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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Committee on Veterans' Affairs, United 
States Senate: 

September 2014: 

VA Dialysis Pilot: 

Documentation of Plans for Concluding the Pilot Needed to Improve 
Transparency and Accountability: 

GAO-14-646: 

GAO Highlights: 

Highlights of GAO-14-646, a report to the Ranking Member, Committee on 
Veterans' Affairs, United States Senate. 

Why GAO Did This Study: 

Veterans with end-stage renal disease-—a condition of permanent kidney 
failure-—are one of the most resource-intensive patient populations 
served by the VA and are generally prescribed a life-saving medical 
procedure called dialysis. In 2009, VA began developing a pilot 
program at four VAMCs to provide dialysis to veterans in VA-operated, 
free-standing dialysis clinics largely in an effort to stem rising 
costs for providing such care in the private sector through the Non-VA 
Medical Care Program. In May 2012, GAO issued a report identifying 
several weaknesses in VA's execution of the planning and early 
implementation phases of the Dialysis Pilot. 

GAO was asked to continue its evaluation of the Dialysis Pilot. GAO 
examined the extent to which VA documented plans for concluding the 
Dialysis Pilot and the status of data on the quality of care and 
treatment costs for the four pilot locations. 

GAO reviewed relevant documents from VA and the evaluation contractor 
selected by VA to perform an independent analysis of the pilot 
locations. GAO also spoke with VA officials responsible for managing 
the Dialysis Pilot, representatives from all four pilot locations, and 
evaluation contractor officials responsible for reviewing the 
performance of the four pilot locations. 

What GAO Found: 

Five years into the Dialysis Pilot, the Department of Veterans Affairs 
(VA) Central Office still has not set a timetable for completing the 
pilot or documented how it will determine the success of the pilot 
locations. GAO previously identified best practices that state that a 
project timeline is critical for managing and measuring an entity's 
performance on projects and that choosing and documenting well-
regarded criteria that are used to make comparisons can lead to 
strong, defensible conclusions. Initially, VA planned to conclude the 
Dialysis Pilot after the pilot locations were all open for 5 years. 
However, in March 2014, VA officials told GAO they are no longer 
operating under this timeline but instead plan to conclude the pilot 
once the pilot locations achieve (1) the creation of a model for a VA-
operated, free-standing dialysis clinic that can be replicated by other 
VA medical centers (VAMC) and (2) the confirmation of the time 
necessary for a pilot location to reach a “breakeven point.” VA 
considers that a pilot location has achieved a breakeven point when it 
repays its start-up funding and the VAMC realizes a cost savings 
because its treatment cost for dialysis at the pilot location is lower 
than purchasing care from non-VA dialysis providers. However, VA has 
not formally documented these pilot location achievements as criteria 
for concluding the Dialysis Pilot. By not doing so, the transparency 
of VA's management decisions on pilot location outcomes is compromised 
and the Department lacks accountability for ensuring the success of 
the Dialysis Pilot. 

The Dialysis Pilot has been under evaluation for 2 years by VA and the 
contractor it selected to conduct an independent analysis of pilot 
location quality of care and treatment costs. However, neither has 
concluded its evaluation. Specifically, VA noted that the delayed 
openings and initial operational issues of two pilot locations—
Philadelphia, Pennsylvania, and Cleveland, Ohio—led to limited data 
availability, and it recommended another 12 months of data be 
collected on these two pilot locations before drawing conclusions. 

Table: Data Available from the Department of Veterans Affairs (VA) and 
Evaluation Contractor on Quality of Care and Treatment Costs for 
Dialysis Pilot Locations, Calendar Years 2012 and 2013: 

Calendar year: 2012: 

Review type: Quality of care; 
Evaluator: VA; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were not included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Review type: Quality of care; 
Evaluator: Contractor; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were not included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Review type: Treatment cost
Evaluator: VA; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were not included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Review type: Treatment cost
Evaluator: Contractor; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were not included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Calendar year: 2013: 

Review type: Quality of care; 
Evaluator: VA; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were included in reviews; 
Cleveland, OH: Data were included in reviews. 

Review type: Quality of care; 
Evaluator: Contractor; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Review type: Treatment cost
Evaluator: VA; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were included in reviews; 
Cleveland, OH: Data were included in reviews. 

Review type: Treatment cost
Evaluator: Contractor; 
Pilot location: 
Raleigh, NC: Reviews were not available at the time of GAO's analysis; 
Fayetteville, NC: Reviews were not available at the time of GAO's 
analysis; 
Philadelphia, PA: Reviews were not available at the time of GAO's 
analysis; 
Cleveland, OH: Reviews were not available at the time of GAO's 
analysis. 

Source: GAO analysis of VA and evaluation contractor data. GAO-14-646. 

[End of table] 

What GAO Recommends: 

GAO recommends that VA document its plans for concluding the Dialysis 
Pilot. VA concurred with GAO's recommendation but did not clearly 
delineate its plans for pilot conclusion. 

View [hyperlink, http://www.gao.gov/products/GAO-14-646]. For more 
information, contact Randall B. Williamson at (202) 512-7114 or 
willamsonr@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

VA Has Not Documented Criteria or Plans for Concluding the Dialysis 
Pilot: 

Current Data on Quality of Care and Treatment Costs Are Limited Due to 
Ongoing Evaluations: 

Conclusions: 

Recommendation: 

Agency Comments and Our Evaluation: 

Appendix I: Results of Clinical Quality Review by the Department of 
Veterans Affairs: 

Appendix II: Results of Patient Satisfaction Review by the Department 
of Veterans Affairs: 

Appendix III: Results of Access to Care Review by the Department of 
Veterans Affairs: 

Appendix IV: Results of Clinical Quality Review by the Evaluation 
Contractor: 

Appendix V: Results of Treatment Cost Reviews by the Department of 
Veterans Affairs and the Evaluation Contractor: 

Appendix VI: Comments from the Department of Veterans Affairs: 

Appendix VII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Data Available from the Department of Veterans Affairs (VA) 
and Evaluation Contractor on Quality of Care and Treatment Costs for 
Dialysis Pilot Locations, Calendar Years 2012 and 2013: 

Table 2: Department of Veterans Affairs' (VA) Results of Centers for 
Medicare & Medicaid Services (CMS) Clinical Quality Measures for 
Dialysis Pilot Locations, Calendar Years 2012 and 2013: 

Table 3: Department of Veterans Affairs' (VA) Results of Patient 
Satisfaction Surveys for the Raleigh, North Carolina, Dialysis Pilot 
Location, June 2011 through September 2013: 

Table 4: Department of Veterans Affairs' (VA) Results of Patient 
Satisfaction Surveys for the Fayetteville, North Carolina, Dialysis 
Pilot Location, June 2011 through September 2013: 

Table 5: Department of Veterans Affairs' (VA) Results of Veterans' 
Access to Care Review for the Raleigh and Fayetteville, North 
Carolina, Dialysis Pilot Locations, Calendar Year 2012: 

Table 6: Department of Veterans Affairs' (VA) Results of Veterans' 
Access to Care Review for the Dialysis Pilot Locations, Calendar Year 
2013: 

Table 7: Evaluation Contractor's 2013 Dialysis Facility Report 
Clinical Quality Measures for the Raleigh and Fayetteville Department 
of Veterans Affairs (VA) Dialysis Pilot Locations Compared to North 
Carolina and U.S. Averages, Calendar Years 2009 to 2012: 

Table 8: Evaluation Contractor's 2013 Dialysis Facility Report 
Clinical Quality Measures for the Philadelphia Department of Veterans 
Affairs (VA) Dialysis Pilot Location Compared to Pennsylvania and U.S. 
Averages, Calendar Years 2009 to 2012: 

Table 9: Average Cost Per Treatment for Department of Veterans Affairs 
(VA) Dialysis Pilot Locations and Non-VA Dialysis Providers as 
Calculated by VA and the Evaluation Contractor, Calendar Years 2012 
and 2013: 

Abbreviations: 

CMS: Centers for Medicare & Medicaid Services: 

DFR: Dialysis Facility Report: 

ESRD: end-stage renal disease: 

VA: Department of Veterans Affairs: 

VAMC: Veterans Affairs medical center: 

VHA: Veterans Health Administration: 

VISN: Veterans Integrated Service Network: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

September 2, 2014: 

The Honorable Richard Burr: 
Ranking Member: 
Committee on Veterans' Affairs: 
United States Senate: 

Dear Mr. Burr: 

Veterans diagnosed with end-stage renal disease (ESRD)--a condition of 
permanent kidney failure--are one of the most resource-intensive 
patient populations served by the Department of Veterans Affairs (VA) 
Veterans Health Administration (VHA).[Footnote 1] Veterans with ESRD 
are generally prescribed dialysis, which is a life-saving medical 
procedure that removes excess fluids and toxins from the bloodstream. 
[Footnote 2] Dialysis treatments are time intensive. Specifically, 
veterans receiving dialysis treatments typically must receive three 
outpatient treatments per week with each treatment lasting about four 
hours. Veterans usually remain on dialysis for the rest of their lives 
unless they receive a kidney transplant. Due to VA's limited dialysis 
capacity in its own facilities, VA most commonly provides dialysis to 
veterans by referring them to non-VA dialysis providers in their local 
communities through the Non-VA Medical Care Program (non-VA medical 
care).[Footnote 3] In fiscal year 2013, VA referred about 14,000 
veterans to non-VA dialysis providers at a cost of about $425 million. 
[Footnote 4] 

In 2009, VA began developing a pilot program at several VA medical 
centers (VAMC) to provide dialysis to veterans in VA-operated dialysis 
clinics in response to several issues--including an increasing number 
of veterans needing dialysis, rising costs of providing dialysis 
through non-VA medical care, and unsuccessful efforts to lower these 
costs.[Footnote 5] The resulting Dialysis Pilot was approved by the 
Secretary of VA in September 2010. Ultimately, VA believes the 
Dialysis Pilot will lead to the development of a business model with a 
mission of providing more veterans' dialysis treatments in VA 
facilities and less through non-VA medical care. Through this pilot, 
VA established four VA-operated dialysis clinics located near 
sponsoring VAMCs in Durham and Fayetteville, North Carolina; 
Cleveland, Ohio; and Philadelphia, Pennsylvania.[Footnote 6] The 
Raleigh and Fayetteville pilot locations opened in June 2011, the 
Philadelphia pilot location opened in October 2012, and the Cleveland 
pilot location opened in July 2013. 

In May 2012, we issued a report on VA's Dialysis Pilot that identified 
several weaknesses in VA's execution of the planning and early 
implementation phases of the pilot.[Footnote 7] Specifically, we found 
VA did not appropriately document its pilot location selection 
process, produce consistent and comparable cost estimates for pilot 
locations, provide clear and timely written guidance on how to repay 
start-up funding to VA Central Office, and provide guidance on how to 
calculate cost savings generated by the pilot locations.[Footnote 8] 
Due to continuing congressional concern about issues raised in our 
prior report, you asked us to continue our evaluation of VA's Dialysis 
Pilot. In this report, we examine (1) the extent to which VA has 
documented plans for concluding the Dialysis Pilot and (2) the status 
of data on the quality of care and treatment costs for the four pilot 
locations. 

To examine the extent to which VA has documented plans for concluding 
the Dialysis Pilot, we interviewed VA Central Office officials and 
VAMC officials responsible for managing pilot locations regarding VA's 
plans for the completion of the Dialysis Pilot and reviewed relevant 
VA documentation. These documents included a VA business analysis for 
the Dialysis Pilot and VA's contract with a leading university 
research center (evaluation contractor) to review the Dialysis Pilot 
locations' quality of care and treatment costs.[Footnote 9] 

To examine the status of data on the quality of care and treatment 
costs for the four pilot locations, we interviewed VA Central Office 
officials and officials from the evaluation contractor regarding the 
status and initial findings of their evaluations. We analyzed 
documents that VA and the evaluation contractor produced regarding the 
quality of care--including clinical quality, patient satisfaction, and 
access to care--and treatment costs at the pilot locations compared 
with non-VA dialysis providers. 

We conducted this performance audit from January 2014 to July 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

VA set four goals for the Dialysis Pilot: (1) improve the quality of 
dialysis care veterans receive, (2) increase veterans' access to 
dialysis care, (3) provide additional dialysis research opportunities, 
and (4) achieve cost savings for VA-funded dialysis treatments. 

VA Dialysis Pilot Evaluation: 

VA is performing an internal evaluation of the performance of the four 
pilot locations by assessing the quality of care--including clinical 
quality, patient satisfaction, and access to care--and treatment costs 
at each pilot location. Results of this evaluation are reported in an 
annual performance review produced by VA each calendar year. To date, 
VA has completed reviews for calendar years 2012 and 2013. 

* Clinical quality: To evaluate the clinical quality at the pilot 
locations, VA selected 11 clinical quality measures that were derived 
from measures and associated performance standards established by the 
Centers for Medicare & Medicaid Services (CMS)--the federal entity 
with primary responsibility for evaluating the quality of dialysis 
care in the United States--and endorsed by the National Quality Forum, 
a leader in evaluating clinical performance measurement for a variety 
of chronic clinical conditions.[Footnote 10] 

* Patient satisfaction: To evaluate veterans' satisfaction with the 
quality of care provided at the pilot locations, VA analyzed the CMS 
standard dialysis facility survey--the In-Center Hemodialysis Consumer 
Assessment of Healthcare Providers and Systems--for the veterans 
treated at pilot locations.[Footnote 11] 

* Access to care: To evaluate veterans' access to the pilot locations, 
VA is measuring the percentage of veterans whose actual travel 
distances are no more than 30 miles from their residence to the pilot 
location where they receive care.[Footnote 12] 

* Treatment cost: To evaluate the cost of care, VA is comparing the 
pilot locations' average cost per treatment and the average cost per 
treatment for non-VA dialysis providers in each pilot location's 
Veterans Integrated Service Network (VISN).[Footnote 13] To calculate 
each pilot location's average cost per treatment, VA divided each 
pilot location's total health care costs by its total number of 
treatments.[Footnote 14] To calculate non-VA dialysis providers' 
average cost per treatment, VA created a composite figure using the 
average per treatment contract rate from the two largest non-VA 
dialysis providers located in each pilot location's VISN, a per 
treatment VA claims processing fee, a per treatment VA physician cost 
for nephrology oversight, and a per treatment VA financial 
administrative cost.[Footnote 15] 

Dialysis Pilot Evaluation Contractor Review: 

In September 2012, VA awarded a 3-year contract to an evaluation 
contractor to provide an independent evaluation of its Dialysis Pilot--
including a comparison of the clinical quality provided by the four 
pilot locations with non-VA dialysis providers and a dialysis per 
treatment cost comparison between the pilot locations and the Non-VA 
Medical Care Program.[Footnote 16] 

* Clinical quality: To evaluate the clinical quality of care provided 
by the pilot locations, the evaluation contractor is assessing the 
results of several measures--such as mortality, hospitalization, and 
infection rates--for the pilot locations and comparing them to 
relevant state and national results. These results are presented for 
each pilot location in quarterly quality reviews and an annual 
dialysis facility report (DFR), a standard report produced by the 
evaluation contractor for CMS for each of the more than 6,000 private 
sector dialysis facilities nationwide. 

* Treatment cost: To evaluate the treatment costs for each pilot 
location, the evaluation contractor is comparing the pilot locations' 
average cost per treatment to that of private sector dialysis 
providers, including certain contracted non-VA dialysis providers. 
[Footnote 17] Results are presented for each pilot location in 
quarterly cost reviews.[Footnote 18] The evaluation contractor used a 
similar methodology as VA to determine each pilot location's average 
cost per treatment.[Footnote 19] To determine the non-VA dialysis 
provider average cost per treatment in calendar year 2012, the 
evaluation contractor created a composite figure that included (1) the 
contract per treatment average price for the three non-VA dialysis 
providers with the largest market share in the VISN responsible for 
the Raleigh and Fayetteville pilot locations, (2) VA's per treatment 
travel-related costs, and (3) VA's per treatment medical oversight 
costs.[Footnote 20] 

VA Has Not Documented Criteria or Plans for Concluding the Dialysis 
Pilot: 

Even though it is 5 years into the Dialysis Pilot, VA Central Office 
has not yet set a timetable for completing the pilot or documented how 
it will determine the success of the four pilot locations. We have 
previously outlined best practices for project scheduling that specify 
project timelines are critical for managing and measuring an agency's 
performance on projects and that it is necessary for the agency to 
have a document that details the rationale used in developing a 
project timeline.[Footnote 21] In addition, We have outlined best 
practices for designing evaluations that state that choosing and 
documenting well-regarded criteria that are used to make comparisons 
can lead to strong, defensible conclusions.[Footnote 22] 

According to VA's business analysis of the Dialysis Pilot conducted 
prior to opening the pilot locations, VA planned to conclude the 
Dialysis Pilot 5 years after the pilot locations opened and assumed 
all four pilot locations would begin operations at generally the same 
time.[Footnote 23] Due to delays in opening the pilot locations, the 
completion of this 5-year period would be in fiscal year 2018--5 years 
after the opening of the fourth pilot location.[Footnote 24] However, 
in March 2014, VA officials told us they are no longer operating under 
the 5-year timeline outlined in this plan, although they have not 
updated the timeline included in the Dialysis Pilot business analysis. 
VA officials told us that instead of ending the Dialysis Pilot based 
on the timeline outlined in VA's business analysis, they believe the 
Dialysis Pilot will be successful and should conclude once the pilot 
locations have achieved the following: 

* Creation of a replicable model. According to VA officials, the first 
achievement that indicates success is the creation of a model for a VA-
operated, free-standing dialysis clinic that can be replicated by other 
VAMCs. Such a model would include clear documentation of the necessary 
staff, equipment, time, and resources required to establish a new 
clinic and serve as a guide to other VAMCs seeking to establish 
similar clinics. VA officials did not specify a timeline for the 
creation of this model; however, they did state that they believe the 
pilot locations have already achieved this milestone. 

* Pilot location breakeven points. VA officials stated that the second 
achievement that indicates success is the confirmation of the time 
necessary for a pilot location to reach its breakeven point--which VA 
has defined as the point when a pilot location achieves cost savings 
in the Non-VA Medical Care Program for dialysis services for its 
sponsoring VAMC and repays its start-up funding to VA Central Office. 
Through the Dialysis Pilot, sponsoring VAMCs for the pilot locations 
were each provided about $2.5 million in start-up funding to establish 
a VA-operated, free-standing dialysis clinic and were to finish 
repaying this start-up funding to VA Central Office in fiscal year 
2014. According to VA Central Office officials, all four pilot 
locations have repaid their start-up funding as of the beginning of 
fiscal year 2014 and two pilot locations--Raleigh and Fayetteville--
have demonstrated that their cost per treatment is lower than 
comparable per treatment costs of non-VA dialysis providers in their 
areas. Achieving this breakeven point indicates that the pilot 
locations are no longer incurring additional costs for VA and are 
fulfilling VA's goal of providing dialysis treatments to veterans at a 
lower cost than similar care provided through non-VA dialysis 
providers. 

While VA officials indicated they could conclude the Dialysis Pilot 
once the pilot locations had created a replicable model and realized 
their breakeven points, VA has not formally communicated these 
achievements in writing as criteria for concluding the pilot. 
Moreover, these criteria were not included in the performance work 
statement for the evaluation contractor, and according to a VA 
official, have not been formally recorded in any official document. By 
not clearly communicating these milestones as criteria for concluding 
the Dialysis Pilot, the transparency of VA's management decisions on 
pilot location outcomes is compromised and the Department lacks 
accountability for ensuring the success of the Dialysis Pilot. 

Current Data on Quality of Care and Treatment Costs Are Limited Due to 
Ongoing Evaluations: 

VA and the evaluation contractor have been evaluating the Dialysis 
Pilot for 2 years; however, neither has concluded its evaluation of 
the Dialysis Pilot and data on two of the pilot locations--
Philadelphia and Cleveland--is limited due to their delayed opening. 
Table 1 shows the data available for each pilot location as of June 
2014. 

Table 1: Data Available from the Department of Veterans Affairs (VA) 
and Evaluation Contractor on Quality of Care and Treatment Costs for 
Dialysis Pilot Locations, Calendar Years 2012 and 2013: 

Calendar year: 2012: 

Review type: Quality of care; 
Evaluator: VA; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were not included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Review type: Quality of care; 
Evaluator: Contractor; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were not included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Review type: Treatment cost
Evaluator: VA; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were not included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Review type: Treatment cost
Evaluator: Contractor; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were not included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Calendar year: 2013: 

Review type: Quality of care; 
Evaluator: VA; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were included in reviews; 
Cleveland, OH: Data were included in reviews. 

Review type: Quality of care; 
Evaluator: Contractor; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were included in reviews; 
Cleveland, OH: Data were not included in reviews. 

Review type: Treatment cost
Evaluator: VA; 
Pilot location: 
Raleigh, NC: Data were included in reviews; 
Fayetteville, NC: Data were included in reviews; 
Philadelphia, PA: Data were included in reviews; 
Cleveland, OH: Data were included in reviews. 

Review type: Treatment cost
Evaluator: Contractor; 
Pilot location: 
Raleigh, NC: Reviews were not available at the time of GAO's analysis; 
Fayetteville, NC: Reviews were not available at the time of GAO's 
analysis; 
Philadelphia, PA: Reviews were not available at the time of GAO's 
analysis; 
Cleveland, OH: Reviews were not available at the time of GAO's 
analysis. 

Source: GAO analysis of VA and evaluation contractor data. GAO-14-646. 

Note: The VA review includes information on quality of care--including 
clinical quality, patient satisfaction, and access to care--and 
treatment costs at pilot locations compared to non-VA dialysis 
providers. VA contracted with a leading university research center to 
evaluate the Dialysis Pilot. This evaluation contractor's review 
includes information on clinical quality provided by the pilot 
locations and private sector free-standing dialysis providers and a 
comparison of the treatment costs for dialysis care through the pilot 
locations and the Non-VA Medical Care Program. The evaluation 
contractor's quality of care data included in this table are from the 
Dialysis Facility Reports, which are standard reports produced by the 
evaluation contractor for the Centers for Medicare & Medicaid Services 
for each of the more than 6,000 private sector dialysis facilities 
nationwide. 

[End of table] 

To date, VA has produced two annual performance reviews on quality of 
care and treatment costs for the Dialysis Pilot--the first for calendar 
year 2012 and the second for calendar year 2013--that include the 
results of pilot locations' clinical quality, patient satisfaction, 
access to care, and treatment cost performance. The VA calendar year 
2012 annual performance review included results for the Raleigh and 
Fayetteville pilot locations only. VA included results for all four 
pilot locations in its calendar year 2013 annual performance review; 
however, this review does not include a full year of data for the 
Cleveland pilot location and VA noted operational challenges that 
affected the data for the Philadelphia pilot location. VA noted 
several contributing factors to the limited data available on the 
Cleveland and Philadelphia pilot locations, including the following: 

* The Cleveland pilot location experienced issues with laboratory data 
in veterans' VA medical records that limited the results on one of the 
clinical quality measures in 2013. 

* For both the Cleveland and Philadelphia pilot locations, VA reported 
that the dialysis machines did not operate properly, which resulted in 
a lower than expected number of veterans being treated at the 
Philadelphia pilot location between January and June 2013 and delayed 
the opening of the Cleveland pilot location until July 2013. 

As a result, VA recommended that another full 12 months of data from 
the Philadelphia and Cleveland pilot locations be analyzed before 
making conclusive comparisons of the treatment costs of these pilot 
locations with non-VA dialysis providers. In addition, the evaluation 
contractor has reviewed the Dialysis Pilot for 2 years and has one 
year remaining on its contract. At the time of our analysis, the 
evaluation contractor had completed 2 years of evaluations on the 
quality of care provided by the four pilot locations and 1 year of 
treatment cost evaluations for two of the pilot locations. For 
information on VA's clinical quality review of pilot locations, see 
appendix I; VA's patient satisfaction review for pilot locations, see 
appendix II; VA's access to care review for pilot locations, see 
appendix III; the evaluation contractor's clinical quality review of 
pilot locations, see appendix IV; and VA's and the evaluation 
contractor's reviews of pilot location average cost per treatment, see 
appendix V. 

Conclusions: 

VA has not documented its plan for the conclusion of the Dialysis 
Pilot, despite beginning pilot development 5 years ago. Without a 
formally established project timeline, VA cannot effectively monitor 
performance against specified timeframes, validate and defend the 
timeline of the Dialysis Pilot to VA decisionmakers and other 
stakeholders, or ultimately hold VA decisionmakers accountable for 
future resource investment decisions. In addition, the transparency of 
the Dialysis Pilot is jeopardized by VA not clearly documenting the 
achievements stated by VA officials--the creation of a replicable 
model for additional VA-operated free-standing dialysis clinics and 
demonstrating a breakeven point--as criteria for concluding the 
Dialysis Pilot. 

Recommendation: 

To improve the transparency and accountability of the Dialysis Pilot, 
we recommend that the Secretary of Veterans Affairs direct the Under 
Secretary for Health to document plans for concluding the Dialysis 
Pilot, including establishing an end date or documenting criteria for 
deciding what constitutes the successful completion of the pilot. 

Agency Comments and Our Evaluation: 

VA provided written comments on a draft of this report, which we have 
reprinted in appendix VI. In its comments, VA generally agreed with 
our conclusions and concurred with our recommendation to improve the 
transparency and accountability of the Dialysis Pilot. VA also stated 
that in July 2015--2 years after the Cleveland pilot location became 
operational--it plans to review the outcomes from the four pilot 
locations and make recommendations for the Dialysis Pilot. VA did not 
provide any technical comments. 

In its general comments, VA noted that the criteria for deciding what 
constitutes the successful completion of its Dialysis Pilot is 
included in the department's document entitled, "Evaluation Plan: VA 
Free-Standing Dialysis Centers," which VA enclosed with its comments. 
While this document describes the measures VA is using to evaluate the 
pilot, it does not delineate the amount of data or length of review 
that is needed in order to conclude the pilot. In addition, VA did not 
clearly state when recommendations will be made and whether the pilot 
will end at that time. We continue to believe that VA should clearly 
document its plan for concluding the Dialysis Pilot by clearly 
specifying an end date for the pilot or specific outcomes that must be 
met. 

We are sending copies of this report to the Secretary of Veterans 
Affairs, appropriate congressional committees, and other interested 
parties. In addition, the report is available at no charge on the GAO 
website at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-7114 or williamsonr@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix VII. 

Sincerely yours, 

Signed by: 

Randall B. Williamson: 
Director, Health Care: 

[End of section] 

Appendix I: Results of Clinical Quality Review by the Department of 
Veterans Affairs: 

This appendix provides information on the Department of Veterans 
Affairs' (VA) results from its review of Dialysis Pilot location 
clinical quality. To assess clinical quality, VA selected and 
evaluated Dialysis Pilot locations using 11 performance measures 
established by the Centers for Medicare & Medicaid Services (CMS). For 
calendar years 2012 and 2013, CMS defined the lowest achievement 
threshold for facility performance as the 15th percentile, the average 
performance standard as the 50th percentile, and the highest benchmark 
as the 90th percentile. Specifically, table 2 provides results of VA's 
review of clinical quality at the four Dialysis Pilot locations--
Raleigh and Fayetteville, North Carolina; Philadelphia, Pennsylvania; 
and Cleveland, Ohio. 

Table 2: Department of Veterans Affairs' (VA) Results of Centers for 
Medicare & Medicaid Services (CMS) Clinical Quality Measures for 
Dialysis Pilot Locations, Calendar Years 2012 and 2013: 

Dialysis adequacy: 

Clinical quality measures: Minimum delivered hemodialysis dose[D]; 
Higher quality of care indicator: higher percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 99.0; 
Raleigh, NC: 2013: 99.0; 
Fayetteville, NC: 2012: 97.5; 
Fayetteville, NC: 2013: 95.0; 
Philadelphia, PA[A]: 2013: 96.0; 
Cleveland, OH[B]: 2013: 81.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: 94-97-100; 
2013: 86-93-97. 

Bone and mineral metabolism: 

Clinical quality measures: Measurement of phosphorous concentration[E]; 
Higher quality of care indicator: higher percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 99.6; 
Raleigh, NC: 2013: 100; 
Fayetteville, NC: 2012: 100; 
Fayetteville, NC: 2013: 100; 
Philadelphia, PA[A]: 2013: 100; 
Cleveland, OH[B]: 2013: 97.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: N/A; 
2013: N/A. 

Clinical quality measures: Measurement of calcium concentration[F]; 
Higher quality of care indicator: higher percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 100; 
Raleigh, NC: 2013: 100; 
Fayetteville, NC: 2012: 100; 
Fayetteville, NC: 2013: 100; 
Philadelphia, PA[A]: 2013: 100; 
Cleveland, OH[B]: 2013: 97.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: N/A; 
2013: N/A. 

Clinical quality measures: Proportion of patients with 
hypercalcemia[G]; 
Higher quality of care indicator: lower percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 0.0; 
Raleigh, NC: 2013: 0.0; 
Fayetteville, NC: 2012: 0.0; 
Fayetteville, NC: 2013: 0.0; 
Philadelphia, PA[A]: 2013: 0.0; 
Cleveland, OH[B]: 2013: 2.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: N/A; 
2013: N/A. 

Anemia management: 

Clinical quality measures: Proportion of patients who exceed hemoglobin 
target[H]; 
Higher quality of care indicator: lower percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 0.0; 
Raleigh, NC: 2013: 0.0; 
Fayetteville, NC: 2012: 0.0; 
Fayetteville, NC: 2013: 1.0; 
Philadelphia, PA[A]: 2013: 0.0; 
Cleveland, OH[B]: 2013: 2.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: 10-4-0; 
2013: 5-1-0. 

Clinical quality measures: Monthly measurement of hemoglobin 
concentration[I]; 
Higher quality of care indicator: higher percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 100; 
Raleigh, NC: 2013: 100; 
Fayetteville, NC: 2012: 100; 
Fayetteville, NC: 2013: 100; 
Philadelphia, PA[A]: 2013: 100; 
Cleveland, OH[B]: 2013: 99.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: N/A; 
2013: N/A. 

Clinical quality measures: Proportion of patients whose iron levels 
were assessed[J]; 
Higher quality of care indicator: higher percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 100; 
Raleigh, NC: 2013: 100; 
Fayetteville, NC: 2012: 100; 
Fayetteville, NC: 2013: 100; 
Philadelphia, PA[A]: 2013: 100; 
Cleveland, OH[B]: 2013: 98.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: N/A; 
2013: N/A. 

Vascular access type: 

Clinical quality measures: Proportion of patients with catheters[K]; 
Higher quality of care indicator: lower percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 3.2; 
Raleigh, NC: 2013: 5.0; 
Fayetteville, NC: 2012: 3.6; 
Fayetteville, NC: 2013: 6.0; 
Philadelphia, PA[A]: 2013: 11.0; 
Cleveland, OH[B]: 2013: 6.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: 24-14-5; 
2013: 22-13-5. 

Clinical quality measures: Proportion of patients with arterial venous 
fistula[L]; 
Higher quality of care indicator: higher percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 49.4; 
Raleigh, NC: 2013: 58.0; 
Fayetteville, NC: 2012: 68.4; 
Fayetteville, NC: 2013: 72.0; 
Philadelphia, PA[A]: 2013: 53.0; 
Cleveland, OH[B]: 2013: 76.0; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: 46-58-74; 
2013: 47-60-75. 

Infection and immunization: 

Clinical quality measures: Proportion of patients with bloodstream 
infections[M]; 
Higher quality of care indicator: lower percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 1.2; 
Raleigh, NC: 2013: 0.7; 
Fayetteville, NC: 2012: 0.7; 
Fayetteville, NC: 2013: 0.4; 
Philadelphia, PA[A]: 2013: 0.0; 
Cleveland, OH[B]: 2013: 0.8; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: N/A; 
2013: N/A. 

Clinical quality measures: Proportion of patients receiving influenza 
immunization[N]; 
Higher quality of care indicator: higher percentage; 
Dialysis pilot location: 
Raleigh, NC: 2012: 100; 
Raleigh, NC: 2013: 100; 
Fayetteville, NC: 2012: 100; 
Fayetteville, NC: 2013: 97.0; 
Philadelphia, PA[A]: 2013: 100; 
Cleveland, OH[B]: 2013: 100; 
CMS-established performance standards [lowest-average-highest][C]: 
2012: N/A; 
2013: N/A. 

Source: VA. GAO-14-646. 

Legend: 
Higher percentage indicates higher quality of care; 
Lower percentage indicates higher quality of care; 
N/A = no CMS-established performance standard available for this 
calendar year. 

Note: Measures in this table are either current or former CMS End-
Stage Renal Disease (ESRD) Quality Incentive Program measures. The 
measures are also currently or were previously endorsed by the 
National Quality Forum. 

[A] VA did not assess clinical performance of the Philadelphia pilot 
location in 2012 because it opened in October 2012. 

[B] VA did not assess clinical performance of the Cleveland pilot 
location in 2012 because it opened in July 2013. 

[C] In 2009, CMS established the ESRD Quality Incentive Program as a 
way to promote high-quality services in outpatient dialysis facilities 
treating patients with ESRD. While the principles guiding the ESRD 
Quality Incentive Program remain the same over time, the program's 
specific quality measures and standards change from year to year. For 
calendar years 2012 and 2013, CMS defined the lowest achievement 
threshold for facility performance as the 15th percentile, the average 
performance standard as the 50th percentile, and the highest benchmark 
as the 90th percentile. 

[D] This measure calculates the proportion of dialysis patients that 
received the minimum recommended amount of dialysis. 

[E] This measure calculates the percentage of months in which the 
blood phosphorous levels--an indicator of potential bone disease--were 
measured for at least 97 percent of patients. 

[F] This measure calculates the percentage of months in which the 
blood calcium levels--an indicator of potential bone disease--were 
measured for at least 97 percent of patients. 

[G] This measure calculates the proportion of patients whose blood 
calcium levels--an indicator of potential bone disease--were on 
average above the recommended levels. 

[H] This measure calculates the proportion of patients whose 
hemoglobin levels were above the recommended levels. 

[I] This measure calculates the percentage of months in which the 
hemoglobin levels were measured for at least 99 percent of patients. 

[J] This measure calculates the proportion of patients whose iron 
levels were measured at least once every three months. 

[K] This measure calculates the proportion of patients that received 
dialysis via a catheter for 90 days or longer, which is associated 
with poorer patient outcomes. 

[L] This measure calculates the proportion of patients that received 
dialysis via an arterial venous fistula, which is associated with the 
most favorable health outcomes. 

[M] This measure calculates the proportion of patients with blood 
infections. 

[N] This measure calculates the proportion of patients who received 
influenza immunizations. 

[End of table] 

[End of section] 

Appendix II: Results of Patient Satisfaction Review by the Department 
of Veterans Affairs: 

This appendix provides results from the Department of Veterans 
Affairs' (VA) review of patient satisfaction at its two more 
established Dialysis Pilot locations--Raleigh and Fayetteville, North 
Carolina. VA did not analyze patient satisfaction for the newer pilot 
locations--Philadelphia, Pennsylvania, and Cleveland, Ohio--because 
these pilot locations were either not open or not operating at full 
capacity during the periods of VA's analysis. 

* Table 3 provides results for VA's review of the Raleigh, North 
Carolina, Dialysis Pilot location's patient satisfaction. 

* Table 4 provides results for VA's review of the Fayetteville, North 
Carolina, Dialysis Pilot location's patient satisfaction. 

Table 3: Department of Veterans Affairs' (VA) Results of Patient 
Satisfaction Surveys for the Raleigh, North Carolina, Dialysis Pilot 
Location, June 2011 through September 2013: 

Measure[A]: Nephrologists' communication and caring; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Raleigh pilot location[D]: 3.85; 
Patient satisfaction scores for non-VA dialysis providers[E]: 3.62; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Raleigh pilot location: 3.69; 
Patient satisfaction scores for non-VA dialysis providers[E]: 3.08. 

Measure[A]: Quality of dialysis center care and operations; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Raleigh pilot location[D]: 3.85: 3.63; 
Patient satisfaction scores for non-VA dialysis providers[E]: 3.52; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Raleigh pilot location: 3.59; 
Patient satisfaction scores for non-VA dialysis providers[E]: 3.16. 

Measure[A]: Providing information to patients; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Raleigh pilot location[D]: 0.79; 
Patient satisfaction scores for non-VA dialysis providers[E]: 0.81; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Raleigh pilot location: 0.77; 
Patient satisfaction scores for non-VA dialysis providers[E]: 0.72. 

Measure[A]: Rating of nephrologists; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Raleigh pilot location[D]: 2.83; 
Patient satisfaction scores for non-VA dialysis providers[E]: 2.77; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Raleigh pilot location: 2.79; 
Patient satisfaction scores for non-VA dialysis providers[E]: 2.50. 

Measure[A]: Rating of dialysis center staff; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Raleigh pilot location[D]: 2.67; 
Patient satisfaction scores for non-VA dialysis providers[E]: 2.69; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Raleigh pilot location: 2.79; 
Patient satisfaction scores for non-VA dialysis providers[E]: 2.50. 

Measure[A]: Rating of dialysis center; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Raleigh pilot location[D]: 2.64; 
Patient satisfaction scores for non-VA dialysis providers[E]: 2.62; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Raleigh pilot location: 2.68; 
Patient satisfaction scores for non-VA dialysis providers[E]: 3.00. 

Measure[A]: Number of completed surveys; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Raleigh pilot location[D]: 12; 
Patient satisfaction scores for non-VA dialysis providers[E]: 30; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Raleigh pilot location: 28; 
October 2012 to September 2013[C]: 2. 

Source: VA. GAO-14-646. 

[A] The score range for the providing information to patients measure 
is between 0 and 1, with 1 being the best possible score. The score 
range for all other measures is between 1 and 4, with 4 being the best 
possible score. 

[B] According to VA, patient satisfaction scores for this period did 
not include any adjustments for patient characteristics due to small 
sample sizes. 

[C] According to VA, patient satisfaction scores for this period did 
not include any adjustments for patient characteristics and should be 
interpreted with caution because sample sizes were too small to make 
significant comparisons. VA did not test for statistical significance 
for any measure during this time period. 

[D] The differences between the patient satisfaction scores for the 
Raleigh pilot location and veterans' previous non-VA dialysis 
providers were not statistically significant for any of the six 
measures. 

[E] The non-VA patient satisfaction scores reflect how veterans rated 
the previous non-VA dialysis provider prior to joining the pilot 
location. 

[End of table] 

Table 4: Department of Veterans Affairs' (VA) Results of Patient 
Satisfaction Surveys for the Fayetteville, North Carolina, Dialysis 
Pilot Location, June 2011 through September 2013: 

Measure[A]: Nephrologists' communication and caring; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Fayetteville pilot location: 3.62[E]; 
Patient satisfaction scores for non-VA dialysis provider[D]: 3.27[E]; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Fayetteville pilot location: 3.59; 
Patient satisfaction scores for non-VA dialysis provider[D]: NR. 

Measure[A]: Quality of dialysis center care and operations; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Fayetteville pilot location: 3.43; 
Patient satisfaction scores for non-VA dialysis provider[D]: 3.31; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Fayetteville pilot location: 3.38; 
Patient satisfaction scores for non-VA dialysis provider[D]: NR. 

Measure[A]: Providing information to patients; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Fayetteville pilot location: 0.70; 
Patient satisfaction scores for non-VA dialysis provider[D]: 0.74; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Fayetteville pilot location: 0.78; 
Patient satisfaction scores for non-VA dialysis provider[D]: NR. 

Measure[A]: Rating of nephrologists; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Fayetteville pilot location: 2.83[E]; 
Patient satisfaction scores for non-VA dialysis provider[D]: 2.52[E]; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Fayetteville pilot location: 2.82; 
Patient satisfaction scores for non-VA dialysis provider[D]: NR. 

Measure[A]: Rating of dialysis center staff; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Fayetteville pilot location: 2.63; 
Patient satisfaction scores for non-VA dialysis provider[D]: 2.42; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Fayetteville pilot location: 2.82; 
Patient satisfaction scores for non-VA dialysis provider[D]: NR. 

Measure[A]: Rating of dialysis center; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Fayetteville pilot location: 2.67; 
Patient satisfaction scores for non-VA dialysis provider[D]: 2.52; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Fayetteville pilot location: 2.80; 
Patient satisfaction scores for non-VA dialysis provider[D]: NR. 

Measure[A]: Number of completed surveys; 
June 2011 to October 2012[B]: 
Patient satisfaction scores for Fayetteville pilot location: 24; 
Patient satisfaction scores for non-VA dialysis provider[D]: 38; 
October 2012 to September 2013[C]: 
Patient satisfaction scores for Fayetteville pilot location: 15; 
Patient satisfaction scores for non-VA dialysis provider[D]: 1. 

Source: VA. GAO-14-646. 

Legend: NR = Survey response was not recorded to protect the anonymity 
of the one veteran who completed it. 

[A] The score range for the providing information to patients measure 
is between 0 and 1, with 1 being the best possible score. The score 
range for all other measures is between 1 and 4, with 4 being the best 
possible score. 

[B] According to VA, patient satisfaction scores for this period did 
not include any adjustments for patient characteristics due to small 
sample sizes. 

[C] According to VA, patient satisfaction scores for this period did 
not include any adjustments for patient characteristics and should be 
interpreted with caution because sample sizes were too small to make 
significant comparisons. VA did not test for statistical significance 
for any measure during this time period. 

[D] The non-VA patient satisfaction scores reflect how veterans rated 
the previous non-VA dialysis provider prior to joining the pilot 
location. 

[E] VA's analysis found that the difference between the Fayetteville 
pilot location and non-VA dialysis provider scores were statistically 
significant. 

[End of table] 

[End of section] 

Appendix III: Results of Access to Care Review by the Department of 
Veterans Affairs: 

This appendix provides results from the Department of Veterans 
Affairs' (VA) review of veterans' access to care at its two more 
established Dialysis Pilot locations--Raleigh and Fayetteville, North 
Carolina. In calendar year 2012, VA did not analyze veterans' access 
to care for the newer pilot locations--Philadelphia, Pennsylvania, and 
Cleveland, Ohio--because these pilot locations were either not open or 
not operating at full capacity during the periods of VA's analysis. 

* Table 5 provides results for VA's review of veterans' access to care 
at the Raleigh and Fayetteville pilot locations for calendar year 2012. 

* Table 6 provides results for VA's review of veterans' access to care 
at all four pilot locations for calendar year 2013. 

Table 5: Department of Veterans Affairs' (VA) Results of Veterans' 
Access to Care Review for the Raleigh and Fayetteville, North 
Carolina, Dialysis Pilot Locations, Calendar Year 2012: 

Performance measure: Average travel distances for veterans to pilot 
location; 
Pilot location: 
Raleigh, NC: 17.7 miles; 
Fayetteville, NC: 7.5 miles; 
VA performance standard: 30 miles. 

Source: VA. GAO-14-646. 

[End of table] 

Table 6: Department of Veterans Affairs' (VA) Results of Veterans' 
Access to Care Review for the Dialysis Pilot Locations, Calendar Year 
2013: 

Performance measure: Percentage of veterans who traveled 30 miles or 
less from their residence to the pilot location where they received 
care; 
Pilot location: 
Raleigh, NC: 87%; 
Fayetteville, NC: 98%; 
Philadelphia, PA: 100%; 
Cleveland, OH: 100%; 
VA performance standard: 100%. 

Source: VA. GAO-14-646. 

[End of table] 

[End of section] 

Appendix IV: Results of Clinical Quality Review by the Evaluation 
Contractor: 

This appendix provides results from the evaluation contractor's review 
of clinical quality for three of the Department of Veterans Affairs' 
(VA) Dialysis Pilot locations in Raleigh and Fayetteville, North 
Carolina, and Philadelphia, Pennsylvania. VA contracted with a leading 
university research center to evaluate the Dialysis Pilot. The 
evaluation contractor's review of the Philadelphia Dialysis Pilot 
location was limited due to operational difficulties at the pilot 
location in calendar year 2012. The evaluation contractor did not 
complete a review of the Cleveland, Ohio, Dialysis Pilot location due 
to insufficient data resulting from the delayed opening of this pilot 
location. 

* Table 7 provides results for the evaluation contractor's review of 
the Raleigh and Fayetteville, North Carolina, Dialysis Pilot 
locations' clinical quality. 

* Table 8 provides results for the evaluation contractor's review of 
the Philadelphia, Pennsylvania, Dialysis Pilot location's clinical 
quality. 

Table 7: Evaluation Contractor's 2013 Dialysis Facility Report 
Clinical Quality Measures for the Raleigh and Fayetteville Department 
of Veterans Affairs (VA) Dialysis Pilot Locations Compared to North 
Carolina and U.S. Averages, Calendar Years 2009 to 2012: 

Clinical quality measure: Standardized mortality ratio[A]; 
Dialysis pilot location: 
Raleigh: 0.24[B]; 
Fayetteville: 0.83[C]; 
North Carolina: 1.02; 
U.S.: 1.00. 

Clinical quality measure: Standardized hospitalization ratio for 
days[D]; 
Dialysis pilot location: 
Raleigh: 0.52[C]; 
Fayetteville: 1.16[B]; 
North Carolina: 0.87; 
U.S.: 1.00. 

Clinical quality measure: Standardized hospitalization ratio for 
admissions[D]; 
Dialysis pilot location: 
Raleigh: 0.47[C]; 
Fayetteville: 0.54[C]; 
North Carolina: 0.91; 
U.S.: 1.00. 

Clinical quality measure: Standardized hospitalization ratio for 
emergency department visits[D]; 
Dialysis pilot location: 
Raleigh: 0.75[C]; 
Fayetteville: 0.85[C]; 
North Carolina: 1.04; 
U.S.: 1.00. 

Clinical quality measure: Hospitalized with septicemia[E]; 
Dialysis pilot location: 
Raleigh: 12.50%; 
Fayetteville: 12.60%; 
North Carolina: 10.20%; 
U.S.: 10.60%. 

Clinical quality measure: Transplant waitlist[F]; 
Dialysis pilot location: 
Raleigh: 19.40%[C]; 
Fayetteville: 11.40%[B]; 
North Carolina: 20.10%; 
U.S.: 24.30%. 

Clinical quality measure: Influenza vaccination[G]; 
Dialysis pilot location: 
Raleigh: 93.60%; 
Fayetteville: 85.20%; 
North Carolina: 75.50%; 
U.S.: 69.70%. 

Clinical quality measure: Urea reduction ratio >65%[H]; 
Dialysis pilot location: 
Raleigh: 95.80%; 
Fayetteville: 89.80%; 
North Carolina: 98.40%; 
U.S.: 98.40%. 

Clinical quality measure: Arterial venous fistula[I]; 
Dialysis pilot location: 
Raleigh: 54.10%; 
Fayetteville: 76.00%; 
North Carolina: 63.20%; 
U.S.: 65.30%. 

Clinical quality measure: Catheter[J]; 
Dialysis pilot location: 
Raleigh: 3.50%; 
Fayetteville: 13.50%; 
North Carolina: 6.40%; 
U.S.: 7.60%. 

Clinical quality measure: Average hemoglobin[K]; 
Dialysis pilot location: 
Raleigh: 10.10g/dL; 
Fayetteville: 10.50g/dL; 
North Carolina: 10.60 g/dL; 
U.S.: 10.60 g/dL. 

Source: Evaluation contractor. GAO-14-646. 

Legend: g/dL = grams per deciliter. 

Notes: VA contracted with a leading university research center to 
evaluate the Dialysis Pilot. This table includes results from the 
Dialysis Facility Reports (DFR) produced by the evaluation contractor 
for the Raleigh and Fayetteville pilot locations in calendar year 
2013. DFRs are standard reports produced by the evaluation contractor 
for CMS for each of the more than 6,000 private sector dialysis 
facilities nationwide. These DFRs include information on several 
clinical quality measures. Each clinical quality measure included in 
the DFRs is analyzed for a unique reporting period--the most common of 
which was from when the pilot location opened through calendar year 
2012. The DFRs only specify whether the difference between the results 
of VA pilot location and non-VA providers is statistically significant 
for some of the quality of care measures. 

[A] The standardized mortality ratio compares the observed death rate 
in the facility to the death rate that was expected based on national 
death rates during that year for patients with the same 
characteristics as those in the facility. The standardized mortality 
ratio accounts for factors such as patient age, race, ethnicity, sex, 
and duration of end-stage renal disease. For this measure, a lower 
result indicates higher quality of care. 

[B] According to the DFR produced by the evaluation contractor, the 
difference between this figure and the national figure was 
statistically significant. 

[C] According to the DFR produced by the evaluation contractor, the 
difference between this figure and the national figure was not 
statistically significant. 

[D] This measure compares the facility's observed number of days 
hospitalized, hospital admissions, or emergency department visits to 
the expected number, based on national averages. For this measure, a 
lower result indicates higher quality of care. 

[E] This measure represents the percentage of dialysis patients whose 
hospitalization diagnoses included septicemia--a serious, life-
threatening infection. For this measure, a lower percentage indicates 
higher quality of care. 

[F] The percentage of all dialysis patients under age 70 that were 
being treated on December 31 in a facility that were on the transplant 
waitlist. 

[G] The percentage of dialysis patients being treated on December 31 
that received the influenza vaccination. For this measure, a higher 
percentage indicates higher quality of care. 

[H] This measure represents the percentage of patients with a urea 
reduction ratio that was 65 percent or more. The urea reduction ratio 
is one measure of how effectively a dialysis treatment removed waste 
products from the body and is commonly expressed as a percentage. For 
this measure, a higher percentage indicates higher quality of care. 

[I] Arterial venous fistula is considered the best long-term access 
method for hemodialysis because it has a lower complication rate than 
other types of access. This measure calculates the percentage of 
patients that used an arterial venous fistula for their last treatment 
of the month. For this measure, a higher percentage indicates higher 
quality of care. 

[J] Catheters are alternative access methods for hemodialysis patients 
that are not ideal for permanent use because they increase the risk of 
infection. This measure reports the percentage of patients in which a 
catheter was used for their last treatment of the month, was the only 
means of vascular access, and was in place for at least 90 days prior 
to treatment. For this measure, a lower percentage indicates higher 
quality of care. 

[K] Anemia--a disease among people whose blood is low in red blood 
cells--is common in people with kidney disease. One of the common 
causes of anemia includes blood loss from hemodialysis and low levels 
of iron. Iron helps red blood cells make hemoglobin. Studies have 
shown that raising the hemoglobin above 12 g/dL in people who have 
kidney disease increases the risk of heart attack, heart failure, and 
stroke. 

[End of table] 

Table 8: Evaluation Contractor's 2013 Dialysis Facility Report 
Clinical Quality Measures for the Philadelphia Department of Veterans 
Affairs (VA) Dialysis Pilot Location Compared to Pennsylvania and U.S. 
Averages, Calendar Years 2009 to 2012: 

Clinical quality measure: Hospitalized with septicemia[A]; 
Philadelphia pilot location: 0.00%; 
Pennsylvania: 11.90%; 
U.S.: 10.60%. 

Clinical quality measure: Influenza vaccination[B]; 
Philadelphia pilot location: 66.70%; 
Pennsylvania: 66.90%; 
U.S.: 69.70%. 

Clinical quality measure: Urea reduction ratio >65%[C]; 
Philadelphia pilot location: 100%; 
Pennsylvania: 98.70%; 
U.S.: 98.40%. 

Clinical quality measure: Average hemoglobin[D]; 
Philadelphia pilot location: 9.80g/dL; 
Pennsylvania: 10.60g/dL; 
U.S.: 10.60g/dL. 

Legend: g/dL = grams per deciliter. 

Source: Evaluation contractor. GAO-14-646. 

Note: VA contracted with a leading university research center to 
evaluate the Dialysis Pilot. This table includes results from the 
Dialysis Facility Reports (DFR) produced by the evaluation contractor 
for the Philadelphia pilot location in calendar year 2013. DFRs are 
standard reports produced by the evaluation contractor for CMS for 
each of the more than 6,000 private sector dialysis facilities 
nationwide. These DFRs include information on several clinical quality 
measures. Each clinical quality measure included in the DFR is 
analyzed for a unique reporting period--the most common of which was 
from when the pilot location opened through calendar year 2012. 

[A] This measure represents the percentage of dialysis patients whose 
hospitalization diagnoses included septicemia--a serious, life-
threatening infection. For this measure, a lower percentage indicates 
higher quality of care. 

[B] This measure represents the percentage of dialysis patients being 
treated on December 31 that received the influenza vaccination. For 
this measure, a higher percentage indicates higher quality of care. 

[C] This measure represents the percentage of patients with a urea 
reduction ratio that was 65 percent or more. The urea reduction ratio 
is one measure of how effectively a dialysis treatment removed waste 
products from the body and is commonly expressed as a percentage. For 
this measure, a higher percentage indicates higher quality of care. 

[D] Anemia--a disease among people whose blood is low in red blood 
cells--is common in people with kidney disease. One of the common 
causes of anemia includes blood loss from hemodialysis and low levels 
of iron. Iron helps red blood cells make hemoglobin. Studies have 
shown that raising the hemoglobin above 12 g/dL in people who have 
kidney disease increases the risk of heart attack, heart failure, and 
stroke. 

[End of table] 

[End of section] 

Appendix V: Results of Treatment Cost Reviews by the Department of 
Veterans Affairs and the Evaluation Contractor: 

Table 9 provides results from the Department of Veterans Affairs' (VA) 
and the evaluation contractor's reviews of the average cost per 
treatment for Dialysis Pilot locations in Raleigh and Fayetteville, 
North Carolina, Philadelphia, Pennsylvania, and Cleveland, Ohio, and 
non-VA dialysis providers for calendar year 2012 and calendar year 
2013. VA contracted with a leading university research center to 
evaluate the Dialysis Pilot. 

Table 9: Average Cost Per Treatment for Department of Veterans Affairs 
(VA) Dialysis Pilot Locations and Non-VA Dialysis Providers as 
Calculated by VA and the Evaluation Contractor, Calendar Years 2012 
and 2013: 

Data source: VA; 

Pilot location: Raleigh, NC; 
2012: 
Pilot location average cost per treatment: $287[A]; 
Non-VA dialysis provider average cost per treatment: $318[B]; 
2013: 
Pilot location average cost per treatment: $266[C]; 
Non-VA dialysis provider average cost per treatment: $350[B,D]. 

Pilot location: Fayetteville, NC; 
2012: 
Pilot location average cost per treatment: $295[A]; 
Non-VA dialysis provider average cost per treatment: $318[B]; 
2013: 
Pilot location average cost per treatment: $296[C]; 
Non-VA dialysis provider average cost per treatment: $350[B,D]. 

Pilot location: Philadelphia, PA[E]; 
2012: 
Pilot location average cost per treatment: No data; 
Non-VA dialysis provider average cost per treatment: No data; 
2013: 
Pilot location average cost per treatment: $766[C,F]; 
Non-VA dialysis provider average cost per treatment: $348[B,D]. 

Pilot location: Evaluation contractor: Cleveland, OH[G]; 
2012: 
Pilot location average cost per treatment: No data; 
Non-VA dialysis provider average cost per treatment: No data; 
2013: 
Pilot location average cost per treatment: $636[C,F]; 
Non-VA dialysis provider average cost per treatment: $362[B,D]. 

Data source: Evaluation contractor; 

Pilot location: Raleigh, NC; 
2012: 
Pilot location average cost per treatment: $291[H]; 
Non-VA dialysis provider average cost per treatment: $324[I]; 
2013: 
Pilot location average cost per treatment: N/A; 
Non-VA dialysis provider average cost per treatment: N/A. 

Pilot location: Fayetteville, NC; 
2012: 
Pilot location average cost per treatment: $310[H]; 
Non-VA dialysis provider average cost per treatment: $324[I]; 
2013: 
Pilot location average cost per treatment: N/A; 
Non-VA dialysis provider average cost per treatment: N/A. 

Pilot location: Philadelphia, PA[E]; 
2012: 
Pilot location average cost per treatment: No data; 
Non-VA dialysis provider average cost per treatment: No data; 
2013: 
Pilot location average cost per treatment: N/A; 
Non-VA dialysis provider average cost per treatment: N/A. 

Pilot location: Pilot location: Cleveland, OH[G]; 
2012: 
Pilot location average cost per treatment: No data; 
Non-VA dialysis provider average cost per treatment: No data; 
2013: 
Pilot location average cost per treatment: N/A; 
Non-VA dialysis provider average cost per treatment: N/A. 

Source: VA and evaluation contractor. GAO-14-646. 

Legend: 

No data: No data existed because the pilot location was not open for 
all or a majority of 2012; 
N/A = No data were available at the time we issued our report. 

Note: VA contracted with a leading university research center to 
evaluate the Dialysis Pilot. Both VA and the evaluation contractor 
calculated the average cost per treatment for each pilot location by 
dividing the pilot location's total health care costs by the total 
number of treatments. Total health care costs included, at a minimum, 
the following costs from Centers for Medicare & Medicaid Services 
(CMS) standard dialysis facility reports: capital-related costs on 
buildings and fixtures, operation and maintenance costs, housekeeping 
costs, machine capital-related or rental and maintenance costs, 
salaries and benefits for direct patient care, supply costs, 
laboratory costs, administrative and general costs, drug costs, and 
medical record costs. Additional costs specific to certain figures are 
detailed below. 

[A] For calendar year 2012, VA excluded costs from services furnished 
to individual patients--known as physician professional services--from 
its nephrologist costs, as these costs are billed separately and 
therefore excluded from CMS's facility cost methodology. Additionally, 
administrative overhead costs from Veterans Integrated Service Network 
(VISN) and VA Central Office staff were not included in calendar year 
2012. 

[B] To calculate non-VA dialysis providers' average cost per 
treatment, VA created a composite figure using the average per 
treatment contract rate from the two largest non-VA dialysis providers 
in each pilot location's VISN, a per treatment VA local claims 
processing fee, a per treatment VA physician cost, and a per treatment 
VA financial administrative cost. 

[C] For calendar year 2013, VA included costs from services furnished 
to individual patients--known as physician professional services--in 
its nephrologist costs. VA also included in calendar year 2013 per 
treatment costs for VISN and VA Central Office overhead and travel 
benefits paid to veterans being treated at the pilot locations. These 
changes were made in order to more closely align VA's calculations of 
pilot location and non-VA dialysis provider costs. 

[D] This figure includes the per treatment cost for VA physician cost 
for nephrology oversight. 

[E] There were no data for the Philadelphia pilot location for 
calendar year 2012 because it did not open until October 2012. 

[F] According to VA, the average cost per treatment for dialysis at 
both the Philadelphia and Cleveland pilot locations was affected by 
these pilot locations not operating at or near full capacity for a 
portion of calendar year 2013. 

[G] There were no data for the Cleveland pilot location for calendar 
year 2012 because it did not open until July 2013. 

[H] This figure includes per treatment costs for nephrology oversight 
and travel benefits paid to veterans being treated at the pilot 
locations. 

[I] To determine the non-VA dialysis provider average cost per 
treatment in calendar year 2012, the evaluation contractor created a 
composite figure that included the weighted average of the contract 
per treatment prices for the three non-VA dialysis providers with the 
largest market share in the VISN where the pilots are located, the VA 
per treatment cost of travel benefits paid to veterans being treated 
at the pilot locations, and the VA per treatment nephrology oversight 
costs. 

[End of table] 

[End of section] 

Appendix VI: Comments from the Department of Veterans Affairs: 

Department of Veterans Affairs: 
Washington DC 20420: 

August 15, 2014: 

Mr. Randall B. Williamson: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Williamson: 

The Department of Veterans Affairs (VA) has reviewed the Government 
Accountability Office's (GAO) draft report, "VA Dialysis Pilot: 
Documentation of Plans for Concluding the Pilot Needed to Improve 
Transparency and Accountability" (GAO-14-646). VA generally agrees 
with GAO's conclusions and concurs with GAO's recommendation to the 
Department. 

The enclosure specifically addresses GAO's recommendation in the draft 
report. VA appreciates the opportunity to comment on your draft report. 

Sincerely, 

Signed by: 

Jose D. Riojas: 
Chief of Staff: 

Enclosure: 

Department of Veterans Affairs (VA) Response to Government 
Accountability Office (GAO) Draft Report "VA Dialysis Pilot: 
Documentation of Plans for Concluding the Pilot Needed to Improve 
Transparency and Accountability" (GA0-14-646): 

GAO Recommendation: To improve the transparency and accountability of 
the Dialysis Pilot, GAO recommends that the Secretary of Veterans 
Affairs direct the Under Secretary for Health to document plans for 
concluding the Dialysis Pilot, including establishing an end date or 
documenting criteria for deciding what constitutes the successful 
completion of the pilot. 

VA Comments: Concur. In July 2015, which is 2 years after the final 
center became operational, the Veterans Health Administration (VHA) 
will review the outcomes from all pilot programs and make 
recommendations for the Dialysis Pilot. VHA anticipates the data 
analysis to be completed by September 30, 2015. The criteria for 
deciding what constitutes the successful completion of the pilots is 
included in the document entitled, "Evaluation Plan: VA Free-Standing 
Dialysis Centers" (Attachment A), and was provided to Senator Burr of 
the Senate Veterans' Affairs Committee in November 2013. Target 
Completion Date: October 1, 2015. 

[End of section] 

Appendix VII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Randall B. Williamson, (202) 512-7114 or williamsonr@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Marcia A. Mann, Assistant 
Director; Cathleen Hamann; Katherine Nicole Laubacher; Said 
Sariolghalam; and Teresa Tam made key contributions to this report. 
Jacquelyn Hamilton provided legal support. 

[End of section] 

Footnotes: 

[1] VHA oversees VA's health care system. The VA health care system 
includes 151 VA medical centers (VAMC) organized into 21 Veterans 
Integrated Service Networks (VISN). Each of VA's 21 VISNs is 
responsible for managing and overseeing VAMCs within a defined 
geographic area. 

[2] In this report, we use the term dialysis to describe hemodialysis-
-the most common form of dialysis treatment provided in the United 
States. VA provides dialysis as part of the medical benefits package--
a full range of hospital and outpatient services, prescription drugs, 
and noninstitutional long-term care services--to all veterans enrolled 
in its health care system. See 38 C.F.R. § 17.38. 

[3] The Non-VA Medical Care Program--previously known as the Fee Basis 
Care Program--includes dialysis services and provides care to eligible 
veterans outside of VA when VA medical facilities are not feasibly 
available. VAMCs have criteria to determine whether non-VA medical 
care may be used. If a veteran is eligible for certain medical care, 
the VAMC should provide it as the first option. If the VAMC cannot 
provide the services--due to a lack of available specialists, long 
wait times, or extraordinary distances from the veteran's home--it may 
consider providing care through the Non-VA Medical Care Program in the 
veteran's community. 

[4] Veterans may elect to have their dialysis treatments through VA or 
Medicare but cannot receive dialysis benefits from both 
simultaneously. Medicare covers dialysis treatments for most 
individuals with ESRD regardless of age. Medicare coverage generally 
begins on the fourth month after they start dialysis. Medicare 
reimburses dialysis providers 80 percent of a specified rate and 
beneficiaries or private health insurance companies are responsible 
for the remaining 20 percent. Veterans who elect to have their 
dialysis treatments paid for by Medicare are responsible for paying 
the remaining 20 percent of their treatment costs because VA is not 
authorized to pay these out-of-pocket expenses incurred by veterans 
covered by Medicare. Veterans who elect to have their dialysis 
treatments provided through VA--either in VAMCs or through the Non-VA 
Medical Care Program--may not incur any out-of-pocket expenses. 

[5] VA-operated dialysis clinics are freestanding clinics that are 
typically located in convenient areas and vary in the number of 
patients served. The VHA Dialysis Steering Committee and its Dialysis 
Center Activation Subcommittee are responsible for overseeing the 
Dialysis Pilot. The VHA Dialysis Steering Committee includes VA 
clinicians and officials who assess and assist in the management of 
the delivery of dialysis services for veterans enrolled at VA. The VHA 
Dialysis Center Activation Subcommittee was created to implement the 
Dialysis Pilot. 

[6] The dialysis clinic for the Durham VAMC is located in Raleigh, 
North Carolina. 

[7] GAO, VA Dialysis Pilot: Increased Attention to Planning, 
Implementation, and Performance Measurement Needed to Help Achieve 
Goals, [hyperlink, http://www.gao.gov/products/GAO-12-584] 
(Washington, D.C.: May 23, 2012). 

[8] Through the Dialysis Pilot, sponsoring VAMCs for the pilot 
locations were each provided about $2.5 million in start-up funding to 
establish a VA-operated free-standing dialysis clinic and were to 
finish repaying this start-up funding to VA Central Office in fiscal 
year 2014. According to VA Office of Finance officials, each pilot 
location was provided $2.5 million from VHA's fiscal year 2010 Medical 
Services appropriation with the requirement that the pilot site would 
repay this amount in two scheduled payments of $1.25 million occurring 
in fiscal years 2012 and 2014. The pilot sites made the scheduled 2012 
and 2014 payments using available balances from their respective 
fiscal years (2012 and 2014). VA added back the same amount to the VHA 
Medical Services appropriation account for the same respective fiscal 
year. 

[9] The contractor selected by VA to evaluate the Dialysis Pilot is a 
leading university research center that carries out a wide variety of 
epidemiological, clinical, medical outcomes, public policy, and 
economic research relating to ESRD, chronic kidney disease, and organ 
transplantation. Its projects are funded by multiple government and 
private sources, including the Centers for Medicare & Medicaid 
Services, Centers for Disease Control and Prevention, National 
Institutes of Health, National Institute of Diabetes and Digestive and 
Kidney Diseases, National Institute of Allergy and Infectious 
Diseases, Renal Research Institute, VA, and the American Society of 
Transplant Surgeons. 

[10] The measures selected to assess the clinical quality of VA pilot 
locations are: (1) the proportion of dialysis patients that received 
the minimum recommended amount of dialysis; (2) the percentage of 
months in which blood phosphorous levels were measured for at least 97 
percent of the patients--blood phosphorous levels are an indicator of 
potential bone disease; (3) the percentage of months in which blood 
calcium levels were measured for at least 97 percent of the patients--
blood calcium levels are an indicator of potential bone disease; (4) 
the proportion of patients whose blood calcium levels were, on 
average, above the recommended levels; (5) the percentage of months in 
which hemoglobin levels were measured for at least 99 percent of the 
patients--hemoglobin levels are an indicator of anemia; (6) the 
proportion of patients whose hemoglobin levels were above the 
recommended levels; (7) the proportion of patients whose iron levels 
were measured at least once every three months--iron levels are an 
indicator of anemia; (8) the proportion of patients that received 
dialysis via a catheter, which is associated with poorer patient 
outcomes; (9) the proportion of patients that received dialysis via an 
arterial venous fistula, which is associated with the most favorable 
health outcomes; (10) the proportion of patients with blood 
infections; and (11) the proportion of patients who received influenza 
immunizations. 

[11] CMS requires that all dialysis facilities treating 30 or more 
patients in the United States administer this survey to all patients 
treated within their facilities. 

[12] The 30 mile access measure is based upon the recommendation of VA 
clinicians. 

[13] These data are extracted from VA's Managerial Cost Accounting 
Office's adjusted cost reports. The Managerial Cost Accounting Office 
manages VA's designated cost accounting system. Adjusted cost reports 
include start-up costs for the pilot locations which are amortized 
over a 10-year period. 

[14] VA uses data from its own Managerial Cost Accounting Office to 
assess pilot location costs and categorized these costs according to 
CMS cost reporting requirements. CMS requires dialysis facilities to 
follow a certain methodology when completing the CMS Independent Renal 
Dialysis Facility Cost Report (CMS Form 265-11) each calendar year. 
This methodology requires facilities to report capital-related costs 
on buildings and fixtures, operation and maintenance costs, 
housekeeping costs, machine capital-related or rental and maintenance 
costs, salaries and benefits for direct patient care, supply costs, 
laboratory costs, administrative and general costs, drug costs, 
medical record costs, and nephrologist costs. A nephrologist is a 
medical doctor who specializes in kidney care and treating diseases of 
the kidneys. 

[15] Nephrology is the branch of medicine that deals with diseases of 
the kidneys. 

[16] This contract includes a mandatory first year of work, referred 
to as a base year, and gives VA the option of continuing the contract 
for two additional years, referred to as option years. VA and the 
evaluation contractor are currently in the first option year of this 
contract and VA officials reported they expect to exercise the second 
option year for fiscal year 2015. 

[17] The data used for the analysis of pilot locations' costs 
conducted by the evaluation contractor are provided by VA's Managerial 
Cost Accounting Office. 

[18] The evaluation contractor is also providing VA with an annual 
dialysis facility cost review for the four pilot locations; however, 
these do not include a cost comparison with non-VA dialysis providers. 

[19] In calendar year 2012, the evaluation contractor did not include 
administrative overhead costs for VISN and VA Central Office staff 
because the evaluation contractor had not yet determined how to 
accurately incorporate them. The evaluation contractor recommended 
that VA revise its methodology for calculating pilot locations' costs 
to include these overhead costs. The evaluation contractor also 
included veteran travel-related and medical oversight costs to ensure 
that the methodology used to calculate the average cost per treatment 
for the pilot locations and non-VA dialysis providers more closely 
aligned. 

[20] A non-VA dialysis provider's market share was determined by the 
percentage of dialysis facilities it owned out of the total number of 
dialysis facilities located in that VISN's geographic area. 

[21] GAO, GAO Schedule Assessment Guide: Best Practices for Project 
Schedules, [hyperlink, http://www.gao.gov/products/GAO-12-120G] 
(Washington, D.C.: May 30, 2012). 

[22] GAO, Designing Evaluations: 2012 Revision, [hyperlink, 
http://www.gao.gov/products/GAO-12-208G] (Washington, D.C.: Jan. 31, 
2012). 

[23] In March 2010, VA completed a business analysis that demonstrated 
the rationale for conducting the Dialysis Pilot. This document 
communicates the results of VA's analysis of internal and external 
options for providing outpatient dialysis treatments to veterans. The 
implementation timeline in this document establishes a 5-year timeline 
for implementing the Dialysis Pilot beginning in April 2010 and 
concluding in fiscal year 2015 with the evaluation of the fifth year 
of pilot location operations. 

[24] VA's business analysis estimated that all four pilot locations 
would open in October 2010; however, the opening of the pilot 
locations was delayed. The first two pilot locations, Raleigh and 
Fayetteville, opened in June 2011, the Philadelphia pilot location 
opened in October 2012, and the Cleveland pilot location opened in 
July 2013. 

[End of section] 

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