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Office of Budget

Fiscal Year 2004 Performance and Accountability Report
Published November 15, 2004

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Objective E-4

FY 2004 Obligation ($ in Millions) % of Total VA Resources
Enabling Goal: Deliver world-class service to veterans and their families by applying sound business principles that result in effective management of people, communications, technology, and governance. $898 1.3%
Objective Performance Results
E-4 Improve the overall governance and performance of VA by applying sound business principles, ensuring accountability, and enhancing our management of resources through improved capital asset management; acquisition and competitive sourcing; and linking strategic planning, budgeting, and performance planning.
  • Maintained at 41 percent the ratio of collections to billings (goal was 41 percent)
  • Achieved a dollar value of sharing agreements with DoD of $120 million (goal was $116 million)
$616 0.9%

Performance

VA recorded a broad array of accomplishments during FY 2004 that demonstrated significant movement toward the ultimate aim of Objective E-4. These achievements covered a wide range of operational processes and management improvement initiatives that will continue to lead to greater efficiency. Many of these efforts are being accomplished largely through centralization of several of our major business processes.

During FY 2004, we moved closer to a realignment of our finance, acquisition, and capital asset management functions into business offices across the Department. This realignment of business functions is leading to reduction and standardization of field business activities into a more manageable size, provides for more consistent interpretation of policies and procedures, and promotes implementation of performance metrics and data collection related to these business functions. We are significantly strengthening compliance and consistency with finance, acquisition, and capital asset policies procedures.

The Department implemented 19 recommendations of the proposals put forth by the Secretary's Procurement Reform Task Force. Those recommendations promote leveraging our size and purchasing power by establishing more national contracts, standardizing procurement requests, creating a procurement database, and improving organizational effectiveness. These reforms have led to cost avoidances of hundreds of millions of dollars.

VA helps ensure accountability for performance through monthly performance reviews involving senior leadership. These reviews provide the forum for the Department's top leaders to continually review financial and program performance, workload, major construction, and information technology projects. As required, corrective actions are identified and implemented quickly in order to help ensure performance goals are achieved.

With the release of the President's FY 2005 budget and the Department's Congressional budget justifications in February 2004, VA integrated performance information with its request for resources. This was the first time the Department used this approach rather than prepare a separate performance plan. This was a major step toward better integration of strategic planning, budgeting, and performance planning.

VA worked to achieve the goal of collecting 41 percent of all medical care billings to veterans and health insurance companies, thus helping to maximize health care resources to our core service population-service-connected disabled veterans, those with lower incomes, and veterans with special health care needs. In addition, we achieved a dollar value of sharing agreements with DoD of $120 million. These collaborative efforts between VA and DoD lead to greater efficiency in both departments.

Program Assessment Rating Tool (PART) Evaluation

During the development of the FY 2005 budget, the Administration conducted a PART evaluation of the medical care program that relates to the accomplishment of Objective E-4. This assessment reviewed the combined effectiveness of the legislative and executive branches in designing and implementing the many aspects of the medical care program. The PART evaluation for the medical care program resulted in a rating of "Adequate," an improvement from the FY 2004 budget year PART rating of "Results Not Demonstrated." The improvement in the PART evaluation of the medical care program resulted from several factors, including VA's sharpening its focus on providing timely, high-quality health care to our highest priority veterans-those with service-connected disabled conditions, veterans with lower incomes, and those with special health care needs.

Major Management Challenges

VA's Office of Inspector General identified the following issues as major management challenges related to Objective E-4 (the program's response to each challenge may be found at the pages linked below):

  • Federal Supply Schedule contracts - VA medical centers need to make more effective use of the best purchasing sources (more information).
  • Contracting for health care services - conflicts of interest exist in the request for approval of contracts, preparation of solicitations, contract negotiations, and contract administration (more information).
  • Government purchase card activities - systemic management weaknesses exist in the oversight and use of government purchase cards (more information).
  • Inventory management - systemic problems exist with inventory management caused by inaccurate information, lack of expertise needed to use the electronic inventory management system, and non-use of the system at some supply points in medical centers (more information).
  • Financial management and reporting - manual compilations and processes should be automated (more information).
  • Data validity - data on performance should be thoroughly reviewed to ensure that data validity problems do not exist (more information).
  • Workers' compensation program - problems exist with inadequate case management and fraud detection (more information).

The Government Accountability Office has identified the following issues as major management challenges related to Objective E-4 (the program's response to each challenge may be found on the pages linked below):

  • VA/DoD Sharing - VA needs to continue to work with DoD to address remaining barriers (more information).
  • Third-party collections - continuing work needs to be done to ensure that VA maximizes its third-party collections and to correct persistent collections process weaknesses (more information).
  • Financial management material weakness - problems still exist with the ability to produce auditable information after year end (more information).
  • Federal real property - this is designated as a governmentwide high-risk area (more information).

Program Evaluations

There have not been any independent program evaluations conducted recently that specifically address Objective E-4.

New Policies and Procedures

During FY 2004 VA was involved in a multitude of new efforts that helped bring the Department closer to the ultimate aim of Objective E-4. Some of these included:

  • VA began using a new capital asset management system (CAMS), an integrated Departmentwide system that enables VA to establish, analyze, monitor, and manage its portfolio of capital assets.
  • Through the Health Executive Council, VA and DoD have adopted a schedule to develop interoperable electronic medical records by FY 2005. This agreement, the VA/DoD Joint Electronic Health Record Plan - HealthePeople (Federal) strategy, calls for joint development of a virtual health record that will be accessible by authorized users throughout both departments.
  • Through the Benefits Executive Council, the transition from active military to veteran status has been simplified by the development of a single examination that meets both military services' separation requirements and VA's disability compensation examination criteria. A national memorandum of agreement to codify this policy is scheduled for implementation shortly.
  • VA is in the process of developing a baseline for erroneous payments in all programs - data that will assist the Department in reducing the volume of such payments in the future.
  • The Department implemented and exceeded aggressive goals for reducing interest penalty payments and increasing discounts earned VA-wide in order to provide additional funds for veterans' programs.
  • VA improved its financial processes by centralizing payment of certified invoices at a single center in Austin, Texas.
  • VA improved its delivery of financial government services through expanded use of electronic commerce/electronic data interchange transactions.

Objective E-4 - Key Performance Goal: Achieve 41 percent ratio of collections to billings.

Ratio of Collections to Billings
2000 28%
2001 31%
2002 37%
2003 41%
2004 Actual 41%*
2004 Plan 41%
2005 Plan 41%
Strategic Target 40%

* Estimated actual. Final data will be available in November 2004.

Description, Importance, and Results

VHA has developed a number of performance measures relating to space, costs, revenue, and value provided. The collections to billings ratio is a calculation based on the total cumulative fiscal year collections divided by the total cumulative billings. VA cannot collect from Medicare, but must include 100 percent of charges to assert claims to Medicare supplemental carriers. Because of this inability to collect from Medicare, the resulting ratio appears comparatively lower than the private sector standard.

Management and Policy Issues

VA's primary strategies to achieve this performance goal include raising awareness of the services VA provides, and increasing revenue and efficiency through sound business practices. VA will assess and align the health care system to enhance cost-effective care for veterans. We will focus on increasing revenue and efficiency through better collections and improved business practices. We will hold managers accountable for performance through performance agreements. Achievement of this performance goal is largely contingent on the willingness of first and third parties to pay their bills.

Data Quality

Please refer to the Key Measures Data Table.

Objective E-4 - Key Performance Goal: Achieve $116 million in the value of sharing agreements with DoD.

Dollar Value of Sharing Agreements with DoD ($ in millions)
2001 $58
2002 $83
2003 $105
2004 Actual $120
2004 Plan $116
2005 Plan $151
Strategic Plan $150

Description, Importance, and Results

VA has entered into a number of sharing agreements and memoranda of understanding with DoD to share direct medical care and other services, such as laundry and fire protection. VA and DoD also use other contracting authority to jointly procure pharmaceuticals, medical/surgical supplies, and equipment in order to combine purchasing power and eliminate redundancies. This measure is based on the total dollar value of sharing agreements VA has entered into with DoD. We achieved a $120 million value of sharing agreements with DoD in FY 2004. VA has continued to increase the dollar value of sharing agreements with DoD each year.

Management and Policy Issues

VA's primary strategies to achieve this performance goal include raising awareness of the services VA provides, and increasing revenue and efficiency through sound business practices. VA and DoD will work collaboratively through the VA/DoD Health Executive Council to drive the sharing process. VA and DoD will work to increase use of the same pharmaceutical and medical products resulting in increased leverage in Federal Supply Schedule or other joint contracting negotiations. VA partners with DoD's Pacific e-Health Center in Honolulu to provide peer consultation and patient care to participants separated by distance. VA and DoD participate in the Alaska Federal Health Care Partnership, with the goal of providing specialized care to isolated or remote patient populations in Alaska. VA's Cooperative Studies Program collaborates with DoD on a number of studies, including an antibiotic treatment trial and an exercise/behavioral medicine treatment trial for Gulf War Syndrome. While efforts are underway to document the value of sharing that is not tabulated in VA's or DoD's accounting systems, the new reimbursement rate-90% of CHAMPUS Maximum Allowable Charges for all clinical services-may actually lead to decreased sharing.

Data Quality

Please refer to the Key Measures Data Table.