The Results Act: Observations on the Department of Health and Human
Services' April 1997 Draft Strategic Plan (Correspondence, 07/11/97,
GAO/HEHS-97-173R).
Pursuant to a congressional request, GAO reviewed the latest available
version of the Department of Health and Human Services' (HHS) April 1997
draft strategic plan, focusing on: (1) the plan's response to the
Results Act's six requirements and the strengths and weaknesses of the
plan's elements; (2) whether the plan covers the agency's key statutory
authorities; (3) whether any agency programs, activities, or functions
are crosscutting, that is, similar to or related to goals, activities,
or functions of other agencies, and the extent to which the strategic
plan reflects interagency coordination; (4) if the draft plan addresses
major management problems; and (5) the agency's capacity to provide
reliable information about performance.
GAO noted that: (1) HHS' draft strategic plan is more a summary of
current programs than a document projecting actions the Department might
take in the next several years to achieve its six goals; (2) although a
description of current programs is helpful, a strategic plan should
allow the Congress and the American people to understand the direction
in which HHS' programs will move; (3) the plan in its draft form does
not provide a useful basis for consultation with the Congress and others
interested in the Department's future; (4) greater attention in the plan
to the six critical elements in the Results Act would allow for more
informed evaluation of the appropriateness of HHS' goals and objectives
and the strategies for achieving them; (5) HHS officials recognize that
the plan is incomplete but felt that it was important to make available
at least the framework for the plan in time to get comments from their
many stakeholders; (6) officials said they have been working on the
missing elements and expect to have them in place by September 30; (7)
specifically, while the plan's mission statement successfully captures
the broad array of the Department's activities, many required elements
of HHS' draft strategic plan are incomplete or missing; (8) the draft
plan identifies six overarching Department-wide goals, such as to
improve the quality of health care, public health, and human services
and to promote self-sufficiency and parental responsibility; (9) it also
recognizes that many different departmental agencies, such as the Health
Care Financing Administration (HCFA), the National Institutes of Health
(NIH), and Administration for Children and Families, are responsible for
achieving the goals; (10) HHS has not, however, consistently identified
strategies for achieving the goals or included measurable objectives
indicating, for example, how to measure an increase in self-sufficiency;
(11) similarly, the draft plan does not sufficiently acknowledge the
many other federal partners, like the Department of Education, that
share responsibility with HHS for many of the same kinds of programs,
such as education and training; (12) also missing are discussions of the
considerable management challenges HHS faces in carrying out both its
program responsibilities and the type of strategic planning and
performance measurement the Results Act requires; and (13) in
particular, the draft plan does not give enough weight to the role that
state and local governments play in carrying out many of HHS' programs
and the fact that these partners may lack the capacity to provide
reliable and comparable information on achieving HHS' goals.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: HEHS-97-173R
TITLE: The Results Act: Observations on the Department of Health
and Human Services' April 1997 Draft Strategic Plan
DATE: 07/11/97
SUBJECT: Health care programs
Financial management
Intergovernmental relations
Strategic planning
Reporting requirements
Information resources management
Agency missions
Congressional/executive relations
Interagency relations
Management information systems
IDENTIFIER: HHS Healthy People 2000 Program
Medicare Program
HHS Temporary Assistance for Needy Families Program
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Cover
================================================================ COVER
September 1997
GAO/HEHS-97-173R
HHS' Draft Strategic Plan
(108336)
Abbreviations
=============================================================== ABBREV
ACF - Administration for Children and Families
BOP - Federal Bureau of Prisons
CFO - Chief Financial Officers
CPS - child protective service
DEA - Drug Enforcement Administration
DOJ - Department of Justice
FBI - Federal Bureau of Investigation
FDA - Food and Drug Administration
GMRA - Government Management Reform Act of 1994
HCFA - Health Care Financing Administration
HHS - x
HIPAA - Health Insurance Portability and Accountability Act of 1996
INS - Immigration and Naturalization Service
MTS - Medicare Transaction System
NIH - National Institutes of Health
NPR - National Performance Review
OCSE - Office of Child Support Enforcement
OIG - Office of the Inspector General
OMB - Office of Management and Budget
PDUFA - Prescription Drug User Fee Act of 1992
PHS - Public Health Service
SAMHSA - Substance Abuse and Mental Health Services Administration
STD - sexually transmitted disease
TANF - Temporary Assistance for Needy Families
Letter
=============================================================== LETTER
B-277400
July 11, 1997
The Honorable Richard K. Armey
Majority Leader
House of Representatives
The Honorable John Kasich
Chairman, Committee on the Budget
House of Representatives
The Honorable Dan Burton
Chairman, Committee on Government
Reform and Oversight
House of Representatives
The Honorable Bob Livingston
Chairman, Committee on Appropriations
House of Representatives
Subject: The Results Act: Observations on the Department of Health
and Human Services' April 1997 Draft Strategic Plan
On June 12, 1997, you asked us to review the draft strategic plans
submitted by the cabinet departments and selected major agencies for
consultation with the Congress as required by the Government
Performance and Results Act of 1993 (the Results Act). This letter
reports on our review of the Department of Health and Human Services'
(HHS) draft strategic plan.
OBJECTIVES, SCOPE, AND
METHODOLOGY
------------------------------------------------------------ Letter :1
Our overall objective was to review and evaluate the latest available
version of HHS' draft strategic plan, dated April 1997. As you
requested, we (1) assessed the plan's response to the Results Act's
six requirements and the strengths and weaknesses of the plan's
elements; (2) assessed whether the plan covers the agency's key
statutory authorities; (3) examined whether any agency programs,
activities, or functions are crosscutting, that is, similar to or
related to goals, activities, or functions of other agencies, and the
extent to which the strategic plan reflects interagency coordination;
(4) determined if the draft plan addresses major management problems;
and (5) provided a preliminary assessment of the agency's capacity to
provide reliable information about performance.
The focus of our review was HHS' April 1997 strategic plan; we did
not examine any plans prepared by HHS' component agencies because HHS
intends to submit only a Department-wide plan. As agreed, to review
the plan, we relied on the Results Act, the Office of Management and
Budget's (OMB) guidance on developing the plans (Circular A-11, Part
2), our May 1997 guidance for congressional review of the plans
(GAO/GGD-10.1.16), our general knowledge of HHS' operations, and the
many reports and testimonies on HHS and its programs that we have
issued over the last several years. (See Related GAO Products at the
end of this correspondence.) As you requested, we coordinated our
work on HHS' key statutory authorities and HHS' capacity to provide
reliable information with the Congressional Research Service and HHS'
Office of Inspector General (OIG), respectively.
In passing the Results Act, the Congress anticipated that several
planning cycles might be needed to perfect the process of developing
a strategic plan and that the plan would be continually refined.
Thus, our comments reflect a "snapshot" of the status of the plan at
a particular point. We recognize that developing a strategic plan is
a dynamic process and that HHS is continuing to work to revise the
draft with input from OMB, congressional staff, and other
stakeholders.
We did our work between June 16 and July 8, 1997, in accordance with
generally accepted government auditing standards. We met with HHS
officials on July 8 to discuss a draft of this correspondence; they
also provided written comments, which are presented in enclosure II.
BACKGROUND
------------------------------------------------------------ Letter :2
The Results Act seeks to shift the focus of federal management and
decision-making from staffing, activity levels, and tasks completed
toward results. Under the Results Act, federal agencies must develop
(1) strategic plans by September 30, 1997; (2) annual performance
plans for fiscal year 1999 and beyond; and (3) annual performance
reports beginning on March 31, 2000. The act states that agencies'
strategic plans should cover at least 5 years\1 and that these plans
should include, among other requirements, a set of strategic goals.
Although it was expected to encourage agencies to focus their
strategic goals on results, the act does not require that all of an
agency's strategic goals be explicitly results oriented. The act
does not require agencies to have final plans until September 30,
1997, so many of these plans will most likely be imperfect,
reflecting their status as draft documents.
The sheer size and complexity of HHS' responsibilities create great
challenges for complying with the requirements of the Results Act.
HHS is one of the largest federal departments, the nation's largest
health insurer, and the largest grant-making agency in the federal
government. Its fiscal year 1996 outlays were $319.8 billion. The
Department comprises several large agencies, each of which manages a
number of programs with many parts. (See enc. I.) The size, range,
and interrelatedness of HHS' activities and responsibilities make it
especially important for HHS to use the framework of the Results Act
to integrate program goals and activities at a departmental planning
level; improve coordination and accountability among its own
agencies; and work successfully with other federal agencies, state
and local governments, and private-sector grantees.
HHS is familiar with the kind of results-oriented management promoted
by the Results Act. HHS conducted two of the Results Act pilots
designated by OMB: one in the Administration for Children and
Families' (ACF) Office of Child Support Enforcement (OCSE) and the
other in the Food and Drug Administration's (FDA) Prescription Drug
User Fee Program.\2 The pilots helped OCSE and FDA identify and
progress toward performance goals. In October 1996, we reported that
OCSE's Results Act pilot had made progress in redirecting its
management of the child support enforcement program toward results.\3
For example, OCSE approved national goals and objectives focused on
key program outcomes such as increasing the number of paternities
established, support orders obtained, and child support collections
received. At the time of our review, OCSE and the states had begun
to develop performance measures as statistical tools for measuring
state progress toward meeting program goals.
A second HHS Results Act pilot involved the Prescription Drug User
Fee Act of 1992 (PDUFA), which allows FDA to collect user fees from
drug companies seeking approval to market drugs. PDUFA dedicated the
revenues to expediting FDA's review of human drug applications and
established time-specific performance goals to be achieved by the end
of fiscal year 1997. To meet these objectives, FDA consulted with
its stakeholders to determine appropriate performance indicators and
target levels and developed output-oriented performance goals. In
its Fourth Annual Performance Review, for fiscal year 1996, FDA
reported that the PDUFA program had exceeded its performance goals,
improving the speed and efficiency of the drug review process.
In addition, Healthy People 2000, the Public Health Service's (PHS)
national public health initiative that seeks to improve the health of
all Americans, is an example of a results-based HHS management
effort. In consultation with HHS stakeholders, other government
agencies, and the public health community, PHS developed a series of
outcome-based public health goals and measures, with 300 disease
prevention and health promotion objectives. In 1995, PHS reviewed
the nation's progress in meeting these objectives and reported that
progress had been made toward achieving half of the objectives;
movement away from the target or no movement at all had occurred for
21 percent; and insufficient data existed to assess 29 percent.
--------------------
\1 OMB Circular A-11, Part 2, requires that strategic plans span a
minimum 6-year period: the fiscal year it is submitted, and at least
5 years following that fiscal year.
\2 When it passed the Results Act, the Congress understood that most
agencies would need to make fundamental management changes to
implement this law properly and that these changes would not come
quickly or easily. To facilitate this process, the act included a
pilot phase during which federal agencies could gain experience in
implementing key parts of the law to provide valuable lessons for the
rest of the government. OMB designated about 70 pilot tests in 26
federal entities for performance planning and reporting.
\3 Child Support Enforcement: Reorienting Management Toward
Achieving Better Program Results (GAO/HEHS/GGD-97-14, Oct. 25,
1996).
RESULTS IN BRIEF
------------------------------------------------------------ Letter :3
HHS' draft strategic plan is more a summary of current programs than
a document projecting actions the Department might take in the next
several years to achieve its six goals. Although a description of
current programs is helpful, a strategic plan should allow the
Congress and the American people to understand the direction in which
HHS' programs will move. The plan in its draft form does not provide
a useful basis for consultation with the Congress and others
interested in the Department's future. Greater attention in the plan
to the six critical elements in the Results Act would allow for more
informed evaluation of the appropriateness of HHS' goals and
objectives and the strategies for achieving them. HHS officials
recognize that the plan is incomplete but felt that it was important
to make available at least the framework for the plan in time to get
comments from their many stakeholders. Officials said they have been
working on the missing elements and expect to have them in place by
September 30.
Specifically, while the plan's mission statement successfully
captures the broad array of the Department's activities, many
required elements of HHS' draft strategic plan are incomplete or
missing. The draft plan identifies six overarching Department-wide
goals, such as to improve the quality of health care, public health,
and human services and to promote self-sufficiency and parental
responsibility. It also recognizes that many different departmental
agencies, such as the Health Care Financing Administration (HCFA),
the National Institutes of Health (NIH), and ACF, are responsible for
achieving the goals. HHS has not, however, consistently identified
strategies for achieving the goals or included measurable objectives
indicating, for example, how to measure an increase in
self-sufficiency. Nor did HHS adequately discuss how its component
agencies, such as HCFA and the Health Resources and Services
Administration, will coordinate their efforts to reach common goals.
Similarly, the draft plan does not sufficiently acknowledge the many
other federal partners, like the Department of Education, that share
responsibility with HHS for many of the same kinds of programs, such
as education and training. Also missing are discussions of the
considerable management challenges HHS faces in carrying out both its
program responsibilities and the type of strategic planning and
performance measurement the Results Act requires. In particular, the
draft plan does not give enough weight to the role that state and
local governments play in carrying out many of HHS' programs and the
fact that these partners may lack the capacity to provide reliable
and comparable information on achieving HHS' goals.
DRAFT STRATEGIC PLAN OMITS
DISCUSSION OF KEY ELEMENTS
REQUIRED BY THE RESULTS ACT
------------------------------------------------------------ Letter :4
HHS' draft strategic plan does not adequately address five of the
Results Act's six key elements. The six elements are (1) mission
statement, (2) goals and objectives, (3) approaches to achieve goals
and objectives, (4) relationship between long-term goals/objectives
and annual performance goals, (5) key external factors beyond the
agency's control, and (6) how program evaluations were used to
establish/revise strategic goals. All of these elements are
important for establishing a meaningful starting point and foundation
for HHS' consultations with the Congress and stakeholders in defining
the Department's aims, identifying the strategies it will use to
achieve desired results, and then determining its success in meeting
its goals and objectives. More completely addressing the six key
elements of the Results Act is essential for HHS to move from a draft
strategic plan that too often merely describes the Department's
programs and processes to a tool useful for projecting organizational
priorities and unifying the Department's staff in the pursuit of
shared goals. Although HHS has developed a mission statement that
successfully captures the broad array of the Department's activities
related to the health and well-being of the nation as well as the
Department's support for social- and health-related research,
discussion of the remaining five elements in its draft strategic plan
is missing or incomplete.
GOALS AND OBJECTIVES
STATEMENT IS INCOMPLETE
---------------------------------------------------------- Letter :4.1
HHS has partially addressed the Results Act requirement to establish
general goals and objectives in the agency's draft strategic plan.
Although HHS has established six goals that are overarching for its
operating divisions and staff offices, the Department needs to take
further action in three areas to completely address the Results Act
requirements for goals and objectives.
First, HHS states that these six goals relate to those activities
that have priority over the next 6 years; they do not relate to every
Department activity that contributes to the overall mission. The
Results Act and OMB Circular A-11 require, however, that agency plans
cover the Department's major functions and operations. The current
HHS draft plan may be missing major functions and operations that are
reflected in statute or are otherwise important to HHS' mission.
Excluding some significant programs and activities obscures their
relationship to the six departmental goals and the methods for
ensuring the accountability of these efforts. The draft strategic
plan, for example, makes no mention of HHS' responsibilities for
certifying medical facilities, such as clinical laboratories and
mammography providers. Furthermore, to achieve the objectives of the
Government Management Reform Act of 1994 (GMRA), agencies must have
implemented financial management systems that provide adequate
safeguards and accountability. Despite numerous known financial
management weaknesses, however, the draft plan is silent about how
HHS plans to address these major operational issues. Including all
major programs and activities in the draft strategic plan would help
to identify their goals and hold managers accountable for achieving
them.
Second, the plan does not always state the goals in a way that would
allow future assessment of whether the goals have been met. Under
the Results Act, goals are to be stated in a way that clarifies what
results are expected from the agency's major functions and when
results are expected. The draft plan is explicit, for example, in
presenting an objective of reducing the number of uninsured children
by half by the year 2002. More often, however, the discussions
supporting the goals explain the processes and outputs of individual
programs and activities without specifying their intended results.
For example, one HHS goal is to promote self-sufficiency, but the
draft plan only lists the programs and activities that support this
goal. It is therefore unclear whether success will be measured by
reducing the number of people on federal assistance, improving the
earning potential of families beyond certain levels, or some other
means.
Third, some HHS goals relate closely to those of other agencies, yet
the draft plan hardly discusses any coordination that may have taken
place to ensure that these goals are complementary rather than
duplicative or even contradictory. For example, the plan's
discussion of HHS' responsibility for maternal and child health
programs makes no reference to the Department of Agriculture's
closely related Special Supplemental Food Program for Women, Infants,
and Children. Similarly, the plan's section on health professions
workforce programs does not discuss Department of Education programs
for training health professionals. HHS' coordination of program
goals with other agencies should help to conserve scarce funds,
minimize confusion and frustration for program customers, and improve
the overall effectiveness of the federal effort.
APPROACHES AND STRATEGIES
LACKING IN DRAFT PLAN
---------------------------------------------------------- Letter :4.2
HHS' strategic plan has not yet fully addressed the Results Act
requirement to include the approaches and strategies for meeting
goals and objectives. Under the Results Act, strategies are to
describe the operational processes, staff skills, and technologies as
well as the human, capital, information, and other resources needed
to achieve agency goals. In addition, according to OMB Circular No.
A-11, Part 2, these strategies should outline how the agency will
communicate strategic goals organizationwide and hold managers and
staff accountable for achieving the goals.
HHS's draft plan discusses its current programs and activities, but
it does not discuss how these programs and activities will operate
and meet the Department's goals. For example, the draft plan cites
research supported by a number of HHS agencies on sexually
transmitted diseases (STD). It does not, however, specify the types
of research initiatives that are planned or under way or how they
relate to a strategy for guiding clinical and public health practice
in preventing and treating STDs.
Nor does the plan specify how HHS' various program strategies will
work together to reach common goals. Many of HHS' programs developed
over time as the federal government responded to new needs and
problems, resulting in many cases in fragmented programs that may
conflict with one another. Especially important, therefore, is HHS'
need to identify and align individual program strategies to support
achievement of its overall strategic goals and mission.
An example of the need to discuss strategies for linking program
goals is the relationship between the child care and Head Start
sections of the draft plan. The Temporary Assistance for Needy
Families (TANF) program requires clients to increase their hours of
work or work-related activity. The draft plan recognizes that as
these parents increase their work hours, they will need additional
child care services, and it mentions some HHS activities related to
child care. The plan fails to note, however, that Head Start, which
currently serves children of some TANF clients and therefore could
meet child care needs to some extent, is limited by being generally a
half-day, part-year program. Nor does the plan discuss strategies
for coordinating these programs, such as increasing HHS' current
efforts to encourage partnerships between Head Start grantees and
child care providers, so that parents will have access to full-day
child care services.\4
In addition, HHS' draft plan fails to discuss additional resources
the Department needs to reach its goals. For example, although the
Health Insurance Portability and Accountability Act of 1996 adds new
funds to fight fraud and abuse in the Medicare program, we have
reported that this additional funding will still leave per claim
safeguard funding in 2003 at about one-half the 1989 level after
adjusting for inflation.
Similarly, the new welfare reform law gives HHS new administrative
and oversight responsibilities, the performance of which will rely on
data provided by the states. For example, using data provided by the
states, HHS is to establish a national directory of newly hired
employees and a registry of child support orders to strengthen child
support enforcement. Yet the plan makes no mention of the financial
and data resources HHS needs for this.
Moreover, HHS officials often cite changes needed in legislation or
regulation to provide them with the flexibility they need to manage
programs more effectively. For example, HHS has been working with
the Congress to try to group large numbers of individual programs
into consolidated program "clusters" to provide not only
administrative savings but also greater flexibility to respond to
changing national needs.\5 The draft plan does not discuss these and
similar matters, however.
Holding managers responsible for progress in meeting goals is a major
focus of the Results Act as a whole. HHS' draft plan, however, does
not discuss what means or incentives the Department will use to
achieve this. By making managers responsible for the
cost-effectiveness of programs and activities, the Results Act can
help move managers from a traditional role as "caretaker" of federal
programs to one of actively improving efficiency and reducing the
costs of federal interventions.
--------------------
\4 Welfare Reform: Implications of Increased Work Participation for
Child Care (GAO/HEHS-97-75, May 29, 1997).
\5 Health Professions Education: Clarifying the Role of Title VII
and VIII Programs Could Improve Accountability (GAO/T-HEHS-97-117,
Apr. 25, 1997).
RELATIONSHIP BETWEEN
LONG-TERM GOALS AND ANNUAL
PERFORMANCE GOALS MISSING
---------------------------------------------------------- Letter :4.3
HHS' draft plan does not define the relationship between the plan's
goals and those it will include in its annual performance plans. The
Results Act requires a description of these goals' relationship to
help the Congress judge whether agencies are progressing toward
meeting their long-term goals. Because HHS' draft plan has
overlooked this discussion, it is difficult to know what many of the
goals mean and how the Congress will evaluate whether they have been
met.
HHS' draft strategic plan states that the Department's operating
divisions and staff offices are developing the performance plans that
will specify how resources will be used to meet goals and describe
the objectives and targets relevant to specific programs. The
Results Act, however, requires HHS' strategic plan to describe how
the annual performance goals will relate to the strategic goals. One
way to clarify the link is for the plan to define the performance
measures that will be used. For example, HHS mentions using
objectives in Healthy People 2000--which sets targets for national
health promotion and disease prevention--for two of its strategic
goals. The draft plan does not, however, clarify the relationship
between these objectives and the programs and activities.
LITTLE MENTION OF KEY
EXTERNAL FACTORS
---------------------------------------------------------- Letter :4.4
HHS' draft plan pays only scant attention to some of the major
external factors that could significantly affect the plan's goals.
The Results Act requires HHS to discuss such factors and encourages
the Department to identify actions that could reduce or ameliorate
their potential impact. The act requires such a discussion to help
HHS and the Congress assess the likelihood of HHS' meeting the
strategic goals and determine the actions needed to meet those goals.
A factor the draft plan does discuss is the impact of the growing
size of the aged population on Medicare's solvency. The draft plan
is silent, however, about other key factors. One major external
factor missing from the draft plan's discussion is changes in the
economy, which could significantly affect how and whether HHS meets
its strategic goals. For example, although the nation is now in a
period of economic growth, diminished national or even regional
growth could increase the demand on state health and income
assistance programs when state revenues may be unable to meet the
need. Implementation of welfare-to-work initiatives could also be
compromised. As families' economic stress would grow, so too would
the risks to their children, suggesting a need for increased
attention to children's well-being.
USE OF PROGRAM EVALUATIONS
TO ESTABLISH OR REVISE
STRATEGIC GOALS NOT
DISCUSSED
---------------------------------------------------------- Letter :4.5
HHS' draft strategic plan does not reflect the role program
evaluation plays in structuring and refocusing Department goals and
strategies. Such a discussion would help show the Congress that HHS
has an evaluation system in place to ensure the reasonableness and
validity of its goals and strategies as well as identify factors
likely to affect performance.
Many evaluations of HHS programs by the Department, its OIG, and us
have raised issues that will affect the Department's ability to
implement the Results Act, yet the draft strategic plan does not
address these issues. For example, many of these evaluations have
pointed out that programs do not gather data necessary to evaluate
their overall effectiveness. Other evaluations have pointed out the
absence of systems to produce reliable performance and cost data
needed to set goals, evaluate results, and improve performance.
Several HHS and our own evaluations, for example, have pointed out
the inability of the Department's health care shortage area systems
to target over $1 billion spent by over 30 programs each year to
alleviate medical underservice.\6 In addition, the midpoint
evaluation of Healthy People 2000 reported that insufficient data
existed to measure progress for over one-fourth of the initiative's
300 objectives.
Moreover, the draft plan does not reflect HHS' experience with its
Results Act pilot programs, which could help the Department develop
strategies for meeting its goals. For example, OCSE gained
experience in developing strategic plans and working with diverse
stakeholders. It also worked closely with state and local
governments to develop national goals and performance measures.
The Results Act offers an opportunity for HHS to discuss in its plan
the role of future program evaluations in improving performance and
informing congressional decision-making. Many HHS programs
established before 1990 have never been evaluated. HHS has authority
to set aside up to 1 percent of PHS program funding for evaluations,
which in 1992 amounted to $119 million. HHS has often used these
funds for other purposes, however.\7 Refocusing these resources to
evaluate program performance may provide HHS and the Congress with
the information they need to explain reasons performance goals are
not met and identify appropriate strategies to meet unmet goals.
--------------------
\6 Two of the most recent studies include Health Care Shortage Areas:
Designations Not a Useful Tool for Directing Resources to the
Underserved (GAO/HEHS-95-200, Sept. 8, 1995) and The Measurement of
Underservice and Provider Shortage in the United States: A Policy
Analysis, North Carolina Rural Health Research Program, Cecil G.
Sheps Center for Health Services Research, University of North
Carolina (Chapel Hill, N.C.: 1994).
\7 Public Health Service: Evaluation Set-Aside Has Not Realized Its
Potential to Inform the Congress (GAO/PEMD-93-13, Apr. 8, 1993).
HHS' STRATEGIC PLAN REFLECTS
KEY STATUTORY AUTHORITIES BUT
OMITS OTHERS
------------------------------------------------------------ Letter :5
A broad range of statutes governs HHS' activities.\8 Among these
statutes, as reflected in the plan, are the Social Security Act
(including, among others, programs pertaining to Medicare, Medicaid,
child welfare services, child support, foster care, and adoption
assistance); the Public Health Service Act; and the Federal Food,
Drug, and Cosmetic Act. Major recent legislation includes the
Personal Responsibility and Work Opportunity Reconciliation Act of
1996 (which, largely through amendments to the Social Security Act,
authorizes TANF block grants, revises the child support enforcement
program, and increases flexibility and funding available for child
care programs) and the Health Insurance Portability and
Accountability Act of 1996 (HIPAA).
Although HHS' draft plan generally reflects the key statutory
authorities governing the agency's activities, it does not address
all significant statutes and the programs for which HHS is
responsible. For example, the plan says nothing about agency
responsibilities such as regulation of the nation's blood supply,
operation of a network for organ procurement and transplant, and
certification of clinical laboratories and mammography facilities.
The Results Act requires that the comprehensive mission statement and
the general goals and objectives cover all major agency functions and
operations. HHS specifically acknowledges, however, that its plan
does not include all activities that contribute to the agency's
overall mission--only those that HHS believes should have priority
over the next 6 years.
--------------------
\8 When we performed our review, no comprehensive list of HHS'
statutory responsibilities was available, and the draft plan did not
provide any linkage between the mission, goals, and key statutory
authorities. In view of the limited time available for our review,
we could not comprehensively compare the plan with the statutory
authorities governing HHS. We did not identify any major agency
activity not grounded in explicit statutory authority.
PLAN PAYS INSUFFICIENT
ATTENTION TO CROSSCUTTING
PROGRAMS
------------------------------------------------------------ Letter :6
HHS' array of interrelated activities and responsibilities makes it
especially important for HHS managers to work together to address the
Department's overarching program goals. Moreover, many programs that
are HHS' responsibility share goals with or relate closely to
programs administered by other federal agencies. In addition to
coordinating the activities of its own agencies, HHS must also
coordinate its efforts with these other agencies. Although HHS'
draft strategic plan recognizes that many different HHS agencies and
programs are responsible for meeting each of the Department's goals,
it does not discuss strategies for coordinating such efforts. Nor
does the draft discuss HHS' need to coordinate its work with other
federal agencies.
The following examples are a few of the many opportunities HHS has
for its plan to discuss both intra- and interdepartmental
crosscutting issues. One program area that requires HHS to focus on
both internal and external coordination is alcohol and drug abuse
treatment and prevention.\9 Programs addressing alcohol and drug
abuse issues are located not only in several HHS agencies--including
the Substance Abuse and Mental Health Services Administration
(SAMHSA), NIH, ACF, and the Centers for Disease Control and
Prevention--but also in 15 other federal agencies. These include the
Departments of Veterans Affairs, Education, Housing and Urban
Development, and Justice.
Substance abuse programs also have a bearing on other aspects of the
Department's mission. HHS has previously reported that the number of
child protective service (CPS) cases involving substance abuse can
range from 20 to 90 percent, depending on the area of the country.
Although the draft strategic plan mentions the use of illicit drugs
as a major threat to the health of Americans and notes its impact on
the complexity of family problems, it does not discuss how ACF and
SAMHSA programs can work together to alleviate the problems that have
produced a crisis for the CPS system.
Nor does the draft plan discuss HHS' work that overlaps with that of
other agencies in addressing the dramatic increase in the number and
severity of cases of child abuse and neglect over the last 20 years.
HHS has recognized the need for interagency cooperation on child
abuse issues and has participated in forums with the Department of
Justice's National Institute of Justice, Office for Victims of Crime,
and Office of Juvenile Justice and Delinquency Programs.
Another example involves the new welfare reform law, which requires
recipients to work after 2 years as a condition of receiving further
benefits and requires states to achieve specified and increasing
levels of recipient participation in work activities until the
required rate reaches 50 percent in fiscal year 2002. State
officials have expressed concern that as the most employable
recipients find jobs, the remaining caseload will consist of
individuals with substantial barriers to employment, making the
higher target rates difficult to achieve. Although HHS' draft plan
does not mention them, the employment, training, and education
programs administered by the Departments of Labor and Education will
probably be essential to TANF's success and to HHS' goal of promoting
self-sufficiency and parental responsibility.
Finally, the draft plan does recognize the enormous impact the aging
of the baby boomers will have on HHS programs. It does not, however,
discuss the effects of this demographic change on related programs
that affect economic well-being, such as Social Security and the
Department of Labor's protections of private pensions, and the need
for HHS to work closely with these other agencies to manage the
consequences of such profound social change.
--------------------
\9 Substance Abuse and Mental Health: Reauthorization Issues Facing
the Substance Abuse and Mental Health Services Administration
(GAO/T-HEHS-97-135, May 22, 1997).
STRATEGIC PLAN DOES NOT FULLY
ADDRESS MAJOR MANAGEMENT
CHALLENGES
------------------------------------------------------------ Letter :7
HHS faces many major management challenges in carrying out both its
program responsibilities and the type of strategic planning and
performance measurement the Results Act requires.\10 Although HHS is
aware of many of these challenges, its plan does not address them.
By acknowledging these challenges in its plan, however, HHS could
foster a more useful dialogue with the Congress about its goals and
the strategies for achieving them. We would like to point out two
areas in particular: HHS' reliance on state, local, and private
agencies to carry out many programs for which it is responsible and
the maintenance of financial management and program integrity.
--------------------
\10 Department of Health and Human Services: Management Challenges
and Opportunities (GAO/T-HEHS-97-98, Mar. 18, 1997).
PARTNERSHIP WITH STATE AND
LOCAL AGENCIES MAKES
ACCOUNTABILITY FOR RESULTS
DIFFICULT
---------------------------------------------------------- Letter :7.1
Many HHS programs are operated by states, localities, or
nongovernmental organizations, which requires HHS agencies to develop
ways to make their many partners accountable for program results. In
administering programs jointly with state governments or that involve
many local grantees, HHS must continually balance program flexibility
with oversight and maintaining program controls. To further
complicate HHS' task, state data necessary for meaningful performance
measurement may not be currently available or may not be comparable
from state to state.
The changes associated with recently enacted welfare reform exemplify
many of these difficulties and will challenge HHS to assess the
effects of reform on children and families. Under the TANF program,
states have flexibility to design and implement their own assistance
programs within federal guidelines, and HHS has a broad range of
responsibilities for ensuring accountability from the states. The
law also gives HHS authority to assess penalties if states fail to
comply with certain requirements and provides for states to receive
bonuses if they meet certain performance standards. HHS will need
comparable and reliable state data to ensure that states are
enforcing the federal 5-year lifetime limit on receiving welfare
benefits, meeting minimum work participation rates, and maintaining a
certain level of welfare spending, as well as to assess penalties and
provide performance bonuses. Enforcing the time limit exemplifies
the difficulty of HHS' task because information on the total amount
of time a person has received welfare is often unavailable in an
individual state, let alone across states.
Administering the Medicaid program presents the same difficulty in
balancing flexibility and accountability. Federal statutes and
regulations allow states substantial flexibility in designing and
administering their Medicaid programs. Because HCFA is authorized to
waive certain statutory requirements, such as those for managed care
or home- and community-based service alternatives to long-term care,
it may provide states with even greater latitude. Although HCFA
performs structural reviews of waiver programs during the planning
stage, problems have developed in some states as programs are
implemented and continue to operate. Flexibility can be positive for
beneficiaries as well as the states; however, HCFA's ongoing
monitoring and oversight are important to ensure the appropriate use
of federal funds. The need for accountability will be even more
pronounced if the need for waivers to enroll beneficiaries in managed
care is eliminated as the President and the Congress have
proposed.\11
--------------------
\11 Medicaid Managed Care: Challenge of Holding Plans Accountable
Requires Greater State Effort (GAO/HEHS-97-86, May 16, 1997).
FINANCIAL MANAGEMENT AND
PROGRAM INTEGRITY REQUIRE
CONSTANT VIGILANCE
---------------------------------------------------------- Letter :7.2
With HHS' broad range of programs, large number of grantees and
contractors, huge volume of vendor payments, and millions of
beneficiaries, the Department must constantly protect its programs
from fraud, abuse, mismanagement, and waste. Safeguarding Medicare,
the government's second largest social program, which in fiscal year
1996 had expenses of about $200 billion and processed 822 million
claims, has been a long-standing management challenge for HHS.\12 The
draft strategic plan recognizes the role of program integrity in
meeting departmental goals in its discussion of Operation Restore
Trust but does not discuss many important aspects of this issue.
The draft plan, for example, does not address HHS' problems in
complying with GMRA. To provide decisionmakers with reliable,
consistent financial data on the operations of federal agencies, GMRA
requires each department and major independent agency to submit to
OMB an audited agencywide financial statement beginning with fiscal
year 1996. The magnitude of this task for HHS is extraordinary.
HHS' expenses exceed $300 billion a year. Over 80 percent of this
amount is spent by HCFA, primarily for the Medicare and Medicaid
programs. Although the OIG tried to audit HCFA's financial
statements in prior years, it could not express an opinion on the
reliability of these statements mainly because of inadequate
supporting documentation for some of the significant reported
amounts. Financial management problems identified by the fiscal year
1996 financial statement audit effort include an estimated $23
billion in improper Medicare benefit payments made during that year.
Another critical challenge that HHS' plan does not address and that
we have reported on is long-standing concerns about Medicare's claims
processing systems. These systems do not allow for cross-checking of
claims processed by carriers and intermediaries or for prepayment
alerts of unusual increases in billing for particular items. HHS has
been developing a single, integrated database system, the Medicare
Transaction System (MTS), but ineffective planning and management of
MTS modernization contributed to a substantial increase--from about
$151 million to $1 billion--in the total costs estimated for
developing and implementing this system. This occurred because HCFA
did not carefully plan its MTS transition, effectively manage MTS as
an investment, and fully follow commonly accepted system development
practices. The MTS project is at risk of not meeting its revised
schedule, which calls for completion of the design by October 1998.
To address these issues, we made numerous recommendations to the
Secretary of HHS that, if implemented effectively, would help ensure
that a successful system will be delivered.\13
HHS' draft strategic plan also fails to address the issue of
information security that was identified during the fiscal year 1996
financial statement audit effort. HCFA's electronic data processing
security program, which should provide a framework for managing risk,
developing security policies, assigning responsibility, and
monitoring the adequacy of computer-related controls, is ineffective.
These weaknesses could allow unauthorized individuals to access
sensitive medical history and personal beneficiary and claims data,
and then inappropriately disclose or alter such data. HCFA's
officials informed us that they plan to implement a plan to address
this issue.
--------------------
\12 Medicare: Inherent Program Risks and Management Challenges
Require Continued Federal Attention (GAO/T-HEHS-97-89, Mar. 4,
1997).
\13 Medicare Transaction System: Success Depends Upon Correcting
Critical Managerial and Technical Weaknesses (GAO/AIMD-97-78, May 16,
1997).
AGENCY CAPACITY TO PROVIDE
RELIABLE INFORMATION ON MEETING
STRATEGIC GOALS IS NOT
DISCUSSED
------------------------------------------------------------ Letter :8
Nothing is more crucial to effectively managing an enterprise of HHS'
size and scope than accurate information about programs and their
effects. Yet HHS' draft strategic plan does not discuss either key
aspect of the Department's capacity to provide needed
information--the use of information technology and the availability
of reliable data on program performance.
Recent information technology reform legislation, including the
Paperwork Reduction Act of 1995 and the Clinger-Cohen Act of 1996,
set forth requirements that promote more efficient and effective use
of information technology to support agency missions and improve
program performance. Under the information technology reform laws,
agencies are to better relate their technology plans and information
technology use to their programs' missions and goals. However, HHS'
plan does not discuss how it plans to use information technology to
achieve its missions, goals, and objectives, nor does the plan
describe how HHS intends to use information technology to improve
performance and reduce costs.
The plan is also silent on how HHS will meet the "year 2000" problem
in connection with existing and planned automated systems. This
problem stems from the common practice of abbreviating years by using
their last two digits only. Thus, miscalculations in all kinds of
activities--such as benefit payments--could occur because the
computer system would interpret 00 as 1900 instead of the year 2000.
HHS, along with other agencies that maintain time-based systems, must
develop strategies to resolve this potential problem in the near
future.
To implement its programs and meet its responsibilities successfully,
HHS must have access to data that are both reliable and appropriate
to the task.\14
Without such data, HHS cannot inform the Congress or the American
people of its progress toward meeting its performance goals. For
example, because several important HHS programs, including Medicaid
and TANF, are joint federal-state efforts, the current lack of
comparable data among states increases the difficulty of obtaining
timely and reliable data.
The federal government has only limited data on the Medicaid program,
some of which are of questionable accuracy. Some of these problems
stem from collecting data from 50 states and the District of
Columbia, which do not all use identical definitions for data
categories. HHS' adoption of standardized data sets, as required by
HIPAA, will provide a structure for reporting but will not solve
other problems such as some duplicate reporting on the number of
managed care enrollees.
Some of Medicaid's long-standing data problems could worsen because
of the program's growing reliance on managed care to provide health
services to beneficiaries. The proportion of Medicaid beneficiaries
enrolled in managed care, as reported by HCFA, quadrupled from about
10 percent in 1991 to about 40 percent in 1996. Although HIPAA
requires the adoption of a standardized encounter transaction format
for managed care, unless proper and sufficient data are required for
that format, HHS will still lack the detailed utilization data it
needs to meaningfully compare the data available under
fee-for-service billing. This, in turn, makes evaluating the
program's success even more difficult.
--------------------
\14 Department of Health and Human Services: Management Challenges
and Opportunities (GAO/T-HEHS-97-98, Mar. 18, 1997).
AGENCY COMMENTS
------------------------------------------------------------ Letter :9
HHS officials agreed that the Department's draft plan omitted many of
the elements required by the Results Act. They explained that the
remaining elements of the plan are now being prepared and they expect
that the plan will be complete by the time it is due in September.
Even though they recognized in April when they released the draft
that it did not contain all required elements, they believed that it
was more important to allow enough time to consult with their many
stakeholders, including state and local governments, than to devote
the time to developing a more complete plan. They also believed that
the plan as distributed in April provided a sufficient framework for
consultation. Furthermore, officials were concerned that providing a
level of detail to the extent we have suggested would make the
strategic plan a poor vehicle for communicating with the Department's
stakeholders. Finally, they believed that it was important to
recognize that the strategic plan was a work in progress and not a
final product to be evaluated against the requirements of the Results
Act. HHS' comments are included in enclosure II. HHS officials also
provided technical comments, which we incorporated in the
correspondence as appropriate.
---------------------------------------------------------- Letter :9.1
As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this
correspondence until 30 days after its issue date. At that time, we
will send copies to the Ranking Minority Members of your Committees;
the Chairmen and Ranking Minority Members of the House Committees on
Commerce and Ways and Means; the Secretary of HHS; the Director,
Office of Management and Budget; and other interested parties. We
will also send copies to others on request.
This work was done under the direction of Bernice Steinhardt,
Director, Health Services Quality and Public Health Issues, who may
be reached on (202) 512-7119 if you or your staffs have any
questions. Other major contributors to this letter are in enclosure
III.
Richard L. Hembra
Assistant Comptroller General
Enclosures - 3
HHS' MAJOR OPERATING DIVISIONS
=========================================================== Appendix I
(See figure in printed
edition.)
Note: Operating divisions marked with an asterisk are part of PHS.
(See figure in printed edition.)Enclosure II
COMMENTS FROM THE DEPARTMENT OF
HEALTH AND HUMAN SERVICES
=========================================================== Appendix I
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
(See figure in printed edition.)
MAJOR CONTRIBUTORS TO THIS
CORRESPONDENCE
========================================================= Appendix III
Marsha Lillie-Blanton, Associate Director
Helene Toiv, Project Manager
Lacinda Baumgartner, Senior Evaluator
Lisanne Bradley, Senior Evaluator
Kay Brown, Assistant Director
Kay Daly, Senior Auditor
Mark E. Heatwole, Assistant Director
Christie M. Motley, Assistant Director
Dayna Shah, Assistant General Counsel
Stefanie Weldon, Senior Attorney
============================================================ Chapter 0
============================================================ Chapter 1
============================================================ Chapter 2
RELATED GAO PRODUCTS
============================================================ Chapter 3
Medicare: Control Over Fraud and Abuse Remains Elusive
(GAO/T-HEHS-97-165, June 26, 1997).
Medicare: Need to Hold Home Health Agencies More Accountable for
Inappropriate Billings (GAO/HEHS-97-108, June 13, 1997).
Managing for Results: Analytic Challenges in Measuring Performance
(GAO/HEHS/GGD-97-138, May 30, 1997).
Head Start: Research Provides Little Information on Impact of
Current Program (GAO/HEHS-97-59, Apr. 15, 1997).
Child Welfare: States' Progress in Implementing Family Preservation
and Support Services (GAO/HEHS-97-34, Feb. 18, 1997).
High-Risk Series: Medicare (GAO/HR-97-10, Feb. 1, 1997).
Medical Device Reporting: Improvements Needed in FDA's System for
Monitoring Problems With Approved Devices (GAO/HEHS-97-21, Jan. 29,
1997).
Rural Health Clinics: Rising Program Expenditures Not Focused on
Improving Care in Isolated Areas (GAO/HEHS-97-24, Nov. 22, 1996).
Child Support Enforcement: States' Experience With Private Agencies'
Collection of Support Payments (GAO/HEHS-97-11, Oct. 23, 1996).
Drug and Alcohol Abuse: Billions Spent Annually for Treatment and
Prevention Activities (GAO/HEHS-97-12, Oct. 8, 1996).
Information Management Review: Effective Implementation Is Essential
for Improving Federal Performance (GAO/T-AIMD-96-132, July 17, 1996).
At-Risk and Delinquent Youth: Multiple Federal Programs Raise
Efficiency Questions (GAO/HEHS-96-34, Mar. 6, 1996).
Medicare: Millions Can Be Saved by Screening Claims for Overused
Services (GAO/HEHS-96-49, Jan. 30, 1996).
*** End of document. ***