In 1989, the Department of Veterans Affairs was established as a cabinet-level agency. VA has made significant progress in improving the efficiency of its health care system. Under the leadership of the Under Secretary for Health, VA has a new emphasis on both economy and efficiency and customer service. The VA Health Care System Continues to Face Major Challenges

In our testimony 2 years ago, we focused on four major challenges facing VA because of a rapidly changing health care marketplace. VISN 5 (Baltimore), for example, uses its reviews primarily for data collection, evaluation, and monitoring. This older group raises particular concerns because the need for nursing home and other long-term care services increases with the age of the beneficiary population. VBA Faces Multiple Challenges

VA, like other federal agencies, could be unable to issue compensation and pension checks at the beginning of the year 2000 unless it is able to reprogram its computers to recognize the next century; veterans frequently wait over 2 years for resolution of disability compensation and pension claims; and hundreds of millions of dollars in overpayments of compensation and pension benefits are made because VBA does not focus on prevention. This framework includes
GPRA, which is designed to improve federal agencies’ performance by requiring them to focus on their missions and goals, and on the results they provide to their customers—for veterans and their families; the CFO Act of 1990, as amended by the Government Management Reform Act, designed to improve the timeliness, reliability, usefulness, and consistency of financial information in federal agencies; and the Paperwork Reduction Act of 1995 and the Clinger-Cohen Act of 1996, which are intended to improve agencies’ ability to use information technology to support their missions and improve performance. While VA has not yet completed its GPRA strategic plan, its fiscal year 1998 budget submission to the Congress includes some of the elements of the GPRA planning process. The Inspector General’s audit of VA’s fiscal year 1996 financial statement disclosed six internal control weaknesses that expose VA to significant financial risks: errors in accounting for property, plant, and equipment, which could result in a future qualification of opinion if not corrected; errors by medical facilities in recording estimated amounts of unbilled services and in estimating uncollectible amounts; failure to cancel approximately $69 million in open obligations that should have been cancelled before the end of the fiscal year—funds that could have been reprogrammed and used for other valid needs if they had been identified before the appropriations expired; an outdated data processing system for VA’s life insurance programs that has the potential to adversely affect the complete and accurate processing of insurance transactions and the integrity of the financial information generated by the system; insufficient VA management emphasis on, and oversight of, VA data processing facilities to ensure that data processing systems are protected from unauthorized access and modification of data; and lack of an integrated financial accounting system for VA’s Housing Credit Assistance Program which, when coupled with the complexities of accounting requirements under credit reform, increases the risk of financial reporting error. Develop a plan to achieve a higher level of software development maturity. Others, however, would require fundamental policy changes in veterans’ benefits, including changes in entitlement programs. Limit Enrollment in VA Health Care System

Recently enacted legislation expands eligibility for VA health benefits to make all veterans eligible for comprehensive inpatient and outpatient services, subject to the availability of resources. enrollment system. VA’s progress in strengthening its management should help it address the multiple challenges facing its health and benefits programs. In addition, actions to expand eligibility, make it easier for VA to buy services from and sell services to the private sector, improve access, and reduce waiting times place VA in a better position to compete with private sector providers for declining numbers of veterans. Veterans’ Health Care: Facilities’ Resource Allocations Could Be More Equitable (GAO/HEHS-96-48, Feb. 7, 1996).
Why GAO Did This Study

GAO discussed some of the major challenges facing the Department of Veterans Affairs (VA) and some of the options for deficit reduction through changes in VA benefits and programs.

What GAO Found

GAO noted that: (1) significant improvements have occurred in the efficiency of the VA health care system; (2) VA's new management and Veterans Integrated Service Network (VISN) structure clearly values efficiency and customer service; (3) in addition, legislation was enacted: (a) expanding eligibility for VA health care; (b) making it easier for VA to contract for and sell services to the private sector; and (c) requiring VA to develop a plan for more equitably allocating resources to its VISNs; (4) these decisions bring with them both solutions to old problems and significant new challenges, such as developing an enrollment process consistent with the priorities established under the eligibility reform legislation and determining when to buy services from the private sector rather than provide them in VA facilities; (5) the Veterans Benefits Administration also faces major challenges; for example: (a) the disability rating schedule has not been updated for over 45 years; (b) VA faces the prospect of late or inaccurate compensation and pension payments to millions of veterans if it is unable to resolve the "year 2000" computer problem; (c) veterans often wait over 2 years for resolution of compensation and pension claims by the time the appeals process has been completed; and (d) VA could avoid millions of dollars in overpayments of compensation and pension benefits by strengthening its ability to prevent such payments; (6) recent legislation, including the Government Performance and Results Act, the Chief Financial Officers (CFO) Act, and the Paperwork Reduction Act, provides a basis for addressing long-standing management challenges; (7) VA has begun to use the legislation to improve its mission performance and results, its financial reporting, and its information resources management; (8) for example, VA included strategic plans for its health and benefits programs in its fiscal year 1998 budget submission, and it has been preparing audited financial statements since 1986, well in advance of the requirements imposed by the CFO Act; (9) multiple options exist for supporting deficit reduction through changes in VA benefits and programs; (10) although some of the changes could be achieved through administrative action, others would require legislation; and (11) the options include: (a) redefining compensation benefits to eliminate compensation for diseases that are not related to military service; (b) imposing higher cost sharing for nursing home and other long-term care services; (c) limiting enrollment in the VA health care system; and (d) closing underused hospitals.