy guide
                                           “Year 2000 (Y2K) Computer Problems.”

                                           In addition, FDA and PhRMA jointly held a government/industry forum on
                                           the Y2K preparedness of the pharmaceutical and biotech industries on
                                           February 22, 1999. The objectives of this forum were to (1) share
                                           information on Y2K programs conducted by health care providers,
                                           pharmaceutical companies, FDA, and other federal agencies, (2) provide a
                                           vehicle for networking, and (3) raise awareness.

                                           On March 29, 1999, FDA revised its February 11, 1999, interim inspection
                                           policy. The revision states that field inspectors are now to inquire about
                                           manufacturers’ efforts to ensure that their computer-controlled or date-



                                           Page 21                                                            GAO/T-AIMD-99-136
sensitive manufacturing processes and distribution systems are Y2K
compliant. Inspectors are to include this information in their reports, along
with a determination of activities that firms have completed or started to
ensure that they will be Y2K compliant.

Further, FDA inspectors may review documentation in cases in which firms
have made changes to their computerized production or manufacturing
control systems to address Y2K problems. The purpose of this review is to
ensure that the changes were made in accordance with the firms’
procedures and applicable regulations. If inspectors determine that a firm
has not taken steps to ensure Y2K compliance, they are to notify their
district managers and the responsible FDA center.

FDA’s interim policy describes steps inspectors are to take in reviewing
manufacturers’Y2K compliance. However, FDA stated that the primary
focus of its inspections for the remainder of 1999 will be to ensure that
products sold in the United States are safe and effective for public use and
comply with federal statutes and regulations, including “good
manufacturing practice” (GMP).23 FDA officials explained that the agency
does not have sufficient resources to perform both regulatory oversight of
the manufacturers and in-depth evaluations of firms’ Y2K compliance
activities.

Nevertheless, according to the March 29, 1999, memorandum, field
inspectors are to note any concerns they may have with a firm’s Y2K
readiness in the administrative remarks section of their inspection reports.
These reports are to be reviewed by FDA district managers. If the Y2K
concern appears to present a serious problem to a firm’s ability to produce
safe, effective medication, the district manager can discuss this issue with
FDA’s Office of Regulatory Affairs and determine a course of action.
However, FDA officials have stressed that the agency cannot take any
regulatory action toward the firm until a Y2K-related problem affects a
pharmaceutical or biological product.

Like VHA, FDA is interested in the impact of Y2K readiness of
pharmaceutical and biological products on the availability of products for
health care facilities and individual patients. FDA’s Acting Deputy
Commissioner for Policy informed us on March 24, 1999, that the agency is


23GMP requirements include federal standards for ensuring that products are high in quality and
produced under sanitary conditions (21 CFR parts 210, 211).




Page 22                                                                        GAO/T-AIMD-99-136
thinking about surveying pharmaceutical and biological products
manufacturers, distributors, product repackagers, and others in the drug
dispensing chain, on their Y2K readiness and contingency planning. In
anticipation of a possible survey, the agency has published a notice in the
March 22, 1999, Federal Register regarding this matter. The Acting Deputy
Commissioner said that potential survey questions on contingency
planning would include steps the manufacturers are taking to ensure an
adequate supply of bulk manufacturing materials from overseas suppliers.
This is a key issue because, as we reported in March 1998, 24 according to
FDA, as much as 80 percent of the bulk pharmaceutical chemicals used by
U.S. manufacturers to produce prescription drugs is imported.


In summary, VBA and VHA continue to make progress in preparing their
mission-critical systems for the year 2000. However, key actions remain to
be taken in the areas of mission-critical systems testing, VHA facility
systems compliance, and CMOP systems compliance. We also reiterate the
need for VHA and FDA to take prudent steps to ensure that the test results
of critical care/life support biomedical equipment are obtained and
reviewed. Finally, VHA needs information on the Y2K readiness of specific
pharmaceutical and medical-surgical manufacturers. Until this information
is obtained and publicized, VHA medical facilities and veterans will remain
in doubt as to whether an adequate supply of pharmaceutical and biological
products will be available. FDA and the pharmaceutical and biological
trade associations can play key roles in helping VHA obtain this
information and publicize the results in a single data clearinghouse.

In carrying out this assignment, we reviewed and analyzed VA's Y2K
documents and plans, comparing them against our guidance on Y2K
activities. We also reviewed and analyzed FDA documentation relating to
its Y2K efforts on biomedical devices and pharmaceutical manufacturers.
In addition, we visited selected VHA medical centers, VA data centers, and
VHA consolidated mail outpatient pharmacies to discuss their Y2K
activities, and interviewed VA and FDA officials on those activities. We
also interviewed officials of the Emergency Care Research Institute
regarding their statements on biomedical equipment testing. Finally, we
interviewed selected private hospital officials about their Y2K actions and



24Food and Drug Administration: Improvements Needed in the Foreign Drug Inspection Program
(GAO/HEHS-98-21, March 17, 1998).




Page 23                                                                  GAO/T-AIMD-99-136
                   pharmaceutical trade associations on their Y2K readiness surveys of
                   pharmaceutical manufacturers.

                   Mr. Chairman, this concludes my statement. I would be pleased to respond
                   to any questions that you or other members of the Subcommittee may have
                   at this time.




(511266)   Leter   Page 24                                                  GAO/T-AIMD-99-136
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