VERA has shifted substantial resources from networks located primarily in the northeast and midwest to networks located in the south and west (see fig. VERA’s implementation resulted in 10 of VA’s 22 networks receiving a smaller share of VA’s medical care appropriation in fiscal year 2001 than in fiscal year 1996. Because VERA allocates resources based on workload, it provides incentives for networks to increase the number of veterans treated. Each network receives an allocation based on a predetermined dollar amount per veteran served. VERA makes this adjustment by applying a price adjustment factor to each network’s allocation. Second, the process for providing supplemental resources through the National Reserve Fund process does not provide adequate information to determine the extent to which networks need supplemental funding as a result of potential problems in VERA, network inefficiency, or other factors. In addition, VERA does not account for variation in patients’ health care needs and related costs among networks as accurately as it could. 8). Agency Comments and Our Evaluation

In comments on a draft of this report, VA agreed with our conclusions that VERA’s design is a reasonable approach to allocate resources commensurate with workloads and that VERA, in concert with other VA initiatives, has provided an incentive for VA to serve more veterans. Appendix I: Scope and Methodology

We reviewed the Department of Veterans Affairs (VA) resource allocation for fiscal years 1997 through 2001 to (1) describe the effect the Veterans Equitable Resource Allocation (VERA) system has had on network resource allocations and workloads, (2) assess whether VERA’s design is a reasonable approach to resource allocation, and (3) identify weaknesses in VERA that may limit VA’s ability to allocate comparable resources for comparable workloads.
Why GAO Did This Study

The Department of Veterans Affairs (VA) spent $21 billion in fiscal year 2001 to treat 3.8 million veterans--most of whom had service-connected disabilities or low incomes. Since 1997, VA has used the Veterans Equitable Resource Allocation (VERA) system to allocate most of its medical care appropriation.

What GAO Found

GAO found that VERA has had a substantial impact on network resource allocations and workloads. First, VERA shifted $921 million from networks located primarily in the northeast and midwest to networks located in the south and west in fiscal year 2001. In addition, VERA, along with other VA initiatives, has provided an incentive for networks to serve more veterans. VERA's overall design is a reasonable approach to allocate resources commensurate with workloads. It provides a predetermined dollar amount per veteran served to each of VA's 22 health care networks. This amount varies depending upon the health care needs of the veteran served and local cost differences. This approach is designed to allocate resources commensurate with each network's workload in terms of veterans served and their health care needs. GAO identified weaknesses in VERA's implementation. First, VERA excludes about one fifth of VA's workload in determining each network's allocation. Second, VERA does not account well for cost differences among networks resulting from variation in their patients' health care needs. Third, the process for providing supplemental resources to networks through VA's National Reserve Fund has not been used to analyze how the need for such resources is caused by potential problems in VERA's allocation, network inefficiency, or other factors.