2. Executive Agreement

In April 2010, the Secretaries of VA and Defense signed the Executive  Agreement that established the FHCC and defined the relationship  between VA and DOD for operating the new, integrated facility, in  accordance with NDAA 2010. 1). Further Progress Has Been Made Implementing the Executive Agreement, but Costly IT Delays and Lack of MTF Designation Continue to Pose Challenges

Eleven of 12 integration areas are now either “implemented” or “in  progress.” The remaining integration area, IT, remains “delayed,” as it  was at our last review, resulting in costly and time-consuming  workarounds. 2.) Of these 6, 4 were integration areas we  previously reported as implemented: (1) governance structure, (2) access  to health care at the FHCC, (3) research, and (4) contracting. The two  other implemented integration areas, quality assurance and contingency  planning, moved from in progress at the time of our last review to  implemented in this review. For example, for the fiscal authority integration area, FHCC officials  continue to make progress implementing the provisions, although they  have experienced some challenges. The Executive Agreement specified three key IT  capabilities that VA and DOD were required to have in place on opening  day, in October 2010, to facilitate interoperability of VA and DOD  electronic health record systems. In addition to delays in developing these specific IT capabilities,  other IT capabilities required by the Executive Agreement have not been  well defined and implementation plans for them have not been  established. In particular, officials told us the FHCC has been denied access  to DOD’s drug pricing arrangements for its DOD beneficiaries, which has  resulted in the FHCC paying higher prices for certain drugs for DOD  beneficiaries than would be the case if it were an MTF, although FHCC  officials were unable to quantify the added expense. VA and DOD Have Not Yet Established a Plan for Evaluating the FHCC Demonstration

Although they are required by NDAA 2010 to conduct a comprehensive  evaluation of the FHCC at the end of the 5-year demonstration and  submit a report on this evaluation to the House and Senate Committees  on Armed Services and Veterans’ Affairs, VA and DOD officials said the  departments have not yet established an evaluation plan. Without such a plan in place during the demonstration— including well-defined measures and standards, such as target scores, for  determining performance on each measure—FHCC leadership cannot  track progress and make adjustments to improve performance in areas  that VA and DOD determine are necessary for the FHCC’s success.addition, we have previously found that joint agreement on commonly  desired outcomes, such as those established as performance measures  and standards in an evaluation plan, is important for collaborating  agencies, such as VA and DOD, to successfully overcome differences in   In  their agency missions, cultures, and established ways of doing  business. Furthermore, VA and DOD have not set specific target scores for  determining successful performance for the existing 15 integration  benchmarks. Although federal financial accounting standards, VA and DOD  departmental priorities, and the Executive Agreement—which lays out the  purpose of the FHCC—indicate that reliable cost information is important  for evaluating the FHCC, VA and DOD officials have not determined what  cost measures, if any, will be used in the FHCC’s evaluation. After spending more than $122 million on IT capabilities needed for the  FHCC, key deliverables remain delayed, resulting in additional costs to  the FHCC. Recommendations for Executive Action

To clarify IT requirements within the Executive Agreement, to enable VA  and DOD to make an informed recommendation about whether the FHCC  should continue after the end of the demonstration, and to provide useful  information for other integrations that may be considered in the future, we  recommend that the Secretaries of Veterans Affairs and Defense take the  following four actions: determine the costs associated with the workarounds required  because of delayed IT capabilities at the FHCC for each year of the  demonstration, including the costs of hiring additional staff and of  managing the administrative burden caused by the workarounds; develop plans with clear definitions and specific deliverables,  including time frames for two IT capabilities—documentation of patient  care to support medical and dental operational readiness and  outpatient appointment enhancements—and formalize these plans,  for example, by incorporating them into the Executive Agreement; expeditiously develop and agree to an evaluation plan, including the  performance measures and standards, such as target scores, to be  used to evaluate the FHCC demonstration, and formalize the plan, for  example, by incorporating it into the Executive Agreement; and establish measures related to the cost-effectiveness of the FHCC’s  care and operations to be included as a part of the evaluation plan. Patient satisfaction measures meet Federal Health Care Center (FHCC) targets. 5.
Why GAO Did This Study

The NDAA for Fiscal Year 2010 authorized VA and DOD to establish a 5-year demonstration to integrate VA and DOD medical care into a first-of-its-kind FHCC in North Chicago, Illinois. Expectations for the FHCC are outlined in the Executive Agreement signed by VA and DOD in April 2010.
The NDAA for Fiscal Year 2010, as amended by the NDAA for Fiscal Year 2012, directed GAO to report on the FHCC demonstration in 2011, 2012, and 2015. This is the second of the three reports and examines (1) to what extent VA and DOD have continued to implement the Executive Agreement to establish and operate the FHCC and (2) what plan, if any, VA and DOD have to assess the provision of care and operations of the FHCC.
To conduct its work, GAO reviewed FHCC documents; interviewed VA, DOD, and FHCC officials; and reviewed related GAO work.

What GAO Found

Officials at the Department of Veterans Affairs (VA) and Department of Defense (DOD) Captain James A. Lovell Federal Health Care Center (FHCC) have continued to make progress implementing provisions of the Executive Agreements 12 integration areas, but delays in the information technology (IT) area have proven costly. Specifically, for 6 integration areas, all provisions have been implemented. Some of these areas were implemented at the time of GAOs 2011 report, including establishing the facilitys governance structure and patient priority system, while 2 areasquality assurance and contingency planningwere more recently implemented. In addition, 5 integration areas, such as property and fiscal authority, remain in progress. However, as previously reported by GAO, there have been delays implementing 1 of the integration areasITwhich have resulted in additional costs for the FHCC, although the FHCC has been unable to quantify the total costs resulting from these delays. Despite an investment of more than $122 million for IT capabilities at the FHCC, VA and DOD have not completed work on all components required by the Executive Agreement, which were to have been in place in time for the FHCCs opening in October 2010. These delays have resulted in additional costs and administrative burden for the FHCC because of the need for workarounds to address them. There also are other IT capabilities required by the Executive Agreement that are ill-defined and for which plans have not been established.
Although they are required by the National Defense Authorization Act (NDAA) for Fiscal Year 2010 to assess the FHCC at the end of the 5-year demonstration, VA and DOD officials said the departments have not yet established an evaluation plan. Officials told GAO that in addition to the performance data already being collected from 15 integration benchmarks established by the Executive Agreement, the departments also expect to consider other factors; however, these factors, which may include performance measures, have not yet been established. VA and DOD officials also have not yet established the standards, such as target scores for the benchmarks, the departments will use to evaluate FHCC performance. GAO has previously found that well-defined measures and standards are essential to a sound evaluation plan. Furthermore, without VA and DOD agreement on the measures and standards, FHCC leadership is unable to track progress and make any midcourse adjustments to improve performance in areas VA and DOD have determined are necessary for the FHCCs success. Although including measures of FHCC costs in the evaluation would be consistent with the FHCCs purpose, VA and DOD departmental priorities, and federal financial accounting standards, no such cost measures have been established for evaluating the FHCC.

What GAO Recommends

GAO recommends that VA and DOD (1) determine the costs associated with the workarounds required because of delays in implementing IT capabilities laid out in the FHCC Executive Agreement; (2) develop plans with clear definitions, specifications, deliverables, and time frames for IT capabilities required by the Executive Agreement but not yet defined; (3) develop and agree to an evaluation plan, to include all performance measures and standards to be used in evaluating the FHCC demonstration; and (4) establish measures related to the cost-effectiveness of the FHCC as part of their evaluation. VA and DOD generally concurred and noted steps to address GAOs recommendations