Veterans Health Care: VA Needs to Improve Its Allocation and Monitoring of Funding
The Veterans Health Administration will spend about $81 billion on care for about 6.9 million patients this year. Higher-than-expected needs have prompted it to repeatedly request supplemental funds.
We reviewed how VHA allocated and monitored use of these funds.
When VHA allocated funds to regional networks and medical centers, it did not use the most recent data on workloads
VHA did not adequately monitor how regional networks changed the allocations to the medical centers in their areas
We made 5 recommendations, including that VHA use the most recent workload data and require regional networks to explain allocation changes.
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What GAO Found
The Department of Veterans Affairs' (VA) Veterans Health Administration (VHA) has developed processes for allocating health care funds to its regional Veterans Integrated Service Networks (VISN) and medical centers. Each year, VHA allocates about two-thirds of funds for general patient care—known as general purpose funds—using two, main allocation models. The first model allocates general purpose funds to each VISN and a second model then allocates these funds to the medical centers that report to each VISN. These models are based on patient workload—that is, the number and type of veterans served and the complexity of care provided. VHA allocates its remaining one-third of funds—known as specific purpose funds—to program offices that manage various, specific programs, such as community care and prosthetics. Program offices, in turn, allocate these funds directly to medical centers using different methodologies, including a workload-based model for community care. GAO found the following weaknesses in VHA's processes for allocating funds:
VHA's allocation models do not use workload data from the most recently completed fiscal year. For example, the fiscal year 2019 allocation levels determined by the models were based on data from fiscal years 2013 through 2017 but did not include data from fiscal year 2018. The models do not use more recent data because officials believed that doing so would not significantly affect allocations. By not using the most recent data available when it makes final allocations, VHA's allocations may not accurately reflect medical centers' funding needs if they experience workload changes. For example, from fiscal years 2017 through 2018, 34 medical centers had patient workload growth of over 3 percent, and 9 experienced a decline of over 3 percent, which was not reflected in the fiscal year 2019 allocations.
VISNs are allowed to make adjustments to allocated funding levels determined by the models and must submit written explanations for doing so according to VHA guidance. However, VHA officials did not adequately review adjustments for fiscal year 2019 to ensure adjustments were documented. Specifically, VHA officials did not provide evidence they sought an explanation for adjustments made by two VISNs that provided no written explanation for their adjustments. Furthermore, GAO also found that VHA guidance does not require VISNs to explain how they determined adjustment amounts and why they made them. Without requiring this information, VHA cannot ensure that these adjustments lead to efficient use of funds.
Once VISNs have made adjustments to allocated funding levels and funds are distributed to VISNs and medical centers, VHA uses multiple mechanisms to monitor the balance of funds. Throughout the year, VHA redistributes funds across the VA health care system to address unfunded needs and surpluses that are identified. However, GAO found that VHA does not adequately monitor the redistribution of allocated funds between VISNs and medical centers. VHA does not require VISNs to provide explanations for redistributions and does not review the amount redistributed. As a result, VHA does not know the extent to which redistributions deviate from workload-based allocations and if VISNs and medical centers are operating efficiently.
Why GAO Did This Study
VHA operates one of the largest health care systems in the nation with an estimate of $81 billion for providing care to over 6.9 million veterans in fiscal year 2019. Recently, VHA has repeatedly requested that Congress provide supplemental funding due to higher-than-expected needs for care.
GAO was asked to examine how VHA allocates funds and monitors use of these funds. This report examines (1) VHA's processes for allocating general purpose and specific purpose funds to its VISNs and medical centers and (2) the extent to which VHA monitors the use of these funds.
GAO reviewed VHA's processes for allocating funds, analyzed data on allocation levels for fiscal years 2015 through 2019, and reviewed documentation on VHA's processes for allocating funds and monitoring. GAO interviewed officials from VHA; all 18 VISNs; and a non-generalizable sample of five medical centers selected based on size, facility complexity, growth in funding, and geographic variation.
GAO is making five recommendations including that VHA use workload data from the most recently completed fiscal year to allocate funds; take steps to review adjustments; revise existing guidance to require VISNs to provide information on adjustment amounts and the reasons for doing so; and require VISNs to provide explanations for redistributions of allocated funds between VISNs and medical centers and then review the amounts redistributed. VA concurred with four recommendations and concurred in principle with one recommendation.
Recommendations for Executive Action
|Veterans Health Administration||The VA Under Secretary of Health should use workload data from the most recently completed fiscal year as part of the models that inform VISNs' and medical centers' general purpose funding needs, when doing so would not significantly delay the allocation of funds. (Recommendation 1)||
In February 2021, VHA provided documentation to show that it used workload data from fiscal year 2020 as part of the models that inform VISNs' and medical centers' general purpose funding needs for fiscal year 2021, following the passage of the Consolidated Appropriations Act, 2021 in December 2020.
|Veterans Health Administration||The VA Under Secretary of Health should establish a formal process to document VHA's review of VISNs' adjustments to medical center allocation levels. (Recommendation 2)||
In 2020, VHA's Chief Financial Officer issued updated guidance to improve the documentation of VISNs' adjustments to medical center allocation levels. Based on this guidance, VISNs are required to provide explanations for these adjustments and submit them to VHA for review. In February 2021, VHA provided documentation to show that it reviews the adjustments to ensure explanations are provided for the redistribution of funds.
|Veterans Health Administration||The VA Under Secretary of Health should revise VHA's existing guidance to require VISNs to provide information on how they determined how much and for what reasons they made adjustments to medical center allocation levels. (Recommendation 3)||
In 2020, VHA's Chief Financial Officer issued updated guidance to improve the documentation of VISNs' adjustments to medical center allocation levels. Based on this guidance, VISNs are required to document the amount and reasons for these adjustments.
|Veterans Health Administration||
Priority Rec.The VA Under Secretary of Health should revise its existing guidance to require VISNs—in conjunction with medical centers—to develop and submit approaches to improve efficiency at medical centers with declining workload that received adjusted funding levels. These approaches could include adjusting the level of services offered. (Recommendation 4)
VA agreed in principle with our recommendation. In January 2023, VHA said that it instructed medical center, VISN, and VA central office leadership to develop a prioritized list of facility investment opportunities, some of which are based on recommendations in the market assessments completed in March 2022. According to VHA, this work will help inform investments in new facilities that are aligned with veteran demand, allow for utilization of modern healthcare technologies, and improve efficiency across the VA healthcare system. Furthermore, VHA said that the implementation of prioritized investments would improve efficiency at medical centers with declining workload by right-sizing, adjusting to appropriate service offerings, and modernizing those locations. VHA provided documentation to show that ten of its 18 VISNs have begun to develop approaches to better match the availability of health care services they offer at their medical centers with veterans' needs for these services. During its second planned round of market assessments, due to be completed in March 2026, VHA plans to assess VAMCs with declining workload as it relates to adjusted funding levels.
|Veterans Health Administration||The VA Under Secretary of Health should require VISNs to provide explanations on the amount of funds redistributed between VISNs and medical centers and VHA to document its review of these redistributions. (Recommendation 5)||
In 2020, VHA issued guidance requiring VISNs to provide explanations on the amount of funds redistributed between VISNs and medical centers. In January 2021, VHA provided documentation showing that it generates a monthly report that is provided to VHA's CFO for review, identifying all transfers between VAMCs within a VISN that exceed 1.5 percent of the VISN's overall funding allocation.