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VAOIG ENUMERATES MANY CHALLENGES FACING THE VA --

Mental health care, research, contracted care, quality

management and claims processing all areas of concern.

When the VAOIG or GAO says an agency has "challenges," that is bureaucratic code for "major problems."

So, it is not surprising to hear the VAOIG testify about "challenges" at the VA.

Below is testimony presented to Congress by the VAOIG on March 12, 2009.

Testimony is here... http://www.va.gov
/oig/pubs/VAOIG-statement-20090312.pdf

Testimony below:

Because of the report layout, we are using a smaller font size.

Our VAOIG report page is here...
http://www.vawatchdog.org/vaoigreports.htm

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Office of Inspector General, Department of Veterans Affairs

Statement before the Subcommittee on Military Construction,

Veterans Affairs, and Related Agencies

Committee on Appropriations

United States House of Representatives

Hearing on Department of Veteran Affairs Challenges

March 12, 2009





Mr. Chairman and Members of the Subcommittee, thank you for the opportunity
to discuss critical challenges facing the Department of Veterans Affairs (VA) and
provide our assessment of VA’s effectiveness in addressing these challenges. Every
year, the Office of Inspector General (OIG) prepares a list of management challenges
facing VA which is included in VA’s Performance and Accountability Report (PAR). In
the most recent PAR, we reported on serious problems across VA in the areas of
health care delivery, benefits processing, financial management, procurement practices,
and information management. These issues were identified as a result of the OIG’s
continuing oversight of VA through national audits, healthcare inspections, Combined
Assessment Program (CAP) reviews, and criminal and administrative investigations. In
fiscal year (FY) 2008, we issued 127 reports; as of February 27th, for FY 2009, we have
issued 43 reports.



Today we will focus on the following challenges because of the Subcommittee’s
particular interests: mental health services, including post traumatic stress disorder and
suicide prevention; medical research; review of issues associated with Community
Based Outpatient Clinics (CBOCs), Vet Centers, and contracted care; quality
management; Department of Defense(DOD)/VA transition to care; progress in
implementing the new GI Bill; Veterans Benefits Administration’s (VBA) claims
processing operations; information technology issues; procurement; and oversight of VA
funds provided in the American Recovery and Reinvestment Act of 2009.



Mental Health Issues



Veteran mental health issues remain a major focus of OIG activities. The issue
of the availability and provision of appropriate treatment for veterans with post traumatic
stress disorder (PTSD) and related mental health conditions was reviewed in several
OIG reports. An August 2008 report, Healthcare Inspection Post-Traumatic Stress
Disorder Program Issues at VA San Diego Healthcare System, San Diego, California,
found that clinical mental health care for veterans must be the first priority of the hospital
staff, even though there are significant and important research questions that must be
answered for the benefit of all veterans at risk. We made recommendations to restore
the balance between research and clinical care.



In a January 2009 report, Healthcare Inspection Allegations of Mental Health
Diagnosis Irregularities at the Olin E. Teague VA Medical Center, Temple, Texas, we
reviewed the allegation that veterans were given the clinical diagnosis of adjustment


disorder to disadvantage them in the VBA disability evaluation process. We found that
the two processes were separate; that veteran’s diagnosis varied depending upon the
clinical facts presented during the visit; and that diagnosis were not always consistent
between providers. However, we did not find data to support that veterans were
disadvantaged in the disability determination process through the use of an adjustment
disorder diagnosis.



Through reports on a number of individual veteran’s cases, it is clear that
veterans’ mental health issues often are complicated by substance and alcohol abuse.
OIG championed VA’s change in policy to permit substance and alcohol abuse issues to
be addressed simultaneously with ongoing mental health issues. Our inspection reports
continue to address this issue. A report that will be issued in early Spring will indicate
that substance abuse is a complicating factor for many veterans, in a higher proportion
among returning Operation Iraqi Freedom/Operation Enduring Freedom (OIF/OEF)
veterans, and is a topic that demands more attention as more needs to be done to
improve treatment and outcomes in this area.



We are currently completing work on a report requested by the Subcommittee on
the mental health strategic plan, which we plan to issue in early April. Another report
requested by the Subcommittee on an audit of the mental health initiative (MHI) fund will
also be issued in early April. We will report on the Veterans Health Administration’s
(VHA) process for tracking funds allocated for the MHI fund, and whether performance
metrics are effectively utilized to determine if the outcome of each initiative met VHA’s
intent. A report on the mental health care received in domiliciaries as required by Public
Law 110-387, Veterans' Mental Health and Other Care Improvements Act of 2008, will
be issued later this year.



Medical Research

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We have published a number of research reports since we last testified before
the Subcommittee. Our most recent report, Healthcare Inspection Review of the
Veterans Health Administration's Use of Appropriated Funds for Research, was
completed at the request of the Subcommittee and found that VA spends appropriated
research funds on research topics that are relevant to the current health care
requirements of veterans.



OIG has reviewed and reported on instances where compliance with VA
research procedures did not occur, and made recommendations that were agreed upon
by VA for change. One report, Healthcare Inspection Human Subjects Protections in
One Research Protocol VA Medical Center, Washington, DC, focused upon the use of a
medication called varenicline (Chantix®) in a particular VA research study, following an
incident in which a veteran alleged that Chantix® caused him to become aggressive
and engage in inappropriate activities. Our review focused on the timeliness of patient
notification following warnings from FDA, the adequacy of the informed consent
process, and the reporting of adverse events. We found that the facility Pharmacy
Service responded appropriately to communications in notifying providers of these


newly defined risks. However, the Research Service did not ensure that patients with
PTSD who were also enrolled in a smoking cessation study received adequate and
timely notice of these risks. We further found that the facility failed to ensure that
patients in this study who had taken Chantix® signed an addendum to the consent form
disclosing these risks.



In another inspection, Healthcare Inspection Human Subjects Protections
Violations at the Central Arkansas Veterans Healthcare System, Little Rock, Arkansas,
we were asked to determine the validity of allegations regarding human subjects’
protection violations in research. We substantiated the allegations of documentation
irregularities and human subject protection violations and found that the affiliate
Institutional Review Board (IRB) was aware of the problems and failed to appropriately
follow up on the issues. We found missing documentation and failure to report serious
adverse events. We also substantiated the allegation that the IRB failed to identify and
address serious and/or continuing noncompliance and failed to ensure that investigators
had the requisite skills to conduct their research. We identified a number of systemic
issues which placed human subjects at risk and substantiated that the facility’s
Research and Development (R&D) Committee failed to protect human subjects. While
we found that current facility leadership has made significant improvements to the R&D
program, the persistence of problems indicates that the R&D program as a whole at this
facility may reflect a culture of noncompliance. We recommended that the Under
Secretary for Health should determine if it is appropriate to continue human research at
the facility, and if the decision is to continue, should provide a plan to ensure that
research complies with VHA standards.



We are currently working on a review of VHA’s human research protocols to
determine if veterans have given their consent to participate in research studies. We
have conducted an online survey of VA facilities that conduct research as well as
randomly visiting 30 sites. This report will be issued by late Spring.



In May 2008, we issued an audit report, Audit of Veterans Health Administration's
Oversight of Nonprofit Research and Education Corporations, addressing the need to
improve VA oversight of their Nonprofit Research and Education Corporations (NPCs).
VA has almost 90 NPCs located in about 40 states with an oversight and management
structure that is multi-layered including responsibilities at the Department level, within
VHA, and at the NPC level. We found that because VHA did not provide the needed
oversight of NPCs by establishing clear lines of authority, implementing effective
oversight procedures, and requiring minimum control requirements for activities, NPCs
did not implement adequate controls to properly manage funds, safeguard equipment,
and guard against conflicts of interest.



As a result of this audit, the Under Secretary for Health agreed to convene a
steering committee to clearly define the associated oversight authorities of the VHA
Nonprofit Corporation Oversight Board, the Nonprofit Research and Education
Corporation Program Office (NPPO), and VHA’s Chief Financial Officer. This steering
committee was also tasked with the development of a policy that can provide


programmatic direction to the NPCs. The NPPO was tasked to work with the Office of
General Counsel to further develop and implement additional administrative controls to
enforce NPC compliance on issues related to conflict of interest.



Community Based Out-Patient Clinics, Vet Centers, and Contracted Care



This Subcommittee recognized the importance of CBOCs and Vet Centers in
providing care for veterans. With your support, we have completed a national review of
Vet Centers and we are currently analyzing data and plan to issue a report this Spring.
We will begin a series of reviews of CBOCs to ensure that veterans receive quality care
at these facilities. The inspections will be performed in a similar fashion as our CAP
reviews of VA Medical Centers.



We have initiated an audit to examine whether VHA has adequate management
controls to oversee CBOC operations including performance measures, monitoring, and
reporting mechanisms. Six years ago, CBOC operations were buried amidst the
primary care lines of the various facilities, transparency was lacking, and VHA did not
have basic information about CBOC operations. Generally, we expect this audit to
identify opportunities to improve national and local management controls needed to
ensure the effective operation of CBOCs. We plan to identify whether there are any
gaps in national or local policies. Controls may vary based on whether CBOCs are VA
or contractor-operated. We will focus on differences in the way these facilities are
managed between VA and contractor-operated clinics.



We reported on the failures of a VA contractor to properly ensure veterans who
underwent endoscopy were provided quality medical care, Healthcare Inspection
Gastroenterology Service Issues at the VA Southern Nevada Healthcare System, Las
Vegas, Nevada. As the use of contracted medical care is likely to increase as VA
expands its provision of health care beyond fixed facilities, through Project Hero and
related health care contracts, we will begin to review the quality of care provided to
veterans under these programs. We will work with VA as they begin to more actively
address the issue of health care quality provided under contract services.



Quality Management



VA is taking steps to improve internal controls over selected quality improvement
processes. In a January 2008 report on the Marion, Illinois, VA Medical Center, we
recommended and VA agreed to issue a national quality management directive that
would standardize the collecting and reporting of VA hospital quality management data.
The OIG has actively contributed to VA’s effort to establish the directive and looks
forward to its issuance. As a result of events at Marion, Illinois, and several smaller VA
hospitals, VA agreed to develop and implement a mechanism to ensure that VHA’s
diagnostic and therapeutic procedures are appropriate to the capabilities of the medical
facility. The OIG believes that the tailoring of diagnostic and treatment procedures to
the capabilities of the hospital is an important national safeguard that will help ensure
that VA facilities practice within their “comfort” level. This internal control, when in


place, should improve the consistency in the quality of more complex procedures that
often require significant hospital support in addition to the skill required by the
physicians and support team that perform the procedure.



The OIG is focused on improving the hospital privileging process. During our
CAP reviews, we are reviewing the privileging process and the requirement that
appropriate data be used to support the hospital’s decision to privilege a physician to
provide care or perform procedures at VA hospitals. VA’s peer review process was
reviewed by OIG. Oversight of hospital performance from the Veterans Integrated
Service Networks’ level of command was significantly lacking when viewed from the
perspective of standards and requirements for performance in VA directives. We made
recommendations to strengthen and improve the peer review program.



We recently completed an evaluation of VHA medical facilities’ quality
management (QM) programs which will be published this month. The purpose of the
evaluation was to determine whether VHA facilities had comprehensive, effective QM
programs designed to monitor patient care activities and coordinate improvement
efforts, and whether VHA facility senior managers actively supported QM efforts and
appropriately responded to QM results. The OIG conducted this review at 44 VA
medical facilities during CAP reviews performed across the country during FY 2008.
This reports notes that there were two facilities with significant weakness in their quality
assurance program, and makes recommendations regarding other quality assurance
programmatic findings.



DOD/VA Transition to Care



The transition of active duty servicemen and women to VA remains an important
topic of OIG review. We published a joint report with the DOD Inspector General that
made recommendations for improvement of the care provided to returning OIF/OEF
veterans, one of which was enacted into law, a provision allowing VA to provide Home
Improvements and Structural Alterations grants to eligible veterans prior to discharge
from military service. An outgrowth of prior OIG work in 2007 is the DOD/VA Reporting
and Analysis Data Mart which, when it is fully populated, will permit the analysis of
transition to care issues by creating cohorts of veterans based upon their year of
discharge from DOD. This data mart requires additional attention on the business rules
that are used to incorporate the various files into the database.



We have continued to improve the data available in our previously published data
set and will report on access to mental health care in one state later this month. This
report will demonstrate the importance of contracted care to supplement fixed VA
facilities and clinics to provide timely access to medical care. In addition, the analysis of
data in this cohort fashion permits contrasts to be drawn between OIF/OEF and
veterans who were not assigned to these theaters, between active and reserve/national
guard soldiers, and between medical diagnoses made before and after discharge from
DOD. When fully operational, the DOD/VA Reporting and Analysis Data Mart should


provide an important resource for research, budget modeling, and health care planning
for VA and DOD.



GI Bill Implementation



The OIG has provided oral briefings to the relevant congressional oversight
committees’ staff on VA’s progress in implementing the Post 9/11 Veterans Educational
Assistance Act of 2008 (new GI Bill) (Public Law 110-252). After a long planning period,
VA has made progress in the current quarter; however successful implementation
remains a difficult and risky challenge due to the inherent difficulties in creating the
software tools, limited VA Office of Information and Technology (OI&T) development
resources, vulnerabilities in VBA staffing estimates, and aggressive project scheduling
requirements. In the coming months, VA will need to complete its primary plans for
software development and implement contingency plans.



We have some concerns that VBA may need more staff than currently planned
since officials have acknowledged reducing planned hiring by 48 employees (8 percent)
due to space limitations. Further, VBA’s estimate is based on annualized workload,
rather than the peak seasonal workload expected during the beginning of the school
year. Also, VBA’s projected workload estimate did not include consideration of greater
participation because of the current economic climate. Inadequate staffing can
potentially delay claims processing. However, VBA is exploring possible solutions, such
as rehiring annuitants with needed expertise.



VA’s contingency plan identifies significant project risks, mitigation strategies,
decision dates to deploy alternate plans, and estimated resource requirements. We are
continuing to monitor the feasibility of some mitigation strategies that are more resource
intensive, such as adding more employees to support the use of manual processes.
For example, if the functionality to make recurring housing payments is delayed, the
contingency plan calls for hiring 263 additional employees to initiate these monthly
education payments. Clearly, implementing a manual process would lack the controls
an automated system could offer.



Completion of the business requirements for the long-term solution may be
delayed because many VA subject matter experts are focused on the interim solution.
We will continue to monitor plan adjustments and additional planning/project
deliverables, including the Integrated Master Schedule, to assess further potential
impediments to program implementation. We will focus our efforts on identifying and
evaluating potential weaknesses in assumptions underlying project feasibility
determinations, schedule, costs, and risk assessments.






these claims. We are also initiating an audit to evaluate the effectiveness of VBA’s
Control of Veterans Record System, which tracks the location of claims folders within
VBA offices. Because a lost or misplaced folder can lead to unnecessary delays in
claims processing, we believe this audit will provide helpful recommendations to
improve services to veterans.



With regard to VBA staffing, in September 2008, the OIG issued a report, Audit of
the Impact of the Veterans Benefits Administration's Special Hiring Initiative, on VBA’s
hiring initiative to reduce the claims backlog. We are planning to begin another review
to examine the effectiveness of VBA’s efforts integrating new staff into their workforce.



Information Technology Issues



VA faces significant challenges in meeting the requirements of the Federal
Information Security Management Act (FISMA). In our FY 2008 FISMA audit, we
reported that VA had made no progress toward eliminating the material weakness in
information technology (IT) security controls and little progress toward remediating the
major deficiencies in IT security. VA has identified over 17,000 system security risks
and developed corresponding Plans of Action & Milestones that need to be remediated
to improve its overall information security posture. Consequently, our audit results
support that a material weakness still exists related to the implementation of VA’s
agency-wide information security program. Legacy IT infrastructure and longstanding
control weaknesses continue to place financial information and veterans’ medical and
benefits information at risk of unauthorized use and disclosure. OI&T has
acknowledged that much work remains, especially in the areas of data security and
privacy and infrastructure improvements.



Although the consolidation of IT functions and activities under the CIO has
addressed some security issues, VA was not in full compliance with the requirements of
FISMA in FY 2008. While progress has been made implementing components of the
agency-wide information security program, we continue to identify significant
deficiencies related to access controls, configuration management controls, change
management controls, service continuity practices designed to protect major
applications, and general support systems from unauthorized access, alteration, or
destruction.



VA did define policies and procedures supporting its agency-wide information
security program with the issuance of various information security directives and
handbooks. Additionally, VA met several major milestones during the implementation of
its information security program during this period. Specifically, VA has certified and
accredited over 600 of its major applications and general support systems, initiated
privacy impact assessments of its major applications and general support systems to
identify and reduce unnecessary holdings of personally identifiable information, and
implemented some technological solutions, such as secure remote access, application
filtering, and portable storage device encryption to improve the security control
protections over its mission critical systems and data.




We are currently performing another audit to evaluate whether VA is managing
its information technology capital investments effectively and efficiently and to
determine why VA was late in submitting Exhibit 300s (an agency’s funding justifications
for IT capital investments) to the Office of Management and Budget (OMB) for budget
year 2010. Without a defined and disciplined process for managing IT investments, VA
will continue to lack reasonable assurance that annual funding decisions for IT capital
investments make the best use of VA’s available IT resources. Our primary focus is to
identify whether VA had implemented the corrective actions needed to prevent
delinquent Exhibit 300 submissions in the future.



IT capital investments can provide solutions that significantly enhance the
delivery of veteran health services and benefits. On the other hand, if not properly
planned and managed, they can become costly, risky, and unproductive. The risks
inherent in VA’s current capital investment control environment and VA’s current
inability to identify IT capital investment needs by the established deadlines make it vital
for VA to take immediate actions to strengthen its oversight to ensure the overall
success of the IT capital investment program.



Procurement



We continue to identify deficiencies in VA’s procurement process, including the
solicitation, award, and administration of its contracts. In the past year, we have issued
over 10 reports illustrating these deficiencies and have provided information on
individual contracting actions to the Deputy Assistant Secretary for Acquisition,
Logistics, and Construction. These deficiencies are identified during pre-award and
post-award reviews of Federal Supply Schedule (FSS) contracts. Although VA’s Office
of Acquisition, Logistics, and Construction has made an effort to identify and correct
problems, and institute policies to improve VA’s acquisition program, the
decentralization of VA’s acquisition program makes this difficult to accomplish. VA does
not have a system that can accurately report what was purchased, when it was
purchased, how it was purchased, from whom it was purchased, and at what price it
was purchased.



Our report, Review of Enterprise-Wide PC Lease Awarded to Dell Marketing,
L.P., on VA’s contract with Dell to standardize personal computers, as well as
installation and other services, showed that the solicitation and award processes were
technically compliant with Federal Acquisition Regulations. However, the review also
found that the contract was not necessary or in the best interest of VA because the
approach limited competition, did not fully consider the needs of VA customers, and
would not achieve one of the stated goals of VA-wide standardization. In addition, we
found that the decision to lease the personal computers was based on a faulty pricing
analysis that incorrectly showed that leasing was more cost effective than purchasing.



Another report involving gastroenterology services for the VA Southern Nevada
Healthcare System in Las Vegas, Nevada, revealed that a contract was inappropriately


entered into by the Chief of Medicine, as opposed to a warranted contracting officer as
required by law.



With regard to VA’s difficulties administering contracts, we issued three reports
that illustrate VA’s challenges in monitoring performance. Our September 2008 report,
Audit of Veterans Health Administration Noncompetitive Clinical Sharing Agreements,
showed that VA lacks reasonable assurance that it received the services it paid for
because of ineffective controls to monitor performance. Strengthening controls over
performance monitoring of these sharing agreements could save VHA about $9.5
million annually or $47.4 million over 5 years. In a July 2008 report, Healthcare
Inspection - Alleged Research Funding Irregularities at the Central Texas Veterans
Health Care System Temple, Texas, we found that VA failed to properly administer a
contract for the use of a magnetic imaging scanner. In a March 2008 report, Audit of
QTC Medical Services, Inc.'s Settlement Offer for Overcharges under Contract
V101(93)P-2099, we found that VA was overcharged $6 million by QTC Medical, Inc.,
because QTC was not following the terms of the contract and VA had not established
appropriate controls to monitor charges.



We plan to issue a report later this month on the implementation and
effectiveness of e-CMS, which is VA’s electronic contracting management system. e-
CMS was designed to standardize the procurement process and provide visibility
regarding VA procurements but our audit found that the system was not being used by
VHA as directed.



A sample of our ongoing work includes a review of VA’s interagency agreement
with the Navy Space and Warfare Systems Command for IT services, an audit of
disability examinations conducted by VA and those conducted by contractors, and a
report summarizing issues identified in pre-award reviews of non-competitive health
care resource contracts and compliance with VA policy.



In March 2008, the General Service Administration convened a Multiple Award
Schedule Advisory Panel to review the structure, use, and pricing for FSS contracts.
VA awards and administers FSS contracts valued at approximately $7.5 billion annually,
about 60 percent of which represent pharmaceuticals, medical/surgical supplies, and
medical equipment. In August 2008, at the invitation of the panel, we made a
presentation demonstrating the significance of key contract clauses, such as the price
reduction clause, which ensures fair and reasonable prices throughout the term of the
contract. Industry panel members have recommended that GSA remove this clause
from the contracts. We have concerns that such actions would result in the
Government paying significantly higher prices than similar commercial customers.



VA’s Office of Acquisition, Logistics & Construction has implemented some and
proposed other additional policies to improve and provide better oversight of the VA
acquisition program. These include the establishment of the Acquisition Academy in
Frederick, Maryland, to improve the quality and efficiency of training initiatives and
development for the acquisition workforce; the utilization of contract review boards to


improve the oversight of large dollar procurements prior to award; increased oversight
of field procurement activities by conducting onsite reviews; and the training of Regional
Counsel attorneys to provide advice and guidance to local contracting entities.



The decentralization of VA’s acquisition functions often results in inconsistent
application of these policies and initiatives as evidenced by our findings relating to the
implementation of e-CMS. In 2008, VA employed the services of a contractor to review
and make recommendations regarding VA’s acquisition structure. Although the
contractor submitted a detailed report that delineated several reorganization options to
improve VA’s procurement activities, none have been implemented.



American Recovery and Reinvestment Act Funds



VA received $1.4 billion under the American Recovery and Reinvestment Act of
2009 for non-recurring maintenance across VHA facilities; repairs and other projects in
the National Cemetery Administration (NCA); hiring of VBA employees and VBA IT
systems. As a proactive step, we plan to assess risk, internal controls, and planning
processes in areas that receive stimulus funds, for the purpose of identifying the
potential for improper payments, and to assess VA’s ability to execute its plan in a cost
effective and timely manner. We also plan to audit VHA and NCA contract and grant
programs to identify improper payments, provide accountability for expended funds, and
evaluate the success of specific projects; and evaluate other Recovery Act projects.



Conclusion



The OIG will continue to work with VA in addressing these challenges in meeting
the needs of veterans for quality and timely health care and benefits. We appreciate the
strong support and interest of the Subcommittee in our independent oversight work, and
we will continue to focus our efforts in priority areas such as mental health, medical
research, and implementation of the new GI Bill.

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posted by Larry Scott
Founder and Editor
VA Watchdog dot Org
-------------------------

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