In June  2012 we reported that in its fiscal year 2013 budget justification VA was  not transparent about the agency’s fiscal year 2013 estimates for  initiatives and ongoing health care services as well as VA’s estimate for  initiatives in support of the fiscal year 2014 advance appropriations  request. VA Expanded the Use of the EHCPM to Develop Its Health Care Budget Estimate and Changed How It Reported Information on Certain Administrative Costs

		VA Expanded the Use of the EHCPM by Using a Blend of EHCPM Estimates of Care Provided and Current Spending Data for Most Long-Term Care Services

VA expanded the use of the EHCPM by using estimates of the amount of  care provided—which is known as workload—from the EHCPM to  estimate resources needed for 14 long-term care services for fiscal years  2014 and 2015. As a result of this blended approach, VA used the EHCPM, in part or in  whole, to develop estimates for 74 health care services that accounted for  more than 85 percent of VA’s budget estimate supporting the President’s  fiscal year 2014 budget request for VA health care. 1.) However, VA did not consistently use the new “Administrative Personnel”  label in its fiscal year 2014 budget justification. VA  provided information on the types of personnel positions included in the  total estimate for administrative personnel costs under the budget  category label “Administrative Personnel,” but did not provide similar  information for the estimates for each appropriations account labeled  under “Administration.” By not providing information on the types of  positions included in these estimates, VA was not transparent about how  the information that was provided applied to the estimates of  administrative personnel costs in each of the appropriations accounts. Further, VA did not provide complete information on the costs included in  its estimates for “Administrative Personnel” and “Administrative Contract  Services.” Regarding its estimate for “Administrative Personnel” VA did  not disclose that this estimate reflected other costs in addition to those  costs associated with administrative personnel. Increase in the Request Compared to the Earlier, Advance Appropriations Request Reflected Changes VA Made to Supporting Estimates

The President’s fiscal year 2014 budget request for VA health care  services was $54.6 billion, about $158 million more than the earlier,  advance appropriations request for the same year. Specifically, the President’s fiscal year 2014 request reflected an estimate  of funding needed for initiatives that increased by $1.021 billion and an  estimate for ongoing health care services that decreased by $519 million. This increase in the initiatives estimate was further offset by an estimate  of $482 million in proposed savings from operational improvements and  management initiatives, which resulted in a net increase in expected total  obligations of $20 million. A decrease of $138 million in anticipated  resources from collections and reimbursements with the increase in  expected total obligations resulted in the net increase in the President’s  request of $158 million. Increase in estimates of proposed savings from new acquisition  savings and other initiatives. Steps Taken to Improve the Transparency, Consistency, and Reliability of Information and Estimates in VA’s Budget Justification

VA took steps to address, in varying degrees, five of the six problems we  previously identified related to the reliability, transparency, and  consistency of information in VA’s congressional budget justification. In its fiscal year 2014 budget  justification, VA used the same label for mental health, inpatient, and  other services across all three appropriations accounts, which it had  not previously done. VA  concurred with this recommendation. In response to our prior  work, VA has taken steps to improve the consistency, reliability, and  transparency of its estimates and information supporting the President’s  budget request for VA health care. In particular, VA has taken steps to  improve (1) the transparency of its estimates for initiatives in support of  the advance appropriations request, (2) the consistency of its language  used to label health care services, (3) the reliability of the estimates for  other facility-related activities funded through the Medical Facilities  account, (4) the reliability of its estimates for NRM, and (5) the reliability  of proposed savings from operational improvements and management  initiatives. While VA has addressed to varying  degrees the problems we previously identified, it is important that VA  ensure that the recommendations from our prior work regarding the  information and estimates in VA’s budget justification are fully  implemented. Until these recommendations are fully implemented, the  problems we previously identified will continue to limit the usefulness of  related information to Congress and other users of VA’s budget  justification. Recommendations for Executive Action

To improve the clarity and transparency of information in VA’s  congressional budget justifications that support the President’s budget  request for VA health care, we recommend the Secretary of Veterans  Affairs take the following two actions: use consistent terminology to label estimates of administrative  personnel costs and provide consistent and comprehensive information explaining the  costs included in each budget category for administrative costs. Veterans’ Health Care Budget Estimate: Changes Were Made in  Developing the President’s Budget Request for Fiscal Years 2012 and  2013. Veterans’ Health Care: VA Uses a Projection Model to Develop Most of  Its Health Care Budget Estimate to Inform the President’s Budget  Request.
Why GAO Did This Study

The Veterans Health Care Budget Reform and Transparency Act of 2009 requires GAO to report on the Presidents annual budget request to Congress for VA health care services. GAOs previous work has focused on issues related to the consistency, transparency, and reliability of information in VAs congressional budget justifications.
Building on GAOs past work and in light of the Presidents most recent request for VA health care, this report examines (1) changes in how VA used the EHCPM to develop VAs budget estimate supporting the Presidents budget request for fiscal year 2014 and changes in how VA reported information related to this estimate in its budget justification; (2) key changes to the Presidents fiscal year 2014 budget request compared to the advance appropriations request for the same year; and (3) the extent to which VA has addressed problems previously identified by GAO related to information in VAs congressional budget justifications. GAO reviewed the Presidents fiscal year 2014 budget request, VAs fiscal year 2014 budget justification, and VA data. GAO interviewed VA officials and staff from the Office of Management and Budget.

What GAO Found

The Department of Veterans Affairs (VA) expanded the use of the Enrollee Health Care Projection Model (EHCPM) in developing the agencys health care budget estimate that supported the Presidents fiscal year 2014 budget request. VA expanded the use of the EHCPM by using, for the first time, the models estimate for the amount of care providedworkloadto develop estimates of the resources needed for 14 long-term care services. However, VA continued to use the most current expenditure data rather than EHCPM estimates for projecting needed resources for these services due to concerns about the reliability of the EHCPM expenditure data. Using this new blended approach, VA used the EHCPM in whole or in part, to develop estimates for 74 health care services that accounted for more than 85 percent of VAs health care budget estimate. Additionally, VA used a new budget category label for its estimate of certain administrative personnel costs, Administrative Personnel, and identified the types of positions this estimate included. However, VA did not consistently use the new label across its three health care appropriations accounts. Instead, VA used Administration and provided no information clarifying the costs included in the estimates. Further, VA did not disclose all the costs included under Administrative Personnel, nor did VA identify the costs included in one other category containing administrative costs, Administrative Contract Services. The lack of transparency regarding administrative costs and inconsistent labeling resulted in Congress and other users of VAs budget justification not having clear and complete information regarding the agencys estimates for such costs.
The Presidents fiscal year 2014 budget request for VA health care services was about $158 million more than the earlier, advance appropriations request for the same year. The estimate for initiatives increased by $1.021 billion and the estimate for ongoing health care services decreased by $519 million. The increase in the initiatives estimate was further offset by $482 million in estimated savings from new acquisition savings and other initiatives, which resulted in a net increase of $20 million. This increase, along with a decrease of $138 million in anticipated resources from collections and reimbursements, resulted in the net increase of $158 million in the Presidents fiscal year 2014 request.
VA has taken steps to address, in varying degrees, five of the six problems GAO previously identified related to information in VAs budget justification. Specifically, VA has taken steps to improve (1) the transparency of its estimates for initiatives in support of the advance appropriations request, (2) the consistency of the language used to label health care services across its three health care appropriations accounts, (3) the reliability of its estimates for certain facility-related activities, (4) the reliability of its estimate for facility maintenance and improvement, and (5) the reliability of its estimates for proposed savings. However, VA did not address (6) the transparency of its estimates for initiatives and ongoing health care services. While VA improved aspects of the information in its fiscal year 2014 budget justification, it is important that VA ensure that the six recommendations from GAOs prior work regarding such information are fully implemented. Until these recommendations are fully implemented, the problems GAO previously identified will continue to limit for Congress and others the usefulness of information related to the estimates that support the Presidents budget request for VA health care.

What GAO Recommends

GAO recommends that VA (1) use consistent terminology to label estimates for administrative personnel costs and (2) provide consistent and comprehensive information explaining the costs in each budget category for administrative costs. VA generally agreed with GAOs conclusions and concurred with GAOs recommendations.