VA and DOD Health Care: Opportunities to Maximize Resource	 
Sharing Remain (20-MAR-06, GAO-06-315). 			 
                                                                 
The National Defense Authorization Act for Fiscal Year 2003	 
required that the Departments of Veterans Affairs (VA) and	 
Defense (DOD) implement programs referred to as the Joint	 
Incentive Fund (JIF) and the Demonstration Site Selection (DSS)  
to increase health care resource sharing between the departments.
The act requires GAO to report on (1) VA's and DOD's progress in 
implementing the programs. GAO also agreed with the committees of
jurisdiction to report on (2) the actions taken by VA and DOD to 
strengthen resource sharing and opportunities to improve upon	 
those actions and (3) whether VA and DOD performance measures are
useful for evaluating progress toward achieving health care	 
resource-sharing goals. 					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-315 					        
    ACCNO:   A49397						        
  TITLE:     VA and DOD Health Care: Opportunities to Maximize	      
Resource Sharing Remain 					 
     DATE:   03/20/2006 
  SUBJECT:   Health care planning				 
	     Health care programs				 
	     Health information architecture			 
	     Health resources utilization			 
	     Interagency relations				 
	     Performance management				 
	     Performance measures				 
	     Program evaluation 				 
	     Strategic planning 				 
	     Program implementation				 
	     Demonstration Site Selection			 
	     Joint Incentive Fund				 

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GAO-06-315

     

     * Results in Brief
     * Background
          * Congressional Initiatives to Increase Health Care Resource S
          * Guidance Related to Strategic Planning and Performance Measu
     * Although JIF and DSS Programs Experienced Start-up Challenge
          * JIF Projects Slowly Becoming Operational
          * Most Demonstration Site Projects Are Operational
     * VA and DOD Have Taken Actions to Strengthen Health Care Reso
          * Actions Taken to Enhance Health Care Resource Sharing
               * Joint Executive Council
               * North Chicago Federal Health Care Facility
               * Joint Strategic Plan
          * Opportunities to Strengthen Health Care Resource Sharing Rem
               * System for Tracking VA and DOD Purchased Services
               * Nationwide Market Analysis
               * Dissemination of Results from the Joint Assessment Study
               * Beneficiary Care
               * Standardized Inpatient Reimbursement Rates
               * OMB's Evaluation of VA and DOD Sharing Activities
     * VA and DOD Lack Useful Performance Measures to Evaluate Heal
     * Conclusions
     * Recommendations for Executive Action
     * Agency Comments and Our Evaluation
     * GAO's Mission
     * Obtaining Copies of GAO Reports and Testimony
          * Order by Mail or Phone
     * To Report Fraud, Waste, and Abuse in Federal Programs
     * Congressional Relations
     * Public Affairs

Report to Congressional Committees

United States Government Accountability Office

GAO

March 2006

VA AND DOD HEALTH CARE

Opportunities to Maximize Resource Sharing Remain

VA and DOD Health Care Resource Sharing VA and DOD Health Care Resource
Sharing VA and DOD Health Care Resource Sharing VA and DOD Health Care
Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD Health
Care Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD
Health Care Resource Sharing VA and DOD Health Care Resource Sharing VA
and DOD Health Care Resource Sharing VA and DOD Health Care Resource
Sharing VA and DOD Health Care Resource Sharing VA and DOD Health Care
Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD Health
Care Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD
Health Care Resource Sharing VA and DOD Health Care Resource Sharing VA
and DOD Health Care Resource Sharing VA and DOD Health Care Resource
Sharing VA and DOD Health Care Resource Sharing VA and DOD Health Care
Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD Health
Care Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD
Health Care Resource Sharing VA and DOD Health Care Resource Sharing VA
and DOD Health Care Resource Sharing VA and DOD Health Care Resource
Sharing VA and DOD Health Care Resource Sharing VA and DOD Health Care
Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD Health
Care Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD
Health Care Resource Sharing VA and DOD Health Care Resource Sharing VA
and DOD Health Care Resource Sharing VA and DOD Health Care Resource
Sharing VA and DOD Health Care Resource Sharing VA and DOD Health Care
Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD Health
Care Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD
Health Care Resource Sharing VA and DOD Health Care Resource Sharing VA
and DOD Health Care Resource Sharing VA and DOD Health Care Resource
Sharing VA and DOD Health Care Resource Sharing VA and DOD Health Care
Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD Health
Care Resource Sharing VA and DOD Health Care Resource Sharing VA and DOD
Health Care Resource Sharing VA and DOD Health Care Resource Sharing VA
and DOD Health Care Resource Sharing VA and DOD Health Care Resource
Sharing

GAO-06-315

Contents

Letter 1

Results in Brief 3
Background 5
Although JIF and DSS Programs Experienced Start-up Challenges, More Than
Half of the Projects Are Operational 10
VA and DOD Have Taken Actions to Strengthen Health Care Resource Sharing,
but Important Opportunities Remain 18
VA and DOD Lack Useful Performance Measures to Evaluate Health Care
Resource Sharing 28
Conclusions 29
Recommendations for Executive Action 30
Agency Comments and Our Evaluation 30
Appendix I Scope and Methodology 33
Appendix II Joint Incentive Fund Program 35
Appendix III Demonstration Site Selection Projects for Fiscal Years 2003
through 2007 39
Appendix IV Description of VA's and DOD's Councils, Committees, and
Workgroups 43
Appendix V Comments from the Department of Veterans Affairs 47
Appendix VI Comments from the Department of Defense 49
Related GAO Products 53

Tables

Table 1: JIF Program Funding 13
Table 2: DSS Program Funding 16

Figures

Figure 1: JIF Program Implementation Timeline 12
Figure 2: DSS Program Implementation Timeline 18
Figure 3: VA/DOD JEC Organizational Chart, as of October 2005 20

Abbreviations

BEC Benefits Executive Council BHIE Bidirectional Health Information
Exchange BRAC base realignment and closure CARES Capital Asset Realignment
for Enhanced Services CCQAS Centralized Credentials Quality Assurance
System CHCS I Composite Health Care System I CHCS II Composite Health Care
System II (renamed the Armed Forces Health Longitudinal Technology
Application in November 2005) CMAC Civilian Health and Medical Program of
the Uniformed Services (CHAMPUS) Maximum Allowable Charge CPC VA/DOD
Construction Planning Committee DOD Department of Defense DSS
Demonstration Site Selection GME graduate medical education GPRA
Government Performance and Results Act of 1993 HEC Health Executive
Council JEC Joint Executive Council JIF Joint Incentive Fund LDSI
Laboratory Data Sharing Initiative MRI magnetic resonance imaging MTF
military treatment facility NDAA National Defense Authorization Act for
Fiscal Year 2003 OMB Office of Management and Budget PMA President's
Management Agenda VA Department of Veterans Affairs VAMC VA medical center
VISTA Veterans Health Information Systems and Technology Architecture

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United States Government Accountability Office

Washington, DC 20548

March 20, 2006

Congressional Committees

Combined, the Department of Veterans Affairs (VA) and Department of
Defense (DOD) provided health care services to about 13.5 million
beneficiaries in fiscal year 2004 at a cost of about $57 billion-$26.8
billion for VA and $30.4 billion for DOD.1 For decades the Congress has
encouraged VA and DOD to increase their resource-sharing activities to
achieve the most cost-effective use of health care resources and deliver
health care services more efficiently. Further, the President's Management
Agenda (PMA) contains an initiative that specifically focuses on improving
coordination of VA and DOD programs and systems by increasing the sharing
of services that will lead to reduced cost and increased quality of care.

The Congress included in the National Defense Authorization Act for Fiscal
Year 2003 (NDAA) a provision that VA and DOD implement two programs-the
joint incentive program2 and the demonstration program3-to increase the
amount of health care resource sharing taking place between VA and DOD. In
addition, the act required that we report on VA and DOD's progress in
implementing the programs and, as agreed with the committees of
jurisdiction, the extent projects funded under the programs are
operational.4 Further, the committees of jurisdiction asked us to describe
the actions taken by VA and DOD to strengthen the sharing of health care
resources between the two departments and opportunities to improve upon
these actions as well as to assess whether VA and DOD performance measures
are useful for evaluating progress toward achieving health care
resource-sharing goals.

1VA provided health care to an estimated 5.2 million of its 7.4 million
enrolled beneficiaries in fiscal year 2004. DOD provided health care to
approximately 8.3 million of the estimated 9.2 million beneficiaries who
were eligible for DOD health care in fiscal year 2004.

2Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub.
L. No. 107-314, S: 721, 116 Stat. 2458, 2589-95, required VA and DOD to
establish a joint incentive program to identify and provide incentives to
implement, fund, and evaluate creative health care coordination and
sharing initiatives between VA and DOD. VA and DOD refer to this program
as the Joint Incentive Fund program.

3Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub.
L. No. 107-314, S: 722, 116 Stat. 2458, 2595-99, required VA and DOD to
establish the Health Care Resources Sharing and Coordination Project to
serve as a test for evaluating the feasibility, advantages, and
disadvantages of programs designed to improve the sharing and coordination
of health care resources between VA and DOD. VA and DOD refer to this
program as the Demonstration Site Selection program.

To assess VA's and DOD's progress in implementing the Joint Incentive Fund
(JIF) and Demonstration Site Selection (DSS) programs, we conducted site
visits at six project sites and interviewed department officials
responsible for the development of each of the projects.5 In addition, we
contacted VA and DOD officials from seven additional sites.6 For all of
the sites, we reviewed project documentation for JIF projects selected in
fiscal year 2004 and DSS projects that consisted of a detailed description
of the project, a timeline for development and implementation, associated
risks, costs, potential cost savings (if applicable), staffing
requirements, and quarterly progress reports for each project.7

To obtain information on the actions taken by VA and DOD to strengthen the
sharing of health care resources, we spoke with officials from VA's Office
of Policy, Planning, and Preparedness and the Veterans Health
Administration-including the VA/DOD Liaison Office and VA medical center
(VAMC) staff at several locations engaged in the sharing of health care
resources. We interviewed officials from DOD's TRICARE Management
Activity;8 the DOD/VA Program Coordination Office; the military services'
surgeons general offices, which coordinate sharing activities; and several
military treatment facilities (MTF) engaged in the sharing of health care
resources. We also interviewed officials from Joint Executive Council
(JEC) committees and Health Executive Council (HEC) workgroups9 to
determine what policies, procedures, and guidance have been promulgated to
promote health care resource sharing and coordination between VA and DOD.
Further, we spoke with officials from the Office of Management and Budget
(OMB). We analyzed the charters and briefing updates for each JEC
committee and HEC workgroup and reviewed OMB's evaluation of the
departments' efforts to implement the PMA initiative. In addition, we
analyzed workload, cost, and sharing agreement data between VA and each
branch of military service.

4We have previously reported on the Joint Incentive Fund program in fiscal
years 2004 and 2005. See GAO, DOD and VA Health Care: Incentives Program
for Sharing Resources, GAO- 04-495R (Washington, D.C.: Feb. 27, 2004), and
DOD and VA Health Care: Incentives Program for Sharing Health Resources,
GAO-05-310R (Washington, D.C.: Feb. 28, 2005).

5We visited VA and DOD medical facilities at six sites-Augusta, Georgia;
Honolulu, Hawaii; North Chicago, Illinois; El Paso, Texas; San Antonio,
Texas; and Puget Sound, Washington.

6Those seven additional sharing sites were located in the following areas:
Alaska, California, Kansas, New York, North Dakota, South Carolina, and
Virginia.

7Under the JIF program, 12 projects were selected for implementation for
fiscal year 2004, but 1 project was removed due to legal concerns. For
fiscal year 2005, 18 JIF projects were selected, but 1 project was removed
due to asset realignment issues. Under the DSS program, 8 projects were
selected.

8DOD provides health care through TRICARE-a regionally structured program
that uses civilian contractors to maintain provider networks to complement
health care services provided at MTFs.

To assess whether VA and DOD performance measures are useful, we
interviewed senior VA and DOD officials about how the sharing of health
care resources is measured. In addition, we analyzed the departments'
Joint Strategic Plan for Fiscal Year 2005, the departments' JEC annual
report to the Congress on sharing, and each department's individual
strategic plan. We also obtained and reviewed VA and DOD policies
governing sharing and reviewed relevant department reports, including
those from the DOD Inspector General and DOD contractors, along with our
prior work. We performed our work from January 2005 through March 2006 in
accordance with generally accepted government auditing standards. For more
details on our scope and methodology, see appendix I.

                                Results in Brief

VA and DOD are making progress in implementing two programs required by
the Congress in December 2002 to encourage health care resource sharing
and collaboration between VA and DOD-JIF and DSS. While JIF projects
experienced challenges because of delays resulting from the initial
absence of funding mechanisms and, in some cases, the need for additional
acquisition and construction approvals, as of December 2005, 7 of 1110
selected 2004 projects were operational. The DSS program also experienced
challenges as some sites reported difficulty putting together project
submission packages, noting confusion over the timelines and approval
process as well as frustration with the amount of paperwork and rework
required. Nonetheless, as of December 2005, 7 of the 8 DSS projects were
operational.11 However, JEC and HEC have not established a plan to measure
and evaluate the advantages and disadvantages of DSS projects-information
that will be useful for determining whether projects that produce cost
savings or enhance health care delivery efficiencies can be replicated
systemwide.

9VA and DOD established JEC along with four additional interagency
councils/committees to further facilitate collaboration between the
departments. HEC and its workgroups, which are under the purview of JEC,
were developed as a mechanism to specifically further the sharing of
health care resources between VA and DOD.

10Originally 12 projects were selected; however, 1 project was removed due
to legal concerns. VA and DOD's offices of general counsel determined
after the selection process that VA and DOD did not possess legal
authority to pursue the project. Subsequently, this project was removed
from the program and funding was reallocated.

VA and DOD are creating mechanisms that support the potential to increase
collaboration, sharing, and coordination of management and oversight of
health care resources and services. The departments have taken steps to
create interagency councils and workgroups to facilitate the sharing and
collaboration of information, establish working relationships among their
leaders, and develop communication channels to further health care
resource sharing. In addition, the departments have worked together to
develop a Joint Strategic Plan outlining six goals. However, JEC and HEC
have not seized upon a number of opportunities to further health care
resource sharing, collaboration, and coordination. For example, JEC and
HEC have not developed a system for collecting, tracking, and monitoring
information on the health care services that each department contracts for
from the private sector. Such a system could promote systemwide cost
savings and efficiencies as the departments could exchange services from
one another or possibly obtain better contract pricing through joint
purchasing of services. In one case in northern California, VA and the Air
Force were independently contracting with private providers for dialysis
services-information that is not stored in a database to be shared with
all VA and DOD health care facilities. During discussions with each other,
local VA and Air Force officials recognized they were paying a high cost
for dialysis services, got together to analyze their costs and determine
the best approach for obtaining these services, and worked together to
open a joint dialysis clinic. In this case, had VA and the Air Force known
about their individual contracting arrangements, they could have combined
their contracting needs and negotiated services at a lower cost or opened
a joint clinic earlier. Furthermore, JEC and HEC have not directed that a
joint nationwide market analysis be conducted to obtain information on
what their combined future workloads will be in the areas of services,
facilities, and patient needs.

11In their technical comments to this report the departments stated that
all eight projects are operational. However, a project in Hawaii is not
fully operational. The goal of that project is to conduct and execute the
findings of studies in four key areas: (1) Health Care Forecasting, Demand
Management, and Resource Tracking; (2) Referral Management and Fee
Authorization; (3) Joint Charge Master Based Billing; and (4) Document
Management. The project is not fully operational since, as DOD reported on
February 27, 2006, the policies and procedures have only been updated in
one of the four areas-Referral Management and Fee Authorization.

VA and DOD lack performance measures that would be useful for evaluating
how well the departments are achieving their health care resource-sharing
goals. For example, of the 30 measures contained in the departments' joint
strategic plan, 5 that were called for in the plan were not developed at
the time the plan was issued and 11 lacked long-term or longitudinal
information. For the remaining 14 that require periodic measurement, there
was variation in the rigor or specificity in the types of data to be
collected or the analysis to be performed.

We are recommending that the Secretaries of Veterans Affairs and Defense
direct JEC and HEC to take two actions to advance health care
resource-sharing activities between the departments. In commenting on a
draft of this report, VA and DOD concurred with our recommendations.

                                   Background

VA operates one of the nation's largest health care systems. In fiscal
year 2004, VA provided health care to approximately 5.2 million veterans
at 157 VAMCs and almost 900 outpatient clinics nationwide.12 In fiscal
year 2004, DOD provided health care to approximately 8.3 million
beneficiaries,13 including active duty personnel and retirees, and their
dependents. DOD health care is provided at more than 530 Army, Navy, and
Air Force MTFs worldwide and is supplemented by TRICARE's network of
civilian providers. Through its TRICARE contracts, DOD uses civilian
managed health care support contractors to develop networks of primary and
specialty care providers and to provide other customer service functions,
such as claims processing. DOD's policy encourages inclusion of all VA
health care facilities in its networks.

12In fiscal year 2004, there were approximately 7.4 million veterans
enrolled to receive care from VA. However, not all enrollees seek health
care from VA.

13In some cases, DOD beneficiaries may also be eligible for health care
benefits from VA.

Health care expenditures for VA and DOD are increasing. VA's expenditures
have grown-from about $12 billion in fiscal year 199014 to about $26.8
billion in fiscal year 2004-as an increasing number of veterans look to VA
to meet their health care needs. DOD's health care spending has gone from
about $12 billion in fiscal year 199015 to about $30.4 billion in fiscal
year 2004-in part, to meet additional demand resulting from congressional
actions to expand program eligibility for military retirees, reservists,
members of the National Guard, and their dependents, along with the
increased needs of active duty personnel involved in conflicts in
Afghanistan (Operation Enduring Freedom) and in Iraq (Operation Iraqi
Freedom). Today, VA and DOD officials are reporting that many of their
facilities are at capacity or exceeding capacity. The nature of sharing
has shifted from one of utilizing untapped resources to one of partnering
and gaining efficiencies by leveraging resources or buying power jointly.
For example, VA and DOD have achieved efficiencies and cost avoidance
through a concerted effort to jointly procure pharmaceuticals.16

Congressional Initiatives to Increase Health Care Resource Sharing

The Congress has had a long-standing interest in expanding VA and DOD
health care resource sharing. In 1982, the Congress passed the Veterans'
Administration and Department of Defense Health Resources Sharing and
Emergency Operations Act (Sharing Act).17 The act authorizes VA and DOD to
enter into sharing agreements to buy, sell, and barter health care
resources to better utilize excess capacity. The head of each VA and DOD
medical facility can enter into local sharing agreements. However, VA and
DOD headquarters officials review and approve agreements that involve
national commitments, such as joint purchasing of pharmaceuticals. VA and
DOD sharing activities have typically fallen into three categories.

           o  Local sharing agreements allow VA and DOD to take advantage of
           their facilities' capacity to provide health care by being
           providers of health services, receivers of health services, or
           both. Health services shared under these agreements can include
           inpatient and outpatient care; ancillary services, such as
           diagnostic and therapeutic radiology; dental care; and specialty
           care services, such as treatment for spinal cord injuries. Other
           examples of services shared under these agreements include support
           services, such as administration and management; research;
           education and training; patient transportation; and laundry. The
           goals of local sharing agreements are to allow VAMCs and MTFs to
           capitalize on their combined purchasing power, exchange health
           services to maximize use of resources, and provide beneficiaries
           with greater access to care.
           o  Joint venture sharing agreements, as distinguished from local
           sharing agreements, aim to avoid costs by pooling resources to
           build a new facility or jointly use an existing facility. Joint
           ventures require an integrated approach, as two separate health
           care systems must develop multiple sharing agreements that allow
           them to operate as one system at one location.
           o  National sharing initiatives are designed to achieve greater
           efficiencies, that is, to lower cost and improve access to goods
           and services when they are acquired on a national level rather
           than by individual facilities-for example, VA and DOD's efforts to
           jointly purchase pharmaceuticals and surgical instruments for
           nationwide distribution.

           Later, in January 2002, the Congress passed legislation requiring
           VA and DOD to conduct a comprehensive assessment that would
           identify and evaluate changes to their health care delivery
           policies, methods, practices, and procedures in order to provide
           improved health care services at reduced cost to the taxpayer.18
           To facilitate this, VA and DOD hired a contractor (at a cost of
           $2.5 million) to conduct the Joint Assessment Study that was
           completed on December 31, 2003.19 Unlike previous studies
           conducted by VA and DOD, the Joint Assessment Study combined VA
           and DOD beneficiary populations into a single market by geographic
           site.20 The contractor examined collaboration and sharing
           opportunities in three VA and DOD market areas: Hawaii; the Gulf
           Coast (Mississippi to Florida); and Puget Sound, Washington.
           Specifically, the study included a detailed independent review of
           options to colocate or share facilities and care providers in
           areas where duplication and some excess capacity may exist;
           optimize economies of scale through joint procurement of supplies
           and services; and partially or fully integrate VA and DOD systems
           to provide tele-health services, provider credentialing, cardiac
           surgical programs, rehabilitation services, and administrative
           services.

           The NDAA, passed in December 2002, required that VA and DOD
           implement two programs-JIF and DSS-to increase the amount of
           health care resource sharing taking place between VA and DOD.
           Under JIF, the departments are to identify and provide incentives
           to implement, fund, and evaluate creative health care coordination
           and sharing initiatives. Under DSS, the departments are to select
           projects to serve as a test for evaluating the feasibility,
           advantages, and disadvantages of programs designed to improve the
           sharing and coordination of health care resources. The NDAA also
           required VA and DOD jointly to develop and implement guidelines
           for a standardized, uniform payment and reimbursement schedule for
           selected health care services. In response, the departments
           established a standardized reimbursement methodology effective
           October 2003, between VA and DOD medical facilities through a
           memorandum of agreement implementing standardized outpatient
           billing rates based on the discounted Civilian Health and Medical
           Program of the Uniformed Services (CHAMPUS) Maximum Allowable
           Charges (CMAC)21 schedule.

           The NDAA also required VA and DOD to develop and publish a joint
           strategic plan to shape, focus, and prioritize the coordination
           and sharing efforts within the departments and incorporate the
           goals and requirements of the joint strategic plan into the
           strategic plan of each department.22 We have reported that there
           is no more important element in results-oriented management than
           an agency's strategic planning effort.23 This is the starting
           point and foundation for defining what the department seeks to
           accomplish, identifying the strategies it will use to achieve
           desired results, and then determining how well it succeeds in
           reaching goals and achieving objectives. We also previously
           reported that traditional management practices involve the
           creation of long-term strategic plans and regular assessments of
           progress toward achieving the plans' stated goals.24

           Moreover, the Government Performance and Results Act of 1993
           (GPRA) requires agencies to set goals, measure performance, and
           report on their accomplishments.25 Performance measures are a key
           tool to help managers assess progress toward achieving the goals
           or objectives stated in their plans. They are also an important
           accountability tool to communicate department progress to the
           Congress and the public.

           Program performance measurement is commonly defined as the regular
           collection and reporting of a range of data, including a program's

           o  inputs, such as dollars, staff, and materials;
           o  workload or activity levels, such as the number of applications
           that are in process, usage rates, or inventory levels;
           o  outputs or final products, such as the number of children
           vaccinated, number of tax returns processed, or miles of road
           built;
           o  outcomes of products or services, such as the number of cases
           of childhood illnesses prevented or the percentage of taxes
           collected; and
           o  efficiency, such as productivity measures or measures of the
           unit costs for producing a service.

           Other data might include information on customer satisfaction,
           program timeliness, and service quality. Managers can use the data
           that performance measures provide to help them manage in three
           basic ways: to account for past activities, to manage current
           operations, or to assess progress toward achieving planned goals
           and objectives. When used to look at past activities, performance
           measures can show the accountability of processes and procedures
           used to complete a task, as well as program results. When used to
           manage current operations, performance measures can show how
           efficiently resources, such as dollars and staff, are being used.
           Finally, when tied to planned goals and objectives, performance
           measures can be used to assess how effectively a department is
           achieving the goals and objectives stated in its long-range
           strategic plan.

           OMB, through the PMA released in the summer of 2001, has
           emphasized improving government performance through governmentwide
           and agency-specific initiatives. OMB is responsible for overseeing
           the implementation of the PMA and tracking its progress. According
           to OMB's mission statement, its role is to help improve
           administrative management, develop better performance measures and
           coordinating mechanisms, and reduce any unnecessary burdens on the
           public. For each initiative, OMB has established "standards for
           success" and rates agencies' progress toward meeting these
           standards. Among the PMA initiatives, one specifically focuses on
           improving coordination of VA and DOD programs and systems by
           increasing the sharing of services that will lead to reduced cost
           and increased quality of care.

           While JIF projects experienced challenges caused by delays
           resulting from the initial absence of funding mechanisms and, in
           some cases, the need for additional acquisition and construction
           approvals, as of December 2005, 7 of 1126 selected 2004 projects
           were operational. DSS also experienced challenges as some sites
           reported difficulty putting together project submission packages,
           noting confusion over the timelines and approval process as well
           as frustration with the amount of paperwork and rework required.
           Nonetheless, as of December 2005, 7 of the 8 DSS projects were
           operational.

           The JIF program is to identify, fund, and evaluate creative health
           care coordination and sharing initiatives. Under the program, VA
           and DOD solicit proposals from their program offices, VAMCs, or
           MTFs for project initiatives at least annually. Legislation
           requires that the Secretaries of VA and DOD each contribute a
           minimum of $15 million from each department's appropriation into a
           no-year27 account established in the U.S. Treasury for each of
           fiscal years 2004 through 2007. From December 2002 through May
           2005, VA and DOD developed JIF program guidelines, solicited and
           reviewed proposals, established an account within the U.S.
           Treasury for funding projects, and selected and funded projects. A
           memorandum of agreement entered into by VA and DOD assigned the
           Financial Management Workgroup-a group established by HEC-as the
           administrator of JIF. The Financial Management Workgroup has
           oversight responsibility for the implementation, monitoring, and
           evaluation of the JIF program. The members of the workgroup review
           concept proposals for selection and provide their recommendations
           to HEC for final approval. They developed the following criteria28
           to be used for evaluating the concept proposals and selecting the
           final projects:

           o  support DOD and VA's joint long-term approach to meeting the
           health care needs of their beneficiary populations;
           o  improve beneficiary access;
           o  ensure exportability to other facilities;
           o  maximize the number of beneficiaries who would benefit from the
           initiative;
           o  result in cost savings or cost avoidance;
           o  develop in-house capability at a lesser cost for services now
           obtained by contract; and
           o  demonstrate that the project would be self-sustaining within 2
           years. If funding is needed beyond 2 years, the local facility,
           the Surgeon General's office, or the Veterans Integrated Service
           Network29 must agree to provide it.

           VA and DOD officials completed their review of 58 concept
           proposals that were submitted for the fiscal year 2004 funding
           cycle and ultimately selected 12 projects (subsequently reduced to
           11) for funding in November 2004. VA and DOD issued a request for
           project proposals for the fiscal year 2005 funding cycle in
           November 2004. Submissions were due by January 2005, and according
           to VA and DOD officials, 56 concept proposals were submitted. VA
           and DOD reviewed the concept proposals in September 2005 and
           selected 18 for funding (subsequently reduced to 17).30 See figure
           1 for a timeline and associated events affecting the
           implementation of the JIF program.

           Figure 1: JIF Program Implementation Timeline

           aOriginally 12 projects were selected; however, 1 project was
           removed due to legal concerns.

           bOriginally 18 projects were selected; however, 1 project was
           removed due to asset realignment issues.

           Beginning in fiscal year 2004, each department as required by law,
           began contributing $15 million annually into the U.S. Treasury
           account established for funding JIF.31 VA and DOD report that as
           of January 2006, $54.3 million of the $90 million they contributed
           has been allocated to specific projects, and $5.3 million has been
           obligated. (See table 1.) For the 2004 JIF projects, project
           selection took place in August 2004. Initial funding for some of
           the projects began in November 2004. However, it was not until May
           2005-about 2 1/2 years after the program was established-that
           initial funding was provided to the last of the approved projects.

           Table 1: JIF Program Funding

           Sources: VA and DOD.

           aFor the purposes of this report, allocated represents the amount
           of money designated for specific projects.

           bFor the purposes of this report, obligated represents the amount
           of allocated funds that have been committed to project activities.

           cOf the $39.0 million, $7.7 million was allocated toward year 2
           funding for 2004 projects and the remaining $31.3 million was
           allocated for 2005 projects.

           According to officials from both departments, funding delays
           occurred for a number of reasons. VA and DOD needed time to set up
           the U.S. Treasury account and to establish funding mechanisms to
           facilitate the transfer of funds from the account to individual
           VAMCs or MTFs. Further, funding could not be provided until
           project officials and the surgeons general for DOD's Departments
           of the Army, Navy, and Air Force completed required administrative
           actions. These actions included obtaining assurance from the
           surgeons general that service-specific department protocols for
           disbursing funds were followed and obtaining certification from
           project officials that projects would be self-sustaining within 2
           years.

           While all approved fiscal year 2004 projects have now received
           funding, those still in the development phase are in the process
           of acquiring needed equipment, staff, or space. In addition to the
           delays caused by VA and DOD administrative processes to fund
           projects, the individual projects experienced delays for other
           reasons. For example, officials from both departments reported
           that additional approvals for acquisition of equipment and minor
           construction were needed before some projects could be initiated.
           Specifically, VA and DOD officials in North Chicago, Illinois,
           stated that in addition to the approvals required from HEC's
           Financial Management Workgroup and the Navy Surgeon General's
           Office, they were also required to seek and obtain acquisition
           approval from the National Acquisition Center for the mammography
           unit requested in their project. The officials stated that these
           three distinct approval processes for their JIF project should
           have been merged into a single approval process. Further, VA and
           DOD officials in Honolulu, Hawaii, reported that because of delays
           in obtaining acquisition approvals, pricing increases occurred,
           resulting in increased cost to the government. Initial project
           approval occurred in August 2004; however, final contract approval
           was not granted as of December 2005, over a year later.32

           As of December 2005, 4 of the 11 JIF fiscal year 2004 projects
           were still in the development stage, with 7 of 11 operational.
           Some of the projects that were operational include a joint
           dialysis unit located at Travis Air Force Base, Fairfield,
           California, that according to VA and DOD officials, improves
           access for VA and DOD beneficiaries and lessens the cost to the
           government by reducing purchased services from the private sector;
           a tele-radiology unit located at the VAMC in Spokane, Washington,
           that is providing tomography scans for DOD beneficiaries; and an
           imaging services unit at Elmendorf Air Force Base in Anchorage,
           Alaska, that allows VA and DOD to pool their imaging needs and
           provide services in-house instead of contracting for them at very
           expensive fees charged by providers in this remote area. See
           appendix II for details about JIF projects selected in fiscal
           years 2004 and 2005.

           DSS projects are piloting different approaches to sharing health
           care resources in three areas-budget and financial management,
           coordinated staffing and assignment, and medical information and
           information technology. Further, each DSS project contains
           individual goals that have the potential to promote VA and DOD
           health care resource sharing and collaboration. The objective of
           each project is aligned with VA's and DOD's strategic goal to
           jointly acquire, deliver, and improve health care services. From
           July 2003 through August 2004, VA and DOD developed DSS program
           guidelines, solicited and reviewed proposals, and began funding
           projects. Eight projects were approved by HEC in October 2003;
           project funding began in August 2004; and as of December 2005,
           seven projects were operational.

           The DSS program is to serve as a test for evaluating the
           feasibility and the advantages and disadvantages of projects
           designed to improve sharing. The Joint Facility and Utilization
           Workgroup-a group established by HEC-is responsible for DSS
           project selection and oversight. Projects selected by the
           workgroup must be approved by HEC. As required by the statute,
           there must be a minimum of three VA and DOD demonstration sites
           (projects) selected. Also, at least one project was required to be
           tested in each area.

           As required by law, each department was required to make available
           at least $3 million in fiscal year 2003, at least $6 million in
           fiscal year 2004, and at least $9 million for each subsequent year
           in fiscal years 2005 through 2007 to fund DSS projects.33 During
           fiscal year 2003 no funds were allocated or obligated to projects
           because, according to VA and DOD officials, the business plans for
           the sites had not been finalized. During fiscal years 2004 and
           2005, approximately $6.2 million and $12.7 million, respectively,
           of the $36 million made available by VA and DOD, were allocated to
           specific DSS projects, and $14.4 million was obligated. See table
           2 for the amount of funds made available, allocated, and obligated
           for the DSS program.

           Table 2: DSS Program Funding

           Sources: VA and DOD.

           aFor the purposes of this report, allocated represents the amount
           of money designated for specific projects.

           bFor the purposes of this report, obligated represents the amount
           of allocated funds that have been committed to project activities.

           cAccording to VA and DOD officials, funding was not allocated in
           2003 because the business plans for the sites had not been
           finalized.

           From July 2003 through October 2003, VA and DOD developed program
           guidelines and solicited and reviewed project proposals. Each
           proposal was reviewed and scored by members of the Joint Facility
           and Utilization Workgroup for each category for which it had been
           submitted. For example, according to VA and DOD officials, under
           budget and financial management, one of the criteria for selection
           included whether a project allowed managers to assess the
           advantages and disadvantages-in terms of relative costs, benefits,
           and opportunities-of using resources from either department to
           provide or enhance the delivery of health care services to
           beneficiaries of either department. For coordinated staffing and
           assignment projects, criteria included whether the project could
           demonstrate agreement on staffing responsibilities in providing
           joint services and the development of a plan to provide adequate
           staffing in the event of deployment or contingency operation.
           Criteria related to medical information and information technology
           included whether a project could communicate medical information
           and incorporate minimum standards of information quality and
           information assurance related to either credentialing,
           consolidated mail outpatient pharmacy, or laboratory data sharing.
           According to VA and DOD officials, upon selection DSS projects are
           to be monitored via periodic progress assessments to ensure that
           project activities align with the cost, schedule, and performance
           parameters outlined in the submitted business plan.

           The Joint Facility and Utilization Workgroup forwarded eight DSS
           project proposals to HEC, which approved them in October 2003.
           However, sites reported some difficulty putting together the
           project submission packages. For example, one site noted there was
           initial confusion over the timelines and approval process as each
           department had differing requirements. Another site expressed
           frustration with the amount of paperwork and rework required.
           Nevertheless, by June 2004 the sites developed and submitted for
           VA and DOD approval proposed implementation and business plans for
           their projects, in August 2004 VA and DOD began project funding,
           and in May 2005 VA and DOD reported that they had approved all the
           proposed project business plans. As of December 2005, VA and DOD
           reported that the following seven DSS projects were operational:

           o  A project at San Antonio, referred to as the Laboratory Data
           Sharing Initiative (LDSI), has been successful in enabling each
           department to conduct laboratory tests and share the results with
           each other. This project allows a VA provider to electronically
           order laboratory tests and receive results from a DOD facility,
           and conversely, a DOD provider can electronically order laboratory
           tests and receive results from a VA facility. An early version of
           what is now LDSI was originally tested and implemented at a joint
           VA and DOD medical facility in Hawaii in May 2003. The San Antonio
           LDSI demonstration project built on the Hawaii version and
           enhanced it. According to the departments, a plan to export LDSI
           to additional sites has been approved.
           o  An electronic data exchange project at El Paso successfully
           exchanged laboratory orders and results as well as limited patient
           information-demographic, outpatient pharmacy, radiology,
           laboratory, and allergy data.
           o  An electronic data exchange project at Puget Sound has also
           achieved similar results by exchanging limited patient
           information-demographic, outpatient pharmacy, radiology, allergy
           data, and discharge summaries. The results of the project are
           scheduled to be replicated at five additional VA and DOD sites
           during the first quarter of fiscal year 2006.
           o  A project at Augusta to coordinate the staffing and sharing of
           nurses at VA and DOD facilities has yielded savings in terms of
           cost, time, and training resources.
           o  A project in Alaska is producing itemized bills for each
           individual VA patient seen at the DOD facility. The cost for each
           patient visit is then credited in VA's accounting system to
           capture the workload.
           o  A project at San Antonio has successfully shared credentialing
           data for licensed VA and DOD providers through an interface
           between the two departments' individual credentialing systems.
           o  A project at Hampton is using an automated tool to evaluate
           staffing shortfalls and mitigate identified gaps in the resources
           needed to provide health care services to VA and DOD
           beneficiaries.

           According to VA and DOD officials, they plan to evaluate whether
           the eight projects were successful and if they can be replicated
           at other VA and DOD medical facilities. However, as of November
           2005, VA and DOD had not developed an evaluation plan for making
           these assessments. See appendix III for additional details about
           the DSS projects. See figure 2 for a timeline and associated
           events affecting the implementation of the DSS program.

           Figure 2: DSS Program Implementation Timeline

           VA and DOD have taken steps to create interagency councils and
           workgroups to facilitate the sharing and collaboration of
           information, establish working relationships among their leaders,
           and develop communication channels to further health care resource
           sharing. However, JEC and HEC have not seized upon a number of
           opportunities to further collaboration and coordination.

           In addition to the development of congressionally mandated JIF and
           DSS programs, VA and DOD have created mechanisms to enhance health
           care resource sharing by forming JEC and through a proposed
           federal health care facility in North Chicago. The two departments
           have also worked together to develop a Joint Strategic Plan
           outlining six goals.

           In February 2002, VA and DOD established JEC to enhance VA and DOD
           collaboration; ensure the efficient use of federal services and
           resources; remove barriers and address challenges that impede
           collaborative efforts; assert and support mutually beneficial
           opportunities to improve business practices; facilitate
           opportunities to enhance sharing arrangements that ensure
           high-quality, cost-effective services for both VA and DOD
           beneficiaries; and develop a joint strategic planning process to
           guide the direction of joint sharing activities.34 JEC is
           co-chaired by the Deputy Secretary of Veterans Affairs and the
           Under Secretary of Defense for Personnel and Readiness.35
           Membership consists of senior leaders from both VA and DOD,
           including VA's Under Secretary for Benefits and Under Secretary
           for Health and DOD's Principal Deputy Under Secretary of Defense
           for Personnel and Readiness and Assistant Secretary for Health
           Affairs. JEC established two interagency councils and two
           interagency committees to facilitate collaboration: (1) Benefits
           Executive Council, (2) HEC, (3) VA/DOD Construction Planning
           Committee (CPC), and (4) Joint Strategic Planning Committee.

           HEC was placed under the purview of JEC specifically to advance VA
           and DOD health care resource sharing and collaboration. Through
           HEC, VA and DOD have developed policies and procedures for
           facilitating health care resource-sharing activities. Together,
           the two departments are working to create, implement, and adhere
           to joint standards in the areas of clinical guidelines,
           information technology, deployment health policies, and purchasing
           of medical and surgical supplies. HEC has organized itself into 11
           workgroups-on subjects such as financial management, pharmacy, and
           deployment health-in order to carry out its mission (see fig.
           3).36 HEC's mission includes formulating VA and DOD joint policies
           that relate to health care, facilitating the exchange of patient
           information, and ensuring patient safety. HEC membership includes
           senior leaders from VA and DOD. HEC is co-chaired by VA's Under
           Secretary for Health and DOD's Assistant Secretary of Defense for
           Health Affairs. DOD membership also includes the surgeons general
           for the military services. See appendix IV for a description of
           VA's and DOD's councils, committees, and workgroups.

14Adjusted for inflation, this would equal about $17 billion in fiscal
year 2004.

15Adjusted for inflation, this would equal about $17 billion in fiscal
year 2004.

16See GAO, DOD and VA Pharmacy: Progress and Remaining Challenges in
Jointly Buying and Mailing Out Drugs, GAO-01-588 (Washington, D.C.: May
25, 2001).

17Pub. L. No. 97-174, 96 Stat. 70.

18Department of Defense and Emergency Supplemental Appropriations for
Recovery from and Response to Terrorist Attacks on the United States Act,
2002, Pub. L. No. 107-117, S: 8147, 115 Stat. 2230, 2280-81.

19Findings and Recommendations from the DOD/VA Joint Assessment Study
presented to Office of Special Programs TRICARE Management Activity,
December 31, 2003, Mitretek Systems.

20The combined beneficiary market included VA beneficiaries, DOD
beneficiaries, and beneficiaries eligible for care from both VA and DOD.

Guidance Related to Strategic Planning and Performance Measures

21To reimburse civilian physicians, DOD has established a CMAC rate. It is
the amount DOD will pay civilian providers for medical services for DOD
patients.

22Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub.
L. No. 107-314, S: 721, 116 Stat. 2458, 2589-95.

23GAO, Agencies' Strategic Plans Under GPRA: Key Questions to Facilitate
Congressional Review, GAO/GGD-10.1.16 (Washington, D.C.: May 1997).

24GAO, Program Performance Measures: Federal Agency Collection and Use of
Performance Data, GAO/GGD-92-65 (Washington, D.C.: May 4, 1992).

25Pub. L. No. 103-62, 107 Stat. 285.

Although JIF and DSS Programs Experienced Start-up Challenges, More Than Half of
                          the Projects Are Operational

JIF Projects Slowly Becoming Operational

26Originally 12 projects were selected; however, 1 project was removed due
to legal concerns. VA and DOD offices of general counsel determined after
the selection process that VA and DOD did not possess legal authority to
pursue the project. Subsequently, this project was removed from the
program and funding was reallocated.

27Under the statute, 38 U.S.C. S: 8111(d)(2), the funding is not required
to be obligated and expensed within a single fiscal year. The funds may be
obligated and expensed over a multiyear period.

28These criteria were used to evaluate fiscal year 2004 proposals; VA and
DOD reported in February 2006 that the criteria have been slightly
refined.

29The management of VA's hospitals and other health care facilities is
decentralized to 21 regional networks referred to as Veterans Integrated
Service Networks.

30Originally 18 projects were selected; however, 1 project was removed due
to asset realignment issues.

Dollars in millions                                             
                                    Department required                       
Fiscal year                            contributions Allocateda Obligatedb
2004                                             $30         $0         $0 
2005                                              30       15.3        5.3 
2006                                              30      39.0c        - - 
2007 (projected)                                  30        - -        - - 
Total                                           $120      $54.3       $5.3 

31The Congress directed VA and DOD to commence funding in fiscal year
2004.

Most Demonstration Site Projects Are Operational

32DOD commented that the contract was awarded on February 23, 2006.

33Pub. L. No. 107-314, S: 722(e), 116 Stat. 2595-98.

Dollars in millions                                             
                         Funds made available by VA and                       
Fiscal year                                      DOD Allocateda Obligatedb
2003                                              $6        $0c         $0 
2004                                              12        6.2        4.9 
2005                                              18       12.7        9.5 
2006 (projected)                                  18       10.2        - - 
2007 (projected)                                  18        9.7        - - 
Total                                            $72      $38.8      $14.4 

 VA and DOD Have Taken Actions to Strengthen Health Care Resource Sharing, but
                         Important Opportunities Remain

Actions Taken to Enhance Health Care Resource Sharing

  Joint Executive Council

34National Defense Authorization Act for Fiscal Year 2004, Pub. L. No.
108-136 S: 583, 117 Stat. 1392, 1490-92, required VA and DOD to establish
a joint executive committee. VA and DOD use their JEC structure to fulfill
this legislative requirement.

35In 1997, VA and DOD established HEC-a precursor to JEC, which was
co-chaired by the VA Under Secretary for Health and the Assistant
Secretary of Defense (Health Affairs). In fiscal year 2002, JEC was
established to further engage VA and DOD senior leadership, including VA's
Deputy Secretary and DOD's Under Secretary for Personnel and Readiness,
who serve as co-chairs for JEC.

Figure 3: VA/DOD JEC Organizational Chart, as of October 2005

36On February 27, 2006, DOD stated that the departments have added an
additional workgroup-the Mental Health Workgroup.

HEC workgroups, such as Joint Facility Utilization/Resource Sharing,
Deployment Health, and Evidence-Based Practice Guidelines, develop and
implement changes in policy and guidance approved by HEC. For example, the
Deployment Health Workgroup has developed medical and public health policy
for active duty service members who have been exposed to tuberculosis, to
be treated by VA without co-payment. This policy allows separating service
members to continue to receive antituberculosis prophylactic treatment at
a VA facility following their separation from active duty military
service. Further, the Deployment Health Workgroup has developed a roster
identifying Operation Enduring Freedom and Operation Iraqi Freedom
veterans who are separating or who have separated from active duty
military service. VA is using this roster to mail letters to individuals
thanking them for their service and advising them of their VA benefits
based on their service in a combat theater. VA is also using this roster
to determine postdeployment VA health care utilization by this population
of veterans. Other efforts include the Evidence-Based Practice Guidelines
Workgroup's development of standardized guidelines to improve patient
outcomes for both VA and DOD beneficiaries. In fiscal year 2005, the
workgroup began revising four of its guidelines, including rehabilitation
for servicemembers with amputations. Completed guidelines are presented at
various national meetings. Tools such as CD-ROMs, pocket cards, and
patient brochures are made available for VA and DOD providers in order to
enhance communications with their patients.

  North Chicago Federal Health Care Facility

JEC and HEC are also promoting integration through the establishment of a
combined VA and DOD federal health care facility in North Chicago.
According to VA and DOD, it was through discussions during JEC and HEC
meetings that the combined federal facility in North Chicago was
envisioned. According to a DOD official, the combined facility will be a
hospital. The current plan is to build an ambulatory care clinic that will
be attached to the current VA medical center. According to the DOD
official, for the first time VA and DOD will operate a facility under a
single chain of command that would integrate the budget and management for
providing medical services from both departments to achieve one cohesive
medical facility that serves VA and DOD beneficiaries. This management
structure differs significantly from joint ventures in which separate VA
and DOD management structures coexist. The North Chicago Federal Health
Care Facility is scheduled to be operational in fiscal year 2010.

  Joint Strategic Plan

VA and DOD also developed a strategic plan in December 2004 that includes
six joint goals.37 Each of JEC's councils and committees and HEC's
workgroups has been assigned responsibility for meeting some aspects of
the goals outlined in the joint strategic plan. For example, according to
VA and DOD officials, the Financial Management Workgroup developed a
standardized business case analysis template for the JIF program to
increase efficiency of operations. VA and DOD staff utilize this template
when requesting funding for joint projects. Previously, the individual
branches of the service had their own templates, all of which were
slightly different. The departments' joint goals are as follows:

           o  Goal 1: Leadership Commitment and Accountability. Promote
           accountability, commitment, performance measurement, and enhanced
           internal and external communication through a joint leadership
           framework.
           o  Goal 2: High-Quality Health Care. Improve the access, quality,
           effectiveness, and efficiency of health care for beneficiaries
           through collaborative activities.
           o  Goal 3: Seamless Coordination of Benefits. Promote coordination
           of benefits to improve understanding of and access to benefits and
           services earned by servicemembers and veterans through each stage
           of life, with a special focus on ensuring a smooth transition from
           active duty to veteran status.
           o  Goal 4: Integrated Information Sharing. Ensure that appropriate
           beneficiary and medical data are visible, accessible, and
           understandable through secure and interoperable information
           management systems.
           o  Goal 5: Efficiency of Operations. Improve management of capital
           assets, procurement, logistics, financial transactions, and human
           resources.
           o  Goal 6: Joint Medical Contingency/Readiness Capabilities.
           Ensure the active participation of both departments in federal and
           local incident and consequence response through joint contingency
           planning, training, and exercising.

           While progress has been made, JEC and HEC-which are responsible
           for advancing VA and DOD health care resource sharing and
           collaboration-have not seized upon a number of opportunities to
           promote sharing and collaboration. For example, during the course
           of our audit work, we found that JEC and HEC have not developed a
           system for jointly collecting, tracking, and monitoring
           information on the health care services that VA and DOD contract
           for from the private sector; directed that a joint nationwide
           market analysis be conducted that contains information on what the
           departments' combined future workloads will be in the areas of
           services, facilities, and patient needs; disseminated in a timely
           manner the information or the tools developed by a congressionally
           required study (the Joint Assessment Study) for assessing
           collaboration and sharing opportunities; or established
           standardized inpatient reimbursement rates-initiatives that would
           be useful for maximizing health care resource-sharing
           opportunities and promoting systemwide cost savings and
           efficiencies.

           Though the Army, Air Force, and Navy each record the amount of
           care that is purchased from the private sector, they do not
           collectively merge that information or combine it with VA's total
           expenditures for services purchased from the community. As a
           result, a systematic approach for collecting, tracking, and
           monitoring information on the services that each department
           contracts for from the private sector is lacking.

           Such an approach could help VA and DOD achieve systemwide cost
           savings and efficiencies, as has been demonstrated at the local
           level where officials at certain sites compare their analyses and
           seek to exchange services from one another or possibly obtain
           better contract pricing through joint purchasing of services. For
           example, for fiscal year 2003, a VA official at one site estimated
           that VA reduced its cost by $1.7 million as compared to acquiring
           the same services in the private sector through its agreements
           with the Army; he also estimated that the Army reduced its cost by
           about $1.25 million as compared to acquiring the same services in
           the private sector. For instance, the site jointly leased a
           magnetic resonance imaging (MRI) unit. The unit eliminated the
           need for beneficiaries to travel to more distant sources of care.
           According to a VA official, the purchase reduced MRI cost by 20
           percent as compared to acquiring the same services in the private
           sector.

           The availability of such information would be helpful to VA and
           DOD sites at the local level for sharing information on services
           they have independently contracted for from the private sector.
           For example, VA and the Air Force at a northern California site
           were able to create efficiencies after recognizing that they had
           been independently contracting for the same services. Both VA and
           the Air Force had been sending patients to private providers for
           dialysis services-information that is not stored in a database to
           be shared with all VA and DOD health care facilities. During
           discussions, local VA and Air Force officials recognized they were
           paying a high cost for dialysis services, got together to analyze
           their costs and determine the best approach for obtaining these
           services, and worked together to open a joint dialysis clinic. In
           this case, had VA and the Air Force known about their individual
           contracting arrangements, they could have combined their
           contracting needs and negotiated services at a lower cost or
           opened a joint clinic earlier.

           In response to our concerns and those of the Congress, VA
           initiated a review of its capital assets under the Capital Asset
           Realignment for Enhanced Services (CARES) program. The review was
           to provide a comprehensive, long-range assessment of VA's health
           care system's capital asset requirements. In May 2004, the
           Secretary's CARES decision document was issued and, according to
           VA, serves as a road map for aligning its facilities with the
           health care needs of 21st century veterans.38 The CARES report
           addresses partnering with DOD. It outlines existing and potential
           areas of sharing at the local level and opportunities for joint
           ventures.

           DOD was authorized to assess its infrastructure and provide base
           realignment and closure (BRAC) recommendations in 2005 to an
           independent commission for its review.39 An objective of the 2005
           BRAC Commission, in addition to realigning DOD's base structure to
           meet post-Cold War force structure, was to examine and implement
           opportunities for greater sharing with VA. Joint cross-service
           groups were tasked with analyzing common business-oriented
           functions, such as health care. The Medical Joint Cross-Service
           Group was chartered to review DOD's health care functions and to
           provide BRAC recommendations based on that review. As we reported
           in July 2005, our examination of the BRAC process found that while
           the medical group examined the capacity and proximity of VA
           facilities to existing MTFs in its analysis, it did not coordinate
           with VA to determine whether military beneficiaries who normally
           receive care at MTFs could also receive care at VA facilities in
           the vicinity.40

           Each department has individually analyzed its health care needs-in
           part through VA's efforts to realign its capital assets under the
           CARES process and through DOD's BRAC process. Each department
           issued reports, which contained references to sharing or
           partnering with one another in the future. However, JEC and HEC
           have not conducted a nationwide integrated review and market
           analysis that would provide information on what their combined
           future health care workloads and needs may be. Such information is
           necessary to fully evaluate, and maximize the potential for,
           health care resource-sharing opportunities. In its February 27,
           2006, comments DOD stated that HEC has established a BRAC Impact
           and Opportunity Ad Hoc Workgroup to explore and identify
           opportunities for local collaboration and health care partnerships
           between VA and DOD in areas potentially affected by BRAC action.
           The work of this group would be a step in obtaining information on
           VA's and DOD's combined future health care workloads and needs.

           Furthermore, JEC and HEC have not disseminated in a timely manner
           the information or the tools developed by the DOD/VA Joint
           Assessment Study that examined the collaboration and health care
           sharing opportunities for three VA and DOD sites. For example,
           officials at one site stated that they did not receive the study
           findings until almost a year after it was completed. At that
           point, the officials stated that the market information was
           outdated and of little use to the site in forecasting and planning
           for future work. In addition, the study also produced a tool for
           combining VA and DOD beneficiary populations by geographic site.
           Utilizing this information, the contractor was able to forecast
           local market demand for health services-potentially allowing VA
           and DOD officials to plan and provide services to their "combined
           market." Further, the contractor formulated "crosswalk" tables to
           assist VA and DOD in matching similar health care services.
           Historically, VA and DOD have captured health services information
           in varying formats and could not always account for their
           workloads in the same manner. The tool would provide VA and DOD
           health care managers within geographic areas with information on
           the health care needs of the combined beneficiary
           populations-information that could be useful to them for sharing
           and joint purchase decisions. However, 2 years after development
           of the tool, it is currently being utilized at one site.

           During the course of our audit work, we also found instances in
           which HEC could have asserted itself in local decision making to
           maximize resource-sharing opportunities as well as to help ensure
           continuity of care for beneficiaries. For example, see the
           following:

           o  In Honolulu, Hawaii, we were informed by DOD that Tripler Army
           Medical Center (Tripler) had resources available to meet the
           health care needs of certain VA beneficiaries, yet VA chose to
           send them to its medical center in Palo Alto, California, for
           their care. Hawaii VA officials told us it does this because the
           cost of care is borne by Palo Alto and not by the Hawaii VA
           medical center, which would have to reimburse Tripler for the
           care. Under this scenario, the federal government is paying for
           underutilized resources and providers at Tripler. We believe HEC
           has an opportunity to step in and ensure that Tripler resources
           are fully maximized-an initiative that would ultimately result in
           overall savings to the government. More important, beneficiaries
           treated at Palo Alto return to Hawaii and require follow-up care,
           and in some cases emergency care, that is often provided by
           Tripler-a situation that could raise continuity of care issues. By
           fully maximizing resources at Tripler, HEC would be helping to
           ensure that initial treatments are provided closer to a
           beneficiary's home and that continuity of care is maintained.
           o  In San Antonio, Texas, we found that VA contracts out
           approximately $1.5 million for diagnostic services to various
           private sector laboratories even though local MTFs have the
           capacity to provide these services. According to VA, it contracts
           out to the private sector because the costs are less than what DOD
           facilities charge. While it is understandable that VA would seek
           to purchase services at the best prices possible, this practice
           may result in greater costs to the government as it is incurring
           VA's costs as well as the costs to maintain underutilized DOD
           facilities. In this case, JEC and HEC have not taken the
           initiative to determine the most cost-effective strategy for
           meeting VA's and DOD's laboratory service needs-information that
           would be useful for VA and DOD to ensure good stewardship of
           federal resources.

           Finally, we found that HEC could be more proactive in establishing
           joint policies or guidance in a timely manner that facilitates
           health care resource sharing. For example, in December 2002
           legislation required VA and DOD to establish a national
           standardized uniform payment and reimbursement schedule for
           selected health care services. In 2003, VA and DOD established a
           reimbursement rate for outpatient services. However, VA and DOD
           have not yet established an inpatient reimbursement rate. Though
           HEC reports it is in the process of soliciting input and
           developing guidance for an inpatient rate, we found that without
           an established inpatient rate local officials were forced to
           negotiate rates among themselves-an activity that consumed staff
           time and often created tension between partners.

           In addition to our observations on opportunities for VA and DOD to
           strengthen health care resource sharing, OMB, the agency
           responsible for improving administrative management in the
           executive branch, also sees room for improvement in achieving the
           President's goal to increase VA and DOD health care
           resource-sharing activities. OMB evaluates VA and DOD's health
           care resource-sharing activities by providing an overall or
           composite score on their ability and progress to

           o  exchange patient medical record information between VA and DOD
           electronically,
           o  adopt governmentwide information technology standards for
           health records,
           o  develop a plan for VA to use DOD's enrollment and eligibility
           data,
           o  establish the DSS program,
           o  develop a graduate medical education pilot program,
           o  increase nongraduate medical education training and education
           opportunities,
           o  utilize one examination for separating servicemembers that
           meets the needs of VA and DOD, and
           o  purchase medical supplies and equipment jointly.41

           OMB uses a color code-green, yellow, and red-to score the current
           status and progress of health care resource-sharing activities. A
           score in the green status would indicate that the departments are
           achieving the degree of health care resource sharing agreed upon
           by the departments and the administration. Yellow status means the
           coordination of VA and DOD health care resource-sharing activities
           are yielding mixed results and not meeting their timelines. A red
           score would indicate that the departments are not achieving the
           degree of health care resource sharing agreed upon by the
           departments and the administration. Since OMB first began scoring
           the departments in 2001, the score for "current status" of health
           care resource sharing has remained yellow and the score for
           "progress in implementation" has dropped from the best score of
           green to a score of yellow.

           VA and DOD health care resource-sharing activities are guided by a
           joint strategic plan-the VA/DOD Joint Strategic Plan, December
           2004. However, the plan does not contain performance measures that
           are useful for evaluating how well the departments are achieving
           their health care resource-sharing goals.

           For example, the plan mentions 30 measures that could be used to
           assess the departments' progress in sharing health care resources.
           We reviewed the plan and found that the measures could be placed
           into one of three categories: (1) a measurement that would be
           developed in the future, (2) a measurement that took place only
           once, and (3) a measurement that was taken periodically.

           We placed 5 of the 30 measures in the first category because the
           plan states that these measures will be developed in the future.
           For example, the plan states that a communication effectiveness
           measure will be developed as part of the communication strategy.
           The plan also states that VA and DOD will develop performance
           measures related to joint education and training opportunities by
           December 2006.

           Further, we placed 11 of the 30 measures in the second category
           because they call for a single event measurement, such as
           "increase the number of collaborative research projects completed
           by VA and DOD by December 2007," or they state a goal, such as a
           system "will be fully operational and providing VA benefit
           eligibility information by December 2008." While measurements of
           this type may provide useful snapshot information of output for a
           point-in-time prospective, they are not periodic and thus do not
           provide long-term or longitudinal information for evaluating the
           usefulness of specific activities.

           Finally, in the third category we placed the plan's remaining 14
           measures that call for periodic measurement. We found there was
           variation in the rigor or specificity in the types of data to be
           collected or the analysis to be performed. For example, CPC is
           tasked with reporting to JEC quarterly; however the tasking does
           not specify the types of data to be collected or the analytical
           assessments to be performed. Another performance measure from the
           plan states that the "Amount of electronic health data available
           to the other department is higher each quarter reported." The lack
           of specificity with this performance measure raises questions
           about the usefulness of the information for evaluating how well
           the departments are achieving their health care resource-sharing
           goals.

           Furthermore, VA and DOD have not established a performance measure
           that would track their progress in jointly obtaining health care
           services-such as difficult-to-fill occupations, laboratory tests,
           and diagnostic equipment. For example, while VA and DOD are in the
           process of jointly acquiring five MRI units to help with their
           diagnostic needs through the JIF program, other opportunities for
           sharing MRI units may exist. During our review, we did not find
           evidence that VA and DOD top management set an expectation for
           their medical facility managers to consider partnering prior to
           purchasing MRI equipment. Without such an expectation and a
           specific measurement tool or metric to track the joint acquisition
           and utilization of MRI services, VA and DOD are not in a position
           to determine on a nationwide basis the most cost-efficient way to
           obtain and deliver MRI services.

           When the idea of health care resource sharing was originally
           conceived and sanctioned by the Congress in the early 1980s, it
           was based on the premise of excess capacity. However, the set of
           circumstances that confront VA and DOD today are quite different,
           as both departments strive to serve an increasing number of
           beneficiaries. VA and DOD officials state that many of their
           facilities are at capacity or exceed capacity. The nature of
           sharing has shifted from one of utilizing untapped resources to
           one of partnering and gaining efficiencies by leveraging resources
           or buying power jointly. Implementing such a process across all
           components involved with the delivery of VA and DOD health care
           should yield positive results as resource sharing becomes an
           integral part of a systemwide decision-making process. However,
           while VA and DOD, through JEC and HEC, have created mechanisms
           that support the potential to increase collaboration, sharing, and
           coordination of management and oversight of health care resources
           and services, more can be done to capitalize on this relationship
           throughout the departments.

           The Congress provided additional sharing opportunities for local
           entities through the establishment of JIF and DSS. These programs
           have laid the foundation for new sharing relationships and, in
           other cases, have deepened existing relationships. The goals of
           each of the projects are aligned with VA's and DOD's goals to
           jointly acquire, deliver, and improve health care services. Both
           the JIF and DSS programs provide a congressionally driven
           mechanism to help increase the number of new sharing agreements
           between VA and DOD partners. However, VA and DOD have not yet
           developed a standardized evaluation plan for documenting and
           recording the advantages and disadvantages of each project and
           whether they can be replicated at other VA and DOD medical
           facilities. Without an established evaluation plan to measure and
           determine the results of the projects, VA and DOD may lose an
           opportunity to obtain information that will be useful for
           determining whether projects can be replicated systemwide.

           The Joint Strategic Plan is a positive first step toward outlining
           VA and DOD sharing goals and measures. However, useful specific
           quantitative performance measures for VA and DOD to track the
           progress of their health care resource-sharing activities have not
           been established. Such measures would be a useful tool for VA and
           DOD to help ensure that health care sharing is optimized and that
           the departments are cost efficiently achieving their
           resource-sharing goals.

           To further advance health care resource sharing within VA and DOD,
           the Secretaries of Veterans Affairs and Defense should direct JEC
           and HEC to take the following two actions:

           o  develop an evaluation plan for documenting and recording the
           reasons for the advantages and disadvantages of each DSS project,
           an activity that will assist VA and DOD in replicating successful
           projects systemwide, and
           o  develop performance measures that would be useful for
           determining the progress of their health care resource-sharing
           goals.

           We received comments from VA and DOD on a draft of this report.
           The departments concurred with our recommendations and also
           provided technical comments that we have incorporated as
           appropriate. VA's comments are included as appendix V and DOD's
           comments are included as appendix VI.

           VA and DOD agreed with our recommendation to develop a DSS
           evaluation plan and described their plans and timelines for
           implementing it. The departments stated they have modified an
           in-progress review template to strengthen department information
           on the advantages and disadvantages of each project and whether
           they can be replicated systemwide. According to the departments,
           the template was distributed to the DSS sites in January 2006 and
           will be operational in the second quarter of fiscal year 2006.

           VA and DOD also agreed with our recommendation to develop
           performance measures that would be useful for determining the
           progress of achieving health care resource-sharing goals. In their
           comments, the departments stated that they have, since the work
           was completed for this report, issued the VA/DOD Joint Executive
           Council Strategic Plan, Fiscal Years 2006-2008 (signed by VA and
           DOD on January 26, 2006)-a plan that revises and updates the
           VA/DOD Joint Strategic Plan, December 2004 and contains
           performance measures that demonstrate measurable progress relative
           to specific strategic milestones. VA included a copy of the
           updated plan with its comments and noted that action on this
           recommendation has been completed as performance measures have
           been identified for each of the health care resource-sharing
           goals. We do not agree that the January 2006 plan fully addresses
           the concerns raised in the report, and maintain our recommendation
           that useful measures-those that provide specifics regarding time
           frames, implementation strategies, and the type of information
           that will be reported to program managers-need to be developed.
           For example, our review of the Joint Strategic Plan, Fiscal Years
           2006-2008, showed that while goal 6-Joint Medical
           Contingency/Readiness Capabilities-has strategies and key
           milestones, it contained no performance measures for monitoring
           progress toward achieving the stated goal. Furthermore, 6 of the
           plan's 22 performance measures call for one point-in-time
           measurement and thus do not provide longitudinal information for
           evaluating the usefulness of specific activities.

           We are sending copies of this report to the Secretaries of
           Veterans Affairs and Defense, appropriate congressional
           committees, and other interested parties. We will also make copies
           available to others upon request. In addition, the report is
           available at no charge on the GAO Web site at http://www.gao.gov .

           If you or your staff have questions about this report, please
           contact me at (202) 512-7101 or [email protected]. Contact points
           for our Office of Congressional Relations and Public Affairs may
           be found on the last page of this report. Michael T. Blair, Jr.,
           Assistant Director; Aditi Archer; Jessica Cobert; Kevin Milne; and
           Julianna Williams made key contributions to this report.

           Laurie E. Ekstrand Director, Health Care

           List of Committees

           The Honorable John Warner Chairman The Honorable Carl Levin
           Ranking Minority Member Committee on Armed Services United States
           Senate

           The Honorable Larry E. Craig Chairman The Honorable Daniel K.
           Akaka Ranking Minority Member Committee on Veterans' Affairs
           United States Senate

           The Honorable Duncan Hunter Chairman The Honorable Ike Skelton
           Ranking Minority Member Committee on Armed Services House of
           Representatives

           The Honorable Steve Buyer Chairman The Honorable Lane Evans
           Ranking Minority Member Committee on Veterans' Affairs House of
           Representatives

           To assess the Department of Veterans Affairs' (VA) and Department
           of Defense's (DOD) progress in implementing the Joint Incentive
           Fund (JIF) and Demonstration Site Selection (DSS) programs,
           including whether they are operational, we visited VA and DOD
           medical facilities at six sites-Augusta, Georgia; Honolulu,
           Hawaii; North Chicago, Illinois; El Paso, Texas; San Antonio,
           Texas; and Puget Sound, Washington, and interviewed department
           officials responsible for the development and implementation of
           each of the projects and conducted site visits at select sites. In
           addition, we contacted VA and DOD officials from seven additional
           sharing sites.1 For all of the sites, we reviewed approved
           business case analyses for JIF projects selected in fiscal year
           2004 and DSS projects that included detailed descriptions of the
           projects, timelines for development and implementation, associated
           risks, costs, potential cost savings (if applicable), staffing
           requirements, and quarterly progress reports. We also obtained and
           reviewed VA and DOD policies governing sharing and reviewed
           relevant department reports, including those from the DOD
           Inspector General and DOD contractors, along with our prior work.

           To obtain information on the actions taken by VA and DOD to
           strengthen the sharing of health care resources, we interviewed
           officials from VA's Office of Policy, Planning, and Preparedness
           and the Veterans Health Administration-including the VA/DOD
           Liaison Office and VA medical center (VAMC) staff at several
           locations engaged in the sharing of health care resources. We
           interviewed officials from DOD's TRICARE Management Activity;2
           DOD/VA Program Coordination Office; the military services'
           surgeons general offices, which coordinate sharing activities; and
           several military treatment facilities (MTF) engaged in the sharing
           of health care resources. We also interviewed officials from Joint
           Executive Council (JEC) committees and Health Executive Council
           (HEC) workgroups3 to determine what policies, procedures, and
           guidance have been promulgated to promote health care resource
           sharing and coordination between VA and DOD. Further, we spoke
           with officials from the Office of Management and Budget (OMB). We
           reviewed the charters, when available, and briefing updates for
           each JEC committee and HEC workgroup and OMB's scorecards for the
           President's Management Agenda initiative directed at VA and DOD
           sharing. We analyzed sharing data between VA and each branch of
           service that included workload, sharing agreements, and cost data.
           We also reviewed the actions taken by both VA and DOD to
           strengthen the sharing of health care resources. In addition, we
           evaluated whether health care resource-sharing activities were
           considered as part of Capital Asset Realignment for Enhanced
           Services and base realignment and closure decisions.

           To assess whether VA and DOD performance measures are useful, we
           interviewed officials from VA's Office of Policy, Planning, and
           Preparedness and the Veterans Health Administration-including the
           VA/DOD Liaison Office and VAMC staff at several locations engaged
           in the sharing of health care resources. We also interviewed
           officials from DOD's TRICARE Management Activity; the DOD/VA
           Program Coordination Office; the military services' surgeons
           general offices, which coordinate sharing activities; and several
           MTF locations engaged in the sharing of health care resources. We
           analyzed the VA/DOD joint strategic plan,4 VA's strategic plan,5
           DOD's Military Health System Strategic Plan,6 VA's performance and
           accountability report,7 DOD's performance and accountability
           report,8 and VA/DOD's annual report to the Congress on sharing.9

           We conducted our work from January 2005 through March 2006 in
           accordance with generally accepted government auditing standards.

           Sources: VA and DOD.

           Note: Projects may be funded over a 2-year period.

           Sources: VA and DOD.

           Joint Executive Council (JEC): Established in February 2002, VA
           and DOD's JEC was created to enhance VA and DOD collaboration,
           ensure the efficient use of federal resources, remove barriers and
           address challenges that impede collaborative efforts, assert and
           support mutually beneficial opportunities to improve business
           practices, and develop a joint strategic planning process to guide
           the direction of sharing activities. JEC is co-chaired by the
           Deputy Secretary of Veterans Affairs and the Under Secretary of
           Defense for Personnel and Readiness. Membership consists of senior
           leaders from both VA and DOD, including VA's Under Secretary for
           Benefits and Under Secretary for Health and DOD's Principal Deputy
           Under Secretary of Defense for Personnel and Readiness and
           Assistant Secretary for Health Affairs. JEC has two interagency
           councils and two interagency committees to further facilitate
           collaboration and sharing opportunities: (1) the Benefits
           Executive Council, (2) the Joint Strategic Planning Committee, (3)
           the Construction Planning Committee, and (4) the Health Executive
           Council. JEC's primary responsibility is to set strategic
           priorities for the four interagency councils and committees,
           monitor the development and implementation of the Joint Strategic
           Plan, and ensure accountability is incorporated into all joint
           initiatives.

           Benefits Executive Council (BEC): Established by JEC in August
           2003, BEC was charged with examining ways to expand and improve
           information sharing, refine the process of records retrieval,
           identify procedures to improve the benefits claims process,
           improve outreach, and increase servicemembers' awareness of
           potential benefits. In addition, BEC provides advice and
           recommendations to JEC on issues related to seamless transition
           from active duty to veteran status through a streamlined benefits
           delivery process, including the development of a cooperative
           physical examination process and the pursuit of interoperability
           and data sharing.

           Joint Strategic Planning Committee: Established by JEC in October
           2002, the committee was charged with developing a joint strategic
           plan that through specific initiatives, would improve the quality,
           efficiency, and effectiveness of the delivery of benefits and
           services to both VA and DOD beneficiaries through enhanced
           collaboration and sharing.

           VA/DOD Construction Planning Committee (CPC): Established by JEC
           in August 2003, CPC provides a formalized structure to facilitate
           cooperation and collaboration in achieving an integrated approach
           to capital coordination that considers both short-term and
           long-term strategic capital issues. CPC was charged with providing
           oversight to ensure that collaborative opportunities for joint
           capital asset planning are maximized, and provides the final
           review and approval of all joint capital asset initiatives
           recommended by any element of JEC structure.

           Health Executive Council (HEC): In 1997, VA and DOD established
           HEC-a precursor to JEC. HEC was co-chaired by the VA Under
           Secretary for Health and the Assistant Secretary of Defense
           (Health Affairs). JEC rechartered HEC in August 2003 to oversee
           the cooperative efforts of each department's health care
           organizations. HEC has charged workgroups to focus on specific
           high-priority areas of national interest. HEC has organized itself
           into 11 workgroups to carry out its mission-to institutionalize VA
           and DOD sharing and collaboration through the efficient use of
           health services and resources.

           HEC Workgroups:

           Results-Oriented Government: Practices That Can Help Enhance and
           Sustain Collaboration among Federal Agencies. GAO-06-15 .
           Washington, D.C.: October 21, 2005.

           VA and DOD Health Care: VA Has Policies and Outreach Efforts to
           Smooth Transition from DOD Health Care, but Sharing of Health
           Information Remains Limited. GAO-05-1052T. Washington, D.C.:
           September 28, 2005.

           Computer-Based Patient Records: VA and DOD Made Progress, but Much
           Work Remains to Fully Share Medical Information. GAO-05-1051T .
           Washington, D.C.: September 28, 2005.

           Mail Order Pharmacies: DOD's Use of VA's Mail Pharmacy Could
           Produce Savings and Other Benefits. GAO-05-555 . Washington, D.C.:
           June 22, 2005.

           DOD and VA Health Care: Incentives Program for Sharing Health
           Resources. GAO-05-310R . Washington, D.C.: February 28, 2005.

           VA and DOD Health Care: Resource Sharing at Selected Sites.
           GAO-04-792 . Washington, D.C.: July 21, 2004.

           DOD and VA Health Care: Incentives Program for Sharing Resources.
           GAO-04-495R . Washington, D.C.: February 27, 2004.

           DOD and VA Health Care: Access for Dual Eligible Beneficiaries.
           GAO-03-904R . Washington, D.C.: June 13, 2003.

           VA and Defense Health Care: Increased Risk of Medication Errors
           for Shared Patients. GAO-02-1017 . Washington, D.C.: September 27,
           2002.

           VA and Defense Health Care: Potential Exists for Savings through
           Joint Purchasing of Medical and Surgical Supplies. GAO-02-872T .
           Washington, D.C.: June 26, 2002.

           DOD and VA Pharmacy: Progress and Remaining Challenges in Jointly
           Buying and Mailing Out Drugs. GAO-01-588 . Washington, D.C.: May
           25, 2001.

           VA and Defense Health Care: Evolving Health Care Systems Require
           Rethinking of Resource Sharing Strategies. GAO/ HEHS-00-52 .
           Washington, D.C.: May 17, 2000.

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                        1. Contingency Planning: The workgroup is responsible
                        for developing collaborative efforts in support of
                        the VA and DOD Contingency Plan and the National
                        Disaster Medical System. Through the workgroup, VA
                        and DOD are in the process of jointly updating the
                        memorandum of understanding regarding VA furnishing
                        health care services to members of the armed forces
                        during a war or national emergency.
                        2. Continuing Education and Training: The workgroup
                        is responsible for developing a shared training
                        infrastructure and for designing, developing, and
                        managing the operational procedures to facilitate
                        increased sharing of education and training
                        opportunities between VA and DOD.
                        3. Deployment Health: The workgroup is responsible
                        for enhancing health care available to servicemembers
                        returning from overseas deployment. Focusing on
                        health risks associated with specific deployments,
                        the group developed proactive approaches toward
                        deployment health surveillance, health risk
                        communication, and early identification and treatment
                        of deployment-related health problems.
                        4. Evidence-Based Practice Guidelines: The workgroup
                        is responsible for the creation and publication of
                        jointly used guidelines for disease management.
                        5. Financial Management: The workgroup is responsible
                        for developing and disseminating principles and
                        procedures, interpreting current policies and
                        guidance, establishing policies to be used in
                        creating reimbursable arrangements, and resolving
                        disputed issues related to such arrangements that
                        cannot be resolved at local or intermediate
                        organizational levels. The workgroup is also
                        responsible for the implementation of JIF.
                        6. Graduate Medical Education (GME): The workgroup is
                        responsible for reviewing the current state of the
                        GME1 program between both departments, and
                        implementing the joint pilot program for GME under
                        which graduate medical education and training is
                        provided to military physicians and physician
                        employees of DOD and VA through one or more programs
                        carried out in DOD's military MTFs and VAMCs, as
                        mandated by legislation in December 2002.2 
                        7. Joint Facility Utilization and Resource Sharing:
                        The workgroup is responsible for examining issues
                        such as removing barriers to resource sharing and
                        streamlining the process for approving sharing
                        agreements. The workgroup was originally tasked with
                        identifying areas for improved resource utilization
                        through local and regional partnerships, assessing
                        the viability and usefulness of interagency clinical
                        agreements, identifying impediments to sharing, and
                        identifying best practices for sharing resources. The
                        workgroup was responsible for providing oversight of
                        the DOD/VA Joint Assessment Study mandated by the
                        Department of Defense and Emergency Supplemental
                        Appropriations for Recovery from and Response to
                        Terrorist Attacks on the United States Act, 2002.3
                        The workgroup is also responsible for the
                        implementation of DSS.
                        8. Information Management/Information Technology: The
                        workgroup is responsible for developing interfaces
                        and implementing standards to facilitate
                        interoperability for improving exchange of health
                        data between VA and DOD.
                        9. Medical Materiel Management: In lieu of a charter,
                        VA and DOD officials signed a memorandum of
                        agreement. Under the terms of the memorandum, the
                        workgroup is to "combine identical medical supply
                        requirements from both agencies and leverage that
                        volume to negotiate better pricing."
                        10. Patient Safety: The workgroup is responsible for
                        reviewing and developing internal and external
                        reporting systems for patient safety. DOD has
                        established a Patient Safety Center at the Armed
                        Forces Institute of Pathology using the VA National
                        Center for Patient Safety as a model.
                        11. Pharmacy: The workgroup is responsible for
                        expanding participation by the VA Pharmacy Benefits
                        Management Strategic Health Care Group and the DOD
                        Pharmacoeconomic Center to evaluate high-dollar and
                        high-volume pharmaceuticals jointly. According to the
                        workgroup, it is overseeing joint actions, such as
                        joint contracts involving high-dollar and high-volume
                        pharmaceuticals, which are designed to increase
                        uniformity and improve the clinical and economic
                        outcomes of drug therapy in the VA and DOD health
                        systems. The workgroup's goals include eliminating
                        unnecessary redundancies that exist in areas of class
                        reviews, contracting prescribing guidelines, and
                        utilization management.

Opportunities to Strengthen Health Care Resource Sharing Remain

37Department of Veterans Affairs/Department of Defense, VA/DOD Joint
Strategic Plan (Washington, D.C.: December 2004).

  System for Tracking VA and DOD Purchased Services

  Nationwide Market Analysis

38Department of Veterans Affairs, Office of the Secretary, Secretary of
Veterans Affairs CARES Decision (Washington, D.C.: May 2004).

39See Defense Base Closure and Realignment Act of 1990, Pub. L. No.
101-510, as amended, codified at 10 U.S.C.A. S: 2687 note (2004 Supp.).

40GAO, Military Bases: Analysis of DOD's 2005 Selection Process and
Recommendations for Base Closures and Realignments, GAO-05-785 (Washington
D.C.: July 1, 2005).

  Dissemination of Results from the Joint Assessment Study

  Beneficiary Care

  Standardized Inpatient Reimbursement Rates

  OMB's Evaluation of VA and DOD Sharing Activities

41OMB's scorecard for PMA Initiative 14-VA/DOD Sharing-does not score each
of these factors individually, rather it uses them to develop two
composite scores: (1) Current Status and (2) Progress in Implementation.

  VA and DOD Lack Useful Performance Measures to Evaluate Health Care Resource
                                    Sharing

                                  Conclusions

                      Recommendations for Executive Action

                       Agency Comments and Our Evaluation

Appendix I: Scope and Methodology Appendix I: Scope and Methodology

1Those seven additional sharing sites were located in the following areas:
Alaska, California, Kansas, New York, North Dakota, South Carolina, and
Virginia.

2DOD provides health care through TRICARE-a regionally structured program
that uses civilian contractors to maintain provider networks to complement
health care services provided at MTFs.

3VA and DOD established JEC along with four additional interagency
councils/committees to further facilitate collaboration between the
departments in areas such as strategic planning and health care. HEC and
its workgroups, which are under the purview of JEC, were developed as a
mechanism to specifically further the sharing of health care resources
between VA and DOD.

4Department of Veterans Affairs/Department of Defense, VA/DOD Joint
Strategic Plan (Washington, D.C.: December 2004).

5Department of Veterans Affairs, Office of the Secretary, Strategic Plan
2003-2008 (Washington D.C.: July 2003).

6Department of Defense, Military Health System Strategic Plan (September
2002).

7Department of Veterans Affairs, Office of Management, FY 2004 Annual
Performance and Accountability Report (Washington, D.C.: November 2004).

8Department of Defense, Performance and Accountability Report, Fiscal Year
2004 (Nov. 15, 2004).

9Department of Veterans Affairs/Department of Defense, VA/DOD Joint
Executive Council Annual Report (Washington, D.C.: December 2004).

Appendix II: Joint Incentive Fund Program Appendix II: Joint Incentive
Fund Program

                                                                Dollar amount 
VA partner        DOD partner      Project description          of project 
JIF fiscal year 2004 projects
VA Pacific        Tripler Army     Delta Systems II-Cad/Cam       $542,000 
Islands Health    Medical Center,  System: This is a         
Care System,      Hawaii           fabrication technology    
Hawaii                             system that produces      
                                      molds for prosthetics and 
                                      orthotics from            
                                      lightweight foam through  
                                      use of a laser scanner    
                                      and mill. Installing this 
                                      device at Tripler should  
                                      allow for greater patient 
                                      access; reduce clinic     
                                      visits for casting,       
                                      adjustments, and          
                                      fittings; and allow for   
                                      an increase in VA         
                                      beneficiary access.       
Fargo Veterans    319th Medical    Joint TeleMental System:        $14,000 
Affairs Medical   Group, Grand     Acquiring                 
Center, North     Forks Air Force  videoconferencing         
Dakota            Base, North      technology should allow   
                     Dakota           VA to provide mental      
                                      health services to DOD    
                                      beneficiaries             
                                      approximately 80 miles    
                                      away.                     
VA Northern       60th Medical     Joint Dialysis Unit:         $1,568,560 
California Health Group, Travis    Through upgrading         
Care System,      Air Force Base,  equipment and increased   
California        California       staffing, Travis Air      
                                      Force Base's dialysis     
                                      unit is expected to be    
                                      able to accommodate VA    
                                      beneficiaries.            
North Chicago     Naval Hospital   Mammography Unit               $655,000 
Veterans Affairs  Great Lakes,     Expansion: The purchase   
Medical Center,   Illinois         of new digital            
Illinois                           mammography equipment, a  
                                      stereotactic unit, and    
                                      hiring of support staff   
                                      should now reduce wait    
                                      times for DOD             
                                      beneficiaries and allow   
                                      for VA beneficiary        
                                      access.                   
Spokane Veterans  92nd Medical     Teleradiology Initiative:      $333,537 
Affairs Medical   Group, Fairchild This will upgrade DOD's   
Center,           Air Force Base,  system so it can download 
Washington        Washington       images from VA for        
                                      radiological              
                                      interpretation and is     
                                      intended to allow VA to   
                                      provide computed          
                                      tomography scans for DOD  
                                      patients.                 
North Chicago     Naval Hospital   Women's Health Center:       $1,315,332 
Veterans Affairs  Great Lakes,     This project proposes to  
Medical Center,   Illinois         create a comprehensive    
Illinois                           women's health center for 
                                      VA and DOD beneficiaries  
                                      by coordinating women's   
                                      services and includes     
                                      hiring gynecology,        
                                      wellness, and case        
                                      management staff.         
Alaska Veterans   3rd Medical      Enhanced Outpatient            $535,000 
Affairs Health    Group, Elmendorf Diagnostic Services: The  
Care System,      Air Force Base,  acquisition of diagnostic 
Alaska            Alaska           equipment is intended to  
                                      provide in-house imaging  
                                      services to VA and DOD    
                                      beneficiaries.            
Syracuse Veterans Fort Drum, New   Telepsychiatry: The            $330,000 
Affairs Medical   York             hiring of a full-time VA  
Center, New York                   psychiatrist is intended  
                                      to allow VA to provide    
                                      mental health services to 
                                      DOD patients via          
                                      videoconferencing.        
Robert J. Dole    22nd Medical     Cardiac Catheterization      $3,539,722 
Veterans Affairs  Group, McConnell Laboratory: Remodeling    
Medical Center,   Air Force Base,  existing VA space is      
Kansas            Kansas           intended to accommodate   
                                      new equipment and provide 
                                      in-house cardiac services 
                                      to VA and DOD             
                                      beneficiaries.            
Dorn Veterans     Moncrief Army    Expansion of Existing        $2,014,000 
Affairs Medical   Community        Magnetic Resonance        
Center, South     Hospital and     Imaging Joint Venture:    
Carolina          20th Medical     The acquisition of an     
                     Group, Shaw Air  open magnetic resonance   
                     Force Base,      imaging unit located at   
                     South Carolina   Moncrief Army Community   
                                      Hospital is intended to   
                                      provide in-house services 
                                      to VA and DOD             
                                      beneficiaries.            
South Texas       Wilford Hall     North Central San Antonio   $11,974,197 
Veterans Health   Medical Center,  Clinic: The establishment 
Care System,      Texas            of a joint VA/DOD clinic  
Texas                              is intended to provide    
                                      greater access for VA and 
                                      DOD beneficiaries.        
JIF fiscal year 2005 projects
Veterans Health   DOD TRICARE      Medical Enterprise Web       $2,501,000 
Administration    Management       Portals: The project is   
Central Office    Activity         designed to standardize   
                                      VA and DOD's Web          
                                      portals-they both will    
                                      have the same "look and   
                                      feel" to them from a      
                                      beneficiary perspective,  
                                      including a requirement   
                                      that each portal meets    
                                      national standards        
                                      regarding accessibility   
                                      for people with           
                                      disabilities.             
Veterans Health   Defense Supply   Medical/Surgical Supply      $4,500,000 
Administration    Center,          Data Sync: This project   
Central Office    Philadelphia     is intended to create a   
                                      joint VA and DOD          
                                      medical/surgical supply   
                                      catalog. According to the 
                                      project plan, the catalog 
                                      will ultimately allow VA  
                                      and DOD to jointly        
                                      identify common           
                                      medical/surgical products 
                                      procured and maximize     
                                      joint buying power for    
                                      these products through    
                                      negotiated volume         
                                      purchase contracts.       
Louisville        Ireland Army     Radiology: The hiring of     $1,185,684 
Veterans Affairs  Community        additional radiologists   
Medical Center,   Hospital, Fort   is intended to fully      
Kentucky          Knox, Kentucky   utilize existing          
                                      equipment and provide     
                                      greater access for VA and 
                                      DOD beneficiaries.        
Harry S. Truman   General Leonard  Sleep Lab Expansion: The       $436,113 
Memorial          Wood Army        renovation and expansion, 
Veterans'         Community        from two beds to four     
Hospital,         Hospital and     beds, of the VA Sleep     
Missouri          509th Medical    Diagnostic and Treatment  
                     Group, Whiteman  Lab is intended to        
                     Air Force Base,  decrease wait times for   
                     Missouri         VA beneficiaries and      
                                      allow for DOD beneficiary 
                                      access.                   
Veterans Affairs  Madigan Army     Cardiac Surgery: The         $1,626,427 
Puget Sound       Medical Center,  consolidation of VA and   
Health Care       Washington       DOD cardiac surgery       
System,                            programs into a           
Washington                         coordinated single large  
                                      cardiac program is        
                                      intended to improve       
                                      quality of care for VA    
                                      and DOD beneficiaries     
                                      while achieving           
                                      efficiencies and          
                                      economies of scale.       
Veterans Affairs  Madigan Army     Neurosurgery Program:          $716,000 
Puget Sound       Medical Center,  This project is intended  
Health Care       Washington       to improve the provision  
System,                            of neurosurgical care to  
Washington                         VA and DOD beneficiaries  
                                      by jointly recruiting     
                                      neurosurgeons.            
Veterans Affairs  Tripler Army     Dialysis: By providing       $2,752,942 
Pacific Islands   Medical Center,  the staff necessary to    
Health Care       Hawaii           optimally utilize an      
System, Hawaii                     existing DOD dialysis     
                                      center, this project is   
                                      intended to increase      
                                      access for VA             
                                      beneficiaries.            
Veterans Affairs  Tripler Army     Pain Management                $707,000 
Pacific Islands   Medical Center,  Improvement: Converting   
Health Care       Hawaii           an anesthesiologist who   
System, Hawaii                     specializes in pain       
                                      rehabilitation from       
                                      part-time to full-time is 
                                      intended to recapture     
                                      pain management workload  
                                      that is currently being   
                                      outsourced and decrease   
                                      beneficiary wait times.   
North Chicago     Naval Hospital   Joint Magnetic Resonance     $3,449,000 
Veterans Affairs  Great Lakes,     Imaging: The acquisition  
Medical Center,   Illinois         of an open field magnetic 
Illinois                           resonance imaging unit    
                                      and the hiring of a       
                                      radiologist are intended  
                                      to reduce patient wait    
                                      time, referrals for       
                                      contract care, delays in  
                                      treatment, and length of  
                                      stay for acutely ill      
                                      patients.                 
North Chicago     Naval Hospital   Clinical Fiber-Optics: By      $247,245 
Veterans Affairs  Great Lakes,     providing the necessary   
Medical Center,   Illinois         high-speed clinical       
Illinois                           connectivity between VA   
                                      and DOD facilities, this  
                                      project is intended to    
                                      provide the bandwidth     
                                      needed to transmit        
                                      clinical images to VA.    
North Chicago     Naval Hospital   Oncology: This project is      $600,000 
Veterans Affairs  Great Lakes,     intended to create a      
Medical Center,   Illinois         hematology-oncology       
Illinois                           program for VA and DOD    
                                      beneficiaries, who are    
                                      currently referred to the 
                                      local community.          
South Texas       Wilford Hall     Digital Imaging: The         $3,450,000 
Veterans Health   Medical Center   seamless sharing of       
Care System,      and Brooke Army  digital images, texts,    
Texas             Medical Center,  and patient demographic   
                     Texas            information between       
                                      clinical VA and DOD       
                                      systems is intended to be 
                                      a pilot data exchange     
                                      program.                  
South Texas       Wilford Hall     Hyperbaric Medicine:         $1,170,000 
Veterans Health   Medical Center   Modifications to the DOD  
Care System,      and Brooke Army  facility to allow for the 
Texas             Medical Center,  installation of a         
                     Texas            hyperbaric chamber that   
                                      is intended to provide    
                                      greater access and        
                                      decrease surgical wait    
                                      times for VA and DOD      
                                      beneficiaries.            
Cheyenne and      F. E. Warren Air Mobile Magnetic Resonance    $2,000,000 
Sheridan Veterans Force Base,      Imaging: This project is  
Affairs Medical   Wyoming          intended to provide       
Centers, Wyoming                   access to VA and DOD      
                                      beneficiaries through the 
                                      acquisition of a mobile   
                                      magnetic resonance        
                                      imaging unit.             
Boise Veterans    366th Medical    Mobile Magnetic Resonance    $2,090,000 
Affairs Medical   Group, Mountain  Imaging: Site preparation 
Center, Idaho     Home Air Force   and the acquisition of a  
                     Base, Idaho      mobile magnetic resonance 
                                      imaging unit along with a 
                                      digital printer are       
                                      intended to recapture     
                                      magnetic resonance        
                                      imaging exams that are    
                                      currently purchased in    
                                      the local community,      
                                      thereby improving access  
                                      for VA and DOD            
                                      beneficiaries.            
Veterans          Air Force        Healthcare Planning Data     $1,067,756 
Integrated        Medical          Mart: This project plans  
Service Network   Operations       to develop a joint VA and 
Support Service   Agency           Air Force database to     
Center                             capture the amount of     
                                      care each contracts for   
                                      outside of its respective 
                                      health care system.       
                                      Through the creation of   
                                      the database, VA and Air  
                                      Force managers hope to    
                                      identify areas in which   
                                      they can jointly purchase 
                                      services and achieve      
                                      savings through leveraged 
                                      buying power.             
Veterans Affairs  28th Medical     Mobile Magnetic Resonance    $2,000,000 
Black Hills       Group, Ellsworth Imaging: The acquisition  
Health Care       Air Force Base,  of a mobile magnetic      
System, South     South Dakota     resonance imaging unit is 
Dakota                             intended to recapture     
                                      magnetic resonance        
                                      imaging exams that are    
                                      currently purchased in    
                                      the local community,      
                                      thereby improving access  
                                      for VA and DOD            
                                      beneficiaries.            

Appendix III: Demonstration Site Selection Projects for Fiscal Years 2003
through 2007 Appendix III: Demonstration Site Selection Projects for
Fiscal Years 2003 through 2007

                                                                    Estimated 
                                                                 total dollar 
                                                                    amount of 
VA partner   DOD partner Category     Project description          project 
Veterans     Tripler     Budget and   Joint Venture             $4,152,000 
Affairs      Army        Financial    Operations Revenue      
Pacific      Medical     Management   Cycle-The goal of this  
Islands      Center,     System       project is to conduct   
Health Care  Hawaii                   and execute the         
System,                               findings of studies in  
Hawaii                                four key areas. (1)     
                                         Health Care             
                                         Forecasting, Demand     
                                         Management, and         
                                         Resource Tracking:      
                                         Define, test and        
                                         implement a system that 
                                         will combine VA and DOD 
                                         data for beneficiaries  
                                         receiving care in the   
                                         Pacific Islands joint   
                                         venture market. This    
                                         will include all        
                                         eligibility, insurance, 
                                         administrative,         
                                         clinical, staffing, and 
                                         costing data that will  
                                         allow VA and DOD to     
                                         query and output        
                                         information on          
                                         utilization and demand, 
                                         supply and capacity,    
                                         combined costs,         
                                         facility and staff,     
                                         services, and           
                                         beneficiary population. 
                                         (2) Referral Management 
                                         and Fee Authorization:  
                                         Define, test, and       
                                         implement a system that 
                                         will provide the        
                                         capability of timely    
                                         tracking of             
                                         authorizations,         
                                         obligations, and        
                                         provisions of clinical  
                                         care to beneficiaries   
                                         referred from one       
                                         department to the       
                                         other. (3) Joint Charge 
                                         Master Based Billing:   
                                         Define, test, and       
                                         implement a system that 
                                         will provide DOD with   
                                         the capability for      
                                         itemized billing and    
                                         patient-level costing.  
                                         (4) Document            
                                         Management: Define,     
                                         test, and implement a   
                                         system that gives VA    
                                         and DOD the capability  
                                         to support all the      
                                         business and clinical   
                                         processes of sharing    
                                         care.                   
Alaska       3rd Medical Budget and   Joint Venture Business    $4,782,000 
Veterans     Group,      Financial    Directorate-This        
Affairs      Elmendorf   Management   project intends to      
Health Care  Air Force   System       achieve the following   
System,      Base,                    goals: (1) Through the  
Alaska       Alaska                   use of a joint business 
                                         office, evaluate areas  
                                         of business             
                                         collaboration as VA     
                                         moves its main          
                                         operation next door to  
                                         the existing joint      
                                         venture hospital. Areas 
                                         for possible sharing    
                                         include library,        
                                         warehouse, radiology,   
                                         ambulatory surgery,     
                                         central sterile supply, 
                                         GI procedure space,     
                                         education facilities,   
                                         physical plant          
                                         utilities, security     
                                         services, and patient   
                                         transportation. (2)     
                                         Generate itemized bills 
                                         and utilize the         
                                         existing VA fee program 
                                         to capture workload and 
                                         patient-specific health 
                                         information. (3) Create 
                                         a coordinated           
                                         calculation of          
                                         cost-based expenses to  
                                         assist in market area   
                                         procurement decisions.  
Augusta      Eisenhower  Coordinated  Joint Staffing-VA and     $2,880,000 
Veterans     Army        Staffing and DOD plan to jointly to  
Affairs      Medical     Assignment   recruit, hire, and      
Medical      Center,     System       train staff for         
Center,      Georgia                  difficult-to-fill       
Georgia                               direct patient care     
                                         occupations, which      
                                         provide clinical and    
                                         ancillary support       
                                         services. Specifically, 
                                         the project is designed 
                                         to (1) utilize the      
                                         Augusta VAMC's          
                                         successful recruitment  
                                         initiatives to aid DOD  
                                         in hiring staff for     
                                         direct patient care     
                                         positions it has been   
                                         unable to fill, (2)     
                                         unite training          
                                         initiatives so direct   
                                         patient care staff may  
                                         take advantage of       
                                         training opportunities  
                                         at either facility, and 
                                         (3) hire and train a    
                                         select group of staff   
                                         that would service      
                                         either facility when a  
                                         critical staffing       
                                         shortage occurred.      
Hampton,     1st Medical Coordinated  Coordinated Staffing        $780,000 
Veterans     Group,      Staffing and Initiative-The goals of 
Affairs      Langley Air Assignment   this project are        
Medical      Force Base, System       intended to achieve the 
Center,      Virginia                 following: (1) Develop  
Virginia                              a process to identify   
                                         department-specific     
                                         needs to address        
                                         staffing shortfalls for 
                                         integrated services.    
                                         (2) Create a method to  
                                         compare, reconcile, and 
                                         integrate requirements  
                                         between facilities. (3) 
                                         Determine a payment     
                                         methodology to support  
                                         the procurement process 
                                         for staffing            
                                         shortfalls. (4)         
                                         Establish a joint       
                                         referral and            
                                         appointment process, to 
                                         include allocation of   
                                         capacity and            
                                         prioritization of       
                                         workload. (5) Maintain  
                                         an ongoing assessment   
                                         of issues and problem   
                                         resolution.             
Veterans     Madigan     Medical      Health Care Data         $14,865,000 
Affairs      Army        Information/ Exchange-The goal of    
Puget Sound, Medical     Information  this project is to      
Health Care  Center,     Technology   transmit a limited      
System,      Washington  Management   subset of currently     
Washington               System       available clinical data 
                                         between VA and DOD. The 
                                         intent of this project  
                                         is to work with the     
                                         developers of Composite 
                                         Health Care System II   
                                         (CHCS II),              
                                         Bidirectional Health    
                                         Information Exchange    
                                         (BHIE), and             
                                         Computerized Patient    
                                         Record System, to       
                                         exchange and view data  
                                         such as discharge       
                                         summaries.              
El Paso      William     Medical      Laboratory Data           $3,058,000 
Veterans     Beaumont    Information/ Sharing-with CHCS II    
Affairs      Army        Information  modifications: Phase I  
Health Care  Medical     Technology   is the implementation   
System,      Center,     Management   of the Laboratory Data  
Texas        Texas       System       Sharing Initiative      
                                         (LDSI) with the CHCS II 
                                         modification. LDSI      
                                         implementation is       
                                         intended to eliminate   
                                         rekeying of orders      
                                         entered by VA providers 
                                         in VA's Veterans Health 
                                         Information Systems and 
                                         Technology Architecture 
                                         (VISTA) into DOD's CHCS 
                                         II, decrease errors     
                                         caused by               
                                         transcription, and      
                                         increase speed of lab   
                                         results availability to 
                                         VA providers for        
                                         treatment purposes.     
                                         Phase II will be the    
                                         implementation of the   
                                         BHIE project, which is  
                                         currently being         
                                         deployed, with the CHCS 
                                         II modification.        
                                         Initial focus will be   
                                         on data sharing related 
                                         to patient demographic  
                                         information, outpatient 
                                         pharmaceuticals         
                                         prescribed to patient   
                                         populations, and        
                                         allergy information.    
                                         Phase III expands on    
                                         the initial development 
                                         of the BHIE project by  
                                         including the data      
                                         sharing of radiology    
                                         reports (text) and      
                                         laboratory results,     
                                         including anatomic      
                                         pathology.              
South Texas  Wilford     Medical      Laboratory Data           $3,923,000 
Veterans     Hall        Information/ Sharing-VA's VISTA to   
Health Care  Medical     Information  DOD's Composite Health  
System,      Center and  Technology   Care System I (CHCS I). 
Texas        Brooke Army Management   LDSI is intended to     
                Medical     System       meet the need of        
                Center,                  receiving electronic    
                Texas                    patient test results    
                                         from reference labs,    
                                         thereby eliminating     
                                         manual data entry of    
                                         such results. The goal  
                                         is to create            
                                         bidirectional           
                                         communication between   
                                         VISTA and CHCS I to     
                                         facilitate ordering,    
                                         sending, and receiving  
                                         of all lab test         
                                         subscripts (including   
                                         chemistry, anatomic     
                                         pathology, and          
                                         microbiology). Tangible 
                                         benefits include more   
                                         efficient use of        
                                         man-hours from not      
                                         having to manually      
                                         enter test results and  
                                         improved turnaround     
                                         time for the providers  
                                         to receive results.     
                                         Intangible benefits     
                                         include increased       
                                         patient safety via the  
                                         elimination of manual   
                                         test results.           
South Texas  Wilford     Medical      Joint Credentialing       $2,554,000 
Veterans     Hall        Information/ System-VA and DOD plan  
Health Care  Medical     Information  to jointly credential   
System,      Center and  Technology   licensed providers      
Texas        Brooke Army Management   based on an interface   
                Medical     System       between DOD's           
                Center,                  Centralized Credentials 
                Texas                    Quality Assurance       
                                         System (CCQAS) and      
                                         VetPro, VA's            
                                         credentialing system.   
                                         The project is divided  
                                         into four phases: Phase 
                                         I-Implement the current 
                                         version of CCQAS that   
                                         is available at the     
                                         time of implementation  
                                         with the interface.     
                                         Phase II-Create a means 
                                         to provide the          
                                         capability to view      
                                         credentialing files and 
                                         scanned primary source  
                                         verification            
                                         documentation in either 
                                         system by VA or DOD     
                                         staff. Phase III-Expand 
                                         the use of              
                                         credentialing in VetPro 
                                         at VA and CCQAS at DOD  
                                         to include nurses and   
                                         other licensed          
                                         professionals. Phase    
                                         IV-Explore the          
                                         feasibility of a local  
                                         centralized site for    
                                         primary source          
                                         verification.           

Appendix IV: Description of VA's and DOD's Councils, Committees, and
Workgroups Appendix IV: Description of VA's and DOD's Councils,
Committees, and Workgroups

1GME is the second phase of medical education, and prepares physicians for
practice in a medical specialty or subspecialty.

2Pub. L. No. 107-314 S: 725, 116 Stat. at 2599.

3Pub. L. No. 107-117 S: 8147, 115 Stat. 2230, 2280-81.

Appendix V: Comments from the Department of Veterans Affairs Appendix V:
Comments from the Department of Veterans Affairs

Appendix VI: Comments from the Department of Defense Appendix VI: Comments
from the Department of Defense

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Highlights of GAO-06-315 , a report to congressional committees

March 2006

VA AND DOD HEALTH CARE

Opportunities to Maximize Resource Sharing Remain

The National Defense Authorization Act for Fiscal Year 2003 required that
the Departments of Veterans Affairs (VA) and Defense (DOD) implement
programs referred to as the Joint Incentive Fund (JIF) and the
Demonstration Site Selection (DSS) to increase health care resource
sharing between the departments. The act requires GAO to report on (1)
VA's and DOD's progress in implementing the programs. GAO also agreed with
the committees of jurisdiction to report on (2) the actions taken by VA
and DOD to strengthen resource sharing and opportunities to improve upon
those actions and (3) whether VA and DOD performance measures are useful
for evaluating progress toward achieving health care resource-sharing
goals.

What GAO Recommends

The Secretaries of VA and DOD should (1) develop an evaluation plan for
documenting and recording the advantages and disadvantages of each DSS
project, an activity that will assist VA and DOD in replicating successful
projects systemwide, and (2) develop performance measures that would be
useful for determining the progress of their health care resource-sharing
goals.

VA and DOD concurred with GAO's recommendations.

VA and DOD are making progress in implementing two programs required by
legislation in December 2002 to encourage health care resource sharing and
collaboration-JIF and DSS. While JIF projects experienced challenges
because of delays resulting from the initial absence of funding mechanisms
and, in some cases, the need for additional acquisition and construction
approvals, as of December 2005, 7 of 11 selected 2004 projects were
operational. The DSS program also experienced challenges as some sites
reported difficulty putting together project submission packages, noting
confusion over the timelines and approval process as well as frustration
with the amount of paperwork and rework required. Nonetheless, as of
December 2005, 7 of the 8 DSS projects were operational. However, the
Joint Executive Council (JEC) and Health Executive Council (HEC), VA and
DOD entities established to facilitate collaboration and health care
resource sharing between the departments, have not established a plan to
measure and evaluate the advantages and disadvantages of DSS
projects-information that will be useful for determining if projects that
produce cost savings or enhance health care delivery efficiencies can be
replicated systemwide.

VA and DOD are creating mechanisms that support the potential to increase
collaboration, sharing, and coordination of management and oversight of
health care resources and services. The departments have taken steps to
create interagency councils and workgroups to facilitate collaboration and
sharing of information, establish working relationships among their
leaders, and develop communication channels to further health care
resource sharing. In addition, the departments developed a Joint Strategic
Plan outlining six goals. However, JEC and HEC have not seized upon a
number of opportunities to further collaboration and coordination. For
example, JEC and HEC have not developed a system for collecting and
monitoring information on the health care services that each department
contracts for from the private sector-such as individual VA medical center
or military treatment facility contracts for dialysis, laboratory
services, or magnetic resonance imaging. If such a system were in place,
the departments could use it to identify services that could be exchanged
from one another or possibly obtain better contract pricing through joint
purchasing of services, thus promoting systemwide cost savings and
efficiencies. Furthermore, JEC and HEC have not directed that a joint
nationwide market analysis be conducted to obtain information on what
their combined future workloads will be in the areas of services,
facilities, and patient needs.

VA and DOD lack performance measures that would be useful for evaluating
how well they are achieving their health care resource-sharing goals. For
example, of the 30 measures contained in the departments' joint strategic
plan, 5 were not developed at the time the plan was issued and 11 lacked
longitudinal information. For the remaining 14 that require periodic
measurement, there was variation in the rigor or specificity in the types
of data to be collected or the analysis to be performed.
*** End of document. ***