[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                     OFFICE OF INSPECTOR GENERAL'S
                         OPEN RECOMMENDATIONS:
                      ARE WE FIXING THE PROBLEMS?

=======================================================================

                                HEARING

                               before the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 9, 2010

                               __________

                           Serial No. 111-83

                               __________

       Printed for the use of the Committee on Veterans' Affairs












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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine            JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South     HENRY E. BROWN, Jr., South 
Dakota                               Carolina
HARRY E. MITCHELL, Arizona           JEFF MILLER, Florida
JOHN J. HALL, New York               JOHN BOOZMAN, Arkansas
DEBORAH L. HALVORSON, Illinois       BRIAN P. BILBRAY, California
THOMAS S.P. PERRIELLO, Virginia      DOUG LAMBORN, Colorado
HARRY TEAGUE, New Mexico             GUS M. BILIRAKIS, Florida
CIRO D. RODRIGUEZ, Texas             VERN BUCHANAN, Florida
JOE DONNELLY, Indiana                DAVID P. ROE, Tennessee
JERRY McNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia

                   Malcom A. Shorter, Staff Director

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
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both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
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                            C O N T E N T S

                               __________

                              June 9, 2010

                                                                   Page
U.S. Department of Veterans Affairs Office of Inspector General's 
  Open Recommendations: Are We Fixing the Problems?..............     1

                           OPENING STATEMENTS

Chairman Bob Filner..............................................     1
    Prepared statement of Chairman Filner........................    36
Hon. Cliff Stearns...............................................     2
Hon. Jeff Miller, prepared statement of..........................    36

                               WITNESSES

U.S. Department of Veterans Affairs:
    Richard J. Griffin, Deputy Inspector General, Office of 
      Inspector General..........................................     3
        Prepared statement of Mr. Griffin........................    37
    Hon. Robert A. Petzel, M.D., Under Secretary for Health, 
      Veterans Health Administration.............................    20
        Prepared statement of Dr. Petzel.........................    40

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:
    Hon. Bob Filner, Chairman, Committee on Veterans' Affairs to 
      Hon. Eric K. Shinseki, Secretary, U.S. Department of 
      Veterans Affairs, letter dated June 10, 2010, and VA 
      responses..................................................    47

 
                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                     OFFICE OF INSPECTOR GENERAL'S
                         OPEN RECOMMENDATIONS:
                      ARE WE FIXING THE PROBLEMS?

                              ----------                              


                        WEDNESDAY, JUNE 9, 2010

                     U.S. House of Representatives,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:07 a.m., in 
Room 334, Cannon House Office Building, Hon. Bob Filner 
[Chairman of the Committee] presiding.

    Present: Representatives Filner, Michaud, Perriello, 
Rodriguez, McNerney, Walz, Adler, Kirkpatrick, Stearns, Miller, 
Boozman, Buchanan, and Roe.

              OPENING STATEMENT OF CHAIRMAN FILNER

    The Chairman. Good morning. I want to call to order this 
meeting of the Committee on Veterans' Affairs.
    I ask unanimous consent that all Members may have 5 
legislative days in which to revise and extend their remarks. 
Hearing no objection, so ordered.
    I think we all know that the U.S. Department of Veterans 
Affairs (VA's) Office of Inspector General (OIG) plays a 
critical role in ensuring proper and efficient oversight of the 
Department's activities.
    In the first half of the fiscal year 2010, from October 
2009 to March 2010, the OIG issued 120 reports, identified 
nearly $673 million in monetary benefits, and conducted work 
that resulted in 232 administrative sanctions.
    It is evident that the Inspector General is essential in 
rooting out fraud, waste, and abuse within the VA. Today, we 
want to examine the progress that the Department of Veterans 
Affairs is making in complying with the OIG's recommendations.
    Currently, the Office of Inspector General has a total of 
115 open reports with almost 694 open recommendations that have 
yet to be implemented by the VA. The target date for 
implementation of these recommendations is within a year of 
publication. Although most of these open recommendations are on 
track to be completed within the 1-year timeframe, 16 reports 
containing 45 open recommendations are over 1 year old.
    Additionally, recommendations on VA information security 
issues tracked by an independent auditor show that there are 
almost 40 open recommendations, 34 of which are carried over 
from previous years.
    The timely implementation of these recommendations is 
crucial to ensuring our Nation's veterans receive the best 
care. Many of these recommendations play a critical role in 
ensuring patient safety and safeguarding veterans' information.
    Additionally, of course, timely implementation not only 
reflects good management, but it always reflects responsible 
use of taxpayer money. The monetary benefit yet to be realized 
by these recommendations going unimplemented approaches $100 
million.
    During this country's difficult financial time brought on 
by the recession, the VA must realize cost savings anywhere 
practical. This can be done straightforwardly through the 
elimination of waste and by acting in a timely manner to 
correct the issues identified in the OIG's recommendations.
    The Office of Management and Administration's Operations 
Division is tasked with following up on the reporting and 
tracking of OIG report recommendations while ensuring that all 
allegations made by the OIG are effectively monitored and 
resolved in a timely, efficient, and impartial manner.
    I am pleased that they are here today with Deputy Inspector 
General Griffin to share with the Committee their insights on 
this issue.
    The OIG's reports for followup procedures are an essential 
component of the oversight process. Secretary Shinseki has 
commented many times on the importance of accountability and 
ensuring veterans' care comes first.
    Every agency, including the VA, must be held accountable 
for implementing the OIG's recommendations in a timely manner 
and making certain our Nation's veterans are receiving the 
quality of care that is reflective of their service and 
sacrifice.
    I recognize Mr. Stearns for an opening statement.
    [The prepared statement of Chairman Filner appears on p. 
36.]

            OPENING STATEMENT OF HON. CLIFF STEARNS

    Mr. Stearns. Good morning and thank you, Mr. Chairman. I 
look forward to this morning's discussion on what the VA must 
do to ensure the prompt and proper resolution of audit 
recommendations that are issued by the Office of Inspector 
General.
    If you do not mind, I would like to read from the Inspector 
General Act of 1978, as amended, in which it states, ``The head 
of a Federal agency shall make management decisions on all 
findings and recommendations set forth in an audit report of 
the Inspector General of the agency within a maximum of 6 
months after the issuance of this report and should complete 
final action on each management decision within 12 months after 
the date of the Inspector General's report.''
    Now, Mr. Chairman, as of March 31st, 2010, there were 107 
OIG reports with 640 open recommendations. While most of these 
recommendations are on track to close within the required 1-
year period, I commend the VA for its timely implementation of 
those recommendations. We also know that there are many other 
recommendations that are over a year old.
    The primary focus of this hearing is to get an update 
regarding the 11 open reports that are over 1 year old and the 
23 recommendations in these reports that are still open.
    According to the OIG's report, it could save taxpayers 
approximately $92 million if these recommendations are 
implemented. We must ensure a concerted effort is underway to 
ensure prompt implementation of the OIG's recommendations in 
order to realize these savings.
    So I look forward to working with both the VA and the OIG 
on this as well as future collaborative efforts that will allow 
us to make VA more efficient and to ensure an improved return 
on investment for the taxpayers and, more importantly, Mr. 
Chairman, to ensure that our veterans have access to the 
highest quality health care and benefit delivery system as 
possible.
    I would point out the staff and I were talking this morning 
that the return on investment is $14 to $1. That is for every 
$1 we spend with the OIG, we get $14 back. This is an enormous 
success and something that we should continue.
    And I would be interested to know, Mr. Chairman, how the VA 
stacks up with the U.S. Department of Health and Human Services 
(HHS) and the U.S. Department of Labor (DoL) and other Federal 
agencies to see how well the other agencies are complying and 
implementing the OIG reports.
    So, Mr. Chairman, I look forward to the testimony from our 
witnesses today and I welcome them too. Thank you.
    The Chairman. Thank you, Mr. Stearns.
    At this time, I welcome Richard Griffin who is the Deputy 
Inspector General for the Department of Veterans Affairs, 
accompanied by Robert Ehrlichman who is the Assistant Inspector 
General for Management and Administration.
    Welcome. We appreciate you being here and look forward to 
your testimony. You are now recognized, Mr. Griffin.

  STATEMENT OF RICHARD J. GRIFFIN, DEPUTY INSPECTOR GENERAL, 
   OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS 
AFFAIRS; ACCOMPANIED BY RICHARD EHRLICHMAN, ASSISTANT INSPECTOR 
GENERAL FOR MANAGEMENT AND ADMINISTRATION, OFFICE OF INSPECTOR 
          GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Griffin. Mr. Chairman and Members of the Committee, 
thank you for conducting this hearing and for the opportunity 
to discuss one of the Office of Inspector General's major 
responsibilities, which is to make recommendations to VA 
management to improve programs and services provided to our 
Nation's veterans.
    Accompanying me today is Richard Ehrlichman who has the 
responsibility for the followup activity at the Office of 
Inspector General.
    Followup is a critical component of OIG's oversight work. 
The Office of Management and Budget (OMB) requires a process to 
follow up and report on the status of OIG recommendations. The 
OIG is required to report in its semiannual report to Congress 
on the status of report recommendations.
    In addition, after the Inspector General testified before 
this Committee in February 2007, we began providing quarterly 
updates to the VA Secretary and Congress on the status of open 
report recommendations with an emphasis on recommendations more 
than 1 year old.
    On balance, VA does a good job implementing OIG report 
recommendations in a timely manner. The percentage of 
recommendations implemented within 1 year has increased to 94 
percent from fiscal year 2007 to 2009. VA performs well based 
on comparative data that other Federal OIGs periodically report 
to Congress.
    We will continue to focus on timely and full implementation 
of recommendations for improvement across VA programs.
    In some instances, VA takes corrective actions while we are 
still onsite and before a final report is published. When this 
happens, we close out the recommendation as implemented and 
reflect that action in our final report. Nonetheless, the 
majority of our reports contain open recommendations for 
improvement.
    Once the final report is issued, OIG followup staff in the 
Office of Management and Administration begin tracking the 
recommendations until they are fully implemented. For each 
report, we separately list recommendations and related monetary 
impact we expect VA to derive from implementation. In each 
status request, we seek a description of what actions have 
occurred toward implementing the recommendations during the 
preceding 90 days. We set a 30-day deadline for VA officials to 
respond in writing. The response must contain evidence such as 
issued policies and certifications before we will close 
recommendations.
    The OIG also conducts followup reviews of some of our audit 
and inspection work. During these reviews, we validate 
implementation, evaluate the effectiveness of the recommended 
changes in fixing a problem, and in some cases identify repeat 
deficiencies.
    Examples of followup reviews include our audit of the 
Veterans Benefits Administration (VBA) Fiduciary Program and 
our health care work on reusable medical equipment.
    Opportunities exist for VA to improve its performance. As 
of March 31st, 2010, we had two reports with open 
recommendations that represented over $81 million in monetary 
impact. One report from September 2007 with over $21 million in 
monetary impact involved a recommendation to improve the 
acquisition and management of surgical device implants. The 
other report from September 2008 with over $59 million in 
monetary impact has multiple unimplemented recommendations on 
noncompetitive clinical sharing agreements.
    Lengthy delays implementing OIG recommendations not only 
cost VA money in unrealized savings but prevent veterans from 
benefiting from improvements in VA programs.
    We will continue to highlight those recommendations in need 
of attention in our reports to the VA Secretary, Congress, and 
in our regular meetings with senior VA officials.
    Mr. Chairman, this concludes my statement. We would be 
happy to answer any questions you or other Members of the 
Committee may have.
    [The prepared statement of Mr. Griffin appears on p. 37.]
    The Chairman. Thank you, Mr. Griffin.
    Mr. Michaud.
    Mr. Michaud. Thank you very much, Mr. Chairman, for having 
this hearing today.
    I have a couple of quick questions. My first, and I want to 
thank the panel for coming this morning, is why do you have a 
centralized followup staff rather than having the auditors or 
investigators who did the original report do the followup? 
Would it not make more sense to have those who did the original 
report do the followup?
    Mr. Griffin. In reality, it is a collaborative effort. The 
followup staff are really the traffic cops for receiving the 
reports from VA with the policies they have implemented or the 
procedures they have put in place or the training programs that 
they have created, those things do not require the absolute 
100-percent attention of the audit staff or the health care 
personnel who did the job.
    Certainly there is collaboration. If there is any question 
as to whether or not a recommendation should be closed based on 
the feedback that we have been given, we will consult with the 
expert who did the job and make sure that everyone is in 
agreement that it can and should be closed.
    Mr. Michaud. Thank you.
    My second question, actually it is a followup to 
Congressman Stearns' interest in exactly how does the VA stack 
up to other departments when you look at completing the 
recommendations?
    Mr. Griffin. From time to time, the Council of the 
Inspectors General on Integrity and Efficiency submit a report 
that goes to the Congress and goes to the White House and it 
lists a number of different performance measures involving the 
OIG's activities.
    And as indicated in our testimony, we feel the 94-percent 
rate that has been demonstrated in the past 12 months by VA 
puts it on the high end of performance compared to some of the 
other departments.
    Mr. Michaud. Thank you.
    And do you feel that the OIG has all the tools that it 
needs to do an adequate job in looking at VA, the programs VA 
has, or do you need additional staffing or is there something 
that we can do differently that would make your job easier?
    Mr. Griffin. I believe in the fiscal environment that we 
are operating in today that the OIG, depending on the outcome 
of the budget request from 2011, will have the tools that it 
needs.
    We are always looking for bright, young auditors, health 
care specialists, and criminal investigators to bring on board 
to attack some of the newer issues that seem to be confronting 
us in the information technology (IT) world and in some of the 
fraud arenas. But I feel like with the Committee's support in 
recent years, we have been properly staffed.
    Mr. Michaud. And does the OIG for the VA work closely with 
the OIG for U.S. Department of Health and Human Services (HHS) 
since, for example, the federally qualified health care 
clinics, I can see where there would be a lot of synergies 
there?
    Mr. Griffin. There are synergies amongst a number of 
different OIGs, certainly in HHS with the health care work that 
they do and our health care staff. There is synergy with the 
Social Security Administration, which like VA has a huge 
benefits program and a process that they utilize to make 
benefits decisions and so on.
    So there are a lot of different agencies that do have 
similar threads of activity and that is the purpose of the 
Council of Inspectors General to identify common problems, 
which every department might be facing. We make sure that we 
are sharing best practices and are sharing findings of 
shortcomings in other departments that might be happening in 
VA.
    Mr. Michaud. Great. Thank you.
    I yield back, Mr. Chairman.
    The Chairman. Thank you, Mr. Michaud.
    Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman. I have a statement I 
would also like entered into the record.
    The Chairman. So ordered.
    [The prepared statement of Congressman Miller appears on p. 
36.]
    Mr. Miller. And I have one question, Mr. Griffin. I was 
looking at your testimony. You talk about the 2005 report 
recommendation to implement more effective project management 
oversight. We are talking about 5 years that this oversight did 
not take place and corrective action should have been done, you 
say, 5 years earlier in your comments.
    My question is, you know, what type of system of 
accountability can you put in place to prevent a 5-year lag of 
implementing recommendations?
    Mr. Griffin. Is that the major construction report you are 
referring to? Seven of the ten recommendations in that report 
address the need for a quality assurance program in order to 
make sure that we have proper oversight and proper program 
management for major construction.
    A quality assurance group was established and this group 
was supposed to have addressed those things. When we went back 
and looked at it a second time, which we will do from time to 
time for validation, we found that, yes, the group was created, 
but it was not properly staffed. It did not have adequate 
policies and procedures in place. So it really was not a 
functional program oversight activity.
    The other two recommendations simply were not addressed 
during that time period.
    Mr. Miller. I yield back.
    The Chairman. You are yielding back when he did not answer 
the question. You asked, ``What can you do to make sure that 
they do not go for 5 years without doing something.'' He 
responded that, yes, indeed, they went 5 years without doing 
something.
    So how do we make sure there is oversight, if I may follow 
up on your question, Mr. Miller?
    Mr. Griffin. I think there are a number of things we do. We 
spotlight anything that has not been accomplished in 1 year and 
it goes in our semi-annual report so that the Committee can be 
aware when we have slippage on an issue.
    I believe very strongly that hearings like this one are 
very helpful based on the flood of documentation we have 
received in the last 72 hours addressing various items that 
needed closure. So, again, I thank you for the hearing.
    We do meet----
    The Chairman. We should schedule one every week.
    Mr. Griffin. We will be here.
    We do meet on a monthly basis with senior leadership from 
VA and certainly those issues that are the most difficult and 
most dated are the subject of those discussions also.
    The Chairman. Thank you, sir.
    Thank you, Mr. Miller.
    Mr. Rodriguez.
    Mr. Rodriguez. You mentioned that the VA had responded by 
establishing a committee that basically was not responsive or, 
I guess, they just responded to try to fill a recommendation 
that was made and it took you 3 years to go back to look at 
that to see whether they were effective or not effective. And 
you found that they were not effective. Is that the case?
    Mr. Griffin. That is correct.
    Mr. Rodriguez. Okay.
    Mr. Griffin. But let me say that we, notwithstanding my 
previous response about resources, we do not have sufficient 
resources that we can go back and redo every audit and every 
health care inspection that we do. So some of them are 
selectively up for review.
    Mr. Rodriguez. What do we need to do to help you out to 
carry the job or what else do we need to do to try to get them 
to become more responsive?
    Mr. Griffin. I think the documentation of those reports 
that become more than 1 year old, which do get reported twice a 
year in our semi-annual report, could be a triggering mechanism 
so that between the OIG organization and the Committee and the 
Department, if we involve all three entities to focus on fixing 
it, I think you could get some synergy from that.
    Mr. Rodriguez. Because in the field, for example, I hear 
reports that they were giving out contracts to contract out, 
for example, somebody is given a contract to do work to pay 
doctors to provide a service, however, doctors are complaining 
because it takes 3 months to pay them.
    And so how do we streamline that? How do we make it more 
responsive in terms of trying to get it done? I hate to think 
that we would have to ask for more reports and more reports 
because then that also bogs it down. So how do we get the 
system to become more responsive?
    Mr. Griffin. I think in the area of acquisition and 
procurement, it is complicated by the current division of labor 
that exists between our medical specialists and our acquisition 
specialists. And I think without both of those entities being 
on the same page, you cannot always have the medical side 
claiming that, well, I am the doctor, I know best about this 
particular device or this procedure. This is what I want. You 
buy it for me.
    I think when it comes to acquisition, you need a little 
more independence in the acquisition function.
    Mr. Rodriguez. The other issues that we hear complaints 
about is, and I am sure we have made assessments in the past, 
the workload in the private sector versus the public sector. 
The doctors will tell me, Ciro, I used to do 15 procedures and 
now I am doing half of them here. I could do more, but it does 
not happen.
    How do we move on those? Do we have any--I am sure we have 
asked for studies in that area and comparisons. How do we move 
the system to become more responsive?
    Mr. Griffin. You are saying that VA doctors are complaining 
they do not get enough work?
    Mr. Rodriguez. Yes, sir.
    Mr. Griffin. I have not experienced that.
    Mr. Rodriguez. Well, I have direct people that have said, 
look, I used to do this and now I am being told that I only 
have this. They also get clients that, because they are 10, 15 
minutes late, they get told to come back 3 months later, stuff 
like that.
    How do we get past this situation?
    Mr. Griffin. I think I would defer to the Veterans Health 
Administration (VHA) on the performance measures for their 
doctors.
    Mr. Rodriguez. Okay. Now, you mention also you do not have 
the resources to follow back. And one of the arguments that we 
have talked about in trying to get the system sometimes, for 
example, on the computers, we talked about getting them, even 
an outside system, to look at moving them in that direction.
    And have we come up with any other way of making it more 
responsive?
    Mr. Griffin. Making----
    Mr. Rodriguez. Well, for example, you mentioned IT, and the 
computer systems and all those when we make those mistakes, 
trying to get one hospital to talk to another and getting all 
that straightened out.
    Is it going to require an outside group coming in basically 
doing it because they are unable to get it done themselves?
    Mr. Griffin. I think it is a combination. I think the IT 
world is so rapidly changing that the planning time and the 
implementation time in some instances is overcome by the next 
generation of tool that becomes available.
    I know that there have been a number of projects that the 
Assistant Secretary has canceled because they became too old 
and they were no longer viable projects. And we applaud that.
    But as far as whether or not the level of expertise is 
proper that exists in the Department, I would defer to 
Assistant Secretary Baker on the second panel on that question.
    Mr. Rodriguez. Okay. Now, if I can follow up, I know he had 
talked about the Capital Asset Realignment for Enhanced 
Services (CARES) Program that went around the country looking 
at vacancy issues.
    From that, have we seen any need to do any followup on 
that? From your perspective, do you think we ought to be 
looking or inspecting any of our facilities for utilization 
purposes and those kind of things and maybe restructuring that?
    Mr. Griffin. I do not believe that the OIG Office has done 
any recent work on vacant buildings.
    Mr. Rodriguez. On occupancy rates and those kind of things?
    Mr. Griffin. Certainly if we have vacant buildings that we 
are paying to maintain and they are not being utilized, it 
would make sense that we should divest ourselves of those. But 
we have not done any recent work.
    Mr. Rodriguez. Are you doing any work right now on the new 
piece of legislation where we fund them in advance? I know it 
is going to take them a while to come into it and make the 
transfers there, but, we are doing that for the first time, so 
I am sure that is going to require them to do a lot of things 
differently.
    But it is going to be able to plan in advance, so are we 
doing any assessments from your perspective or should we?
    Mr. Griffin. Now you are referring to----
    Mr. Rodriguez. The appropriations to fund direct 
appropriations a year in advance.
    Mr. Griffin. We have not looked at that. I think it makes 
sense to have the flexibility though.
    Mr. Rodriguez. Does it make sense for you to be able to 
look at it from the onset in terms of the implementation of it 
and see how that is going?
    Mr. Griffin. We could examine that if you would like. We do 
do the financial statement audit every year and look at all of 
the financial activities of the Department. And we could make 
it an adjunct to that perhaps.
    Mr. Rodriguez. Okay. Thank you.
    The Chairman. Thank you, Mr. Rodriguez.
    Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Griffin, in reviewing the Combined Assessment Program 
(CAP) reviews of VA medical centers, are there specific items 
that the OIG finds recurring that would indicate a systemwide 
breakdown of procedures that should be addressed not only at 
the local medical center but also throughout all of the VHA 
through the use of a directive from the Central Office and what 
are these recurring items?
    Mr. Griffin. When we do a series of CAP reviews, normally 
we will look at eight or ten specific items. And when we have 
multiple findings on an item, we will do a roll-up report to 
VHA so that they can look at it from a systemic perspective.
    One such item that we recently published was in the area of 
quality management. And we looked at 44 different facilities 
during the time period in question. We identified four that we 
thought had serious issues.
    Mr. Stearns. Was the VA medical facility in Gainesville, 
Florida, one of them?
    Mr. Griffin. No, it was not.
    Mr. Stearns. Okay.
    Mr. Griffin. But we specifically mentioned those four 
facilities in our report to VHA and we would expect that there 
would be followup activity by VHA on those.
    Mr. Stearns. Can you tell me those four facilities? Can you 
name them?
    Mr. Griffin. Manila, Honolulu, Marion, Illinois, and give 
me a minute and I will come up with the fourth one.
    Mr. Stearns. Okay.
    Mr. Griffin. Fayetteville.
    Mr. Stearns. Fayetteville. Okay.
    Mr. Griffin. Yes, sir.
    Mr. Stearns. And what are the recurring items?
    Mr. Griffin. There are occasional findings involving 
environment of care in our Community-Based Outpatient Clinic 
(CBOC) reviews, which mimic the CAP reviews. We have had 
recurring issues over contract management at each of the CBOCs.
    Mr. Stearns. But specifically are there any that involve 
patient safety?
    Mr. Griffin. Well, from the standpoint of quality 
management being your overall umbrella, which would include how 
well patients are being treated, whether you have the proper 
peer review processes in place, whether you are doing the 
proper after action and analysis when there is an adverse 
event, whether you are properly notifying family about adverse 
events, and so on.
    Mr. Stearns. So patient safety in those four hospitals you 
mentioned, is that a serious recurring problem?
    Mr. Griffin. I would not say patient safety per se. It is 
just that all of the activities, which I just touched upon, 
many of those may not have occurred at all four facilities, but 
some combination of those things were not happening at those 
facilities.
    Mr. Stearns. You mentioned in the followup audit of the VHA 
major construction award administration and cite that while the 
VHA officials have taken actions to address your most recent 
recommendations, the corrective actions should have been put in 
place 5 years earlier, I think is what you were saying.
    So what do you believe is the root cause for these delays 
in implementing these corrective actions? Five years is a long 
time.
    Mr. Griffin. It is a long time. I am not able to give you 
an answer as to why it took 5 years.
    Mr. Stearns. Well, should we ask the VA then? But nobody on 
your staff could help us out here?
    Mr. Griffin. I could give----
    Mr. Stearns. Just from your observation. I mean, not 
necessarily scientific.
    Mr. Griffin. Again, in the followup process, when the 
quality assurance activity was documented in their directive 
and how it was supposed to work, someone in our organization 
must have been convinced that would address the issues. And it 
was only when we went back to do it, we realized that those 
seven items were not properly addressed.
    Mr. Stearns. Well, that is 60 months. You would think 
during that time, somebody could have taken care of that. I 
think a lot of us just want to see more efficiency at the VA. 
And, you know, the Chairman and I and others have talked about 
the backlog of processing and how slow it has been. In fact, we 
have given more money and more people for this, yet the backlog 
still remains there.
    So thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Stearns.
    Mr. Walz.
    Mr. Walz. Thank you, Mr. Chairman.
    And, Mr. Griffin, thank you for being here and the work you 
do.
    I think we all understand that one of our main 
responsibilities here is hearings just like this to provide the 
oversight that is necessary because at the end of the day, it 
is all about how do we provide the best quality care and 
resources to our veterans while ensuring taxpayer dollars are 
watched more.
    And so I have to say there is good news in here and I think 
we should applaud those things when they happen.
    The endoscope issue was very troubling for many of us in 
that hearing and the way that that was pointed out, the hearing 
that was done, the recommendations for oversight and the 
followup all happening between June and basically September of 
last year. To have the VA get clear marks on that is a sign 
that the system can work and it is working. So I very much 
appreciate you on that.
    I wanted to just ask one question, I guess. It is dealing 
with, and I know it is a complicated one, the issue of 
procurement and contracting and this issue. It especially hits 
home in letting out of the contracts for the CBOCs that are so 
important in rural America. And these things seem to just 
continue to drag on and drag on and drag on. And the best 
intentions of everyone is, yes, this will be the date we will 
get it to you. And it just keeps getting pushed down.
    And I am wondering, the recommendations go back to what Mr. 
Miller asked about in terms of project management and quality 
assurance programs. From the OIG's side of things, is there 
anything we can do there that is better in terms of cutting out 
fraud, waste, and abuse but moving these things forward? Is 
there anything you can say on that, Mr. Griffin, that will help 
me understand why it seems to take so long? I am not so certain 
that the time lag is doing anything to improve the contracting.
    Mr. Griffin. We always try to bring something to the 
attention of the Department at the earliest possible moment. We 
have only been doing these CBOC reviews for a number of months 
now, probably several months. But in each review that we did, 
we found that the contract was poorly written, each one was a 
little different, most of them called for a per capita payment 
basis tied to whether or not a veteran had been seen in the 
last 12 months.
    There are terms for removing somebody from the rolls which 
means that you are not paying the contractor for that person 
for that particular time period and so on. And what we found in 
repeated visits to different CBOCs was that no one was paying 
attention to the terms of the contract.
    So Dr. Daigh, from our staff, quickly brought that to the 
attention of VHA and told them you need a standardized contract 
that everybody understands and that everybody can apply across 
the board. And when someone dies or someone should be 
disenrolled for some other reason, we need to make sure that 
happens.
    We need to make sure that when there are disincentive 
clauses included in the contract that the people managing the 
contract are aware of those and looking for opportunities to 
recover moneys that should not have been paid and so on.
    But we did not wait until the end of a year or a year and a 
half worth of reviews. Once we realized that this was a 
systemic problem, we quickly called for a meeting with VHA. And 
Dr. Daigh sat down with them and explained what we were finding 
so that we can cut off the bleeding as early as possible.
    Mr. Walz. Well, I appreciate that because one of the things 
that I talked about here, I am very proud of what we have done 
in terms of enhancing VA and enhancing care for our veterans, 
but one of the things I have been talking about and warning 
everyone here about is if we are not good stewards of these 
dollars, that is going to be a tragedy in this, that we do not 
improve the care. So I appreciate you doing that as quickly as 
possible.
    One last thing. VBA's process on employee effectiveness of 
how we are going to measure what we are getting done, how we 
measure work process and everything as it deals with again the 
backlog on this.
    Are you seeing anything from the OIG's side of how do we 
ensure that is happening?
    Mr. Griffin. Well, we recently started a new initiative. 
That is the Benefit Inspection Division that goes out and does 
a review of five different categories to check on a number of 
things.
    One is to check on the accuracy of the rating that was 
given to determine whether or not people have the proper 
training so that they can do it right the first time and not 
expend that extra amount of time redoing the claims.
    And much like the contracts and CBOCs, when our staff finds 
a problem in the course of doing their daily reviews in the 
Regional Offices, on a daily basis, they provide to the 
director those claims that we reviewed in which we found 
problems with the rating determination and they fix them on the 
spot.
    So I think what we are finding is the volume of work 
continues to grow and the lack of adequate training and the 
nuances of the rating schedule and the fact that you have so 
many new hires that it is like a perfect storm as far as what 
you need for good performance measures and program management 
that is not there right now.
    Mr. Walz. Well, I am afraid you are right on that. And that 
is one of the things we have a concern about at the end of the 
day is none of those things are going to get a reduction in the 
backlog of claims or inaccuracy which is, of course, the 
paramount issue, accuracy in the claim.
    I yield back. Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Walz.
    Mr. Roe.
    Mr. Roe. Thank you, Mr. Chairman.
    And just to start off on what Congressman Rodriguez said, 
I, too, Mr. Griffin, have heard exactly the same thing 
specifically in colonoscopy. One of my good friends is a 
gastrointestinal (GI) physician at a VA and complains all the 
time that he could do twice as many colonoscopies if he were 
allowed to. When he was in private practice, he did. And I 
think that is a quality of care issue because it delays care of 
our veterans.
    And I do plan on coming back next term and the quality of 
care issues are the ones that I want to focus on. I think that 
is paramount. That is why we have a VA hospital system--to 
provide the best quality of care that we possibly can.
    And one of the questions I have is, and I really appreciate 
the work you all are doing. And I know in practice, we had a 
weekly conference, patient conference where we looked at all 
the difficult cases. We had a standard of care, but we did not 
have any person like yourself to come in because we all think 
we are providing good care.
    But at the end of the day, maybe we are not, when you have 
someone objectively come in and look at that. So that is why it 
is important for you to continue doing what you are doing.
    How robust, and I think one of the things that brought this 
up was the incident that occurred with the brachytherapy, that 
was not very good, and how robust is the evaluation and peer 
review of dysfunctional or practitioners that are outside the 
standard of care?
    Mr. Griffin. How dysfunctional is it for----
    Mr. Roe. No. I mean, how robust is your evaluation, I guess 
a peer review of practitioners who fall outside the standard of 
care like this physician in the brachytherapy case that we 
looked at last year?
    Mr. Griffin. Well, unfortunately, sometimes it takes a call 
to our hotline for a case to come to our attention or during 
the course of one of our cyclical reviews at a medical center, 
someone will approach a member of our staff and say you really 
need to look at this or that area.
    When you talk about how robust is our ability to examine 
those areas----
    Mr. Roe. Well, yeah, I guess. Well, both. I mean, how 
robust is your ability and then how does that investigation 
actually occur? And Congressman Walz brought up the colonoscopy 
issue last year, which I thought was handled very well once it 
was discovered.
    Mr. Griffin. Well, I can tell you that from when I first 
arrived at VA in 1997, we had 16 people in our health care unit 
to do quality oversight for the whole VA. Clearly, an 
inadequate number.
    Mr. Roe. Inaccurate.
    Mr. Griffin. They are presently up to 119. They have a 
number of different disciplines. Dr. Daigh has been able to 
hire a number of excellent physicians, but he also knows that 
when we do not have the expertise on our staff we will go out 
and pay for that expertise and bring in an outside expert which 
is something we did in the brachytherapy work.
    Mr. Roe. Well, another question I have then is on the 
CBOCs. There are, I do not know, 1,200 of them in the country, 
over 1,000 anyway. And the way the current oversight and 
investigation, there is an investigation or evaluation, I 
should say, every 20 years. And we just added $50 million to 
hopefully get this down to 3 to 4 years.
    Is that enough money? Do you have enough resources to do 
what we have asked you to do?
    Mr. Griffin. Well, the 20-year cycle is clearly 
unacceptable.
    Mr. Roe. Yeah, it is.
    Mr. Griffin. We thought that 3 years would be a more 
reasonable number to work with. And if we get the additional 
funds, that is what we will do. We will make it a 3-year cycle.
    Mr. Roe. And that is----
    Mr. Griffin. We are still building the database. Some of 
those are clinics that are run by a VA full-time equivalent. 
Some of them are private contractors.
    So it kind of gets back to the question about does the 
private sector person have a greater caseload than the VA 
person. We are going to be able to do at that type of analysis 
on the CBOCs once we get a little more in depth in our 
database.
    Mr. Roe. So we should be able to have that information in 
fairly short order, a couple of years, 3 years----
    Mr. Griffin. Right.
    Mr. Roe [continuing]. Something like that?
    Mr. Griffin. Right. And we will do it after the 1st year 
and then we will continue to build upon it.
    Mr. Roe. Well, you know, it is a huge system. You have over 
300,000 employees in the VA system or around 300,000 people. 
That is an enormous job that we have asked you to do, but it is 
an incredibly important one.
    And, again, as I know, when you look at what I thought I 
was doing well sometimes, when it is evaluated, you find out it 
is not. And it is not a problem to change once you get accurate 
information. It is not that you do not want to do the right 
thing. You may not know you are not doing the right thing.
    So, Mr. Chairman, I yield back.
    The Chairman. Thank you, Mr. Roe.
    Mr. McNerney.
    Mr. McNerney. Thank you, Mr. Chairman.
    Inspector Griffin, my understanding is that the OIG does 
not make recommendations for improvements that are expected to 
take longer than 1 year to implement. Is that correct?
    Mr. Griffin. Except in rare circumstances. And if there is 
a project that realistically cannot be done in a year, we will 
accept those recommendations as long as there is a timeline 
that shows here is phase one and by a date certain, we are 
going to have the alpha portion of this project completed. And 
here is the next date and the next date and we will at least 
track those activities.
    Mr. McNerney. Okay. You know, implementing OIG 
recommendations clearly has benefits both in terms of fiscally 
and in responsiveness of the VA to veterans' needs.
    Are there any instances in which using VA assets to address 
OIG recommendations has detrimental effects in terms of direct 
services to the vets? Are there any cases that you are aware 
of?
    Mr. Griffin. No, I cannot say that I am. I suspect that if 
that were the case, we would have heard about it.
    Mr. McNerney. So you have a good feedback mechanism from 
the----
    Mr. Griffin. Absolutely.
    Mr. McNerney [continuing]. Providers? So okay. That is 
good. Do you feel that providing the OIG with additional 
authority in cases where the VA is severely late in 
implementing recommendations would be effective in assisting 
the VA with its obligations? In other words, how can additional 
resources be helpful to you or the VA in implementing your 
programs?
    Mr. Griffin. I do not know that it is a resource issue. I 
think that some of these issues are extremely difficult. And 
the reality also is that we have seen turnover in some of the 
most senior positions. We see it every 4 years obviously.
    But in the middle of a term, you might have somebody who 
holds a top position for a couple years and he is gone. People 
are in an acting capacity during that time period. They are not 
always certain that they want to make a radical decision on 
something that is difficult. So I think there is a combination 
of factors that come into play.
    Mr. McNerney. Thank you.
    Well, you recommended that the time it takes the VA to 
implement your recommendations has improved over the past. What 
do you attribute that improvement to in the time that it takes 
to implement?
    Mr. Griffin. I think Mr. Ehrlichman has the percentages to 
demonstrate that improvement from 2007 through 2009 and I am 
sure he could answer the rest of that question.
    Mr. Ehrlichman. Thank you.
    What we have done, and we started it late in 2006, is 
myself and the Deputy OIG at the time went around and met with 
all of the principals throughout the Department, all the 
Assistant Secretaries and the Under Secretaries and their 
staff.
    We talked about trying to change the followup process 
significantly and we talked about trying to come up with 
recommendations that were specific, measurable, that could be 
implemented within a year, and that we were going to have a lot 
more frequent contact. We were going to be a little bit more 
persistent.
    If we were not hearing that there was progress, we were 
probably going to make an appointment, meet with them. We were 
going to bring the health care inspectors, the auditors, 
followup staff and we have done much better.
    In 2007, we were at about 86 percent. In 2008, it went up 
to 88 percent. And the last complete fiscal year, we were at 94 
percent implemented within 1 year.
    Mr. McNerney. So basically you made it a priority and you 
held their feet to the fire once the recommendations were made?
    Mr. Ehrlichman. That and a lot more direct communications, 
a lot more meetings. As Mr. Griffin had mentioned, we began 
meeting on a monthly basis with principals in all the 
administrations and the staff offices and I think that has 
helped a lot, having the communications.
    Mr. McNerney. Okay. Thank you, Mr. Chairman. I yield back.
    The Chairman. Thank you, Mr. McNerney.
    Mr. Boozman, congratulations on your victory yesterday. You 
have to get the TV networks to concentrate on Boze rather than 
Booz.
    Mr. Boozman. Thank you, Mr. Chairman.
    I think we need an OIG investigation as to whether or not 
you were behind my chair being broken over here.
    I just have, and, again, this might be kind of a dumb 
question, but we have all of these things outstanding and some 
of them are important in regards to patient care. Others are 
important in regard to a monetary sense. And it all goes back 
to be important to veterans.
    Do we prioritize which ones are the most important? Does 
that make sense? We have all of these things. It is almost 
overwhelming, and we have to be helpful and push this thing 
forward. Is there the ability to kind of rank the ones that we 
need to really get on the stick and use our ability with 
oversight to push forward?
    Mr. Griffin. I think clearly there is a need to realize 
which ones are most important. But when we start an audit or we 
start a health care review, we might think we know what the 
condition is that we are going to find, but we really do not 
know with certainty until we do it.
    And when we have completed our work, if we do have 
recommendations, we will forward them to the Department to fix.
    I would be shocked if the Department were to say anything 
other than those issues that are most critical for patient 
safety and those issues that are most critical from a monetary 
standpoint rise to the top of the pile. I would be very 
surprised if that was not the case.
    But within the OIG, we might have our own views which ones 
are the most critical, but we do not rank our audits and 
inspections per se.
    I think that if they were easy, the fixes would be made 
while we were on site which does happen on some occasions as I 
already mentioned. So I think it is the complexity of some of 
the issues and it is the huge decentralized health care system 
and benefit system that the VA represents that makes it 
difficult.
    And as far as ranking them, it is not something that we do, 
but I would have to believe the Department evaluates things 
based on the criticality of the timing of the fixes.
    Mr. Boozman. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Boozman.
    Mrs. Kirkpatrick.
    Mrs. Kirkpatrick. Thank you, Mr. Chairman.
    My concern is about inefficiencies in the followup process. 
So my first question is, why do you use a centralized staff to 
do followup rather than the auditors and the investigators who 
did the initial reports?
    Mr. Griffin. It is done on a centralized basis because the 
auditors and the inspectors who did the audit on inspection are 
doing additional work. They have moved on to do other work.
    But while the followup group itself is pursuing closure of 
those recommendations, they will call upon the auditor or the 
lead health care inspector who did the job and consult with 
them on whether or not the response that we are getting to the 
recommendation satisfies the finding.
    So it is a shared responsibility. It is centrally 
controlled here because, frankly, that is where most of the 
headquarters' replies are coming out of VHA and VBA and the 
Office of Information and Technology (OI&T) and the National 
Cemetery Administration (NCA). The senior managers are here. 
And those are the senior managers that we will meet with on 
about a monthly basis to make sure that people are aware of 
what is out there and what needs to be done.
    Mrs. Kirkpatrick. You talked about the need to standardize 
contracts. Do you use a checklist system when you are doing 
that followup review? I mean, is there some uniformity in terms 
of the staff review and how they work that process?
    Mr. Griffin. There is uniformity in the timing of our 
request every 90 days and we ask for a response within 30 days. 
But there is not a one-size-fits-all sheet that you could apply 
to every health care inspection and every audit or every 
administrative investigation and so on.
    So that is why it is critical, as you point out, to have 
the subject matter experts collaborate with our followup team 
to make sure that we got it right.
    Mrs. Kirkpatrick. Well, my last question is about on-site 
review. It seems to me that that is probably the best way to 
garner the information about whether or not the different 
departments are doing their job. I guess I wonder why you do 
not do on-site review on every report.
    Mr. Griffin. Because it would be too manpower intensive to 
try and go back and redo every one. There is a number, a 
percentage, you know, that would make sense. It is not 100 
percent. The exact number, I guess, depends on whether we are 
suspicious as to whether or not the recommendation and the 
proposed fix was the right fix. Perhaps we will get a call to 
our hotline where we get 29 to 30,000 calls a year. If we get 
multiple calls suggesting that we still have a problem in a 
certain area, that might trigger us to go back.
    And our CAP cycle, which is a 3-year cycle, every time when 
we go back to a medical center, we will take a look at the 
previous report and we will see what the recommendations were 
in that report and we will validate whether or not, in fact, 
they were addressed to our satisfaction.
    Mrs. Kirkpatrick. Your answer conjures up one more 
question.
    Mr. Griffin. Okay.
    Mrs. Kirkpatrick. Would it not be better to do the CAP 
review every year as opposed to every 3 years?
    Mr. Griffin. Well, that is a resource issue. You know, we 
are at these medical centers for a week, which is not a long 
time, and that is why their scope is such that there is no way 
you can go in and look at every activity in a medical center.
    So every 6 months or so, we will decide these are the pulse 
points as we call them, these are the areas that we are going 
to look at for the next 6 months. And if we have repeat 
findings on one or more of those, we will bring that to the 
attention of VHA so that we can say this is not something that 
we found at one medical center. This is something that eight 
out of the last ten seem to be having a problem with or, you 
know, 15 out of 20, whatever the number might be. And then they 
know, okay, it is not an anecdotal situation.
    They either need to clarify the policy, write new policy or 
get on the phone and find out why someone is not following the 
policy.
    Mrs. Kirkpatrick. Thank you very much.
    I yield back, Mr. Chairman.
    The Chairman. Thank you.
    Let me just wind up our questioning. First, thank you so 
much for your testimony, Mr. Griffin.
    Given the open recommendations and especially the last 
recommendations, what is your sense? What is the most important 
outstanding recommendation either by policy issue or by money, 
that we should focus on to save money?
    Mr. Griffin. I think when you are talking about money and 
policy, I think procurement represents a huge dollar value for 
the Department. I think the acquisition area on a number of 
different fronts, not just the drugs that we purchase, but the 
clinical health care specialists that we contract for, the 
contracts that we have with medical experts from the 
affiliates, contracts at CBOCs----
    The Chairman. What is the problem there? How would you 
define the problem?
    Mr. Griffin. I would define the problem that you have the 
acquisition staff in Washington writing policy for how 
procurement and acquisition should be done. You have a 
contracting officer who works for the Veterans Integrated 
Service Network (VISN) who is working for a different master. 
And you have some Contracting Officer's Technical 
Representatives (COTRs) that are working in conjunction with 
the contracting officers who are also out at the medical center 
taking their direction at the medical center.
    And too frequently what we find is the acquisition 
regulations and even VA regulations about the order that 
procurements are supposed to occur in do not happen. In 
addition, there is inadequate attention to monitoring the 
performance of what is in the contract and there is a lot of 
money left on the table as a result.
    The Chairman. Money left because there are not tough enough 
negotiations or is there anything----
    Mr. Griffin. I think negotiation is part of it. I think 
when you establish a contract, if you do adequate analysis of 
what the need is and you put the proper parameters in for where 
you are going to go to get that person or that item and then 
after the contract which is properly competed, if it is a 
competitive contract, you have a COTR that monitors compliance 
with what is in the contract.
    The Chairman. Give us the name of that acronym.
    Mr. Griffin. I am sorry. That is the contract officer's 
technical representative.
    So it is a combination of things, but part of the issue is 
the people who write the policy are back in Washington and 
where the rubber meets the road is out in the field. And as I 
alluded to earlier in some instances, we will have a medical 
expert who says forget about the supply schedule or forget 
about what you are hearing from them, I want this prosthetic 
for my patient.
    And I am sure there are occasions when for medical reasons 
that is 100 percent correct and that prosthetic should be the 
one used. But I think there are a lot of times where the 
sentiment is we cannot be bothered with contracting and 
procurement issues. We have veterans to take care of. So you 
have that constant struggle.
    The Chairman. I mean, the Secretary is recommending that we 
have a new Under Secretary for Acquisition and Procurement.
    Do you think that would help, or does that further move the 
focus to Washington as opposed to the sites?
    Mr. Griffin. I think given the proper authority to the 
position, that can help.
    The Chairman. Has the office ever looked at the 
decisionmaking process for deciding what drugs may be on the 
formulary that the VA uses? Have you ever looked at that?
    Mr. Griffin. I am not aware that we have done any recent 
work in that area.
    The Chairman. There are situations where new drugs are 
coming on the market and the people who are deciding on the 
formulary are looking too closely at the direct cost.
    Let us say hypothetically that a new diabetes drug is 
online and it costs $50. The other drug costs $1. Of course, it 
seems $1 versus $50 is a clear monetary decision and, yet, the 
$50 drug one may help the quality of life of the patient. For 
example, taking a shot once every 2 weeks instead of twice a 
day may prevent complications in the future, and we are saving 
money in the future.
    That is a process where people have to make decisions. Have 
we never looked at that directly?
    Mr. Griffin. No.
    The Chairman. Okay. We might want to.
    How about the processes used for looking at innovation in 
general in the VA, new technologies, new equipment, new ways of 
doing things?
    We have a lot of complaints about not having new 
innovations available. Is there no real way for this 
bureaucracy to make these decisions? We tend to reject new 
ideas as opposed to embracing them. Have you ever looked at the 
situation?
    Mr. Griffin. I cannot say we have looked at that, but I 
would hope that our relationship with our affiliates who do 
have a number of medical innovations happening in their 
facilities, and who are working hand in hand with our doctors 
on sharing best practices. I think that was part of the intent 
of the affiliate process in the first place, that it would be 
mutually beneficial.
    The Chairman. I am sorry, could you explain the affiliate 
process?
    Mr. Griffin. We have all these affiliates with our medical 
centers. Some of these affiliates----
    The Chairman. I do not know what you mean by affiliates.
    Mr. Griffin. Well----
    The Chairman. Is that the name given to the medical 
centers?
    Mr. Griffin. No. We have a VA medical center----
    The Chairman. Yes.
    Mr. Griffin [continuing]. That is collocated with a 
university hospital. And those university hospitals often are 
perhaps getting some of the new technology earlier. But because 
we are in partnership with them, hopefully we benefit from 
experience they may have with new innovations.
    The Chairman. I do not know how we ask you to look at this 
or ask the Secretary but the whole notion of a big bureaucracy 
and how it deals with innovation, is a real problem.
    I do not know how big companies such as Microsoft or IBM 
embrace new innovation. The VA is in areas where we should be 
actively searching out new innovations and new ways of doing 
things. It just seems that we act as a bureaucracy that pushes 
back rather than embraces innovation.
    We will talk to you about that later. Maybe we need to look 
at that.
    I thank you both for being here with us. Thank you, Mr. 
Griffin. We hope you will continue in your job. I guess in your 
official position, when several people have asked you about new 
resources you are not allowed to say you need new resources. 
OMB says that you do, and on about six or seven different 
occasions, you have said that you have a lack of resources. We 
will have to look at that and talk to you in an informal way 
and----
    Mr. Griffin. Well, I am hopeful that the support that the 
Committee gave us on the 2011 budget causes our resources in 
2011 to increase. That is where I am at.
    The Chairman. Thank you, sir.
    Mr. Griffin. Thank you.
    The Chairman. We appreciate that.
    Mr. Griffin. Thank you for having the hearing, Mr. 
Chairman.
    The Chairman. If our next panel will join us, please? We 
have the Department of Veterans Affairs, Dr. Robert Petzel, the 
Under Secretary for Health; accompanied by Roger Baker, the 
Assistant Secretary for Information and Technology, and Diana 
Rubens, the Associate Deputy Under Secretary for Field 
Operations for the VBA.
    We thank you all for being here.
    Dr. Petzel, your written testimony will be made part of the 
record and we look forward to hearing from you.

 STATEMENT OF HON. ROBERT A. PETZEL, M.D., UNDER SECRETARY FOR 
  HEALTH, VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF 
VETERANS AFFAIRS; ACCOMPANIED BY HON. ROGER W. BAKER, ASSISTANT 
SECRETARY FOR INFORMATION AND TECHNOLOGY AND CHIEF INFORMATION 
OFFICER, OFFICE OF INFORMATION AND TECHNOLOGY, U.S. DEPARTMENT 
  OF VETERANS AFFAIRS; AND DIANA M. RUBENS, ASSOCIATE DEPUTY 
    UNDER SECRETARY FOR FIELD OPERATIONS, VETERANS BENEFITS 
      ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Dr. Petzel. Good morning. Chairman Filner, Congressman 
Stearns, and Committee Members, we thank you for the 
opportunity to appear before you today to discuss the 
Department of Veterans Affairs work in responding to 
recommendations from the Office of the Inspector General.
    Joining me today are Roger Baker, the Assistant Secretary 
for Information and Technology, and Diane Rubens, the Associate 
Deputy Under Secretary for Field Operations for the Veterans 
Benefits Administration.
    I also want to thank the Deputy Inspector General, Mr. 
Griffin, for his testimony in the previous panel. Thank you and 
thank you to your employees for your tireless commitment to our 
veterans and improving care within VHA and benefits within the 
VBA.
    I am pleased to be here today to talk about what is perhaps 
the most important element of VA's mission, ensuring we deliver 
the absolute best care and services to our Nation's veterans.
    The Chairman. I am sorry. Let me interrupt. Did anybody 
from the Office of Inspector General stay? Okay, thank you. I 
believe you wanted to hear the response to your testimony, so I 
am glad somebody is here. Thank you.
    I'm sorry, Mr. Petzel. Please.
    Dr. Petzel. In my more than 35 years with the Veterans 
Health Administration, I have seen remarkable advances in the 
quality of care we provide to veterans. These improvements were 
due to the dedication of VA's employees. It is a dedication 
that continues today.
    However, these years have also had their share of setbacks, 
but hindsight has revealed we could have and should have in 
many ways done better by our veterans. We have an excellent 
system, but it is not a perfect one.
    VA is committed to identify those areas where we can do or 
need to do more to improve and we value the OIG as an important 
partner in ensuring the accuracy, integrity, and accountability 
in the delivery of benefits and services to our Nation's 
veterans.
    VA OIG helps us ensure that we are being as effective and 
as efficient as possible. We are also partners in identifying 
areas of waste, fraud, and abuse, as well as removing persons 
whose conduct is truly criminal.
    This not only improves our operations as a Department in 
providing services to veterans, but it saves the American 
taxpayers millions of dollars every year and reaffirms the 
faith that veterans have in this Department. Much of this is 
about the matter of trust.
    If I may provide a brief example that illustrates both the 
partnership we have with the OIG and how this relationship 
improves care, I direct you no further than our facility at 
Marion, Illinois.
    The problems we experience at that facility are well 
documented. And it is thanks in part to the OIG that the 
facility is on the corrective course it is today. We are 
establishing a new leadership team there, changing the culture, 
and our veterans are already experiencing these improvements.
    The scope of the OIG's work is immense and it is far 
reaching as its investigations can be specific to facilities or 
result in broad reviews of VA programs. Its reports have 
resulted in hundreds of recommendations for the Department 
ranging from administrative actions against specific personnel 
to large-scale policy reviews.
    Additionally, the Department and the VA OIG maintain a 
strong relationship in identifying, investigating, and bringing 
to justice those who use their positions to defraud or harm 
veterans.
    The administrations and staff offices involved with each of 
these reports work directly with the VA OIG to ensure that 
action plans are developed and implemented in a timely and 
appropriate manner to make this change positive.
    This system gives VA the flexibility to respond quickly and 
effectively to reports and recommendations that the OIG has 
issued. The administrations and offices are in regular 
communication with the VA OIG to track the progress in 
responding to its reports and to identify what more needs to be 
done.
    I think the effectiveness of this partnership speaks for 
itself in the 94 percent accomplishment of recommendations 
within the 1st year.
    While VA OIG has significantly increased the volume of its 
reports and recommendations, VA is closing out these reports 
and recommendations as quickly as ever has. The VA OIG has 
identified 16 reports with 45 recommendations open for over a 
year. These are the second lowest numbers in each of these 
categories over the last 5 years.
    Furthermore, Mr. Chairman, as I detailed in my written 
testimony, since that report, we have provided the OIG with 
progress updates on two of these reports and recommendations 
and we are confident that our actions on these outstanding 
reports will close them out.
    In closing, Mr. Chairman, let me say it again. VA is 
committed to being a veteran-centric, results-driven, forward-
looking organization that provides the best care and services 
possible to our Nation's veterans. And we value the partnership 
we have with the Office of the Inspector General.
    Thank you again for the opportunity to appear and I and my 
colleagues would be delighted to respond to any questions.
    [The prepared statement of Dr. Petzel appears on p. 40.]
    The Chairman. Thank you.
    Mr. McNerney, do you have any questions for the Secretary?
    Mr. McNerney. Thank you, Mr. Chairman.
    Well, the improvements have been pretty impressive, at 
least the way they have been outlined here this morning, so I 
appreciate that effort, both your part and the OIG's part.
    I have a specific question regarding traumatic brain injury 
(TBI). The OIG mentioned that the VHA's support for veterans 
with TBI is extensive, but that long-term case management is 
not uniformly provided within the VA and that significant needs 
remain unmet.
    I recently wrote legislation that was passed into law to 
direct the VA to specifically assess the needs of TBI patients 
and develop initiatives to meet those needs.
    Can you please inform me of an update on the VA's or give 
me an update on the VA's efforts to improve TBI care and 
treatment?
    Dr. Petzel. Thank you, Congressman McNerney. That is an 
excellent question.
    The patients that are returning from Iraq and Afghanistan 
with traumatic brain injury are of deep concern to the Veterans 
Health Administration and to the Department in general.
    We have in place now a program to screen all combat 
veterans for the presence of traumatic brain injury. To date, 
we have screened over 50,000 of these veterans and have 
identified 16,000 people that have symptoms of traumatic brain 
injury. They have undergone a second level assessment to see 
how severe that traumatic brain injury is.
    The Chairman. Dr. Petzel, can I interject?
    Dr. Petzel. Certainly.
    The Chairman. These are people who have come to the VA, 
right?
    Dr. Petzel. That is correct.
    The Chairman. Have we not gone out to all people?
    Dr. Petzel. Well, we have gone out. I will get to that in a 
moment.
    The Chairman. And when you say screening, can you define 
that process?
    Dr. Petzel. There is a tool that is used----
    The Chairman. A questionnaire?
    Dr. Petzel [continuing]. A questionnaire that is used by a 
practitioner to assess----
    The Chairman. And is that----
    Dr. Petzel [continuing]. The possibility of traumatic brain 
injury.
    The Chairman. Does someone sit down with the questionnaire, 
with the----
    Dr. Petzel. That is correct. It is administered by a 
practitioner.
    The Chairman. The reason I am asking is because the 
military uses the word screening and what they mean by that is 
a questionnaire, usually a few questions, and they do not sit 
down with anybody. Somebody looks at them and if there are any 
yeses, they call them back, so everybody knows how to say no. 
That is a little different than sitting down with a qualified 
medical person for 45 minutes or an hour. I call that an 
evaluation.
    I think the single most important step this country can 
take to deal with both traumatic brain injury and post-
traumatic stress disorder (PTSD) is to have the evaluation be 
mandatory before or after combat, or at least before discharge. 
We let tens of thousands of our young people out without an 
evaluation, and then we wait until they come to the VA. Maybe 
we do the evaluation better, but we still have hundreds of 
thousands of young people without ever being evaluated.
    Dr. Petzel. We would agree with you that screening while a 
soldier is still in the military would be best.
    The Chairman. Do me a favor. Issue a directive not to use 
the word screening because----
    Dr. Petzel. Evaluate.
    The Chairman [continuing]. U.S. Department of Defense (DoD) 
says they screen everybody and VA says we screen everybody who 
comes in. But a self-administered questionnaire is not an 
evaluation. I think they use the word screen advisedly and it 
is not sufficient in my view to screen somebody as opposed to 
evaluating them with a professional person.
    I apologize, Mr. McNerney, for jumping in here, but I think 
it is the real single most important thing we can do for our 
young people is to have a mandatory evaluation.
    Dr. Petzel. We would agree. If I may, our biggest issue is 
the fact that we have only enrolled and seen 46 percent of 
these veterans who are returning from Iraq and Afghanistan. 
There is another 54 percent that we have not, in spite of our 
outreach efforts, actually been able to see. So our biggest 
issue is that we are not able to evaluate a large percentage of 
the veterans from Iraq and Afghanistan.
    I am comfortable that, we have a very good case management 
program for the severe traumatic brain injury patients that 
pass through our TBI centers and for the moderately and mildly 
injured patients, but there are people who fall through the 
cracks. There are individuals, and I am sure that you probably 
have an example or some examples of people who have not been 
case managed well by us, which we would obviously like to hear 
about. We have a very extensive outreach program and a very 
extensive case management program.
    Mr. McNerney. Well, we talk a lot about the seamless 
transition from the DoD to the VA. Is there some way that that 
could be used to make this more effective in reaching those 54 
percent that you are not able to get through to?
    Dr. Petzel. That is a very good point, Congressman. Once 
the soldier leaves their unit, their interest obviously is 
getting back to their families, getting back to their jobs, et 
cetera.
    With the National Guard, we have the opportunities to go to 
their Guard centers and we do. We have Beyond the Yellow Ribbon 
Program which is very effective in getting to the Guard and 
alerting them about potential problems they may have, and the 
kind of services that are available.
    We are doing a better job with the Reserve now, too, 
because they again go back to a unit that we can visit.
    The most difficult group of people are the active-duty 
servicemembers who are discharged, go back to their community, 
and are not in a setting where they gather that we can reach 
numbers of them at one time.
    The DoD has an excellent program to reach out to them in 
conjunction with us, but I would say that is the most difficult 
group that we have.
    And, again, as the Chairman has suggested, screen at the 
time of return before discharge, evaluating at the time of 
return would be an effective thing to do, I think.
    Mr. McNerney. Okay. Thank you.
    I am going to yield back, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Stearns, you are recognized.
    Mr. Stearns. Thank you, Mr. Chairman.
    Dr. Petzel, there was a July 2008 hearing on miscellaneous 
expenditures, inadequate controls at the VA. The U.S. 
Government Accountability Office (GAO) testified that the VHA 
recorded over $6.9 billion in miscellaneous obligations during 
fiscal year 2007. These obligations were for fee-based medical 
services, drugs, medicine, and transportation of veterans. I 
understand this amount has increased.
    GAO looked at 42 case studies and all 42 cases lacked 
documented oversight by contracting officials. VHA reacted by 
issuing new guidance on the use of miscellaneous obligations in 
2008. GAO stated that without basic controls over the billions 
of dollars that the VHA is spending in miscellaneous 
obligations, and I quote, ``VA is at significant risk of fraud, 
waste, and abuse.''
    The two OIG reports released this past Monday indicate very 
little improvement over the past 2 years. I think VA is in deep 
denial that procurement reform is in the VA, specifically in 
VHA was broken and is severely vulnerable to billions of 
dollars in fraud, waste, and abuse today.
    Do you agree?
    Dr. Petzel. Congressman, I agree that there were serious 
problems with acquisition. I believe that it is absolutely 
essential that we professionalize our acquisition and technical 
contract oversight group.
    The Secretary has taken this on as a fundamentally 
important part of his transformation. And just to go through 
some of the details that have occurred, the administrations, 
and I speak particularly about VHA, has centralized its 
contract administration. The contracting officers do not now 
report to the VISN or to the medical center. There is a central 
administration of contracting.
    They have added a very strong compliance and a very strong 
review process and personnel to the contract offices. We have 
literally hired in the last 6 months and are continuing to hire 
hundreds of people to staff the oversight staff, the 
compliance, and to beef up our contracting personnel.
    I am quite confident speaking today that once we have these 
people hired and once we have the oversight groups in terms of 
quality assurance and compliance up and functioning, you are 
going to see dramatic improvements in our administration of the 
miscellaneous expenses and in the contracts that we have.
    Mr. Stearns. You say once they are hired. When do you think 
they will be hired?
    Dr. Petzel. I am sorry, Congressman. I cannot say exactly 
when. I know we have already hired over 100 new people and have 
authorized the hiring of an additional 100 people. So by the 
end hopefully of this fiscal year, we will have hired at least 
200 of these new individuals.
    The Chairman. Could you yield for a second?
    Mr. Stearns. Sure.
    The Chairman. When you answered Mr. Stearns, the first 
beneficial thing you said was centralization. I understand that 
in terms of legal issues and oversight but the OIG suggested 
that the provider may have some more insight to that or has 
some direct health concerns rather than a monetary concern. It 
also happens with IT.
    Mr. Baker, I think you know there is a sense in the 
hinterlands that centralization in some of these areas is 
obviously very important for reform. But if it overrules local 
expertise for no other reason than the fact that it is 
efficient in the Central Office, that is also a problem.
    How do you balance that both in the area--you are not the 
acquisition guy--but----
    Dr. Petzel. Mr. Chairman----
    The Chairman [continuing]. The local guy versus the central 
guy, how do you balance that stuff?
    Dr. Petzel [continuing]. I can certainly speak about the 
clinical implications of this. The issues that involve the 
practitioners, the pharmacists and the physicians, are what are 
you going to purchase. The example in the OIG's report that I 
think is an excellent one, if you will pardon me for spending a 
moment with it, is the surgical implants.
    There were three items that were mentioned in that report, 
coronary artery stents, aortic grafts, and aortic valves. 
Coronary artery stents, the issues about what stent you put in 
are not particularly controversial.
    We, for the last 2 years, have been trying to get bids on a 
national contract. We would love to have a national contract 
with stents. We spend $59 million a year and there is general 
agreement that we could do this amongst the cardiologists, but 
no provider has taken us up yet on that. We are out with 
another RFP and we will see if we can manage to get that 
procurement completed.
    Aortic grafts and aortic valves are far different. We use 
very few of them, 150 aortic grafts a year and about 1,500, 
which is not very many, aortic valves per year. In those 
instances, it is felt that the practitioner choice is very 
important, that the clinical circumstances within the aortic 
valve vary tremendously from patient to patient. The surgeon 
needs to be able to get the valve that they want.
    The same thing with aortic grafts. They are very infrequent 
and the surgeons again feel they need to get what they want. 
Plus the fact that the volume is so low that we are not talking 
about saving a tremendous amount of money.
    So in that instance, we have recommended, we have said back 
to the OIG that we are not going to get a national contract in 
either one of those areas, but we are going to ask or allow the 
practitioners to pick and choose what they want.
    That, Mr. Chairman, is an example of how the practitioners 
get involved in this acquisition process to make sure on the 
one hand their needs are met and on the other hand we are doing 
the fiscally responsible thing.
    Mr. Baker. If I could address the IT side of that, Mr. 
Chairman, just quickly. One of the things that we have lots of 
great private sector examples on IT, the infrastructure, the 
networks, the e-mail system, the security are best done from a 
central perspective and very uniformly. But customer service 
like politics is a local thing. It is the person that comes to 
see you. It is the person you can see and hold directly 
responsible for whether or not your services are getting done.
    And we have really tried to have that focus inside of the 
Office of Information and Technology here for the last year. It 
is really focusing on customer service for our clients at VHA, 
VBA, and the rest of the corporate folks.
    Mr. Stearns. Mr. Chairman, thank you.
    Dr. Petzel, I have two reports here. One is dated June 7th 
and the other one is June 7th also. These are two VA OIG 
reports that were released, of course, this last Monday. Both 
deal with flawed VA procurement practices.
    If you do not mind, let me just quickly, Mr. Chairman, 
highlight some of the findings.
    Contracting officers did not ensure adequate competition, 
maximize use of the Federal supply schedule instead of local 
contracts, or maintain required contract documentation.
    Medical facility staff made unauthorized commitments.
    The Procurement and Logistics Office lacked an effective 
oversight process for health care staffing and service 
procurements.
    There was lack of guidance and training, which made 
procurements more vulnerable to improper payments, higher 
prices, and Federal acquisition regulations deficiency.
    And, finally, 77 percent of the audited procurement orders 
had not been adequately reviewed and 51 percent had ordering 
and competition issues.
    Were you aware of these two reports that came out on June 
7th?
    Dr. Petzel. I saw them on Monday, June 7th, Congressman, 
when they came out.
    Mr. Stearns. Were they a surprise to you?
    Dr. Petzel. No, they were not.
    Mr. Stearns. So a lot of this information you knew how long 
ago?
    Dr. Petzel. I cannot tell you, Congressman, exactly how 
long ago, but we make the responses to the OIG recommendations, 
so we have seen the reports previously.
    Mr. Stearns. Okay. Of the different findings, is there any 
one that you think can be solved immediately? All of these go 
into you once we have sufficient people, will we be able to 
solve them, or otherwise, will this continue?
    Dr. Petzel. No, I do not think we need to wait until we 
have sufficient people, Congressman.
    Mr. Stearns. You know, I mean, if I got this and I was 
operating a corporation, as soon as I got this, I would 
implement a special task team, ad hoc Committee to go right at 
it and solve the problem. And I would be able to say to my 
board of directors or shareholders who also got a copy of this 
report, I would say to them I hope to have this solved within 6 
months to a year, but I will get back to you in 90 days what I 
am going to do.
    Is that a reasonable request on you?
    Dr. Petzel. Oh, absolutely.
    Mr. Stearns. Because the amount of money you are talking 
about is enormous and here you have these two reports. You have 
a copy of them. I just outlined some of the problems. And each 
of these areas would mean huge amount of savings which we could 
use for better care of our veterans.
    Dr. Petzel. Let me describe the process.
    Mr. Stearns. Well, let me just ask you a question. Do you 
think it is reasonable to ask--I mean, it is possible that if I 
was Chairman, I would ask you on these reports to maybe call me 
in 90 days and say what you have done. Is that a reasonable 
request?
    Dr. Petzel. Absolutely. We do ourselves 30-day, weekly, 30-
day, and 90-day updates on what is happening with each one of 
the recommendations. We are required and we do report back 
every 90 days to the OIG.
    Mr. Stearns. What about to Congress who appropriates the 
money for you? Do you tell us what you have done?
    Dr. Petzel. Sir, to be honest with you, I do not know what 
the process is----
    Mr. Stearns. Okay.
    Dr. Petzel [continuing]. With Congress. I will find out.
    Mr. Stearns. Well, you know, staff just pointed out to me 
that there was a July 2008 hearing on these very items, 
miscellaneous expenditures and inadequate controls. So that was 
2 years ago and evidently the reports that have come out from 
the Inspector General have just reiterated what we discussed 2 
years ago in a VA hearing.
    Were you aware of that July 2008 hearing on miscellaneous 
expenditures?
    Dr. Petzel. I was not.
    Mr. Stearns. You were not. Does anybody on your staff know 
about those hearings?
    Okay. Were you in the Department 2 years ago?
    Dr. Petzel. I was in the Department, not in this job.
    Mr. Stearns. Not in this job. Who was in the job that you 
have in 2008?
    Dr. Petzel. Michael Kussman, Dr. Michael Kussman.
    Mr. Stearns. Okay. So Michael Kussman must have known about 
this and this hearing, so all these expenditures, miscellaneous 
expenditures were talked about. It was revealed there is 
inadequate controls at the VA. So 2 years later, there is 
nothing changed because we have two reports that came out June 
7th and we are talking about pretty much the same items.
    What does that tell you?
    Dr. Petzel. Congressman, that tells me that there was 
inadequate followup and followthrough on the recommendations 
that were done before, inadequate education, perhaps inadequate 
staffing, and those, I am sure, are part of the responses to or 
are part of the responses to the recommendations.
    Mr. Stearns. So what you need to do is convince us here on 
the Committee that your response is not going to be like the 
response of your predecessor.
    Dr. Petzel. I can assure you, Congressman, that that is the 
case.
    Mr. Stearns. Okay. Mr. Chairman, would you like to comment?
    The Chairman. I think we need a followup on the issues you 
are raising here, just on procurement. As you know, the 
Secretary is making a suggestion for a new Under Secretary for 
Procurement. Perhaps we can follow up on your questions with 
the Secretary and this Deputy in a separate hearing that I 
think we need to have on procurement issues.
    Mr. Stearns. I think that is true and I think also that Dr. 
Petzel should send a letter to the Committee with the assurance 
that what occurred 2 years ago will not reoccur and perhaps 
give you an update of what he is doing.
    The Chairman. Yes. Correct me, Mr. Stearns, was this 
directly in the Veterans Health Administration?
    Mr. Stearns. It was. I am told by staff it was.
    The Chairman. Okay, because Dr. Petzel is not directly 
responsible for procurement and maybe we should have had the 
Deputy Secretary here for that. I think we need to focus in on 
those issues with the people who have to deal directly with 
them.
    Mr. Stearns. Okay. Thank you, Mr. Chairman.
    The Chairman. I appreciate you bringing those up.
    Just as a followup to what Mr. Stearns was talking about, 
and this is directly in VHA, there are reports still open from 
the OIG, one from September of 2008 that says an audit of VHA 
noncompetitive clinical sharing agreements would have a 
potential savings of $60 million. Apparently, we have not had 
the response within the year.
    Are you aware of that report?
    Dr. Petzel. I am aware of that, Mr. Chairman.
    The Chairman. What is going on?
    Dr. Petzel. My understanding is, and I reviewed all 23 of 
the outstanding recommendations that we had seen in the semi-
annual report, and that group associated with that particular 
acquisition process all revolved around the training of our 
acquisition staff.
    There is a relatively newly established acquisition academy 
to which everybody has to attend and the curriculum was written 
around the recommendations in that OIG report. The OIG will not 
close that recommendation out until we certify that every 
single acquisition individual has been through that training 
program.
    The Chairman. I see. But you have----
    Dr. Petzel. Absolutely.
    The Chairman [continuing]. Eventually reacted to it. Mr. 
Michaud?
    Mr. Michaud. Thank you very much, Mr. Chairman.
    Dr. Petzel, last month, this Committee held a hearing on 
the status of the National Vietnam Veterans Longitudinal Study. 
Several Members of the Committee expressed concern that the VA 
has taken so long to finish conducting the study due to 
problems related to VA's acquisition process.
    While I am pleased that the VA has since released a request 
for proposal on May 25th for this effort and expects a contract 
to be awarded by the end of the year, I am concerned about the 
overall number of open recommendations that VA still has not 
implemented and that even once the study is finally completed, 
VA will have even further delays in implementing any 
recommendation that results from this study.
    What plans does the VA have to ensure that this does not 
happen?
    Dr. Petzel. Well, first of all, Congressman Michaud, I 
share your concern about the delay. This harkens back to 2005. 
And just to reiterate a bit of that history, we found that we 
had difficulties with the contractor and eventually have come 
to the point of writing a new Request for Procurement (RFP) 
which, as you pointed out, was just issued on the 25th.
    I think a number of lessons have been learned from that. 
One is that the RFP that has been written this time is a much 
tighter document and I think it is going to allow us to find a 
better contractor for that study.
    Those veterans deserve that longitudinal study. There are 
many issues in their minds that surround the experience in 
Vietnam and I think that this study is a very important part of 
the ongoing evaluation of the health effects that might have 
been associated with Vietnam.
    So, number one, I think we have a better RFP. Number two is 
we are going to have a much tighter process of monitoring the 
performance in that contract than existed previously now that 
we know about the difficulties with that kind of a study and 
the kinds of issues.
    So I can promise you that we will keep much better track of 
what is happening with that contract in the future.
    Mr. Michaud. Thank you very much.
    My second question is, the OIG talked about the two reports 
on reusable medical equipment and indicated that at the August 
2009 followup review that 129 facilities were compliant with 
respect to standard of operation procedure and 128 had 
appropriate documentations of demonstrated competence.
    Yet, in March of this year, the OIG issued a report about 
reusable medical equipment problems at three sites in Puerto 
Rico. And my concern is, you know, with this report dealing 
with Puerto Rico, you know, once we--it appears that we are 
solving some problems.
    How can these things happen, especially since they are just 
recent?
    Dr. Petzel. Congressman Michaud, another good question. We 
have noticed in the CAP reports periodically as with Puerto 
Rico that there are sometimes relatively minor but definitely 
issues with reusable medical equipment. A placard is not posted 
in the correct place. There is not good documentation of 
training, et cetera.
    I believe that this is a result in part of the fact that we 
have not yet completed our response to this larger issue across 
the country. There are two aspects to that.
    One is that we are industrializing the process of cleansing 
and sterilizing reusable medical equipment, turning it into not 
a medical process, but into an actual industrial grade or level 
process using the standards of what is called ISO 9000, which 
is a set of industrial standards used in many different 
manufacturing processes. That effort is underway, but is not 
yet complete.
    A corollary to that is that we are setting up a national 
compliance and oversight program for reusable medical equipment 
where we have a separate group of people that will be 
responsible for seeing that the rules, et cetera, the 
directions, the directives are being followed.
    And then the third thing is that we are standardizing our 
reusable medical equipment. At the time that we first began 
looking at colonoscopes, there were probably 30 to 40 different 
kinds of colonoscopes around the country. In an individual 
medical center, it could be 20 or 25. We are asking a group of 
technicians to be facile with 25 different cleaning 
instructions for colonoscopes. So that is not reasonable and 
that is not good practice.
    We are in the process of getting RFPs and going out to 
develop standardized national contracts and we will ask that 
the medical center have no more than, let us say, ten, I am not 
sure what the number will be yet, but ten scopes so that we can 
be sure that there is a minimum stress on the part of the 
people cleaning these scopes to learn a large number of 
different processes.
    So those two efforts, I think, are going to eventually lead 
us to the point where we will not be seeing these isolated 
incidents in the CAP reports as you pointed out.
    Mr. Michaud. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Dr. Roe?
    Mr. Roe. Thank you, Mr. Chairman.
    Just a couple of questions to dovetail with Mr. Michaud's 
points. You said there were, in some institutions, 25 different 
colonoscopes?
    Dr. Petzel. There could be that many, correct, Congressman.
    Mr. Roe. Hmm.
    Dr. Petzel. Different models perhaps in some instances of 
the same scope, but absolutely.
    Mr. Roe. Yeah. I mean, it would not be 25 different 
procedures to clean a scope with a minor variance. I mean, 
that----
    Dr. Petzel. Well, each one of those scopes, Congressman, 
could have different cleaning instructions. If it is a 
different model of the scope, the cleaning instructions can be 
different. So, yes, it is possible.
    Mr. Roe. I will have some more information on that later. I 
am not so sure about that.
    The Chairman made a great point a minute ago when he 
mentioned about new innovations that would come along, and I 
know this is not your area of expertise on procurement, but 
where you would have a central procurement here. And I could 
understand where if you are looking at IV fluids or band-aids 
or whatever it might be that are pretty generic, that are 
pretty standard, whether you have D5 lactated ringers made by 
somebody and somebody, I get that. But his point was a little 
more specific.
    And what the OIG was saying a minute ago is very true is 
that when you get down to the individual patient and you are 
taking care of that person, you want whatever it takes to give 
quality of care to that person and as a more centralized issue, 
I mean, procurement may not work for an individual person.
    How does the VA, and I heard you say about the aortic 
valves and the micro valves, but I hear this a lot at the VA 
about when you--by an individual practitioner, I may not have 
this particular medicine or that particular device, for 
instance, orthopedists use a lot of different knee devices or 
shoulders or fingers or whatever it may be, how do you do that?
    And I worry about that because I have worked in a hospital 
where a central supply tries to buy something for me that I am 
trying to use in the operating room and they could not tie a 
knot if they had to. So it does make a difference when you are 
in the operating room using a device or piece of equipment that 
you are familiar with, you know that works, and you get good 
results with.
    Dr. Petzel. Congressman, as you pointed out, there is a 
tension between the desire to have some standardization and 
provide as much value as you can for whatever it might be you 
are purchasing on the one hand and on the other hand, the 
individual particular desires of a practitioner.
    Orthopedic surgery is an excellent example of that. 
Orthopedic surgeons tend to use the equipment that they were 
trained on. It does not mean that one piece is better than the 
other piece. It happens to be the piece that they are familiar 
with.
    The question is, how far do you go in compromising the 
individual person's desire to have the kinds of equipment that 
they trained on versus the need to add value by being cost 
effective.
    Mr. Roe. Let me give you an example. I do not have much 
time. Let me give you an example. We were able to buy some new 
laparoscopic equipment that was expensive. It was about $2,000 
for one piece of equipment. But we cut our operating time on a 
laparoscopically assessed vaginal hysterectomy from 3 or 4 
hours to an hour.
    Is that worth doing? Did patients benefit? Absolutely. 
Would it have made sense economically? I do not know, but I 
know the patients certainly benefited from it.
    Dr. Petzel. I can tell you it would have made sense 
economically because if it cuts an hour off your operating room 
time, that means you can use that operating room more 
efficiently. That is the kind of decision that we would 
endorse.
    Mr. Roe. I think the other issue that the Chairman brought 
up very well was his example about diabetes. And I realize 
those are not real facts, but how do you evaluate that? And I 
agree with him completely. How do you evaluate that? You can 
take the dollar pill or you can take something more expensive, 
but may be better and the benefits may be down the road.
    Dr. Petzel. That is again a very good point, Congressman 
and Chairman. You both have raised it.
    The key to that in my mind is comparative effectiveness 
trial. That is, these two ways of treating diabetes need to be 
evaluated side by side. If the expensive drug proves to be 
substantially better than the inexpensive drug in managing a 
diabetic, then it will become the drug of choice.
    Cost cannot be and is not ever the only thing that is being 
considered. You need to look at the medical literature, you 
need to look at the comparative effectiveness studies and make 
a decision about whether or not the advantage of this drug, if 
there is any, outweighs the cost of that particular drug.
    Mr. Roe. But is that being done? I mean----
    Dr. Petzel. Absolutely. Absolutely.
    Mr. Roe. Okay. Could we see that here because I think that 
is very important?
    And just before I yield back, thank you, Mr. Chairman. I 
know my time is expired. On your point on PTSD, I think an 
evaluation should be mandatory when you get out, not just a 
questionnaire, and then continue to evaluate these folks. And I 
think what the OIG said, because I know from my own experience 
as a veteran, some of those issues are dealt with then as a 
young man, a 25-, 26-year-old Army Captain, you are still 
dealing with now later. And some of these things amplify, and 
that is what PTSD basically is. You see a lot of folks that are 
having a very difficult time later in their life dealing with 
issues that happened to them three decades ago.
    So I think that is a good point, but to continue to do 
that, and outreach, I think I heard maybe it was you or the OIG 
say is it is difficult to find these folks that are regular 
Army or Navy, whatever, career military folks that do not have 
a way to get back to them.
    Dr. Petzel. Right.
    Mr. Roe. Okay. Thank you.
    I yield back.
    The Chairman. Mrs. Kirkpatrick?
    Mrs. Kirkpatrick. Thank you, Dr. Petzel, for your testimony 
today and for answering our questions.
    I am going to ask you about the Fiduciary Program. We 
recently had a Subcommittee hearing about the program that 
raised some substantial questions in my mind about the 
oversight of the fiduciaries.
    You know, with the increased incidence of TBI and severe 
PTSD, apparently more and more veterans are needing fiduciaries 
to help them handle their money. And I think the fact that they 
need this help makes them among the most vulnerable of our 
veterans.
    So I was troubled when I saw that the OIG's 2006 audit made 
recommendations to the Fiduciary Program and then 4 years later 
in 2010, there were similar problems.
    And so I wondered if you could explain to me why those 
recommendations were not implemented in that 4-year time 
period.
    Dr. Petzel. I would like to turn that question, if you do 
not mind, over to my colleague from VBA, Ms. Rubens.
    Ms. Rubens. Yes. Thank you. I appreciate the opportunity to 
address this.
    I cannot tell you how much I agree with you in terms of the 
special needs our veterans have when they come back with that 
TBI or been determined to be incompetent perhaps later in life.
    That 2006 OIG report troubled me when I was out in the 
field. And as I did my homework after now being here to say, 
okay, why have we not finished implementing these 
recommendations, particularly as they pertain to appropriate 
levels of staffing. And, in fact, after the OIG study had come 
out, VBA did go out and engage a contractor to help us take a 
look at what are the work measurement issues around managing 
that program to ensure we actually are providing enough 
oversight.
    Quite frankly, the initial study that was done was found to 
be, if you will, inadequate in terms of the findings. The 
recommendations were sort of scattered. As we began to look at 
validating, if you will, their approach and their findings, 
P.L. 110-389 was passed which required an overall work 
measurement study within the Compensation Program.
    So, okay, we are going to shelve the first one. We are 
going to take this second study on. And, in fact, that study 
was done and the results of it as we worked with the contractor 
to review what they had come up with were largely qualitative. 
They were not quantitative in terms of beginning to lay down 
some real hard data in terms of how many incompetent veterans 
requires what level of oversight.
    Given that I will call it disappointing outcomes on two 
studies, we are taking that information and putting together an 
internal review. And before the end of this fiscal year, we 
will have recommendations on what is the appropriate level of 
oversight to provide to our Fiduciary Program.
    Mrs. Kirkpatrick. Thank you. That is good information. I am 
pleased to hear that you have a specific timetable for 
completing that.
    Let me ask you, is there, in the recommendations, I have 
not seen them, I would like to see them, but is there a 
recommendation that all the fiduciaries be certified or have a 
certain standard of training?
    Ms. Rubens. You know, I am not sure if that is within the 
recommendations. I would tell you that VBA has begun to work to 
establish, if you will, a more professional workforce overall. 
There are some standardized tests in place as a result of the 
training programs for our veteran services representatives. We 
are also developing those studies and test instruments for the 
knowledge base and ability to provide the benefits for both our 
rating veteran service representatives, our decision review 
officers.
    We have strengthened the expertise in our Compensation and 
Pension Program and are building a much more robust training 
program and we will look to engage that certification program 
for both our legal instruments examiners as well as our field 
examiners who have real responsibility for our incompetent 
veterans in the Fiduciary Program.
    Mrs. Kirkpatrick. Well, thank you for your attention to 
this. I think it should be a top priority. And I will look 
forward to the report later on this year. Thank you.
    Ms. Rubens. Terrific.
    The Chairman. Thank you.
    Dr. Petzel, thank you for your presence here.
    You heard me ask a couple questions which are sort of off 
the subject, but we referred to them again as in the formulary 
determinations. And you were very confident about the process. 
I am not sure about that process. I do not know who makes those 
decisions.
    I will give you a chance to say some more, but I want to 
give you a heads up. We are going to ask the Secretary and 
yourself to look at certain decisions that were made that seem 
to neglect, one, the long-term cause versus the immediate cause 
and, second, maybe more importantly, I will say quality of life 
issues that are hard to quantify.
    This diabetes situation I brought up, which was basically, 
by the way, a factual situation, I may have the numbers or the 
numbers were not exactly accurate, but to take a shot once 
every 2 weeks instead of twice a day, how do you measure that? 
And, yet, I mean, if it was up to me, I would go to the 2-week 
one.
    How is that considered in the formulary determinations and 
effectiveness? I mean----
    Dr. Petzel. Congressman, I would absolutely agree with you. 
If that were I and I were diabetic, I would want the shot every 
2 weeks as opposed to every 1 week or every day obviously.
    I cannot tell you specifically the inner workings of the 
Pharmacy Benefits Management Board, which is the group that 
looks at these nationally and makes these decisions, but I 
would welcome the inquiry.
    The Chairman. I think I would like to bring some examples 
to you and the Secretary to see how that decisionmaking is 
considered good. Maybe there is a reason for it, but maybe not. 
I just want to give you a heads up that we will be looking at 
that.
    Dr. Petzel. Thank you.
    The Chairman. When I said innovations, just one sticks in 
my mind where a Food and Drug Administration (FDA) approved 
technology for TBI victims that would expand the field of 
vision from a few percent to 50 percent and gives that patient 
the chance to read. This would be an incredible increase in the 
quality of life, right? And, again, FDA approved the technology 
and the manufacturer could not get past the acquisitions staff 
at VA. This is what we are dealing with that. That is just the 
one example that sticks in my mind. But, I would multiply those 
examples.
    I think we are going to bring a bunch of these situations 
to you and the Secretary. Technology changes so quickly, and it 
can be hard to evaluate but when these smaller innovative 
companies come to the VA with new processes, new techniques, 
new technologies, they seem to be met with a bureaucratic lull. 
We will be looking at the process.
    Dr. Petzel. Well, we would be delighted to, in these 
specific instances particularly, to respond to you about how we 
have evaluated a particular drug or particular technology. I 
think that would be an excellent dialogue to have.
    The Chairman. By the way, on the formulary, you said it is 
in pharmacy. You mentioned some department.
    Dr. Petzel. Well.
    The Chairman. Is that directly under the VHA?
    Dr. Petzel. Yes, that is in the Veterans Health 
Administration. We have a Pharmacy Benefits Management Board 
that looks at the national formulary.
    The Chairman. Is that sort of self-contained, or do you 
know? You do not interfere in that or----
    Dr. Petzel. Absolutely not.
    The Chairman. See, that may be what's wrong. You want 
independence but on the other hand, if they are the shopkeepers 
and one costs $50 and the next one costs $1, we will take the 
one that is less expensive.
    Dr. Petzel. There is a process, Mr. Chairman, by which in 
theory any practitioner can get any drug they want by making a 
request to purchase something or have something dispensed off 
formulary. There is a very clearly mapped out process by which 
one goes through. You would be quite surprised, I think both of 
you would be, at the number of off formulary drugs that we do 
use.
    The Chairman. Maybe the practitioner does not even know 
about it though. Part of what the VA should be doing is looking 
for this stuff and working to help.
    I think this is the first time you have testified before 
the full Committee.
    Dr. Petzel. It is, sir.
    The Chairman. I want to say I appreciate your testimony. I 
appreciate the way you handled the questions. I appreciate your 
expertise and your willingness to work with us.
    Mr. Baker, you all were good witnesses as well and we 
appreciate that. We usually do not say that to folks. We look 
forward to working with you and we thank you for being here.
    This hearing is adjourned.
    Dr. Petzel. Thank you, Mr. Chairman.
    [Whereupon, at 12:03 p.m., the Committee was adjourned.]








                            A P P E N D I X

                              ----------                              

                 Prepared Statement of Hon. Bob Filner,
                Chairman, Committee on Veterans' Affairs
    The Department of Veterans Affairs Office of Inspector General 
plays a critical role in ensuring proper and efficient oversight of the 
Department's activities.
    In the first half of fiscal year 2010, from October 2009 to March 
2010, the OIG issued 120 reports, identified nearly $673 million in 
monetary benefits, and conducted work that resulted in 232 
administrative sanctions.
    It is evident by these numbers that the high quality of OIG's work 
is essential in rooting out fraud, waste and abuse within the VA.
    Today, we will examine the progress that the Department of Veterans 
Affairs is making in complying with the OIG's recommendations.
    Currently, the Office of Inspector General has a total of 115 open 
reports with almost 694 open recommendations that have yet to be 
implemented by the VA.
    The OIG's target date for implementation of these recommendations 
is within a year of publication.
    Although most of these open recommendations are on track to be 
completed within the 1-year timeframe, 16 reports containing 45 open 
recommendations are over 1 year old.
    Additionally, recommendations on VA information security issues 
tracked by an independent auditor show that there are almost 40 open 
recommendations, 34 of which are carried over from prior years.
    The timely implementation of these recommendations is crucial to 
ensuring our Nation's veterans receive the best care. Many of these 
recommendations play a critical role in ensuring patient safety and 
safeguarding veterans' information.
    Additionally, timely implementation not only reflects good 
management, but it always reflects a responsible use of taxpayer money. 
The monetary benefit yet to be realized by these recommendations going 
unimplemented is almost $92 million.
    During the country's difficult financial time brought on by the 
recession, the VA must realize cost savings anywhere practical. This 
can be done straightforwardly through the elimination of waste and by 
acting to correct the issues identified in the OIG's recommendations in 
a timely manner.
    The Office of Management and Administration's Operations Division 
is tasked with followup reporting and tracking of OIG report 
recommendations while ensuring that all allegations made by the OIG are 
effectively monitored and resolved in a timely, efficient and impartial 
manner. I am pleased that they are here today with Deputy Inspector 
General Griffin to share with the Committee their insights on this 
issue.
    The OIG's reports for followup procedures are an essential 
component of the oversight process. Secretary Shinseki has said many 
times before this Committee the importance of accountability and 
ensuring veterans' care comes first.
    The VA must be held accountable for implementing the OIG's 
recommendations in a timely manner, and make certain our Nation's 
veterans are receiving the quality of care that is reflective of their 
service and sacrifice.

                                 
                Prepared Statement of Hon. Jeff Miller,
         a Representative in Congress from the State of Florida
    Thank you, Mr. Chairman.
    The existence, and independence, of the Office of Inspector General 
is an incredibly important tool in not only helping VA identify 
shortcomings but also to help us here on this Committee do our job more 
effectively.
    Maintaining the OIG's full capabilities is of importance to all of 
us here, and that starts with the budget process. As that office 
identifies areas of redundancy, poor performance, or potential cost-
savings, I see no reason to flatline or even cut its budget. As the 
authorizing Committee, this is one step we can take every year toward 
doing our part.
    VA has acted on an overwhelming majority of IG recommendations, in 
accordance with their standardized process. That much I am glad to see.
    What I hope others on this Committee share with me is concern about 
the lack of action on IG recommendations that have been open over a 
year. The total number of recommendations as a percentage might be 
comparatively small, but as an actual number are high.
    These recommendations aren't simply ways for VA to cut costs or 
eliminate waste, fraud, and abuse. They are potential ways to better 
deliver services to veterans across all departments within VA. That 
objective cannot--and must not--be overlooked.
    I look forward to today's testimony about VA's implementation of 
the OIG's recommendations, and, in cases where there has been no 
implementation, to hearing the reasons why. VA, its Office of Inspector 
General, and this Committee can make great progress together, and this 
hearing is one step in making that progress.
    I yield back.

                                 
  Prepared Statement of Richard J. Griffin, Deputy Inspector General,
    Office of Inspector General, U.S. Department of Veterans Affairs
    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to discuss one of the Office of Inspector General's (OIG) 
major responsibilities, which is to make recommendations to VA 
management to improve programs and services provided to veterans. 
Accompanying me today is Mr. Richard Ehrlichman, Assistant Inspector 
General for Management and Administration.
    On balance, VA does a good job of implementing OIG report 
recommendations in a timely manner. The percentage of recommendations 
implemented within 1 year has increased each year from fiscal year 2007 
through 2009, reaching a level of 94 percent. VA performs relatively 
well based on comparative data that other Federal OIGs periodically 
reported to Congress. OIG will continue to invest resources and keep a 
focus on timely and full implementation on recommendations for 
improvement across VA programs and operations.
    The OIG provides summaries on open recommendations in our 
Semiannual Report to Congress. The most recent Semiannual Report to 
Congress for the period October 1, 2009, through March 31, 2010, shows 
107 open OIG reports with 640 open recommendations. Of the 107 open 
reports, 11 reports with 23 recommendations and monetary impact of over 
$92 million, were pending over 1 year. The oldest open report was 
issued on September 30, 2005. In preparation for this hearing, we 
reviewed our inventory and as of May 31, 2010, we are now tracking 124 
open reports that contain 756 recommendations for implementation. Of 
these 124 open reports, 16 are pending over 1 year and contain 45 
unimplemented recommendations, with a monetary impact of just under $92 
million.
OIG FOLLOWUP PROGRAM
    Followup is an important component of OIG oversight work. The 
Office of Management and Budget requires a process to follow up and 
report on the status of OIG report recommendations. The OIG is also 
required to report in its Semiannual Report to Congress on the status 
of report recommendations. Moreover, after the Inspector General 
testified before this Committee in February 2007, we began providing 
quarterly updates to Congress and the VA Secretary on the status of 
open report recommendations, with an added emphasis on those 
recommendations pending over 1 year.
    OIG staff take great care in developing recommendations for 
improvement that are clear and specific; provide a yardstick to measure 
improvement and gauge full implementation; and afford VA program 
officials an opportunity to implement the improvements within 1 year. 
Since 2007, we have worked closely with VA officials to develop 
recommendations for corrective action that can be realistically 
implemented within a year. As such, OIG no longer accepts VA 
implementation plans that take more than a year to complete, except 
under the rarest of circumstances and only when measurable timelines 
are provided. In some instances, based on OIG staff evaluation, VA 
program offices take corrective action while we are onsite or in the 
period between issuing a draft report and when the final report is 
published. When this happens, we close out the recommendation as fully 
implemented and reflect the action in our final report.
    However, a majority of the reports we issue contain open 
recommendations for improvement. Once a final report is issued, OIG 
followup staff in the Office of Management and Administration begin a 
process of tracking them until fully implemented. Independent public 
accounting firms collaborate with the OIG to track recommendations 
contained in the Federal Information Security Management Act of 2002 
audit and the Audit of VA Consolidated Financial Statement.
    For each report, we separately list recommendations for improvement 
and any related monetary impact we expect VA to derive from 
implementation. The staff begin a tracking process, with controls in 
place to focus on full implementation within our 1-year goal. The first 
OIG followup request is sent to the responsible VA program office 90 
days after the report is published.
    In each followup status request we seek a description of what 
actions have occurred toward implementing the recommendations during 
the preceding 90 days. We set a 30-day deadline for VA officials to 
respond in writing. The response must contain documentary evidence such 
as issued policies, certifications, or other material supporting any 
request to close recommendations. Our intermediate goal is to obtain 
evidence that VA is making progress in implementing recommendations. If 
we do not receive a timely reply, or if we determine VA's efforts 
appear to be falling behind schedule, we schedule a face-to-face 
meeting to discuss how to get implementation back on track.
    OIG followup staff coordinate with OIG line officials who worked on 
the report. To ensure VA's implementation plans remain on track, they 
discuss the documentary evidence VA submits with the status reports. If 
a report recommendation remains unimplemented, OIG staff repeat this 
followup cycle every 90 days. Once a report passes the 6-month mark and 
we determine implementation is unlikely within the 1-year goal, we 
increase the frequency of discussions with OIG line staff and VA 
program officials, and ensure the appropriate senior management 
officials in the OIG and VA recognize the probability of missing the 1-
year target for implementation.
    In Appendix B of our Semiannual Report to Congress, we present 
tables on open reports and recommendations. In the first table, we 
provide a matrix with totals for both open reports and the associated 
unimplemented recommendations. The table further breaks the data into 
those open less than or more than 1 year, and provides the same data by 
VA Administration or Staff Office. The second table shows only those 
reports and recommendations that are unimplemented for more than 1 
year. In this table, we show the report title, date of issue, 
responsible VA organization, monetary impact, full text of each 
recommendation, and an indication of how many recommendations on each 
report are still open.
OIG FOLLOWUP OVERSIGHT REVIEWS
    The OIG also conducts followup reviews of our audit and inspection 
work. For example, our Office of Healthcare Inspections conducts 
Combined Assessment Program (CAP) reviews of VA medical centers. These 
cyclical reviews evaluate how well VA medical centers are accomplishing 
their mission of providing high quality medical services to veterans. 
When health care inspectors return to a VA medical facility on a 
subsequent CAP, they review VA's implementation plans from the earlier 
CAP in order to validate implementation, evaluate the effectiveness of 
the recommended changes in fixing problems, or in some cases to 
identify repeat deficiencies.
    We also perform followup reviews on our national projects. For 
example, in May 2008, the OIG issued Follow-Up Healthcare Inspection--
VA's Role in Ensuring Services for Operation Enduring Freedom/Operation 
Iraqi Freedom Veterans after Traumatic Brain Injury Rehabilitation. 
This followed up on a July 2006 report, Healthcare Inspection--Health 
Status of and Services for Operation Enduring Freedom/Operation Iraqi 
Freedom Veterans after Traumatic Brain Injury Rehabilitation, which 
described the health status of and services provided for a group of 
servicemembers and veterans who had received inpatient rehabilitative 
care in VA facilities for traumatic brain injury (TBI).
    Three years after completion of initial inpatient rehabilitation 
for TBI, many of these patients continue to have significant 
disabilities. Veterans Health Administration (VHA) and Veterans 
Benefits Administration (VBA) support for TBI patients is extensive. 
While case management has improved, long-term case management is not 
uniformly provided for these patients, and significant needs remain 
unmet. OIG will continue to monitor VHA's progress toward achieving 
consistent delivery of case management services for this select group 
of injured veterans.
    In another pair of reviews, Healthcare Inspection--Use and 
Reprocessing of Flexible Fiberoptic Endoscopes at VA Medical Facilities 
(June 2009) and Healthcare Inspection Follow-Up--Colonoscope 
Reprocessing at VA Medical Facilities (September 2009), we reported on 
reusable medical equipment reprocessing (RME) issues. The first report 
determined that facilities had not complied with management directives 
to ensure compliance with reprocessing of endoscopes, resulting in a 
risk of infectious disease to veterans. The failure of medical 
facilities to comply on such a large scale with repeated alerts and 
directives suggests fundamental defects in organizational structure. A 
followup inspection 2 months later provided results for all facilities 
not previously inspected and for facilities previously found to be 
noncompliant with VHA's directive on RME reprocessing. Among the 129 
facilities inspected in August 2009 during our followup review, all 129 
were compliant with respect to posting model specific standard 
operating procedures, and all facilities had adequate documentation of 
demonstrated competence for reprocessing staff except for one facility. 
However, we continue to be concerned about this issue and we are 
reviewing and reporting on RME processing as part of our CAP reviews.
    In March 2010, we issued Audit of the Fiduciary Program's 
Effectiveness in Addressing Potential Misuse of Beneficiary Funds, 
which found similar to those in our June 2006 report, Audit of VBA 
Fiduciary Program Operations. In fact, we found that VBA had failed to 
take and complete promised actions in response to three recommendations 
made in our 2006 report. For example, in 2006 we recommended that VBA 
determine appropriate Fiduciary Program staff caseload levels and 
staffing requirements. In response to this recommendation, the then-
Under Secretary for Benefits stated that VBA would conduct a work 
measurement study and convene a work group to closely examine Fiduciary 
Program staffing at VA regional offices (VARO) and to make 
recommendations regarding case workloads. During our 2010 audit, we 
found that VBA did not implement the actions they had previously agreed 
to take, including not issuing a staffing and workload model. Fiduciary 
Program staffing has been left to the judgment of individual VAROs. As 
a result, we found that a wide variation exists in the number of 
beneficiaries managed by individual Legal Instrument Examiner, ranging 
from 188 to 1,576 beneficiaries.
    In April 2009 we issued Follow-Up Audit of Veterans Health 
Administration Major Construction Contract Award and Administration 
Process to determine whether VA implemented corrective action plans in 
response to the recommendations we made in the February 2005 Audit of 
Veterans Health Administration Major Construction Contract Award and 
Administration Process. This report contained 12 recommendations to 
strengthen VHA's contract award, administration, and project 
management. The then-Under Secretary for Health concurred with the 2005 
report recommendations and provided corrective action plans. Nine of 
the 12 recommendations involved the establishment of a Quality 
Assurance Program. VHA had established a Quality Assurance (QA) 
Service, but this service lacked written policies, procedures, and 
performance measures. Further, the QA Service lacked a staffing plan to 
ensure it met all of its major quality control responsibilities. We 
also found that VHA did not fully implement the 2005 report 
recommendation to implement more effective project management oversight 
to manage and reduce construction schedule slippage from a national 
perspective or the recommendation to establish an effective program to 
ensure the timely close-out of major construction contracts. VHA 
officials have taken actions to address our most recent 
recommendations; however, the corrective actions should have been put 
in place 5 years earlier.
VA'S PROGRESS IN IMPLEMENTING OIG RECOMMENDATIONS
    In the area of OIG's benefits inspections of VBA's regional 
offices, VBA officials have taken timely action to correct monthly 
benefits paid to veterans that we identify during our inspections as 
inaccurate. We provide a daily list of identified claims processing 
errors during our site visits. VBA's efforts to establish a process to 
track and quickly fix these errors is a positive step toward ensuring 
veterans receive accurate benefits. We have had similar results 
correcting problems on the spot at VA medical facilities during our CAP 
reviews and Community Based Outpatient Clinic inspections.
    In July 2009, we issued an Oversight Review of Specialty Service 
Issues at the VA Montana Health Care System, Fort Harrison, Montana. 
This was a review of actions taken by VHA to address allegations that a 
physician was providing substandard care and engaging in improper 
medical record documentation practices. In the course of performing 
this review, we had numerous concerns on the overall operation of a 
particular clinical service. As a result of the followup process, over 
5,000 veterans had their care in this specialty area reviewed and, 
where necessary, some were contacted for further care. In addition, we 
found that the waiting times for one procedure were excessive; this has 
now been corrected.
    In January 2008, we issued a report, Healthcare Inspection--Quality 
of Care Issues, VA Medical Center, Marion, Illinois, that concluded 
that the Surgical Specialty Care Line at Marion was in disarray, the 
oversight reporting structure for Quality Management (QM) reviews was 
fragmented and inconsistent, and there were significant deficiencies in 
the privileging of physicians, which is the process by which physicians 
are granted permissions by a medical center to perform specific 
diagnostic and therapeutic procedures. Although some of the 
recommendations dealt with specific issues that needed correction at 
Marion, there were also systemic recommendations for VHA, such as the 
need to standardize the collection and reporting of QM data throughout 
VHA and to ensure that VHA's diagnostic and therapeutic interventions 
are appropriate to the capabilities of the medical facility.
    We used our cyclical CAP process to return to Marion in August 
2009, and in a CAP report published in November 2009, we reported that 
of 13 QM areas reviewed, we found deficiencies in 10. Several QM-
specific corrective actions initiated in response to the January 2008 
report had not been fully implemented and did not consistently correct 
the conditions identified.
    Since that time, VHA has worked in earnest to review and rewrite 
VHA guidance on Peer Review, Credentialing and Privileging, and Quality 
Management. In addition, in May 2010, VHA released their Surgical 
Complexity Initiative: Aligning VA Medical Center Infrastructure with 
the Performance of Inpatient Surgery directive. This model matches the 
capabilities of all aspects of a medical facility with the complexity 
of permitted procedures. This is a major step to ensure that VHA's 
diagnostic and therapeutic interventions are appropriate to the 
capabilities of the medical facility, thus ensuring that veterans 
receive surgical care in the appropriate setting.
OPPORTUNITIES FOR IMPROVEMENT
    Opportunities exist for VA to improve on its performance. As of 
March 31, 2010, we had two reports with open recommendations that 
represented over $81 million in monetary impact. One report from 
September 2007, Audit of the Acquisition and Management of Selected 
Surgical Device Implants, with over $21 million in monetary impact, 
involved an open recommendation to improve the acquisition and 
management of selected surgical device implants (stents, aortic valves, 
and thoracic grafts). The other report from September 2008, Audit of 
Veterans Health Administration Noncompetitive Clinical Sharing 
Agreements, with over $59 million in monetary impact, has multiple 
unimplemented recommendations related to noncompetitive clinical 
sharing agreements.
    Although we have not reached the 1-year mark on two significant 
administrative investigations issued in August 2009, Administrative 
Investigation--Misuse of Position, Abuse of Authority, and Prohibited 
Personnel Practices, Office of Information & Technology, Washington, 
DC, and Administrative Investigation--Nepotism, Abuse of Authority, 
Misuse of Position, Improper Hiring, and Improperly Administered 
Awards, OI&T, Washington, DC, we have concerns about the progress being 
made and commitment to implementation of OIG recommendations agreed to 
by VA program officials. Almost 10 months after we issued the final 
reports, only 3 of 45 recommendations are fully implemented.
CONCLUSION
    Lengthy delays implementing OIG recommendations not only cost VA 
money in unrealized savings but prevent veterans from benefiting from 
improvements in VA programs and services. We will continue to highlight 
those recommendations in need of attention in our reports to the VA 
Secretary, Congress, and in our regular meetings with senior VHA, VBA, 
and other VA officials.
    Mr. Chairman, this concludes my statement. We would be happy to 
answer any questions you or other Members of the Committee may have.

                                 
           Prepared Statement of Hon. Robert A. Petzel, M.D.,
      Under Secretary for Health, Veterans Health Administration,
                  U.S. Department of Veterans Affairs
    Good morning, Chairman Filner, Ranking Member Buyer, and Committee 
Members. Thank you for the opportunity to appear before you today to 
discuss the Department of Veterans Affairs' (VA) work in responding to 
recommendations from the VA Office of the Inspector General (VAOIG). 
Joining me today are Roger Baker, Assistant Secretary for Information 
and Technology, and Diana Rubens, Associate Deputy Under Secretary for 
Field Operations for the Veterans Benefits Administration (VBA).
    The scope of VA's missions extends far beyond the provision of 
health care to include providing educational benefits so veterans can 
receive the knowledge and skills to continue serving the needs of a 
21st century America; processing compensation and pension claims in our 
regional claims processing offices; and showing the utmost respect for 
veterans and their families at the end of life in our national 
cemeteries. For example, VA:

      Provides educational benefits of $9 billion annually, 
second only to the amount provided by the Department of Education.
      Guarantees nearly 1.3 million individual home loans with 
an unpaid balance of $175 billion. VA foreclosure rate is among the 
lowest in all categories of mortgage loans.
      Insures veterans' lives as the Nation's eighth largest 
life insurance enterprise with $1.3 trillion in coverage, 7.2 million 
clients, and a 96 percent customer satisfaction rating.

    To accomplish its diverse mission, VA employs more than 300,000 
people--the second largest department in the Federal Government. The 
standard for each employee who works at one of our facilities is to be 
fully aware of and committed to our mission to serve veterans. I trust 
that every employee, up to and including our leadership, strives to 
meet that mission daily with the utmost professionalism and integrity.
    However, improvement is also a goal. With that in mind, VA 
recognizes the VAOIG's valuable work as our partner in ensuring 
accuracy, integrity, and accountability in the delivery of benefits and 
services to our Nation's veterans. VA is committed to doing everything 
possible to ensure that it is delivering the best possible service to 
our veterans, and we also recognize the value of working with VAOIG in 
our current ``check and balance'' system to ensure that we are being as 
effective and efficient as possible. Additionally, VAOIG's work helps 
VA to identify areas of waste, fraud, and abuse, as well as to remove 
persons whose conduct is truly criminal. This not only improves our 
operations as a Department in providing services to our veterans, but 
it saves the American taxpayer millions of dollars every year.
    The scope of the VAOIG's work is immense and far-reaching, as its 
investigations can be specific to facilities, or result in broad 
reviews of VA programs. Its reports have resulted in hundreds of 
recommendations for the Department, ranging from administrative actions 
against specific personnel to large-scale policy reviews. Additionally, 
the Department and VAOIG maintain a strong relationship in identifying, 
investigating, and bringing to justice those who use their positions to 
defraud or harm our veterans.
    In order to provide timely and appropriate responses to VAOIG's 
recommendations, the administrations and staff offices involved with 
each report work directly with VAOIG to ensure that action plans are 
developed and implemented to result in positive change.
Veterans Health Administration
    VAOIG conducts several different types of reviews of Veterans 
Health Administration (VHA) facilities and programs. VAOIG reviews:

      National programs through audits, broadly focused 
Healthcare Inspections, and other nationally focused reviews.
      Single VA medical centers or community-based outpatient 
clinics (CBOC) through Combined Assessment Program (CAP) reviews and 
individual CBOC reviews.
      Roll-ups of CAP reviews can summarize a number of 
findings from several facilities and include recommendations with a 
broader scope than a single CAP review.
      Healthcare Inspections can result from a nationwide or 
broad review initiated by VAOIG, an individual CAP review, or a finding 
after a review of an allegation made by a call to the VAOIG hotline. 
These Healthcare Inspections can be specific to a facility or involve a 
broader scope.

    VHA has a standardized process to identify and respond to VAOIG 
recommendations from each type of review. Initially, once the VAOIG has 
issued a final report including recommendations and VA responses, VHA 
staff use its database (VHA Electronic GAO and VAOIG Recommendation 
Status System--EGORS) to track progress of closing recommendations. 
When VHA program offices submit reports about completing tasks that are 
part of an action plan, VHA records and reports that to VAOIG. Also, 
VAOIG requests a status update on the progress in closing a report's 
recommendations 90 and 180 days after the issuance of the final report. 
At these 90-day intervals, VHA communicates with program offices on the 
progress of the action plans previously submitted and documents the 
completion of any items, regularly reporting to VAOIG about the status 
of closing recommendations. This process is repeated until VAOIG closes 
all pending recommendations. If progress in implementing changes is 
delayed, VHA leadership meets with the responsible office to expedite 
action and close the assignment. For recommendations that are open more 
than 6 months, the VHA Chief of Staff meets directly with the program 
office to review the status of closing a recommendation and does so 
monthly until the action has been completed.
    For the more narrowly focused CAP reviews, VAOIG requests a status 
update from VHA 90 days after the issuance of the final VAOIG CAP 
report. This request is sent directly to the Veterans Integrated 
Service Network (VISN), the VA medical center, and VHA leadership in 
Central Office. The facility provides an update of its progress in 
completing the action plan included with the final CAP report directly 
to VAOIG and informs VHA leadership at the same time. VHA leadership 
tracks the facility's progress in implementing the action plan and 
communicates with the facility directly when there are delays or 
questions. This process is repeated until VAOIG closes all 
recommendations from a CAP. This same process applies to Healthcare 
Inspections that result from a CAP or a finding resulting from a review 
of an allegation made to the VAOIG hotline.
    VHA leadership, including the Chief of Staff, the Office of the 
Deputy Under Secretary for Health for Operations and Management, the 
Office of the Principal Deputy Under Secretary for Health, and the 
Director of the Management Review Service, meet on a monthly basis with 
VAOIG leadership and staff to discuss ongoing and future reviews and 
how to continue improving communications. Less formal discussions 
between VHA and VAOIG are more frequent.
Veterans Benefits Administration
    VBA takes very seriously VAOIG reports' findings and 
recommendations, and it works diligently to implement recommendations 
made in those reports to further strengthen benefit programs.
    VBA works closely with VAOIG, Office of Audits and Evaluations and 
the Office of Management and Administration, to provide timely and 
accurate status updates on all open recommendations. VBA provides 
status updates to VAOIG every 90 days to describe the actions taken or 
in progress to fully address recommendations until they are 
satisfactorily closed by VAOIG. VBA tracks and maintains current 
information on the status and target completion dates for all open 
recommendations, and works proactively with VAOIG to reconcile data and 
address outstanding questions.
    The VAOIG Benefits Inspection Division (BID) implemented 
independent inspections beginning in fiscal year 2009 to provide 
recurring oversight of VA regional offices by focusing on disability 
compensation claims processing and performance of Veterans Service 
Center operations. The BID's audits of regional offices include reviews 
of local claims processing, data integrity, management controls, 
information security, and public contact. These inspections incorporate 
claim file reviews, employee interviews, and management feedback. VBA 
leadership reviews and responds to the recommendations provided by the 
BID, ensuring errors are corrected and recommendations are implemented 
in a timely manner. The issuance of the audit report follows 60 days 
after the BID team conducts a site visit and all initial and followup 
responses to inspection recommendations are reviewed and concurred upon 
by the regional office, area office, and Office of Field Operations. 
Once these steps are completed, the BID determines the recommendation 
is implemented and the report can be closed. VBA currently has nine 
open BID reports of specific VBA regional offices.
    While VAOIG's audit work in VBA is primarily focused on the 
compensation and pension program, VAOIG is also currently reviewing the 
implementation of the Post-9/11 GI Bill.
Office of Information and Technology
    Upon receipt of VAOIG's status request, a notification is sent by 
the Project Coordination Service to the appropriate points of contact 
in the Office of Information and Technology (OI&T) staff office 
responsible for implementing the open VAOIG recommendation. The Project 
Coordination Service conducts followup reporting and tracking of VAOIG 
report recommendations to ensure implementation.
    IT staff offices are directed to address each open recommendation 
individually, stating the progress made over the preceding 90 days and 
providing supporting documentation, if applicable. Their response also 
indicates whether OI&T recommends closing any recommendations. OI&T 
staff offices then prepare a soft and hard copy submission, to include 
background information on the IG report/recommendation, a signed 
briefing note, a memorandum for Senior Level Executive (SES)-level 
signature, and an attachment containing status updates.
    All status updates are submitted to the Project Coordination 
Service for review no later than five business days before the VAOIG 
due date. Once the Assistant Secretary for OI&T signs the memorandum, 
the response is sent to the VAOIG Operations Division, Office of 
Management and Administration.
Recommendations Open for Over One Year
    The ``Federal Acquisition Streamlining Act 1994,'' P.L. 103-355, 
requires VA to complete final action on each VAOIG report 
recommendation within 1 year after the report is finalized. Although VA 
strives to meet this target, and does so for the overwhelming majority 
of reports issued, OIG has identified recommendations that have been 
open for over 1 year.
VHA Recommendations Open for Over One Year
    VHA has eight VAOIG reports with 19 recommendations that have been 
open more than 1 year.
    First, the ``Audit of VA Acquisition Practices for the National 
Vietnam Veterans Longitudinal Study (NVVLS)'' has one of three 
recommendations still open. This recommendation involves initiating 
formal acquisition and planning and proper contracting processes to 
expeditiously and successfully complete the NVVLS and ensure that 
assigned project management and contracting staff have the required 
knowledge and skills to effectively plan, procure, administer and 
manage the NVVLS in accordance with pertinent legal, procedural and 
technical requirements. We acknowledge that deciding how to proceed 
with the NVVLS has been a long process. Since VA decided to re-initiate 
its work on NVVLS in late 2009, significant progress has been made, and 
I am pleased to report that VA released a request for proposals (RFP) 
on May 25, 2010, and expects an award will be made later this year. 
Details about the timeline are available in the testimony provided 
before this Committee on May 5, 2010. VAOIG has indicated it will close 
the recommendation when the contract award is made.
    Second, the ``Review of Access to Care in the Veterans Health 
Administration'' report, issued in 2006, has two of nine 
recommendations that remain open. These involve standardizing tracking 
methods and appropriate performance metrics to evaluate and improve the 
timeliness of elective procedures as well as implementing 
prioritization processes to ensure that veterans receive clinically 
indicated elective procedures according to their clinical needs. 
Through VHA's Surgical Quality Improvement Program (SQIP), VA is 
developing long-term information technology (IT) solutions, and in the 
interim has standardized appropriate tracking methods to improve the 
evaluation and timeliness of elective procedures. VHA has been advised 
that the IT solution will be implemented in early 2012. Also, VHA 
recently issued Directive 2010-018, ``Facility Infrastructure 
Requirements to Perform Standard, Intermediate or Complex Surgical 
Procedures'' in May 2010, requiring each facility to establish a 
transfer policy based on clinical need. VHA is currently working with 
VAOIG to close these recommendations based on these recent and ongoing 
actions.
    Third, the ``Review of the Acquisition and Management of Selected 
Surgical Device Implants'' report from 2007 has one recommendation 
still open. This recommendation directed VHA to evaluate aortic valve, 
coronary stent, and thoracic graft procedures to study the feasibility 
of establishing national contracts and blanket purchase agreements 
(BPA) and, where indicated, initiate national contracts and BPAs.
    When OIG issued the recommendation, VHA had been actively seeking 
national contracts for coronary stents for 2 years; however, few 
existing manufacturers indicated a willingness to participate. VHA has 
continued to evaluate the procurement history for these products to 
identify possible targets for standardization.
    This spring, a Request for Information (RFI) related to coronary 
stents was again sent to industry, and VHA expects to respond to the 
vendor's questions mid-June as well as develop and distribute an RFP by 
the end of summer 2010. VHA acknowledges that based on the current 
surveys, the price of drug-eluting stents, on average, are likely to 
decrease by $300-$400 per stent, resulting in significant cost 
reduction for VA if the RFP process is successful.
    In regard to aortic valves and thoracic grafts, VHA recently 
completed comprehensive reviews of the procurement history for these 
devices to determine if the use of national contracts or BPAs were 
feasible. The completion of these reviews has been time consuming to 
ensure that the analysis was complete and comprehensive.
    For aortic valves, the procurement history does not support use of 
a national contract or BPA because of issues involving the complexity 
of the clinical decisions resulting in vendor choice, the variety and 
availability requirements of implant types (mechanical, bioprosthetic, 
etc.) in relationship to the complexity of the disease being treated, 
the relatively low number of devices implanted by VHA, and the 
established safety of the devices currently utilized.
    Neither does the review of the procurement history related to 
thoracic grafts indicate that use of a national contract or BPA is 
recommended. This is based on the overall low number of thoracic aortic 
grafts being implanted by VHA, the complexity of the disease process 
requiring a choice of available and emerging vendor products, and the 
established safety of the devices currently utilized.
    This information is currently being shared with VAOIG to determine 
if it is sufficient to close the recommendation.
    Fourth, the ``Audit of Veterans Health Administration's Oversight 
of Nonprofit Research and Education Corporations'' report from 2008 has 
four of five recommendations still open related to establishing 
oversight authority parameters for Non-Profit Corporations (NPC); 
defining minimum control requirements for NPCs and subsequently 
training NPC Directors about these requirements; implementing oversight 
procedures to perform substantive reviews of NPC financial and 
management controls to ensure NPCs fully comply with Federal laws, VHA 
policies, and control standards; and developing and implementing 
procedures to review, monitor and enforce NPC compliance with conflict 
of interest laws and policies.
    To address these concerns, the Under Secretary for Health (USH) 
chartered the Nonprofit Corporation Oversight Steering Committee 
(Steering Committee) in 2008 to develop a plan to assess existing NPC 
financial and management controls and use that information to develop 
and implement future processes. The reviews were completed in December 
2009, and a white paper has been subsequently issued. Also, legislation 
that would significantly change the operations of NPCs has been pending 
since early 2009. Congress passed legislation in April 2010, and Public 
Law 111-163 was enacted in May 2010. On May 7, 2010, in response to the 
new law, the VA Nonprofit Oversight Board decided to delay issuance of 
any pending changes to NPC practices so that the elements from Public 
Law 111-163 could be included. The USH has directed that issuance of a 
handbook to implement this legislation and respond to the VAOIG 
concerns will be completed no later than December 7, 2010. Also, the 
VHA Nonprofit Program Office is using the results of the reviews 
completed in December 2009 to guide its continuing review of NPC 
operations.
    Fifth, an ``Audit of Veterans Health Administration's Government 
Purchase Card Practices'' issued in 2008 has one of four 
recommendations still open. Recommendation 2 directed VHA to provide 
approving officials refresher training on using the revised Approving 
Official Checklist to ensure cardholders maintain adequate 
documentation to support their purchases. On February 18, 2010, the 
Deputy Under Secretary for Health for Operations and Management 
(DUSHOM) mandated that all purchase card approving officials receive 
this refresher training. Each VISN Purchase Card Manager was to submit 
written certification when the training was complete. VHA has received 
documentation that the training is complete, and it anticipates that 
OIG will close this recommendation.
    Sixth, the ``Audit of Veterans Health Administration Noncompetitive 
Clinical Sharing Agreements'' issued in 2008 still has all seven 
recommendations open. An action plan to close these recommendations was 
developed in September 2008; however, that action plan had to be 
amended in December 2009 to add a mandatory training component to 
ensure consistent implementation of new policies and procedures. The 
curriculum for this training has been developed and submitted to the VA 
Office of Acquisition, Logistics, and Construction's (OAL&C) 
Acquisition Academy. The Academy is currently working to contract the 
completion of the provided material into curriculum for instruction. 
The course is scheduled to be available in 2nd Quarter FY 2011.
    In regard to Recommendation 5 that directed VHA to instruct the 
VISN contracting officers to initiate recovery of overpayments 
identified by the VAOIG audit, as appropriate, VHA has instructed its 
VISN contracting officers how to initiate recovery of overpayments 
identified by this audit, and VHA is compiling documentation of this 
process. To date, all VISNs have completed their audits, and VA 
continues to work to resolve questions about the overpayments.
    Seventh, the ``Audit of Procurements Using Prior-Year Funds for VA 
Health Care Facilities'' issued in 2008 has two of seven 
recommendations still open. Recommendation 5 directed VHA to initiate 
appropriate administrative action against contracting officers who 
entered inaccurate contract award dates in the electronic procurement 
accounting system and later signed the contracts after they should have 
known the funds had expired. Recommendation 7 directed VHA and the 
Assistant Secretary for Management to develop plans to implement 
controls over obligation of expired funds in other VHA programs, 
projects, or activities. VHA has sent documentation to VAOIG showing 
administrative actions taken in nine VISNs in response to 
Recommendation 5; VHA believes this may be sufficient to close the 
recommendation. Concerning the other item, VHA is working with VAOIG to 
determine if data extracted from VHA's sources other than nonrecurring 
maintenance obligation during FY 2009 for FYs 2004 through 2008 is 
acceptable to close the recommendation.
    The final report, ``Combined Assessment Program Review of the VA 
Central Iowa Health Care System, Des Moines, Iowa'' issued in 2009 has 
1 of 13 recommendations still open. Recommendation 4 directed VHA to 
ensure that the System Director requires the identified safety, 
infection control and patient privacy deficiencies be corrected. VHA 
continues to communicate with VAOIG about whether the documentation 
submitted earlier this year is sufficient to close the recommendation.
    The VISN has taken other actions to ensure the high quality of 
current safety, infection control, and patient privacy practices. For 
example, the VISN 23 Readiness/Annual Work Evaluation (AWE) Team 
surveyed the organization March 8-12, 2010. A primary purpose of the 
Readiness/AWE Team visit was to ensure that there was follow up and 
closure regarding previous findings by VAOIG, the Joint Commission, and 
others. Items cited in Recommendation 4 were reviewed by the team and 
considered compliant.
    Also the Joint Commission surveyed VA Central Iowa Health Care 
System April 27 to April 30, 2010. No previous OIG recommendations were 
identified in the Joint Commission survey as noncompliant at the time 
of the survey.
    We are working with VAOIG to verify that the VISN has implemented 
the system changes necessary to attain compliance, and that these 
changes are being sustained. The VISN currently reports ongoing 
compliance above the 90 percent level.
VBA Recommendations Open for Over One Year
    VBA has one VAOIG report with two recommendations that have been 
open more than 1 year.
    The VAOIG Audit of ``Veterans Benefits Administration Transition 
Assistance for Operations Enduring and Iraqi Freedom Servicemembers and 
Veterans'' was issued on July 17, 2008. Two of the eight report 
recommendations remain open and VA action is ongoing.
    Recommendation 6 directed the Acting Under Secretary for Benefits 
to develop a mechanism to obtain the DD-214 information needed to 
identify discharged veterans who should receive outreach letters. The 
goal is to use separation data from the VA/DoD Identity Repository 
(VADIR) to systemically issue outreach packages to separating 
Servicemembers, replacing the current manual process that utilizes the 
Veterans Assistance at Discharge System. VBA is working with VA's 
Office of Information and Technology and the Department of Defense to 
address unresolved technical and data quality issues. VA anticipates 
resolving these technical and data quality matters by September 2010.
    Recommendation 8 directed the Acting Under Secretary for Benefits 
to establish policies and procedures that require staff to provide 
special outreach to veterans who do not have a high school diploma or 
equivalent. Full implementation of this recommendation is dependent on 
the receipt of complete and accurate information from DoD's Defense 
Manpower Data Center (DMDC) through VADIR. VBA continues to work with 
the DMDC to resolve discrepancies in the data necessary to implement 
this outreach effort. VBA is also writing the procedures for field 
offices, which will allow for full implementation once the data issues 
are resolved and construction is completed for an electronic mechanism 
to assign and track field outreach activities for this target 
population.
OI&T Recommendations Open for Over One Year
    OI&T has one VAOIG report with one recommendation that has been 
open more than 1 year. The report, ``Review of Issues Related to the 
Loss of VA Information Involving the Identify of Millions of 
Veterans,'' was issued on July 7, 2006. Recommendation 1d directed the 
Secretary to ensure all position descriptions (PD) are evaluated and 
have proper sensitivity level designations, that there be consistency 
nationwide for positions that are similar in nature or have similar 
access to VA protected information and automated systems, and that all 
required background checks are completed in a timely manner.
    As a result of the recommendation, the Department has worked 
diligently to implement use of the U.S. Office of Personnel Management 
(OPM)-developed Position Designation System and Automated Tool (PDAT). 
The PDAT assists VA human resources specialists, managers, and security 
specialists to designate position risk levels for PDs. The PDAT has 
been in use since March 2009. Many VA organizations have used the PDAT 
to review current PDs and the PDAT is used for new PDs. Although the 
PDAT and the resultant new business processes meets the intent of 
recommendation 1d, the recommendation remains open pending issuance of 
VA Directive 0710, ``Personnel Security and Suitability Program.'' The 
VA Office of Operations, Security, and Preparedness (OSP) was tasked 
with authoring the Directive, which has been approved by the Assistant 
Secretary for Operations, Security, and Preparedness. The Directive was 
signed on June 4, 2010.
    VA will communicate the new Directive to the field in order for the 
field to understand the changes from the previous edition, as well as 
the mandated use of the PDAT. The 0710 Handbook is under development, 
and an inter-agency workgroup will be established to assist with the 
Handbook.
OSP Recommendations Open for Over One Year
    VAOIG's Semiannual Report to Congress, October 1, 2009-March 31, 
2009, lists one VAOIG report with one recommendation more than 1 year 
old for VA's Office of Operations, Security and Preparedness.
    The report, ``Audit of the Veterans Health Administration's 
Domiciliary Safety, Security and Privacy,'' issued on October 4, 2008, 
directed the Assistant Secretary for OSP to strengthen controls to 
ensure physical security surveys are conducted at domiciliaries with 
controlled substances. On May 28, 2010, OSP provided information on its 
directive to VAOIG, following the publication of Appendix B, ``Physical 
Security Requirements and Options, VA Directive and Handbook 0730.02.'' 
We are awaiting VAOIG's response, although we anticipate that this 
recommendation and report will be closed.
Conclusion
    As a Department, we strive to meet our mission to care and serve 
our veterans to the greatest possible measures of success and 
professionalism. However, we value the partnership with VAOIG's work to 
identify and work with us to ensure that we appropriately and quickly 
improve. In so doing, we are able to provide the kind of service to our 
veterans that they deserve and have earned. Thank you again for the 
opportunity to appear. We are prepared to answer any questions you may 
have.
          POST-HEARING QUESTIONS AND RESPONSES FOR THE RECORD

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                      June 10, 2010

The Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420

Dear Mr. Secretary:

    In reference to our full Committee hearing entitled ``U.S. 
Department of Veterans Affairs Office of Inspector General's Open 
Recommendations: Are We Fixing the Problems?'' on June 9, 2010, I would 
appreciate it if you could answer the enclosed hearing questions by the 
close of business on July 23, 2010.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Debbie Smith by fax at 202-225-2034. If you have any questions, please 
call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                                           Chairman
MH:ds

                               __________

                        Questions for the Record
                   The Honorable Bob Filner, Chairman
                  House Committee on Veterans Affairs
   U.S. Department of Veterans Affairs Office of Inspector General's
           Open Recommendations: Are We Fixing the Problems?
                              June 9, 2010
    Question 1: The Inspector General's Benefits Inspection program 
identifies approximately 40 (28 percent) out of 145 errors identified 
by the Veterans Benefits Administration's internal quality assurance 
program (Sustained Treatment and Rehabilitation Program--STAR) that 
were not covered by regional office staff. What is your plan to ensure 
these offices follow the national quality assurance program?

    Response: The Compensation & Pension (C&P) Service conducts monthly 
Systematic Technical Accuracy Reviews (STAR) and other quality reviews 
to assess national accuracy and consistency of claims processing. When 
errors are identified regional offices must take corrective action or 
request reconsideration of the error. If C&P Service withdraws the 
error, no further action is required.
    Regional offices are required to report the corrective actions 
taken on errors identified through national STAR review during that 
quarter or indicate that a request for reconsideration has been 
submitted. Regional office management is required to ensure that all 
STAR errors and problem quality areas are reviewed and addressed in the 
regional office's periodic Systematic Analysis of Operations covering 
the quality of rating, authorization, and fiduciary actions. 
Additionally, the C&P Program Operations Staff conduct oversight 
compliance visits of regional offices at least every three years. 
During the regional office site visit, claims with STAR errors are 
reviewed and the reported corrective actions validated. Any 
discrepancies are reported and appropriate followups are conducted with 
the regional office to validate improvement in deficient areas. 
Remediation plans are required from stations for all cited action 
items.
    Thus far, in fiscal year 10, 11 percent of STAR error calls have 
been identified as pending corrective action. Some of the discrepancy 
in our internal validation reports and the numbers reported by the OIG 
can be easily explained. VBA's site visit team only identifies errors 
when corrective action has not been taken. The OIG identifies errors 
not only for failure to take corrective action, but also for such 
procedural discrepancies as leaving the STAR checklist in the claims 
folder.
    VA is strengthening the STAR process. C&P Service will provide the 
Associate Deputy Under Secretary for Field Operations, through the 
Associate Deputy Under Secretary for Policy and Program Management with 
a quarterly report of uncorrected error calls for which reconsideration 
has not been requested. The report will identify those error calls that 
are uncorrected for more than 60 days.

    Question 2: What are the primary reasons for the delays in 
implementing the recommendation for the Office of Inspector General's 
Audit of Veterans Health Administration Noncompetitive Clinical Sharing 
Agreements?

    Response: The primary reason for the delay in implementing the 
recommendation for the Office of Inspector General's Audit of Veterans 
Health Administration Noncompetitive Clinical Sharing Agreement was the 
underestimation of the time required to draft a clinic sharing 
curriculum and develop the curriculum into a formal training class.
    As the formal training class will not be available for attendance 
until the second quarter of fiscal year 2011, VHA's Chief Procurement 
and Logistics Office is taking interim measures to correct the 
weaknesses identified in the report. The measures include establishing 
standardized written procedures for monitoring and ensuring proper 
payment of noncompetitive clinical sharing contracts and the creation 
of a mandated interim training initiative for all contracting officers 
and contracting officer technical representatives. The training will be 
completed by August 31, 2010.

    Question 3: The OIG talked about the two reports on reusable 
medical equipment and indicated that at the August 2009 followup 
review, 129 facilities were compliant with respect to SOPs and 128 had 
appropriate documentation of demonstrated competence. Yet in March 
2010, the IG issued a report (Healthcare Inspection Patient Safety 
Issues VA Caribbean Healthcare System San Juan, Puerto, Rico Report 
Number 09-03055-103, 3/16/2010) about reusable medical equipment 
problems at three sites in Puerto Rico. How can this happen?

    Response: Office of Inspector General (OIG) published a report on 
June, 16, 2009, ``Use and Reprocessing of Flexible Fiberoptic 
Endoscopes at VA Medical Facilities.'' During the inspections related 
to this report, OIG found that several VHA medical facilities had 
deviated from recommended procedures in the reprocessing of endoscopes. 
On September 17, 2009, OIG issued the report, ``Followup Colonoscope 
Reprocessing at VA Medical Facilities.'' OIG indicated that this report 
provided results from August 2009 inspections of all facilities not 
previously inspected in relation to the June 2009 report and a followup 
for facilities previously found to be not compliant with Directive 
2009-004, Use and Reprocessing of Reusable Medical Equipment in 
Veterans Health Administration Facilities. The September 2009 report 
specified that the August 2009 inspections were limited to colonoscope 
reprocessing. This report found that among the 129 facilities inspected 
in August, all 129 of those inspected were compliant with respect to 
the OIG's review about standard operating procedures while 128 had 
adequate documentation of demonstrated competence for reprocessing 
staff. The VA Caribbean Healthcare System in San Juan, Puerto Rico, was 
one of the 129 facilities visited by the OIG on August 5, 2009, for the 
followup review, and the OIG did not indicate any concerns in the scope 
of their review.
    According to the reports, the scope of the March 2010 report, 
``Patient Safety Issues, VA Caribbean Healthcare System, San Juan, 
Puerto Rico,'' differed from the OIG's 2009 review of colonoscope 
reprocessing. The March 2010 report involving Puerto Rico was a result 
of an OIG Hotline call that prompted a visit on August 25-28, 2009, to 
the VA Caribbean Healthcare System. This report did not specifically 
address colonoscope reprocessing that was addressed in the June 2009, 
and September 2009 reports. The report addressed several issues such as 
training of staff, equipment concerns, and processes that the facility 
had identified previously and were already working to correct prior to 
the August 2009 site visit as follows:

      July 2009: The Veterans Integrated Service Network (VISN) 
8 Reusable Medical Equipment (RME) Committee conducted a site visit/
review and made recommendations to further enhance the San Juan RME 
program.
      July 2009: The VA Caribbean Healthcare System aligned the 
RME Committee under the leadership of the Associate Director for 
Patient Care Services and changed its membership. Committee Members 
underwent a comprehensive orientation on the purpose and expectation of 
the RME Committee.
      July/August 2009: Staff involved in the cleaning and 
reprocessing of RME underwent retraining and the recertification of 
competencies. RME orientations were held with Service Chiefs outlining 
their responsibilities. Leadership conducted inspections at RME pre-
cleaning and reprocessing sites.

    Recently, during the week of June 7, 2010, the VA Caribbean 
Healthcare System completed their tri-annual unannounced Joint 
Commission survey. The Joint Commission conducted a focused review on 
reusable medical equipment during this survey and had no findings.

    Question 4: If the Office of Inspector General made recommendations 
to fix the Fiduciary Program in a 2006 audit, why did they find similar 
problems in a 2010 audit? It would seem that veterans who need 
fiduciaries to manage their funds are among the most vulnerable of 
veterans.

    Response: VA agrees that beneficiaries who need fiduciaries to 
manage their funds are among the most vulnerable veterans. VA is 
committed to strengthening the program and safeguarding the welfare of 
veterans and survivors with fiduciaries.
    Although VA concurred in the findings of the report, the Acting 
Under Secretary for Benefits comments indicated that we continued to 
have serious concerns about the quality of the report.
    VA has made significant progress since 2006. The current report 
identified four recommendations as similar dealing with documenting 
receipts, staffing, training and the fiduciary IT system FBS. Here is 
an update on each recommendation and the actions taken.

      Documentation of receipts: Conducted a training 
conference for Legal Instruments Examiners from all regional offices, 
providing in-depth training in areas including account audits, estate 
administration, misuse identification, and surety bonds;
      Completed a total revision, reorganization, and update of 
the Legal Instruments Program Guide; and
      Released Fast Letter 07-12, Quarterly Review of Selected 
Fiduciary Accounting Work Products to further monitor fiduciaries that 
are required to submit accountings; and verified and updated all estate 
values in the Fiduciary Beneficiary System, and required annual updates 
in the future.

    The IG's most recent report expressed their view that more can be 
done. VA concurred in the finding and strengthened policy guidance in 
Fast Letters dealing with fund usage; misuse allegation review, 
investigation and determination; collection of Social Security numbers 
and taxpayer identification numbers; and onsite reviews. Policy 
guidance was also updated to require a Legal Instruments Examiner to 
obtain receipts for any item, regardless of the amount or its inclusion 
in the fund Usage Agreement, if documentation is determined necessary.
    C&P Service further strengthened the program by deploying improved 
oversight of allegations on the misuse of beneficiary funds. Effective 
fiscal year 2010, C&P Service Fiduciary Staff is required to complete 
an annual Systematic Analysis of Operations of the misuse process. This 
analysis will identify the following: areas in which regional offices 
are following prescribed policies and procedures; areas in which 
current VBA policies and procedures may be enhanced; and any weaknesses 
in the fiduciary program as it relates to misuse. In addition, the C&P 
Service Fiduciary Site Survey Protocol was amended to include a review 
of all documentation pertaining to any misuse issues addressed.
    The IG's second finding was that a fiduciary program staffing model 
was needed to assure that the Department identifies the needed 
resources to conduct the program. An analysis of current staffing and 
workload has been completed and a proposed staffing model has been 
developed to be used as a guide developed and are currently under 
review in VBA.
    With respect to training, the third area of ``similar'' findings, 
the IG focused on their preference for centralized training for Legal 
Instrument Examiners.
    C&P Service deployed a comprehensive training program for all 
fiduciary activity personnel nationwide. This is a week-long training 
program to provide clear and consistent training that is delivered by 
C&P Fiduciary Staff. Additionally, a National Fiduciary Managers 
Training Conference was conducted in June 2010. As noted in our 
response to the report, VBA conducts monthly training calls with the 
fiduciary staff around the country. We believe these calls are 
effective training tools and we are providing appropriate guidance. The 
true measure of training is the outcome not the format. We will 
continue to conduct training of our staff to improve effectiveness.
    The fourth area of similar findings relates to the current FBS 
system. VBA convened a workgroup to evaluate the current electronic 
fiduciary case management system and to provide recommendations for 
either enhancements or a replacement system. The workgroup presented 
its findings and recommendations in June 2010. Based on those findings 
we have concluded that the current system should be replaced. A Request 
for Information (RFI) has been prepared and it is planned for release 
by September 30, 2010. That RFI seeks industry recommendations on how 
best to design the replacement system to meet the needs of the 
fiduciary program. Input from that RFI will inform a solicitation for 
development of the program.

    Question 5: Regarding the two administrative investigations reports 
that were released in August 2009 (while it has only been 10 months) at 
this rate of 3 recommendations closed out of 45, we don't think you 
will close all recommendations out within a year. What is the delay and 
why have you not acted on the egregious behavior of several senior 
officials?

    Response: The VA Office of Information & Technology (OI&T) has 
initiated corrective action on all recommendations and completed 
corrective actions on a number of recommendations detailed in the two 
administrative investigation reports. OI&T has conferred with the 
Office of Human Resources and Administration and the General Counsel on 
the recommendations, and made various determinations based on the 
advice given to each of the claims.
    In regards to Investigation Report No. 09-1123-195, 
``Administrative Investigation Misuse of Position, Abuse of Authority, 
and Prohibited Personnel Practices Office of Information & Technology 
Washington, DC'' the former Deputy Assistant Secretary for Information 
Protection and Risk Management, a Senior Executive and the primary 
subject of the report, was removed from the Department of Veterans 
Affairs. Additionally, appropriate administrative actions ranging from 
admonishment to suspension were taken against various management 
officials for engaging in prohibited personnel practices. In fact, 8 of 
the 11 recommendations presented in this report are now closed. OI&T 
continues to update OIG and is working toward completing the tasks that 
are necessary to close the remaining recommendations.
    In regards to Investigation Report No. 09-1123-0196, 
``Administrative Investigation--Nepotism, Abuse of Authority, Misuse of 
Position, Improper Hiring, and Improperly Administered Awards, OI&T, 
Washington, DC'' the former Director, OI&T Human Resources Operations, 
a primary subject of the investigation, was removed from his 
supervisory position and demoted to a position that does not require 
any direct or indirect human resources responsibility. Several of the 
OIG recommendations included collecting funds from employees whose 
college tuition was funded by the VA. More specifically, six 
nonsupervisory employees were identified as having received funds 
improperly expended to pay for their academic degree. The Office of the 
General Counsel (OGC) is currently conducting a review of this issue 
and will soon provide OI&T with a legal opinion regarding the 
employees' liability. OI&T will forward this information to OIG for 
final resolution. In the meantime, OI&T issued new guidelines 
clarifying the approval of government funds for college tuition.
    Also, Investigation Report No. 09-1123-0196 identified 10 
individuals that were erroneously appointed and/or appointed at a rate 
above the minimum. OI&T has established a procedure for requesting 
above minimum rate for new appointees, and continues to confer with the 
Office of Human Resources & Administration so that the appointment 
status of all OI&T employees is in accordance with the law.
    The Assistant Secretary for OI&T has implemented a new policy 
regarding the authorization of awards and bonuses over $2,000, and any 
award amount where the employee's prior cumulative awards exceed $5,000 
in any fiscal year. The new policy requires that any award 
recommendation over $2,000 must be reviewed by the OI&T Office of Human 
Capital Management--this includes all types of awards, i.e. monetary 
awards, honor awards, and nonmonetary awards.
    OI&T continues to update OIG and is working toward completing the 
tasks that are necessary to close all remaining recommendations.

    Question 6: Why will it take 2 years to complete the 
standardization of coronary stents and why has the Veterans Health 
Administrations only started surveying facilities about the aortic 
valves and thoracic grafts when this recommendation was made in 
September of 2007?

    Response: In 2007, the VA National Director of Surgery determined 
that there was no need to pursue a national contract for aortic valves 
and thoracic grafts based upon an independent assessment of relevant 
surgical volumes for aortic valve and thoracic aortic graft procedures. 
In November 2008, a new National Director of Surgery was appointed and 
in July, 2009 an internal review identified that a formal response to 
the 2007 OIG recommendations had not been submitted. The National 
Director of Surgery initiated a survey of the field, and two Integrated 
Product Teams (IPT) were established in October 2009. The teams 
reviewed survey data, information from the VA Surgical Quality 
Improvement Program, and prosthetics data. The findings of the IPT 
reviews are summarized below:

      With regard to aortic valve implant devices, the IPT 
determined that a national contract and Blanket Purchase Agreement 
(BPA) was not recommended. The basis for this decision considered the 
complexity of the clinical decisions resulting in vendor choice, the 
variety and availability requirements of implant types (mechanical, 
bioprosthetic, etc) in relationship to the complexity of the disease 
being treated, the relatively low number of devices implanted by the 
VHA, and the established safety of the devices currently utilized.
      With regard to thoracic aorta grafts, the IPT did not 
recommend either a national contract or BPA. The basis for this 
decision was the overall low number of thoracic aortic grafts being 
implanted by the VHA, the complexity of the disease process requiring a 
choice of available and emerging vendor products, and the established 
safety of the devices currently utilized.

    The recommendations of the Aortic Valve IPT and the Thoracic Aortic 
Graft IPT were submitted to and accepted by the National Director of 
Surgery. The National Director of Surgery submitted a declarative 
statement, consistent with the findings of the IPTs, to the OIG for 
review and consideration for closing the recommendation.

                                 
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